Calculating Medicaid capitation payments can be a complex process incorporating several factors. Age, health conditions, geography, provider network, gender, and more can play a role in calculating the Medicaid capitation rate.
Any discrepancy in those factors between a managed care organization’s (MCO) data and state data can lead to a payment discrepancy. By reconciling payments against enrollment data, MCOs may recapture a significant amount of lost revenue.
But for many MCOs, that process may be time-consuming, manual, and prone to error. Some MCOs may have partially automated the reconciliation process, but with incomplete or inaccurate data. Worse still, many MCOs may fail to reconcile payments entirely, finding the effort to build a solution or manually reconcile payments not worth it.
But reconciling Medicaid capitation payments is worth the effort if you can automate the process with technology. In brief, Certifi’s Medicaid capitated payment solution ingests rate and enrollment data to generate expected transactions, then compares those transactions to actual payments to identify any discrepancies.
Here are four benefits of automated Medicaid payment reconciliation:
Manual processes waste time and often introduce human error. Trying to compare expected payments with actual payments manually is not different. Realistically, MCOs manually performing payment reconciliation aren’t fully reconciling payments. They likely review a small percentage of their actual payments.
But even those manual attempts at reconciling a small percentage of payments take time. That’s time you can save by automating the reconciliation process, so your staff reviews payment discrepancies instead of all payments.
Improve Payment Accuracy
MCOs reconcile payments primarily to ensure accurate payments for every Medicaid beneficiary. Humans perform manual processes, which may introduce additional errors – perhaps wrongly identifying a payment discrepancy. That error can lead to more manual work.
Automating Medicaid payment reconciliation with software eliminates that human error element. Though often overlooked, the human element can introduce significant errors.
But the primary issue isn’t humans performing the reconciliation. Failing to perform a complete reconciliation can be costly. One MCO we talked to estimated not reconciling payments cost them anywhere from $3 million to $5 million annually.
Automating your reconciliation process has costs, but if you’re losing $3 million to $5 million annually by failing to reconcile payments, automated Medicaid payment reconciliation offers significant ROI.
Uncover Enrollment Data Errors
Often, payment mismatches occur because beneficiary data differs between the state and the MCO. These differences – a different age, health status, or location, for example – can impact the payment made to the MCO. The process of identifying mismatched payments may uncover those data errors.
For example, assume the capitation payment for a pregnant woman is more. Jane Doe is in a pregnancy cohort in your system but does not exist in the state system due to a data error. As a result, you receive a smaller-than-expected payment based on her health status. Your reconciliation uncovers this payment discrepancy. You can fix the enrollment data as a result.
Improve the Beneficiary Experience
In the example above, inaccurate enrollment data could lead to negative beneficiary experiences. By reconciling payments, you likely uncover these data errors earlier, limiting the opportunity for a poor beneficiary experience. It’s one of the often overlooked benefits of automated Medicaid payment reconciliation.
Take the case of a subsidiary of a large Medicaid MCO that a state fined $9 million and paused new enrollments in 2022. One of the issues: Some Medicaid members didn’t exist in the MCOs system after it merged with another MCO. That data error also led to the MCO failing to make payments to providers, some of whom stopped providing care for beneficiaries, which included disabled children.
Reconciliation may have enabled the MCO to identify the missing data earlier, enabling it to provide corrective actions sooner. Instead, the company faced a significant fine and a public relations nightmare.
Certifi’s William™ platform helps managed care plans reconcile Medicaid capitated payments, recapturing lost revenue and ensuring accurate payments.