Table of Contents
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007 | ||
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File Number 1-31719
MOLINA HEALTHCARE,
INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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13-4204626 | |
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(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer Identification No.) |
200
Oceangate, Suite 100, Long Beach, California 90802
(Address of principal executive offices)
(Address of principal executive offices)
(562) 435-3666
(Registrant’s telephone
number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. o Yes þ No
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. o Yes þ No
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. þ Yes o No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
| Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). o Yes þ No
The aggregate market value of Common Stock held by
non-affiliates of the Registrant as of June 30, 2007, the
last business day of our most recently completed second fiscal
quarter, was approximately $394.5 million (based upon the
closing price for shares of the Registrant’s Common Stock
as reported by the New York Stock Exchange, Inc. on
June 29, 2007).
As of February 26, 2008, approximately
28,445,000 shares of the Registrant’s Common Stock,
$0.001 par value per share, were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2008
Annual Meeting of Stockholders to be held on May 15, 2008
are incorporated by reference into Part III of this
Form 10-K.
MOLINA
HEALTHCARE, INC.
Table of
Contents
Form 10-K
Table of Contents
PART I
| Item 1: | Business |
Overview
We are a multi-state managed care organization participating
exclusively in government-sponsored health care programs for
low-income persons, such as the Medicaid program and the State
Children’s Health Insurance Program, or SCHIP. Commencing
in January 2006, we also began to serve a small number of
members who are dually eligible under both the Medicaid and
Medicare programs. We conduct our business primarily through
nine licensed health plans in the states of California,
Michigan, Missouri, Nevada, New Mexico, Ohio, Texas, Utah, and
Washington. The health plans are locally operated by our
respective wholly owned subsidiaries in those nine states, each
of which is licensed as a health maintenance organization, or
HMO. Our revenues are derived primarily from premium revenues
paid to our HMOs by the relevant state Medicaid authority.
Increasingly, we also derive revenues from the federal Centers
for Medicare and Medicaid Services, or CMS, in connection with
our Medicare services.
The payments made to our HMOs generally represent an agreed upon
amount per member per month, or a “capitation” amount,
which is paid regardless of whether the member utilizes any
medical services in that month or whether the member utilizes
medical services in excess of the capitation amount. Each of our
HMOs (with the exception of our Utah plan whose Medicaid
business is not capitated) is thus financially “at
risk” for the medical care of its members. Each HMO
arranges for health care services for its members by contracting
with health care providers in the relevant communities or
states, including contracting with primary care physicians,
specialist physicians, physician groups, hospitals, and other
medical care providers. Our California HMO also operates 19 of
its own primary care community clinics. Various core
administrative functions of our health plans —
primarily claims processing, information systems, and
finance — are centralized at our corporate parent in
Long Beach, California. As of December 31, 2007,
approximately 1,149,000 members were enrolled in our nine health
plans.
Dr. C. David Molina founded our company in 1980 under the
name “Molina Medical Centers” as a provider
organization serving the Medicaid population in Southern
California through a network of primary care clinics. Since
then, we have increased our membership through the
start-up
development of new health plan operations, through the
acquisition of existing health plans, and through internal or
organic growth. In 1997, we established our Utah health plan as
a start-up
operation. In 1999, we incorporated in California as the parent
company of our California and Utah health plan subsidiaries
under the name “American Family Care, Inc.” In late
1999, we acquired our Michigan and Washington health plans. In
March 2000, we changed our name to Molina Healthcare, Inc. In
June 2003, we reincorporated from California to Delaware, and in
July 2003 we completed our initial public offering of common
stock and listed our shares for trading on the New York Stock
Exchange under the trading symbol, MOH. In July 2004, we
acquired our New Mexico health plan. Our
start-up
health plan in Ohio began operations in December 2005. On
January 1, 2006, our health plans in California, Michigan,
Utah, and Washington began operating Medicare Advantage Special
Needs Plans in their respective states. On May 15, 2006, we
acquired Cape Health Plan in Michigan, merging it into our
Michigan HMO effective December 31, 2006. Our
start-up
health plan in Texas began operations in September 2006. In June
2007, we organized a health plan in Nevada which serves only
Medicare members. On November 1, 2007, we acquired Alliance
For Community Health LLC, d/b/a Mercy CarePlus (“Mercy
CarePlus”), an HMO serving approximately 68,000 members in
Missouri as of December 31, 2007. We previously operated an
HMO in Indiana which ceased serving members effective
December 31, 2006 after its state Medicaid contract was not
renewed. On January 1, 2008, our health plans in
California, Michigan, Nevada, New Mexico, Texas, Utah, and
Washington began enrolling members in our new Medicare Advantage
plans with prescription drug coverage, or MA-PD plans. Also in
January 2008, our health plans in New Mexico and Texas began
operating Medicare Advantage Special Needs Plans.
Our members have distinct social and medical needs and come from
diverse cultural, ethnic, and linguistic backgrounds. From our
inception, we have focused exclusively on serving low-income
individuals enrolled in government-sponsored healthcare
programs. Our success has resulted from our extensive experience
with meeting the needs of our members, including our over
27 years of experience in operating community-based primary
care clinics, our cultural and linguistic expertise, our
education and outreach programs, our expertise in working with
government agencies, and our focus on operational and
administrative efficiencies.
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Our principal executive offices are located at 200 Oceangate,
Suite 100, Long Beach, California 90802, and our telephone
number is
(562) 435-3666.
Our website is www.molinahealthcare.com. Information
contained on our website or linked to our website is not
incorporated by reference into, or as part of, this annual
report. Unless the context otherwise requires, references to
“Molina Healthcare,” the “Company,”
“we,” “our,” and “us” herein refer
to Molina Healthcare, Inc. and its subsidiaries. Our annual
reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and all amendments to these reports, are available free of
charge on our website, www.molinahealthcare.com, as soon
as reasonably practicable after such reports are electronically
filed with or furnished to the Securities and Exchange
Commission, or SEC. Information regarding our officers,
directors, and copies of our Code of Business Conduct and
Ethics, Corporate Governance Guidelines, and our Audit,
Compensation, and Corporate Governance and Nominating Committee
Charters, are also available on our website. Such information is
also available in print upon the request of any stockholder to
our Investor Relations Department at the address of our
executive offices set forth above.
Our
Industry
The Medicaid and SCHIP Programs. Established
in 1965, the Medicaid program is an entitlement program funded
jointly by the federal and state governments and administered by
the states. The Medicaid program provides health care benefits
to low-income families and individuals. Each state establishes
its own eligibility standards, benefit packages, payment rates,
and program administration within federal guidelines. The most
common state-administered Medicaid program is the Temporary
Assistance for Needy Families program, or TANF (often pronounced
“TAN-if”). TANF is the successor to the Aid to
Families with Dependent Children program, or AFDC, and most
enrolled members are mothers and their children. Another common
state-administered Medicaid program is for the aged, blind, and
disabled, or ABD Medicaid members, who do not qualify under
other Medicaid coverage categories.
In addition, the State Children’s Health Insurance Program,
known widely by the acronym, SCHIP, is a matching program that
provides health care coverage to children whose families earn
too much to qualify for Medicaid coverage, but not enough to
afford commercial health insurance. States have the option of
administering SCHIP through their Medicaid programs.
The state and federal governments jointly finance Medicaid and
SCHIP through a matching program in which the federal government
pays a percentage based on the average per capita income in each
state. Typically, this federal percentage match is at least 50%.
Federal payments for Medicaid have no set dollar ceiling and are
limited only by the amount states are willing to spend.
Nevertheless, budgetary constraints at both the federal and
state levels may limit the benefits paid and the number of
members served by Medicaid.
Medicaid Managed Care. Under traditional
fee-for-service
Medicaid programs, health care services are made available to
beneficiaries in an uncoordinated manner. These beneficiaries
typically have minimal access to preventive care such as
immunizations, and access to primary care physicians is limited.
As a consequence, treatment is often postponed until medical
conditions become more severe, leading to higher utilization of
costly emergency room services. In addition, because providers
are paid on a fee-for-service basis where additional services
rendered result in additional revenues, they lack incentives to
monitor utilization and control costs.
In an effort to improve quality and provide more uniform and
more cost-effective care, many states have implemented Medicaid
managed care programs. Such programs seek to improve access to
coordinated health care services, including preventive care, and
to control health care costs. Under Medicaid managed care
programs, a health plan receives a predetermined payment per
enrollee or member (commonly referred to as
“capitation”) for the covered health care services.
The health plan is thus financially “at risk” for its
members’ medical services. The health plan, in turn,
arranges for the provision of the covered health care services
by contracting with a network of providers, including both
physicians and hospitals, who agree to provide the covered
services to the health plan’s members. The health plan also
monitors quality of care and implements preventive programs,
thereby striving to improve access to care while more
effectively controlling costs.
Over the past decade, the federal government has expanded the
ability of state Medicaid agencies to explore and, in many
cases, to mandate the use of managed care for Medicaid
beneficiaries. If Medicaid managed care is not
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mandatory, individuals entitled to Medicaid may choose either
the fee-for-service Medicaid program or a managed care plan, if
available. All states in which we operate have mandatory
Medicaid managed care programs.
Medicare Advantage Special Needs
Plans. Consistent with our historical mission of
serving low-income and medically underserved families and
individuals, on January 1, 2006, our health plans in
California, Michigan, Utah, and Washington began operating
Medicare Advantage Special Needs Plans in their respective
states. The Medicare Modernization Act of 2003 created a new
type of Medicare Advantage coordinated care plan focused on
individuals with special needs, such as those Medicare
beneficiaries who are also eligible for Medicaid, are
institutionalized, or have severe or disabling chronic
conditions. The plans organized to provide services to these
“special needs individuals” are called Special Needs
Plans, or SNPs. The Molina Healthcare SNPs operate under the
trade name, “Molina Medicare Options Plus,” and
currently focus on serving only the dual eligible
population — that is, those beneficiaries eligible for
both Medicare and Medicaid such as low-income seniors and people
with disabilities. We use our Medicare Advantage SNPs as a
platform for ongoing discussions with state and federal
regulators regarding the integration of Medicare and Medicaid
benefits in order to provide a single point of access and
accountability for care and services. Total enrollment in our
SNPs at December 31, 2007 was approximately 5,000 members.
On January 1, 2008, our New Mexico and Texas health plans
also began operating SNPs. Our 2007 premium revenues from
Medicare across all health plans represented approximately 2.0%
of our total premium revenues.
Medicare Advantage Prescription Drug Plans. On
January 1, 2008, our health plans in California, Michigan,
Nevada, New Mexico, Texas, Utah, and Washington also began
enrolling members in our new Medicare Advantage Prescription
Drug plans, or MA-PD plans. The Molina MA-PD plans operate under
the trade name, “Molina Medicare Options.”
Other Government Programs for Low Income
Individuals. In certain instances, states have
elected to provide medical benefits to individuals and families
who do not qualify for Medicaid. Such programs are often
administered in a manner similar to Medicaid and SCHIP, but
without federal matching funds. At December 31, 2007, our
Washington HMO served approximately 26,000 such members under
one such program, that state’s “Basic Health
Plan.”
Our
Approach
We focus on serving low-income families and individuals who
receive health care benefits through government-sponsored
programs within a managed care model. These families and
individuals generally represent diverse cultures and
ethnicities. Many have had limited educational opportunities and
do not speak English as their first language. Lack of adequate
transportation is common. We believe we are well-positioned to
capitalize on the growth opportunities in serving these members.
Our approach to managed care is based on the following key
attributes:
Experience. For over 27 years we have
focused on serving Medicaid beneficiaries as both a health plan
and as a provider. We have developed and forged strong
relationships with the constituents whom we serve —
members, providers, and government agencies. Our ability to
deliver quality care and to establish and maintain provider
networks, as well as our administrative efficiency, has allowed
us to compete successfully for government contracts. We have a
strong record of obtaining and renewing contracts and have
developed significant expertise as a government contractor.
Administrative Efficiency. We have centralized
and standardized various functions and practices across all of
our health plans to increase administrative efficiency. The
steps we have taken include centralizing claims processing and
information services onto a single platform. We have
standardized medical management programs, pharmacy benefits
management contracts, and health education. In addition, we have
designed our administrative and operational infrastructure to be
scalable for cost-effective expansion into new and existing
markets.
Proven Expansion Capability. We have
successfully replicated our business model through the
acquisition of health plans, the
start-up
development of new operations, and the transition of members
from other health plans. The integration of our New Mexico
acquisition demonstrated our ability to integrate stand-alone
acquisitions. The establishment of our health plans in Utah,
Ohio, and Texas reflects our ability to replicate our business
model in new
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states, while contract acquisitions in California, Michigan, and
Washington have demonstrated our ability to acquire and
successfully integrate existing health plan operations into our
business model.
Flexible Care Delivery Systems. Our systems
for delivery of health care services are diverse and readily
adaptable to different markets and changing conditions. We
arrange health care services through contracts with providers
that include independent physicians and medical groups,
hospitals, ancillary providers and, in California, our own
clinics. Our systems support multiple contracting models, such
as fee-for-service, capitation, per diem, case rates, and
diagnostic related groups, or DRGs. Our provider network
strategy is to contract with providers that are best-suited,
based on expertise, proximity, cultural sensitivity, and
experience, to provide services to the members we serve.
We operate 19 company-owned primary care clinics in
California. Our clinics require low capital expenditures and
minimal
start-up
time. We believe that our clinics serve a useful role in
providing certain communities with access to primary care and
providing us with insights into physician practice patterns,
first-hand knowledge of the needs of our members, and a platform
to pilot new programs.
Cultural and Linguistic Expertise. We have
over 27 years of experience developing targeted health care
programs for culturally diverse Medicaid members, and believe we
are well-qualified to successfully serve these populations. We
contract with a diverse network of community-oriented providers
who have the capabilities to address the linguistic and cultural
needs of our members. We educate employees and providers about
the differing needs among our members. We develop member
education material in a variety of media and languages and
ensure that the literacy level is appropriate for our target
audience.
Medical Management. We believe that our
experience as a health care provider has helped us to improve
medical outcomes for our members while at the same time
enhancing the cost-effectiveness of care. We carefully monitor
day-to-day medical management in order to provide appropriate
care to our members, contain costs, and ensure an efficient
delivery network. We have developed disease management and
health education programs that address the particular health
care needs of our members. We have established pharmacy
management programs and policies that have allowed us to manage
our pharmaceutical costs effectively. For example, our staff
pharmacists educate our providers on the use of generic drugs
rather than brand drugs.
Our
Strategy
Our objective is to be an innovative health care leader
providing quality care and accessible services in an efficient
and caring manner to Medicaid, SCHIP, Medicare, and other
low-income members. To achieve this objective, we intend to:
Focus On Serving Low-Income Families And
Individuals. We believe that the Medicaid and
low-income Medicare population, which is characterized by
significant ethnic diversity, requires unique services to meet
its health care needs. Our more than 27 years of experience
in serving this population has provided us significant expertise
in meeting the unique needs of our members.
Increase Our Membership. We have grown our
membership through a combination of acquisitions,
start-up
health plans, serving new populations, and internal or organic
growth. Increasing our membership provides the opportunity to
grow and diversify our revenues, increase profits, enhance
economies of scale, and strengthen our relationships with
providers and government agencies. We will continue to seek to
grow our membership by expanding within existing markets and
entering new strategic markets.
| • | Expand within existing markets. We expect to grow in existing markets by expanding our service areas and provider networks, increasing awareness of the Molina brand name, extending our services to new populations, maintaining positive provider relationships, and integrating members from other health plans. | |
| • | Enter new strategic markets. We intend to enter new markets by acquiring existing businesses or building our own operations. We will focus our expansion on markets with competitive provider communities, supportive regulatory environments, significant size and, where possible, mandated Medicaid managed care enrollment. |
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Provide quality cost-effective care. We will
use our information systems, strong provider networks, and
first-hand provider experience to further develop and utilize
effective medical management and other programs that address the
distinct needs of our members. While improving the quality of
care, these programs also facilitate the cost-effective delivery
of that care. To document our commitment to quality, each Molina
Healthcare health plan has adopted goals: (1) to achieve or
continue accreditation by the National Committee for Quality
Assurance, or NCQA, and (2) to achieve scores under the
Healthcare Effectiveness Data and Information Set (HEDIS) at the
75th percentile for Medicaid plans. It is our goal to be
the health plan of choice, recognized for the quality and
accessibility of our services. Low-income families and
individuals covered by government programs have traditionally
faced long-standing barriers to accessing care that include
language, culture, and literacy. We want to be known for our
ability to help others overcome these barriers. Among
physicians, hospitals, and other providers, we want to be known
for prompt and accurate payment of claims and sound medical
decisions.
Leverage operational efficiencies. Our
centralized administrative infrastructure, flexible information
systems, and dedication to controlling administrative costs
provide economies of scale. We believe our administrative
infrastructure has significant expansion capacity, allowing us
to integrate new members from expansion within existing markets
and entry into new markets.
Our
Health Plans
As of December 31, 2007, our health plans were located in
California, Michigan, Missouri, Nevada, New Mexico, Ohio,
Texas, Utah, and Washington. An overview of our health plans and
their principal governmental program contracts with the relevant
state authority as of December 31, 2007 is provided below:
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State
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Expiration Date
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Contract Description or Covered Program
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California
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6-30-09 | Subcontract with Health Net for services to Medi-Cal members under Health Net’s Los Angeles County Two-Plan Model Medi-Cal contract with the California Department of Health Services (DHS). | ||
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California
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12-31-08 | Medi-Cal contract for Sacramento Geographic Managed Care Program with California Department of Health Services (DHS). | ||
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California
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3-31-09 | Two Plan Model Medi-Cal contract for Riverside and San Bernardino Counties (Inland Empire) with California Department of Health Services (DHS). | ||
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California
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12-31-08 | Medi-Cal contract for San Diego Geographic Managed Care Program with California Department of Health Services (DHS). | ||
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California
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6-30-08 | Healthy Families contract (California’s SCHIP program) with California Managed Risk Medical Insurance Board (MRMIB). | ||
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Michigan
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9-30-08 | Medicaid contract with State of Michigan. | ||
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Missouri
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6-30-09 | Medicaid contract with the Missouri Department of Social Services. | ||
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New Mexico
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6-30-08 | Salud! Medicaid Managed Care Program contract (including SCHIP) with New Mexico Human Services Department (HSD). | ||
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Ohio
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6-30-08 | Medicaid contract with Ohio Department of Job and Family Services (ODJFS). | ||
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Texas
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8-31-08 | Medicaid contract with Texas Health and Human Services Commission (HHSC). | ||
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Utah
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6-30-08 | Medicaid contract with Utah Department of Health. | ||
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Washington
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12-31-08 | Basic Health Plan and Basic Health Plus Programs contract with Washington State Health Care Authority (HCA). | ||
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Washington
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12-31-08 | Healthy Options Program (including Medicaid and SCHIP) contract with State of Washington Department of Social and Health Services. |
In addition to the foregoing, our health plans in California,
Michigan, New Mexico, Texas, Utah, and Washington have entered
into a standardized form of contract with CMS with respect to
their operation of a MA SNP, and our health plans in California,
Michigan, Nevada, New Mexico, Texas, Utah, and Washington have
also entered into a standardized form of contact with CMS with
respect to their operations of an MA-PD plan. Our 2007
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premium revenues from Medicare across all health plans
represented approximately 2.0% of our total premium revenues.
Our health plan subsidiaries have generally been successful in
obtaining the renewal by amendment of their contracts in each
state prior to the actual expiration of their contracts.
However, there can be no assurance that these contracts will
continue to be renewed. For example, our Indiana plan’s
contract with the state of Indiana expired without being renewed
effective December 31, 2006. The Salud! Medicaid Managed
Care contract of our New Mexico plan is currently the
subject of a new Request for Proposal, or RFP, and the New
Mexico plan is currently awaiting the results of its submission
to the New Mexico Human Services Department.
Our contracts with state and local governments determine the
type and scope of health care services that we arrange for our
members. Generally, our contracts require us to arrange for
preventive care, office visits, inpatient and outpatient
hospital and medical services, and pharmacy benefits. We are
usually paid a negotiated amount per member per month, with
the amount varying from contract to contract. Generally, that
amount is higher in states where we are required to offer more
extensive health benefits. We are also paid an additional amount
for each newborn delivery in Michigan, New Mexico, Texas, Ohio,
and Washington. Since July 1, 2002, our Utah health plan
has been reimbursed by the state for all medical costs incurred
by Utah Medicaid members plus a 9% administrative fee. In
general, either party may terminate our state contracts with or
without cause upon 30 days to nine months prior written
notice. In addition, most of these contracts contain renewal
options that are exercisable by the state.
California. Molina Healthcare of California,
our California HMO, had enrollment of 296,000 total members at
December 31, 2007. We arrange health care services for our
members either as a direct contractor to the state or through
subcontracts with other health plans. Our plan serves the
counties of Los Angeles, Riverside, San Bernardino,
San Diego, Sacramento, and Yolo. Our Medi-Cal members in
Los Angeles County are served pursuant to a subcontract we have
entered into with Health Net, with Health Net in turn
contracting with the state.
Michigan. Molina Healthcare of Michigan, Inc.,
our Michigan HMO, is the largest Medicaid managed care health
plan in the state, with 209,000 members at December 31,
2007. Our Michigan HMO serves 41 counties throughout Michigan,
including the Detroit metropolitan area.
Missouri. On November 1, 2007, Molina
Healthcare, Inc. acquired Mercy CarePlus, a licensed Medicaid
managed care plan based in St. Louis, Missouri. Our
Missouri health plan operates in 57 counties of the state, with
68,000 members at December 31, 2007.
Nevada. On Nevada HMO became operational on
June 1, 2007. As of December 31, 2007, our Nevada HMO
served approximately 500 Medicare members. Our Nevada HMO has no
Medicaid enrollment.
New Mexico. As of December 31, 2007, our
New Mexico HMO served 73,000 members. Our New Mexico HMO serves
members in all of New Mexico’s 33 counties.
Ohio. As of December 31, 2007, our Ohio
HMO served 136,000 members. Our Ohio HMO operates in
50 counties of the state.
Texas. As of December 31, 2007, our Texas
HMO served 29,000 members. Our Texas HMO serves STAR and CHIP
members in 6 counties and STAR PLUS members in 13 counties. STAR
stands for State of Texas Access Reform, and is Texas’
Medicaid managed care program. STAR PLUS is the Texas Medicaid
managed care program serving the aged, blind and disabled and
includes a long-term care component.
Utah. As of December 31, 2007, Molina
Healthcare of Utah, Inc., our Utah HMO, served 55,000 members
(including 1,900 Medicare Advantage SNP members). Our Utah HMO
serves Medicaid members in 25 of the state’s 29 counties,
including the Salt Lake City metropolitan area, and SCHIP
members in all 29 counties.
Washington. Molina Healthcare of Washington,
Inc., our Washington HMO, is the largest Medicaid managed care
health plan in the state, with 283,000 members at
December 31, 2007. We serve members in 32 of the
state’s 39 counties.
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Provider
Networks
We arrange health care services for our members through
contracts with providers that include independent physicians and
groups, hospitals, ancillary providers, and our own clinics. Our
strategy is to contract with providers in those geographic areas
and medical specialties necessary to meet the needs of our
members. We also strive to ensure that our providers have the
appropriate cultural and linguistic experience and skills.
The following table shows the total approximate number of
primary care physicians, specialists, and hospitals
participating in our network as of December 31, 2007:
| California | Michigan | Missouri | Nevada | New Mexico | Ohio | Texas | Utah | Washington | Total | |||||||||||||||||||||||||||||||
|
Primary care physicians
|
2,620 | 1,933 | 1,966 | 807 | 1,493 | 1,666 | 1,321 | 989 | 2,548 | 15,343 | ||||||||||||||||||||||||||||||
|
Specialists
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6,403 | 3,364 | 2,376 | 1,525 | 6,915 | 9,460 | 3,326 | 1,172 | 5,809 | 40,350 | ||||||||||||||||||||||||||||||
|
Hospitals
|
80 | 60 | 61 | 17 | 55 | 115 | 40 | 33 | 83 | 544 | ||||||||||||||||||||||||||||||
Physicians. We contract with both primary care
physicians and specialists, many of whom are organized into
medical groups or independent practice associations. Primary
care physicians provide office-based primary care services.
Primary care physicians may be paid under capitation or
fee-for-service contracts and may receive additional
compensation by providing certain preventive services. Our
specialists care for patients for a specific episode or
condition, usually upon referral from a primary care physician,
and are usually compensated on a fee-for-service basis. When we
contract with groups of physicians on a capitated basis, we
monitor their solvency.
Hospitals. We generally contract with
hospitals that have significant experience dealing with the
medical needs of the Medicaid population. We reimburse hospitals
under a variety of payment methods, including fee-for-service,
per diems, diagnostic-related groups, or DRGs, capitation, and
case rates.
Primary Care Clinics. Our California HMO
operates 19 company-owned primary care clinics in
California staffed by our physicians, physician assistants, and
nurse practitioners. These clinics are located in neighborhoods
where our members live, and provide us a first-hand opportunity
to understand the special needs of our members. The clinics
assist us in developing and implementing community education,
disease management, and other programs. The clinics also give us
direct clinic management experience that enables us to better
understand the needs of our contracted providers.
Medical
Management
Our experience in medical management extends back to our roots
as a provider organization. Primary care physicians are the
focal point of the delivery of health care to our members,
providing routine and preventive care, coordinating referrals to
specialists, and assessing the need for hospital care. This
model has proven to be an effective method for coordinating
medical care for our members. The underlying challenge we face
is to coordinate health care so that our members receive timely
and appropriate care from the right provider at the appropriate
cost. In support of this goal, and to ensure medical management
consistency among our various state health plans, we
continuously refine and upgrade our medical management efforts
at both the corporate and subsidiary levels.
We seek to ensure quality care for our members on a
cost-effective basis through the use of certain key medical
management and cost control tools. These tools include
utilization management, case and health management, and provider
network and contract management.
Utilization Management. We continuously review
utilization patterns with the intent to optimize quality of care
and ensure that only appropriate services are rendered in the
most cost-effective manner. Utilization management, along with
our other tools of medical management and cost control, is
supported by a centralized corporate medical informatics
function which utilizes third-party software and data
warehousing tools to convert data into actionable information.
We use a predictive modeling capability that supports a
proactive case and health management approach both for us and
our affiliated physicians. We also use provider profiling to
supply network physicians with information and tools to assist
them in making appropriate, cost-effective referrals for
specialty and hospital care. Provider profiling seeks to
accomplish this aim by furnishing physicians and facilities with
information about their own performance relative to national
standards and relevant peer groups.
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Case and Health Management. We seek to
encourage quality, cost-effective care through a variety of case
and health management programs, including disease management
programs, educational programs, and pharmacy management programs.
Disease Management Programs. We develop
specialized disease management programs that address the
particular health care needs of our members. motherhood
matters!sm
is a comprehensive program designed to improve pregnancy
outcomes and enhance member satisfaction. breathe with
ease!sm
is a multi-disciplinary disease management program that provides
intensive health education resources and case management
services to assist physicians caring for asthmatic members
between the ages of three and fifteen. Healthy Living with
Diabetessm
is a diabetes disease management program. “Heart Health
Living” is a cardiovascular disease management program
for members who have suffered from congestive heart failure,
angina, heart attack, or high blood pressure.
Educational Programs. Educational programs are
an important aspect of our approach to health care delivery.
These programs are designed to increase awareness of various
diseases, conditions, and methods of prevention in a manner that
supports our providers while meeting the unique needs of our
members. For example, we provide our members with information to
guide them through various episodes of care. This information,
which is available in appropriate languages, is designed to
educate parents on the use of primary care physicians, emergency
rooms, and nurse call centers.
Pharmacy Management Programs. Our pharmacy
management programs focus on physician education regarding
appropriate medication utilization and encouraging the use of
generic medications. Our pharmacists and medical directors work
with our pharmacy benefits manager to maintain a formulary that
promotes both improved patient care and generic drug use. We
employ full-time pharmacists and pharmacy technicians who work
with physicians to educate them on the uses of specific drugs,
the implementation of best practices, and the importance of
cost-effective care.
Provider Network and Contract Management. The
quality, depth, and scope of our provider network are essential
if we are to ensure quality, cost-effective care for our
members. In partnering with quality, cost-effective providers,
we utilize clinical and financial information derived by our
medical informatics function, as well as the experience we have
gained in serving Medicaid members to gain insight into the
needs of both our members and our providers. As we grow in size,
we seek to strengthen our ties with high-quality, cost-effective
providers by offering them greater patient volume.
Plan
Administration and Operations
Management Information Systems. With the
exception of our recently acquired Missouri health plan which
will be transitioned at a later date, all of our health plan
information technology and systems operate on a single platform.
This approach avoids the costs associated with maintaining
multiple systems, improves productivity, and enables medical
directors to compare costs, identify trends, and exchange best
practices among our plans. Our single platform also facilitates
our compliance with current and future regulatory requirements.
The software we use is based on client-server technology and is
scalable. We believe the software is flexible, easy to use, and
allows us to accommodate anticipated enrollment growth and new
contracts. The open architecture of the system gives us the
ability to transfer data from other systems without the need to
write a significant amount of computer code, thereby
facilitating the integration of new plans and acquisitions.
We have designed our corporate website with a focus on ease of
use and visual appeal. For example, our website has a secure
ePortal which allows providers, members, and trading partners to
access individualized data. The ePortal allows the following
self-services:
| • | Provider Self Services. Providers have the ability to access information regarding their members and claims. Key functionalities include Check Member Eligibility, View Claim, and View/ Submit Authorizations. | |
| • | Member Self Services. Members can access information regarding their personal data, and can perform the following key functionalities: View Benefits, Request New ID Card, Print Temporary ID Card, and Request Change of Address/ PCP. |
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| • | File Exchange Services. Various trading partners — such as service partners, providers, vendors, management companies, and individual IPAs — are able to exchange data files (HIPAA or any other proprietary format) with us using the file exchange functionality. |
Best Practices. We continuously seek to
promote best practices. Our approach to quality is broad,
encompassing traditional medical management and the improvement
of our internal operations. We have staff assigned full-time to
the development and implementation of a uniform, efficient, and
quality-based medical care delivery model for our health plans.
These employees coordinate and implement Company-wide programs
and strategic initiatives such as preparation of the Health Plan
Employer Data and Information Set (HEDIS) and accreditation by
the National Committee on Quality Assurance, or NCQA. We use
measures established by the NCQA in credentialing the physicians
in our network. We routinely use peer review to assess the
quality of care rendered by providers. At December 31,
2007, five of our nine HMOs were accredited by the NCQA. Our
Ohio and Texas HMOs expect to apply for NCQA review later in
2008. Our Missouri plan will undergo NCQA review at a later
date, and our Nevada plan will apply for NCQA review as soon as
it is eligible.
Claims Processing. With the exception of our
Missouri plan, all of the medical claims of our health plans are
centrally processed at our processing facility in Long Beach,
California.
Compliance. Our health plans have established
high standards of ethical conduct. Our compliance programs are
modeled after the compliance guidance statements published by
the Office of the Inspector General of the U.S. Department
of Health and Human Services. Our uniform approach to compliance
makes it easier for our health plans to share information and
practices and reduces the potential for compliance errors and
any associated liability.
Disaster Recovery. We have established a
disaster recovery and business resumption plan, with
back-up
operating sites, to be deployed in the case of a major
disruptive event such as an earthquake along the
San Andreas fault in Southern California.
Competition
We operate in a highly competitive environment. The Medicaid
managed care industry is fragmented and currently subject to
significant changes as a result of business consolidations, new
strategic alliances entered into by other managed care
organizations, and the entry into the industry of large
commercial health plans. We compete with a large number of
national, regional, and local Medicaid service providers,
principally on the basis of size, location, and quality of
provider network, quality of service, and reputation. Below is a
general description of our principal competitors for state
contracts, members, and providers:
| • | Multi-Product Managed Care Organizations — National and regional managed care organizations that have Medicaid members in addition to numerous commercial health plan and Medicare members. | |
| • | Medicaid HMOs — National and regional managed care organizations that focus principally on providing health care services to Medicaid beneficiaries, many of which operate in only one city or state. | |
| • | Prepaid Health Plans — Health plans that provide less comprehensive services on an at-risk basis or that provide benefit packages on a non-risk basis. | |
| • | Primary Care Case Management Programs — Programs established by the states through contracts with primary care providers to provide primary care services to Medicaid beneficiaries, as well as to provide limited oversight of other services. |
We will continue to face varying levels of competition. Health
care reform proposals may cause organizations to enter or exit
the market for government sponsored health programs. However,
the licensing requirements and bidding and contracting
procedures in some states may present partial barriers to entry
into our industry.
We compete for government contracts, renewals of those
government contracts, members, and providers. State agencies
consider many factors in awarding contracts to health plans.
Among such factors are the health plan’s provider network,
medical management, degree of member satisfaction, timeliness of
claims payment, and financial resources. Potential members
typically choose a health plan based on a specific provider
being a part of the network, the quality of care and services
available, accessibility of services, and reputation or name
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recognition of the health plan. We believe factors that
providers consider in deciding whether to contract with a health
plan include potential member volume, payment methods,
timeliness and accuracy of claims payment, and administrative
service capabilities.
Regulation
Our health plans are regulated by both state and federal
government agencies. Regulation of managed care products and
health care services is an evolving area of law that varies from
jurisdiction to jurisdiction. Regulatory agencies generally have
discretion to issue regulations and interpret and enforce laws
and rules. Changes in applicable laws and rules occur frequently.
In order to operate a health plan in a given state we must apply
for and obtain a certificate of authority or license from that
state. Our nine operating health plans are licensed to operate
as HMOs in each of California, Michigan, Missouri, Nevada, New
Mexico, Ohio, Texas, Utah, and Washington. In those states we
are regulated by the agency with responsibility for the
oversight of HMOs which, in most cases, is the state department
of insurance. In California, however, the agency with
responsibility for the oversight of HMOs is the Department of
Managed Health Care. Licensing requirements are the same for us
as they are for health plans serving commercial or Medicare
members. We must demonstrate that our provider network is
adequate, that our quality and utilization management processes
comply with state requirements, and that we have adequate
procedures in place for responding to member and provider
complaints and grievances. We must also demonstrate that we can
meet requirements for the timely processing of provider claims,
and that we can collect and analyze the information needed to
manage our quality improvement activities. In addition, we must
prove that we have the financial resources necessary to pay our
anticipated medical care expenses and the infrastructure needed
to account for our costs.
Each of our health plans is required to report quarterly on its
operating results to the appropriate state regulatory agencies,
and to undergo periodic examinations and reviews by the state in
which it operates. The health plans generally must obtain
approval from the state before declaring dividends in excess of
certain thresholds. Each health plan must maintain its net worth
at an amount determined by statute or regulation. Any
acquisition of another plan’s members must also be approved
by the state, and our ability to invest in certain financial
securities may be proscribed by statute.
In addition, we are also regulated by each state’s
department of health services or the equivalent agency charged
with oversight of Medicaid and SCHIP. These agencies typically
require demonstration of the same capabilities mentioned above
and perform periodic audits of performance, usually annually.
Medicaid. Medicaid was established under the
U.S. Social Security Act to provide medical assistance to
the poor. Although both the federal and state governments fund
it, Medicaid is a state-operated and implemented program. Our
contracts with the state Medicaid programs place additional
requirements on us. Within broad guidelines established by the
federal government, each state:
| • | establishes its own member eligibility standards; | |
| • | determines the type, amount, duration, and scope of services; | |
| • | sets the rate of payment for health care services; and | |
| • | administers its own program. |
We obtain our Medicaid contracts in different ways. Some states,
such as Washington, award contracts to any applicant
demonstrating that it meets the state’s requirements. Other
states, such as California, engage in a competitive bidding
process. In all cases, we must demonstrate to the satisfaction
of the state Medicaid program that we are able to meet the
state’s operational and financial requirements. These
requirements are in addition to those required for a license and
are targeted to the specific needs of the Medicaid population.
For example:
| • | We must measure provider access and availability in terms of the time needed to reach the doctor’s office using public transportation; |
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| • | Our quality improvement programs must emphasize member education and outreach and include measures designed to promote utilization of preventive services; | |
| • | We must have linkages with schools, city or county health departments, and other community-based providers of health care, in order to demonstrate our ability to coordinate all of the sources from which our members may receive care; | |
| • | We must be able to meet the needs of the disabled and others with special needs; | |
| • | Our providers and member service representatives must be able to communicate with members who do not speak English or who are deaf; and | |
| • | Our member handbook, newsletters, and other communications must be written at the prescribed reading level, and must be available in languages other than English. |
In addition, we must demonstrate that we have the systems
required to process enrollment information, to report on care
and services provided, and to process claims for payment in a
timely fashion. We must also have the financial resources needed
to protect the state, our providers, and our members against the
insolvency of one of our health plans.
Once awarded, our contracts generally have terms of one to four
years, with renewal options at the discretion of the states. Our
health plan subsidiaries have generally been successful in
obtaining the renewal by amendment of their contracts in each
state prior to the actual expiration of their contracts.
However, there can be no assurance that these contracts will
continue to be renewed. For example, our Indiana plan’s
contract with the state of Indiana expired without being renewed
effective December 31, 2006. The Salud! Medicaid Managed
Care contract of our New Mexico plan is currently the
subject of a new Request for Proposal, or RFP, and the New
Mexico plan is currently awaiting the results of its submission
to the New Mexico Human Services Department. Our health plans
are subject to periodic reporting requirements and comprehensive
quality assurance evaluations, and must submit periodic
utilization reports and other information to state or county
Medicaid authorities. We are not permitted to enroll members
directly, and are permitted to market only in accordance with
strict guidelines.
HIPAA. In 1996, Congress enacted the Health
Insurance Portability and Accountability Act of 1996, or HIPAA.
All health plans are subject to HIPAA, including ours. HIPAA
generally requires health plans to:
| • | Establish the capability to receive and transmit electronically certain administrative health care transactions, like claims payments, in a standardized format, | |
| • | Afford privacy to patient health information, and | |
| • | Protect the privacy of patient health information through physical and electronic security measures. |
HIPAA regulations require that health care providers obtain from
CMS a unique
10-digit
national provider identifier, or NPI. The providers are required
to use the NPI when submitting electronic claims to health plans
such as us. The regulations had required providers and plans to
use only the NPI in applicable transactions by May 23,
2007. However, on April 18, 2007, CMS issued guidance
indicating that it would not impose penalties on covered
entities that deploy contingency plans in order to ensure the
smooth flow of payments if the entities have made reasonable and
diligent efforts to become compliant. Pursuant to CMS’s
guidance, we implemented an NPI contingency plan in order to
help ensure the smooth flow of payments to providers. We
anticipate ending this contingency plan by May 22, 2008.
Fraud and Abuse Laws. Federal and state
governments have made investigating and prosecuting health care
fraud and abuse a priority. Fraud and abuse prohibitions
encompass a wide range of activities, including kickbacks for
referral of members, billing for unnecessary medical services,
improper marketing, and violations of patient privacy rights.
Companies involved in public health care programs such as
Medicaid are often the subject of fraud and abuse
investigations. The regulations and contractual requirements
applicable to participants in these public-sector programs are
complex and subject to change. Although we believe that our
compliance efforts are adequate, we will continue to devote
significant resources to support our compliance efforts.
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Employees
As of December 31, 2007, we had approximately
2,300 employees. Our employee base is multicultural and
reflects the diverse Medicaid and Medicare membership we serve.
We believe we have good relations with our employees. None of
our employees is represented by a union.
| Item 1A: | Risk Factors |
RISK
FACTORS
Investing in our securities involves a high degree of risk.
Before making an investment decision, you should carefully read
and consider the following risk factors, as well as other
information we include or incorporate by reference in this
report and the information in the other reports we file with the
Securities and Exchange Commission. If any of the following
events actually occur, our business, results of operations,
financial condition, cash flows, or prospects could be
materially adversely affected. The risks and uncertainties
described below are those that we currently believe may
materially affect us. Additional risks and uncertainties that we
are unaware of or that we currently deem immaterial may also
become important factors that may materially affect us.
Our
profitability depends on our ability to accurately predict and
effectively manage our medical care costs.
Our profitability depends, to a significant degree, on our
ability to accurately predict and effectively manage our medical
care costs. Historically, our medical care cost ratio, meaning
our medical care costs as a percentage of our premium revenue,
has fluctuated, and has also varied across our state health
plans. Because the premium payments we receive are generally
fixed in advance and we operate with a narrow profit margin,
relatively small changes in our medical care cost ratio can
create significant changes in our financial results. For
example, if our overall medical care ratio for 2007 of 84.5% had
been one percentage point higher, or 85.5%, our earnings for the
year would have been $1.50 per diluted share rather than our
actual 2007 earnings of $2.05 per diluted share, a 27% reduction
in earnings. Factors that may affect our medical care costs
include the level of utilization of healthcare services,
increases in hospital costs or pharmaceutical costs, an
increased incidence or acuity of high dollar claims related to
catastrophic illness for which we do not have adequate
reinsurance coverage, increased maternity costs, payment rates
that are not actuarially sound, changes in state eligibility
certification methodologies, unexpected patterns in the annual
flu season, relatively low levels of hospital and specialty
provider competition in certain geographic areas, increases in
the cost of pharmaceutical products and services, changes in
healthcare regulations and practices, epidemics, new medical
technologies, and other external factors such as general
economic conditions, inflation, interest rate fluctuations, or
federal or state budgetary issues. Many of these factors are
beyond our control and could reduce our ability to accurately
predict and effectively manage the costs of providing health
care services. The inability to forecast and manage our medical
care costs or to establish and maintain a satisfactory medical
care cost ratio, either with respect to a particular state
health plan or across the consolidated entity, could have a
material adverse effect on our business, financial condition,
cash flows, or results of operations. For additional information
regarding this risk, see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations — Critical Accounting Policies.”
A
failure to accurately estimate incurred but not reported medical
care costs may negatively impact our results of
operations.
Because of the significant time lag between when medical
services are actually rendered by our providers and when we
receive, process, and pay a claim for those medical services, we
must continually estimate our medical claims liability at
particular points in time, and establish claims reserves related
to such estimates. Our estimated reserves for such
“incurred but not reported,” or IBNR medical care
costs, are based on numerous assumptions. We estimate our
medical claims liabilities using actuarial methods based on
historical data adjusted for claims receipt and payment
experience (and variations in that experience), changes in
membership, provider billing practices, health care service
utilization trends, cost trends, product mix, seasonality, prior
authorization of medical services, benefit changes, known
outbreaks of disease or increased incidence of illness such as
influenza, provider contract
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changes, changes to Medicaid fee schedules, and the incidence of
high dollar or catastrophic claims. Our ability to accurately
estimate claims for our newer HMOs in Missouri, Ohio, and Texas
is impacted by the limited claims payment history of those HMOs.
Likewise, our ability to accurately estimate claims for our
newer lines of business or populations, such as with respect to
Medicare Advantage or aged, blind, or disabled Medicaid members,
is likewise impacted by the more limited experience we have had
with those populations. The IBNR estimation methods we use and
the resulting reserves that we establish are reviewed and
updated, and adjustments, if deemed necessary, are reflected in
the current period. Given the uncertainties inherent in such
estimates, our actual claims liabilities for particular periods
could differ significantly from the amounts estimated and
reserved. Our actual claims liabilities have varied and will
continue to vary from our estimates, particularly in times of
significant changes in utilization, medical cost trends, and
populations and markets served. If our actual liability for
claims payments is higher than estimated, our earnings per share
in any particular quarter or annual period could be negatively
affected. Our estimates of IBNR may be inadequate in the future,
which would negatively affect our results of operations for the
relevant time period. Furthermore, if we are unable to
accurately estimate IBNR, our ability to take timely corrective
actions may be limited, further exacerbating the extent of the
negative impact on our results. For additional information
regarding this risk, see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations — Critical Accounting Policies.”
There
are numerous risks associated with the growth of our Ohio
HMO.
Membership at our Ohio HMO has grown rapidly, and the medical
care ratio of our Ohio plan has been substantially higher than
that historically experienced by the Company as a whole. In
2007, the medical care ratio of our Ohio plan was 90.4%. For
2008, we have projected that we can lower the medical care ratio
of our Ohio plan to approximately 88%. In the event we are
unable to do so, our higher than expected medical care ratio in
Ohio could negatively impact the financial performance of the
Company as a whole. In addition, the lower amount of experience
of our Ohio Medicaid and ABD members in accessing managed care,
of our local providers in coordinating managed care services for
their patients, and our relative lack of experience in operating
in that state, may also contribute to a higher than average
medical care ratio. In addition, as our Ohio plan continues to
grow, we will be required to increase the amount of regulatory
capital we contribute to it. In December 2007, we were required
to contribute $32.5 million in additional regulatory
capital to our Ohio plan. If we are required to contribute
additional capital in the future, our existing cash balances or
cash from operations may not be sufficient to cover such
payments, in which case we would be required to draw down on our
credit facility or obtain additional financing from another
source and thereby incur additional indebtedness. In the event
we are unable to lower our medical care ratio in Ohio, or if the
Ohio plan requires a disproportionate investment of corporate
energy and resources or is otherwise unsuccessful, the poor
performance of that health plan could detrimentally impact the
financial performance of the Company as a whole.
If our
government contracts are not renewed or are terminated, or if
the RFP bids of our health plans are not successful, our premium
revenues could be materially reduced.
Our contracts generally run for periods of from one year to four
years, and may be successively extended by amendment for
additional periods if the relevant state agency so elects. Our
current contracts expire on various dates over the next several
years. There is no guarantee that our contracts will be renewed
or extended. For example, in the fall of 2006, we were informed
that the contract of our Indiana HMO to provide Medicaid
services would not be extended beyond its expiration date of
December 31, 2006. Moreover, our contracts may be opened
for bidding by competing healthcare providers. As an example of
that, our New Mexico health plan recently submitted a bid in
response to the request for proposals of the New Mexico Medicaid
authority for the new Salud! Medicaid managed care contract. In
addition, all of our contracts may be terminated for cause if we
breach a material provision of the contract or violate relevant
laws or regulations. Our contracts with the states are also
subject to cancellation by the state in the event of
unavailability of state or federal funding. In some
jurisdictions, such cancellation may be immediate and in other
jurisdictions a notice period is required. In addition, most
contracts are terminable without cause. We may face increased
competition as other plans (many with greater financial
resources and greater name recognition) attempt to enter our
markets through the contracting process. If we are unable to
renew, successfully re-bid, or compete for any of our government
contracts, or if any of our contracts are terminated or renewed
on less favorable terms, our business, financial condition, or
results of operations could be adversely affected.
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We
derive a majority of our premium revenues from operations in a
small number of states.
Operations in California, Michigan, New Mexico, Ohio, Utah, and
Washington accounted for most of our premium revenues in 2007.
If we were unable to continue to operate in any of those states
or in any other states in which we have a health plan, or if our
current operations in any portion of the states we are in were
significantly curtailed, our revenues could decrease materially.
Our reliance on operations in a limited number of states could
cause our revenue and profitability to change suddenly and
unexpectedly depending on a loss of a material contract,
legislative actions, changes in Medicaid eligibility
methodologies, catastrophic claims, an epidemic or unexpected
increase in utilization, general economic conditions, and
similar factors in those states. Our inability to continue to
operate in any of the states in which we currently operate could
adversely affect our results of operations.
A
sustained drop in the rate of interest earned on our invested
balances could adversely affect our revenues.
Our revenues from invested balances were $30.1 million in
2007. We have projected that, on average in fiscal year 2008,
our invested balances will earn interest at the rate of at least
4%. However, due to the slowing growth in the economy at the
beginning of 2008, the Federal Reserve Bank Board has effected a
series of cuts to the target federal funds interest rate. These
rate cuts lower the interest rate we can achieve on our invested
balances. For every one-quarter drop in interest rates, our
investment income will be reduced by approximately
$1.8 million. In the event the interest earned on our
invested balances throughout 2008 averages less than 4% per
annum, our revenues and results of operations could be adversely
affected.
If we
are unable to achieve our projected growth in Medicare members
or our projected medical care ratio with respect to our Medicare
program, our results of operations could be adversely
affected.
Our business strategy includes increasing enrollment for our
members who are dually eligible under both the Medicaid and
Medicare programs, as well as increasing the number of our
members eligible under Medicare alone. Our experience with the
Medicare program and with Medicare members is much more limited
than our experience with Medicaid. The administrative processes,
programmatic requirements, and regulations pertaining to the
Medicare program differ significantly from those of the Medicaid
program. Likewise, the Medicare population has many
characteristics and behavior patterns which differ from the
Medicaid population with which we are familiar. Finally,
Medicare providers, provider networks, and provider relations
also differ from those of Medicaid.
During 2008, we will continue to invest heavily in the
infrastructure necessary to grow our Medicare program. We have
projected that we will add 5,000 Medicare members in 2008, and
that our medical care ratio with respect to our Medicare members
will be approximately 85%. In the event we are unable to enroll
as many Medicare members as we project or are unable to maintain
a medical care ratio of no greater than 85%, or if we are unable
to quickly develop our Medicare expertise and adapt to the
differing requirements and needs of the Medicare program and
Medicare members, our business strategy may be unsuccessful and
our business, financial condition, or results of operations
could be adversely affected.
Medicaid
and SCHIP funding is subject to political disagreements over
budgetary funding and efforts to control governmental spending
in order to balance federal and/or state budgets.
Nearly all of our revenues come from federal and state funding
of the Medicaid and SCHIP programs. Because these governmental
health care programs account for such a large portion of federal
and state budgets, efforts to contain overall governmental
spending and to achieve a balanced budget often result in
significant political pressure being directed at the funding for
these programs. The funding of our various Medicaid contracts,
or the rate increases we expect to obtain during the course of a
year, can thus be put at risk whenever there is a federal or
state budget impasse, a budgetary crisis, or political
disagreement that is not quickly resolved. For example:
| • | In the summer of 2007, passage of the 2008 budget for the State of California was months overdue, thereby threatening the funding of our California health plan’s contracts with the state. In early 2008, due to a mounting state budget deficit, the California Legislature passed and Governor Arnold Schwarzenegger signed a 10% across-the-board cut to most California government-funded programs, including the reimbursement rates paid to physicians under Medi-Cal as well as Medi-Cal outpatient fees. The cuts are |
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| scheduled to be implemented on July 1, 2008 unless an alternative budget is passed and signed before that date. |
| • | The Michigan state government briefly shut down on October 1, 2007 due to lack of agreement on a significant budget shortfall in that state. | |
| • | Funding under the federal SCHIP program, which provided 2.1% of our total premium revenues for the year ended December 31, 2007, is subject to an ongoing political disagreement between the United States Congress and President Bush. While it is unclear when a political compromise might be reached, the SCHIP program has been extended on its existing terms through March 31, 2009. |
Overall Medicaid enrollment and costs are projected to continue
to increase over the next several years. These increasing costs,
combined with an economic slowdown or recession in 2008, will
exert additional budgetary pressures on federal and state
governments. In the event of a recession, an extended budgetary
or political impasse at either the federal or state level, the
failure of the California legislature to pass an alternative
budget with less draconian cuts to Medi-Cal provider rates, the
failure of the states of Michigan, Missouri, or Texas to provide
our health plans in those states with their expected rate
increases, or the non-renewal of the SCHIP program, the funding
of one or more of our contracts could be curtailed or cut off
which could have a material adverse effect on our business,
financial condition, or results of operations.
Funding
under our contracts is also subject to regulatory and
programmatic adjustments and reforms for which we may not be
appropriately compensated.
The federal government and the governments of the states in
which we operate frequently consider legislative and regulatory
proposals regarding Medicaid reform and programmatic changes.
Such proposals involve, among other things, changes in
reimbursement or payment levels based on certain parameters or
member characteristics, changes in eligibility for Medicaid, and
changes in benefits covered such as pharmacy, behavioral health,
or vision. Any of these changes could be made effective
retroactively. If our cost increases resulting from these
changes are not matched by commensurate increases in our
revenue, we would be unable to make offsetting adjustments, such
as supplemental premiums or changes in our benefit plans, as
would a commercial health plan. For example, as part of its
periodic rebasing of diagnostic-related group (DRG) rates to
adjust for changes in hospital cost experience, effective
August 1, 2007, the state of Washington recalibrated the
relative weights used in its DRG reimbursement system for
in-patient hospital claims. The changes were intended to be
budget neutral, but corresponding increases were not made to the
amounts paid to managed care organizations such as our
Washington health plan until January 1, 2008. As a result,
the Washington DRG rebasing increased our Washington plan’s
medical care costs for the second half of 2007 without a
compensating increase in payments to the Washington plan. Any
other such regulatory or programmatic reforms at either the
federal or state level could have a material adverse effect on
our business, financial condition, or results of operations.
Difficulties
in executing our acquisition strategy could adversely affect our
business.
The acquisitions of Medicaid contract rights and other health
plans have accounted for a significant amount of our growth over
the last several years. For example, on November 1, 2007,
we acquired Mercy CarePlus, an HMO in Missouri. Although we
cannot predict with certainty our rate of growth as the result
of acquisitions, we believe that additional acquisitions of all
sizes will be important to our future growth strategy. Many of
the other potential purchasers of these assets —
particular operators of commercial health plans — have
significantly greater financial resources than we do. Also, many
of the sellers may insist on selling assets that we do not want,
such as commercial lines of business, or may insist on
transferring their liabilities to us as part of the sale of
their companies or assets. Even if we identify suitable targets,
we may be unable to complete acquisitions on terms favorable to
us or obtain the necessary financing for these acquisitions.
Further, to the extent we complete an acquisition, we may be
unable to realize the anticipated benefits from such acquisition
because of operational factors or difficulty in integrating the
acquisition with our existing business. This may include
problems involving the integration of:
| • | additional employees who are not familiar with our operations or our corporate culture, | |
| • | new provider networks which may operate on terms different from our existing networks, |
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| • | additional members who may decide to transfer to other health care providers or health plans, | |
| • | disparate information, claims processing, and record keeping systems, | |
| • | internal controls and accounting policies, including those which require the exercise of judgment and complex estimation processes, such as estimates of claims incurred but not reported, accounting for goodwill, intangible assets, stock-based compensation, and income tax matters, and | |
| • | new regulatory schemes, relationships, practices, and compliance requirements. |
Also, we are generally required to obtain regulatory approval
from one or more state agencies when making acquisitions. In the
case of an acquisition of a business located in a state in which
we do not already operate, we would be required to obtain the
necessary licenses to operate in that state. In addition,
although we may already operate in a state in which we acquire a
new business, we would be required to obtain regulatory approval
if, as a result of the acquisition, we will operate in an area
of that state in which we did not operate previously. We may be
unable to obtain the necessary governmental approvals or comply
with these regulatory requirements in a timely manner, if at
all. For all of the above reasons, we may not be able to
consummate our proposed acquisitions as announced from time to
time to sustain our pattern of growth or to realize benefits
from completed acquisitions.
Ineffective
management of our growth may negatively affect our business,
financial condition, or results of operations.
Depending on acquisitions and other opportunities, we expect to
continue to grow our membership and to expand into other
markets. In fiscal year 2004, we had total premium revenue of
$1,171 million. In fiscal year 2007, we had total premium
revenue of $2,462 million, an increase of 110% over a
three-year span. Continued rapid growth could place a
significant strain on our management and on other Company
resources. Our ability to manage our growth may depend on our
ability to strengthen our management team and attract, train,
and retain skilled employees, and our ability to implement and
improve operational, financial, and management information
systems on a timely basis. If we are unable to manage our growth
effectively, our financial condition and results of operations
could be materially and adversely affected. In addition, due to
the initial substantial costs related to acquisitions, rapid
growth could adversely affect our short-term profitability and
liquidity.
Any
changes to the laws and regulations governing our business, or
the interpretation and enforcement of those laws or regulations,
could cause us to modify our operations and could negatively
impact our operating results.
Our business is extensively regulated by the federal government
and the states in which we operate. The laws and regulations
governing our operations are generally intended to benefit and
protect health plan members and providers rather than managed
care organizations. The government agencies administering these
laws and regulations have broad latitude in interpreting and
applying them. These laws and regulations, along with the terms
of our government contracts, regulate how we do business, what
services we offer, and how we interact with members and the
public. For instance, some states mandate minimum medical
expense levels as a percentage of premium revenues. These laws
and regulations, and their interpretations, are subject to
frequent change. The interpretation of certain contract
provisions by our governmental regulators may also change.
Changes in existing laws or regulations, or their
interpretations, or the enactment of new laws or regulations,
could reduce our profitability by imposing additional capital
requirements, increasing our liability, increasing our
administrative and other costs, increasing mandated benefits,
forcing us to restructure our relationships with providers, or
requiring us to implement additional or different programs and
systems. Changes in the interpretation of our contracts could
also reduce our profitability if we have detrimentally relied on
a prior interpretation.
We are subject to various routine and non-routine governmental
reviews, audits, and investigations. Violation of the laws
governing our operations, or changes in interpretations of those
laws, could result in the imposition of civil or criminal
penalties, the cancellation of our contracts to provide managed
care services, the suspension or revocation of our licenses, and
exclusion from participation in government sponsored health
programs, including Medicaid and SCHIP. If we become subject to
material fines or if other sanctions or other corrective actions
were imposed upon us, we might suffer a substantial reduction in
profitability, and might also lose one or more of our
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government contracts and as a result lose significant numbers of
members and amounts of revenue. In addition, government
receivables are subject to government audit and negotiation, and
government contracts are vulnerable to disagreements with the
government. The final amounts we ultimately receive under
government contracts may be different from the amounts we
initially recognize in our financial statements.
States may only mandate Medicaid enrollment into managed care
under federal waivers or demonstrations. Waivers and programs
under demonstrations are typically approved for multi-year
periods and can be renewed on an ongoing basis if the state
applies. We have no control over this renewal process. If a
state does not renew its mandated program or the federal
government denies the state’s application for renewal, our
business would suffer as a result of a likely decrease in
membership.
Our
business depends on our information and medical management
systems, and our inability to effectively integrate, manage, and
keep secure our information and medical management systems could
disrupt our operations.
Our business is dependent on effective and secure information
systems that assist us in, among other things, monitoring
utilization and other cost factors, supporting our medical
management techniques, processing provider claims, and providing
data to our regulators. Our providers also depend upon our
information systems for membership verifications, claims status,
and other information. If we experience a reduction in the
performance, reliability, or availability of our information and
medical management systems, our operations and ability to
produce timely and accurate reports could be adversely affected.
In addition, if the licensor or vendor of any software which is
integral to our operations were to become insolvent or otherwise
fail to support the software sufficiently, our operations could
be negatively affected.
Our information systems and applications require continual
maintenance, upgrading, and enhancement to meet our operational
needs. Moreover, our acquisition activity requires transitions
to or from, and the integration of, various information systems.
Our policy is to upgrade and expand our information systems
capabilities. If we experience difficulties with the transition
to or from information systems or are unable to properly
implement, maintain, upgrade or expand our system, we could
suffer from, among other things, operational disruptions, loss
of members, difficulty in attracting new members, regulatory
problems, and increases in administrative expenses.
Our business requires the secure transmission of confidential
information over public networks. Advances in computer
capabilities, new discoveries in the field of cryptography, or
other events or developments could result in compromises or
breaches of our security systems and client data stored in our
information systems. Anyone who circumvents our security
measures could misappropriate our confidential information or
cause interruptions in services or operations. The internet is a
public network, and data is sent over this network from many
sources. In the past, computer viruses or software programs that
disable or impair computers have been distributed and have
rapidly spread over the internet. Computer viruses could be
introduced into our systems, or those of our providers or
regulators, which could disrupt our operations, or make our
systems inaccessible to our members, providers, or regulators.
We may be required to expend significant capital and other
resources to protect against the threat of security breaches or
to alleviate problems caused by breaches. Because of the
confidential health information we store and transmit, security
breaches could expose us to a risk of regulatory action,
litigation, possible liability and loss. Our security measures
may be inadequate to prevent security breaches, and our business
operations would be negatively impacted by cancellation of
contracts and loss of members if they are not prevented.
If we
are unable to maintain good relations with the physicians,
hospitals, and other providers with whom we contract, or if we
are unable to enter into cost-effective contracts with such
providers, our profitability could be adversely
affected.
We contract with physicians, hospitals, and other providers as a
means to assure access to health care services for our members,
to manage health care costs and utilization, and to better
monitor the quality of care being delivered. In any particular
market, providers could refuse to contract with us, demand
higher payments, or take other actions which could result in
higher health care costs, disruption to provider access for
current members, a decline in our growth rate, or difficulty in
meeting regulatory or accreditation requirements.
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In some markets, certain providers, particularly hospitals,
physician/hospital organizations, and some specialists, may have
significant market positions or even monopolies. If these
providers refuse to contract with us or utilize their market
position to negotiate favorable contracts which are
disadvantageous to us, our profitability in those areas could be
adversely affected.
Some providers that render services to our members are not
contracted with our plans. In those cases, there is no
pre-established understanding between the provider and our plan
about the amount of compensation that is due to the provider. In
some states, the amount of compensation is defined by law or
regulation, but in most instances it is either not defined or it
is established by a standard that is not clearly translatable
into dollar terms. In such instances, providers may believe they
are underpaid for their services and may either litigate or
arbitrate their dispute with our plan. The uncertainty of the
amount to pay and the possibility of subsequent adjustment of
the payment could adversely affect our financial position or
results of operations.
Failure
to attain profitability in any new
start-up
operations or in connection with our expansion into Medicare
could negatively affect our results of operations.
Start-up
costs associated with a new business can be substantial. For
example, in order to obtain a certificate of authority to
operate as a health maintenance organization in most
jurisdictions, we must first establish a provider network, have
infrastructure and required systems in place, and demonstrate
our ability to obtain a state contract and process claims. Often
we are also required to contribute significant capital in order
to fund mandated net worth requirements, performance bonds or
escrows, or contingency guaranties. If we were unsuccessful in
obtaining the certificate of authority, winning the bid to
provide services, or attracting members in sufficient numbers to
cover our costs, any new business of ours would fail. We also
could be required by the state to continue to provide services
for some period of time without sufficient revenue to cover our
ongoing costs or to recover our significant
start-up
costs.
Even if we are successful in establishing a profitable HMO in a
new state, increasing membership, revenues, and medical costs
will trigger increased mandated net worth requirements which
could substantially exceed the net income generated by the HMO.
Rapid growth in an existing state will also create increased net
worth requirements. In such circumstances we may not be able to
fund on a timely basis or at all the increased net worth
requirements with our available cash resources. The expenses
associated with starting up a health plan in a new state or
expanding a health plan in an existing state could have a
significant adverse impact on our business, financial condition,
or results of operations.
Likewise, our expansion into Medicare involves substantial
start-up
costs for which there may be minimal associated revenue. For
example, we must hire sales personnel and establish a rigorous
and comprehensive compliance program. The expenses associated
with our expansion into Medicare could have a significant impact
on our business, financial condition and results of operations.
High
profile qui tam matters and negative publicity regarding
Medicaid managed care and Medicare Advantage may lead to
programmatic changes, intensified regulatory scrutiny, or
“guilt by association.”
Certain of our competitors have recently been involved in high
profile qui tam or “whistleblower” actions which have
resulted in significant volatility in the price of their stock.
Because of the limited number of health care companies competing
in our market space, these whistleblower actions and
investigations, and the resulting negative publicity, could
become associated with or imputed to the Company, regardless of
the Company’s actual regulatory compliance. Such an
association, as well as any perception of a recurring pattern of
abuse among the health plan participants in these government
programs and the diminished reputation of the managed care
sector as a whole, could result in public distrust, political
pressure for programmatic changes, intensified scrutiny by
regulators, increased stock volatility due to speculative
trading, and heightened barriers to new managed care markets and
contracts, all of which could have a material adverse effect on
our business, financial condition, or results of operations.
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If a
state fails to renew its federal waiver application for mandated
Medicaid enrollment into managed care or such application is
denied, our membership in that state will likely
decrease.
States may only mandate Medicaid enrollment into managed care
under federal waivers or demonstrations. Waivers and programs
under demonstrations are approved for two-year periods and can
be renewed on an ongoing basis if the state applies. We have no
control over this renewal process. If a state does not renew its
mandated program or the federal government denies the
state’s application for renewal, our business would suffer
as a result of a likely decrease in membership.
We
face claims related to litigation which could result in
substantial monetary damages.
We are subject to a variety of legal actions, including medical
malpractice actions, provider disputes, employment related
disputes, and breach of contract actions. In the event we incur
liability materially in excess of the amount for which we have
insurance coverage, our profitability would suffer. In addition,
our providers involved in medical care decisions are exposed to
the risk of medical malpractice claims. Providers at the 19
primary care clinics we operate in California are employees of
our California health plan. As a direct employer of physicians
and ancillary medical personnel and as an operator of primary
care clinics, our California plan is subject to liability for
negligent acts, omissions, or injuries occurring at one of its
clinics or caused by one of its employees. We maintain medical
malpractice insurance for our clinics in the amount of
$1 million per occurrence, and an annual aggregate limit of
$3 million, errors and omissions insurance in the amount of
$10 million per occurrence and in aggregate for each policy
year, and such other lines of coverage as we believe are
reasonable in light of our experience to date. However, given
the significant amount of some medical malpractice awards and
settlements, this insurance may not be sufficient or available
at a reasonable cost to protect us from damage awards or other
liabilities. Even if any claims brought against us were
unsuccessful or without merit, we would have to defend ourselves
against such claims. The defense of any such actions may be
time-consuming and costly, and may distract our
management’s attention. As a result, we may incur
significant expenses and may be unable to effectively operate
our business.
Furthermore, claimants often sue managed care organizations for
improper denials of or delays in care, and in some instances
improper authorizations of care. Also, Congress and several
state legislatures have considered legislation that would permit
managed care organizations to be held liable for negligent
treatment decisions or benefits coverage determinations. If this
or similar legislation were enacted, claims of this nature could
result in substantial damage awards against us and our providers
that could exceed the limits of any applicable medical
malpractice insurance coverage. Successful malpractice or tort
claims asserted against us, our providers, or our employees
could adversely affect our financial condition and profitability.
We cannot predict the outcome of any lawsuit with certainty.
While we currently have insurance coverage for some of the
potential liabilities relating to litigation, other such
liabilities may not be covered by insurance, the insurers could
dispute coverage, or the amount of insurance could be
insufficient to cover the damages awarded. In addition,
insurance coverage for all or certain types of liability may
become unavailable or prohibitively expensive in the future or
the deductible on any such insurance coverage could be set at a
level which would result in us effectively self-insuring cases
against us.
Although we have established reserves for litigation as we
believe appropriate, we cannot assure you that our recorded
reserves will be adequate to cover such costs. Therefore, the
litigation to which we are subject could have a material adverse
effect on our financial condition, results of operations, or
cash flows and could prompt us to change our operating
procedures.
The
Medicaid citizenship documentation requirements may adversely
impact the enrollment levels of our health plans.
The United States Department of Health and Human Services
requires persons applying for Medicaid to document their
citizenship. The documentation requirement is outlined in
Section 6036 of the Deficit Reduction Act of 2005 and is
intended to ensure that Medicaid beneficiaries are United States
citizens without imposing undue burdens on them or the states.
The rule requires actual documentary evidence before Medicaid
eligibility is granted or renewed. The provision requires that a
person provide both evidence of citizenship and identity. In
many cases, a
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single document will be enough to establish both citizenship and
identity, such as a passport. However, if secondary
documentation is used, such as a birth certificate, the
individual will also need evidence of his or her identity.
Affidavits can only be used in rare circumstances. Additional
types of documentation, such as school records, may be used for
children. Once citizenship has been proven, it need not be
documented again with each eligibility renewal unless later
evidence raises a question.
Each state must implement its own process for assuring
compliance with documentation of citizenship in order to obtain
federal matching funds, and effective compliance is part of
Medicaid program integrity monitoring. In particular, audit
processes track the extent to which a state relies on lower
categories of documentation, and on affidavits, with the
expectation that such categories would be used relatively
infrequently and less over time, as state processes and
beneficiary documentation improves.
Because this rule is relatively new and states have varied their
compliance processes since its implementation, it is unclear
what the full impact will be on the enrollment levels of our
various state HMOs. The rule could result in the disenrollment
of a material number of our members, thereby decreasing our
premium revenues. As a result, this proof of citizenship
requirement could have a material adverse effect on our
business, financial condition, or results of operations.
We are
subject to competition which negatively impacts our ability to
increase penetration in the markets we serve.
We operate in a highly competitive environment and in an
industry that is currently subject to significant changes from
business consolidations, new strategic alliances, and aggressive
marketing practices by other managed care organizations. We
compete for members principally on the basis of size, location,
and quality of provider network, benefits supplied, quality of
service, and reputation. A number of these competitive elements
are partially dependent upon and can be positively affected by
the financial resources available to a health plan. Many other
organizations with which we compete, including large commercial
plans, have substantially greater financial and other resources
than we do. For these reasons, we may be unable to grow our
membership, or may lose members to other health plans.
Restrictions
and covenants in our credit facility may limit our ability to
make certain acquisitions.
In order to provide liquidity, we have a $200 million
senior secured credit facility that matures in May 2012. As of
December 31, 2007, we had no outstanding indebtedness under
our credit facility. Our credit facility imposes numerous
restrictions and covenants, including prescribed debt coverage
ratios, net worth requirements, and acquisition limitations that
restrict our financial and operating flexibility, including our
ability to make certain acquisitions above specified values and
declare dividends without lender approval. As a result of the
restrictions and covenants imposed under our credit facility,
our growth strategy may be negatively impacted by our inability
to act with complete flexibility, or our inability to use our
credit facility in the manner intended.
If we are in default at a time when funds under the credit
facility are required to finance an acquisition, or if a
proposed acquisition does not satisfy the pro forma financial
requirements under our credit facility, we may be unable to use
the credit facility in the manner intended. In addition, if we
were to draw down on our credit facility, or incur other
additional debt in the future, it could have an adverse effect
on our business and future operations. For example, it could:
| • | require us to dedicate a substantial portion of cash flow from operations to pay principal and interest on our debt, which would reduce funds available to fund future working capital, capital expenditures, and other general operating requirements; | |
| • | increase our vulnerability to general adverse economic and industry conditions or a downturn in our business; and | |
| • | place us at a competitive disadvantage compared to our competitors that have less debt. |
Our ability to obtain any financing, whether through the
issuance of new debt securities or otherwise, and the terms of
any such financing are dependent on, among other things, our
financial condition, financial market
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conditions within our industry and generally, credit ratings,
and numerous other factors. There can be no assurance that we
will be able to refinance our credit facility and obtain
financing on acceptable terms or within an acceptable time
frame, if at all. If we are unable to obtain financing on terms
and within a time frame acceptable to us it could, in addition
to other negative effects, have a material adverse effect on our
operations, financial condition, ability to compete or ability
to comply with regulatory requirements.
We are
dependent on our executive officers and other key
employees.
Our operations are highly dependent on the efforts of our
executive officers. The loss of their leadership, knowledge, and
experience could negatively impact our operations. Replacing
many of our executive officers might be difficult or take an
extended period of time because a limited number of individuals
in the managed care industry have the breadth and depth of
skills and experience necessary to operate and expand
successfully a business such as ours. Our success is also
dependent on our ability to hire and retain qualified
management, technical, and medical personnel. We may be
unsuccessful in recruiting and retaining such personnel which
could negatively impact our operations.
A
pandemic, such as a worldwide outbreak of a new influenza virus,
could materially and adversely affect our ability to control
health care costs.
An outbreak of a pandemic disease, such as the H5N1 avian flu,
could materially and adversely affect our business and operating
results. The impact of a flu pandemic on the United States would
likely be substantial. Estimates of the contagion and mortality
rate of any mutated avian flu virus that can be transmitted from
human to human are highly speculative. A significant global
outbreak of avian flu among humans could have a material adverse
effect on our results of operations and financial condition as a
result of increased inpatient and outpatient hospital costs and
the cost of anti-viral medication to treat the virus.
Because
our corporate headquarters and claims processing facilities are
located in Southern California, our business operations may be
significantly disrupted as a result of a major
earthquake.
Our corporate headquarters, centralized claims processing,
finance, and information technology support functions are
located in Long Beach, California. Southern California is
located along the San Andreas fault and is thus exposed to
a statistically greater risk of a major earthquake than most
other parts of the country. If a major earthquake were to strike
the Los Angeles and Long Beach area, our claims processing and
other corporate functions could be significantly impaired for a
substantial period of time. Although we have established a
disaster recovery and business resumption plan with
back-up
operating sites to be deployed in the case of such a major
disruptive event, there can be no assurances that the business
operations of all our health plans, including those that are
remote from any such event, would not be substantially impacted
by a major earthquake.
Our
results of operations could be negatively impacted by both
upturns and downturns in general economic
conditions.
The number of persons eligible to receive Medicaid benefits has
historically increased more rapidly during periods of rising
unemployment, corresponding to less favorable general economic
conditions. However, during such economic downturns, state and
federal tax receipts could decrease, causing states to attempt
to cut health care programs, benefits, and rates. If federal or
state funding were decreased while our membership was
increasing, our results of operations would be negatively
affected. Conversely, the number of persons eligible to receive
Medicaid benefits may grow more slowly or even decline if
economic conditions improve. Therefore, improvements in general
economic conditions may cause our membership levels and
profitability to decrease, which could lead to decreases in our
operating income.
If
state regulators do not approve payments of dividends and
distributions by our subsidiaries, it may negatively affect our
business strategy.
We are a corporate parent holding company and hold most of our
assets at, and conduct most of our operations through, direct
and indirect subsidiaries. As a holding company, our results of
operations depend on the results of
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operations of our subsidiaries. Moreover, we are dependent on
dividends or other intercompany transfers of funds from our
subsidiaries to meet our debt service and other obligations. The
ability of our subsidiaries to pay dividends or make other
payments or advances to us will depend on their operating
results and will be subject to applicable laws and restrictions
contained in agreements governing the debt of such subsidiaries.
In addition, our health plan subsidiaries are subject to laws
and regulations that limit the amount of dividends and
distributions that they can pay to us without prior approval of,
or notification to, state regulators. In California, our health
plan may dividend, without notice to or approval of the
California Department of Managed Health Care, amounts by which
its tangible net equity exceeds 130% of the tangible net equity
requirement. In Michigan, New Mexico, Ohio, Texas, Utah, and
Washington, our health plans must give thirty days advance
notice and the opportunity to disapprove
“extraordinary” dividends to the respective state
departments of insurance for amounts over the lesser of
(a) ten percent of surplus or net worth at the prior year
end or (b) the net income for the prior year. The
discretion of the state regulators, if any, in approving or
disapproving a dividend is not clearly defined. Health plans
that declare non-extraordinary dividends must usually provide
notice to the regulators ten or fifteen days in advance of the
intended distribution date of the non-extraordinary dividend.
The aggregate amounts our health plan subsidiaries could have
paid us at December 31, 2007, 2006, and 2005 without
approval of the regulatory authorities were approximately
$18.7 million, $6.9 million, and $4.3 million,
respectively. If the regulators were to deny or significantly
restrict our subsidiaries’ requests to pay dividends to us,
the funds available to our company as a whole would be limited,
which could harm our ability to implement our business strategy.
For example, we could be hindered in our ability to make debt
service payments under our credit facility
and/or our
senior convertible notes.
Unforeseen
changes in regulations or pharmaceutical market conditions may
impact our revenues and adversely affect our results of
operations.
A significant category of our health care costs relate to
pharmaceutical products and services. Evolving regulations and
state and federal mandates regarding coverage may impact the
ability of our HMOs to continue to receive existing price
discounts on pharmaceutical products for our members. Other
factors affecting our pharmaceutical costs include, but are not
limited to, the price of pharmaceuticals, geographic variation
in utilization of new and existing pharmaceuticals, and changes
in discounts. The unpredictable nature of these factors may have
an adverse effect on our financial condition and results of
operations.
Failure
to maintain effective internal controls over financial reporting
could have a material adverse effect on our business, operating
results, and stock price.
The Sarbanes-Oxley Act of 2002 requires, among other things,
that we maintain effective internal control over financial
reporting. In particular, we must perform system and process
evaluation and testing of our internal controls over financial
reporting to allow management to report on, and our independent
registered public accounting firm to attest to, our internal
controls over our financial reporting as required by
Section 404 of the Sarbanes-Oxley Act of 2002. Our future
testing, or the subsequent testing by our independent registered
public accounting firm, may reveal deficiencies in our internal
controls over financial reporting that are deemed to be material
weaknesses. Our compliance with Section 404 will continue
to require that we incur substantial accounting expense and
expend significant management time and effort. Moreover, if we
are not able to continue to comply with the requirements of
Section 404 in a timely manner, or if we or our independent
registered public accounting firm identifies deficiencies in our
internal control over financial reporting that are deemed to be
material weaknesses, the market price of our stock could decline
and we could be subject to sanctions or investigations by the
NYSE, SEC or other regulatory authorities, which would require
additional financial and management resources.
Volatility
of our stock price could adversely affect
stockholders.
Since our initial public offering in July 2003, the sales price
of our common stock has ranged from a low of $20.00 to a high of
$53.23. A number of factors will continue to influence the
market price of our common stock, including:
| • | state and federal budget decreases, | |
| • | adverse publicity regarding health maintenance organizations and other managed care organizations, |
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| • | government action regarding member eligibility, | |
| • | changes in government payment levels, | |
| • | a change in control of the Presidency or of Congress from one party to the other, | |
| • | changes in state mandatory programs, | |
| • | changes in expectations as to our future financial performance or changes in financial estimates, if any, of public market analysts, | |
| • | announcements relating to our business or the business of our competitors, | |
| • | conditions generally affecting the managed care industry or our provider networks, | |
| • | the success of our operating or acquisition strategy, | |
| • | the operating and stock price performance of other comparable companies in the healthcare industry, | |
| • | the termination of our Medicaid or SCHIP contracts with state or county agencies, or subcontracts with other Medicaid managed care organizations that contract with such state or county agencies, | |
| • | regulatory or legislative change, and | |
| • | general economic conditions, including inflation, interest rates, and unemployment rates. |
Our stock may not trade at the same levels as the stock of other
health care companies and the market in general may not sustain
its current prices. Also, if the trading market for our stock
does not continue to develop, securities analysts may not
initiate or maintain research coverage of our company and our
shares, and this could further depress the market for our shares.
Our
directors and officers and members of the Molina family own a
majority of our capital stock, decreasing the influence of other
stockholders on stockholder decisions.
Our executive officers and directors, in the aggregate,
beneficially own approximately 20% of our capital stock, and
members of the Molina family (some of whom are also officers or
directors), in the aggregate, beneficially own approximately 53%
of our capital stock, either directly or in trusts of which
members of the Molina family are beneficiaries. In some cases,
members of the Molina family are trustees of the trusts. As a
result, Molina family members, acting by themselves or together
with our officers and directors, have the ability to
significantly influence all matters submitted to stockholders
for approval, including the election and removal of directors,
amendments to our charter, and any merger, consolidation, or
sale of substantially all of our assets. A significant
concentration of share ownership can also adversely affect the
trading price for our common stock because investors often
discount the value of stock in companies that have controlling
stockholders. Furthermore, the concentration of ownership in our
company could delay, defer, or prevent a merger or
consolidation, takeover, or other business combination that
could be favorable to our stockholders. Finally, the interests
and objectives of our controlling stockholders may be different
from those of our company or our other stockholders, and our
controlling stockholders may vote their common stock in a manner
that may adversely affect our other stockholders.
It may
be difficult for a third party to acquire our company, which
could inhibit stockholders from realizing a premium on their
stock price.
We are subject to the Delaware anti-takeover laws regulating
corporate takeovers. These provisions may prohibit stockholders
owning 15% or more of our outstanding voting stock from merging
or combining with us.
Our certificate of incorporation and bylaws also contain
provisions that could have the effect of delaying, deferring, or
preventing a change in control of our company that stockholders
may consider favorable or beneficial. These provisions could
discourage proxy contests and make it more difficult for our
stockholders to elect directors and take other corporate
actions. These provisions could also limit the price that
investors might be willing to pay in the future for shares of
our common stock. These provisions include:
| • | a staggered board of directors, so that it would take three successive annual meetings to replace all directors, |
23
Table of Contents
| • | prohibition of stockholder action by written consent, and | |
| • | advance notice requirements for the submission by stockholders of nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a meeting. |
In addition, changes of control are often subject to state
regulatory notification, and in some cases, prior approval.
Our
forecasts and other forward-looking statements are based on a
variety of assumptions that are subject to significant
uncertainties. Our performance may not be consistent with these
forecasts and forward-looking statements.
From time to time in press releases and otherwise, we may
publish earnings guidance, forecasts, or other forward-looking
statements regarding our future results, including estimated
revenues, net earnings, and other operating and financial
metrics. Any forecast of our future performance reflects
numerous assumptions. These assumptions are subject to
significant uncertainties, and as a matter of course, any number
of them may prove to be incorrect. For example, our earnings
guidance issued on January 18, 2007 assumed that the
membership of our Ohio HMO would grow during 2007 to
approximately 160,000 members, an assumption which proved to be
inaccurate (actual membership in Ohio grew to 136,000 at
December 31, 2007). Further, the achievement of any
forecast depends on numerous risks and other factors, including
those described in this report, many of which are beyond our
control. As a result, we cannot assure that our performance will
be consistent with any management forecasts or that the
variation from such forecasts will not be material and adverse.
You are cautioned not to base your entire analysis of our
business and prospects upon isolated predictions, but instead
are encouraged to utilize the entire publicly available mix of
historical and forward-looking information, as well as other
available information affecting us and our services, when
evaluating our prospective results of operations.
We do
not anticipate paying any cash dividends in the foreseeable
future.
We have not declared or paid any dividends since our initial
public offering in July 2003, and we currently anticipate that
we will retain any future earnings for the development and
operation of our business. Accordingly, we do not anticipate
declaring or paying any cash dividends in the foreseeable future.
Our
ability to deduct interest on our convertible notes for U.S.
federal income tax purposes may be reduced or eliminated and as
a result our after-tax cash flow could be adversely
affected.
In October 2007, we completed our offering of $200 million
aggregate principal amount of 3.75% Convertible Senior
Notes due 2014. Under Section 279 of the Internal Revenue
Code, deductions otherwise allowable to a corporation for
interest may be reduced or eliminated in the case of corporate
acquisition indebtedness, which is generally defined to include
subordinated convertible debt issued to provide consideration
for the acquisition of stock or a substantial portion of the
assets of another corporation, if either (i) the acquiring
corporation has a debt to equity ratio (measured, in part, with
reference to tax basis) that exceeds 2 to 1 or (ii) the
projected earnings of the corporation (the average annual
earnings, determined with certain adjustments, for the
three-year period ending on the test date) do not exceed three
times the annual interest costs of the corporation. At the
present time, based on our current and expected operational
metrics for the current taxable year (as specifically calculated
for purposes of the debt to equity ratio and projected earnings
tests referred to in the preceding sentence), we do not expect
our convertible notes to qualify as corporate acquisition
indebtedness. However, our actual operational metrics could
differ from our expectations and, as a result, our deductions
for interest on our convertible notes could be reduced or
eliminated if our convertible notes meet the definition of
corporate acquisition indebtedness in 2007, the taxable year in
which the notes were issued. In addition, our convertible notes
could become corporate acquisition indebtedness in a subsequent
taxable year if we initially meet the debt to equity ratio and
projected earnings tests, but later fail one or both tests in a
year during which we issue additional indebtedness for certain
corporate acquisitions. If we are not entitled to deduct
interest on our convertible notes, our after-tax cash flow could
be adversely affected.
24
Table of Contents
Conversion
of our senior convertible notes may dilute the ownership
interest of existing stockholders.
Our convertible notes are convertible into cash and, under
certain circumstances, shares of our common stock. The
conversion of some or all of our convertible notes may dilute
the ownership interests of existing stockholders. Any sales in
the public market of our common stock issuable upon such
conversion could adversely affect prevailing market prices of
our common stock. In addition, the anticipated conversion of the
convertible notes into cash and shares of our common stock could
depress the price of our common stock.
The
accounting method for convertible debt securities with net share
settlement, like our $200 million senior convertible notes,
could change in a manner that may affect our results of
operations.
In August 2007, the Financial Accounting Standards Board, or
FASB, issued an exposure draft of a proposed FASB Staff Position
(the “Proposed FSP”) reflecting new rules that would
change the accounting for certain convertible debt instruments,
including our convertible notes. Under the proposed new rules
for convertible debt instruments that may be settled entirely or
partially in cash upon conversion, an entity should separately
account for the liability and equity components of the
instrument in a manner that reflects the issuer’s economic
interest cost. The effect of the proposed new rules for our
convertible note is that the equity component would be included
in the
paid-in-capital
section of stockholders’ equity on our balance sheet and
the value of the equity component would be treated as original
issue discount for purposes of accounting for the debt component
of our convertible notes. Higher interest expense would result
by recognizing accretion of the discounted carrying value of our
convertible notes to their face amount as interest expense over
the term of our convertible notes. We believe FASB plans to
issue final guidance in the first half of 2008. This Proposed
FSP is expected to be effective for fiscal years beginning after
December 15, 2008, would not permit early application, and
would be applied retrospectively to all periods presented. We
are currently evaluating the proposed new rules and cannot
quantify the impact at this time. However, if the Proposed FSP
is adopted, we expect to have higher interest expense in 2009
due to the interest expense accretion, and prior period interest
expense associated with our convertible notes would also reflect
higher than previously reported interest expense due to
retrospective application.
In addition, for purposes of calculating diluted earnings per
share, a convertible debt security providing for net share
settlement upon conversion and meeting specified requirements
under Emerging Issues Task Force, or EITF, Issue
No. 00-19,
“Accounting for Derivative Financial Instruments Indexed
to, and Potentially Settled in, a Company’s Own
Stock,” is currently accounted for in a manner similar to
non-convertible debt, with the stated coupon constituting
interest expense and any shares issuable upon conversion of the
security accounted for under the treasury stock method. The
effect of the treasury stock method is that the shares
potentially issuable upon conversion of our convertible notes
are not included in the calculation of our earnings per share
except to the extent that the conversion value of our
convertible notes exceeds their principal amount, in which
event, for earnings per share purposes, we would account for the
transaction as if we had issued the number of shares of our
common stock necessary to settle the conversion. The Proposed
FSP does not affect the earnings per share accounting for
convertible instruments such as our convertible notes.
Our
investments in auction rate securities are subject to risks that
may cause losses and have a material adverse effect on our
liquidity.
As of December 31, 2007, $82.1 million of our total
$242.9 million in short-term investments were comprised of
municipal note investments with an auction reset feature
(“auction rate securities”). These notes are issued by
various state and local municipal entities for the purpose of
financing student loans, public projects and other activities;
they carry a AAA credit rating. $74.1 million of the
$82.1 million are secured by student loans which are
generally 97% guaranteed by the U.S. Government under the
Federal Family Education Loan Program (FFELP). In addition to
the U.S. Government guarantee on such student loans, some
of the securities also have separate insurance policies
guaranteeing both the principal and accrued interest. Liquidity
for these auction rate securities is typically provided by an
auction process which allows holders to sell their notes and
resets the applicable interest rate at pre-determined intervals
up to 35 days. Recently, auctions for some of these auction
rate securities have failed and there is no assurance that
auctions on the remaining auction rate securities in our
investment portfolio will succeed. An auction failure means that
the parties wishing to sell their securities could not be
matched with an adequate volume of buyers. In the event that
there is a failed auction the indenture governing the security
requires
25
Table of Contents
the issuer to pay interest at a contractually defined rate that
is generally above market rates for other types of similar
short-term instruments. The securities for which auctions have
failed will continue to accrue interest at the contractual rate
and be auctioned every 7, 28, or 35 days until the auction
succeeds, the issuer calls the securities, or they mature. As a
result, our ability to liquidate and fully recover the carrying
value of our auction rate securities in the near term may be
limited or not exist. All of these investments are currently
classified as short-term investments. If the credit ratings of
the security issuers deteriorate or if normal market conditions
do not return in the near future, we may be required to reduce
the value of these securities through an impairment charge
against net income and reflect them as long-term investments on
our balance sheet for the period ending March 31, 2008 or
thereafter.
As of February 29, 2008, the Company held
$75.6 million of auction rate securities.
$71.1 million of these securities are secured by student
loans which are generally 97% guaranteed by the
U.S. Government under FFELP.
SPECIAL
NOTE REGARDING FORWARD-LOOKING INFORMATION
This report and the documents we incorporate by reference in
this report contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E
of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). All statements, other than statements
of historical facts, that we include in this report and in the
documents we incorporate by reference in this report, may be
deemed forward-looking statements for purposes of the Securities
Act and the Securities Exchange Act. We use the words
“anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “project,”
“should,” “will,” “would” and
similar expressions to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. We cannot guarantee that we actually will
achieve the plans, intentions, or expectations disclosed in our
forward-looking statements and, accordingly, you should not
place undue reliance on our forward-looking statements. There
are a number of important factors that could cause actual
results or events to differ materially from the forward-looking
statements that we make, including the factors discussed above
and also the factors included in the documents we incorporate by
reference in this report. We wish to caution readers that these
factors, among others, could cause our actual results to differ
materially from those expressed in our forward-looking
statements. In addition, those factors should be considered in
conjunction with any discussion of our results of operations
herein or in other period reports, as well as in conjunction
with all of our press releases, presentations to securities
analysts or investors, or other communications by us. You should
not place undue reliance on any forward-looking statements,
which reflect management’s analysis, judgment, belief, or
expectation only as of the date thereof. Except as may be
required by law, we undertake no obligation to publicly update
or revise any forward-looking statements to reflect events or
circumstances that arise after the date on which the
forward-looking statement was made.
| Item 1B: | Unresolved Staff Comments |
None.
| Item 2: | Properties |
We lease a total of 53 facilities, including our corporate
headquarters at 200 Oceangate in Long Beach, California, and 18
of our 19 California medical clinics. We also own a
32,000 square-foot office building in Long Beach,
California, and one of our medical clinics in Pomona,
California. We believe our current facilities are adequate to
meet our operational needs for the foreseeable future.
| Item 3: | Legal Proceedings |
Malpractice Action. On February 1, 2007,
a complaint was filed in the Superior Court of the State of
California for the County of Riverside by plaintiff Staci Robyn
Ward through her guardian ad litem, Case No. 465374. The
complaint purports to allege claims for medical malpractice
against several unaffiliated physicians, medical groups, and
hospitals, including Molina Medical Centers and one of its
physician employees. The plaintiff alleges that the defendants
failed to properly diagnose her medical condition which resulted
in her severe and permanent disability. On July 22, 2007,
the plaintiff passed away. The proceeding is in the early
stages, and no prediction can be made as to the outcome.
26
Table of Contents
Starko. Our New Mexico HMO is named as a
defendant in a class action lawsuit brought by New Mexico
pharmacies and pharmacists, Starko, Inc., et al. v. NMHSD,
et al.,
No. CV-97-06599,
Second Judicial District Court, State of New Mexico. The lawsuit
was originally filed in August 1997 against the New Mexico Human
Services Department (“NMHSD”). In February 2001, the
plaintiffs named health maintenance organizations participating
in the New Mexico Medicaid program as defendants (the
“HMOs”), including Cimarron Health Plan, the
predecessor of our New Mexico HMO. Plaintiff asserts that NMHSD
and the HMOs failed to pay pharmacy dispensing fees under an
alleged New Mexico statutory mandate. On July 10, 2007, the
court dismissed all damages claims against Molina Healthcare of
New Mexico, leaving only a pending action for injunctive and
declaratory relief. On August 15, 2007, the court held a
hearing on the motion of Molina Healthcare of New Mexico to
dismiss the plaintiffs’ claims for injunctive and
declaratory relief. At that hearing, the court dismissed all
remaining claims against Molina Healthcare of New Mexico. The
plaintiffs have filed an appeal with respect to the court’s
dismissal orders and have submitted their opening appellate
brief. Molina Healthcare of New Mexico is preparing its
responsive appellate brief. Under the terms of the stock
purchase agreement pursuant to which we acquired Health Care
Horizons, Inc., the parent company to Molina Healthcare of New
Mexico, an indemnification escrow account was established and
funded with $6,000,000 in order to indemnify Molina Healthcare
of New Mexico against the costs of such litigation and any
eventual liability or settlement costs. Currently, approximately
$4,100,000 remains in the indemnification escrow fund.
