Third Party Liability Collections Under the Medicaid Program- Indiana Department of Public Welfare

Federal regulations require States to pay the Federal Government a portion of third party liability (TLP) collections. The appropriate amount is determined by applying the Federal Medicaid matching percentage to total TPL collections. The State agency attempted to credit the applicable portion of TPL collections to the Federal Government on quarterly expenditure reports but, through clerical errors, the effect of the credits was negated by offsetting entries on the same reports. We recommended that the State agency refund $15 million, the aggregate Federal share of TPL credits due, and improve internal controls over TPL collections and reporting.