Report Template Update:  04-03-08  
    
 Department of Health and Human Services
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
MEDI CAID MANAGED CARE 
 
E D :  
NCOUNTER  ATA   
 
 
C U  
OLLECTION AND  SE
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
May 2009 
OEI-07-06-00540 
    Report Template Update:  04-03-08  
 
 
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities. 
    Report Template Update:  04-03-08  
 
 
 E X E C U T I V E   S U M M A R Y  
OBJECTIVE
 
To determine the extent to which States and the Centers for Medicare 
& Medicaid Services (CMS) are collecting and using Medicaid managed 
care encounter data. 
BACKGROUND 
From 2000 to 2006, combined Federal and State Medicaid expenditures 
increased from $207 billion to $322 billion.  In response to this growth, 
States have increasingly used Medicaid managed care to deliver 
services to beneficiaries.  As of 2006, 65 percent of the 45.6 million 
Medicaid beneficiaries were receiving all or part of their health care 
services through Medicaid managed care.  Encounter data are the 
primary records of Medicaid services provided to beneficiaries enrolled 
in capitated Medicaid managed care.   
The Balanced Budget Act of 1997 requires that Medicaid claims 
submitted to CMS on or after January 1, 1999, provide for electronic 
transmission of claims data in the format specified by the Secretary [of 
Health and Human Services] and consistent with the MSIS [Medicaid 
Statistical Information System] (including detailed individual enrollee 
encounter data and other information that the Secretary may find 
necessary).  As the only national database of Medicaid claims and 
beneficiary eligibility information, the MSIS is used by CMS to manage, 
analyze, and disseminate information on Medicaid beneficiaries, 
services, and payments.  The MSIS data are also widely used for 
research and policy analysis by both public and private organizations, 
and may be used for detecting fraud, waste, and abuse.  The MSIS must 
include encounter data to be representative of Medicaid beneficiaries 
and services.   
This study is based on (1) a review of the most recent complete MSIS 
quarterly data submission for each State at the time of our review, 
(2) 1998 State MSIS Application Forms, and (3) structured interviews 
with State Medicaid agency staff in the 40 States providing services 
through capitated Medicaid managed care and with CMS officials. 
FINDINGS 
States reported collecting and using encounter data.  State Medicaid 
agency staff in all 40 States with capitated Medicaid managed care 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  i   
   
E   X E C U T I V E   S U M M A R Y   
rreeppoorrtteedd  tthhaatt  tthheeyy  ccoolllleecctt  eennccoouunntteerr  ddaattaa  ffrroomm  mmaannaaggeedd  ccaarree  
oorrggaanniizzaattiioonnss  ((MMCCOO))..    TToo  eennssuurree  ssuucccceessssffuull  ccoolllleeccttiioonn,,  aallll  4400  SSttaatteess  hhaavvee  
eessttaabblliisshheedd  rreeppoorrttiinngg  rreeqquuiirreemmeennttss  tthhaatt  ddiiccttaattee  tthhee  ffoorrmmaatt,,  ffrreeqquueennccyy,,  
aanndd//oorr  vvaalliiddaattiioonn  eexxppeeccttaattiioonnss  ffoorr  tthhee  ddaattaa..    AAllmmoosstt  aallll  SSttaatteess  hhaavvee  
eessttaabblliisshheedd  iinncceennttiivveess  aanndd//oorr  ssaannccttiioonnss  ttoo  eennccoouurraaggee  MMCCOOss  ttoo  rreeppoorrtt  
eennccoouunntteerr  ddaattaa..    MMoosstt  SSttaatteess  aarree  uussiinngg  tthhee  eennccoouunntteerr  ddaattaa  tthhaatt  tthheeyy  
ccoolllleecctt  ttoo  mmaannaaggee  tthheeiirr  MMeeddiiccaaiidd  mmaannaaggeedd  ccaarree  pprrooggrraammss  aanndd  rreeppoorrtteedd  
tthhaatt  tthheeyy  wwoouulldd  wweellccoommee  aaddddiittiioonnaall  gguuiiddaannccee  aanndd  tteecchhnniiccaall  aassssiissttaannccee  
ffrroomm  CCMMSS,,  ccoollllaabboorraattiioonn  wwiitthh  CCMMSS  aanndd  ootthheerr  SSttaatteess,,  aanndd  iinnffoorrmmaattiioonn  
aabboouutt  hhooww  ootthheerr  SSttaatteess  aarree  uussiinngg  tthhee  ddaattaa..  
UUsseeffuullnneessss  ooff  tthhee  MMSSIISS  iiss  lliimmiitteedd  bbeeccaauussee  CCMMSS  ddooeess  nnoott  eennffoorrccee  
eennccoouunntteerr  ddaattaa  rreeqquuiirreemmeennttss..    CCMMSS  aacccceepptteedd  tthhee  mmoosstt  rreecceenntt  MMSSIISS  
ssuubbmmiissssiioonnss  wwiitthhoouutt  eennccoouunntteerr  ddaattaa  ffrroomm  1155  ooff  tthhee  4400  SSttaatteess,,  ddeessppiittee  tthhee  
BBaallaanncceedd  BBuuddggeett  AAcctt  ooff  11999977  aanndd  SSttaattee  MMeeddiiccaaiidd  MMaannuuaall  rreeqquuiirreemmeennttss..    
CCMMSS  ssttaaffff  iinnddiiccaatteedd  tthhaatt  tthheeyy  hhaavvee  pprroovviiddeedd  aallll  SSttaatteess  wwiitthh  tthhee  MMSSIISS  
rreeppoorrttiinngg  rreeqquuiirreemmeennttss,,  wwhhiicchh  iinncclluuddee  tthhee  rreeqquuiirreemmeenntt  ttoo  ssuubbmmiitt  
eennccoouunntteerr  ddaattaa..    RReeppoorrttiinngg  pprraaccttiicceess  mmoossttllyy  mmiirrrroorr  tthhee  11999988  MMSSIISS  
AApppplliiccaattiioonn  FFoorrmmss  tthhaatt  pprroovviiddeedd  aa  ddeessccrriippttiioonn  ooff  SSttaatteess  iinntteenntt  wwiitthh  rreeggaarrdd  
ttoo  MMSSIISS  ssuubbmmiissssiioonnss,,  iinncclluuddiinngg  rreeppoorrttiinngg  eennccoouunntteerr  ddaattaa..    CCMMSS  hhaass  ttaakkeenn  
nnoo  ffoorrmmaall  aaccttiioonn  ssppeecciiffiicc  ttoo  eennccoouunntteerr  ddaattaa  ssiinnccee  tthhaatt  ttiimmee  aanndd  hhaass  nnoo  
ggrraadduuaatteedd  ssaannccttiioonnss  oorr  ppeennaallttiieess  aaggaaiinnsstt  SSttaatteess  tthhaatt  ddoo  nnoott  ffuullllyy  ccoommppllyy  
wwiitthh  MMSSIISS  rreeppoorrttiinngg  rreeqquuiirreemmeennttss..    TThhee  aabbsseennccee  ooff  eennccoouunntteerr  ddaattaa  ffrroomm  
SSttaatteess  wwiitthh  MMeeddiiccaaiidd  mmaannaaggeedd  ccaarree  lliimmiittss  tthhee  uusseeffuullnneessss  ooff  tthhee  MMSSIISS..    
RREECCOOMMMMEENNDDAATTIIOONNSS  
We recommend that CMS: 
Clarify existing Federal requirements that States include encounter 
data in MSIS submissions.  CMS could accomplish this by first issuing 
comprehensive guidance that emphasizes Federal requirements for 
including encounter data in the MSIS, issuing national standards for 
encounter data included in the MSIS, and outlining its expectations 
regarding MSIS submissions with regard to encounter data 
(e.g., inclusion, format, frequency, and validation).  CMS could also 
provide States with technical assistance and/or facilitate encounter data 
discussions among States to ensure that States understand the Federal 
requirements and submit data that meet quality expectations.  Technical 
assistance may assist States with regard to successful encounter data 
collection and reporting practices, quality control measures, and ways to 
overcome any systems limitations. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  ii   
   
