[Federal Register Volume 60, Number 131 (Monday, July 10, 1995)]
[Rules and Regulations]
[Pages 35498-35503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16806]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 433
[MB-39-F]
RIN: 0938-AF11
Medicaid Program; Third Party Liability (TPL) Cost-Effectiveness
Waivers
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule revises regulations concerning Medicaid
agencies' actions where third party liability (TPL) may exist for
expenditures for medical assistance covered under the State plan. It
allows the Medicaid agencies to request waivers from certain procedures
in our regulations that are not expressly required by the Social
Security Act. We will consider waiving nonstatutorily required
procedures relating to identifying possible TPL where the agency finds
that following a given required procedure is not cost-effective and is
duplicative of another State activity. A nonstatutorily required
activity is eligible for a waiver if the cost of the required activity
exceeds the TPL recoupment and the required activity accomplishes, at
the same or at a higher cost, the same objective as another activity
that is being performed by the States. This change gives States greater
flexibility in managing their Medicaid programs.
EFFECTIVE DATE: This final rule is effective September 8, 1995.
FOR FURTHER INFORMATION CONTACT: Mel Schmerler, (410) 966-5942.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1902(a)(25) of the Social Security Act (the Act) requires
that State or local Medicaid agencies take all reasonable measures to
ascertain the legal liability of third parties to pay for care and
services furnished to Medicaid recipients. A third party is 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. Medicaid is intended to be the payer of last resort; that is,
other available resources must be used before Medicaid pays for the
care and services of a Medicaid-eligible individual. These other
resources are known as third party liability, or TPL.
Further, provisions under section 1902(a)(25)(A)(i) of the Act
specify that the Medicaid State plan must provide for the collection of
sufficient information to enable the State to pursue claims against
third parties. Examples of liable third parties include commercial
insurance companies through employment-related or privately purchased
health insurance; casualty coverage resulting from an accidental
injury; payments received directly from an individual who has either
voluntarily accepted or been assigned legal responsibility for the
health care of one or more Medicaid recipients; and fraternal groups,
union, or State workers' compensation commissions. TPL also includes
medical support provided by a parent under a court or administrative
order.
Statutory provisions (sections 1137 and 1902(a)(25) of the Act)
require States to obtain health insurance information at eligibility
intake and redetermination interviews, perform the State Wage
Information Collection
[[Page 35499]]
Agency (SWICA) data match, safeguard recipient information, obtain
recipient assignment of rights, and submit a TPL action plan for HCFA
approval. These statutory requirements are not affected by the
provisions of this final rule.
Nonstatutory requirements, specified in the Medicaid regulations at
Sec. 433.138 (and subject to proposed waiver), include obtaining
information (via data matching) with the State Workers' Compensation or
Industrial Accident Commission files and State Motor Vehicle Accident
report files. Another nonstatutory requirement is the requirement for
agencies to identify all paid claims with trauma/diagnosis codes found
in the International Classification of Disease, 9th Revision, Clinical
Modification, Volume 1 (ICD-9-CM) 800 through 999, except 994.6. In
Sec. 433.139 (and subject to proposed waiver), State agencies are
required to bill the third party resource within 60 days after the last
day of the month the State learns of the available resource.
Under our regulations at Sec. 433.138, pertinent health insurance
information must be obtained (1) from Medicaid applicants or recipients
during the determination and redetermination process; (2) by securing
data match agreements with specific Federal and State agencies; (3) by
conducting diagnosis and trauma code edits; and (4) by following
specified procedures regarding the frequency of these activities.
Regulations at Sec. 433.139 govern State payment of claims where
TPL is involved. There are two methods of paying claims for recipients
with known TPL: the cost-avoidance method and the pay-and-chase method.
Under the cost-avoidance method, the Medicaid agency does not initially
pay the claim, but returns the claim to the provider with information
necessary for the provider to bill the third party. Under the pay-and-
chase method, an agency may pay the total amount allowed under its
payment schedule and then seek recovery from the liable third parties.
The agency must initiate recovery within 60 days after the end of the
month in which payment is made or the Agency learns of the existence of
the third party resource.
Most States that implement the requirements in our regulations at
Sec. 433.138 achieve significant Medicaid savings. Whenever third party
resources can be utilized instead of Medicaid, both Federal and State
taxpayers save money. In some instances, however, TPL requirements are
not cost-effective.
