Financial Management

The Formulate Budget business process: • Examines the current budget revenue stream and trends, and expenditures. • Assesses external factors affecting the program. • Assesses agency initiatives and plans. • Models different budget scenarios. • Periodically produces a new budget.

It is essential for the State Medicaid Agency (SMA) to be able to generate various financial and program analysis reports to assist with budgetary controls and to ensure that the established benefits and programs are meeting the needs of the member population and are performing according to the intent of the legislative laws or federal reporting requirements. The Generate Financial Report business process begins with a request for information or a timetable for scheduled correspondence. The business process includes: • Defining the report attributes (e.g., format, content, frequency, media, and retention). • Defining the state and federal budget categories of service, eligibility codes, provider types, and specialties (taxonomy). • Extracting required financial information from source data stores. • Transforming information to meet business and technical needs of target destination. • Applying necessary encryption algorithms for security. • Sending alert with information to the target destination. NOTE: This business process does not include maintaining the benefits, reference, or program information. Maintenance of the health plan, health benefits, and reference information is in separate business processes.

The Manage Budget Information business process is responsible for auditing all planned expenses and revenues of the State Medicaid Agency (SMA). Activities in this business process comply with Cash Management Act, Governmental Accounting Standards Board (GASB) standards and Generally Accepted Accounting Principles (GAAP).

The Manage Fund business process oversees Medicaid funds, ensures accuracy in their allocation and the reporting of funding sources. Funding for Medicaid services may come from a variety of sources, and often, state funds span across state agency administrations, e.g., Mental Health, Aging, Substance Abuse, physical health, as well as state counties and local jurisdictions. The Manage Fund business process monitors funds through ongoing tracking and reporting of expenditures and corrects any improperly accounted expenditure. It also deals with projected and actual over and under fund allocations. Manage Federal Medical Assistance Percentages (FMAP) The Manage FMAP activity periodically reviews and modifies, as appropriate, FMAP and Enhanced Federal Medical Assistance Percentages (enhanced FMAP) rate used. (See 42 CFR 433.10). The U.S. Department of Health & Human Services (HHS) notifies the state of the FMAP and (enhanced FMAP) that HHS will use in determining the amount of federal matching for state medical assistance (Medicaid), Children's Health Insurance Program (CHIP), and Recovery Audit Contractor (RAC) expenditures for a specified federal fiscal year. The State Medicaid Agency (SMA) reviews and approves the FMAP rates for application in enterprise accounting. Manage Federal Financial Participation (FFP) The Manage FFP business activity includes the creation and management of business rules for assigning claims, service payments, and recoveries (including RAC recoveries) to the appropriate FMAP, and the application of administrative costs to the state accounting system. It also includes the oversight of reporting and monitoring Advance Planning Documents or other program documents necessary to secure and maintain FFP. Draw and Report FFP The Draw and Report FFP business activity assures that the SMA properly draws federal funds and reports to Centers for Medicare & Medicaid Services (CMS). The SMA is responsible for assuring that the correct FFP rate applies to all expenditures in determining the amount of federal funds to draw. When CMS has approved a Medicaid State Plan, it makes quarterly grant awards to the SMA to cover the federal share of expenditures for services, training, and administration. The grant award authorizes the SMA to draw federal funds as needed in accordance with the Cash Management Improvement Act (CMIA) to pay the federal share of disbursements. The SMA receives FFP in expenditures for the CHIP program.

The Manage 1099 business process describes how the State Medicaid Agency (SMA) handles IRS 1099 forms including preparation, maintenance, and corrections. Any payment or adjustment in payment made to a single Social Security Number (SSN) or federal Tax ID Number (TIN) impacts the business process. The Manage 1099 business process receives payment and/or recoupment information from the Process Claim business process or from the Manage Accounts Payable Information business process. The Manage 1099 business process may also receive requests for additional copies of a specific IRS 1099 form or receive notification of an error or a needed correction. The business process provides additional requested copies via the Manage Provider Communication or Manage Contractor Communication business processes. Staff researches error notifications and requests for corrections for validity and generate a corrected 1099 or a brief explanation of findings.

