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Frequently Asked Questions

Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.

FAQ Library

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Does CMS require states to submit their 2019 Upper Payment Limit (UPL) demonstrations using the Office of Management and Budget (OMB) approved templates for Inpatient Hospital services (IPH), Outpatient Hospital services (OPH), and Nursing Facility services (NF) UPLs?

Yes, CMS requires states to use all of the OMB approved templates for their 2019 (07/01/2018 to 06/30/2019) UPL demonstrations submitted to meet the annual UPL reporting requirement and with State Plan Amendment (SPA) submissions. When submitting UPL demonstrations, use the following naming convention: UPL_<UPL Demo Date Range>_<Service Type Abbreviation>_R<Region Number>_<State Abbreviation>_<Workbook Number>.xls. Here is an example of the naming convention: UPL_20170701-20180630_IP_R01_CT_01.xls.

FAQ ID:92196

Does a health plan's submission of information from its full eligibility file, for the purpose of matching that information to the Medicaid eligibility file, violate the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy rules?

State laws determine what information is required of the health plans. A health plan's disclosure and use of information that is required to be submitted under state law - such as, information from insurer eligibility files sufficient to determine during what period any individual may be, or have been, covered by a health insurer and the nature of the coverage that is or was provided by the health insurer — is consistent with the HIPAA privacy provisions.

Under HIPAA, both the state Medicaid agency and most health insurers are covered entities and must comply with the HIPAA Privacy Rule in 45 CFR Part 160 and Part 164, Subparts A and E. In their capacities as covered entities under HIPAA, the state Medicaid agency and health insurers are restricted from using and disclosing protected health information (PHI), as that term is defined in 45 CFR section 160.103, other than as permitted or required by the HIPAA Privacy Rule. However, as relevant here:

  1. A covered entity may use or disclose PHI to the extent that such use or disclosure is required by law and the use or disclosure complies with and is limited to the relevant requirements of the law. (45 CFR 164.512(a)(1)) Under this provision, each covered entity must be limited to disclosing or using only the PHI necessary to meet the requirements of the law that compels the use or disclosure. Anything required to be disclosed by a law can be disclosed without violating HIPAA under the "required by law" provisions. Therefore, health insurers may disclose data elements in addition to the four minimum data elements, up to and including submission of an entire insurer eligibility file, to the extent such information is required to be submitted by state law. (45 CFR 164.512(a))
  2. Separately, a covered entity may use or disclose PHI, without the consent of an individual, for payment activities, including to facilitate payment. (45 CFR 164.502(a)(1) and 164.506) Under HIPAA, the term payment includes activities undertaken by a health plan to determine or fulfill its responsibility for coverage and provision of benefits under the health plan. These activities include determinations of eligibility or coverage, adjudication or subrogation of health benefits claims, and collection activities. (45 CFR 164.501) To the extent plans are releasing this information to the Medicaid program for payment purposes; this is a separate basis for disclosure under HIPAA.
  3. The HIPAA Privacy Rule generally requires covered entities to take reasonable steps to limit the use and disclosure of PHI to the minimum necessary to accomplish the intended purpose. (45 CFR 164.502(b)(1)) However, among other limited exceptions, the minimum necessary requirements do not apply to uses or disclosures that are required by law under 45 CFR 164.512(a).

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FAQ ID:91216

May state Medicaid agencies request information on subscribers and dependents covered in other states?

Yes. There is a significant amount of third party coverage derived from health plans licensed in a different state than where the Medicaid beneficiary resides. This can commonly happen when the policyholder works in one state and lives in another state. For example, there may be policyholders who are enrolled in Medicaid coverage in Maryland, or have dependents that are enrolled, who work in Delaware, the District of Columbia, Pennsylvania, Virginia, or West Virginia and also have coverage through their employer in that state. This highlights the need for Medicaid agencies to obtain plan eligibility information from contiguous states in addition to collecting information in their respective state.

Another example is when Medicaid-eligible children are covered by the insurance plan of non-custodial parents who live in a different state than their child(ren). This example is not limited to contiguous states because non-custodial parents could reside in any state in the country. Depending on the size, it may be beneficial for the state to obtain the plan's entire eligibility file. The specific geographical areas to be included in the data exchange should be negotiated with the plans. We recommend use of a Trading Partner Agreement in the exchange of electronic data.

