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Manage Accounts Payable Disbursement

Accounts Payable Management

Description

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).

Business Process Template

Trigger events
Environment-based
  • Receive payment request.
Interaction-based

None published

Results
  • Provider or contractor received payment either by EFT or check.
  • Alert sent to send ASC X12 820 Payment Order/Remittance Advice transaction for payment to provider or contractor.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • 1. START: Receive request for payment.
  • 2. Prepare provider payment: a. Receive payment information from the Process Claim or Process Encounter. b. Apply automated or user-defined payment calculation rules (e.g., deducting tax per rates in provider files, garnishments, and liens) by accessing information from provider files and sending an alert to the Manage Accounts Payable Information business process. c. For payroll processing, perform tax withholds and generate information for accounting.
  • 3. Prepare premium payment: a. Receive premium payment information from the Manage Member Financial Participation or Prepare Provider Payment business processes.
  • 4. Disburse funds as specified by the state and the SMA accounting and budget business rules.
  • 5. END: Route payments as specified by the provider or contractor pay-to instruction or based on information submitted in the standard claim transactions.
Predecessor processes
Successor processes
Shared data
  • Claims data store including payment information
  • Health Benefit data store including benefit information and fee schedules
  • Provider data store including demographic, tax, pay-to and payment routing instructions, liens, garnishments, adjustments, incentives, rates, and contract information
  • Authorization data store including authorization and treatment plan information
  • Contractor data store including demographic, tax, pay-to and payment routing instructions, liens, garnishments, adjustments, incentives, reimbursement arrangements, rates, stop-loss claim payments, and contract information
  • Financial data store including accounting rules, rates, and funding sources
  • Member data store including demographics information
Constraints

States apply different tax and accounting rules to this business process. Some will not do payroll processing or have performance incentives. Some may associate EFTs with remittance advice transactions. Some will not have an MCO premium or MCO capitation, a PCCM fee, stop-loss, or performance incentives. Some may associate EFTs with premium payment transactions.

Failures
  • Calculation of payment and application of payment adjustments may lack
  • accurate information or be inaccurate.
  • Entity failed to receive EFT or check, the check is not payable due to insufficient funds, or payee returns the check.
  • Unable to process payment due to a mutilated, destroyed or stale dated check.
Performance measures
  • Time to complete process = within __ days
  • Accuracy with which the SMA applies edits = ___%
  • Consistency of decisions and disposition = ___%
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Financial Management BPT.pdf, pages 26-29.

Business Capability Model (11 questions)

Each capability question defines five maturity levels, from Level 1 through Level 5.

Business Capability Descriptions

What format does SMA use for payments?
  1. LEVEL 1SMA or Department of Finance uses an automatic check write process to produce a paper check. SMA mails to the provider. State does not use Electronic Funds Transfers (EFT).
  2. LEVEL 2SMA complies with state or industry standards for EFT and conforms to HIPAA requirements. SMA sends some paper checks to submitters. SMA encourages electronic billers to adopt EFT payment.
  3. LEVEL 3SMA uses MITA Framework, industry standards, for EFT transactions. All submitters receive EFT payment.
  4. LEVEL 4SMA fully automates the process with EFT payments to the extent possible across the interstate.
  5. LEVEL 5SMA fully automates the process with EFT payments to the extent possible across the nation.
Is the process primarily manual or automatic?
  1. LEVEL 1The process consists primarily of manual paper-based activity to accomplish tasks.
  2. LEVEL 2SMA uses a mix of manual and automatic processes to accomplish tasks.
  3. LEVEL 3SMA automates process to the full extent possible within the intrastate.
  4. LEVEL 4SMA automates process to the full extent possible across the interstate.
  5. LEVEL 5SMA automates process to the full extent possible across the nation.
Does the State Medicaid Agency use standards in the process?
  1. LEVEL 1SMA focuses on meeting compliance thresholds for state and federal regulations using state-specific standards.
  2. LEVEL 2SMA applies a mix of HIPAA and state-specific standards.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards for intrastate exchange of information.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and other nationally recognized standards for clinical and interstate information exchange.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and other nationally recognized standards for national exchange of information.
How does the State Medicaid Agency collaborate with other agencies or entities in performing the process?
  1. LEVEL 1Very little collaboration occurs with other agencies to standardize information exchange or business tasks.
  2. LEVEL 2SMA collaborates with other agencies and entities to adopt HIPAA standards and Electronic Data Interchange (EDI) transactions.
  3. LEVEL 3SMA collaborates with other intrastate agencies and entities to adopt national standards, and to develop and share reusable business services.
  4. LEVEL 4SMA collaborates with other interstate agencies and entities to adopt national standards, and to develop and share reusable processes including clinical information.
  5. LEVEL 5SMA collaborates with agencies and entities for national (and international) interoperability improvements that maximize automation of routine operations.

