Every state is looking to curb its 2020 Medicaid spending, even as it designs healthcare programs tailored to its unique population. Now, states can file Section 1115 waivers seeking “Healthy Adult Opportunity” (HAO) block grants. And hospitals, health systems and medical practices must brace for the potential impact on their revenue cycles.
Successful HAO grant applicants would be freed from many of the usual federal eligibility standards, thus gaining extensive flexibility in how they spend their federal Medicaid dollars to care for a limited population. With that money they could provide Affordable Care Act (ACA) coverage to adults 65 and older who previously did not qualify for a state plan because of disability or a need for long-term care. In exchange for this flexibility, participating states would have to work within a defined budget while being held accountable for results and quality improvement.
The HAO initiative, announced January 30, 2020, by the Centers for Medicare and Medicaid Services (CMS), is promoted as ensuring transparency and integrity. With an emphasis on transparent value-based care, it presents opportunity as well as challenge for all involved. As states consider participation, healthcare industry leaders would be wise to develop new best practices.
The HAO initiative, like work requirements for Medicaid eligibility, is an example of a restrictive approach to cost containment: Funding is limited, in HAO’s case by either an aggregate or a per-capita cap. For providers relying on Medicaid reimbursement, that means increased revenue cycle challenges.
Providers in a block grant situation are forced to compete for their share of a fixed amount of money. This adds pressure in terms of compliance: demonstrating that claims are accurate, clinical documentation is sound, billing codes are correct. It also can complicate areas ranging from patient intake and eligibility verification to claims processing.
Should your state go to a block grant situation, there are steps your organization can take to increase its ability to adapt.
1. Know the facts. Revenue cycle managers in a capitated payment plan must stay informed on plan specifics, such as services covered and not covered, and base their budgets on reliable information. Informed use of analytics tools can help paint a clear picture of patient populations, identifying care gaps and inefficiencies. Technology upgrades help to capture the information and share it with others who need to know. Meanwhile, hospital systems operating across state lines must contend with varying rules in different states. This requires a fresh set of core competencies, with state-specific expertise informing decisions in many cases.
2. Know the people. Understanding the demographics of a particular patient population is essential to success under a capitated payment model. Revenue cycle managers need timely access to data in categories such as population, age, sex, insurer, plan utilization rates and risk adjustments. Analytics can be used to sort patients and generate reports.
3. Know the cost. Under today’s value-based care models, tracking is more essential than it’s ever been. Precise tracking helps an organization stay informed and connected on its spending and on quality improvement progress. Easy-to-access data can streamline, and increase the accuracy of, billings and payments.
The common threads here, in addition to money, are information and communication, with precision essential to both. Beyond the broad steps above, training and communication loom large. Staff must be kept in the know on the latest requirements, and be trained to ensure precise clinical documentation, bill coding and more.
As the Kaiser Family Foundation points out, block grants have been debated in the past—during the Reagan administration, for example, and the 2017 ACA repeal-and-replace debate. But Congress did not enact these proposals. Now, the forecast is far from clear. Court challenges are likely. Patient and physician groups have cautioned that the block grants could result in cuts to eligibility and benefits for those covered under Medicaid expansion.
Could the Healthy Adult Opportunity block grant come to your state?
Whatever happens, healthcare providers will inevitably be forced to grapple with a more complex revenue cycle. As a top executive or revenue leader, you’ll need to answer hundreds of questions about costs and outcomes in order to get paid. Parallon can bring you up to speed on upgrades to make your revenue cycle processes more effective. We also can advise you on the competencies, skill sets and technologies you’ll need to maintain your Medicaid cash flow.