The Manage Accounts Payable Disbursement business process that is responsible for managing the generation of electronic and paper-based reimbursement instruments, includes: • Calculation of payment amounts fee-for-service claims, pharmacy point-of-sale, and Home and Community-Based Services (HCBS) based on: - Priced claim, including any Third-Party Liability (TPL), and crossover or member payment adjustments. - Retroactive rate adjustments. - Adjustments for previous incorrect payments, taxes, performance incentives, recoupments, garnishments, and liens based on information in the Provider data store, as well as state accounting and budget rules. - Payroll processing (e.g., for HCBS providers) which includes withholding payments for payroll, federal and state taxes, as well as union dues. - Application of automated or user-defined adjustments based on contract (e.g., adjustments or performance incentives). • Disbursement of payment from appropriate funding sources per state and the State Medicaid Agency (SMA) accounting and budget rules including: - Managed Care Organization (MCO) per member per month premium. - Health Insurance Premium Payment (HIPP) Program premium. - Medicare premium. - Primary Care Case Managers (PCCM) fee. - Stop-loss payment. - PCCM management fee. - Health Insurance Flexibility and Accountability (HIFA) waiver small employer refunds (i.e. Parents of children enrolled in Children's Health Insurance Program (CHIP)). • If applicable, association of the Electronic Funds Transfer (EFT) with an Accredited Standards Committee (ASC) X12 835 Health Care Claim Payment/Advice or ASC X12 820 Payroll Deducted and Other Group Premium Payment for Insurance Products transaction. • Routing of the payment per the provider or contractor data store payment instructions for EFT or check generation and mailing. • Alert sent to the Manage Accounts Payable Information business process with updated suspended and paid claims transaction accounting details. • Alert sent to the Manage Accounts Payable Information business process with updated suspended and paid premium, fees, and stop-loss claims transaction accounting details. The SMA will support frequency of payments under the federal Cash Management Improvement Act (CMIA), including real-time payments where appropriate (e.g., Pharmacy Point-of-Sale).

The Manage Accounts Payable Information business process is responsible for all operational aspects of money the State Medicaid Agency (SMA) pays. Activities in this business process comply with Cash Management Act, Governmental Accounting Standards Board (GASB) standards and Generally Accepted Accounting Principles (GAAP). Activities included in this process may be: • Periodic reconciliations between the State Medicaid Enterprise and the system(s) that performs accounting functions. • Assignment of account coding to transactions processed in the State Medicaid Enterprise. • Processing accounts payable invoices created in the State Medicaid Enterprise. • Processing accounts payable invoices created in state accounting system (gross adjustments or other service payments not processed through the State Medicaid Enterprise, and administrative payables). • Loading accounts payable information (warrant number, date, etc.) into the State Medicaid Enterprise. • Managing canceled/voided/stale dated warrants. • Performing payroll activities. • Disbursing federal administrative costs reimbursements to other entities. • Responding to inquiries concerning accounting activities. NOTE: States use a variety of solutions including outsourcing to another department or use of a Commercial-Off-the-Shelf (COTS) package.

The Manage Capitation Payment business process includes the activities to prepare Primary Care Case Management (PCCM) or Managed Care Organization (MCO) capitation payments. Some States offer members the option of enrolling in a PCCM product that requires the selection of a Primary Care Physician (PCP). The PCP receives a Per-Member-Per-Month (PMPM) capitation payment amount for all members that the State Medicaid Agency (SMA) assigns. The provider payment schedule defines the PCCM capitation rates typically actuary based on an age and gender rating or flat rate. Provider may opt in or out of PCCM plan and does not have to belong to the MCO. A prevailing alternative to the SMA integrated managed care model is to delegate specific member populations to MCOs and pay the MCO a PMPM capitation amount for all assigned members. The Manage Capitation Payment business process interrogates the member, provider, and MCO, member assignment and contract capitation information, and creates the information extract necessary to generate the capitation payment. The data extract includes any processing rules and options including retroactive adjustments to member assignments that affect the capitation payment amount to the provider or MCO.

