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House committee backs bill to require clearer third‑party liability and limits on MCO claim downcoding
Summary
A bill sponsored by Representative Amy Spell would require managed care organizations to provide third‑party liability information to the Louisiana Department of Health and to prohibit MCOs from unilaterally downcoding provider claims; committee approved the measure with amendments.
BATON ROUGE — The House Committee on Health and Welfare on May 8 advanced legislation aimed at strengthening how Medicaid managed care organizations (MCOs) handle claims and third‑party liability information.
Representative Amy Spell said HB 565 will “ensure that the Louisiana Department of Health maintains its fiduciary duty to the taxpayers of this state and ensuring that Medicaid is the payer of last resort.” She told the committee the bill requires LDH to maintain third‑party liability (TPL) data and obligates MCOs to provide accurate TPL information to the state and to providers.
The measure, as amended, directs MCOs to report insurer and policy details so the Medicaid eligibility verification (MEV) system can be updated, sets timeliness standards for reporting, and bars MCOs from adjusting a submitted claim to a lower level of service as a substitute for a formal denial or post‑payment review. “If we mimic that current contract language, then we should be consistent on that position,” said Greg Waddell of the Louisiana Hospital Association, describing language that tracks existing state‑MCO contract terms.
Physicians and hospital representatives told the committee that MCOs sometimes deny payment citing third‑party coverage without sharing details, making it difficult for providers to bill the correct liable party. “The big change in this bill…is say, look, that information has to be with the state of Louisiana, and it has to be on the Medicaid eligibility verification system,” Waddell said.
Supporters said the bill also calls for stronger deterrents against improper claims practices, including penalties intended to be meaningful rather than “a cost of doing business,” as one witness put it. Representatives of the MCOs — Louisiana Managed Medicaid Association — testified they supported the bill in its amended posture and thanked lawmakers for working with plans and providers.
After testimony from hospitals, ambulance services and physician groups, the committee voted to report HB 565 favorably with amendments.
The bill now moves to the House floor. Proponents said it would help providers get accurate payment information and reduce administrative disputes; opponents expressed concerns about enforcement mechanics and timing but acknowledged the amended text addressed several points of contention.