Some States have reported very poor results in terms of identifying
new TPL leads through trauma and diagnosis code edits. There are
reports that some codes never yield TPL. Currently, States may obtain a
partial waiver from HCFA of the requirement in Sec. 433.138(e) to take
action to identify those paid claims for Medicaid recipients that
contain diagnosis codes 800 through 999 (except that no State has to
pursue information concerning code 994.6, motion sickness). Under
Sec. 433.138(e), the State may obtain a waiver from complying with the
requirements for specific codes.
In Sec. 433.139(e), we also permit a State to request a waiver from
HCFA of the cost-avoidance method of paying if the State could document
that the pay-and-chase method is at least as cost-effective as the
cost-avoidance method. The State is required to revalidate its cost-
avoidance waiver request every 3 years and notify HCFA of any event
that may change the cost-effectiveness of the waiver.
When these requirements were established by HCFA, the Medicaid TPL
program was in its infancy. Many States were not pursuing TPL or only
recovering TPL passively; that is, making recoveries when contacted by
a provider or attorney who was making a third party settlement. We
believed there were tremendous untapped TPL resources that were not
identified by States. Therefore, the initial regulations were broad and
did not allow States discretion to decide whether or not to perform
required TPL activities based upon their cost-effectiveness. For this
reason, we issued TPL regulations which we have determined are now too
prescriptive and, at times, duplicative. On February 27, 1987, we
published in the Federal Register (52 FR 5971) a response to State
comments regarding cost-effectiveness of our discretionary regulations
at Secs. 433.138 and 433.139. We stated that we would reevaluate these
requirements if we received substantial complaints. This rule is
consistent with that statement.
Currently, the majority of the States have aggressive and
comprehensive TPL programs and have reported substantial savings from
TPL activities. However, program experience has identified situations
where some activities required by our regulations duplicate some State
agency requirements in identifying new TPL leads. Also, situations have
been identified where some of our requirements in regulations are not
cost-effective; that is, States can reasonably expect to spend more to
perform a TPL activity than will be realized in savings. It is for
these reasons that we are now offering States the opportunity to
request waivers from the unproductive activities that are not mandated
by statute, and for which States have superior methods for
accomplishing the same objectives as our regulations.
II. Issuance of Proposed Rule
On February 2, 1994, we published in the Federal Register (59 FR
4880) a proposed rule that would allow States to request a waiver from
requirements in Sec. 433.138(c), (d)(4), (d)(5), (e), (f), (g)(1),
(g)(2), (g)(3), and (g)(4) or Sec. 433.139(b), (d)(1), and (d)(2) that
are not explicitly mandated by statute when it is found that performing
the requirement is not cost-effective. We indicated that we would
revise our rules to allow a State to request a waiver from the
nonstatutorily required activities that concern specific types of third
party information, exchange of data, diagnosis and trauma code edits,
and follow-up activities for certain exchanges. A nonstatutorily
required activity would be eligible for a waiver if the cost of the
required activity exceeds the TPL recoupment and the required activity
accomplishes, at the same or at a higher cost, the same objective as
another activity that is being performed by the State.
We made this proposal to allow States to perform TPL operations
more efficiently and at a greater savings to the Federal Government. We
believed that duplicative efforts (and higher costs) would be
eliminated when States have already identified third party resources
through another more cost-effective means. We note that HCFA's
financial participation in State Medicaid Management Information
Systems costs, including costs related to data matches we require
States to perform, may be as much as 90 percent. Therefore, it is not
in the interest of the Federal Government to have States perform
activities which are either duplicative or nonproductive.
We proposed relief from regulatory requirements in the form of a
waiver. The State would submit a formal request to the HCFA regional
office (RO). The State would be required to provide documentation that
demonstrates that the cost of the required activity exceeds the TPL
recoupment and the required activity accomplishes, at the same or at a
higher cost, the same objective as another activity which is being
performed by the State.
Documentation to support the waiver request could include past
claims recovery data that demonstrate the administrative expenses
involved in meeting that particular requirement, and a State analysis
that documents a cost-effective alternative that accomplishes the same
task. HCFA's ROs would
[[Page 35500]]
consider the individual merits of each waiver request and would grant
or deny the waiver request based on cost-effectiveness and State
alternatives presented.
