[Code of Federal Regulations]

[Title 42, Volume 4]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR433.138]



[Page 96-100]

 

                         TITLE 42--PUBLIC HEALTH

 

  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 

                  HEALTH AND HUMAN SERVICES (CONTINUED)

 

PART 433_STATE FISCAL ADMINISTRATION--Table of Contents

 

                     Subpart D_Third Party Liability

 

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.

    (b) Obtaining health insurance information: Initial application and 

redetermination processes for Medicaid eligibility. (1) If the Medicaid 

agency determines eligibility for Medicaid, it must, during the initial 

application and each redetermination process, obtain from the applicant 

or recipient such health insurance information as would be useful in 

identifying legally liable third party resources so that the agency may 

process claims under the third party liability payment procedures 

specified in Sec.  433.139 (b) through (f). Health insurance information 

may include, but is not limited to, the name of the policy holder, his 

or her relationship to the applicant or recipient, the social security 

number (SSN) of the policy holder, and the name and address of insurance 

company and policy number.

    (2) If Medicaid eligibility is determined by the Federal agency 

administering the supplemental security income program under title XVI 

in accordance with a written agreement under section 1634 of the Act, 

the Medicaid agency must take the following action. It must enter into 

an agreement with CMS or must have, prior to February 1, 1985, executed 

a modified section 1634 agreement that is still in effect to provide 

for--

    (i) Collection, from the applicant or recipient during the initial 

application and each redetermination process, of health insurance 

information in the form and manner specified by the Secretary; and

    (ii) Transmittal of the information to the Medicaid agency.



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    (3) If Medicaid eligibility is determined by any other agency in 

accordance with a written agreement, the Medicaid agency must modify the 

agreement to provide for--

    (i) Collection, from the applicant or recipient during the initial 

application and each redetermination process, of such health insurance 

information as would be useful in identifying legally liable third party 

resources so that the Medicaid agency may process claims under the third 

party liability payment procedures specified in Sec.  433.139 (b) 

through (f). Health insurance information may include, but is not 

limited to, those elements described in paragraph (b)(1) of this 

section; and

    (ii) Transmittal of the information to the Medicaid agency.

    (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:

    (1) Except as specified in paragraph (d)(2) of this section, as part 

of the data exchange requirements under Sec.  435.945 of this chapter, 

from the State wage information collection agency (SWICA) defined in 

Sec.  435.4 of this chapter and from the SSA wage and earnings files 

data as specified in Sec.  435.948(a)(2) of this chapter, the agency 

must--

    (i) Use the information that identifies Medicaid recipients that are 

employed and their employer(s); and

    (ii) Obtain and use, if their names and SSNs are available to the 

agency under paragraph (c) of this section, information that identifies 

employed absent or custodial parents of recipients and their 

employer(s).

    (2) If the agency can demonstrate to CMS that it has an alternate 

source of information that furnishes information as timely, complete and 

useful as the SWICA and SSA wage and earnings files in determining the 

legal liability of third parties, the requirements of paragraph (d)(1) 

of this section are deemed to be met.

    (3) The agency must request, as required under Sec.  

435.948(a)(6)(i), from the State title IV-A agency, information not 

previously reported that identifies those Medicaid recipients that are 

employed and their employer(s).

    (4) Except as specified in paragraph (d)(5) of this section, the 

agency must attempt to secure agreements (to the extent permitted by 

State law) to provide for obtaining--

    (i) From State Workers' Compensation or Industrial Accident 

Commission files, information that identifies Medicaid recipients and, 

(if their names and SSNs were available to the agency under paragraph 

(c) of this section) absent or custodial parents of Medicaid recipients 

with employment-related injuries or illnesses; and

    (ii) From State Motor Vehicle accident report files, information 

that identifies those Medicaid recipients injured in motor vehicle 

accidents, whether injured as pedestrians, drivers, passengers, or 

bicyclists.

    (5) If unable to secure agreements as specified in paragraph (d)(4) 

of this section, the agency must submit documentation to the regional 

office that demonstrates the agency made a reasonable attempt to secure 

these agreements. If CMS determines that a reasonable attempt was made, 

the requirements of paragraph (d)(4) of this section are deemed to be 

met.

    (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



[[Page 98]]



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) Followup 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.

    (1) SWICA, SSA wage and earnings files, and title IV-A data 

exchanges. With respect to information obtained under paragraphs (d)(1) 

through (d)(3) of this section--

    (i) Except as specified in Sec.  435.952(d) of this chapter, within 

45 days, the agency must followup (if appropriate) on such information 

in order to identify legally liable third party resources and 

incorporate such information into the eligibility case file and into its 

third party data base and third party recovery unit so the agency may 

process claims under the third party liability payment procedures 

specified in Sec.  433.139 (b) through (f); and

    (ii) The State plan must describe the methods the agency uses for 

meeting the requirements of paragraph (g)(1)(i) of this section.