The Manage Contractor Payment business process includes the activities necessary to reimburse contractors for services rendered based on a contract executed between the State Medicaid Agency (SMA) and the contractor. When a contractor renders services on behalf of a Medicaid member, the contractor invoices Medicaid according to the specifics defined in the contract. Agency staff responsible for Contract Administration process invoices according to the SMA policy including validation of the invoice content to reimbursement details defined in the contract.

The Manage Incentive Payment business process accommodates administration of various incentive compensations to payers, providers, and members. Federal or state policy defines the programs, which are typically short duration and limited in scope. The policy defines specific periods, qualification criteria, and certification or verification requirements. The Manage Incentive Payment business process follows the Manage Program Policy business process that manages program administrative rules, whether federal or state, and concludes with paying the payer, provider, or member.

The Manage Member Financial Participation business process is responsible for all operations aspects of preparing member premium payments. This includes premiums for Medicare, also known as Medicare Buy-in, and other health insurance. The business process begins with the alert to determine if the State Medicaid Agency (SMA) should pay a member’s premium. The SMA will assist low-income Medicare beneficiaries in Medicare cost-sharing, defined as premiums, deductibles, and co-insurance in a process referred to as buy-in. Under the buy-in process the SMA, the Social Security Administration (SSA), and U.S. Department of Health & Human Services (HHS) enter into a contract where States pay the Medicare beneficiary share of premium costs, and, in some instances, deductibles, and co-insurance. An exchange of eligibility information between Medicare and the SMA initiates Medicare premium payments. The service agreement between the SMA and business partner determines the intervals for this business process to execute. The business process receives eligibility information from Medicare, performs a matching process against the State Medicaid Enterprise member data store, generates buy-in files to Centers for Medicare & Medicaid Services (CMS) for verification, receives premium payment information from and generates payments to CMS. The SMA will pay the private health insurance premiums for members who have private health insurance benefits, if it determines the insurance to be cost effective. In these circumstances, the SMA prepares and sends a premium to the member’s private health insurance company. Health insurance premium payment initiates with an application for Medicaid where the applicant indicates they have third-party health coverage or by receiving eligibility information via referrals from Home and Community-Based Services (HCBS) Offices, schools, community services organizations, or phone calls directly from members. The business process checks for internal eligibility status as well as eligibility with other payers, producing a report identifying individuals where paying premiums would be cost effective, and notifying members via Manage Applicant and Member Communication business process. NOTE: This business process does not include sending the premium payments as an Electronic Data Interchange (EDI) transaction.

The Manage Accounts Receivable Funds business process is responsible for all operations aspects of the collection of payment owed to the State Medicaid Agency (SMA). Activities in this business process comply with Cash Management Improvement Act (CMIA), Governmental Accounting Standards Board (GASB) standards and Generally Accepted Accounting Principles (GAAP).

The Manage Accounts Receivable Information business process is responsible for all operational aspects of collecting money owed to the State Medicaid Agency (SMA). Activities in this business process comply with CFR 45, Cash Management Improvement Act (CMIA), Governmental Accounting Standards Board (GASB) standards and Generally Accepted Accounting Principles (GAAP). Activities included in this business process can be as follows: • Periodic reconciliations between the State Medicaid Enterprise and the state accounting system. • Assign account coding to transactions processed in State Medicaid Enterprise. • Process accounts receivable invoicing (estate recovery, co-pay, drug rebate, recoupment, Third-Party Liability (TPL) recovery, and member premiums). • Manage cash receipting process. • Manage payment-offset process to collect receivables. • Respond to inquiries concerning accounts receivable. NOTE: States use a variety of solutions including outsourcing to another department or use of a Commercial Off-the-Shelf (COTS) package.

The Manage Cost Settlement business process begins with the submission of the provider’s annual Medicare Cost Report to Medicaid. Staff makes inquires for paid, denied, and adjusted claims information in the Claims data store. The business process includes: • Reviewing provider costs and establishing a basis for cost settlements or compliance reviews. • Receiving audited Medicare Cost Report from intermediaries. • Capturing the necessary provider cost settlement information. • Calculating the final annual cost settlement based on the Medicare Cost Report. • Generating the information for notification to the provider. • Verifying the information is correct. • Producing the notifications to providers. • Establishing interim reimbursement rates. NOTE: In some States, the State Medicaid Agency (SMA) may make cost settlements through the Apply Mass Adjustment business process.