E X E C U T I V E   S U M M A R Y  
Enforce existing Federal requirements that States include encounter 
data in MSIS submissions.  Once CMS has provided States with 
encounter data guidance and technical assistance, it could develop edit 
checks to ensure the completeness and quality of encounter data.    
Seek legislative authority to impose sanctions against States that 
fail to meet the MSIS reporting requirements for encounter data.  
CMS could seek legislative authority to withhold Federal financial 
participation for capitated payments and/or levy graduated fines and 
penalties against States that fail to meet MSIS reporting requirements 
for encounter data. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our first two recommendations and outlined the 
actions it would take to clarify and enforce existing Federal encounter 
data reporting requirements.  CMS stated that it did not concur at this 
time with our third recommendation to seek legislative authority to 
impose sanctions against States that fail to meet the MSIS reporting 
requirements for encounter data.   
CMS stated that it will (1) issue a State Medicaid Director letter to 
States that use managed care to clarify Medicaid managed care 
encounter data reporting requirements, (2) inform States that CMS 
staff will be available to provide technical assistance, (3) utilize State 
Technical Advisory Groups to collaborate with States on best practices, 
and (4) establish an Encounter Data Workgroup. 
CMS also stated it intends to increase efforts to consistently enforce all 
Federal encounter data reporting requirements and will review current 
authorities to determine areas where it can strengthen authorities to 
improve encounter data reporting.  
CMS did not concur, at this time, with our recommendation to seek 
legislative authority to impose sanctions against States.  CMS stated 
that it wants to first pursue efforts that address our first two 
recommendations before considering seeking sanction authority.  We 
agree that CMS should address our first two recommendations as an 
initial step, but continue to support our third recommendation should 
CMS efforts not result in States reporting encounter data as required.  
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  iii   
   
E X E C U T I V E   S U M M A R Y  
 T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 
  States reported collecting and using encounter data. . . . . . . . . . . . 7 
Usefulness of the MSIS is limited because CMS does not enforce  
encounter data requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 
 
R E C O MMEN D A T ION S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 
  Agency Comments and Office of Inspector General Response . . . 14 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 
A:  States Medicaid Managed Care Enrollment and                   ........    
Plan Types as of June 30, 2006 . . . . . . . . . . . . . . . . . . . . . . . . 15 
B:  States Reporting Requirements for Medicaid Managed Care 
Encounter Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 
C:  States Established Incentives and/or Sanctions for Medicaid 
Managed Care Encounter Data . . . . . . . . . . . . . . . . . . . . . . . . 19 
  D:  States Most Common Uses of Medicaid Managed Care          
Encounter Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 
  E:  States MSIS Submissions of Medicaid Managed Care                       
Encounter Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
  F:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 
 
 
  Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 
 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 
   
   
 I N T R O D U C T I O N  
OBJECTIVE 
To determine the extent to which States and the Centers for Medicare 
& Medicaid Services (CMS) are collecting and using Medicaid managed 
care encounter data. 
BACKGROUND 
The Growth of Medicaid Managed Care  
From 2000 to 2006, Federal Medicaid expenditures increased from 
$118 billion to $180 billion and State Medicaid expenditures increased 
from $89 billion to $142 billion.1  In 2006, Medicaid expenditures 
accounted for almost one-quarter of all States expenditures.2  In 
response to the growth in Medicaid expenditures, States have 
increasingly used Medicaid managed care to deliver services to 
beneficiaries.3  From 2000 to 2006, enrollment in Medicaid managed 
care grew 59 percent, from 18.8 million to 29.8 million beneficiaries.  
As of 2006, 65 percent of the 45.6 million Medicaid beneficiaries were 
receiving all or part of their health care services through Medicaid 
managed care.4  See Appendix A for States Medicaid managed care 
enrollment and plan types.5   
Capitated Medicaid Managed Care  
States utilize a variety of managed care arrangements to provide 
Medicaid services to eligible beneficiaries.  In the most common 
arrangement (i.e., capitated Medicaid managed care), State Medicaid 
programs pay managed care plans a fixed rate per enrolled Medicaid 
beneficiary in exchange for services included in the plan.  States receive 
Federal financial participation (FFP) for these capitated payments 
 
1 Department of Health and Human Services, Budget in Brief, 2002, and Budget in 
Brief, 2008.  Available online at http://www.hhs.gov/budget/docbudget.htm.  Accessed on 
June 3, 2008. 
2 National Association of State Budget Officers, 2006 State Expenditure Report, 2007.  
Available online at http://www.nasbo.org/publications.php.  Accessed on June 3, 2008. 
3 Managed care is a health care delivery system that aims to maximize efficiency by 
negotiating rates, coordinating care, and managing use of services. 
4 At the time of our review, all States had enrolled at least a portion of their Medicaid 
population in managed care, with the exception of Alaska and Wyoming.  
5 CMS surveys States annually to collect Medicaid managed care enrollment statistics 
and program characteristics and publishes that information in the Medicaid Managed Care 
Enrollment Report and the National Summary of State Medicaid Managed Care 
Programs.   
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  1   
   
I N T R O D U C T I O N  
rather than for each individual service, which is how FFP is determined 
for fee-for-service claims.  FFP is the Federal Governments share of an 
approved State cost for operating a Medicaid program.   
Encounter data are detailed information regarding the services provided 
to Medicaid beneficiaries enrolled in capitated managed care.  Like 
Medicaid claims for services provided on a fee-for-service basis, 
encounter data are the primary record of services provided to Medicaid 
beneficiaries enrolled in capitated Medicaid managed care.  However, 
unlike Medicaid fee-for-service claims, States do not receive FFP for 
encounter data claims.  States receive FFP for capitated payments for 
services provided through Medicaid managed care.   
Managed care organizations (MCO) that contract with States to provide 
Medicaid services are required to maintain health information systems.  
These systems must be able to collect data on Medicaid beneficiaries, 
provider characteristics, and services using encounter data or other 
State-specified methods.  MCOs are required to ensure that data 
received from Medicaid providers are accurate and complete.6 
The Medicaid Statistical Information System  
The Medicaid Statistical Information System (MSIS) was created to 
establish a primary source of Medicaid data at the Federal level for 
maintaining a single, accurate, and comprehensive Medicaid database 
that may be used to: 
  produce regular statistical reports;  
  support research into important policy, quality and effectiveness of 
care, and epidemiological issues; and  
  support detecting fraud, waste, and abuse regarding the Medicaid 
program.7 
The Balanced Budget Act of 1997 amended section 1903(r) of the Social 
Security Act to require that Medicaid claims submitted to CMS on or 
after January 1, 1999, provide for electronic transmission of claims data 
in the format specified by the Secretary [of Health and Human Services] 
and consistent with the MSIS (including detailed individual enrollee 
encounter data and other information that the Secretary may find 
 
6 42 CFR  438.242(b)(2). 
7 53 Fed. Reg. 26674 (July 14, 1988). 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  2   
   
