Top 3 Issues Faced by Medicaid Managed Care Organizations

Feb 16, 2021

What can your Medicaid MCO do to prepare for this year and beyond?

Medicaid managed care organizations are continually in a balancing act, facing tighter-than-average budgets, political pressures, and an evolving, uncertain healthcare landscape. But the COVID-19 public health emergency and related economic downturn took these issues to new levels. Enrollment increased significantly in 2020 after several years of declines and is expected to continue to rise through 2021. At the same time, state fiscal conditions are shaky and worsening.

In this environment, how can these payers continue to serve their vital role as a healthcare safety net for members while maintaining their provider network and protecting their margins? Here are 3 trends affecting Medicaid MCOs along with solutions to mitigate their impact.

1. Balancing Claims Payment Accuracy and Provider Relationships

Left wondering how to balance benefits coordination and timely claims payments to providers? You’re not alone. Managing this careful balance, which must take many factors into consideration while keeping providers happy, can prove tricky.

Failures of MCOs in some states have served to highlight just how precarious this issue can be. As this article puts it, “The backbone of any managed-care program begins with your provider network. Keeping them happy and paying claims on a timely basis is critical.”

Solution: Improve payment accuracy while minimizing provider abrasion

MCOs are looking for a better, more technology-driven way to coordinate patient benefits. Advanced software platforms can streamline data and reduce the Medicaid improper payment rate. These platforms, such as Pareo, offer Medicaid managed care organizations an integrated approach to payment integrity through a software-as-a-service (SaaS) model.

Additionally, these technology solutions should support real-time communications between payer and provider. This functionality can help ease the administrative burden and foster trust with providers. Realizing improved recoveries and improving provider relationships is a fiscally-sound move that a MCO cannot afford to overlook.

2. Ensuring Proper Capitated Payment Rates

Per member per month rates paid to Medicaid MCOs must be “actuarially sound.” Meaning, these rates must be “sufficient for a health plan to meet its obligations to its population, taking into account all necessary cost including patient care and necessary administrative costs, and the need to maintain reserves for high-cost years.”

Certifying these rates requires detailed documentation, essentially defined as improved transparency into the managed care organization capitation under Medicaid. But data issues run rampant. Inaccurate encounter data, MCO reported costs that are not allowable, overpayments that are not adjusted, and data that do not reflect changes in care delivery practices that have affected MCO costs can all result in inaccurate capitation rates. Especially when events like public health emergencies introduce cost uncertainties.

2020 final rule

To mitigate this complexity, CMS released an update to the “2016 final rule” for Medicaid MCOs that took effect in December 2020. While these updates didn’t rise to the level of a full revision, several changes to rate setting and payment are worth noting:

  • States can set capitation rate cell ranges – 5% or +/-2.5% from the midpoint – instead of a single rate per cell.
  • States can’t vary capitation rates based on the amount of federal financial participation for a covered population in a manner that increases federal costs.
  • States that use a single rate per cell can adjust certified capitation rates within a rating period by +/-1.5% without re-submitting to CMS.

Solution: Ensure complete data that accurately reflects costs

States face the uneasy position of paying provider’s rates that are high enough (the failure to do so brings its own set of adverse reactions) while not wasting taxpayer money, a balancing act that can leave MCOs caught in the middle. In fact, experts have recommended states revisit their payment rates to balance the uneven effects of COVID-19. Namely, enrollment increases and low care utilization combined with unanticipated testing and treatment costs.

Let’s consider the ways that data insights could prove beneficial to MCOs in this process. Specific data is required in order to certify a rate as actuarially sound. Plans that have full visibility into their payment data, as well as access to analytics, advanced predictive modelling and closed-loop reporting on overpayment recoveries, can be more confident in the documentation they provide. In turn, states can better ensure capitated payment rates are adequate and appropriate.

3. Mitigating Funding Cuts

There has been no shortage of questions surrounding the future of the ACA and, for MCOs, the future of funding for Medicaid. Repeated challenges to the ACA have so far proved unsuccessful. But, in 2020, some states took drastic steps to overhaul their Medicaid programs. Most notably by introducing work requirement waivers and block grants.

However, there are signs the current administration takes a different view on these issues, a move which has the support of industry organizations. “ACAP supports Medicaid modernization, so long as it follows certain key principles—that it covers all Medicaid enrollees equitably and provides state budget writers with certainty.”

Solution: Maximize cost avoidance and recovery efforts

Because states must balance their budgets every year, it is all too easy to propose cuts to Medicaid enrollment and services. Now more than ever, MCOs must prove they are good stewards of the public dollar. A comprehensive technology platform that integrates data streams and cross-functional activities eliminates gaps while reducing administrative complexity. Ensuring that a managed care organization has good data and strong payment integrity will help make any financial cuts more navigable.

It’s Time for Medicaid MCOs to Innovate

With today’s uncertain healthcare landscape – brought on by COVID-19, policy changes, and jumps in enrollment – Medicaid MCO programs face increased scrutiny. Add in resulting tighter margins, and relegating your payment integrity and FWA efforts to “just enough for compliance” will no longer suffice.

So, how can your organization prepare for this year and beyond? Think progressively. Health plans have achieved success and improved returns by utilizing payment integrity technology platforms like Pareo. And its flexible outsource-to-insource capabilities make it an ideal fit for organizations with limited resources.

Coordinating patient benefits, ensuring proper payment, communicating with providers, utilizing data effectively and maximizing limited resources are some of the key ways that your MCO can advantageously plan for the future.

Now’s the time for total payment integrity

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