States face deadline for Medicaid computer interface and submission of encounter-level data to HCFA

But feds take tolerant view of technological, administrative hurdles

States and the Health Care Financing Administration (HCFA) are steeling themselves to meet a Jan. 1 deadline for submitting Medicaid data in a format consistent with the federal Medicaid Statistical Information System (MSIS). It’s a deadline the Health Care Financing Administration knew would be tough for everyone to meet.

"It simply takes a while to get the systems working together correctly," says Sue Dodds, a senior researcher with Princeton, NJ-based Mathematica Policy Research.

Despite the looming deadline, only about 30 states are in compliance with the MSIS requirement, says Rachel Block, acting deputy director of HCFA’s Center for Medicaid and State Operations.

"We view this as sort of a rolling implementation effort for next year," Ms. Block says. "Until now, it’s been a voluntary system. The first thing is to get all the states in, and that takes some work, particularly for states that had not participated before. The second part is to figure out how encounter data fits into that system."

The Balanced Budget Act (BBA) of 1997 requires that states submit encounter-level data, beginning with claims filed on Jan. 1, 1999. The requirement particularly affects states providing Medicaid services through managed care contracts.

"The encounter data really requires a lot more work for us and also for the states. That’s another reason why I think it’s going to take a little while before we have a complete approach to encounter data collection through that system," Ms. Block notes.

A proposed rule would require states to require their health plans to have an information system that describes utilization, grievances, disenrollments, solvency, and other areas. HCFA also wants health plans to submit enrollee and provider-level data to states through an encounter data system or some other mechanism.

There are enormous bureaucratic and technical problems to be overcome before states can collect and submit encounter-level data from managed care companies. Even the adoption of sophisticated decision support systems in the past few years has not always helped state Medicaid programs break through the data firewall that separates them from such information. Because states typically pay for managed care services on a capitated basis, they do not always have easy access to encounter-level Medicaid managed care information that is collected at the plan level.

Managed care a roadblock

For example, an 18-month-old decision support system in the Georgia Medicaid program provides unprecedented access to information on the utilization and costs associated with virtually all of the state’s 1.2 million Medicaid recipients. It’s possible in part because Georgia’s managed care population is only a "tiny" portion—20,000 recipients—of the Georgia Medicaid population. Encounter-level managed care information remains beyond the scope of Georgia’s Medicaid program.

"To get these encounter claims into a format [our software] can use would require us introducing an additional third party, whoever is processing these claims, or perhaps receiving them from our HMO providers," says Phil Harris, statistics team leader in Georgia’s Medicaid program. "It creates the potential for a lot of confusion, so we’re having to approach it very carefully."

Getting good encounter-level data requires more than making it a contractual requirement, says Shelby Solomon, senior vice president and general manager of Lansing, MI-based MedStat, which installed Georgia’s system. Mr. Solomon recalls that in the early days of Tennessee’s Medicaid managed care implementation, many health plans ignored a contractual requirement to supply encounter-level data, finding it more economical to pay hefty fines instead.

Instead, health plans and states should work together prospectively to develop systems that provide data at the level of detail needed for programming planning and analysis, says David Pedersen, a director in First Consulting Group’s Chicago office.

"The struggle is that many of these [health plans] who took on capitated risk did so not anticipating that they would have to bear the administrative cost of capturing and maintaining and forwarding encounter-level, claim-level data to these state organizations," says Mr. Pedersen, who leads First’s health plan lines.

Instead of requiring massive amounts of potentially unusable data, HCFA should narrow the requirement to a few "critical" areas of concern, says Donna Checkett, chief executive officer of the Missouri Care Health Plan in Columbia.

HCFA officials point out that states can use strategies in addition to encounter-level data to provide the descriptive statistics on Medicaid managed care as required in the proposed rule.

"Although encounter data is certainly one method by which states and health plans could comply with the BBA requirements, it’s not the only one," Ms. Block says.

Furthermore, the lack of encounter-level data is a "limitation," but getting it is not the be-all-and-end-all to managing Medicaid programs, says Mathematica senior fellow Marsha Gold.

"It is a limitation, but if you solve that, you still wouldn’t have gone the full route to figuring out how you oversee the system and what you do with the data," says Ms. Gold, who has studied Medicaid managed care extensively.

She cautions that a more pressing need is to develop the appropriate "analytic infrastructure" to recognize and explore the issues that will improve the quality and delivery of care.

Contact Ms. Dodds at (805) 964-6548, Ms. Gold at (202) 484-9220, Ms. Block at (410) 786-3870, Mr. Harris at (404) 657-5763, Ms. Checkett at (573) 441-2100, and Mr. Pedersen at (312) 706-0200.