An MCO’s Roadmap to Continuous Compliance: 3 Adjustments to Make


As MCOs contend with more federal and state-level regulations, below are a few adjustments leaders can make to ensure compliance while Medicaid enrollees increase.

As COVID-19 continues to disrupt the economy and keep many out of work, and Medicaid expansion continues across the country, states must prepare for new strains on the Medicaid system.

According to a recent report from the Urban Institute, states that are expanding Medicaid can expect more than half of the people who are newly unemployed to join plans. In non-expansion states, one-third of those who lost employer-sponsored health insurance are likely to become eligible for Medicaid. As enrollees increase, Managed Care Organizations (MCOs) will be put to the test, especially when it comes to ensuring submitted encounter data are compliant, timely and accurate.

The healthcare industry often discusses encounter management in terms of risk adjustment and Medicare Advantage, but the reality is MCOs are under more intense encounter scrutiny than ever before, from the Office of the Inspector General (OIG) and even more so from state-level regulators’ compliance standards.

The OIG announced a planned study by 2021 of three to five states to determine if states had the required elements and steps to ensure that managed care encounter data is accurate and complete. The risk of noncompliance can be costly to the state (which could lead to reductions in Medicaid funding) as well as the MCOs themselves in the form of state-levied financial penalties.

As MCOs contend with more federal and state-level regulations, below are a few adjustments leaders can make to ensure compliance:

  1. Stay nimble. “One size fits all” is not the right approach.
    While non-state-specific encounter management solutions might sound appealing to MCOs, implementing them can mean more issues down the line. Throwing services dollars at broad solutions to make them meet a specific state’s standards is not only a waste of resources, but risks rendering the entire system null as one change to these tightly architected, customized solutions can break multiple elements down the line.

    In addition, as MCOs are contending with shorter timeframes to make adjustments, the need to stay flexible is paramount. Some states may only give MCOs 60 days (as an example) to make a major adjustment to their encounter submission strategy, and the fines for failing to comply can be steep. Large fines can also be charged for failure to submit encounter data in the required form or format each month.
  2. Embrace change. New care models provide opportunity for innovation and better care.
    As the healthcare industry shifts towards a value-based care model, encounter data has become even more crucial, providing information much like the claims data in a fee-for-service model. This data provides a wealth of information on patients, and forward-thinking health plans would be wise to tap this source.

    Concurrently, the patient access component of the new CMS interoperability rules states that managed care plans must have the ability to serve up encounter data to members in a specific timeframe. Having accurate data to complete these asks within the given timeframe will mean less hassle later on.
  3. Invest in proven strategies. Consider which resources are needed.
    When considering a technology partner, MCOs should choose one that has deep domain expertise at the state level and attends the state calls where changes and timeframes are handed down.

    MCOs need a plug and play solution that can be catered to each state, adjusting quickly to new state regulatory mandates, and a team that can work quickly and ensure continuous compliance. Now is not the time to experiment - when MCOs devote significant resources towards compliance that then miss the mark, they must work quickly to become compliant and make up for time lost while still being subject to penalties.

In the midst of widespread unemployment and continuous expansion to state Medicaid systems, MCOs are falling under increased scrutiny by both state and federal offices. Keeping these three elements in mind can mean the difference between struggling to update sub-optimal systems and being subjected to non-compliance penalties, and enjoying business continuity and continuous compliance.

Aaron Fulner is senior director at Edifecs focused on insurers involved in commercial, managed Medicaid, Medicare Advantage, and dual eligible programs.

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