We are involved in other legal actions in the normal course of
business, some of which seek monetary damages, including claims
for punitive damages, which are not covered by insurance. These
actions, when finally concluded and determined, are not likely,
in our opinion, to have a material adverse effect on our
consolidated financial position, results of operations, or cash
flows.
| Item 4: | Submission of Matters to a Vote of Security Holders |
None.
Executive
Officers of the Registrant
J. Mario Molina, M.D., 49, has served as President and
Chief Executive Officer since succeeding his father and company
founder, Dr. C. David Molina, in 1996. He has also served
as Chairman of the Board since 1996. Prior to that, he served as
Medical Director from 1991 through 1994 and was Vice President
responsible for provider contracting and relations, member
services, marketing and quality assurance from 1994 to 1996. He
earned an M.D. from the University of Southern California and
performed his medical internship and residency at the Johns
Hopkins Hospital. Dr. Molina is the brother of John C.
Molina.
John C. Molina, J.D., 43, has served in the role of Chief
Financial Officer since 1995. He also has served as a director
since 1994. Mr. Molina has been employed by us for over
27 years in a variety of positions. Mr. Molina is a
past president of the California Association of Primary Care
Case Management Plans. He earned a Juris Doctorate from the
University of Southern California School of Law. Mr. Molina
is the brother of J. Mario Molina, M.D.
Mark L. Andrews, Esq., 50, has served as Chief Legal
Officer and General Counsel since 1998. He also has served as a
member of the Executive Committee of our company since 1998.
Before joining our company, Mr. Andrews was a partner at
Wilke, Fleury, Hoffelt, Gould & Birney of Sacramento,
California, where he chaired that firm’s health care and
employment law departments and represented Molina as outside
counsel from 1994 through 1997. Mr. Andrews holds a Juris
Doctorate degree from Hastings College of the Law.
Terry P. Bayer, 57, has served as our Chief Operating Officer
since November 2005. She had formerly served as our Executive
Vice President, Health Plan Operations since January 2005.
Ms. Bayer has 25 years of healthcare management
experience, including staff model clinic administration,
provider contracting, managed care operations, disease
management, and home care. Prior to joining us, her professional
experience included regional responsibility at FHP, Inc. and
multi-state responsibility as Regional Vice-President at
Maxicare; Partners National Health Plan, a joint venture of
Aetna Life Insurance Company and Voluntary Hospital Association
(VHA); and Lincoln National. She has also served as Executive
Vice President of Managed Care at Matria Healthcare, President
and Chief Operating Officer of Praxis Clinical Services, and as
Western Division President of AccentCare. She holds a Juris
Doctorate from Stanford University, a Master’s degree in
Public Health from the University of
27
Table of Contents
California, Berkeley, and a Bachelor’s degree in
Communications from Northwestern University. Ms. Bayer is a
member of the board of directors of Apria Healthcare Group Inc.
James W. Howatt, 61, has served as our Chief Medical Officer
since May 2007. Dr. Howatt formerly served as the chief
medical officer of Molina Healthcare of Washington. Prior to
joining Molina Healthcare in February 2006, Dr. Howatt
was Western Regional Medical Director for Humana, where he was
responsible for the coordination and oversight of quality,
utilization management, credentialing, and accreditation for
Humana’s activities west of Kansas City. Previously, he was
Vice President and CMO of Humana Arizona, where he was
responsible for leading a variety of medical management
functions and worked closely with the company’s sales
division to develop customer-focused benefit structures.
Dr. Howatt also served as CMO for Humana TRICARE, where he
oversaw a $2.5 billion health care operation that served
three million beneficiaries and comprised a professional network
of 40,000 providers, 800 institutions, and 13 medical directors.
Dr. Howatt received B.S. and M.D. degrees from the
University of California, San Francisco, and also holds a
Master of Business Administration degree with an emphasis in
Health Management from the University of Phoenix. He interned
and completed his residency program in family practice at
Ventura County Hospital in Ventura, California. Dr. Howatt
is a board-certified family physician and a member of the
American College of Managed Care Medicine.
28
Table of Contents
PART II
| Item 5: | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Our common stock has been listed on the New York Stock Exchange
under the trading symbol “MOH” since July 2003. The
high and low sales prices of our common stock for specified
periods are set forth below:
|
Date Range
|
High
|
Low
|
||||||
|
2007
|
||||||||
|
First Quarter
|
$ | 34.76 | $ | 28.88 | ||||
|
Second Quarter
|
$ | 34.92 | $ | 28.72 | ||||
|
Third Quarter
|
$ | 38.41 | $ | 28.15 | ||||
|
Fourth Quarter
|
$ | 41.21 | $ | 34.01 | ||||
|
2006
|
||||||||
|
First Quarter
|
$ | 34.60 | $ | 23.30 | ||||
|
Second Quarter
|
$ | 39.78 | $ | 30.17 | ||||
|
Third Quarter
|
$ | 39.39 | $ | 31.10 | ||||
|
Fourth Quarter
|
$ | 41.25 | $ | 32.02 | ||||
As of February 26, 2008, there were approximately 141
holders of record of our common stock.
We did not declare or pay any dividends in 2007, 2006, or 2005.
We currently anticipate that we will retain any future earnings
for the development and operation of our business. Accordingly,
we do not anticipate declaring or paying any cash dividends in
the foreseeable future.
Our ability to pay dividends to stockholders is dependent on
cash dividends being paid to us by our subsidiaries. Laws of the
states in which we operate or may operate our health plans, as
well as requirements of the government sponsored health programs
in which we participate, limit the ability of our health plan
subsidiaries to pay dividends to us. In addition, the terms of
our credit facility limit our ability to pay dividends.
Securities
Authorized for Issuance Under Equity Compensation Plans (as of
December 31, 2007)
|
Number of Securities |
||||||||||||
|
Remaining Available for |
||||||||||||
|
Number of Securities to be |
Weighted Average |
Future Issuance |
||||||||||
|
Issued Upon Exercise of |
Exercise Price of |
Under Equity Compensation |
||||||||||
|
Outstanding Options, |
Outstanding Options, |
Plans (Excluding Securities |
||||||||||
|
warrants and rights |
Warrants and Rights |
Reflected in Column (a)) |
||||||||||
|
Plan Category
|
(a) | (b) | (c) | |||||||||
|
Equity compensation plans approved by security holders
|
733,713 | (1) | $ | 30.45 | 3,622,689 | (2) | ||||||
| (1) | Options to purchase shares of our common stock issued under the 2000 Omnibus Stock and Incentive Plan and the 2002 Equity Incentive Plan. Further grants under the 2000 Omnibus Stock and Incentive Plan have been frozen. | |
| (2) | Includes only shares remaining available to issue under the 2002 Equity Incentive Plan (the “2002 Incentive Plan”) and the 2002 Employee Stock Purchase Plan (the “ESPP”). The 2002 Incentive Plan initially allowed for the issuance of 1.6 million shares of common stock. Beginning January 1, 2004, shares available for issuance under the 2002 Incentive Plan automatically increase by the lesser of 400,000 shares or 2% of total outstanding capital stock on a fully diluted basis, unless the board of directors affirmatively acts to nullify the automatic increase. The 400,000 share increase on January 1, 2008 increased the total number of shares available for issuance under the 2002 Incentive Plan to 3,600,000 shares. The ESPP initially allowed for the issuance of 600,000 shares of common stock. Beginning December 31, 2003, and each year until the 2.2 million maximum aggregate number of shares reserved for issuance is reached, shares eligible for issuance under the ESPP |
29
Table of Contents
| automatically increase by 1% of total outstanding capital stock. Through the automatic increase effective December 31, 2007, the total number of shares reserved for issuance under the ESPP has increased to approximately 2.0 million shares. |
STOCK
PERFORMANCE GRAPH
The following discussion shall not be deemed to be
“soliciting material” or to be “filed” with
the SEC nor shall this information be incorporated by reference
into any future filing under the Securities Act or the Exchange
Act, except to the extent that the Company specifically
incorporates it by reference into a filing.
The following line graph compares the percentage change in the
cumulative total return on our common stock against the
cumulative total return of the Standard & Poor’s
Corporation Composite 500 Index (the “S&P 500”)
and a peer group index for the
54-month
period from July 2, 2003 (the date of our initial public
offering of common stock) to December 31, 2007. The graph
assumes an initial investment of $100 in Molina Healthcare, Inc.
common stock and in each of the indices.
The peer group index consists of Amerigroup Corporation (AGP),
Centene Corporation (CNC), Coventry Health Care, Inc. (CVH),
Health Net, Inc. (HNT), Humana, Inc. (HUM), UnitedHealth Group
Incorporated (UNH), and WellPoint, Inc. (WLP).
COMPARISON
OF 54 MONTH CUMULATIVE TOTAL RETURN*
Among Molina Healthcare, Inc, The S&P 500 Index
And A Peer Group
| * | $100 invested on 7/2/03 in stock or on 6/30/03 in index-including reinvestment of dividends. Fiscal year ending December 31. |
30
Table of Contents
| Item 6. | Selected Financial Data |
SELECTED
FINANCIAL DATA
We derived the following selected consolidated financial data
(other than the data under the caption “Operating
Statistics”) for the five years ended December 31,
2007 from our audited consolidated financial statements. You
should read the data in conjunction with our consolidated
financial statements, related notes and other financial
information included herein. All dollars are in thousands,
except per share data. The data under the caption
“Operating Statistics” has not been audited.
| Year Ended December 31, | ||||||||||||||||||||
| 2007(1) | 2006(2) | 2005 | 2004(3) | 2003 | ||||||||||||||||
|
Statements of Income Data:
|
||||||||||||||||||||
|
Revenue:
|
||||||||||||||||||||
|
Premium revenue
|
$ | 2,462,369 | $ | 1,985,109 | $ | 1,639,884 | $ | 1,171,038 | $ | 791,783 | ||||||||||
|
Investment income
|
30,085 | 19,886 | 10,174 | 4,230 | 1,761 | |||||||||||||||
|
Total revenue
|
2,492,454 | 2,004,995 | 1,650,058 | 1,175,268 | 793,544 | |||||||||||||||
|
Expenses:
|
||||||||||||||||||||
|
Medical care costs
|
2,080,083 | 1,678,652 | 1,424,872 | 984,686 | 657,921 | |||||||||||||||
|
General and administrative expenses
|
285,295 | 229,057 | 163,342 | 94,150 | 61,543 | |||||||||||||||
|
Loss contract charge
|
— | — | 939 | — | — | |||||||||||||||
|
Impairment charge on purchased software(4)
|
782 | — | — | — | — | |||||||||||||||
|
Depreciation and amortization
|
27,967 | 21,475 | 15,125 | 8,869 | 6,333 | |||||||||||||||
|
Total expenses
|
2,394,127 | 1,929,184 | 1,604,278 | 1,087,705 | 725,797 | |||||||||||||||
|
Operating income
|
98,327 | 75,811 | 45,780 | 87,563 | 67,747 | |||||||||||||||
|
Total other income (expense), net
|
(4,631 | ) | (2,353 | ) | (1,929 | ) | 122 | (1,334 | ) | |||||||||||
|
Income before income taxes
|
93,696 | 73,458 | 43,851 | 87,685 | 66,413 | |||||||||||||||
|
Provision for income taxes
|
35,366 | 27,731 | 16,255 | 31,912 | 23,896 | |||||||||||||||
|
Net income
|
$ | 58,330 | $ | 45,727 | $ | 27,596 | $ | 55,773 | $ | 42,517 | ||||||||||
|
Net income per share:
|
||||||||||||||||||||
|
Basic
|
$ | 2.06 | $ | 1.64 | $ | 1.00 | $ | 2.07 | $ | 1.91 | ||||||||||
|
Diluted
|
$ | 2.05 | $ | 1.62 | $ | 0.98 | $ | 2.04 | $ | 1.88 | ||||||||||
|
Weighted average number of common shares outstanding
|
28,275,000 | 27,966,000 | 27,711,000 | 26,965,000 | 22,224,000 | |||||||||||||||
|
Weighted average number of common shares and potential dilutive
common shares outstanding
|
28,419,000 | 28,164,000 | 28,023,000 | 27,342,000 | 22,629,000 | |||||||||||||||
|
Operating Statistics:
|
||||||||||||||||||||
|
Medical care ratio(5)
|
84.5 | % | 84.6 | % | 86.9 | % | 84.1 | % | 83.1 | % | ||||||||||
|
General and administrative expense ratio(6)
|
11.5 | % | 11.4 | % | 9.9 | % | 8.0 | % | 7.8 | % | ||||||||||
|
General and administrative expense ratio, excluding premium taxes
|
8.2 | % | 8.4 | % | 7.1 | % | 5.9 | % | 6.6 | % | ||||||||||
|
Members(7)
|
1,149,000 | 1,077,000 | 893,000 | 788,000 | 564,000 | |||||||||||||||
31
Table of Contents
| As of December 31, | ||||||||||||||||||||
| 2007(1) | 2006(2) | 2005 | 2004(3) | 2003 | ||||||||||||||||
|
Balance Sheet Data:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 459,064 | $ | 403,650 | $ | 249,203 | $ | 228,071 | $ | 141,850 | ||||||||||
|
Total assets
|
1,171,305 | 864,475 | 659,927 | 533,859 | 344,585 | |||||||||||||||
|
Long-term debt (including current maturities)
|
200,000 | 45,000 | — | 1,894 | — | |||||||||||||||
|
Total liabilities
|
680,827 | 444,309 | 297,077 | 203,237 | 123,263 | |||||||||||||||
|
Stockholders’ equity
|
490,478 | 420,166 | 362,850 | 330,622 | 221,322 | |||||||||||||||
| (1) | The balance sheet and operating results of the MCP (Mercy CarePlus) acquisition have been included since November 1, 2007, the effective date of the acquisition. | |
| (2) | The balance sheet and operating results of the HCLB (Cape Health Plan) acquisition have been included since May 15, 2006, the effective date of the acquisition. | |
| (3) | The balance sheet and operating results of the New Mexico HMO have been included since July 1, 2004, the effective date of the acquisition. | |
| (4) | Amount represents an impairment charge related to commercial software no longer used for operations. | |
| (5) | Medical care ratio represents medical care costs as a percentage of premium revenue. The medical care ratio is a key operating indicator used to measure our performance in delivering efficient and cost effective healthcare services. Changes in the medical care ratio from period to period result from changes in Medicaid funding by the states, our ability to effectively manage costs, and changes in accounting estimates related to incurred but not reported claims. See Management’s Discussion and Analysis of Financial Condition and Results of Operation for further discussion. | |
| (6) | General and administrative expense ratio represents such expenses as a percentage of total revenue. | |
| (7) | Number of members at end of period. |
32
Table of Contents
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
The following discussion of our financial condition and results
of operations should be read in conjunction with the
“Selected Financial Data” and the accompanying
consolidated financial statements and the notes to those
statements appearing elsewhere in this report. This discussion
contains forward-looking statements that involve known and
unknown risks and uncertainties, including those set forth under
Item 1A — Risk Factors, above.
Overview
Molina Healthcare, Inc. is a multi-state managed care
organization that arranges for the delivery of health care
services to persons eligible for Medicaid and other programs for
low-income families and individuals. We were founded in 1980 as
a provider organization serving the Medicaid population through
a network of primary care clinics in California. In 1994, we
began operating as a health maintenance organization, or HMO.
Beginning in January 2006, we began to serve a very small number
of our dual eligible members under both the Medicaid and the
Medicare programs (we served 5,000 Medicare members as of
December 31, 2007). We operate our business through health
plan subsidiaries in California, Michigan, Missouri, Nevada, New
Mexico, Ohio, Texas, Utah, and Washington. Our financial
performance for 2007, 2006 and 2005 is briefly summarized below
(dollars in thousands, except per share data):
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Earnings per diluted share
|
$ | 2.05 | $ | 1.62 | $ | 0.98 | ||||||
|
Premium revenue
|
$ | 2,462,369 | $ | 1,985,109 | $ | 1,639,884 | ||||||
|
Operating income
|
$ | 98,327 | $ | 75,811 | $ | 45,780 | ||||||
|
Net income
|
$ | 58,330 | $ | 45,727 | $ | 27,596 | ||||||
|
Medical care ratio
|
84.5% | 84.6% | 86.9% | |||||||||
|
G&A expenses as a percentage of total revenue
|
11.5% | 11.4% | 9.9% | |||||||||
|
Total ending membership
|
1,149,000 | 1,077,000 | 893,000 | |||||||||
Revenue
Premium revenue is fixed in advance of the periods covered and
is not generally subject to significant accounting estimates.
For the year ended December 31, 2007, we received
approximately 91.9% of our premium revenue as a fixed amount per
member per month, or PMPM, pursuant to our contracts with state
Medicaid agencies and other managed care organizations for which
we operate as a subcontractor. These premium revenues are
recognized in the month that members are entitled to receive
health care services. The state Medicaid programs periodically
adjust premium rates.
The amount of these premiums may vary substantially between
states and among various government programs. PMPM premiums for
members of the State Children’s Health Insurance Program,
or SCHIP, are generally among the Company’s lowest, with
rates as low as approximately $80 PMPM in California and
Utah. Premium revenues for Medicaid members are generally
higher. Among the Temporary Aid for Needy Families (TANF)
Medicaid population — the Medicaid group that includes
most mothers and children — PMPM premiums range
between approximately $95 in California to over $200 in New
Mexico and Ohio. Among our Medicaid Aged, Blind or Disabled, or
ABD membership, PMPM premiums range from approximately $370 in
California to over $1,000 in New Mexico and Ohio. Medicare
revenue is approximately $1,200 PMPM. Approximately 3.4% of
our premium revenue in the year ended December 31, 2007 was
realized under a Medicaid cost-plus reimbursement agreement that
our Utah plan has with that state. We also received
approximately 4.7% of our premium revenue for the year ended
December 31, 2007 in the form of “birth
income” — a one-time payment for the delivery of
a child — from the Medicaid programs in Michigan,
Ohio, Texas, and Washington. Such payments are recognized as
revenue in the month the birth occurs. Starting in 2006, our
premium revenue also included premiums generated from Medicare,
which totaled approximately $49.3 million for the year
ended December 31, 2007. All of our Medicare revenue is
paid to us as a fixed PMPM amount.
Certain components of premium revenue are subject to accounting
estimates. Chief among these are: 1) that portion of
premium revenue paid to our New Mexico health plan by the state
of New Mexico that may be refunded to
33
Table of Contents
the state if certain minimum amounts are not expended on defined
medical care costs, 2) the additional premium revenue our
Utah health plan is entitled to receive from the state of Utah
as an incentive payment for saving the state of Utah money in
relation to fee-for-service Medicaid, and 3) the
profit-sharing agreement between our Texas health plan and the
state of Texas, where we pay a rebate to the state of Texas if
our Texas health plan generates pretax income, according to a
tiered rebate schedule.
Our contract with the state of New Mexico requires that we spend
a minimum percentage of premium revenue on certain explicitly
defined medical care costs. During 2007, we recorded adjustments
totaling $6.0 million to reduce premium revenue associated
with this requirement. At December 31, 2007, we have
recorded a liability of approximately $12.9 million under
our interpretation of the existing terms of this contract
provision. Any change to the terms of this provision, including
revisions to the definitions of premium revenue or medical care
costs, the period of time over which the minimum percentage is
measured or the manner of its measurement, or the percentage of
revenue required to be spent on the defined medical care costs,
may trigger a change in this amount. If the state of New Mexico
disagrees with our interpretation of the existing contract
terms, an adjustment to this amount may occur.
The Medicaid contract of our Utah health plan with the state of
Utah is paid on a cost plus nine percent basis. In addition, in
order to incentivize the plan to save the state money, the
contract also entitles the health plan to be paid a percentage
of the savings realized as measured against what claims would
have been paid on a fee-for-service basis by the state. We had
previously estimated the amount that we believe our Utah plan
will recover under its savings sharing agreement with the state
of Utah. However, as a result of an ongoing disagreement with
the state, during 2007 our Utah health plan wrote off the entire
receivable, totaling $4.7 million, $4.0 million of
which was accrued as of December 31, 2006. Nevertheless,
our Utah health plan has not waived any of its rights to
recovery under the savings sharing provision of the contract,
and continues to work with the state in an effort to assure an
appropriate determination of amounts due. When additional
information is known or agreement is reached with the state
regarding the appropriate savings sharing payment amount, we
will adjust the amount of savings sharing revenue recorded in
our financial statements.
As of December 31, 2007, we have accrued a liability of
approximately $2.3 million pursuant to our profit-sharing
agreement with the state of Texas, for the 2006 and 2007
contract years. Because the final settlement calculations
include a claims run-out period of nearly one year, the amounts
recorded, based on our estimates, may be adjusted. We believe
that the ultimate settlement will not differ materially from our
estimate.
Historically, membership growth has been the primary reason for
our increasing revenues, although more recently our revenues
have also grown due to the more care intensive benefits
associated with our ABD and dual eligible members. We have
increased our membership through both internal growth and
acquisitions. The following table sets forth the approximate
total number of members by state as of the dates indicated.
| As of December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Total Ending Membership by Health Plan:
|
||||||||||||
|
California
|
296,000 | 300,000 | 321,000 | |||||||||
|
Michigan
|
209,000 | 228,000 | 144,000 | |||||||||
|
Missouri(1)
|
68,000 | — | — | |||||||||
|
Nevada(2)
|
— | — | — | |||||||||
|
New Mexico
|
73,000 | 65,000 | 60,000 | |||||||||
|
Ohio(3)
|
136,000 | 76,000 | — | |||||||||
|
Texas(4)
|
29,000 | 19,000 | — | |||||||||
|
Utah
|
55,000 | 52,000 | 59,000 | |||||||||
|
Washington
|
283,000 | 281,000 | 285,000 | |||||||||
|
Subtotal
|
1,149,000 | 1,021,000 | 869,000 | |||||||||
|
Indiana(5)
|
N/A | 56,000 | 24,000 | |||||||||
|
Total
|
1,149,000 | 1,077,000 | 893,000 | |||||||||
34
Table of Contents
| As of December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Total Ending Membership by State for our Medicare
Advantage Special Needs Plans:
|
||||||||||||
|
California
|
1,115 | 549 | — | |||||||||
|
Michigan
|
1,090 | 152 | — | |||||||||
|
Nevada
|
520 | — | — | |||||||||
|
Utah
|
1,860 | 1,452 | — | |||||||||
|
Washington
|
507 | 235 | — | |||||||||
|
Total
|
5,092 | 2,388 | — | |||||||||
|
Total Ending Membership by State for our Aged, Blind and
Disabled (“ABD”) Population:
|
||||||||||||
|
California
|
11,837 | 10,717 | 10,492 | |||||||||
|
Michigan
|
31,399 | 33,204 | 23,101 | |||||||||
|
New Mexico
|
6,792 | 6,697 | 6,665 | |||||||||
|
Ohio(3)
|
14,887 | — | — | |||||||||
|
Texas(4)
|
16,018 | — | — | |||||||||
|
Utah
|
6,795 | 6,827 | 7,234 | |||||||||
|
Washington
|
2,814 | 2,713 | 1,864 | |||||||||
|
Total
|
90,542 | 60,158 | 49,356 | |||||||||
| (1) | Our Missouri health plan was acquired effective November 1, 2007. | |
| (2) | Less than one thousand members. Our Nevada plan serves only Medicare members and commenced operations in June 2007. | |
| (3) | Our Ohio health plan commenced operations in December 2005, serving less than 250 members as of December 31, 2005. | |
| (4) | Our Texas health plan commenced operations in September 2006. | |
| (5) | Our Indiana health plan ceased serving members effective January 1, 2007; it currently has no members. |
The following table provides details of member months (defined
as the aggregation of each month’s membership for the
period) by state for the years ended December 31, 2007,
2006, and 2005:
| 2007 | 2006 | 2005 | ||||||||||
|
Total Member Months by Health Plan:
|
||||||||||||
|
California
|
3,500,000 | 3,694,000 | 3,569,000 | |||||||||
|
Michigan
|
2,597,000 | 2,365,000 | 1,811,000 | |||||||||
|
Missouri(1)
|
136,000 | — | — | |||||||||
|
Nevada(2)
|
1,000 | — | — | |||||||||
|
New Mexico
|
803,000 | 726,000 | 734,000 | |||||||||
|
Ohio(3)
|
1,567,000 | 442,000 | — | |||||||||
|
Texas(4)
|
335,000 | 34,000 | — | |||||||||
|
Utah
|
593,000 | 689,000 | 668,000 | |||||||||
|
Washington
|
3,419,000 | 3,410,000 | 3,383,000 | |||||||||
|
Subtotal
|
12,951,000 | 11,360,000 | 10,165,000 | |||||||||
|
Indiana(5)
|
N/A | 499,000 | 149,000 | |||||||||
|
Total
|
12,951,000 | 11,859,000 | 10,314,000 | |||||||||
35
Table of Contents
| (1) | Our Missouri health plan was acquired effective November 1, 2007. | |
| (2) | Our Nevada plan serves only Medicare members and commenced operations in June 2007. | |
| (3) | Our Ohio health plan commenced operations in December 2005, serving less than 250 members as of December 31, 2005. | |
| (4) | Our Texas health plan commenced operations in September 2006. | |
| (5) | Our Indiana health plan ceased serving members effective January 1, 2007; it currently has no members. |
Expenses
Our operating expenses include expenses related to the provision
of medical care services and general and administrative, or
G&A, expenses. Our results of operations are impacted by
our ability to effectively manage expenses related to health
care services and to accurately estimate costs incurred.
Expenses related to medical care services are captured in the
following four categories:
| • | Fee-for-service: Physician providers paid on a fee-for-service basis are paid according to a fee schedule set by the state or by our contracts with these providers. We pay hospitals in a variety of ways, including per diem amounts, diagnostic-related groups or DRGs, percent of billed charges, case rates, and capitation. We also have stop-loss agreements with the hospitals with which we contract. Under all fee-for-service arrangements, we retain the financial responsibility for medical care provided. Expenses related to fee-for-service contracts are recorded in the period in which the related services are dispensed. The costs of drugs administered in a physician or hospital setting that are not billed through our pharmacy benefit managers are included in fee-for-service costs. | |
| • | Capitation: Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitation basis. Under capitation contracts, we typically pay a fixed PMPM payment to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated contracts, we remain liable for the provision of certain health care services. Certain of our capitated contracts also contain incentive programs based on service delivery, quality of care, utilization management, and other criteria. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers. | |
| • | Pharmacy: Pharmacy costs include all drug, injectibles, and immunization costs paid through our pharmacy benefit managers. As noted above, drugs and injectibles not paid through our pharmacy benefit managers are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs. | |
| • | Other: Other medical care costs include medically related administrative costs, certain provider incentive costs, reinsurance cost, and other health care expense. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, disease management, 24-hour on-call nurses, and a portion of our information technology costs. Salary and benefit costs are a substantial portion of these expenses. For the years ended December 31, 2007, 2006 and 2005, medically related administrative costs were approximately $65.4 million, $52.6 million, and $44.4 million, respectively. |
36
Table of Contents
The following table provides the details of our consolidated
medical care costs for the periods indicated (dollars in
thousands except PMPM amounts):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
|
% of |
% of |
% of |
||||||||||||||||||||||||||||||||||
| Amount | PMPM | Total | Amount | PMPM | Total | Amount | PMPM | Total | ||||||||||||||||||||||||||||
|
Medical care costs:
|
||||||||||||||||||||||||||||||||||||
|
Fee for service
|
$ | 1,343,911 | $ | 103.77 | 64.6 | % | $ | 1,125,031 | $ | 94.86 | 67.0 | % | $ | 983,608 | $ | 95.36 | 69.0 | % | ||||||||||||||||||
|
Capitation
|
375,206 | 28.97 | 18.0 | 261,476 | 22.05 | 15.6 | 199,821 | 19.37 | 14.0 | |||||||||||||||||||||||||||
|
Pharmacy
|
270,363 | 20.88 | 13.0 | 209,366 | 17.65 | 12.5 | 176,250 | 17.09 | 12.4 | |||||||||||||||||||||||||||
|
Other
|
90,603 | 7.00 | 4.4 | 82,779 | 6.98 | 4.9 | 65,193 | 6.32 | 4.6 | |||||||||||||||||||||||||||
|
Total
|
$ | 2,080,083 | $ | 160.62 | 100.0 | % | $ | 1,678,652 | $ | 141.54 | 100.0 | % | $ | 1,424,872 | $ | 138.14 | 100.0 | % | ||||||||||||||||||
Our medical care costs include amounts that have been paid by us
through the reporting date as well as estimated liabilities for
medical care costs incurred but not paid by us as of the
reporting date. See “Critical Accounting Policies”
below for a comprehensive discussion of how we estimate such
liabilities.
G&A expenses largely consist of wage and benefit costs for
our employees, premium taxes, and other administrative expenses.
Some G&A services are provided locally, while others are
delivered to our health plans from a centralized location. The
primary centralized functions are claims processing, information
systems, finance and accounting services, and legal and
regulatory services. Locally provided functions include member
services, plan administration, and provider relations. G&A
expenses include premium taxes for each of our health plans in
California, Michigan, New Mexico, Ohio, Texas, and Washington.
Results
of Operations
The following table sets forth selected consolidated operating
ratios. All ratios, with the exception of the medical care
ratio, are shown as a percentage of total revenue. The medical
care ratio is shown as a percentage of premium revenue because
there is a direct relationship between the premium revenue
earned and the cost of health care.
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Premium revenue
|
98.8 | % | 99.0 | % | 99.4 | % | ||||||
|
Investment income
|
1.2 | 1.0 | 0.6 | |||||||||
|
Total revenue
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
|
Medical care ratio
|
84.5 | % | 84.6 | % | 86.9 | % | ||||||
|
General and administrative expense ratio, excluding premium taxes
|
8.2 | % | 8.4 | % | 7.1 | % | ||||||
|
Premium taxes included in general and administrative expenses
|
3.3 | 3.0 | 2.8 | |||||||||
|
Total general and administrative expense ratio
|
11.5 | % | 11.4 | % | 9.9 | % | ||||||
|
Depreciation and amortization expense ratio
|
1.1 | % | 1.1 | % | 0.9 | % | ||||||
|
Effective tax rate
|
37.8 | % | 37.8 | % | 37.1 | % | ||||||
|
Operating income
|
3.9 | % | 3.8 | % | 2.8 | % | ||||||
|
Net income
|
2.3 | % | 2.3 | % | 1.7 | % | ||||||
37
Table of Contents
Year
Ended December 31, 2007 Compared with the Year Ended
December 31, 2006
The following table summarizes premium revenue, medical care
costs, medical care ratio, and premium taxes by health plan for
the periods indicated (PMPM amounts are in whole dollars; other
dollar amounts are in thousands):
| Year Ended December 31, 2007 | ||||||||||||||||||||||||
| Premium Revenue | Medical Care Costs |
Medical |
Premium Tax |
|||||||||||||||||||||
| Total | PMPM | Total | PMPM | Care Ratio | Expense | |||||||||||||||||||
|
California
|
$ | 378,934 | $ | 108.29 | $ | 310,226 | $ | 88.66 | 81.9 | % | $ | 11,338 | ||||||||||||
|
Indiana
|
366 | — | (3,729 | ) | — | — | — | |||||||||||||||||
|
Michigan
|
487,032 | 187.55 | 409,230 | 157.59 | 84.0 | % | 28,493 | |||||||||||||||||
|
Missouri
|
30,730 | 226.65 | 26,396 | 194.69 | 85.9 | % | — | |||||||||||||||||
|
Nevada
|
2,438 | 1,440.73 | 2,069 | 1,222.76 | 84.9 | % | — | |||||||||||||||||
|
New Mexico
|
268,115 | 333.94 | 221,567 | 275.97 | 82.6 | % | 9,088 | |||||||||||||||||
|
Ohio
|
436,238 | 278.39 | 394,451 | 251.72 | 90.4 | % | 19,631 | |||||||||||||||||
|
Texas
|
88,453 | 263.90 | 68,173 | 203.40 | 77.1 | % | 1,598 | |||||||||||||||||
|
Utah
|
116,907 | 197.19 | 109,895 | 185.36 | 94.0 | % | — | |||||||||||||||||
|
Washington
|
652,970 | 190.96 | 519,763 | 152.00 | 79.6 | % | 10,844 | |||||||||||||||||
|
Other
|
186 | — | 22,042 | — | — | 28 | ||||||||||||||||||
| $ | 2,462,369 | $ | 190.13 | $ | 2,080,083 | $ | 160.62 | 84.5 | % | $ | 81,020 | |||||||||||||
| Year Ended December 31, 2006 | ||||||||||||||||||||||||
| Premium Revenue | Medical Care Costs |
Medical |
Premium Tax |
|||||||||||||||||||||
| Total | PMPM | Total | PMPM | Care Ratio | Expense | |||||||||||||||||||
|
California
|
$ | 372,071 | $ | 100.74 | $ | 328,532 | $ | 88.95 | 88.3 | % | $ | 11,738 | ||||||||||||
|
Indiana
|
82,946 | 166.29 | 79,411 | 159.20 | 95.7 | % | — | |||||||||||||||||
|
Michigan
|
429,835 | 181.73 | 335,696 | 141.93 | 78.1 | % | 25,982 | |||||||||||||||||
|
New Mexico
|
221,597 | 305.07 | 187,460 | 258.08 | 84.6 | % | 8,203 | |||||||||||||||||
|
Ohio
|
94,751 | 214.25 | 86,249 | 195.03 | 91.0 | % | 4,265 | |||||||||||||||||
|
Texas
|
4,508 | 133.37 | 4,688 | 138.70 | 104.0 | % | 79 | |||||||||||||||||
|
Utah
|
165,507 | 240.10 | 151,417 | 219.66 | 91.5 | % | — | |||||||||||||||||
|
Washington
|
613,750 | 179.98 | 484,435 | 142.06 | 78.9 | % | 10,506 | |||||||||||||||||
|
Other
|
144 | — | 20,764 | — | — | 4 | ||||||||||||||||||
| $ | 1,985,109 | $ | 167.39 | $ | 1,678,652 | $ | 141.55 | 84.6 | % | $ | 60,777 | |||||||||||||
Net
Income
For the year ended December 31, 2007, net income increased
to $58.3 million, or $2.05 per diluted share, from
$45.7 million, or $1.62 per diluted share, for the year
ended December 31, 2006.
Premium
Revenue
For the year ended December 31, 2007, premium revenue was
$2,462.4 million, an increase of $477.3 million, or
24.0%, over $1,985.1 million for the year ended
December 31, 2006. Medicare premium revenue for 2007 was
$49.3 million compared with $27.2 million in 2006.
Contributing to the $477.3 million increase in annual
premium revenues were the following:
| • | A $341.5 million increase at the Ohio health plan principally due to higher enrollment; |
38
Table of Contents
| • | An $83.9 million increase at the Texas health plan due to higher enrollment. During 2007, the Texas health plan reduced revenue by $3.1 million to record amounts due back to the state under a profit sharing agreement; | |
| • | A $57.2 million increase at our Michigan health plan principally due to a full year of operations which had included the revenue of the Cape Health Plan, compared to only eight months of operations including Cape Health Plan revenues in 2006 (the acquisition of Cape Health Plan was effective May 1, 2006); | |
| • | A $46.5 million increase at our New Mexico health plan due to higher enrollment and higher premium rates. The New Mexico health plan reduced revenue by $6.0 million and $6.9 million in 2007 and 2006, respectively, to meet a contractually required minimum medical care ratio; | |
| • | A $39.2 million increase at our Washington health plan due to higher premium rates and slightly higher membership; | |
| • | A $30.7 million increase as a result of our acquisition of Mercy CarePlus in Missouri effective November 1, 2007; and | |
| • | A $6.9 million increase at our California health plan as increased premium rates offset lower enrollment. |
These increases in premium revenues during 2007 were partially
offset by:
| • | An $82.9 million decrease due to the termination of operations of our Indiana health plan effective January 1, 2007; and | |
| • | A $48.6 million decrease at our Utah health plan due to reduced membership (on a member-month basis), and the write-off of $4.7 million in savings share receivables. |
Investment
Income
Investment income for 2007 increased $10.2 million to
$30.1 million, from $19.9 million for 2006, as a
result of higher invested balances, due in part to the
investment of proceeds from our offering of convertible senior
notes in the fourth quarter of 2007, and higher investment
yields.
Medical
Care Costs
Medical care costs as a percentage of premium revenue (the
medical care ratio), decreased to 84.5% in the year ended
December 31, 2007, from 84.6% in 2006. Contributing to this
change were the following:
| • | The medical care ratio of the California health plan decreased to 81.9% in 2007 from 88.3% in 2006 as a result of the premium increases received during 2007 in San Bernardino/Riverside, San Diego, and Sacramento counties, while PMPM medical costs were essentially flat; | |
| • | The medical care ratio of the Michigan health plan increased to 84.0% in 2007 from 78.1% in 2006 due to higher capitation and pharmacy and specialty fee-for-service costs partially offset by lower hospital fee-for-service costs; | |
| • | The medical care ratio of the New Mexico health plan decreased to 82.6% in 2007 from 84.6% in 2006. The decrease was the result of higher premium rates and a reduction in the minimum medical care ratio premium adjustment, partially offset by the impact of Medicaid fee schedule increases. Absent the adjustments made to premium revenue in 2007 and 2006, the medical care ratio in New Mexico would have been 80.8% in 2007 and 82.0% in 2006; | |
| • | The medical care ratio of the Ohio health plan decreased to 90.4% for 2007 from 91.0% in 2006. The medical care ratio for the Ohio health plan’s CFC population decreased to 88.5% in 2007 compared to 91.0% in 2006. During 2007, the Ohio health plan began serving the ABD population for the first time. The medical care ratio for the ABD population for all of 2007 was 94.7%. We expect that the Ohio ABD medical care ratio will decrease in 2008 as a result of the 2.6% rate increase the health plan received under its ABD contract with the state effective January 1, 2008, and the realization of improved utilization as the transition to managed care continues. We estimate that if the 2008 medical care ratio for the CFC population remains at |
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| 86.2% for all of 2008, we will need to achieve a medical care ratio of 91.0% for our ABD population to reach our expectation of an 88.0% medical care ratio plan-wide for Ohio. The recent addition of the ABD members (some of whom were not added until late summer of 2007) adds a degree of uncertainty to the medical care cost estimates in Ohio that is not found in our more mature health plans; |
| • | The medical care ratio of the Texas health plan decreased in 2007 primarily due to very low medical costs for the Star Plus membership. As noted above, we recorded a $3.1 million reduction to revenue in Texas during 2007 to reflect estimated amounts due back to the state under a profit sharing arrangement. We believe that the medical care ratio reported by the Texas health plan in 2007 is not sustainable, and expect the medical care ratio to rise during 2008 to a level consistent with consolidated results; | |
| • | The medical care ratio of the Utah health plan increased due to the write-off of $4.7 million in savings share receivables in the second half of 2007. Medical care costs in Utah decreased on a PMPM basis in 2007 when compared to 2006. Absent the write-off of $4.7 million in savings share receivable in the second half of 2007 ($4.0 million of which was accrued as of December 31, 2006), the Utah health plan’s medical care ratio would have been 90.4%, an improvement over the 91.5% reported for 2006. Our Utah health plan serves the majority of its membership under a cost-plus contract with the state of Utah; | |
| • | The medical care ratio reported at the Washington health plan increased to 79.6% in 2007 from 78.9% in 2006, principally due to higher fee-for-service costs; and | |
| • | The termination of our operations in Indiana resulted in a 10 basis-point improvement in our medical care ratio, to 84.5%, in 2007. Absent the impact of the Indiana plan in both years, the medical care ratio in 2007 would have increased 50 basis points to 84.6% from 84.1% in 2006. |
General
and Administrative Expenses
G&A expenses were $285.3 million, or 11.5% of total
revenue, for the year ended December 31, 2007, compared to
$229.1 million, or 11.4% of total revenue, for 2006.
Included in G&A expenses were premium taxes totaling
$81.0 million in 2007 and $60.8 million in 2006.
Premium taxes increased in 2007 due to increased revenues in the
states where premium taxes are assessed.
Core G&A expenses (defined as G&A expenses less
premium taxes) decreased to 8.2% of total revenue for the year
ended December 31, 2007, compared with 8.4% for 2006.
Although Core G&A expenses declined slightly in 2007 as a
percentage of total revenue, certain categories of expenses
increased. These increases included employee incentive
compensation, recruitment costs, and our continued investment in
the administrative infrastructure necessary to support the
Medicare product line. The following table provides details
regarding the impact of these increases (dollars in thousands):
| 2007 | 2006 | |||||||||||||||
|
% of Total |
% of Total |
|||||||||||||||
| Amount | Revenue | Amount | Revenue | |||||||||||||
|
Medicare-related administrative costs
|
$ | 9,778 | 0.4 | % | $ | 3,237 | 0.2 | % | ||||||||
|
Non Medicare-related administrative costs:
|
||||||||||||||||
|
Employee recruitment expense
|
2,568 | 0.1 | 1,769 | 0.1 | ||||||||||||
|
Employee incentive compensation
|
9,976 | 0.4 | 5,102 | 0.2 | ||||||||||||
|
All other administrative expense
|
182,735 | 7.3 | 158,172 | 7.9 | ||||||||||||
|
Core G&A expenses
|
$ | 205,057 | 8.2 | % | $ | 168,280 | 8.4 | % | ||||||||
Depreciation
and Amortization
Depreciation and amortization expense increased
$6.5 million for the year ended December 31, 2007
compared to 2006, primarily due to depreciation expense
associated with investments in infrastructure. Of the total
increase, amortization expense contributed $1.3 million,
primarily due to the Cape Health Plan acquisition in
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Michigan in 2006. The following table presents the components of
depreciation and amortization expense (in thousands):
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Depreciation expense
|
$ | 17,118 | $ | 11,936 | ||||
|
Amortization expense on intangible assets
|
10,849 | 9,539 | ||||||
|
Total depreciation and amortization expense
|
$ | 27,967 | $ | 21,475 | ||||
Impairment
Charge on Purchased Software
During the second quarter of 2007, we recorded an impairment
charge of $782,000 related to purchased software no longer used
for operations. No such charge occurred during the year ended
December 31, 2006.
Interest
Expense
Interest expense increased to $4.6 million in 2007 from
$2.4 million in 2006 primarily due to increased borrowings,
including the issuance of our convertible senior notes in the
fourth quarter of 2007.
Income
Taxes
We recognized income tax expense for the year ended
December 31, 2007 using an effective tax rate of 37.8%,
consistent with the rate used for the year ended
December 31, 2006.
Year
Ended December 31, 2006 Compared with the Year Ended
December 31, 2005
The following summarizes premium revenue, medical care costs,
medical care ratio, and premium taxes by health plan for the
periods indicated (PMPM amounts are in whole dollars; other
dollar amounts are in thousands):
| Year Ended December 31, 2006 | ||||||||||||||||||||||||
| Premium Revenue | Medical Care Costs |
Medical Care |
Premium Tax |
|||||||||||||||||||||
| Total | PMPM | Total | PMPM | Ratio | Expense | |||||||||||||||||||
|
California
|
$ | 372,071 | $ | 100.74 | $ | 328,532 | $ | 88.95 | 88.3 | % | $ | 11,738 | ||||||||||||
|
Indiana
|
82,946 | 166.29 | 79,411 | 159.20 | 95.7 | % | — | |||||||||||||||||
|
Michigan
|
429,835 | 181.73 | 335,696 | 141.93 | 78.1 | % | 25,982 | |||||||||||||||||
|
New Mexico
|
221,597 | 305.07 | 187,460 | 258.08 | 84.6 | % | 8,203 | |||||||||||||||||
|
Ohio
|
94,751 | 214.25 | 86,249 | 195.03 | 91.0 | % | 4,265 | |||||||||||||||||
|
Texas
|
4,508 | 133.37 | 4,688 | 138.70 | 104.0 | % | 79 | |||||||||||||||||
|
Utah
|
165,507 | 240.10 | 151,417 | 219.66 | 91.5 | % | — | |||||||||||||||||
|
Washington
|
613,750 | 179.98 | 484,435 | 142.06 | 78.9 | % | 10,506 | |||||||||||||||||
|
Other
|
144 | — | 20,764 | — | — | 4 | ||||||||||||||||||
| $ | 1,985,109 | $ | 167.39 | $ | 1,678,652 | $ | 141.55 | 84.6 | % | $ | 60,777 | |||||||||||||
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Table of Contents
| Year Ended December 31, 2005 | ||||||||||||||||||||||||
| Premium Revenue | Medical Care Costs |
Medical Care |
Premium Tax |
|||||||||||||||||||||
| Total | PMPM | Total | PMPM | Ratio | Expense | |||||||||||||||||||
|
California
|
$ | 340,360 | $ | 95.36 | $ | 293,485 | $ | 82.23 | 86.2 | % | $ | 6,401 | ||||||||||||
|
Indiana
|
23,373 | 157.38 | 23,925 | 161.09 | 102.4 | % | — | |||||||||||||||||
|
Michigan
|
325,651 | 179.80 | 267,111 | 147.48 | 82.0 | % | 20,038 | |||||||||||||||||
|
New Mexico
|
241,404 | 328.84 | 220,679 | 300.61 | 91.4 | % | 9,393 | |||||||||||||||||
|
Ohio
|
38 | 178.59 | 66 | 305.65 | 171.2 | % | 1 | |||||||||||||||||
|
Utah
|
115,297 | 172.53 | 105,298 | 157.57 | 91.3 | % | — | |||||||||||||||||
|
Washington
|
593,583 | 175.46 | 497,853 | 147.17 | 83.9 | % | 10,468 | |||||||||||||||||
|
Other
|
178 | — | 16,455 | — | — | — | ||||||||||||||||||
| $ | 1,639,884 | $ | 158.99 | $ | 1,424,872 | $ | 138.14 | 86.9 | % | $ | 46,301 | |||||||||||||
Net
Income
For the year ended December 31, 2006, net income increased
to $45.7 million, or $1.62 per diluted share, from
$27.6 million, or $0.98 per diluted share, for the year
ended December 31, 2005.
Premium
Revenue
For the year ended December 31, 2006, premium revenue was
$1,985.1 million, an increase of $345.2 million, or
21.1%, over $1,639.9 million for the year ended
December 31, 2005. Medicare premium revenue for 2006 was
$27.2 million, with no comparable revenue in 2005.
Contributing to the $345.2 million increase in annual
premium revenues were the following:
| • | A $114.4 million increase at the Michigan health plan due to the acquisition of Cape Health Plan in Michigan effective May 2006; | |
| • | A $94.8 million increase at the Ohio health plan, which commenced operations in December 2005 with nominal premium revenue in 2005; | |
| • | A $50.2 million increase at the Utah health plan, of which $20.2 million was attributable to Medicare Advantage revenue; | |
| • | A $31.7 million increase at the California health plan due to increased membership as a result of acquisitions in San Diego county effective June 1, 2005; | |
| • | A $20.2 million increase at the Washington health plan due to improved premium rates; and | |
| • | A $59.6 million increase contributed by the now-terminated Indiana health plan. |
These increases in premium revenues during 2006 were partially
offset by:
| • | A $19.8 million decrease at the New Mexico health plan, which reduced revenue by $6.9 million in 2006 to meet a contractually required minimum medical care ratio; and | |
| • | A $10.2 million decrease at the Michigan health plan due to a reduction in membership exclusive of the addition of members from the Cape Health Plan acquisition. |
Investment
Income
Investment income for 2006 was $19.9 million, compared with
$10.2 million for 2005, an increase of $9.7 million as
a result of higher invested balances and higher investment
yields.
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Table of Contents
Medical Care Costs
Our consolidated medical care ratio decreased to 84.6% in 2006,
compared with 86.9% in 2005. Contributing to this change were
the following:
| • | Improved medical care ratios reported in our Michigan (excluding Cape Health Plan), Washington, and New Mexico health plans; | |
| • | Partially offsetting the improved medical care ratios in these states was a 207 basis point increase in the medical care ratio in our California health plan in 2006 compared with 2005, due to higher unit costs and limited premium rate increases; | |
| • | The Cape Health Plan (acquired effective May 15, 2006) experienced a higher medical care ratio during 2006 than our consolidated average; and | |
| • | The medical care ratios for our start-up operations in Ohio, Texas, and Indiana were substantially higher than those experienced by the Company as a whole. Excluding these start-up operations, our medical care ratio decreased 300 basis points to 83.7% for the year ended December 31, 2006 compared with 86.7% in 2005. We believe our medical care cost control initiatives contributed substantially to the year-over-year decrease in our medical care ratio. |
General
and Administrative Expenses
G&A expenses for 2006 were $229.1 million compared
with $163.3 million for 2005. G&A expenses as a
percentage of total revenue were 11.4% for 2006 compared with
9.9% for 2005. Premium taxes (which are included in G&A)
increased to 3.0% of total revenue in 2006 from 2.8% of total
revenue in 2005. Increased premium taxes were due to the
acquisition of Cape Health Plan in May 2006, the
start-up
Ohio health plan which commenced operations in December 2005,
and the full year effect of premium taxes in California
commencing July 1, 2005.
Core G&A increased to 8.4% of total revenue for 2006 from
7.1% of total revenue for 2005. The increase in Core G&A
was due to continued investments in infrastructure and workforce
to support our medical care cost control initiatives and improve
our information technology, the expansion into Ohio and Texas,
and the launch of our Medicare Advantage Special Needs Plans.
Additionally, effective January 1, 2006, we adopted
Statement of Financial Accounting Standards No. 123(R),
“Share-Based Payment.” This increased our G&A
expenses by $3.2 million, or approximately $0.07 per
diluted share, in 2006.
Depreciation
and Amortization
Depreciation and amortization expense for 2006 increased to
$21.5 million from $15.1 million for 2005.
Amortization expense increased $2.1 million in 2006,
primarily due to acquisitions in California and Michigan.
Depreciation expense increased $4.2 million in 2006 due to
investments in infrastructure, principally at our corporate
offices. The following table presents the components of
depreciation and amortization expense (in thousands):
|
Year Ended |
||||||||
| December 31, | ||||||||
| 2006 | 2005 | |||||||
|
Depreciation expense
|
$ | 11,936 | $ | 7,695 | ||||
|
Amortization expense on intangible assets
|
9,539 | 7,430 | ||||||
|
Total depreciation and amortization expense
|
$ | 21,475 | $ | 15,125 | ||||
Interest
Expense
Interest expense increased to $2.4 million in 2006 from
$1.5 million in 2005 due to increased borrowings on our
credit facility and higher interest rates during 2006.
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Table of Contents
Other
Income (Expense)
No other expense was recorded in 2006. Other expense recorded
for the year ended December 31, 2005 of $0.4 million
consisted of a charge for the write-off of costs associated with
a registration statement filed during the second quarter of 2005.
Provision
for Income Taxes
Income tax expense totaled $27.7 million in 2006, resulting
in an effective tax rate of 37.8%, compared with
$16.3 million in 2005, resulting in an effective tax rate
of 37.1%. The increase in our effective tax rate during 2006 was
primarily attributable to the accrual of a valuation allowance
related to net operating loss carryforwards generated by certain
states.
Acquisitions
Effective November 1, 2007, we acquired Mercy CarePlus, a
licensed Medicaid managed care plan based in St. Louis,
Missouri. The purchase price for the acquisition was
$80.0 million, subject to adjustment based on an analysis
after closing of Mercy CarePlus’ risk-based capital and
incurred but not reported medical costs (IBNR). We also
contributed an additional $7.0 million to the Missouri
health plan to fund its statutory net worth requirement. The
sellers are entitled to an additional $5.0 million payment
from us in the event the earnings of Mercy CarePlus in the
twelve months ending June 30, 2008 are in excess of
$22.0 million. Mercy CarePlus has a contractual agreement
to provide healthcare services with the state of Missouri
through June 2009 under the state’s MC+ Managed Care
program. As of December 31, 2007, Mercy CarePlus served
approximately 62,000 Medicaid and 6,000 SCHIP members primarily
located in the St. Louis metropolitan area.
In May 2006, we acquired HCLB, Inc. (“HCLB”). HCLB is
the parent company of Cape Health Plan, Inc. (“Cape”),
a Michigan corporation based in Southfield, Michigan. The Cape
acquisition has expanded our geographic presence within
Michigan. The purchase price was $44.0 million in cash and
the acquisition was deemed effective May 15, 2006 for
accounting purposes. Accordingly, the results of operations for
Cape are included in the consolidated financial statements for
the periods following May 15, 2006. Effective
December 31, 2006, we merged Cape into Molina Healthcare of
Michigan, Inc., our Michigan health plan.
Liquidity
and Capital Resources
We generate cash from premium revenue and investment income. Our
primary uses of cash include the payment of expenses related to
medical care services and G&A expenses. We generally
receive premium revenue in advance of payment of claims for
related health care services.
Our investment policies are designed to provide liquidity,
preserve capital, and maximize total return on invested assets,
all in a manner consistent with state requirements which
prescribe the types of instruments in which our subsidiaries may
invest their funds. As of December 31, 2007, a substantial
portion of our cash was invested in a portfolio of highly liquid
money market securities, and our investments consisted solely of
investment-grade debt securities, all of which are classified as
current assets. Our investment policies require that all of our
investments have final maturities of ten years or less
(excluding auction rate securities and variable rate securities,
for which interest rates are periodically reset) and that the
average maturity be four years or less. Three professional
portfolio managers operating under documented investment
guidelines manage our investments. The average annualized
portfolio yields for the years ended December 31, 2007,
2006, and 2005 were approximately 5.2%, 4.8%, and 3.0%,
respectively.
The states in which we operate prescribe the types of
instruments in which our subsidiaries may invest their funds.
Our restricted investments are invested principally in
certificates of deposit and U.S. Treasury securities.
Cash provided by operating activities for the year ended
December 31, 2007 was $158.6 million, compared with
$102.3 million for 2006, an increase of $56.3 million.
Cash provided by operating activities described herein does not
include the addition of operating assets and liabilities related
to our acquisition of Mercy CarePlus, our new Missouri health
plan, in 2007. These amounts are reflected in Net cash paid
in purchase transactions in the accompanying Consolidated
Statements of Cash Flows. The 2007 increase in cash provided by
operating activities
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Table of Contents
included the following: 1) increased net income, 2) a
nominal change in receivables in 2007, compared with a
significant increase in 2006 due to increases of receivables at
our Utah, California and Ohio health plans, 3) increased
medical claims and benefits payable due to a net increase of
$40.2 million for enrollment growth at our Ohio and Texas
health plans, offset by declining enrollment at our Utah health
plan, and also offset by a $21.2 million decrease due to
the termination of our Indiana health plan effective
December 31, 2006, 4) increased deferred revenue at
the Ohio health plan due to the timing of our receipts of
premium payments from the state of Ohio, 5) an increase in
accounts payable and accrued liabilities due primarily to
increases in premium taxes payable, employee incentive
compensation accruals and the New Mexico health plan accrual to
meet a contractually required minimum medical care ratio, and
6) an increase in income taxes payable due to timing of
receipts and payments.
Cash used in investing activities was $256.3 million for
the year ended December 31, 2007, compared with
$3.9 million provided by investing activities for 2006. The
primary uses of cash in 2007 were attributable to investment of
the proceeds from our issuance of convertible senior notes in
the fourth quarter of 2007, and our acquisition of Mercy
CarePlus.
Cash provided by financing activities totaled
$153.1 million for the year ended December 31, 2007,
compared with $48.2 million for 2006. The primary source of
cash was the receipt of net proceeds from our issuance of
convertible senior notes in 2007, offset by the reduction in
borrowings and the repayment of amounts owed under our credit
facility.
At December 31, 2007, we had working capital of
$407.7 million compared with $258.6 million at
December 31, 2006. At December 31, 2007 and
December 31, 2006, cash and cash equivalents were
$459.1 million and $403.7 million, respectively. At
December 31, 2007 and December 31, 2006, investments
(all classified as current assets) were $242.9 million and
$81.5 million, respectively. At December 31, 2007, the
parent company (Molina Healthcare, Inc.) had cash and
investments of approximately $98.3 million. We believe that
our cash resources and internally generated funds will be
sufficient to support our operations, regulatory requirements,
and capital expenditures for at least the next 12 months.
Long-Term
Debt
Convertible
Senior Notes
In October 2007, we completed our offering of
$200.0 million aggregate principal amount of
3.75% Convertible Senior Notes due 2014 (the
“Notes”). The sale of the Notes resulted in net
proceeds totaling $193.4 million, from which we repaid the
$20.0 million balance outstanding under our credit
facility. In November 2007, we used $80.0 million of the
net proceeds in connection with our acquisition of Mercy
CarePlus in Missouri. In December 2007, we used
$41.5 million for contributions to regulatory capital of
certain of our health plan subsidiaries, including contributions
of $32.5 million to our Ohio plan, $7.0 million to our
Missouri plan, $1.5 million to our Texas plan, and
$0.5 million to our Nevada plan. We intend to use the
remaining net proceeds of approximately $52 million to fund
future acquisitions and expansion and for general corporate
purposes, including working capital. The Notes rank equally in
right of payment with our existing and future senior
indebtedness.
The Notes are convertible into cash and, under certain
circumstances, shares of our common stock. The initial
conversion rate is 21.3067 shares of our common stock per
$1,000 principal amount of the Notes. This represents an initial
conversion price of approximately $46.93 per share of our common
stock. In addition, if certain corporate transactions that
constitute a change of control occur prior to maturity, we will
increase the conversion rate in certain circumstances. Prior to
July 2014, holders may convert their Notes only under the
following circumstances:
| • | During any fiscal quarter after our fiscal quarter ending December 31, 2007, if the closing sale price per share of our common stock, for each of at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the previous fiscal quarter, is greater than or equal to 120% of the conversion price per share of our common stock; | |
| • | During the five business day period immediately following any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of such period was less than |
45
Table of Contents
98% of the product of the closing price per share of our common
stock on such day and the conversion rate in effect on such
day; or
| • | Upon the occurrence of specified corporate transactions or other specified events. |
On or after July 1, 2014, holders may convert their Notes
at any time prior to the close of business on the scheduled
trading day immediately preceding the stated maturity date
regardless of whether any of the foregoing conditions is
satisfied.
We will deliver cash and shares of our common stock, if any,
upon conversion of each $1,000 principal amount of Notes, as
follows:
| • | An amount in cash (the “principal return”) equal to the sum of, for each of the 20 Volume-Weighted Average Price (VWAP) trading days during the conversion period, the lesser of the daily conversion value for such VWAP trading day and $50 (representing 1/20th of $1,000); and | |
| • | A number of shares based upon, for each of the 20 VWAP trading days during the conversion period, any excess of the daily conversion value above $50. |
Credit
Facility
In 2005, we entered into an Amended and Restated Credit
Agreement, dated as of March 9, 2005, among Molina
Healthcare Inc., certain lenders, and Bank of America N.A., as
Administrative Agent (the “Credit Facility”).
Effective May 2007, we entered into a third amendment of the
Credit Facility that increased the size of the revolving line of
credit from $180.0 million to $200.0 million, maturing
in May 2012. The Credit Facility is intended to be used for
working capital and general corporate purposes, and subject to
obtaining commitments from existing or new lenders and
satisfaction of other specified conditions, we may increase the
amount available under the Credit Facility to up to
$250.0 million.
Borrowings under the Credit Facility are based, at our election,
on the London Interbank Offered Rate, or LIBOR, or the base rate
plus an applicable margin. The base rate equals the higher of
Bank of America’s prime rate or 0.500% above the federal
funds rate. We also pay a commitment fee on the total unused
commitments of the lenders under the Credit Facility. The
applicable margins and commitment fee are based on our ratio of
consolidated funded debt to consolidated earnings before
interest, taxes, depreciation and amortization, or EBITDA. The
applicable margins range between 0.750% and 1.750% for LIBOR
loans and between 0.000% and 0.750% for base rate loans. The
commitment fee ranges between 0.150% and 0.275%. In addition, we
are required to pay a fee for each letter of credit issued under
the Credit Facility equal to the applicable margin for LIBOR
loans and a customary fronting fee. As of December 31,
2007, there were no borrowings outstanding under the Credit
Facility.
Our obligations under the Credit Facility are secured by a lien
on substantially all of our assets and by a pledge of the
capital stock of our Michigan, New Mexico, Utah, and Washington
health plan subsidiaries. The amended Credit Facility includes
usual and customary covenants for credit facilities of this
type, including covenants limiting liens, mergers, asset sales,
other fundamental changes, debt, acquisitions, dividends and
other distributions, capital expenditures, investments, and a
fixed charge coverage ratio. The Credit Facility also requires
us to maintain a ratio of total consolidated debt to total
consolidated EBITDA of not more than 2.75 to 1.00 at any time.
At December 31, 2007, we were in compliance with all
financial covenants in the Credit Facility.
Regulatory
Capital and Dividend Restrictions
Our principal operations are conducted through our nine health
plan subsidiaries operating in California, Michigan, Missouri,
Nevada, New Mexico, Ohio, Texas, Utah, and Washington. The
health plans are subject to state laws that, among other things,
require the maintenance of minimum levels of statutory capital,
as defined by each state, and may restrict the timing, payment,
and amount of dividends and other distributions that may be paid
to Molina Healthcare, Inc. as the sole stockholder of each of
our health plans. To the extent the subsidiaries must comply
with these regulations, they may not have the financial
flexibility to transfer funds to us. The net assets in these
subsidiaries, after intercompany eliminations, which may not be
transferable to us in the form of loans,
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Table of Contents
advances, or cash dividends totaled $332.2 million at
December 31, 2007, and $236.8 million at
December 31, 2006.
The National Association of Insurance Commissioners, or NAIC,
has established model rules which, if adopted by a particular
state, set minimum capitalization requirements for health plans
and other insurance entities bearing risk for health care
coverage. The requirements take the form of risk-based capital,
or RBC, rules. These rules, which vary slightly from state to
state, have been adopted in Michigan, Nevada, New Mexico, Ohio,
Texas, Utah, and Washington. California has not adopted RBC
rules and has not given notice of any intention to do so. The
RBC rules, if adopted by California, may increase the minimum
capital required by that state.
At December 31, 2007, our health plans had aggregate
statutory capital and surplus of approximately
$350.9 million, compared to the required minimum aggregate
statutory capital and surplus of approximately
$202.5 million. All of our health plans were in compliance
with the minimum capital requirements at December 31, 2007.
We have the ability and commitment to provide additional working
capital to each of our health plans when necessary to ensure
that capital and surplus continue to meet regulatory
requirements. Barring any change in regulatory requirements, we
believe that we will continue to be in compliance with these
requirements through 2008.
Critical
Accounting Policies
When we prepare our consolidated financial statements, we use
estimates and assumptions that may affect reported amounts and
disclosures. The determination of our liability for claims and
medical benefits payable is particularly important to the
determination of our financial position and results of
operations in any given period. Such determination of our
liability requires the application of a significant degree of
judgment by our management. As a result, the determination of
our liability for claims and medical benefits is subject to an
inherent degree of uncertainty.
Our medical care costs include amounts that have been paid by us
through the reporting date, as well as estimated liabilities for
medical care costs incurred but not paid by us as of the
reporting date. Such medical care cost liabilities include,
among other items, capitation payments owed providers, unpaid
pharmacy invoices, and various medically related administrative
costs that have been incurred but not paid. We use judgment to
determine the appropriate assumptions for determining the
required estimates.
The most important element in estimating our medical care costs
is our estimate for fee-for-service claims which have been
incurred but not paid by us. These fee-for-service costs that
have been incurred but have not been paid at the reporting date
are collectively referred to as medical costs that are
“Incurred But Not Reported,” or IBNR. Our IBNR claims
reserve, as reported in our balance sheet, represents our best
estimate of the total amount of claims we will ultimately pay
with respect to claims that we have incurred as of the balance
sheet date. We estimate our IBNR monthly using actuarial methods
based on a number of factors. Our estimated IBNR liability
represented $264.4 million of our total medical claims and
benefits payable of $311.6 million as of December 31,
2007. Excluding IBNR related to our Utah health plan, where we
are reimbursed on a cost-plus basis, our IBNR liability at
December 31, 2007 was $244.9 million.
The factors we consider when estimating our IBNR include,
without limitation, claims receipt and payment experience (and
variations in that experience), changes in membership, provider
billing practices, health care service utilization trends, cost
trends, product mix, seasonality, prior authorization of medical
services, benefit changes, known outbreaks of disease or
increased incidence of illness such as influenza, provider
contract changes, changes to Medicaid fee schedules, and the
incidence of high dollar or catastrophic claims. Our assessment
of these factors is then translated into an estimate of our IBNR
liability at the relevant measuring point through the
calculation of a base estimate IBNR, a further reserve for
adverse claims development, and an estimate of the
administrative costs of settling all claims incurred through the
reporting date. The base estimate of IBNR is derived through
application of claims payment completion factors and trended per
member per month (PMPM) cost estimates.
For the fifth month of service prior to the reporting date and
earlier, we estimate our outstanding claims liability based on
actual claims paid, adjusted for estimated completion factors.
Completion factors seek to measure
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Table of Contents
the cumulative percentage of claims expense that will have been
paid for a given month of service as of the reporting date,
based on historical payment patterns.
The following table reflects the change in our estimate of
claims liability as of December 31, 2007 that would have
resulted had we changed our completion factors for the fifth
through the twelfth months preceding December 31, 2007, by
the percentages indicated. A reduction in the completion factor
results in an increase in medical claims liabilities. Our Utah
health plan is excluded from these calculations, because the
majority of the Utah business is conducted under a cost-plus
reimbursement contract. Dollar amounts are in thousands.
|
(Decrease) Increase in |
Increase (Decrease) in |
|||
|
Estimated |
Medical Claims and |
|||
|
Completion Factors
|
Benefits Payable | |||
|
(6)%
|
$ | 47,818 | ||
|
(4)%
|
31,879 | |||
|
(2)%
|
15,939 | |||
|
2%
|
(15,939 | ) | ||
|
4%
|
(31,879 | ) | ||
|
6%
|
(47,818 | ) | ||
For the four months of service immediately prior to the
reporting date, actual claims paid are not a reliable measure of
our ultimate liability, given the inherent delay between the
patient/physician encounter and the actual submission of a claim
for payment. For these months of service, we estimate our claims
liability based on trended PMPM cost estimates. These estimates
are designed to reflect recent trends in payments and expense,
utilization patterns, authorized services, and other relevant
factors. The following table reflects the change in our estimate
of claims liability as of December 31, 2007, that would
have resulted had we altered our trend factors by the
percentages indicated. An increase in the PMPM costs results in
an increase in medical claims liabilities. Our Utah HMO is
excluded from these calculations, because the majority of the
Utah business is conducted under a cost-plus reimbursement
contract. Dollar amounts are in thousands.
|
(Decrease) Increase in |
(Decrease) Increase in |
|||
|
Trended Per member Per Month |
Medical Claims and |
|||
|
Cost Estimates
|
Benefits Payable | |||
|
(6)%
|
$ | (25,564 | ) | |
|
(4)%
|
(17,043 | ) | ||
|
(2)%
|
(8,521 | ) | ||
|
2%
|
8,521 | |||
|
4%
|
17,043 | |||
|
6%
|
25,564 | |||
Assuming a hypothetical 1% change in completion factors from
those used in our calculation of IBNR at December 31, 2007,
net income for the year ended December 31, 2007 would
increase or decrease by approximately $5.0 million, or
$0.17 per diluted share, net of tax. Assuming a hypothetical 1%
change in PMPM cost estimates from those used in our calculation
of IBNR at December 31, 2007, net income for the year ended
December 31, 2007 would increase or decrease by
approximately $2.7 million, or $0.09 per diluted share, net
of tax. The corresponding figures for a 5% change in completion
factors and PMPM cost estimates would be $24.8 million, or
$0.87 per diluted share, net of tax, and $13.3 million, or
$0.47 per diluted share, net of tax, respectively.
It is important to note that any error in the estimate of either
completion factors or trended PMPM costs would usually be
accompanied by an error in the estimate of the other component,
and that an error in one component would almost always compound
rather than offset the resulting distortion to net income. When
completion factors are overestimated, trended PMPM costs
tend to be underestimated. Both circumstances will create
an overstatement of net income. Likewise, when completion
factors are underestimated, trended PMPM costs tend to be
overestimated, creating an understatement of net income.
In other words, errors in estimates involving both completion
factors and trended PMPM costs will act to drive estimates of
claims liabilities and medical care costs in the same direction.
For example, if completion factors were overestimated by 1%,
resulting in an overstatement of net
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Table of Contents
income by approximately $5 million, it is likely that
trended PMPM costs would be underestimated, resulting in an
additional overstatement of net income.
After we have established our base IBNR reserve through the
application of completion factors and trended PMPM cost
estimates, we then compute an additional liability, which also
uses actuarial techniques, to account for adverse developments
in our claims payments which the base actuarial model is not
intended to and does not account for. We refer to this
additional liability as the provision for adverse claims
development. The provision for adverse claims development is a
component of our overall determination of the adequacy of our
IBNR. It is intended to capture the adverse development of
factors such as the speed of claims payment, the relative
magnitude or severity of claims, known outbreaks of disease such
as influenza, our entry into new geographical markets, our
provision of services to new populations such as the aged, blind
and disabled (ABD), changes to state-controlled fee schedules
upon which much of our provider payments are based,
modifications and upgrades to our claims processing systems and
practices, and increasing medical costs. Because of the
complexity of our business, the number of states in which we
operate, and the need to account for different health care
benefit packages among those states, we make an overall
assessment of IBNR after considering the base actuarial model
reserves and the provision for adverse claims development. We
also include in our IBNR liability an estimate of the
administrative costs of settling all claims incurred through the
reporting date. The development of IBNR is a continuous process
that we monitor and refine on a monthly basis as additional
claims payment information becomes available. As additional
information becomes known to us, we adjust our actuarial model
accordingly to establish IBNR.
On a monthly basis, we review and update our estimated IBNR
liability and the methods used to determine that liability. Any
adjustments, if appropriate, are reflected in the period known.
While we believe our current estimates are adequate, we have in
the past (most recently during the second quarter of
2005) been required to increase significantly our claims
reserves for periods previously reported and may be required to
do so again in the future. Any significant increases to prior
period claims reserves would materially decrease reported
earnings for the period in which the adjustment is made.
In our judgment, the estimates for completion factors will
likely prove to be more accurate than trended PMPM cost
estimates because estimated completion factors are subject to
fewer variables in their determination. Specifically, completion
factors are developed over long periods of time, and are most
likely to be affected by changes in claims receipt and payment
experience and by provider billing practices. Trended PMPM cost
estimates, while affected by the same factors, will also be
influenced by health care service utilization trends, cost
trends, product mix, seasonality, prior authorization of medical
services, benefit changes, outbreaks of disease or increased
incidence of illness, provider contract changes, changes to
Medicaid fee schedules, and the incidence of high dollar or
catastrophic claims. As discussed above, however, errors in
estimates involving trended PMPM costs will almost always be
accompanied by errors in estimates involving completion factors,
and vice versa. In such circumstances, errors in estimation
involving both completion factors and trended PMPM costs will
act to drive estimates of claims liabilities (and therefore
medical care costs) in the same direction.
Assuming that base reserves have been adequately set, we believe
that amounts ultimately paid out should generally be between 8%
and 10% less than the liability recorded at the end of the
period as a result of the inclusion in that liability of the
allowance for adverse claims development and the accrued cost of
settling those claims. However, there can be no assurance that
amounts ultimately paid out will not be higher or lower than
this 8% to 10% range, as shown by our results in 2007 and 2006
when the amounts ultimately paid out were less than the amount
of our established reserves by approximately 19% and 17%,
respectively.
As shown in greater detail in the table below, the amounts
ultimately paid out on our liabilities recorded at both
December 31, 2007 and 2006 were less than what we had
expected when we established our reserves. While the specific
reasons for the overestimation of our liabilities were different
at each of the two reporting dates, in general the
overestimations were tied to our assessment of specific
circumstances at our various individual health plans which were
unique to those reporting periods.
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Table of Contents
In 2006, overestimation of the claims liability at our Michigan,
New Mexico, and Washington health plans at December 31,
2005 led to the recognition of a benefit from prior period
claims development, which benefit was partially offset by the
underestimation of our claims liability at December 31,
2005 at our California and Indiana health plans.
| • | In both Michigan and Washington, we overestimated in the second half of 2005 the impact of the upward trend in medical costs observed during the first half of 2005, resulting in an overestimation of the liability of those plans at December 31, 2005. | |
| • | In New Mexico, during the second half of the year with respect to medical and drug costs associated with providing care related to behavioral health conditions, we underestimated the impact that the state’s assumption of financial responsibility for costs related to the treatment of those behavioral health conditions would have on our claims liability at December 31, 2005, resulting in our overestimating that liability. | |
| • | In California, we underestimated costs associated with our members in San Diego County, a market we had first entered only seven months earlier. Additionally, a claims system upgrade during 2005 delayed claims processing and distorted our normal payment pattern for claims. Both of these circumstances led us to underestimate our claim liability at December 31, 2005. | |
| • | In Indiana, we underestimated medical costs in a state where we had only begun operations earlier in 2005, leading us to underestimate our claims liability at December 31, 2005. |
In 2007, overestimation of the claims liability at our
California, New Mexico, and Washington health plans at
December 31, 2006, led to the recognition of a benefit from
prior period claims development, which benefit was partially
offset by the underestimation of our claims liability at
December 31, 2006 at our Michigan health plan.
| • | In California, we underestimated the impact of changes to certain provider contracts implemented during the second half of 2006 which lowered medical costs further than we had anticipated, leading us to overestimate our claims liability at December 31, 2006. | |
| • | In Washington, we overestimated the impact of the upward trend in medical costs during the latter half of 2006. Additionally, we lowered claims inventory in December 2006 in anticipation of a claims system upgrade in early 2007. While we attempted to adjust our claims liability estimation procedures for the increased speed of claims payment, we were only partially successful in doing so. Both of these circumstances led us to overestimate our claims liability at December 31, 2006. | |
| • | In Michigan, we underestimated the upward trend in medical costs during the latter half of 2006. Additionally, we underestimated the costs associated with the membership we had added as a result of our acquisition of Cape Health Plan in May 2006. |
We do not believe that the recognition of a benefit (or
detriment) from prior period claims development had a material
impact on our consolidated results of operations in either 2007
or 2006.
In estimating our claims liability at December 31, 2007, we
adjusted our base calculation to take account of the impact of
the following factors which we believe are reasonably likely to
change our final claims liability amount:
| • | The addition during 2007 of a substantial number of aged, blind or disabled (ABD) members to our Ohio health, which members incur higher medical costs than do our members in other categories. | |
| • | Our assessment regarding the impact of some overpayments made to certain Ohio providers in 2007 and 2006 and the impact of those overpayments on reported medical cost trends. | |
| • | Uncertainties regarding the impact of state-mandated changes to hospital fee schedules implemented in Washington in August 2007. | |
| • | Uncertainties regarding the impact of state-mandated changes to the methodology used to pay outpatient claims in Michigan during 2007. |
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| • | The addition to our California provider network during 2007 of a hospital that serves high cost patients, as well as changes implemented in September 2007 to our contract with a leading childrens’ hospital that provides care to a significant number of our California members. | |
| • | The addition in November 2007 of approximately 4,300 members in Sacramento County, California where we have traditionally experienced higher medical costs. | |
| • | Changes we made during 2007 to our pharmacy formulary in California in response to competitive pressures. | |
| • | Costs associated with our newly acquired membership in Missouri, as well as the impact of any difference between our claims payment policies and those used by the prior management of our Missouri health plan. | |
| • | Increases in claims inventory at our California, New Mexico, and Texas health plans during the fourth quarter of 2007. | |
| • | Decreases in claims inventory at our Michigan and Washington health plans during the fourth quarter of 2007. |
Any absence of adverse claims development (as well as the
expensing of the costs to settle claims held at the start of the
period through general and administrative expense) will lead to
the recognition of a benefit from prior period claims
development in the period subsequent to the date of the original
estimate. However, that benefit will affect current period
earnings only to the extent that the replenishment of the
reserve for adverse claims development (and the re-accrual of
administrative costs for the settlement of those claims) is less
than the benefit recognized from the prior period liability.
We seek to maintain a consistent claims reserving methodology
across all periods. Accordingly, any prior period benefit from
an un-utilized reserve for adverse claims development would
likely be offset by the establishment of a new reserve in an
approximately equal amount (relative to premium revenue, medical
care costs, and medical claims and benefits payable) in the
current period, and thus the impact on earnings for the current
period would likely be minimal.
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Table of Contents
The following table presents the components of the change in our
medical claims and benefits payable for the years ended
December 31, 2007 and 2006. The negative amounts displayed
for “components of medical care costs related to prior
years” represent the amount by which our original
estimate of claims and benefits payable at the beginning of the
period exceeded the actual amount of the liability based on
information (principally the payment of claims) developed since
that liability was first reported. The benefit of this prior
period development may be offset by the addition of a reserve
for adverse claims development when estimating the liability at
the end of the period (captured as a “component of
medical care costs related to current year”). Dollar
amounts are in thousands.
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Balances at beginning of period
|
$ | 290,048 | $ | 217,354 | ||||
|
Medical claims and benefits payable from business acquired
|
14,876 | 21,144 | ||||||
|
Components of medical care costs related to:
|
||||||||
|
Current year
|
2,136,381 | 1,716,256 | ||||||
|
Prior years
|
(56,298 | ) | (37,604 | ) | ||||
|
Total medical care costs
|
2,080,083 | 1,678,652 | ||||||
|
Payments for medical care costs related to:
|
||||||||
|
Current year
|
1,851,035 | 1,443,843 | ||||||
|
Prior years
|
222,366 | 183,259 | ||||||
|
Total paid
|
2,073,401 | 1,627,102 | ||||||
|
Balances at end of period
|
$ | 311,606 | $ | 290,048 | ||||
|
Benefit from prior period as a percentage of premium revenue
|
2.3 | % | 1.9 | % | ||||
|
Benefit from prior period as a percentage of balance at
beginning of period
|
19.4 | % | 17.3 | % | ||||
|
Benefit from prior period as a percentage of total medical care
costs
|
2.7 | % | 2.2 | % | ||||
|
Days in claims payable
|
52 | 57 | ||||||
|
Number of members at end of period
|
1,149,000 | 1,077,000 | ||||||
|
Number of claims in inventory at end of period(1)
|
161,395 | 260,958 | ||||||
|
Billed charges of claims in inventory at end of period (in
thousands)(1)
|
$ | 211,958 | $ | 285,385 | ||||
|
Claims in inventory per member at end of period(1)
|
0.14 | 0.26 | ||||||
| (1) | 2006 claims data excludes information for Cape Health Plan membership of approximately 83,000 members. Cape membership was processed on a separate claims platform through September 30, 2007. |
Commitments
and Contingencies
We lease office space and equipment under various operating
leases. As of December 31, 2007, our lease obligations for
the next five years and thereafter are as follows:
$15.9 million in 2008, $15.5 million in 2009,
$14.2 million in 2010, $13.6 million in 2011,
$12.3 million in 2012, and an aggregate of
$49.5 million thereafter.
We are not an obligor to or guarantor of any indebtedness of any
other party. We are not a party to off-balance sheet financing
arrangements except for operating leases which are disclosed in
Note 14 to the accompanying audited consolidated financial
statements for the year ended December 31, 2007. We have
certain advances to related parties, which are discussed in
Note 13 to the accompanying audited consolidated financial
statements for the year ended December 31, 2007
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Table of Contents
Contractual
Obligations
In the table below, we present our contractual obligations as of
December 31, 2007. Some of the amounts we have included in
this table are based on management’s estimates and
assumptions about these obligations, including their duration,
the possibility of renewal, anticipated actions by third
parties, and other factors. Because these estimates and
assumptions are necessarily subjective, the contractual
obligations we will actually pay in future periods may vary from
those reflected in the table. Amounts are in thousands.
| Total | 2008 | 2009-2010 | 2011-2012 | 2013 and Beyond | ||||||||||||||||
|
Medical claims and benefits payable
|
$ | 311,606 | $ | 311,606 | $ | — | $ | — | $ | — | ||||||||||
|
Long-term debt(1)
|
200,000 | — | — | — | 200,000 | |||||||||||||||
|
Operating leases
|
121,056 | 15,942 | 29,658 | 25,946 | 49,510 | |||||||||||||||
|
Interest on long-term debt(1)
|
50,625 | 7,500 | 15,000 | 15,000 | 13,125 | |||||||||||||||
|
Purchase commitments
|
23,542 | 11,290 | 7,615 | 3,145 | 1,492 | |||||||||||||||
|
Total contractual obligations
|
$ | 706,829 | $ | 346,338 | $ | 52,273 | $ | 44,091 | $ | 264,127 | ||||||||||
| (1) | Amounts relate to our October 2007 offering of $200.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2014. |
In accordance with Financial Accounting Standards Board
Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, we have recorded approximately $10.3 million of
unrecognized tax benefits as liabilities. The above table does
not contain this amount because we cannot reasonably estimate
when or if such amount may be settled. See Note 11 to the
accompanying audited consolidated financial statements for the
year ended December 31, 2007 for further information.
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Quantitative
and Qualitative Disclosures About Market Risk
Financial instruments that potentially subject us to
concentrations of credit risk consist primarily of cash and cash
equivalents, receivables, and restricted investments. We invest
a substantial portion of our cash in a portfolio of highly
liquid money market securities. Professional portfolio managers
operating under documented investment guidelines manage our
investments. Restricted investments are invested principally in
certificates of deposit and U.S. Treasury securities.
Concentration of credit risk with respect to accounts receivable
is limited due to payors consisting principally of the
governments of each state in which our health plans operate.
As of December 31, 2007, we had cash and cash equivalents
of $459.1 million, investments of $242.9 million, and
restricted investments of $29.0 million. The cash
equivalents consist of highly liquid securities with original or
purchase date remaining maturities of up to three months that
are readily convertible into known amounts of cash. As of
December 31, 2007, our investments consisted solely of
investment grade debt securities, all of which were classified
as current assets. Our investment policies require that all of
our investments have final maturities of ten years or less
(excluding auction rate and variable rate securities where
interest rates are periodically reset) and that the average
maturity be four years or less. The restricted investments
consist of interest-bearing deposits and treasury securities
required by the respective states in which we operate.
Investments and restricted investments are subject to interest
rate risk and will decrease in value if market rates increase.
All non-restricted investments are reported at fair market value
on the balance sheet. All restricted investments are carried at
amortized cost, which approximates market value. We have the
ability to hold these restricted investments until maturity and,
as a result, we would not expect the value of these investments
to decline significantly due to a sudden change in market
interest rates. Declines in interest rates over time will reduce
our investment income.
As of December 31, 2007, $82.1 million of our total
$242.9 million in short-term investments were comprised of
municipal note investments with an auction reset feature
(“auction rate securities”). These notes are issued by
various state and local municipal entities for the purpose of
financing student loans, public projects and other activities;
they carry an AAA credit rating. $74.1 million of the
$82.1 million are secured by student loans which are
53
Table of Contents
generally 97% guaranteed by the U.S. Government under the
Federal Family Education Loan Program (FFELP). In addition to
the U.S. Government guarantee on such student loans, some
of the securities also have separate insurance policies
guaranteeing both the principal and accrued interest. Liquidity
for these auction rate securities is typically provided by an
auction process which allows holders to sell their notes and
resets the applicable interest rate at pre-determined intervals
up to 35 days. Recently, auctions for some of these auction
rate securities have failed and there is no assurance that
auctions on the remaining auction rate securities in our
investment portfolio will succeed. An auction failure means that
the parties wishing to sell their securities could not be
matched with an adequate volume of buyers. In the event that
there is a failed auction, the indenture governing the security
requires the issuer to pay interest at a contractually defined
rate that is generally above market rates for other types of
similar short-term instruments. The securities for which
auctions have failed will continue to accrue interest at the
contractual rate and be auctioned every 7, 28, or 35 days
until the auction succeeds, the issuer calls the securities, or
they mature. As a result, our ability to liquidate and fully
recover the carrying value of our auction rate securities in the
near term may be limited or not exist. All of these investments
are currently classified as short-term investments. If the
credit ratings of the security issuers deteriorate or if normal
market conditions do not return in the near future, we may be
required to reduce the value of these securities through an
impairment charge against net income and reflect them as
long-term investments on our balance sheet for the period ending
March 31, 2008 or thereafter.
As of February 29, 2008, the Company held
$75.6 million of auction rate securities.
$71.1 million of these securities are secured by student
loans which are generally 97% guaranteed by the
U.S. Government under FFELP.
Inflation
Althought the general rate of inflation has remained relatively
stable and healthcare cost inflation has stabilized in recent
years, the national healthcare cost inflation rate still exceeds
the general inflation rate. We use various strategies to
mitigate the negative effects of health care cost inflation.
Specifically, our health plans try to control medical and
hospital costs through contracts with independent providers of
health care services. Through these contracted providers, our
health plans emphasize preventive health care and appropriate
use of specialty and hospital services. While we currently
believe our strategies will mitigate health care cost inflation,
competitive pressures, new health care and pharmaceutical
product introductions, demands from health care providers and
customers, applicable regulations, or other factors may affect
our ability to control health care costs.
54
MOLINA
HEALTHCARE, INC.
| Item 8. | Financial Statements and Supplementary Data |
INDEX TO
FINANCIAL STATEMENTS
| Page | ||||
|
MOLINA HEALTHCARE INC.
|
||||
| 56 | ||||
| 57 | ||||
| 58 | ||||
| 59 | ||||
| 60 | ||||
| 62 | ||||
55
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
of Molina Healthcare, Inc.
We have audited the accompanying consolidated balance sheets of
Molina Healthcare, Inc. (the Company) as of December 31,
2007 and 2006, and the related consolidated statements of
income, stockholders’ equity and cash flows for each of the
three years in the period ended December 31, 2007. These
financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Molina Healthcare, Inc. at
December 31, 2007 and 2006, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2007, in conformity with
U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial
statements, Molina Healthcare, Inc. changed its method of
accounting for Share-Based Payments in accordance with Statement
of Financial Accounting Standards No. 123 (revised
2004) on January 1, 2006.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Molina Healthcare, Inc.’s internal control over financial
reporting as of December 31, 2007, based on criteria
established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 17, 2008
expressed an unqualified opinion thereon.
/s/ ERNST &
YOUNG LLP
Los Angeles, California
March 17, 2008
56
Table of Contents
MOLINA
HEALTHCARE, INC.
CONSOLIDATED
BALANCE SHEETS
| December 31, | ||||||||
| 2007 | 2006 | |||||||
| (Dollars in thousands, except per share data) | ||||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 459,064 | $ | 403,650 | ||||
|
Investments
|
242,855 | 81,481 | ||||||
|
Receivables
|
111,537 | 110,835 | ||||||
|
Income tax receivable
|
— | 7,960 | ||||||
|
Deferred income taxes
|
8,616 | 313 | ||||||
|
Prepaid expenses and other current assets
|
12,521 | 9,263 | ||||||
|
Total current assets
|
834,593 | 613,502 | ||||||
|
Property and equipment, net
|
49,555 | 41,903 | ||||||
|
Intangible assets, net
|
92,226 | 85,480 | ||||||
|
Goodwill
|
114,997 | 57,659 | ||||||
|
Restricted investments
|
29,019 | 20,154 | ||||||
|
Receivable for ceded life and annuity contracts
|
29,240 | 32,923 | ||||||
|
Other assets
|
21,675 | 12,854 | ||||||
|
Total assets
|
$ | 1,171,305 | $ | 864,475 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Medical claims and benefits payable
|
$ | 311,606 | $ | 290,048 | ||||
|
Accounts payable and accrued liabilities
|
69,266 | 46,725 | ||||||
|
Deferred revenue
|
40,104 | 18,120 | ||||||
|
Income tax payable
|
5,946 | — | ||||||
|
Total current liabilities
|
426,922 | 354,893 | ||||||
|
Long-term debt
|
200,000 | 45,000 | ||||||
|
Liability for ceded life and annuity contracts
|
29,240 | 32,923 | ||||||
|
Deferred income taxes
|
10,136 | 6,700 | ||||||
|
Other long-term liabilities
|
14,529 | 4,793 | ||||||
|
Total liabilities
|
680,827 | 444,309 | ||||||
|
Stockholders’ equity:
|
||||||||
|
Common stock, $0.001 par value; 80,000,000 shares
authorized; issued and outstanding: 28,443,680 shares at
December 31, 2007 and 28,119,026 shares at
December 31, 2006
|
28 | 28 | ||||||
|
Preferred stock, $0.001 par value; 20,000,000 shares
authorized, no shares issued and outstanding
|
— | — | ||||||
|
Additional paid-in capital
|
185,808 | 173,990 | ||||||
|
Accumulated other comprehensive income (loss)
|
272 | (337 | ) | |||||
|
Retained earnings
|
324,760 | 266,875 | ||||||
|
Treasury stock (1,201,174 shares, at cost)
|
(20,390 | ) | (20,390 | ) | ||||
|
Total stockholders’ equity
|
490,478 | 420,166 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 1,171,305 | $ | 864,475 | ||||
See accompanying notes.
57
Table of Contents
MOLINA
HEALTHCARE, INC.
CONSOLIDATED
STATEMENTS OF INCOME
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||
|
Revenue:
|
||||||||||||
|
Premium revenue
|
$ | 2,462,369 | $ | 1,985,109 | $ | 1,639,884 | ||||||
|
Investment income
|
30,085 | 19,886 | 10,174 | |||||||||
|
Total revenue
|
2,492,454 | 2,004,995 | 1,650,058 | |||||||||
|
Expenses:
|
||||||||||||
|
Medical care costs
|
2,080,083 | 1,678,652 | 1,424,872 | |||||||||
|
General and administrative expenses
|
285,295 | 229,057 | 163,342 | |||||||||
|
Depreciation and amortization
|
27,967 | 21,475 | 15,125 | |||||||||
|
Impairment charge on purchased software
|
782 | — | — | |||||||||
|
Loss contract charge
|
— | — | 939 | |||||||||
|
Total expenses
|
2,394,127 | 1,929,184 | 1,604,278 | |||||||||
|
Operating income
|
98,327 | 75,811 | 45,780 | |||||||||
|
Other expense:
|
||||||||||||
|
Interest expense
|
(4,631 | ) | (2,353 | ) | (1,529 | ) | ||||||
|
Other, net
|
— | — | (400 | ) | ||||||||
|
Total other expense
|
(4,631 | ) | (2,353 | ) | (1,929 | ) | ||||||
|
Income before income taxes
|
93,696 | 73,458 | 43,851 | |||||||||
|
Provision for income taxes
|
35,366 | 27,731 | 16,255 | |||||||||
|
Net income
|
$ | 58,330 | $ | 45,727 | $ | 27,596 | ||||||
|
Net income per share(1):
|
||||||||||||
|
Basic
|
$ | 2.06 | $ | 1.64 | $ | 1.00 | ||||||
|
Diluted
|
$ | 2.05 | $ | 1.62 | $ | 0.98 | ||||||
|
Weighted average shares outstanding:
|
||||||||||||
|
Basic
|
28,275,000 | 27,966,000 | 27,711,000 | |||||||||
|
Diluted
|
28,419,000 | 28,164,000 | 28,023,000 | |||||||||
| (1) | Potentially dilutive shares issuable pursuant to the Company’s 2007 offering of convertible senior notes were not included in the computation of diluted net income per share because to do so would have been antidilutive for the year ended December 31, 2007. |
See accompanying notes.
