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Process Claim

Claims Adjudication

Description

The Process Claim business process receives original or adjusted claim (e.g., institutional, professional, dental, pharmacy, and waiver) information via web or Electronic Data Interchange (EDI) transaction, assigns an internal control number, and • Determines its submission status, and based on that: - Performs Claims Edits: ✓ Edit a single transaction for valid syntax and format, identifiers and codes, dates, and other information required for the transaction. ✓ Validate business edits, service coverage, Third-Party Liability (TPL), and reference coding. - Performs Claims Audits: ✓ Verify against historical information. ✓ Verify that services requiring authorization have approval, clinical appropriateness, and payment integrity. - Suspends claim that fail edits or audits for return to the provider for corrections, additional information, or internal review according to state defined business rules. - Applies National Correct Coding Initiative (NCCI) Edits. - Applies Diagnosis Related Group (DRG)/Ambulatory Payment Classification (APC), as appropriate. - Prices Claims: ✓ Calculate state allowed amount. ✓ Calculate paid amount. NOTE: All fee-for-services claim types will go through most of the business process steps but with different business rules associated with the different claim types. Both Centers for Medicaid & Medicaid Services (CMS) and state policy determine business rules for claims edits, audits, and pricing methodologies. State business rules define whether the State Medicaid Agency (SMA) pays, suspends, flags for information, or denies a claim. State business rules define whether an edit is fatal or non-fatal as well. See Constraints. NOTE: submitted processed claim in order to reverse the original claim payment and associate the original and replacement claim in the payment information. NOTE: This business process is part of a suite including Calculate Spend-down Amount, Submit Electronic Attachment, and Generate Remittance Advice business processes.