    (2) Health insurance information and workers' compensation data 

exchanges. With respect to information obtained under paragraphs (b) and 

(d)(4)(i) of this section--

    (i) Within 60 days, the agency must followup on such information (if 

appropriate) in order to identify legally liable third party resources 

and incorporate such information into the eligibility case file and into 

its third party data base and third party recovery unit so the agency 

may process claims under the third party liability payment procedures 

specified in Sec.  433.139 (b) through (f); and

    (ii) The State plan must describe the methods the agency uses for 

meeting the requirements of paragraph (g)(2)(i) of this section.

    (3) State motor vehicle accident report file data exchanges. With 

respect to information obtained under paragraph (d)(4)(ii) of this 

section--

    (i) The State plan must describe the methods the agency uses for 

following up on such information in order to identify legally liable 

third party resources so the agency may process claims under the third 

party liability payment procedures specified in Sec.  433.139 (b) 

through (f);

    (ii) After followup, the agency must incorporate all information 

that identifies legally liable third party resources into the 

eligibility case file and into its third party data base and third party 

recovery unit; and

    (iii) The State plan must specify timeframes for incorporation of 

the information.

    (4) Diagnosis and trauma code edits. With respect to the paid claims 

identified under paragraph (e) of this section--

    (i) The State plan must describe the methods the agency uses to 

follow up on such claims in order to identify legally liable third party 

resources so the agency may process claims under the third party 

liability payment procedures specified in Sec.  433.139 (b) through (f) 

(Methods must include a procedure for periodically identifying those 

trauma codes that yield the highest third party collections and giving 

priority to following up on those codes.);

    (ii) After followup, the agency must incorporate all information 

that identifies legally liable third party resources into the 

eligibility case file and into its third party data base and third party 

recovery unit; and

    (iii) The State plan must specify the timeframes for incorporation 

of the information.

    (h) Obtaining other information and data exchanges: Safeguarding 

information. (1) The agency must safeguard information obtained from and 

exchanged under this section with other



[[Page 99]]



agencies in accordance with the requirements set forth in part 431, 

subpart F of this chapter.

    (2) Before requesting information from, or releasing information to 

other agencies to identify legally liable third party resources under 

paragraph (d) of this section the agency must execute data exchange 

agreements with those agencies. The agreements, at a minimum, must 

specify--

    (i) The information to be exchanged;

    (ii) The titles of all agency officials with the authority to 

request third party information;

    (iii) The methods, including the formats to be used, and the timing 

for requesting and providing the information;

    (iv) The safeguards limiting the use and disclosure of the 

information as required by Federal or State law or regulations; and

    (v) The method the agency will use to reimburse reasonable costs of 

furnishing the information if payment is requested.

    (i) Reimbursement. The agency must, upon request, reimburse an 

agency for the reasonable costs incurred in furnishing information under 

this section to the Medicaid agency.

    (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.

    (k) Integration with the State mechanized claims processing and 

information retrieval system. Basic requirement--Development of an 

action plan. (1) If a State has a mechanized claims processing and 

information retrieval system approved by CMS under subpart C of this 

part, the agency must have an action plan for pursuing third party 

liability claims and the action plan must be integrated with the 

mechanized claims processing and information retrieval system.

    (2) The action plan must describe the actions and methodologies the 

State will follow to--

    (i) Identify third parties;

    (ii) Determine the liability of third parties;

    (iii) Avoid payment of third party claims as required in Sec.  

433.139;

    (iv) Recover reimbursement from third parties after Medicaid claims 

payment as required in Sec.  433.139; and,

    (v) Record information and actions relating to the action plan.

    (3) The action plan must be consistent with the conditions for 

reapproval set forth in Sec.  433.119. The portion of the plan which is 

integrated with MMIS is monitored in accordance with those conditions 

and if the conditions are not met; it is subject to FFP reduction in 

accordance with procedures set forth in Sec.  433.120. The State is not 

subject to any other penalty as a result of other monitoring, quality 

control, or auditing requirements for those items in the action plan.

    (4) The agency must submit its action plan to the CMS Regional 

Office within 120 days from the date CMS issues implementing 

instructions for the State Medicaid Manual. If a State does not have an 

approved MMIS on the date of issuance of the State Medicaid Manual but 

subsequently implements an MMIS, the State must submit its action plan 

within 90 days from the date the system is operational. The CMS Regional 

Office approves or disapproves the action plan.

    (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 CMS regional office.



[[Page 100]]



    (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 CMS 

of any event that occurs that changes the conditions upon which the 

waiver was approved.

    (2) CMS 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. CMS will notify the 

State of its approval or disapproval determination within 30 days of 

receipt of a properly documented request.

    (3) CMS may rescind a waiver at any time that it determines that the 

agency 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.



[52 FR 5975, Feb. 27, 1987, as amended at 54 FR 8741, Mar. 2, 1989; 55 

FR 1432, Jan. 16, 1990; 55 FR 5118, Feb. 13, 1990; 60 FR 35502, July 10, 

1995]