What Health Plans Need to Know about Medicaid Encounter Data

By Sonya Henderson
Thu, Dec, 07, 2017

In recent years, Medicaid has put greater emphasis on requiring health plans to capture and report back more detailed Medicaid Encounter Data to the state. Unfortunately for health plans, this can be a complex internal process where things often go wrong – putting them at significant financial risk.

Today we’re taking a look at what Medicaid Encounter Data is, why it is problematic for many plans, and steps health plans can take to more effectively manage the process to reduce their risks.

Definition of Medicaid Encounter Data

An encounter refers to any care episode in which a Medicaid member sees a doctor or qualified provider and submits a claim for that visit. State Medicaid programs rely on plan-submitted Medicaid Encounter Data to determine payment rates and whether key quality of care indicators (such as whether children are receiving required immunizations on schedule) are being met. The state also uses Medicaid Encounter Data to show legislators and regulators whether the program’s goals of providing greater patient access to care within budget are being satisfied.

What Plans are Required to Do

State Medicaid programs specify in their contracts with health plans how Medicaid Encounter Data are to be captured, tagged, manipulated and sent to the state via a special data file. These contracts also specify the penalties plans may be subject to if data isn’t provided in a timely, accurate or complete manner. Typically, plans submit their Medicaid Encounter Data at least monthly.

Medicaid, in turn, provides reports back to plans indicating whether they have adequately met the data submission requirements for completeness and accuracy. Medicaid Encounter Data files are closely reviewed and compared to financial reports submitted by plans to Medicaid to confirm that the value of the services provided (encounters) is close to the value of services paid for (claims).

Financial Penalties can be Steep

Medicaid gives plans a limited “grace” window for data completeness. In some states, only a 2% discrepancy is allowable between the number of encounters your paid claim file shows and the number your encounter data file shows. Any discrepancy larger than that will subject your plan to penalties for missing data. Plans can also be fined if data submitted is otherwise incorrect or incomplete. That includes if your Medicaid Encounter Data includes information from claims that may have been miscoded by the treating physician (and that Medicaid determines should never have been reimbursed by the plan to begin with).

Penalties levied against plans for missing or incorrect data are often calculated on a per encounter, per day basis, such as $100 per encounter per day, for each day the data was incomplete or inaccurate. This can very quickly add up to hundreds of thousands of dollars, depending on the number of encounters involved and the amount of time lapsed.

Why Medicaid Encounter Data Presents Challenges for Plans

Collecting and reporting Medicaid Encounter Data presents a huge area of risk for health plans. In fact, virtually all plans we have worked with have run into significant problems with this data at some point. There are several reasons why this area is problematic:

  • To provide accurate Medicaid Encounter Data, a plan needs to be clear on all the technical requirements Medicaid specifies for the data collection and submission. Although Medicaid issues a companion guide for plans to follow, this document is not always clear or has provisions that are open to interpretation.
  • This lack of clarity can often mislead IT departments down the wrong path, causing IT personnel to misread or misinterpret how to input claims data or incorrectly set up systems for collecting and processing data.
  • Some plans may not have updated systems in place that can do the job efficiently.
  • Most plans don’t have the internal resources to regularly manage, oversee, and refine the process for data collection, interpretation, manipulation, processing and reporting.
  • As the Medicaid program has expanded, so have the number of encounters, increasing the chances for errors.

What Medicaid Plans Need to Do

The only way to reduce your risks is to do a comprehensive assessment – from start to finish --of your current internal process for converting claims data into encounter data. You will need to identify problem areas and then implement changes needed to correct them. Here are several areas you should assess:

  • Does your IT team understand the Medicaid Encounter Data technical specifications for your state’s program? Can they verify the accuracy of their interpretation of Medicaid requirements? What is the current process for capturing claims data? How is that data handed off to your IT department that develops the Medicaid Encounter Data from those claims?
  • How does your IT department create the Medicaid Encounter Data files? What information do they include from the claims files?
  • How does IT change or manipulate that information into encounter data? Can your IT people independently verify the accuracy of the information on the claims?
  • Is there a process in place for handling claim rejects? Is that process adequate?
  • How adequate or not are your current systems for handling the data workload required?
  • Do you or others in your organization have relationships with key Medicaid personnel responsible for encounter data? How good is your plan at working with them to get answers to questions or troubleshoot potential problems?

When to Hire Outside Help

It’s critical to have one person fully dedicated to examining, coordinating and managing your process in its entirety. Because most plans don’t have resources to hire a FTE for this role, tasks associated with addressing and overseeing the Medicaid Data Encounter process are often delegated internally to others. But these individuals have other full-time responsibilities, meaning no one owns the process. These individuals may also lack the technical or other expertise needed to identify and correct problem areas, or do not have a complete understanding of your state’s requirements.

If that’s your plan’s situation, then it’s best to hire an outside expert who can come in and get the job done efficiently and correctly. What you spend in one year to address this problem will more than pay for itself over the term of your Medicaid contract. You’ll also gain peace of mind.