The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


Health Plans: Choose Your Initial Validation Audit Vendor Wisely

By Truven Staff

For health plans, the time to select an initial validation audit (IVA) vendor is drawing near. Selecting a qualified vendor should be a thoughtful and informed process. If the audit shows a plan’s EDGE data are not valid and have risk score-impacting errors, the Centers for Medicare & Medicaid Services (CMS) may act to scale down the plan’s premium risk transfer payments, which may incur negative results for the plan’s financial performance. As a CMS-accepted IVA entity, we’ve been partnering with health plans to meet this requirement since the law was implemented.

CMS developed IVA requirements to help ensure that accurate and complete membership and risk adjustment information is submitted by health plans to the EDGE servers for eventual payment transfer calculations. According to the regulations, qualified commercial health plans must have an independent auditor with certified coders review medical records for 200 random members (or less if the Finite Population Analysis applies to the issuer) selected by CMS and must validate the enrollment and the diagnosis codes submitted. The deadline to select a vendor for this year is April 28, 2017.

 Medical records review is a critical part of the validation process, so health plans should consider experience and certification when selecting a vendor. Some other important qualities to look for in an IVA vendor are:

●      Deep knowledge of ACA regulations. A vendor should have a history of monitoring, evaluating, and influencing the changing ACA requirements.

●      Data, analytics, and auditing experience. A long history analyzing large claims databases and auditing healthcare claims, and prior experience with CMS-mandated reporting, are critical experiences.

●      Experience with EDGE servers. To efficiently audit EDGE data, the vendor needs experience with EDGE data format and content, and in processing large amounts of data.

●      Risk and reinsurance expertise. Look for an auditor with experience with risk models.

●      Flexible approach. This is not a completely straightforward process. Every health plan is different, and your vendor should be able to implement a solution to meet a health plan’s specific needs.

●      Certified coders. This one is straightforward. By law, the coders must be certified by the American Health Information Management Association (AHIMA) or the American Academy of Professional Coders (AAPC).

●      An IVA Approved by CMS. Plans must choose from a list of CMS-accepted entities.

Selecting an experienced and qualified partner to support the IVA will help give health plans peace of mind in managing the IVA requirements. If complying with CMS’s EDGE server requirements is taxing your organization’s resources, it’s time to consider partnering with a qualified EDGE server administrator, and IVA vendor, so you can get back to the business of offering quality health care. Contact us to learn more.

Anita Nair-Hartman, Senior Vice President, Payer Strategy and Business Operations
Bryan Briegel, Healthcare Reform Solutions Specialist

Employers and Health Plans Need Modeling Solutions for Pay or Play Decision Making

By Truven Staff

Without much fanfare, the Department of Health and Human Services (HHS) opened the Small Business Health Options Program (SHOP) marketplace in five states last week after a year-long delay. HHS did this soft launch as a test before rolling out the SHOP to most of the rest of the country by on November 15. Although the action was quiet, make no mistake: this is big news for small employers and the health plans that serve them. Employers are once again faced with the tough decision on whether to continue offering benefits. And health plans have much to gain or lose in this process.

When it comes to Pay or Play decisions, health plans are also at risk, because employer decisions about this Affordable Care Act (ACA) provision will have a far-reaching impact on their business. There are billions of premium dollars at stake, potential shifts in health status, and the significant challenge of managing the Medical Loss Ratio requirements. 

Any Pay or Play decisions must be approached by measuring the impact of continuing to offer group health benefits and complying with legislative mandates (Play) or exiting group health and paying the noncompliance penalty (Pay). Modeling should project the effect of the ACA regulations on employer health plan costs for 2014-2020, as well as the influence of the Cadillac tax slated for 2018, transitional reinsurance, comparative effectiveness fees, and for small employers, the value of Small Business Healthcare Tax Credits.

Now is the time for employers to tap into the right resources to make an educated Pay or Play decision. Wise health plan executives will take the lead by supporting their employer partners in this process. 

Anita Nair-Hartman, Vice President, Market Planning and Strategy
Bryan Briegel, Director, Operations


New CMS EDGE Server Requirements Challenge Health Plans

By Truven Staff
On Wednesday, October 1, Centers for Medicare & Medicaid Services (CMS) hosted a special webinar on EDGE server requirements for issuers of ACA-compliant small group and individual plans on and off the Exchange, subject to the Risk Adjustment and Reinsurance programs. The webinar has left many health plans confused – CMS’s updated enrollment file requirements are a fundamental shift away from specifications issuers have been coding to since May 2013, when CMS announced the enrollment technical and business rules.

What was announced? In short, effective immediately, all enrollment extracts that have been coded to comply with CMS specifications have been rendered incorrect, and will not support the Risk Adjustment Transfer payment calculations – one of the key reasons for submitting data to the EDGE servers. As an EDGE server host and partner with a number of health plans, we at Truven Health Analytics have been working with our clients to handle these changes. 

Here is some background for those new to the game: CMS announced late this summer that it expects issuers to load 2014 enrollment and claims data to their EDGE servers by December 5, 2014, so issuers may receive estimates of their reinsurance payments and risk scores. Since the inception of the program, the enrollment file – and its required structure – has been the most complex and challenging file to produce. Compounding this has been the lack of clarity on how to set a particular field called “Enrollment Period Activity Indicator” (EPAI) and the companion requirement mandating how dependent records must fall within bounds of enrollment start and end dates of their subscriber’s record.

From the October 1 announcement, through the eventual late October 7 release, the CMS shift in requirements left issuers in limbo – suspending any coding activity on enrollment extracts or for those who may have completed coding, and left them considering resourcing a rapid response team to review and revise the extracts. 

Since the October 7 release, the Truven Health EDGE team has reviewed the updated requirements and is working with our issuer partners to re-code their extracts. In helping our issuer partners prepare for the CMS December 5 EDGE data load and initial CMS report run, many have discovered gaps in their billing and rendering provider IDs. CMS has specified that provider IDs are required for claims submitted to the EDGE server and will reject claims with missing IDs. Truven Health has worked with CMS to validate that billing and rendering provider IDs may be used interchangeably on a claim. Additionally, if there is no provider ID information available, issuers may use a proxy or “dummy” ID in its place; for example, a constant string of “333333333333333” while setting the provider ID qualifier as 99. CMS will publish updates to provider ID requirements within the next few weeks via REGTAP, where CMS promulgates business rules and technical requirements for EDGE.

For Truven Health’s part, we’ll continue to monitor these events and share information that impacts your EDGE server work and partner with you to keep in step with CMS.

Bryan Briegel
Director, Operations