58
Table of Contents
MOLINA
HEALTHCARE, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
Accumulated |
||||||||||||||||||||||||||||
|
Additional |
Other |
|||||||||||||||||||||||||||
| Common Stock |
Paid-in |
Comprehensive |
Retained |
Treasury |
||||||||||||||||||||||||
| Outstanding | Amount | Capital | Income (Loss) | Earnings | Stock | Total | ||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
|
Balance at January 1, 2005
|
27,602,443 | $ | 28 | $ | 157,666 | $ | (234 | ) | $ | 193,552 | $ | (20,390 | ) | $ | 330,622 | |||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | 27,596 | — | 27,596 | |||||||||||||||||||||
|
Other comprehensive loss, net of tax:
|
||||||||||||||||||||||||||||
|
Unrealized loss on investments
|
— | — | — | (395 | ) | — | — | (395 | ) | |||||||||||||||||||
|
Total comprehensive income
|
— | — | — | (395 | ) | 27,596 | — | 27,201 | ||||||||||||||||||||
|
Stock options exercised, employee stock grants and employee
stock purchases
|
189,917 | — | 3,155 | — | — | — | 3,155 | |||||||||||||||||||||
|
Tax benefit for exercise of employee stock options
|
— | — | 1,872 | — | — | — | 1,872 | |||||||||||||||||||||
|
Balance at December 31, 2005
|
27,792,360 | $ | 28 | $ | 162,693 | $ | (629 | ) | $ | 221,148 | $ | (20,390 | ) | $ | 362,850 | |||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | 45,727 | — | 45,727 | |||||||||||||||||||||
|
Other comprehensive income, net of tax:
|
||||||||||||||||||||||||||||
|
Unrealized gain on investments
|
— | — | — | 292 | — | — | 292 | |||||||||||||||||||||
|
Total comprehensive income
|
— | — | — | 292 | 45,727 | — | 46,019 | |||||||||||||||||||||
|
Stock options exercised, employee stock grants and employee
stock purchases
|
326,666 | — | 10,070 | — | — | — | 10,070 | |||||||||||||||||||||
|
Tax benefit for exercise of employee stock options
|
— | — | 1,227 | — | — | — | 1,227 | |||||||||||||||||||||
|
Balance at December 31, 2006
|
28,119,026 | $ | 28 | $ | 173,990 | $ | (337 | ) | $ | 266,875 | $ | (20,390 | ) | $ | 420,166 | |||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | 58,330 | — | 58,330 | |||||||||||||||||||||
|
Other comprehensive income, net of tax:
|
||||||||||||||||||||||||||||
|
Unrealized gain on investments
|
— | — | — | 609 | — | — | 609 | |||||||||||||||||||||
|
Total comprehensive income
|
— | — | — | 609 | 58,330 | — | 58,939 | |||||||||||||||||||||
|
Adjustment to initially apply FIN 48 (see Note 11,
“Income Taxes”)
|
(445 | ) | (445 | ) | ||||||||||||||||||||||||
|
Stock options exercised, employee stock grants and employee
stock purchases
|
324,654 | — | 10,965 | — | — | — | 10,965 | |||||||||||||||||||||
|
Tax benefit for exercise of employee stock options
|
— | — | 853 | — | — | — | 853 | |||||||||||||||||||||
|
Balance at December 31, 2007
|
28,443,680 | $ | 28 | $ | 185,808 | $ | 272 | $ | 324,760 | $ | (20,390 | ) | $ | 490,478 | ||||||||||||||
See accompanying notes.
59
Table of Contents
MOLINA
HEALTHCARE, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
| (Dollars in thousands) | ||||||||||||
|
Operating activities:
|
||||||||||||
|
Net income
|
$ | 58,330 | $ | 45,727 | $ | 27,596 | ||||||
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||||||
|
Depreciation and amortization
|
27,967 | 21,475 | 15,125 | |||||||||
|
Amortization of capitalized long-term debt fees
|
1,042 | 885 | 718 | |||||||||
|
Deferred income taxes
|
(9,057 | ) | (399 | ) | 1,705 | |||||||
|
Tax benefit from exercise of employee stock options recorded as
additional paid-in capital
|
— | — | 1,872 | |||||||||
|
Loss on disposal of property and equipment
|
— | — | 297 | |||||||||
|
Stock-based compensation
|
7,188 | 5,505 | 1,283 | |||||||||
|
Changes in operating assets and liabilities, net of effects of
acquisitions:
|
||||||||||||
|
Receivables
|
15,007 | (38,847 | ) | (5,102 | ) | |||||||
|
Prepaid expenses and other current assets
|
(2,911 | ) | 1,369 | (1,866 | ) | |||||||
|
Medical claims and benefits payable
|
6,683 | 51,550 | 57,144 | |||||||||
|
Deferred revenue
|
21,984 | 10,443 | 803 | |||||||||
|
Accounts payable and accrued liabilities
|
18,700 | 5,188 | 6,665 | |||||||||
|
Income taxes
|
13,693 | (579 | ) | (8,982 | ) | |||||||
|
Net cash provided by operating activities
|
158,626 | 102,317 | 97,258 | |||||||||
|
Investing activities:
|
||||||||||||
|
Purchases of equipment
|
(22,299 | ) | (20,297 | ) | (13,960 | ) | ||||||
|
Purchases of investments
|
(264,115 | ) | (148,795 | ) | (63,774 | ) | ||||||
|
Sales and maturities of investments
|
103,718 | 171,225 | 48,227 | |||||||||
|
Net cash (paid) acquired in business purchase transactions
|
(70,172 | ) | 5,820 | (40,866 | ) | |||||||
|
Increase in restricted investments
|
(8,365 | ) | (912 | ) | (1,706 | ) | ||||||
|
Increase in other assets
|
(4,330 | ) | (3,334 | ) | (983 | ) | ||||||
|
Increase in other long-term liabilities
|
9,290 | 239 | 488 | |||||||||
|
Net cash (used in) provided by investing activities
|
(256,273 | ) | 3,946 | (72,574 | ) | |||||||
|
Financing activities:
|
||||||||||||
|
Borrowings under credit facility
|
— | 50,000 | 3,100 | |||||||||
|
Proceeds from issuance of convertible senior notes
|
200,000 | — | — | |||||||||
|
Repayments of amounts borrowed under credit facility
|
(45,000 | ) | (5,000 | ) | (3,100 | ) | ||||||
|
Payment of credit facility fees
|
(551 | ) | (459 | ) | (3,530 | ) | ||||||
|
Payment of convertible senior notes fees
|
(6,498 | ) | — | — | ||||||||
|
Repayment of mortgage note
|
— | — | (1,302 | ) | ||||||||
|
Principal payments on capital lease obligations
|
— | — | (592 | ) | ||||||||
|
Tax benefit from exercise of employee stock options recorded as
additional paid-in capital
|
853 | 1,227 | — | |||||||||
|
Proceeds from exercise of stock options and employee stock plan
purchases
|
4,257 | 2,416 | 1,872 | |||||||||
|
Net cash provided by (used in) financing activities
|
153,061 | 48,184 | (3,552 | ) | ||||||||
|
Net increase in cash and cash equivalents
|
55,414 | 154,447 | 21,132 | |||||||||
|
Cash and cash equivalents at beginning of year
|
403,650 | 249,203 | 228,071 | |||||||||
|
Cash and cash equivalents at end of year
|
$ | 459,064 | $ | 403,650 | $ | 249,203 | ||||||
60
Table of Contents
MOLINA
HEALTHCARE, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS — (Continued)
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
| (Dollars in thousands) | ||||||||||||
|
Supplemental cash flow information
|
||||||||||||
|
Cash paid during the year for:
|
||||||||||||
|
Income taxes
|
$ | 27,734 | $ | 27,354 | $ | 21,684 | ||||||
|
Interest
|
$ | 9,419 | $ | 2,260 | $ | 1,620 | ||||||
|
Schedule of non-cash investing and financing activities:
|
||||||||||||
|
Change in unrealized gain (loss) on investments
|
$ | 977 | $ | 474 | $ | (640 | ) | |||||
|
Deferred income taxes
|
(368 | ) | (182 | ) | 245 | |||||||
|
Net unrealized gain (loss) on investments
|
$ | 609 | $ | 292 | $ | (395 | ) | |||||
|
Accrual of software license fees
|
$ | — | $ | 2,375 | $ | — | ||||||
|
Accrual of equipment
|
$ | 672 | $ | 945 | $ | — | ||||||
|
Impairment charge on purchased software
|
$ | 782 | $ | — | $ | — | ||||||
|
Cumulative effect of adoption of Financial Interpretation
No. 48, Accounting for Uncertainty in Income Taxes
|
$ | 445 | $ | — | $ | — | ||||||
|
Value of stock issued for employee compensation earned in the
previous year
|
$ | — | $ | 2,149 | $ | — | ||||||
|
Retirement of common stock used for stock-based compensation
|
$ | (480 | ) | $ | — | $ | — | |||||
|
Details of business purchase transactions:
|
||||||||||||
|
Fair value of assets acquired
|
$ | (106,233 | ) | $ | (86,024 | ) | $ | (43,265 | ) | |||
|
Less cash acquired
|
10,843 | 49,820 | 2,249 | |||||||||
|
Liabilities assumed
|
25,218 | 42,024 | 150 | |||||||||
|
Net cash (paid) acquired in business purchase transactions
|
$ | (70,172 | ) | $ | 5,820 | $ | (40,866 | ) | ||||
|
Deferred tax asset related to business purchase transactions
|
$ | 2,747 | $ | — | $ | — | ||||||
See accompanying notes.
61
Table of Contents
MOLINA
HEALTHCARE, INC.
(Dollars
in thousands, except per-share data)
| 1. | Basis of Presentation |
Organization
and Operations
Molina Healthcare, Inc. is a multi-state managed care
organization that arranges for the delivery of health care
services to persons eligible for Medicaid and other programs for
low-income families and individuals. We were founded in 1980 as
a provider organization serving the Medicaid population through
a network of primary care clinics in California. In 1994, we
began operating as a health maintenance organization (HMO).
Beginning in January 2006, we began to serve a very small number
of our dual eligible members under both the Medicaid and the
Medicare programs. We operate our business through health plan
subsidiaries in California, Michigan, Missouri, Nevada, New
Mexico, Ohio, Texas, Utah, and Washington.
Our results of operations include the results of recent
acquisitions, including the acquisition of Mercy CarePlus, a
Medicaid managed care organization based in St. Louis,
Missouri, effective as of November 1, 2007, and the
acquisition of Cape Health Plan, Inc. based in Southfield,
Michigan, effective as of May 15, 2006.
Our Texas health plan began serving members in September 2006,
and our Ohio health plan began serving members in late 2005. Our
Indiana health plan ceased serving members effective
January 1, 2007 because its Medicaid contract with the
State of Indiana expired on December 31, 2006. Our Nevada
health plan began serving only Medicare members in June 2007.
Consolidation
The consolidated financial statements include the accounts of
Molina Healthcare, Inc. and all majority owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation. Financial information related to
subsidiaries acquired during any year is included only for the
period subsequent to their acquisition.
Use of
Estimates
The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements. Estimates
also affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these
estimates. Principal areas requiring the use of estimates
include medical claims payable and accruals, determination of
allowances for uncollectible accounts, settlements under
risks/savings sharing programs, impairment of long-lived and
intangible assets, professional and general liability claims,
reserves for potential absorption of claims unpaid by insolvent
providers, reserves for the outcome of litigation and valuation
allowances for deferred tax assets.
| 2. | Significant Accounting Policies |
Premium
Revenue
Premium revenue is fixed in advance of the periods covered and
is not generally subject to significant accounting estimates.
For the year ended December 31, 2007, we received
approximately 91.9% of our premium revenue as a fixed amount per
member per month, or PMPM, pursuant to our contracts with state
Medicaid agencies and other managed care organizations for which
we operate as a subcontractor. These premium revenues are
recognized in the month that members are entitled to receive
health care services. Premiums collected in advance are
deferred. The state Medicaid programs periodically adjust
premium rates. The amount of these premiums may vary
substantially between states and among various government
programs. We received approximately 4.7% of our premium revenue
for the year ended December 31, 2007 in the form of
“birth income” — a one-time payment for
62
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
the delivery of a child — from the Medicaid programs
in Michigan, Ohio, Texas, and Washington. Such payments are
recognized as revenue in the month the birth occurs. Starting in
2006, our premium revenue also included premiums generated from
Medicare, which totaled approximately $49.3 million for the
year ended December 31, 2007. All of our Medicare revenue
is paid to us as a fixed PMPM amount.
Certain components of premium revenue are subject to accounting
estimates. Chief among these are: 1) that portion of
premium revenue paid to our New Mexico health plan by the state
of New Mexico that may be refunded to the state if certain
minimum amounts are not expended on defined medical care costs,
2) the additional premium revenue our Utah health plan is
entitled to receive from the state of Utah as an incentive
payment for saving the state of Utah money in relation to
fee-for-service Medicaid, and 3) the profit-sharing
agreement between our Texas health plan and the state of Texas,
where we pay a rebate to the state of Texas if our Texas health
plan generates pretax income, according to a tiered rebate
schedule.
Our contract with the state of New Mexico requires that we spend
a minimum percentage of premium revenue on certain explicitly
defined medical care costs. During 2007, we recorded adjustments
totaling $6.0 million to reduce premium revenue associated
with this requirement. At December 31, 2007, we have
recorded a liability of approximately $12.9 million under
our interpretation of the existing terms of this contract
provision. Any change to the terms of this provision, including
revisions to the definitions of premium revenue or medical care
costs, the period of time over which the minimum percentage is
measured or the manner of its measurement, or the percentage of
revenue required to be spent on the defined medical care costs,
may trigger a change in this amount. If the state of New Mexico
disagrees with our interpretation of the existing contract
terms, an adjustment to this amount may occur.
The Medicaid contract of our Utah health plan with the state of
Utah is paid on a cost plus nine percent basis. In addition, in
order to incentivize the plan to save the state money, the
contract also entitles the health plan to be paid a percentage
of the savings realized as measured against what claims would
have been paid on a fee-for-service basis by the state. We had
previously estimated the amount that we believe our Utah plan
will recover under its savings sharing agreement with the state
of Utah. However, as a result of an ongoing disagreement with
the state, during 2007 our Utah health plan wrote off the entire
receivable, totaling $4.7 million, $4.0 million of
which was accrued as of December 31, 2006. Nevertheless,
our Utah health plan has not waived any of its rights to
recovery under the savings sharing provision of the contract,
and continues to work with the state in an effort to assure an
appropriate determination of amounts due. When additional
information is known or agreement is reached with the state
regarding the appropriate savings sharing payment amount, we
will adjust the amount of savings sharing revenue recorded in
our financial statements.
As of December 31, 2007, we had accrued a liability of
approximately $2.3 million pursuant to our profit-sharing
agreement with the state of Texas, for the 2006 and 2007
contract years. Because the final settlement calculations
include a claims run-out period of nearly one year, the amounts
recorded, based on our estimates, may be adjusted. We believe
that the ultimate settlement will not differ materially from our
estimate.
Medical
Care Costs
Expenses related to medical care services are captured in the
following four categories:
| • | Fee-for-service: Physician providers paid on a fee-for-service basis are paid according to a fee schedule set by the state or by our contracts with these providers. We pay hospitals in a variety of ways, including per diem amounts, diagnostic-related groups or DRGs, percent of billed charges, case rates, and capitation. We also have stop-loss agreements with the hospitals with which we contract. Under all fee-for-service arrangements, we retain the financial responsibility for medical care provided. Expenses related to fee-for-service contracts are recorded in the period in which the related services are dispensed. The costs of |
63
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| drugs administered in a physician or hospital setting that are not billed through our pharmacy benefit managers are included in fee-for-service costs. |
| • | Capitation: Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitation basis. Under capitation contracts, we typically pay a fixed PMPM payment to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated contracts, we remain liable for the provision of certain health care services. Certain of our capitated contracts also contain incentive programs based on service delivery, quality of care, utilization management, and other criteria. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers. | |
| • | Pharmacy: Pharmacy costs include all drug, injectibles, and immunization costs paid through our pharmacy benefit managers. As noted above, drugs and injectibles not paid through our pharmacy benefit managers are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs. | |
| • | Other: Other medical care costs include medically related administrative costs, certain provider incentive costs, reinsurance cost, and other health care expense. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, disease management, 24-hour on-call nurses, and a portion of our information technology costs. Salary and benefit costs are a substantial portion of these expenses. For the years ended December 31, 2007, 2006, and 2005, medically related administrative costs were approximately $65.4 million, $52.6 million, and $44.4 million, respectively. |
The following table provides the details of our consolidated
medical care costs for the periods indicated:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
|
% of |
% of |
% of |
||||||||||||||||||||||||||||||||||
| Amount | PMPM | Total | Amount | PMPM | Total | Amount | PMPM | Total | ||||||||||||||||||||||||||||
|
Medical care costs:
|
||||||||||||||||||||||||||||||||||||
|
Fee for service
|
$ | 1,343,911 | $ | 103.77 | 64.6 | % | $ | 1,125,031 | $ | 94.86 | 67.0 | % | $ | 983,608 | $ | 95.36 | 69.0 | % | ||||||||||||||||||
|
Capitation
|
375,206 | 28.97 | 18.0 | 261,476 | 22.05 | 15.6 | 199,821 | 19.37 | 14.0 | |||||||||||||||||||||||||||
|
Pharmacy
|
270,363 | 20.88 | 13.0 | 209,366 | 17.65 | 12.5 | 176,250 | 17.09 | 12.4 | |||||||||||||||||||||||||||
|
Other
|
90,603 | 7.00 | 4.4 | 82,779 | 6.98 | 4.9 | 65,193 | 6.32 | 4.6 | |||||||||||||||||||||||||||
|
Total
|
$ | 2,080,083 | $ | 160.62 | 100.0 | % | $ | 1,678,652 | $ | 141.54 | 100.0 | % | $ | 1,424,872 | $ | 138.14 | 100.0 | % | ||||||||||||||||||
Our medical care costs include amounts that have been paid by us
through the reporting date, as well as estimated liabilities for
medical care costs incurred but not paid by us as of the
reporting date. Such medical care cost liabilities include,
among other items, capitation payments owed providers, unpaid
pharmacy invoices, and various medically related administrative
costs that have been incurred but not paid. We use judgment to
determine the appropriate assumptions for determining the
required estimates. See Note 9, “Medical Claims and
Benefits Payable.”
We report reinsurance premiums as medical care costs, while
related reinsurance recoveries are reported as deductions from
medical care costs. We limit our risk of catastrophic losses by
maintaining high deductible reinsurance coverage. We do not
consider this coverage to be material as the cost is not
significant and the likelihood that coverage will be applicable
is low.
64
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Taxes
Based on Premiums
Our California (beginning July 1, 2005), Michigan, New
Mexico, Ohio, Texas and Washington health plans are assessed a
tax based on premium revenue collected. We report these taxes on
a gross basis, included in general and administrative expenses.
Premium tax expense totaled $81,020, $60,777, and $46,301 in
2007, 2006, and 2005, respectively.
Delegated
Provider Insolvency
Circumstances may arise where providers to whom we have
delegated risk, due to insolvency or other circumstances, are
unable to pay claims they have incurred with third parties in
connection with referral services provided to our members. The
inability of delegated providers to pay referral claims presents
us with both immediate financial risk and potential disruption
to member care. Depending on states’ laws, we may be held
liable for such unpaid referral claims even though the delegated
provider has contractually assumed such risk. Additionally,
competitive pressures may force us to pay such claims even when
we have no legal obligation to do so. To reduce the risk that
delegated providers are unable to pay referral claims, we
monitor the operational and financial performance of such
providers. We also maintain contingency plans that include
transferring members to other providers in response to potential
network instability.
In certain instances, we have required providers to place funds
on deposit with us as protection against their potential
insolvency. These reserves are frequently in the form of
segregated funds received from the provider and held by us or
placed in a third-party financial institution. These funds may
be used to pay claims that are the financial responsibility of
the provider in the event the provider is unable to meet these
obligations. Additionally, we have recorded liabilities for
estimated losses arising from provider instability or insolvency
in excess of provider funds on deposit with us. Such liabilities
were not material at December 31, 2007 or 2006.
Premium
Deficiency Reserves on Loss Contracts
We assess the profitability of our contracts for providing
medical care services to our members and identify those
contracts where current operating results or forecasts indicate
probable future losses. Anticipated future premiums are compared
to anticipated medical care costs, including the cost of
processing claims. If the anticipated future costs exceed the
premiums, a loss contract accrual is recognized.
Cash
and Cash Equivalents
Cash and cash equivalents consist of cash and short-term, highly
liquid investments that are both readily convertible into known
amounts of cash and have a maturity of three months or less on
the date of purchase.
Investments
We account for our investments in marketable securities in
accordance with Statement of Financial Accounting Standards No.
(SFAS) 115, Accounting for Certain Investments in Debt and
Equity Securities. Realized gains and losses and unrealized
losses judged to be other than temporary with respect to
available-for-sale and held-to-maturity securities are included
in the determination of net income. All unrealized losses at
December 31, 2007 and 2006 were deemed to be temporary as
all such losses were the result of increases in interest rates
rather than a change in the credit quality of the investments.
No losses will be realized if we hold these investments to
maturity. The cost of securities sold is determined using the
specific-identification method, on an amortized cost basis. Fair
values of securities are based on quoted prices in active
markets.
Except for restricted investments, marketable securities are
designated as available-for-sale and are carried at fair value.
Unrealized gains or losses, if any, net of applicable income
taxes, are recorded in stockholders’ equity as
65
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
other comprehensive income (loss). Since these securities may be
readily liquidated, they are classified as current assets
without regard to the securities’ contractual maturity
dates. See Note 4, “Investments.”
Receivables
Receivables consist primarily of amounts due from the various
states in which we operate. All receivables are subject to
potential retroactive adjustment. As the amounts of all
receivables are readily determinable and our creditors are state
governments, our allowance for doubtful accounts is immaterial.
Any amounts determined to be uncollectible are charged to
expense when such determination is made. See Note 5,
“Receivables.”
Property
and Equipment
Property and equipment are stated at historical cost.
Replacements and major improvements are capitalized, and repairs
and maintenance are charged to expense as incurred. Software
developed for internal use is capitalized in accordance with the
provision of AICPA Statement of Position
No. 98-1,
Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. Furniture and equipment are
depreciated using the straight-line method over estimated useful
lives ranging from three to seven years. Software is amortized
over its estimated useful life of three years. Leasehold
improvements are amortized over the term of the lease or five to
10 years, whichever is shorter. Buildings are depreciated
over their estimated useful lives of 31.5 years. See
Note 6, “Property and Equipment.”
Goodwill
and Intangible Assets
Goodwill represents the excess of the purchase price over the
fair value of net assets acquired. Identifiable intangible
assets (consisting principally of purchased contract rights and
provider contracts) are amortized on a straight-line basis over
the expected period to be benefited (between one and
15 years). See Note 7, “Goodwill and Intangible
Assets.”
Under SFAS 142, Goodwill and Other Intangible
Assets, goodwill and indefinite lived assets are no longer
amortized, but are subject to impairment tests on an annual
basis or more frequently if impairment indicators exist. Under
the guidance of SFAS 142, we used a discounted cash flow
methodology to assess the fair values of our reporting units at
December 31, 2007 and 2006. If book equity values of our
reporting units exceed the fair values, we perform a
hypothetical purchase price allocation. Impairment is measured
by comparing the goodwill derived from the hypothetical purchase
price allocation to the carrying value of the goodwill and
indefinite lived asset balance. Based on the results of our
impairment testing, no adjustments were required for the years
ended December 31, 2007, 2006, and 2005.
Long-Lived
Asset Impairment
Situations may arise where the carrying value of a long-lived
asset may exceed the undiscounted expected cash flows associated
with that asset. In such circumstances the asset is deemed to be
impaired. We review material long-lived assets for impairment on
an annual basis, as well as when events or changes in business
conditions suggest potential impairment. Impaired assets are
written down to fair value. In the second quarter of 2007, we
recorded an impairment charge totaling $782, related to
commercial software no longer used in operations. Other than
this 2007 charge, we have determined that no long-lived assets
were impaired at December 31, 2007 or 2006.
Restricted
Investments
Restricted investments, which consist of certificates of deposit
and treasury securities, are designated as held-to-maturity and
are carried at amortized cost, which approximates market value.
The use of these funds is limited to
66
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
specific purposes as required by each state, or as protection
against the insolvency of capitated providers. See Note 8,
“Restricted Investments.”
Receivable
/ Liability for Ceded Life and Annuity Contracts
We report an acquired 100% ceded reinsurance arrangement related
to the December 2005 purchase of Phoenix National Insurance
Company by recording a non-current receivable from the reinsurer
with a corresponding non-current liability for ceded life and
annuity contracts. The name of Phoenix National Insurance
Company has been changed to Molina Healthcare Insurance Company.
Other
Assets
Other assets include primarily deferred financing costs
associated with long-term debt, certain investments held in
connection with our employee deferred compensation program, and
an investment in a vision services provider (see Note 13,
“Related Party Transactions”). A liability
approximately equal to the assets held in connection with our
deferred employee compensation program is included in long-term
liabilities. During 2007, deferred financing costs increased
$6,498 for the deferral of fees paid in connection with the
issuance of our convertible senior notes in October 2007. These
fees are being amortized on a straight-line basis over the
seven-year term of the convertible senior notes.
Income
Taxes, including the Recently Adopted Financial Accounting
Standard (FIN 48)
We account for income taxes under SFAS 109, Accounting
for Income Taxes. Deferred tax assets and liabilities are
recorded based on temporary differences between the financial
statement basis and the tax basis of assets and liabilities
using presently enacted tax rates. On January 1, 2007, we
adopted the provisions of Financial Accounting Standards Board
(FASB) Interpretation No. (FIN) 48, Accounting for
Uncertainty in Income Taxes, which clarifies the accounting
for uncertainty in income taxes recognized in companies’
financial statements in accordance with SFAS 109.
FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a
tax return. The evaluation of a tax position in accordance with
FIN 48 is a two-step process. The first step is recognition
to determine whether it is more likely than not that a tax
position will be sustained upon examination. The second step is
measurement whereby a tax position that meets the
more-likely-than-not recognition threshold is measured to
determine the amount of benefit to recognize in the financial
statements. FIN 48 also provides guidance on derecognition
of recognized tax benefits, classification, interest and
penalties, accounting in interim periods, disclosure and
transition.
As a result of the implementation of FIN 48, we recognized
a $445 increase to liabilities for uncertain tax positions, of
which the entire increase was accounted for as an adjustment to
the beginning balance of retained earnings as of January 1,
2007. Including the cumulative effect increase, at the beginning
of 2007, we had $4,355 of total gross unrecognized tax benefits
including $384 of accrued interest. Of this total, $1,524
represents the amount of unrecognized tax benefits that, if
recognized, would favorably affect the effective income tax rate
in any future period. In May 2007, the FASB issued FASB Staff
Position No. (FSP)
FIN 48-1,
Definition of Settlement in FASB Interpretation
No. 48, which provides guidance on how a company should
determine whether a tax position is effectively settled for the
purpose of recognizing previously unrecognized tax benefits. We
have applied the provisions of FSP
FIN 48-1
in our adoption of FIN 48. See Note 11, “Income
Taxes.”
Stock-Based
Compensation
At December 31, 2007, we had two stock-based employee
compensation plans, both of which are described more fully in
Note 15, “Stock Plans.” Until December 31,
2005, we accounted for the plans according to Accounting
Principles Board Opinion No. (APB) 25, Accounting for Stock
Issued to Employees, and related interpretations.
67
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Under APB 25, compensation cost for stock options was generally
recognized as the excess of the market price of the stock over
the exercise price of the option awarded on the grant date, if
any. This recognition method is also referred to as the
intrinsic value method.
In December 2004, the FASB issued SFAS 123 (revised 2004)
(SFAS 123(R)), Share-Based Payment. SFAS 123(R)
is a revision of SFAS 123, Accounting for Stock Based
Compensation, and supersedes APB 25. SFAS 123(R)
eliminates the use of the intrinsic value recognition method,
and requires companies to recognize the cost of employee
services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards. As of
January 1, 2006, we adopted SFAS 123(R) using the
modified prospective transition method. Under this transition
method, there is compensation cost attributable to the unvested
portion of option and restricted stock awards granted prior to
January 1, 2006. This cost is being recognized in periods
subsequent to the adoption date based on the grant date fair
values previously determined for pro forma disclosure purposes
under SFAS 123, as illustrated in the table below.
We use the Black-Scholes valuation model to determine the fair
value of stock option awards; the fair value of restricted stock
awards is determined based on the number of shares granted and
the quoted price of our common stock on the grant date, which is
consistent with our valuation techniques previously used for
options in footnote disclosures required under SFAS 123, as
amended by SFAS 148, Accounting for Stock-Based
Compensation — Transition and Disclosure. We
estimate the fair value of all share-based awards on the date of
grant. Generally, we recognize compensation expense attributable
to stock options and restricted stock awards on a straight-line
basis over the related vesting periods. We have adopted the
alternative transition method of calculating the excess tax
benefits available to absorb any tax deficiencies recognized
subsequent to the adoption of SFAS 123(R).
The following table illustrates the effect on net income and
earnings per share if we had applied the fair value recognition
provisions to stock-based employee compensation using the
following weighted-average assumptions: a risk-free interest
rate of 4.11%; expected stock price volatility of 53.2%;
dividend yield of 0% and expected option lives of 60 months.
|
Year Ended |
||||
|
December 31, 2005
|
||||
|
Net income, as reported
|
$ | 27,596 | ||
|
Reconciling items (net of related tax effects):
|
||||
|
Deduct: Stock-based employee compensation expense determined
under the fair-value based method for stock option and employee
stock purchase plan awards
|
(1,048 | ) | ||
|
Net income, as adjusted
|
$ | 26,548 | ||
|
Earnings per share:
|
||||
|
Basic — as reported
|
$ | 1.00 | ||
|
Basic — as adjusted
|
$ | 0.96 | ||
|
Diluted — as reported
|
$ | 0.98 | ||
|
Diluted — as adjusted
|
$ | 0.95 | ||
68
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Earnings
Per Share
The denominators for the computation of basic and diluted
earnings per share were calculated as follows:
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Shares outstanding at the beginning of the year
|
28,119,000 | 27,792,000 | 27,602,000 | |||||||||
|
Weighted-average number of shares issued
|
156,000 | 174,000 | 109,000 | |||||||||
|
Denominator for basic earnings per share
|
28,275,000 | 27,966,000 | 27,711,000 | |||||||||
|
Dilutive effect of employee stock options and stock grants(1)
|
144,000 | 198,000 | 312,000 | |||||||||
|
Denominator for diluted earnings per share(2)
|
28,419,000 | 28,164,000 | 28,023,000 | |||||||||
| (1) | Options to purchase common shares are included in the calculation of diluted earnings per share when their exercise prices are at or below the average fair value of the common shares for each of the periods presented. | |
| (2) | Potentially dilutive shares issuable pursuant to the Company’s 2007 offering of convertible senior notes were not included in the computation of diluted net income per share because to do so would have been antidilutive for the year ended December 31, 2007. |
Concentrations
of Credit Risk
Financial instruments that potentially subject us to
concentrations of credit risk consist primarily of cash and cash
equivalents, investments, receivables, and restricted
investments. We invest a substantial portion of our cash in the
CADRE Liquid Asset Fund and CADRE Reserve Fund (CADRE Funds), a
portfolio of highly liquid money market securities. The CADRE
Funds are a series of funds managed by the CADRE Institutional
Investors Trust (Trust), a Delaware business trust registered as
an open-end management investment fund. Our investments and a
portion of our cash equivalents are managed by three
professional portfolio managers operating under documented
investment guidelines. Our investments consist solely of
investment grade debt securities with a maximum maturity of ten
years and an average duration of four years. Concentration of
credit risk with respect to receivables is limited as the payors
consist principally of state governments. Restricted investments
are invested principally in certificates of deposit and treasury
securities.
Fair
Value of Financial Instruments
Our consolidated balance sheets include the following financial
instruments: cash and cash equivalents, investments,
receivables, trade accounts payable, medical claims and benefits
payable, long-term debt and other liabilities. We consider the
carrying amounts of current assets and liabilities to
approximate their fair value because of the relatively short
period of time between the origination of these instruments and
their expected realization. The carrying amounts of other
long-term obligations, including borrowings under our Credit
Facility, approximated their fair values based on borrowing
rates currently available to us for instruments with similar
terms and remaining maturities, as of December 31, 2007 and
2006. Based on quoted market prices the fair value of our
convertible senior notes, issued in October 2007, was $225,634
as of December 31, 2007. The carrying amount of the
convertible senior notes totaled $200,000 as of
December 31, 2007.
Risks
and Uncertainties
Our profitability depends in large part on accurately predicting
and effectively managing medical care costs. We continually
review our medical costs in light of our underlying claims
experience and revised actuarial data. However, several factors
could adversely affect medical care costs. These factors, which
include changes in health
69
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
care practices, inflation, new technologies, major epidemics,
natural disasters, and malpractice litigation, are beyond our
control and may have an adverse effect on our ability to
accurately predict and effectively control medical care costs.
Costs in excess of those anticipated could have a material
adverse effect on our financial condition, results of
operations, or cash flows.
At December 31, 2007, we operated in nine states, in some
instances as a direct contractor with the state, and in others
as a subcontractor to another health plan holding a direct
contract with the state. We are therefore dependent upon a small
number of contracts to support our revenue. The loss of any one
of those contracts could have a material adverse effect on our
financial position, results of operations, or cash flows. Our
ability to arrange for the provision of medical services to our
members is dependent upon our ability to develop and maintain
adequate provider networks. Our inability to develop or maintain
such networks might, in certain circumstances, have a material
adverse effect on our financial position, results of operations,
or cash flows.
Segment
Information
We present segment information externally in the same manner
used by management to make operating decisions and assess
performance. Each of our subsidiaries arranges for the provision
of health care services to Medicaid and similar members in
return for compensation from state agencies. They share similar
characteristics in the membership they serve, the nature of
services provided and the method by which medical care is
rendered. The subsidiaries are also subject to similar
regulatory environment and long-term economic prospects. As
such, we have one reportable segment.
Recent
Accounting Pronouncements
In September 2006, the FASB issued SFAS 157, Fair Value
Measurements, which defines fair value, establishes a
framework for measuring fair value in U.S. generally
accepted accounting principles, and expands disclosures about
fair value measurements. SFAS 157 applies under other
accounting pronouncements that require or permit fair value
measurements, the FASB having previously concluded in those
accounting pronouncements that fair value is the relevant
measurement attribute. SFAS 157 is effective for financial
statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal
years. We do not expect the adoption of SFAS 157 in 2008 to
have a material impact on our consolidated financial statements.
In February 2007, the FASB issued SFAS 159, The Fair
Value Option for Financial Assets and Financial Liabilities,
Including an Amendment of FASB Statement No. 115, which
is effective for fiscal years beginning after November 15,
2007. SFAS 159 permits entities to measure eligible
financial assets, financial liabilities and firm commitments at
fair value, on an
instrument-by-instrument
basis, that are otherwise not permitted to be accounted for at
fair value under other U.S. generally accepted accounting
principles. The fair value measurement election is irrevocable
and subsequent changes in fair value must be recorded in
earnings. We do not expect the adoption of SFAS 159 in 2008
to have a material impact on our consolidated financial
statements.
In December 2007, the FASB issued SFAS 141(R), Business
Combinations and SFAS 160, Noncontrolling Interests
in Consolidated Financial Statements. The standards are
intended to improve, simplify, and converge internationally the
accounting for business combinations and the reporting of
noncontrolling (minority) interests in consolidated financial
statements. SFAS 141(R) requires the acquiring entity in a
business combination to recognize all (and only) the assets
acquired and liabilities assumed in the transaction; establishes
the acquisition-date fair value as the measurement objective for
all assets acquired and liabilities assumed; and requires the
acquirer to disclose to investors and other users all of the
information they need to evaluate and understand the nature and
financial effect of the business combination. SFAS 141(R)
is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008.
SFAS 141(R) applies prospectively to business combinations
for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after
December 15, 2008. Earlier adoption is prohibited.
70
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
SFAS 160 is designed to improve the relevance,
comparability, and transparency of financial information
provided to investors by requiring all entities to report
minority interests in subsidiaries in the same way —
as equity in the consolidated financial statements. Moreover,
SFAS 160 eliminates the diversity that currently exists in
accounting for transactions between an entity and minority
interests by requiring they be treated as equity transactions.
SFAS 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after
December 15, 2008. Earlier adoption is prohibited. In
addition, SFAS 160 shall be applied prospectively as of the
beginning of the fiscal year in which it is initially applied,
except for the presentation and disclosure requirements. The
presentation and disclosure requirements shall be applied
retrospectively for all periods presented. We do not have any
material outstanding minority interests in one or more
subsidiaries and therefore, SFAS 160 is not applicable to
the Company at this time.
Other recent accounting pronouncements issued by the FASB
(including its Emerging Issues Task Force), the AICPA, and the
SEC did not, or are not believed by management to, have a
material impact on our present or future consolidated financial
statements.
| 3. | Business Purchase Transactions |
In accordance with SFAS 141, Business Combinations,
the purchase price of the acquisition described below was
allocated to the fair value of assets acquired and liabilities
assumed, including identifiable intangible assets, and the
excess of purchase price over the fair value of net assets
acquired was recorded as goodwill.
Effective November 1, 2007, we acquired Mercy CarePlus, a
licensed Medicaid managed care plan based in St. Louis,
Missouri, to expand our market share within our core Medicaid
managed care business. The purchase price for the acquisition
was $80,045, subject to adjustment based upon an analysis after
closing of Mercy CarePlus’ risk-based capital and incurred
but not reported medical costs (IBNR). The sellers are entitled
to an additional $5,000 payment from Molina Healthcare in the
event the earnings of Mercy CarePlus in the twelve months ending
June 30, 2008 are in excess of $22,000. Mercy CarePlus has
a contractual agreement to provide healthcare services with the
state of Missouri through June 2009. The acquisition was funded
with available cash and proceeds from our issuance of
convertible senior notes in October 2007. Based on our
preliminary valuation, the fair values of Mercy CarePlus assets
acquired and liabilities assumed as of November 1, 2007
were as follows:
|
Cash
|
$ | 10,843 | ||||||
|
Other current assets
|
16,057 | |||||||
|
Property and equipment
|
213 | |||||||
|
Other non-current assets
|
874 | |||||||
|
Goodwill
|
60,650 | |||||||
|
Intangible assets
|
16,626 | |||||||
|
Total assets acquired
|
105,263 | |||||||
|
Current liabilities
|
(17,564 | ) | ||||||
|
Other long-term liabilities
|
(7,654 | ) | ||||||
|
Total liabilities assumed
|
(25,218 | ) | ||||||
|
Net assets acquired
|
$ | 80,045 | ||||||
Of the $16,626 of acquired intangible assets, $354 was assigned
to the tradename with a one-year life, $8,050 was assigned to
the member list with a five-year life, $6,535 was assigned to
the provider network with a ten-year life, and $1,687 was
assigned to payor contracts with a fifteen-year life, for a
weighted average amortization period of approximately
7.9 years. The acquired goodwill is not subject to
amortization.
71
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
The unaudited pro forma financial information presented below
assumes that the acquisition of Mercy CarePlus had occurred as
of the beginning of each period presented. This pro forma
information includes the results of Mercy CarePlus for the
period prior to its acquisition, adjusting for interest expense
on the portion of the convertible senior notes proceeds used to
fund the acquisition, amortization of intangible assets with
definite useful lives, and related income tax effects. The pro
forma net income for the year ended December 31, 2007
includes a non-recurring charge recorded by Mercy CarePlus prior
to the acquisition totaling $3,840 ($2,390, net of tax), related
primarily to the termination of certain Mercy CarePlus
employment agreements as a result of the acquisition. The pro
forma financial information is presented for informational
purposes only and may not be indicative of the results of
operations had Mercy CarePlus been a wholly owned subsidiary
during the years ended December 31, 2007 and 2006, nor is
it necessarily indicative of future results of operations.
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Pro forma revenues
|
$ | 2,636,825 | $ | 2,130,628 | ||||
|
Pro forma net income
|
$ | 62,487 | $ | 51,291 | ||||
|
Pro forma earnings per share:
|
||||||||
|
Basic
|
$ | 2.21 | $ | 1.83 | ||||
|
Diluted
|
$ | 2.20 | $ | 1.82 | ||||
Pro forma earnings per share are based on 28.3 million and
28.0 million weighted average shares for the years ended
December 31, 2007 and 2006, respectively. Pro forma
earnings per share assuming full dilution is based on
28.4 million and 28.2 million weighted average shares
for the years ended December 31, 2007 and 2006,
respectively.
Effective November 1, 2007 we purchased certain contract
rights from another health plan in Sacramento, California for
approximately $970. As a result of this acquisition, we
transitioned approximately 4,300 members into our California
health plan. The entire purchase price has been recorded as an
identifiable intangible asset and is being amortized over a
period of fifteen years.
| 4. | Investments |
The following tables summarize our investments as of the dates
indicated:
| December 31, 2007 | ||||||||||||||||
|
Cost or |
Estimated |
|||||||||||||||
|
Amortized |
Gross Unrealized |
Fair |
||||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
|
Municipal securities
|
$ | 114,123 | $ | 10 | $ | 36 | $ | 114,097 | ||||||||
|
U.S. Government agency securities
|
42,727 | 162 | 18 | 42,871 | ||||||||||||
|
U.S. Treasury notes
|
31,563 | 510 | — | 32,073 | ||||||||||||
|
Certificates of deposit
|
29,136 | — | — | 29,136 | ||||||||||||
|
Corporate bonds
|
24,556 | 155 | 33 | 24,678 | ||||||||||||
| $ | 242,105 | $ | 837 | $ | 87 | $ | 242,855 | |||||||||
72
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| December 31, 2006 | ||||||||||||||||
|
Cost or |
Estimated |
|||||||||||||||
|
Amortized |
Gross Unrealized |
Fair |
||||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
|
U.S. Treasury notes
|
$ | 41,256 | $ | 23 | $ | 99 | $ | 41,167 | ||||||||
|
U.S. Government agency securities
|
30,118 | 1 | 342 | 29,790 | ||||||||||||
|
Municipal securities
|
8,515 | — | 10 | 8,505 | ||||||||||||
|
Corporate bonds
|
2,020 | — | 1 | 2,019 | ||||||||||||
| $ | 81,909 | $ | 24 | $ | 452 | $ | 81,481 | |||||||||
The contractual maturities of our investments as of
December 31, 2007 are summarized below.
|
Estimated |
||||||||
|
Amortized |
Fair |
|||||||
| Cost | Value | |||||||
|
Due in one year or less
|
$ | 90,776 | $ | 93,802 | ||||
|
Due one year through five years
|
53,027 | 50,723 | ||||||
|
Due after five years through ten years
|
3,402 | 3,451 | ||||||
|
Due after ten years
|
94,900 | 94,879 | ||||||
| $ | 242,105 | $ | 242,855 | |||||
Gross realized gains and gross realized losses from sales of
available-for-sale
securities are calculated under the specific identification
method and are included in investment income. Total proceeds
from sales of
available-for-sale
securities were $13,136, $12,583 and $4,689 for the years ended
December 31, 2007, 2006 and 2005, respectively. Net
realized investment losses for the years ended December 31,
2007, 2006 and 2005 were $78, $151 and $220, respectively.
Unrealized gains and losses at December 31, 2007 and 2006
have been determined to be temporary in nature. The change in
market value for these securities is the result of declining or
rising interest rates rather than a deterioration of the credit
worthiness of the issuers. So long as we hold these securities
to maturity, we are unlikely to experience gains or losses. In
the event that we dispose of these securities before maturity,
we expect that realized gains or losses, if any, will be
immaterial. The disclosures required under Emerging Issues Task
Force No. (EITF)
03-1, The
Meaning of
Other-Than-Temporary
Impairment and Its Application to Certain Investments, have
not been included because our unrealized losses are immaterial
at December 31, 2007 and 2006.
73
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| 5. | Receivables |
Accounts receivable by health plan operating subsidiary were as
follows:
| December 31, | ||||||||
| 2007 | 2006 | |||||||
|
California
|
$ | 23,046 | $ | 32,404 | ||||
|
Michigan
|
6,419 | 3,392 | ||||||
|
Missouri
|
15,986 | — | ||||||
|
New Mexico
|
3,887 | 2,763 | ||||||
|
Ohio
|
28,522 | 11,611 | ||||||
|
Utah
|
23,987 | 46,570 | ||||||
|
Washington
|
8,308 | 7,447 | ||||||
|
Other
|
1,382 | 6,648 | ||||||
|
Total receivables
|
$ | 111,537 | $ | 110,835 | ||||
Substantially all receivables due our California and Missouri
health plans at December 31, 2007 were collected in January
2008.
Our agreement with the state of Utah calls for the reimbursement
of our Utah HMO of medical costs incurred in serving our members
plus an administrative fee of 9% of medical costs and all or a
portion of any cost savings realized, as defined in the
agreement. Our Utah health plan bills the state of Utah monthly
for actual paid health care claims plus administrative fees. Our
receivable balance from the state of Utah includes:
1) amounts billed to the state for actual paid health care
claims plus administrative fees; 2) amounts estimated to be
due under the savings sharing provision of the agreement; and
3) amounts estimated for incurred but not reported claims,
which, along with the related administrative fees, are not
billable to the state of Utah until such claims are actually
paid.
As of December 31, 2007, the receivable due our Ohio health
plan included approximately $7,400 of accrued delivery payments
due from the state of Ohio and approximately $19,400 due from a
capitated provider group. Our agreement with that group calls
for us to pay for certain medical services incurred by the
group’s members, and then to deduct the amount of such
payments from the monthly capitation paid to the group. This
receivable also includes an estimate of our liability for claims
incurred by members of this group for which we have not made
payment. The offsetting liability for the amount of this
receivable established for claims incurred but not paid is
included in “Medical claims and benefits payable” in
our Consolidated Balance Sheets. At December 31, 2007, this
receivable comprised approximately $10,700 paid on behalf of the
provider group, which will be deducted from capitation payments
in the months of January and February 2008. An additional $8,700
receivable has been recorded to offset amounts included in
“Medical claims and benefits payable” in our
Consolidated Balance Sheets that are the responsibility of the
capitated provider group. Our Ohio health plan has withheld
approximately $9,000 from capitation payments due this provider
group and placed the funds in an escrow account. The Ohio health
plan is entitled to the escrow amount if the provider is unable
to repay amounts owed to us. The escrow amount is included in
“Restricted Investments” in our Consolidated Balance
Sheets. Monthly gross capitation paid to the provider group is
approximately $8,300.
74
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| 6. | Property and Equipment |
A summary of property and equipment is as follows:
| December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Land
|
$ | 3,000 | $ | 3,000 | ||||
|
Building and improvements
|
21,928 | 18,665 | ||||||
|
Furniture, equipment and automobiles
|
38,439 | 32,933 | ||||||
|
Capitalized computer software costs
|
34,895 | 20,571 | ||||||
| 98,262 | 75,169 | |||||||
|
Less: accumulated depreciation and amortization on building and
improvements, furniture, equipment and automobiles
|
(34,071 | ) | (25,670 | ) | ||||
|
Less: accumulated amortization on capitalized computer software
costs
|
(14,636 | ) | (7,596 | ) | ||||
| (48,707 | ) | (33,266 | ) | |||||
|
Property and equipment, net
|
$ | 49,555 | $ | 41,903 | ||||
Depreciation expense recognized for building and improvements,
furniture, equipment and automobiles was $8,494, $7,676, and
$5,909 for the years ended December 31, 2007, 2006, and
2005, respectively. Amortization expense recognized for
capitalized computer software costs was $8,624, $4,260 and
$1,786 for the years ended December 31, 2007, 2006, and
2005, respectively.
| 7. | Goodwill and Intangible Assets |
Other intangible assets are amortized over their useful lives
ranging from one to 15 years. The weighted average
amortization period for contract rights and licenses is
approximately 11.7 years, and for provider network is
approximately 9.9 years. Amortization expense on intangible
assets recognized for the years ended December 31, 2007,
2006, and 2005 was $10,849, $9,539, and $7,430, respectively. We
estimate our intangible asset amortization expense will be
$12,766 in 2008, $11,117 in 2009, $11,117 in 2010, $9,880 in
2011, and $8,012 in 2012. The following table provides details
of identified intangible assets, by major class, for the periods
indicated:
|
Accumulated |
Net |
|||||||||||
| Cost | Amortization | Balance | ||||||||||
|
Intangible assets:
|
||||||||||||
|
Contract rights and licenses
|
$ | 114,342 | $ | 34,775 | $ | 79,567 | ||||||
|
Provider network
|
14,548 | 1,889 | 12,659 | |||||||||
|
Balance at December 31, 2007
|
$ | 128,890 | $ | 36,664 | $ | 92,226 | ||||||
|
Intangible assets:
|
||||||||||||
|
Contract rights and licenses
|
$ | 103,282 | $ | 24,748 | $ | 78,534 | ||||||
|
Provider network
|
8,013 | 1,067 | 6,946 | |||||||||
|
Balance at December 31, 2006
|
$ | 111,295 | $ | 25,815 | $ | 85,480 | ||||||
75
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
The changes in the carrying amount of goodwill were as follows:
|
Balance as of December 31, 2006
|
$ | 57,659 | ||
|
Goodwill related to acquisition of Mercy CarePlus
|
60,085 | |||
|
Adjustment to goodwill, related primarily to the acquisition of
Cape Health Plan, Inc.
|
(2,747 | ) | ||
|
Balance at December 31, 2007
|
$ | 114,997 | ||
| 8. | Restricted Investments |
Pursuant to the regulations governing our subsidiaries, we
maintain statutory deposits and deposits required by state
Medicaid authorities. Additionally, we maintain restricted
investments as protection against the insolvency of capitated
providers. The following table presents the balances of
restricted investments by health plan, and by our insurance
company:
| December 31, | ||||||||
| 2007 | 2006 | |||||||
|
California
|
$ | 524 | $ | 301 | ||||
|
Florida
|
307 | — | ||||||
|
Indiana
|
500 | 536 | ||||||
|
Michigan
|
1,000 | 2,000 | ||||||
|
Missouri
|
500 | — | ||||||
|
Nevada
|
885 | — | ||||||
|
New Mexico
|
8,991 | 8,571 | ||||||
|
Ohio
|
9,370 | 1,742 | ||||||
|
Texas
|
1,491 | 1,559 | ||||||
|
Utah
|
575 | 550 | ||||||
|
Washington
|
154 | 151 | ||||||
|
Molina Healthcare Insurance Company
|
4,722 | 4,744 | ||||||
|
Total
|
$ | 29,019 | $ | 20,154 | ||||
| 9. | Medical Claims and Benefits Payable |
The following table presents the components of the change in our
medical claims and benefits payable for the years ended
December 31, 2007 and 2006. The negative amounts displayed
for “components of medical care costs related to prior
years” represent the amount by which our original
estimate of claims and benefits payable at the beginning of the
period exceeded the actual amount of the liability based on
information (principally the payment of claims) developed since
that liability was first reported. The benefit of this prior
period development may be offset
76
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
by the addition of a reserve for adverse claims development when
estimating the liability at the end of the period (captured as
“components of medical care costs related to current
year”).
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Balances at beginning of period
|
$ | 290,048 | $ | 217,354 | ||||
|
Medical claims and benefits payable from business acquired
|
14,876 | 21,144 | ||||||
|
Components of medical care costs related to:
|
||||||||
|
Current year
|
2,136,381 | 1,716,256 | ||||||
|
Prior years
|
(56,298 | ) | (37,604 | ) | ||||
|
Total medical care costs
|
2,080,083 | 1,678,652 | ||||||
|
Payments for medical care costs related to:
|
||||||||
|
Current year
|
1,851,035 | 1,443,843 | ||||||
|
Prior years
|
222,366 | 183,259 | ||||||
|
Total paid
|
2,073,401 | 1,627,102 | ||||||
|
Balances at end of period
|
$ | 311,606 | $ | 290,048 | ||||
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Benefit from prior period as a percentage of premium revenue
|
2.3 | % | 1.9 | % | ||||
|
Benefit from prior period as a percentage of balance at
beginning of period
|
19.4 | % | 17.3 | % | ||||
|
Benefit from prior period as a percentage of total medical care
costs
|
2.7 | % | 2.2 | % | ||||
|
Days in claims payable
|
52 | 57 | ||||||
|
Number of members at end of period
|
1,149,000 | 1,077,000 | ||||||
|
Number of claims in inventory at end of period(1)
|
161,395 | 260,958 | ||||||
|
Billed charges of claims in inventory at end of period (in
thousands)(1)
|
$ | 211,958 | $ | 285,385 | ||||
|
Claims in inventory per member at end of period(1)
|
0.14 | 0.26 | ||||||
| (1) | 2006 claims data excludes information for Cape Health Plan membership of approximately 83,000 members. Cape membership was processed on a separate claims platform through September 30, 2007. |
| 10. | Long-Term Debt |
Convertible
Senior Notes
In October 2007, we completed our offering of $200,000 aggregate
principal amount of 3.75% Convertible Senior Notes due 2014
(the “Notes”). The sale of the Notes resulted in net
proceeds totaling $193,400, from which we repaid the $20,000
balance outstanding under our credit facility. In November 2007,
we used $80,045 of the net proceeds in connection with our
acquisition of Mercy CarePlus in Missouri. In December 2007, we
used $41,500 for contributions to regulatory capital of certain
of our health plan subsidiaries, including contributions of
$32,500 to our Ohio plan, $7,000 to our Missouri plan, $1,500 to
our Texas plan, and $500 to our Nevada plan. The Notes rank
equally in right of payment with our existing and future senior
indebtedness.
The Notes are convertible into cash and, under certain
circumstances, shares of our common stock. The initial
conversion rate is 21.3067 shares of our common stock per
one thousand dollar principal amount of the Notes. This
77
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
represents an initial conversion price of approximately $46.93
per share of our common stock. In addition, if certain corporate
transactions that constitute a change of control occur prior to
maturity, we will increase the conversion rate in certain
circumstances. Prior to July 2014, holders may convert their
Notes only under the following circumstances:
| • | During any fiscal quarter after our fiscal quarter ending December 31, 2007, if the closing sale price per share of our common stock, for each of at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the previous fiscal quarter, is greater than or equal to 120% of the conversion price per share of our common stock; | |
| • | During the five business day period immediately following any five consecutive trading day period in which the trading price per one thousand dollar principal amount of the Notes for each trading day of such period was less than 98% of the product of the closing price per share of our common stock on such day and the conversion rate in effect on such day; or | |
| • | Upon the occurrence of specified corporate transactions or other specified events. |
On or after July 1, 2014, holders may convert their Notes
at any time prior to the close of business on the scheduled
trading day immediately preceding the stated maturity date
regardless of whether any of the foregoing conditions is
satisfied.
We will deliver cash and shares of our common stock, if any,
upon conversion of each $1,000 principal amount of Notes, as
follows:
| • | An amount in cash (the “principal return”) equal to the sum of, for each of the 20 Volume-Weighted Average Price (VWAP) trading days during the conversion period, the lesser of the daily conversion value for such VWAP trading day and fifty dollars (representing 1/20th of one thousand dollars); and |
A number of shares based upon, for each of the 20 VWAP trading
days during the conversion period, any excess of the daily
conversion value above fifty dollars.
Credit
Facility
In 2005, we entered into the Amended and Restated Credit
Agreement, dated as of March 9, 2005, among Molina
Healthcare Inc., certain lenders, and Bank of America N.A., as
Administrative Agent (the “Credit Facility”).
Effective May 2007, we entered into a third amendment of the
Credit Facility that increased the size of the revolving line of
credit from $180,000 to $200,000, maturing in May 2012. The
Credit Facility is intended to be used for working capital and
general corporate purposes, and subject to obtaining commitments
from existing or new lenders and satisfaction of other specified
conditions, we may increase the amount available under the
Credit Facility to up to $250,000.
Borrowings under the Credit Facility are based, at our election,
on the London Interbank Offered Rate, or LIBOR, or the base rate
plus an applicable margin. The base rate equals the higher of
Bank of America’s prime rate or 0.500% above the federal
funds rate. We also pay a commitment fee on the total unused
commitments of the lenders under the Credit Facility. The
applicable margins and commitment fee are based on our ratio of
consolidated funded debt to consolidated earnings before
interest, taxes, depreciation and amortization, or EBITDA. The
applicable margins range between 0.750% and 1.750% for LIBOR
loans and between 0.000% and 0.750% for base rate loans. The
commitment fee ranges between 0.150% and 0.275%. In addition, we
are required to pay a fee for each letter of credit issued under
the Credit Facility equal to the applicable margin for LIBOR
loans and a customary fronting fee. As of December 31, 2007
and 2006, the amounts outstanding under the Credit Facility were
zero and $45,000, respectively.
78
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Our obligations under the Credit Facility are secured by a lien
on substantially all of our assets and by a pledge of the
capital stock of our Michigan, New Mexico, Utah, and Washington
health plan subsidiaries. The Credit Facility includes usual and
customary covenants for credit facilities of this type,
including covenants limiting liens, mergers, asset sales, other
fundamental changes, debt, acquisitions, dividends and other
distributions, capital expenditures, investments, and a fixed
charge coverage ratio. The Credit Facility also requires us to
maintain a ratio of total consolidated debt to total
consolidated EBITDA of not more than 2.75 to 1.00 at any time.
At December 31, 2007, we were in compliance with all
financial covenants in the Credit Facility.
| 11. | Income Taxes |
The provision for income taxes consisted of the following:
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Current:
|
||||||||||||
|
Federal
|
$ | 36,171 | $ | 24,987 | $ | 13,906 | ||||||
|
State
|
3,073 | 3,143 | 879 | |||||||||
|
Total current
|
39,244 | 28,130 | 14,785 | |||||||||
|
Deferred:
|
||||||||||||
|
Federal
|
(3,630 | ) | (471 | ) | 1,404 | |||||||
|
State
|
(293 | ) | (578 | ) | 66 | |||||||
|
Total deferred
|
(3,923 | ) | (1,049 | ) | 1,470 | |||||||
|
Change in valuation allowance
|
45 | 650 | — | |||||||||
|
Total provision for income taxes
|
$ | 35,366 | $ | 27,731 | $ | 16,255 | ||||||
A reconciliation of the effective income tax rate to the
statutory federal income tax rate is as follows:
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Taxes on income at statutory federal tax rate
|
$ | 32,794 | $ | 25,710 | $ | 15,348 | ||||||
|
State income taxes, net of federal benefit
|
1,954 | 2,097 | 614 | |||||||||
|
Other
|
618 | (76 | ) | 293 | ||||||||
|
Reported income tax expense
|
$ | 35,366 | $ | 27,731 | $ | 16,255 | ||||||
Our effective tax rate is based on expected income, statutory
tax rates, and tax planning opportunities available to us in the
various jurisdictions in which we operate. Significant
management estimates and judgments are required in determining
our effective tax rate. We are routinely under audit by federal,
state, or local authorities regarding the timing and amount of
deductions, nexus of income among various tax jurisdictions, and
compliance with federal, state, and local tax laws. We have
pursued various strategies to reduce our federal, state and
local taxes. As a result, we have reduced our state income tax
expense due to California Economic Development Tax Credits.
During 2007, 2006, and 2005, excess tax benefits related to
stock option exercises were $853, $1,227 and $1,872,
respectively. Such benefits were recorded as a reduction of
income taxes payable with an increase in additional paid-in
capital.
79
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Deferred tax assets and liabilities are classified as current or
non-current according to the classification of the related asset
or liability. Significant components of our deferred tax assets
and liabilities as of December 31, 2007 and 2006 were as
follows:
| December 31, | ||||||||
| 2007 | 2006 | |||||||
|
Accrued expenses
|
$ | 6,335 | $ | 1,388 | ||||
|
Reserve liabilities
|
624 | 425 | ||||||
|
State taxes
|
911 | 1,005 | ||||||
|
Other accrued medical costs
|
863 | — | ||||||
|
Prepaid expenses
|
(2,783 | ) | (2,396 | ) | ||||
|
Net operating losses
|
27 | 27 | ||||||
|
Other, net
|
2,641 | (130 | ) | |||||
|
Valuation allowance
|
(2 | ) | (6 | ) | ||||
|
Deferred tax asset, net of valuation allowance —
current
|
8,616 | 313 | ||||||
|
Net operating losses
|
856 | 819 | ||||||
|
State taxes
|
840 | 437 | ||||||
|
Depreciation and amortization
|
(14,453 | ) | (9,656 | ) | ||||
|
Deferred compensation
|
3,208 | 2,329 | ||||||
|
Other accrued medical costs
|
103 | 98 | ||||||
|
Reserve liabilities
|
885 | — | ||||||
|
Other, net
|
(882 | ) | (83 | ) | ||||
|
Valuation allowance
|
(693 | ) | (644 | ) | ||||
|
Deferred tax liability — long term
|
(10,136 | ) | (6,700 | ) | ||||
|
Net deferred income tax liabilities
|
$ | (1,520 | ) | $ | (6,387 | ) | ||
At December 31, 2007, we had federal and state net
operating loss carryforwards of $499 and $8,343, respectively.
The federal net operating losses begin expiring in 2011 and
state net operating losses begin expiring in 2025. The
utilization of the net operating losses is subject to certain
limitations under federal and state law.
We determined that, as of December 31, 2007, $695 of
deferred tax assets did not satisfy the recognition criteria set
forth in SFAS 109. Accordingly, a valuation allowance has
been recorded for this amount. This valuation allowance
primarily relates to the uncertainty of realizing certain state
net operating loss carryforwards. In the future, if we determine
that the realization of the net operating losses is more likely
than not, the reversal of the related valuation allowance will
reduce the provision for income taxes.
During 2007, $6,659 of net deferred tax liabilities were
established for certain acquired intangible assets in connection
with the purchase of Mercy CarePlus. Under purchase accounting,
the intangible assets were recorded at fair market value. For
tax purposes, the intangible assets were recorded at carry-over
basis. Therefore, the basis difference was recorded as deferred
tax liabilities which increased goodwill.
We adopted the provisions of FIN 48 on January 1,
2007. As a result of the implementation we recognized a $445
increase to liabilities for uncertain tax positions of which the
entire increase was accounted for as an adjustment to the
beginning balance of retained earnings. Including the cumulative
effect increase, at the beginning of 2007, we had $4,355 of
total gross unrecognized tax benefits, including $384 of accrued
interest. Of this total, $1,524 (net of federal benefit of state
issues) represents the amount of unrecognized tax benefits that,
if recognized,
80
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
would favorably affect the effective income tax rate in any
future period. As of December 31, 2007, we had $10,278 of
total gross unrecognized tax benefits of which $758 represents
the amount of unrecognized tax benefits that, if recognized,
could favorably affect the effective income tax rate in any
future period. We anticipate a decrease of $395 to our liability
for unrecognized tax benefits within the next
twelve-month
period.
Our continuing practice is to recognize interest
and/or
penalties related to income tax matters in income tax expense.
As of December 31, 2007 and January 1, 2007, we had
accrued cumulative $638 and $384, respectively, for the payment
of interest and penalties.
A reconciliation of the beginning and ending balances of the
total amounts of gross unrecognized tax benefits is as follows:
|
Gross unrecognized tax benefits at January 1, 2007
|
$ | 4,355 | ||
|
Increases in tax positions for prior years
|
3,197 | |||
|
Decreases in tax positions for prior years
|
(1,527 | ) | ||
|
Increases in tax positions for current year
|
4,935 | |||
|
Decreases in tax positions for current year
|
— | |||
|
Settlements
|
(202 | ) | ||
|
Lapse in statute of limitations
|
(480 | ) | ||
|
Gross unrecognized tax benefits at December 31, 2007
|
$ | 10,278 | ||
We are subject to taxation in the United States and various
states. With certain exceptions, we are no longer subject to
U.S. federal tax examination for tax years before 2004 and
state as well as local income tax examination for tax years
before 2003.
| 12. | Employee Benefits |
We sponsor a defined contribution 401(k) plan that covers
substantially all full-time salaried and hourly employees of our
company and its subsidiaries. Eligible employees are permitted
to contribute up to the maximum amount allowed by law. We match
up to the first 4% of compensation contributed by employees.
Expense recognized in connection with our contributions to the
401(k) plan totaled $3,553, $2,540 and $1,633 in the years ended
December 31, 2007, 2006, and 2005, respectively.
We also have a nonqualified deferred compensation plan for
certain key employees. Under this plan, eligible participants
can defer up to 100% of their base salary and 100% of their
bonus to provide tax-deferred growth for retirement. The funds
deferred are invested in various mutual funds, through a rabbi
trust.
| 13. | Related Party Transactions |
We lease two medical clinics from the Molina Family Trust, which
each have five five-year renewal options. Rental expense for
these leases totaled $97, $97, and $96 for the years ended
December 31, 2007, 2006, and 2005, respectively. At
December 31, 2007, minimum future lease payments for the
clinics consisted of the following:
|
Year ending December 31,
|
||||
|
2008
|
$ | 107 | ||
|
2009
|
107 | |||
|
2010
|
26 | |||
|
Total minimum lease payments
|
$ | 240 | ||
81
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
We have an equity investment in a medical service provider that
provides certain vision services to our members. We account for
this investment under the equity method of accounting because we
have an ownership interest in the investee in excess of 20%. As
of December 31, 2007 and 2006, our carrying amount for this
investment totaled $3,460 and $1,375, respectively. During the
third quarter of 2007, we invested an additional $2,100 in this
medical service provider. Effective July 1, 2007 we paid
this provider a $900 network access fee, which is being
amortized over twelve months. For the years ended
December 31, 2007, 2006, and 2005, we paid $10,894, $7,862
and $3,440, respectively, for medical service fees to this
provider.
In 2006, we assumed an office lease from Millworks Capital
Ventures with a remaining term of 52 months. Millworks
Capital Ventures is owned by John C. Molina, our Chief Financial
Officer, and his wife. The monthly base lease payment is
approximately $18 and is subject to an annual increase. Based on
a market report prepared by an independent realtor, we believe
the terms and conditions of the assumed lease are at fair market
value. We are currently using the office space under the lease
for an office expansion. Payments made under this lease totaled
$246 and $170 for the years ended December 31, 2007
and 2006, respectively.
We are a party to a fee for service agreement with Pacific
Hospital of Long Beach (“Pacific Hospital”). Pacific
Hospital is owned by Abrazos Healthcare, Inc., the shares of
which are held as community property by the husband of
Dr. Martha Bernadett, our Executive Vice President,
Research and Development. Amounts paid under the terms of that
agreement were $157 and $357 for the years ended
December 31, 2007 and 2006, respectively. We believe that
the claims submitted to us by Pacific Hospital were reimbursed
at prevailing market rates. In 2006, we entered into an
additional agreement with Pacific Hospital as part of a
capitation arrangement. Under this arrangement, we pay Pacific
Hospital a fixed monthly fee based on member type. For the years
ended December 31, 2007 and 2006, we paid approximately
$4,837 and $1,652, respectively, to Pacific Hospital for
capitation services. We believe that this agreement with Pacific
Hospital is based on prevailing market rates for similar
services. Also as of December 31, 2007, we had an advance
outstanding to this provider totaling $250, which will be offset
to capitation payments in 2008.
| 14. | Commitments and Contingencies |
Leases
We lease office space, clinics, equipment, and automobiles under
agreements that expire at various dates through 2018. Future
minimum lease payments by year and in the aggregate under all
non-cancelable operating leases, including those payments
described in Note 13, “Related Party
Transactions,” consist of the following approximate amounts:
|
Year ending December 31,
|
||||
|
2008
|
$ | 15,942 | ||
|
2009
|
15,465 | |||
|
2010
|
14,193 | |||
|
2011
|
13,660 | |||
|
2012
|
12,286 | |||
|
Thereafter
|
49,510 | |||
|
Total minimum lease payments
|
$ | 121,056 | ||
Rental expense related to these leases totaled $18,127, $12,193
and $9,505 for the years ended December 31, 2007, 2006, and
2005, respectively.
82
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Employment
Agreements
During 2001 and 2002, we entered into employment agreements with
three current executives with initial terms of one to three
years, subject to automatic one-year extensions thereafter. In
most cases, should the executive be terminated without cause or
resign for good reason before a Change of Control, as defined,
we will pay one year’s base salary and Target Bonus, as
defined, for the year of termination, in addition to full
vesting of 401(k) employer contributions and stock options, and
continued health and welfare benefits for the earlier of
18 months or the date the executive receives substantially
similar benefits from another employer. If any of the executives
are terminated for cause, no further payments are due under the
contracts.
In most cases, if termination occurs within two years following
a Change of Control, the employee will receive two times their
base salary and Target Bonus for the year of termination in
addition to full vesting of 401(k) employer contributions and
stock options and continued health and welfare benefits for the
earlier of three years or the date the executive receives
substantially similar benefits from another employer.
Executives who receive severance benefits, whether or not in
connection with a Change of Control, will also receive all
accrued benefits for prior service including a pro rata Target
Bonus for the year of termination.
Legal
Proceedings
The health care industry is subject to numerous laws and
regulations of federal, state, and local governments. Compliance
with these laws and regulations can be subject to government
review and interpretation, as well as regulatory actions unknown
and unasserted at this time. Penalties associated with
violations of these laws and regulations include significant
fines and penalties, exclusion from participating in
publicly-funded programs, and the repayment of previously billed
and collected revenues.
Malpractice Action. On February 1, 2007,
a complaint was filed in the Superior Court of the State of
California for the County of Riverside by plaintiff Staci Robyn
Ward through her guardian ad litem, Case No. 465374. The
complaint purports to allege claims for medical malpractice
against several unaffiliated physicians, medical groups, and
hospitals, including Molina Medical Centers and one of its
physician employees. The plaintiff alleges that the defendants
failed to properly diagnose her medical condition which has
resulted in her severe and permanent disability. On
July 22, 2007, the plaintiff passed away. The proceeding is
in the early stages, and no prediction can be made as to the
outcome.
Starko. Our New Mexico HMO is named as a
defendant in a class action lawsuit brought by New Mexico
pharmacies and pharmacists, Starko, Inc., et al. v. NMHSD,
et al.,
No. CV-97-06599,
Second Judicial District Court, State of New Mexico. The lawsuit
was originally filed in August 1997 against the New Mexico Human
Services Department (“NMHSD”). In February 2001, the
plaintiffs named health maintenance organizations participating
in the New Mexico Medicaid program as defendants (the
“HMOs”), including Cimarron Health Plan, the
predecessor of our New Mexico HMO. Plaintiff asserts that NMHSD
and the HMOs failed to pay pharmacy dispensing fees under an
alleged New Mexico statutory mandate. Discovery is currently
underway. It is not currently possible to assess the amount or
range of potential loss or probability of a favorable or
unfavorable outcome. On July 10, 2007, the court dismissed
all damages claims against Molina Healthcare of New Mexico,
leaving only a pending action for injunctive and declaratory
relief. On August 15, 2007, the court held a hearing on the
motion of Molina Healthcare of New Mexico to dismiss the
plaintiffs’ claims for injunctive and declaratory relief.
At that hearing, the court dismissed all remaining claims
against Molina Healthcare of New Mexico. The plaintiffs have
filed an appeal with respect to the court’s dismissal
orders and have submitted their opening appellate brief. Molina
Healthcare of New Mexico is preparing its responsive
appellate brief. Under the terms of the stock purchase agreement
pursuant to which we acquired Health Care Horizons, Inc., the
parent company to the Molina Healthcare of New Mexico HMO, an
indemnification escrow account was established and funded with
$6,000 in order to indemnify our Molina
83
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Healthcare of New Mexico HMO against the costs of such
litigation and any eventual liability or settlement costs.
Currently, approximately $4,100 remains in the indemnification
escrow fund.
We are involved in other legal actions in the normal course of
business, some of which seek monetary damages, including claims
for punitive damages, which are not covered by insurance. These
actions, when finally concluded and determined, are not likely,
in our opinion, to have a material adverse effect on our
consolidated financial position, results of operations, or cash
flows.
Professional
Liability Insurance
We carry medical malpractice insurance for health care services
rendered through our clinics in California. Claims-made coverage
under this policy is $1,000 per occurrence with an annual
aggregate limit of $3,000 for each of the years ended
December 31, 2007 and 2006. We also carry claims-made
managed care errors and omissions professional liability
insurance for our HMO operations. This insurance is subject to a
coverage limit of $10,000 per occurrence and $10,000 in the
aggregate for each policy year.
Provider
Claims
Many of our medical contracts are complex in nature and may be
subject to differing interpretations regarding amounts due for
the provision of various services. Such differing
interpretations may lead medical providers to pursue us for
additional compensation. The claims made by providers in such
circumstances often involve issues of contract compliance,
interpretation, payment methodology, and intent. These claims
often extend to services provided by the providers over a number
of years.
Various providers have contacted us seeking additional
compensation for claims that we believe to have been settled.
These matters, when finally concluded and determined, will not,
in our opinion, have a material adverse effect on our
consolidated financial position, results of operations, or cash
flows.
Subscriber
Group Claims
The United States Office of Personnel Management (OPM) contacted
our New Mexico HMO in June 2005 seeking repayment of
approximately $3,800 in premiums paid by OPM on behalf of
Federal employees for the years 1999, 2000, and 2002, plus
approximately $500 in interest. OPM asserted that, during the
years in question, it did not receive rate discounts equivalent
to the largest discount given by the New Mexico HMO for Similar
Sized Subscriber Groups as required by the New Mexico HMO’s
agreement with OPM. In consultation with its external actuaries,
our New Mexico HMO responded to OPM asserting that, based upon
its analysis, no funds were owed to OPM. Following further
discussions of the parties regarding the three plan years at
issue, the parties agreed that our New Mexico HMO owed OPM only
$340 for the plan year of 2002, plus $69 in accrued interest.
The parties agreed that no amounts were owed for the plan years
of 1999 or 2000. Under the terms of the stock purchase agreement
pursuant to which we acquired Health Care Horizons, Inc., the
parent company to our New Mexico HMO, an indemnification escrow
account was established and funded with $6 million to
indemnify our New Mexico HMO against the costs of such
liabilities. The escrow account paid the full $409 amount due to
OPM on February 26, 2007.
Regulatory
Capital and Dividend Restrictions
Our principal operations are conducted through our health plan
subsidiaries operating in California, Michigan, Missouri,
Nevada, New Mexico, Ohio, Texas, Washington and Utah. Our health
plans are subject to state regulations that, among other things,
require the maintenance of minimum levels of statutory capital,
as defined by each state, and restrict the timing, payment and
amount of dividends and other distributions that may be paid to
us as the sole stockholder. To the extent the subsidiaries must
comply with these regulations, they may not have the
84
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
financial flexibility to transfer funds to us. The net assets in
these subsidiaries (after intercompany eliminations) which may
not be transferable to us in the form of loans, advances or cash
dividends was $332,209 at December 31, 2007, and $236,800
at December 31, 2006. The National Association of Insurance
Commissioners, or NAIC, adopted rules effective
December 31, 1998, which, if implemented by the states, set
new minimum capitalization requirements for insurance companies,
HMOs and other entities bearing risk for health care coverage.
The requirements take the form of risk-based capital (RBC)
rules. Michigan, Nevada, New Mexico, Ohio, Texas, Washington,
and Utah have adopted these rules, which may vary from state to
state. California has not yet adopted NAIC risk-based capital
requirements for HMOs and has not formally given notice of its
intention to do so. Such requirements, if adopted by California,
may increase the minimum capital required for that state.
As of December 31, 2007, our health plans had aggregate
statutory capital and surplus of approximately $350,870,
compared with the required minimum aggregate statutory capital
and surplus of approximately $202,484. All of our HMOs were in
compliance with the minimum capital requirements at
December 31, 2007. We have the ability and commitment to
provide additional capital to each of our health plans when
necessary to ensure that statutory capital and surplus continue
to meet regulatory requirements.
| 15. | Stock Plans |
In 2002, we adopted the 2002 Equity Incentive Plan (2002
Incentive Plan), which provides for the granting of stock
options, restricted stock, performance shares, and stock bonus
awards to the company’s officers, employees, directors,
consultants, advisors, and other service providers. The 2002
Incentive Plan became effective upon our initial public offering
of common stock (IPO) in July 2003, and initially allowed for
the issuance of 1.6 million shares of common stock.
Beginning January 1, 2004, shares eligible for issuance
automatically increase by the lesser of 400,000 shares or
2% of total outstanding capital stock on a fully diluted basis,
unless the board of directors affirmatively acts to nullify the
automatic increase. There were 3.6 million shares available for
issuance under the 2002 Incentive Plan as of January 1,
2008.
Stock option awards have an exercise price equal to the fair
market value of our common stock on the date of grant, generally
vest in equal annual installments over periods up to four years
from the date of grant, and have a maximum term of ten years
from the date of grant. Restricted stock awards are granted with
a fair value equal to the market price of our common stock on
the date of grant, and generally vest in equal annual
installments over periods up to five years from the date of
grant.
In July 2002, we adopted the 2002 Employee Stock Purchase Plan
(ESPP). The ESPP became effective upon our IPO in July 2003.
During each six-month offering period, eligible employees may
purchase common shares at 85% of the lower of the fair market
value of our common stock on either the first or last trading
day of the offering period. Each participant is limited to a
maximum purchase of $25 (as measured by the fair value of the
stock acquired) per year through payroll deductions. Under the
ESPP, we issued 48,000 and 44,400 shares of our common
stock during the years ended December 31, 2007 and 2006,
respectively. Beginning January 1, 2004, and each year
until the 2.2 million maximum aggregate number of shares
reserved for issuance is reached, shares eligible for issuance
under the ESPP automatically increase by 1% of total outstanding
capital stock. The number of unissued common shares reserved for
future grants under the 2002 Plan and the ESPP was
3.6 million and 3.4 million as of December 31,
2007 and 2006, respectively.
85
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
The following table illustrates the components of our
stock-based compensation expense as reported in general and
administrative expenses in the Consolidated Statements of Income:
| Year Ended December 31, | ||||||||||||||||||||||||
| 2007 | 2006 | 2005 | ||||||||||||||||||||||
|
Pretax |
Net-of-Tax |
Pretax |
Net-of-Tax |
Pretax |
Net-of-Tax |
|||||||||||||||||||
| Charges | Amount | Charges | Amount | Charges | Amount | |||||||||||||||||||
|
Stock options and ESPP
|
$ | 3,437 | $ | 2,139 | $ | 3,248 | $ | 2,020 | $ | — | $ | — | ||||||||||||
|
Stock grants
|
3,751 | 2,335 | 2,257 | 1,404 | 1,283 | 795 | ||||||||||||||||||
|
Total
|
$ | 7,188 | $ | 4,474 | $ | 5,505 | $ | 3,424 | $ | 1,283 | $ | 795 | ||||||||||||
As of December 31, 2007, there was $3,973 of unrecognized
compensation expense related to non-vested stock options, which
we expect to recognize over a weighted-average period of
2.3 years. Also as of December 31, 2007, there was
$7,868 of unrecognized compensation cost related to non-vested
restricted stock awards, which we expect to recognize over a
weighted-average period of 3.0 years.
The Black-Scholes valuation model was used to estimate the fair
value of the options at grant date based on the assumptions
noted in the following table. The risk-free interest rate is
based on the implied yield currently available on
U.S. Treasury zero coupon issues. The expected volatility
is primarily based on historical volatility levels along with
the implied volatility of exchange-traded options to purchase
our common stock. The expected option life of each award granted
was calculated using the “simplified method” in
accordance with SAB 107. There were no material changes
made to the methodology used to determine the assumptions during
2007. The assumptions disclosed below represent a
weighted-average of the assumptions used for all of our stock
option grants throughout the year.
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Risk-free interest rate
|
4.5 | % | 4.5 | % | 4.1 | % | ||||||
|
Expected volatility
|
47.1 | % | 53.1 | % | 53.2 | % | ||||||
|
Expected option life (in years)
|
6 | 6 | 5 | |||||||||
|
Expected dividend yield
|
0 | % | 0 | % | 0 | % | ||||||
|
Grant date weighted-average fair value
|
$ | 16.37 | $ | 16.01 | $ | 21.45 | ||||||
Stock option activity for the year ended December 31, 2007
was as follows:
|
Weighted- |
||||||||||||||||
|
Weighted- |
Average |
|||||||||||||||
|
Average |
Remaining |
Aggregate |
||||||||||||||
|
Number |
Exercise |
Contractual |
Intrinsic |
|||||||||||||
| of Options | Price | Term (Years) | Value | |||||||||||||
|
Stock options outstanding at December 31, 2006
|
789,965 | $ | 25.78 | |||||||||||||
|
Granted
|
279,100 | $ | 32.02 | |||||||||||||
|
Exercised
|
(212,364 | ) | $ | 14.17 | ||||||||||||
|
Forfeited
|
(122,988 | ) | $ | 32.09 | ||||||||||||
|
Stock options outstanding at December 31, 2007
|
733,713 | $ | 30.45 | 7.80 | $ | 6,471 | ||||||||||
|
Stock options exercisable and expected to vest at
December 31, 2007(a)
|
602,479 | $ | 30.23 | 7.60 | $ | 5,483 | ||||||||||
|
Stock options exercisable at December 31, 2007
|
312,079 | $ | 29.04 | 6.53 | $ | 3,308 | ||||||||||
| (a) | Stock options exercisable and expected to vest at December 31, 2007 information is based on a forfeiture rate of 14.24%, the rate used to estimate the fair value of stock options granted in the fourth quarter of 2007. |
86
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
The following is a summary of information about stock options
outstanding and options exercisable at December 31, 2007:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
|
Number |
Weighted- |
Number |
||||||||||||||||||
|
Outstanding |
Average |
Weighted- |
Exercisable |
Weighted- |
||||||||||||||||
|
at |
Remaining |
Average |
at |
Average |
||||||||||||||||
|
December 31, |
Contractual |
Exercise |
December 31, |
Exercise |
||||||||||||||||
|
Range of Exercise Prices
|
2007 | Life (Years) | Price | 2007 | Price | |||||||||||||||
|
$ 4.50 - $27.49
|
171,170 | 5.97 | $ | 23.21 | 165,602 | $ | 23.11 | |||||||||||||
|
$28.66 - $28.66
|
207,069 | 8.09 | $ | 28.66 | 65,631 | $ | 28.66 | |||||||||||||
|
$29.17 - $30.85
|
12,700 | 8.26 | $ | 30.12 | 3,782 | $ | 29.73 | |||||||||||||
|
$31.32 - $48.35
|
342,774 | 8.52 | $ | 35.17 | 77,064 | $ | 42.08 | |||||||||||||
| 733,713 | 7.80 | $ | 30.45 | 312,079 | $ | 29.04 | ||||||||||||||
The total intrinsic value of stock options exercised during the
years ended December 31, 2007, 2006, and 2005 amounted to
$4,251, $3,812, and $6,182, respectively.
Non-vested restricted stock activity for the year ended
December 31, 2007 is summarized below.
|
Weighted- |
||||||||
|
Average Grant Date |
||||||||
| Shares | Fair Value | |||||||
|
Non-vested balance as of December 31, 2006
|
101,758 | $ | 39.10 | |||||
|
Granted
|
256,750 | $ | 32.46 | |||||
|
Vested
|
(78,705 | ) | $ | 35.72 | ||||
|
Forfeited
|
(44,390 | ) | $ | 33.00 | ||||
|
Non-vested balance as of December 31, 2007
|
235,413 | $ | 34.14 | |||||
The total fair value of restricted shares vested during the
years ended December 31, 2007, 2006, and 2005 was $2,612,
$1,993, and $723, respectively.
| 16. | Stockholders’ Equity |
As described in Note 15, “Stock Plans,” we award
shares of restricted stock to employees and others under our
equity incentive plan. When these shares vest, employees may
choose to settle their associated tax obligation by instructing
the Company to withhold the number of shares that will settle
the tax obligation based on the current market value of the
stock. When we settle tax obligations associated with the
vesting of restricted stock awards, we retire the stock used.
During 2007, we retired 14,391 shares of common stock,
totaling $480.
In November 2005, we filed a shelf registration statement on
Form S-3
with the Securities and Exchange Commission covering the
issuance of up to $300,000 of securities, including common stock
or debt securities. In October 2007, we issued $200,000 in
convertible senior notes under this shelf registration
statement. See Note 10, “Long-Term Debt.” We may
publicly offer securities from time to time at prices and terms
to be determined at the time of the offering.
87
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| 17. | Quarterly Results of Operations (Unaudited) |
The following is a summary of the quarterly results of
operations for the years ended December 31, 2007 and 2006.
| For the Quarter Ended | ||||||||||||||||
|
March 31, |
June 30, |
September 30, |
December 31, |
|||||||||||||
| 2007 | 2007 | 2007 | 2007 | |||||||||||||
|
Premium revenue
|
$ | 556,235 | $ | 607,127 | $ | 628,402 | $ | 670,605 | ||||||||
|
Operating income
|
16,595 | 22,284 | 28,815 | 30,633 | ||||||||||||
|
Income before income taxes
|
15,470 | 21,559 | 28,285 | 28,382 | ||||||||||||
|
Net income
|
9,592 | 13,314 | 17,513 | 17,911 | ||||||||||||
|
Net income per share(1):
|
||||||||||||||||
|
Basic
|
$ | 0.34 | $ | 0.47 | $ | 0.62 | $ | 0.63 | ||||||||
|
Diluted
|
$ | 0.34 | $ | 0.47 | $ | 0.62 | $ | 0.63 | ||||||||
| For the Quarter Ended | ||||||||||||||||
|
March 31, |
June 30, |
September 30, |
December 31, |
|||||||||||||
| 2006 | 2006 | 2006 | 2006 | |||||||||||||
|
Premium revenue
|
$ | 449,294 | $ | 479,823 | $ | 512,080 | $ | 543,912 | ||||||||
|
Operating income
|
14,154 | 21,741 | 20,458 | 19,458 | ||||||||||||
|
Income before income taxes
|
13,740 | 21,164 | 19,813 | 18,741 | ||||||||||||
|
Net income
|
8,590 | 13,152 | 12,341 | 11,644 | ||||||||||||
|
Net income per share:
|
||||||||||||||||
|
Basic
|
$ | 0.31 | $ | 0.47 | $ | 0.44 | $ | 0.41 | ||||||||
|
Diluted
|
$ | 0.31 | $ | 0.47 | $ | 0.44 | $ | 0.41 | ||||||||
| (1) | Potentially dilutive shares issuable pursuant to the Company’s 2007 offering of convertible senior notes were not included in the computation of diluted net income per share because to do so would have been antidilutive for the year ended December 31, 2007. |
88
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MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
| 18. | Condensed Financial Information of Registrant |
Following are the condensed balance sheets of the Registrant as
of December 31, 2007 and 2006, and the statements of income
and cash flows for each of the three years in the period ended
December 31, 2007.
Condensed
Balance Sheets
| December 31, | ||||||||
| 2007 | 2006 | |||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 36,286 | $ | 17,398 | ||||
|
Investments
|
61,970 | 17,215 | ||||||
|
Deferred income taxes
|
4,072 | 39 | ||||||
|
Due from affiliates
|
6,705 | 9,592 | ||||||
|
Prepaid and other current assets
|
9,234 | 6,739 | ||||||
|
Total current assets
|
118,267 | 50,983 | ||||||
|
Property and equipment, net
|
37,448 | 30,134 | ||||||
|
Goodwill
|
1,742 | — | ||||||
|
Investment in subsidiaries
|
548,931 | 391,694 | ||||||
|
Deferred income taxes
|
1,583 | 1,683 | ||||||
|
Advances to related parties and other assets
|
19,933 | 12,350 | ||||||
|
Total assets
|
$ | 727,904 | $ | 486,844 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable and accrued liabilities
|
$ | 29,222 | $ | 17,826 | ||||
|
Long-term debt
|
200,000 | 45,000 | ||||||
|
Other long-term liabilities
|
8,204 | 3,852 | ||||||
|
Total liabilities
|
237,426 | 66,678 | ||||||
|
Stockholders’ equity:
|
||||||||
|
Common stock, $0.001 par value; 80,000,000 shares
authorized; issued and outstanding: 28,443,680 shares at
December 31, 2007 and 28,119,026 shares at
December 31, 2006
|
28 | 28 | ||||||
|
Preferred stock, $0.001 par value; 20,000,000 shares
authorized, no shares issued and outstanding
|
— | — | ||||||
|
Paid-in capital
|
185,808 | 173,990 | ||||||
|
Accumulated other comprehensive gain (loss), net of tax
|
272 | (337 | ) | |||||
|
Retained earnings
|
324,760 | 266,875 | ||||||
|
Treasury stock (1,201,174 shares, at cost)
|
(20,390 | ) | (20,390 | ) | ||||
|
Total stockholders’ equity
|
490,478 | 420,166 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 727,904 | $ | 486,844 | ||||
89
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Condensed
Statements of Operations
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Revenue:
|
||||||||||||
|
Management fees
|
$ | 154,071 | $ | 120,036 | $ | 81,694 | ||||||
|
Other operating revenue
|
186 | 144 | 139 | |||||||||
|
Investment income
|
2,915 | 1,361 | 1,436 | |||||||||
|
Total revenue
|
157,172 | 121,541 | 83,269 | |||||||||
|
Expenses:
|
||||||||||||
|
Medical care costs
|
22,042 | 20,764 | 16,455 | |||||||||
|
General and administrative expenses
|
114,616 | 91,347 | 61,111 | |||||||||
|
Depreciation and amortization
|
15,101 | 10,162 | 6,169 | |||||||||
|
Total expenses
|
151,759 | 122,273 | 83,735 | |||||||||
|
Operating income (loss)
|
5,413 | (732 | ) | (466 | ) | |||||||
|
Interest expense
|
(4,485 | ) | (2,239 | ) | (1,426 | ) | ||||||
|
Income (loss) before income taxes and equity in net income of
subsidiaries
|
928 | (2,971 | ) | (1,892 | ) | |||||||
|
Income tax expense (benefit)
|
2,333 | (610 | ) | 502 | ||||||||
|
Net loss before equity in net income of subsidiaries
|
(1,405 | ) | (2,361 | ) | (2,394 | ) | ||||||
|
Equity in net income of subsidiaries
|
59,735 | 48,088 | 29,990 | |||||||||
|
Net income
|
$ | 58,330 | $ | 45,727 | $ | 27,596 | ||||||
90
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Condensed
Statements of Cash Flows
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Operating activities:
|
||||||||||||
|
Cash provided by operating activities
|
$ | 23,500 | $ | 24,205 | $ | 6,709 | ||||||
|
Investing activities:
|
||||||||||||
|
Net dividends from and capital contributions to subsidiaries
|
(16,890 | ) | (51,260 | ) | 1,110 | |||||||
|
Purchases of investments
|
(74,604 | ) | (20,613 | ) | (17,772 | ) | ||||||
|
Sales and maturities of investments
|
29,946 | 29,181 | 42,119 | |||||||||
|
Cash paid in business purchase transactions
|
(80,045 | ) | — | (10,827 | ) | |||||||
|
Purchases of equipment
|
(20,159 | ) | (17,723 | ) | (11,960 | ) | ||||||
|
Changes in amounts due to and due from affiliates
|
2,887 | 5,684 | (7,482 | ) | ||||||||
|
Change in other assets and liabilities
|
1,192 | (2,996 | ) | (451 | ) | |||||||
|
Net cash used in investing activities
|
(157,673 | ) | (57,727 | ) | (5,263 | ) | ||||||
|
Financing activities:
|
||||||||||||
|
Borrowings under credit facility
|
— | 50,000 | 3,100 | |||||||||
|
Proceeds from issuance of convertible senior notes
|
200,000 | — | — | |||||||||
|
Repayments of amounts borrowed under credit facility
|
(45,000 | ) | (5,000 | ) | (3,100 | ) | ||||||
|
Payment of credit facility fees
|
(551 | ) | (459 | ) | (3,530 | ) | ||||||
|
Payment of convertible senior notes fees
|
(6,498 | ) | — | — | ||||||||
|
Tax benefit from exercise of employee stock options recorded as
additional paid-in capital
|
853 | 1,227 | — | |||||||||
|
Proceeds from exercise of stock options and employee stock
purchases
|
4,257 | 2,416 | 1,872 | |||||||||
|
Repayment of mortgage note
|
— | — | (1,302 | ) | ||||||||
|
Net cash provided by (used in) financing activities
|
153,061 | 48,184 | (2,960 | ) | ||||||||
|
Net increase (decrease) in cash and cash equivalents
|
18,888 | 14,662 | (1,514 | ) | ||||||||
|
Cash and cash equivalents at beginning of year
|
17,398 | 2,736 | 4,250 | |||||||||
|
Cash and cash equivalents at end of year
|
$ | 36,286 | $ | 17,398 | $ | 2,736 | ||||||
|
Supplemental cash flow information
|
||||||||||||
|
Cash paid (received) during the year for:
|
||||||||||||
|
Income taxes
|
$ | 1,981 | $ | (7,721 | ) | $ | 5,918 | |||||
|
Interest
|
9,282 | 2,154 | 1,520 | |||||||||
|
Schedule of non-cash investing and financing activities:
|
||||||||||||
|
Change in unrealized gain (loss) on investments
|
$ | 97 | $ | 60 | $ | (73 | ) | |||||
|
Deferred income taxes
|
(55 | ) | (40 | ) | 46 | |||||||
|
Net unrealized gain (loss) on investments
|
$ | 42 | $ | 20 | $ | (27 | ) | |||||
|
Accrual of software license fees
|
$ | — | $ | 2,375 | $ | — | ||||||
|
Retirement of common stock used for stock-based compensation
|
$ | 480 | $ | — | $ | — | ||||||
|
Accrual of equipment
|
$ | 672 | $ | 945 | $ | — | ||||||
|
Cumulative effect of adoption of Financial Interpretation
No. 48, Accounting for Uncertainty in Income Taxes
|
$ | 445 | $ | — | $ | — | ||||||
|
Value of stock issued for employee compensation earned in the
previous year
|
$ | — | $ | 2,178 | $ | — | ||||||
91
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
Notes to
Condensed Financial Information of Registrant
| Note A — | Basis of Presentation |
Molina Healthcare, Inc. (Registrant) was incorporated on
July 24, 2002. Prior to that date, Molina Healthcare of
California (formerly known as Molina Medical Centers) operated
as a California HMO and as the parent company for Molina
Healthcare of Utah, Inc. and Molina Healthcare of Michigan, Inc.
