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Value-based
care to increase provider and delivery system resiliency

12.08.20

Read this if you are a state Medicaid agency (SMA) or managed care organization (MCO).

Value-based care (VBC) can help stabilize healthcare revenues during times of unexpected challenges and market volatility. Implementing or solidifying value-based payment (VBP) or purchasing arrangements between payers and providers is one pathway to stabilizing provider revenues, especially during the era of COVID-19.

On September 15, 2020, the Centers for Medicare & Medicaid Services (CMS) released a letter to state Medicaid directors (SMDs) on how states can advance VBC across healthcare systems. Earlier in 2020, the CMS Administrator indicated that value-based or capitated payments can help promote provider resiliency, allowing providers to focus on quality of care as opposed to increasing utilization for short-term reimbursement gains. 

Promoting the adoption of VBC in Medicaid managed care is a long-term strategy to create stable and predictable revenues for providers, and potentially critical to successfully react to market disruptions caused by COVID-19. Providers are encouraged or obligated to see patients to drive quality outcomes, receiving VBPs or capitation that shifts revenue streams away from traditional fee-for-service models. VBP arrangements focus on quality of care, and can promote beneficiary health while reducing total costs.

A roadmap to advancing VBP in Medicaid

As healthcare costs continue to increase, states, payers, and providers have started transitioning to VBC to reimburse services based upon particular conditions (e.g., diabetes), Episodes of Care (EOC) (e.g., pregnancy and delivery), or different population healthcare needs (e.g., immunizations and well-child visits). VBP arrangements can incentivize the delivery of healthcare innovations that prioritize care coordination and quality outcomes over volume of services rendered, and help to avoid waste and duplication of services. VBP seeks to incentivize providers based on performance, and can result in shared savings for both providers and healthcare payers.

While many states have made significant progress moving towards VBP arrangements in their Medicaid managed care programs, data from the Health Care Payment Learning and Action Network (HCP-LAN) indicates there is still opportunity for improvement. In 2018, 90% of Medicare payments were made through a VBP arrangement, yet only 34% of Medicaid payments were made through VBP.  

Through its recent guidance, CMS provides a roadmap, strategies, and alternative payment methodology frameworks for states and health plans to implement successful VBP models in collaboration with the provider community. Key considerations for successful VBP implementation include:

  • Defining level and scope of financial risk, and developing associated performance benchmarks
  • Selecting established quality metrics that incentivize provider performance without undue administrative burden
  • Encouraging multi-payer participation (e.g., Medicaid managed care, Medicare, commercial health plans) to align provider incentives across payers and delivery systems
  • Advancing Health Information Technology (HIT) capabilities across providers and delivery systems
  • Assessing health plan and provider/delivery system readiness
  • Promoting stakeholder engagement and transparency
  • Developing VBC programs focusing on sustainability

Regarding HIT and the exchange of data between providers, MCOs, and SMAs, CMS recommends states take advantage of the Advanced Planning Document (APD) process to request 90/10 funding to address technology infrastructure needs associated to help implement a robust VBC program and help ensure delivery system readiness. Facilitating data sharing and promoting real-time and reliable data transactions between payers and providers engaged in VBC is critical to measurement, monitoring, and programmatic success. Additionally, SMAs can leverage VBP arrangements to focus on areas of waste in the healthcare system, including care delivery, and care coordination. 

If you would like more information or have questions about VBC and guidance on assessing, developing or implementing changes to your managed care program, please contact us. We also offer services related to value-based payment, as detailed here. We’re here to help.

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Read this if you are a Chief Financial Officer, Chief Compliance Officer, FINOP, or charged with governance of a broker-dealer.

The results of the Public Company Accounting Oversight Board’s (PCAOB) 2020 inspections are included in its 2020 Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers. There were 65 audit firms inspected in 2020 by the PCAOB and, although deficiencies declined 11% from 2019, 51 firms still had deficiencies. This high level of deficiencies, as well as the nature of the deficiencies, provides insight into audit quality for broker-dealer stakeholders. Those charged with governance should be having conversations with their auditor to see how they are addressing these commonly found deficiencies and asking if the PCAOB identified any deficiencies in the auditor’s most recent examination. 

If there were deficiencies identified, what actions have been taken to eliminate these deficiencies going forward? Although the annual report on the Interim Inspection Program acts as an auditor report card, the results may have implications for the broker-dealer, as gaps in audit quality may mean internal control weaknesses or misstatements go undetected.

Attestation Standard (AT) No. 1 examination engagements test compliance with the financial responsibility rules and the internal controls surrounding compliance with the financial responsibility rules. The PCAOB examined 21 of these engagements and found 14 of them to have deficiencies. The PCAOB continued to find high deficiency rates in testing internal control over compliance (ICOC). They specifically found that many audit firms did not obtain sufficient, appropriate evidence about the operating effectiveness of controls important to the auditor’s conclusions regarding the effectiveness of ICOC. This insufficiency was widespread in all four areas of the financial responsibility rules: the Reserve Requirement rule, possession or control requirements of the Customer Protection Rule, Account Statement Rule, and the Quarterly Security Counts Rule.

The PCAOB also identified a firm that included a statement in its examination report that referred to an assertion by the broker-dealer that its ICOC was effective as of its fiscal year-end; however, the broker-dealer did not include that required assertion in its compliance report.

AT No. 2 review engagements test compliance with the broker-dealer’s exemption provisions. The PCAOB examined 83 AT No. 2 engagements and found 19 of them to have deficiencies. The most significant deficiencies were that audit firms:

  • Did not make required inquiries, including inquiries about controls in place to maintain compliance with the exemption provisions, and those involving the nature, frequency, and results of related monitoring activities.
  • Similar to AT No. 1 engagements, included a statement in their review reports that referred to an assertion by the broker-dealer that it met the identified exemption provisions throughout the most recent fiscal year without exception; however, the broker-dealers did not include that required assertion in their exemption reports.

The majority of the deficiencies found were in the audits of the financial statements. The PCAOB did not examine every aspect of the financial statement audit, but focused on key areas. These areas were: revenue, evaluating audit results, identifying and assessing risks of material misstatement, related party relationships and transactions, receivables and payables, consideration of an entity’s ability to continue as a going concern, consideration of materiality in planning and performing an audit, leases, and fair value measurements. Of these areas, revenue and evaluating audit results had the most deficiencies, with 45 and 27 deficiencies, or 47% and 26% of engagements examined, respectively.