We indicated that we would issue separate guidelines for developing
and evaluating waiver requests for the new waivers. We currently have
cost-effectiveness guidelines in place to govern our existing cost-
avoidance waiver process. These guidelines were developed by a national
work group comprised of HCFA Central Office (CO) and RO staff, whose
purpose was to make the guidelines comprehensive and to ensure
consistent application throughout the country. They are found in
section 3904.2 of the State Medicaid Manual. We indicated that we would
issue similar guidelines to review the new waivers. Sources of data
would most likely include claims processing tabulations, State
expenditure reports, and savings data from the TPL recovery units and
the HCFA Form 64.9a report.
CO staff also would provide clarification to RO staff as needed
through our regular teleconferences. Consultation on specific waiver
requests would be provided routinely, as is currently done in the State
plan amendment process, cost-avoidance waivers, trauma code edit
waivers, and State TPL action plan submissions. As with our current
waiver provisions, ROs would be required to report approvals and
disapprovals to CO on an ongoing basis. When changes in waiver status
occur, CO also would be notified.
III. Summary of Public Comments and Responses
We received four letters of comment on the February 1994 proposed
rule. These comments and our responses are discussed below:
Comment: Several commenters expressed concern that the proposed
rule did not go far enough to allow States the flexibility needed to
achieve additional savings from TPL. One commenter cited section
1902(a)(25) of the Act which requires States to take all reasonable
measures to ascertain the legal liability of third parties (including
health insurers) to pay for care and services available under the plan.
The commenter provided two examples of unique and innovative practices
that enhance the State's TPL operations and should be permissible under
Federal regulations. In the first example, the recipient receives a
portion of the proceeds of settlements from tort actions taken against
third parties. In the second example, the State has developed a program
which pays county welfare departments incentive payments (``bounties'')
of $50 for each new case certified for eligibility where other health
insurance is identified.
Response: We agree that States should be allowed to implement
unique and innovative practices that are reasonable measures and not
prohibited by Federal statute. Medicaid services are provided using
Federal matching funds. In the first example, the State has provided
Medicaid services for recipients that were injured by liable third
parties, and these recipients have subsequently taken legal action to
receive compensation through the courts for their injuries. Section
1912(b) of the Act requires that when a State makes a recovery, the
State reimburse itself (and the Federal government) before any
remaining funds are given to the recipient. If the State is reimbursing
the recipient from the amounts collected before fully refunding the
Federal government its share, such practice violates section 1912(b) of
the Act. The State is, however, free to pay State monies to the
recipient as an incentive, without violating section 1912 of the Act.
In the second example, we take issue with the ``county bounty''
program where Federal matching funds were requested and denied for the
bounty payments, because these expenditures are not authorized for
Federal matching funds under title XIX of the Act. We agree, that in
both examples, these practices could increase TPL identification and
savings, and States may find it worthwhile to continue these programs
with State-only funds. This rule will provide States with additional
flexibility in their TPL programs within the confines of Federal law.
Comment: One commenter requested that we revise the regulations to
define, interpret, and explain more positively the meaning of the
statutory phrase ``all reasonable measures.''
Response: We have interpreted the language in section 1902(a)(25)
of the Act that refers to ``all reasonable measures'' by specifying the
requirements for TPL in regulations at Secs. 433.138 and 433.139. These
regulations include TPL activities specified by the statute, and other
discretionary activities that we have deemed to be logical actions to
take to identify and pursue TPL. We originally decided to offer TPL
waivers of these regulatory requirements because several States
expressed concern that our discretionary regulatory activities were not
cost effective, and that other State activities were accomplishing the
same objective. We believe waivers of discretionary TPL requirements
can provide States with some flexibility in managing their TPL programs
without compromising the integrity of the TPL program. We have always
supported States' innovative and unique measures to achieve TPL savings
that are not prohibited by Federal statute. These innovative and unique
measures have been issued several times by us in a compilation
entitled, ``Third Party Liability in the Medicaid Program . . . A Guide
to Successful State Agency Practices.'' We are continuously supportive
of approaches that do not violate the statute, and these regulations do
not preclude States from developing such operations.