The Manage Drug Rebate business process describes the process of managing drug rebate that the State Medicaid Agency (SMA) collects from manufacturers. This business process: • Receives quarterly drug rebate information from Centers for Medicare & Medicaid Services (CMS). • Compares drug rebate to quarterly payment history information. • Identifies drug information matches based on manufacturer and drug code. • Applies the rebate factor and volume indicators. • Calculates the total rebate per manufacturer. • Prepares drug rebate invoices. • Sorts the invoices by manufacturer and drug code. • Sends the invoice information to the drug manufacturer via the Send Outbound Transaction. • Sends an alert to Manage Accounts Receivable Information to monitor for rebate payment.

Manage Estate Recovery is a business process that requires States to recover certain Medicaid benefits correctly paid on behalf of an individual, by filing liens against a deceased member’s or deceased spouse’s estate to recover the costs of Medicaid benefits correctly paid during the time the member was eligible for Medicaid. Estate recovery usually applies to permanently institutionalized individuals such as persons in a nursing facility, Intermediate Care Facility for Persons with Mental Retardation (ICF/MR), or other medical institution. The Manage Estate Recovery business process begins by receiving estate recovery information from multiple sources (e.g., vital statistics and Social Security Administration (SSA) date of death matches, probate petition notices, tips from caseworkers, and reports of death from nursing homes). It generates correspondence (e.g., demand of notice to probate court via Send Outbound Transaction, to member’s personal representative, generating notice of intent to file claim and exemption questionnaire) via the Manage Applicant and Member Communication business process. In addition, the business process: • Opens a formal estate recovery case based on estate ownership and value of property. • Determines the value of the estate lien. • Files a petition for a lien. • Files an estate claim of lien. • Conducts case follow-up. • Sends an alert to Manage Accounts Receivable Information business process, releasing the estate lien when recovery is complete. • Sends an alert to Manage Member Information business process, updating Member data store. NOTE: Do not confuse this with settlements that are recoveries for certain Medicaid benefits correctly paid on behalf of an individual because of a legal ruling or award involving accidents.

The Manage Provider Recoupment business process manages the determination and recovery of overpayments to providers. The State Medicaid Agency (SMA) initiates provider recoupment upon the discovery of an overpayment, for example, as the result of a provider utilization review audit, receipt of a claims adjustment request, or for situations where provider owes monies to the SMA due to fraud or abuse. The business thread begins with discovering the overpayment, then retrieving claims payment information, initiating the recoupment request, or adjudicating a claims adjustment request, and notifying the provider of audit results via the Manage Provider Communication business process, applying recoupments in the system via the Manage Accounts Receivable Information business process, and monitoring payment history until the provider satisfies the repayment. The SMA collects recoupments via check sent by the provider or credited against future payments for services.

The Manage TPL Recovery business process begins by receiving Third-Party Liability (TPL) information from various sources such as external and internal information matches, tips, referrals, attorneys, compliance management incident, Medicaid Fraud Control Unit (MFCU), providers, and insurance companies. The business process: • Identifies the provider or TPL carrier, locates recoverable claims. • Creates the coordination of benefits file. • Creates post-payment recovery files. • Sends notification to other payer or provider from the Manage Provider Communication business process.

States may implement member cost sharing through the collection of premiums for medical coverage provided under Medicaid and Children’s Health Insurance Program (CHIP). The State Medicaid Agency (SMA) formulates the premium amounts on factors such as family size, income, age, benefit plan, and in some cases the selected health plan, if covered under managed care, during eligibility determination and enrollment. The Prepare Member Premium Invoice business process begins with a timetable (usually monthly) for scheduled invoicing. The business process includes: • Retrieving member premium information. • Performing required information manipulation according to business rules. • Formatting the results into required output information. • Sending member premium invoice alert to the Manage Applicant and Member Communication business process. NOTE: This business process does not include sending the member premium invoice Electronic Data Interchange (EDI) transaction.