In June 2003, the employees and operations of the corporate
entity were transferred from Molina Healthcare of California to
the Registrant.
The Registrant’s investment in subsidiaries is stated at
cost plus equity in undistributed earnings of subsidiaries since
the date of acquisition. The parent company-only financial
statements should be read in conjunction with the consolidated
financial statements and accompanying notes.
| Note B — | Transactions with Subsidiaries |
The Registrant provides certain centralized medical and
administrative services to its subsidiaries pursuant to
administrative services agreements, including medical affairs
and quality management, health education, credentialing,
management, financial, legal, information systems and human
resources services. Fees are based on the fair market value of
services rendered and are recorded as operating revenue. Payment
is subordinated to the subsidiaries’ ability to comply with
minimum capital and other restrictive financial requirements of
the states in which they operate. Charges in 2007, 2006, and
2005 for these services totaled $154,071, $120,036, and $81,694,
respectively, which are included in operating revenue.
The Registrant and its subsidiaries are included in the
consolidated federal and state income tax returns filed by the
Registrant. Income taxes are allocated to each subsidiary in
accordance with an intercompany tax allocation agreement. The
agreement allocates income taxes in an amount generally
equivalent to the amount which would be expensed by the
subsidiary if it filed a separate tax return. Net operating loss
benefits are paid to the subsidiary by the Registrant to the
extent such losses are utilized in the consolidated tax returns.
| Note C — | Capital Contribution and Dividends |
During 2007, 2006, and 2005, the Registrant received dividends
from its subsidiaries totaling $39,000, $22,500, and $29,000,
respectively. Such amounts have been recorded as a reduction to
the investments in the respective subsidiaries.
During 2007, 2006, and 2005, the Registrant made capital
contributions to certain subsidiaries totaling $55,887, 73,760,
and $27,890 respectively, primarily to comply with minimum net
worth requirements and to fund contract acquisitions. Such
amounts have been recorded as an increase in investment in the
respective subsidiaries.
| Note D — | Related Party Transactions |
The Registrant has an equity investment in a medical service
provider that provides certain vision services to its members.
The Registrant accounts for this investment under the equity
method of accounting because it has an ownership interest in the
investee in excess of 20%. As of December 31, 2007 and
2006, the Registrant’s carrying amount for this investment
totaled $3,460 and $1,375, respectively. During the third
quarter of 2007, an additional $2,100 was invested in this
medical service provider. Effective July 1, 2007 the
Registrant paid this provider a $900 network access fee, which
is being amortized over twelve months. For the years ended
December 31, 2007, 2006, and 2005, the Registrant paid
$10,894, $7,862, and $3,440, respectively, for medical service
fees to this provider.
Effective March 1, 2006, the Registrant assumed an office
lease from Millworks Capital Ventures with a remaining term of
52 months. Millworks Capital Ventures is owned by John C.
Molina, Chief Financial Officer, and his wife. The monthly base
lease payment is approximately $18 and is subject to an annual
increase. Based on a market report prepared by an independent
realtor, the Registrant believes the terms and conditions of the
assumed
92
Table of Contents
MOLINA
HEALTHCARE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(Dollars in thousands, except per-share data)
lease are at fair market value. The Registrant is currently
using the office space under the lease for an office expansion.
Payments made under this lease totaled $246 and $170 for the
years ended December 31, 2007 and 2006, respectively.
The Registrant is a party to a fee for service agreement with
Pacific Hospital of Long Beach (“Pacific Hospital”).
Pacific Hospital is owned by Abrazos Healthcare, Inc., the
shares of which are held as community property by the husband of
Dr. Martha Bernadett, the Registrant’s Executive Vice
President, Research and Development. Amounts paid under the
terms of that agreement were $157 and $357 for the years ended
December 31, 2007 and 2006, respectively. The Registrant
believes that the claims submitted to it by Pacific Hospital
were reimbursed at prevailing market rates. In 2006, the
Registrant entered into an additional agreement with Pacific
Hospital as part of a capitation arrangement. Under this
arrangement, the Registrant pays Pacific Hospital a fixed
monthly fee based on member type. For the years ended
December 31, 2007 and 2006, the Registrant paid
approximately $4,837 and $1,652, respectively, to Pacific
Hospital for capitation services. The Registrant believes that
this agreement with Pacific Hospital is based on prevailing
market rates for similar services. Also as of December 31,
2007, the Registrant had an advance outstanding to this provider
totaling $250, which will be offset to capitation payments in
2008.
93
Table of Contents
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures |
None.
| Item 9A. | Controls and Procedures |
Disclosure Controls and Procedures: Our
management is responsible for establishing and maintaining
effective internal control over financial reporting as defined
in
Rules 13a-15(f)
and
15d-15(f)
under the Securities Exchange Act of 1934 (the “Exchange
Act”). Our internal control over financial reporting is
designed to provide reasonable assurance to our management and
board of directors regarding the preparation and fair
presentation of published financial statements. We maintain
controls and procedures designed to ensure that we are able to
collect the information we are required to disclose in the
reports we file with the Securities and Exchange Commission, and
to process, summarize and disclose this information within the
time periods specified in the rules of the Securities and
Exchange Commission.
Evaluation of Disclosure Controls and
Procedures: Our management, with the
participation of our Chief Executive Officer and our Chief
Financial Officer, has conducted an evaluation of the design and
operation of our “disclosure controls and procedures”
(as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded
that our disclosure controls and procedures are effective as of
the end of the period covered by this report to ensure that
information required to be disclosed in the reports that we file
or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
Changes in Internal Controls: There were no
changes in our internal control over financial reporting during
the three months ended December 31, 2007 that have
materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
Management’s Report on Internal Control over Financial
Reporting: Management of the Company is
responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rule 13a-15(f)
under the Securities Exchange Act of 1934. The Company’s
internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principles in the United States. However, all
internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with
respect to financial statement preparation and reporting.
Management assessed the effectiveness of the Company’s
internal control over financial reporting as of
December 31, 2007. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in
Internal Control-Integrated Framework. Based on our assessment,
management believes that the Company maintained effective
internal control over financial reporting as of
December 31, 2007, based on those criteria.
Management’s assessment of and conclusion on the
effectiveness of internal control over financial reporting did
not include the internal controls of Alliance for Community
Health, LLC d/b/a Mercy CarePlus (acquired on November 1,
2007), which is included in the 2007 consolidated financial
statements of Molina Healthcare, Inc. and constituted
$115.8 million and $87.9 million of total and net
assets, respectively, as of December 31, 2007, and
$30.9 million and $0.9 million of revenues and net
income, respectively, for the year then ended. Our audit of
internal control over financial reporting of the Company also
did not include an evaluation of the internal control
94
Table of Contents
over financial reporting of Alliance for Community Health, LLC
d/b/a Mercy CarePlus. Our management has not had sufficient time
to make an assessment of this subsidiary’s internal control
over financial reporting.
The effectiveness of the Company’s internal control over
financial reporting has been audited by Ernst & Young
LLP, an independent registered public accounting firm, as stated
in their report appearing on the page immediately following,
which expresses an unqualified opinion on the effectiveness of
the Company’s internal control over financial reporting as
of December 31, 2007.
| Item 9B. | Other Information |
None.
95
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
of Molina Healthcare, Inc.
We have audited Molina Healthcare, Inc.’s (the
“Company’s”) internal control over financial
reporting as of December 31, 2007, based on criteria
established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). The Company’s
management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting
included in the accompanying management’s report on
internal control over financial reporting. Our responsibility is
to express an opinion on the Company’s internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
As indicated in the accompanying management’s report on
internal control over financial reporting, management’s
assessment of and conclusion on the effectiveness of internal
control over financial reporting did not include the internal
controls of Alliance for Community Health, LLC d/b/a Mercy
CarePlus (acquired on November 1, 2007), which is included
in the 2007 consolidated financial statements of Molina
Healthcare, Inc. and constituted $115.8 million and
$87.9 million of total and net assets, respectively, as of
December 31, 2007, and $30.9 million and
$0.9 million of revenues and net income, respectively, for
the year then ended. Our audit of internal control over
financial reporting of the Company also did not include an
evaluation of the internal control over financial reporting of
Alliance for Community Health, LLC d/b/a Mercy CarePlus.
In our opinion, Molina Healthcare, Inc. maintained, in all
material respects, effective internal control over financial
reporting as of December 31, 2007, based on the COSO
criteria.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Molina Healthcare, Inc. as of
December 31, 2007 and 2006, and the related consolidated
statements of income, stockholders’ equity, and cash flows
for each of the three years in the period ended
December 31, 2007 and our report dated March 17, 2008
expressed an unqualified opinion thereon.
/s/ ERNST &
YOUNG LLP
Los Angeles, California
March 17, 2008
96
Table of Contents
PART III
| Item 10. | Directors, Executive Officers, and Corporate Governance |
| (a) | Directors of the Registrant |
Information concerning our directors will appear in our Proxy
Statement for our 2008 Annual Meeting of Stockholders under
“Proposal No. 1 — Election of Three
Class III Directors.” This portion of the Proxy
Statement is incorporated herein by reference.
| (b) | Executive Officers of the Registrant |
Pursuant to General Instruction G(3) to
Form 10-K
and Instruction 3 to Item 401(b) of
Regulation S-K,
information regarding our executive officers is provided in
Item 4 of Part I of this Annual Report on
Form 10-K
under the caption “Executive Officers,” and will also
appear in our Proxy Statement for our 2008 Annual Meeting of
Stockholders. Such portion of the Proxy Statement is
incorporated herein by reference.
| (c) | Corporate Governance |
Information concerning certain corporate governance matters will
appear in our Proxy Statement for our 2008 Annual Meeting of
Stockholders under “Corporate Governance,”
“Corporate Governance and Nominating Committee,”
“Corporate Governance Guidelines,” and “Code of
Business Conduct and Ethics.” These portions of our Proxy
Statement are incorporated herein by reference.
| (d) | Section 16(a) Beneficial Ownership Reporting Compliance |
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership and
changes in ownership with the SEC, and to furnish us with copies
of the forms. Purchases and sales of our equity securities by
such persons are published on our website at
www.molinahealthcare.com. Based on our review of the
copies of such reports, on our involvement in assisting our
reporting persons with such filings, and on written
representations from our reporting persons, we believe that,
during 2007, each of our officers, directors, and greater than
ten percent stockholders complied with all such filing
requirements on a timely basis, with the single exception of one
Form 4 for our director Romney which we inadvertently filed
one day late.
| Item 11. | Executive Compensation |
The information which will appear in our Proxy Statement for our
2008 Annual Meeting under the captions, “Compensation
Committee Interlocks,” “Non-Employee Director
Compensation,” and “Compensation Discussion and
Analysis,” is incorporated herein by reference. The
information which will appear in our Proxy Statement under the
caption, “Compensation Committee Report” is not
incorporated herein by reference.
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Information concerning the security ownership of certain
beneficial owners and management will appear in our Proxy
Statement for our 2008 Annual Meeting of Stockholders under
“Information About Stock Ownership.” This portion of
the Proxy Statement is incorporated herein by reference. The
information required by this item regarding our equity
compensation plans is set forth in Part II, Item 5 of
this report and incorporated herein by reference.
| Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Information concerning certain relationships and related
transactions will appear in our Proxy Statement for our 2008
Annual Meeting of Stockholders under “Related Party
Transactions.” Information concerning director independence
will appear in our Proxy Statement under “Director
Independence.” These portions of our Proxy Statement are
incorporated herein by reference.
97
Table of Contents
| Item 14. | Principal Accountant Fees and Services |
Information concerning principal accountant fees and services
will appear in our Proxy Statement for our 2008 Annual Meeting
of Stockholders under “Disclosure of Auditor Fees.”
This portion of our Proxy Statement is incorporated herein by
reference.
PART IV
| Item 15. | Exhibits and Financial Statement Schedules |
(a) The consolidated financial statements and exhibits
listed below are filed as part of this report.
(1) The Company’s consolidated financial
statements, the notes thereto and the report of the Registered
Public Accounting Firm are on pages 49 through 80 of this Annual
Report on
Form 10-K
and are incorporated by reference.
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets — At December 31,
2007 and 2006
|
|
Consolidated Statements of Operations — Years ended
December 31, 2007, 2006, and 2005
|
|
Consolidated Statements of Stockholders’ Equity —
Years ended December 31, 2007, 2006, and 2005
|
|
Consolidated Statements of Cash Flows — Years ended
December 31, 2007, 2006, and 2005
|
|
Notes to Consolidated Financial Statements
|
(2) Financial Statement Schedules
None.
(3) Exhibits
Reference is made to the accompanying Index to Exhibits.
98
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the undersigned
registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the
17th
day of March, 2008.
MOLINA HEALTHCARE, INC.
| By: |
/s/ Joseph
M. Molina, M.D.
|
Joseph M. Molina, M.D.
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
||||
|
/s/ Joseph
M. Molina, M.D. Joseph M. Molina, M.D. |
Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) | March 17, 2008 | ||||
|
/s/ John
C. Molina, J.D. John C. Molina, J.D. |
Director, Chief Financial Officer, and Treasurer (Principal Financial Officer) | March 17, 2008 | ||||
|
/s/ Joseph
W. White, CPA, MBA Joseph W. White, CPA, MBA |
Chief Accounting Officer (Principal Accounting Officer) | March 17, 2008 | ||||
|
/s/ Charles
Z. Fedak, CPA, MBA Charles Z. Fedak, CPA, MBA |
Director | March 17, 2008 | ||||
|
/s/ Frank
E. Murray, M.D. Frank E. Murray, M.D. |
Director | March 17, 2008 | ||||
|
/s/ Steven
Orlando, CPA Steven Orlando, CPA |
Director | March 17, 2008 | ||||
|
/s/ Sally
K. Richardson Sally K. Richardson |
Director | March 17, 2008 | ||||
|
/s/ Ronna
Romney Ronna Romney |
Director | March 17, 2008 | ||||
|
/s/ John
P. Szabo, Jr. John P. Szabo, Jr. |
Director | March 17, 2008 | ||||
99
Table of Contents
INDEX TO
EXHIBITS
|
Number
|
Description
|
Method of Filing
|
||||
| 3 | .1 | Certificate of Incorporation | Filed as Exhibit 3.2 to registrant’s Registration Statement on Form S-1 filed December 30, 2002. | |||
| 3 | .2 | Amended and Restated Bylaws | Filed as Exhibit 3.4 to registrant’s Form S-1/A filed March 11, 2003. | |||
| 4 | .1 | Indenture dated as of October 11, 2007 | Filed as Exhibit 4.1 to registrant’s Form 8-K filed October 5, 2007. | |||
| 4 | .2 | First Supplemental Indenture dated as of October 11, 2007 | Filed as Exhibit 4.2 to registrant’s Form 8-K filed October 5, 2007. | |||
| 4 | .3 | Global Form of 3.75% Convertible Senior Note due 2014 | Filed as Exhibit 4.3 to registrant’s Form 8-K filed October 5, 2007. | |||
| 10 | .1 | 2000 Omnibus Stock and Incentive Plan | Filed as Exhibit 10.12 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .2 | 2002 Equity Incentive Plan | Filed as Exhibit 10.13 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .3 | Form of Stock Option Agreement under 2002 Equity Incentive Plan | Filed as Exhibit 10.3 to registrant’s Form 10-K filed March 14, 2007. | |||
| 10 | .4 | 2002 Employee Stock Purchase Plan | Filed as Exhibit 10.14 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .5 | 2005 Molina Deferred Compensation Plan adopted November 6, 2006 | Filed as Exhibit 10.4 to registrant’s Form 10-Q filed November 9, 2006. | |||
| 10 | .6 | 2005 Incentive Compensation Plan | Filed as Appendix A to registrant’s Proxy Statement filed March 28, 2005. | |||
| 10 | .7 | Form of Restricted Stock Award Agreement (Executive Officer) under Molina Healthcare, Inc. 2002 Equity Incentive Plan | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed August 9, 2005. | |||
| 10 | .8 | Form of Restricted Stock Award Agreement (Outside Director) under Molina Healthcare, Inc. 2002 Equity Incentive Plan | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed August 9, 2005. | |||
| 10 | .9 | Form of Restricted Stock Award Agreement (Employee) under Molina Healthcare, Inc. 2002 Equity Incentive Plan | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed August 9, 2005. | |||
| 10 | .10 | Employment Agreement with J. Mario Molina, M.D. dated January 2, 2002 | Filed as Exhibit 10.7 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .10.1 | Amendment to Employment Agreement with J. Mario Molina dated July 1, 2006 | Filed as Exhibit 10.2 to registrant’s Form 10-Q filed August 8, 2006. | |||
| 10 | .11 | Employment Agreement with John C. Molina dated January 1, 2002 | Filed as Exhibit 10.8 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .12 | Employment Agreement with Mark L. Andrews dated December 1, 2001 | Filed as Exhibit 10.9 to registrant’s Form S-1 filed December 30, 2002. | |||
| 10 | .13 | Change in Control Agreement dated June 15, 2006 with Terry Bayer | Filed as Exhibit 10.1 to registrant’s Form 8-K filed June 16, 2006. | |||
| 10 | .14 | Change in Control Agreement dated May 29, 2007 with James W. Howatt, M.D. | Filed as Exhibit 10.1 to registrant’s Form 8-K filed May 30, 2007. | |||
| 10 | .15 | Change in Control Agreement dated March 1, 2008 with Joseph White | Filed herewith. | |||
| 10 | .16 | Form of Indemnification Agreement | Filed as Exhibit 10.14 to registrant’s Form 10-K filed March 14, 2007. | |||
| 10 | .17 | Health Services Agreement between Foundation Health and Molina Medical Centers dated February 1, 1996 | Filed as Exhibit 10.2 to registrant’s Form S-1 filed December 30, 2002. | |||
Table of Contents
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Number
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Description
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Method of Filing
|
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| 10 | .17.1 | Amendment to Health Services Agreement effective October 1, 2002 between Foundation Health and Molina Medical Centers dated February 1, 1996 | Filed as Exhibit 10.18 to registrant’s Form S-1/A filed June 3, 2003. | |||
| 10 | .17.2 | Amendment to Health Services Agreement effective October 1, 2002 between Foundation Health and Molina Medical Centers dated February 1, 1996 | Filed as Exhibit 10.19 to registrant’s Form S-1/A filed June 3, 2003. | |||
| 10 | .17.3 | Amendment to Health Services Agreement effective October 28, 2003 between Foundation Health and Molina Medical Centers dated February 1, 1996 | Filed as Exhibit 10.18 to registrant’s Form 10-K filed February 20, 2004. | |||
| 10 | .18 | Two Plan Model Medi-Cal contract for Riverside and San Bernardino Counties (Inland Empire) with California Department of Health Services | Filed as Exhibit 10.16 to registrant’s Form 10-K filed March 14, 2007. | |||
| 10 | .19 | Contract between Molina Healthcare of California Partner Plan, Inc. and the California Department of Health Services regarding San Diego Geographic Managed Care Program** | Filed as Exhibit 10.3 to registrant’s Form 10-Q filed August 7, 2007. | |||
| 10 | .20 | Contract between Molina Healthcare of California Partner Plan, Inc. and the California Department of Health Services regarding Sacramento Geographic Managed Care Program** | Filed as Exhibit 10.4 to registrant’s Form 10-Q filed August 7, 2007. | |||
| 10 | .21 | Contract Extension between Molina Healthcare of Michigan, Inc. and State of Michigan Department of Management and Budget effective as of October 1, 2006 | Filed as Exhibit 10.2 to registrant’s Form 10-Q filed November 9, 2006. | |||
| 10 | .21.1 | Contract Extension between Molina Healthcare of Michigan, Inc. and State of Michigan Department of Management and Budget effective as of October 1, 2007 | Filed herewith. | |||
| 10 | .22 | Contract Extension between Molina Healthcare of Michigan, Inc. and State of Michigan Department of Management and Budget effective as of October 1, 2006 | Filed as Exhibit 10.3 to registrant’s Form 10-Q filed November 9, 2006. | |||
| 10 | .23 | Medicaid Managed Care Services Agreement between Molina Healthcare of New Mexico, Inc. and the New Mexico Human Services Department | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed August 9, 2005. | |||
| 10 | .23.1 | Amendment No. 2 to the Salud! Medicaid Managed Care Services Contract between Molina Healthcare of New Mexico, Inc. and the New Mexico Human Services Department(2) | Filed as Exhibit 10.1 to registrant’s Form 10-K filed August 31, 2007. | |||
| 10 | .24 | Ohio Medical Assistance Provider Agreement for Managed Care Plan CFC Eligible Population effective July 1, 2007 | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed August 7, 2007. | |||
| 10 | .24.1 | Amendment to Ohio Medical Assistance Provider Agreement for Managed Care Plan CFC Eligible Population effective January 1, 2008 | Filed herewith. | |||
| 10 | .25 | Ohio Medical Assistance Provider Agreement for Managed Care Plan ABD Eligible Population effective July 1, 2007 | Filed as Exhibit 10.2 to registrant’s Form 10-Q filed August 7, 2007. | |||
Table of Contents
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Number
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Description
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Method of Filing
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||||
| 10 | .25.1 | Amendment to Ohio Medical Assistance Provider Agreement for Managed Care Plan ABD Eligible Population effective January 1, 2008 | Filed herewith. | |||
| 10 | .26 | Medicaid Contract with Texas Health & Human Services Commission | Filed as Exhibit 10.23 to registrant’s Form 10-K filed March 14, 2007. | |||
| 10 | .27 | Contract between Molina Healthcare of Utah, Inc. and the Utah Department of Health effective July 1, 2007 | Filed as Exhibit 10.5 to registrant’s Form 10-Q filed August 7, 2007. | |||
| 10 | .27 | Basic Health Plan and Basic Health Plus Program contract with Washington State Health Care Authority (HCA) | Filed as Exhibit 10.3 to registrant’s Form 10-Q filed May 10, 2006. | |||
| 10 | .27.1 | Contract amendment between Molina Healthcare of Utah, Inc. and the Utah Department of Health effective January 1, 2008 | Filed as Exhibit 10.1 to registrant’s Form 8-K filed December 28, 2007. | |||
| 10 | .28 | Basic Health Plan and Basic Health Plus Program contract with Washington State Health Care Authority (HCA) | Filed as Exhibit 10.3 to registrant’s Form 10-Q filed May 10, 2006. | |||
| 10 | .28.1 | One-Year Extension of Basic Health Plan and Basic Health Plus Program contract with Washington State Health Care Authority | Filed as Exhibit 10.1 to registrant’s Form 8-K filed January 3, 2008. | |||
| 10 | .29 | Healthy Options Program (including Medicaid and SCHIP) contract with State of Washington Department of Social and Health Services | Filed as Exhibit 10.2 to registrant’s Form 10-Q filed May 10, 2006. | |||
| 10 | .29.1 | One-Year Extension of Healthy Options Program (including Medicaid and SCHIP) contract with State of Washington Department of Social and Health Services | Filed as Exhibit 10.2 to registrant’s Form 8-K filed January 3, 2008. | |||
| 10 | .30 | MC+ Medicaid Managed Care contract between Mercy CarePlus and Missouri Department of Social Services | Filed herewith. | |||
| 10 | .31 | Common form of Medicare Advantage Special Needs Plan Contract for California, Michigan, Utah, and Washington health plans | Filed as Exhibit 10.27 to registrant’s Form 10-K filed March 14, 2007. | |||
| 10 | .32 | Common form of Medicare Advantage Prescription Drug Plan Contract for California, Michigan, Nevada, New Mexico, Texas, Utah, and Washington health plans | Filed herewith. | |||
| 10 | .33 | Amended and Restated Credit Agreement, dated as of March 9, 2005, among Molina Healthcare, Inc., as the Borrower, certain lenders, and Bank of America, N.A., as Administrative Agent | Filed as Exhibit 10.1 to registrant’s current report on Form 8-K filed March 10, 2005. | |||
| 10 | .33.1 | First Amendment and Waiver to the Amended and Restated Credit Agreement, dated as of October 5, 2005, among Molina Healthcare, Inc., certain lenders, and Bank of America, N.A., as Administrative Agent | Filed as Exhibit 10.1 to registrant’s current report on Form 8-K filed October 13, 2005. | |||
| 10 | .33.2 | Second Amendment and Waiver to the Amended and Restated Credit Agreement, dated as of November 6, 2006, among Molina Healthcare, Inc., certain lenders, and Bank of America, N.A., as Administrative Agent | Filed as Exhibit 10.1 to registrant’s Form 10-Q filed November 9, 2006. | |||
Table of Contents
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Number
|
Description
|
Method of Filing
|
||||
| 10 | .33.3 | Third Amendment and Waiver to the Amended and Restated Credit Agreement, dated as of May 25, 2007, among Molina Healthcare, Inc., certain lenders, and Bank of America, N.A., as Administrative Agent | Filed as Exhibit 10.1 to registrant’s Form 8-K filed May 31, 2007. | |||
| 10 | .34 | Office Lease with Pacific Towers Associates for 200 Oceangate Corporate Headquarters. | Filed herewith. | |||
| 10 | .35 | Summary of 2008 Base Salary and Bonus Targets for CEO and CFO | Filed herewith. | |||
| 12 | .1 | Computation of Ratio of Earnings to Fixed Charges | Filed herewith. | |||
| 21 | .1 | List of subsidiaries | Filed herewith. | |||
| 23 | .1 | Consent of Registered Independent Public Accounting Firm | Filed herewith. | |||
| 31 | .1 | Section 302 Certification of Chief Executive Officer | Filed herewith. | |||
| 31 | .2 | Section 302 Certification of Chief Financial Officer | Filed herewith. | |||
| 32 | .1 | Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||
| 32 | .2 | Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||
| ** | Confidential treatment has been requested for certain rate information in this Exhibit pursuant to Exchange Act Rule 24b-2. |
Exhibit 10.15
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered into as of March 1, 2008, (the
“Effective Date”), by and between Joseph White (the “Executive”) and Molina Healthcare, Inc., a
Delaware corporation (the “Company”).
| 1. | Definitions. The following definitions shall apply for all purposes under this Agreement: |
(a) Change in Control. “Change in Control” means the occurrence of any of the
following events after the Effective Date:
| (i) | The acquisition (other than by an Excluded Person), directly or indirectly, in one or more transactions, by any person or by any group of persons, within the meaning of Section 13(d) or 14(d) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of more than fifty percent (50%) of either the outstanding shares of common stock or the combined voting power of the Company’s outstanding voting securities entitled to vote generally, whether or not the acquisition was previously approved by the existing directors, other than an acquisition that complies with clause (x) and (y) of paragraph (ii); | ||
| (ii) | Consummation of a reorganization, merger, or consolidation of the Company or the sale or other disposition of all or substantially all of the Company’s assets unless, immediately following such event, (x) all or substantially all of the stockholders of the Company immediately prior to such event own, directly or indirectly, more than fifty percent (50%) of the then outstanding voting securities of the resulting corporation (including without limitation, a corporation which as a result of such event owns the Company or all or substantially all of the Company’s assets either directly or indirectly through one or more subsidiaries) and (y) the securities of the surviving or resulting corporation received or retained by the stockholders of the Company are publicly traded; | ||
| (iii) | Approval by the stockholders of the complete liquidation or dissolution of the Company; or | ||
| (iv) | A change in the composition of a majority of the directors on the Company’s Board of Directors within 12 months if not approved by a majority of the pre-existing directors. |
A transaction shall not constitute a Change in Control if its sole purpose is to change the
state of the Company’s incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s securities immediately
before such transaction.
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(b) Excluded Person. “Excluded Person” means:
| (i) | Any person described in and satisfying the conditions of Rule 13d-1(b)(1) under the Exchange Act; | ||
| (ii) | The Company; | ||
| (iii) | An employee benefit plan (or related trust) sponsored or maintained by the Company or its successor; | ||
| (iv) | Any person who is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 15% of the Common Stock on the Effective Date (or any affiliate, successor, heir, descendant, or related party of or to such person). |
(c) Good Reason. “Good Reason” shall mean that, on or after the effective date of a
Change in Control, the Executive (without Executive’s written consent):
| (i) | Has incurred a material reduction in his or her authority or responsibility in comparison to the Executive’s authority or responsibility prior to the public announcement of the Change in Control (the “Announcement”); | ||
| (ii) | Has incurred one or more reductions in his or her “total compensation” which is defined as follows: | ||
| (A) | any reduction in base salary, or | ||
| (B) | any reduction in the target annual bonus percentage of base salary; or | ||
| (iii) | Has been notified that his or her principal place of work will be relocated by a distance of 50 miles or more. |
For purposes of this Agreement, “base salary” shall mean the Executive’s annualized base
salary as of the Effective Date, as may be subsequently adjusted upward for increases.
(d) Just Cause. “Just Cause” includes but is not limited to any of the following
committed by Executive (or omitted to be done by Executive) that occur on or after the Effective
Date:
| (i) | Theft, unethical or unlawful activity, or other dishonesty; | ||
| (ii) | Neglect of or failure to perform employment duties; | ||
| (iii) | Inability or unwillingness to perform employment duties; | ||
| (iv) | Insubordination; | ||
| (v) | Abuse of alcohol or other drugs or substances; |
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| (vi) | Breach of this Agreement; | ||
| (vii) | A conviction of or plea of “guilty” or “no contest” to a felony under the laws of the United States or any state thereof; or | ||
| (viii) | Any violation or breach of any Company policy that has been established to comply with either the Sarbanes-Oxley Act of 2002 (or any regulations or rules or decisions that implement/interpret such act) or any laws, rules, or requirements of the Securities and Exchange Commission or the New York Stock Exchange. |
(e) Total Disability. “Total Disability” shall be deemed to occur on the ninetieth
(90th) consecutive or non-consecutive calendar day within any twelve (12) month period that
Executive is unable to perform his or her duties because of any physical or mental illness or
disability.
| 2. | Severance Payment and Equity Compensation. |
(a) The Executive shall be entitled to receive a severance payment from the Company as
provided herein (the “Severance Payment”) if within the first twelve (12) month period after the
occurrence of a Change in Control, either:
| (i) | The Executive voluntarily resigns his or her employment for Good Reason within sixty (60) days after the Executive becomes aware of the occurrence of an event specified in Section 1(c); or | ||
| (ii) | The Company terminates the Executive’s employment for any reason other than Just Cause, death, or Total Disability. |
For all purposes under this Agreement, the amount of the Severance Payment shall be equal to
two times (2X) the Executive’s annual base salary, as in effect on the date of the termination of
Executive’s employment (or if Executive’s salary was greater, on the date of the Announcement),
plus a prorata portion of the Executive’s target bonus for the fiscal year in which Executive’s
employment is terminated, based on the number of entire months of such fiscal year that have
elapsed through the date of Executive’s termination of employment as a fraction of twelve (12).
The Severance Payment shall be made to Executive in a single lump sum cash payment not later than
seven (7) business days following the date that Executive becomes entitled to a Severance Payment.
Except as may be provided under Sections 2(b) and 2(c), the Severance Payment shall be in lieu
of any other post-termination employment payments.
(b) Incentive, Deferred Compensation, and Retirement Programs. If the Executive is
entitled to a Severance Payment under Section 2(a) and notwithstanding anything to the contrary in
any stock option or stock appreciation right (SAR) or deferred compensation plan or retirement plan
or agreements, then (i) the Executive shall become immediately fully vested in all of his or her
outstanding stock options, SARs, warrants, restricted stock, phantom stock, deferred compensation,
retirement or similar plans or agreements of the Company, and (ii) the Executive (or his or her
personal representative if applicable) shall be permitted to exercise any of his or her vested
stock
3
options/SARs until the earlier of (i) one (1) year after Executive’s termination of employment
or (ii) the term of such unexercised stock options, warrants, or SARs.
(c) Health Coverage. If the Executive is entitled to a Severance Payment under Section
2(a), the Company shall reimburse Executive for a portion of the cost of any group health
continuation coverage that the Company is otherwise required to offer under the Consolidated
Omnibus Budget Reconciliation Act of 1986 (“COBRA”) until the earlier of the date that (i) the
Executive becomes covered by comparable health coverage, offered by another employer, or (ii) is
twelve (12) months after the date upon which the Executive becomes entitled to a Severance Payment
under Section 2(a). The Executive shall continue to be responsible to pay for the cost of the
employee portion of COBRA coverage (such employee portion cost shall not be reimbursed by the
Company).
(d) Mitigation. Except as may be expressly provided elsewhere in this Agreement, the
Executive shall not be required to mitigate the amount of any payment or benefit contemplated by
this Section 2 (whether by seeking new employment or in any other manner). No such payment shall
be reduced by earnings that the Executive may receive from any other source.
(e) Conditions. All payments and benefits provided under this Section 2 are
conditioned on Executive’s continuing compliance with this Agreement and the Company’s policies.
All payments and benefits are also conditioned on, and in consideration for, Executive’s execution
(and effectiveness) of a release of claims and covenant not to sue substantially in the form
provided in Exhibit A upon termination of employment, to be delivered by Executive
simultaneously upon payment by the Company.
| 3. | Successors. |
(a) Company’s Successors. Any successor (whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of
the Company’s business and/or assets, shall be obligated to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform it in the absence of a
succession.
(b) Executive’s Successors. This Agreement and all rights of the Executive hereunder
shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees, and
legatees.
| 4. | Miscellaneous Provisions. |
(a) Notice. Notices and all other communications contemplated by this Agreement shall
be in writing and shall be deemed to have been duly given when personally delivered or when mailed
by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of
the Executive, mailed notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing. In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
4
(b) Waiver. No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by the Executive
and by an authorized officer of the Company (other than the Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. This Agreement contains all the legally binding understandings
and agreements between Executive and the Company pertaining to the subject matter of this Agreement
and supersedes all such agreements, whether oral or in writing, previously entered into between the
parties.
(d) Withholding Taxes. All payments made under this Agreement shall be subject to
reduction to reflect taxes required to be withheld by law.
(e) Choice of Law. The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of California without regard to the
conflicts of laws principles thereof.
(f) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in Los Angeles County in
accordance with the Commercial Arbitration Rules of the American Arbitration Association.
Discovery shall be permitted to the same extent as in a proceeding under the Federal Rules of Civil
Procedure, including (without limitation) such discovery as is specifically authorized by section
1283.05 of the California Code of Civil Procedure, without need of prior leave of the arbitrator
under section 1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All fees and expenses of the arbitrator and such
Association and attorney fees shall be paid as determined by the arbitrator.
(h) No Assignment. The rights of Executive to payments or benefits under this
Agreement shall not be made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in violation of this Subsection (h) shall be
void.
(i) Nondisparagement; Confidentiality. On the Effective Date and thereafter,
Executive agrees that he/she will not disparage the Company or its directors, officers, employees,
affiliates, subsidiaries, predecessors, successors or assigns in any written or oral communications
to any third party. Executive further agrees that he/she will not direct anyone to make any
disparaging oral or written remarks to any third parties. During Executive’s employment and
following Executive’s termination of employment for any reason, Executive agrees to not
intentionally use or disclose the confidential information or trade secrets of the Company.
5
(j) Nonsolicit. During the Executive’s employment with Company and for twelve months
after Executive’s termination of employment and payment of the Severance Payment hereunder, the
Executive shall not, directly or indirectly, either as an individual or as an employee, agent,
consultant, advisor, independent contractor, general partner, officer, director, stockholder,
investor, lender, or in any other capacity whatsoever, of any person, firm, corporation, or
partnership: (i) induce or attempt to induce any person who at the time of such inducement is an
employee of the Company to perform work or service for any other person or entity other than the
Company or (ii) participate or engage in the design, development, manufacture, production,
marketing, sale, or servicing of any product, or the provision of any service, that directly or
indirectly relates to Company business.
(k) Notice of Employment. During Executive’s employment and for twelve months after
Executive’s termination of employment and payment of the Severance Payment hereunder, the Executive
will promptly notify the Company in writing if Executive becomes (or agrees to become) an employee
or director of any other employer. Such notice shall include the name of the other employer and
the date of commencement of employment or service as a director.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.
| EXECUTIVE: |
||||
| /s/ Joseph White | ||||
| Joseph White | ||||
| MOLINA HEALTHCARE, INC.: |
||||
| /s/ John C. Molina | ||||
| By: John C. Molina | ||||
| Its: Chief Financial Officer | ||||
6
EXHIBIT A
Form of Release of Claims and Covenant Not To Sue
In consideration of the payments and other benefits that Molina Healthcare, Inc., a Delaware
corporation (the “Company”), is providing to Joseph White (“Executive”) under the Change in Control
Agreement entered into by and between Executive and the Company, dated June 12, 2006, the
Executive, on his or her own behalf and on behalf of Employee’s representatives, agents, heirs and
assigns, waives, releases, discharges and promises never to assert any and all claims, demands,
actions, costs, rights, liabilities, damages or obligations of every kind and nature, whether known
or unknown, suspected or unsuspected that Executive ever had, now have or might have as of the date
of Executive’s termination of employment with the Company against the Company or its predecessors,
parent, affiliates, subsidiaries, stockholders, owners, directors, officers, employees, agents,
attorneys, insurers, successors, or assigns (including all such persons or entities that have a
current and/or former relationship with the Company) for any claims arising from or related to
Executive’s employment with the Company, its parent or any of its affiliates and subsidiaries and
the termination of that employment.
These released claims also specifically include, but are not limited to, any claims arising under
any federal, state and local statutory or common law, such as (as amended and as applicable) Title
VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans With
Disabilities Act, the Employee Retirement Income Security Act, the Family Medical Leave Act, the
Equal Pay Act, the Fair Labor Standards Act, the Industrial Welfare Commission’s Orders, the
California Fair Employment and Housing Act, the California Constitution, the California Government
Code, the California Labor Code and any other federal, state or local constitution, law, regulation
or ordinance governing the terms and conditions of employment or the termination of employment, and
the law of contract and tort and any claim for attorneys’ fees.
Furthermore, the Executive acknowledges that this waiver and release is knowing and voluntary and
that the consideration given for this waiver and release is in addition to anything of value to
which Executive was already entitled. Executive acknowledges that there may exist facts or claims
in addition to or different from those which are now known or believed by Executive to exist.
Nonetheless, this Agreement extends to all claims of every nature and kind whatsoever, whether
known or unknown, suspected or unsuspected, past or present. Executive also expressly waives the
provisions of California Civil Code section 1542, which provides: “A general release does not
extend to claims which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him/her must have materially affected his settlement with
the debtor.” With respect to the claims released in the preceding sentences, the Executive will
not initiate or maintain any legal or administrative action or proceeding of any kind against the
Company or its predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors,
officers, employees, agents, successors, or assigns (including all such persons or entities that
have a current or former relationship with the Company), for the purpose of obtaining any personal
relief, nor assist or participate in any such proceedings, including any proceedings brought by any
third parties (except as otherwise required or permitted by law). The Executive further
acknowledges that he has been advised by this writing that:
7
| • | he should consult with an attorney prior to executing this release; | ||
| • | he has at least twenty-one (21) days within which to consider this release; | ||
| • | he has up to seven (7) days following the execution of this release by the parties to revoke the release; and | ||
| • | this release shall not be effective until such seven (7) day revocation period has expired. |
Executive agrees that the release set forth above shall be and remain in effect in all respects as
a complete general release as to the matters released.
EXECUTIVE
Joseph White
Date:
8
Exhibit 10.21.1
Form No. DMB 234 (Rev. 1/96)
AUTHORITY: Act 431 of 1984
COMPLETION: Required
PENALTY: Contract will not be executed unless form is filed
AUTHORITY: Act 431 of 1984
COMPLETION: Required
PENALTY: Contract will not be executed unless form is filed
September 20, 2007
STATE OF MICHIGAN
DEPARTMENT OF MANAGEMENT AND BUDGET
PURCHASING OPERATIONS
P.O. BOX 30026, LANSING, MI 48909
OR
530 W. ALLEGAN, LANSING, MI 48933
DEPARTMENT OF MANAGEMENT AND BUDGET
PURCHASING OPERATIONS
P.O. BOX 30026, LANSING, MI 48909
OR
530 W. ALLEGAN, LANSING, MI 48933
CHANGE NOTICE NO. 12
TO
CONTRACT NO. 071B5200018
between
THE STATE OF MICHIGAN
and
TO
CONTRACT NO. 071B5200018
between
THE STATE OF MICHIGAN
and
| NAME & ADDRESS OF VENDOR | TELEPHONE (248) 925-1710 | |||||
| Roman T. Kulich | ||||||
| Molina Healthcare of Michigan Inc. 100 West Big Beaver Road, Suite 600 Troy, MI 48084 |
VENDOR NUMBER/MAIL CODE | |||||
| (2) 38-3341599 (004) | ||||||
| BUYER/CA (517) 241-4225 | ||||||
| Roman.kulich@Molinahealthcare.com | Kevin Dunn | |||||
| Contract Compliance Inspector: Cheryl Bupp 241-7933 | ||||||
| Comprehensive Health Care for Medicaid Beneficiaries — Regions 1, 4, 6, 7, 9, 10 — DCH | ||||||
| CONTRACT PERIOD: From: October 1, 2004 To: September 30, 2008 | ||||||
| TERMS | SHIPMENT | |||||
| N/A | N/A | |||||
| F.O.B. | SHIPPED FROM | |||||
| N/A | N/A | |||||
MINIMUM DELIVERY REQUIREMENTS |
||||||
N/A |
||||||
NATURE OF CHANGE (S):
Effective October 1, 2007, the attached changes are incorporated into this Contract.
Furthermore, FY08 rates are included in the Contract. All other terms, conditions,
specifications, and pricing remain unchanged.
AUTHORITY/REASON:
Per DCH request and DMB/Purchasing Operations’ approval.
TOTAL ESTIMATED CONTRACT VALUE REMAINS:
|
$667,875,969.33 | |||
FOR THE VENDOR:
|
FOR THE STATE: | |||
Molina Healthcare of Michigan Inc. |
||||
Firm Name
|
Signature | |||
| Elise A. Lancaster | ||||
Authorized Agent Signature
|
Name | |||
| Director, Purchasing Operations | ||||
Authorized Agent (Print or Type)
|
Title | |||
Date
|
Date | |||
CHANGES FOR THE FY08 MEDICAID HEALTH PLAN CONTRACT
Effective Date 10/1/07
Contract Change #1 — Service Area Expansions
Modify section II-C (Targeted Geographical Area for Implementation of the CHCP) to clarify the
State’s policy with regard to the approval of requests for service area expansion. Specifically,
modify Section II-C-2 to clarify that approval of requests will be at the sole discretion of the
State.
DCH may consider Contractors’ requests for service area expansion during the term of the
Contract. Approval of service area expansion requests will be at the sole discretion of the
State. and will be contingent upon The state may consider certain factors including, but not limited to, the need for
additional capacity, Contractor performance, Contractor fiscal status, and Contractor provider
network. in the counties proposed under the expansion request. Requests should be submitted using the provider profile information form contained in
Appendix 1 of the Contract.
Rationale
This change clarifies that the State reserves the right to determine criteria upon which requests
for service area expansion are approved.
Contract Change #2 — Change in Mandatory Population
Modify Sections II-D-1, II-D-2, and II-H to reflect that pregnant women, whose pregnancy is the
basis for Medicaid eligibility, residing in rural exception counties, are changed from a voluntary
to mandatory population. Specifically, modify sections II-D-1 and II-D-2 as follows and add a new
section II-H-19.
| 1. | Medicaid Eligible Groups Who Must Enroll in the CHCP: |
| • | Families with children receiving assistance under the Financial Independence Program (FIP) | ||
| • | Persons under age 21 who are receiving Medicaid | ||
| • | Persons receiving Medicaid for caretaker relatives and families with dependent children who do not receive FIP | ||
| • | Supplemental Security Income (SSI) Beneficiaries who do not receive Medicare | ||
| • | Persons receiving Medicaid for the blind or disabled | ||
| • | Persons receiving Medicaid for the aged | ||
| • | Pregnant women residing in a county listed in Appendix 6 |
| 2. | Medicaid Eligible Groups Who May Voluntarily Enroll in the CHCP: |
| • | Migrants | ||
| • | Native Americans | ||
| • | Pregnant women, whose pregnancy is the basis for Medicaid eligibility, who do not reside in a county listed in Appendix 6 |
II-H-19. Pregnant Women
Special conditions apply to new mandatory Enrollees in the Contractor’s health plan whose Medicaid
eligibility was determined based on pregnancy. These Enrollees must be allowed to select or remain
with the Medicaid obstetrician of her choice and are entitled to receive all medically necessary
obstetrical and prenatal care without preauthorization from the health plan. In the event that the
1
Contractor does not have a contract with the provider, all claims should be paid at the Medicaid
fee-for-service rate.
Rationale
The single MHP operating in the Upper Peninsula counties through the rural exception waiver
maintains an extensive provider network. The network includes all Local Health Departments and the
overwhelming majority of obstetricians practicing in the Upper Peninsula. Therefore, pregnant women
in these counties may be made a mandatory population without impairment to continuity of care and
further will receive all of the benefits from managed care such as case management and ease of
transportation. The special coverage provisions are included to emphasize DCH requirements
regarding new mandatory-enrolled pregnant women.
Contract Change #3 — Special Disenrollments
Modify Section II-F-11 (a) (Disenrollment Requests Initiated by the Contractor, Special
Disenrollments) to clarify the circumstances under which Medicaid Health Plans can request a
disenrollment for enrollee noncompliance. Specifically, modify section II-F-1l (a) as follows:
| • | Other noncompliance situations involving the repeated use of non-Contractor providers when in-network providers are available; discharge from the practices of available Contractor’s network providers; repeated emergency room use for non-emergent services; and other situations that impede care |
Rationale
Based on the State’s review of noncompliance disenrollment requests submitted by the Medicaid
Health Plans, the State determined that the language regarding “failure to follow treatment plan”
may be broad and misleading. Several factors may impact an enrollee’s failure to follow a treatment
plan and a special disenrollment is not appropriate in all cases. Additionally, the State wishes to
clarify that repeated use of out-of-network providers is a rationale for special disenrollment only
in those cases where in-network providers are available.
Contract Change #4 — State and Federal False Claims Act
Add a new subsection to section II-I (Observance of Federal, State and Local Laws) to specifically
require Medicaid Health Plans (MHPs) to comply with all applicable portions of the State and
Federal False Claims Act. Specifically, the new Section II-I-9 shall read as follows:
| 9. | Compliance with False Claims Acts |
The Contractor shall comply with all applicable provisions of the Federal False Claims Act and
Michigan Medicaid False Claims Act. Actions taken to comply with the federal and state laws
specifically include, but are not limited to, the following:
| • | Establish and disseminate written policies for employees of the entity
(including
management) and any contractor or agent of the entity regarding the detection and prevention of waste, fraud, and abuse. |
||
| • | The written policies must include detailed information about the False Claim Act and the other provisions named in section 1902(a)(68)(A). | ||
| • | The written policies must specify the rights of employees to be protected as whistleblowers. | ||
| • | The written policies must also be adopted by the Contractor’s contractors or agents A “contractor” or “agent” includes any contractor, subcontractor, agent, or other |
2
person which or who, on behalf of the entity, furnishes, or otherwise
authorizes the furnishing of Medicaid health care items or services, performs
billing or coding functions, or is involved in monitoring of health care
provided by the entity. Contractors or agents that meet or surpass the
monetary threshold are subject to the requirements in this Section.
| • | If the Contractor currently has an employee handbook, the handbook must contain the Contractor’s written policies for employees including an explanation of the rights of employees to be protected as whistleblowers. |
Rationale
Based on feedback from the Office of Inspector General and Centers for Medicare and Medicaid
Services, Michigan’s Medicaid False Claims Act does not include certain specific provisions
required under the Deficit Reduction Act. This contract change highlights these provisions and
ensures that the MHPs requirements are aligned with the key requirements under the federal law.
Contract Change #5 — Reporting Fraud and Abuse
Modify Section II-L-4 (Program Integrity) to more specifically define the requirements regarding
Contractor fraud and abuse reporting requirements. Specifically, modify this section as indicated:
| 1. | Program Integrity | ||
| The Contractor must have administrative and management arrangements or procedures, including a mandatory compliance plan. The Contractors’ arrangements or procedures must include the following as defined in 42 CFR 438.608: |
| • | Written policies and procedures that describes how the Contractor will comply with federal and state fraud and abuse standards. | ||
| • | The designation of a compliance officer and a compliance committee who are accountable to the senior management or Board of Directors and who have effective lines of communication to the Contractor’s employees. | ||
| • | Effective training and education for the compliance officer and the Contractor’s employees. | ||
| • | Provisions for internal monitoring and auditing. | ||
| • | Provisions for prompt response to detected offenses and for the development of corrective action initiatives. | ||
| • | Documentation of the Contractor’s enforcement of the Federal and State fraud and abuse standards. |
Contractors who have any suspicion or knowledge of fraud and/or abuse within any of the
DCH’s programs must report directly to the DCH by calling (866) 428-0005 or sending a
memo or letter to:
Program Investigations Section
Capitol Commons Center Building
400 S. Pine Street, 6th floor
Lansing, Michigan 48909
Capitol Commons Center Building
400 S. Pine Street, 6th floor
Lansing, Michigan 48909
The Contractor should must report all suspected fraud and/or abuse that warrant
investigation to the DCH, Program Investigation Section.
3
| • | The name of the provider, individuals, and/or entity |
||
| • | Source of the complaint | ||
| • | Type of provider | ||
| • | Nature of the complaint | ||
| • | Approximate range of dollars involved | ||
| • | Legal and administrative disposition of the case, including actions taken by law enforcement officials to whom the case has been referred. |
The Contractor shall inform the DCH of actions taken to investigate or resolve the
reported suspicion, knowledge, or action. Contractors must also cooperate fully in any
investigation by the DCH or Office of Attorney General and any subsequent legal action
that may result from such investigation.
Contractors shall be permitted to disclose protected health information to DCH or the
Attorney General without first obtaining authorization from the enrollee to disclose
such information. DCH and the Attorney General shall ensure that such disclosures meet
the requirements for disclosures made as part of the Contractor’s treatment, payment, or
health care operations as defined in 45 CFR 164.501.
Rationale
The current contract does not include all the reporting components specified in the Balanced Budge
Act. The contract change is necessary to bring the contract into alignment with all specific
requirements of 42 CFR 455.17. All information required in this section remains an integral
component of the fraud and abuse site visits.
Contract Change #6 — Payment to Providers
Modify Section II-M (Payment to Providers) to incorporate language that enables MHPs to collaborate
with DCH and providers in the development and implementation of programs for improving access,
quality, and performance. Specifically, modify the introductory paragraph to read as follows:
The Contractor must make timely payments to all providers for covered services rendered to
enrollees as required by MCL 400.11li and in compliance with established DCH performance
standards (Appendix 4). Upon request from DCH, Contractors must develop programs for improving
access, quality, and performance with providers. Such programs must include DCH in the design
methodology, data collection, and evaluation. The Contractor must make all payments to both
network and out-of-network providers dictated by the methodology jointly developed by the
Contractor and DCH.
4
With the exception of newborns, the Contractor will not be responsible for any payments owed
to providers for services rendered prior to a beneficiary’s enrollment with the Contractor’s
plan. Except for newborns, payment for services provided during a period of retroactive
eligibility will be the responsibility of DCH.
Rationale
The intent of this contract change is to enable MHPs and DCH to work collaboratively to develop
innovative programs with health care providers. The contract language permits MHPs to make payments
to providers that participate in the programs designed to improve access, quality and performance.
Contract Change #7 — Clinical Practice Guidelines
Modify section II-O-I to clarify the time period required for provider assessment, feedback, and
review of clinical practice guidelines. Specifically, the 7th and 8th bullet
requirement for the written quality plan will be changed as follows:
| • | At least |
||
| • | Develop, |
Rationale
This contract change is designed to better align the contract provisions with the requirements
included as part of the on-site review process.
Contract Change #8 — Consumer Survey
Modify section II-O-6 to reflect the name change of the Consumer Assessment survey. Specifically,
the first sentence of section II-O-6 will be changed as follows:
Contractors must conduct an annual survey of their adult enrollee population using the
Consumer Assessment of Healthcare Providers and Systems Plan Survey (CAHPS®) instrument.
Rationale
The contract change is needed to accurately reflect the description of the CAHPS survey.
Contract Change #9 — Prevalent Language
Modify Section II-S (Enrollee Services) to clarify Contractor’s requirements regarding the
provision of interpretation services. Specifically, revise the fourth paragraph in Section II-S-3
to read as follows:
The handbook must be written at no higher than a 6.9 grade reading level and must be available
in alternative formats for enrollees with special needs. Member handbooks must be available in
a prevalent language when more than five percent (5%) of the Contractor’s enrollees speak a
prevalent language, as defined by the Contract. Contractors must also provide a mechanism for
enrollees who speak the prevalent language to obtain member materials in the prevalent
language and a mechanism for enrollees or to obtain assistance with interpretation. The
Contractor must agree to make modifications in the handbook language so as to comply with the
specifications of this Contract.
5
Rationale
The current contract does not clearly delineate language requirements for written materials and
language requirements for oral interpretations services. The Balanced Budget Act Checklist provided
by the Center for Medicare and Medicaid Services emphasizes that managed care organizations must
make oral interpretation services available free of charge to all enrollees not just enrollees who
speak the prevalent non-English language.
Contract Change #10 — Provider Directory
Modify section II-S-2 to clarify that all Contractors are required to place the provider directory
on a web site available to the members. Prior to this contract change, placing the provider
directory on the Contractor’s web site was options. Specifically, modify the final bullet of
II-S-2(a) as follows:
| • | A website, maintained by the Contractor, that includes information on preventive health strategies, health/wellness promotion programs offered by the Contractor, updates related to covered services, access to providers, complete provider directory, and updated policies and procedures. |
Additionally, because placing the provider directory on the web site is no longer optional, the
following changes are needed in the final paragraph of II-S-3:
Rationale
Most MHPs have chosen to the place the provider directory on the web site. With the increasing
access to computers, providing access to the provider directory on the web site may improve access
to network providers and facilitate compliance with network limitations. Because the provider
directory will be available on the web site, MHPs are only required to mail the provider directory
to members upon request.
Contract Change #11 — Payment Withhold
Modify Section II-Z-1 (Contractor Performance Bonus) to reflect the revised withhold amount. DCH
has increased the threshold to .19%. The first sentence of this section will read as follows:
During
each Contract year, DCH will withhold .0012 .0019 of the approved capitation payment from
each Contractor until the performance bonus withhold reaches
approximately $35.0 million
dollars.
Rationale
In order to implement an increased performance bonus withhold of approximately $5.0 million, DCH
must increase the percentage of the capitation withhold amount.
6
Contract Change #12 — Appendix 6
Insert a new appendix at the end of the contract that lists the rural exception counties in which
pregnant women will be a mandatory population. Specifically, the newly inserted Appendix 6 will
read as follows:
Appendix 6
Rural Exception Counties in which Pregnant Women are a Mandatory Population
Rural Exception Counties in which Pregnant Women are a Mandatory Population
Alger
Baraga
Chippewa
Delta
Dickinson
Gogebic
Houghton
Iron
Keweenaw
Luce
Mackinac
Marquette
Menominee
Ontonagon
Schoolcraft
Baraga
Chippewa
Delta
Dickinson
Gogebic
Houghton
Iron
Keweenaw
Luce
Mackinac
Marquette
Menominee
Ontonagon
Schoolcraft
Rationale
The Centers for Medicare and Medicaid Services requested that the Department specifically lists the
counties in which pregnant women would be a mandatory population.
7
MEDICAID MANAGED CARE
PERFORMANCE MONITORING STANDARDS
(Contract Year October 1, 2007 — September 30, 2008)
PERFORMANCE MONITORING STANDARDS
(Contract Year October 1, 2007 — September 30, 2008)
Appendix 4 — PERFORMANCE MONITORING STANDARDS
PURPOSE: The purpose of the performance monitoring standards is to establish an explicit process
for the ongoing monitoring of health plan performance in important areas of quality, access,
customer services and reporting. The performance monitoring standards are part of the Contract
between the State of Michigan and Contracting Health Plans (Appendix 4).
The process is dynamic and reflects state and national issues that may change on a year-to-year
basis. Performance measurement is shared with Health Plans during the fiscal year and compares
performance of each Plan over time, to other health plans, and to industry standards, where
available.
The Performance Monitoring Standards address the following performance areas:
| • | Quality of Care | ||
| • | Access to Care | ||
| • | Customer Services | ||
| • | Claims Reporting and Processing | ||
| • | Encounter Data | ||
| • | Provider File reporting |
For each performance area the following categories are identified:
| • | Measure | ||
| • | Goal | ||
| • | Minimum Standard for each measure | ||
| • | Data Source | ||
| • | Monitoring Intervals, (annually, quarterly, monthly) |
Failure to meet the minimum performance monitoring standards may result in the implementation of
remedial actions and/or improvement plans as outlined in the contract section II-V.
| PERFORMANCE AREA | GOAL | MINIMUM STANDARD |
DATA SOURCE | MONITORING INTERVALS |
||||||
•
|
Quality of Care: Childhood Immunization Status |
Fully immunize children who turn two years old during the calendar year. | Combination 2 ³ 82% |
HEDIS report | Annual | |||||
•
|
Quality of Care: Prenatal Care |
Pregnant women receive an initial prenatal care visit in the first trimester or within 42 days of enrollment | ³ 85% | MDCH Data Warehouse | Quarterly | |||||
•
|
Quality of Care: Postpartum Care |
Women delivering a live birth received a postpartum visit on or between 21 days and 56 days after delivery. | ³ 62% | HEDIS report | Annual | |||||
•
|
Quality of Care: Blood Lead Testing |
Children at the age of 3 years old receive at least one blood lead test on/before 3rd birthday | ³ 80% for total enrollment and ³ 80% for continuous enrollment | MDCH Data Warehouse | Monthly | |||||
•
|
Access to care: Well-Child Visits in the First 15 Months of Life |
Children 15 months of age receive six or more well child visits during first 15 months of life | ³ 60% | Encounter data | Quarterly | |||||
•
|
Access to care: Well-Child Visits in the Third, Fourth, Fifth, and Sixth Years of Life |
Children three, four, five, and six years old receive one or more well child visits during twelve-month period. | ³ 68% | Encounter data | Quarterly | |||||
| PERFORMANCE AREA | GOAL | MINIMUM STANDARD |
DATA SOURCE | MONITORING INTERVALS |
||||||
•
|
Customer Services: Enrollee Complaints |
Plan will have minimal enrollee contacts through the Medicaid Helpline for issues determined to be complaints | Complaint rate < ..25 per 1000 member months | Beneficiary/Provider contacts tracking (BPCT) |
Quarterly | |||||
•
|
Claims Reporting and Processing | Health Plan submits timely and complete report, and processes claims in accordance with minimum standard | Timely, ³ 95% of clean claims paid within 30 days, and £1.85%of ending inventory over 45 days old | Claims report submitted by health plan |
Monthly | |||||
•
|
Encounter Data Reporting (Institutional, Professional) |
Timely and complete encounter data submission by the 15th of the month while meeting minimum volume requirements | Timely and Complete submission while meeting minimum volume | MDCH Data Exchange Gateway (DEG) and MDCH Data Warehouse | Monthly | |||||
•
|
Encounter Data Reporting (Pharmacy) |
Timely and complete encounter data submission by the 15th of the month while meeting minimum volume requirements | Timely and Complete submission while meeting minimum volume | MDCH Data Exchange Gateway (DEG) and MDCH Data Warehouse | Monthly | |||||
•
|
Provider File Reporting |
Timely and accurate provider file update/submission before the last Tuesday of the month | Timely and Complete submission | Ml Enrolls | Monthly | |||||
Minimum standard will be updated effective October 1, 2007 for HEDIS measures based on 2007 HEDIS
Michigan Medicaid Avg.
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; Counties 82
Region 01
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | < 1 | M | 356.82 | 112.83 | 39.18 | 3.38 | 512.21 | 0.996 | 510.16 | -0.97 | 509.19 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | < 1 | F | 329.61 | 98.22 | 34.77 | 3.38 | 465.98 | 0.996 | 464.12 | -0.88 | 463.24 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1 - 4 | M | 85.16 | 15.43 | 2.33 | 3.38 | 106.3 | 0.996 | 105.87 | -0.20 | 105.67 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1 - 4 | F | 69.67 | 10.59 | 1.73 | 3.38 | 85.37 | 0.996 | 85.03 | -0.16 | 84.87 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5 - 14 | M | 54.51 | 7.12 | 0.96 | 3.38 | 65.97 | 0.996 | 65.71 | -0.12 | 65.59 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5 - 14 | F | 46.82 | 6.12 | 0.85 | 3.38 | 57.17 | 0.996 | 56.94 | -0.11 | 56.83 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15 - 20 | M | 56.48 | 10.11 | 1.76 | 3.38 | 71.73 | 0.996 | 71.44 | -0.14 | 71.30 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15 - 20 | F | 84.04 | 12.68 | 2.06 | 3.38 | 102.16 | 0.996 | 101.75 | -0.19 | 101.56 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21 - 25 | M | 94.10 | 21.43 | 3.69 | 3.38 | 122.6 | 0.996 | 122.11 | -0.23 | 121.88 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21 - 25 | F | 150.86 | 30.15 | 5.63 | 3.38 | 190.02 | 0.996 | 189.26 | -0.36 | 188.90 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26 - 44 | M | 213.46 | 45.38 | 10.83 | 3.38 | 273.05 | 0.996 | 271.96 | -0.52 | 271.44 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26 - 44 | F | 220.76 | 44.85 | 8.21 | 3.38 | 277.2 | 0.996 | 276.09 | -0.52 | 275.57 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 407.57 | 82.90 | 21.09 | 3.38 | 514.94 | 0.996 | 512.88 | -0.97 | 511.91 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 416.01 | 91.52 | 19.29 | 3.38 | 530.2 | 0.996 | 528.08 | -1.00 | 527.08 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0 - 20 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0 - 20 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21 - 39 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21 - 39 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21 - 39 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21 - 39 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40 - 64 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40 - 64 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40 - 64 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40 - 64 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 639.42 | 146.86 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9200 | 763.52 | -1.45 | 762.07 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
| 59.9 | Rate MCR | 4,529.56 | 1545.03 | 605.58 | 0.00 | 6680.17 | 6,680.17 | -12.69 | 6667.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 30
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; County 58
Region 02
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | < 1 | M | 342.76 | 99.34 | 35.21 | 3.38 | 480.69 | 1.029 | 494.63 | -0.94 | 493.69 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | < 1 | F | 307.20 | 90.78 | 32.19 | 3.38 | 433.55 | 1.029 | 446.12 | -0.85 | 445.27 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1 - 4 | M | 81.05 | 14.58 | 2.12 | 3.38 | 101.13 | 1.029 | 104.06 | -0.20 | 103.86 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1 - 4 | F | 69.36 | 11.19 | 1.68 | 3.38 | 85.61 | 1.029 | 88.09 | -0.17 | 87.92 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5 - 14 | M | 64.56 | 7.76 | 1.00 | 3.38 | 76.7 | 1.029 | 78.92 | -0.15 | 78.77 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5 - 14 | F | 54.83 | 6.59 | 0.78 | 3.38 | 65.58 | 1.029 | 67.48 | -0.13 | 67.35 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15 - 20 | M | 68.86 | 11.50 | 1.83 | 3.38 | 85.57 | 1.029 | 88.05 | -0.17 | 87.88 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15 - 20 | F | 111.50 | 17.54 | 2.29 | 3.38 | 134.71 | 1.029 | 138.62 | -0.26 | 138.36 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21 - 25 | M | 101.22 | 20.74 | 3.15 | 3.38 | 128.49 | 1.029 | 132.22 | -0.25 | 131.97 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21 - 25 | F | 186.03 | 35.64 | 4.54 | 3.38 | 229.59 | 1.029 | 236.25 | -0.45 | 235.80 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26 - 44 | M | 230.29 | 56.57 | 7.86 | 3.38 | 298.1 | 1.029 | 306.74 | -0.58 | 306.16 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26 - 44 | F | 264.38 | 48.52 | 8.14 | 3.38 | 324.42 | 1.029 | 333.83 | -0.63 | 333.20 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 429.31 | 83.78 | 19.59 | 3.38 | 536.06 | 1.029 | 551.61 | -1.05 | 550.56 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 465.00 | 83.28 | 18.90 | 3.38 | 570.56 | 1.029 | 587.11 | -1.12 | 585.99 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0 - 20 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0 - 20 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21 - 39 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21 - 39 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21 - 39 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21 - 39 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40 - 64 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40 - 64 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40 - 64 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40 - 64 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0020 | 750.94 | -1.43 | 749.51 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
| 59.9 | Rate MCR | 4,246.33 | 1298.79 | 522.24 | 0.00 | 6067.36 | 6,067.36 | -11.53 | 6056.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 31
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; Counties 03, 10, 34, 41, 43, 51, 53, 54, 57, 59, 61, 62,
64, 67, 70, 83
Region 04
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | < 1 | M | 342.76 | 99.34 | 35.21 | 3.38 | 480.69 | 0.986 | 473.96 | -0.90 | 473.06 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | < 1 | F | 307.20 | 90.78 | 32.19 | 3.38 | 433.55 | 0.986 | 427.48 | -0.81 | 426.67 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1 - 4 | M | 81.05 | 14.58 | 2.12 | 3.38 | 101.13 | 0.986 | 99.71 | -0.19 | 99.52 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1 - 4 | F | 69.36 | 11.19 | 1.68 | 3.38 | 85.61 | 0.986 | 84.41 | -0.16 | 84.25 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5 - 14 | M | 64.56 | 7.76 | 1.00 | 3.38 | 76.7 | 0.986 | 75.63 | -0.14 | 75.49 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5 - 14 | F | 54.83 | 6.59 | 0.78 | 3.38 | 65.58 | 0.986 | 64.66 | -0.12 | 64.54 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15 - 20 | M | 68.86 | 11.50 | 1.83 | 3.38 | 85.57 | 0.986 | 84.37 | -0.16 | 84.21 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15 - 20 | F | 111.50 | 17.54 | 2.29 | 3.38 | 134.71 | 0.986 | 132.82 | -0.25 | 132.57 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21 - 25 | M | 101.22 | 20.74 | 3.15 | 3.38 | 128.49 | 0.986 | 126.69 | -0.24 | 126.45 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21 - 25 | F | 186.03 | 35.64 | 4.54 | 3.38 | 229.59 | 0.986 | 226.38 | -0.43 | 225.95 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26 - 44 | M | 230.29 | 56.57 | 7.86 | 3.38 | 298.1 | 0.986 | 293.93 | -0.56 | 293.37 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26 - 44 | F | 264.38 | 48.52 | 8.14 | 3.38 | 324.42 | 0.986 | 319.88 | -0.61 | 319.27 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45+ | M | 429.31 | 83.78 | 19.59 | 3.38 | 536.06 | 0.986 | 528.56 | -1.00 | 527.56 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45+ | F | 465.00 | 83.28 | 18.90 | 3.38 | 570.56 | 0.986 | 562.57 | -1.07 | 561.50 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0 - 20 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0 - 20 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21 - 39 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21 - 39 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21 - 39 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21 - 39 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40 - 64 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40 - 64 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40 - 64 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40 - 64 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9270 | 694.73 | -1.32 | 693.41 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
| 59.9 | Rate MCR | 3,930.83 | 1298.79 | 522.24 | 0.00 | 5751.86 | 5,751.86 | -10.93 | 5741.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 32
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; County 25
Region 06
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | < 1 | M | 342.76 | 99.34 | 35.21 | 3.38 | 480.69 | 0.998 | 479.73 | -0.91 | 478.82 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | < 1 | F | 307.20 | 90.78 | 32.19 | 3.38 | 433.55 | 0.998 | 432.68 | -0.82 | 431.86 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1 - 4 | M | 81.05 | 14.58 | 2.12 | 3.38 | 101.13 | 0.998 | 100.93 | -0.19 | 100.74 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1 - 4 | F | 69.36 | 11.19 | 1.68 | 3.38 | 85.61 | 0.998 | 85.44 | -0.16 | 85.28 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5 - 14 | M | 64.56 | 7.76 | 1.00 | 3.38 | 76.7 | 0.998 | 76.55 | -0.15 | 76.40 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5 - 14 | F | 54.83 | 6.59 | 0.78 | 3.38 | 65.58 | 0.998 | 65.45 | -0.12 | 65.33 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15 - 20 | M | 68.86 | 11.50 | 1.83 | 3.38 | 85.57 | 0.998 | 85.40 | -0.16 | 85.24 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15 - 20 | F | 111.50 | 17.54 | 2.29 | 3.38 | 134.71 | 0.998 | 134.44 | -0.26 | 134.18 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21 - 25 | M | 101.22 | 20.74 | 3.15 | 3.38 | 128.49 | 0.998 | 128.23 | -0.24 | 127.99 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21 - 25 | F | 186.03 | 35.64 | 4.54 | 3.38 | 229.59 | 0.998 | 229.13 | -0.44 | 228.69 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26 - 44 | M | 230.29 | 56.57 | 7.86 | 3.38 | 298.1 | 0.998 | 297.50 | -0.57 | 296.93 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26 - 44 | F | 264.38 | 48.52 | 8.14 | 3.38 | 324.42 | 0.998 | 323.77 | -0.62 | 323.15 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 429.31 | 83.78 | 19.59 | 3.38 | 536.06 | 0.998 | 534.99 | -1.02 | 533.97 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 465.00 | 83.28 | 18.90 | 3.38 | 570.56 | 0.998 | 569.42 | -1.08 | 568.34 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0 - 20 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0 - 20 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21 - 39 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21 - 39 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21 - 39 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21 - 39 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40 - 64 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40 - 64 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40 - 64 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40 - 64 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 1.0030 | 751.69 | -1.43 | 750.26 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
| 59.9 | Rate MCR | 4,502.46 | 1298.79 | 522.24 | 0.00 | 6323.49 | 6,323.49 | -12.01 | 6311.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 33
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; Counties 01, 06, 09, 20, 26, 29, 32, 35, 37, 56, 60, 65,
68, 69, 71, 72, 73, 76, 79
Region 07
Region 07
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Access | Base | Risk | OAA | Base | Bonus | after | ||||||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Base Rate | Hosp Adj | GME | Fee | Rate | Area Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | <1 | M | 342.76 | 99.34 | 35.21 | 3.38 | 480.69 | 1.009 | 485.02 | -0.92 | 484.10 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | <1 | F | 307.20 | 90.78 | 32.19 | 3.38 | 433.55 | 1.009 | 437.45 | -0.83 | 436.62 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1-4 | M | 81.05 | 14.58 | 2.12 | 3.38 | 101.13 | 1.009 | 102.04 | -0.19 | 101.85 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1-4 | F | 69.36 | 11.19 | 1.68 | 3.38 | 85.61 | 1.009 | 86.38 | -0.16 | 86.22 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5-14 | M | 64.56 | 7.76 | 1.00 | 3.38 | 76.7 | 1.009 | 77.39 | -0.15 | 77.24 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5-14 | F | 54.83 | 6.59 | 0.78 | 3.38 | 65.58 | 1.009 | 66.17 | -0.13 | 66.04 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15-20 | M | 68.86 | 11.50 | 1.83 | 3.38 | 85.57 | 1.009 | 86.34 | -0.16 | 86.18 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15-20 | F | 111.50 | 17.54 | 2.29 | 3.38 | 134.71 | 1.009 | 135.92 | -0.26 | 135.66 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21-25 | M | 101.22 | 20.74 | 3.15 | 3.38 | 128.49 | 1.009 | 129.65 | -0.25 | 129.40 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21-25 | F | 186.03 | 35.64 | 4.54 | 3.38 | 229.59 | 1.009 | 231.66 | -0.44 | 231.22 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26-44 | M | 230.29 | 56.57 | 7.86 | 3.38 | 298.1 | 1.009 | 300.78 | -0.57 | 300.21 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26-44 | F | 264.38 | 48.52 | 8.14 | 3.38 | 324.42 | 1.009 | 327.34 | -0.62 | 326.72 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 429.31 | 83.78 | 19.59 | 3.38 | 536.06 | 1.009 | 540.88 | -1.03 | 539.85 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 465.00 | 83.28 | 18.90 | 3.38 | 570.56 | 1.009 | 575.70 | -1.09 | 574.61 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0-20 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0-20 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21-39 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21-39 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21-39 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21-39 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40-64 | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40-64 | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40-64 | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40-64 | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.9910 | 742.70 | -1.41 | 741.29 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 603.27 | 112.96 | 26.45 | 6.76 | 749.44 | 0.848 | 635.53 | -1.21 | 634.32 | ||||||||||||||||||||||||||||||||||||||||
59.9 |
Rate MCR | 4,190.98 | 1298.79 | 522.24 | 0.00 | 6012.01 | 6,012.01 | -11.42 | 6001.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 34
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; Counties 50, 74
Region 09
Region 09
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | <1 | M | 356.82 | 112.83 | 39.18 | 3.38 | 512.21 | 0.998 | 511.19 | -0.97 | 510.22 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | <1 | F | 329.61 | 98.22 | 34.77 | 3.38 | 465.98 | 0.998 | 465.05 | -0.88 | 464.17 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1-4 | M | 85.16 | 15.43 | 2.33 | 3.38 | 106.3 | 0.998 | 106.09 | -0.20 | 105.89 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1-4 | F | 69.67 | 10.59 | 1.73 | 3.38 | 85.37 | 0.998 | 85.20 | -0.16 | 85.04 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5-14 | M | 54.51 | 7.12 | 0.96 | 3.38 | 65.97 | 0.998 | 65.84 | -0.13 | 65.71 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5-14 | F | 46.82 | 6.12 | 0.85 | 3.38 | 57.17 | 0.998 | 57.06 | -0.11 | 56.95 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15-20 | M | 56.48 | 10.11 | 1.76 | 3.38 | 71.73 | 0.998 | 71.59 | -0.14 | 71.45 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15-20 | F | 84.04 | 12.68 | 2.06 | 3.38 | 102.16 | 0.998 | 101.96 | -0.19 | 101.77 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21-25 | M | 94.10 | 21.43 | 3.69 | 3.38 | 122.6 | 0.998 | 122.35 | -0.23 | 122.12 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21-25 | F | 150.86 | 30.15 | 5.63 | 3.38 | 190.02 | 0.998 | 189.64 | -0.36 | 189.28 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26-44 | M | 213.46 | 45.38 | 10.83 | 3.38 | 273.05 | 0.998 | 272.50 | -0.52 | 271.98 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26-44 | F | 220.76 | 44.85 | 8.21 | 3.38 | 277.2 | 0.998 | 276.65 | -0.53 | 276.12 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 407.57 | 82.90 | 21.09 | 3.38 | 514.94 | 0.998 | 513.91 | -0.98 | 512.93 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 416.01 | 91.52 | 19.29 | 3.38 | 530.2 | 0.998 | 529.14 | -1.01 | 528.13 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0-20 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0-20 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21-39 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21-39 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21-39 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21-39 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40-64 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40-64 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40-64 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40-64 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823,27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9920 | 823.27 | -1.56 | 821.71 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
59.9 |
Rate MCR | 4,377.00 | 1545.03 | 605.58 | 0.00 | 6527.61 | 6,527.61 | -12.40 | 6515.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 35
State of Michigan Managed Care Rates FY08
Effective October 1, 2007
Effective October 1, 2007
Molina Healthcare 0004318627 0004318645; County 63
Region 10
Region 10
| Phys | New | Adj | 0.19% | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base | Hosp | Access | Base | Area | Risk | OAA | Base | Bonus | after | |||||||||||||||||||||||||||||||||||||||||||
| Rate Cell | Description | Sex | Rate | Adj | GME | Fee | Rate | Factor | Adj. | Factor | Rate | W/H | W/H | |||||||||||||||||||||||||||||||||||||||
1 |
TANF | <1 | M | 356.82 | 112.83 | 39.18 | 3.38 | 512.21 | 1.022 | 523.48 | -0.99 | 522.49 | ||||||||||||||||||||||||||||||||||||||||
2 |
TANF | <1 | F | 329.61 | 98.22 | 34.77 | 3.38 | 465.98 | 1.022 | 476.23 | -0.90 | 475.33 | ||||||||||||||||||||||||||||||||||||||||
3 |
TANF | 1-4 | M | 85.16 | 15.43 | 2.33 | 3.38 | 106.3 | 1.022 | 108.64 | -0.21 | 108.43 | ||||||||||||||||||||||||||||||||||||||||
4 |
TANF | 1-4 | F | 69.67 | 10.59 | 1.73 | 3.38 | 85.37 | 1.022 | 87.25 | -0.17 | 87.08 | ||||||||||||||||||||||||||||||||||||||||
5 |
TANF | 5-14 | M | 54.51 | 7.12 | 0.96 | 3.38 | 65.97 | 1.022 | 67.42 | -0.13 | 67.29 | ||||||||||||||||||||||||||||||||||||||||
6 |
TANF | 5-14 | F | 46.82 | 6.12 | 0.85 | 3.38 | 57.17 | 1.022 | 58.43 | -0.11 | 58.32 | ||||||||||||||||||||||||||||||||||||||||
7 |
TANF | 15-20 | M | 56.48 | 10.11 | 1.76 | 3.38 | 71.73 | 1.022 | 73.31 | -0.14 | 73.17 | ||||||||||||||||||||||||||||||||||||||||
8 |
TANF | 15-20 | F | 84.04 | 12.68 | 2.06 | 3.38 | 102.16 | 1.022 | 104.41 | -0.20 | 104.21 | ||||||||||||||||||||||||||||||||||||||||
9 |
TANF | 21-25 | M | 94.10 | 21.43 | 3.69 | 3.38 | 122.6 | 1.022 | 125.30 | -0.24 | 125.06 | ||||||||||||||||||||||||||||||||||||||||
10 |
TANF | 21-25 | F | 150.86 | 30.15 | 5.63 | 3.38 | 190.02 | 1.022 | 194.20 | -0.37 | 193.83 | ||||||||||||||||||||||||||||||||||||||||
11 |
TANF | 26-44 | M | 213.46 | 45.38 | 10.83 | 3.38 | 273.05 | 1.022 | 279.06 | -0.53 | 278.53 | ||||||||||||||||||||||||||||||||||||||||
12 |
TANF | 26-44 | F | 220.76 | 44.85 | 8.21 | 3.38 | 277.2 | 1.022 | 283.30 | -0.54 | 282.76 | ||||||||||||||||||||||||||||||||||||||||
13 |
TANF | 45 + | M | 407.57 | 82.90 | 21.09 | 3.38 | 514.94 | 1.022 | 526.27 | -1.00 | 525.27 | ||||||||||||||||||||||||||||||||||||||||
14 |
TANF | 45 + | F | 416.01 | 91.52 | 19.29 | 3.38 | 530.2 | 1.022 | 541.86 | -1.03 | 540.83 | ||||||||||||||||||||||||||||||||||||||||
15 |
ABAD | 0-20 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
16 |
ABAD | 0-20 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
17.1 |
ABAD | 21-39 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
18.1 |
ABAD | 21-39 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
17.2 |
ABAD | 21-39 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
18.2 |
ABAD | 21-39 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
19.1 |
ABAD | 40-64 | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
20.1 |
ABAD | 40-64 | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
19.2 |
ABAD | 40-64 | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
20.2 |
ABAD | 40-64 | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
21.1 |
ABAD | 65 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
22.1 |
ABAD | 65 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | |||||||||||||||||||||||||||||||||||||||
21.2 |
ABAD | 65 + | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
22.2 |
ABAD | 65 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.9870 | 819.12 | -1.56 | 817.56 | ||||||||||||||||||||||||||||||||||||||||
23.1 |
OAA | 0 + | Medicare | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
24.1 |
OAA | 0 + | Medicare | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | |||||||||||||||||||||||||||||||||||||||
23.2 |
OAA | 0 + | M | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
24.2 |
OAA | 0 + | F | 639.42 | 146.88 | 36.85 | 6.76 | 829.91 | 0.758 | 629.07 | -1.20 | 627.87 | ||||||||||||||||||||||||||||||||||||||||
59.9 |
Rate MCR | 4,512.89 | 1545.03 | 605.58 | 0.00 | 6663.5 | 6,663.50 | -12.66 | 6651.00 | |||||||||||||||||||||||||||||||||||||||||||
| NOTE: | Due to MDCH Medicaid claims system limitations, MCR (Rate Cell 59.9) is rounded to nearest whole dollar after the bonus withhold. |
Page 36
EXHIBIT 10.24.1
PROVIDER AGREEMENT
BETWEEN
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
AND
MOLINA HEALTHCARE OF OHIO, INC
Amendment No. 1
Pursuant to Article IX.A. the Provider Agreement between the State of Ohio, Department of Job and
Family Services, (hereinafter referred to as “ODJFS”) and MOLINA HEALTHCARE OF OHIO, INC
(hereinafter referred to as “MCP”) for the Covered Families and Children (hereinafter referred to
as “CFC”) population dated July 1, 2007, is hereby amended as follows:
| 1. | Appendices C, D, E, F, G, H, J, K, L, M, N and O are modified as attached. | ||
| 2. | All other terms of the provider agreement are hereby affirmed. | ||
| The amendment contained herein shall be effective January 1, 2008. |
| MOLINA HEALTHCARE OF OHIO, INC: | ||||
BY: |
/s/ Kathie Mancini | DATE: 12/20/07 | ||
| KATHIE MANCINI, PRESIDENT On behalf of Kathie Mancini | ||||
| OHIO DEPARTMENT OF JOB AND FAMILY SERVICES: | ||||
BY: |
/s/ Helen E. Jones-Kelley | DATE: 12/20/07 | ||
| HELEN E. JONES-KELLEY, DIRECTOR | ||||
Appendix C
Covered Families and Children (CFC) population
Page 1
Covered Families and Children (CFC) population
Page 1
APPENDIX C
MCP RESPONSIBILITIES
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
The MCP must meet on an ongoing basis, all program requirements specified in Chapter 5101:3-26 of
the Ohio Administrative Code (OAC) and the Ohio Department of Job and Family Services (ODJFS) — MCP
Provider Agreement. The following are MCP responsibilities that are not otherwise specifically
stated in OAC rule provisions or elsewhere in the MCP provider agreement, but are required by
ODJFS.
General Provisions
| 1. | The MCP agrees to implement program modifications as soon as reasonably possible or no later than the required effective date, in response to changes in applicable state and federal laws and regulations. | |
| 2. | The MCP must submit a current copy of their Certificate of Authority (COA) to ODJFS within 30 days of issuance by the Ohio Department of Insurance. | |
| 3 | The MCP must designate the following: |
a. A primary contact person (the Medicaid Coordinator) who will dedicate a majority of their
time to the Medicaid product line and coordinate overall communication between ODJFS and the MCP.
ODJFS may also require the MCP to designate contact staff for specific program areas. The Medicaid
Coordinator will be responsible for ensuring the timeliness, accuracy, completeness and
responsiveness of all MCP submissions to ODJFS.
b. A provider relations representative for each service area included in their ODJFS provider
agreement. This provider relations representative can serve in this capacity for only one service
area (as specified in Appendix H).