Comment: Two commenters suggested that in Sec. 433.138(l) we
provide considerable flexibility in our interpretation of ``adequate
documentation'' for waiver consideration.
Response: We wish to stress that our ``examples of documentation''
in the proposed rule are strictly examples and not an inclusive list.
It is our intention to employ flexibility when considering these waiver
requests. While we will provide guidance to States for submissions of
waiver requests through the State Medicaid Manual, we understand that
the unique characteristics of each State Medicaid program will govern
States' abilities to produce cost-effectiveness data.
Comment: One commenter questioned our intent regarding the
requirements for ``adequate documentation'', as specified in proposed
Sec. 433.138(l)(ii), which states that ``Examples of documentation are
claims recovery data and a State analysis documenting a cost-effective
alternative that accomplished the same task.'' The commenter noted that
this language means that even if a State TPL practice is not cost-
effective, the State must also demonstrate that it performs an
alternative practice. The commenter also points out that in section II
of the preamble of the proposed rule, an example of ``adequate
documentation'' was given as ``. . . claims recovery data or State
analysis . . .'' (emphasis added), and asserts that HCFA intended that
States either document that a practice is not cost-effective or that
another alternative practice is performed, but that the intent is that
States do not have to provide both. In addition, the commenter
requested that we add after the words ``. . . claims recovery data . .
.'' the language ``costs for the process(es) for which a waiver is
being requested.''
Response: The commenter was correct in pointing out the
inconsistency in the use of the word ``or'' in section II of the
preamble of the proposed rule which
[[Page 35501]]
was not used in proposed Sec. 433.138(l)(ii). The use of ``or'' in the
preamble was inadvertent, and we have deleted the word ``or'' and
replaced it with ``and'' in this final rule. The intent of the proposed
rule is elucidated in the summary of the preamble of the proposed rule.
The summary stated the following: ``We would consider waiving
nonstatutorily required procedures relating to identifying possible TPL
where the agency finds that following a given required procedure is not
cost-effective and is duplicative of another State activity. A
nonstatutorily required activity would be eligible for a waiver if the
cost of the required activity exceeds the TPL recoupment and the
required activity accomplishes, at the same or at a higher cost, the
same objective as another activity that is being performed by the
States.'' (59 FR 4880). We added this waiver consideration because we
found through the Federal oversight process that some States have not
achieved a satisfactory level of compliance with TPL requirements, and
for these States, where processes can be highly manual and labor
intensive, an argument can be made that certain TPL requirements are
not cost-effective. Nevertheless, the objective of the requirement in
question has not been accomplished, and potential TPL resources are
lost. Our concern is that these States could theoretically receive
waivers and remain in technical compliance, and yet still not
accomplish the TPL objective. Therefore, our position is that a State
can receive approval of a waiver of a current requirement only if it
has an alternate activity that will accomplish the same objective.
In terms of the language that the commenter has requested to be
added to the ``examples of documentation'', our reponse is the same as
the response to the previous comment requesting flexibility in our
interpretation of ``adequate documentation.'' Our examples of
documentation are not inclusive, and we will be flexible when
considering these waiver requests. We therefore are not adding the
requested language to our example in the final rule.
Comment: One commenter requested that States be allowed to request
TPL waivers for certain family planning clients.
Response: The commenter appears to be requesting that this rule
should provide relief from the general statutory requirement of section
1902(a)(25) of the Act to perform TPL activities for certain family
planning clients. This request addresses a broader issue, the State's
general responsibility to pursue and determine the existence of third
parties, than what is addressed by this rule. There is no statutory
authority or regulation that permits HCFA to waive third party
identification for a class of claims or recipients. If a State believes
that cost avoidance of family planning claims for recipients with TPL
is not cost-effective, the regulations at Sec. 433.139(e) provide a
recourse for States to follow. If a State identifies TPL but finds that
pursuing a recovery is no longer cost-effective, the regulations at
Sec. 433.139(f) may provide relief.
In situations where it is determined that the recipient has ``good
cause'' for not cooperating in pursuing the third party, the Medicaid
agency would not pursue the third party by employing either the cost
avoidance or pay and chase method.
