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Calculate Spend-Down Amount

Claims Adjudication

Description

A person that is not eligible for medical coverage when they have income above the health plan standards may become eligible for coverage through a process called spend-down (see Determine Member Eligibility business process). The Calculate Spend-Down Amount business process is responsible for tracking spend-down amounts and determining if a member meets its responsibility through the submission of medical claims. The Process Claim business process automatically accounts for the spend-down amount during adjudication. Once the member has met the spend-down obligation, a modification of eligibility status allows Medicaid payments to begin and/or resume. This typically occurs in situations where a member has a chronic condition and is consistently above the resource levels, but it may also occur in other situations. The Calculate Spend-Down Amount business process begins with the receipt of member’s health plan information from Enroll Member business process that requires a predetermined amount the member will be financially responsible for prior to Medicaid payment for any medical services.

Business Process Template

Trigger events
Environment-based

None published

Interaction-based
  • Receive health plan information from Enroll Member business process.
Results
  • Member has met spend-down obligation.
  • Alert sent to Manage Member Information with spend-down information.
  • Sent notification that Member has met spend-down obligation to member via Manage Applicant and Member Communication business process.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • 1. START: Receive health plan information from Enroll Member business process
  • 2. Determine spend-down obligation amount.
  • 3. Receive claim including payment information.
  • 4. Subtract medical claim amounts from member’s spend-down until they meet their responsibility.
  • 5. Send alert to Manage Member Information with spend-down information.
  • 6. END: Send notification that member has met spend-down obligation via Manage Applicant and Member Communication business process.
Predecessor processes
Successor processes
  • Manage Applicant and Member Communication
  • Maintain Member Information
Shared data
  • Member data store with demographics and spend-down information
  • Claims data store with payment information
Constraints

The calculate spend-down will conform to the state-specific policies that may differ by state.

Failures
  • No health plan information from Enroll Member.
Performance measures
  • Time to complete the process: e.g., Real Time response = within __ seconds, Batch Response = within__ hours
  • Accuracy with which rules are applied
  • Consistency of decisions and disposition = __%
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Operations Management BPT.pdf, pages 20-21.

Business Capability Model (15 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.
  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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
What methodology is used for managing spend down calculations?
  1. LEVEL 1The member submits the claims and receipts to SMA. There is a manual process for tallying claim amounts, subtracting disallowed amounts, and determining if member has met the spend down in a given period.
  2. LEVEL 2An electronic tally adds member bills and reports on progress toward spend-down threshold.
  3. LEVEL 3Members are eligible for Medicaid coverage with a deductible amount equal to their spend-down requirements for the specified period. Spend down is essentially eliminated as a distinct process.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
How does the member present proof that it has incurred and/or paid health care bills?
  1. LEVEL 1The member submits the claims/bill and/or receipts to SMA.
  2. LEVEL 2Members may submit electronic spend-down reports, and either scan, facsimile, or mail health care bills and receipts. SMA keys data into an electronic system. Providers submit claims and system automatically applies to spend down
  3. LEVEL 3SMA uses SMA adopts MITA Framework, industry standards, and other nationally recognized standards for access to Health Information Exchange (HIE) for direct billing to payer.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
How does the State Medicaid Agency track payments for health care bills?
  1. LEVEL 1SMA tracks a member’s costs for health services by tallying paper bills by staff and receipts until member meets spend-down amount for each period.
  2. LEVEL 2An electronic tally adds member’s bills and reports on progress toward spend-down threshold. Staff enters information and the system calculates.
  3. LEVEL 3SMA tracks deductible until member meets spend-down threshold. System notifies staff and/or claims payment system when member meets spend-down the threshold.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
How does the agency determine that the member has met the spend-down target?
  1. LEVEL 1Staff applies spend down business rules to decide whether the submitted costs are allowable and in the appropriate period to apply the costs, sometimes resulting in inconsistent determinations or controversy with the member. The process is manual.
  2. LEVEL 2SMA tests claims submitted by the member against Medicaid Program payment business rules. SMA identifies services and amounts that Medicaid will not pay
  3. LEVEL 3The deductible calculation is automatic. SMA receives signal when member will soon reach or has reached the spend-down threshold.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
How does the State Medicaid Agency transmit that the member has met spend-down requirements to the claims payment processes and the provider community?
  1. LEVEL 1If member meets the spend-down, staff keys change in eligibility status into the member’s record so that provider claims will pay for a specified period. Providers submit denied claims for billing to the member until member meets spend down.
  2. LEVEL 2If member meets spend down, staff keys change in eligibility status into the member’s record so that subsequent claims will pay for a specified period. Providers have difficulty determining whether the member has met spend-down requirements and the remaining amount the member has to pay before the provider may bill Medicaid.
  3. LEVEL 3Providers are able to determine spend down amount when they verify eligibility. SMA automatically adjusts the member’s spend-down amount during claims processing.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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. Switch to auto-deductible accounting supports real-time reporting of spend down totals. Timeliness exceeds Level 2.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.
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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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. Auto-deductible accounting further improving cost effectiveness ratio over Level 2.
  4. LEVEL 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

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 4Maturity level is not applicable.
  5. LEVEL 5Maturity level is not applicable.

Source: CMS MITA 3.0 Business Capability Model, Operations Management BCM.pdf, pages 38-46.

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