As long as the MCP serves both the CFC and ABD populations, they are not required to have separate
provider relations representatives or Medicaid coordinators.
| 4. | All MCP employees are to direct all day-to-day submissions and communications to their ODJFS-designated Contract Administrator unless otherwise notified by ODJFS. | |
| 5. | The MCP must be represented at all meetings and events designated by ODJFS as requiring mandatory attendance. | |
| 6. | The MCP must have an administrative office located in Ohio. |
Appendix C
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
| 7. | Upon request by ODJFS, the MCP must submit information on the current status of their company’s operations not specifically covered under this provider agreement (for example, other product lines, Medicaid contracts in other states, NCQA accreditation, etc.) unless otherwise excluded by law. | |
| 8. | The MCP must have all new employees trained on applicable program requirements, and represent, warrant and certify to ODJFS that such training occurs, or has occurred. | |
| 9. | If an MCP determines that it does not wish to provide, reimburse, or cover a counseling service or referral service due to an objection to the service on moral or religious grounds, it must immediately notify ODJFS to coordinate the implementation of this change. MCPs will be required to notify their members of this change at least thirty (30) days prior to the effective date. The MCP’s member handbook and provider directory, as well as all marketing materials, will need to include information specifying any such services that the MCP will not provide. | |
| 10. | For any data and/or documentation that MCPs are required to maintain, ODJFS may request that MCPs provide analysis of this data and/or documentation to ODJFS in an aggregate format, such format to be solely determined by ODJFS. | |
| 11. | The MCP is responsible for determining medical necessity for services and supplies requested for their members as specified in OAC rule 5101:3-26-03. Notwithstanding such responsibility, ODJFS retains the right to make the final determination on medical necessity in specific member situations. | |
| 12. | In addition to the timely submission of medical records at no cost for the annual external quality review as specified in OAC rule 5101:3-26-07, the MCP may be required for other purposes to submit medical records at no cost to ODJFS and/or designee upon request. | |
| 13. | The MCP must notify the BMHC of the termination of an MCP panel provider that is designated as the primary care provider for 500 or more of the MCP’s CFC members. The MCP must provide notification within one working day of the MCP becoming aware of the termination. | |
| 14. | Upon request by ODJFS, MCPs may be required to provide written notice to members of any significant change(s) affecting contractual requirements, member services or access to providers. | |
| 15. | MCPs may elect to provide services that are in addition to those covered under the Ohio Medicaid fee-for-service program. Before MCPs notify potential or current members of the availability of these services, they must first notify ODJFS and advise ODJFS of such |
Appendix C
Covered Families and Children (CFC) population
Page 3
Covered Families and Children (CFC) population
Page 3
| planned services availability. If an MCP elects to provide additional services, the MCP must ensure to the satisfaction of ODJFS that the services are readily available and accessible to members who are eligible to receive them. |
| a. | MCPs are required to make transportation available to any member requesting transportation when they must travel (thirty) 30 miles or more from their home to receive a medically-necessary Medicaid-covered service. If the MCP offers transportation to their members as an additional benefit and this transportation benefit only covers a limited number of trips, the required transportation listed above may not be counted toward this trip limit. | ||
| b. | Additional benefits may not vary by county within a region except out of necessity for transportation arrangements (e.g., bus versus cab). MCPs approved to serve consumers in more than one region may vary additional benefits between regions. | ||
| c. | MCPs must give ODJFS and members (ninety) 90 days prior notice when decreasing or ceasing any additional benefit(s). When it is beyond the control of the MCP, as demonstrated to ODJFS’ satisfaction, ODJFS must be notified within (one) 1 working day. |
| 16. | MCPs must comply with any applicable Federal and State laws that pertain to member rights and ensure that its staff adheres to such laws when furnishing services to its members. MCPs shall include a requirement in its contracts with affiliated providers that such providers also adhere to applicable Federal and State laws when providing services to members. | |
| 17. | MCPs must comply with any other applicable Federal and State laws (such as Title VI of the Civil rights Act of 1964, etc.) and other laws regarding privacy and confidentiality, as such may be applicable to this Agreement. | |
| 18. | Upon request, the MCP will provide members and potential members with a copy of their practice guidelines. | |
| 19. | The MCP is responsible for promoting the delivery of services in a culturally competent manner, as solely determined by ODJFS, to all members, including those with limited English proficiency (LEP) and diverse cultural and ethnic backgrounds. | |
| All MCPs must comply with the requirements specified in OAC rules 5101:3-26-03.1, 5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08 and 5101:3-26-08.2 for providing assistance to LEP members and eligible individuals. In addition, MCPs must provide written translations of certain MCP materials in the prevalent non-English languages of members and eligible individuals in accordance with the following: |
Appendix C
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
| a. | When 10% or more of the CFC eligible individuals in the MCP’s service area have a common primary language other than English, the MCP must translate all ODJFS-approved marketing materials into the primary language of that group. The MCP must monitor changes in the eligible population on an ongoing basis and conduct an assessment no less often than annually to determine which, if any, primary language groups meet the 10% threshold for the eligible individuals in each service area. When the 10% threshold is met, the MCP must report this information to ODJFS, in a format as requested by ODJFS, translate their marketing materials, and make these marketing materials available to eligible individuals. MCPs must submit to ODJFS, upon request, their prevalent non-English language analysis of eligible individuals and the results of this analysis. | ||
| b. | When 10% or more of an MCP’s CFC members in the MCP’s service area have a common primary language other than English, the MCP must translate all ODJFS-approved member materials into the primary language of that group. The MCP must monitor their membership and conduct a quarterly assessment to determine which, if any, primary language groups meet the 10% threshold. When the 10% threshold is met, the MCP must report this information to ODJFS, in a format as requested by ODJFS, translate their member materials, and make these materials available to their members. MCPs must submit to ODJFS, upon request, their prevalent non-English language member analysis and the results of this analysis. |
| 20. | The MCP must utilize a centralized database which records the special communication needs of all MCP members (i.e., those with limited English proficiency, limited reading proficiency, visual impairment, and hearing impairment) and the provision of related services (i.e., MCP materials in alternate format, oral interpretation, oral translation services, written translations of MCP materials, and sign language services). This database must include all MCP member primary language information (PLI) as well as all other special communication needs information for MCP members, as indicated above, when identified by any source including but not limited to ODJFS, ODJFS selection services entity, MCP staff, providers, and members. This centralized database must be readily available to MCP staff and be used in coordinating communication and services to members, including the selection of a PCP who speaks the primary language of an LEP member, when such a provider is available. MCPs must share specific communication needs information with their providers [e.g., PCPs, Pharmacy Benefit Managers (PBMs), and Third Party Administrators (TPAs)], as applicable. MCPs must submit to ODJFS, upon request, detailed information regarding the MCP’s members with special communication needs, which could include individual member names, their specific communication need, and any provision of special services to members |
Appendix C
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
| (i.e., those special services arranged by the MCP as well as those services reported to the MCP which were arranged by the provider). | ||
| Additional requirements specific to providing assistance to hearing-impaired, vision-impaired, limited reading proficient (LRP), and LEP members and eligible individuals are found in OAC rules 5101:3-26-03.1, 5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08, and 5101-3-26-08.2. | ||
| 21. | The MCP is responsible for ensuring that all member materials use easily understood language and format. The determination of what materials comply with this requirement is in the sole discretion of ODJFS. | |
| 22. | Pursuant to OAC rules 5101:3-26-08 and 5101:3-26-08.2, the MCP is responsible for ensuring that all MCP marketing and member materials are prior approved by ODJFS before being used or shared with members. Marketing and member materials are defined as follows: |
| a. | Marketing materials are those items produced in any medium, by or on behalf of an MCP, including gifts of nominal value (i.e., items worth no more than $15.00), which can reasonably be interpreted as intended to market to eligible individuals. | ||
| b. | Member materials are those items developed, by or on behalf of an MCP, to fulfill MCP program requirements or to communicate to all members or a group of members. Member health education materials that are produced by a source other than the MCP and which do not include any reference to the MCP are not considered to be member materials. | ||
| c. | All MCP marketing and member materials must represent the MCP in an honest and forthright manner and must not make statements which are inaccurate, misleading, confusing, or otherwise misrepresentative, or which defraud eligible individuals or ODJFS. | ||
| d. | All MCP marketing cannot contain any assertion or statement (whether written or oral) that the MCP is endorsed by CMS, the Federal or State government or similar entity. | ||
| e. | MCPs must establish positive working relationships with the CDJFS offices and must not aggressively solicit from local Directors, MCP County Coordinators, or or other staff. Furthermore, MCPs are prohibited from offering gifts of nominal value (i.e. clipboards, pens, coffee mugs, etc.) to CDJFS offices or managed care enrollment center (MCEC) staff, as these may influence an individual’s decision to select a particular MCP. |
Appendix C
Covered Families and Children (CFC) population
Page 6
Covered Families and Children (CFC) population
Page 6
| 23. | Advance Directives — All MCPs must comply with the requirements specified in 42 CFR 422.128. At a minimum, the MCP must: |
| a. | Maintain written policies and procedures that meet the requirements for advance directives, as set forth in 42 CFR Subpart I of part 489. | ||
| b. | Maintain written policies and procedures concerning advance directives with respect to all adult individuals receiving medical care by or through the MCP to ensure that the MCP: |
| i. | Provides written information to all adult members concerning: |
| a. | the member’s rights under state law to make decisions concerning their medical care, including the right to accept or refuse medical or surgical treatment and the right to formulate advance directives. (In meeting this requirement, MCPs must utilize form JFS 08095 entitled You Have the Right, or include the text from JFS 08095 in their ODJFS-approved member handbook). | ||
| b. | the MCP’s policies concerning the implementation of those rights including a clear and precise statement of any limitation regarding the implementation of advance directives as a matter of conscience; | ||
| c. | any changes in state law regarding advance directives as soon as possible but no later than (ninety) 90 days after the proposed effective date of the change; and | ||
| d. | the right to file complaints concerning noncompliance with the advance directive requirements with the Ohio Department of Health. |
| ii. | Provides for education of staff concerning the MCP’s policies and procedures on advance directives; | ||
| iii. | Provides for community education regarding advance directives directly or in concert with other providers or entities; | ||
| iv. | Requires that the member’s medical record document whether or not the member has executed an advance directive; and |
Appendix C
Covered Families and Children (CFC) population
Page 7
Covered Families and Children (CFC) population
Page 7
| v. | Does not condition the provision of care, or otherwise discriminate against a member, based on whether the member has executed an advance directive. |
| 24. | New Member Materials |
| Pursuant to OAC rule 5101:3-26-08.2 (B)(3), MCPs must provide to each member or assistance group, as applicable, an MCP identification (ID) card, a new member letter, a member handbook, a provider directory, and information on advance directives. |
a. MCPs must use the model language specified by ODJFS for the new member letter.
b. The ID card and new member letter must be mailed together to the member via a method
that will ensure their receipt prior to the member’s effective date of coverage.
c. The member handbook, provider directory and advance directives information may be
mailed to the member separately from the ID card and new member letter. MCPs will meet the
timely receipt requirement for these materials if they are mailed to the member within
(twenty-four) 24 hours of the MCP receiving the ODJFS produced monthly membership roster
(MMR). This is provided the materials are mailed via a method with an expected delivery
date of no more than five (5) days. If the member handbook, provider directory and advance
directives information are mailed separately from the ID card and new member letter and
the MCP is unable to mail the materials within twenty-four (24) hours, the member
handbook, provider directory and advance directives information must be mailed via a
method that will ensure receipt by no later than the effective date of coverage. If the
MCP mails the ID card and new member letter with the other materials (e.g., member
handbook, provider directory, and advance directives), the MCP must ensure that
all materials are mailed via a method that will ensure their receipt prior
to the member’s effective date of coverage.
d. MCPs must designate two (2) MCP staff members to receive a copy of the new member
materials on a monthly basis in order to monitor the timely receipt of these
materials. At least one of the staff members must receive the materials at their home
address.
| 25. | Call Center Standards |
| The MCP must provide assistance to members through a member services toll-free call-in system pursuant to OAC rule 5101:3-26-08.2(A)(1). MCP member services staff must be available nationwide to provide assistance to members through the toll-free call-in system every Monday through Friday, at all times during the hours of 7:00 am to 7:00 pm Eastern Time, except for the following major holidays: |
| • | New Year’s Day | ||
| • | Martin Luther King’s Birthday | ||
| • | Memorial Day |
Appendix C
Covered Families and Children (CFC) population
Page 8
Covered Families and Children (CFC) population
Page 8
| • | Independence Day | ||
| • | Labor Day | ||
| • | Thanksgiving Day | ||
| • | Christmas Day | ||
| • | 2 optional closure days: These days can be used independently or in combination with any of the major holiday closures but cannot both be used within the same closure period. |
| Before announcing any optional closure dates to members and/or staff, MCPs must receive ODJFS prior-approval which verifies that the optional closure days meet the specified criteria. |
| If a major holiday falls on a Saturday, the MCP member services line may be closed on the preceding Friday. If a major holiday falls on a Sunday, the member services line may be closed on the following Monday. MCP member services closure days must be specified in the MCP’s member handbook, member newsletter, or other some general issuance to the MCP’s members at least (thirty) 30 days in advance of the closure. | ||
| The MCP must also provide access to medical advice and direction through a centralized twenty-four-hour, seven day (24/7) toll-free call-in system, available nationwide, pursuant to OAC rule 5101:3-26-03.1(A)(6). The 24/7 call-in system must be staffed by appropriately trained medical personnel. For the purposes of meeting this requirement, trained medical professionals are defined as physicians, physician assistants, licensed practical nurses, and registered nurses. | ||
| MCPs must meet the current American Accreditation HealthCare Commission/URAC-designed Health Call Center Standards (HCC) for call center abandonment rate, blockage rate and average speed of answer. By the 10th of each month, MCPs must self-report their prior month performance in these three areas for their member services and 24/7 toll-free call-in systems to ODJFS. ODJFS will inform the MCPs of any changes/updates to these URAC call center standards. | ||
| MCPs are not permitted to delegate grievance/appeal functions [Ohio Administrative Code (OAC) rule 5101:3-26-08.4(A)(9)]. Therefore, the member services call center requirement may not be met through the execution of a Medicaid Delegation Subcontract Addendum or Medicaid Combined Services Subcontract Addendum. |
| 26. | Notification of Optional MCP Membership |
| In order to comply with the terms of the ODJFS State Plan Amendment for the managed care program (i.e., 42 CFR 438.50), MCPs in mandatory membership service areas must inform new members that MCP membership is optional for certain populations. Specifically, MCPs must inform any applicable pending member or member that the following CFC populations are not required to select an MCP in order to receive their |
Appendix C
Covered Families and Children (CFC) population
Page 9
Covered Families and Children (CFC) population
Page 9
| Medicaid healthcare benefit and what steps they need to take if they do not wish to be a member of an MCP: |
| - | Indians who are members of federally-recognized tribes. |
| - | Children under 19 years of age who are: |
| O | Eligible for Supplemental Security Income under title XVI; | ||
| O | In foster care or other out-of-home placement; | ||
| O | Receiving foster care of adoption assistance; | ||
| O | Receiving services through the Ohio Department of Health’s Bureau for Children with Medical Handicaps (BCMH) or any other family-centered, community-based, coordinated care system that receives grant funds under section 501(a)(1)(D) of title V, and is defined by the State in terms of either program participation or special health care needs. |
| 27. | HIPAA Privacy Compliance Requirements |
| The Health Insurance Portability and Accountability Act (HIPAA) Privacy Regulations at 45 CFR. § 164.502(e) and § 164.504(e) require ODJFS to have agreements with MCPs as a means of obtaining satisfactory assurance that the MCPs will appropriately safeguard all personal identified health information. Protected Health Information (PHI) is information received from or on behalf of ODJFS that meets the definition of PHI as defined by HIPAA and the regulations promulgated by the United States Department of Health and Human Services, specifically 45 CFR 164.501, and any amendments thereto. MCPs must agree to the following: |
| a. | MCPs shall not use or disclose PHI other than is permitted by this agreement or required by law. | ||
| b. | MCPs shall use appropriate safeguards to prevent unauthorized use or disclosure of PHI. | ||
| c. | MCPs shall report to ODJFS any unauthorized use or disclosure of PHI of which it becomes aware. Any breach by the MCP or its representatives of protected health information (PHI) standards shall be immediately reported to the State HIPAA Compliance Officer through the Bureau of Managed Health Care. MCPs must provide documentation of the breach and complete all actions ordered by the HIPAA Compliance Officer. | ||
| d. | MCPs shall ensure that all its agents and subcontractors agree to these same PHI conditions and restrictions. | ||
| e. | MCPs shall make PHI available for access as required by law. | ||
| f. | MCP shall make PHI available for amendment, and incorporate amendments as |
Appendix C
Covered Families and Children (CFC) population
Page 10
Covered Families and Children (CFC) population
Page 10
| appropriate as required by law. | |||
| g. | MCPs shall make PHI disclosure information available for accounting as required by law. | ||
| h. | MCPs shall make its internal PHI practices, books and records available to the Secretary of Health and Human Services (HHS) to determine compliance. | ||
| i. | Upon termination of their agreement with ODJFS, the MCPs, at ODJFS’ option, shall return to ODJFS, or destroy, all PHI in its possession, and keep no copies of the information, except as requested by ODJFS or required by law. | ||
| j. | ODJFS will propose termination of the MCP’s provider agreement if ODJFS determines that the MCP has violated a material breach under this section of the agreement, unless inconsistent with statutory obligations of ODJFS or the MCP. |
| 28. | Electronic Communications – MCPs are required to purchase/utilize Transport Layer Security (TLS) for all e-mail communication between ODJFS and the MCP. The MCP’s e-mail gateway must be able to support the sending and receiving of e-mail using Transport Layer Security (TLS) and the MCP’s gateway must be able to enforce the sending and receiving of email via TLS. | |
| 29. | MCP Membership acceptance, documentation and reconciliation |
| a. | Selection Services Contractor: The MCP shall provide to the MCEC ODJFS prior-approved MCP materials and directories for distribution to eligible individuals who request additional information about the MCP. | ||
| b. | Monthly Reconciliation of Membership and Premiums: The MCP shall reconcile member data as reported on the MCEC produced consumer contact record (CCR) with the ODJFS-produced monthly member roster (MMR) and report to the ODJFS any difficulties in interpreting or reconciling information received. Membership reconciliation questions must be identified and reported to the ODJFS prior to the first of the month to assure that no member is left without coverage. The MCP shall reconcile membership with premium payments and delivery payments as reported on the monthly remittance advice (RA). | ||
| The MCP shall work directly with the ODJFS, or other ODJFS-identified entity, to resolve any difficulties in interpreting or reconciling premium information. Premium reconciliation questions must be identified within thirty (30) days of receipt of the RA. |
Appendix C
Covered Families and Children (CFC) population
Page 11
Covered Families and Children (CFC) population
Page 11
| c. | Monthly Premiums and Delivery Payments: The MCP must be able to receive monthly premiums and delivery payments in a method specified by ODJFS.(ODJFS monthly prospective premium and delivery payment issue dates are provided in advance to the MCPs.) Various retroactive premium payments (e.g., newborns), and recovery of premiums paid (e.g., retroactive terminations of membership for children in custody, deferments, etc.,) may occur via any ODJFS weekly remittance. | ||
| d. | Hospital/Inpatient Facility Deferment: When an MCP learns of a currently hospitalized member’s intent to disenroll through the CCR or the 834, the disenrolling MCP must notify the hospital/inpatient facility and treating providers as well as the enrolling MCP of the change in enrollment within five (5) business days of receipt of the CCR or 834. The disenrolling MCP must notify the inpatient facility that it will remain responsible for the inpatient facility charges through the date of discharge; and must notify the treating providers that it will remain responsible for provider charges through the date of disenrollment. | ||
| When the enrolling MCP learns through the disenrolling MCP, through ODJFS or other means, that a new member who was previously enrolled with another MCP was admitted prior to the effective date of enrollment and remains an inpatient on the effective date of enrollment, the enrolling MCP shall contact the hospital/inpatient facility within five (5) business days of learning of the hospitalization. The enrolling MCP shall verify that it is responsible for all medically necessary Medicaid covered services from the effective date of MCP membership, including treating provider services related to the inpatient stay; the enrolling MCP must reiterate that the admitting/disenrolling MCP remains responsible for the hospital/inpatient facility charges through the date of discharge. The enrolling MCP shall work with the hospital/inpatient facility to facilitate discharge planning and authorize services as needed. | |||
| When an MCP learns that a new member who was previously on Medicaid fee for service was admitted prior to the effective date of enrollment and remains an inpatient on the effective date of enrollment, the enrolling MCP shall notify the hospital/ inpatient facility and treating providers that the MCP may not be the payer. The MCP shall work with hospital/inpatient facility, treating providers and the ODJFS to assure that discharge planning assures continuity of care and accurate payment. Notwithstanding the MCP’s right to request a hospital deferment up to six (6) months following the member’s effective date, when the enrolling MCP learns of a deferment-eligible hospitalization, the MCP shall notify the ODJFS and request the deferment within five (5) business days of learning of the potential deferment. |
Appendix C
Covered Families and Children (CFC) population
Page 12
Covered Families and Children (CFC) population
Page 12
| e. | Just Cause Requests: The MCP shall follow procedures as specified by ODJFS in assisting the ODJFS in resolving member requests for member-initiated requests affecting membership. | ||
| f. | Newborn Notifications: The MCP is required to submit newborn notifications to ODJFS in accordance with the ODJFS Newborn Notification File and Submissions Specifications. | ||
| g. | Eligible Individuals: If an eligible individual contacts the MCP, the MCP must provide any MCP-specific managed care program information requested. The MCP must not attempt to assess the eligible individual’s health care needs. However, if the eligible individual inquires about continuing/transitioning health care services, MCPs shall provide an assurance that all MCPs must cover all medically necessary Medicaid-covered health care services and assist members with transitioning their health care services. | ||
| h. | Pending Member | ||
| If a pending member (i.e., an eligible individual subsequent to plan selection or assignment, but prior to their membership effective date) contacts the selected MCP, the MCP must provide any membership information requested, including but not limited to, assistance in determining whether the current medications require prior authorization. The MCP must also ensure that any care coordination (e.g., PCP selection, prescheduled services and transition of services) information provided by the pending member is logged in the MCP’s system and forwarded to the appropriate MCP staff for processing as required. MCPs may confirm any information provided on the CCR at this time. Such communication does not constitute confirmation of membership. MCPs are prohibited from initiating contact with a pending member. Upon receipt of the 834, the MCP may contact a pending member to confirm information provided on the CCR or the 834, assist with care coordination and transition of care, and inquire if the pending member has any membership questions. | |||
| i. | Transition of Fee-For-Service Members | ||
| Providing care coordination for prescheduled health services and existing care treatment plans, is critical for members transitioning from Medicaid fee-for service (FFS) to managed care. Therefore, MCPs must: |
| i. | Allow their new members that are transitioning from Medicaid fee-for-service to receive services from out-of-panel providers if the member or provider contacts the MCP to discuss the scheduled health |
Appendix C
Covered Families and Children (CFC) population
Page 13
Covered Families and Children (CFC) population
Page 13
| services in advance of the service date and one of the following applies: |
| a. | The member is in her third trimester of pregnancy and has an established relationship with an obstetrician and/or delivery hospital; | ||
| b. | The member has been scheduled for an inpatient/outpatient surgery and has been prior-approved and/or precertified pursuant to OAC rule 5101:3-2-40 (surgical procedures would also include follow-up care as appropriate); | ||
| c. | The member has appointments within the initial month of MCP membership with specialty physicians that were scheduled prior to the effective date of membership; or | ||
| d. | The member is receiving ongoing chemotherapy or radiation treatment. |
| If contacted by the member, the MCP must contact the provider’s office as expeditiously as the situation warrants to confirm that the service(s) meets the above criteria. |
| ii. | Allow their new members that are transitioning from Medicaid fee-for-service to continue receiving home care services (i.e., nursing, aide, and skilled therapy services) and private duty nursing (PDN) services if the member or provider contacts the MCP to discuss the health services in advance of the service date. These services must be covered from the date of the member or provider contact at the current service level, and with the current provider, whether a panel or out-of-panel provider, until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. As soon as the MCP becomes aware of the member’s current home care services, the MCP must initiate contact with the current provider and member as applicable to ensure continuity of care and coordinate a transfer of services to a panel provider, if appropriate. | ||
| iii. | Honor any current fee-for-service prior authorization to allow their new members that are transitioning from Medicaid fee-for-service to receive services from the authorized provider, whether a panel or out-of-panel provider, for the following approved services: |
| a. | an organ, bone marrow, or hematapoietic stem cell transplant pursuant to OAC rule 5101:3-2-07.1; |
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| b. | dental services that have not yet been received; | ||
| c. | vision services that have not yet been received; | ||
| d. | durable medical equipment (DME) that has not yet been received. Ongoing DME services and supplies are to be covered by the MCP as previously-authorized until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. | ||
| e. | private duty nursing (PDN) services. PDN services must be covered at the previously-authorized service level until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. |
| As soon as the MCP becomes aware of the member’s current fee-for-service authorization approval, the MCP must initiate contact with the authorized provider and member as applicable to ensure continuity of care. The MCP must implement a plan to meet the member’s immediate and ongoing medical needs and, with the exception of organ, bone marrow, or hematapoietic stem cell transplants, coordinate the transfer of services to a panel provider, if appropriate. | |||
| When an MCP medical necessity review results in a decision to reduce, suspend, or terminate services previously authorized by fee-for-service Medicaid, the MCP must notify the member of their state hearing rights no less than 15 calendar days prior to the effective date of the MCP’s proposed action, per rule 5101:3-26-08.4 of the Administrative Code. |
| iv. | Reimburse out-of-panel providers that agree to provide the transition services at 100% of the current Medicaid fee-for-service provider rate for the service(s) identified in Section 29.i. (i., ii., and iii.) of this appendix. | ||
| v. | Document the provision of transition of services identified in Section 29.i. (i., ii., and iii.) of this appendix as follows: |
| a. | For non-panel providers, notification to the provider confirming the provider’s agreement/disagreement to provide the service and accept 100% of the current Medicaid fee-for-service rate as payment. If the provider agrees, the distribution of the MCP’s materials as outlined in Appendix G.3.e. |
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| b. | Notification to the member of the non-panel provider’s agreement/disagreement to provide the service. If the provider disagrees, notification to the member of the MCP’s availability to assist with locating a provider as expeditiously as the member’s health condition warrants. | ||
| c. | For panel providers, notification to the provider and member confirming the MCP’s responsibility to cover the service. |
| MCPs must use the ODJFS-specified model language for the provider and member notices and maintain documentation of all member and/or provider contacts relating to such services. |
| 30. | Health Information System Requirements The ability to develop and maintain information management systems capacity is crucial to successful plan performance. ODJFS therefore requires MCPs to demonstrate their ongoing capacity in this area by meeting several related specifications. |
| a. | Health Information System |
| i. | As required by 42 CFR 438.242(a), each MCP must maintain a health information system that collects, analyzes, integrates, and reports data. The system must provide information on areas including, but not limited to, utilization, grievances and appeals, and MCP membership terminations for other than loss of Medicaid eligibility. | ||
| ii. | As required by 42 CFR 438.242(b)(1), each MCP must collect data on member and provider characteristics and on services furnished to its members. | ||
| iii. | As required by 42 CFR 438.242(b)(2), each MCP must ensure that data received from providers is accurate and complete by verifying the accuracy and timeliness of reported data; screening the data for completeness, logic, and consistency; and collecting service information in standardized formats to the extent feasible and appropriate. | ||
| iv. | As required by 42 CFR 438.242(b)(3), each MCP must make all collected data available upon request by ODJFS or the Center for Medicare and Medicaid Services (CMS). | ||
| v. | Acceptance testing of any data that is electronically submitted to ODJFS is required: |
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| a. | Before an MCP may submit production files | ||
| b. | Whenever an MCP changes the method or preparer of the electronic media; and/or | ||
| c. | When the ODJFS determines an MCP’s data submissions have an unacceptably high error rate. |
| MCPs that change or modify information systems that are involved in producing any type of electronically submitted files, either internally or by changing vendors, are required to submit to ODJFS for review and approval a transition plan including the submission of test files in the ODJFS-specified formats. Once an acceptable test file is submitted to ODJFS, as determined solely by ODJFS, the MCP can return to submitting production files. ODJFS will inform MCPs in writing when a test file is acceptable. Once an MCP’s new or modified information system is operational, that MCP will have up to ninety (90) days to submit an acceptable test file and an acceptable production file. | |||
| Submission of test files can start before the new or modified information system is in production. ODJFS reserves the right to verify any MCP’s capability to report elements in the minimum data set prior to executing the provider agreement for the next contract period. Penalties for noncompliance with this requirement are specified in Appendix N, Compliance Assessment System of the Provider Agreement. |
| b. | Electronic Data Interchange and Claims Adjudication Requirements |
| Claims Adjudication | |||
| The MCP must have the capacity to electronically accept and adjudicate all claims to final status (payment or denial). Information on claims submission procedures must be provided to non-contracting providers within thirty (30) days of a request. MCPs must inform providers of its ability to electronically process and adjudicate claims and the process for submission. Such information must be initiated by the MCP and not only in response to provider requests. | |||
| The MCP must notify providers who have submitted claims of claims status [paid, denied, pended (suspended)] within one month of receipt. Such notification be in the form of a claim payment/remittance advice produced on a routine monthly, or more frequent, basis. |
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Covered Families and Children (CFC) population
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Electronic Data Interchange
The MCP shall comply with all applicable provisions of HIPAA including electronic data
interchange (EDI) standards for code sets and the following electronic transactions:
Health care claims;
Health care claim status request and response;
Health care payment and remittance status;
Standard code sets; and
National Provider Identifier (NPI).
Health care claim status request and response;
Health care payment and remittance status;
Standard code sets; and
National Provider Identifier (NPI).
Each EDI transaction processed by the MCP shall be implemented in conformance with the
appropriate version of the transaction implementation guide, as specified by applicable
federal rule or regulation.
The MCP must have the capacity to accept the following transactions from the Ohio
Department of Job and Family services consistent with EDI processing specifications in
the transaction implementation guides and in conformance with the 820 and 834
Transaction Companion Guides issued by ODJFS:
ASC X12 820 — Payroll Deducted and Other Group Premium Payment for Insurance Products;
and
ASC X12 834 — Benefit Enrollment and Maintenance.
The MCP shall comply with the HIPAA mandated EDI transaction standards and code sets no
later than the required compliance dates as set forth in the federal regulations.
Documentation of Compliance with Mandated EDI Standards
The capacity of the MCP and/or applicable trading partners and business associates to
electronically conduct claims processing and related transactions in compliance with
standards and effective dates mandated by HIPAA must be demonstrated, to the
satisfaction of ODJFS, as outlined below.
Verification of Compliance with HIPAA (Health Insurance Portability and
Accountability Act of 1995)
MCPs shall comply with the transaction standards and code sets for sending and receiving
applicable transactions as specified in 45 CFR Part 162 – Health Insurance Reform:
Standards for Electronic Transactions (HIPAA regulations) In addition the MCP must enter
into the appropriate trading partner agreement and implemented standard code sets. If
the MCP has obtained third-party certification
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of HIPAA compliance for any of the items listed below, that certification may be
submitted in lieu of the MCP’s written verification for the applicable item(s).
| i. | Trading Partner Agreements | ||
| ii. | Code Sets | ||
| iii. | Transactions |
| a. | Health Care Claims or Equivalent Encounter Information (ASC X12N 837 & NCPDP 5.1) | ||
| b. | Eligibility for a Health Plan (ASC X12N 270/271) | ||
| c. | Referral Certification and Authorization (ASC X12N 278) | ||
| d. | Health Care Claim Status (ASC X12N 276/277) | ||
| e. | Enrollment and Disenrollment in a Health Plan (ASC X12N 834) | ||
| f. | Health Care Payment and Remittance Advice (ASC X12N 835) | ||
| g. | Health Plan Premium Payments (ASC X12N 820) | ||
| h. | Coordination of Benefits |
| Trading Partner Agreement with ODJFS | |||
| MCPs must complete and submit an EDI trading partner agreement in a format specified by the ODJFS. Submission of the copy of the trading partner agreement prior to entering into this Agreement may be waived at the discretion of ODJFS; if submission prior to entering into this Agreement is waived, the trading partner agreement must be submitted at a subsequent date determined by ODJFS. | |||
| Noncompliance with the EDI and claims adjudication requirements will result in the imposition of penalties, as outlined in Appendix N, Compliance Assessment System, of the Provider Agreement. |
| c. | Encounter Data Submission Requirements | ||
| General Requirements | |||
| Each MCP must collect data on services furnished to members through an encounter data system and must report encounter data to the ODJFS. MCPs are required to submit this data electronically to ODJFS on a monthly basis in the following standard formats: |
| • | Institutional Claims — UB92 flat file | ||
| • | Noninstitutional Claims — National standard format | ||
| • | Prescription Drug Claims — NCPDP |
| ODJFS relies heavily on encounter data for monitoring MCP performance. The ODJFS uses encounter data to measure clinical performance, conduct access and utilization reviews, reimburse MCPs for newborn deliveries and aid in setting |
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MCP capitation rates. For these reasons, it is important that encounter data is
timely, accurate, and complete. Data quality, performance measures and standards
are described in the Agreement.
An encounter represents all of the services, including medical supplies and
medications, provided to a member of the MCP by a particular provider, regardless
of the payment arrangement between the MCP and the provider. For example, if a
member had an emergency department visit and was examined by a physician, this
would constitute two encounters, one related to the hospital provider and one
related to the physician provider. However, for the purposes of calculating a
utilization measure, this would be counted as a single emergency department visit.
If a member visits their PCP and the PCP examines the member and has laboratory
procedures done within the office, then this is one encounter between the member
and their PCP.
If the PCP sends the member to a lab to have procedures performed, then this is
two encounters; one with the PCP and another with the lab. For pharmacy
encounters, each prescription filled is a separate encounter.
Encounters include services paid for retrospectively through fee-for-service
payment arrangements, and prospectively through capitated arrangements. Only
encounters with services (line items) that are paid by the MCP, fully or in part,
and for which no further payment is anticipated, are acceptable encounter data
submissions, except for immunization services. Immunization services submitted to
the MCP must be submitted to ODJFS if these services were paid for by another
entity (e.g., free vaccine program).
All other services that are unpaid or paid in part and for which the MCP
anticipates further payment (e.g., unpaid services rendered during a delivery of a
newborn) may not be submitted to ODJFS until they are paid. Penalties for
noncompliance with this requirement are specified in Appendix N, Compliance
Assessment System of the Agreement.
Acceptance Testing
The MCP must have the capability to report all elements in the Minimum Data Set as
set forth in the ODJFS Encounter Data Specifications and must submit a test file
in the ODJFS-specified medium in the required formats prior to contracting or
prior to an information systems replacement or update.
Acceptance testing of encounter data is required as specified in Section
29(a)(v) of this Appendix.
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| Encounter Data File Submission Procedures |
| A certification letter must accompany the submission of an encounter data file in the ODJFS-specified medium. The certification letter must be signed by the MCP’s Chief Executive Officer (CEO), Chief Financial Officer (CFO), or an individual who has delegated authority to sign for, and who reports directly to, the MCP’s CEO or CFO. |
| Timing of Encounter Data Submissions |
| ODJFS recommends that MCPs submit encounters no more than thirty-five (35) days after the end of the month in which they were paid. For example, claims paid in January are due March 5. ODJFS recommends that MCPs submit files in the ODJFS-specified medium by the 5th of each month. This will help to ensure that the encounters are included in the ODJFS master file in the same month in which they were submitted. |
| d. | Information Systems Review |
| ODJFS or its designee may review the information system capabilities of each MCP, before ODJFS enters into a provider agreement with a new MCP, when a participating MCP undergoes a major information system upgrade or change, when there is identification of significant information system problems, or at ODJFS’ discretion. Each MCP must participate in the review. The review will assess the extent to which MCPs are capable of maintaining a health information system including producing valid encounter data, performance measures, and other data necessary to support quality assessment and improvement, as well as managing the care delivered to its members. |
| The following activities, at a minimum, will be carried out during the review. ODJFS or its designee will: |
| i. | Review the Information Systems Capabilities Assessment (ISCA) forms, as developed by CMS; which the MCP will be required to complete. |
| ii. | Review the completed ISCA and accompanying documents; |
| iii. | Conduct interviews with MCP staff responsible for completing the ISCA, as well as staff responsible for aspects of the MCP’s information systems function; |
| iv. | Analyze the information obtained through the ISCA, conduct follow-up interviews with MCP staff, and write a statement of findings about the MCP’s information system. |
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| v. | Assess the ability of the MCP to link data from multiple sources; |
| vi. | Examine MCP processes for data transfers; |
| vii. | If an MCP has a data warehouse, evaluate its structure and reporting capabilities; |
| viii. | Review MCP processes, documentation, and data files to ensure that they comply with state specifications for encounter data submissions; and |
| ix. | Assess the claims adjudication process and capabilities of the MCP. |
| 31. | Delivery Payments |
| MCPs will be reimbursed for paid deliveries that are identified in the submitted encounters using the methodology outlined in the ODJFS Methods for Reimbursing for Deliveries (as specified in Appendix L). The delivery payment represents the facility and professional service costs associated with the delivery event and postpartum care that is rendered in the hospital immediately following the delivery event; no prenatal or neonatal experience is included in the delivery payment. | ||
| If a delivery occurred, but the MCP did not reimburse providers for any costs associated with the delivery, then the MCP shall not submit the delivery encounter to ODJFS and is not entitled to receive payment for the delivery. MCPs are required to submit all delivery encounters to ODJFS no later than one year after the date of the delivery. Delivery encounters which are submitted after this time will be denied payment. MCPs will receive notice of the payment denial on the remittance advice. | ||
| If an MCP is denied payment through ODJFS’ automated payment system because the delivery encounter was not submitted within a year of the delivery date, then it will be necessary for the MCP to contact BMHC staff to receive payment. Payment will be made for the delivery, at the discretion of ODJFS if a payment had not been made previously for the same delivery. | ||
| To capture deliveries outside of institutions (e.g., hospitals) and deliveries in hospitals without an accompanying physician encounter, both the institutional encounters (UB-92) and the noninstitutional encounters (NSF) are searched for deliveries. | ||
| If a physician and a hospital encounter is found for the same delivery, only one payment will be made. The same is true for multiple births; if multiple delivery encounters are submitted, only one payment will be made. The method for reimbursing for deliveries |
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| includes the delivery of stillborns where the MCP incurred costs related to the delivery. | ||
| Rejections | ||
| If a delivery encounter is not submitted according to ODJFS specifications, it will be rejected and MCPs will receive this information on the exception report (or error report) that accompanies every file in the ODJFS-specified format. Tracking, correcting and resubmitting all rejected encounters is the responsibility of the MCP and is required by ODJFS. | ||
| Timing of Delivery Payments | ||
| MCPs will be paid monthly for deliveries. For example, payment for a delivery encounter submitted with the required encounter data submission in March, will be reimbursed in March. The delivery payment will cover any encounters submitted with the monthly encounter data submission regardless of the date of the encounter, but will not cover encounters that occurred over one year ago. | ||
| This payment will be a part of the weekly update (adjustment payment) that is in place currently. The third weekly update of the month will include the delivery payment. The remittance advice is in the same format as the capitation remittance advice. | ||
| Updating and Deleting Delivery Encounters | ||
| The process for updating and deleting delivery encounters is handled differently from all other encounters. See the ODJFS Encounter Data Specifications for detailed instructions on updating and deleting delivery encounters. | ||
| The process for deleting delivery encounters can be found on page 35 of the UB-92 technical specifications (record/field 20-7) and page III-47 of the NSF technical specifications (record/field CA0-31.0a). | ||
| Auditing of Delivery Payments | ||
| A delivery payment audit will be conducted periodically. If medical records do not substantiate that a delivery occurred related to the payment that was made, then ODJFS will recoup the delivery payment from the MCP. Also, if it is determined that the encounter which triggered the delivery payment was not a paid encounter, then ODJFS will recoup the delivery payment. | ||
| 32. | If the MCP will be using the Internet functions that will allow approved users to access member information (e.g., eligibility verification), the MCP must receive prior approval from ODJFS that verifies that the proper safeguards, firewalls, etc., are in place to protect member data. | |
| 33. | MCPs must receive prior written approval from ODJFS before adding any information to their website that would require ODJFS prior approval in hard copy form (e.g., provider listings, member handbook information). | |
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| 34. | Pursuant to 42 CFR 438.106(b), the MCP acknowledges that it is prohibited from holding a member liable for services provided to the member in the event that the ODJFS fails to make payment to the MCP. | |
| 35. | In the event of an insolvency of an MCP, the MCP, as directed by ODJFS, must cover the continued provision of services to members until the end of the month in which insolvency has occurred, as well as the continued provision of inpatient services until the date of discharge for a member who is institutionalized when insolvency occurs. | |
| 36. | Franchise Fee Assessment Requirements |
| a. | Each MCP is required to pay a franchise permit fee to ODJFS for each calendar quarter as required by ORC Section 5111.176. The current fee to be paid is an amount equal to 41/2 percent of the managed care premiums, minus Medicare premiums that the MCP received from any payer in the quarter to which the fee applies. Any premiums the MCP returned or refunded to members or premium payers during that quarter are excluded from the fee. | ||
| b. | The franchise fee is due to ODJFS in the ODJFS-specified format on or before the 30th day following the end of the calendar quarter to which the fee applies. | ||
| c. | At the time the fee is submitted, the MCP must also submit to ODJFS a completed form and any supporting documentation pursuant to ODJFS specifications. | ||
| d. | Penalties for noncompliance with this requirement are specified in Appendix N, Compliance Assessment System of the Provider Agreement and in ORC Section 5111.176. |
| 37. | Information Required for MCP Websites |
| a. | On-line Provider Directory – MCPs must have an internet-based provider directory available in the same format as their ODJFS-approved provider directory, that allows members to electronically search for the MCP panel providers based on name, provider type, geographic proximity, and population (as specified in Appendix H). MCP provider directories must include all MCP-contracted providers [except as specified by ODJFS] as well as certain ODJFS non-contracted providers. | ||
| b. | On-line Member Website – MCPs must have a secure internet-based website which is regularly updated to include the most current ODJFS approved materials. The website at a minimum must include: (1) a list of the counties that are covered |
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| in their service area; (2) the ODJFS-approved MCP member handbook, recent
newsletters/announcements, MCP contact information including member services hours
and closures; (3) the MCP provider directory as referenced in section 36(a) of this
appendix; (4) the MCP’s current preferred drug list (PDL), including an explanation
of the list, which drugs require prior authorization (PA), and the PA process; (5)
the MCP’s current list of drugs covered only with PA, the PA process, and the MCP’s
policy for covering generic for brand-name drugs; and (6) the ability for members
to submit questions/comments/ grievances/appeals/etc. and receive a response (members must be given the option of a return e-mail or phone call) within one working day of receipt. MCPs must ensure that all member materials designated specifically for CFC and/or ABD consumers (i.e. the MCP member handbook) are clearly labeled as such. The MCP’s member website cannot be used as the only means to notify members of new and/or revised MCP information (e.g., change in holiday closures, change in additional benefits, revisions to approved member materials etc.). ODJFS may require MCPs to include additional information on the member website, as needed. |
|||
| c. | On-line Provider Website – MCPs must have a secure internet-based website for contracting providers where they will be able to confirm a consumer’s MCP enrollment and through this website (or through e-mail process) allow providers to electronically submit and receive responses to prior authorization requests. This website must also include: (1) a list of the counties that are covered in their service area; (2) the MCP’s provider manual;(3) MCP contact information; (4) a link to the MCP’s on-line provider directory as referenced in section 37(a) of this appendix; (5) the MCP’s current PDL list, including an explanation of the list, which drugs require PA, and the PA process; (6) the MCP’s current list of drugs covered only with PA, the PA process, and the MCP’s policy for covering generic for brand-name drugs. MCPs must ensure that all provider materials designated specifically for CFC and/or ABD consumers (i.e. the MCP’s provider manual) are clearly labeled as such; and (7) information regarding the availability of expedited prior authorization requests, as well as the information that is required from that provider in order to substantiate an expedited prior authorization request. | ||
| ODJFS may require MCPs to include additional information on the provider website, as needed. |
| 38. | MCPs must provide members with a printed version of their PDL and PA lists, upon request. | |
| 39. | MCPs must not use, or propose to use, any offshore programming or call center services in fulfilling the program requirements. |
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| 40. | Coordination of Benefits |
| When a claim is denied due to third party liability, the managed care plan must timely share appropriate and available information regarding the third party to the provider for the purposes of coordination of benefits, including, but not limited to third party liability information received from the Ohio Department of Job and Family Services. |
Appendix D
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APPENDIX D
ODJFS RESPONSIBILITIES
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
The following are ODJFS responsibilities or clarifications that are not otherwise specifically
stated in OAC Chapter 5101: 3-26 or elsewhere in the ODJFS-MCP provider agreement.
General Provisions
| 1. | ODJFS will provide MCPs with an opportunity to review and comment on the rate-setting time line and proposed rates, and proposed changes to the OAC program rules or the provider agreement. | |
| 2. | ODJFS will notify MCPs of managed care program policy and procedural changes and, whenever possible, offer sufficient time for comment and implementation. | |
| 3. | ODJFS will provide regular opportunities for MCPs to receive program updates and discuss program issues with ODJFS staff. | |
| 4. | ODJFS will provide technical assistance sessions where MCP attendance and participation is required. ODJFS will also provide optional technical assistance sessions to MCPs, individually or as a group. | |
| 5. | ODJFS will provide MCPs with an annual MCP Calendar of Submissions outlining major submissions and due dates. | |
| 6. | ODJFS will identify contact staff, including the Contract Administrator, selected for each MCP. | |
| 7. | ODJFS will recalculate the minimum provider panel specifications if ODJFS determines that significant changes have occurred in the availability of specific provider types and the number and composition of the eligible population. | |
| 8. | ODJFS will recalculate the geographic accessibility standards, using the geographic information systems (GIS) software, if ODJFS determines that significant changes have occurred in the availability of specific provider types and the number and composition of the eligible population and/or the ODJFS provider panel specifications. | |
| 9. | On a monthly basis, ODJFS will provide MCPs with an electronic file containing their MCP’s provider panel as reflected in the ODJFS Provider Verification System (PVS) database, or other designated system. |
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| 10. | On a monthly basis, ODJFS will provide MCPs with an electronic Master Provider File containing all the Ohio Medicaid fee-for-service providers, which includes their Medicaid Provider Number, as well as all providers who have been assigned a provider reporting number for current encounter data purposes. | |
| 11. | It is the intent of ODJFS to utilize electronic commerce for many processes and procedures that are now limited by HIPAA privacy concerns to FAX, telephone, or hard copy. The use of TLS will mean that private health information (PHI) and the identification of consumers as Medicaid recipients can be shared between ODJFS and the contracting MCPs via e-mail such as reports, copies of letters, forms, hospital claims, discharge records, general discussions of member-specific information, etc. ODJFS may revise data/information exchange policies and procedures for many functions that are now restricted to FAX, telephone, and hard copy, including, but not limited to, monthly membership and premium payment reconciliation requests, newborn reporting, Just Cause disenrollment requests, information requests etc. (as specified in Appendix C). | |
| 12. | ODJFS will immediately report to Center for Medicare and Medicaid Services (CMS) any breach in privacy or security that compromises protected health information (PHI), when reported by the MCP or ODJFS staff. | |
| 13. | Service Area Designation | |
| Membership in a service area is mandatory unless ODJFS approves membership in the service area for consumer initiated selections only. It is ODJFS’current intention to implement a mandatory managed care program in service areas wherever choice and capacity allow and the criteria in 42 CFR 438.50(a) are met. | ||
| 14. | Consumer information |
| a. | ODJFS or its delegated entity will provide membership notices, informational materials, and instructional materials relating to members and eligible individuals in a manner and format that may be easily understood. At least annually, ODJFS or designee will provide MCP eligible individuals, including current MCP members, with a Consumer Guide. The Consumer Guide will describe the managed care program and include information on the MCP options in the service area and other information regarding the managed care program as specified in 42 CFR 438.10. | ||
| b. | ODJFS will notify members or ask MCPs to notify members about significant changes affecting contractual requirements, member services or access to providers. | ||
| c. | If an MCP elects not to provide, reimburse, or cover a counseling service or referral service due to an objection to the service on moral or religious grounds, ODJFS will provide coverage and reimbursement for these services for the MCP’s members. |
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| ODJFS will provide information on what services the MCP will not cover and how and where the MCP’s members may obtain these services in the applicable Consumer Guides. |
| 15. | Membership Selection and Premium Payment |
| a. | The managed care enrollment center (MCEC): The ODJFS-contracted MCEC will provide unbiased education, selection services, and community outreach for the Medicaid managed care program. The MCEC shall operate a statewide toll-free telephone center to assist eligible individuals in selecting an MCP or choosing a health care delivery option. | ||
| The MCEC shall distribute the most current Consumer Guide that includes the managed care program information as specified in 42 CFR 438.10, as well as ODJFS prior-approved MCP materials, such as solicitation brochures and provider directories, to consumers who request additional materials. | |||
| b. | Auto-Assignment Limitations – In order to ensure market and program stability, ODJFS may limit an MCP’s auto-assignments if they meet any of the following enrollment thresholds: |
| • | 40% of statewide Covered Families and Children (CFC) eligible population; and/or | ||
| • | 60% of the CFC eligibles in any region with two MCPs; and/or | ||
| • | 40% of the CFC eligibles in any region with three MCPs. |
| Once an MCP meets one of these enrollment thresholds, the MCP will only be permitted to receive the additional new membership (in the region or statewide, as applicable) through: (1) consumer-initiated enrollment; and (2) auto-assignments which are based on previous enrollment in that MCP or an historical provider relationship with a provider who is not on the panel of any other MCP in that region. In the event that an MCP in a region meets one or more of these enrollment thresholds, ODJFS, in their sole discretion, may not impose the auto-assignment limitation and auto-assign members to the MCPs in that region as ODJFS deems appropriate. | |||
| c. | Consumer Contact Record (CCR): ODJFS or their designated entity shall forward CCRs to MCPs on no less than a weekly basis. The CCRs are a record of each consumer-initiated MCP enrollment, change, or termination, and each MCEC initiated MCP assignment processed through the MCEC. The CCR contains information that is not included on the monthly member roster. |
Appendix D
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
| d. | Monthly member roster (MR): ODJFS verifies managed care plan enrollment on a monthly basis via the monthly membership roster. ODJFS or its designated entity provides a full member roster (F) and a change roster (C) via HIPAA 834 compliant transactions. | ||
| e. | Monthly Premiums and Delivery Payments: ODJFS will remit payment to the MCPs via an electronic funds transfer (EFT), or at the discretion of ODJFS, by paper warrant. | ||
| f. | Remittance Advice: ODJFS will confirm all premium payments and delivery payments paid to the MCP during the month via a monthly remittance advice (RA), which is sent to the MCP the week following state cut-off. ODJFS or its designated entity provides a record of each payment via HIPAA 820 compliant transactions. | ||
| g. | MCP Reconciliation Assistance: ODJFS will work with an MCP-designated contact(s) to resolve the MCP’s member and newborn eligibility inquiries, premium and delivery payment inquiries/discrepancies and to review/approve hospital deferment requests. |
| 16. | ODJFS will make available a website which includes current program information. | |
| 17. | ODJFS will regularly provide information to MCPs regarding different aspects of MCP performance including, but not limited to, information on MCP-specific and statewide external quality review organization surveys, focused clinical quality of care studies, consumer satisfaction surveys and provider profiles. | |
| 18. | ODJFS will periodically review a random sample of online and printed directories to assess whether MCP information is both accessible and updated. | |
| 19. | Communications |
| a. | ODJFS/BMHC: The Bureau of Managed Health Care (BMHC) is responsible for the oversight of the MCPs’ provider agreements with ODJFS. Within the BMHC, a specific Contract Administrator (CA) has been assigned to each MCP. Unless expressly directed otherwise, MCPs shall first contact their designated CA for questions/assistance related to Medicaid and/or the MCP’s program requirements /responsibilities. If their CA is not available and the MCP needs immediate assistance, MCP staff should request to speak to a supervisor within the Contract Administration Section. MCPs should take all necessary and appropriate steps to ensure all MCP staff are aware of, and follow, this communication process. |
Appendix D
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
| b. | ODJFS contracting-entities: ODJFS-contracting entities should never be contacted by the MCPs unless the MCPs have been specifically instructed to contact the ODJFS contracting entity directly. | ||
| c. | MCP delegated entities: In that MCPs are ultimately responsible for meeting program requirements, the BMHC will not discuss MCP issues with the MCPs’ delegated entities unless the applicable MCP is also participating in the discussion. MCP delegated entities, with the applicable MCP participating, should only communicate with the specific CA assigned to that MCP. |
APPENDIX E
RATE METHODOLOGY
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
|
Chase Center/Circle 111 Monument Circle Suite 601 Indianapolis, IN 46204-5128 USA |
|
| Tel +1 317 639 1000 | ||
| Fax +1 317 639 1001 | ||
| milliman.com |
FINAL and CONFIDENTIAL
December 12, 2007
Mr. Jon Barley, Ph.D., Bureau Chief
Bureau of Managed Health Care
Ohio Department of Job and Family Services
Lazarus Building
50 West Town St., Suite 400
Columbus, OH 43215
Bureau of Managed Health Care
Ohio Department of Job and Family Services
Lazarus Building
50 West Town St., Suite 400
Columbus, OH 43215
| RE: | CY 2008 RATE DEVELOPMENT METHODOLOGY — COVERED FAMILIES AND CHILDREN |
Dear Jon:
Milliman, Inc. {Milliman) was retained by the State of Ohio, Department of Job and
Family Services (ODJFS) to develop the calendar year 2008 actuarially sound capitation
rates for the Covered Families and Children (CFC) Risk Based Managed Care (RBMC)
program. This letter provides the documentation for the actuarially sound capitation
rates.
LIMITATIONS
The information contained in this letter, including the enclosures, has been prepared
for the State of Ohio, Department of Job and Family Services and their consultants and
advisors. It is our understanding that the information contained in this letter may be
utilized in a public document. To the extent that the information contained in this
letter is provided to third parties, the letter should be distributed in its entirety.
Any user of the data must possess a certain level of expertise in actuarial science and
healthcare modeling so as not to misinterpret the data presented.
Milliman makes no representations or warranties regarding the contents of this letter
to third parties. Likewise, third parties are instructed that they are to place no
reliance upon this letter prepared for ODJFS by Milliman that would result in the
creation of any duty or liability under any theory of law by Milliman or its employees
to third parties. Other parties receiving this letter must rely upon their own experts
in drawing conclusions about the capitation rates, assumptions, and trends.
The information contained in this letter was prepared as documentation of the
actuarially sound capitation rates for Medicaid managed care organization health plans
in the State of Ohio. The information may not be appropriate for any other purpose.
Milliman makes no representations or warranties regarding the contents of this letter to
third parties. Likewise, third parties are instructed that they are to place no
reliance upon this letter prepared for ODJFS by Milliman that would result in the
creation of any duty or liability under any theory of law by Milliman or its employees
to third parties. Other parties receiving this letter must rely upon their own experts
in drawing conclusions about the information presented.
Offices in principal Cities Worldwide
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 2 |
FINAL and CONFIDENTIAL
SUMMARY OF METHODOLOGY
ODJFS
contracted with Milliman to develop the CY 2008 CFC actuarially sound
capitation rates. The actuarially sound capitation rates were developed from
historical claims and enrollment data for the fee for service (FFS) and managed
care populations. The composite of the FFS and managed care populations are
considered a comparable population to the population enrolled with the health
plans. The historical experience was converted to a per member per month (PMPM)
basis and stratified by region, age / gender rating group, and category of service.
The historical experience was trended forward using projected trend rates to a
center point of July 1, 2008 for the 2008 calendar year contract period. The
historical experience was adjusted to reflect adjustments to the utilization and
average cost per service that would be expected in a managed care environment.
Appendix 1 contains a chart outlining the methodology that was used to develop the
CY 2008 capitation rates for the CFC populations.
Appendix 2 contains the actuarial certification regarding the actuarial soundness of
the capitation rates.
Appendix 3 contains the CY 2008 capitation rates by rate group and region, including
the segmentation of the administrative cost allowance between guaranteed and at-risk
components.
DETAILS OF METHODOLOGY
I. COVERED POPULATION
The CY 2008 CFC capitation rates have been developed using historical experience
for the population eligible for managed care enrollment based on age, gender, and
program assignment. The program assignments shown in Table 1 were included in the
development of the CY 2008 CFC capitation rates.
Milliman makes no representations or warranties regarding the contents of this
letter to third parties . Likewise, third parties are instructed that they are to
place no reliance upon this letter prepared for ODJFS by Milliman that would result
in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must rely upon
their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 3 |
FINAL and CONFIDENTIAL
Table 1
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Summary of Managed Care Eligible Population
Summary of Managed Care Eligible Population
| Program Assignment | Description | |
PREG
|
Healthy Start Pregnant Women | |
PREGE
|
Healthy Start Pregnant Women Expansion | |
PREGEX
|
Healthy Start Expedited Pregnant Women | |
RPREGEX
|
Healthy Start Expedited Pregnant Women RMF | |
HSC
|
Healthy Start Children | |
HSCE
|
Healthy Start Expansion <= 150% | |
RHSC
|
Healthy Start Children RMF | |
CHIP1
|
Healthy Start CHIP 1 <=150% | |
CHIP2
|
Healthy Start CHIP 2 151-200% | |
RCHIP1
|
Healthy Start CHIP 1 <=150% RMF | |
RCHIP2
|
Healthy Start CHIP 2 151-200% RMF | |
RCHSUP
|
Healthy Family Child Support Extended RMF | |
CHSUP
|
Healthy Family Child Support Extended | |
OWFFAM
|
Ohio Works First Families — Cash | |
ROWFFAM
|
Ohio Works First Families — Cash RMF | |
LIFAM
|
Low Income Families | |
RLIFAM
|
Low Income Families RMF | |
HYFAM
|
Healthy Families (Expansion 7/00 Reduced 1/06) | |
TRANS
|
Transitional | |
LIIND
|
Low Income Individuals | |
RLIIND
|
Low Income Individuals RMF |
Milliman extracted the eligible population information from historical data. The
eligible population includes the Healthy Start and Healthy Families
populations. If
a member was ineligible during a month, all claims and eligibility for the month
were excluded from the actuarial models.
II. CATEGORY OF SERVICE DEFINITIONS
The categories of service listed in Table 2 describe the actuarial model service
groupings. The units associated with the categories have been indicated. Further,
the primary method of classifying the claims has been provided.
Milliman makes no representations or warranties regarding the contents of this
letter to third parties . Likewise, third parties are instructed that they are to
place no reliance upon this letter prepared for ODJFS by Milliman that would result
in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must rely upon
their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 4 |
FINAL and CONFIDENTIAL
Table 2
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Categories of Service
DEPARTMENT OF JOB AND FAMILY SERVICES
Categories of Service
| Type of Service | Service Category | Utilization Units | Classification Basis | |||
Inpatient Hospital
|
Medical/Surgical | Admits/Days | COS, DRG | |||
| MH/SA | Admits/Days | |||||
| Well Newborn | Admits/Days | |||||
| Maternity Non-Deliveries | Admits/Days | |||||
| Nursing Facility | Admits/Days | |||||
| Other Inpatient | Admits/Days | |||||
Outpatient Hospital
|
Emergency Room | Claims | COS, Revenue Code | |||
| Surgery/ASC | Services | |||||
| Cardiovascular | Services | |||||
| PT/ST/OT | Services | |||||
| Clinic | Services | |||||
| Other | Services | |||||
Professional
|
Inpatient/Outpatient Surgery | Services | COS, Provider Type, Procedure, Modifier | |||
| Anesthesia | Line Items | |||||
| Obstetrics | Services | |||||
| Office Visits/Consults | Services | |||||
| Hospital Inpatient Visits | Services | |||||
| Periodic Exams | ||||||
| Emergency Room Visits | Services | |||||
| Immunizations & Injections | Services | |||||
| Physical Medicine | Services | |||||
| Miscellaneous Services | Line Items, Services | |||||
Rad/Path/Lab
|
Radiology | Services | COS, Revenue Code, Provider | |||
| Pathology/Laboratory | Services | Type, Procedure | ||||
Ancillaries
|
MH/SA | Services | COS, Provider Type, Procedure | |||
| FQHC/RHF/OP Health Facility | Services | COS | ||||
| Pharmacy | Line Items | COS | ||||
| Dental | Services | COS | ||||
| Vision | Services | COS, Provider Type, Procedure | ||||
| Home Health | Line Items | COS | ||||
| Non- Emergent Transportation | Line Items | COS | ||||
| Ambulance | Line Items | COS, Procedure Code | ||||
| Supplies and DME | Line Items | COS, Provider Type, Procedure | ||||
| Miscellaneous Services | Line Items | COS |
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties.
Other parties receiving this letter must rely upon their own experts in drawing conclusions about
the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 5 |
FINAL and CONFIDENTIAL
III. RATE GROUPS
The CY 2008 CFC capitation rates are segmented by region and rate group. Table 3
contains the rate groups used for the CFC population. The non-delivery rate groups
vary by age, gender, and program assignment. The delivery rate group is determined
based on the CFC Program Delivery Payment Reporting Procedures for ODJFS Managed Care
Plans, effective September 7, 2005.
Table 3
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Rate Groups
DEPARTMENT OF JOB AND FAMILY SERVICES
Rate Groups
| Age/Gender Groups | Benefit TyoeType | Population | ||
M/F- <1
|
Non - Delivery | Healthy Start / Healthy Families | ||
M/F- 1
|
Non - Delivery | Healthy Start / Healthy Families | ||
M/F -2 to 13
|
Non - Delivery | Healthy Start / Healthy Families | ||
M-14 to 18
|
Non - Delivery | Healthy Start / Healthy Families | ||
F- 14 to 18
|
Non - Delivery | Healthy Start / Healthy Families | ||
M- 19 to 44
|
Non - Delivery | Healthy Families | ||
F- 19 to 44
|
Non - Delivery | Healthy Families | ||
M/F - 45 to 64
|
Non - Delivery | Healthy Families | ||
F- 19 to 64
|
Non - Delivery | Healthy Start | ||
F - All Ages
|
Delivery | Healthy Start / Healthy Families |
IV. DEVELOPMENT OF CY 2006 ADJUSTED FFS DATA
a. Historical Data Summaries
The CY 2008 CFC capitation rates were developed, in part, using FFS claims for two
state fiscal year (SFY) periods:
| • | SFY 2005 (Incurred during the 12 months ending June 30, 2005 paid through May 31, 2007). | ||
| • | SFY 2006 (Incurred during the 12 months ending June 30, 2006 paid through May 31, 2007). |
The claims data was provided by ODJFS from the data warehouse. The experience was
stratified into geographic region based on the member’s county of residence.
The reimbursement amounts captured on the FFS actuarial models reflect the amount
paid by ODJFS, net of third party liability recoveries and member co-payment amounts.
The reimbursement amounts have not been adjusted for payments made outside the claims
processing system. These amounts are discussed later in the documentation.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties . Likewise, third parties are
instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that
would result in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must rely upon their own experts
in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 6 |
FINAL and CONFIDENTIAL
The FFS data summaries represent historical experience for those services that are
included in the capitation payment. Services that are not covered under the
capitation payment have been excluded from the experience. The excluded services were
identified by the ODJFS defined category of service field, as shown in Table 4.
Table 4
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Claims Excluded from the FFS Data Summaries
DEPARTMENT OF JOB AND FAMILY SERVICES
Claims Excluded from the FFS Data Summaries
| COS Field Value | Description | |
08
|
PACE | |
13
|
ICF/MR Public | |
18
|
ICF/MR Private | |
35
|
Core Services | |
36
|
Home Care Facilitator Services | |
41
|
Mental Health Services | |
42
|
Mental Retardation | |
46
|
Model 50 Waiver Services | |
58
|
HMO Services | |
59
|
Mental Health Support Services | |
60
|
Mental Retardation Support Services | |
63
|
PPO Services | |
64
|
Passport | |
66
|
Passport Waiver III | |
67
|
OBRA MR/DD Waiver | |
80
|
Alcohol and Drug Abuse | |
82
|
Department of Education | |
84
|
ODADAS |
b. Completion Factors
Milliman utilized 24 months of claims experience for the FFS population that was
incurred through June 2006 and paid through May 2007 (eleven months of run-out).
Milliman applied claim completion factors to the twelve months of SFY 2005 and twelve
months of SFY 2006 claims experience. The claim completion factors were developed by
service category based on claims experience for the FFS population incurred and paid
through May 2007.
c. Historical Program Adjustments
The base FFS data summaries represent a historical time period from which projections
were developed. Certain program changes have occurred during and subsequent to the
base data time period. The program adjustments were estimated and applied to the
portion of the base experience data prior to the program
Milliman makes no representations or warranties regarding the contents of this letter to third
parties . Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information
presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 7 |
FINAL and CONFIDENTIAL
change effective date. For example, a program change implemented on January 1, 2006 will only be
reflected in the second half of SFY 2006. As such, an adjustment was applied to all of SFY 2005 and
half of SFY 2006 to include the program change in all periods of the base experience data.
ODJFS has provided a listing of all program changes impacting the base experience data. Table 5
summarizes the historical program changes that were reflected in the development of the CY 2008
capitation rates.
Table 5
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Historical Program Adjustments — FFS
DEPARTMENT OF JOB AND FAMILY SERVICES
Historical Program Adjustments — FFS
| Effective | ||||||
| Program Adjustment | Date | Service Category(s) | Rate Group | |||
Inpatient Market Basket Increase
|
1/1/2005 | Inpatient Hospital | All Rate Groups (incl. Delivery) | |||
Dental Fee Schedule Reduction
|
1/1/2006 | Dental | All Rate Groups (incl. Delivery) | |||
Inpatient Recalibration and Outlier Policy
|
1/1/2006 | Inpatient | All Rate Groups (incl. Delivery) | |||
Pharmacy Co-pay ($2 Per Brand Prescription) |
1/1/2006 | Pharmacy | HF M-19 to 44 HF F-19 to 44 |
|||
| HF M/F-45 to 64 | ||||||
Dental Co-pay ($3 Per Date of Service) |
1/1/2006 | Dental | HF M-19 to 44 HF F-19 to 44 |
|||
| HF M/F-45 to 64 | ||||||
| HST F-19 to 64 | ||||||
Vision Exam Co-Pay ($2 Per Exam) |
1/1/2006 | Vision / Optometric |
HF M-19 to 44 HF F-19 to 44 |
|||
| HF M/F-45 to 64 | ||||||
| HST F-19 to 64 | ||||||
Vision Hardware Co-Pay ($1 Per Item) |
1/1/2006 | Vision / Optometric |
HF M-19 to 44 HF F-19 to 44 |
|||
| HF M/F-45 to 64 | ||||||
| HST F-19 to 64 | ||||||
ER Co-Pay ($3 Per Non-Emergency Visit) |
1/1/2006 | Emergency Room | HF M-19 to 44 HF F-19 to 44 |
|||
| HF M/F-45 to 64 | ||||||
| HST F-19 to 64 | ||||||
Dental Benefit Reduction
|
1/1/2006 | Dental | HF M-19 to 44 | |||
| HF F-19 to 44 | ||||||
| HF M/F-45 to 64 | ||||||
| HST F-19 to 64 |
Milliman makes no representations or warranties regarding the contents of this letter to third
parties . Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that
would result in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must rely upon their own experts
in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 8 |
FINAL and CONFIDENTIAL
d. Third-Party Liability
The FFS experience was calculated using the net paid claim data from the FFS data
provided by ODJFS. The paid amounts reflect a reduction for the amounts paid by third
party carriers. Additionally, Milliman reduced the FFS experience to reflect third
party liability recoveries following payment of claims. The reduction represents the
average third party liability recovery rate received by the state under the
“pay-and-chase” recovery program for each base year. It is expected that the health
plans will collect the third party liability recoveries for managed care enrolled
individuals.
e. Fraud and Abuse
The FFS experience was calculated using the net paid claim data from the FFS data
provided by ODJFS. Milliman reduced the FFS experience to reflect fraud and abuse
recoveries following payment of claims. The reduction represents the average fraud and
abuse recovery rate received by the state for each base year. It is expected that the
health plans will pursue fraud and abuse detection activities for managed care
enrolled individuals.
f. Gross Adjustments
The FFS experience was calculated using the net paid claim data from the FFS data
provided by ODJFS. Milliman adjusted the FFS experience to reflect payments/refunds
occurring outside of normal claim adjudication. Milliman received a “gross
adjustments” file from ODJFS containing the additional adjustments.
g. Non-State Plan Services
CMS requires removal of non-state plan services from rate-setting. The FFS data does
not contain any such services. As such, no adjustment was applied to the base FFS
data for non-state plan services.
h. Historical Selection Adjustments
Milliman applied a historical selection adjustment to the base FFS data to reflect
that the base period contains a combination of FFS and managed care enrollment. The
historical selection adjustment is intended to normalize the FFS experience to the
morbidity level of the entire managed care eligible population and is similar in
methodology to previous years.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties . Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information
presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 9 |
FINAL and CONFIDENTIAL
i. Trends/Inflation to CY 2006
Milliman developed trend rates to progress the historical experience from SFY 2005 and SFY 2006
forward to a common center point (CY 2006). Milliman reviewed historical experience and performed
linear regression on the experience data to develop trend rates by category of service for both
utilization and unit cost. Additionally. Milliman reviewed the resulting trends with internal data
sources to develop the trends used in the development of the CY 2008 CFC capitation rates.
The base experience data was normalized for artificial program adjustments prior to the trend rate
development. Milliman did not consider items such as fee schedule changes or benefit modifications
as standard components of trend. Removing the impact of historical changes allows for transparent
inclusion of prospective program changes for future periods.
j. Blend Base Experience Years
Each of the base experience years was trended to CY 2006. At this point, each base year was on a
comparable basis and could be aggregated. The weighting was developed with the intention of
placing more credibility on the most recent experience and is consistent with the CY 2007
methodology. Specifically, SFY 2005 received a weight of 30% and SFY 2006 received a weight of
70%.
k. Managed Care Adjustments
Utilization and cost per service adjustments were developed for each rate group, service category,
and region.
Utilization
Milliman adjusted the FFS utilization and cost per service to reflect the managed care environment.
After reviewing utilization benchmarks in the Milliman Medicaid Guidelines (Guidelines) as well as
other sources. Milliman calculated percentage adjustments to reflect the utilization differential
between an economic and efficiently managed plan and the FFS base experience.
Cost Per Service
Milliman adjusted the cost per service amounts to reflect changes in the mix / intensity of
services due to the management of health care. The reimbursement rate changes were also developed
following a review of benchmarks in the Guidelines as well as other sources.
In addition to the intensity adjustments applied to the cost per service amounts, Milliman also
included adjustments to reflect the health plan contracted rates with providers in the managed care
adjustments.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties . Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information
presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 10 |
FINAL and CONFIDENTIAL
| V. | DEVELOPMENT OF CY 2006 ADJUSTED ENCOUNTER DATA |
|
| a. | Historical Data Summaries |
The CY 2008 CFC capitation rates were developed, in part, using Encounter claims for two SFY
periods:
| § | SFY 2005 (Incurred during the 12 months ending June 30, 2005 paid through May 31, 2007). | ||
| § | SFY 2006 (Incurred during the 12 months ending June 30, 2006 paid through May 31, 2007). |
The claims data was provided by ODJFS from the data warehouse. The experience was stratified
into geographic region based on the member’s county of residence.
The Encounter data summaries represent historical experience for those services that are
included in the capitation payment. Services that are not covered under the capitation payment
have been excluded from the experience. The excluded services were identified by the ODJFS
defined category of service field, as shown in Section IV. Table 4.
The historical data summaries for the base encounter experience reflect only region, county,
health plan combinations with sufficient experience to be considered credible. As such, counties
considered “voluntary” and health plans with low enrollment were not included in the base data.
Table 6 provides the region/county and health plan combinations contained in the capitation rate
development.
Table 6
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Region/County and Health Plan Inclusions — Encounter
DEPARTMENT OF JOB AND FAMILY SERVICES
Region/County and Health Plan Inclusions — Encounter
| Region — County | Health Plans | |
Central — Franklin
|
Caresource; Molina | |
East Central — Stark
|
Buckeye; Caresource; Mediplan | |
East Central — Summit
|
Buckeye: Caresource; Surnmacare | |
Northeast — Cuyahoga
|
Caresource; Anthem/Qualchoice | |
Northeast — Lorain
|
Caresource; Anthem/Qualchoice | |
Northeast Central — Mahoning
|
Caresource; Gateway; Unison | |
Northeast Central — Trumbull
|
Caresource; Gateway; Unison | |
Northwest — Lucas
|
Buckeye; Paramount | |
Southwest — Butler
|
Amerigroup; Caresource | |
Southwest — Hamilton
|
Amerigroup; Caresource | |
West Central — Clark
|
Caresource; Molina | |
West Central — Montgomery
|
Caresource; Molina |
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 11 |
FINAL and CONFIDENTIAL
| b. | Imputed Cost per Service |
Milliman applied a cost per service amount to the managed care encounter data to reflect the
missing financial information in the base managed care encounter experience. The cost per
service was applied by rate group on a statewide basis for all categories of service except
for inpatient services. The cost per service was applied by rate group and region for
inpatient services.
Additionally, the cost per service was re-priced based on the mix/intensity of services
included in the encounter base experience. The cost per service was developed from the
Medicaid FFS reimbursement rates. In addition to reflecting the health plan mix of services,
the cost per service was adjusted for other managed care factors as described below.
| c. | Completion Factors |
Milliman utilized 24 months of claims experience for the managed care population that was
incurred through June 2006 and paid through May 2007 (eleven months of run-out). Milliman
applied claim completion factors to the twelve months of SFY 2005 and twelve months of SFY
2006 claims experience. The claim completion factors were developed by service category based
on utilization experience for the managed care population incurred and paid through May 2007.
| d. | Historical Program Adjustments |
The base experience data represents a historical time period from which projections were
developed. Certain program changes have occurred during and subsequent to the base data time
period. The program adjustments were estimated and applied to the portion of the base
experience data prior to the program change effective date. For example, a program change
implemented on January 1, 2006 will only be reflected in the second half of SFY 2006. As
such, an adjustment was applied to all of SFY 2005 and half of SFY 2006 to include the
program change in all periods of the base experience data.
ODJFS has provided a listing of all program changes impacting the base experience data.
Section IV, Table 5 summarizes the historical program changes that were reflected in the
development of the CY 2008 capitation rates.
| e. | Third-Party Liability and Fraud-Abuse Recoveries |
The cost reports submitted by the health plans contained information related to third-party
liability and fraud-abuse recoveries. Milliman calculated the average recoveries and applied
the reduction to the base encounter data.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 12 |
FINAL and CONFIDENTIAL
| f. | Non-State Plan Services |
CMS requires removal of non-state plan services from rate-setting. The encounter data contains
certain claims that are considered non-state plan services. The health plan submitted cost
reports were used as the source of information for the non-state plan service adjustments.
| g. | Historical Selection Adjustments |
Milliman applied a historical selection adjustment to the base encounter data to reflect that
the base period contains a combination of FFS and managed care enrollment. The historical
selection adjustment is intended to normalize the encounter experience to the morbidity level of
the entire managed care eligible population.
| h. | Trends/Inflation to CY 2006 |
Milliman developed trend rates to progress the historical experience from SFY 2005 and SFY 2006
forward to a common center point (CY 2006). Milliman reviewed historical experience and
performed linear regression on the experience data to develop trend rates by category of
service for both utilization and unit cost. Additionally, Milliman reviewed the resulting
trends with internal data sources to develop the trends used in the development of the CY 2008
CFC capitation rates.
The base experience data was normalized for artificial program adjustments prior to the trend
rate development. Milliman did not consider items such as fee schedule changes or benefit
modifications as standard components of trend. Removing the impact of historical changes allows
for transparent inclusion of prospective program changes for future periods.
| i. | Blend Base Experience Years |
Each of the base experience years was trended to CY 2006. At this point, each base year was on
a comparable basis and could be aggregated. The weighting was developed with the intention of
placing more credibility on the most recent experience. Generally, SFY 2006 was given 70%
weight except where insufficient experience existed in either SFY 2005 or SFY 2006. In these
situations, either SFY 2005 or SFY 2006 was given 100% credibility.
| j. | Managed Care Adjustments |
Utilization and cost per service adjustments were developed for each rate group, service
category, and region.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 13 |
FINAL and CONFIDENTIAL
Utilization
Milliman adjusted the encounter utilization and cost per service to reflect changes
anticipated in the managed care environment. After reviewing utilization benchmarks in the
Milliman Medicaid Guidelines (Guidelines) as well as other sources, Milliman calculated
percentage adjustments to reflect the utilization differential between an economic and
efficiently managed plan and the encounter base experience.
Cost Per Service
Milliman adjusted the average reimbursement rates to reflect changes in the mix / intensity
of services due to the management of health care. The reimbursement rate changes were also
developed following a review of benchmarks in the Guidelines as well as other sources.
In addition to the intensity adjustments applied to the cost per service amounts, Milliman
also included adjustments to reflect the health plan contracted rates with providers in the
managed care adjustments.
| VI. | DEVELOPMENT OF CY 2006 ADJUSTED COST REPORT DATA |
|
| a. | Historical Data Summaries |
The CY 2008 CFC capitation rates were developed, in part, using health plan submitted cost
reports for two calendar year (CY) periods:
| § | CY 2005 {Incurred during the 12 months ending December 31, 2005 paid through December 31, 2006). | ||
| § | CY 2006 (Incurred during the 12 months ending December 31, 2006 paid through December 31, 2007). |
The historical data summaries for the base cost report experience reflect only region,
county, health plan combinations with sufficient experience to be considered credible. As
such, counties considered “voluntary” and health plans with low enrollment were not included
in the base data. Table 7 provides the region/county and health plan combinations contained
in the capitation rate development.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
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Mr. Jon Barley, Ph.D. December 12, 2007 Page 14 |
FINAL and CONFIDENTIAL
Table 7
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Region/County and Health Plan Inclusions — Cost Report
DEPARTMENT OF JOB AND FAMILY SERVICES
Region/County and Health Plan Inclusions — Cost Report
| Region — County | Health Plans | |
Central — Franklin
|
Caresource; Molina | |
East Central — Stark
|
Buckeye; Caresource | |
East Central — Summit
|
Buckeye; Caresource | |
Northeast — Cuyahoga
|
Caresource; Anthem/Qualchoice | |
Northeast — Lorain
|
Caresource; Anthem/Qualchoice | |
Northeast Central — Mahoning
|
Caresource; Gateway; Unison | |
Northeast Central — Trumbull
|
Caresource; Gateway; Unison | |
Northwest — Lucas
|
Buckeye; Paramount | |
Southwest — Butler
|
Amerigroup; Caresource | |
Southwest — Hamilton
|
Amerigroup; Caresource | |
West Central — Clark
|
Caresource; Molina | |
West Central — Montgomery
|
Caresource; Molina |
| b. | Completion Factors |
The cost reports contained claim experience incurred through December 31, 2006 and paid through
December 31, 2006, as well as health plan estimated 1BNR reserve amounts. Milliman reviewed the
claims completion contained in the submitted cost reports for reasonableness. During this review,
Milliman estimated a high and low completion percentage on a statewide basis. The claims
completion implemented by the health plans in aggregate was within the range and, as such, no
further adjustments were applied.
| c. | Historical Program Adjustments |
The base experience data represents a historical time period from which projections were developed.
Certain program changes have occurred during and subsequent to the base data time period. The
program adjustments were estimated and applied to the portion of the base experience data prior to
the program change effective date. For example, a program change implemented on January 1, 2006
will only be reflected in the CY 2006 experience. As such, an adjustment was applied to CY 2005 to
include the program change in all periods of the base experience data.
ODJFS has provided a listing of all program changes impacting the base experience data. Section
IV, Table 5 summarizes the historical program changes that were reflected in the development of
the CY 2008 capitation rates.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 15 |
FINAL and CONFIDENTIAL
| d. | Third-Party Liability and Fraud-Abuse Recoveries |
The cost reports submitted by the health plans contained information related to third-party
liability and fraud-abuse recoveries. Milliman calculated the average recoveries and applied the
reduction to the base cost report data.
| e. | Non-State Plan Services |
CMS requires removal of non-state plan services from rate-setting. The cost report data contains
certain claims that are considered non-state plan services. The health plan submitted cost reports
were used as the source of information for the non-state plan service adjustments.
| f. | Historical Selection Adjustments |
Milliman applied a historical selection adjustment to the base cost report data to reflect that
the base period contains a combination of FFS and managed care enrollment. The historical
selection adjustment is intended to normalize the cost report experience to the morbidity level of
the entire managed care eligible population.
| g. | Trends/Inflation to CY 2006 |
Milliman developed trend rates to progress the historical experience from calendar years 2005 and
2006 forward to a common center point (CY 2006). Milliman reviewed historical experience and
performed linear regression on the experience data to develop trend rates by category of service
for both utilization and unit cost. Additionally, Milliman reviewed the resulting trends with
internal data sources to develop the trends used in the development of the CY 2008 capitation
rates.
The base experience data was normalized for artificial program adjustments prior to the trend rate
development. Milliman did not consider items such as fee schedule changes or benefit modifications
as standard components of trend. Removing the impact of historical changes allows for transparent
inclusion of prospective program changes for future periods.
| h. | Blend Base Experience Years |
The base CY 2005 year was trended to CY 2006. At this point, each base year was on a comparable
basis and could be aggregated. The weighting was developed with the intention of placing more
credibility on the most recent experience. Generally. CY 2006 was given 70% weight except where
insufficient experience existed in either CY 2005 or CY 2006. In these situations, either CY 2005
or CY 2006 was given 100% credibility.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this
letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability
under any theory of law by Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 16 |
FINAL and CONFIDENTIAL
| i. | Managed Care Adjustments |
Milllman adjusted the cost report experience data to reflect changes anticipated in the managed
care environment. The cost report base experience was adjusted using the same managed care
adjustments as the base encounter data with the exception of the health plan provider contracting
adjustment. The health plan rate of provider reimbursement is already included in the cost report
base experience.
Adjustments were developed for each rate group, service category, and region.
| VII. | CY 2006 ADJUSTED BASE DATA TO CY 2008 CAPITATION RATES |
The adjusted CY 2006 utilization and cost per service rates are trended forward to CY 2008 and
adjusted for prospective program changes that will be effective for the CY 2008 contract period.
The resulting PMPM establishes the regional adjusted claim cost for the health plans in CY 2008.
The administrative cost allowance and franchise fee components are applied to the adjusted claim
cost to develop the CY 2008 capitation rates.
| a. | Trend to CY 2008 |
The trend rates that were used to progress the CY 2006 experience forward to the CY 2008 rating
period were developed from the historical experience, the experience from other Medicaid managed
care programs, and our actuarial judgment. The trend rates include a component for utilization and
unit cost by major category of service.
| b. | Prospective Program Adjustments |
The SFY 2008/2009 Budget contains several program changes that impacted the development of the
capitation rates. The program changes include items such as provider fee changes, benefit changes,
and administrative changes. Adjustments to the CY 2006 experience were developed for each item
based on its expected impact to the prospective claims cost. Table 8 lists the program changes that
were included in the CY 2008 capitation rate development.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 17 |
FINAL and CONFIDENTIAL
Table 8
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Program Adjustments
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Program Adjustments
| Effective | Service | |||||
| Program Adjustment | Date | Category(s) | Rate Groups | |||
Nursing Facility Fee Increase
|
7/1/2007 7/1/2008 |
Nursing Facility | All Rate Groups (excl. Delivery) | |||
Chiropractor Benefit Restoration
|
1/1/2008 | Miscellaneous Services | HF M — 19 to 44 | |||
| HF F — 19 to 44 | ||||||
| HF M/F — 45 to 64 | ||||||
| HST F — 19 to 64 | ||||||
Independent Psychologists Benefit Restoration |
1/1/2008 | Mental Health / Substance Abuse | HF M — 19 to 44 HF F — 19 to 44 |
|||
| HF M/F — 45 to 64 | ||||||
| HST F — 19 to 64 | ||||||
Occupational Therapy-Independent Provider Status |
1/1/2008 | Miscellaneous Services | All Rate Groups (excl. Delivery) | |||
Developmental Therapies
|
1/1/2008 | Miscellaneous Services | HST M/F — <1 | |||
Foster Children Expansion
|
1/1/2008 | All Service Categories | HST M — 14 to 18 | |||
| HST F — 14 to 18 | ||||||
CHIP III Expansion
|
1/1/2008 | All Service Categories | HF M — 19 to 44 HF F — 19 to 44 |
|||
| HST F — 19 to 64 | ||||||
| HST M/F — 2 to l3 | ||||||
| HST M — 14 to 18 | ||||||
Pregnant Women Expansion
|
1/1/2008 | All Service Categories | HST F — 14 to 18 | |||
| HST F — 19 to 64 | ||||||
| Delivery | ||||||
Improved TPL Management
|
1/1/2008 | All Service Categories | All Rate Groups (incl. Delivery) | |||
Expedite Managed Care Enrollment
|
1/1/2008 | All Service Categories | All Rate Groups (incl. Delivery) | |||
Expedite Newborn Enrollment
|
1/1/2008 | All Service Categories | HST M/F — <1 | |||
Short Term Nursing Facility Policy Change (consistent with ABD) |
1/1/2008 | Nursing Facility | All Rate Groups (excl. Delivery) | |||
Prior Authorization Policy
Change
|
1/1/2008 | Pharmacy | All Rate Groups (excl. Delivery) | |||
Prior Authorization of Atypical
Anti-Psychotic Medication
|
1/1/2008 | Pharmacy | All Rate Groups (excl. Delivery) |
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 18 |
FINAL and CONFIDENTIAL
| c. | Prospective Selection Adjustment |
Milliman adjusted the base experience data to reflect the morbidity of the entire managed care
eligible population. Subsequently, a prospective selection adjustment was developed to reflect
that less than 100% of managed care eligibles will enroll in managed care. Table 9 provides the
target managed care penetration used in the development of the CY 2008 capitation rates.
Table 9
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Selection Adjustments
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Selection Adjustments
| June 2007 MC | Target MC | |||||||
| Region | Penetration | Penetration | ||||||
Central |
93.4 | % | 95 | % | ||||
East Central |
94.6 | % | 95 | % | ||||
Northeast |
95.2 | % | 95 | % | ||||
Northeast Central |
75.8 | % | 95 | % | ||||
Northwest |
94.5 | % | 95 | % | ||||
Southeast |
94.9 | % | 95 | % | ||||
Southwest |
93.6 | % | 95 | % | ||||
West Central |
94.0 | % | 95 | % | ||||
| d. | Clinical Measures Adjustments |
Appendix M of the provider agreement between contracted health plans and ODJFS contains certain
clinical measures that each health plan must achieve. The agreement stipulates that, at a minimum,
the experience improvement must reduce the discrepancy between the ultimate target and the actual
rate by a certain percentage. Milliman developed adjustments to the capitation rates to reflect
this required improvement in performance based on the CY 2006 actual results. Table 10 illustrates
the measures for which adjustment factors were applied by category of service and rate group.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 19 |
FINAL and CONFIDENTIAL
Table 10
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Clinical Measures Adjustments
DEPARTMENT OF JOB AND FAMILY SERVICES
Clinical Measures Adjustments
| Clinical Measure | Service | |||||
| Description | Measure | Category | Rate Groups | |||
Ongoing Prenatal
Care
|
80% receive 81+% of expected visits | Office Visits / Consults | HST F — 14 to l8 HF F — 19 to 44 |
|||
| HST F — 19 to 64 | ||||||
Postpartum Care
|
80% receive a visit | Obstetrics | HST F — 14 to 18 | |||
| HF F — 19 to 44 | ||||||
| HST F — 19 to 64 | ||||||
Well Child Visits
|
80% receive expected visits | Periodic Exams | HST M/F — <1 | |||
| HST M/F — 1 | ||||||
| HST M/F — 2 to 13 | ||||||
| HST F — 14 to 18 | ||||||
| HST M — 14 to 18 | ||||||
Asthma Medications
|
95% receive appropriate medications | Pharmacy | HST M/F — 2 to 13 HST F — 14 to 18 |
|||
| HST M — 14 to 18 | ||||||
| HF F — 19 to 44 | ||||||
| HF M — 19 to 44 | ||||||
| HF M/F — 45 to 64 | ||||||
| HST F — 19 to 64 | ||||||
Annual Dental Visits
|
60% receive a visit | Dental | HST M/F — 2 to 13 | |||
| HST F — 14 to 18 | ||||||
| HST M — 14 to 18 | ||||||
Lead Screening
|
80% receive a screening | Pathology / Laboratory | HST M/F — 1 | |||
| HST M/F — 2 to 13 |
| e. | Delivery Cesarean Section Rates |
Milliman reviewed the cesarean rates for both the FFS and managed care populations in the base
period data summaries. In previous years, the capitation rates were adjusted to target a specific
cesarean rate. For 2008, Milliman did not adjust the regional cost summaries, up or down, to
reflect a different cesarean rate.
| f. | Blend FFS / Encounter / Cost Report |
The FFS, encounter, and cost report data sets were projected to CY 2008 and composited to establish
the CY 2008 total claims cost. The credibility between data sources was based upon the amount of
managed
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would
result in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must rely upon their own experts in
drawing conclusions about the information presented.
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 20 |
FINAL and CONFIDENTIAL
care experience in the base data. The encounter and cost report data sources were given equal
weight in each region.
| g. | Age/Gender Realignment |
Milliman developed the 2008 capitation rates by rate group and region. The resulting capitation
rates by rate group were then adjusted within each region to realign the age/gender relativities
among regions. The realignment maintains the composite capitation rates for each region and in
aggregate while allowing for more consistent age/gender relativities.
| h. | Administrative Allowance |
Milliman included an administrative cost allowance in the development of the actuarially sound
capitation rates for CY 2008. The administrative cost allowance contains provision for
administrative expenses, profit/contingency, and surplus contribution and was calculated as a
percentage of the capitation rate prior to the franchise fee. As such, the pre-franchise fee
capitation rate will be determined by dividing the projected managed care claim cost by one minus
the administrative cost allowance. By determining the pre-franchise fee capitation rate in this
manner, the administrative allowance may be expressed as a percentage of the pre-franchise fee
capitation rate. Milliman developed the administrative cost allowance following a review of actual
health plan cost information contained in the cost reports as well as information from other
representative Medicaid managed care organizations.
For health plans in plan year 3 or later, 1% of the administrative component will be at-risk and
contingent upon performance requirements defined in the ODJFS provider agreements. Table 11
provides the administrative cost allowance for each plan year.
Table 11
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Administrative Cost Allowance
DEPARTMENT OF JOB AND FAMILY SERVICES
Administrative Cost Allowance
Non — Delivery
| Plan Year | Guaranteed % | At-Risk % | Total % | |||||||||
Plan Year 1 (1-12 Months) |
12.5 | % | 0.0 | % | 12.5 | % | ||||||
Plan Year 2 (13-24 Months) |
11.5 | % | 0.0 | % | 11.5 | % | ||||||
Plan Year 3 (25 + Months) |
10.5 | % | 1.0 | % | 11.5 | % | ||||||
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would
result in the creation of any duty or liability under any theory of law by Milliman or its
employees to third parties. Other parties receiving this letter must
rely upon their own experts in
drawing conclusions about the information presented.
Mr. Jon Barley, Ph.D.
December 12, 2007
Page 21
December 12, 2007
Page 21
FINAL and CONFIDENTIAL
Delivery
Plan
Year |
Guaranteed % | At Risk % | Total % | |||||||||
Plan Year 1 (1-12 Months)
|
6.0 | % | 0.0 | % | 6.0 | % | ||||||
Plan Year 2 (13-24 Months)
|
5.0 | % | 0.0 | % | 5.0 | % | ||||||
Plan Year 3 (25 + Months)
|
4.0 | % | 1.0 | % | 5.0 | % | ||||||
The administrative cost allowance percentages contained in Table 11 reflect a change from the 2007
methodology.
i Franchise Fee
Milliman included a franchise fee component in the development of the actuarially sound capitation
rates for CY 2008. The franchise fee was calculated as a percentage of the capitation rates.
Therefore, the capitation rate will be determined by dividing the pre-franchise fee capitation
rate by one minus the franchise fee component. By determining the pre-franchise fee capitation
rate in this manner, the franchise fee may be expressed as a percentage of the capitation rate.
The franchise fee component is 4.5% of the capitation rate.
DATA RELIANCE
In developing the CY 2008 CFC capitation rates, we have relied upon certain data and information
from ODJFS. While limited review was performed for reasonableness, the data and information was
accepted without audit. To the extent that the data and information was not accurate or complete,
the values shown in this letter will need to be revised.
w w w w
If you have any questions regarding the enclosed information, please do not hesitate to contact me
at 317-524-3512.
Sincerely,
Robert M. Damler, FSA, MAAA
Principal and Consulting Actuary
Principal and Consulting Actuary
RMD/mle
cc: Dan Hecht (ODJFS)
Mitali Ghatak (ODJFS)
Robert Monks (ODJFS)
cc: Dan Hecht (ODJFS)
Mitali Ghatak (ODJFS)
Robert Monks (ODJFS)
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL and CONFIDENTIAL
APPENDIX 1
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL and CONFIDENTIAL
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL and CONFIDENTIAL
APPENDIX 2
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL and CONFIDENTIAL
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Covered Families and Children — CY 2008 Capitation Rates
DEPARTMENT OF JOB AND FAMILY SERVICES
Covered Families and Children — CY 2008 Capitation Rates
Actuarial Certification
I, Robert
M. Damler, am a Principal and Consulting Actuary with the firm of
Milliman. Inc. I am a
Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. I was
retained by the State of Ohio, Department of Job and Family Services to perform an actuarial
review and certification regarding the development of the capitation rates to be effective for
calendar year 2008. The capitation rates were developed for the Covered Families and Children
managed care eligible populations. I have experience in the examination of financial calculations
for Medicaid programs and meet the qualification standards for rendering this opinion.
I reviewed the historical claims experience for reasonableness and consistency. I have developed
certain actuarial assumptions and actuarial methodologies regarding the projection of healthcare
expenditures into future periods. I have complied with the elements of the rate setting checklist
CMS developed for its Regional Offices regarding 42 CFR 438.6(c) for capitated Medicaid managed
care plans.
The capitation rates provided with this certification are effective for a one-year rating period
beginning January 1, 2008 through December 31, 2008. At the end of the one-year period, the
capitation rates will be updated for calendar year 2009. The update may be based on
fee-for-service experience, managed care utilization and trend experience, policy and procedure
changes, and other changes in the health care market. A separate certification will be provided
with the updated rates.
The capitation rates provided with this certification are considered actuarially sound, defined as:
| • | the capitation rates have been developed in accordance with generally accepted actuarial principles and practices; | ||
| • | the capitation rates are appropriate for the populations to be covered, and the services to be furnished under the contract; and, | ||
| • | the capitation rates meet the requirements of 42 CFR 438.6(c). |
This actuarial certification has been based on the actuarial methods, considerations, and analyses
promulgated from time to time through the Actuarial Standards of Practice by the Actuarial
Standards Board.
Robert M. Damler, FSA
Member, American Academy of Actuaries
Member, American Academy of Actuaries
December 4, 2007 |
Date |
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL and CONFIDENTIAL
APPENDIX 3
Milliman makes no representations or warranties regarding the
contents of this letter to third
parties. Likewise, third parties are instructed that they are to
place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the information presented.
