#8: (PIE) Payer Initiated Eligibility/Benefit Transaction

Business Scenarios
Federal law generally requires health insurers and other third parties legally liable to pay for
health care services to pay for such services primary to Medicaid. However, Medicaid agencies
often pay claims for which a third party may be liable because they lack information about the
existence of other coverage. The DRA made several changes to the third party liability
provisions of the Medicaid statute which are designed to enhance States’ ability to identify
insurance coverage, coordinate benefits, and obtain payment from third party resources that are
legally responsible to pay claims primary to Medicaid. The DRA Companion Guide for the Plan
Initiated Eligibility/Benefit (PIE) Transaction provides a national standard for payers to share
information with Medicaid agencies. This, in turn, makes it easier for Medicaid agencies to
coordinate benefits in accordance with Federal requirements. The following table describes
challenges in coordinating benefits that the DRA Companion Guide is designed to meet.

Coordination of Benefits Challenge

DRA Companion Guide Solution

The Medicaid agency is not aware that a third party
payer exists and so cannot advise providers to bill
that primary payer first. Medicaid agencies pay
providers, then must expend administrative
resources to attempt to locate and bill primary
payers.

The PIE Transaction will be sent by payers, e.g.
Third Party Administrators, to the Medicaid agency
on a periodic basis and will include all insured
lives. The Medicaid agency will match subscribers
to the Medicaid agency database and identify
primary payers for Medicaid recipients.

The Medicaid agency cannot confirm eligibility or
submit an eligibility inquiry by traditional means
because the agency does not have the required
Member ID. The agency is not in a position to
require that the recipient present his/her insurance
card at the point of sale, since in most cases other
providers (and not the agency) control the point of
sale.

The PIE Transaction will be sent to the Medicaid
agency on a periodic basis and will include all
insured lives. The Medicaid agency will use
traditional identifiers (such as name and date of
birth), social security numbers, and on occasion,
addresses, to match subscribers to the Medicaid
agency database and collect the Member ID.

Extensive time may pass between the time the
provider submits a claim to the Medicaid agency,
the Medicaid agency pays it and then the Medicaid
agencies seeks reimbursement. The DRA requires
that claims be honored by primary payers if
submitted by Medicaid within three years. For
some payers it is costly to process older claims.

The Medicaid agency will use the information from
the PIE Transaction to direct the provider to bill the
primary payer. If the provider subsequently bills
the Medicaid agency for amounts not paid by the
primary payer, the Medicaid agency would process
the claim for proper payment. Accurate and early
identification of the primary payer benefits both the
Medicaid agency and the payer by ensuring that
claims are processed in a timely manner.

Excessive time is spent by Medicaid agency staff
on negotiating with individual payers to outline file
standards for roster files. The issue is compounded
when considering expanding current match
programs to a greater number of payers. Payers
spend large quantities of man hours managing
multitudes of file formats for relaying enrollment
data to each requesting State or Federal agency.

The Medicaid agency may require all payers to
conform to the DRA specifications. This allows the
Medicaid agency to develop one application to read
all payers’ roster files. Payers benefit by developing
one application to output a roster file which may be
consumed by any State Medicaid agency.

Payers and Medicaid agencies can work together to ensure that coordination of benefits is
efficient, effective and accurate. The following table describes some of the limitations of the
DRA Companion Guide and actions that Medicaid agencies and payers can take to support
coordination of benefits and claims processing.

Limitation

Payer and Medicaid Agency Collaboration

Medicaid agencies do not have complete
information about primary coverage and so they
submit claims which payers must process and
deny, reducing efficiencies and increasing
processing costs to payers.

Medicaid agencies can map Service Type qualifiers
received on the PIE Transaction to corresponding
services supported by the Medicaid agency. When
in doubt about coverage, Medicaid agencies can
clarify or update coverage by submitting a 270
eligibility inquiry with specific relevant Service Type
codes and accurately process the results.
Payers can send all relevant Service Type
qualifiers on the PIE Transaction, and can respond
to each Service Type qualifier sent on 270s.

Medicaid agencies matching on Name, Date of
Birth, and Gender with no SSN store a Member ID
for a Medicaid recipient that is not the ID for that
person. Claims are submitted and honored
erroneously because the Member ID, Name and
Date of Birth and Gender match.

When no SSN is present, Medicaid agencies can
include algorithms for matching on addresses
before storing Member IDs and/or promote manual
review of records.

Medicaid agencies identified the primary payer
based on a PIE Transaction, but since the last
transmission the recipient’s coverage has changed
and the recipient is no longer covered.

Medicaid agencies can submit a 270 to obtain
updated coverage information when notified by the
provider that the claim was denied. The
information received on the 271 will be used to
refresh the Medicaid agency records for future
transactions.

Payers can send all available identifiers and
include full address information in the PIE
Transaction to support accurate identification.

Payers can support full and accurate reporting of
coverage in the 270/271 transactions to ensure
proper coordination of benefits and accurate claims
submittal.