Business Capability Quality: Timeliness of Process

How timely is the end-to-end process?
  1. LEVEL 1Process meets threshold or mandated requirements for timeliness (i.e., the process achieves results within the time specified by law or regulation).The process may require weeks to complete a cycle.
  2. LEVEL 2Process timeliness improves through use of automation. Timeliness exceeds legal requirements. The process requires no more than a week to complete a cycle.
  3. LEVEL 3Timeliness improves via state and federal collaboration, use of information sharing, standards, and regional information exchange hubs. Timeliness exceeds Level 2.
  4. LEVEL 4Information is available in near real time. Processes that use clinical information result in immediate action, response, and results. SMA has interstate interoperability, which further improves timeliness over Level 3.
  5. LEVEL 5Information is available in real time. Processes improve further through connectivity with other States and with federal agencies. Most processes execute at the point of service. Results are almost immediate.

Business Capability Quality: Data Access and Accuracy

How accurate is the information in the process?
  1. LEVEL 1Use of direct data entry for information collection is manually intensive and susceptible to inconsistent or incorrect information. Stakeholders are unable to rely on information for decision-making.
  2. LEVEL 2HIPAA standard transactions improve accuracy of information but the decision-making process may be erroneous or misleading. Accuracy is higher than at Level 1.
  3. LEVEL 3Automation of information collection increases the reliability of SMA’s internal information. External sources of information use MITA Framework and industry standards for information exchange. Decision-making is automatic using standardized business rules definitions. Accuracy rating is at 99% or higher.
  4. LEVEL 4Automation of information collection increases the reliability of SMA’s internal and external sources of information. SMA adopts MITA Framework and industry standards for information exchange with interstate agencies. Decision-making is automatic using regional standardized business rules definitions. Accuracy rating is at 99% or higher.
  5. LEVEL 5SMA adopts MITA Framework and industry standards for information exchange with national agencies. Decision-making is automatic using national standardized business rules definitions. Accuracy rating is at 99% or higher.
How accessible is the information in the process?
  1. LEVEL 1SMA stores information in disparate systems including paper storage and obtains information manually.
  2. LEVEL 2SMA stores information in disparate systems, but automation and HIPAA standards increase accessibility over Level 1.
  3. LEVEL 3SMA obtains information easily and exchanges with intrastate agencies and entities based on MITA Framework and industry standards. Accessibility is greater than Level 2.
  4. LEVEL 4SMA obtains information easily and exchanges with interstate agencies and entities. Accessibility is greater than Level 3.
  5. LEVEL 5SMA obtains information easily and exchanges with national agencies and entities. Accessibility is greater than Level 4.

Business Capability Quality: Cost Effectiveness

What is the cost of the process compared to the benefits of its results?
  1. LEVEL 1High relative cost due to low number of automatic, standardized tasks.
  2. LEVEL 2Automation improves process and allows focus on exception resolution, improving cost effectiveness ratio over Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards further improving cost effectiveness ratio over Level 2.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and other nationally recognized standards for interstate information exchange. SMA increases cost effectiveness ratio over Level 3.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and other nationally recognized standards for national (and international) information exchange. SMA increases cost effectiveness ratio over level 4.

Business Capability Quality: Effort to Perform; Efficiency

How efficient is the process?
  1. LEVEL 1Process is labor intensive. There is wasted effort or expense to accomplish tasks. Process meets minimum state process guidelines and SMA performance standards. Efficiency is low.
  2. LEVEL 2Automation and state standards increase productivity. Efficiency is higher than Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities improving efficiency to 95% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving efficiency to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving efficiency to 98% or higher.

Business Capability Quality: Accuracy of Process Results

How accurate are the results of the process?
  1. LEVEL 1Manual processes result in greater opportunity for human error. Accuracy is low.
  2. LEVEL 2Automation and standardized business rules definitions reduce error and improve accuracy above Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities improving accuracy to 98% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving accuracy to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving accuracy to 98% or higher.

Business Capability Quality: Utility or Value to Stakeholders

Does the business process satisfy stakeholders?
  1. LEVEL 1Stakeholders lack confidence in information negatively affecting stakeholder satisfaction with the process.
  2. LEVEL 2Automation and standardization provides clear and useful information. Stakeholder satisfaction is greater than Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities improving stakeholder satisfaction to 90% or higher. SMA uses survey or questionnaire for information collection.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving stakeholder satisfaction to 95% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving stakeholder satisfaction to 98% or higher.

Source: CMS MITA 3.0 Business Capability Model, Financial Management BCM.pdf, pages 81-86.

Other Financial Management processes

Formulate BudgetGenerate Financial ReportManage 1099Manage Accounts Payable InformationManage Accounts Receivable FundsManage Accounts Receivable InformationManage Budget InformationManage Capitation PaymentManage Contractor PaymentManage Cost SettlementManage Drug RebateManage Estate RecoveryManage FundManage Incentive PaymentManage Member Financial ParticipationManage Provider RecoupmentManage TPL RecoveryPrepare Member Premium Invoice