III NNN TTT RRR OOO DDD UUU CCC TTT III OOO NNN    
necessary).8  The MSIS is the only national database of Medicaid 
claims and beneficiary eligibility information.  CMS uses MSIS to 
manage, analyze, and disseminate information on Medicaid 
beneficiaries, services, and payments.  The MSIS data are also widely 
used for research and policy analysis by both public and private 
organizations, and may be used for detecting fraud, waste, and abuse.9  
The CMS State Medicaid Manual provides guidance and requires that 
States meet the MSIS systems and data specifications.10  To implement 
the MSIS, CMS issued the MSIS Tape Specification and Data 
Dictionary and the MSIS Participation Guide, which contain 
instructions on the files that States are required to report.11  More 
specifically, the data dictionary requires that claim files include 
encounter claims to the extent that they are routinely received by the 
State.  The MSIS Participation Guide included an MSIS Application 
Form that each State was required to complete and submit to CMS by 
September 30, 1998.  The information required in the application 
generally outlined States claims data systems, the fields that they 
would use, and a description of the types of data that they would 
provide in their MSIS submissions.  Although the applications did not 
serve as an approval mechanism, they did describe States intentions 
with regard to MSIS submissions, including any exceptions to 
comprehensive reporting (e.g., the absence of encounter data).12    
Medicaid Integrity and Program Management  
As mandated by the Deficit Reduction Act of 2005, CMS established a 
Comprehensive Medicaid Integrity Plan (CMIP) to combat Medicaid 
fraud, waste, and abuse.13  In the CMIP, CMS notes that it must 
determine how to calculate return on investment for program integrity 
strategies aimed at managed care.  CMS also notes that it must provide 
guidance on how to ensure Medicaid integrity in a managed care 
delivery system and help States develop more sophisticated approaches  
 
8 Balanced Budget Act of 1997, P.L. No. 105-33,  4753(a)(1) 
(codified at 42 U.S.C.  1396b(r)). 
9 MSIS Overview.  Available online at 
http://www.cms.hhs.gov/MSIS/01_Overview.asp#TopOfPage.  Accessed on June 3, 2008. 
10 CMS, State Medicaid Manual (Pub. No. 45), Chapter 2,  2700.2(B). 
11 CMS, MSIS State Participation Procedures Manual.  Available online at 
http://www.cms.hhs.gov/MSIS/.  Accessed on June 3, 2008.   
12 CMS, State Medicaid Manual (Pub. No. 45), Chapter 2,  2700.2(D). 
13 Deficit Reduction Act of 2005, P.L. No 109-171,  6034(a) (codified at 
42 U.S.C.  1396u-6). 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  3   
   
I N T R O D U C T I O N  
to addressing fraud and abuse in the managed care environment.14  As 
part of CMIP, CMS announced plans to use the MSIS data as a source 
of Medicaid information to maximize fraud, waste, and abuse detection 
activities by providing a single, integrated source of timely and quality 
Medicaid data. 
Other Studies 
Thomson Medstat, an organization that contracts with CMS to conduct 
analyses and provide guidance on a broad range of policy issues, 
reviewed 2001 and 2002 encounter data from MSIS submissions and 
indicated that the absence of encounter data prevents CMS, States, and 
even MCOs from determining Medicaid service utilization by 
beneficiaries.15  A 2006 report from the Government Accountability 
Office found that CMS has not incorporated the MSIS into its oversight 
of States claims or other systems projects intended to improve its 
analytic capabilities.16   
METHODOLOGY 
Scope 
This study focused on Medicaid managed care encounter data for 
services provided in 39 States and the District of Columbia (hereinafter 
referred to as States) that have capitated Medicaid managed care 
arrangements.  We excluded Alaska and Wyoming because they do not 
offer Medicaid managed care.  We excluded an additional nine States 
(Arkansas, Idaho, Louisiana, Maine, Mississippi, Montana, New 
Hampshire, Oklahoma, and South Dakota) that provided Medicaid 
managed care services only through primary care case management 
arrangements or prepaid ambulatory health plans because these 
 
14 CMS, Center for Medicaid and State Operations, Medicaid Integrity Group, 
Comprehensive Medicaid Integrity Plan of the Medicaid Integrity Program, 
FY 2007-2011, August 2007.  Available online at 
http://www.cms.hhs.gov/DeficitReductionAct/Downloads/CMIPupdateaugust2007final.pdf. 
Accessed on June 4, 2008. 
15 Thomson Medstat, Cross-State MSIS Encounter Data Quality Feedback Report, 
March 28, 2006.   
16 Government Accountability Office, Medicaid Financial Management:  Steps Taken To 
Improve Federal Oversight but Other Actions Needed To Sustain Efforts, GAO-06-705,  
June 2006.    
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  4   
   
I N T R O D U C T I O N  
entities are not subject to the same administrative requirements as 
other capitated managed care plans.17   
The mixed methods used to conduct this evaluation included the review 
and analysis of data in States MSIS submissions, States MSIS 
Application Forms, structured interviews with State Medicaid agency 
staff, and structured interviews with CMS staff.  This evaluation did not 
assess the completeness, accuracy, or timeliness of the encounter data 
collected by the States and/or reported to CMS in MSIS.  
Data Collection and Analysis 
Medicaid Managed Care Encounter Data.  We obtained the most recent 
complete quarterly MSIS data submissions from CMS for the 40 States 
that provide Medicaid services through capitated Medicaid managed 
care.18  The claims data varied by time period based on the most recent 
complete data submission in the MSIS for each State.  We determined 
the extent to which States included encounter data in their most recent 
MSIS submissions to CMS by searching for a 3 in the claim type 
field.19     
MSIS Application Forms.  We obtained State MSIS Application Forms 
required by and submitted to CMS in 1998 by each of the 51 States.  
We limited our review to the 40 States that provided Medicaid services 
through capitated Medicaid managed care at the time of our review.  
We reviewed State responses to application questions and compared the 
information provided in the applications to current MSIS encounter 
data reporting practices.  
Interviews with State Medicaid agency staff.  We conducted structured 
telephone interviews with State Medicaid agency staff in all 40 States 
with capitated managed care to determine why States did or did not 
include Medicaid managed care encounter data in their most recent 
MSIS submission.  We also determined: 
 
 
17 See 42 CFR  438.242 (describing health information system requirements that apply 
only to MCOs and Prepaid Inpatient Health Plans).  
18 MSIS complete files as of June 1, 2007.  There are no edit checks specific to encounter 
data.  To be considered complete, submitted MSIS data files (i.e., eligibility, long-term care, 
pharmacy, inpatient, and other) must meet CMSs edit criteria for fee-for-service claims.   
19 Encounter data are to be reported in the MSIS with a 3 in the claim type field as 
specified in the MSIS Tape Specification and Data Dictionary, updated February 2007.  
Available online at http://www.cms.hhs.gov/MSIS/Downloads/msisdd05.zip.  Accessed on 
September 8, 2008. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  5   
   
I N T R O D U C T I O N  
  the extent to which States required or encouraged MCOs to report 
encounter data to the States,  
  any barriers that States experienced in collecting encounter data 
from MCOs,  
  whether nonreporting States anticipated including encounter data 
in their MSIS submissions to CMS and when,  
  the extent to which States use encounter data, and 
  how encounter data could be improved to meet States needs. 
 
Interviews with CMS staff.  We conducted structured interviews with 
CMS staff responsible for implementation and oversight of the MSIS 
and with CMSs Office of Research, Development, and Information.  
Through these interviews, we determined how CMS is using Medicaid 
managed care encounter data, whether reported data meet its needs, 
what potential uses exist for the data, and how encounter data could be 
improved to meet current and future needs.   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  6   
   
 F I N D I N G S  
States reported collecting and using  State Medicaid agency staff in 
encounter data  all 40 States with capitated 
Medicaid managed care reported 
that they collect encounter data from MCOs.  To ensure successful 
collection, all 40 States have established reporting requirements that 
dictate the format, frequency, and/or validation expectations for the 
data.  Almost all States have established incentives and/or sanctions to 
encourage MCOs to report encounter data.  Most States are using the 
encounter data that they collect to manage their Medicaid managed 
care programs and would welcome additional guidance from CMS and 
information about how other States are using the data. 
All 40 States have established reporting requirements for MCOs   
States contractual agreements with MCOs dictate the format, 
frequency, and/or validation expectations for encounter data.  See 
Table 1 for the number of States that have each type of reporting 
requirement.  See Appendix B for an overview of reporting requirements 
established by each State for Medicaid managed care encounter data. 
Table 1:  Reporting 
Requirements for Medicaid 
Managed Care Encounter Data 
Number of 
Type of Requirement 
States 
Format  40 
Frequency  38 
Validation  33 
     Attestation only  21 
     Edits only  4 
     Attestation and edits  8 
Source:  Office of Inspector General (OIG) analysis 
of interview responses, 2008. 
 