Business Process Template

Trigger events
Environment-based
  • Receive a scanned or direct-data-entered paper claim.
  • Periodic (e.g., daily, weekly) adjudication/payment cycles is due.
Interaction-based
  • Receive claim via Accredited Standards Committee (ASC) X12 837 Health Care Claim fee-for-services claims transactions.
  • Receive Retail Pharmacy Claim Transaction (National Council for Prescription Drug Programs (NCPDP) Telecommunications Standard).
Results
  • The SMA adjudicates a claim.
  • If applicable, alert sent to submitter via ASC X12 TA1 Interchange Acknowledgment, 997 Functional Acknowledgment, 999 Implementation Acknowledgment, and/or the 824 Application Advice transaction(s) per Trading Partner Agreement (TPA).
  • If applicable, alert sent to send to submitter via ASC X12 277 Health Care Information Status Notification for requesting additional information.
  • If applicable, receive alert from receiver via ASC X12 TA1 Interchange Acknowledgment, 997 Functional Acknowledgment, 999 Implementation Acknowledgment, and/or the 824 Application Advice transaction(s) per Trading Partner Agreement (TPA).
  • If applicable, alert sent to Generate Remittance Advice business process with payment and/or error report information.
  • Alert sent to Prepare Provider Payment business process for payment.
  • If applicable, alert sent to send to Manage TPL Recovery business process for third-party insurance.
  • Alert sent to Manage Accounts Receivable Information business process with payment information.
  • Alert sent to Manage Accounts Payable Information business process with HCBS payment information.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • 1. START: Receive claim submission or claim adjustment information.
  • 2. Perform Fatal Edits:
  • 3. Perform Non-Fatal Edits: a. Determine claim status as initial, adjustment to a processed claim, or a duplicate submission that is already in the adjudication process, but not yet completed and loaded into payment history (using a unique Patient Account Number). i. If applicable, associate the claim adjustment to the original claim submission. b. Validate provider information (e.g., provider taxonomy, National Provider Identification (NPI), enrollment status, approved to bill for this service). c. Validate member information (e.g., Member’s eligibility status on the date of service, apply third-party resources to the claim). i. If applicable, alert sent to Manage TPL Recovery business process for third-party insurance. d. Validate member’s health benefit covers the service and apply appropriate rules. For example: i. Because adult member benefit package does not cover dental services, deny the claim. ii. Member is in another health plan that is their primary insurance, and the Medicaid covers the same service. Designate the claim for the Coordination of Benefits (COB) and deny the claim. Under a payer-to-payer business model, the primary payer receives the COB claim. e. Validate appropriateness of service codes including correct code set versions, and correct association of services with diagnosis and member demographic and health status. f. If provider submits service authorization, referral or treatment plan number, verify the number, member, provider, service, and date(s) of service. g. If state-defined business rules identify certain edits that cause a claim to suspend, and a claim fails for one or more of them, go to Alternate
  • 4. Perform Audits: a. Check payment history for duplicate processed claim using search key information such as in-house claim number, date of service, provider and member demographics, service, and diagnosis codes. b. If provider did not submit service authorization, referral or treatment plan, and one exists on file, validate number, member, provider, service, and date(s) of service against claims history. c. Check Clinical Appropriateness of the services provided based on clinical, case, and disease management protocols. d. Perform Prospective Payment Integrity Check. e. If state-defined business rules identify certain audits that cause a claim to suspend, and a claim fails for one or more of them, go to Alternate Path: Suspended Claim below.
  • 5. Validate National Correct Coding Initiative (NCCI) (bundle/unbundle codes).
  • 6. If applicable, apply Diagnosis Related Group (DRG)/Ambulatory Payment Classification (APC) business rules, as appropriate.
  • 7. Perform Pricing: a. Calculates state allowed payment amount by applying pricing algorithms (e.g., member-specific pricing, DRG, APC).
  • 8. Check for presence of Coordination of Benefits (COB) claim information. a. If COB is present: i. Set status to Deny claim. iii. Flag and move claim to COB file. iv. Send alert to Send Outbound Process with claim adjudication information and claim.
  • 9. Send alert to Generate Remittance Advice business process with payment information.
  • 10. Send alert to Manage Accounts Receivable Information business process with payment information.
  • 11. Send alert to Manage Accounts Payable Information business process with payment information.
  • 12. END: Send alert to Prepare Provider Payment business process for payment.
  • Alternate Path: Suspended Claim
  • 1. START: Claim has an assigned suspended status.
  • 2. Conduct Internal review a. If applicable, reviewer requests further information as an alert sent to requestor via ASC X12 277 Health Care Information Status Notification.
  • 3. Provider submits corrected information in response to an error notification. a. The claim passes the edit or audit based on additional information submitted in response to a request, such as the ASC X12 277 Health Care Information Status Notification. NOTE: The Submit Electronic Attachment business process generates this request and reviews the response to validate that the additional information submitted is sufficient to pass the edit or audit.
  • 4. If there is a favorably resolved suspended claim: a. Send alert to Generate Remittance Advice business process with adjudicated claim information. b. Go to step 7 of the Process Claim business process. c. END: Business process stops.
  • 5. If provider submits a corrected claim, process it as if it is an original claim. a. Go to step 2 of the Process Claim business process. b. END: Business process stops.
  • 6. If there is an unfavorably resolved suspended claim, send alert to Generate Remittance Advice business process with error report information. These include failures because the additional information requested for a suspended claim is not present, is inadequate or fails to satisfy the edit or audit.
  • 7. END: The SMA resolves the suspended claim.
  • Alternate Path: Third Party Liability Failures
  • 1. START: The SMA identifies a third-party resource.
  • 2. If a Cost Avoidance for third-party liability exists, reject claim for edit errors.
  • 3. Send alert to Manage TPL Recovery business process for third-party insurance recovery.
  • 4. END: Send alert to Generate Remittance Advice business process with Edit Error Report information.
Predecessor processes
Successor processes
Shared data
  • EDI Translator data store including ASC X12 Implementation Guide Validation Edits for Levels 1 through 7 Claim data store including payment, in-house claim number,
  • and Patient Account Number information
  • Provider data store including performing prospective program integrity (e.g., Healthcare Integrity and Protection Data Bank (HIPDB)) and Medicare/Medicaid sanctions information, provider network, and contract information
  • Member data store including demographics, third-party insurance information, and member-specific pricing
  • Plan data store including health benefit information (e.g., covered services, units, life-time limits, units and funding limits for authorized services, and benefit package-specific rates)
  • Reference data store including filing deadlines, code set, drug formulary, and service code formulary. Additional information includes Diagnosis Related Group (DRG), Ambulatory Payment Classification (APC), and National Correct Coding Initiative (NCCI) information
  • Authorization data store including authorization and treatment plan information
  • Rate setting data store including applicable rates
  • Claims data store including adjudication and payment history information
  • Financial data store including accounts receivable and accounts payable information
Constraints

All claim types will go through most of the steps within the Process Claim business process main flow with some variance of business rules and information. Types of claim variances include: Institutional, Professional, Dental, Pharmacy, and Waiver claims, Medicare Crossover and Medicare Part D pharmacy claims, coordination of benefits claims received from payers secondary to Medicaid (e.g., for IHS eligibles), and TPL cost-avoided claims. The business rules will conform to federal and state-specific rules and pricing algorithms. Editing, auditing, and pricing variances could exist on services billed by claim type, provider taxonomy code, service line codes, and the process may require additional information. An adjustment to a claim follows the same business process path except that it requires a link to the previously submitted and processed claim in order to reverse the original claim payment, and associate the original to the adjustment.