FINAL AND CONFIDENTIAL
State of Ohio
Department of Job and Family Services
Capitation Rate Summary — Rate Group Level
Department of Job and Family Services
Capitation Rate Summary — Rate Group Level
| Projected | CY 2008 | |||||||||||||||||||||
| CY 2008 | Guaranteed | CY 2008 At | ||||||||||||||||||||
| Region | Rate Group | MMs/Deliveries | %of MMs | Rate | Risk Rate | CY 2008 Rate | ||||||||||||||||
Central |
HF/HST <1 M+F | 203,519 | 7.4 | % | $ | 562.74 | $ | 5.43 | $ | 568.17 | ||||||||||||
Central |
HF/HST 1 M+F | 158,456 | 5.8 | % | 145.11 | 1.40 | 146.51 | |||||||||||||||
Central |
HF/HST 2-13 M+F | 1,226,460 | 44.7 | % | 98.15 | 0.95 | 99.10 | |||||||||||||||
Central |
HF/HST 14-18 F | 163,216 | 5.9 | % | 163.61 | 1.58 | 165.19 | |||||||||||||||
Central |
HF/HST 14-18 M | 146,796 | 5.3 | % | 117.41 | 1.13 | 118.54 | |||||||||||||||
Central |
HF 19-44 F | 550,237 | 20.1 | % | 301.40 | 2.91 | 304.31 | |||||||||||||||
Central |
HF 19-44 M | 168,204 | 6.1 | % | 196.85 | 1.90 | 198.75 | |||||||||||||||
Central |
HF 45+ M+F | 65,409 | 2.4 | % | 481.13 | 4.64 | 485.77 | |||||||||||||||
Central |
HST 19-64 F | 61,713 | 2.2 | % | 372.66 | 3.59 | 376.25 | |||||||||||||||
Central |
Composite Non-Delivery | 2,744,010 | $ | 202.36 | $ | 1.95 | $ | 204.31 | ||||||||||||||
Central |
Delivery CFC | 10,854 | 3,718.41 | 35.85 | 3,754.26 | |||||||||||||||||
Central |
Composite with Delivery | 2,744,010 | $ | 217.07 | $ | 2.09 | $ | 219.16 | ||||||||||||||
East Central |
HF/HST <1 M+F | 100,943 | 6.7 | % | $ | 548.66 | $ | 5.29 | $ | 553.95 | ||||||||||||
East Central |
HF/HST 1 M+F | 75,476 | 5.0 | % | 141.49 | 1.36 | 142.85 | |||||||||||||||
East Central |
HF/HST 2-13 M+F | 669,784 | 44.2 | % | 95.70 | 0.92 | 96.62 | |||||||||||||||
East Central |
HF/HST 14-18 F | 96,465 | 6.4 | % | 159.52 | 1.54 | 161.06 | |||||||||||||||
East Central |
HF/HST 14-18 M | 88,374 | 5.8 | % | 114.47 | 1.10 | 115.57 | |||||||||||||||
East Central |
HF I9-44 F | 320,982 | 21.2 | % | 293.86 | 2.83 | 296.69 | |||||||||||||||
East Central |
HF 19-44 M | 90,883 | 6.0 | % | 191.93 | 1.85 | 193.78 | |||||||||||||||
East Central |
HF 45+ M+F | 39,563 | 2.6 | % | 469.08 | 4.52 | 473.60 | |||||||||||||||
East Central |
HST 19-64 F | 33,888 | 2.2 | % | 363.34 | 3.50 | 366.84 | |||||||||||||||
East Central |
Composite Non-Delivery | 1,516,358 | $ | 196.72 | $ | 1.90 | $ | 198.62 | ||||||||||||||
East Central |
Delivery CFC | 6,386 | 3,952.33 | 38.11 | 3,990.44 | |||||||||||||||||
East Central |
Composite with Delivery | 1,516,358 | $ | 213.36 | $ | 2.06 | $ | 215.42 | ||||||||||||||
Northeast |
HF/HST <1 M+F | 162,387 | 6.2 | % | $ | 532.52 | $ | 5.13 | $ | 537.65 | ||||||||||||
Northeast |
HF/HST 1 M+F | 130,937 | 5.0 | % | 137.33 | 1.32 | 138.65 | |||||||||||||||
Northeast |
HF/HST 2-13 M+F | 1,160,029 | 44.5 | % | 92.88 | 0.90 | 93.78 | |||||||||||||||
Northeast |
HF/HST 14-18 F | 180,843 | 6.9 | % | 154.83 | 1.49 | 156.32 | |||||||||||||||
Northeast |
HF/HST 14-18 M | 164,388 | 6.3 | % | 111.11 | 1.07 | 112.18 | |||||||||||||||
Northeast |
HF 19-44 F | 561,019 | 21.5 | % | 285.22 | 2.75 | 287.97 | |||||||||||||||
Northeast |
HF 19-44 M | 119,830 | 4.6 | % | 186.28 | 1.80 | 188.08 | |||||||||||||||
Northeast |
HF 45+ M+F | 78,748 | 3.0 | % | 455.29 | 4.39 | 459.68 | |||||||||||||||
Northeast |
HST 19-64 F | 50,934 | 2.0 | % | 352.64 | 3.40 | 356.04 | |||||||||||||||
Northeast |
Composite Non-Delivery | 2,609,115 | $ | 189.57 | $ | 1.83 | $ | 191.40 | ||||||||||||||
Northeast |
Delivery CFC | 9,871 | 4,066.54 | 39.21 | 4,105.75 | |||||||||||||||||
Northeast |
Composite with Delivery | 2,609,115 | $ | 204.96 | $ | 1.98 | $ | 206.93 | ||||||||||||||
Northeast Central |
HF/HST <1 M+F | 42,798 | 6.2 | % | $ | 575.16 | $ | 5.55 | $ | 580.71 | ||||||||||||
Northeast Central |
HF/HST 1 M+F | 32,550 | 4.7 | % | 148.33 | 1.43 | 149.76 | |||||||||||||||
Northeast Central |
HF/HST 2-13 M+F | 306,477 | 44.2 | % | 100.32 | 0.97 | 101.29 | |||||||||||||||
Northeast Central |
HF/HST 14-18 F | 47,853 | 6.9 | % | 167.23 | 1.61 | 168.84 | |||||||||||||||
Northeast
Central |
HF/HST 14-18 M | 44,376 | 6.4 | % | 120.00 | 1.16 | 121.16 | |||||||||||||||
Northeast Central |
HF 19-44 F | 145,323 | 20.9 | % | 308.07 | 2.97 | 311.04 | |||||||||||||||
Northeast Central |
HF 19-44 M | 41,692 | 6.0 | % | 201.20 | 1.94 | 203.14 | |||||||||||||||
Northeast Central |
HF 45+ M+F | 18,583 | 2.7 | % | 491.75 | 4.74 | 496.49 | |||||||||||||||
Northeast Central |
HST 19-64 F | 14,085 | 2.0 | % | 380.88 | 3.67 | 384.55 | |||||||||||||||
Northeast Central |
Composite Non-Delivery | 693,737 | $ | 203.51 | $ | 1.96 | $ | 205.47 | ||||||||||||||
Northeast Central |
Delivery CFC | 2,683 | 4,074.59 | 39.29 | 4,113.88 | |||||||||||||||||
Northeast Central |
Composite with Delivery | 693,737 | $ | 219.27 | $ | 2.11 | $ | 221.38 | ||||||||||||||
Northwest |
hf/hst <1 M+F | 103,070 | 7.2 | % | $ | 560.41 | $ | 5.40 | $ | 565.81 | ||||||||||||
Northwest |
HF/HST 1 M+F | 76,773 | 5.4 | % | 144.52 | 1.39 | 145.91 | |||||||||||||||
Northwest |
HF/HST 2-13 M+F | 627,854 | 44.0 | % | 97.75 | 0.94 | 98.69 | |||||||||||||||
Northwest |
HF/HST 14-18 F | 91,028 | 6.4 | % | 162.94 | 1.57 | 164.51 | |||||||||||||||
Northwest |
HF/HST 14-18 M | 82,247 | 5.8 | % | 116.91 | 1.13 | 118.04 | |||||||||||||||
Northwest |
HF 19-44 F | 290,044 | 20.3 | % | 300.16 | 2.89 | 303.05 | |||||||||||||||
Northwest |
HF 19-44 M | 88,010 | 6.2 | % | 196.05 | 1.89 | 197.94 | |||||||||||||||
Northwest |
HF 45+ M+F | 32,963 | 2.3 | % | 479.14 | 4.62 | 483.76 | |||||||||||||||
Northwest |
HST 19-64 F | 36,142 | 2.5 | % | 371.11 | 3.58 | 374.69 | |||||||||||||||
Northwest |
Composite Non-Delivery | 1,428,131 | $ | 201.79 | $ | 1.95 | $ | 203.74 | ||||||||||||||
Northwest |
Delivery CFC | 6,080 | 3,732.40 | 35.99 | 3,768.39 | |||||||||||||||||
Northwest |
Composite with Delivery | 1,428,131 | $ | 217.69 | $ | 2.10 | $ | 219.79 | ||||||||||||||
| Appendix 3 | Milliman, Inc. | Page 1 |
FINAL AND CONFIDENTIAL
State of Ohio
Department of Job and Family Services
Capitation Rate Summary — Rate Group Level
Capitation Rate Summary — Rate Group Level
| Projected | CY 2008 | |||||||||||||||||||||
| CY 2008 | Guaranteed | CY 2008 At | ||||||||||||||||||||
| Region | Rate Group | MMs/Deliveries | % of MMs | Rate | Risk Rate | CY 2008 Rate | ||||||||||||||||
Southeast |
HF/HST<1 M+F | 54,113 | 5.6 | % | $ | 569.55 | $ | 5.49 | $ | 575.04 | ||||||||||||
Southeast |
HF/HST 1 M+F | 44,355 | 4.6 | % | 146.87 | 1.42 | 148.29 | |||||||||||||||
Southeast |
HF/HST 2 -13 M+F | 405,711 | 42.2 | % | 99.34 | 0.96 | 100.30 | |||||||||||||||
Southeast |
HF/HST 14-18 F | 60,544 | 6.3 | % | 165.59 | 1.60 | 167.19 | |||||||||||||||
Southeast |
HF/HST 14-18 M | 56,221 | 5.8 | % | 118.83 | 1.15 | 119.98 | |||||||||||||||
Southeast |
HF 19-44 F | 205,174 | 21.3 | % | 305.06 | 2.94 | 308.00 | |||||||||||||||
Southeast |
HF 19-44 M | 90,312 | 9.4 | % | 199.24 | 1.92 | 201.16 | |||||||||||||||
Southeast |
HF 45+ M+F | 27,036 | 2.8 | % | 486.93 | 4.70 | 491.63 | |||||||||||||||
Southeast |
HST 19-64 F | 18,943 | 2.0 | % | 377.17 | 3.64 | 380.81 | |||||||||||||||
Southeast |
Composite Non-Delivery | 962,409 | $ | 202.86 | $ | 1.96 | $ | 204.82 | ||||||||||||||
Southeast |
Delivery CFC | 3,528 | 3,523.18 | 33.97 | 3,557.15 | |||||||||||||||||
Southeast |
Composite with Delivery | 962,409 | $ | 215.78 | $ | 2.08 | $ | 217.86 | ||||||||||||||
Southwest |
HF/HST <1 M+F | 136,292 | 8.2 | % | $ | 601.16 | $ | 5.80 | $ | 606.96 | ||||||||||||
Southwest |
HF/HST 1 M+F | 98,401 | 5.9 | % | 155.03 | 1.49 | 156.52 | |||||||||||||||
Southwest |
HF/HST 2-13 M+F | 761,118 | 45.6 | % | 104.86 | 1.01 | 105.87 | |||||||||||||||
Southwest |
HF/HST 14-18 F | 102,994 | 6.2 | % | 174.78 | 1.69 | 176.47 | |||||||||||||||
Southwest |
HF/HST 14-18 M | 88,400 | 5.3 | % | 125.43 | 1.21 | 126.64 | |||||||||||||||
Southwest |
HF 19-44F | 321,176 | 19.2 | % | 321.99 | 3.10 | 325.09 | |||||||||||||||
Southwest |
HF 19-44 M | 84,540 | 5.1 | % | 210.31 | 2.03 | 212.34 | |||||||||||||||
Southwest |
HF 45+ M+F | 34,189 | 2.0 | % | 513.98 | 4.96 | 518.94 | |||||||||||||||
Southwest |
HST 19-64 F | 42,884 | 2.6 | % | 398.11 | 3.84 | 401.95 | |||||||||||||||
Southwest |
Composite Non-Delivery | 1,669,994 | $ | 216.72 | $ | 2.09 | $ | 218.81 | ||||||||||||||
Southwest |
Delivery CFC | 7,350 | 3,973.57 | 38.31 | 4,011.88 | |||||||||||||||||
Southwest |
Composite with Delivery | 1,669,994 | $ | 234.21 | $ | 2.26 | $ | 236.47 | ||||||||||||||
West Central |
HF/HST < 1M+F | 88,254 | 7.5 | % | $ | 567.07 | $ | 5.47 | $ | 572.54 | ||||||||||||
West Central |
HF/HST 1 M+F | 65,856 | 5.6 | % | 146.24 | 1.41 | 147.65 | |||||||||||||||
West Central |
HF/HST 2-13 M+F | 528,534 | 44.7 | % | 98.91 | 0.95 | 99,86 | |||||||||||||||
West Central |
HF/HST 14-18 F | 77,143 | 6.5 | % | 164.88 | 1.59 | 166.47 | |||||||||||||||
West Central |
HF/HST 14-18 M | 67,395 | 5.7 | % | 118.32 | 1.14 | 119.46 | |||||||||||||||
West Central |
HF 19-44 F | 234,878 | 19.9 | % | 303.73 | 2.93 | 306.66 | |||||||||||||||
West Central |
HF-19-44 M | 66,482 | 5.6 | % | 198.38 | 1.91 | 200.29 | |||||||||||||||
West Central |
HF 45+ M+F | 27,032 | 2.3 | % | 484.84 | 4.67 | 489.51 | |||||||||||||||
West Centra! |
HST 19-64 F | 27,422 | 2.3 | % | 375.53 | 3.62 | 379.15 | |||||||||||||||
West Central |
Composite Non-Delivery | 1,182,996 | $ | 203.36 | $ | 1.96 | $ | 205.32 | ||||||||||||||
West Central |
Delivery CFC | 4,916 | 4,301.21 | 41.47 | 4,342.68 | |||||||||||||||||
West Central |
Composite with Delivery | 1,182,996 | $ | 221.24 | $ | 2.13 | $ | 223.37 | ||||||||||||||
Statewide |
HF/HST <1 M+F | 891,376 | 7.0 | % | $ | 562.68 | $ | 5.43 | $ | 568.11 | ||||||||||||
Statewide |
HF/HST 1 M+F | 682,804 | 5.3 | % | 144.95 | 1.40 | 146.35 | |||||||||||||||
Statewide |
HF/HST 2- 13 M+F | 5,685,967 | 44.4 | % | 97.92 | 0.94 | 98.86 | |||||||||||||||
Statewide |
HF/HST 14-18F | 820,086 | 6.4 | % | 163.00 | 1.57 | 164.57 | |||||||||||||||
Statewide |
HF/HST 14-18 M | 738,197 | 5.8 | % | 116.90 | 1.13 | 118.03 | |||||||||||||||
Statewide |
HF 19-44 F | 2,628,833 | 20.5 | % | 300.26 | 2.90 | 303.16 | |||||||||||||||
Statewide |
HF 19-44 M | 749,953 | 5.9 | % | 196.65 | 1.90 | 198.55 | |||||||||||||||
Statewide |
HF 45 + M+F | 323,523 | 2.5 | % | 478.04 | 4.61 | 482.65 | |||||||||||||||
Statewide |
HST 19-64 F | 286,011 | 2.2 | % | 372.59 | 3.59 | 376.18 | |||||||||||||||
Statewide |
Composite Non-Delivery | 12,806,750 | 100.0 | % | $ | 201.09 | $ | 1.94 | 203.03 | |||||||||||||
Statewide |
Delivery CFC | 51,668 | 0.4 | % | 3,91.39 | 37.72 | 3,950.11 | |||||||||||||||
Statewide |
Composite with Delivery | 12,806,750 | $ | 100.0 | % | $ | 216.87 | $ | 2.09 | $ | 218.96 | |||||||||||
| Appendix 3 | Milliman, Inc. | Page 2 |
APPENDIX F
REGIONAL RATES
REGIONAL RATES
1. PREMIUM RATES WITHOUT THE AT-RISK PAYMENT AMOUNTS FOR 01/01/08 THROUGH 06/30/08 SHALL BE AS FOLLOWS
MCP: MOLINA HEALTHCARE OF OHIO, INC.
| SERVICE | HF/HST | HF/HST | HF | HF | HF | HST | ||||||||||||||||||||||||||||||||||||||
| ENROLLMENT | REGIONAL | HF/HST | HF/HST | HF/HST | Age 14-18 | Age 14-18 | Age 19-44 | Age 19-44 | Age 45 | Age 19-64 | Delivery | |||||||||||||||||||||||||||||||||
| AREA | STATUS | Age < 1 | Age 1 | Age 2-13 | Male | Female | Male | Female | and over | Female | Payment | |||||||||||||||||||||||||||||||||
Central |
Mandatory | $ | 562.74 | $ | 145.11 | $ | 98.15 | $ | 117.41 | $ | 163.61 | $ | 196.85 | $ | 301.40 | $ | 481.13 | $ | 372.66 | $ | 3,718.41 | |||||||||||||||||||||||
Southeast |
Mandatory | $ | 575.04 | $ | 148.29 | $ | 100.30 | $ | 119.98 | $ | 167.19 | $ | 201.16 | $ | 308.00 | $ | 491.63 | $ | 380.81 | $ | 3,557.15 | |||||||||||||||||||||||
Southwest |
Mandatory | $ | 606.96 | $ | 156.52 | $ | 105.87 | $ | 126.64 | $ | 176.47 | $ | 212.34 | $ | 325.09 | $ | 518.94 | $ | 401.95 | $ | 4,011.88 | |||||||||||||||||||||||
West Central |
Mandatory | $ | 567.07 | $ | 146.24 | $ | 98.91 | $ | 118.32 | $ | 164.88 | $ | 198.38 | $ | 303.73 | $ | 484.84 | $ | 375.53 | $ | 4,301.21 | |||||||||||||||||||||||
List of Eligible Assistance Groups (AGs)
Healthy Families: — MA-C Categorically eligible due to TANF cash
— MA-T Children under 21
— MA-Y Transitional Medicaid
— MA-Y Transitional Medicaid
Healthy Start: — MA-P Pregnant Women and Children
Per Appendix E, Rate Methodology, MCPs in the first two years of operation of the MC program are
not subject to an at-risk recovery amount.
For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the premiums received
for members in counties they served as of
January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
MCPs will be put
at-risk for a portion of the premiums received for members in counties they began serving after
January 1, 2006, beginning
with the MCP’s twenty-fifth month of membership in each county’s region.
with the MCP’s twenty-fifth month of membership in each county’s region.
Molina’s regional counties at-risk: Clark, Franklin, Montgomery.
Page 4 of 6
APPENDIX F
REGIONAL RATES
REGIONAL RATES
2. AT-RISK AMOUNTS FOR 01/01/08 THROUGH 06/30/08 SHALL BE AS FOLLOWS:
MCP: MOLINA HEALTHCARE OF OHIO, INC.
| SERVICE | HF/HST | HF/HST | HF | HF | HF | HST | ||||||||||||||||||||||||||||||||||||||
| ENROLLMENT | REGIONAL | HF/HST | HF/HST | HF/HST | Age 14-18 | Age 14-18 | Age 19-44 | Age 19-44 | Age 45 | Age 19-64 | Delivery | |||||||||||||||||||||||||||||||||
| AREA | STATUS | Age < 1 | Age 1 | Age 2-13 | Male | Female | Male | Female | and over | Female | Payment | |||||||||||||||||||||||||||||||||
Central |
Mandatory | $ | 5.43 | $ | 1.40 | $ | 0.95 | $ | 1.13 | $ | 1.58 | $ | 1.90 | $ | 2.91 | $ | 4.64 | $ | 3.59 | $ | 35.85 | |||||||||||||||||||||||
Southeast |
Mandatory | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||||||||||
Southwest |
Mandatory | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||||||||||
West Central |
Mandatory | $ | 5.47 | $ | 1.41 | $ | 0.95 | $ | 1.14 | $ | 1.59 | $ | 1.91 | $ | 2.93 | $ | 4.67 | $ | 3.62 | $ | 41.47 | |||||||||||||||||||||||
List of Eligible Assistance Groups (AGs)
Healthy Families: — MA-C Categorically eligible due to TANF cash
— MA-T Children under 21
— MA-Y Transitional Medicaid
— MA-Y Transitional Medicaid
Healthy Start: — MA-P Pregnant Women and Children
Per Appendix E, Rate Methodology, MCPs in the first two years of operation in the MC program are
not subject to an at-risk recovery amount.
For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the premiums received
for members in counties they served as
of January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
of January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
MCPs will be put
at-risk for a portion of the premiums received for members in counties they began serving after
January 1, 2006, beginning
with the MCP’s twenty-fifth month of membership in each county’s region.
with the MCP’s twenty-fifth month of membership in each county’s region.
Molina’s regional
counties at-risk: Clark, Franklin,
Montgomery.
Page 5 of 6
APPENDIX F
REGIONAL RATES
REGIONAL RATES
3. PREMIUM RATES FOR 01/01/08 THROUGH 06/30/08 SHALL BE AS FOLLOWS:
MCP: MOLINA HEALTHCARE OF OHIO, INC.
| SERVICE | HF/HST | HF/HST | HF | HF | HF | HST | ||||||||||||||||||||||||||||||||||||||
| ENROLLMENT | REGIONAL | HF/HST | HF/HST | HF/HST | Age 14-18 | Age 14-18 | Age 19-44 | Age 19-44 | Age 45 | Age 19-64 | Delivery | |||||||||||||||||||||||||||||||||
| AREA | STATUS | Age < 1 | Age 1 | Age 2-13 | Male | Female | Male | Female | and over | Female | Payment | |||||||||||||||||||||||||||||||||
Central |
Mandatory | $ | 568.17 | $ | 146.51 | $ | 99.10 | $ | 118.54 | $ | 165.19 | $ | 198.75 | $ | 304.31 | $ | 485.77 | $ | 376.25 | $ | 3,754.26 | |||||||||||||||||||||||
Southeast |
Mandatory | $ | 575.04 | $ | 148.29 | $ | 100.30 | $ | 119.98 | $ | 167.19 | $ | 201.16 | $ | 308.00 | $ | 491.63 | $ | 380.81 | $ | 3,557.15 | |||||||||||||||||||||||
Southwest |
Mandatory | $ | 606.96 | $ | 156.52 | $ | 105.87 | $ | 126.64 | $ | 176.47 | $ | 212.34 | $ | 325.09 | $ | 518.94 | $ | 401.95 | $ | 4,011.88 | |||||||||||||||||||||||
West Central |
Mandatory | $ | 572.54 | $ | 147.65 | $ | 99.86 | $ | 119.46 | $ | 166.47 | $ | 200.29 | $ | 306.66 | $ | 489.51 | $ | 379.15 | $ | 4,342.68 | |||||||||||||||||||||||
List of Eligible Assistance Groups (AGs)
Healthy Families: — MA-C Categorically eligible due to TANF cash
— MA-T Children under 21
— MA-Y Transitional Medicaid
— MA-Y Transitional Medicaid
Healthy Start: — MA-P Pregnant Women and Children
Per
Appendix E, Rate Methodology, MCPs in the first two years of operation in the MC program are not
subject to an at-risk recovery amount.
For
the SFY 2008 contract period, MCPs will be put-at risk for a portion of the premiums received
for members in counties they served
as of January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
as of January 1, 2006, provided the MCP has participated in the program for more than twenty-four months.
MCPs will be put
at-risk for a portion of the premiums received for members in counties they began serving after
January 1, 2006,
beginning with the MCP’s twenty-fifth month of membership in each county’s region.
beginning with the MCP’s twenty-fifth month of membership in each county’s region.
Molina’s regional
counties at-risk: Clark, Franklin,
Montgomery.
Page 6 of 6
| Appendix G Covered Families and Children (CFC) population Page l |
APPENDIX G
COVERAGE AND SERVICES
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
| 1. | Basic Benefit Package |
Pursuant to OAC rule 5101:3-26-03(A), with limited exclusions (see section G.2 of this
appendix), MCPs must ensure that members have access to medically-necessary services covered
by the Ohio Medicaid fee-for-service (FFS) program. For information ( Medicaid-covered
services, MCPs must refer to the ODJFS website. The following is general list of the
benefits covered by the Ohio Medicaid fee-for-service program:
| • | Inpatient hospital services | ||
| • | Outpatient hospital services | ||
| • | Rural health clinics (RHCs) and Federally qualified health centers (FQHCs) | ||
| • | Physician services whether furnished in the physician’s office, the covered person’s home, a hospital, or elsewhere · | ||
| • | Laboratory and x-ray services | ||
| • | Screening, diagnosis, and treatment services to children under the age of twenty-one (21) under the HealthChek (EPSDT) program | ||
| • | Family planning services and supplies | ||
| • | Home health and private duty nursing services | ||
| • | Podiatry | ||
| • | Chiropractic services | ||
| • | Physical therapy, occupational therapy, developmental therapy and speech therapy | ||
| • | Nurse-midwife, certified family nurse practitioner, and certified pediatric nurse practitioner services | ||
| • | Prescription drugs | ||
| • | Ambulance and ambulette services | ||
| • | Dental services |
| Appendix G Covered Families and Children (CFC) population Page 2 |
| • | Durable medical equipment and medical supplies | ||
| • | Vision care services, including eyeglasses | ||
| • | Short-term rehabilitative stays in a nursing facility as specified in OAC rule 5101:3-26-03 | ||
| • | Hospice care | ||
| • | Behavioral health services (see section G.2.b.iii of this appendix) |
| 2. | Exclusions, Limitations and Clarifications |
a. Exclusions
MCPs are not required to pay for Ohio Medicaid FFS program (Medicaid)
non-covered services. For information regarding Medicaid noncovered
services, MCPs must refer to the ODJFS website. The following is a general
list of the services not covered by the Ohio Medicaid fee-for-service
program:
| • | Services or supplies that are not medically necessary | ||
| • | Experimental services and procedures, including drugs and equipment, not covered by Medicaid | ||
| • | Organ transplants that are not covered by Medicaid | ||
| • | Abortions, except in the case of a reported rape, incest, or when medically necessary to save the life of the mother | ||
| • | Infertility services for males or females | ||
| • | Voluntary sterilization if under 21 years of age or legally incapable of consenting to the procedure | ||
| • | Reversal of voluntary sterilization procedures | ||
| • | Plastic or cosmetic surgery that is not medically necessary* | ||
| • | Immunizations for travel outside of the United States | ||
| • | Services for the treatment of obesity unless medically necessary* | ||
| • | Custodial or supportive care not covered by Medicaid |
| Appendix G Covered Families and Children (CFC) population Page 3 |
| • | Sex change surgery and related services | ||
| • | Sexual or marriage counseling | ||
| • | Acupuncture and biofeedback services | ||
| • | Services to find cause of death (autopsy) | ||
| • | Comfort items in the hospital (e.g., TV or phone) | ||
| • | Paternity testing |
MCPs are also not required to pay for non-emergency services or supplies
received without members following the directions in their MCP member
handbook, unless otherwise directed by ODJFS.
| * | These services could be deemed medically necessary if medical complications/conditions in addition to the obesity or physical imperfection are present. |
| b. | Limitations & Clarifications |
| i. | Member Cost-Sharing |
As specified in OAC rules 5101:3-26-05(D) and 5101:3-26-12, MCPs are
permitted to impose the applicable member co-payment amount(s) for
dental services, vision services, non-emergency emergency department
services, or prescription drugs, other than generic drugs. MCPs must
notify ODJFS if they intend to impose a co-payment. ODJFS must
approve the notice to be sent to the MCP’s members and the timing of
when the co-payments will begin to be imposed. If ODJFS determines
that an MCP’s decision to impose a particular co-payment on their
members would constitute a significant change for those members,
ODJFS may require the effective date of the co-payment to coincide
with the “Open Enrollment” month.
Notwithstanding the preceding paragraph, MCPs must provide an
ODJFS-approved notice to all their members 90 days in advance of the
date that the MCP will impose the co-payment. With the exception of
member co-payments the MCP has elected to implement in accordance
with OAC rules 5101:3-26-05(D) and 5101:3-26-12, the MCP’s payment
constitutes payment in full for any covered services and their
subcontractors must not charge members or ODJFS any additional
co-payment, cost sharing, down-payment, or similar charge, refundable
or otherwise.
| Appendix G Covered Families and Children (CFC) population Page 4 |
| ii. | Abortion and Sterilization |
The use of federal funds to pay for abortion and sterilization
services is prohibited unless the specific criteria found in 42 CFR
441 and OAC rules 5101:3-17-01 and 5101:3-21-01 are met. MCPs must
verify that all of the information on the required forms (JFS 03197,
03198, and 03199) is provided and that the service meets the required
criteria before any such claim is paid.
Additionally, payment must not be made for associated services such
as anesthesia, laboratory tests, or hospital services if the abortion
or sterilization itself does not qualify for payment. MCPs are
responsible for educating their providers on the requirements;
implementing internal procedures including systems edits to ensure
that claims are only paid once the MCP has determined if the
applicable forms are completed and the required criteria are met, as
confirmed by the appropriate certification/consent forms; and for
maintaining documentation to justify any such claim payments.
| iii. | Behavioral Health Services |
Coordination of Services: MCPs must have a process to
coordinate benefits of and referrals to the publicly funded community
behavioral health system. MCPs must ensure that members have access
to all medically-necessary behavioral health services covered by the
Ohio Medicaid FFS program and are responsible for coordinating those
services with other medical and support services. MCPs must notify
members via the member handbook and provider directory of where and
how to access behavioral health services, including the ability to
self-refer to mental health services offered through ODMH community
mental health centers (CMHCs) as well as substance abuse services
offered through Ohio Department of Alcohol and Drug Addiction
Services (ODADAS)-certified Medicaid providers. Pursuant to ORC
Section 5111.16, alcohol, drug addiction and mental health services
covered by Medicaid are not to be paid by the managed care program
when the nonfederal share of the cost of those services is provided
by a board of alcohol, drug addiction, and mental health services or
a state agency other than ODJFS. MCPs are also not responsible for
providing mental health services to persons between 22 and 64 years
of age while residing in an institution for mental disease (IMD) as
defined in Section 1905(i) of the Social Security Act.
MCPs must provide Medicaid-covered behavioral health services for
members who are unable to timely access services or are unwilling to
access services through community providers.
| Appendix G Covered Families and Children (CFC) population Page 5 |
Mental Health Services: There are a number of
Medicaid-covered mental health (MH) services available through ODMH
CMHCs.
Where an MCP is responsible for providing MH services for their
members, the MCP is responsible for ensuring access to counseling and
psychotherapy, physician/psychologist/psychiatrist services,
outpatient clinic services, general hospital outpatient psychiatric
services, pre-hospitalization screening, diagnostic assessment
(clinical evaluation), crisis intervention, psychiatric
hospitalization in general hospitals (for all ages), and
Medicaid-covered prescription drugs and laboratory services. MCPs are
not required to cover partial hospitalization, or inpatient
psychiatric care in a private or public free-standing psychiatric
hospital. However, MCPs are required to cover the payment of
physician services in a private or public free-standing psychiatric
hospital when such services are billed independent of the hospital.
Substance Abuse Services: There are a number of
Medicaid-covered substance abuse services available through
ODADAS-certified Medicaid providers.
Where an MCP is responsible for providing substance abuse services
for their members, the MCP is responsible for ensuring access to
alcohol and other drug (AOD) urinalysis screening, assessment,
counseling, physician/psychologist/psychiatrist AOD treatment
services, outpatient clinic AOD treatment services, general hospital
outpatient AOD treatment services, crisis intervention, inpatient
detoxification services in a general hospital, and Medicaid-covered
prescription drugs and laboratory services. MCPs are not required to
cover outpatient detoxification and methadone maintenance.
Financial Responsibility for Behavioral Health Services:
MCPs are responsible for the following:
| • | payment of Medicaid-covered prescription drugs prescribed by an ODMH CMHC or ODADAS-certified provider when obtained through an MCP’s panel pharmacy; | ||
| • | payment of Medicaid-covered services provided by an MCP’s panel laboratory when referred by an ODMH CMHC or ODADAS-certified provider; | ||
| • | payment of all other Medicaid-covered behavioral health services obtained through providers other than those who are ODMH CMHCs or ODADAS-certified providers when arranged/authorized by the MCP. |
| Appendix G Covered Families and Children (CFC) population Page 6 |
Limitations:
| • | Pursuant to ORC Section 5111.16, alcohol, drug addiction and mental health services covered by Medicaid are not to be paid by the managed care program when the nonfederal share of the cost of those services is provided by a board of alcohol, drug addiction, and mental health services or a state agency other than ODJFS. As part of this limitation: |
| • | MCPs are not responsible for paying for behavioral health services provided through ODMH CMHCs and ODADAS-certified Medicaid providers; | ||
| • | MCPs are not responsible for payment of partial hospitalization (mental health), inpatient psychiatric care in a private or public free-standing inpatient psychiatric hospital, outpatient detoxification, intensive outpatient programs (IOP) (substance abuse) or methadone maintenance. | ||
| • | However, MCPs are required to cover the payment of physician services in a private or public free standing psychiatric hospital when such services are billed independent of the hospital. |
| iv. | Pharmacy Benefit: In providing the Medicaid pharmacy benefit to their members, MCPs must cover the same drugs covered by the Ohio Medicaid fee-for-service program. |
MCPs may establish a preferred drug list for members and providers
which includes a listing of the drugs that they prefer to have
prescribed. Preferred drugs requiring prior authorization approval
must be clearly indicated as such. Pursuant to ORC §5111.172, ODJFS
may approve MCP-specific pharmacy program utilization management
strategies (see appendix G.3.a).
| v. | Organ Transplants: MCPs must ensure coverage for organ transplants and related services in accordance with OAC 5101-3-2-07.1 (B)(4)&(5). Coverage for all organ transplant services, except kidney transplants, is contingent upon review and recommendation by the “Ohio Solid Organ Transplant Consortium” based on criteria established by Ohio organ transplant surgeons and authorization from the ODJFS prior authorization unit. Reimbursement for bone marrow transplant and hematapoietic stem cell transplant services, as defined in OAC 3701:84-01, is contingent upon review and recommendation by the “Ohio Hematapoietic Stem Cell Transplant Consortium” again based on criteria established by Ohio experts in the field of bone marrow transplant. While MCPs may require prior authorization for these transplant services, the approval criteria would be limited to |
| Appendix G Covered Families and Children (CFC) population Page 7 |
confirming the consumer is being considered and/or has been
recommended for a transplant by either consortium and authorized
by ODJFS. Additionally, in accordance with OAC 5101:3-2-03 (A)(4)
all services related to organ donations are covered for the donor
recipient when the consumer is Medicaid eligible.
| 3. | Care Coordination |
| a. | Utilization Management Programs |
General Provisions — Pursuant to OAC rule 5101:3-26-03.1(A)(7),
MCPs must implement a utilization management (UM)
program to maximize the effectiveness of the care provided to members and may develop other UM programs, subject to prior approval by ODJFS. For the purposes of this requirement, the specific UM programs which require ODJFS prior-approval are an MCP’s general pharmacy program, a controlled substances and member management program, and any other program designed by the MCP with the purpose of redirecting or restricting access to a particular service or service location.
program to maximize the effectiveness of the care provided to members and may develop other UM programs, subject to prior approval by ODJFS. For the purposes of this requirement, the specific UM programs which require ODJFS prior-approval are an MCP’s general pharmacy program, a controlled substances and member management program, and any other program designed by the MCP with the purpose of redirecting or restricting access to a particular service or service location.
| i. | Pharmacy Programs — Pursuant to ORC Sec. 5111.172 and OAC rule 5101:3-26-03(A) and (B), MCPs may, subject to ODJFS prior-approval, implement strategies for the management of pharmacy utilization. Pharmacy utilization management strategies may include developing preferred drug lists, requiring prior authorization for certain drugs, placing limitations on the type of provider and locations where certain medications may be administered, and developing and implementing a specialized pharmacy program to address the utilization of controlled substances, as defined in section 3719.01 of the Ohio Revised Code. | ||
| Drug Prior Authorizations: MCPs must receive prior approval from ODJFS for the medications that they wish to cover through prior authorization. MCPs must establish their prior authorization system so that it does not unnecessarily impede member access to medically-necessary Medicaid-covered services. MCPs must make their approved list of drugs covered only with prior authorization available to members and providers, as outlined in paragraphs 37(b) and (c) of Appendix C. | |||
| Beginning January 1, 2008, MCPs may require prior authorization for the coverage of antipsychotic drugs with ODJFS approval. MCPs must, however, allow any member to continue receiving a specific antipsychotic drug if the member is stabilized on that particular medication. The MCP must continue to cover that specific drug for the stabilized member for as long as that medication continues to be |
Appendix G
Covered Families and Children (CFC) population
Page 8
Covered Families and Children (CFC) population
Page 8
| effective for the member. MCPs may also implement a drug utilization review program designed to promote the appropriate clinical prescribing of antipsychotic drugs. This can be accomplished through the MCP’s retrospective analysis of drug claims to identify potential inappropriate use and provide education to those providers who are outliers to acceptable standards for prescribing/dispensing antipsychotic drugs. | |||
| MCPs must comply with the provisions of 1927(d)(5) of the Social Security Act, 42 USC 1396r-8(k)(3), and OAC rule 5101:3-26-03.1 regarding the timeframes for prior authorization of covered outpatient drugs. | |||
| Controlled Substances and Member Management Programs: MCPs may also, with ODJFS prior approval, develop and implement Controlled Substances and Member Management (CSMM) programs designed to address use of controlled substances. Utilization management strategies may include prior authorization as a condition of obtaining a controlled substance, as defined in section 3719.01 of the Ohio Revised Code. CSMM strategies may also include processes for requiring MCP members at high risk for fraud or abuse involving controlled substances to have their narcotic medications prescribed by a designated provider/providers and filled by a pharmacy, medical provider, or health care facility designated by the program. | |||
| ii. | Emergency Department Diversion (EDD) — MCPs must provide access to services in a way that assures access to primary, specialist and urgent care in the most appropriate settings and that minimizes frequent, preventable utilization of emergency department (ED) services. OAC rule 5101:3-26-03.1(A)(7)(d) requires MCPs to implement the ODJFS-required emergency department diversion (EDD) program for frequent utilizers. | ||
| Each MCP must establish an ED diversion (EDD) program with the goal of minimizing frequent ED utilization. The MCP’s EDD program must include the monitoring of ED utilization, identification of frequent ED utilizers, and targeted approaches designed to reduce avoidable ED utilization. MCP EDD programs must, at a minimum, address those ED visits which could have been prevented through improved education, access, quality or care management approaches. | |||
| Although there is often an assumption that frequent ED visits are solely the result of a preference on the part of the member and education is therefore the standard remedy, it is also important to ensure that a member’s frequent ED utilization is not due to |
Appendix G
Covered Families and Children (CFC) population
Page 9
Covered Families and Children (CFC) population
Page 9
| problems such as their PCP’s lack of accessibility or failure to make appropriate specialist referrals. The MCP’s EDD program must therefore also include the identification of providers who serve as PCPs for a substantial number of frequent ED utilizers and the implementation of corrective action with these providers as so indicated. | |||
| This requirement does not replace the MCP’s responsibility to inform and educate all members regarding the appropriate use of the ED. |
| b. | Case Management Programs | ||
| In accordance with 5101:3-26-03.1(A)(8), MCPs must offer and provide comprehensive case management services which coordinate and monitor the care of members with specific diagnoses, or who require high-cost and/or extensive services. The MCP’s comprehensive case management program must also include a Children with Special Health Care Needs component as specified below. |
| i. | Each MCP must inform all members and contracting providers of the MCP’s case management services. | ||
| ii. | Children with Special Health Care Needs (CSHCN): | ||
| CSHCN are a particularly vulnerable population which often have chronic and complex medical health care conditions. In order to ensure compliance with the provisions of 42 CFR 438.208, each MCP must establish a CSHCN component as part of the MCP’s comprehensive case management program. The MCP must establish a process for the timely identification, completion of a comprehensive needs assessment, and providing appropriate and targeted case management services for any CSHCN. | |||
| CSHCN are defined as children age 17 and under who are pregnant, and members under 21 years of age with one or more of the following: |
-Asthma
-HIV/AIDS
-A
chronic physical, emotional or mental condition for which they are receiving treatment or counseling
-Supplemental security income (SSI) for a health-related condition
-A current letter of approval from the Bureau of Children with Medical Handicaps (BCMH), Ohio
Department of Health
Appendix G
Covered Families and Children (CFC) population
Page 10
Covered Families and Children (CFC) population
Page 10
| iii. | Comprehensive Case Management Program |
1. The MCP must have a process to inform members and their
PCPs in writing that they have been identified as meeting the criteria for
case management, including their enrollment into case management services.
2. The MCP must assure and coordinate the placement of the member into
case management — including identification of the member’s need for case
management services, completion of the comprehensive health needs
assessment, and timely development of a care treatment plan. This process
must occur within the following timeframes for:
| a) | newly enrolled members, 90 days from the effective date of enrollment; and | ||
| b) | existing members, 90 days from identifying their need for case management. |
3. The MCP’s comprehensive case management program must include, at a
minimum, the following components:
| a. | Identification | ||
| The MCP must have a variety of mechanisms in place to identify members potentially eligible for case management. These mechanisms must include an administrative data review (e.g., diagnosis, cost threshold, and/or service utilization) and may include provider/self referrals, telephone interviews, information as reported by MCEC during membership selection, or home visits. | |||
| b. | Assessment | ||
| The MCP must arrange for or conduct a comprehensive assessment of the member’s physical and/or behavioral health condition(s) to confirm the results of a positive identification, and determine the need for case management services. The assessment must be completed by a physician, physician assistant, RN, LPN, licensed social worker, or a graduate of a two- or four-year allied health program. If the assessment is completed by another medical professional, there should be oversight and monitoring by either a registered nurse or physician. | |||
| For CSHCN, the comprehensive assessment must include, at a minimum, the use of the ODJFS CSHCN Standard Assessment Tool. |
Appendix G
Covered Families and Children (CFC) population
Page 11
Covered Families and Children (CFC) population
Page 11
| c. | Care Treatment Plan | ||
| The care treatment plan is defined by ODJFS as the one developed by the MCP for the member. The development of the care treatment plan must be based on the comprehensive health assessment and reflect the member’s primary medical diagnosis and health conditions, any co-morbidities, and the member’s psychological, behavioral health and community support needs. The care treatment plan must also include specific provisions for periodic reviews (i.e., no less than semi-annually ) of the member’s condition and appropriate updates to the plan. The member and the member’s PCP must be actively involved in the development of and revisions to the care treatment plan. The designated PCP is the provider, or specialist, who will manage and coordinate the overall care for the member. Ongoing communication regarding the status of the care treatment plan may be accomplished between the MCP and the PCP’s designee (i.e., qualified health professional). Revisions to the clinical portion of the care treatment plan should be completed in consultation with the PCP. | |||
| The elements of a comprehensive care treatment plan include: | |||
| Goals and actions that address medical, social, behavioral and psychological needs; | |||
| Member level interventions (i.e., referrals and making appointments) that assist members in obtaining services, providers and programs; | |||
| Continuous review, revision and contact follow-up, as needed, to insure the care treatment plan is adequately monitored including the following: |
| • | Documentation that services are provided in accordance with the care treatment plan; | ||
| • | Re-evaluation to determine if the care treatment plan is adequate to meet the member’s current needs; | ||
| • | Identification of gaps between recommended care and actual care provided; | ||
| • | A change in needs or status from the re-evaluation that requires revisions to the care treatment plan; | ||
| • | Active participation by the member or representative in the care treatment plan development; | ||
| • | Monitoring of specific service delivery including service utilization; and |
Appendix G
Covered Families and Children (CFC) population
Page 12
Covered Families and Children (CFC) population
Page 12
| • | Re-evaluation of a member’s risk level with adjustment to the level of case management services provided. |
| 4. | Coordination of Care and Communication | ||
| The MCP must provide case management services for: |
| • | all CSHCN, including the ODJFS mandated conditions as specified in Appendix M, Case Management Program Performance Measures; | ||
| • | all members enrolled in an MCP’s CSMM program as specified in Section G(3)(a)(i); and | ||
| • | adults whose health conditions warrant case management services. |
| Case management services should not be limited only to members with the mandated conditions. | |||
| There should be an accountable point of contact (i.e., case manager) who can help obtain medically necessary care, assist with health-related services and coordinate care needs. The MCP must arrange or provide for professional case management services that are performed collaboratively by a team of professionals appropriate for the member’s condition and health care needs. At a minimum, the MCP’s case manager must attempt to coordinate with the member’s case manager from other health systems, including behavioral health. The MCP must have a process to facilitate, maintain, and coordinate communication between service providers, the member, and the member’s family. The MCP must have a provision to disseminate information to the member/caregiver concerning the health condition, types of services that may be available, and how to access the services. | |||
| The MCP must implement mechanisms to notify all Members with Special Health Care Needs of their right to directly access a specialist. Such access may be assured through, for example, a standing referral or an approved number of visits, and documented in the care treatment plan. |
| iv. | Case Management Strategies |
| The MCP must follow best-practice and/or evidence based clinical guidelines when developing a member’s care treatment plan and coordinating the case management needs. The MCP |
Appendix G
Covered Families and Children (CFC) population
Page 13
Covered Families and Children (CFC) population
Page 13
| must develop and implement mechanisms to educate and equip providers and case managers with evidence-based clinical guidelines or best practice approaches to assist in providing a high level of quality of care to members. |
| v. | Case Management Program Staffing |
| The MCP must identify the staff that will be involved in the operations of the case management program, including but not limited to: case manager supervisors, case manager, and administrative support staff. The MCP must identify the role and functions of each case management staff member as well as the educational requirements, clinical licensure standards, certification and relevant experience with care management standards and/or activities. The MCP must provide case manager staff/member ratios based on the member risk stratification and different levels of care being provided to members. |
| vi. | Case Management Data Submission |
| The MCP must submit a monthly electronic report to the Case Management System (CAMS) for all members who are case managed by the MCP as outlined in the ODJFS Case Management File and Submission Specifications. In order for a member to be submitted as case managed in CAMS, the MCP must (1) complete the identification process, a comprehensive health needs assessment and development of a care treatment plan for the member; and (2) document the member’s written or verbal confirmation of his/her case management status in the case management record. ODJFS, or its designated entity, the external quality review vendor, will validate on an annual basis the accuracy of the information contained in CAMS with the member’s case management record. | |||
| The CAMS files are due the 10th business day of each month. | |||
| The MCP must also have an ODJFS-approved case management program which includes the items in Section 3.b.. Each MCP should implement an evaluation process to review, revise and/or update the case management program. The MCP must annually submit its case management program for approval by ODJFS. Any subsequent changes to an approved case management program description must be submitted to ODJFS in writing for review and approval prior to implementation. |
Appendix G
Covered Families and Children (CFC) population
Page 14
Covered Families and Children (CFC) population
Page 14
| c. | Care Coordination with ODJFS-Designated Providers | ||
| Per OAC rule 5101:3-26-03.1(A)(4), MCPs are required to share specific information with certain ODJFS-designated non- contracting providers in order to ensure that these providers have been supplied with specific information needed to coordinate care for the MCP’s members. Once an MCP has obtained a provider agreement, but within the first month of operation, the MCP must provide to the ODJFS-designated providers (i.e., ODMH Community Mental Health Centers, ODADAS-certified Medicaid providers, FQHCs/RHCs, QFPPs, CNMs, CNPs [if applicable], and hospitals) a quick reference information packet which includes the following: |
| i. | A brief cover letter explaining the purpose of the mailing; and | ||
| ii. | A brief summary document that includes the following information: |
| • | Claims submission information including the MCP’s Medicaid provider number for each region; | ||
| • | The MCP’s prior authorization and referral procedures or the MCP’s website which includes this information; | ||
| • | A picture of the MCP’s member identification card (front and back); | ||
| • | Contact numbers and website location for obtaining information for eligibility verification, claims processing, referrals/prior authorization, and information regarding the MCP’s behavioral health administrator; | ||
| • | A listing of the MCP’s major pharmacy chains and the contact number for the MCP’s pharmacy benefit administrator (PBM); | ||
| • | A listing of the MCP’s laboratories and radiology providers; and | ||
| • | A listing of the MCP’s contracting behavioral health providers and how to access services through them (this information is only to be provided to non-contracting community mental health and substance abuse providers). |
Appendix G
Covered Families and Children (CFC) population
Page 15
Covered Families and Children (CFC) population
Page 15
| d. | Care coordination with Non-Contracting Providers | ||
| Per OAC rule 5101:3-26-05(A)(9), MCPs authorizing the delivery of services from a provider who does not have an executed subcontract must ensure that they have a mutually agreed upon compensation amount for the authorized service and notify the provider of the applicable provisions of paragraph D of OAC rule 5101:3-26-05. This notice is provided when an MCP authorizes a non-contracting provider to furnish services on a one-time or infrequent basis to an MCP member and must include required ODJFS-model language and information. This notice must also be included with the transition of services form sent to providers as outlined in paragraph 29.h of Appendix C. | |||
| e. | Integration of Member Care | ||
| The MCP must ensure that a discharge plan is in place to meet a member’s health care needs following discharge from a nursing facility, and integrated into the member’s continuum of care. The discharge plan must address the services to be provided for the member and must be developed prior to the date of discharge from the nursing facility. The MCP must ensure follow-up contact occurs with the member, or authorized representative, within thirty (30) days of the member’s discharge from the nursing facility to ensure that the member’s health care needs are being met. |
Appendix H
Covered Families and Children (CFC) population
Page 1
Covered Families and Children (CFC) population
Page 1
APPENDIX H
PROVIDER PANEL SPECIFICATIONS
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
1. GENERAL PROVISIONS
MCPs must provide or arrange for the delivery of all medically necessary, Medicaid-covered health
services, as well as assure that they meet all applicable provider panel requirements for their
entire designated service area. The ODJFS provider panel requirements are specified in the charts
included with this appendix and must be met prior to the MCP receiving a provider agreement with
ODJFS. The MCP must remain in compliance with these requirements for the duration of the provider
agreement.
If an MCP is unable to provide the medically necessary, Medicaid-covered services through their
contracted provider panel, the MCP must ensure access to these services on an as needed basis. For
example, if an MCP meets the pediatrician requirement but a member is unable to obtain a timely
appointment from a pediatrician on the MCP’s provider panel, the MCP will be required to secure an
appointment from a panel pediatrician or arrange for an out-of-panel referral to a pediatrician.
MCPs are required to make transportation available to any member requesting transportation when
they must travel 30 miles or more from their home to receive a medically-necessary Medicaid-covered
service. If the MCP offers transportation to their members as an additional benefit and this
transportation benefit only covers a limited number of trips, the required transportation listed
above may not be counted toward this trip limit (as specified in Appendix C).
In developing the provider panel requirements, ODJFS considered, on a county-by-county basis, the
population size and utilization patterns of the Covered Families and Children (CFC) consumers, as
well as the potential availability of the designated provider types. ODJFS has integrated existing
utilization patterns into the provider network requirements to avoid disruption of care. Most
provider panel requirements are county-specific but in certain circumstances, ODJFS requires
providers to be located anywhere in the region. Although all provider types listed in this appendix
are required provider types, only those listed on the attached charts must be submitted for ODJFS
prior approval.
2. PROVIDER SUBCONTRACTING
Unless otherwise specified in this appendix or OAC rule 5101:3-26-05, all MCPs are required to
enter into fully-executed subcontracts with their providers. These subcontracts must include a
baseline contractual agreement, as well as the appropriate ODJFS-approved Model Medicaid Addendum. The Model Medicaid Addendum incorporates all applicable Ohio
Appendix H
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
Administrative Code rule requirements specific to provider subcontracting and therefore cannot be
modified except to add personalizing information such as the MCP’s name.
ODJFS must prior approve all MCP providers in the ODJFS- required provider type categories before
they can begin to provide services to that MCP’s members. MCPs may not employ or contract with
providers excluded from participation in Federal health care programs under either section 1128 or
section 1128A of the Social Security Act. As part of the prior approval process, MCPs must submit
documentation verifying that all necessary contract documents have been appropriately completed.
ODJFS will verify the approvability of the submission and process this information using the ODJFS
Provider Verification System (PVS) or other designated process. The PVS is a centralized database
system that maintains information on the status of all MCP-submitted providers.
Only those providers who meet the applicable criteria specified in this document, as determined by
ODJFS, will be approved by ODJFS. MCPs must credential/recredential providers in accordance with
the standards specified by the National Committee for Quality Assurance (or receive approval from
ODJFS to use an alternate industry standard) and must have completed the credentialing review
before submitting any provider to ODJFS for approval. Regardless of whether ODJFS has approved a
provider, the MCP must ensure that the provider has met all applicable credentialing criteria
before the provider can render services to the MCP’s members.
MCPs must notify ODJFS of the addition and deletion of their contracting providers as specified in
OAC rule 5101:3-26-05, and must notify ODJFS within one working day in instances where the MCP has
identified that they are not in compliance with the provider panel requirements specified in this
appendix.
2. PROVIDER PANEL REQUIREMENTS
The provider network criteria that must be met by each MCP are as follows:
a.
Primary Care Providers (PCPs)
Primary Care Provider (PCP) means an individual physician (M.D. or D.O.), certain physician group
practice/clinic (Primary Care Clinics [PCCs]), or an advanced practice nurse (APN) as defined in
ORC 4723.43 or advanced practice nurse group practice within an acceptable specialty, contracting
with an MCP to provide services as specified in paragraph (B) of OAC rule 5101: 3-26-03.1.
Acceptable specialty types for PCPs include family/general practice, internal medicine, pediatrics,
and obstetrics/gynecology (OB/GYN). Acceptable PCCs include FQHCs, RHCs and the acceptable group
practices/clinics specified by ODJFS. As part of their subcontract with an MCP, PCPs must
stipulate the total Medicaid member capacity that they can ensure for that individual MCP.
Appendix H
Covered Families and Children (CFC) population
Page 3
Covered Families and Children (CFC) population
Page 3
Each PCP must have the capacity and agree to serve at least 50 Medicaid members at each practice
site in order to be approved by ODJFS as a PCP. The capacity-by-site requirement must be met for
all ODJFS-approved PCPs.
In determining whether an MCP has sufficient PCP capacity for a region, ODJFS considers a provider
who can serve as a PCP for 2000 Medicaid MCP members as one full-time equivalent (FTE).
ODJFS reviews the capacity totals for each PCP to determine if they appear excessive. ODJFS
reserves the right to request clarification from an MCP for any PCP whose total stated capacity for
all MCP networks added together exceeds 2000 Medicaid members (i.e., 1 FTE). Where indicated, ODJFS
may set a cap on the maximum amount of capacity that we will recognize for a specific PCP. ODJFS
may allow up to an additional 750 member capacity for each nurse practitioner or physician’s
assistant that is used to provide clinical support for a PCP.
For PCPs contracting with more than one MCP, the MCP must ensure that the capacity figure stated by
the PCP in their subcontract reflects only the capacity the PCP intends to provide for that one
MCP. ODJFS utilizes each approved PCP’s capacity figure to determine if an MCP meets the provider
panel requirements and this stated capacity figure does not prohibit a PCP from actually having a
caseload that exceeds the capacity figure indicated in their subcontract.
ODJFS recognizes that MCPs will need to utilize specialty providers to serve as PCPs for some
special needs members. Also, in some situations (e.g., continuity of care) a PCP may only want to
serve a very small number of members for an MCP. In these situations it will not be necessary for
the MCP to submit these PCPs to ODJFS for prior approval. These PCPs will not be included in the
ODJFS PVS database, or other designated process, and therefore may not appear as PCPs in the MCP’s
provider directory. These PCPs will, however, need to execute a subcontract with the MCP which
includes the appropriate Model Medicaid Addendum.
The PCP
requirement is based on an MCP having sufficient PCP capacity to serve 40% of the eligibles in the region if three MCPs are serving the region and 55% of the eligibles in
the region if two MCPs are serving the region. At a minimum, each MCP must meet both the PCP FTE
requirement for that region, and a ratio of one PCP FTE for each 2,000 of their Medicaid members in
that region. MCPs must also satisfy a PCP geographic accessibility standard. ODJFS will match the
PCP practice sites and the stated PCP capacity with the geographic location of the eligible
population in that region (on a county-specific basis) and perform analysis using Geographic
Information Systems (GIS) software. The analysis will be used to determine if at least 40% of the
eligible population is located within 10 miles of PCP with available capacity in urban counties and
40% of the eligible population within 30 miles of a PCP with available capacity in rural counties. [Rural
areas are defined pursuant to 42 CFR 412.62(f)(1)(iii).]
Appendix H
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
In addition to the PCP FTE capacity requirement, MCPs must also contract with the specified number
of pediatric PCPs for each region. These pediatric PCPs will have their stated capacity counted
toward the PCP FTE requirement.
A pediatric PCP must maintain a general pediatric practice (e.g., a pediatric neurologist would not
meet this definition unless this physician also operated a practice as a general pediatrician) at a
site(s) located within the county/region and be listed as a pediatrician with the Ohio State
Medical Board. In addition, half of the required number of pediatric PCPs must also be certified by
the American Board of Pediatrics. The provider panel requirements for pediatricians are included in
the practitioner charts in this appendix.
Until July 1, 2008, MCPs may only use PCPs who are individual physicians (M.D. or D.O.), physician
group practices, or PCCs to meet capacity and FTE requirements.
b. Non-PCP Provider Network
In addition to the PCP capacity requirements, each MCP is also required to maintain adequate
capacity in the remainder of its provider network within the following categories: hospitals,
dentists, pharmacies, vision care providers, obstetricians/gynecologists (OB/GYNs), allergists,
general surgeons, otolaryngologists, orthopedists, certified nurse midwives (CNMs), certified nurse
practitioners (CNPs), federally qualified health centers (FQHCs)/rural health centers (RHCs) and
qualified family planning providers (QFPPs). CNMs, CNPs, FQHCs/RHCs and QFPPs are
federally-required provider types.
All Medicaid-contracting MCPs must provide all medically-necessary Medicaid-covered services to
their members and therefore their complete provider network will include many other additional
specialists and provider types. MCPs must ensure that all non-PCP network providers follow
community standards in the scheduling of routine appointments (i.e., the amount of time members
must wait from the time of their request to the first available time when the visit can occur).
Although there are currently no FTE capacity requirements of the non-PCP required provider types,
MCPs are required to ensure that adequate access is available to members for all required provider
types. Additionally, for certain non-PCP required provider types, MCPs must ensure that these
providers maintain a full-time practice at a site(s) located in the specified county/region (i.e.,
the ODJFS-specified county within the region or anywhere within the region if no particular county
is specified). A full-time practice is defined as one where the provider is available to patients
at their practice site(s) in the specified county/region for at least 25 hours a week. ODJFS will
monitor access to services through a variety of data sources, including: consumer satisfaction
surveys; member appeals/grievances/complaints and state hearing notifications/requests; clinical quality
studies; encounter data volume; provider complaints, and clinical performance measures.
Appendix H
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
Hospitals - MCPs must contract with the number and type of hospitals specified by ODJFS for each
county/region. In developing these hospital requirements, ODJFS considered, on a county-by-county
basis, the population size and utilization patterns of the Covered Families and
Children (CFC) consumers and integrated the existing utilization patterns into the hospital network
requirements to avoid disruption of care. For this reason, ODJFS may require that MCPs contract
with out-of-state hospitals (i.e. Kentucky, West Virginia, etc.).
For each Ohio hospital, ODJFS utilizes the hospital’s most current Annual Hospital Registration and
Planning Report, as filed with the Ohio Department of Health, in verifying types of services that
hospital provides. Although ODJFS has the authority, under certain situations, to obligate a
non-contracting hospital to provide non-emergency hospital services to an MCP’s members, MCPs must
still contract with the specified number and type of hospitals unless ODJFS approves a provider
panel exception (see Section 4 of this appendix – Provider Panel Exceptions).
If an MCP-contracted hospital elects not to provide specific Medicaid-covered hospital services
because of an objection on moral or religious grounds, the MCP must ensure that these hospital
services are available to its members through another MCP-contracted hospital in the specified
county/region.
OB/GYNs - MCPs must contract with the specified number of OB/GYNs for each county/region, all of
whom must maintain a full-time obstetrical practice at a site(s) located in the specified
county/region. Only MCP-contracting OB/GYNs with current hospital privileges at a hospital under
contract with the MCP in the region can be submitted to the PVS, or other system, count towards MCP
minimum panel requirements, and be listed in the MCPs’ provider directory.
Certified Nurse Midwives (CNMs) and Certified Nurse Practitioners (CNPs) - MCPs must ensure access
to CNM and CNP services in the region if such provider types are present within the region. The MCP
may contract directly with the CNM or CNP providers, or with a physician or other provider entity
who is able to obligate the participation of a CNM or CNP. If an MCP does not contract for CNM or
CNP services and such providers are present within the region, the MCP will be required to allow
members to receive CNM or CNP services outside of the MCP’s provider network.
Only CNMs with hospital delivery privileges at a hospital under contract with the MCP in the region
can be submitted to the PVS, or other system, count towards MCP minimum
panel requirements, and be listed in the MCPs’ provider
directory. The MCP must ensure a member’s
access to CNM and CNP services if such providers are practicing within the region.
Vision Care Providers - MCPs must contract with the specified number of
ophthalmologists/optometrists for each specified county/region , all of whom must maintain a
full-time practice at a site(s) located in the specified county/region. All ODJFS-approved vision
providers must regularly perform routine eye exams. (MCPs will be expected to contract with an
adequate number of ophthalmologists as part of their overall provider panel, but only
Appendix H
Covered Families and Children (CFC) population
Page 6
Covered Families and Children (CFC) population
Page 6
ophthalmologists who regularly perform routine eye exams can be used to meet the vision care
provider panel requirement.) If optical dispensing is not sufficiently available in a region
through the MCP’s contracting ophthalmologists/optometrists, the MCP must separately contract with
an adequate number of optical dispensers located in the region.
Dental Care Providers - MCPs must contract with the specified number of dentists. In order to
assure sufficient access to adult MCP members, no more than two-thirds of the dentists used to meet
the provider panel requirement may be pediatric dentists.
Federally Qualified Health Centers/Rural Health Clinics (FQHCs/RHCs) - MCPs are required to ensure
member access to any federally qualified health center or rural health clinic (FQHCs/RHCs),
regardless of contracting status. Contracting FQHC/RHC providers must be submitted for ODJFS
approval via the PVS process, or other designated process. Even if no FQHC/RHC is available within
the region, MCPs must have mechanisms in place to ensure coverage for FQHC/RHC services in the
event that a member accesses these services outside of the region.
In order to ensure that any FQHC/RHC has the ability to submit a claim to ODJFS for the state’s
supplemental payment, MCPs must offer FQHCs/RHCs reimbursement pursuant to the following:
| • | MCPs must provide expedited reimbursement on a service-specific basis in an amount no less than the payment made to other providers for the same or similar service. | ||
| • | If the MCP has no comparable service-specific rate structure, the MCP must use the regular Medicaid fee-for-service payment schedule for non-FQHC/RHC providers. | ||
| • | MCPs must make all efforts to pay FQHCs/RHCs as quickly as possible and not just attempt to pay these claims within the prompt pay time frames. |
MCPs are required to educate their staff and providers on the need to assure member access to
FQHC/RHC services.
Qualified Family Planning Providers (QFPPs) - All MCP members must be permitted to self-refer to
family planning services provided by a QFPP. A QFPP is defined as any public or not-for-profit
health care provider that complies with Title X guidelines/standards, and receives
either Title X funding or family planning funding from the Ohio Department of Health. MCPs must
reimburse all medically-necessary Medicaid-covered family planning services provided to eligible
members by a QFPP provider (including on-site pharmacy and diagnostic services) on a patient
self-referral basis, regardless of the provider’s status as a panel or non-panel provider. MCPs
will be required to work with QFPPs in the region to develop mutually-agreeable HIPAA
Appendix H
Covered Families and Children (CFC) population
Page 7
Covered Families and Children (CFC) population
Page 7
compliant policies and procedures to preserve patient/provider confidentiality, and convey
pertinent information to the member’s PCP and/or MCP.
Behavioral Health Providers – MCPs must assure member access to all Medicaid-covered behavioral
health services for members as specified in Appendix G.b.ii. Although ODJFS is aware that certain
outpatient substance abuse services may only be available through Medicaid providers certified by
the Ohio Department of Drug and Alcohol Addiction Services (ODADAS) in some areas, MCPs must
maintain an adequate number of contracted mental health providers in the region to assure access
for members who are unable to timely access services or unwilling to access services through
community mental health centers. MCPs are advised not to contract with community mental health
centers as all services they provide to MCP members are to be billed to ODJFS.
Other Specialty Types (pediatricians, general surgeons, otolaryngologists, allergists, and
orthopedists) - MCPs must contract with the specified number of all other ODJFS designated
specialty provider types. In order to be counted toward meeting the provider panel requirements,
these specialty providers must maintain a full-time practice at a site(s) located within the
specified county/region. Only contracting general surgeons, orthopedists, and otolaryngologists
with admitting privileges at a hospital under contract with the MCP in the region can be submitted
to the PVS, or other system, count towards MCP minimum panel requirements, and be listed in the
MCPs’ provider directory.
4. PROVIDER PANEL EXCEPTIONS
ODJFS may specify provider panel criteria for a service area that deviates from that specified in
this appendix if:
| - | the MCP presents sufficient documentation to ODJFS to verify that they have been unable to meet or maintain certain provider panel requirements in a particular service area despite all reasonable efforts on their part to secure such a contract(s), and | ||
| - | if notified by ODJFS, the provider(s) in question fails to provide a reasonable argument why they would not contract with the MCP, and | ||
| - | the MCP presents sufficient assurances to ODJFS that their members will have adequate access to the services in question. |
If an MCP is unable to contract with or maintain a sufficient number of providers to meet the
ODJFS-specified provider panel criteria, the MCP may request an exception to these criteria by
submitting a provider panel exception request as specified by ODJFS. ODJFS will review the
exception request and determine whether the MCP has sufficiently demonstrated that all reasonable
efforts were made to obtain contracts with providers of the type in question and that they will be
able to provide access to the services in question.
Appendix H
Covered Families and Children (CFC) population
Page 8
Covered Families and Children (CFC) population
Page 8
ODJFS will aggressively monitor access to all services related to the approval of a provider panel
exception request through a variety of data sources, including: consumer satisfaction surveys;
member appeals/grievances/complaints and state hearing notifications/requests; member just-cause
for termination requests; clinical quality studies; encounter data volume; provider complaints, and
clinical performance measures. ODJFS approval of a provider panel exception request does not exempt
the MCP from assuring access to the services in question. If ODJFS determines that an MCP has not
provided sufficient access to these services, the MCP may be subject to sanctions.
5. PROVIDER DIRECTORIES
MCP provider directories must include all MCP-contracted providers [except as specified by ODJFS]
as well as certain non-contracted providers. At the time of ODJFS’ review, the information listed
in the MCP’s provider directory for all ODJFS-required provider types specified on the attached
charts must exactly match the data currently on file in the ODJFS PVS, or other designated process.
MCP provider directories must utilize a format specified by ODJFS. Directories may be
region-specific or include multiple regions, however, the providers within the directory must be
divided by region, county, and provider type, in that order.
The directory must also specify:
| • | provider address(es) and phone number(s); | |
| • | an explanation of how to access providers (e.g. referral required vs. self-referral); | |
| • | an indication of which providers are available to members on a self-referral basis | |
| • | foreign-language speaking PCPs and specialists and the specific foreign language(s) spoken; | |
| • | how members may obtain directory information in alternate formats that takes into consideration the special needs of eligible individuals including but not limited to, visually-limited, LEP, and LRP eligible individuals; and | |
| • | any PCP or specialist practice limitations. |
Printed Provider Directory
Prior to receiving a provider agreement, all MCPs must develop a printed provider directory that
shall be prior-approved by ODJFS for each covered population. For example, an MCP who serves CFC
and ABD in the Central Region would have two provider directories, one for CFC and one for ABD.
Once approved, this directory may be regularly updated with provider additions or deletions by the
MCP without ODJFS prior-approval, however, copies of the revised directory (or inserts) must be
submitted to ODJFS prior to distribution to members.
Appendix H
Covered Families and Children (CFC) population
Page 9
Covered Families and Children (CFC) population
Page 9
On a quarterly basis, MCPs must create an insert to each printed directory that lists those
providers deleted from the MCP’s provider panel during the previous three months. Although this
insert does not need to be prior approved by ODJFS, copies of the insert must be submitted to ODJFS
two weeks prior to distribution to members.
Internet Provider Directory
MCPs are required to have an internet-based provider directory available in the same format as
their ODJFS-approved printed directory. This internet directory must allow members to
electronically search for MCP panel providers based on name, provider type, and geographic
proximity, and population (e.g. CFC and/or ABD). If an MCP has one internet-based directory for
multiple populations, each provider must include a description of which population they serve.
The internet directory may be updated at any time to include providers who are not one of the
ODJFS-required provider types listed on the charts included with this appendix. ODJFS-required
providers must be added to the internet directory within one week of the MCP’s notification of
ODJFS-approval of the provider via the Provider Verification process. Providers being deleted from
the MCP’s panel must deleted from the internet directory within one week of notification from the
provider to the MCP. Providers being deleted from the MCP’s panel must be posted to the internet
directory within one week of notification from the provider to the MCP of the deletion. These
deleted providers must be included in the inserts to the MCP’s provider directory referenced above.
6. FEDERAL ACCESS STANDARDS
MCPs must demonstrate that they are in compliance with the following federally defined provider
panel access standards as required by 42 CFR 438.206:
In establishing and maintaining their provider panel, MCPs must consider the following:
| • | The anticipated Medicaid membership. | |
| • | The expected utilization of services, taking into consideration the characteristics and health care needs of specific Medicaid populations represented in the MCP. | |
| • | The number and types (in terms of training, experience, and specialization) of panel providers required to deliver the contracted Medicaid services. | |
| • | The geographic location of panel providers and Medicaid members, considering distance, travel time, the means of transportation ordinarily used by Medicaid members, and whether the location provides physical access for Medicaid members with disabilities. | |
| • | MCPs must adequately and timely cover services to an out-of-network provider if the MCP’s contracted provider panel is unable to provide the services covered under the MCP’s provider agreement. The MCP must cover the out-of-network services for as long as the MCP network is unable to provide the services. MCPs must coordinate with the out-of-network provider with respect to payment and |
Appendix H
Page 10
Page 10
ensure that the provider agrees with the applicable requirements.
Contracting providers must offer hours of operation that are no less than the hours of operation
offered to commercial members or comparable to Medicaid fee-for-service, if the provider serves
only Medicaid members. MCPs must ensure that services are available 24 hours a day, 7 days a week,
when medically necessary. MCPs must establish mechanisms to ensure that panel providers comply
with timely access requirements, and must take corrective action if there is failure to comply.
In order to demonstrate adequate provider panel capacity and services, 42 CFR 438.206 and 438.207
stipulates that the MCP must submit documentation to ODJFS, in a format specified by ODJFS, that
demonstrates it offers an appropriate range of preventive, primary care and specialty services
adequate for the anticipated number of members in the service area, while maintaining a provider
panel that is sufficient in number, mix, and geographic distribution to meet the needs of the
number of members in the service area.
This documentation of assurance of adequate capacity and services must be submitted to ODJFS no
less frequently than at the time the MCP enters into a contract with ODJFS; at any time there is a
significant change (as defined by ODJFS) in the MCP’s operations that would affect adequate
capacity and services (including changes in services, benefits, geographic service or payments);
and at any time there is enrollment of a new population in the MCP.
Molina
APPENDIX J
FINANCIAL PERFORMANCE
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
1. SUBMISSION OF FINANCIAL STATEMENTS AND REPORTS
MCPs must submit the following financial reports to ODJFS:
| a. | The National Association of Insurance Commissioners (NAIC) quarterly and annual Health Statements (hereafter referred to as the “Financial Statements”), as outlined in Ohio Administrative Code (OAC) rule 5101:3-26-09(B). The Financial Statements must include all required Health Statement filings, schedules and exhibits as stated in the NAIC Annual Health Statement Instructions including, but not limited to, the following sections: Assets, Liabilities, Capital and Surplus Account, Cash Flow, Analysis of Operations by Lines of Business, Five-Year Historical Data, and the Exhibit of Premiums, Enrollment and Utilization. The Financial Statements must be submitted to BMHC even if the Ohio Department of Insurance (ODI) does not require the MCP to submit these statements to ODI. A signed hard copy and an electronic copy of the reports in the NAIC-approved format must both be provided to ODJFS; | ||
| b. | Hard copies of annual financial statements for those entities who have an ownership interest totaling five percent or more in the MCP or an indirect interest of five percent or more, or a combination of direct and indirect interest equal to five percent or more in the MCP; | ||
| c. | Annual audited Financial Statements prepared by a licensed independent external auditor as submitted to the ODI, as outlined in OAC rule 5101:3-26-09(B); | ||
| d. | Medicaid Managed Care Plan Annual Ohio Department of Job and Family Services (ODJFS) Cost Report and the auditor’s certification of the cost report, as outlined in OAC rule 5101:3-26-09(B); | ||
| e. | Medicaid MCP Annual Restated Cost Report for the prior calendar year. The restated cost report shall be audited upon BMHC request; | ||
| f. | Annual physician incentive plan disclosure statements and disclosure of and changes to the MCP’s physician incentive plans, as outlined in OAC rule 5101:3-26-09(B); | ||
| g. | Reinsurance agreements, as outlined in OAC rule 5101:3-26-09(C); |
Appendix J
Page 2
Page 2
| h. | Prompt Pay Reports, in accordance with OAC rule 5101:3-26-09(B). A hard copy and an electronic copy of the reports in the ODJFS-specified format must be provided to ODJFS; | ||
| i. | Notification of requests for information and copies of information released pursuant to a tort action (i.e., third party recovery), as outlined in OAC rule 5101:3-26-09.1; | ||
| j. | Financial, utilization, and statistical reports, when ODJFS requests such reports, based on a concern regarding the MCP’s quality of care, delivery of services, fiscal operations or solvency, in accordance with OAC rule 5101:3-26-06(D); | ||
| k. | In accordance with ORC Section 5111.76 and Appendix C, MCP Responsibilities, MCPs must submit ODJFS-specified franchise fee reports in hard copy and electronic formats pursuant to ODJFS specifications. |
2. FINANCIAL PERFORMANCE MEASURES AND STANDARDS
This Appendix establishes specific expectations concerning the financial performance of
MCPs. In the interest of administrative simplicity and nonduplication of areas of the ODI
authority, ODJFS’ emphasis is on the assurance of access to and quality of care. ODJFS will
focus only on a limited number of indicators and related standards to monitor plan
performance. The three indicators and standards for this contract period are identified
below, along with the calculation methodologies. The source for each indicator will be the
NAIC Quarterly and Annual Financial Statements.
Report Period: Compliance will be determined based on the annual Financial
Statement.
a.
|
Indicator: | Net Worth as measured by Net Worth Per Member | ||
| Definition: | Net Worth = Total Admitted Assets minus Total Liabilities divided by Total Members across all lines of business | |||
| Standard: | For the financial report that covers calendar year 2008, a minimum net worth per member of $172.00, as determined from the annual Financial Statement submitted to ODI and the ODJFS. | |||
| The Net Worth Per Member (NWPM) standard is the Medicaid Managed Care Capitation amount paid to the MCP during the preceding calendar year, including delivery payments, but excluding the at-risk amount, expressed as a per-member per-month figure, multiplied by the applicable proportion below: |
Appendix J
Page 3
Page 3
| 0.75 if the MCP had a total membership of 100,000 or more during that calendar year | ||||
| 0.90 if the MCP had a total membership of less than 100,000 for that calendar year | ||||
| If the MCP did not receive Medicaid Managed Care Capitation payments during the preceding calendar year, then the NWPM standard for the MCP is the average Medicaid Managed Care capitation amount paid to Medicaid-contracting MCPs during the preceding calendar year, including delivery payments, but excluding the at-risk amount, multiplied by the applicable proportion above. | ||||
b.
|
Indicator: | Administrative Expense Ratio | ||
| Definition: | Administrative Expense Ratio = Administrative Expenses minus Franchise Fees divided by Total Revenue minus Franchise Fees. | |||
| Standard: | Administrative Expense Ratio not to exceed 15%, as determined from the annual Financial Statement submitted to ODI and ODJFS. | |||
c.
|
Indicator: | Overall Expense Ratio | ||
| Definition: | Overall Expense Ratio = The sum of the Administrative Expense Ratio and the Medical Expense Ratio. | |||
| Administrative Expense Ratio = Administrative Expenses minus Franchise Fees divided by Total Revenue minus Franchise Fees. | ||||
| Medical Expense Ratio = Medical Expenses divided by Total Revenue minus Franchise Fees. | ||||
| Standard: | Overall Expense Ratio not to exceed 100% as determined from the annual Financial Statement submitted to ODI and ODJFS. |
Penalty for noncompliance: Failure to meet any standard on 2.a., 2.b., or 2.c. above will result in
ODJFS requiring the MCP to complete a corrective action plan (CAP) and specifying the date by which
compliance must be demonstrated. Failure to meet the standard or otherwise comply with the CAP by
the specified date will result in a new membership freeze unless ODJFS determines that the
deficiency does not potentially jeopardize access to or quality of care or affect the MCP’s ability
to meet administrative requirements (e.g., prompt pay requirements). Justifiable reasons for
noncompliance may include one-time events (e.g., MCP investment in information system products).
If the financial statement is not submitted to ODI by the due date, the MCP
Appendix J
Page 4
Page 4
continues to be obligated to submit the report to ODJFS by ODI’s originally specified
due date unless the MCP requests and is granted an extension by
ODJFS.
Failure to submit complete quarterly and annual Financial Statements on a timely basis will
be deemed a failure to meet the standards and will be subject to the noncompliance
penalties listed for indicators 2.a., 2.b., and 2.c., including the imposition of a new
membership freeze. The new membership freeze will take effect at the first of the month
following the month in which the determination was made that the MCP was non-compliant for
failing to submit financial reports timely.
In addition, ODJFS will review two liquidity indicators if a plan demonstrates potential
problems in meeting related administrative requirements or the standards listed above. The
two standards, 2.d and 2.e, reflect ODJFS’ expected level of performance. At this time,
ODJFS has not established penalties for noncompliance with these standards; however, ODJFS
will consider the MCP’s performance regarding the liquidity measures, in addition to
indicators 2.a., 2.b., and 2.c., in determining whether to impose a new membership freeze,
as outlined above, or to not issue or renew a contract with an MCP. The source for each
indicator will be the NAIC Quarterly and annual Financial Statements.
Long-term investments that can be liquidated without significant penalty within 24 hours,
which a plan would like to include in Cash and Short-Term Investments in the next two
measurements, must be disclosed in footnotes on the NAIC Reports. Descriptions and amounts
should be disclosed. Please note that “significant penalty” for this purpose is any penalty
greater than 20%. Also, enter the amortized cost of the investment, the market value of the
investment, and the amount of the penalty.
d.
|
Indicator: | Days Cash on Hand | ||
| Definition: | Days Cash on Hand = Cash and Short-Term Investments divided by (Total Hospital and Medical Expenses plus Total Administrative Expenses) divided by 365. | |||
| Standard: | Greater than 25 days as determined from the annual Financial Statement submitted to ODI and ODJFS. | |||
e.
|
Indicator: | Ratio of Cash to Claims Payable | ||
| Definition: | Ratio of Cash to Claims Payable = Cash and Short-Term Investments divided by claims Payable (reported and unreported). | |||
| Standard: | Greater than 0.83 as determined from the annual Financial Statement submitted to ODI and ODJFS. |
Appendix J
Page 5
Page 5
3. REINSURANCE REQUIREMENTS
Pursuant to the provisions of OAC rule 5101:3-26-09 (C), each MCP must carry reinsurance
coverage from a licensed commercial carrier to protect against inpatient-related medical
expenses incurred by Medicaid members.
The annual deductible or retention amount for such insurance must be specified in the
reinsurance agreement and must not exceed $75,000.00, except as provided below. Except for
transplant services, and as provided below, this reinsurance must cover, at a minimum, 80%
of inpatient costs incurred by one member in one year, in excess of $75,000.00.
For transplant services, the reinsurance must cover, at a minimum, 50% of inpatient
transplant related costs incurred by one member in one year, in excess of $75,000.00.
An MCP may request a higher deductible amount and/or that the reinsurance cover less than
80% of inpatient costs in excess of the deductible amount. If the MCP does not have more
than 75,000 members in Ohio, but does have more than 75,000 members between Ohio and other
states, ODJFS may consider alternate reinsurance arrangements. However, depending on the
corporate structures of the Medicaid MCP, other forms of security may be required in
addition to reinsurance. These other security tools may include parental guarantees,
letters of credit, or performance bonds. In determining whether or not the request will be
approved, the ODJFS may consider any or all of the following:
| a. | whether the MCP has sufficient reserves available to pay unexpected claims; | ||
| b. | the MCP’s history in complying with financial indicators 2.a., 2.b., and 2.c., as specified in this Appendix. | ||
| c. | the number of members covered by the MCP; | ||
| d. | how long the MCP has been covering Medicaid or other members on a full risk basis. | ||
| e. | risk based capital ratio greater than 2.5 calculated from the last annual ODI financial statement. | ||
| f. | scatter diagram or bar graph from the last calendar year that shows the number of reinsurance claims that exceeded the current reinsurance deductible. |
The MCP has been approved to have a reinsurance policy with a deductible amount of $400,000
that covers 80% of inpatient costs in excess of the deductible amount for non-transplant
services.
Appendix J
Page 6
Page 6
Molina has also been approved to delegate the responsibility for maintaining reinsurance
coverage for Molina members who are with Children’s Hospital and Physician Health Care Network
(CHPHN) to CHPHN. Molina must assure that CHPHN maintains a reinsurance policy and that this policy
covers at least 70% of inpatient costs incurred by one member in one year, in excess of CHPHN’s
$100,000.00 deductible.
Penalty for noncompliance: If it is determined that an MCP failed to have reinsurance
coverage, that an MCP’s deductible exceeds $75,000.00 without approval from ODJFS, or that
the MCP’s reinsurance for non-transplant services covers less than 80% of inpatient costs
in excess of the deductible incurred by one member for one year without approval from
ODJFS, then the MCP will be required to pay a monetary penalty to ODJFS. The amount of the
penalty will be the difference between the estimated amount, as determined by ODJFS, of
what the MCP would have paid in premiums for the reinsurance policy if it had been in
compliance and what the MCP did actually pay while it was out of compliance plus 5%. For
example, if the MCP paid $3,000,000.00 in premiums during the period of non-compliance and
would have paid $5,000,000.00 if the requirements had been met, then the penalty would be
$2,100,000.00.
If it is determined that an MCP’s reinsurance for transplant services covers less than 50%
of inpatient costs incurred by one member for one year, the MCP will be required to develop
a corrective action plan (CAP).
4. PROMPT PAY REQUIREMENTS
In accordance with 42 CFR 447.46, MCPs must pay 90% of all submitted clean claims
within 30 days of the date of receipt and 99% of such claims within 90 days of the date
of receipt, unless the MCP and its contracted provider(s) have established an
alternative payment schedule that is mutually agreed upon and described in their
contract. The prompt pay requirement applies to the processing of both electronic and
paper claims for contracting and non-contracting providers by the MCP and delegated
claims processing entities.
The date of receipt is the date the MCP receives the claim, as indicated by its date
stamp on the claim. The date of payment is the date of the check or date of electronic
payment transmission. A claim means a bill from a provider for health care services
that is assigned a unique identifier. A claim does not include an encounter form.
A “claim” can include any of the following: (1) a bill for services; (2) a line item of
services; or (3) all services for one recipient within a bill. A “clean claim” is a
claim that can be processed without obtaining additional information from the provider
of a service or from a third party.
Clean claims do not include payments made to a provider of service or a third party
where the timing of the payment is not directly related to submission of a completed
claim by the provider of service or third party (e.g., capitation). A clean claim also
Appendix J
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Page 7
does not include a claim from a provider who is under investigation for fraud or abuse, or a
claim under review for medical necessity.
Penalty for noncompliance: Noncompliance with prompt pay requirements will result in
progressive penalties to be assessed on a quarterly basis, as outlined in Appendix N of
the Provider Agreement.
5. PHYSICIAN INCENTIVE PLAN DISCLOSURE REQUIREMENTS
MCPs must comply with the physician incentive plan requirements stipulated in 42 CFR
438.6(h). If the MCP operates a physician incentive plan, no specific payment can be made
directly or indirectly under this physician incentive plan to a physician or physician
group as an inducement to reduce or limit medically necessary services furnished to an
individual.
If the physician incentive plan places a physician or physician group at substantial
financial risk [as determined under paragraph (d) of 42 CFR 422.208] for services that the
physician or physician group does not furnish itself, the MCP must assure that all
physicians and physician groups at substantial financial risk have either aggregate or
per-patient stop-loss protection in accordance with paragraph (f) of 42 CFR 422.208, and
conduct periodic surveys in accordance with paragraph (h) of 42 CFR 422.208.
In accordance with 42 CFR 417.479 and 42 CFR 422.210, MCPs must maintain copies of the
following required documentation and submit to ODJFS annually, no later than 30 days after
the close of the state fiscal year and upon any modification of the MCP’s physician
incentive plan:
| a. | A description of the types of physician incentive arrangements the MCP has in place which indicates whether they involve a withhold, bonus, capitation, or other arrangement. If a physician incentive arrangement involves a withhold or bonus, the percent of the withhold or bonus must be specified. | ||
| b. | A description of information/data feedback to a physician/group on their: 1) adherence to evidence-based practice guidelines; and 2) positive and/or negative care variances from standard clinical pathways that may impact outcomes or costs. The feedback information may be used by the MCP for activities such as physician performance improvement projects that include incentive programs or the development of quality improvement initiatives. | ||
| c. | A description of the panel size for each physician incentive plan. If patients are pooled, then the pooling method used to determine if substantial financial risk exists must also be specified. |
Appendix J
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Page 8
| d. | If more than 25% of the total potential payment of a physician/group is at risk for referral services, the MCP must maintain a copy of the results of the required patient satisfaction survey and documentation verifying that the physician or physician group has adequate stop-loss protection, including the type of coverage (e.g., per member per year, aggregate), the threshold amounts, and any coinsurance required for amounts over the threshold. |
6. NOTIFICATION OF REGULATORY ACTION
Any MCP notified by the ODI of proposed or implemented regulatory action must report such
notification and the nature of the action to ODJFS no later than one working day after
receipt from ODI. The ODJFS may request, and the MCP must provide, any additional
information as necessary to assure continued satisfaction of program requirements. MCPs may
request that information related to such actions be considered proprietary in accordance
with established ODJFS procedures. Failure to comply with this provision will result in an
immediate membership freeze.
Appendix K
Covered Families and Children (CFC) population
Page 1
Covered Families and Children (CFC) population
Page 1
APPENDIX K
QUALITY ASSESSMENT AND PERFORMANCE IMPROVEMENT PROGRAM
AND
EXTERNAL QUALITY REVIEW
CFC ELIGIBLE POPULATION
AND
EXTERNAL QUALITY REVIEW
CFC ELIGIBLE POPULATION
1. As required by federal regulation, 42 CFR 438.240, each managed care plan (MCP) must have an
ongoing Quality Assessment and Performance Improvement Program (QAPI) that is annually
prior-approved by the Ohio Department of Job and Family Services (ODJFS). The program must include
the following elements:
a. PERFORMANCE IMPROVEMENT PROJECTS
Each MCP must conduct performance improvement projects (PIPs), including those specified by
ODJFS. PIPs must achieve, through periodic measurements and intervention, significant and
sustained improvement in clinical and non-clinical areas which are expected to have a
favorable effect on health outcomes and satisfaction. MCPs must adhere to ODJFS PIP content
and format specifications.
All ODJFS-specified PIPs must be prior-approved by ODJFS. As part of the external quality
review organization (EQRO) process, the EQRO will assist MCPs with conducting PIPs by
providing technical assistance and will annually validate the PIPs. In addition, the MCP
must annually submit to ODJFS the status and results of each PIP.
MCPs must initiate the following PIPs:
i. Non-clinical Topic: Identifying children/members with special health care needs.
ii. Clinical Topic: Well-child visits during the first 15 months of life.
iii. Clinical Topic: Percentage of members aged 2-21 years that access dental care
services.
Initiation of PIPs will begin in the second year of participation in the Medicaid managed
care program.
b. UNDER- AND OVER-UTILIZATION
Each MCP must have mechanisms in place to detect under- and over-utilization of health care
services. The MCP must specify the mechanisms used to monitor utilization in its annual
submission of the QAPI program to ODJFS.
It should also be noted that pursuant to the program integrity provisions outlined in
Appendix I, MCPs must monitor for the potential under-utilization of services by their
members in order to assure that all Medicaid-covered services are being provided, as
Appendix K
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
required. If any under-utilized services are identified, the MCP must immediately investigate
and correct the problem(s) which resulted in such under-utilization of services.
In addition the MCP must conduct an ongoing review of service denials and must monitor
utilization on an ongoing basis in order to identify services which may be under-utilized.
c. SPECIAL HEALTH CARE NEEDS
Each MCP must have mechanisms in place to assess the quality and appropriateness of care
furnished to children/members with special health care needs. The MCP must specify the
mechanisms used in its annual submission of the QAPI program to ODJFS.
d. SUBMISSION OF PERFORMANCE MEASUREMENT DATA
Each MCP must submit clinical performance measurement data as required by ODJFS that
enables ODJFS to calculate standard measures. Refer to Appendix M “Performance Evaluation”
for a more comprehensive description of the clinical performance measures.
Each MCP must also submit clinical performance measurement data as required by ODJFS that
uses standard measures as specified by ODJFS. MCPs are required to submit Health Employer
Data Information Set (HEDIS) audited data for the following measures:
| i. | Well Child Visits in the First 15 Months of Life | ||
| ii. | Child Immunization Status |
The measures must have received a “report” designation from the HEDIS certified auditor and
must be specific to the Medicaid population. Data must be submitted annually and in an
electronic format. Data will be used for MCP clinical performance monitoring and will be
incorporated into comparative reports developed by the EQRO.
Initiation of submission of performance data will begin in the second year of participation
in the Medicaid managed care program.
e. QAPI PROGRAM SUBMISSION
Each MCP must implement an evaluation process to review, revise, and/or update the QAPI
program. The MCP must annually submit its QAPI program for review and approval by ODJFS.
| 2. | EXTERNAL QUALITY REVIEW | |
| In addition to the following requirements, MCPs must participate in external quality review activities as outlined in OAC 5101:3-26-07. |
Appendix K
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
Page 3
a. EQRO ADMINISTRATIVE REVIEWS
The EQRO will conduct annual focused administrative compliance assessments for each MCP
which will include, but not be limited to, the following domains as specified by ODJFS:
member rights and services, QAPI program, case management, provider networks, grievance
system, coordination and continuity of care, and utilization management. In addition, the
EQRO will complete a comprehensive administrative compliance assessment every three (3)
years as required by 42 CFR 438.358 and specified by ODJFS.
In accordance with 42 CFR 438.360 and 438.362, MCPs with accreditation from a national
accrediting organization approved by the Centers for Medicare and Medicaid Services (CMS)
may request a non-duplication exemption from certain specified components of the
administrative review. Non-duplication exemptions may not be requested for SFY 2008.
b. EXTERNAL QUALITY REVIEW PERFORMANCE
In accordance with OAC 5101: 3-26-07, each MCP must participate in an annual external
quality review survey. If the EQRO cites a deficiency in performance, the MCP will be
required to complete a Corrective Action Plan (e.g., ODJFS technical assistance session) or
Quality Improvement Directives depending on the severity of the deficiency. (An example of
a deficiency is if an MCP fails to meet certain clinical or administrative standards as
supported by national evidence-based guidelines or best practices.) Serious deficiencies
may result in immediate termination or non-renewal of the provider agreement. These quality
improvement measures recognize the importance of ongoing MCP performance improvement
related to clinical care and service delivery.
Appendix L
Covered Families and Children
Page 1
Covered Families and Children
Page 1
APPENDIX L
DATA QUALITY
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
A high level of performance on the data quality measures established in this appendix is crucial in
order for the Ohio Department of Job and Family Services (ODJFS) to determine the value of the
Medicaid Managed Health Care Program and to evaluate Medicaid consumers’ access to and quality of
services. Data collected from MCPs are used in key performance assessments such as the external
quality review, clinical performance measures, utilization review, care coordination and case
management, and in determining incentives. The data will also be used in conjunction with the cost
reports in setting the premium payment rates. The following measures, as specified in this
appendix, will be calculated per MCP and include all Ohio Medicaid members receiving services from
the MCP (i.e., Covered Families and Children (CFC) and Aged, Blind, or Disabled (ABD) membership,
if applicable): Incomplete Outpatient Hospital Data, Rejected Encounters, Acceptance Rate,
Encounter Data Accuracy, and Generic Provider Number Usage.
Data sets collected from MCPs with data quality standards include: encounter data; case management
data; data used in the external quality review; members’ PCP data; and appeal and grievance data.