Auditing standards indicate there is a rebuttable presumption that improper revenue recognition is a fraud risk. In the PCAOB’s examinations, most audit firms either identified a fraud risk related to revenue or did not rebut the presumption of revenue recognition as a fraud risk. These firms should have addressed the risk of material misstatement through appropriate substantive procedures that included tests of details. The PCAOB noted there were instances of firms that did not perform any procedures for one or more significant revenue accounts, or did not perform procedures to address the assessed risks of material misstatement for one or more relevant assertions for revenue. The PCAOB also identified deficiencies related to revenue in audit firms’ sampling methodologies and substantive analytical procedures. Other deficiencies of note, that were not revenue related, included:

  • Incomplete qualitative and quantitative disclosure information, specifically in regards to revenue from contracts with customers and leases.
  • Missing required elements from the auditor’s report.
  • Missing auditor communications:
    • Not inquiring of the audit committee (or equivalent body) about whether it was aware of matters relevant to the audit.
    • Not communicating the audit strategy and results of the audit to the audit committee (or equivalent body).
  • Engagement quality reviews were not performed for some audit and attestation engagements.
  • Audit firms assisted in the preparation of broker-dealer financial statements and supplemental information.

Although there have been improvements in the amounts of deficiencies found in the PCAOB’s examinations, the 2020 annual report shows that there is still work to be done by audit firms. Just like auditors should be inquiring of broker-dealer clients about the results of their most recent FINRA examination, broker-dealers should be inquiring of auditors about the results of their most recent PCAOB examination. Doing so will help broker-dealers identify where their auditor may reside on the audit quality spectrum. If you have any questions, please don’t hesitate to reach out to our broker-dealer services team.

Article
2020 Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers

Read this if you are a director or manager at a Health and Human Services agency in charge of modernizing your state's Health and Human Services systems.

With stream-lined applications, online portals, text updates, and one-stop offices serving programs like Medicaid, SNAP, and Child Welfare, states are rapidly adopting integrated systems serving multiple programs. As state leaders collaborate on system design and functionality to meet federal and state requirements, it is equally important to create a human-centered design built for the whole family.

We know families are comprised of a variety of people with various levels of need, and blended families ranging from grandparents to infants may qualify for a variety of programs. We may connect with families who are on Medicaid, aged and disabled or SNAP, but also have cases within child support or with child welfare. 

If your state is considering updating a current system, or procuring for an innovative design, there are key strategies and concepts to consider when creating a fully integrated system for our most vulnerable populations. Below are a few advantages for building a human-centric system:

  • The sharing of demographic, contact, and financial information reduces duplication and improves communication between state entities and families seeking services
  • Improvement of business services and expedited eligibility determinations, as a human-centric model gathers information upfront to reduce a stream of verification requests
  • The cost of ownership decreases when multiple programs share design costs
  • Client portals and services align as a family-focused model

Collaboration and integrated design

How many states use a separate application for Medicaid and SNAP? More specifically, is the application process time consuming? Is the same information requested over and over for each program? 

How efficient (and wonderful) would it be for clients to complete task-based questions, and then each program could review the information separately for case-based eligibility? How can you design an integrated system that aligns with business and federal rules, and state policy?

Once your state has decided a human-centered design would be most beneficial, you can narrow your focus—whether you are already in the RFP process, or within requirements sessions. You can stop extraneous efforts, and change your perspective by asking the question: How can we build this for the entire family? The first step is to see beyond your specific program requirements and consider the families each program serves. 

Integrated design is usually most successful when leaders and subject matter experts from multiple programs can collaborate. If all personnel are engaged in an overarching vision of building a system for the family, the integrated design can be fundamentally successful, and transforming for your entire work environment across agencies and departments.

Begin with combining leadership and subject matter experts from each geographic region. Families in the far corners of our states may have unique needs or challenges only experts from those areas know about. These collaborative sessions provide streamlined communications and ideas, and empower staff to become actively involved and invested in an integrated system design. 

Next, delve into the core information required from each family member and utilize a checklist to determine if the information meets the requirements of the individual programs. Finally, decide which specific data can streamline across programs for benefit determinations. For example, name, address, age, employment, income, disability status, and family composition are standard pieces of information. However, two or more programs may also require documentation on housing, motor vehicle, or retirement accounts.

Maintaining your focus on the families you serve

When designing an integrated system, it is easy to lose focus on the family and return to program-specific requirements. Your leaders and subject matter experts know what their individual programs need, which can lead to debates over final decisions regarding design. It is perfectly normal to develop tunnel vision regarding our programs because we want to meet regulations and maintain funding.

Below are recommendations for maintaining your focus on building for the family, which can start as soon as the RFP. 

  • Emphasize RFP team accountability
    • Everyone should share an array of family household examples who benefit from the various programs (Medicaid, SNAP, TANF, etc.), to help determine how to deliver a full spectrum of services. 
    • Challenge each program with writing their program-specific sections of the RFP and have one person combine the responses for a review session.
  • If the integrated system design is in the requirements phase, brainstorm scenarios, like the benefit example provided in recommendation number one. When information is required by one program, but not another, can the team collaborate and include the information knowing it could benefit an entire family?
  • When considering required tasks, and special requests, always ask: Will this request/change/enhancement help a family, or help staff assist a family?
  • Consider a universal approach to case management. Can staff be cross trained to support multiple programs to reduce transferring clients to additional staff?

We understand adopting a human-centered design can be a challenging approach, but there are options and approaches to help you through the process. Just continue to ask yourself, when it comes to an integrated approach, are you building the system for the program or for the family?

Article
Integrated design and development for state agencies: Building for the family

Read this if you support State Medicaid Program Integrity efforts.

Recently, the Centers for Medicare & Medicaid Services (CMS) released updated guidance on how states should handle their Third Party Liability (TPL) claims and ensuring that all insurances pay prior to the State Medicaid Agency (SMA) paying any claims. Before we get into the updated guidance, let’s discuss the basics of TPL and what your SMA needs to know.

TPL Basics

There are several different types of healthcare liabilities:

  • Health insurers – Coordination of benefits and primary payers; this can be through group insurances or employer/member paid insurance.
  • Government programs – Public health programs, such as the Breast & Cervical Cancer Screening or the Vaccines for Children Program.
  • Other people or entities – Automobile insurance, product liability, or medical malpractice. The main thing to remember is that Medicaid will not pay if someone else is responsible.
  • Awards through courts or casualty/tort claims – This would be if a payment is made in a settlement, Medicaid can claim off of that award for Medicaid covered services that do not exceed what has already been paid out.