Thirty-four States have implemented incentives and/or sanctions regarding 
MCOs reporting of encounter data  
Thirty-four States have established various incentives and/or sanctions 
to encourage MCOs to submit encounter data to the States.  Incentives 
may include rewards for plans meeting all encounter data reporting 
requirements.  Sanctions may serve as punitive measures or as 
deterrents for failure to meet encounter data reporting requirements.  
States described efforts to encourage MCOs to report encounter data as 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  7   
   
F I N D I N G S  
incentives and/or sanctions.  For example, a plan could receive full 
capitated payments for reporting encounter data (described as an 
incentive by some States) or reduced payments for failing to report 
encounter data (described as a sanction by some States).  See Table 2 for 
the incentives and/or sanctions that States have established. 
  Table 2:  State-Established Incentives and/or 
Sanctions 
 
Number of 
   States 
 
Financial inducements and/or penalties  26 
 
Rate setting  13 
 
Automatic enrollment/assignment   7 
 
Performance measures   7 
 
Medicaid Fraud Control Units referral  4 
 
Suspension or termination of contract  3 
 
Other (nonspecific)  3 
 
Source:  OIG analysis of interview responses, 2008. 
 
Financial incentives and sanctions described by Medicaid State agency 
staff include withholding a percentage of the capitated payments for 
failure to report encounter data, charging managed care plans a daily 
fee for failure to report encounter data, and basing pay for performance 
on the receipt and quality of encounter data.  Automatic enrollment 
assignments include enrolling or suspending enrollment of beneficiaries 
into a managed care plan based on the plans submission of encounter 
data.  Performance measures include publishing performance 
information on State Web sites and publishing report cards based on 
managed care plan performance.  See Appendix C for an overview of 
incentives and sanctions established by each State.   
Thirty-nine States use the encounter data that they collect 
State Medicaid agency staff reported using the encounter data received 
from MCOs in a variety of ways to meet State-established goals.  
Thirty-nine of the forty States reported using encounter data to better 
understand and administer their Medicaid programs.  See Table 3 for 
the most common State uses. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  8   
   
F I N D I N G S  
Table 3:  States' Most Common Uses for Medicaid 
Managed Care Encounter Data 
Number of States 
  
Quality assurance  34 
Rate setting  33 
Service utilization  33 
Early and Periodic Screening, Diagnosis, 
29 
and Treatment reporting 
Program trending  25 
Healthcare Effectiveness Data and 
23 
Information Set measures 
Monitoring immunizations  18 
Monitoring expenditures  16 
Source:  OIG analysis of interview responses, 2008. 
 
See Appendix D for an overview of each States most common uses of 
Medicaid managed care encounter data.   
States reported using encounter data for additional purposes, including 
measuring managed care plan and physician performance, producing ad 
hoc reports, detecting fraud and abuse, formulating and implementing 
health care policies, comparing Medicaid managed care and commercial 
managed care plan performance, gathering beneficiary demographic 
information, and/or capturing health outcomes (e.g., laboratory results).   
State Medicaid agency staff in 28 States reported successfully using 
encounter data.  The staff in one State remarked that they cannot 
imagine living without encounter data; the data are the lifeblood of the 
agency.  State Medicaid agency staff in another State reported that 
Encounter data are the foundation for our State to achieve its 
objectives across the board.   
In contrast, Medicaid agency staff in 11 States reported difficulty in 
using encounter data.  Staff in six States attributed this difficulty to 
State system limitations.  Staff in four States noted receiving 
inconsistent and/or flawed data (e.g., problems with particular fields, 
such as the provider or beneficiary identification) from MCOs.  
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  9   
   
F I N D I N G S  
One State provided no specific reason for its difficulty in using 
encounter data.    
Twenty-five States want additional guidance for encounter data  
State Medicaid agency staff reported a desire to know how other States 
are using the data and how those uses might transfer to their own 
programs.  They noted that working with other States that are more 
advanced in collecting, reporting, and using encounter data could 
improve their understanding and use of the data.  Additionally, State 
Medicaid agency staff in 25 States noted that they would welcome more 
guidance from CMS (e.g., national standards regarding encounter data), 
and/or collaboration with CMS and other States.  However, State 
Medicaid agency staff in a few States indicated that any new guidance 
or requirements should not hinder State flexibility and that reporting 
encounter data should be optional.  See Table 4 for the number of States 
that want additional guidance and/or collaboration.    
Table 4:  Twenty-Five States Want 
Additional Guidance and/or Collaboration 
Number of 
  
States 
     Guidance only  12 
     Collaboration only  4 
     Guidance and collaboration  9 
Source:  OIG analysis of interview responses, 2008. 
 
CMS accepted the most recent 
Usefulness of the MSIS is limited because CMS 
MSIS submissions without 
does not enforce encounter data requirements 
encounter data from 15 of the 
40 States, despite the Balanced Budget Act and State Medicaid 
Manual requirements.  CMS staff indicated that they have provided all 
States with the MSIS reporting requirements, which include the 
requirement to submit encounter data.  Reporting practices mostly 
mirror the 1998 MSIS Application Forms, and CMS has taken no formal 
action specific to encounter data since that time.  The absence of 
encounter data from some States with Medicaid managed care limits 
the usefulness of the MSIS.  
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  10   
   
F I N D I N G S  
Not all States submit encounter data as required 
Fifteen States did not include encounter data in their most recent MSIS 
submissions at the time of our review (June 1, 2007).  State Medicaid 
agency staff for 11 of these nonreporting States indicated that they were 
not aware of any requirements to include encounter data in the MSIS.  
For 9 of the 15 nonreporting States, staff anticipate including the data 
in future submissions but offered no timeframes for when this reporting 
might occur.  In the remaining six nonreporting States, staff do not 
anticipate including the data in their MSIS submissions.   
For the 25 States that did report encounter data in their most recent 
MSIS submissions, State Medicaid agency staff said that they included 
the data based on Federal requirements (e.g., MSIS Operations 
Manual, specific waiver requirements, or the direction of CMS) and/or 
individual State initiatives.   
CMS does not enforce encounter data reporting requirements and its 
enforcement options are limited 
CMS staff indicated that they are not satisfied with the completeness, 
quality, or usefulness of encounter data submitted by States, yet they 
accept MSIS submissions that do not include the encounter data, as 
required.  CMS does not enforce the current MSIS reporting 
requirements or subject encounter data to the same edit checks and/or 
quality reviews as fee-for-service claims data.  CMS staff indicated that 
unlike fee-for-service claims and capitated payments, encounter data 
are not linked to FFP, making enforcement difficult.  Further, CMS 
does not have graduated sanctions or penalties against States that do 
not fully comply with MSIS reporting requirements (e.g., absence of 
encounter data).   
States 1998 MSIS Application Forms mostly mirror current reporting 
practices 
The 1998 MSIS Application Forms for all of the 15 nonreporting States 
indicated that these States would not include encounter data in their 
MSIS submissions.  Of the 25 reporting States, 23 indicated that they 
would include encounter data on their 1998 MSIS Application Forms.  
Two reporting States indicated on their applications that they would not 
include encounter data in their MSIS submissions, yet they included 
encounter data in their most recent submissions.  See Appendix E for an 
overview of States current encounter data submissions in the MSIS and 
the 1998 MSIS Application Form responses regarding the inclusion of 
encounter data in the MSIS. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  11   
   
