Understanding the WA State Medicaid Reconciliation AUP Process and Its Cash Flow Impacts on FQHCs

By: Zac Mueller

Federally Qualified Health Centers (FQHCs) play a vital role in providing comprehensive healthcare services to underserved communities. To ensure they are adequately reimbursed for the services they provide, FQHCs must navigate the complex process of the Agreed Upon Procedures (AUP) for Medicaid managed care payments. This article will offer a high-level overview of the AUP process and explore its potential cash flow effects on FQHCs.

What is the AUP Process?

The Agreed Upon Procedures (AUP) process is a set of guidelines provided by the Health Care Authority (HCA) to ensure FQHCs accurately report and submit their annual managed care reconciliations. This process is crucial for compliance with state regulations and involves the following key steps:

  1. Sample Selection and Testing: A random sample of 95 encounters from the total reported encounters is selected for detailed testing. This sample is representative of the various types of services provided, including medical and if applicable, behavioral health services.

  2. Verification and Validation: Each sampled encounter is verified to ensure it meets eligibility criteria, such as patient enrollment in Medicaid managed care, appropriate CPT codes, and accurate service documentation.

  3. Payment Reconciliation: The process involves reconciling payments received for managed care services with the reported encounters to ensure that FQHCs have been correctly reimbursed. This includes validating capitated and non-capitated payments and addressing any discrepancies.

 Potential Cash Flow Effects of the AUP Process

The AUP process can significantly impact the cash flow of FQHCs in several ways:

  1. Revenue Adjustments: The reconciliation process may identify discrepancies in reported encounters and payments received, leading to adjustments in revenue. These reconciliations can be hundreds of thousands of dollars as either a receivable or payable.

  2. Operational Improvements: While the AUP process can be resource-intensive, it also provides an opportunity to improve billing and documentation practices. Enhanced accuracy in reporting can lead to more predictable and stable cash flows over time.

  3. Financial Predictability: Successful completion of the AUP process provides FQHCs with a clearer understanding of their financial standing. Accurate reconciliation results in better financial predictability, aiding in effective budgeting and resource allocation.

Conclusion

The AUP process is essential for FQHCs to ensure they receive accurate reimbursements for the vital services they provide. While it can be administratively demanding, the benefits of improved financial predictability, operational efficiency, and compliance far outweigh the challenges. By understanding and effectively navigating the AUP process, FQHCs can better manage their cash flow, ultimately supporting their mission to deliver quality healthcare to those who need it most.

Community Link Consulting experts are available to assist your organization with every facet of the AUP process. Email us at info@communitylinkconsulting.com to schedule an initial conversation with an AUP expert.