Again, the main thing to remember is Medicaid is the payer of last resort! There are few exceptions to this rule, including:

  • Indian Health Services (IHS), where Medicaid pays first and IHS covers the remaining services covered for this population.
  • Members who have Veterans Assistance (VA) coverage. Medicaid is the second payer to VA benefits except for in nursing homes and emergency treatment cases outside of VA facilities.

Agencies have data use agreements that describe how the data will be collected, transmitted, and used. But where does the data come from? 

  • Caseworkers can collect information directly from the member at the time of enrollment or re-enrollment.
  • Eligibility system(s) and the TPL vendor can access both state and federal data exchanges, which can then be shared with the Medicaid Management Information System (MMIS).
  • Medical, dental, vision, and pharmacy claims are a great source of data because this information comes from the provider who collects it from the member.
  • Data exchanges are also an important part of data gathering:
    • State Wage Information Collection Agencies (SWICA) is a state database that shows if a member or family member is employed allowing the state to inquire about additional coverage through the employers insurance.
    • Defense Enrollment Eligibility Reporting System (DEERS) is related to members of current or former military service who have TriCare insurance coverage.
    • State Verification and Eligibility Systems (SVES) and the State Data Exchange (SDX) work together to verify tax information, employment, eligibility, etc.
      • These systems work for more than just TPL through verifying enrollment but TPL is a component. 
      • This is also where the state can reduce duplicate enrollments—having a member with enrollments in Medicaid in several states and reaping the benefits in each state.
  • Motor vehicle administration and worker’s compensation systems can verify if the claim was the result of an automobile accident or occurred on the job. Once verified in the system, an edit can be included to deny so the TPL vendor knows to go back and review the claim.
  • Payers and health plans share the information with each other and with Medicaid. This allows all payer to use the same database.

TPL checkpoints

Throughout the process of developing a claim, there are many opportunities to check TPL coverage. The member is a great source of information since who else knows more about a person, besides themselves. The member enrollment caseworker and the enrollment application can also provide a lot of information that comes directly from the member. Through Medicaid and CHIP work with the Managed Care Organizations (MCO), it is in the MCO’s best interest to ask a member about TPL coverage during each and every encounter with the member. However, it is important to remember that if TPL is involved, Medicaid is the payer of last resort; but for CHIP, if TPL is involved, typically there is no CHIP coverage. 

The TPL vendor, enrollment broker, and providers are also excellent resources for obtaining member information. The TPL vendor conducts data mining within claims to find external causes of conditions that suggest another person or entity is responsible for payment. When a member calls the enrollment broker to choose their MCO, this is an opportunity to ask the member about any TPL coverage. Finally, the providers can share valuable information that was received from the member.

Claims adjudication process

Up to this point, we have discussed the primary payer information, the accident indicator, and a work related indicator, but there are still a couple more steps in the process to discuss. Your SMA’s should set the edits within your MMIS so that the state can process payments correctly up front to reduce overpayments and the expense of recouping that money. The edits within the MMIS should be regularly reviewed to ensure they are in compliance with state policies (including state plans) and federal guidelines.

Some other areas that should be reviewed to check for TPL coverage is the member age and diagnosis codes. If the member is 65 years of age or older, Medicare should be considered as a source of coverage. Also, diagnosis codes can be an indicator of an automobile accident or injury on the job. Following each of these steps, can prevent the state from overpaying a claim or making a payment in error.

Potential TPL indicators in information received on a claim can vary. For example, CMS and dental codes use the same field names, while the uniform billing (UB) form has defined codes to identify the primary liability. 

CMS-1500     UB-04     Dental
Other Insurance Condition Code Other Insurance
Accident Date Occurrence Code Accident Date
Work Related Injury Diagnosis Code Work Related Injury
Diagnosis Codes Diagnosis Code

Data relationships

The relationship between data sources varies across programs. Medicaid feeds into and/or receives information from all data sources, including CHIP, MCOs, TPL vendor, data warehouse, federal databases, and state databases (such as department of motor vehicles and worker’s compensation). CHIP interacts with Medicaid, MCOs, TPL vendor, and the data warehouse. The TPL vendor exchanges information with Medicaid, CHIP, MCOs, data warehouse, and state databases. The MCOs have a relationship with Medicaid, CHIP, TPL vendor, and the data warehouse. Working together, these programs have access to all of the different data sources; however, sometimes the relationship is indirect and takes multiple steps to complete the transaction. This is why the sharing of data is so important!

TPL data sharing

Working together is the best way to ensure all entities have access to the same and as much information as possible. There typically needs to be a contract relationship between your SMA and all entities that send or receive data. It is a good idea for the SMA to have a data use agreement with each agency that defines how the data will be collected, transmitted, and used. The data can be transmitted in any way, as long as it is secure, and can be stored in the data warehouse which allows all entities that will use the data to have access to the same information.

MCO contracting

The MCO contract between the SMA or the CHIP Agency and the MCO requires the MCOs to conduct TPL activity. In addition, your state should consider including a finder’s keepers clause in their contract with the MCO, which allows the state to collect on overpayments that the MCO chooses not to collect. For example: the MCO can decide that it will cost more to recoup the overpayment than the money recouped so the MCO can choose not to pursue in which case the state can pursue. The state would keep all the money collected.

The contract between your SMA and TPL vendor should include the state and federal data searches as required by regulation. This contract should also include sharing of data with the MCOs that reduces the risk of duplicate expenses for the SMA and the MCOs.

TPL policy

It is key for your SMA to align all policies to both state and federal regulations but the more the policies are aligned across programs within your state, the better.

Many TPL policy references can provide all information regarding the federal regulations.

  • Title 42, Chapter IV, Subchapter C, Part 433 – State Fiscal Administration, Subpart D – Third-Party Liability
  • Medicaid Bipartisan Budget Act (BBA) of 2018, Section 53102, Third Party Liability in Medicaid and CHIP
  • Deficit Reduction Act of 2005 (DRA)
  • Coordination of Benefits and Third Party Liability (COB/TPL) in Medicaid 2020 Handbook
    • This comprehensive resource includes all of the references as well as guidance for your SMA.
  • Medicaid.gov TPL 
    • Good resource for updated information in addition to resources and guidance for states.

Now that we have covered the basics of TPL, let’s review some of the updated guidance recently released by CMS.