F I N D I N G S  
The 1998 MSIS Application Forms served as the only formal CMS 
request for information from States as to how they intended to comply 
with MSIS reporting requirements, including encounter data.  Despite 
the growth in Medicaid managed care since 1998, CMS has taken no 
formal action to request updated information from States, issue 
guidance to States, or develop edit checks for encounter data.   
The lack of encounter data in MSIS submissions from some States limits its 
usefulness 
The absence of encounter data in the MSIS creates an incomplete 
picture of Medicaid overall and Medicaid managed care specifically, 
thereby limiting the intended uses of the MSIS.  CMS staff responsible 
for implementation and oversight of the MSIS and staff at CMSs Office 
of Research, Development, and Information explained that the absence 
of encounter data in the MSIS restricts their use of the data.  CMS staff 
would like to progress toward more useful data and explained that 
without encounter data, the Medicaid managed care picture is 
incomplete.  CMS staff indicated that they need encounter data to be 
able to measure what we are paying for. 
 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  12   
   
 R E C O M M E N D A T I O N S  
All 40 States providing services through capitated Medicaid managed 
care collect encounter data, and almost all of these States use the data 
to administer their Medicaid programs.  However, CMS accepted MSIS 
submissions from 15 States that did not include encounter data, thereby 
failing to enforce the MSIS encounter data reporting requirements for 
these States.  As the only national database of Medicaid claims and 
beneficiary eligibility information, the MSIS data are widely used for 
research and policy analysis and may also be used for detecting fraud, 
waste, and abuse by both public and private organizations.  However, to 
be used as intended, the MSIS must include encounter data to represent 
the more than 65 percent of the Medicaid population enrolled in 
Medicaid managed care.  
To strengthen enforcement of the MSIS requirements, we recommend 
that CMS: 
Clarify Existing Federal Requirements That States Include Encounter 
Data in MSIS Submissions   
CMS could accomplish this by first issuing (1) comprehensive guidance 
that emphasizes Federal requirements for including encounter data in 
the MSIS, (2) national standards for encounter data included in the 
MSIS, and (3) its expectations regarding MSIS submissions with regard 
to encounter data (e.g., inclusion, format, frequency, and validation).  
CMS could also provide States with technical assistance and/or 
facilitate encounter data discussions among States to ensure that 
States understand the Federal requirements and submit data that meet 
quality expectations.  Technical assistance may assist States with 
regard to successful encounter data collection and reporting practices, 
quality control measures, and ways to overcome any systems 
limitations. 
Enforce Existing Federal Requirements That States Include Encounter 
Data in MSIS Submissions   
Once CMS has clarified existing Federal requirements that States 
include encounter data in MSIS submissions, it could develop edit 
checks to ensure that States comply with those requirements and that 
the data are complete and meet quality expectations.   
Seek Legislative Authority To Impose Sanctions Against States That Fail To 
Meet the MSIS Reporting Requirements for Encounter Data   
CMS could seek legislative authority to withhold FFP for capitated 
payments and/or levy graduated fines and penalties against States that 
fail to meet MSIS reporting requirements for encounter data. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  13   
   
R E C O M M E N D A T I O N S  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our first two recommendations and outlined the 
actions it would take to clarify and enforce existing Federal 
requirements that require States to include encounter data in MSIS 
submissions.  CMS stated that it did not concur at this time with our 
third recommendation to seek legislative authority to impose sanctions 
against States that fail to meet the MSIS reporting requirements for 
encounter data.   
CMS stated that it will issue a State Medicaid Director letter to all 
States that use managed care to clarify Medicaid managed care 
encounter data reporting requirements and inform States that CMS 
staff will be available to provide technical assistance with encounter 
data submissions.  CMS will utilize State Technical Advisory Groups to 
collaborate with States on best practices for encounter data submissions 
and establish an Encounter Data Workgroup to address additional 
issues.  
CMS also stated that it intends to increase efforts to consistently 
enforce all Federal requirements for Medicaid managed care encounter 
data reporting and will review current authorities to determine areas 
where it can strengthen authorities to improve managed care encounter 
data reporting.  
CMS did not concur, at this time, with our recommendation to seek 
legislative authority to impose sanctions against States that fail to meet 
the MSIS reporting requirements for encounter data.  CMS stated that 
it wants to first pursue efforts that address our first two 
recommendations before considering seeking sanction authority.  We 
agree that CMS should address our first two recommendations as an 
initial step, but continue to support our third recommendation should 
CMS efforts not result in States reporting encounter data as required. 
We did not make any changes to the report based on CMSs written 
comments.  For the full text of CMSs comments, see Appendix F.  
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  14   
   
 A P P E N D I X   ~   A  
 
State Medicaid Managed Care Enrollment and Plan Types as of June 30, 200620  
Types of Managed Care Plans 
Percentage of 
State   Beneficiaries in  Number of  Number of  Number  Number of  Number  Number 
Number  Number 
Managed Care  Commercial  Medicaid-Only  of  PACE  of  of 
of PIHPs  of HIOs 
MCOs  MCOs  PAHPs  Programs  PCCMs  Others 
AK*  0.00%  0  0  0  0  0  0  0  1 
AL  63.30%  0  0  2  0  0  1  0  0 
AR  83.02%  0  0  0  1  0  1  0  0 
AZ  89.60%  0  25  1  0  0  0  0  0 
CA  50.34%  24  2  1  13  4  0  4  1 
CO  95.10%  0  2  6  0  1  1  0  0 
CT  75.59%  2  2  0  0  0  0  0  0 
DC  67.76%  0  3  1  0  0  0  0  0 
DE  76.48%  0  1  0  0  0  0  0  1 
FL  65.49%  13  1  3  5  1  1  0  2 
GA  97.67%  0  1  1  1  0  1  0  0 
HI  79.99%  2  1  2  0  0  0  0  1 
IA  86.51%  1  0  1  0  0  1  0  0 
ID  81.42%  0  0  0  0  0  1  0  0 
IL  7.26%  1  2  0  0  0  0  0  0 
IN  72.09%  0  5  0  0  0  1  0  0 
KS  57.03%  0  1  0  0  1  1  0  0 
KY  92.37%  0  1  0  1  0  1  0  0 
LA  71.15%  0  0  0  0  0  1  0  0 
MA  60.43%  2  2  1  0  6  1  0  0 
MD  69.96%  0  7  0  0  1  0  0  0 
ME  66.70%  0  0  0  0  0  1  0  0 
MI  84.85%  4  11  18  0  1  0  0  0 
MN  63.65%  6  3  0  0  0  0  0  0 
MO  99.53%  3  4  0  1  1  0  0  0 
MS  10.21%  0  0  0  1  0  0  0  0 
 
20 See Glossary on page 28 for terms and abbreviations used in Appendix A. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  15   
   
A P P E N D I X   ~   A  
State Medicaid Managed Care Enrollment and Plan Types as of June 30, 2006 
(Continued) 
 
