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Bill to bar certain third-party denials for Medicaid claims cited as federal alignment and modest state savings
Summary
Senate Bill 361 would align Montana law with a federal requirement added in the Consolidated Appropriations Act, 2022, preventing liable third-party payers from denying payment to Medicaid solely for lack of a prior authorization. The department testified the change will increase Medicaid recoveries modestly.
A bill to clarify third-party liability rules for Medicaid — Senate Bill 361 — drew informational testimony that it aligns Montana statute with federal law and could modestly increase state recoveries.
Sponsor Mike Yakawich described the measure as a clarification intended to ensure third-party payers do not refuse payment for covered items solely because a prior authorization was not obtained under the payer's rules. Heather Smith, program compliance bureau chief for the Department of Public Health and Human Services' inspector general office, told the committee the bill implements a provision of the Consolidated Appropriations Act of 2022.
"This provision... will increase state Medicaid recoveries by barring liable third party payers from refusing payment for an item or service solely because a prior authorization under that third party payer's rules was not received," Smith said. The department's fiscal note cited expected Medicaid recoveries increasing by approximately $32,000 per fiscal year.
Smith emphasized that federal rules still treat Medicaid as a payer of last resort; the bill narrows one permissible reason a liable third party payer could deny a claim but does not change third-party rules for non-Medicaid members.
The committee had no opponents on the record and no informational witnesses beyond the department. The hearing closed without recorded committee action in the transcript.
Why it matters: The change is procedural but could produce modest net state savings, the department said, by improving cost recovery when primary payers cover items for members who also have Medicaid.
