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Newsletter Vol. 3, No. 02
Act
immediately
Effective date
Not stated in the notice
Identified
Jun 20, 2026
Summary
This policy clarifies how indemnity benefit plan payments (fixed per diem rates for inpatients in psychiatric hospitals and nursing facilities) must be treated for Medicaid eligibility and billing purposes. Payments to individuals count as income unless restricted to medical services; payments directly to facilities are treated as third-party liability (TPL). Billing teams must now report indemnity benefits on specific forms with proper coding to avoid claim denials.
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What to do
immediately · 7 steps
01Billing team must implement the following changes for all Medicaid claims involving patients receiving indemnity benefits while admitted to governmental psychiatric hospitals, psychiatric extended stay hospitals, or nursing facilities.
02When indemnity benefits are paid to the individual, include the amount on the PAL (Statement of Available Income for Medicaid Payment) under 'Other Income' with source annotation and code 'I' for indemnity benefit in the Remarks section; show this on the Turn Around Document (TAD) under Patient Payment block.
03When indemnity benefits are paid directly to the facility, do NOT report on PAL; instead, forward TPL information to the Bureau of Third Party Liability at the Division of Medical Assistance and Health Services.
04On TAD Insurance Payment block, identify all indemnity benefit payments received using the appropriate carrier code from Appendix D of the Nursing Facility Services Fiscal Agent Billing Supplement.
05County Welfare Agency (CWA) or Institutional Services Section (ISS) staff must prepare PAL statements and coordinate with Bureau of Third Party Liability.
06Failure to provide correct TPL identification codes will result in claim denial.
07Contact Ellen Keane, Bureau of Claims and Accounts, for questions.
Original notice
Newsletter Vol. 3, No. 02
njmmis.com · Always check the source before changing claims.
Related changes
See all New Jersey Medicaid changes →Newsletter Vol. 3, No. 01MediumNo effective date · Provider NoticeNewsletter Vol. 3, No. 03LowNo effective date · Provider NoticeNewsletter Vol. 3, No. 04LowEffective Jan 1, 2025 · PharmacyNewsletter Vol. 3, No. 05MediumNo effective date · Provider NoticeBrowse every New Jersey Medicaid change in the policy list