  Types of Managed Care Plans 
Percentage of 
 
State  BMeanneafigceiadr iCeasr ien   CNoummmbeerrc oiaf l  MeNduimcabide-rO onf ly  Number  Numofb er  NuPmAbCeEr  of  Numofb er  Number  Numofb er 
of PIHPs  of HIOs 
MCOs  MCOs  PAHPs  Programs  PCCMs  Others 
MT  66.86%  0  0  0  0  0  1  0  0 
NC  64.90%  1  0  2  0  0  2  0  0 
ND  55.62%  0  1  0  0  0  1  0  0 
NE  80.85%  1  0  0  0  0  1  0  1 
NH  74.87%  0  0  0  1  0  0  0  0 
NJ  69.41%  2  3  0  0  0  0  0  0 
NM  65.19%  2  1  1  0  1  0  0  0 
NV  82.39%  2  0  0  1  0  0  0  0 
NY  61.12%  20  19  12  1  4  4  0  1 
OH  39.91%  0  8  0  0  2  0  0  0 
OK  85.90%  0  0  0  2  0  1  0  0 
OR  90.34%  2  11  9  8  1  1  0  1 
PA  86.32%  11  0  28  1  4  1  0  0 
RI  65.84%  2  1  0  0  1  0  0  0 
SC  20.19%  0  2  0  2  1  1  0  0 
SD  98.25%  0  0  0  1  0  1  0  0 
TN  100.00%  4  4  2  0  1  0  0  2 
TX  68.55%  8  2  1  0  2  2  0  0 
UT  86.89%  0  0  12  1  0  1  0  0 
VA  63.22%  5  2  0  1  0  1  0  0 
VT  64.70%  0  1  0  0  0  0  0  0 
WA  86.64%  7  1  1  1  1  1  0  0 
WI  46.73%  34  3  2  0  1  0  0  0 
WV  46.31%  3  0  0  0  0  1  0  0 
WY  0.00%  0  0  0  0  0  0  0  0 
Total  65.34%  162  133  107  43  35  33  4  11 
Source:  CMS, 2006 Medicaid Managed Care Enrollment Report. 
*Alaska offers nonemergency medical transportation through a managed care waiver authority but uses a fee-for-service transportation broker. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  16   
   
A P P E N D I X   ~   A  
 A P P E N D I X   ~   B  
States Reporting Requirements for Medicaid Managed Care Encounter Data21 
States With  Reporting Requirements 
Capitated 
Medicaid 
Data Must Pass 
Managed Care  Format  Frequency  CEO/CFO Attestation 
Edit Checks 
AL  X  X    X 
AZ  X  X  X  X 
CA  X  X    X 
CO  X  X  X   
CT  X  X  X  X 
DC  X  X  X   
DE  X  X    
FL  X  X  X  X 
GA  X  X  X   
HI  X  X    X 
IA  X  X  X   
IL  X  X  X   
IN  X      
KS  X  X  X   
KY  X  X  X   
MA  X  X  X   
MD  X  X  X  X 
MI  X  X  X  X 
MN  X  X  X   
MO  X  X  X  X 
 
 
21 See Glossary on page 28 for terms and abbreviations used in Appendix B. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  17   
   
A P P E N D I X   ~   B  
States Reporting Requirements for Medicaid Managed Care Encounter Data 
(Continued)  
States With  Reporting Requirements 
Capitated 
Medicaid  Data Must Pass 
Managed Care  Format  Frequency  CEO/CFO Attestation  Edit Checks 
NC  X      
ND  X  X    
NE  X  X    
NJ  X  X  X   
NM  X  X  X   
NV  X  X  X   
NY  X  X  X   
OH  X  X  X   
OR  X  X  X  X 
PA  X  X  X   
RI  X  X    
SC  X  X  X   
TN  X  X  X  X 
TX  X  X  X   
UT  X  X  X   
VA  X  X  X   
VT  X  X    X 
WA  X  X  X   
WI  X  X    
WV  X  X  X   
Total   40  38  29  12 
Source:  Office of Inspector General analysis of interview responses, 2008. 
A blank field indicates that the State did not have the requirement or did not specifically indicate it in the 
interview. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  18   
   
 A P P E N D I X   ~   C  
States Established Incentives and/or Sanctions for Medicaid Managed Care 
Encounter Data22
States 
Incentives and/or Sanctions 
With 
Capitated  
Financial  Suspension 
Medicaid  Automatic 
Inducements  Rate  Performance  MFCU  or  Other 
Managed  Enrollment/ 
and/or  Setting  Measures  Referral  Termination  Nonspecific
Care   Assignment 
Penalties  of Contract 
AL            
AZ  X  X  X  X      
CA          X   
CO            
CT  X  X          
DC  X          
DE            
FL            
GA  X          
HI*           X 
IA    X     X    
IL  X          
IN    X        
KS  X          
KY  X          
MA  X    X  X      
MD  X  X    X      
MI  X  X  X  X      
MN  X  X        
MO  X       X    
 
22 See Glossary on page 28 for terms and abbreviations used in Appendix C. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  19   
   
A P P E N D I X   ~   C  
States Established Incentives and/or Sanctions for Medicaid Managed Care 
Encounter Data (Continued) 
 
States 
Incentives and/or Sanctions 
With 
Capitated 
Financial  Suspension 
Medicaid  Automatic 
Inducements  Rate  Performance  MFCU  or  Other 
Managed  Enrollment/ 
and/or  Setting  Measures  Referral  Termination  Nonspecific
Care  Assignment 
Penalties  of Contract 
NC             
ND            X 
NE*            X 
NJ  X     X      
NM  X           
NV    X         
NY  X  X         
OH  X    X    X  X   
OR  X    X       
PA  X  X         
RI  X  X  X  X      
SC  X           
TN  X           
TX  X  X    X      
UT  X           
VA             
VT    X     X  X   
WA  X           
WI  X           
WV  X    X       
Total   26  13  7  7  4  3  3 
Source:  Office of Inspector General analysis of interview responses, 2008.   
A blank field indicates that the State did not have the incentive and/or sanction or did not specifically indicate it in the 
interview. 
*State has incentives and/or sanctions outlined in contractual agreement but does not currently implement them.   
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  20   
   
 A P P E N D I X   ~   D  
States Most Common Uses of Medicaid Managed Care Encounter Data23  
States With  Uses of Encounter Data 
Capitated 
Medicaid 
Monitoring 
Managed  Rate  Quality  Service  EPSDT  Program  HEDIS  Monitoring 
Program 
Care  Setting  Assurance  Utilization  Reporting  Trending  Measures  Immunizations 
Expenditures
AL  X  X  X    X      
AZ*  X  X  X    X      
CA  X  X  X  X  X  X  X   
CO  X  X  X    X  X    X 
CT  X    X  X    X    X 
DC*  X  X  X    X  X    X 
DE  X  X  X  X  X  X     
FL  X  X  X         X 
GA  X  X  X  X  X  X  X  X 
HI  X         X     
IA  X  X  X  X    X  X   
IL    X  X  X  X  X  X   
IN    X  X  X  X  X  X  X 
KS    X  X  X     X  X 
KY  X  X  X  X  X    X  X 
MA  X  X  X  X  X  X     
MD  X  X  X  X  X    X  X 
MI  X  X  X  X  X    X  X 
MN  X  X  X  X  X  X  X   
MO    X    X    X     
 
23 See Glossary on page 28 for terms and abbreviations used in Appendix D. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  21   
   
A P P E N D I X   ~   D  
States Most Common Uses of Medicaid Managed Care Encounter Data (Continued) 
States With  Uses of Encounter Data 
Capitated 
Medicaid 
Monitoring 
Managed  Rate  Quality  Service  EPSDT  Program  HEDIS  Monitoring 
Program 
Care  Setting  Assurance  Utilization  Reporting  Trending  Measures  Immunizations 
Expenditures 
NC  X              
ND  X              
NE       X        
NJ  X  X  X  X  X  X  X   
NM  X  X  X  X  X    X  X 
NV  X  X  X  X  X  X  X  X 
NY  X  X     X  X     
OH  X  X  X  X  X  X  X   
OR*  X  X  X  X  X    X  X 
PA  X  X  X     X     
RI  X  X  X  X  X  X    X 
SC                
TN  X  X  X  X    X  X   
TX*  X  X  X  X  X  X    X 
UT*  X  X  X  X  X      
VA*    X  X  X    X  X   
VT  X  X  X  X    X     
WA*  X  X  X  X        
WI*  X  X  X  X  X    X  X 
WV  X  X  X  X  X      
Total   33  34  33  29  25  23  18  16 
Source:  Office of Inspector General analysis of interview responses, 2008.                                                                                                              
*State also uses encounter data for establishing DME payments and/or determining DSH payments.              
A blank field indicates not applicable. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  22   
   