1. ENCOUNTER DATA
For detailed descriptions of the encounter data quality measures below, see ODJFS Methods for
Encounter Data Quality Measures for CFC and ABD.
1.a. Encounter Data Completeness
Each MCP’s encounter data submissions will be assessed for completeness. The MCP is responsible for
collecting information from providers and reporting the data to ODJFS in accordance with program
requirements established in Appendix C, MCP Responsibilities. Failure to do so jeopardizes the
MCP’s ability to demonstrate compliance with other performance standards.
1.a.i. Encounter Data Volume
Measure: The volume measure for each service category, as listed in Table 2 below, is the rate of
utilization (e.g., discharges, visits) per 1,000 member months (MM).
Report Period: The report periods for the SFY 2008 and SFY 2009 contract periods are listed in
Table 1. below.
Appendix L
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
Table 1. Report Periods for the SFY 2008 and 2009 Contract Periods
| Data Source: | ||||||
| Estimated Encounter | Quarterly Report | |||||
| Quarterly Report Periods | Data File Update | Estimated Issue Date | Contract Period | |||
Qtr 3 & Qtr 4 2004, 2005, 2006 Qtr 1 2007 |
July 2007 | August 2007 | SFY 2008 | |||
Qtr 3 & Qtr 4 2004, 2005, 2006 Qtr 1, Qtr 2 2007 |
October 2007 | November 2007 | ||||
Qtr 4 2004, 2005, 2006 Qtr 1 thru Qtr 3 2007 |
January 2008 | February 2008 | ||||
Qtr 1 thru Qtr 4: 2005, 2006, 2007 |
April 2008 | May 2008 | ||||
Qtr 2 thru Qtr 4 2005, Qtr 1 thru Qtr 4: 2006, 2007 Qtr 1 2008 |
July 2008 | August 2008 | SFY 2009 | |||
Qtr 3, Qtr 4: 2005, Qtr 1 thru Qtr 4: 2006, 2007 Qtr 1, Qtr 2 2008 |
October 2008 | November 2008 | ||||
Qtr 4: 2005, Qtr 1 thru Qtr 4: 2006, 2007 Qtr 1 thru Qtr 3: 2008 |
January 2009 | February 2009 | ||||
Qtr 1 thru Qtr 4: 2006, 2007, 2008
|
April 2009 | May 2009 |
| Qtr1 = January to March | Qtr2 = April to June | Qtr3 = July to September | Qtr4 = October to December |
Appendix L
Covered Families and Children (CFC) population
Page 3
Covered Families and Children (CFC) population
Page 3
Table 2. Standards – Encounter Data Volume (County-Based Approach)
Data Quality Standard, County-Based Approach: The standards in Table 2 apply to the MCP’s
county-based results (see County-Based Approach below). The utilization rate for all service
categories listed in Table 2 must be equal to or greater than the standard established in Table 2
below.
| Standard for | ||||||||||||||||
| Standard for | Standard for | Dates of | ||||||||||||||
| Dates of Service | Dates of Service | Service | ||||||||||||||
| Measure per | 7/1/2003 thru | 7/1/2004 thru | on or after | |||||||||||||
| Category | 1,000/MM | 6/30/2004 | 6/30/2006 | 7/1/2006 | Description | |||||||||||
Inpatient Hospital
|
Discharges | 5.4 | 5.0 | 5.4 | General/acute care, excluding newborns and mental health and chemical dependency services | |||||||||||
Emergency Department
|
51.6 | 51.4 | 50.7 | Includes physician and hospital emergency department encounters | ||||||||||||
Dental
|
38.2 | 41.7 | 50.9 | Non-institutional and hospital dental visits | ||||||||||||
Vision
|
Visits | 11.6 | 11.6 | 10.6 | Non-institutional and hospital outpatient optometry and ophthalmology visits | |||||||||||
Primary and
Specialist Care
|
220.1 | 225.7 | 233.2 | Physician/practitioner and hospital outpatient visits | ||||||||||||
Ancillary Services
|
144.7 | 123.0 | 133.6 | Ancillary visits | ||||||||||||
Behavioral Health
|
Service | 7.6 | 8.6 | 10.5 | Inpatient and outpatient behavioral encounters | |||||||||||
Pharmacy
|
Prescriptions | 388.5 | 457.6 | 492.2 | Prescribed drugs | |||||||||||
County-Based Approach: All counties with managed care membership as of February 1, 2006, will be
included in a county-based encounter data volume measure until regional evaluation is implemented
for the county’s applicable region.. Upon implementation of regional-based evaluation for a
particular county’s region, the county will be included in the MCP’s regional-based results and
will no longer be included in the MCP’s county-based results. County-based results will be
determined by MCP (i.e., one utilization rate
per service category for all applicable counties) and must be equal to or greater than the
standards established in Table 2 above. [Example: The county-based result for MCP AAA, which has
contracts in the Central and West Central regions, will include Franklin, Pickaway, Montgomery,
Greene and Clark counties (i.e., counties with managed care membership as of February 1, 2006).
When the regional-based evaluation is implemented for the Central region, Franklin and Pickaway
counties, along with all other counties in the region, will then be included in the Central region
results for MCP AAA; Montgomery, Greene, and Clark
Appendix L
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
counties will remain in the county-based results for MCP AAA until the West Central regional
measure is implemented.]
Interim Regional-Based Approach:
Prior to the transition to the regional-based approach, encounter data volume will be evaluated by
MCP, by region, using an interim approach. All regions with managed care membership will be
included in results for an interim regional-based encounter data volume measure until regional
evaluation is implemented for the applicable region (see Regional-Based Approach below). Encounter
data volume will be evaluated by MCP ( i.e., one utilization rate per service category for all
counties in the region). The utilization rate for all service categories listed in Table 3 must be
equal to or greater than the standard established in Table 3 below. The standards listed in Table 3
below are based on utilization data for counties with managed care membership as of February 1,
2006, and have been adjusted to accommodate estimated differences in utilization for all counties
in a region, including counties that did not have membership as of February 1, 2006.
Prior to implementation of the regional-based approach, an MCP’s encounter data volume will be
evaluated using the county-based approach and the interim regional-based approach. A county with
managed care membership as of February 1, 2006, will be included in both the County-Based approach
and the Interim Regional-Based approach until regional evaluation is implemented for the county’s
applicable region.
Data Quality Standard, Interim Regional-Based Approach: The standards in Table 3 apply to the MCP’s
interim regional-based results. The utilization rate for all service categories listed in Table 3
must be equal to or greater than the standard established in Table 3 below.
Table 3. Standards – Encounter Data Volume (Interim Regional-Based Approach)
| Standard for | ||||||||
| Dates of | ||||||||
| Service | ||||||||
| Measure per | on or after | |||||||
| Category | 1,000/MM | 7/1/2006 | Description | |||||
Inpatient Hospital
|
Discharges | 2.7 | General/acute care, excluding newborns and mental health and chemical dependency services | |||||
Emergency Department
|
25.3 | Includes physician and hospital emergency department encounters | ||||||
Dental
|
25.5 | Non-institutional and hospital dental visits | ||||||
Vision
|
Visits | 5.3 | Non-institutional and hospital outpatient optometry and ophthalmology visits | |||||
Primary and
Specialist Care
|
116.6 | Physician/practitioner and hospital outpatient visits | ||||||
Ancillary Services
|
66.8 | Ancillary visits | ||||||
Behavioral Health
|
Service | 5.2 | Inpatient and outpatient behavioral encounters | |||||
Pharmacy
|
Prescriptions | 246.1 | Prescribed drugs | |||||
Appendix L
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
Determination of Compliance: Performance is monitored once every quarter for the entire report
period. If the standard is not met for every service category in all quarters of the report period
in either the county-based or interim regional-based approach, or both, then the MCP will be
determined to be noncompliant for the report period.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of two percent of the current
month’s premium payment. Monetary sanctions will not be levied for consecutive quarters that an
MCP is determined to be noncompliant. If an MCP is noncompliant for three consecutive quarters,
membership will be frozen. Once the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be lifted, if
applicable, and monetary sanctions will be returned.
Regional-Based Approach: Transition to the regional-based approach will occur by region, after the
first four quarters (i.e., full calendar year quarters) of regional membership. Encounter data
volume will be evaluated by MCP, by region, after determination of the regional-based data quality
standards. ODJFS will use the first four quarters of data (i.e., full calendar year quarters) from
all MCPs serving in an active region to determine minimum encounter volume data quality standards
for that region.
1.a.ii. Incomplete Outpatient Hospital Data
Since July 1, 1997, MCPs have been required to provide both the revenue code and the HCPCS code on
applicable outpatient hospital encounters. ODJFS will be monitoring, on a quarterly basis, the
percentage of hospital encounters which contain a revenue code and CPT/HCPCS code. A CPT/HCPCS
code must accompany certain revenue center codes. These codes are listed in Appendix B of Ohio
Administrative Code rule 5101:3-2-21 (fee-for-service outpatient hospital policies) and in the
methods for calculating the completeness measures.
Measure: The percentage of outpatient hospital line items with certain revenue center codes, as
explained above, which had an accompanying valid procedure (CPT/HCPCS) code. The measure will be
calculated per MCP.
Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will be evaluated using
the report periods listed in 1.a.i., Table 1.
Data Quality Standard: The data quality standard is a minimum rate of 95%.
Determination of Compliance: Performance is monitored once every quarter for all report periods.
Appendix L
Covered Families and Children (CFC) population
Page 6
Covered Families and Children (CFC) population
Page 6
For quarterly reports that are issued on or after July 1, 2007, an MCP will be determined to be
noncompliant for the quarter if the standard is not met in any report period and the initial
instance of noncompliance in a report period is determined on or after July 1, 2007. An initial
instance of noncompliance means that the result for the applicable report period was in compliance
as determined in the prior quarterly report, or the instance of noncompliance is the first
determination for an MCP’s first quarter of measurement.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent quarterly measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 6) of one percent of the
current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
1.a.iii. Incomplete Data For Last Menstrual Period
As outlined in ODJFS Encounter Data Specifications, the last menstrual period (LMP) field is a
required encounter data field. It is discussed in Item 14 of the “HCFA 1500 Billing Instructions.”
The date of the LMP is essential for calculating the clinical performance measures and allows the
ODJFS to adjust performance expectations for the length of a pregnancy.
The occurrence code and date fields on the UB-92, which are “optional” fields, can also be used to
submit the date of the LMP. These fields are described in Items 32a & b, 33a & b, 34a & b, 35a & b
of the “Inpatient Hospital” and “Outpatient Hospital UB-92 Claim Form Instructions.”
An occurrence code value of ‘10’ indicates that a LMP date was provided. The actual date of the LMP
would be given in the ‘Occurrence Date’ field.
Measure: The percentage of recipients with a live birth during the report period where a “valid”
LMP date was given on one or more of the recipient’s perinatal claims. If the LMP date is before
the date of birth and there is a difference of between 119 and 315 days between the date the
recipient gave birth and the LMP date, then the LMP date will be considered a valid date. The
measure will be calculated per MCP (i.e., to include the MCP’s service area for the CFC.
Report Period: For the SFY 2008 contract period, performance will be evaluated using the January -
December 2007 report period. For the SFY 2009 contract period, performance will be evaluated using
the January — December 2008 report period.
Data Quality Standard: The data quality standard is a minimum rate of 80%.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance
Appendix L
Covered Families and Children (CFC) population
Page 7
Covered Families and Children (CFC) population
Page 7
instances with the standard for this measure will result in ODJFS imposing a monetary sanction.
Upon all subsequent measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 6.) of one percent of the
current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
1.a.iv. Rejected Encounters
Encounters submitted to ODJFS that are incomplete or inaccurate are rejected and reported back to
the MCPs on the Exception Report. If an MCP does not resubmit rejected encounters, ODJFS’ encounter
data set will be incomplete.
Measure 1 only applies to MCPs that have had Medicaid membership for more than one year.
Measure 1: The percentage of encounters submitted to ODJFS that are rejected. The measure will be
calculated per MCP.
Report Period: For the SFY 2008 contract period, performance will be evaluated using the following
report periods: April — June 2007; July — September 2007; October — December 2007, January — March
2008, and April – June 2008. For the SFY 2009 contract period, performance will be evaluated using
the following report periods: July — September 2008; October — December 2008, January — March 2009,
and April – June 2009.
Data Quality Standard for measure 1: Data Quality Standard 1 is a maximum encounter data rejection
rate of 10% for each file type in the ODJFS-specified medium per format for encounters submitted in
SFY 2004 and thereafter. The measure will be calculated per MCP.
Determination of Compliance: Performance is monitored once every quarter. Compliance determination
with the standard applies only to the quarter under consideration and does not include performance
in previous quarters.
Penalty for noncompliance with the Data Quality Standard for measure 1: The first time an MCP is
noncompliant with a standard for this measure, ODJFS will issue a Sanction Advisory informing the
MCP that any future noncompliance instances with the standard for this measure will result in ODJFS
imposing a monetary sanction. Upon all subsequent measurements of performance, if an MCP is again
determined to be noncompliant with the standard, ODJFS will impose a monetary sanction (see Section
6.) of one percent of the current month’s premium payment. The monetary sanction will be applied
for each file type in the ODJFS-specified medium per format that is determined to be out of
compliance. Once the MCP is performing at standard levels and violations/deficiencies are resolved
to the satisfaction of ODJFS, the money will be refunded.
Measure 2 only applies to MCPs that have had Medicaid membership for one year or less.
Measure 2: The percentage of encounters submitted to ODJFS that are rejected. The measure will be
calculated per MCP.
Appendix L
Covered Families and Children (CFC) population
Page 8
Covered Families and Children (CFC) population
Page 8
Report Period: The report period for Measure 2 is monthly. Results are calculated and performance
is monitored monthly. The first reporting month begins with the third month of enrollment.
Data Quality Standard for measure 2: The data quality standard is a maximum encounter data
rejection rate for each file type in the ODJFS-specified medium per format as follows:
Third through sixth months with membership: |
50 | % | ||
Seventh through twelfth month with membership: |
25 | % |
Files in the ODJFS-specified medium per format that are totally rejected will not be considered in
the determination of noncompliance.
Determination of Compliance: Performance is monitored once every month. Compliance determination
with the standard applies only to the month under consideration and does not include performance in
previous quarters.
Penalty for Noncompliance with the Data Quality Standard for measure 2: If the MCP is determined
to be noncompliant for either standard, ODJFS will impose a monetary sanction of one percent of the
MCP’s current month’s premium payment. The monetary sanction will be applied for each file type in
the ODJFS-specified medium per format that is determined to be out of compliance. The monetary
sanction will be applied only once per file type per compliance determination period and will not
exceed a total of two percent of the MCP’s current month’s premium payment. Once the MCP is
performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. Special consideration will be made for MCPs with less than 1,000
members.
1.a.v. Acceptance Rate
This measure only applies to MCPs that have had Medicaid membership for one year or less.
Measure: The rate of encounters that are submitted to ODJFS and accepted (accepted encounters per
1,000 member months). The measure will be calculated per MCP
Report Period: The report period for this measure is monthly. Results are calculated and
performance is monitored monthly. The first reporting month begins with the third month of
enrollment.
Data Quality Standard: The data quality standard is a monthly minimum accepted rate of encounters
for each file type in the ODJFS-specified medium per format as follows:
Appendix L
Covered Families and Children (CFC) population
Page 9
Covered Families and Children (CFC) population
Page 9
Third through sixth month with membership:
|
50 encounters per 1,000 MM for NCPDP | |
| 65 encounters per 1,000 MM for NSF | ||
| 20 encounters per 1,000 MM for UB-92 | ||
Seventh through twelfth month of membership:
|
250 encounters per 1,000 MM for NCPDP | |
| 350 encounters per 1,000 MM for NSF | ||
| 100 encounters per 1,000 MM for UB-92 |
Determination of Compliance: Performance is monitored once every month. Compliance determination
with the standard applies only to the month under consideration and does not include performance in
previous months.
Penalty for Noncompliance: If the MCP is determined to be noncompliant with the standard, ODJFS
will impose a monetary sanction of one percent of the MCP’s current month’s premium payment. The
monetary sanction will be applied for each file type in the ODJFS-specified medium per format that
is determined to be out of compliance. The monetary sanction will be applied only once per file
type per compliance determination period and will not exceed a total of two percent of the MCP’s
current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
Special consideration will be made for MCPs with less than 1,000 members.
1.b. Encounter Data Accuracy
As with data completeness, MCPs are responsible for assuring the collection and submission of
accurate data to ODJFS. Failure to do so jeopardizes MCPs’ performance, credibility and, if not
corrected, will be assumed to indicate a failure in actual performance.
1.b.i. Encounter Data Accuracy Studies
Measure 1: The focus of this accuracy study will be on delivery encounters. Its primary purpose
will be to verify that MCPs submit encounter data accurately and to ensure only one payment is made
per delivery. The rate of appropriate payments will be determined by comparing a sample of delivery
payments to the medical record. The measure will be calculated per MCP (i.e., to include the MCP’s
entire service area for the CFC membership.
Report Period: In order to provide timely feedback on the accuracy rate of encounters, the report
period will be the most recent from when the measure is initiated. This measure is conducted
annually.
Medical records retrieval from the provider and submittal to ODJFS or its designee is an integral
component of the validation process. ODJFS has optimized the sampling to minimize the number of
records required. This methodology requires a high record submittal rate. To aid MCPs in
achieving
Appendix L
Covered Families and Children (CFC) population
Page 10
Covered Families and Children (CFC) population
Page 10
a high submittal rate, ODJFS will give at least an 8 week period to retrieve and submit medical
records as a part of the validation process. A record submittal rate will be calculated as a
percentage of all records requested for the study.
Data Quality Standard 1 for Measure 1: For results that are finalized during the contract year, the
accuracy rate for encounters generating delivery payments is 100%.
Penalty for noncompliance: The MCP must participate in a detailed review of delivery payments made
for deliveries during the report period. Any duplicate or unvalidated delivery payments must be
returned to ODJFS.
Data
Quality Standard 2 for Measure 1: A minimum record submittal rate
of 85%.
Penalty for noncompliance: For all encounter data accuracy studies that are completed during this
contract period, if an MCP is noncompliant with the standard, ODJFS will impose a non-refundable
$10,000 monetary sanction.
Measure 2: This accuracy study will compare the accuracy and completeness of payment data stored in
MCPs’ claims systems during the study period to payment data submitted to and accepted by ODJFS.
The measure will be calculated per MCP.
Payment information found in MCPs’ claims systems for paid claims that does not match payment
information found on a corresponding encounter will be counted as
omissions.
Report Period: In order to provide timely feedback on the omission rate of encounters, the report
period will be the most recent from when the measure is initiated. This measure is conducted
annually.
Data Quality Standard for Measure 2: TBD for SFY 2008 and SFY 2009 based on study conducted in SFY
2007 (standard to be released in June, 2007).
Penalty for Noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6) of one percent of the current
month’s premium payment. Once the MCP is performing at standard levels and violations/deficiencies
are resolved to the satisfaction of ODJFS, the money will be refunded.
1.b.ii. Generic Provider Number Usage
Measure: This measure is the percentage of non-pharmacy encounters with the generic provider
number. Providers submitting claims which do not have an MMIS provider
number must be submitted to ODJFS with the generic provider number 9111115. The measure will be
calculated per MCP.
Appendix L
Covered Families and Children (CFC) population
Page 11
Covered Families and Children (CFC) population
Page 11
All other encounters are required to have the MMIS provider number of the servicing provider. The
report period for this measure is quarterly.
Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will be evaluated using
the report periods listed in 1.a.i.,
Table 1.
Table 1.
Data
Quality Standard: A maximum generic provider number usage rate of
10%.
Determination of Compliance: Performance is monitored once every quarter for all report periods.
For quarterly reports that are issued on or after July 1, 2007, an MCP will be determined to be
noncompliant for the quarter if the standard is not met in any report period and the initial
instance of noncompliance in a report period is determined on or after July 1, 2007. An initial
instance of noncompliance means that the result for the applicable report period was in compliance
as determined in the prior quarterly report, or the instance of noncompliance is the first
determination for an MCP’s first quarter of measurement.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a
monetary sanction.
Upon all subsequent measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 6.) of three percent of the
current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
1.c. Timely Submission of Encounter Data
1.c.i. Timeliness
ODJFS recommends submitting encounters no later than thirty-five days after the end of the month in
which they were paid. ODJFS does not monitor standards specifically for timeliness, but the minimum
claims volume (Section 1.a.i.) and the rejected encounter (Section 1.a.v.) standards are based on
encounters being submitted within this time frame.
1.c.ii. Submission of Encounter Data Files in the ODJFS-specified medium per format
Information concerning the proper submission of encounter data may be obtained from the ODJFS
Encounter Data File and Submission Specifications document. The MCP must submit a letter of
certification, using the form required by ODJFS, with each encounter data file in the
ODJFS-specified medium per format.
The letter of certification must be signed by the MCP’s Chief Executive Officer (CEO), Chief
Financial Officer (CFO), or an individual who has delegated authority to sign for, and who reports
directly to, the MCP’s CEO or CFO.
Appendix L
Covered Families and Children (CFC) population
Page 12
Covered Families and Children (CFC) population
Page 12
2. CASE MANAGEMENT DATA
ODJFS designed a case management system (CAMS) in order to monitor MCP compliance with program
requirements specified in Appendix G, Coverage and Services. Each MCP’s case management data
submissions will be assessed for completeness and accuracy. The MCP is responsible for submitting
a case management file every month. Failure to do so jeopardizes the MCP’s ability to demonstrate
compliance with CSHCN requirements. For detailed descriptions of the case management measures
below, see ODJFS Methods for Case Management Data Quality Measures.
2.a. Case Management System Data Accuracy
2.a.i. Open Case Management Spans for Disenrolled Members (this measure will be discontinued as of
January 2008)
Measure: The percentage of the MCP’s adult and children case management records in the Screening,
Assessment, and Case Management System that have open case management date spans for members who
have disenrolled from the MCP.
Report Period: For the third and fourth quarters of SFY 2007, January – March 2007, and April –
June 2007 report periods. For the SFY 2008 contract period, July – September 2007, and October –
December 2007.
Statewide and Regional Data Quality Standard: A rate of open case management spans for disenrolled
members of no more than 1.0%.
For an MCP which had membership as of February 1, 2006: Performance will be evaluated using: 1)
region-based results for any active region in which all selected MCPs had at least 10,000 members
during each month of the entire report period; and/or 2) the statewide result for all counties that
were not included in the region-based results, but in which the MCP had managed care membership as
of February 1, 2006.
For any MCP which did not have membership as of February 1, 2006: Performance will begin to be
evaluated using region-based results for any active region in which all selected MCPs had at least
10,000 members during each month of the entire report period.
Regional-Based Approach: MCPs will be evaluated by region, using results for all counties included
in the region.
Penalty for noncompliance: If an MCP is noncompliant with the standard, then the ODJFS will issue a
Sanction Advisory informing the MCP that a monetary sanction will be imposed if the MCP is
noncompliant for any future report periods. Upon all subsequent semi-annual measurements of
performance, if an MCP is again determined to
be noncompliant with the standard, ODJFS will impose a monetary sanction of one-half of one percent
of the current month’s premium payment.
Appendix L
Covered Families and Children (CFC) population
Page 13
Covered Families and Children (CFC) population
Page 13
Once the MCP is performing at standard levels and violations/deficiencies are resolved to the
satisfaction of ODJFS, the money will be refunded.
2.b. Timely Submission of Case Management Files
Data Quality Submission Requirement: The MCP must submit Case Management files on a monthly basis
according to the specifications established in ODJFS’ Case Management File and Submission
Specifications.
Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the penalty for
noncompliance with this requirement.
3. EXTERNAL QUALITY REVIEW DATA
In accordance with federal law and regulations, ODJFS is required to conduct an independent quality
review of contracting managed care plans. The OAC rule 5101:3-26-07(C) requires MCPs to submit data
and information as requested by ODJFS or its designee for the annual external quality review.
Two information sources are integral to these studies: encounter data and medical records. Because
encounter data is used to draw samples for these studies, quality must be sufficient to ensure
valid sampling.
An adequate number of medical records must then be retrieved from providers and submitted to ODJFS
or its designee in order to generalize results to all applicable members. To aid MCPs in achieving
the required medical record submittal rate, ODJFS will give at least an eight week period to
retrieve and submit medical records.
3.a. Independent External Quality Review
Measure: The percentage of requested records for a study conducted by the External Quality Review
Organization (EQRO) that are submitted by the managed care plan.
Report Period: The report period is one year. Results are calculated and performance is monitored
annually. Performance is measured with each review.
Data Quality Standard: A minimum record submittal rate of 85% for each clinical measure.
Penalty for noncompliance for Data Quality Standard: For each study that is completed during this
contract period, if an MCP is noncompliant with the standard, ODJFS will impose a non-refundable
$10,000 monetary sanction.
Appendix L
Covered Families and Children (CFC) population
Page 14
Covered Families and Children (CFC) population
Page 14
4. MEMBERS’ PCP DATA
The designated PCP is the provider who will manage and coordinate the overall care for CFC members,
including those who have case management needs. The MCP must submit a Members’ Designated PCP file
every month. Specialists may and should be identified as the PCP as appropriate for the member’s
condition per the specialty types specified for the CFC population in ODJFS Member’s PCP Data File
and Submission Specifications; however, no CFC member may have more than one PCP identified for a
given month.
4.a. Timely submission of Member’s PCP Data
Data Quality Submission Requirement: The MCP must submit a Members’ Designated PCP Data file on a
monthly basis according to the specifications established in ODJFS Member’s PCP Data File and
Submission Specifications.
Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the penalty for
noncompliance with this requirement.
4.b. Designated PCP for newly enrolled members (only applicable for report periods prior to January
2008)
Measure: The percentage of MCP’s newly enrolled members who were designated a PCP by their
effective date of enrollment.
Report Periods: For the third and fourth quarters of SFY 2007, performance will be evaluated using
the January – March 2007 and April – June 2007 report periods. For the SFY 2008 contract period,
performance will be evaluated using the July-September 2007, and October – December 2007 report
periods.
Data Quality Standard: SFY 2007 will be informational only. A minimum rate of 75% of new members
with PCP designation by their effective date of enrollment for quarter one and quarter two of SFY
2008.
Statewide Approach: MCPs will be evaluated using a statewide result, including all active regions
and counties (Mahoning and Trumbull) in which an MCP has CFC membership.
Penalty for noncompliance: If an MCP is noncompliant with the standard, ODJFS will impose a
monetary sanction of one-half of one percent the current month’s premium payment. Once the MCP is
performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. As stipulated in OAC rule 5101:3-26-08.2, each new member must
have a designated primary care provider (PCP) prior to their effective date of coverage. Therefore,
MCPs are subject to additional corrective action measures under Appendix N, Compliance Assessment
System, for failure to meet this requirement.
4.b.i. Designated PCP for newly enrolled members (only applicable for report periods after December
2007)
Appendix L
Covered Families and Children (CFC) population
Page 15
Covered Families and Children (CFC) population
Page 15
Measure: The percentage of MCP’s newly enrolled members who were designated a PCP by their
effective date of enrollment.
Statewide Approach: MCPs will be evaluated using their statewide result, including all active
regions and counties (Mahoning and Trumbull) in which an MCP has CFC membership.
Report Periods: For the SFY 2009 contract period, performance will be evaluated annually using CY
2008.
Data Quality Standards: For SFY 2009, a minimum rate of 85% of new members with PCP designation by
their effective date of enrollment.
Penalty for noncompliance: If an MCP is noncompliant with the standard, ODJFS will impose a
monetary sanction of one-half of one percent the current month’s premium payment. Once the MCP is
performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. As stipulated in OAC rule 5101:3-26-08.2, each new member must
have a designated primary care provider (PCP) prior to their effective date of coverage. Therefore,
MCPs are subject to additional corrective action measures under Appendix N, Compliance Assessment
System, for failure to meet this requirement.
5. APPEALS AND GRIEVANCES DATA
Pursuant to OAC rule 5101:3-26-08.4, MCPs are required to submit information at least monthly to
ODJFS regarding appeal and grievance activity. ODJFS requires these submissions to be in an
electronic data file format pursuant to the Appeal File and Submission Specifications and Grievance
File and Submission Specifications.
The appeal data file and the grievance data file must include all appeal and grievance activity,
respectively, for the previous month, and must be submitted by the ODJFS-specified due date. These
data files must be submitted in the ODJFS-specified format and with the ODJFS-specified filename in
order to be successfully processed.
Penalty for noncompliance: MCPs who fail to submit their monthly electronic data files to the ODJFS
by the specified due date or who fail to resubmit, by no later than the end of that month, a file
which meets the data quality requirements will be subject to penalty as stipulated under the
Compliance Assessment System (Appendix N).
6. NOTES
6.a. Penalties, Including Monetary Sanctions, for Noncompliance
Appendix L
Covered Families and Children (CFC) population
Page 16
Covered Families and Children (CFC) population
Page 16
Penalties for noncompliance with standards outlined in this appendix, including monetary sanctions,
will be imposed as the results are finalized. With the exception of Sections 1.a.i., 1.a.iii.,
1.a.v., 1.a.vi., and 1.b.ii, no monetary sanctions described in this appendix will be imposed if
the MCP is in its first contract year of Medicaid program participation. Notwithstanding the
penalties specified in this Appendix, ODJFS reserves the right to apply the most appropriate
penalty to the area of deficiency identified when an MCP is determined to be noncompliant with a
standard. Monetary penalties for noncompliance with any individual measure, as determined in this
appendix, shall not exceed $300,000 during each evaluation period.
Refundable
monetary sanctions will be based on the premium payment in the month of the cited
deficiency and due within 30 days of notification by ODJFS to the MCP of the amount.
Any monies collected through the imposition of such a sanction will be returned to the MCP (minus
any applicable collection fees owed to the Attorney General’s Office, if the MCP has been
delinquent in submitting payment) after the MCP has demonstrated full compliance with the
particular program requirement and the violations/deficiencies are resolved to the satisfaction of
ODJFS. If an MCP does not comply within two years of the date of notification of noncompliance,
then the monies will not be refunded.
6.b. Combined Remedies
If ODJFS determines that one systemic problem is responsible for multiple deficiencies, ODJFS may
impose a combined remedy which will address all areas of deficient performance. The total fines
assessed in any one month will not exceed 15% of the MCP’s monthly premium payment.
6.c. Membership Freezes
MCPs found to have a pattern of repeated or ongoing noncompliance may be subject to a membership
freeze.
6.d. Reconsideration
Requests for reconsideration of monetary sanctions and enrollment freezes may be submitted as
provided in Appendix N, Compliance Assessment System.
6.e. Contract Termination, Nonrenewals, or Denials
Upon termination either by the MCP or ODJFS, nonrenewal, or denial of an MCP provider agreement,
all previously collected refundable monetary sanctions will be retained by ODJFS.
Appendix M
Covered Families and Children (CFC) population
Page 1
Covered Families and Children (CFC) population
Page 1
APPENDIX M
PERFORMANCE EVALUATION
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
This appendix establishes minimum performance standards for managed care plans (MCPs) in key
program areas. The intent is to maintain accountability for contract requirements. Standards are
subject to change based on the revision or update of applicable national standards, methods or
benchmarks. Performance will be evaluated in the categories of Quality of Care, Access, Consumer
Satisfaction, and Administrative Capacity. Each performance measure has an accompanying minimum
performance standard. MCPs with performance levels below the minimum performance standards will be
required to take corrective action.
With the statewide expansion of the Ohio Medicaid Managed Care Program for the Covered Families and
Children (CFC) population nearly complete, evaluation of performance will transition to a statewide
approach encompassing all members who meet the criteria specified per the given methodology for
each measure (i.e., measures will include members in any county who meet criteria per the given
methodology as opposed to only those members with managed care membership as of February 1, 2006).
The statewide approach will be implemented beginning January 1, 2008. Due to differences in data
and reporting requirements, transition to statewide measurement will vary by performance measure.
Given that the original intent of the SFY 2007 and SFY 2008 Covered Families and Children Provider
Agreements, Appendix M, was to transition to a regional-based system of evaluation, several
performance measures have used regional-based results for performance monitoring. Regional-based
performance monitoring will be discontinued for all measures in Appendix M for report periods from
January, 2008 onward. Unless otherwise noted, performance measures and standards (see Sections 1,
2, 3 and 4 of this appendix) will be applicable for all counties in which the MCP has membership as
of February 1, 2006, until statewide measurement is implemented.
Selected measures in this appendix will be used to determine pay-for-performance (P4P) as specified
in Appendix O, Pay for Performance.
1. QUALITY OF CARE
1.a. Independent External Quality Review
In accordance with federal law and regulations, state Medicaid agencies must annually provide for
an external quality review of the quality outcomes and timeliness of, and access to, services
provided by Medicaid-contracting MCPs [(42 CFR 438.204(d)]. The external review assists the state
in assuring MCP compliance with program requirements
and facilitates the collection of accurate and reliable information concerning MCP performance.
Measure: The independent external quality review covers a review of clinical and non-clinical
performance as outlined in Appendix K.
Appendix M
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
Report Period: Performance will be evaluated using the reviews conducted during SFY 2008.
Action Required for Deficiencies: For all reviews conducted during the contract period, if the EQRO
cites a deficiency in performance, the MCP will be required to complete a Corrective Action Plan or
Quality Improvement Directive depending on the severity of the deficiency. Serious deficiencies
may result in immediate termination or non-renewal of the provider agreement.
1.b. Children with Special Health Care Needs (CSHCN)
In order to ensure state compliance with the provisions of 42 CFR 438.208, the Bureau of Managed
Health Care established Children with Special Health Care Needs (CSHCN) basic program requirements
in Appendix G, Coverage and Services, and corresponding minimum performance standards as described
below. The purpose of these measures is to provide appropriate and targeted case management
services to CSHCN.
1.b.i. Case Management of Children (applicable to performance evaluation through December 2007 and
P4P through SFY 2009)
Measure: The average monthly case management rate for children under 21 years of age.
Report Period: For the SFY 2007 contract period, January — March 2007, and April — June 2007
report periods. For the SFY 2008 contract period, July — September 2007, and October — December
2007 report periods.
County-Based Approach: MCPs with managed care membership as of February 1, 2006 will be evaluated
using their county-based statewide result until regional evaluation is implemented for the county’s
applicable region. The county-based statewide result will include data for all counties in which
the MCP had membership as of February 1, 2006 that are not included in any regional-based result.
Regional-based results will not be used for evaluation until all selected MCPs in an active region
have at least 10,000 members during each month of the entire report period. Upon implementation of
regional-based evaluation for a particular county’s region, the county will be included in the
MCP’s regional-based result and will no longer be included in the MCP’s county-based statewide
result. [Example: The county-based statewide result for MCP AAA, which has contracts in the Central
and West Central regions, will include Franklin, Pickaway, Montgomery, Greene and Clark counties
(i.e., counties in which MCP AAA had managed care membership as of February 1, 2006). When regional-based evaluation is implemented for the Central
region, Franklin and Pickaway counties, along with all other counties in the region, will then be
included in the Central region results for MCP AAA; Montgomery, Greene, and Clark counties will
remain in the county-based statewide result for evaluation of MCP AAA until the West Central
regional-based approach is implemented.] The last report period using the MCP’s county-based
statewide result for the counties in which the MCP had membership as of February 1, 2006 for P4P
(Appendix O) is April-June 2009.
Regional-Based Approach: MCPs will be evaluated by region, using results for all counties
included in the region. Performance will begin to be evaluated using regional-based results for any
Appendix M
Covered Families and Children (CFC) population
Page 3
Covered Families and Children (CFC) population
Page 3
active region in which all selected MCPs had at least 10,000 members during each month of the
entire report period.
County and Regional-Based Minimum Performance Standard: For the third and fourth quarters of SFY
2007, a case management rate of 5.0%. For the first and second quarters of SFY 2008, a case
management rate of 5.0%.
Penalty for Noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 5) of two percent of the current
month’s premium payment. Monetary sanctions will not be levied for consecutive quarters that an MCP
is determined to be noncompliant. If an MCP is noncompliant for a subsequent quarter, new member
selection freezes or a reduction of assignments will occur as outlined in Appendix N of the
Provider Agreement. Once the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be lifted, if
applicable, and monetary sanctions will be returned.
1.b.ii. Case Management of Children (applicable to performance evaluation as of January, 2008)
Measure: The average monthly case management rate for children under 21 years of age.
Report Period: For the SFY 2008 contract period, January — March 2008, and April — June 2008
report periods. For the SFY 2009 contract period, July — September 2008, October — December 2008,
January — March 2009, and April — June 2009 report periods.
Regional-Based Statewide Approach: Performance will be evaluated using a regional-based statewide approach for all active regions and counties (Mahoning and Trumbull) in which the
MCP has membership.
Regional-Based Statewide Target: For the third and fourth quarters of SFY 2008, a case management
rate of 5.0%. For SFY 2009, a case management rate of 5.0%.
Regional-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 20% decrease in the difference between the target and the previous report period’s results.
Penalty for Noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 5) of two percent of the current
month’s premium payment. Monetary sanctions will not be levied for consecutive quarters that an MCP
is determined to be noncompliant. If an MCP is noncompliant for
Appendix M
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
a subsequent quarter, new member selection freezes or a reduction of assignments will occur as
outlined in Appendix N of the Provider Agreement. Once the MCP is determined to be compliant with
the standard and the violations/deficiencies are resolved to the satisfaction of ODJFS, the
penalties will be lifted, if applicable, and monetary sanctions will be returned.
1.b.iii. Case Management of Children with an ODJFS-Mandated Condition (applicable to performance
evaluation through December 2007)
Measure 1: The percent of children under 21 years of age with a positive identification through an
ODJFS administrative review of data for the ODJFS-mandated case management condition of asthma that
are case managed.
Measure 2: The percent of children age 17 and under with a positive identification through an ODJFS
administrative review of data for the ODJFS-mandated case management condition of teenage pregnancy
that are case managed.
Measure 3: The percent of children under 21 years of age with a positive identification through an
ODJFS administrative review of data for the ODJFS-mandated case
management condition of HIV/AIDS
that are case managed.
Report Periods for Measures 1, 2, and 3: For the SFY 2007 contract period, January — March 2007,
and April — June 2007 report periods. For the SFY 2008 contract period, and July — September
2007, October — December 2007 report periods.
County-Based Approach: MCPs with managed care membership as of February 1, 2006 will be evaluated
using their county-based statewide result until regional evaluation is implemented for the county’s
applicable region. The county-based statewide result will include data for all counties in which
the MCP had membership as of February 1, 2006 that are not included in any regional-based result.
Regional-based results will not be used for evaluation until all selected MCPs in an active region
have at least 10,000 members during each month of the entire report period. Upon implementation of
regional-based evaluation for a particular county’s region, the county will be included in the
MCP’s regional-based result and will no longer be included in the MCP’s county-based statewide
result. [Example: The county-based statewide result for MCP AAA, which has contracts in the Central
and West Central regions, will include Franklin, Pickaway, Montgomery, Greene and Clark counties
(i.e., counties in which MCP AAA had managed care membership as of February 1, 2006). When
regional-based evaluation is implemented for the Central region, Franklin and Pickaway counties,
along with all other counties in the region, will then be included in the Central region results
for MCP AAA; Montgomery, Greene, and Clark counties will remain in the county-based statewide
result for evaluation of MCP AAA until the West Central regional-based approach is implemented.]
Regional-Based Approach: MCPs will be evaluated by region, using results for all counties included
in the region. Performance will begin to be evaluated using regional-based results for any active
region in which all selected MCPs had at least 10,000 members during each month of the entire
report period.
Appendix M
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
County and Regional-Based Minimum Performance Standard for Measures 1 and 3: For the third and
fourth quarters of SFY 2007, a case management rate of 70%. For the first and second quarters of
SFY 2008, a case management rate of 70%.
County and Regional-Based Minimum Performance Standard for Measure 2: For the third and fourth
quarters of SFY 2007, a case management rate of 60%. For the first and second quarters of SFY 2008,
a case management rate of 60%.
Penalty for Noncompliance for Measures 1 and 2: The first time an MCP is noncompliant with a
standard for this measure, ODJFS will issue a Sanction Advisory informing the MCP that any future
noncompliance instances with the standard for this measure will result in ODJFS imposing a monetary
sanction. Upon all subsequent measurements of performance, if an MCP is again determined to be
noncompliant with the standard, ODJFS will impose a monetary sanction (see Section 5) of two
percent of the current month’s premium payment. Monetary sanctions will not be levied for
consecutive quarters that an MCP is determined to be noncompliant. If an MCP is noncompliant for a
subsequent quarter, new member selection freezes or a reduction of assignments will occur as
outlined in Appendix N of the Provider Agreement. Once the MCP is determined to be compliant with
the standard and the violations/deficiencies are
resolved to the satisfaction of ODJFS, the penalties will be lifted, if applicable, and monetary
sanctions will be returned. Note: For the first reporting period during which regional results are
used to evaluate performance, measures 1, 2, and 3 are reporting-only measures. For SFY 2008,
measure 3 is a reporting-only measure.
1.b.iv. Case Management of Children with an ODJFS-Mandated Condition (applicable to performance
evaluation as of January 2008)
Measure 1: The percent of children under 21 years of age with a positive identification through an
ODJFS administrative review of data for the ODJFS-mandated case management condition of asthma that
are case managed.
Measure 2: The percent of children under 21 years of age with a positive identification through an
ODJFS administrative review of data for the ODJFS-mandated case management condition of HIV/AIDS
that are case managed.
Report Periods for Measures 1 and 2: For the SFY 2008 contract period, January — March 2008, and
April — June 2008 report periods. For the SFY 2009 contract period, July — September 2008,
October — December 2008, January — March 2009, and April — June 2009 report periods.
Regional-Based Statewide Approach: Performance will be evaluated using a regional-based statewide
approach for all active regions and counties (Mahoning and Trumbull) in which the MCP has
membership.
Regional-Based Statewide Target for Measures 1 and 2: For the third and fourth quarters of SFY
2008, a case management rate of 70%. For SFY 2009, a case management rate of 80%.
Appendix M
Covered Families and Children (CFC) population
Page 6
Covered Families and Children (CFC) population
Page 6
Regional-Based Statewide Minimum Performance Standard for Measures 1 and 2: The level of
improvement must result in at least a 20% decrease in the difference between the target and the
previous report period’s results.
Penalty for Noncompliance for Measure 1 : The first time an MCP is noncompliant with a standard for
this measure, ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance
instances with the standard for this measure will result in ODJFS imposing a monetary sanction.
Upon all subsequent measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 5) of two percent of the
current month’s premium payment. Monetary sanctions will not be levied for consecutive quarters
that an MCP is determined to be noncompliant. If an MCP is noncompliant for a subsequent quarter,
new member selection freezes or a reduction of assignments will occur as outlined in Appendix N of
the Provider Agreement. Once the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be lifted, if applicable, and monetary sanctions
will be returned. For SFY 2008 and SFY 2009, measure 2 is a reporting-only measure.
1.c. Clinical Performance Measures
MCP performance will be assessed based on the analysis of submitted encounter data for each year.
For certain measures, standards are established; the identification of these standards is not
intended to limit the assessment of other indicators for performance improvement activities.
Performance on multiple measures will be assessed and reported to the MCPs and others, including
Medicaid consumers.
The clinical performance measures described below closely follow the National Committee for Quality
Assurance’s Health Plan Employer Data and Information Set (HEDIS). Minor adjustments to HEDIS
measures are required to account for the differences between the commercial population and the
Medicaid population, such as shorter and interrupted enrollment periods. NCQA may annually change
its method for calculating a measure. These changes can make it difficult to evaluate whether
improvement occurred from a prior year. For this reason, ODJFS will use the same methods to
calculate the baseline results and the results for the period in which the MCP is being held
accountable. For example, the same methods were being used to calculate calendar year 2005 results
(the baseline period) and calendar year 2006 results. The methods will be updated and a new
baseline will be created during 2007 for calendar year 2006 results. These results will then serve
as the baseline to evaluate whether improvement occurred from calendar year 2006 to calendar year
2007. Clinical performance measure results will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout. For a comprehensive
description of the clinical performance measures below, see ODJFS Methods for Clinical Performance
Measures for the CFC Managed Care Program. Performance standards are subject to change based on the
revision or update of NCQA methods or other national standards, methods or benchmarks.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership
Appendix M
Covered Families and Children (CFC) population
Page 7
Covered Families and Children (CFC) population
Page 7
as of February 1, 2006. For reporting periods CY 2007 and CY 2008, targets and performance
standards for Clinical Performance Measures in this Appendix (1.c.i — 1.c.vii) will be applicable
to all counties in which MCPs had membership as of February 1, 2006. The final reporting year for
the counties in which an MCP had membership as of February 1, 2006, will be CY 2008.
For any MCP which did not have membership as of February 1, 2006: Performance will
be evaluated using a regional-based statewide approach for all active regions and counties
(Trumbull and Mahoning) in which the MCP has membership.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership.
For measures requiring one year of baseline data, ODJFS will use the first full calendar year of
data (CY 2007 — which may be adjusted based on the number of months of managed care membership)
from all MCPs serving CFC membership to determine statewide minimum performance standards. CY 2008
will be the first reporting year that MCPs will be held accountable to the statewide performance
standards for one year measures, and penalties will be applied for noncompliance.
For measures requiring two years of baseline data, ODJFS will use the first two full calendar years
of data (CY 2007 and CY 2008 — which may be adjusted based on the number of months of managed care
membership) from all MCPs serving CFC membership to determine statewide minimum performance
standards. CY 2009 will be the first reporting year that MCPs will be held accountable to the
statewide performance standards for two year measures, and penalties will be applied for
noncompliance.
Statewide performance measure results will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout.
Report Period: In order to adhere to the statewide expansion timeline, reporting periods may be
adjusted based on the number of months of managed care membership. For the SFY 2007 contract
period, performance will be evaluated using the January — December 2006 report period. For the SFY
2008 contract period, performance will be evaluated using the January — December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using the January —
December 2008 report period.
1.c.i. Perinatal Care — Frequency of Ongoing Prenatal Care
Measure: The percentage of enrolled women with a live birth during the year who received the
expected number of prenatal visits. The number of observed versus expected visits will be adjusted
for length of enrollment.
County-Based Statewide Target: At least 80% of the eligible population must receive 81% or more of
the expected number of prenatal visits.
County-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 10% decrease in the difference between the target and the previous report period’s results.
Appendix M
Covered Families and Children (CFC) population
Page 8
Covered Families and Children (CFC) population
Page 8
(For example, if last year’s results were 20%, then the difference between the target and last
year’s results is 60%. In this example, the standard is an improvement in performance of 10% of
this difference or 6%. In this example, results of 26% or better would be compliant with the
standard.)
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard: TBD
Action Required for Noncompliance: Beginning SFY 2007, if the standard is not met and the results
are below 42% (44% for SFY 2009), the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above 42%
(44% for SFY 2009), ODJFS will issue a Quality Improvement Directive which will notify the MCP of
noncompliance and may outline the steps that the MCP must take to improve the results.
1.c.ii. Perinatal Care — Initiation of Prenatal Care
Measure: The percentage of enrolled women with a live birth during the year who had a prenatal
visit within 42 days of enrollment or by the end of the first trimester for those women who
enrolled in the MCP during the early stages of pregnancy.
County-Based Statewide Target: At least 90% of the eligible population initiate prenatal care
within the specified time.
County-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 10% decrease in the difference between the target and the previous year’s results.
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard: TBD
Action Required for Noncompliance: Beginning SFY 2007, if the standard is not met and the results
are below 71% (74% for SFY 2009), the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above 71%
(74% for SFY 2009), ODJFS will issue a Quality Improvement Directive which will notify the MCP of
noncompliance and may outline the steps that the MCP must take to improve the results.
1.c.iii. Perinatal Care — Postpartum Care
Measure: The percentage of women who delivered a live birth who had a postpartum visit on or
between 21 days and 56 days after delivery.
County-Based Statewide Target: At least 80% of the eligible population must receive a postpartum
visit.
County-Based Statewide Minimum Performance Standard: The level of improvement
must result in at least a 5% decrease in the difference between the target and the previous year’s
results.
Appendix M
Covered Families and Children (CFC) population
Page 9
Covered Families and Children (CFC) population
Page 9
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard: TBD
Action Required for Noncompliance: Beginning SFY 2007, if the standard is not met and the results
are below 48% (50% for SFY 2009), the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above 48%
(50% for SFY 2009), ODJFS will issue a Quality Improvement Directive which will notify the MCP of
noncompliance and may outline the steps that the MCP must take to improve the results.
1.c.iv. Preventive Care for Children — Well-Child Visits
Measure: The percentage of children who received the expected number of well-child visits adjusted
by age and enrollment. The expected number of visits is as follows:
Children who turn 15 months old: six or more well-child visits.
Children who were 3, 4, 5, or 6, years old: one or more well-child visits.
Children who were 12 through 21 years old: one or more well-child visits.
County-Based Statewide Target: At least 80% of the eligible children receive the expected number of
well-child visits.
County-Based Statewide Minimum Performance Standard for Each of the Age Groups: The level of
improvement must result in at least a 10% decrease in the difference between the target and the
previous year’s results.
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard for Each of the Age Groups: TBD
Action Required for Noncompliance (15 month old age group): Beginning SFY 2007, if the standard is
not met and the results are below 34% (42% for SFY 2009), the MCP is required to complete a
Corrective Action Plan to address the area of noncompliance. If the standard is not met and the
results are at or above 34% (42% for SFY 2009), ODJFS will issue a Quality Improvement Directive
which will notify the MCP of noncompliance and may outline the steps that the MCP must take to
improve the results.
Action Required for Noncompliance (3-6 year old age group): Beginning SFY 2007, if
the standard is not met and the results are below 50% (57% for SFY 2009), the MCP is required to
complete a Corrective Action Plan to address the area of noncompliance. If the standard is not met
and the results are at or above 50% (57% for SFY 2009), ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
Appendix M
Covered Families and Children (CFC) population
Page 10
Covered Families and Children (CFC) population
Page 10
Action Required for Noncompliance (12-21 year old age group): Beginning SFY 2007, if the standard
is not met and the results are below 30% (33% for SFY 2009), the MCP is required to complete a
Corrective Action Plan to address the area of noncompliance. If the standard is not met and the
results are at or above 30% (33% for SFY 2009), ODJFS will issue a Quality Improvement Directive
which will notify the MCP of noncompliance and may outline the steps that the MCP must take to
improve the results.
1.c.v. Use of Appropriate Medications for People with Asthma
Measure: The percentage of members with persistent asthma who were enrolled for at least 11 months
with the plan during the year and who received prescribed medications acceptable as primary therapy
for long-term control of asthma.
County-Based Statewide Target: At least 95% of the eligible population must receive the recommended
medications.
County-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 10% decrease in the difference between the target and the previous year’s results.
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard: TBD
Action Required for Noncompliance: Beginning SFY 2007, if the standard is not met and the results
are below 83% (84% for SFY 2009), the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above 83%
(84% for SFY 2009), ODJFS will issue a Quality Improvement Directive which will notify the MCP of
noncompliance and may outline the steps that the MCP must take to improve the results.
1.c.vi. Annual Dental Visits
Measure: The percentage of enrolled members age 4 through 21 who were enrolled for at least 11
months with the plan during the year and who had at least one dental visit during the year.
County-Based Statewide Target: At least 60% of the eligible population receive a dental
visit.
County-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 10% decrease in the difference between the target and the previous year’s results.
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard: TBD
Appendix M
Covered Families and Children (CFC) population
Page 11
Covered Families and Children (CFC) population
Page 11
Action Required for Noncompliance: Beginning SFY 2007, if the standard is not met and the results
are below 40% (42% for SFY 2009), the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above 40%
(42% for SFY 2009), ODJFS will issue a Quality Improvement Directive which will notify the MCP of
noncompliance and may outline the steps that the MCP must take to improve the results.
1.c.vii. Lead Screening
Measure: The percentage of one and two year olds who received a blood lead screening by age group.
County-Based Statewide Target: At least 80% of the eligible population receive a blood lead
screening.
County-Based Statewide Minimum Performance Standard for Each of the Age Groups: The level of
improvement must result in at least a 10% decrease in the difference between the target and the
previous year’s results.
Regional-Based Statewide Target: TBD
Regional-Based Statewide Minimum Performance Standard for Each of the Age Groups: TBD
Action Required for Noncompliance (1 year olds): Beginning SFY 2007, if the standard is not met and
the results are below 45% the MCP is required to complete a Corrective Action Plan to address the
area of noncompliance. If the standard is not met and the results are at or above 45%, ODJFS will
issue a Quality Improvement Directive which will notify the MCP of noncompliance and may outline
the steps that the MCP must take to improve the results.
Action Required for Noncompliance (2 year olds): Beginning SFY 2007, if the standard is not met
and the results are below 28% the MCP is required to complete a Corrective Action Plan to address
the area of noncompliance. If the standard is not met and the
results are at or above 28%, ODJFS will issue a Quality Improvement Directive which will notify the
MCP of noncompliance and may outline the steps that the MCP must take to improve the results.
2. ACCESS
Performance in the Access category will be determined by the following measures: Primary Care
Provider (PCP) Turnover, Children’s Access to Primary Care, Adults’ Access to Preventive/Ambulatory
Health Services, and Members’ Access to Designated PCP. For a comprehensive description of the
access performance measures below, see ODJFS Methods for Access Performance Measures for the CFC
Managed Care Program.
2.a. PCP Turnover
A high PCP turnover rate may affect continuity of care and may signal poor management of providers.
However, some turnover may be expected when MCPs end contracts with providers who
Appendix M
Covered Families and Children (CFC) population
Page 12
Covered Families and Children (CFC) population
Page 12
are not adhering to the MCP’s standard of care. Therefore, this measure is used in conjunction with
the children and adult access measures to assess performance in the access category.
Measure: The percentage of primary care providers affiliated with the MCP as of the beginning of
the measurement year who were not affiliated with the MCP as of the end of the year.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership as of
February 1, 2006. The minimum performance standard in this
Appendix (2.a) will be applicable to
the MCP’s county-based statewide result for the counties in which the MCP had membership as of
February 1, 2006. The last reporting year using the MCP’s county-based statewide result for the
counties in which the MCP had membership as of February 1, 2006 for performance evaluation is CY
2007; the last reporting year using the MCP’s county-based statewide result for the counties in
which the MCP had membership as of February 1, 2006 for P4P (Appendix O) is CY 2008.
For any MCP which did not have membership as of February 1, 2006: Performance will be evaluated
using a regional-based statewide approach for all active regions and counties (Mahoning and
Trumbull) in which the MCP has membership.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all regions
and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the first full
calendar year of data (CY 2007 — which may
be adjusted based on the number of months of managed care membership) from all MCPs serving CFC
membership as a baseline to determine a statewide minimum performance standard. CY 2008 will be the
first reporting year that MCPs will be held accountable to the statewide performance standard for
statewide reporting, and penalties will be applied for noncompliance.
Report Period: In order to adhere to the statewide expansion timeline, reporting periods may be
adjusted based on the number of months of managed care membership. For the SFY 2007 contract
period, performance will be evaluated using the January — December 2006 report period. For the SFY
2008 contract period, performance will be evaluated using the January — December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using the January -
December 2008 report period.
County-Based Statewide Minimum Performance Standard: A maximum PCP Turnover rate of 18%.
Regional-Based Statewide Minimum Performance Standard: TBD
Action Required for Noncompliance: MCPs are required to perform a causal analysis of the high PCP
turnover rate and assess the impact on timely access to health services, including continuity of
care. If access has been reduced or coordination of care affected, then the MCP must develop and
implement a corrective action plan to address the findings.
2.b. Children’s Access to Primary Care
Appendix M
Covered Families and Children (CFC) population
Page 13
Covered Families and Children (CFC) population
Page 13
This measure indicates whether children aged 12 months to 11 years are accessing PCPs for sick or
well-child visits.
Measure: The percentage of members age 12 months to 11 years who had a visit with an MCP PCP-type
provider.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard in this Appendix (2.b) will be applicable to the MCP’s
county-based statewide result for the counties in which the MCP had membership as of February 1,
2006. The last reporting year using the MCP’s county-based statewide result for the counties in
which the MCP had membership as of February 1, 2006 is CY 2008.
For any MCP which did not have membership as of February 1, 2006: Performance will be evaluated
using a regional-based statewide approach for all active regions and counties (Mahoning and
Trumbull) in which the MCP has membership.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the
first two full calendar years of data (CY 2007 and CY 2008 — which may be adjusted based on the
number of months of managed care membership) from all MCPs serving CFC membership as a baseline to
determine a statewide minimum performance standard. CY 2009 will be the first reporting year that
MCPs will be held accountable to the statewide performance standard for statewide reporting, and
penalties will be applied for noncompliance. Statewide performance measure results will be
calculated after a sufficient amount of time has passed after the end of the report period in order
to allow for claims runout.
Report Period: In order to adhere to the statewide expansion timeline, reporting periods may be
adjusted based on the number of months of managed care membership. For the SFY 2007 contract
period, performance will be evaluated using the January — December 2006 report period. For the SFY
2008 contract period, performance will be evaluated using the January — December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using the January -
December 2008 report period.
County-Based Statewide Minimum Performance Standards:
CY 2006 report period — 70% of children must receive a visit.
CY 2007 report period — 71% of children must receive a visit
CY 2008 report period — 74% of children must receive a visit
CY 2007 report period — 71% of children must receive a visit
CY 2008 report period — 74% of children must receive a visit
Regional-Based Statewide Minimum Performance Standards: TBD
Penalty for Noncompliance: If an MCP is noncompliant with the Minimum Performance Standard, then
the MCP must develop and implement a corrective action plan.
Appendix M
Covered Families and Children (CFC) population
Page 14
Covered Families and Children (CFC) population
Page 14
2.c. Adults’ Access to Preventive/Ambulatory Health Services
This measure indicates whether adult members are accessing health services.
Measure: The percentage of members age 20 and older who had an ambulatory or preventive-care visit.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard in this Appendix (2.c) will be applicable to the MCP’s
county-based statewide result for the counties in which the MCP had membership as of February 1,
2006. The last reporting year using the MCP’s county-based statewide result for the counties in
which the MCP had membership as of February 1, 2006 for performance evaluation is CY 2007; the last
reporting year using the MCP’s county-based statewide result for the counties in which
the MCP had membership as of February 1, 2006 for P4P (Appendix O) is CY 2008.
For any MCP which did not have membership as of February 1, 2006: Performance will be evaluated
using a regional-based statewide approach for all active regions and counties (Mahoning and
Trumbull) in which the MCP has membership.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the
first full calendar year of data (CY 2007 — which may be adjusted based on the number of months of
managed care membership) from all MCPs serving CFC membership as a baseline to determine a
statewide minimum performance standard. CY 2008 will be the first reporting year that MCPs will be
held accountable to the statewide performance standard for statewide reporting, and penalties will
be applied for noncompliance. Statewide performance measure results will be calculated after a
sufficient amount of time has passed after the end of the report period in order to allow for
claims runout.
Report Period: In order to adhere to the statewide expansion timeline, reporting periods may be
adjusted based on the number of months of managed care membership. For the SFY 2007 contract
period, performance will be evaluated using the January — December 2006 report period. For the SFY
2008 contract period, performance will be evaluated using the January — December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using the January -
December 2008 report period.
County-Based Statewide Minimum Performance Standards:
CY 2006 report period — 63% of adults must receive a visit.
CY 2007 report period — 63% of adults must receive a visit.
CY 2008 report period — 63% of adults must receive a visit.
CY 2007 report period — 63% of adults must receive a visit.
CY 2008 report period — 63% of adults must receive a visit.
Regional-Based Statewide Minimum Performance Standards: TBD
Appendix M
Covered Families and Children (CFC) population
Page 15
Covered Families and Children (CFC) population
Page 15
Penalty for Noncompliance: If an MCP is noncompliant with the Minimum Performance Standard, then
the MCP must develop and implement a corrective action plan.
2.d. Members’ Access to Designated PCP
The MCP must encourage and assist CFC members without a designated primary care provider (PCP) to
establish such a relationship, so that a designated PCP can coordinate and manage a member’s health
care needs. This measure is to be used to assess MCPs’ performance in the access category.
Measure: The percentage of members who had a visit through members’ designated PCPs.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the
first full calendar year of data (CY 2007 — which may be adjusted based on the number of months of
managed care membership) from all MCPs serving CFC membership as a baseline to determine a
statewide minimum performance standard. CY 2008 will be the first reporting year that MCPs will be
held accountable to the performance standard and penalties will be applied for noncompliance.
Statewide performance measure results will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout.
Report Period: For the SFY 2009 contract period, performance will be evaluated using the January -
December 2008 report period.
Regional-Based Statewide Minimum Performance Standard: TBD
Penalty for Noncompliance: If an MCP is noncompliant with the Minimum Performance Standard, then
the MCP must develop and implement a corrective action plan.
3. CONSUMER SATISFACTION
In accordance with federal requirements and in the interest of assessing enrollee satisfaction with
MCP performance, ODJFS annually conducts independent consumer satisfaction surveys. Results are
used to assist in identifying and correcting MCP performance overall and in the areas of access,
quality of care, and member services. For SFY 2007 and SFY 2008, performance in this category will
be determined by the overall satisfaction score. For a comprehensive description of the Consumer
Satisfaction performance measure below, see ODJFS Methods for the Consumer Satisfaction Performance
Measure for the CFC Program.
Measure: Overall Satisfaction with MCP: The average rating of the respondents to the Consumer
Satisfaction Survey who were asked to rate their overall satisfaction with their MCP. The results
of this measure are reported annually.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership
Appendix M
Covered Families and Children (CFC) population
Page 16
Covered Families and Children (CFC) population
Page 16
as of February 1, 2006. The minimum performance standard in this Appendix (3.) will be applicable
to the MCP’s county-based statewide result for the counties in which the MCP had membership as of
February 1, 2006. For performance evaluation, the last year to use the county-based statewide
approach for the counties in which the MCP had membership as of February 1, 2006 will be SFY 2008,
using CY 2008 data. For P4P (Appendix O), the last year to use the county-based statewide approach
for the counties in which the MCP had membership as of February 1, 2006 will be SFY 2009, using CY
2009 data.
For any MCP which did not have membership as of February 1, 2006: Performance will be evaluated
using a regional-based statewide approach for all active regions and counties (Mahoning and
Trumbull) in which the MCP has membership.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the
first full calendar year of data (CY 2008 adult and child survey results) from all MCPs serving CFC
membership as a baseline to establish a measure and determine a minimum statewide performance
standard. For performance evaluation, the first year to use the statewide regional-based approach
will be SFY 2009, using CY 2009 data. For P4P (Appendix O), the first year to use the statewide
regional-based approach will be SFY 2010, using CY 2010 data.
Report Period: For the SFY 2007 contract period, performance will be evaluated using the results
from the CY 2007 consumer satisfaction survey. For the SFY 2008 contract period, performance will
be evaluated using the results from the CY 2008 consumer satisfaction survey. For the SFY 2009
contract period, performance will be evaluated using the results from the CY 2009 consumer
satisfaction survey.
County-Based Statewide Minimum Performance Standard: An average score of no less than 7.0.
Regional-Based Statewide Minimum Performance Standard: TBD
Penalty for noncompliance: If an MCP is determined noncompliant with the Minimum Performance
Standard, then the MCP must develop a corrective action plan and provider agreement renewals may be
affected.
4. ADMINISTRATIVE CAPACITY
The ability of an MCP to meet administrative requirements has been found to be both an indicator of
current plan performance and a predictor of future performance. Deficiencies in administrative
capacity make the accurate assessment of performance in other categories difficult, with findings
uncertain. Performance in this category will be determined by the Compliance Assessment System, and
the emergency department diversion program. For a comprehensive description of the Administrative
Capacity performance measures below, see ODJFS Methods for the Administrative Capacity Performance Measure
for the CFC Managed Care Program.
Appendix M
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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4.a. Compliance Assessment System
Measure:
The number of points accumulated during a rolling 12-month period through the Compliance Assessment System.
Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will be evaluated using
a rolling 12-month report period.
Performance Standard: A maximum of 15 points
Penalty for Noncompliance: Penalties for points are established in Appendix N, Compliance
Assessment System.
4.b. Emergency Department Diversion (applicable to performance evaluation through SFY 2008 and P4P
through SFY 2007)
Managed care plans must provide access to services in a way that assures access to primary and
urgent care in the most effective settings and minimizes inappropriate utilization of emergency
department (ED) services. MCPs are required to identify high utilizers of ED services and
implement action plans designed to minimize inappropriate ED utilization.
Measure: The percentage of members who had four or more ED visits during the six month reporting
period.
For an MCP which had membership as of February 1, 2006: MCP performance will be evaluated using an
MCP’s county-based statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard and the target in this Appendix (4.b) will be applicable
to the MCP’s county-based statewide result for the counties in which the MCP had membership as of
February 1, 2006. The last reporting period using the MCP’s county-based statewide result for the
counties in which the MCP had membership as of February 1, 2006 for performance evaluation is
July-December 2007; the last reporting period using the MCP’s county-based statewide result for the
counties in which the MCP had membership as of February 1, 2006 for P4P (Appendix O) is
July-December 2006.
Report Period: For the SFY 2007 contract period, a baseline level of performance will be set using
the January — June 2006 report period. Results will be calculated for the reporting period of July
- - December 2006 and compared to the baseline results to determine if the minimum performance
standard is met. For the SFY 2008 contract period, a baseline level of performance will be set
using the January — June 2007 report period. Results will be calculated for the reporting period of
July — December 2007 and compared to the baseline results to determine if the minimum performance
standard is met
County-Based Statewide Target: A maximum of 0.70% of the eligible population will have four or more
ED visits during the reporting period.
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Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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County-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a 10% decrease in the difference between the target and the baseline period results.
Penalty for Noncompliance: If the standard is not met and the results are above 1.1%, then the MCP
must develop a corrective action plan, for which ODJFS may direct the MCP to develop the components
of their EDD program as specified by ODJFS. If the standard is not met and the results are at or
below 1.1%, then the MCP must develop a Quality Improvement Directive.
4.b.i. Emergency Department Diversion (applicable to performance evaluation as of SFY 2009)
Managed care plans must provide access to services in a way that assures access to primary and
urgent care in the most effective settings and minimizes inappropriate utilization of emergency
department (ED) services. MCPs are required to identify high utilizers of targeted ED services and
implement action plans designed to minimize inappropriate, preventable and/or primary care
sensitive ED utilization.
Measure: The percentage of members who had TBD or more targeted ED visits during the twelve month
reporting period.
Regional-Based Statewide Approach: MCPs will be evaluated statewide, using results for all active
regions and counties (Mahoning and Trumbull) in which the MCP has membership. ODJFS will use the
first full calendar year of data (CY 2007 — which may be adjusted based on the number of months of
managed care membership) from all MCPs serving CFC membership as the first baseline reporting year
for statewide reporting and to determine a statewide minimum performance standard and target. CY
2008 will be the first reporting year that MCPs will be held accountable to the performance
standard and penalties will be applied for noncompliance.
Report Period: For the SFY 2009 contract period, January — December 2008.
Regional-Based Statewide Target: A maximum of TBD of the eligible population will have TBD or more
targeted ED visits during the reporting period.
Regional-Based Statewide Minimum Performance Standard: The level of improvement must result in at
least a TBD decrease in the difference between the target and the baseline period results.
Penalty for Noncompliance: If the standard is not met and the results are above TBD%, then the MCP
must develop a corrective action plan, for which ODJFS may direct the MCP to develop the components
of their EDD program as specified by ODJFS. If the standard is not met and the results are at or
below TBD%, then the MCP must develop a Quality Improvement Directive.
5. NOTES
Given that unforeseen circumstances (e.g., revision or update of applicable national standards,
methods or benchmarks, or issues related to program implementation) may impact performance
assessment as specified in Sections 1 through 4, ODJFS reserves the right to apply the most
Appendix M
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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appropriate penalty to the area of deficiency identified with any individual measure,
notwithstanding the penalties specified in this Appendix.
5.a. Report Periods
Unless otherwise noted, the most recent report or study finalized prior to the end of the contract
period will be used in determining the MCP’s performance level for that contract period.
5.b. Monetary Sanctions
Penalties for noncompliance with individual standards in this appendix will be imposed as the
results are finalized. Penalties for noncompliance with individual standards for each period of
compliance, as determined in this appendix, will not exceed $250,000.
Refundable monetary sanctions will be based on the capitation payment in the month of the cited
deficiency and due within 30 days of notification by ODJFS to the MCP of the amount. Any monies
collected through the imposition of such a sanction would be returned to the MCP (minus any
applicable collection fees owed to the Attorney General’s Office, if the MCP has been delinquent in
submitting payment) after they have demonstrated improved performance in accordance with this
appendix. If an MCP does not comply within two years of the date of notification of noncompliance,
then the monies will not be refunded.
5.c. Combined Remedies
If ODJFS determines that one systemic problem is responsible for multiple deficiencies, ODJFS may
impose a combined remedy which will address all areas of deficient performance. The total fines
assessed in any one month will not exceed 15% of the MCP’s monthly capitation.
5.d. Enrollment Freezes
MCPs found to have a pattern of repeated or ongoing noncompliance may be subject to an enrollment
freeze.
5.e. Reconsideration
Requests for reconsideration of monetary sanctions and enrollment freezes may be submitted as
provided in Appendix N, Compliance Assessment System.
5.f. Contract Termination, Nonrenewals or Denials
Upon termination, nonrenewal or denial of an MCP contract, all monetary sanctions collected under
this appendix will be retained by ODJFS. The at-risk amount paid to the MCP under the current
provider agreement will be returned to ODJFS in accordance with Appendix P, Terminations, of the
provider agreement.
Appendix N
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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APPENDIX N
COMPLIANCE ASSESSMENT SYSTEM
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
I. General Provisions of the Compliance Assessment System
A. The Compliance Assessment System (CAS) is designed to improve the quality of each
managed care plan’s (MCP’s) performance through actions taken by the Ohio Department of Job
and Family Services (ODJFS) to address identified failures to meet program requirements.
This appendix applies to the MCP specified in the baseline of this MCP Provider Agreement
(hereinafter referred to as the Agreement).
B. The CAS assesses progressive remedies with specified values (e.g., points, fines, etc.)
assigned for certain documented failures to satisfy the deliverables required by Ohio
Administrative Code (OAC) rule or the Agreement. Remedies are progressive based upon the
severity of the violation, or a repeated pattern of violations. The CAS allows the
accumulated point total to reflect patterns of less serious violations as well as less
frequent, more serious violations.
C. The CAS focuses on clearly identifiable deliverables and sanctions/remedial actions are
only assessed in documented and verified instances of noncompliance. The CAS does not
include categories which require subjective assessments or which are not within the MCPs
control.
D. The CAS does not replace ODJFS’ ability to require corrective action plans (CAPs) and
program improvements, or to impose any of the sanctions specified in OAC rule 5101:3-26-10,
including the proposed termination, amendment, or nonrenewal of the MCP’s Provider
Agreement.
E. As stipulated in OAC rule 5101:3-26-10(F), regardless of whether ODJFS imposes a
sanction, MCPs are required to initiate corrective action for any MCP program violations or
deficiencies as soon as they are identified by the MCP or ODJFS.
F. In addition to the remedies imposed in Appendix N, remedies related to areas of
financial performance, data quality, and performance management may also be imposed
pursuant to Appendices J, L, and M respectively, of the Agreement.
G. If ODJFS determines that an MCP has violated any of the requirements of sections 1903(m)
or 1932 of the Social Security Act which are not specifically identified within the CAS,
ODJFS may, pursuant to the provisions of OAC rule 5101:3-26-10(A), notify the MCP’s members
that they may terminate from the MCP without cause and/or
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Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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suspend
any further new member selections.
H. For purposes of the CAS, the date that ODJFS first becomes aware of an MCP’s program
violation is considered the date on which the violation occurred. Therefore, program
violations that technically reflect noncompliance from the previous compliance term will be
subject to remedial action under CAS at the time that ODJFS first becomes aware of this
noncompliance.
I. In cases where an MCP contracted healthcare provider is found to have violated a program
requirement (e.g., failing to provide adequate contract termination notice, marketing to
potential members, inappropriate member billing, etc.), ODJFS will not assess points if:
(1) the MCP can document that they provided sufficient notification/education to providers
of applicable program requirements and prohibited activities; and (2) the MCP takes
immediate and appropriate action to correct the problem and to ensure that it does not
happen again to the satisfaction of ODJFS. Repeated incidents will be reviewed to determine
if the MCP has a systemic problem in this area, and if so, sanctions/remedial actions may
be assessed, as determined by ODJFS.
J. All notices of noncompliance will be issued in writing via email and facsimile to the
identified MCP contact.
II. Types of Sanctions/Remedial Actions
ODJFS may impose the following types of sanctions/remedial actions, including, but not
limited to, the items listed below. The following are examples of program violations and
their related penalties. This list is not all inclusive. As with any instance of
noncompliance, ODJFS retains the right to use their sole discretion to determine the most
appropriate penalty based on the severity of the offense, pattern of repeated noncompliance, and number of consumers affected. Additionally, if an
MCP has received any previous written correspondence regarding their duties and obligations
under OAC rule or the Agreement, such notice may be taken into consideration when
determining penalties and/or remedial actions.
A. Corrective Action Plans (CAPs) — A CAP is a structured activity/process implemented by
the MCP to improve identified operational deficiencies.
MCPs may be required to develop CAPs for any instance of noncompliance, and CAPs are not
limited to actions taken in this Appendix. All CAPs requiring ongoing activity on the part
of an MCP to ensure their compliance with a program requirement remain in effect for
twenty-four months.
In situations where ODJFS has already determined the specific action which must be
implemented by the MCP or if the MCP has failed to submit a CAP, ODJFS may require the MCP
to comply with an ODJFS-developed or “directed” CAP.
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Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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In situations where a penalty is assessed for a violation an MCP has previously been
assessed a CAP (or any penalty or any other related written correspondence), the MCP may be
assessed escalating penalties.
B. Quality Improvement Directives (QIDs) — A QID is a general instruction that directs the
MCP to implement a quality improvement initiative to improve identified administrative or clinical
deficiencies. All QIDs remain in effect for twelve months from the date of implementation.
MCPs may be required to develop QIDs for any instance of noncompliance.
In situations where ODJFS has already determined the specific action which must be implemented
by the MCP or if the MCP has failed to submit a QID, ODJFS may require the MCP to comply with an
ODJFS-developed or “directed” QID.
In situations where a penalty is assessed for a violation an MCP has previously been assessed
a QID (or any penalty or any other related written correspondence), the MCP may be assessed
escalating penalties.
C. Points — Points will accumulate over a rolling 12-month schedule. Each month, points
that are more than 12-months old will expire. Points will be tracked and monitored
separately for each Agreement the MCP concomitantly holds with the BMHC, beginning with the
commencement of this Agreement (i.e., the MCP will have zero points at the onset of this
Agreement).
No
points will be assigned for any violation where an MCP is able to document that the precipitating circumstances were completely beyond their control and could not
have been foreseen (e.g., a construction crew severs a phone line, a lightning strike blows
a computer system, etc.).
C.1. 5 Points — Failures to meet program requirements, including but not limited
to, actions which could impair the member’s ability to obtain correct information
regarding services or which could impair a consumer’s or member’s rights, as
determined by ODJFS, will result in the assessment of 5 points.
Examples include, but are not limited to, the following:
| • | Violations which result in a member’s MCP selection or termination based on inaccurate provider panel information from the MCP. | ||
| • | Failure to provide member materials to new members in a timely manner. | ||
| • | Failure to comply with appeal, grievance, or state hearing requirements, including the failure to notify a member of their right to a state hearing when the MCP proposes to deny, reduce, suspend or |
Appendix N
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Covered Families and Children (CFC) population
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| terminate a Medicaid-covered service. | |||
| • | Failure to staff 24-hour call-in system with appropriate trained medical personnel. | ||
| • | Failure to meet the monthly call-center requirements for either the member services or the 24-hour call-in system lines. | ||
| • | Provision of false, inaccurate or materially misleading information to health care providers, the MCP’s members, or any eligible individuals. | ||
| • | Use of unapproved marketing or member materials. | ||
| • | Failure to appropriately notify ODJFS or members of provider panel terminations. | ||
| • | Failure to update website provider directories as required. |
C.2. 10 Points — Failures to meet program requirements, including but not limited
to, actions which could affect the ability of the MCP to deliver or the consumer to
access covered services, as determined by ODJFS. Examples include, but are not
limited to, the following:
| • | Discrimination among members on the basis of their health status or need for health care services (this includes any practice that would reasonably be expected to encourage termination or discourage selection by individuals whose medical condition indicates probable need for substantial future medical services). | ||
| • | Failure to assist a member in accessing needed services in a timely manner after request from the member. | ||
| • | Failure to provide medically-necessary Medicaid covered services to members. | ||
| • | Failure to process prior authorization requests within the prescribed time frames. |
D. Fines — Refundable or nonrefundable fines may be assessed as a penalty separate to or
in combination with other sanctions/remedial actions.
D.1. Unless otherwise stated, all fines are nonrefundable.
D.2. Pursuant to procedures as established by ODJFS, refundable and nonrefundable
monetary sanctions/assurances must be remitted to ODJFS within thirty (30) days of
receipt of the invoice by the MCP. In addition, per Ohio Revised Code Section
131.02, payments not received within forty-five (45) days will be certified to the
Attorney General’s (AG’s) office. MCP payments certified to the AG’s office will be
assessed the appropriate collection fee by the AG’s office.
D.3. Monetary sanctions/assurances imposed by ODJFS will be based on the most
recent premium payments.
Appendix N
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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D.4. Any monies collected through the imposition of a refundable fine will be
returned to the MCP (minus any applicable collection fees owed to the Attorney
General’s Office if the MCP has been delinquent in submitting payment) after they
have demonstrated full compliance, as determined by ODJFS, with the particular
program requirement. If an MCP does not comply within one (1) year of the date of
notification of noncompliance involving issues of case management and two (2) years
of the date of notification of noncompliance in issues involving encounter data,
then the monies will not be refunded.
D.5. MCPs are required to submit a written request for refund to ODJFS at the time
they believe is appropriate before a refund of monies will be considered.
E. Combined Remedies — Notwithstanding any other action ODJFS may take under this Appendix,
ODJFS may impose a combined remedy which will address all areas of noncompliance if ODJFS
determines, in its sole discretion, that (1) one systemic problem is responsible for
multiple areas of noncompliance and/or (2) that there are a number of repeated instances of
noncompliance with the same program requirement.
F. Progressive Remedies — Progressive remedies will be based on the number of points
accumulated at the time of the most recent incident. Unless specifically otherwise
indicated in this appendix, all fines are nonrefundable. The designated fine amount will be
assessed when the number of accumulated points falls within the ranges specified below:
| 0 -15 Points | Corrective Action Plan (CAP) | |||
| 16-25 Points | CAP + $5,000 fine | |||
| 26-50 Points | CAP + $10,000 fine | |||
| 51-70 Points | CAP + $20,000 fine | |||
| 71-100 Points | CAP + $30,000 fine | |||
| 100+ Points | Proposed Contract Termination |
G. New Member Selection Freezes — Notwithstanding any other penalty or point assessment that ODJFS
may impose on the MCP under this Appendix, ODJFS may prohibit an MCP from receiving new membership
through consumer initiated selection or the assignment process if: (1) the MCP has accumulated a
total of 51 or more points during a rolling 12-month period; (2) or the MCP fails to fully
implement a CAP within the designated time frame; or (3) circumstances exist which potentially
jeopardize the MCP’s members’ access to care. [Examples of circumstances that ODJFS may consider
Appendix N
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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as jeopardizing member access to care include:
| – | the MCP has been found by ODJFS to be noncompliant with the prompt payment or the non-contracting provider payment requirements; | ||
| – | the MCP has been found by ODJFS to be noncompliant with the provider panel requirements specified in Appendix H of the Agreement; | ||
| – | the MCP’s refusal to comply with a program requirement after ODJFS has directed the MCP to comply with the specific program requirement; or | ||
| – | the MCP has received notice of proposed or implemented adverse action by the Ohio Department of Insurance.] |
Payments provided for under the Agreement will be denied for new enrollees,
when and for so long as, payments for those enrollees are denied by CMS in accordance with
the requirements in 42 CFR 438.730.
H. Reduction of Assignments — ODJFS has sole discretion over how member auto-assignments
are made. ODJFS may reduce the number of assignments an MCP receives to assure program
stability within a region or if ODJFS determines that the MCP lacks sufficient capacity to
meet the needs of the increased volume in membership. Examples of circumstances which ODJFS
may determine demonstrate a lack of sufficient capacity include, but are not limited to an
MCP’s failure to: maintain an adequate provider network; repeatedly provide new member
materials by the member’s effective date; meet the minimum call center requirements; meet
the minimum performance standards for identifying and assessing children with special
health care needs and members needing case management services; and/or provide complete and
accurate appeal/grievance, member’s PCP and CAMS data files.
I. Termination, Amendment, or Nonrenewal of MCP Provider Agreement - ODJFS can at any time
move to terminate, amend or deny renewal of a provider agreement. Upon such termination,
nonrenewal, or denial of an MCP provider agreement, all previously collected monetary
sanctions will be retained by ODJFS.
J. Specific Pre-Determined Penalties
I.1. Adequate network-minimum provider panel requirements — Compliance with
provider panel requirements will be assessed quarterly. Any deficiencies in the
MCP’s provider network as specified in Appendix H of the Agreement or by ODJFS,
will result in the assessment of a $1,000 nonrefundable fine for each category
(practitioners, PCP capacity, hospitals), for each county, and for each population
(e.g., ABD, CFC). For example if the MCP did not meet the following minimum panel
requirements, the MCP would be assessed (1) a $3,000
Appendix N
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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nonrefundable fine for the failure to meet
CFC panel requirements; and, (2) a $1,000 nonrefundable fine for the failure to meet ABD panel
requirements).
| • | practitioner requirements in Franklin county for the CFC population | ||
| • | practitioner requirements in Franklin county for the ABD population | ||
| • | hospital requirements in Franklin county for the CFC population | ||
| • | PCP capacity requirements in Fairfield county for the CFC population |
In addition to the pre-determined penalties, ODJFS may assess additional penalties
pursuant to this Appendix (e.g. CAPs, points, fines) if member specific access
issues are identified resulting from provider panel noncompliance.
J.2. Geographic Information System — Compliance with the Geographic Information
System (GIS) requirements will be assessed semi-annually. Any failure to meet GIS
requirements as specified in Appendix H of the Agreement will result a $1,000
nonrefundable fine for each county and for each population (e.g., ABD, CFC, etc.).
For example if the MCP did not meet GIS requirements in the following counties, the
MCP would be assessed (1) a nonrefundable $2,000 fine for the failure to meet GIS
requirements for the CFC population and (2) a $1,000 nonrefundable fine for the
failure to meet GIS requirements for the ABD population.
| • | GIS requirements in Franklin county for the CFC population | ||
| • | GIS requirements in Fairfield county for the CFC population | ||
| • | GIS requirements in Franklin county for the ABD population |
J.3. Late Submissions — All required submissions/data and documentation requests
must be received by their specified deadline and must represent the MCP in an
honest and forthright manner. Failure to provide ODJFS with a required submission
or any data/documentation requested by ODJFS will result in the assessment of a
nonrefundable fine of $100 per day, unless the MCP requests and is granted an
extension by ODJFS. Assessments for late submissions will be done monthly. Examples
of such program violations include, but are not limited to:
| • | Late required submissions |
| o | Annual delegation assessments | ||
| o | Call center report | ||
| o | Franchise fee documentation | ||
| o | Reinsurance information (e.g., prior approval of changes) | ||
| o | State hearing notifications |
| • | Late required data submissions |
| o | Appeals and grievances, case management, or PCP data |
| • | Late required information requests |
| o | Automatic call distribution reports | ||
| o | Information/resolution regarding consumer or provider complaint |
Appendix N
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Covered Families and Children (CFC) population
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| o | Just cause or other coordination care request from ODJFS | ||
| o | Provider panel documentation | ||
| o | Failure to provide ODJFS with a required submission after ODJFS has notified the MCP that the prescribed deadline for that submission has passed |
If an MCP determines that they will be unable to meet a program deadline or
data/documentation submission deadline, the MCP must submit a written request to
its Contract Administrator for an extension of the deadline, as soon as possible,
but no later than 3 PM EST on the date of the deadline in question. Extension
requests should only be submitted in situations where unforeseeable circumstances
have occurred which make it impossible for the MCP to meet an ODJFS-stipulated
deadline and all such requests will be evaluated upon this standard. Only written
approval as may be granted by ODJFS of a deadline extension will preclude the
assessment of compliance action for untimely submissions.
J.4. Noncompliance with Claims Adjudication Requirements — If ODJFS finds that an
MCP is unable to (1) electronically accept and adjudicate claims to final status
and/or (2) notify providers of the status of their submitted claims, as stipulated
in Appendix C of the Agreement, ODJFS will assess the MCP with a monetary sanction
of $20,000 per day for the period of noncompliance.
If ODJFS has identified specific instances where an MCP has failed to take the
necessary steps to comply with the requirements specified in Appendix C of the
Agreement for (1) failing to notify non-contracting providers of procedures for
claims submissions when requested and/or (2) failing to notify contracting and
non-contracting providers of the status of their submitted claims, the MCP will be
assessed 5 points per incident of noncompliance.
J.5. Noncompliance with Prompt Payment: — Noncompliance with the prompt pay
requirements as specified in Appendix J of the Agreement will result in progressive
penalties. The first violation during a rolling
12-month period will result in the
submission of quarterly prompt pay and monthly status reports to ODJFS until the
next quarterly report is due. The second violation during a rolling
12-month period will result in the submission of monthly status reports and a refundable fine equal to 5% of the MCP’s monthly premium payment or $300,000, whichever is less. The refundable fine will be applied in lieu of a nonrefundable fine and the money will be refunded by ODJFS only after the MCP complies with the required standards for two (2) consecutive quarters. Subsequent violations will result in an enrollment freeze.
12-month period will result in the submission of monthly status reports and a refundable fine equal to 5% of the MCP’s monthly premium payment or $300,000, whichever is less. The refundable fine will be applied in lieu of a nonrefundable fine and the money will be refunded by ODJFS only after the MCP complies with the required standards for two (2) consecutive quarters. Subsequent violations will result in an enrollment freeze.
Appendix N
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Covered Families and Children (CFC) population
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If an MCP is found to have not been in compliance with the prompt pay requirements
for any time period for which a report and signed attestation have been submitted
representing the MCP as being in compliance, the MCP will be subject to an enrollment freeze of not less than three (3) months
duration.
J.6. Noncompliance with Franchise Fee Assessment Requirements — In accordance with
ORC Section 5111.176, and in addition to the imposition of any other penalty,
occurrence or points under this Appendix, an MCP that does not pay the franchise
permit fee in full by the due date is subject to any or all of the following:
| • | A monetary penalty in the amount of $500 for each day any part of the fee remains unpaid, except the penalty will not exceed an amount equal to 5 % of the total fee that was due for the calendar quarter for which the penalty was imposed; | ||
| • | Withholdings from future ODJFS capitation payments. If an MCP fails to pay the full amount of its franchise fee when due, or the full amount of the imposed penalty, ODJFS may withhold an amount equal to the remaining amount due from any future ODJFS capitation payments. ODJFS will return all withheld capitation payments when the franchise fee amount has been paid in full; | ||
| • | Proposed termination or non-renewal of the MCP’s Medicaid provider agreement may occur if the MCP: |
| a. | Fails to pay its franchise permit fee or fails to pay the fee promptly; | ||
| b. | Fails to pay a penalty imposed under this Appendix or fails to pay the penalty promptly; | ||
| c. | Fails to cooperate with an audit conducted in accordance with ORC Section 5111.176. |
J.7. Noncompliance with Clinical Laboratory Improvement Amendments - Noncompliance
with CLIA requirements as specified by ODJFS will result in the assessment of a
nonrefundable $1,000 fine for each violation.
J.8. Noncompliance with Abortion and Sterilization Payment — Noncompliance with
abortion and sterilization requirements as specified by ODJFS will result in the
assessment of a nonrefundable $2,000 fine for each documented violation.
Additionally, MCPs must take all appropriate action to correct each
ODJFS-documented violation.
Appendix N
Covered Families and Children (CFC) population
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Covered Families and Children (CFC) population
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J.9. Refusal to Comply with Program Requirements — If ODJFS has instructed an MCP
that they must comply with a specific program requirement and the MCP refuses, such
refusal constitutes documentation
that the MCP is no longer operating in the best interests of the MCP’s members or
the state of Ohio and ODJFS will move to terminate or nonrenew the MCP’s provider
agreement.
III. Request for Reconsiderations
MCPs may request a reconsideration of remedial action taken under the CAS for penalties
that include points, fines, reductions in assignments and/or selection freezes. Requests
for reconsideration must be submitted on the ODJFS required form as follows:
A. MCPs notified of ODJFS’ imposition of remedial action taken under the CAS will have ten
(10) working days from the date of receipt of the facsimile to request reconsideration,
although ODJFS will impose enrollment freezes based on an access to care concern concurrent
with initiating notification to the MCP. Any information that the MCP would like reviewed
as part of the reconsideration request must be submitted at the time of submission of the
reconsideration request, unless ODJFS extends the time frame in writing.
B. All requests for reconsideration must be submitted by either facsimile transmission or
overnight mail to the Chief, Bureau of Managed Health Care, and received by ODJFS by the
tenth business day after receipt of the faxed notification of the imposition of the
remedial action by ODJFS.
C. The MCP will be responsible for verifying timely receipt of all reconsideration
requests. All requests for reconsideration must explain in detail why the specified
remedial action should not be imposed. The MCP’s justification for reconsideration will be
limited to a review of the written material submitted by the MCP. The Bureau Chief will
review all correspondence and materials related to the violation in question in making the
final reconsideration decision.
D. Final decisions or requests for additional information will be made by ODJFS within ten
(10) business days of receipt of the request for reconsideration.
E. If additional information is requested by ODJFS, a final reconsideration decision will
be made within three (3) business days of the due date for the submission. Should ODJFS
require additional time in rendering the final reconsideration decision, the MCP will be
notified of such in writing.
F. If a reconsideration request is decided, in whole or in part, in favor of the MCP, both
the penalty and the points associated with the incident, will be rescinded or reduced, in
the sole discretion of ODJFS. The MCP may still be required to submit a CAP if ODJFS, in
its sole discretion, believes that a CAP is still warranted under the circumstances.
Appendix O
Covered Families and Children (CFC) population
Page 1
Covered Families and Children (CFC) population
Page 1
APPENDIX O
PAY-FOR PERFORMANCE (P4P)
CFC ELIGIBLE POPULATION
CFC ELIGIBLE POPULATION
This Appendix establishes P4P for managed care plans (MCPs) to improve performance in specific
areas important to the Medicaid MCP members. P4P include the at-risk amount included with the
monthly premium payments (see Appendix F, Rate Chart), and possible additional monetary rewards up
to $250,000.
To qualify for consideration of any P4P, MCPs must meet minimum performance standards established
in Appendix M, Performance Evaluation on selected measures, and achieve P4P standards established
for selected Clinical Performance Measures. For qualifying MCPs, higher performance standards for
three measures must be reached to be awarded a portion of the at-risk amount and any additional P4P
(see Sections 1 and 2). An excellent and superior standard is set in this Appendix for each of the
three measures. Qualifying MCPs will be awarded a portion of the at-risk amount for each excellent
standard met. If an MCP meets all three excellent and superior standards, they may be awarded
additional P4P (see Section 3).
Prior to the transition to a regional-based statewide P4P system (SFY 2006 through SFY 2009), the
county-based statewide P4P system (sections 1 and 2 of this Appendix) will apply to MCPs with
membership as of February 1, 2006. Only counties with membership as of February 1, 2006 will be
used to calculate performance levels for the county-based statewide P4P system.
