To help newcomers understand the early days of Medicaid Expansion (ME), Tampa Bay attorney Gary Gibbons gives a simple analogy: Medicaid is like building a house, except that it is nothing like building a house.

If you were to ask the CEO of the Cook County Health and Hospitals System (CCHHS) how their Medicaid expansion progressed, he would most likely answer “challenging.” However, thanks to a Federal Section 1115 demonstration waiver, CEO Jay Shannon stated CCHHS was “fortunate to get a one-year head start in Medicaid enrollment in the health plan we own and operate. Everyone else had to wait until 2014 to start enrolling new Medicaid-eligible adults.”

Even with potential challenges, some see them as well worth overcoming. Pinellas County Commissioner, Charlie Justices, comments that if states and health insurance carriers would “be able to provide that basic level of safety net for these people, that is worth doing.” But they also faced a broader challenge, “with federal funds decreasing down to 90 percent after three years.”

The new era of financial management

Historically, MMIS was designed primarily as a financial and accounting system for paying provider claims accurately and timely. What we’ve seen emerging over the past few years is an increasingly complex Medicaid program. To truly succeed in the Medicaid industry, especially under expansion, it’s important to understand these complexities.

The three new overarching elements that make up MITA’s Financial Management are: Accounts Payable, Accounts Receivable and Fiscal Management. Each has its own unique set of requirements which fulfills the key components:

  • Accounts Payable Management – Manage Member Financial Participation and Manage Capitation Payments.
  • Accounts Receivable Management – Manage Accounts Receivable Information, Manage Accounts Receivable Funds, and Prepare Member Premium Invoice, while Fiscal Managements’ component is to Generate Financial Report.
  • Member Financial Participation and Manage Capitation Payments – each are defined by triggers, constraints and performance measures, as well as what type of data is required for successful transactions.

The MITA maturity model shows the transformation and improvement of a business during a 10+ year timeline. Within so many moving parts, the maturity model encompasses the breadth and depth of the Medicaid business processes. During the early stages, when states are undergoing the review process, the technology, enablers, and policy all comply with the baseline requirements. In the next stages, the business begins to use technology that is currently available in other business sectors. The business adopts the policy to promote collaboration, consolidation and data sharing. During the “To-Be” years, which can start from year eight and grow to above 10+ years, the technology and policy are under development – agencies extend the automation, optimization, accuracy, speed, and flexibility to share solutions intra and inter-state.

The Member Financial Participation process is responsible for all operations when preparing member premium payments, and is measured in a real-time response within seconds or a batch response within hours. The accuracy of the applied rules can be measured in a percentage as well as the consistency and error rate. It all begins when an alert determines if the State Medicaid Agency (SMA) should pay a member’s premium. If the alert is deemed necessary, then the preparation begins.

The Medicaid Premium Payment receives State Data Exchange (SDX), Enrollment Data Base (EDB), and or other data such as the SSA Beneficiary Data Exchange (BENDEX). After rules and the buy-in file is generated, the system then begins the preparation of the Health Insurance Premium Payment (HIPP). Lastly, multiple alerts are sent to the member, Medicare, and other partners.

On the other hand, Manage Capitation Payments includes activities to prepare Primary Care Case Management (PCCM) or Managed Care Organization (MCO) capitation payments. After the member is enrolled, financial member, provider, and contractor data is parsed through systems to determine the periodic timetable process to invoke capitation information extract. The data is then processed through to generate provider or MCO capitation payments. When no PCP or PCCM information is available, this will trigger failures and halt the generation of capitation payments. Performance measures of Manage Capitation Payments are similar to Member Financial Participation.

Tiered capitated payments

Within MITA, a distinction can be made between 2-tiered and 3-tiered capitated payments. Within the 2-tiered system, the health plan contracts directly with a physician, then is paid directly on a Per-Member-Per-Month (PMPM) basis. In the 3-tiered capitation system, the health plan contracts with a group who determines how the physician is paid: by either capitation, salary, fee-for-service (FFS), or a combination. While costs of care are directly related to an individual’s health status, capitated payments are commonly based on the average cost of care. As an example, under FFS, an elderly Medicare beneficiary reporting poor health will have subsequent Medicare annual expenditures 5 times greater than that of a beneficiary reporting excellent health, although their capitated payments would be the same if they were the same age and gender and lived in the same area.

Agencies are not just buying software.

Government agencies are not just buying software; they’re investing in higher levels of technology maturity for the enterprise. States have access to a much wider range of timely and accurate data and share the information within and outside of the state through secure data exchanges. Softheon’s enterprise technology has the flexibility and adaptability to respond to a program’s measurements and needs while promoting each state’s individual business goals.

From multi-channel payment options, automated scheduling, custom templates, and on-demand reporting, Softheon’s Financial Management platform achieves this high level of technological maturity.

For more information, download our whitepaper: A Formula for Success, the Future of Technology maturity improvement.



The views and opinions expressed by the authors on this blog website and those providing comments are theirs alone, and do not reflect the opinions of Softheon, Inc. Please direct any questions or comments to

Reshika Mahase

UX Design Architect at Softheon
Reshika Mahase works with the Product Innovations team as a UX Design Architect, where she is responsible for new product development such as the Medicaid Administrative Cloud solution. Reshika has worked on a number of projects during her years at Softheon, including private health plans, Welltheos, and Marketplace Exchange UX/UI. She earned both her MBA in Information Systems Management and BBA from Dowling College.