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Background

 With the introduction of Patient Protection and Affordable Care Act, Health Insurance industry needs to go through a series of changes to meet the rules and regulations set forward by the act. Payments from various government agencies such as Advanced Tax Premium Credit (APTC) or Cost Sharing Reduction (CSR) from CMS and regular Premium Payments from State Exchanges are sent to the individual carriers in EDI 820 format. The Carriers are not only responsible for accurate posting of these payments to the Shop or Individual account, but also responsible to report any discrepancies to State and CMS and reconcile such discrepancies.
    
This “Payment Processing and Financial Reconciliation System” is designed to automate the process of financial transactions among the State, CMS and Carriers. This system will provide an accurate timely processing of various payments from State and CMS, produce financial discrepancies and reconciliation reports, thereby enabling both carrier and government agencies to automate the financial bookkeeping process specifically for Affordable Care Act provisions.

Objective

Payments Processing And Financial Reconciliation Process

The objective of Payment Processing and Financial Reconciliation project is to focus on the automating the State and Federal Payment processing for Premiums, Advanced Tax Premium Credit (APTC) and Cost Sharing Reduction (CSR) and provide a financial reconciliation process. This initiative will bring in efficiency, accuracy and faster payment processing and reduction in financial transaction errors. Due to the various subsidies and complexity of subsidy calculation, this financial transactions and reconciliation process is very critical to success of the implementation of this Affordable Care Act. Two primary subsidies are -

–    Advanced Premium Tax Credit: Household income between 100 and 400% of federal poverty (FPL) are eligible for Advanced Premium Tax Credit (APTC). This can be applied to all Individual Market plans sold through the Exchange. This credit helps pay premiums for individuals and their spouse or dependents with a household income between 100 and 400% of federal poverty level (FPL), who are not eligible for affordable minimum essential coverage from an employer.

–    Cost Sharing Reduction Subsidy: Household income between 100-250% of FPL (up to 300% for Native Americans) is eligible for Cost Sharing Reduction Subsidy (CSR). CSRs make using coverage more affordable by reducing the member’s out of pocket expense

To get subsidies, the household must enroll through the Exchange and not be eligible for affordable minimum essential coverage from an employer.
In addition to that, the state exchanges will collect the premiums from Individuals and Shops, and send those premiums over to the carriers through EDI 820 transactions.

   
The benefits and objectives of the project are as follows:

•    Systematic financial transaction exchange between the carriers and government agencies such as State Exchanges and CMS.
•    Accurate and Timely processing of premium there by reducing the probability of undesired delinquencies.
•    Faster financial reconciliation and recovery.
•    Easy audit and error handling.

Scope

Payment Processing and Financial Reconciliation System

For the Payment Processing and Financial Reconciliation System project to meet its goals and objectives, the following must be achieved and are considered as in scope –
•    Provide ability to automate posting of payment information at Individual Member enrolled in a Direct Pay group or as a member of a Small Business Health Options Program (SHOP) group.
•    Accept output formatted payment data file in 820 EDI format containing all the required data elements.
•    Apply the business rules required for payment posting at Individual Member enrolled in a Direct Pay group or as a Member of a Small Business Health Options Program (SHOP) group.
•    Create output formatted data file containing all the required data elements to be fed interface for Payment posting at Individual Member enrolled in a Direct Pay group or as a member of a Small Business Health Options Program (SHOP) group.
•    Generate Discrepancy report for Members and SHOP for Monthly payment activity.
•    Generate Negative Payment report for members with Negative Payment / APTC information.
•    Reconcile Payment received with the payment receivable in carriers billing system and generate the premium, APTC and CRS reconciliation reports.

System Architecture

I.    Interaction between EDI820 and Mercator Application

The new software developed in JCAPS will be responsible for editing and formatting the 820 EDI transactions invoked via the State Exchange or CMS and generating 999 EDI acknowledgement transactions in response. 
The new Interface software will perform editing based on business rules defined in the 820 Companion Guide and format a 999 EDI Acknowledgement transaction with results of the 820 file received.  The 999 transaction will provide details on what errors caused any rejected Transaction Sets and which Transaction Sets were accepted. A new formatted output file out of the 820 process will need to be defined and created.   This file will then be used as input into the AI (Application Integration) for further processing.  A complete description of all new data elements created for the SBE and the mappings to the internal format is contained in the attached Excel entitled Internal Format HCR.  

II.    Interaction between  EDI Interface and Payment Interface

The payment posting process will read the EDI 820 formatted data file received from EDI Interface and process for payment posting.  The payment posting process will process the formatted file based on the business rules defined under Application Business Logic for payment posting for Individual and SHOP exchange members.  


For the individuals and SHOP exchange members with unmatched and unidentified data, Discrepancy report will be generated to be consumed by the client for further processing and reconciliation.  Discrepancy report will be generated based on the Business rules defined under the Application Business Logic for Discrepancy Report


For the member record with negative payment / APTC payment, a Negative Premium Report will be generated. Negative payment is positive payment information which will be related to either refund or adjustments. This is a new report to be consumed by client for further reconciliation. Business will decide whether to issue a refund or do an adjustment, and take the action manually. Application Business Logic Negative Premium Report


For a member with a Payment type not “APTC” a Federal CSR data report will be generated with the same format of negative report. This is a new report to be consumed by client for further reconciliation. Application Business Logic Federal CSR data


A new formatted output file out of the 820 process will need to be defined and created.   A complete description of all new data elements created for the SBE and the mappings to the internal format is contained in the attached Excel entitled Ouput Format HCR001. 

820 Issuer Inbound Payment Architecture

Message Format

Source File
1.    Inbound EDI 820 premium payment formatted data file from Mercator application containing all the data elements.

2.    Inbound EDI 820 premium payment formatted data file from Mercator application will be in fixed length file format.

3.    There will be 1 premium payment formatted data file received from Mercator application for State Based Exchange.

4.    There will be 1 premium payment file containing Tax Subsidy received from Mercator application for Federal Exchange.

5.    Inbound EDI 820 premium payment formatted data file from Mercator application will have multiple data record for members of Individual and SHOP members.


 
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