MES Certification Navigator
FM

Manage Cost Settlement

Accounts Receivable Management

Description

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.

Business Process Template

Trigger events
Environment-based
  • Receive provider costs from claims history data store.
  • Receive Medicare Cost Report.
  • Prompt for annual provider cost review.
Interaction-based

None published

Results
  • Alert sent to notify provider of cost settlement information.
  • Alert sent to Manage Accounts Receivable Information business process to monitor for payment.
  • Alert sent to Manage Rate Setting business process of interim reimbursement rates.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • 1. START: Receive Medicare Cost Report from provider.
  • 2. Request annual claims detail information.
  • 3. Review provider costs.
  • 4. Establish a basis for cost settlements or compliance reviews.
  • 5. Receive audited Medicare Cost Report from intermediaries from Receive Inbound Transaction.
  • 6. Receive provider cost settlement information from Receive Inbound Transaction.
  • 7. Capture the necessary provider cost settlement information.
  • 8. Calculate the final annual cost settlement based on the Medicare Cost Report and prorate for Medicaid services.
  • 9. Establish interim reimbursement rates.
  • 10. Generate cost settlement information identifying the amount of overpayment or underpayment and the reimbursement rates the SMA would consider for the next year.
  • 11. Verify the information is correct.
  • 12. Send alert to notify providers of cost settlements summary information.
  • 13. Send cost settlement summary information to providers via Send Outbound Transaction.
  • 14. Send alert to monitor payment activities to Manage Accounts Receivable Information (if overpayment) or to Manage Accounts Payable Information (if underpayment) business processes.
  • 15. Send alert to conduct retroactive modifications to Apply Mass Adjustment business process.
  • 16. END: Send alert of interim reimbursement rates to Manage Rate Setting business process.
Predecessor processes
  • Receive Inbound Transaction
Successor processes
Shared data
  • Claims data store including payment information
  • Provider data store including provider network and contract information
  • Financial data store including accounts receivable information
  • Cost log information sent to Centers for Medicare & Medicaid Services (CMS)
Constraints

Cost Settlement information will conform to CMS and state-specific reporting requirements.

Failures
  • This process has no failure modes that prevent the process from completion.
  • Delays are the result of delays in the audited Medicare Cost Report.
  • A provider may file a grievance if it does not agree with established rates or settlement amounts.
Performance measures
  • Time to complete the process = e.g., ___ months, ___ weeks or ___ days
  • Accuracy with which the SMA applies Cost Settlement rules = __%
  • Consistency with which the SMA applies Cost Settlement rules = __%
  • Number of grievances or protests received = __
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Financial Management BPT.pdf, pages 9-11.

Business Capability Model (11 questions)

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

Business Capability Descriptions

How integrated is the process?
  1. LEVEL 1SMA has no coordination among programs, between SMA and other intermediaries that produce the Medicare Cost Report.
  2. LEVEL 2SMA is centralizing common processes to achieve economies of scale, increase coordination, and improve the consistency of rule application. This improves the ability to process cost settlements. Application-to-application updates are possible in some cases (e.g., automatic updates of the Payment Information store.)
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards for intrastate exchange of information for cost settlement coordination.
  4. LEVEL 4SMA fully integrates the process to the extent possible across the interstate.
  5. LEVEL 5SMA fully integrates the process 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 requires four (4) or more months per settlement.
  2. LEVEL 2Process timeliness improves through use of automation. Timeliness exceeds legal requirements. The process requires four (4) or fewer weeks per settlement.
  3. LEVEL 3Timeliness improves via state and federal collaboration, use of information sharing, standards, and regional information exchange hubs. The process requires ten (10) or fewer business days.
  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 90% 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 28-35.

Other Financial Management processes

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