IV. Provisions of the Final Regulations
We are adopting the February 2, 1994 proposed rule as final with a
modification to the title of Sec. 433.138 ``Determining liability of
third parties'' to read ``Identifying liable third parties'' and a
conforming change to Sec. 433.137 to reflect this change. While section
1902(a)(25)(A) requires States to take reasonable measures to ascertain
the legal liability of third parties to pay for care and services
available under the plan, States must first identify third party
resources. Section 433.138 explains the requirements for identifying
third parties through data exchanges. It does not explain the process
of determining liability of third parties. We believe Sec. 433.139
explains that determination of the liability of a third party takes
place when the Medicaid agency receives confirmation from the provider
or third party resource indicating the extent of TPL. Therefore, we are
changing the title of Sec. 433.138 to accurately reflect the section's
content.
V. Regulatory Impact Statement
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), unless the Secretary certifies that a final regulation
will not have a significant impact on a substantial number of small
entities.
Under the RFA, a small entity is a small business, a nonprofit
enterprise, or a government jurisdiction (such as a county or township)
with a population of less than 50,000. These final regulations will
affect only States and individuals, which are not considered small
entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any final rule that may have a
significant impact on the operations of a substantial number of small
rural hospitals. Such an analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside a
Metropolitan Statistical Area and has fewer than 50 beds.
This final rule requires States to submit a formal waiver request
to be relieved of compliance with certain TPL requirements that are in
our regulations when the cost of implementing the regulation's
requirement is not cost-effective. It is extremely difficult to give an
exact estimate of the cost savings that would accrue with the
implementation of this regulation. This is largely because the cost of
any single TPL data match or other procedure, as well as its relative
effectiveness, varies from State to State.
In reviewing the need for this waiver, we recognized that some TPL
claims reporting and payment regulations are expressly required by
statute and that these and additional regulatory requirements are a
valuable mechanism by which the Medicaid program has saved and
recovered financial resources and that these regulations should be
maintained. This waiver gives credence to valid concerns raised by
States regarding the cost-effectiveness of certain portions of the TPL
regulations in certain instances and allows States greater flexibility
in managing their Medicaid programs.
An alternative to these regulatory enhancements would be to force
States to comply with all regulations and not allow for any waiver
provisions. In this scenario, States would either comply and lose money
or discontinue the inefficient practice and risk HCFA sanctions through
the system's performance review. Clearly, it was not the intent of the
Congress for HCFA to promulgate regulations designed to save the
taxpayers money, and then penalize States when the regulations are
found by experience not to be cost-effective. This is consistent with
our response to comments published in the Federal Register dated
February 27, 1987 (52 FR 5971) stating that if HCFA received
substantial complaints from State Medicaid agencies regarding the cost-
effectiveness of State workers' compensation or Motor Vehicle Accident
File data matches and diagnosis and trauma code edits, HCFA would
reevaluate the data requirement.
We believe that implementation of the waiver procedures will work
towards a realistic and cost-effective TPL program.
[[Page 35502]]
Allowing States to request waivers will also provide States with
increased control over their individual TPL programs.
We have determined, and the Secretary certifies, that this final
rule is not a significant regulatory action and will not have a
significant economic impact on a substantial number of small entities.
Also, this final rule will not have a significant impact on the
operations of a substantial number of small rural hospitals. Therefore,
we have not prepared a regulatory impact analysis, a small rural
hospital analysis, or an initial regulatory flexibility analysis.
In accordance with the provisions of the Executive Order of 12866,
this final regulation was not reviewed by the Office of Management and
Budget.
VI. Paperwork Reduction Act
Sections 433.138(l) and 433.139(e) of this final rule contain new
information collection requirements that are subject to the Office of
Management and Budget (OMB) approval under the Paperwork Reduction Act
of 1980 (44 U.S.C 3504, et seq.). Reporting burden for the collection
of information in Secs. 433.138(1) and 433.139(e) is estimated to be 8
hours per request for waiver.
List of Subjects in 42 CFR Part 433
Administrative practice and procedure, Claims, Grant programs--
health, Medicaid, Reporting and recordkeeping requirements.