 A P P E N D I X   ~   E  
States MSIS Submissions of Medicaid Managed Care Encounter Data24 
Most Recent  Application  MSIS Files Containing Encounter Data 
States With  MSIS  Encounter 
Indicates State 
Capitated  Quarterly  Data Included 
Will Include 
Medicaid  Submission  in Most 
Encounter 
Managed  Month/Year at  Recent MSIS  Long-Term 
Data in the  Inpatient  Other  Pharmacy  Eligibility 
Care  the Time of  Submission  Care 
MSIS 
Our Review 
AL  04/2005  X  X  X        X 
AZ  02/2007  X  X  X  X  X  X  X 
CA  01/2007  X  X  X  X  X  X   
CO  01/2006             
CT  04/2006            
DC  02/2007            
DE  01/2007            
FL  02/2007            
GA  01/2007  X  X    X      X 
HI  02/2007  X  X  X  X  X  X  X 
IA  03/2006  X  X  X  X      
IL  01/2007  X  X  X  X      
IN  02/2007  X  X  X  X  X    
KS  02/2006  X  X  X  X  X    
KY  04/2006  X  X  X  X  X    X 
MA  04/2004            
MD  01/2005  X  X  X  X  X    
MI  04/2005            
MN  04/2006  X  X  X  X  X  X   
MO  02/2007  X  X  X  X  X    
 
24 See Glossary on page 28 for terms and abbreviations used in Appendix E. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  23   
   
A P P E N D I X   ~   E  
States MSIS Submissions of Medicaid Managed Care Encounter Data (Continued) 
The Most  MSIS Files Containing Encounter Data 
Application 
States With  Recent MSIS  Encounter 
Indicates State 
Capitated  Quarterly  Data Included 
Will Include 
Medicaid  Submission  in Most 
Encounter 
Managed  Month/Year at  Recent MSIS  Long-Term 
Data in the  Inpatient  Other  Pharmacy  Eligibility 
Care  the Time of  Submission  Care 
MSIS 
Our Review 
NC  04/2006  X  X  X       X 
ND  01/2005  X  X  X  X       
NE  01/2007  X  X  X  X       
NJ  04/2005  X  X    X  X     
NM  01/2007  X  X  X  X    X   
NV  04/2005  X  X  X  X    X   
NY  02/2007  X  X  X  X  X  X   
OH  04/2005             
OR  01/2006  X  X  X  X       
PA  02/2005             
RI  03/2005  X  X  X  X  X     
SC  02/2007             
TN  04/2006             
TX  04/2006             
UT  04/2005             
VA  04/2006  X  X  X  X  X  X  X 
VT  04/2005             
WA  02/2007  X    X    X  X   
WI  01/2007  X    X  X  X  X   
WV  03/2006              
Total     25  23  23  22  15  10  7 
Source:  Office of Inspector General analysis of the most recent and complete quarter of the State MSIS data submitted to the Centers for 
Medicare & Medicaid Services, 2008. 
A blank field indicates not applicable. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  24   
   
 A P P E N D I X   ~   F  
Agency Comments 
#,~f,f."'lt"l.'t.4\t
~
\. DEPARTME O'HEA :rII&HUMANSERVlCES CentersforMedicare&MedicaidServices
~S~
200IndependenceAvenueSW
Washinglon,DC 20201
DATE: APR 1'! 2009
,==",''-">
TO: Daniel R. Levinson ::a .J
InspectorGeneral rC,.l :"1;u:1 ~.,
C~\.~~-'j~t.v- :l: ')
FRO CharlcneFrizzera ;',";, en 1
t>. "
ActingAdministrator r- ~
i9
SUBJECT: OfficeofInspectorGeneral(OIG) DraftRcport: "Medicaid Managed a;
CareEncounterData: Collectionand Use'(OEJ-07-06-00540)
Thankyou fortheopportunitytoreviewandcommentonthe ubjectOlG DraftReport.
Thepurposeofthis reportwastodeterminetheextenttowhichStatesandtheCentersfor
Medicare& Medicaid Services(CMS)arecollectingand usingMedicaidmanagedcare
encounterdata.
Asof2006,65percentoftbe45.6 million Medicaid beneficiarieswercreceivingall or
partoftheirhealthcare ervicesthrough aMedicaid managedcareprogram. Encounter
dataaretheprimaryrecordsofMedicaidservicesprovidedto beneficiariesenrolled in
capitatedmanagedcare. Unlikeclaimsdata fTom fee-for-service providers,whichis
reporteddirectlyfrom theStatestoCMS,encounterdataconcerningmanagedcare
enrolleesflows from theprovidertothe provider'sgrouppracticeorotherentity,tothe
managedcareorganization to theState,and then finallyfrom theStatetoCMS.
Section4753(a)(I)ofthe Balanced BudgetActof1997(BBA), P.L. 105-33,amended
section 1903(r)oftheSocial SecurityAct(theAct)torequire,'effectiveforclaims liled
onorafterJanuary I, 1999,"that tates"provide forelectronictransmissionofclaims
datain the formatspecified bytheSecretaryofHealthand Human ervicesand
consistentwiththeMedicaidStatisticalInforntationSystem(MSIS) includingdetailed
individualenrolleeencounterdataandotherinformationthatthe ccrctarymayfind
necessary.' Whilethetenn"encounterdata" ismostcommonlyused toreferto managcd
caresettingsinwhichan individualclaimfor paymentmaynotbesubmitted,neither
section4753(a)(1),noranyotherprovisionsoftheBBA,amendcd thestatutory
provisionsgoverningMedicaid managedcarecontract toreferencethisncw
requirement. Moreover, thereferencingofencounterdatamodifiesareference to
"transmissionofclaimsdata'suggestingthat"claimsdata" isto includeencounterdata.
onethe1ess,ofthe40StatesprovidingMedicaidservicesthroughcapitatcdmanaged
careprograms all40collectsomeencounterdatafrom the managedcareorganiZe"ltions
and uscitto managetheirMedicaid managedcareprograms. Wenote M ISdataare
lIsed byCMSand otherpublicandprivateorganizationsforresearchandpolicyanalysis.
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  25   
   
