MES Certification Navigator
FM

Manage Fund

Fiscal Management

Description

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.

Business Process Template

Trigger events
Environment-based
  • A request from the legislature, or a new budget approved.
  • Periodic timetable (e.g., weekly, monthly, quarterly, annual, 3-year plan, 5-year plan) is due for generating required reports.
  • Receive new match rates or rate modifications from HHS.
  • Receive notification to apply FMAP rate to service expenditures or recoveries.
  • Periodic timetable (e.g., quarterly) is due for a statement of expenditures.
  • Continuous oversight of expenditures for an FFP.
  • The SMA adds a new health plan or health benefit.
  • Periodic timetable is due for an audit.
Interaction-based

None published

Results
  • Tracking and trending of all program expenditures and management of them within budget constraints.
  • Produces updated FMAP.
  • Service expenditure and recovery information with applied FMAP rate.
  • Calculation of FFP available for all eligible members, systems, and administration of the State Medicaid Enterprise.
  • Content prepared for the following reports: o CHIP Program Budget Report (CMS-21B) o Medicaid Program Budget Report (CMS-37) o Quarterly CHIP Statement of Expenditures (CMS-21) o Quarterly Expense Report (CMS-64) NOTE: The Generate Financial Report business process generates and sends the CMS report.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • Manage Fund
  • 1. START: Establish state appropriation for federal and state funds.
  • 2. Allocate funds to direct and indirect budget categories.
  • 3. Establish reporting requirements.
  • 4. Define report content, frequency, and media.
  • 5. Prepare the information.
  • 6. Compare fund usage with categories, flag funds improperly used.
  • 7. Trend rate of usage of funds versus amounts available, flag-computed shortfalls.
  • 8. Generate defined reports.
  • 9. Review reports for accuracy.
  • 10. Distribute reports.
  • 11. END: Review trends and improper use of funds, and manage funds as needed to deal with shortfalls and over allocations.
  • Manage FMAP
  • 1. START: Receive notification of FMAP rates or rate modifications.
  • 2. Review and analyze notification.
  • 3. Verify accuracy of rates in notification.
  • 4. Notify HHS of any disagreement.
  • 5. Resolve any disagreement with HHS.
  • 6. END: Publish/load approved rates.
  • Manage FFP
  • 1. Prepare information necessary to create the reports (e.g., CMS-21, CMS-37 and CMS-64).
  • 2. Generate reports.
  • 3. Review generated reports for accuracy and deficiencies.
  • 4. Monitor expenditures, cost, budget, and so forth.
  • 5. Analyze potential program additions, modifications, or deletions for fiscal impact.
  • 6. Modify and update impacted reports and budget.
  • 7. Finalize report.
  • 8. END: Send report via the Send Outbound Transaction.
  • Draw and Report FFP
  • 1. START: Submit Form CMS-37 and Form CMS-21B through the Medicaid Budget and Expenditure System/CHIP Budget and Expenditure System (MBES/CBES).
  • 2. Review the quarterly grant request.
  • 3. Receive the grant award from CMS regardless of whether there are open issues with CMS. The Payment Management System (PMS) deposits funds into the Medicaid account based upon the CMS 37 estimates.
  • 4. Determine the federal share of current expenditures taking into consideration receipts (e.g. estate recovery, recoupments of incorrect billings) and draw federal funds in accordance with the terms of the CMIA.
  • 5. At end of each quarter, complete cash management reconciliation using the PMS 272 report.
  • 6. Submit Form CMS-64 and Form CMS-21 to MBES/CBES.
  • 7. CMS may increase or decrease the grant request amount already deposited according to the resolution of issues process. The SMA sends supporting documentation to the CMS Regional Office for use in its quarterly review to support State Medicaid Enterprise numbers and to address deferrals,
  • 8. The SMA cooperates with CMS reviews of program and administration expenditures and implements corrective action if CMS Financial Management Review (FMR) or Office of Inspector General reviews reveal any federal requirement compliance problems.
  • 9. Arrange for annual Single Audit for the Comprehensive Annual Financial Report conducted by a state-contracted Certified Public Accountant (CPA) firm in accordance with the provisions of OMB Circular A-133.
  • 10. END: Follow-up and corrective action(s) on audit findings includes the preparation of a summary schedule of prior audit findings and submission of a Corrective Action Plan (CAP).
Predecessor processes
Successor processes
Shared data
  • Financial data store including budget, accounts receivable, and accounts payable information
  • Plan data store including health plan information
  • Health Benefit data store including benefit package and benefits information
  • State Financial Management Applications
  • Reference data store including code sets information
Constraints

State legislative or agency policies augment the information. FMAP applies to Medicaid expenditures for services under the Medicaid State Plan with the exception of the following: family planning services, services provided through Indian Health Service facilities, services provided to members eligible under the optional Breast and Cervical Cancer program, and Medicare Part B premiums for Qualified Individuals. Manage FFP will conform to state-specific and CMS FFP assignment requirements.

Failures
  • The SMA lacks money for budget or is short of revenue.
  • Natural disaster strikes impacting budget management.
  • System failure prevents new rates from loading or rates are loaded incorrectly.
  • The SMA encounters errors in FMAP rate or assignment of rate to individual services.
  • The SMA is unable to balance reports.
  • The SMA is unable to access all information required for reporting.
  • There are discrepancies in information invalidate FFP calculations.
Performance measures
  • Time to complete process: e.g., Real Time response = within __ seconds, Batch Response = within __hours
  • Accuracy of decisions = ___%
  • Consistency of decisions and disposition = ___%
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Financial Management BPT.pdf, pages 35-39.

Business Capability Model (10 questions)

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

Business Capability Descriptions

Is the process primarily manual or automatic?
  1. LEVEL 1The process consists primarily of manual paper-based activity to accomplish tasks. Data is stored in electronic format, but the analysis and application of decisions regarding allocations and reporting are manual.
  2. LEVEL 2SMA uses a mix of manual and automatic processes to accomplish tasks. Use of Commercial Off-the-Shelf (COTS) products to support SMA financial functions improves ability to access information, analyze, and make decisions regarding allocation and reporting.
  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. Some collaboration is required in the allocation of federal funds where non-Medicaid agencies are involved.
  2. LEVEL 2SMA collaborates with other agencies and entities to adopt HIPAA standards and Electronic Data Interchange (EDI) transactions. A Memoranda of Understanding (MOU) with other agencies provides a legal basis for allocation of funds.
  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).
  2. LEVEL 2Process timeliness improves through use of automation. Timeliness exceeds legal requirements.
  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 2Nationally recognized standards 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 nationally recognized 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. Process meets SMA goals for completing allocation of state funds. Cost benefit ratio may not be able to be calculated.
  2. LEVEL 2Automation improves process and allows focus on exception resolution, improving cost effectiveness ratio over Level 1.Staff focuses on analysis of the data, projections, and recommendations for improvements in allocation formulas.
  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 103-111.

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 Cost SettlementManage Drug RebateManage Estate RecoveryManage Incentive PaymentManage Member Financial ParticipationManage Provider RecoupmentManage TPL RecoveryPrepare Member Premium Invoice