Business Process Details
February 2012
Version 3.0
Page 1 of 3
FM Accounts Receivable Management
Manage Cost Settlement
Item
Details
Description
The Manage Cost Settlement business process begins with the submission of the
provider’s annual Medicare Cost Report to Medicaid. Staff makes inquires for paid,
denied, and adjusted claims information in the Claims data store. The business
process includes:
Reviewing provider costs and establishing a basis for cost settlements or
compliance reviews.
Receiving audited Medicare Cost Report from intermediaries.
Capturing the necessary provider cost settlement information.
Calculating the final annual cost settlement based on the Medicare Cost
Report.
Generating the information for notification to the provider.
Verifying the information is correct.
Producing the notifications to providers.
Establishing interim reimbursement rates.
NOTE: In some States, the State Medicaid Agency (SMA) may make cost
settlements through the Apply Mass Adjustment business process.
Trigger Event
Environment-based Trigger Event:
Receive provider costs from claims history data store.
Receive Medicare Cost Report.
Prompt for annual provider cost review.
Result
Alert sent to notify provider of cost settlement information.
Alert sent to Manage Accounts Receivable Information business process to
monitor for payment.
Alert sent to Manage Rate Setting business process of interim reimbursement
rates.
Tracking information as needed for measuring performance and business
activity monitoring.
Business
Process Steps
1. START: Receive Medicare Cost Report from provider.
2. Request annual claims detail information.
3. Review provider costs.
4. Establish a basis for cost settlements or compliance reviews.
5. Receive audited Medicare Cost Report from intermediaries from Receive
Inbound Transaction.
6. Receive provider cost settlement information from Receive Inbound
Business Process Details
February 2012
Version 3.0
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FM Accounts Receivable Management
Manage Cost Settlement
Item
Details
Transaction.
7. Capture the necessary provider cost settlement information.
8. Calculate the final annual cost settlement based on the Medicare Cost Report
and prorate for Medicaid services.
9. Establish interim reimbursement rates.
10. Generate cost settlement information identifying the amount of overpayment or
underpayment and the reimbursement rates the SMA would consider for the
next year.
11. Verify the information is correct.
12. Send alert to notify providers of cost settlements summary information.
13. Send cost settlement summary information to providers via Send Outbound
Transaction.
14. Send alert to monitor payment activities to Manage Accounts Receivable
Information (if overpayment) or to Manage Accounts Payable Information (if
underpayment) business processes.
15. Send alert to conduct retroactive modifications to Apply Mass Adjustment
business process.
16. END: Send alert of interim reimbursement rates to Manage Rate Setting
business process.
Shared Data
Claims data store including payment information
Provider data store including provider network and contract information
Financial data store including accounts receivable information
Cost log information sent to Centers for Medicare & Medicaid Services (CMS)
Predecessor
Receive Inbound Transaction
Successor
Send Outbound Transaction
Manage Provider Communication
Manage Accounts Receivable Information
Manage Rate Setting
Apply Mass Adjustment
Constraints
Cost Settlement information will conform to CMS and state-specific reporting
requirements.
Failures
This process has no failure modes that prevent the process from completion.
Delays are the result of delays in the audited Medicare Cost Report.
A provider may file a grievance if it does not agree with established rates or
Business Process Details
February 2012
Version 3.0
Page 3 of 3
FM Accounts Receivable Management
Manage Cost Settlement
Item
Details
settlement amounts.
Performance
Measures
Time to complete the process = e.g., ___ months, ___ weeks or ___ days
Accuracy with which the SMA applies Cost Settlement rules = __%
Consistency with which the SMA applies Cost Settlement rules = __%
Number of grievances or protests received = __
Error rate = __% or less
