In September 2006, shortly after the Deficit Reduction Act of 2005 (DRA) was authorized into statute, the Government Accountability Office (GAO), that is the investigatory arm of the U.S. Congress set up to assist Congress in enhancing efficiency and responsibility of the federal government to the nation's residents, documented that 13 percent of Medicaid recipients in the years from 2002 to 2004 held supplemental medical insurance coverage, referred to as third-party liability (TPL), and this ought to be financing health costs prior to contributions from Medicaid. The GAO additionally found that states were suffering complications with regard to retrieving TPL funds in two aspects: 1) determining when Medicaid beneficiaries owned private health insurance coverage; and 2) garnering payments from these insurance companies.
Upon scrutinizing these difficulties, the GAO said two areas should be resolved by the Centers for Medicare & Medicaid Services (CMS), the department within the U.S. Department of Health and Human Services (HHS), which manages Medicaid, and they are 1) to set up a timeline for states to enact laws that abide by TPL demands created by DRA; and 2) identify the certain entities that must adhere to state laws imposed by DRA on TPL payments. CMS concurred with these GAO suggestions and as of June 2006, advised the GAO that CMS was creating guidance to states.
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