TPL policy changes

Medicaid BBA of 2018

  • CMS updated the pay and chase guidelines and removed some of the requirements.
    • SMAs are no longer required to pay and chase pregnancy claims. These can now be rejected up front.
  • CMS updated medical support enforcement claims payment to extend the timely filing period.
    • The timely filing period was 30 days but has now been extended up to 100 days.

DRA of 2005

  • The updated regulations clarified that third-parties include:

    • Health insurance
    • Medicare
    • Employer sponsored health insurance
    • Settlements from liability insurer
    • Workers compensation
    • Long-term care insurance
    • State and federal programs unless specifically excluded by statute
  • The updated regulations also specified that health insurers should provide the SMA with eligibility data, honor assignment of right to payment, and refrain from procedural denial of Medicaid claims.

COB/TPL in Medicaid 2020 Handbook

  • CMS updated the guidelines to include the pay and chase requirement for Medical Support Enforcement and Preventive Pediatric Services.

On August 27, 2021, CMS released guidance directing SMAs to ensure their state plans are updated and in compliance with federal guidelines by December 31, 2021. 

You can learn more about the updated guidance here

MCO claims

  • MCO encounter claims need to be in the state’s data warehouse to ensure:
    • TPL services are tracked in the data warehouse
    • TPL and MCO paid claims can be differentiated
    • All services are reported within the warehouse

Next steps

There are several things you can do to help ensure your SMA is getting the most out of your TPL data. You can review the following:

  • Medicaid, CHIP, and MCO TPL policies
  • TPL vendor business processes and policies
  • MCO contracts for TPL language
  • TPL vendor contract
  • Claim edits in the MMIS

If you have any questions, please contact our Medicaid consulting team. We're here to help.

Article
Third Party Liability claims: What state Medicaid agencies need to know

Read this if you are a State Medicaid Director, State Medicaid Chief Information Officer, State Medicaid Project Manager, or State Procurement Officer.

Hurray! The in-person Medicaid Enterprise Systems Conference (MESC) was successfully held! It was a wonderful and true reunion for all those who attended the conference in Boston this year. Hats off to MESC’s sponsoring organization, NESCSO, for holding a hybrid in-person/virtual event. Although there were some minor technological glitches at the start, MESC went very smoothly. The curriculum, good planning, and hard work prevailed and led to a very successful conference.

Before highlighting the session content and conference themes, I must mention what first occurred upon arrival: We were able to greet our colleagues, partners, and vendor teams. How wonderful it was to be together with some colleagues who I had not seen for over two years! We all had stories and pictures that video conferencing just can’t convey, and being able to share them, face-fo-face (and tear-to-tear), was the highlight for me. Who cried when Shivane Pratap and Laura Licata played cello and violin Bach pieces for us? That would be me. 

Our Medicaid Practice Group team was not able to get to our agendas until checking in with each other. The joy of seeing people, hugging people, shaking hands, or bumping elbows or fists underscored the value of being able to utilize all our senses when we meet with people—after all, we are in a people industry, and it was amazing to see the care we have for each other, and it was a reminder that that care is the foundation of what we strive to deliver to the Medicaid population each and every day through our work.

What an amazing 18 months we’ve been through—hearing that the Medicaid population is now over 80 million, and that it exceeds the Medicare population is hard to fathom, and this means that the Medicaid population is 25% of our overall population, and Medicaid and Medicare populations combined are half of our population. I think the growth in Medicaid of 10 million members in just a few years is a reflection of the pandemic and hardships our nation is currently enduring.

In the midst of the loss endured as COVID-19 waves continue to seep through this world, we have accomplished much. I’m not sure if these gains seem bigger because it’s been two years since we last gathered, the appreciation of being able to get anything accomplished other than respond to the pandemic, or maybe we really have hit our goals out of the ballpark (most likely a mixture of all three).

Significant achievements of the past two years

Items of significant accomplishment and change since our last MESC in-person conference include:

  • A new administration and CMS Senior Leadership, Deputy Administrator and Director, Daniel Tsai
  • System and policy changes to accommodate needs driven by COVID-19, the substance use epidemic, and other hardships
  • Continued modular implementations, piloting of Outcomes-Based Certification and a focus on the Medicaid problems we are trying to solve
  • Steady progress on Medicaid Enterprise Systems modernization
  • Human-centered design focus
  • States seem to be striving to be more proactive and set up project management offices to help them be more efficient (great to hear attitudes like Kentucky’s, “If you can measure it, you can improve it.”). Examining the root cause with good planning helps reduce “reacting”
  • Agency collaboration and improvements in interoperability as well as collaboration with our federal CMS partners
  • Improved tools and monitoring tools (how about Tennessee’s dashboard demo!)

Challenges ahead that were raised in sessions and conversations during MESC include:

  • Public health emergency “unwinding” – lots of rule changes, potential re-enrollment for up to 80 million members
  • Coverage and access – healthcare is at a tipping point, and the future is a connected healthcare system
  • Equity and patient access
  • Whole person care innovation, delivery system reform, putting patients at the center
  • Managing data and data exchanges
  • Focus on Fast Healthcare Interoperability Resources (FHIR)—a progressive change

Inspiration to continue moving forward

Concepts of inspiration that I carry with me from this conference and will help me continue moving forward:

  • Many responses to the pandemic began organically with only a few, which grew to hundreds of thousands, showing us that a “few” (i.e., us) can lead to meaningful and impactful solutions.
  • Medicaid is about the people it’s serving, not the technology.
  • Everyone is born with creativity and the importance of curiosity as a form of listening
  • Collaboration is about peer respect—we need to understand what everyone is excellent at so we can count on them (thank you Michael Hendrix!)
  • Embrace change as a healthy way of being

We all know there is a lot going on right now and there is more to come—at work, in our lives, in our country, and on this planet. Our state partners need help as they are continually asked to do more (effectively) with less. States’ Medicaid members need help, and our state partners need help. Examining how we are structured, what tools and organizational and project management approaches we can leverage, and how we care for ourselves and our teams so we can be there for our citizens, will take us a long way towards a successful outcome. We are all in this together. Let’s dare to be bold, be creative, be innovative, be intentional—let’s lead the way to fulfil our vision and our mission!

Article
MESC 2021 reflections 

Read this if you are a State Medicaid Director, State Medicaid Chief Information Officer, State Medicaid Project Manager, or State Procurement Officer—or if you work on State Medicaid Enterprise System (MES) certification or modernization efforts.