Finally, section 1902(a)(25)(I)(i) of the Social Security Act directs states, as a condition of receiving federal financial participation (FFP) for Medicaid, to have laws in effect that require health insurers doing business in their state to provide the state with the requisite information with respect to individuals who are eligible for, or are provided medical assistance, i.e., Medicaid beneficiaries. State law cannot reach beyond the entities that are "doing business" in their states.

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FAQ ID:91221

May state Medicaid agencies use contractors to complete data matches with health insurers?

Yes. State Medicaid programs may enter into data matching agreements directly with third parties or may obtain the services of a contractor to complete the required matches. Such arrangements should comply with Health Insurance Portability and Accountability Act of 1996 (HIPAA)'s "Business Associate" requirements, where applicable. When the state Medicaid program chooses to use a contractor to complete data matches, including matches as required by the Deficit Reduction Act of 2005 (DRA), the program delegates its authority to obtain the desired information from third parties to the contractor.

Third parties should generally treat a request from the contractor as a request from the state Medicaid agency. Third parties may request verification from the state Medicaid agency that the contractor is working on behalf of the agency and the scope of the delegated work.

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FAQ ID:91226

Can Medicaid Managed Care Organizations (MCOs) use a contractor to complete data matches with health insurers, as authorized by the state Medicaid agency?

Yes. State Medicaid programs may contract with MCOs to provide health care to Medicaid beneficiaries, and may delegate responsibility and authority to the MCOs to perform third party liability TPL discovery and recovery activities, including data matches as required by the Deficit Reduction Act of 2005 (DRA). The Medicaid program may authorize the MCO to use a contractor to complete these activities. The contract language between the state Medicaid agency and the MCO dictates the terms and conditions under which the MCO assumes TPL responsibility. Generally, any TPL administration and performance standards for the MCO will be set by the state and should be accompanied by state oversight.

When TPL responsibilities are delegated to an MCO, third parties are required to treat the MCO as if it were the state Medicaid agency, including:

  1. Providing access to third party eligibility and claims data to identify individuals with third party coverage;
  2. Adhering to the assignment of rights from the state to the MCO of a Medicaid beneficiary's right to payment by such insurers for health care items or services; and,
  3. Refraining from denying payment of claims submitted by the MCO for procedural reasons.

Third parties may request verification from the state Medicaid agency that the MCO or its contractor is working on behalf of the agency and the scope of the delegated work.

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FAQ ID:91231

What is the responsibility of liable third parties regarding health insurers' denials of Medicaid claims based on insurers' procedural requirements?

Under section 1902(a)(25)(H) of the Social Security Act (the Act) before passage of the Deficit Reduction Act of 2005 (DRA), states were required to have laws in effect that to the extent Medicaid payment was made, the state was considered to have acquired the rights of the Medicaid beneficiary to reimbursement by any other party that was liable for payment. However, payers sometimes deny Medicaid claims based on procedural requirements. Section 1902(a)(25)(I) of the Act, added by the DRA, strengthens the statute by requiring states to enact laws that require health insurers:

  1. To accept the state's right of recovery and the assignment to the state of the right of a Medicaid beneficiary or other entity to payment from such party for an item or service for which Medicaid has made payment; and,
  2. To process and, if appropriate, pay the claim for reimbursement from Medicaid to the same extent that the plan would have been liable had the plan's card been used for billing at the "point of sale" (POS).

Specifically, the state should pass laws which require an insurer to agree not to deny claims submitted by the state on the basis of the date of submission of the claim, the type or format of the claim form, or a failure to present proper documentation of coverage at the POS that is the basis of the claim.

Whether a plan provision affecting payment for an item or service is solely procedural in nature or whether it defines or limits the covered benefits must be determined on a case-by-case basis.

Note that nothing in the DRA negates the state's responsibility to provide proper documentation when submitting claims to the health insurer so that the insurer can determine that a covered service for which the insurer is liable was provided.

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FAQ ID:91236

Are health plans permitted to require a National Provider Identifier (NPI) for transactions with Medicaid programs?

No. States typically do not meet the definition of a covered health care provider under 45 CFR 160.103, and therefore, are not eligible to receive an NPI. If states encounter situations where plans are requiring them to submit an NPI, they can submit a formal complaint to the Office of E-Health Standards and Services (OESS) in CMS by using the online Administrative Simplification Enforcement Tool (ASET). ASET allows individuals or organizations to electronically file a complaint against an entity whose actions they believe violate an Administrative Simplification provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

States may submit a formal complaint electronically at: https://htct.hhs.gov/aset/. ASET users are required to register with OESS and create a user identification name and password. States also may submit a paper complaint. The form is available at: www.cms.hhs.gov/Enforcement/Downloads/HIPAANon-PrivacyComplaintForm.pdf.

