MO HealthNet for the Aged, Blind, and Disabled

0810.010.15.02 Determining Patient Responsibility After Third Party Liability

IM-#88, November 2, 2012, IM-#58, July 7, 2012

When documentation of incurred medical expenses is received by the Family Support Division (FSD), the eligibility specialist (ES) must review the documentation to determine when spend down liability is met.

Calculating Medical Expenses after Third Party Liability

When the ES receives documentation of incurred medical expenses which shows third party payment of each individual expense, follow these steps:

  1. Verify the gross cost of the medical expense prior to any payments by the participant or third party.
  2. Determine if third party liability (TPL) coverage exists to cover all or part of the medical expense, as follows:
    • Verify and deduct any amount paid or expected to be paid by a liable third party, such as health insurance or Medicare.
    • Verify amounts denied by liable third party payers. If the participant remains responsible to pay the denied amounts, allow to meet their spend down. If the provider does not hold the participant responsible do not allow the denied amount to meet spend down.
    • Verify and deduct anticipated third party payments based on coverage information in the insurance policy or other sources.
  3. If it is known to FSD that a provider does not bill the participant for the remaining balance after third party liability, contact the provider for verification of the participant’s responsibility. Do not allow the balance to be applied to the participant’s spend down liability if they are not responsible to pay the remaining balance. Record contact information including, date, person, title, and summary on the Eligibility Unit Member Role (EUMEMROL\FM3Z) screen.

    EXAMPLE: Mr. Jones provides a detail bill from the local hospital that lists the date of service, type of services provided, and what the third party is anticipated to pay, but lists no amount due from the participant. Do not allow the remaining balance to be applied to Mr. Jones’ spend down until it is verified that he is legally obligated to pay the balance. If the hospital states that the participant is not billed for the balance, Mr. Jones does not meet his spend down liability with the hospital stay.  The information is recorded on Eligibility Unit Member Role (EUMEMROL\FM3Z) screen.

One Payment for Multiple Expenses

Documentation of medical expenses does not always show a breakdown of what the third party liability pays for each service. Some providers are paid based on methods such as episode-based payments, bundled payments,  case rate, packaged pricing, flat fees, or capitation. If the documentation received by FSD does not break down the payment by date, types, and cost of each service covered, follow these steps:

  1. Attempt to obtain information on the payment by service, including the date of service and the amount paid for that service. The information may be obtained by either:
    • Requesting the third party to provide a detailed explanation of the payment.
    • Examining available coverage information.
  2. Deduct the third party payment or the amount expected to be paid by the third party, from the gross cost of each service. Use the remaining balance to meet the participant’s spend down liability.

    NOTE:  If it is not possible to obtain the amount of the payment by date of service within the case processing standards, apply the total payment against the services it covers starting with the oldest expense. Continue applying the payment until it is used up.

  3. Document the following in the electronic case record on the Eligibility Unit Member Role (EUMEMROL\FM3Z) screen:
    • How the information was obtained or attempted to be obtained.
    • The exact calculation to show how the third party payments were applied.

EXAMPLE:  Mr. Star has a monthly spend down of $100. He has Medicare Part B and has already met his deductible for the year. Mr. Star provides documentation of medical expenses from a physician visit on June 1 totaling $240. The documentation does not show a breakdown of third party payment by services, but shows one payment for his medical expenses incurred at the visit, June 1. After third party payment, Mr. Star is responsible for $48. Mr. Star does not meet his spend down for June with this incurred medical expense. Mr. Star also provides documentation of a medical expense from another physician visit on June 7 totaling $300. This documentation does not show a breakdown of third party payment by services, but shows one payment for the medical expenses incurred at the visit, June 7. After third party payment, he is responsible for $60. Mr. Star meets his spend down on June 7.

Deductible and Copayment Amounts Due

When the participant is responsible for a set deductible or copayment (copay) amount for the services provided, apply the deductible or copay to the services provided in date order.

EXAMPLE:  Mr. Green has a spend down of $700 per month. He has Medicare Part A and Part B. On May 5, the local hospital provides a bill to FSD showing Mr. Green was hospitalized from April 19-May 2. The bill provided shows a breakdown including dates of service, types of services, and patient responsibility of $1,156. The $1,156 is Mr. Green’s Medicare Part A inpatient deductible and is applied to the first date of hospitalization. He met his spend down liability on April 19. Mr. Green did not incur any expenses from this hospitalization to apply to his May spend down liability.

EXAMPLE: Ms. Smith has a spend down of $500 per month. She has private health insurance with a hospitalization copay of $300. On June 15, the local hospital provides a bill to FSD showing Ms. Smith was hospitalized from June 5-June 7. The bill provided shows a breakdown including the dates of service, types of services, and patient responsibility of $300 (her hospital copay). The copay is applied to the first date of hospitalization. Ms. Smith did not incur expenses up to her June spend down amount, so she did not meet her spend down liability with this hospitalization.

For more information about Medicare as a third party liability visit https://www.medicare.gov/.

Calculating Medical Expenses When the Portion Subject to Third Party Payment Can Not be Identified

Because medical providers are mandated to provide any additional information required to establish that an individual has incurred a medical expense, it is only in rare circumstances, such as a catastrophic loss of provider billing records, that the portion subject to third party payment can not be identified. When it is known that the individual has third party liability and the portion subject to payment by the third party cannot be identified, estimate the amount of the individual’s responsibility based upon provisions of their third party coverage.

  1. Verify the gross cost of the medical expense prior to any payments by the participant.
  2. Calculate and deduct any amount anticipated to be paid by a liable third party, such as health insurance or Medicare, based on coverage information in the insurance policy, handbook, summary of benefits, or other sources.
    NOTE:  For individuals with Medicare Part A and/or B coverage who do not have Qualified Medicare Beneficiary (QMB) coverage, estimate the amount of the individual’s incurred medical cost as 100% of the Medicare reimbursement rate up to the individual’s Medicare deductible when the deductible has not been met.  Once the deductible is met, estimate that the individual is responsible for 20% of the Medicare allowable reimbursement rate.
  3. Determine if there will be amounts anticipated to be denied by liable third party payers, based on coverage exclusions in the insurance policy or other documented sources.