As states transition to the Centers for Medicare & Medicaid Services' (CMS) Outcomes-Based Certification (OBC), many jurisdictions are also implementing (or considering implementation of) an Integrated Eligibility System (IES). Federal certification for a standalone Medicaid Enterprise System (MES) comes with its own challenges, especially as states navigate the recent shift to OBC for Medicaid Eligibility and Enrollment (E&E) services. Certification in the context of an IES creates a whole new set of considerations for states, as Medicaid eligibility overlaps with that of benefit programs like the Supplemental Nutrition Assistant Program (SNAP), Temporary Assistance for Needy Families (TANF), and others. We’ve identified the following areas for consideration in your own state's IES implementation: 

  • Modernizing MES 
    It's likely your state has considered the pros and cons of implementing an IES, since CMS' announcement of increased federal funds for states committed to building new and/or enhanced Medicaid systems. Determining whether an IES is the right solution is no small undertaking. From coordinating on user design to system security, development of an IES requires buy-in across a wider range of programs and stakeholders. Certification will look different from that of a standalone MES. For example, your state will not only need to ensure compliance with CMS' Minimum Acceptable Risk Standards for Exchanges (MARS-E), but also account for sensitive data, such as medical information, across program interfaces and integration. 

    BerryDunn recommends one of the first steps states take in the planning phase of their IES implementation is to identify how they will define their certification team. Federal certification itself does not yet reflect the level of integration states want to achieve with an IES, and will require as much subject matter expertise per program included in the IES as it requires an understanding of your state's targeted integration outcomes and desired overlap among programs.
  • Scale and scope of requirements
    Once your agency commits to designing an IES, the scope of its solution becomes much broader. With this comes a wider range of contract requirements. Requirements can be program-specific (e.g., relevant only to Medicaid) or program-agnostic (e.g., general technical, "look-and-feel", and security requirements that apply throughout the solution). Common requirements across certain programs (e.g., certain eligibility criteria) will also need to be determined. Requirements validation and the development of Requirements Traceability Matrixes (RTM) per program are critical parts of the development phase of an IES implementation.

    BerryDunn recommends a comprehensive mapping process of requirements to OBC and other federal certification criteria, to ensure system design is in compliance with federal guidance prior to entering go/no-go for system testing phases.
  • Outcomes as they apply across programs
    CMS' transition to OBC changed the way states define their Medicaid program outcomes. Under this new definition outcomes are the value-add, or the end result, a state wishes to achieve as the result of its Medicaid eligibility solution enhancements. In the context of an IES, Medicaid outcomes have to be considered in terms of their relation to other programs. For example, presumptive eligibility (PE) between SNAP and Medicaid and/or cross-program referrals might become more direct outcomes when there is an immediate data exchange between and among programs.

    BerryDunn recommends consideration of what you hope to achieve with your IES implementation. Is it simply an upgrade to an antiquated legacy system(s), or is the goal ultimately to improve data sharing and coordination across benefit programs? While certification documentation is submitted to individual federal agencies, cross-program outcomes can be worked into your contract requirements to ensure they are included in IES business rules and design.
  • Cost allocation
    In the planning phase of any Design, Development, and Implementation (DDI) project, states submit an Advance Planning Document (APD) to formally request Federal Financial Participation (FFP), pending certification review and approval. This APD process becomes more complex in an IES, as states need to account for FFP from federal programs in addition to CMS as well as develop a weighted cost allocation methodology to distribute shares equitably across benefit programs.

    BerryDunn recommends States utilize the U.S. Department of Health & Human Services (HHS), Administration for Children & Families (ACF), Office of Child Support Enforcement's (OCSE) Cost Allocation Methodologies (CAM) Toolkit to inform your cost allocation model across benefit programs, as part of the APD development process
  • Timeline
    A traditional MES implementation timeline accounts for project stages such as configuration sessions, requirement mapping, design validation, testing, CMS' Operational Readiness Review (ORR), etc. The project schedule for an IES is dependent on additional factors and variables. Scheduling of federal certification reviews for OBC and/or other programs might be held up by project delays in another area of the implementation, and project teams must be agile enough to navigate such changes

    BerryDunn recommends development of a thoughtful, comprehensive project schedule allowing ample time for each project phase across programs. We also recommend states cultivate relationships with federal partners including, but not limited to, CMS, to communicate when a development delay is anticipated. Engaging federal partners throughout the DDI phases will be a critical part of your IES implementation.

In theory, an IES benefits stakeholders on both sides of the system. Caseworkers avoid duplication of efforts, reduce administrative costs, and ensure program integrity, while individuals and families on the receiving end of public benefit programs experience a more efficient, streamlined application process. In practice, the development of a comprehensive business rules, case management, and workflow system across human services programs can prove to be a heavy lift for states, including but not limited to considerations around certification to secure FFP. Planning for the implications of an IES implementation ahead of time will go a long way in preparing your agency and state for this comprehensive certification effort.
 
For further reading
Keep an eye out for the next blog in this series, highlighting certification guidelines across an IES implementation (for CMS and other Federal programs). You can read more on OBC here

If you have questions about your specific situation, please contact the Medicaid Consulting team. We’re here to help. 

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States transition to Outcomes-Based Certification: Considerations and recommendations

Read this if you are a State Medicaid Director, State Medicaid Chief Information Officer, State Medicaid Project Manager, or State Procurement Officer—or if you work on a State Medicaid Enterprise System (MES) certification or modernization efforts.

You can listen to the companion podcast to this article, Organization development: Shortcuts for states to consider, here: 

Over the last two years, the Centers for Medicare and Medicaid Services (CMS) has undertaken an effort to streamline MES certification. During this time, we have been fortunate enough to be a trusted partner in several states working to evolve the certification process. Through this collaboration with CMS and state partners, we have been in front of recent certification trends. The content we are covering is based on our experience supporting states with efforts related to CMS certification. We do not speak for CMS, nor do we have the authority to do so.

What organization development (OD) shortcuts can state Medicaid agencies consider when faced with competing priorities and challenges such as Medicaid modernization projects in flight, staffing shortages, and a retiring workforce?