Failures
  • Claim submitted without all the required information.
  • Provider files claim after claim filing deadline. Other Edit Failures: Claim information has other errors. For example:
  • The SMA does not cover the service because not in health benefit, not provided in an approved facility or by an approved provider type.
  • Service is not appropriate based on member demographics.
  • Member has TPL coverage.
Performance measures
  • Time to complete the process: e.g., Real Time response = within __ seconds, Batch Response = within __ hour
  • Accuracy with which edits, audits and pricing algorithms are applied and paid amount is calculated = ___%
  • Consistency of decisions on suspended claims = ___%
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Operations Management BPT.pdf, pages 6-13.

Business Capability Model (12 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. SMA scans or manually enters claims into an electronic record format.
  2. LEVEL 2SMA uses a mix of manual and automatic processes to accomplish tasks. SMA continues to accept paper claims, but most providers submit claims electronically
  3. LEVEL 3SMA automates process to the full extent possible within the intrastate. Providers submit claims electronically. SMA adjudicates claims via standardized business rules definitions according to methodologies of the National Correct Coding Initiative (NCCI).
  4. LEVEL 4SMA automates process to the full extent possible via regional standardized business rules definitions.
  5. LEVEL 5SMA automates process to the full extent possible across the nation via national standardized business rules definitions.
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 Accredited Standards Committee (ASC) X12 837 Health Care Claim and National Council for Prescription Drug Programs (NCPDP) and state-specific standards.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards (e.g., code sets) for claim processing.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and other nationally recognized standards for clinical and interstate claim processing.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and other nationally recognized standards for national claim processing.
How integrated is the process?
  1. LEVEL 1There is little coordination between the portions of SMA responsible for claims processing.
  2. LEVEL 2SMA centralizes common processes to achieve economies of scale and increase coordination.
  3. LEVEL 3SMA fully integrates process between intrastate agencies and other entities.
  4. LEVEL 4SMA integrates process to the full extent possible across the interstate.
  5. LEVEL 5SMA integrates process to the full extent possible across the nation.
How easy is it to change edit business rules and criteria?
  1. LEVEL 1SMA embeds business rules and validations directly into the source code. Changes are difficult, lengthy, and costly to implement.
  2. LEVEL 2SMA has mix of automatic business rules definitions and embedded business rules and validation directly into the source code. Changes to edits, audits and pricing business rules results in unintended downstream processing consequences. Average change takes fewer business days than Level 1.
  3. LEVEL 3SMA automates process to the full extent possible across the intrastate. Related processes are decoupled, allowing changes to editing, auditing and pricing standardized business rules definitions without affecting downstream processes. Average changes take less time than Level 2.
  4. LEVEL 4SMA automates process to the full extent possible by using regional standardized business rules definitions. Average changes take less time than Level 3.
  5. LEVEL 5SMA automates process to the full extent possible by using national standardized business rules definitions. Average changes take less time than Level 4.
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). Manual-processing steps may require multiple business days to complete claims edits, audits, or pricing. Suspended claims require lengthy manual resolution.
  2. LEVEL 2Process timeliness improves through use of automation. Timeliness exceeds legal requirements. Electronic claim processing and Point of Sale (POS) adjudication greatly increase timeliness. The entire claim process completes within 24 hours or less.
  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. It is difficult for reviewers to consistently interpret and apply adjudication business rules manually. Attachment data is unstructured, which increases inconsistency of the review process.
  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, by intrastate agencies and entities improving efficiency to 95% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, by interstate agencies and entities improving efficiency to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, by 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 business rules engines by intrastate agencies and entities improving accuracy to 90% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and business rules engines by interstate agencies and entities improving accuracy to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and business rules engines, by 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, by 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, by interstate agencies and entities improving stakeholder satisfaction to 95% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, by national agencies and entities improving stakeholder satisfaction to 98% or higher.

Source: CMS MITA 3.0 Business Capability Model, Operations Management BCM.pdf, pages 24-31.

Other Operations Management processes

Apply Mass AdjustmentCalculate Spend-Down AmountGenerate Remittance AdviceInquire Payment StatusManage DataPrepare Provider PaymentProcess EncounterSubmit Electronic Attachment