Participant-Directed Services in Managed Long-Term Services and Supports Programs: A Five State Comparison. 3.5. Financial Management Services


All five states require the MCOs to contract with state-approved agencies to provide FMS. The primary duties of an FMS agency include a payment function (providing payments on behalf of the participant to workers, agencies, or vendors for goods and services), a reporting function (generating expenditure reports for participants, MCOs, and state programs), and a management function (managing employer tax and insurance responsibilities). While the FMS agencies across the five states fulfill these functions, many provide other types of support as well (e.g., ongoing information and assistance (Tennessee), assistance with worker recruitment (Arizona, Tennessee, and Texas), providing training for participants and/or workers (Texas).

  • FMS selection varies across the states: Across the five states there were two basic ways MCOs selected FMS entities with which to contract: (1) the state delegates the authority to each MCO to select and contract with FMS entities who have been approved as a Medicaid Provider by the state (Arizona, Massachusetts, and Texas); or (2) the state contracts directly with providers (New Mexico and Tennessee) and the MCO is required to contact with these entities as well. In Tennessee, the contract is a three-way contract signed by the state, MCO and FMS agency.

  • The number of FMS providers varies greatly across the states: New Mexico and Tennessee have a single FMS entity. Arizona (n=3) and Massachusetts (n=4) have a very small number of FMS agencies, while Texas has upwards of 400 FMS agencies. Texas has had an open period of allowing any interested entities to participate as an FMS agency. Entities interested in FMS must attend a three-day training and pass a test to show they have the required skills and knowledge. The three-day training and "certification" is run by the state. Once they are certified by the state, MCOs can contract with these FMS agencies. While there are benefits for states to allow multiple FMS agencies (e.g., allowing flexibility for the MCO and participant to select an FMS that is the right "fit" in terms of experience, and having an option in place if one FMS did not work out), there are drawbacks as well. Increased quantity does not always mean enhanced quality, and it is harder to monitor FMS activities. With the exception of Tennessee, MCOs do not closely monitor the tasks and performances of the FMS.

  • FMS providers reported contracting with multiple MCOs: In all five states, MCOs were required to contract with any FMS provider approved by the state. So the majority of MCOs reported receiving FMS services from multiple providers. New Mexico and Tennessee were the only states with one approved FMS provider. States operating with more than one FMS providers can be challenged with monitoring oversight since universal standards are not required by the state.

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