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Hospital Reimbursement in 2019: How Service Line Integration Can Speed Up Payments While Maintaining Compliance

Many hospital patients and their families can be overwhelmed during a hospital stay and in the aftermath of an accident or injury. With so much going on, patients might not be aware of the financial assistance for medical expenses available to them. And during hospital admission, they might not effectively communicate to a patient registrar about potential liability for what occurred.

Healthcare reimbursement is the process in which hospitals, doctor’s offices, and other providers bill payers for services provided to a patient through a fee for service, fixed amount,  prospective payment, or based payment system.

In many cases, these claims are sent to Medicaid, which is known for low hospital reimbursement rates. Hospital reimbursement from Medicaid varies by state, but it can be as low as 25%. Whereas third parties that may be liable to pay for services generally pay 40%-50% and sometimes close to dollar-for-dollar value.

Hospitals and health systems don’t have sufficient resources – whether internally or through Third Party Liability (TPL) vendors – to effectively handle the volume of potential TPL cases, and many such cases end up being sent to Medicaid. But with a combination of thorough eligibility screening and TPL referral and follow-up, hospitals can improve identification of third-party payers, ensuring faster and better reimbursement. A recent multisite study by MedData shows this integrated approach can significantly increase reimbursement vs. government payers.

Key Takeaways

Identifying and pursuing third-party payers can:

  • Speed up reimbursement
  • Maintain compliance with government payers
  • Increase amount reimbursed vs. Medicaid
  • Improve patient satisfaction

TPL, a Welcome Payment Option Oasis Before the Last Resort

Federal regulations require that Medicaid and Medicare are payers of last resort, meaning alternative methods of payment must be explored before claims are sent to Medicaid. If it is determined that a third party – an insurer or program other than Medicaid – is responsible for covering the medical bills of a Medicaid-eligible patient, then it is required to pay all or part of the claim before any contribution from Medicaid.

In cases where a potentially liable third party has been identified, the healthcare provider must pursue payment from the third party – an insurer or program other than Medicaid – before passing the claim to Medicaid. Third parties that may be liable to pay for services include private health insurance, Medicare, employer-sponsored health insurance, settlements from a liability insurer, workers’ compensation, long-term care insurance, and other state and federal programs.

It’s important to note that while Centers for Medicare & Medicaid Services rules indicate that Medicaid funds are last resort, there are some rare exceptions. Since Medicaid funds are state-generated and state-regulated, some state legislation places Medicaid in the primary position to thirdparty funds; e.g., California, Colorado, and Indiana.

Typically, liability companies rely on referrals derived from coding that are identified through hospital registration. However, registration is prone to human error and is not a completely reliable method of identifying injury/ accident information from a patient. TPL advocates are highly skilled and trained specifically to understand the importance of determining whether a potentially liable third party exists. And if a claim is not coded as a liability – perhaps it gets coded as self-pay instead – then it likely would not make it to TPL for payment.

How Hospital Reimbursement Integrated Services Work

Most hospitals and health systems can’t rely on their own internal resources or on the typical liability vendor – which commonly is not on-site – if they want to capture potential TPL cases in the most effective manner. They must employ a combination of tactics as soon as possible after patient admission. MedData has developed a payment process that combines Eligibility and TPL services to achieve optimum effect.

MedData leveraged a team of hospital-based screeners as a means to build rapport and gain the patient’s cooperation from the initial in-house screening and throughout the eligibility process.

The advocates know to ask about any potential liability related to the injury or accident. By immediately beginning personal contact, they are able to identify accurate options for payment assistance in a timelier fashion than relying solely on the hospital’s patient registrar.

TPL accounts require a working knowledge of state tort and insurance laws, as well as constant communication and negotiation with the patient, insurance adjusters, and personal injury law firms. From the initial treatment and referral through assessing and resolving reduction requests, MedData’s TPL experts navigate the personal injury process for patients – identifying and coordinating all available insurance to deliver prompt settlements, maximize reimbursement, and ensure payment to hospitals.

Beyond TPL, MedData’s account representatives screen patients for all government programs including Medicaid, SSI/SSDI, Victims of Crime, CIHCP, COBRA, Indian Health Services, Veterans benefits, and any other program that is potentially available.

Having team members on-site allows MedData to easily send potential TPL accounts that have been identified by Eligibility advocates into the TPL program – often on the same day.

Occasionally, screening and application for assistance aren’t completed before a patient is discharged from the hospital, and the patient may lose interest in seeking assistance. Extended outreach through field advocacy – including visits to their homes, their places of employment, or elsewhere – can help sustain TPL accounts, though it’s an uncommon service for many TPL vendors.

MedData’s Eligibility team has advocates on-site in 43 states, giving the TPL program broad local access to request field visits with patients wherever they are.

Improved Healthcare Reimbursement and Patient Satisfaction

MedData researched reimbursement totals from TPL vs. Medicaid/Medicare from all of 2016, and this integrated approach to TPL showed, on average, a 10% increase in reimbursement. Here are examples, representing different types of providers – a large health system, a medium-size hospital, and a small hospital.

Large Health System (2,591 beds)

  • Total dollars collected via TPL: $11,557,597
  • Improved reimbursement from TPL over typical Medicare/Medicaid reimbursement: $1,016,099

Medium-Size Hospital (643 beds)

  • Total dollars collected via TPL: $7,264,098
  • Improved reimbursement from TPL over typical Medicare/Medicaid reimbursement: $724,844

Small Hospital (139 beds)

  • Total dollars collected via TPL: $888,478
  • Improved reimbursement from TPL over typical Medicare/Medicaid reimbursement: $126,297


The forecast for healthcare regulation is cloudy at best. Hospitals and health systems can’t afford to let claims that could receive better reimbursement through TPL slip toward Medicaid, the last resort payer known for its low reimbursement.

Yet many cases where a potentially liable third party could have been identified end up slipping through the cracks in the registration process. They are coded as something other than TPL and are possibly directed to Medicaid. To avoid this, hospitals and health systems must reconsider resource allocation not only for TPL services, but also in other areas such as eligibility.

By integrating eligibility and TPL, hospitals can better identify third-party payers, ensure faster and better reimbursement, and improve the overall patient experience. MedData research has shown its efficient and effective combination of Eligibility and TPL programs delivers substantial reimbursement advantages through TPL compared to Medicaid for healthcare providers across a range of sizes.


“Deficit Reduction Act Important Facts for State Policymakers,” Centers for Medicare & Medicaid Services

“Medicaid Third Party Liability & Coordination of Benefits,” Center for Medicaid and CHIP Services

Kathy Hershey

Kathy Hershey

Kathy is Marketing Director for MedData, overseeing all events, trade shows, and CRM activities.