The Operations Division's Third Party Resources unit maintains an effective third-party liability program. The Third Party Liability program helps reduce Medicaid costs by shifting claims expenses to third-party payers. Third-party payers are entities or individuals that are legally responsible for paying the medical claims of Medicaid recipients. As a condition of eligibility, Medicaid recipients assign their rights (and the rights of any other eligible individuals on whose behalf he or she has legal authority under state law to assign such rights) to medical support and payment for medical care from any third party to Medicaid.

Federal law and regulations require states to ensure Medicaid recipients use all other resources available to them to pay for all or part of their medical care before turning to Medicaid. Medicaid pays only after the third party has met its legal obligation to pay (i.e., Medicaid is the payer of last resort).

A third party is any individual, entity, or program that is, or may be, liable to pay for any medical assistance provided to a recipient under the approved state Medicaid plan. Third parties may include:

• Private health insurance
• Employment-related health insurance
• Medical support from absent parents
• Casualty coverage resulting from an accidental injury such as automobile or property insurance (including no-fault insurance)
• Court judgments or settlements from a liability insurer
• State workers' compensation
• First party probate-estate recoveries; and/or
• Other federal programs (e.g., Indian Health, Community Health, and Migrant Health programs), unless excluded by statute.