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FAQ ID:91241

How long do states have to submit a claim for reimbursement to health insurers?

Section 1902(a)(25)(I) of the Social Security Act requires states to have laws in effect that require health insurers to make payment as long as the claim is submitted by the state within three years from the date on which the item or service was furnished.

Some health insurers currently deny claims submitted by Medicaid if they are not filed within a prescribed time limit, which is applied to plan beneficiaries and providers (e.g., a plan might require beneficiaries and providers to submit claims within 30 days from date of service). If the state Medicaid agency is unable to ascertain the existence of the third party coverage and submit a claim within the time limit, the insurer may attempt to avoid liability.

Any action by the state to enforce its rights with respect to such claim must be commenced within six years of the state's submission of such claim. Health insurers also must respond to any inquiry by a state regarding claims submitted within three years from the date on which the item or service was furnished.

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FAQ ID:91246

How does section 1902(a) (25) of the Social Security Act (the Act) define "health insurers"?

Section 1902(a) (25) (I) of the Act defines ""health insurers"" to include self-insured plans, group health plans (as defined in section Medicaid Management Information Systems (MMIS)(l) of the Employee Retirement Income Security Act of 1974 (ERISA)), service benefit plans, managed care organizations (MCOs), pharmacy benefit managers (PBMs), and ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service."" Workers' compensation, automobile insurance, and liability insurance plans all are included within the definition of ""health insurer"" for purposes of this section and the requisite state laws which must be enacted pursuant to it.

The CMS interprets ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim"" to include:

  1. Prepaid Inpatient Health Plans (PIHPs) and Prepaid Ambulatory Health Plans (PAHPs). For purposes of Medicaid managed care, PIHPs and PAHPs are entities that contract with the state to deliver Medicaid-covered services; in that context, they would also be considered ""other parties that are, by contract, legally responsible for payment of a claim for a health care item or service;"" and,
  2. Such entities as third party administrators (TPAs), fiscal intermediaries, and managed care contractors, which administer benefits on behalf of the riskbearing plan sponsor (e.g., an employer with a self-insured health plan). CMS recognizes that entities such as PBMs and TPAs do not necessarily have ultimate financial liability, but, to the extent that they are required, by contract or otherwise, to review claims and authorize payment by the plan sponsor, they are included within the definition of ""third party"" and ""health insurer"" for purposes of section 1902(a) (25) of the Act.

Nothing in revisions to the Social Security Act made by the Deficit Reduction Act of 2005 (DRA) imposes new liability to pay claims on entities that do not otherwise bear such liability. Nor does section 1902(a) (25) of the Act negate any right of indemnification against a plan sponsor or other entity with ultimate liability for health care claims by a contracting party that pays the claims.

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FAQ ID:94021

Are indemnity insurance policies considered to be third party resources for purposes of Medicaid?

Indemnity policies may be considered third party resources if the policies meet certain criteria. Federal Medicaid regulations at 42 CFR 433.136 define a third party as ""any individual, entity, or program that is or may be liable to pay all or part of the expenditures for medical assistance furnished under a state plan."" This includes private insurance. Section 433.136 also defines private insurer to include ""any commercial insurance company offering health or casualty insurance to individuals or groups (including both experience-related insurance contracts and indemnity contracts)."" Private insurers are required to comply with the Deficit Reduction Act of 2005 (DRA) and related state enactments.

Indemnity plans may include a variety of insurance policies such as accident, cancer/specified disease, dental, hospital confinement indemnity, hospital confinement sickness indemnity, hospital intensive care, long-term care, short-term disability, specified health event, and vision. An individualized review of the various policy terms would be necessary to determine if they should be considered a third party resource for purposes of Medicaid. If this review determines that the policy provides for payment of health care items and services, the policy is a third party resource and payments would be assigned to the Medicaid agency.

An indemnity policy may be designed to pay a cash benefit to policyholders, unless the policyholder chooses otherwise. The policy may state that these payments may be used to cover medical expenses or living expenses such as rent, child care, or groceries. However, the insurance company may condition payment upon the occurrence of a medical event. Whenever payments are linked to specific medical events, these payments should be considered third party payments. Thus, the state could seek to recover Medicaid payments from the policy benefits.

Where indemnity policies do not qualify as a third party resource, any payments made to a Medicaid beneficiary may be countable as income for Medicaid eligibility purposes.

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FAQ ID:94026

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