A P P E N D I X   ~   F  
Page2- Danicl R. Levinson
CMSacceptedthemostrecentMSISsubmissionsfrom 15ofthe40Statcswithmanaged
.careprogramswithoutencounterdatabeingincluded. Theabsenceoftheseencounter
datafromStateswithMedicaidmanagedcareprogramslimitstheusefulnessofthe
MSIS.
Afterreviewingthisreport,CMShasthefollowing commentsinresponsetothereport's
recommendations:
OIG Recommendation
ClarifyexistingFedcral requirementslhat StatesincludeencounterdatainMSIS
submissions.
eMS Response
TheCMSconcurswiththisrecommendationand intendstodothefollowing: (I)issuea
StateMedicaid DirectorleitertoallStatcsthatusemanagedcareentitiestoprovide
servicestotheirMedicaidbeneficiariesthatclarifiesCMS' interpretationofsection
1903(r)ofthcActasrequiringthatmanagedcareencounterdatabesubmittedaspartof
MSISclaimsdatasubmissions,and indicrltethatcentralofficeandregionalofficcstaff
willbeavailabletoprovidetcchnicalassistancctoassisttheStatesinsubmittingsuch
data;(2)utilizethevariousStateTcehnical AdvisoryGroups(rAGs)tobringtogcther
appropriateStateandCMSstafftocollaborateonthebestpracticesthatStatesemployto
collect, use,andsubmitencounterdataandtodetenninewhatothertypesoftechnical
guidanceorclarificationsarcncededbytheStatcsandmanagedcareentities;and(3)
establishanEncounterData WorkgroupcomprisedofCentralOfficestaff, Regional
Officestaff,andstafffrom Stateswhoarcmostcloselyinvolvedinsubmittingencounter
datatoaddressissuesrelatedtotherequirementsforthcongoingsubmission,accuracy,
completenessandusesofencounterdata.
OIG Recommendation
EnforceexistingFederal requirementsthatStatesincludeencountcrdatain MSIS
submissions.
eMSResponse
TheCMSconcursthateffortsshouldbemadetoensurethatStates'submitmanagedcare
encounterdatatoCMSandintendstoincreaseoureffortstoconsistcntlycnforeeall
currentstatutory,regulatory,andpolicyguidelinesinthisarea. Theseenforcement
effortswould includeremindingStatcsoftheirobligationsaspartoftheStatesingle 
auditprocess,eMSoversightreviews,andthroughongoingdiseussionswiththeState
officials,Statestaff,and managcdcareentitiesduringmectings,conferences,andother
forums thattakeplaceonanongoingbasis. Additionally,wearegoingtoreviewour
currentmanagedeareandMSISdatastatutoryand regulatoryauthoritiestodetcnnine
 
 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  26    
     
AA PP PP EE NN DD II XX    ~~    FF   
AAggeennccyy  CCoommmmeennttss  
Page3- Daniel R. Levinson
whatchangesmaybelleededandwherewecanstrengthencurrentauthoritiestoimprove
thecollection,submission,use,ofmanagedcareencountcrdata
DIG Recommendation
SccklegislativeauthoritytoimposesanctionsagainstSlatcsthaifail tomeettheMSIS
reportingrequirementsforencounterdata.
eMS Response
Wedonotconcurwiththisrecommendationatthistime. Ratherthan pursuing
lcgislativeauthorityto imposesanctionswewanttobegintomoreactivelypursuethc
specificitemswehaveoutlinedabovetoworkwiththeStatesandmanagedcare
organizationscollaborativelytoimprovethecollection,submission,anduseofmanaged
careencounterdala. Webelievethaibyclarifyingtheexistingrequirements,Sharingbest
practices,workingtogetherwiththeStatesandourmanagedcarepartners,andusingour
currentauthoritiestoimprovethisprocessneedstobedonebeforeconsidcringanoption
togetsanctionauthority.
"bceMSthanksthe010 for theopportunitytoreviewandcommentonthisdraftreport.
 
   OOEEII--0077--0066--0000554400   MMEEDDIICCAAIIDD  MMAANNAAGGEEDD  CCAARREE  EENNCCOOUUNNTTEERR  DDAATTAA::    CCOOLLLLEECCTTIIOONN  AANNDD  UUSSEE   2277    
   
 G L O S S A R Y  
 
 
Centers for Medicare & Medicaid Services   The Federal agency responsible for  
(CMS)  administering  Medicare, Medicaid, the State 
Childrens Health Insurance Program, Health 
Insurance Portability and Accountability Act, 
Clinical Laboratory Improvement Amendments, 
and several other health-related programs.  CMS 
was formerly known as the Health Care 
Financing Administration (HCFA). 
    
Chief Executive Officer (CEO)  In an organization that has a board of directors, 
the CEO is (usually) the singular organizational 
position that is primarily responsible for carrying 
out the strategic plans and policies as established 
by the board of directors.  In this case, the CEO 
reports to the board of directors.  In a form of 
business that is usually without a board of 
directors (sole proprietorship, partnership, etc.), 
the CEO is (usually) the singular organizational 
position (other than partnerships, etc.) that sets 
the direction and oversees the operations of an 
organization. 
 
Chief Financial Officer (CFO)  CFOs direct the organizations financial goals, 
objectives, and budgets.  They oversee the 
investment of funds and manage associated risks, 
supervise cash management activities, execute 
capital-raising strategies to support a firms 
expansion, and deal with mergers and 
acquisitions. 
 
Disproportionate Share Hospital (DSH)  A hospital with a disproportionately large share 
  of low-income patients.  Under Medicaid, States 
may augment payment to these hospitals. 
 
Durable Medical Equipment (DME)  Medical equipment ordered by a doctor or other 
authorized medical professional for use in the 
home.  DME includes reusable items, such as 
walkers, wheelchairs, and hospital beds.  
 
Early and Periodic Screening, Diagnosis,  The child health component of the Medicaid  
and Treatment (EPSDT) Program   program.  It is required in every State and is 
designed to improve the health of low-income 
individuals under age 21 by financing 
appropriate and necessary pediatric services.  
 
 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  28   
   
G L O S S A R Y  
Healthcare Effectiveness Data     A set of standard performance indicators used  
and Information Set (HEDIS)  to compare the quality of care, access, and cost of 
health care services provided through managed 
care plans.   
 
Health Insuring Organization (HIO)  An entity that provides or arranges for the 
provision of care and that contracts on a prepaid 
capitated risk basis to provide a comprehensive 
set of services. 
 
Managed Care Organization (MCO)  An entity that serves beneficiaries on a risk basis 
through a network of employed or affiliated 
providers.   
 
Medicaid Fraud Control Unit     The mission of MFCUs is to investigate and 
(MFCU)          prosecute Medicaid provider fraud and incidences 
of patient abuse and neglect.  Currently, 49 
States and the District of Columbia have MFCUs, 
most of which are located within the Offices of 
State Attorneys General.  
 
Medicaid Statistical Information System   The electronic system through which States 
(MSIS)   submit all of their Medicaid eligibility and claims 
data to CMS on a quarterly basis.  The purpose of 
MSIS is to collect, manage, analyze, and 
disseminate information on Medicaid-eligible 
beneficiaries, Medicaid utilization, and payments 
for services covered by State Medicaid programs.   
 
Prepaid Ambulatory Health Plan (PAHP)  An entity that provides ambulatory medical 
services to beneficiaries under contract with the 
State agency on the basis of prepaid capitation 
payments or other payment arrangements that 
do not use State plan payment rates.  The entity 
does not provide, arrange for, or otherwise have 
responsibility for the provision of any inpatient 
hospital or institutional services for its 
beneficiaries. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  29   
   
G L O S S A R Y  
Prepaid Inpatient Health Plan (PIHP)  An entity that provides, arranges for, or 
otherwise has responsibility for the provision of 
inpatient medical services to beneficiaries under 
contract with the State agency on the basis of 
prepaid capitation payments or other payment 
arrangements that do not use State plan 
payment rates.   
 
Primary Care Case Management (PCCM)  An entity or a provider that contracts with the 
State to furnish case management services 
(e.g., locating, coordinating, and monitoring 
covered primary care services) to Medicaid 
beneficiaries.   
 
Program of All-inclusive Care for   A comprehensive program that combines medical, 
the Elderly (PACE)  social, and long term care services that enable 
elderly beneficiaries to remain independent and 
live in their communities. 
 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  30   
   
 A C K N O W L E D G M E N T S  
This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office.   
Deborah Walden served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the 
Kansas City regional office who contributed to the report include 
Michael Barrett, Megan Buck, Lt. Mike Garner, and Amber Meurs; 
other central office staff who contributed include Jennifer Jones and 
Kevin Manley. 
  OEI-07-06-00540  MEDICAID MANAGED CARE ENCOUNTER DATA:  COLLECTION AND USE  31