Strategy 3
Master the Mechanics of Partnership: Billing, Operations, and Navigation
Even with robust outcomes data and readiness to engage in VBP, operational failures—particularly related to billing and documentation complexity—can quickly dismantle promising partnerships when margins are thin. MCOs provide high-quality services efficiently in resource-constrained environments. State Medicaid programs face significant ongoing challenges related to IT systems expenses, data sharing, and vendor oversight. Therefore, SSOs/CBOs must prioritize operational efficiencies and invest in billing expertise to minimize administrative burdens for their own organization as well as for their MCO partners.
In Massachusetts, the Quality and Equity Incentive Program financially rewards Medicaid MCOs and Accountable Care Organizations (ACOs) based on the completeness of their social needs data, aiming to improve quality of and access to care and to promote collaborative care. In response to this program, one ACO started screening for social needs in all affiliated primary care practices in 2023, expanding to inpatient settings in 2024, and placing Community Health Workers (CHWs) in practices to support the screening and follow-up.37
Such data collection is directly linked to billing and payment mechanics. The state’s Medicaid model contracts mandate that ACOs ensure providers include relevant ICD-10 Z-codes on claims when a social need is identified. Similarly, MCOs are required to ensure their subcontracted community partners document these Z-codes following a screening. This creates a clear, codified pathway for SSOs and CBOs to demonstrate the volume and type of social needs they are addressing. Mastering the use of Z-codes in documentation and billing is a fundamental operational skill for proving service value and ensuring financial sustainability in partnerships with MCOs and ACOs.
Simultaneously, states are making large investments in modernizing their IT systems to handle new federal mandates and improve efficiency.38 SSOs must be prepared to integrate seamlessly with these new IT systems or risk losing out on partnerships. This is particularly relevant because states are increasing contract management and oversight of MCOs.39 For instance, Virginia reorganized its oversight structure by creating an Office of MCO Compliance and Monitoring to elevate accountability and conduct a 360-degree performance review of MCOs.39 Massachusetts developed a contract management tracker to gather additional monthly data outside of normal compliance reports, using it to facilitate conversations and identify issues like approved/denied service determinations and appeals.40
SSOs/CBOs should be aware of these technology and oversight pressures. In response, they should prioritize streamlining internal documentation processes and proactively negotiate clear payment terms with MCOs to offer their services.
Ultimately, SSOs/CBOs must be prepared to invest in the administrative infrastructure necessary to navigate complex payment systems, including PMPM models, which may require significant initial outlay. Streamlining billing and documentation ensures that services are reimbursed promptly and accurately, safeguarding the financial sustainability of the partnership.
Case Study in Action: Mastering Operations to Strengthen Partnerships in California
The experience of Lutheran Social Services of Northern California (LSS)42 highlights the critical importance of operational mastery.43 LSS was an early adopter of California’s Medi-Cal Transformation, California Advancing and Innovating Medi-Cal or CalAIM, partnering with MCOs to provide ILOS like ECM and Community Supports (CS) for individuals experiencing homelessness. LSS’s services were covered under a PMPM arrangement, a payment model increasingly favored by MCOs.44
Despite the importance of this work—which accounts for 13% of the organization’s budget—LSS initially faced severe administrative challenges related to MCO payments, leading to a collection rate of just 40% of billed amounts. This low collection rate threatened the viability of the program. Recognizing that operational inefficiencies could undermine their partnership, LSS made a strategic investment in July 2023 by hiring a billing firm. This external expertise was used to streamline documentation and ensure proper reimbursement, quickly resolving the administrative backlog and resulting in a major improvement: the collection rate jumped to over 75% of billed amounts.45 This successful intervention demonstrates that technical competence in billing and documentation is a competitive advantage and a crucial component of long-term partnership resilience.
Actionable Steps for Members
To master the mechanics of partnership, members must:
- Invest in Billing Expertise: Either develop robust internal expertise or hire specialized billing firms to efficiently navigate the complex MCO pre-authorization, documentation, and claims submission processes unique to Medicaid managed care arrangements (like ECM and PMPM structures and billing for Z-codes).
- Streamline Documentation: Proactively develop streamlined documentation processes that minimize duplication and ensure necessary information is consistently captured, avoiding the pitfalls of system complexity. This includes identifying and documenting overlapping populations, like those covered by Medicaid managed care, and providing them with an appropriate scope of services that can be reimbursed.
- Negotiate Clear Payment Terms: Proactively negotiate clear, detailed payment terms and performance metrics with MCOs to establish predictability and financial sustainability for the services provided.