42 CFR part 433 is amended as follows:
PART 433--STATE FISCAL ADMINISTRATION
1. The authority citation for part 433 continues to read as
follows:
Authority: Secs. 1102, 1137, 1902(a)(4), 1902(a)(25),
1902(a)(45), 1903(a)(3), 1903(d)(2), 1902(d)(5), 1903(o), 1903(p),
1903(r), and 1912 of the Social Security Act (42 U.S.C. 1302, 1320b-
7, 1396a(a)(4), 1396a(a)(25), 1396a(a)(45), 1396b(a)(3),
1396b(d)(2), 1396a(d)(5), 1396b(o), 1396b(p), 1396b(r), and 1396k,
unless otherwise noted.
2. Section 433.137(a) is revised to read as follows:
Sec. 433.137 State plan requirements.
(a) A State plan must provide that the requirements of
Secs. 433.138 and 433.139 are met for identifying third parties liable
for payment of services under the plan and for payment of claims
involving third parties.
* * * * *
3. Section 433.138 is amended by revising the section title,
paragraphs (a) and (c), the introductory text of paragraph (d), and
paragraphs (e), (f), and (j); by adding undesignated introductory
language to paragraph (g); and by adding a new paragraph (l) to read as
follows:
Sec. 433.138 Identifying liable third parties.
(a) Basic provisions. The agency must take reasonable measures to
determine the legal liability of the third parties who are liable to
pay for services furnished under the plan. At a minimum, such measures
must include the requirements specified in paragraphs (b) through (k)
of this section, unless waived under paragraph (l) of this section.
* * * * *
(c) Obtaining other information. Except as provided in paragraph
(l) of this section, the agency must, for the purpose of implementing
the requirements in paragraphs (d)(1)(ii) and (d)(4)(i) of this
section, incorporate into the eligibility case file the names and SSNs
of absent or custodial parents of Medicaid recipients to the extent
such information is available.
(d) Exchange of data. Except as provided in paragraph (l) of this
section, to obtain and use information for the purpose of determining
the legal liability of the third parties so that the agency may process
claims under the third party liability payment procedures specified in
Sec. 433.139(b) through (f), the agency must take the following
actions:
* * * * *
(e) Diagnosis and trauma code edits. (1) Except as specified under
paragraph (e)(2) or (l) of this section, or both, the agency must take
action to identify those paid claims for Medicaid recipients that
contain diagnosis codes 800 through 999 International Classification of
Disease, 9th Revision, Clinical Modification, Volume 1 (ICD-9-CM)
inclusive, for the purpose of determining the legal liability of third
parties so that the agency may process claims under the third party
liability payment procedures specified in Sec. 433.139(b) through (f).
(2) The agency may exclude code 994.6, Motion Sickness, from the
edits required under paragraph (e)(1) of this section.
(f) Data exchanges and trauma code edits: Frequency. Except as
provided in paragraph (l) of this section, the agency must conduct the
data exchanges required in paragraphs (d)(1) and (d)(3) of this section
in accordance with the intervals specified in Sec. 435.948 of this
chapter, and diagnosis and trauma edits required in paragraphs (d)(4)
and (e) of this section on a routine and timely basis. The State plan
must specify the frequency of these activities.
(g) Follow-up procedures for identifying legally liable third party
resources. Except as provided in paragraph (l) of this section, the
State must meet the requirements of this paragraph.
* * * * *
(j) Reports. The agency must provide such reports with respect to
the data exchanges and trauma code edits set forth in paragraphs (d)(1)
through (d)(4) and paragraph (e) of this section, respectively, as the
Secretary prescribes for the purpose of determining compliance under
Sec. 433.138 and evaluating the effectiveness of the third party
liability identification system. However, if the State is not meeting
the provisions of paragraph (e) of this section because it has been
granted a waiver of those provisions under paragraph (l) of this
section, it is not required to provide the reports required in this
paragraph.
* * * * *
(l) Waiver of requirements. (1) The agency may request initial and
continuing waiver of the requirements to determine third party
liability found in paragraphs (c), (d)(4), (d)(5), (e), (f), (g)(1),
(g)(2), (g)(3), and (g)(4) of this section if the State determines the
activity to be not cost-effective. An activity would not be cost-
effective if the cost of the required activity exceeds the third party
liability recoupment and the required activity accomplishes, at the
same or at a higher cost, the same objective as another activity that
is being performed by the State.
(i) The agency must submit a request for waiver of the requirement
in writing to the HCFA regional office.
(ii) The request must contain adequate documentation to establish
that to meet a requirement specified by the agency is not cost-
effective. Examples of documentation are claims recovery data and a
State analysis documenting a cost-effective alternative that
accomplished the same task.
