Better Ways for Plans to Meet CMS Revenue Reconciliation Requirements


The relationship between plans and BPOs — as well as BPOs and transaction vendors — is critical when it comes to enrollment processing and revenue reconciliation. 

By: Ed Madden, Consulting Manager, Change Healthcare Consulting

As the number of experienced enrollment and reconciliation staff who support Medicare Advantage revenue reconciliation shrinks, the relationship between plans and BPOs is becoming ever more important. That’s why plans may want to consider healthcare consulting to help assess their BPO relationships. The goal is to be sure that BPOs are held accountable for CMS requirements for enrollment processing and financial reconciliation.

Medicare Advantage plans may want to consider healthcare consulting to help them pay attention to their BPO relationships and keep an eye on BPO-transaction vendor connections.

The number of experienced enrollment and reconciliation staff who help Medicare Advantage plans with their revenue reconciliation has been shrinking as the healthcare industry continues its relentless consolidation. As a result, small and mid-size plans tend to seek healthcare business process outsourcing (BPO) firms to support their revenue-reconciliation efforts.

In the past 10 years alone, the use of BPOs has noticeably increased as the number of plans seeking contracts with Centers for Medicare and Medicaid Services (CMS) for Medicare Advantage Prescription Drug Plans (MAPDs) and Dual Eligible Special Needs Plans (D-SNPs) has increased significantly.

That’s a problem, however, as plans have fewer employees who are knowledgeable about operations and the all-important handoff between the plan and its BPO or between the BPO and healthcare IT-transaction vendors.

The plan-BPO relationship is critical for the revenue-reconciliation process.

Some plans run the danger of missing the mark in terms of their revenue goals. At Change Healthcare, we recommend that plans actively assess capabilities and operational needs so they know what they need from new or existing BPO partners.

A plan should define a level of BPO accountability that meets all CMS requirements for enrollment processing and financial reconciliation and provide the data and the quarterly reporting needed for the periodic attestation. A BPO must be held accountable for common variances, including late transmission of enrollment information, retroactive payments, adjustments, residence changes, and more.

Communication between the plan and the BPO must be seamless for two key reasons: to maintain financial viability and to meet CMS compliance rules at the point of enrollment and revenue reconciliation. On the revenue side, both plans and BPOs need to work together to guarantee that the plan can maximize monthly revenue due from CMS.

Enter the BPO-transaction vendor relationship.

For a BPO to meet CMS conditions of a first-tier, downstream, or related entity (FDR), it must have seamless, secure access to the right resources to process enrollment and revenue reconciliation. That’s where the transaction vendor comes in.

Transaction vendors must identify and reconcile enrollment variances and identify payment adjustments, retroactive payments, annual and semiannual risk, and end-stage renal disease (ESRD) adjustments.

The arrangement between the BPO and the transaction vendor should contain an agreement (usually a Service Level Agreement) that lays out a clear timeline for providing results of the daily transaction reply report (DTRR) from CMS, the monthly membership report, and the monthly payment report with retroactive payments, adjustments, and variances information.

Healthcare consulting can help consider the role of key handoffs when it comes to revenue reconciliation.

The required CMS timelines for processing enrollment, communicating eligibility status to members, and reconciling payment variances must be processed within prescribed time frames. Indeed, there are four timely handoffs that must occur between all the parties:

  • The transaction Vendor and the BPO
  • The plan and the BPO
  • The plan and the member
  • The plan and CMS

These handoffs are critical. If a plan only considers the monthly revenue reported on the CMS monthly plan payment, it can leave money on the table. And, depending on the size of a plan’s enrollment, that can range from thousands to millions of dollars annually. Hence, revenue reconciliation can help find other gaps or inconsistencies.

For those plans that are considering (or currently use) a BPO, our healthcare-consulting practice recommends that plans address the following key issues:

  • Do plans have experienced and knowledgeable enrollment and reconciliation staff?
  • Is the decision to contract with a BPO cost-effective?
  • Will having a BPO on board help the plan meet its financial, compliance, and budgeting requirements?
  • For those plans that choose to outsource to a BPO, have those plans adequately stated their needs and matched them with the BPO’s capabilities?
  • What’s the track record of the BPO?
  • Does the BPO employ the right software to accurately and timely reconcile enrollment through financial reconciliation and attestation? 

How to better align expected revenue with expectations.

With the right staff, good plan-BPO connections, and a seamless BPO-transaction vendor partnership, the amount of money a plan receives from CMS may be much closer to expectations.

This is where a partner such as Change Healthcare Government Programs Consulting comes into play. Plans need experience in all areas of Medicare Advantage revenue reconciliation, including the operational structures that focus enrollment and revenue-reconciliations processes, as well as handoffs between plans and BPOs and between BPOs and transaction vendors. 

Learn more about Change Healthcare’s Government Programs Consulting.

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