The shortcuts include rapid development and understanding of the “why”. This requires the courage to challenge assumptions, especially around transparency, to allow for a consistent understanding of the needs, data, environment, and staff members’ role in impacting the health of the people served by a state’s Medicaid program. To rapidly gain an understanding of the “why”, state Medicaid agencies should:

  1. Accelerate the transparency of information and use of data in ways that lead to a collective understanding of the “why”. Accelerating a collective understanding of the why requires improved communication mechanisms. 
  2. Invest time to connect with staff. The insistence, persistence, and consistency of leaders to stay connected to their workforce will help keep the focus on the “why” and build a shared sense of connection and purpose among teams.
  3. Create the standard that planning involves all stakeholders (e.g., policy, operations, systems staff, etc.) and focus on building consensus and alignment throughout the organization. During planning, identify answers to the following questions: What are we trying to achieve, what are the outcomes, and what is the vision for what we are trying to do?
  4. Question any fragmentation. For example, if there is a hiring freeze, several staff are retiring, and demand is increasing, it is a good idea to think about how the organization manages people. Question boundaries related to your staff and the business processes they perform (e.g., some staff can only complete a portion of a business process because of a job classification). Look at ways to broaden the expectations of staff, eliminate unnecessary handoffs, and expect development. Leaders and teams work together to build a culture that is vision-driven, data-informed, and values-based.

What are some considerations when organizations are defining program outcomes and the “why” behind what they are doing? 

Keep in mind that designing system requirements is not the same as designing program outcomes. System requirements need to be able to deliver the outcomes and the information the organization needs. With something like a Medicaid Enterprise System (MES) modernization project, outcomes are what follow because of a successful project or series of projects. For example, a state Medicaid agency looking to improve access to care might develop an outcome focused on enabling the timely and accurate screening and revalidation for Medicaid providers. 

Next, keeping with the improving access to care example, state Medicaid agencies should define and communicate the roles technology and staff play in helping achieve the desired outcome and continue communicating and helping staff understand the “why”. In Medicaid we impact people’s lives, and that makes it easy to find the heart. Helping staff connect their own motivation and find meaning in achieving an outcome is key to help ensure project success and realize desired outcomes. 

Program outcomes represents one of the six major categories related to organizational health: 

  1. Leadership
  2. Strategy
  3. Workforce
  4. Operations and process improvement 
  5. Person-centered service
  6. Program outcomes

Focusing on these six key areas during the analysis, planning, development, and integration will help organizations improve performance, increase their impact, and achieve program outcomes. Reach out to the BerryDunn’s Medicaid and Organization Development consulting team for more information about how organization develop can help your Medicaid agency.
 

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Outcomes and organization development, part II

Read this if you are a State Medicaid Director, State Medicaid Chief Information Officer, State Medicaid Project Manager, or State Procurement Officer—or if you work on a State Medicaid Enterprise System (MES) certification or modernization efforts. 

The companion podcast to this article, Organization development: Preparing for Medicaid Enterprise Systems (MES) modernization, can be found in our virtual library.  


What is organization development (OD)? 

The purpose of OD is to improve organizational performance and outcomes. OD focuses on improving an organization’s capability through the alignment of strategy, structure, people, rewards, systems, metrics, and management processes.  

OD is a science-backed, interdisciplinary field rooted in psychology, culture, innovation, social sciences, quality management, project management, adult learning, human resource management, change management, organization behavior, and research analysis and design, among others.  

OD typically starts with a clear sense of mission, vision, and values that answers the question “what we are trying to be?” OD develops the culture and behaviors that reflect the organizational values.  

OD facilitates the transformation of the workplace culture to become strategic, meaning: vision-driven, values-based, and goals-aligned. This may include talent development for leaders and staff and redesigning organizational infrastructure. 

What is the scope of an OD effort? 

OD efforts are most effective when they encompass the entire organization becoming the basis for a strategic plan. OD can be just as effective when applied to a MES modernization project. In this application of OD, we facilitate stakeholder engagement with the intent of person-centered service, concurrent design for operations, processes, and training side-by-side with the systems design and development. This approach is also referred to as human-centered design (HCD).  

Regardless of the scope, OD reinforces benchmarks of high-performance organizations including: 

  • Transparent and data-informed decision making 
  • Developed leadership building connections with consistent expectations 
  • Culture of continuous improvement and innovation 
  • Team-based success and ownership for outcomes 
  • Person-centered service 

What does OD look like in action? 

We facilitate leaders to assess their organization through the eyes of stakeholders, particularly staff and people served. Collaboratively, with no blame or shame, the leaders articulate where they are today and where they need to be in the future, and build a roadmap or strategic plan to get there. In the assessment and roadmap we use the following six focal points of the organization:  

  • Excellent leadership 
  • Effective strategy 
  • A workforce that is confident, competent, consistent, and compassionate 
  • Quality operations and process improvement 
  • Person-centered service that results in a positive client experience 
  • Quality program outcomes for the communities served 

The roadmap or strategic plan typically includes talent development, and redesign of the infrastructure, including structure, processes, communication mechanisms, performance management processes, deployment of resources, and job skills development approaches.  

Talent development ensures that your leaders are aligned, prepared, and most importantly leading and inspiring their people toward that vision and the development of the workforce. Talent development provides staff with the skills, knowledge, and abilities needed, and reinforces positive attitudes, beliefs, and willingness to work together towards common goals. This might also include restructuring business process redesign, it might include expanding roles or shifting roles.  

Principles of lean are an important component of organization development when redesigning processes and helps organizations, such as state Medicaid agencies, do more with the current resources. With so many constraints placed on organizations, the lean approach is a critical component of optimizing existing resources and finding cost savings through changing “what we do” and “how we do it”, as opposed to cutting “what we do” or “changing who does it”. Resource optimization is just one of the benefits of organization development. 

Why is it important to redesign your organization and develop your staff when you're implementing a new technology system, such as a new Medicaid Enterprise System module? 

For state Medicaid Agencies, the organization goal isn't to modernize a system, the goal is for competent and compassionate staff serving clients and providers to improve health and wellness in our communities. Our goal is streamlined processes that improve accuracy and timeliness. Look at the outcomes of the program, then design the systems that enable business processes and the people who make that process happen every single day. We go back to why we are doing anything in the first place. Why do we need this change? What are we trying to accomplish? If we're trying to accomplish better service, a healthier community, and streamline processes so we are cost effective, then it leads us to modernizing our enterprise system and making sure that our people are prepared to be successful in using that system. Aligning to the organizational goals, or what we call the North Star, sets us up for success with the enterprise efforts and the human efforts. 

What can clients do to navigate some of the uncertainties of a modernization effort, and how can they prepare their staff for what's next? 

First articulate the goals or why you want the modernization, and build a foundation with aligned, and effective leaders. Assess the needs of the organization from a “social” or people perspective and a technical or systems perspective (note: BerryDunn uses a socio-technical systems design approach). Then, engage staff to develop a high-performance, team-based culture to improve lean processes. Design and develop the system to enable lean business processes and concurrently have operations design standard operating procedures, and develop the training needed to optimize the new system.  