(iii) The agency must agree, if a waiver is granted, to notify HCFA
of any event that occurs that changes the conditions upon which the
waiver was approved.
(2) HCFA will review a State's request to have a requirement
specified under paragraph (l)(1) of this section waived and will
request additional information from the State, if necessary. HCFA will
notify the State of its approval or disapproval determination within 30
days of receipt of a properly documented request.
(3) HCFA may rescind a waiver at any time that it determines that
the agency
[[Page 35503]]
no longer meets the criteria for approving the waiver. If the waiver is
rescinded, the agency has 6 months from the date of the rescission
notice to meet the requirement that had been waived.
4. Section 433.139 is amended by revising paragraphs (b), (d)(1),
(d)(2), and (e) to read as follows:
Sec. 433.139 Payment of claims.
* * * * *
(b) Probable liability is established at the time claim is filed.
Except as provided in paragraph (e) of this section--
(1) If the agency has established the probable existence of third
party liability at the time the claim is filed, the agency must reject
the claim and return it to the provider for a determination of the
amount of liability. The establishment of third party liability takes
place when the agency receives confirmation from the provider or a
third party resource indicating the extent of third party liability.
When the amount of liability is determined, the agency must then pay
the claim to the extent that payment allowed under the agency's payment
schedule exceeds the amount of the third party's payment.
(2) The agency may pay the full amount allowed under the agency's
payment schedule for the claim and then seek reimbursement from any
liable third party to the limit of legal liability if the claim is for
labor and delivery and postpartum care. (Costs associated with the
inpatient hospital stay for labor and delivery and postpartum care must
be cost-avoided.)
* * * * *
(d) Recovery of reimbursement. (1) If the agency has an approved
waiver under paragraph (e) of this section to pay a claim in which the
probable existence of third party liability has been established and
then seek reimbursement, the agency must seek recovery of reimbursement
from the third party to the limit of legal liability within 60 days
after the end of the month in which payment is made unless the agency
has a waiver of the 60-day requirement under paragraph (e) of this
section.
(2) Except as provided in paragraph (e) of this section, if the
agency learns of the existence of a liable third party after a claim is
paid, or benefits become available from a third party after a claim is
paid, the agency must seek recovery of reimbursement within 60 days
after the end of the month it learns of the existence of the liable
third party or benefits become available.
* * * * *
(e) Waiver of requirements. (1) The agency may request initial and
continuing waiver of the requirements in paragraphs (b)(1), (d)(1), and
(d)(2) of this section, if it determines that the requirement is not
cost-effective. An activity would not be cost-effective if the cost of
the required activity exceeds the third party liability recoupment and
the required activity accomplishes, at the same or at a higher cost,
the same objective as another activity that is being performed by the
State.
(i) The agency must submit a request for waiver of the requirement
in writing to the HCFA regional office.
(ii) The request must contain adequate documentation to establish
that to meet a requirement specified by the agency is not cost-
effective. Examples of documentation are costs associated with billing,
claims recovery data, and a State analysis documenting a cost-effective
alternative that accomplishes the same task.
(iii) The agency must agree, if a waiver is granted, to notify HCFA
of any event that occurs that changes the conditions upon which the
waiver was approved.
(2) HCFA will review a State's request to have a requirement
specified under paragraph (e)(1) of this section waived and will
request additional information from the State, if necessary. HCFA will
notify the State of its approval or disapproval determination within 30
days of receipt of a properly documented request.
(3) HCFA may rescind the waiver at any time that it determines that
the State no longer meets the criteria for approving the waiver. If the
waiver is rescinded, the agency has 6 months from the date of the
rescission notice to meet the requirement that had been waived.
(4) An agency requesting a waiver of the requirements specifically
concerning either the 60-day limit in paragraph (d)(1) or (d)(2) of
this section must submit documentation of written agreement between the
agency and the third party, including Medicare fiscal intermediaries
and carriers, that extension of the billing requirement is agreeable to
all parties.
(Catalog of Federal Domestic Assistance Program No. 93.778--Medical
Assistance Program)
Dated: June 28, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 95-16806 Filed 7-7-95; 8:45 am]
BILLING CODE 4120-01-P
