Claim denied.
These words can be a consistent source of frustration for healthcare revenue cycle managers. In some cases, they signify reimbursement that might not be received for services provided — in others they represent a patient’s inability to receive medically necessary care. Neither of these outcomes is desirable, but what can you as a revenue cycle manager do about it?
Denial of care or coverage often results from prior authorization. Health plans wield this tool for the stated purpose of managing care, preventing unnecessary or unproven treatments, and controlling costs. Although those are valid goals, the use of prior authorization has drawn increasing criticism and scrutiny, including from Congress. Some have questioned whether the health plans, in particular Medicaid Managed Care Organizations (MCOs) and Medicare Advantage (MA) plans, are providing the care they are legally responsible for providing.
Patients experience worse health outcomes when they cannot get the care they need. And the financial health of hospitals and other healthcare organizations suffers when they do not get paid for care they have provided. But what is the remedy?
For revenue cycle managers, this is confusing territory to navigate — even more so when patients in Medicaid MCOs seek care outside their home state. Let’s take a closer look at the issue.
Medicaid MCOs and MA Plans: Similarities and Differences
Both Medicaid MCOs and MA plans are offered through insurers that have been contracted to manage care for a specified population. Medicare, run by the Centers for Medicare & Medicaid Services (CMS), is federal health insurance for anyone 65 or older, as well as those with qualifying disabilities or conditions. Medicaid, which helps cover medical costs for certain people with limited income and resources, is available through a federal-state partnership. While CMS oversees Medicaid and has general rules that all state programs must follow, each state runs its own program, establishing its own eligibility requirements and coverage and paying MCOs a set monthly amount for each enrollee.
Both types of plans might have rejected care that was medically necessary, investigators say. A recent study, however, found such refusals were much more prevalent under the Medicaid plans, which denied 1 of every 8 claims (12.5%), more than double the 5.7% rate of MA plans.
Given that hospitals received 13.5% of their reimbursement — or $141 billion in net revenue — from Medicaid in 2021, you cannot afford to overlook this revenue source. But collecting payment can be extremely tricky. Under the federal-state partnership, each state has the authority to limit or expand its own program, as long as it complies with established CMS requirements for service delivery, quality, funding, and eligibility standards. This coverage, like other insurance, travels with the patient. But if your hospital or provider group has not enrolled with the patient’s home-state Medicaid agency, the billing process can be complicated, hindering your ability to collect the appropriate reimbursement.
When Prior Authorization Denials Happen
Even when doctors deem treatment medically necessary, a Medicaid MCO can issue a prior authorization denial of coverage for various reasons, including:
- Differences in coverage from one state to another. Medicaid benefits fall into two broad categories: mandatory and optional. States can decide whether to cover benefits such as clinic services, dental services, physical and occupational therapy, and prescription drugs, to name a few.
- Differences in requirements from one state to another. Patient enrollment, eligibility, and other requirements can vary widely. Some states have decreased their Medicaid populations, while others have expanded theirs.
- Provider’s failure to complete periodic revalidation with a program. Your organization must re-enroll annually with an out-of-state agency. In addition to avoiding expiration or deactivation, this also ensures compliance with program requirements. Organizations can choose which out-of-state Medicaid agencies it makes sense for them to enroll in.
- Limited oversight of denials and appeals by states. Many states do not routinely monitor denial decisions to determine whether they are clinically appropriate.
Enrollees in both Medicaid MCOs and Medicare Advantage plans can appeal denials, but those in the latter group have more recourse. The upholding of an MA denial automatically triggers an independent external medical review, and an enrollee has two other layers of appeal available after that. Medicaid enrollees, on the other hand, have only one other option for appeal: what is known as a state hearing.
What Revenue Cycle Managers Can Do
One proactive step you can take is to be diligent about re-enrolling each year with every
out-of-state Medicaid agency whose enrollees their organization is likely to treat. A good place to start would be agencies in bordering states and in states from which one’s organization has historically seen significant numbers of patients.
Once you have done this, you can turn your attention to becoming familiar with the coverage and requirements of Medicaid MCOs in as many states as you deem relevant — that is, if your organization has sufficient workforce and know-how to handle these functions in-house.
Finally, it would be useful to know the history of Medicaid, understand the nuances of
out-of-state guidelines, and stay current on the continuous changes from state to state. That can be a full-time job in itself!
Because of the major investment of time and expertise required to manage out-of-state Medicaid claims, many revenue cycle managers choose to write off these claims rather than try to stay on top of the varying rules from state to state. But, as we’ve discussed, this can result in large amounts of potential revenue being left on the table.
Another option is to outsource your out-of-state Medicaid claims. Engaging with the right partner for complex claims can help you simplify out-of-state Medicaid enrollment, reduce out-of-state Medicaid authorization denials, maximize operational efficiency, and improve your organization’s financial health and well-being.
EnableComp, with more than 20 years of complex claims experience, possesses a deep understanding of this niche class of reimbursement. We successfully enroll, validate, check eligibility, bill, and obtain reimbursement for providers in all 50 states. With an average 3:1 ROI, our clients often see an increase of over 50% in out-of-state Medicaid payments.
Learn More
For more information on this and related topics, see our white paper “Navigating Out-of-State Medicaid & Getting Paid for Claims: The Essential Guide for Chief Revenue Cycle Officers,” available here. Or contact us to find out more about what we can do for you.