Leaders must lead. If leaders are fragmented, if they are not effective communicators, if they do not have a sense of trust and connection with their workforce, then any change will be sub-optimized and probably will be a frustrating experience for all.  

If the workforce is in a place where staff live with suspicion or a lack of trust, or maybe some dysfunctional interpersonal skills, then they are not in a place to learn a new system. If you try to build a system based on a fragmented organizational structure or inconsistent processes, you will not achieve the potential of the modernization efforts and will limit how people view your enterprise system. The worst thing you can do is invest millions of dollars in the system based on a flawed organizational design or trying to get that system to just do what we've always done. 

By starting with building the foundation of engaging employees, not just to make people feel good, but also to help them understand how to improve their processes and build a positive workplace. Do we have the transparency in our data so that we understand what the actual problems are? Can employees articulate the North Star goals, the constraints, the reasons to update systems, then the organizations will have a pull for change as opposed to a push.

Medicaid agencies and other organizations can create a pull for change by engaging with their resources who can identify what gets in the way of serving the clients, i.e., what gets in the way of timeliness or adds redundancy or rework to the process. The first step is building that foundation, getting people leaning in, and understanding what's happening. By laying the foundation first, organizations help reduce the barriers between operations and systems, and ensure that they're working collaboratively toward organizational goals, always keeping the ‘why’ in mind and using measures to know when they are successful. 

How does a state focus on organization development when they are facing budget and staffing constraints? 

It is too easy to say, "invest in your people". In reality, the first thing that state Medicaid agencies or other organizations need do is redefine their sense of lean. Many inaccurately believe that lean means limited resources working really hard. Lean is tapping into the potential creativity and innovation of each staff member to look for ways to improve the process. Organizations should look at everything they do and ask “Does this add value to the end recipient of our service?” Even if I'm processing travel reimbursement requests, I still have a customer, I still have a need for timeliness and accuracy. If state Medicaid agencies can mobilize that type of focus with every single employee in their organization, they can achieve huge cost savings without the pain of cutting the workforce.   

In one state where BerryDunn’s organization development team provided this level and type of organizational transformation, there was a very deliberate focus on building this foundation prior to a large-scale system modernization.

By developing the leaders and training the employees in how to improve their processes, improve teamwork and trust, and align to the goal of a positive client experience, they were able to effectively implement the new system and seamlessly move to remote pandemic conditions. Once the state Medicaid agency had aligned the technical systems and the people systems to the organizational goals, they were successful and more resilient for future changes.   

You can learn more in Part II of our Outcomes and Organization Development podcast and article

If you have any questions, please contact our Medicaid consulting team. We're here to help.

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Outcomes and organization development 

Read this if you work in an alcohol control capacity for state government.

The COVID-19 outbreak has changed the alcoholic beverage industry significantly over the last 14 months. Restrictions forced people to stay at home, limiting their travel to restaurants, bars, and even some stores to purchase their favorite spirits. In at least 32 states, new legislation allowed consumers the option to buy to-go cocktails as a way to help these establishments stay in business. As a result, consumers took advantage of alcohol delivery services. 

There were two large shifts in consumer purchasing for the alcoholic beverage industry in 2020. The first was a shift from on-premise to off-premise purchasing (for example, more takeaway beverages from bars, breweries, and other establishments). The second was the explosion of e-commerce sales for curbside pickup and home delivery. A study by IWSR, an alcoholic beverage market research firm, stated that alcohol e-commerce sales grew 42% in 2020. The head of consumer insights for the online alcoholic beverage delivery service, Drizly, attributes this growth to the “increased consumer awareness of alcohol delivery as a legal option, as well as an overall shift in consumer purchasing behavior toward online ordering and delivery”. 

How state agencies responded

The move to an e-commerce model has impacted state agencies who regulate the distribution and/or sale of alcohol. States such as Oklahoma, Alabama, and Georgia recently passed legislation allowing alcohol delivery to consumers’ homes. In alcoholic beverage control states, where the state controls the sale of alcohol at the wholesale level, curbside pickup programs (New Hampshire) were implemented, while others started online home delivery services (Pennsylvania). 

In a fluid legislative environment, states agencies are working to meet consumer needs in a very competitive marketplace, while fulfilling their regulatory obligation to the health and safety of their constituents.

How alcoholic beverage control states can adapt

Now is an opportune time for control state agencies to keep pace with consumer demand for more flexible purchasing options, such as buying online with home delivery, or some form of curbside and/or in-store pickup programs. Every one of the 17 alcoholic beverage control states has passed legislation to allow the delivery of either beer, wine, and/or distilled spirits in some form, with some limitations.

While for some the COVID-19 outbreak has necessitated these more distant shopping experiences, the option of these sales channels has brought consumers flexibility they will expect going forward. This calls for control state agencies to act on this changing consumer demand. By prioritizing investing in and taking ownership of new sales channels, such as e-commerce and curbside pickup, control state agencies’ technology and logistics teams can develop strategies and tools to effectively adapt to this new demand. 

Adapting technology and logistics

Through technology, control state agencies can take advantage of e-commerce and curbside pickup sales channels, to drive more revenue. We recommend control states consider the following: 

Define the current capabilities to support an online sales strategy

An important first step is to define how to address constituents’ evolving needs as compared to the current e-commerce capabilities control state agencies can support. Considerations include:

  • Are current staff capable of developing and supporting new website capabilities to meet the increased demand on the website?  
  • How will the current customer support team(s) expand to support concerns from the new channels?
  • How will new e-commerce order volume be fulfilled for home delivery (including order errors, breakage, returns, etc.)?   

Control state agencies should complete current and future state assessments in each area above to confirm what capabilities they have today and which they would like to have in the future; which will allow for an accurate gap analysis and comparison to their future state needs. Once the current state assessment, future state strategy, and gap analysis are complete, control state agencies can define the projects required to support the future state requirements. 

Reevaluate existing fulfillment, inventory, and distribution processes

Each control state has existing product fulfillment, inventory and distribution processes, and information technology (IT) tools for delivering alcohol, to their own or licensed retail stores and businesses. These current processes and IT systems should be assessed as part of the current state capabilities assessment mentioned above, to help define the level of change needed to support the control state agency’s future needs in the e-commerce channel. Key assessment questions control state agencies should ask themselves include: 

  • Can the current IT systems (e.g., inventory management, customer relationship management [CRM], customer support/call center, financial, point of sale [POS], and website infrastructure) support required upgrades?
  • Can retail teams and today’s infrastructure support order taking, inventory, fulfillment, and buy online pickup in store programs?
  • How will warehouse and retail stores track and manage the e-commerce shipments and returns related to this channel?
  • If home delivery is part of the strategy, define how the delivery logistics will be met through state or vendor resources.
  • What staffing model and skill sets will support future business needs?
  • What is the total cost of ownership for these new e-commerce capabilities so that the short and long-term costs and profits can be accurately estimated? 

The answers to these questions will help to inform a future e-commerce strategy and accommodate the cost and staff impacts. 

Bring in online retail expertise

It is important to ensure that the control state agency has website and mobile capabilities to support today’s consumer needs. This includes the ability to order a wide range of products online for either home delivery or buy online pickup in store. The design of the website and mobile transactional capabilities is critically important to the success of this channel, the true growth in revenues. Being marketing focused (e.g., allowing consumers to view and order products, save items for later, and see similar products) will help drive traffic and sales on this upgraded channel. 

For control state agencies with a more static product website, consider purchasing a commercial off-the-shelf (COTS) e-commerce product with existing retail-focused website features, or contract with a vendor to build a website that meets more unique needs. The control state agency should bring in at least one online retail subject matter expert vendor to help set the direction, design the upgrades or new site, manage the project(s) needed to implement the online capabilities, and potentially manage the operational support of the website and mobile solution.

BerryDunn provides state alcoholic beverage control boards and commissions with many services along the IT system acquisition lifecycle, including planning, needs assessment, business process analysis, request for proposal (RFP) development, requirements development, technology contract development, and project management services. 

For the full list of steps to consider and to learn more about how you can successfully position your control state agency to adapt to the changing alcoholic beverage landscape, contact us.
 

Article
COVID-19 and the e-commerce explosion

Read this if your organization operates under the Governmental Accounting Standards Board (GASB).

Governmental Accounting Standards Board (GASB) Statement No. 93 Replacement of Interbank Offered Rates

Summary

With the global reference rate reform and the London Interbank Offered Rate (LIBOR) disappearing at the end of 2021, GASB Statement No. 93 was issued to address the accounting and financial impacts for replacing a reference rate. 

The article below is focused on Hedging Derivative Investments and amendments impacting Statement No. 87, Leases. We have not included guidance related to the Secured Overnight Financing Rate or the Up-Front Payments. 

Background

We have all heard that by the end of 2021, LIBOR will cease to exist in its current form. LIBOR is one of the most commonly used interbank offered rates (IBOR). Now what?

In March 2020, the GASB provided guidance to address the accounting treatment and financial reporting impacts of the replacement of IBORs with other referenced rates while maintaining reliable and comparable information. Statement No. 93 specifically addresses previously issued Statements No. 53, Accounting and Financial Reporting for Derivative Instruments, and No. 87, Leases, to provide updated guidance on how a change to the reference rate impacts the accounting for hedging transactions and leases.  

Here are our analyses of what is changing as well as easy-to-understand and important considerations for your organization as you implement the new standards.

Part 1: Hedging Derivative Instruments

The original guidance under Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, as amended, requires that a government terminate a hedging transaction if the government renegotiates or amends a critical term of a hedging derivative instruction. 

Reference rate is the critical term that differentiates Statement No. 93 from Statement No. 53. The newly issued Statement No. 93 provides an exception that allows for certain hedging instruments to hedge the required accounting termination provisions when the IBOR is replaced with a new reference rate. 

In order words, under Statement No. 53, a modification of the IBOR would have caused the hedging instrument to terminate. However, Statement No. 93 now provides an exception to the termination rules as a result of the end of LIBOR. According to Statement No. 93, the exception is allowable when: 

  1. The hedging derivative instrument is amended or replaced to change the reference rate of the hedging derivative instrument’s variable payment or to add or change fallback provisions related to the reference rate of the variable payment.
  2. The reference rate of the amended or replacement hedging derivative instrument’s variable payment essentially equates to the reference rate of the original hedging derivative instrument’s variable payment by one or both of the following methods:
    • The replacement rate is multiplied by a coefficient or adjusted by addition or subtraction of a constant; the amount of the coefficient or constant is limited to what is necessary to essentially equate the replacement rate and the original rate
    •  An up-front payment is made between the parties; the amount of the payment is limited to what is necessary to essentially equate the replacement rate and the original rate.
  3. If the replacement of the reference rate is effectuated by ending the original hedging derivative instrument and entering into a replacement hedging derivative instrument, those transactions occur on the same date.
  4. Other terms that affect changes in fair values and cash flows in the original and amended or replacement hedging derivative instruments are identical, except for the term changes, as specified in number 1 below, that may be necessary for the replacement of the reference rate.

As noted above, there are term changes that may be necessary for the replacement of the reference rate are limited to the following

  • The frequency with which the rate of the variable payment resets
  • The dates on which the rate resets
  • The methodology for resetting the rate
  • The dates on which periodic payments are made.

Many contracts that will be impacted by LIBOR will be covered under Statement No. 93. The statement was created in order to ease with the transition and not create unnecessary burdens on the organizations. 

Part 2: Leases

Under the original guidance of Statement No. 87 Leases, lease contracts could be amended while the contract was in effect. This was considered a lease modification. In addition, the guidance states that an amendment to the contract during the reporting period would result in a separate lease. Examples of such an amendment included change in price, length, or the underlying asset.  

Included within Statement No. 93, are modifications to the lease standard as it relates to LIBOR. In situations where a contract contains variable payments with an IBOR, an amendment to replace IBOR with another rate by either changing the rate or adding or changing the fallback provisions related to the rate is not considered a lease modification. This modification does not require a separate lease. 

When is Statement No. 93 effective for me?

The removal of LIBOR as an appropriate interest rate is effective for reporting periods ending after June 31, 2021. All other requirements of Statement No. 93 are effective for all reporting periods beginning after June 15, 2022. Early adoption is allowed and encouraged. 

What should I do next? 

We encourage all those that may be impacted by LIBOR—whether with hedging derivative instruments, leases, and/or specific debt arrangements—to review all of their instruments to determine the specific impact on your organization. This process will be time consuming, and may require communication with the organizations with whom you are contracted to modify the terms so that they are agreeable to both parties.

If you would like more information about early adoption, or implementing the new Hedging Derivative Instruments or Leases, please contact Katy Balukas or Grant Ballantyne.
 

Article
The clock is ticking on LIBOR. Now what?