1. SFY 2007 P4P
1.a. Qualifying Performance Levels
To qualify for consideration of the SFY 2007 P4P, an MCP’s performance level must:
1) Meet the minimum performance standards set in Appendix M, Performance Evaluation, for
the measures listed below; and
2) Meet the P4P standards established for the Emergency Department Diversion and Clinical
Performance Measures below.
A detailed description of the methodologies for each measure can be found on the BMHC page of the
ODJFS website.
Measures for which the minimum performance standard for SFY 2007 established in Appendix M,
Performance Evaluation, must be met to qualify for consideration of P4P are as follows:
1. PCP Turnover (Appendix M, Section 2.a.)
Report Period: CY 2006
Appendix O
Covered Families and Children (CFC) population
Page 2
Covered Families and Children (CFC) population
Page 2
2. Children’s Access to Primary Care (Appendix M, Section 2.b.)
Report Period: CY 2006
3. Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.)
Report Period: CY 2006
4. Overall Satisfaction with MCP (Appendix M, Section 3.)
Report Period: The most recent consumer satisfaction survey completed prior to the end of
the SFY 2007 contract period.
For the EDD performance measure, the MCP must meet the P4P standard for the report period of July -
December, 2006 to be considered for SFY 2007 P4P. The MCP meets the P4P standard if one of two
criteria are met. The P4P standard is a performance level of either:
1) The minimum performance standard established in Appendix M, Section 4.b.; or
2) The Medicaid benchmark of a performance level at or below 1.1%.
For each clinical performance measure listed below, the MCP must meet the P4P standard to be
considered for SFY 2007 P4P. The MCP meets the P4P standard if one of two criteria are met. The P4P
standard is a performance level of either:
1) The minimum performance standard established in Appendix M, Performance Evaluation, for seven of
the nine clinical performance measures listed below; or
2) The Medicaid benchmarks for seven of the nine clinical performance measures listed below. The
Medicaid benchmarks are subject to change based on the revision or update of applicable national
standards, methods or benchmarks.
| Medicaid | ||||
| Clinical Performance Measure | Benchmark | |||
1. Perinatal Care — Frequency of Ongoing Prenatal Care |
42 | % | ||
2. Perinatal Care — Initiation of Prenatal Care |
71 | % | ||
3. Perinatal Care — Postpartum Care |
48 | % | ||
4. Well-Child Visits — Children who turn 15 months old |
34 | % | ||
5. Well-Child Visits — 3, 4, 5, or 6, years old |
50 | % | ||
6. Well-Child Visits — 12 through 21 years old |
30 | % | ||
7. Use of Appropriate Medications for People with Asthma |
83 | % | ||
8. Annual Dental Visits |
40 | % | ||
9. Blood Lead — 1 year olds |
45 | % | ||
Appendix O
Covered Families and Children (CFC) population
Page 3
Covered Families and Children (CFC) population
Page 3
1.b. Excellent and Superior Performance Levels
For qualifying MCPs as determined by Section 2.a., performance will be evaluated on the measures
below to determine the status of the at-risk amount or any additional P4P that may be awarded.
Excellent and Superior standards are set for the three measures described below. The standards are
subject to change based on the revision or update of applicable national standards, methods or
benchmarks.
A brief description of these measures is provided in Appendix M, Performance Evaluation. A detailed
description of the methodologies for each measure can be found on the BMHC page of the ODJFS
website.
1. Case Management of Children (Appendix M, Section 1.b.ii.)
Report Period: April — June 2007
Excellent Standard: 5.5%
Superior Standard: 6.5%
Superior Standard: 6.5%
2. Use of Appropriate Medications for People with Asthma (Appendix M, Section 1.c.vi.)
Report Period: CY 2006
Excellent Standard: 86%
Superior Standard: 88%
3. Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.)
Report Period: CY 2006
Excellent Standard: 76%
Superior Standard: 83%
1.c. Determining SFY 2007 P4P
MCPs reaching the minimum performance standards described in Section 1.a. herein, will be
considered for P4P including retention of the at-risk amount and any additional P4P. For each
Excellent standard established in Section 1.b. herein, that an MCP meets, one-third of the at-risk
amount may be retained. For MCPs meeting all of the Excellent and Superior standards established
in Section 1.b. herein, additional P4P may be awarded. For MCPs receiving additional P4P, the
amount in the P4P fund (see section 2.) will be divided equally, up to the maximum additional
amount, among all MCPs’ABD and/or CFC programs
Appendix O
Covered Families and Children (CFC) population
Page 4
Covered Families and Children (CFC) population
Page 4
receiving additional P4P. The maximum additional amount to be awarded per plan, per program, per
contract year is $250,000. An MCP may receive up to $500,000 should both of the MCP’s ABD and CFC
programs achieve the Superior Performance Levels.
2. SFY 2008 P4P
2.a. Qualifying Performance Levels
To qualify for consideration of the SFY 2008 P4P, an MCP’s performance level must meet the minimum
performance standards set in Appendix M, Performance Evaluation, for the measures listed below. A
detailed description of the methodologies for each measure can be found on the BMHC page of the
ODJFS website.
Measures for which the minimum performance standard for SFY 2008 established in Appendix M,
Performance Evaluation, must be met to qualify for consideration of P4P are as follows:
1. PCP Turnover (Appendix M, Section 2.a.)
Report Period: CY 2007
2. Children’s Access to Primary Care (Appendix M, Section 2.b.)
Report Period: CY 2007
3. Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.)
Report Period: CY 2007
4. Overall Satisfaction with MCP (Appendix M, Section 3.)
Report Period: The most recent consumer satisfaction survey completed prior to the end of
the SFY2008.
For each clinical performance measure listed below, the MCP must meet the P4P standard to be
considered for SFY 2008 P4P. The MCP meets the P4P standard if one of two criteria are met. The P4P
standard is a performance level of either:
1) The minimum performance standard established in Appendix M, Performance Evaluation, for seven of
the nine clinical performance measures listed below; or
2) The Medicaid benchmarks for seven of the nine clinical performance measures listed below. The
Medicaid benchmarks are subject to change based on the revision or update of applicable national
standards, methods or benchmarks.
Appendix O
Covered Families and Children (CFC) population
Page 5
Covered Families and Children (CFC) population
Page 5
| Medicaid | ||||
| Clinical Performance Measure | Benchmark | |||
1. Perinatal Care — Frequency of Ongoing Prenatal Care |
42 | % | ||
2. Perinatal Care — Initiation of Prenatal Care |
71 | % | ||
3. Perinatal Care — Postpartum Care |
48 | % | ||
4. Well-Child Visits — Children who turn 15 months old |
34 | % | ||
5. Well-Child Visits — 3, 4, 5, or 6, years old |
50 | % | ||
6. Well-Child Visits — 12 through 21 years old |
30 | % | ||
7. Use of Appropriate Medications for People with Asthma |
83 | % | ||
8. Annual Dental Visits |
40 | % | ||
9. Blood Lead — 1 year olds |
45 | % | ||
2.b. Excellent and Superior Performance Levels
For qualifying MCPs as determined by Section 2.a., performance will be evaluated on the measures
below to determine the status of the at-risk amount or any additional
P4P that may be awarded.
Excellent and Superior standards are set for the three measures described below. The standards are
subject to change based on the revision or update of applicable national standards, methods or
benchmarks.
A brief
description of these measures is provided in Appendix M,
Performance Evaluation. A detailed
description of the methodologies for each measure can be found on the
BMHC page of the ODJFS website.
1. Case Management of Children (Appendix M, Section 1.b.i.)
Report Period: April — June 2008
Excellent Standard: 5.5%
Superior Standard: 6.5%
2. Use of Appropriate Medications for People with Asthma (Appendix M, Section 1.c.v.)
Report Period: CY 2007
Excellent Standard: 86%
Superior Standard: 88%
3. Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.)
Report Period: CY 2007
Excellent Standard: 76%
Appendix O
Covered Families and Children (CFC) population
Page 6
Covered Families and Children (CFC) population
Page 6
Superior Standard: 84%
2.c. Determining SFY 2008 P4P
MCP’s reaching the minimum performance standards described in Section 2.a. herein, will be
considered for P4P including retention of the at-risk amount and any additional P4P. For each
Excellent standard established in Section 2.b. herein, that an MCP meets,
one-third of the at-risk amount may be retained. For MCPs meeting all of the Excellent and
Superior standards established in Section 2.b. herein, additional P4P may be awarded. For MCPs
receiving additional P4P, the amount in the P4P fund (see Section 3.) will be divided equally, up
to the maximum additional amount, among all MCPs’ ABD and/or CFC programs receiving additional P4P.
The maximum additional amount to be awarded per plan, per program, per contract year is $250,000.
An MCP may receive up to $500,000 should both of the MCP’s ABD and CFC programs achieve the
Superior Performance Levels.
3. NOTES
3.a. Transition from a county-based statewide to a regional-based statewide P4P system.
The current county-based statewide P4P system will transition to a regional-based statewide system
as managed care expands statewide. The regional-based statewide approach will be fully phased in no
later than SFY 2010. The regional-based statewide P4P system will be modeled after the county-based
statewide system with adjustments to performance standards where appropriate.
3.a.i. County-based statewide P4P system
For MCPs in their first twenty-four months of Ohio Medicaid CFC Managed Care Program participation,
the status of the at-risk amount will not be determined because compliance with many of the
standards cannot be determined in an MCP’s first two contract years (see Appendix F., Rate Chart).
In addition, MCPs in their first two contract years are not eligible for the additional P4P amount
awarded for superior performance.
Starting with the twenty-fifth month of participation in the program, a new MCP’s at-risk amount
will be included in the P4P system. The determination of the status of this at-risk amount will be
after at least three full calendar years of membership as many of the performance standards require
three full calendar years to determine an MCP’s performance level. Because of this requirement,
more than 12 months of at-risk dollars may be included in an MCP’s first at-risk status
determination depending on when an MCP starts with the program relative to the calendar year.
During the transition to a regional-based statewide system (SFY 2006 through SFY 2009), MCPs with
membership as of February 1, 2006 will continue in the county-based statewide P4P system until the
transition is complete. These MCPs will be put at-risk for a portion of the premiums received for
members in counties they are serving as of February 1, 2006.
Appendix O
Covered Families and Children (CFC) population
Page 7
Covered Families and Children (CFC) population
Page 7
3.a.ii. Regional-based statewide P4P system
All MCPs will be included in the regional-based statewide P4P system. The at-risk amount will be
determined separately for each region an MCP serves.
The status of the at-risk amount for counties not included in the county-based statewide P4P system
will not be determined for the first twenty-four months of regional membership. Starting with the
twenty-fifth month of regional membership, the MCP’s at-risk amount will be included in the P4P
system. The determination of the status of this at-risk amount will be after at least three full
calendar years of regional membership as many of the performance standards require three full
calendar years to determine an MCP’s performance level. Given that statewide expansion was not
complete by December 31, 2006, ODJFS may adjust performance measure reporting periods based on the
number of months an MCP has had regional membership. Because of this requirement, more than 12
months of at-risk dollars may be included in an MCP’s first regional at-risk status determination
depending on when regional membership starts relative to the calendar year. Regional premium
payments for months prior to July 2009 for members in counties included in the county-based
statewide P4P system for the SFY 2009 P4P determination, will be excluded from the at-risk dollars
included in the first regional-based statewide P4P determination.
3.b. Determination of at-risk amounts and additional P4P payments
For MCPs that have participated in the Ohio Medicaid Managed Care Program long enough to calculate
performance levels for all of the performance measures included in the P4P system, determination of
the status of an MCP’s at-risk amount will occur within six months of the end of the contract
period. Determination of additional P4P payments will be made at the same time the status of an
MCP’s at-risk amount is determined.
3.c. Contract Termination, Nonrenewals, or Denials
Upon termination, nonrenewal or denial of an MCP contract, the at-risk amount paid to the MCP under
the current provider agreement will be returned to ODJFS in accordance with Appendix P.,
Terminations/Nonrenewals/Amendments, of the provider agreement.
Additionally, in accordance with Article XI of the provider agreement, the return of the at-risk
amount paid to the MCP under the current provider agreement will be a condition necessary for
ODJFS’ approval of a provider agreement assignment.
3.d. Report Periods
The report period used in determining the MCP’s performance levels varies for each measure
depending on the frequency of the report and the data source. Unless otherwise noted, the most
recent report or study finalized prior to the end of the contract period will be used in
determining the MCP’s overall performance level for that contract period.
EXHIBIT
10.25.1
PROVIDER AGREEMENT
BETWEEN
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
DEPARTMENT OF JOB AND FAMILY SERVICES
AND
MOLINA HEALTHCARE OF OHIO, INC
Amendment No. 1
Pursuant to Article IX. A. the Provider Agreement between the State of Ohio, Department of Job and Family Services,
(hereinafter referred to as “ODJFS”) and MOLINA HEALTHCARE OF OHIO INC (hereinafter referred to as “MCP”) for the
Aged, Blind or Disabled (hereinafter referred to as “ABD”)
population dated July 1, 2007, is hereby amended as follows:
| 1. | Appendices C, D, E, F, G, H, J, K, L, M, N and O are modified as attached. | |
| 2. | All other terms of the provider agreement are hereby affirmed. | |
| The amendment contained herein shall be effective January 1, 2008. |
MOLINA HEALTHCARE OF OHIO, INC:
BY:
|
/s/ KATHIE MANCINI
|
DATE: | 12/20/07
|
|||||||
| On behalf of Kathie Mancini |
||||||||||
| OHIO DEPARTMENT OF JOB AND FAMILY SERVICES: | ||||||||||
BY:
|
/s/ HELEN E. JONES-KELLEY
|
DATE: | 12/26/07
|
|||||||
Appendix C
Aged, Blind or Disabled population
Page 1
Aged, Blind or Disabled population
Page 1
APPENDIX C
MCP RESPONSIBILITIES
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
The MCP must meet on an ongoing basis, all program requirements specified in Chapter 5101:3-26 of
the Ohio Administrative Code (OAC) and the Ohio Department of Job and Family Services (ODJFS) — MCP
Provider Agreement. The following are MCP responsibilities that are not otherwise specifically
stated in OAC rule provisions or elsewhere in the MCP provider agreement, but are required by
ODJFS.
General Provisions
| 1. | The MCP agrees to implement program modifications as soon as reasonably possible or no later than the required effective date, in response to changes in applicable state and federal laws and regulations. | |
| 2. | The MCP must submit a current copy of their Certificate of Authority (COA) to ODJFS within 30 days of issuance by the Ohio Department of Insurance. | |
| 3 | The MCP must designate the following: |
a. A primary contact person (the Medicaid Coordinator) who will dedicate a majority of their
time to the Medicaid product line and coordinate overall communication between ODJFS and the MCP.
ODJFS may also require the MCP to designate contact staff for specific program areas. The Medicaid
Coordinator will be responsible for ensuring the timeliness, accuracy, completeness and
responsiveness of all MCP submissions to ODJFS.
b. A provider relations representative for each service area included in their ODJFS provider
agreement. This provider relations representative can serve in this capacity for only one service
area (as specified in Appendix H).
If an MCP serves both the CFC and ABD populations, they are not required to designate a
separate provider relations representative or Medicaid Coordinator for each population group.
| 4. | All MCP employees are to direct all day-to-day submissions and communications to their ODJFS-designated Contract Administrator unless otherwise notified by ODJFS. |
| 5. | The MCP must be represented at all meetings and events designated by ODJFS as requiring mandatory attendance. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 2
Aged, Blind or Disabled (ABD) population
Page 2
| 6. | The MCP must have an administrative office located in Ohio. |
| 7. | Upon request by ODJFS, the MCP must submit information on the current status of their company’s operations not specifically covered under this Agreement (for example, other product lines, Medicaid contracts in other states, NCQA accreditation, etc.) unless otherwise excluded by law. |
| 8. | The MCP must have all new employees trained on applicable program requirements, and represent, warrant and certify to ODJFS that such training occurs, or has occurred. |
| 9. | If an MCP determines that it does not wish to provide, reimburse, or cover a counseling service or referral service due to an objection to the service on moral or religious grounds, it must immediately notify ODJFS to coordinate the implementation of this change. MCPs will be required to notify their members of this change at least thirty (30) days prior to the effective date. The MCP’s member handbook and provider directory, as well as all marketing materials, will need to include information specifying any such services that the MCP will not provide. |
| 10. | For any data and/or documentation that MCPs are required to maintain, ODJFS may request that MCPs provide analysis of this data and/or documentation to ODJFS in an aggregate format, such format to be solely determined by ODJFS. | |
| 11. | The MCP is responsible for determining medical necessity for services and supplies requested for their members as specified in OAC rule 5101:3-26-03. Notwithstanding such responsibility, ODJFS retains the right to make the final determination on medical necessity in specific member situations. | |
| 12. | In addition to the timely submission of medical records at no cost for the annual external quality review as specified in OAC rule 5101:3-26-07, the MCP may be required for other purposes to submit medical records at no cost to ODJFS and/or designee upon request. | |
| 13. | The MCP must notify the BMHC of the termination of an MCP panel provider that is designated as the primary care provider for 100 or more of the MCP’s ABD members. The MCP must provide notification within one working day of the MCP becoming aware of the termination. | |
| 14. | Upon request by ODJFS, MCPs may be required to provide written notice to members of any significant change(s) affecting contractual requirements, member services or access to providers. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 3
Aged, Blind or Disabled (ABD) population
Page 3
| 15. | MCPs may elect to provide services that are in addition to those covered under the Ohio Medicaid fee-for-service program. Before MCPs notify potential or current members of the availability of these services, they must first notify ODJFS and advise ODJFS of such planned services availability. If an MCP elects to provide additional services, the MCP must ensure to the satisfaction of ODJFS that the services are readily available and accessible to members who are eligible to receive them. |
| a. | MCPs are required to make transportation available to any member requesting transportation when they must travel thirty (30) miles or more from their home to receive a medically-necessary Medicaid-covered service. If the MCP offers transportation to their members as an additional benefit and this transportation benefit only covers a limited number of trips, the required transportation listed above may not be counted toward this trip limit. | ||
| b. | Additional benefits may not vary by county within a region except out of necessity for transportation arrangements (e.g., bus versus cab). MCPs approved to serve consumers in more than one region may vary additional benefits between regions. | ||
| c. | MCPs must give ODJFS and members ninety (90) days prior notice when decreasing or ceasing any additional benefit(s). When it is beyond the control of the MCP, as demonstrated to ODJFS’ satisfaction, ODJFS must be notified within one (1) working day. |
| 16. | MCPs must comply with any applicable Federal and State laws that pertain to member rights and ensure that its staff adheres to such laws when furnishing services to its members. MCPs shall include a requirement in its contracts with affiliated providers that such providers also adhere to applicable Federal and State laws when providing services to members. | |
| 17. | MCPs must comply with any other applicable Federal and State laws (such as Title VI of the Civil rights Act of 1964, etc.) and other laws regarding privacy and confidentiality, as such may be applicable to this Agreement. | |
| 18. | Upon request, the MCP will provide members and potential members with a copy of their practice guidelines. | |
| 19. | The MCP is responsible for promoting the delivery of services in a culturally competent manner, as solely determined by ODJFS, to all members, including those with limited English proficiency (LEP) and diverse cultural and ethnic backgrounds. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 4
Aged, Blind or Disabled (ABD) population
Page 4
| All MCPs must comply with the requirements specified in OAC rules 5101:3-26-03.1, 5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08 and 5101:3-26-08.2 for providing assistance to LEP members and eligible individuals. In addition, MCPs must provide written translations of certain MCP materials in the prevalent non-English languages of members and eligible individuals in accordance with the following: |
| a. | When 10% or more of the ABD eligible individuals in the MCP’s service area have a common primary language other than English, the MCP must translate all ODJFS-approved marketing materials into the primary language of that group. The MCP must monitor changes in the eligible population on an ongoing basis and conduct an assessment no less often than annually to determine which, if any, primary language groups meet the 10% threshold for the eligible individuals in each service area. When the 10% threshold is met, the MCP must report this information to ODJFS, in a format as requested by ODJFS, translate their marketing materials, and make these marketing materials available to eligible individuals. MCPs must submit to ODJFS, upon request, their prevalent non English language analysis of eligible individuals and the results of this analysis. | ||
| b. | When 10% or more of an MCP’s ABD members in the MCP’s service area have a common primary language other than English, the MCP must translate all ODJFS-approved member materials into the primary language of that group. The MCP must monitor their membership and conduct a quarterly assessment to determine which, if any, primary language groups meet the 10% threshold. When the 10% threshold is met, the MCP must report this information to ODJFS, in a format as requested by ODJFS, translate their member materials, and make these materials available to their members. MCPs must submit to ODJFS, upon request, their prevalent non-English language member analysis and the results of this analysis. |
| 20. | The MCP must utilize a centralized database which records the special communication needs of all MCP members (i.e., those with limited English proficiency, limited reading proficiency, visual impairment, and hearing impairment) and the provision of related services (i.e., MCP materials in alternate format, oral interpretation, oral translation services, written translations of MCP materials, and sign language services). This database must include all MCP member primary language information (PLI) as well as all other special communication needs information for MCP members, as indicated above, when identified by any source including but not limited to ODJFS, ODJFS selection services entity, MCP staff, providers, and members. This centralized database must be readily available to MCP staff and be used in coordinating communication and services to members, including the selection of a PCP who speaks the primary language of an LEP member, when such a provider is available. MCPs must share member specific communication needs information with their providers [e.g., PCPs, Pharmacy Benefit |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 5
Aged, Blind or Disabled (ABD) population
Page 5
| Managers (PBMs), and Third Party Administrators (TPAs)], as applicable. MCPs must submit to ODJFS, upon request, detailed information regarding the MCP’s members with special communication needs, which could include individual member names, their specific communication need, and any provision of special services to members (i.e., those special services arranged by the MCP as well as those services reported to the MCP which were arranged by the provider). | ||
| Additional requirements specific to providing assistance to hearing-impaired, vision- impaired, limited reading proficient (LRP), and LEP members and eligible individuals are found in OAC rules 5101:3-26-03.1, 5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08, and 5101-3-26-08.2. | ||
| 21. | The MCP is responsible for ensuring that all member materials use easily understood language and format. The determination of what materials comply with this requirement is in the sole discretion of ODJFS. | |
| 22. | Pursuant to OAC rules 5101:3-26-08 and 5101:3-26-08.2, the MCP is responsible for ensuring that all MCP marketing and member materials are prior approved by ODJFS before being used or shared with members. Marketing and member materials are defined as follows: |
| a. | Marketing materials are those items produced in any medium, by or on behalf of an MCP, including gifts of nominal value (i.e., items worth no more than $15.00), which can reasonably be interpreted as intended to market to eligible individuals. | ||
| b. | Member materials are those items developed, by or on behalf of an MCP, to fulfill MCP program requirements or to communicate to all members or a group of members. Member health education materials that are produced by a source other than the MCP and which do not include any reference to the MCP are not considered to be member materials. | ||
| c. | All MCP marketing and member materials must represent the MCP in an honest and forthright manner and must not make statements which are inaccurate, misleading, confusing, or otherwise misrepresentative, or which defraud eligible individuals or ODJFS. | ||
| d. | All MCP marketing cannot contain any assertion or statement (whether written or oral) that the MCP is endorsed by CMS, the Federal or State government or similar entity. | ||
| e. | MCPs must establish positive working relationships with the CDJFS offices and must not aggressively solicit from local Directors, MCP County Coordinators, or |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 6
Aged, Blind or Disabled (ABD) population
Page 6
| other staff. Furthermore, MCPs are prohibited from offering gifts of nominal value (i.e. clipboards, pens, coffee mugs, etc.) to CDJFS offices or managed care enrollment center (MCEC) staff, as these may influence an individual’s decision to select a particular MCP. |
| 23. | Advance Directives – All MCPs must comply with the requirements specified in 42 CFR 422.128. At a minimum, the MCP must: |
| a. | Maintain written policies and procedures that meet the requirements for advance directives, as set forth in 42 CFR Subpart I of part 489. | ||
| b. | Maintain written policies and procedures concerning advance directives with respect to all adult individuals receiving medical care by or through the MCP to ensure that the MCP: |
| i. | Provides written information to all adult members concerning: |
| a. | the member’s rights under state law to make decisions concerning their medical care, including the right to accept or refuse medical or surgical treatment and the right to formulate advance directives. (In meeting this requirement, MCPs must utilize form JFS 08095 entitled You Have the Right, or include the text from JFS 08095 in their ODJFS-approved member handbook). | ||
| b. | the MCP’s policies concerning the implementation of those rights including a clear and precise statement of any limitation regarding the implementation of advance directives as a matter of conscience; | ||
| c. | any changes in state law regarding advance directives as soon as possible but no later than ninety (90) days after the proposed effective date of the change; and | ||
| d. | the right to file complaints concerning noncompliance with the advance directive requirements with the Ohio Department of Health. |
| ii. | Provides for education of staff concerning the MCP’s policies and procedures on advance directives; | ||
| iii. | Provides for community education regarding advance directives directly or in concert with other providers or entities; |
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| iv. | Requires that the member’s medical record document whether or not the member has executed an advance directive; and | ||
| v. | Does not condition the provision of care, or otherwise discriminate against a member, based on whether the member has executed an advance directive. |
| 24. | New Member Materials | |
| Pursuant to OAC rule 5101:3-26-08.2 (B)(3), MCPs must provide to each member or assistance group, as applicable, an MCP identification (ID) card, a new member letter, a member handbook, a provider directory, and information on advance directives. |
a. MCPs must use the model language specified by ODJFS for the new member letter.
b. The ID card and new member letter must be mailed together to the member via a method that will ensure their receipt prior to the member’s effective date of coverage.
c. The member handbook, provider directory and advance directives information may be mailed to
the member separately from the ID card and new member letter. MCPs will meet the timely receipt
requirement for these materials if they are mailed to the member within (twenty-four) 24 hours of
the MCP receiving the ODJFS produced monthly membership roster (MMR). This is provided the
materials are mailed via a method with an expected delivery date of no more than five (5) days.
If the member handbook, provider directory and advance directives information are mailed
separately from the ID card and new member letter and the MCP is unable to mail the materials
within twenty-four (24) hours, the member handbook, provider directory and advance directives
information must be mailed via a method that will ensure receipt by no later than the effective
date of coverage. If the MCP mails the ID card and new member letter with the other materials
(e.g., member handbook, provider directory, and advance directives), the MCP must ensure that all
materials are mailed via a method that will ensure their receipt prior to the member’s effective
date of coverage.
d. MCPs must designate two (2) MCP staff members to receive a copy of the new member
materials on a monthly basis in order to monitor the timely receipt of these materials. At
least one of the staff members must receive the materials at their home address.
| 25. | Call Center Standards | |
| The MCP must provide assistance to members through a member services toll-free call-in system pursuant to OAC rule 5101:3-26-08.2(A)(1). MCP member services staff must be available nationwide to provide assistance to members through the toll-free call-in system every Monday through Friday, at all times during the hours of 7:00 am to 7:00 pm |
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Aged, Blind or Disabled (ABD) population
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| Eastern Time, except for the following major holidays: |
| • | New Year’s Day | ||
| • | Martin Luther King’s Birthday | ||
| • | Memorial Day | ||
| • | Independence Day | ||
| • | Labor Day | ||
| • | Thanksgiving Day | ||
| • | Christmas Day | ||
| • | 2 optional closure days: These days can be used independently or in combination with any of the major holiday closures but cannot both be used within the same closure period. Before announcing any optional closure dates to members and/or staff, MCPs must receive ODJFS prior-approval which verifies that the optional closure days meet the specified criteria. |
| If a major holiday falls on a Saturday, the MCP member services line may be closed on the preceding Friday. If a major holiday falls on a Sunday, the member services line may be closed on the following Monday. MCP member services closure days must be specified in the MCP’s member handbook, member newsletter, or other some general issuance to the MCP’s members at least thirty (30) days in advance of the closure. | ||
| The MCP must also provide access to medical advice and direction through a centralized twenty-four-hour, seven day, toll-free call-in system, available nationwide, pursuant to OAC rule 5101:3-26-03.1(A)(6). The twenty-four (24)/7 hour call-in system must be staffed by appropriately trained medical personnel. For the purposes of meeting this requirement, trained medical professionals are defined as physicians, physician assistants, licensed practical nurses, and registered nurses. | ||
| MCPs must meet the current American Accreditation HealthCare Commission/URAC-designed Health Call Center Standards (HCC) for call center abandonment rate, blockage rate and average speed of answer. By the 10th of each month, MCPs must self-report their prior month performance in these three areas for their member services and twenty-four (24) hour toll-free call-in systems to ODJFS. ODJFS will inform the MCPs of any changes/updates to these URAC call center standards. | ||
| MCPs are not permitted to delegate grievance/appeal functions [Ohio Administrative Code (OAC) rule 5101:3-26-08.4(A)(9)]. Therefore, the member services call center requirement may not be met through the execution of a Medicaid Delegation Subcontract Addendum or Medicaid Combined Services Subcontract Addendum. |
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Aged, Blind or Disabled (ABD) population
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| 26. | Notification of Optional MCP Membership | |
| In order to comply with the terms of the ODJFS State Plan Amendment for the managed care program (i.e., 42 CFR 438.50), MCPs in mandatory membership service areas must inform new members, as applicable, that MCP membership is optional for certain populations. Specifically, MCPs must inform any applicable pending member or member that the following ABD population is not required to select an MCP in order to receive their Medicaid healthcare benefit and what steps they need to take if they do not wish to be a member of an MCP: |
| - | Indians who are members of federally-recognized tribes, except as permitted under 42 C.F.R 438.50(d)(21). |
| 27. | HIPAA Privacy Compliance Requirements |
| The Health Insurance Portability and Accountability Act (HIPAA) Privacy Regulations at 45 CFR. § 164.502(e) and § 164.504(e) require ODJFS to have agreements with MCPs as a means of obtaining satisfactory assurance that the MCPs will appropriately safeguard all personal identified health information. Protected Health Information (PHI) is information received from or on behalf of ODJFS that meets the definition of PHI as defined by HIPAA and the regulations promulgated by the United States Department of Health and Human Services, specifically 45 CFR 164.501, and any amendments thereto. MCPs must agree to the following: |
| a. | MCPs shall not use or disclose PHI other than is permitted by this Agreement or required by law. | ||
| b. | MCPs shall use appropriate safeguards to prevent unauthorized use or disclosure of PHI. | ||
| c. | MCPs shall report to ODJFS any unauthorized use or disclosure of PHI of which it becomes aware. Any breach by the MCP or its representatives of protected health information (PHI) standards shall be immediately reported to the State HIPAA Compliance Officer through the Bureau of Managed Health Care. MCPs must provide documentation of the breach and complete all actions ordered by the HIPAA Compliance Officer. | ||
| d. | MCPs shall ensure that all its agents and subcontractors agree to these same PHI conditions and restrictions. | ||
| e. | MCPs shall make PHI available for access as required by law. |
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| f. | MCP shall make PHI available for amendment, and incorporate amendments as appropriate as required by law. | ||
| g. | MCPs shall make PHI disclosure information available for accounting as required by law. | ||
| h. | MCPs shall make its internal PHI practices, books and records available to the Secretary of Health and Human Services (HHS) to determine compliance. | ||
| i. | Upon termination of their agreement with ODJFS, the MCPs, at ODJFS’ option, shall return to ODJFS, or destroy, all PHI in its possession, and keep no copies of the information, except as requested by ODJFS or required by law. | ||
| j. | ODJFS will propose termination of the MCP’s provider agreement if ODJFS determines that the MCP has violated a material breach under this section of the agreement, unless inconsistent with statutory obligations of ODJFS or the MCP. |
| 28. | Electronic Communications – MCPs are required to purchase/utilize Transport Layer Security (TLS) for all e-mail communication between ODJFS and the MCP. The MCP’s e-mail gateway must be able to support the sending and receiving of e-mail using Transport Layer Security (TLS) and the MCP’s gateway must be able to enforce the sending and receiving of email via TLS. | |
| 29. | MCP Membership acceptance, documentation and reconciliation |
| a. | Selection Services Contractor: The MCP shall provide to the MCEC ODJFS prior-approved MCP materials and directories for distribution to eligible individuals who request additional information about the MCP. | ||
| b. | Monthly Reconciliation of Membership and Premiums: The MCP shall reconcile member data as reported on the MCEC produced consumer contact record (CCR) with the ODJFS-produced monthly member roster (MMR) and report to the ODJFS any difficulties in interpreting or reconciling information received. Membership reconciliation questions must be identified and reported to the ODJFS prior to the first of the month to assure that no member is left without coverage. The MCP shall reconcile membership with premium payments reported on the monthly remittance advice (RA). | ||
| The MCP shall work directly with the ODJFS, or other ODJFS-identified entity, to resolve any difficulties in interpreting or reconciling premium information. Premium reconciliation questions must be identified within thirty (30) days of receipt of the RA. |
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| c. | Monthly Premiums: The MCP must be able to receive monthly premiums in a method specified by ODJFS. (ODJFS monthly prospective premium issue dates are provided in advance to the MCPs.) Various retroactive premium payments and recovery of premiums paid (e.g., retroactive terminations of membership, deferments, etc.,) may occur via any ODJFS weekly remittance. | ||
| d. | Hospital/Inpatient Facility Deferment: When an MCP learns of a currently hospitalized member’s intent to disenroll through the CCR or the 834, the disenrolling MCP must notify the hospital/inpatient facility and treating providers as well as the enrolling MCP of the change in enrollment within five (5) business days of receipt of the CCR or 834. The disenrolling MCP must notify the inpatient facility that it will remain responsible for the inpatient facility charges through the date of discharge; and must notify the treating providers that it will remain responsible for provider charges through the date of disenrollment. | ||
| When the enrolling MCP learns through the disenrolling MCP, through ODJFS or other means, that a new member who was previously enrolled with another MCP was admitted prior to the effective date of enrollment and remains an inpatient on the effective date of enrollment, the enrolling MCP shall contact the hospital/inpatient facility within five (5) business days of learning of the hospitalization. The enrolling MCP shall verify that it is responsible for all medically necessary Medicaid covered services from the effective date of MCP membership, including treating provider services related to the inpatient stay; the enrolling MCP must reiterate that the admitting/disenrolling MCP remains responsible for the hospital/inpatient facility charges through the date of discharge. The enrolling MCP shall work with the hospital/inpatient facility to facilitate discharge planning and authorize services as needed. | |||
| When an MCP learns that a new member who was previously on Medicaid fee for service was admitted prior to the effective date of enrollment and remains an inpatient on the effective date of enrollment, the enrolling MCP shall notify the hospital/ inpatient facility and treating providers that the MCP may not be the payer. The MCP shall work with hospital/inpatient facility, treating providers and the ODJFS to assure that discharge planning assures continuity of care and accurate payment. Notwithstanding the MCP’s right to request a hospital deferment up to six (6) months following the member’s effective date, when the enrolling MCP learns of a deferment-eligible hospitalization, the MCP shall notify the ODJFS and request the deferment within five (5) business days of learning of the potential deferment. | |||
| e. | Just Cause Requests: The MCP shall follow procedures as specified by ODJFS in assisting the ODJFS in resolving member requests for member-initiated requests affecting membership. |
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| f. | Eligible Individuals: If an eligible individual contacts the MCP, the MCP must provide any MCP-specific managed care program information requested. The MCP must not attempt to assess the eligible individual’s health care needs. However, if the eligible individual inquires about continuing/transitioning health care services, MCPs shall provide an assurance that all MCPs must cover all medically necessary Medicaid-covered health care services and assist members with transitioning their health care services. | ||
| g. | Pending Member | ||
| If a pending member (i.e., an eligible individual subsequent to plan selection or assignment, but prior to their membership effective date) contacts the selected MCP, the MCP must provide any membership information requested, including but not limited to, assistance in determining whether the current medications require prior authorization. The MCP must also ensure that any care coordination (e.g., PCP selection, prescheduled services and transition of services) information provided by the pending member is logged in the MCP’s system and forwarded to the appropriate MCP staff for processing as required. MCPs may confirm any information provided on the CCR at this time. Such communication does not constitute confirmation of membership. MCPs are prohibited from initiating contact with a pending member. Upon receipt of the 834, the MCP may contact a pending member to confirm information provided on the CCR or the 834, assist with care coordination and transition of care, and inquire if the pending member has any membership questions. | |||
| h. | Transition of Fee-For-Service Members | ||
| Providing care coordination, access to preventive and specialized care, case management, member services, and education with minimal disruption to members’ established relationships with providers and existing care treatment plans is critical for members transitioning from Medicaid fee-for-service to managed care. MCPs must develop and implement a transition plan that outlines how the MCP will effectively address the unique care coordination issues of members in their first three months of MCP membership and how the various MCP departments will coordinate and share information regarding these new members. The transition plan must include at a minimum: |
| i. | An effective outreach process to identify each new member’s existing and/or potential health care needs that results in a new member profile that includes, but is not limited to identification of: |
| a. | Health care needs, including those services received through state |
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| sub-recipient agencies [e.g., the Ohio Department of Mental Health (ODMH), the Ohio Department of Mental Retardation and Developmental Disabilities (ODMR/DD), the Ohio Department of Alcohol and Drug Addiction Services (ODADAS) and the Ohio Department of Aging (ODA)]; | |||
| b. | Existing sources of care (i.e., primary physicians, specialists, case manager(s), ancillary and other care givers); and | ||
| c. | Current care therapies for all aspects of health care services, including scheduled health care appointments, planned and/or approved surgeries (inpatient or outpatient), ancillary or medical therapies, prescribed drugs, home health care services, private duty nursing (PDN), scheduled lab/radiology tests, necessary durable medical equipment, supplies and needed/approved transportation arrangements. |
| ii. | Strategies for how each new member will obtain care therapies from appropriate sources of care as an MCP member. The MCP’s strategies must include at a minimum: |
| a. | Allowing their new members that are transitioning from Medicaid fee-for-service to receive services from out-of-panel providers if the member or provider contacts the MCP to discuss the scheduled health services in advance of the service date and one of the following applies: |
| i. | The member has appointments within the initial three months of the MCP membership with a primary care provider_or specialty physician that was scheduled prior to the effective date of the MCP membership; | ||
| ii. | The member is in her third trimester of pregnancy and has an established relationship with an obstetrician and/or delivery hospital; | ||
| iii. | The member has been scheduled for an inpatient or outpatient surgery and has been prior-approved and/or precertified pursuant to OAC rule 5101:3-2-40 (surgical procedures would also include follow-up care as appropriate); | ||
| iv. | The member is receiving ongoing chemotherapy or radiation treatment; or |
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| v. | The member has been released from the hospital within thirty (30) days prior to MCP enrollment and is following a treatment plan. |
| If contacted by the member, the MCP must contact the provider’s office as expeditiously as the situation warrants to confirm that the service(s) meets the above criteria. | |||
| b. | Allowing their new members that are transitioning from Medicaid fee-for-service to continue receiving home care services (i.e., nursing, aide, and skilled therapy services) and private duty nursing (PDN) services if the member or provider contacts the MCP to discuss the health services in advance of the service date. These services must be covered from the date of the member or provider contact at the current service level, and with the current provider, whether a panel or out-of-panel provider, until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. As soon as the MCP becomes aware of the member’s current home care services, the MCP must initiate contact with the current provider and member as applicable to ensure continuity of care and coordinate a transfer of services to a panel provider, if appropriate. | ||
| c. | Honoring any current fee-for-service prior authorization to allow their new members that are transitioning from Medicaid fee-for- service to receive services from the authorized provider, whether a panel or out-of-panel provider, for the following approved services: |
| i. | an organ, bone marrow, or hematapoietic stem cell transplant pursuant to OAC rule 5101:3-2-07.1; | ||
| ii. | dental services that have not yet been received; | ||
| iii. | vision services that have not yet been received; | ||
| iv. | durable medical equipment (DME) that has not yet been received. Ongoing DME services and supplies are to be covered by the MCP as previously-authorized until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. |
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| v. | private duty nursing (PDN) services. PDN services must be covered at the previously-authorized service level until the MCP conducts a medical necessity review and renders an authorization decision pursuant to OAC rule 5101:3-26-03.1. |
| As soon as the MCP becomes aware of the member’s current fee-for-service authorization approval, the MCP must initiate contact with the authorized provider and member as applicable to ensure continuity of care. The MCP must implement a plan to meet the member’s immediate and ongoing medical needs and, with the exception of organ, bone marrow, or hematapoietic stem cell transplants, coordinate the transfer of services to a panel provider, if appropriate. | |||
| When an MCP medical necessity review results in a decision to reduce, suspend, or terminate services previously authorized by fee-for-service Medicaid, the MCP must notify the member of their state hearing rights no less than 15 calendar days prior to the effective date of the MCP’s proposed action, per rule 5101:3-26-08.4 of the Administrative Code. | |||
| d. | Reimbursing out-of-panel providers that agree to provide the transition services at 100% of the current Medicaid fee-for-service provider rate for the service(s) identified in Section 29.h.ii.(a., b., and c.) of this appendix. | ||
| e. | Documenting the provision of transition services identified in Section 29.h.ii.(a., b., and c.) of this appendix as follows: |
| i. | For non-panel providers, notification to the provider confirming the provider’s agreement/disagreement to provide the service and accept 100% of the current Medicaid fee-for-service rate as payment. If the provider agrees, the distribution of the MCP’s materials as outlined in Appendix G.4.e. | ||
| ii. | Notification to the member of the non-panel provider’s agreement /disagreement to provide the service. If the provider disagrees, notification to the member of the |
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| MCP’s availability to assist with locating a provider as expeditiously as the member’s health condition warrants. | |||
| iii. | For panel providers, notification to the provider and member confirming the MCP’s responsibility to cover the service. |
| MCPs must use the ODJFS-specified model language for the provider and member notices and maintain documentation of all member and/or provider contacts relating to such services. | |||
| f. | Implementing a drug transition of care process that prevents drug access problems for new members that are transitioning from Medicaid fee-for-service (FFS). Such a process would involve the MCP covering at least one prescription fill or refill without prior authorization (PA) of any covered prescription drug not requiring PA by FFS. For new members that are transitioning from FFS who utilize ongoing medications for chronic conditions the MCP must educate the member about how to continue to access drugs for their chronic condition before the MCP may implement PA requirements for that member’s specific ongoing medication. The MCP’s process for covering the prescription fill or refill without PA must be based on one of the following approaches: |
i. the MCP covers without PA all prescriptions written within
the two months prior to the effective date of MCP enrollment
that do not require PA by Medicaid fee-for-service; or
ii. the MCP covers without PA for at least the initial 30 days
of the member’s MCP membership all prescriptions that do not
require PA by Medicaid fee-for-service.
| For any new member transitioning from FFS who utilizes ongoing medications for chronic conditions the MCP may require subsequent PA for those drugs once the MCP has educated the member about the importance of working with their physician to discuss initiating a PA request to continue the current medication and the option of using alternative medications that may be available without PA. Written member notices must use ODJFS-specified model language and be ODJFS-approved. Verbal member education may be done in place of written education but must contain the same information as a written notice and must follow a call script that contains ODJFS-specified model language and be ODJFS-approved. |
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| For those new members who are not utilizing ongoing medications for chronic conditions, no additional drug PA education is required beyond the MCP’s general new member education that includes what drugs require MCP PA. | |||
| MCPs must receive ODJFS approval prior to implementing their transition of care drug PA process. An MCP’s proposal must document how the MCP will: |
i. implement one of the above options to ensure that members
transitioning from FFS receive at least one prescription fill
or refill without PA of any covered prescription drug not
requiring PA by FFS; and
ii. identify new members that are transitioning from FFS who
utilize ongoing medications for chronic conditions and provide
timely education to the member about how to continue to access
drugs for their chronic condition before the MCP will
implement PA requirements for that member’s specific ongoing
medication.
| MCPs who have not received ODJFS approval for their transition of care drug PA process must not require PA of any prescription drug that does not require PA by Medicaid fee-for-service for the initial three months of a member’s MCP membership. | |||
| g. | Covering antipsychotic medications for new members as well as current members as stipulated in Appendix G(3)(a)(i). |
| 30. | Health Information System Requirements | |
| The ability to develop and maintain information management systems capacity is crucial to successful plan performance. ODJFS therefore requires MCPs to demonstrate their ongoing capacity in this area by meeting several related specifications. |
| a. | Health Information System |
| i. | As required by 42 CFR 438.242(a), each MCP must maintain a health information system that collects, analyzes, integrates, and reports data. The system must provide information on areas including, but not limited to, utilization, grievances and appeals, and MCP membership terminations for other than loss of Medicaid eligibility. |
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| ii. | As required by 42 CFR 438.242(b)(1), each MCP must collect data on member and provider characteristics and on services furnished to its members. | ||
| iii. | As required by 42 CFR 438.242(b)(2), each MCP must ensure that data received from providers is accurate and complete by verifying the accuracy and timeliness of reported data; screening the data for completeness, logic, and consistency; and collecting service information in standardized formats to the extent feasible and appropriate. | ||
| iv. | As required by 42 CFR 438.242(b)(3), each MCP must make all collected data available upon request by ODJFS or the Center for Medicare and Medicaid Services (CMS). | ||
| v. | Acceptance testing of any data that is electronically submitted to ODJFS is required: |
| a. | Before an MCP may submit production files | ||
| b. | Whenever an MCP changes the method or preparer of the electronic media; and/or | ||
| c. | When the ODJFS determines an MCP’s data submissions have an unacceptably high error rate. |
| MCPs that change or modify information systems that are involved in producing any type of electronically submitted files, either internally or by changing vendors, are required to submit to ODJFS for review and approval a transition plan including the submission of test files in the ODJFS-specified formats. Once an acceptable test file is submitted to ODJFS, as determined solely by ODJFS, the MCP can return to submitting production files. ODJFS will inform MCPs in writing when a test file is acceptable. Once an MCP’s new or modified information system is operational, that MCP will have up to ninety (90) days to submit an acceptable test file and an acceptable production file. | |||
| Submission of test files can start before the new or modified information system is in production. ODJFS reserves the right to verify any MCP’s capability to report elements in the minimum data set prior to executing the provider agreement for the next contract period. Penalties for noncompliance with this requirement are specified in Appendix N, Compliance Assessment System of the Provider Agreement. |
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| b. | Electronic Data Interchange and Claims Adjudication Requirements | ||
| Claims Adjudication | |||
| The MCP must have the capacity to electronically accept and adjudicate all claims to final status (payment or denial). Information on claims submission procedures must be provided to non-contracting providers within thirty (30) days of a request. MCPs must inform providers of its ability to electronically process and adjudicate claims and the process for submission. Such information must be initiated by the MCP and not only in response to provider requests. | |||
| The MCP must notify providers who have submitted claims of claims status [paid, denied, pended (suspended)] within one month of receipt. Such notification may be in the form of a claim payment/remittance advice produced on a routine monthly, or more frequent, basis. | |||
| Electronic Data Interchange | |||
| The MCP shall comply with all applicable provisions of HIPAA including electronic data interchange (EDI) standards for code sets and the following electronic transactions: | |||
| Health care claims; Health care claim status request and response; Health care payment and remittance status; Standard code sets; and |
|||
| National Provider Identifier (NPI). | |||
| Each EDI transaction processed by the MCP shall be implemented in conformance with the appropriate version of the transaction implementation guide, as specified by applicable federal rule or regulation. | |||
| The MCP must have the capacity to accept the following transactions from the Ohio Department of Job and Family services consistent with EDI processing specifications in the transaction implementation guides and in conformance with the 820 and 834 Transaction Companion Guides issued by ODJFS: | |||
| ASC X12 820 — Payroll Deducted and Other Group Premium Payment for Insurance Products; and | |||
| ASC X12 834 — Benefit Enrollment and Maintenance. | |||
| The MCP shall comply with the HIPAA mandated EDI transaction standards and |
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| code sets no later than the required compliance dates as set forth in the federal regulations. | |||
| Documentation of Compliance with Mandated EDI Standards | |||
| The capacity of the MCP and/or applicable trading partners and business associates to electronically conduct claims processing and related transactions in compliance with standards and effective dates mandated by HIPAA must be demonstrated, to the satisfaction of ODJFS, as outlined below. | |||
| Verification of Compliance with HIPAA (Health Insurance Portability and Accountability Act of 1995) | |||
| MCPs shall comply with the transaction standards and code sets for sending and receiving applicable transactions as specified in 45 CFR Part 162 – Health Insurance Reform: Standards for Electronic Transactions (HIPAA regulations) In addition the MCP must enter into the appropriate trading partner agreement and implemented standard code sets. If the MCP has obtained third-party certification of HIPAA compliance for any of the items listed below, that certification may be submitted in lieu of the MCP’s written verification for the applicable item(s). |
| i. | Trading Partner Agreements | ||
| ii. | Code Sets | ||
| iii. | Transactions |
| a. | Health Care Claims or Equivalent Encounter Information (ASC X12N 837 & NCPDP 5.1) | ||
| b. | Eligibility for a Health Plan (ASC X12N 270/271) | ||
| c. | Referral Certification and Authorization (ASC X12N 278) | ||
| d. | Health Care Claim Status (ASC X12N 276/277) | ||
| e. | Enrollment and Disenrollment in a Health Plan (ASC X12N 834) | ||
| f. | Health Care Payment and Remittance Advice (ASC X12N 835) | ||
| g. | Health Plan Premium Payments (ASC X12N 820) | ||
| h. | Coordination of Benefits |
| Trading Partner Agreement with ODJFS | |||
| MCPs must complete and submit an EDI trading partner agreement in a format specified by the ODJFS. Submission of the copy of the trading partner agreement prior to entering into this Agreement may be waived at the discretion of ODJFS; if submission prior to entering into the Agreement is waived, the trading partner agreement must be submitted at a subsequent date determined by ODJFS. |
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| Noncompliance with the EDI and claims adjudication requirements will result in the imposition of penalties, as outlined in Appendix N, Compliance Assessment System, of the Provider Agreement. | |||
| c. | Encounter Data Submission Requirements | ||
| General Requirements | |||
| Each MCP must collect data on services furnished to members through an encounter data system and must report encounter data to the ODJFS. MCPs are required to submit this data electronically to ODJFS on a monthly basis in the following standard formats: |
| • | Institutional Claims — UB92 flat file | ||
| • | Noninstitutional Claims — National standard format | ||
| • | Prescription Drug Claims — NCPDP |
| ODJFS relies heavily on encounter data for monitoring MCP performance. The ODJFS uses encounter data to measure clinical performance, conduct access and utilization reviews, reimburse MCPs for newborn deliveries and aid in setting | |||
| MCP capitation rates. For these reasons, it is important that encounter data is timely, accurate, and complete. Data quality, performance measures and standards are described in the Agreement. | |||
| An encounter represents all of the services, including medical supplies and medications, provided to a member of the MCP by a particular provider, regardless of the payment arrangement between the MCP and the provider. (For example, if a member had an emergency department visit and was examined by a physician, this would constitute two encounters, one related to the hospital provider and one related to the physician provider. However, for the purposes of calculating a utilization measure, this would be counted as a single emergency department visit. If a member visits their PCP and the PCP examines the member and has laboratory procedures done within the office, then this is one encounter between the member and their PCP.) | |||
| If the PCP sends the member to a lab to have procedures performed, then this is two encounters; one with the PCP and another with the lab. For pharmacy encounters, each prescription filled is a separate encounter. | |||
| Encounters include services paid for retrospectively, through fee-for-service payment arrangements, and prospectively, through capitated arrangements. Only encounters with services (line items) that are paid by the MCP, fully or in part, and for which no further payment is anticipated, are acceptable encounter data submissions. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 22
Aged, Blind or Disabled (ABD) population
Page 22
| All other services that are unpaid or paid in part and for which the MCP anticipates further payment (e.g., unpaid services rendered during a delivery of a newborn) may not be submitted to ODJFS until they are paid. Penalties for noncompliance with this requirement are specified in Appendix N, Compliance Assessment System of the Agreement. | |||
| Acceptance Testing | |||
| The MCP must have the capability to report all elements in the Minimum Data Set as set forth in the ODJFS Encounter Data Specifications and must submit a test file in the ODJFS-specified medium in the required formats prior to contracting or prior to an information systems replacement or update. | |||
| Acceptance testing of encounter data is required as specified in Section 29(a)(v) of this Appendix. | |||
| Encounter Data File Submission Procedures | |||
| A certification letter must accompany the submission of an encounter data file in the ODJFS-specified medium. The certification letter must be signed by the MCP’s Chief Executive Officer (CEO), Chief Financial Officer (CFO), or an individual who has delegated authority to sign for, and who reports directly to, the MCP’s CEO or CFO. | |||
| Timing of Encounter Data Submissions | |||
| ODJFS recommends that MCPs submit encounters no more than thirty-five (35) days after the end of the month in which they were paid. (For example, claims paid in January are due March 5.) ODJFS recommends that MCPs submit files in the ODJFS-specified medium by the 5th of each month. This will help to ensure that the encounters are included in the ODJFS master file in the same month in which they were submitted. | |||
| d. | Information Systems Review | ||
| ODJFS or its designee may review the information system capabilities of each MCP before ODJFS enters into a provider agreement with a new MCP, when a participating MCP undergoes a major information system upgrade or change, when there is identification of significant information system problems, or at ODJFS’ discretion. Each MCP must participate in the review. The review will assess the extent to which MCPs are capable of maintaining a health information system including producing valid encounter data, performance measures, and other data necessary to support quality assessment and improvement, as well as managing the care delivered to its members. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 23
Aged, Blind or Disabled (ABD) population
Page 23
| The following activities, at a minimum, will be carried out during the review. ODJFS or its designee will: |
| i. | Review the Information Systems Capabilities Assessment (ISCA) forms, as developed by CMS; which the MCP will be required to complete. | ||
| ii. | Review the completed ISCA and accompanying documents; | ||
| iii. | Conduct interviews with MCP staff responsible for completing the ISCA, as well as staff responsible for aspects of the MCP’s information systems function; | ||
| iv. | Analyze the information obtained through the ISCA, conduct follow-up interviews with MCP staff, and write a statement of findings about the MCP’s information system. | ||
| v. | Assess the ability of the MCP to link data from multiple sources; | ||
| vi. | Examine MCP processes for data transfers; | ||
| vii. | If an MCP has a data warehouse, evaluate its structure and reporting capabilities; | ||
| viii. | Review MCP processes, documentation, and data files to ensure that they comply with state specifications for encounter data submissions; and | ||
| ix. | Assess the claims adjudication process and capabilities of the MCP. |
| 31. | If the MCP will be using the Internet functions that will allow approved users to access member information (e.g., eligibility verification), the MCP must receive prior written approval from ODJFS that verifies that the proper safeguards, firewalls, etc., are in place to protect member data. | |
| 32. | MCPs must receive prior written approval from ODJFS before adding any information to their website that would require ODJFS prior approval in hard copy form (e.g., provider listings, member handbook information). | |
| 33. | Pursuant to 42 CFR 438.106(b), the MCP acknowledges that it is prohibited from holding a member liable for services provided to the member in the event that the ODJFS fails to make payment to the MCP. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 24
Aged, Blind or Disabled (ABD) population
Page 24
| 34. | In the event of an insolvency of an MCP, the MCP, as directed by ODJFS, must cover the continued provision of services to members until the end of the month in which insolvency has occurred, as well as the continued provision of inpatient services until the date of discharge for a member who is institutionalized when insolvency occurs. | |
| 35. | Franchise Fee Assessment Requirements |
| a. | Each MCP is required to pay a franchise permit fee to ODJFS for each calendar quarter as required by ORC Section 5111.176. The current fee to be paid is an amount equal to 41/2 percent of the managed care premiums, minus Medicare premiums that the MCP received from any payer in the quarter to which the fee applies. Any premiums the MCP returned or refunded to members or premium payers during that quarter are excluded from the fee. | ||
| b. | The franchise fee is due to ODJFS in the ODJFS-specified format on or before the 30th day following the end of the calendar quarter to which the fee applies. | ||
| c. | At the time the fee is submitted, the MCP must also submit to ODJFS a completed form and any supporting documentation pursuant to ODJFS specifications. | ||
| d. | Penalties for noncompliance with this requirement are specified in Appendix N, Compliance Assessment System of the Provider Agreement and in ORC Section 5111.176. |
| 36. | Information Required for MCP Websites |
| a. | On-line Provider Directory – MCPs must have an internet-based provider directory available in the same format as their ODJFS-approved provider directory, that allows members to electronically search for the MCP panel providers based on name, provider type, geographic proximity, and population (as specified in Appendix H). MCP provider directories must include all MCP-contracted providers [except as specified by ODJFS] as well as certain ODJFS non-contracted providers. | ||
| b. | On-line Member Website – MCPs must have a secure internet-based website which is regularly updated to include the most current ODJFS approved materials. The website at a minimum must include: (1) a list of the counties that are covered in their service area; (2) the ODJFS-approved MCP member handbook, recent newsletters/announcements, MCP contact information including member services hours and closures; (3) the MCP provider directory as referenced in section 36(a) of this appendix; (4) the MCP’s current preferred drug list (PDL), |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 25
Aged, Blind or Disabled (ABD) population
Page 25
| including an explanation of the list, which drugs require prior authorization (PA), and the PA process; (5) the MCP’s current list of drugs covered only with PA, the PA process, and the MCP’s policy for covering generic for brand-name drugs; and (6) the ability for members to submit questions/comments/grievances/appeals/etc. and receive a response (members must be given the option of a return e-mail or phone call). Responses regarding questions or comments are expected within one working day of receipt, whereas responses regarding grievances and appeals must be within the timeframes specified in OAC rule 5101:3-26-08.4. MCPs must ensure that all member materials designated specifically for CFC and/or ABD consumers (i.e. the MCP member handbook) are clearly labeled as such. The MCP’s member website cannot be used as the only means to notify members of new and/or revised MCP information (e.g., change in holiday closures, change in additional benefits, revisions to approved member materials etc.). ODJFS may require MCPs to include additional information on the member website, as needed. | |||
| c. | On-line Provider Website – MCPs must have a secure internet-based website for contracting providers where they will be able to confirm a consumer’s MCP enrollment and through this website (or through e-mail process) allow providers to electronically submit and receive responses to prior authorization requests. This website must also include: (1) a list of the counties that are covered in their service area; (2) the MCP’s provider manual;(3) MCP contact information; (4) a link to the MCP’s on-line provider directory as referenced in section 37(a) of this appendix; (5) the MCP’s current PDL list, including an explanation of the list, which drugs require PA, and the PA process; (6) the MCP’s current list of drugs covered only with PA, the PA process, and the MCP’s policy for covering generic for brand-name drugs. MCPs must ensure that all provider materials designated specifically for CFC and/or ABD consumers (i.e. the MCP’s provider manual) are clearly labeled as such; and (7) information regarding the availability of expedited prior authorization requests, as well as the information that is required from that provider in order to substantiate an expedited prior authorization request. | ||
| ODJFS may require MCPs to include additional information on the provider website, as needed. |
| 38. | MCPs must provide members with a printed version of their PDL and PA lists, upon request. | |
| 39. | MCPs must not use, or propose to use , any offshore programming or call center services in fulfilling the program requirements. |
Appendix C
Aged, Blind or Disabled (ABD) population
Page 26
Aged, Blind or Disabled (ABD) population
Page 26
| 40. | PCP Feedback – The MCP must have the administrative capacity to offer feedback to individual providers on their: 1) adherence to evidence-based practice guidelines; and 2) positive and negative care variances from standard clinical pathways that may impact outcomes or costs. In addition, the feedback information may be used by the MCP for activities such as provider performance improvement projects that include incentive programs or the development of quality improvement programs. | |
| 41. | Coordination of Benefits | |
| When a claim is denied due to third party liability, the managed care plan must timely share appropriate and available information regarding the third party to the provider for the purposes of coordination of benefits, including, but not limited to third party liability information received from the Ohio Department of Job and Family Services. |
Appendix D
Aged, Blind or Disabled (ABD) population
Page 1
Aged, Blind or Disabled (ABD) population
Page 1
APPENDIX D
ODJFS RESPONSIBILITIES
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
The following are ODJFS responsibilities or clarifications that are not otherwise specifically
stated in OAC Chapter 5101: 3-26 or elsewhere in the ODJFS-MCP provider agreement.
General Provisions
| 1. | ODJFS will provide MCPs with an opportunity to review and comment on the rate-setting time line and proposed rates, and proposed changes to the OAC program rules or the provider agreement. | |
| 2. | ODJFS will notify MCPs of managed care program policy and procedural changes and, whenever possible, offer sufficient time for comment and implementation. | |
| 3. | ODJFS will provide regular opportunities for MCPs to receive program updates and discuss program issues with ODJFS staff. | |
| 4. | ODJFS will provide technical assistance sessions where MCP attendance and participation is required. ODJFS will also provide optional technical assistance sessions to MCPs, individually or as a group. | |
| 5. | ODJFS will provide MCPs with an annual MCP Calendar of Submissions outlining major submissions and due dates. | |
| 6. | ODJFS will identify contact staff, including the Contract Administrator, selected for each MCP. | |
| 7. | ODJFS will recalculate the minimum provider panel specifications if ODJFS determines that significant changes have occurred in the availability of specific provider types and the number and composition of the eligible population. | |
| 8. | ODJFS will recalculate the geographic accessibility standards, using the geographic information systems (GIS) software, if ODJFS determines that significant changes have occurred in the availability of specific provider types and the number and composition of the eligible population and/or the ODJFS provider panel specifications. | |
| 9. | On a monthly basis, ODJFS will provide MCPs with an electronic file containing their MCP’s provider panel as reflected in the ODJFS Provider Verification System (PVS) database, or other designated system. |
Appendix D
Aged, Blind or Disabled (ABD) population
Page 2
Aged, Blind or Disabled (ABD) population
Page 2
| 10. | On a monthly basis, ODJFS will provide MCPs with an electronic Master Provider File containing all the Ohio Medicaid fee-for-service providers, which includes their Medicaid Provider Number, as well as all providers who have been assigned a provider reporting number for current encounter data purposes. |
| 11. | It is the intent of ODJFS to utilize electronic commerce for many processes and procedures that are now limited by HIPAA privacy concerns to FAX, telephone, or hard copy. The use of TLS will mean that private health information (PHI) and the identification of consumers as Medicaid recipients can be shared between ODJFS and the contracting MCPs via e-mail such as reports, copies of letters, forms, hospital claims, discharge records, general discussions of member-specific information, etc. ODJFS may revise data/information exchange policies and procedures for many functions that are now restricted to FAX, telephone, and hard copy, including, but not limited to, monthly membership and premium payment reconciliation requests, newborn reporting, Just Cause disenrollment requests, information requests etc. (as specified in Appendix C). | |
| 12. | ODJFS will immediately report to Center for Medicare and Medicaid Services (CMS) any breach in privacy or security that compromises protected health information (PHI), when reported by the MCP or ODJFS staff. | |
| 13. | Service Area Designation Membership in a service area is mandatory unless ODJFS approves membership in the service area for consumer initiated selections only. It is ODJFS’ current intention to implement a mandatory managed care program in service areas wherever choice and capacity allow and the criteria in 42 CFR 438.50(a) are met. | |
| 14. | Consumer information |
| a. | ODJFS, or its delegated entity, will provide membership notices, informational materials, and instructional materials relating to members and eligible individuals in a manner and format that may be easily understood. At least annually, ODJFS or designee will provide MCP eligible individuals, including current MCP members, with a Consumer Guide. The Consumer Guide will describe the managed care program and include information on the MCP options in the service area and other information regarding the managed care program as specified in 42 CFR 438.10. | ||
| b. | ODJFS will notify members or ask MCPs to notify members about significant changes affecting contractual requirements, member services or access to providers. | ||
| c. | If an MCP elects not to provide, reimburse, or cover a counseling service or referral service due to an objection to the service on moral or religious grounds, ODJFS will provide coverage and reimbursement for these services for the MCP’s members. |
Appendix D
Aged, Blind or Disabled (ABD) population
Page 3
Aged, Blind or Disabled (ABD) population
Page 3
| ODJFS will provide information on what services the MCP will not cover and how and where the MCP’s members may obtain these services in the applicable Consumer Guides. |
| 15. | Membership Selection and Premium Payment |
| a. | The managed care enrollment center (MCEC): The ODJFS-contracted MCEC will provide unbiased education, selection services, and community outreach for the Medicaid managed care program. The MCEC shall operate a statewide toll-free telephone center to assist eligible individuals in selecting an MCP or choosing a health care delivery option. | ||
| The MCEC shall distribute the most current Consumer Guide that includes the managed care program information as specified in 42 CFR 438.10, as well as ODJFS prior-approved MCP materials, such as solicitation brochures and provider directories, to consumers who request additional materials. | |||
| b. | Auto-Assignment Limitations – In order to promote market and program stability, ODJFS may limit an MCP’s auto-assignments if they meet any of the following enrollment thresholds: |
| • | 40% of statewide Aged, Blind, or Disabled (ABD) managed care eligibles;and/or | ||
| • | 60% of the ABD managed care eligibles in any region with two MCPs; and/or | ||
| • | 40% of the ABD managed care eligibles in any region with three MCPs. |
| Once an MCP meets one of these enrollment thresholds, the MCP will only be permitted to receive the additional new membership (in the region or statewide, as applicable) through: (1) consumer-initiated enrollment; and (2) auto-assignments which are based on previous enrollment in that MCP or an historical provider relationship with a provider who is not on the panel of any other MCP in that region. In the event that an MCP in a region meets one or more of these enrollment thresholds, ODJFS, may not impose the auto-assignment limitation and auto-assign members to the MCPs in that region as ODJFS deems appropriate. | |||
| c. | Consumer Contact Record (CCR): ODJFS or their designated entity shall forward CCRs to MCPs on no less than a weekly basis. The CCRs are a record of each consumer-initiated MCP enrollment, change, or termination, and each MCEC |
Appendix D
Aged, Blind or Disabled (ABD) population
Page 4
Aged, Blind or Disabled (ABD) population
Page 4
| initiated MCP assignment processed through the MCEC. The CCR contains information that is not included on the monthly member roster. | |||
| d. | Monthly member roster (MR): ODJFS verifies managed care plan enrollment on a monthly basis via the monthly membership roster. ODJFS or its designated entity provides a full member roster (F) and a change roster (C) via HIPAA 834 compliant transactions. | ||
| e. | Monthly Premiums: ODJFS will remit payment to the MCPs via an electronic funds transfer (EFT), or at the discretion of ODJFS, by paper warrant. | ||
| f. | Remittance Advice: ODJFS will confirm all premium payments paid to the MCP during the month via a monthly remittance advice (RA), which is sent to the MCP the week following state cut-off. ODJFS or its designated entity provides a record of each payment via HIPAA 820 compliant transactions. | ||
| g. | MCP Reconciliation Assistance: ODJFS will work with an MCP-designated contact(s) to resolve the MCP’s member and newborn eligibility inquiries, and premium inquiries/discrepancies and to review/approve hospital deferment requests. |
| 16. | ODJFS will make available a website which includes current program information. | |
| 17. | ODJFS will regularly provide information to MCPs regarding different aspects of MCP performance including, but not limited to, information on MCP-specific and statewide external quality review organization surveys, focused clinical quality of care studies, consumer satisfaction surveys and provider profiles. | |
| 18. | ODJFS will periodically review a random sample of online and printed directories to assess whether MCP information is both accessible and updated. | |
| 19. | Communications |
| a. | ODJFS/BMHC: The Bureau of Managed Health Care (BMHC) is responsible for the oversight of the MCPs’ provider agreements with ODJFS. Within the BMHC, a specific Contract Administrator (CA) has been assigned to each MCP. Unless expressly directed otherwise, MCPs shall first contact their designated CA for questions/assistance related to Medicaid and/or the MCP’s program requirements /responsibilities. If their CA is not available and the MCP needs immediate assistance, MCP staff should request to speak to a supervisor within the Contract Administration |
Appendix D
Aged, Blind or Disabled (ABD) population
Page 5
Aged, Blind or Disabled (ABD) population
Page 5
| Section. MCPs should take all necessary and appropriate steps to ensure all MCP staff are aware of, and follow, this communication process. | |||
| b. | ODJFS contracting entities: ODJFS-contracting entities should never be contacted by the MCPs unless the MCPs have been specifically instructed by ODJFS to contact the ODJFS contracting entity directly. | ||
| c. | MCP delegated entities: In that MCPs are ultimately responsible for meeting program requirements, the BMHC will not discuss MCP issues with the MCPs’ delegated entities unless the applicable MCP is also participating in the discussion. MCP delegated entities, with the applicable MCP participating, should only communicate with the specific CA assigned to that MCP. |
APPENDIX E
RATE METHODOLOGY
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
|
|
Chase Center/Circle 111 Monument Circle Suite 601 Indianapolis, IN 46204-5128 USA Tel +1 317 639 1000 Fax +1 317 639 1001 milliman.com |
FINAL and CONFIDENTIAL
December 12,2007
Mr. Jon Barley, Ph.D., Bureau Chief
Bureau of Managed Health Care
Ohio Department of Job and Family Services
Lazarus Building
50 West Town St., Suite 400
Columbus, OH 43215
Bureau of Managed Health Care
Ohio Department of Job and Family Services
Lazarus Building
50 West Town St., Suite 400
Columbus, OH 43215
RE:
CY 2008 CAPITATION RATE DEVELOPMENT — AGED, BLIND, OR DISABLED
Dear Jon:
Milliman, Inc. (Milliman) was retained by the State of Ohio, Department of Job and Family Services
(ODJFS) to develop the calendar year 2008 actuarially sound
capitation rates for the Aged, Blind,
or Disabled (ABD) Risk Based Managed Care (RBMC) program. This letter provides the documentation
for the actuarially sound capitation rates.
LIMITATIONS
The information contained in this letter, including the enclosures, has been prepared for the State
of Ohio, Department of Job and Family Services and their consultants and advisors. It is our
understanding that the information contained in this letter may be utilized in a public document.
To the extent that the information contained in this letter is provided to third parties, the
letter should be distributed in its entirety. Any user of the data must possess a certain level of
expertise in actuarial science and healthcare modeling so as not to misinterpret the data
presented.
Milliman makes no representations or warranties regarding the contents of this letter to third
parties. Likewise, third parties are instructed that they are to place no reliance upon this letter
prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any
theory of law by Milliman or its employees to third parties. Other parties receiving this letter
must rely upon their own experts in drawing conclusions about the capitation rates, assumptions,
and trends.
Milliman
makes no representations or warranties regarding the contents of this
letter to third parties. Likewise,
third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by
Milliman that would result in the creation of any duty or liability under any theory of law by Milliman
or its employees to third parties. Other parties receiving this letter must rely upon their own experts
in drawing conclusions about the information presented
Offices
in Principal Cities Worldwick
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 2 |
FINAL and CONFIDENTIAL
The information contained in this letter was prepared as documentation of the actuarially sound
capitation rates for Medicaid managed care organization health plans in the State of Ohio. The
information may not be appropriate for any other purpose.
SUMMARY OF METHODOLOGY
ODJFS contracted with Milliman to develop the CY 2008 ABD actuarially sound capitation rates. The
actuarially sound capitation rates were developed from historical claims and enrollment data for
the fee for service (FFS) population. The FFS population is considered a comparable population to
the population to be enrolled with the health plans. The historical experience was converted to a
per member per month (PMPM) basis and stratified by region and category of service. The historical
experience was trended forward using projected trend rates to a center point of July 1, 2008 for
the 2008 calendar year contract period. The historical experience was adjusted to reflect
adjustments to the utilization and average cost per service that would be expected in a managed
care environment.
Appendix 1 contains a chart outlining the methodology that was used to develop the CY 2008
capitation rates for the ABD populations.
Appendix 2 contains the actuarial certification regarding the actuarial soundness of the capitation
rates.
Appendix 3 contains the CY 2008 capitation rates by region, including the segmentation of the
administrative cost allowance between guaranteed and at-risk components.
DETAILS OF METHODOLOGY
I. COVERED POPULATION
The CY 2008 ABD capitation rates have been developed using historical experience from the FFS
population. The historical experience was developed for the population eligible for managed care
enrollment based on age and program assignment. The program assignments shown in Table 1 were
included in the development of the capitation rates.
Milliman
makes no representations or warranties regarding the contents of this letter to third parties.
Likewise, third parties are instructed that they are to place no reliance upon this letter prepared
for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of
law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon
their own experts in drawing conclusions about the information presented
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 3 |
FINAL and CONFIDENTIAL
Table 1
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Summary of Managed Care Eligible Population
DEPARTMENT OF JOB AND FAMILY SERVICES
Summary of Managed Care Eligible Population
| Program Assignment | Description | |
AGED
|
Aged | |
RAGED
|
Aged as defined on RMF | |
BLIND
|
Blind | |
RBLIND
|
Blind as defined on RMF | |
DISABLED
|
Disabled | |
RDISABLED
|
Disabled as defined on RMF | |
RESMED
|
Residential State Supplement & Medicaid |
Milliman extracted the eligible population information from historical data. The eligible
population includes the adult ABD population excluding: retro-active periods, back-dated periods,
institutionalized, waiver, spend-down, Medicare dual-eligibles, and long-term nursing facility
recipients. Adults are defined based on age greater than or equal to 21 during the base experience
period. Long-term nursing facility was defined as stays lasting past the last day of the month
following the admission to the nursing facility.
If a member was ineligible during a month, all claims and eligibility for the month were excluded
from the actuarial models.
II. CATEGORY OF SERVICE DEFINITIONS
The categories of service listed in Table 2 describe the actuarial model service groupings. The
units associated with the categories have been indicated. Further, the primary method of
classifying the claims has been provided.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 4 |
FINAL and CONFIDENTIAL
Table 2
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Categories of Service
DEPARTMENT OF JOB AND FAMILY SERVICES
Categories of Service
| Type of Service | Service Category | Utilization Units | Classification Basis | |||
Inpatient Hospital
|
Medical/Surgical | Admits/Days | ||||
| MH/SA | Admits/Days | |||||
| Maternity Delivery | Admits/Days | |||||
| Well Newborn | Admits/Days | COS, DRG | ||||
| Maternity Non-Deliveries | Admits/Days | |||||
| Nursing Facility | Admits/Days | |||||
| Other Inpatient | Admits/Days | |||||
Outpatient Hospital
|
Emergency Room | Claims | ||||
| Surgery/ASC | Services | |||||
| Cardiovascular | Services | COS, Revenue Code | ||||
| PT/ST/OT | Services | |||||
| Clinic | Services | |||||
| Other | Services | |||||
Professional
|
Inpatient/Outpatient Surgery | Services | ||||
| Anesthesia | Line Items | |||||
| Obstetrics | Services | |||||
| Office Visits/Consults | Services | COS, Provider Type, Procedure, | ||||
| Hospital Inpatient Visits | Services | Modifier | ||||
| Emergency Room Visits | Services | |||||
| Immunizations & Injections | Services | |||||
| Physical Medicine | Services | |||||
| Miscellaneous Services | Line Items, Services | |||||
Rad/Path/Lab
|
Radiology | Services | COS, Revenue Code, Provider | |||
| Pathology/Laboratory | Services | Type, Procedure | ||||
Ancillaries
|
MH/SA | Services | COS, Provider Type, Procedure | |||
| FQHC/RHF/OP Health Facility | Services | COS | ||||
| Pharmacy | Line Items | COS | ||||
| Dental | Services | COS | ||||
| Vision | Services | COS, Provider Type, Procedure | ||||
| Home Health | Line Items | COS | ||||
| Non-Emergent Transportation | Line Items | COS | ||||
| Ambulance | Line Items | COS, Procedure Code | ||||
| Supplies and DME | Line Items | COS, Provider Type, Procedure | ||||
| Miscellaneous Services | Line Items | COS |
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 5 |
FINAL and CONFIDENTIAL
III. RATE GROUPS
The CY
2008 ABD capitation rates will be risk adjusted using the Chronic
Illness and Disability Payment System (CDPS). As such, the ABD capitation rates are provided in one single rate group. Further
information regarding the CDPS risk adjustment is contained in a later section as well as
documented in detail in other correspondence provided by Milliman.
IV. DEVELOPMENT OF CY 2006 ADJUSTED FFS DATA
As discussed in other sections of this document, several adjustments were applied to the
base FFS data to develop the CY 2008 capitation rates. The following outlines each of the
adjustments applied to the base FFS data.
a.
Historical Data Summaries
The CY 2008 ABD capitation rates were developed using FFS claims for two state fiscal year (SFY)
periods:
| § | SFY 2005 (Incurred during the 12 months ending June 30, 2005 paid through May 31, 2007). | ||
| § | SFY 2006 (Incurred during the 12 months ending June 30, 2006 paid through May 31, 2007). |
The claims data was provided by ODJFS from the data warehouse. The experience was stratified into
geographic region based on the member’s county of residence.
The reimbursement amounts captured on the FFS actuarial models reflect the amount paid by ODJFS,
net of third party liability recoveries and member co-payment amounts. The reimbursement amounts
have not been adjusted for payments made outside the claims processing system. These amounts are
discussed later in the documentation.
The FFS historical experience was adjusted to include only those services that are included in the
capitation payment. Services that are not covered under the capitation payment have been excluded
from the experience. The excluded services were identified by the state-assigned Category of
Service field, as shown in Table 3.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
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Mr. Jon Barley, Ph.D. December 12, 2007 Page 6 |
FINAL and CONFIDENTIAL
Table 3
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
FFS Claim Exclusions
DEPARTMENT OF JOB AND FAMILY SERVICES
FFS Claim Exclusions
| COS Field Value | Description | |
08
|
PACE | |
13
|
ICF/MR Public | |
18
|
ICF/MR Private | |
35
|
Core Services | |
36
|
Home Care Facilitator Services | |
41
|
Mental Health Services | |
42
|
Mental Retardation | |
46
|
Model 50 Waiver Services | |
58
|
HMO Services | |
59
|
Mental Health Support Services | |
60
|
Mental Retardation Support Services | |
63
|
PPO Services | |
64
|
Passport | |
66
|
Passport Waiver III | |
67
|
OBRA MR/DD Waiver | |
80
|
Alcohol and Drug Abuse | |
82
|
Department of Education | |
84
|
ODADAS |
b. Completion Factors
Milliman utilized 24 months of claims experience for the FFS population that was incurred through
June 2006 and paid through May 2007 (eleven months of run-out). Milliman applied claim completion
factors to the twelve months of fiscal year 2005 and twelve months of fiscal year 2006 claims
experience. The claim completion factors were developed by service category based on claims
experience for the FFS population incurred and paid through May 2007.
c. Historical Program Adjustments
The base experience data represents a historical time period from which projections were
developed. Certain program changes have occurred during and subsequent to the base data time
period. The program adjustments were estimated and applied to the portion of the base experience
data prior to the program
change effective date. For example, a program change implemented on
January 1, 2006 will only be
reflected in the second half of SFY 2006. As such, an adjustment was applied to all of SFY 2005 and
half of SFY 2006 to include the program change in all periods of the base experience data.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
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Mr. Jon Barley, Ph.D. December 12, 2007 Page 7 |
FINAL and CONFIDENTIAL
ODJFS has provided a listing of all program changes impacting the base experience data. Table 4
summarizes the historical program changes that were reflected in the development of the CY 2008
capitation rates.
Table 4
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Historical Program Adjustments — FFS
DEPARTMENT OF JOB AND FAMILY SERVICES
Historical Program Adjustments — FFS
| Program Adjustment | Effective Date | Service Category(s) | ||||||
Inpatient Market Basket Increase |
1/1/2005 | Inpatient Hospital | ||||||
Dental Fee Schedule Reduction |
1/1/2006 | Dental | ||||||
Inpatient Recalibration and Outlier Policy |
1/1/2006 | Inpatient | ||||||
Pharmacy Co-pay ($2 Per Brand Prescription) |
1/1/2006 | Pharmacy | ||||||
Dental Co-pay ($3 Per Date of Service) |
1/1/2006 | Dental | ||||||
Vision Exam Co-Pay ($2 Per Exam) |
1/1/2006 | Vision / Optometric | ||||||
Vision Hardware Co-Pay ($1 Per Item) |
1/1/2006 | Vision / Optometric | ||||||
ER Co-Pay ($3 Per Non-Emergency Visit) |
1/1/2006 | Emergency Room | ||||||
Dental Benefit Reduction |
1/1/2006 | Dental | ||||||
d. Third-Party Liability
The FFS experience was calculated using the net paid claim data from the FFS data provided by
ODJFS. The paid amounts reflect a reduction for the amounts paid by third party carriers.
Additionally, Milliman reduced the FFS experience to reflect third party liability recoveries
following payment of claims. The reduction represents the average third party liability recovery
rate received by the state under the “pay-and-chase” recovery program for each base year. It is
expected that the health plans will collect the third party liability recoveries for managed care
enrolled individuals.
e. Fraud and Abuse
The FFS experience was calculated using the net paid claim data from the FFS data provided by
ODJFS. Milliman reduced the FFS experience to reflect fraud and abuse recoveries following payment
of claims. The reduction represents the average fraud and abuse recovery rate received by the state
for each base year. It is expected that the health plans will pursue fraud and abuse detection
activities for managed care enrolled individuals.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 8 |
FINAL and CONFIDENTIAL
f. Gross Adjustments
The FFS experience was calculated using the net paid claim data from the FFS data provided by
ODJFS. Milliman adjusted the FFS experience to reflect payments/refunds occurring outside of
normal claim adjudication. Milliman received a “gross adjustments” file from ODJFS containing the
additional adjustments.
g. Non-State Plan Services
CMS requires removal of non-state plan services from rate-setting. The FFS data does not contain
any such services. As such, no adjustment was applied to the base FFS data for non-state plan
services.
h. Trends/Inflation to CY 2006
Milliman developed trend rates to progress the historical experience from state fiscal years 2005
and 2006 forward to a common center point (CY 2006). Milliman reviewed historical experience and
performed linear regression on the experience data to develop trend
rates by category of service
for both utilization and unit cost. Additionally, Milliman reviewed the resulting trends with
internal data sources to develop the trends used to develop the CY 2008 ABD capitation rates.
The base experience data was normalized for artificial program adjustments prior to the trend rate
development. Milliman did not consider items such as fee schedule changes or benefit modifications
as standard components of trend. Removing the impact of historical changes allows for transparent
inclusion of prospective program changes for future periods.
i. Blend Base Experience Years
Each of the base experience years was trended to CY 2006. At this point, each base year was on a
comparable basis and could be aggregated. The weighting was developed with the intention of
placing more credibility on the most recent experience and is consistent with the CY 2007
methodology. Specifically, SFY 2005 received a weight of 30% and SFY 2006 received a weight of
70%.
j. Managed Care Adjustments
Utilization and cost per service adjustments were developed for each service category and region.
Utilization
Milliman adjusted the FFS utilization and cost per service to reflect the managed care environment.
After reviewing utilization benchmarks in the Milliman Medicaid Guidelines (Guidelines) as well as
other
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 9 |
FINAL and CONFIDENTIAL
sources, Milliman calculated percentage adjustments to reflect the utilization differential between
an economic and efficiently managed plan and the FFS base experience.
Cost Per Service
Milliman adjusted the average reimbursement rates to reflect changes in the mix / intensity of
services due to the management of health care. The reimbursement rate changes were also developed
following a review of benchmarks in the Guidelines as well as other sources.
In addition to the intensity adjustments applied to the cost per service amounts, Milliman also
included adjustments to reflect the health plan contracted rates with providers in the managed
care adjustments.
V. CY 2006 ADJUSTED BASE DATA TO CY 2008 CAPITATION RATES
The adjusted CY 2006 utilization and cost per service rates are trended forward to CY 2008 and
adjusted for prospective program changes that will be effective for the CY 2008 contract period.
The resulting PMPM, after trend and prospective program changes establishes the regional adjusted
claim cost for the health plans in CY 2008. The administrative cost allowance and franchise fee
components are applied to the adjusted claim cost to develop the CY 2008 capitation rate.
a. Trend to CY 2008
The trend rates that were used to progress the CY 2006 experience forward to the CY 2008 rating
period were developed from the historical experience, the experience from other Medicaid managed
care programs, and our actuarial judgment. The trend rates include a component for utilization and
unit cost by major category of service.
b. Prospective Program Adjustments
The SFY 2008/2009 Budget contains several program changes that impacted the development of the
capitation rates. The program changes include items such as provider fee changes, benefit changes,
and administrative changes. Adjustments to the CY 2006 experience were developed for each item
based on its expected impact to the prospective claims cost. Table 5 lists the program changes
that were included in the CY 2008 capitation rate development.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 10 |
FINAL and CONFIDENTIAL
Table 5
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Program Adjustments
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Program Adjustments
| Effective | ||||||||
| Program Adjustment | Date | Service Category(s) | ||||||
Nursing Facility Fee Increase |
7/1/2007 | Nursing Facility | ||||||
| 7/1/2008 | ||||||||
Chiropractor Benefit Restoration |
1/1/2008 | Miscellaneous Services | ||||||
Independent Psychologists Benefit Restoration |
1/1/2008 | Mental Health / Substance Abuse | ||||||
Occupational Therapy-Independent Provider Status |
1/1/2008 | Miscellaneous Services | ||||||
Improved TPL Management |
1/1/2008 | All Service Categories | ||||||
Prior Authorization Policy Change |
1/1/2008 | Pharmacy | ||||||
Prior Authorization of Atypical Anti-Psychotic Medication |
1/1/2008 | Pharmacy | ||||||
c. Prospective Selection Adjustment
Milliman adjusted the CY 2006 experience to reflect the expected penetration of managed care in
CY 2008. Table 6 provides the target managed care penetration used in the development of the CY
2008 capitation rates.
Table 6
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Selection Adjustments
DEPARTMENT OF JOB AND FAMILY SERVICES
Prospective Selection Adjustments
| June 2007 MC | Target MC | |||||||
| Region | Penetration | Penetration | ||||||
Central |
89.5 | % | 93 | % | ||||
East Central |
88.8 | % | 93 | % | ||||
Northeast |
89.7 | % | 93 | % | ||||
Northeast Central |
0.0 | % | 93 | % | ||||
Northwest |
87.6 | % | 93 | % | ||||
Southeast |
92.3 | % | 93 | % | ||||
Southwest |
86.0 | % | 93 | % | ||||
West Central |
87.7 | % | 93 | % | ||||
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 11 |
FINAL and CONFIDENTIAL
d. Administrative Allowance
Milliman included an administrative cost allowance in the development of the actuarially sound
capitation rates for CY 2008. The administrative cost allowance contains provision for
administrative expenses, profit/contingency, and surplus contribution and was calculated as a
percentage of the capitation rate prior to the franchise fee. As such, the pre-franchise fee
capitation rate will be determined by dividing the projected managed care claim cost by one minus
the administrative cost allowance. By determining the pre-franchise fee capitation rate in this
manner, the administrative allowance may be expressed as a percentage of the pre-franchise fee
capitation rate. Milliman developed the administrative cost allowance following a review of cost
information from other representative Medicaid managed care organizations.
For health plans in plan year 3 or later, 1% of the administrative component will be at-risk and
contingent upon performance requirements defined in the ODJFS provider agreements. Table 7
provides the administrative cost allowance for each plan year.
Table 7
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Administrative Cost Allowance
DEPARTMENT OF JOB AND FAMILY SERVICES
Administrative Cost Allowance
| Plan Year | Guaranteed % | At-Risk % | Total % | |||||||||
Plan Year 1 (1-12 Months)
|
11.5 | % | 0.0 | % | 11.5 | % | ||||||
Plan Year 2 (13-24 Months)
|
10.5 | % | 0.0 | % | 10.5 | % | ||||||
Plan Year 3 (25 + Months)
|
9.5 | % | 1.0 | % | 10.5 | % | ||||||
The administrative cost allowance percentages contained in Table 7 reflect a change from the 2007
methodology.
e. Franchise Fee
Milliman included a franchise fee component in the development of the actuarially sound capitation
rates for CY 2008. The franchise fee was calculated as a percentage of the capitation rates.
Therefore, the capitation rate will be determined by dividing the pre-franchise fee capitation rate
by one minus the franchise fee component. By determining the pre-franchise fee capitation rate in
this manner, the franchise fee may be expressed as a percentage of the capitation rate. The
franchise fee component is 4.5% of the capitation rate.
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
Mr. Jon Barley, Ph.D. December 12, 2007 Page 12 |
FINAL and CONFIDENTIAL
VI. CDPS RISK ADJUSTMENT
The methodology described in this correspondence was used to develop the base capitation rates for
CY 2008 for each region. Milliman will then apply the Chronic Illness and Disability Payment
System (CDPS) to adjust the actuarially sound base capitation rates for the ABD population on a
regional basis for each health plan. The CDPS risk adjustment will be updated each six month
period for existing regions and plans. For the initial period of managed care within a region and
plan, a monthly risk score will be developed for the first three months.
The next anticipated risk score update will be January 1, 2008. The CDPS risk scores will be
developed for ABD recipients enrolled in managed care during December 2007 using diagnosis
information from claims incurred in calendar year 2006 with paid dates between January 1, 2006 and
June 30, 2007. Health plan and region specific prevalence reports will be provided with the
updated risk scores.
DATA RELIANCE
In developing the CY 2008 ABD capitation rates, we have relied upon certain data and information
from ODJFS. While limited review was performed for reasonableness, the data and information was
accepted without audit. To the extent that the data and information was not accurate or complete,
the values shown in this letter will need to be revised.
u
u
u
u
If you have any questions regarding the enclosed information, please do not hesitate to contact me
at (317) 524-3512.
Sincerely,
Robert M. Damler, FSA, MAAA
Principal and Consulting Actuary
RMD/mle
cc: Dan Hecht (ODJFS)
Mitali Ghatak (ODJFS)
Robert Monks (ODJFS)
cc: Dan Hecht (ODJFS)
Mitali Ghatak (ODJFS)
Robert Monks (ODJFS)
Milliman makes no representations or warranties regarding the
contents of this letter to third parties. Likewise, third parties are
instructed that they are to
place no reliance upon this letter prepared for ODJFS by Milliman
that would result in the creation of any duty or liability under any theory of law by
Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions about the information presented.
|
|
FINAL and CONFIDENTIAL |
APPENDIX 1
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
FINAL and CONFIDENTIAL
| SFY 2005/2006 Fee For Service |
| incomplete Data Adjustments (Service Category) |
| Historical Program Adjustments (Service Category) |
| Trend to CY 2006 Adjustments |
| (Service Category) |
| Blend Base Years |
| CY 2006 Utilization, Cost Per Service., and Per Member Per Month |
| Blended CY 2006 Fee For Service |
| Managed Care Adjustments (Region. Service Category) |
| Prospective Program Adjustments (Service Category) |
| Trend to CY 2008 Adjustments (Service Category) |
| CY 2008 Utilization, Cost Per Service, and Per Member Per Month |
| Administrative Cost Allowance |
| Franchise Fee |
| CY 2008 Base Capitation Rates |
| C’DPS Risk Adjustment |
Milliman makes no representations or warranties regarding the
contents of this letter to third parties. Likewise, third parties are
instructed that they are to
place no reliance upon this letter prepared for ODJFS by Milliman
that would result in the creation of any duty or liability under any theory of law by
Milliman or its employees to third parties. Other parties receiving
this letter must rely upon their own experts in drawing conclusions
about the information presented.
|
|
FINAL and CONFIDENTIAL |
APPENDIX 2
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
FINAL and CONFIDENTIAL |
STATE OF OHIO
DEPARTMENT OF JOB AND FAMILY SERVICES
Aged, Blind, or Disabled — CY 2008 Capitation Rates
DEPARTMENT OF JOB AND FAMILY SERVICES
Aged, Blind, or Disabled — CY 2008 Capitation Rates
Actuarial Certification
I, Robert M. Damler, am a Principal and Consulting Actuary with the firm of Milliman, Inc. I am a
Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. I was
retained by the State of Ohio, Department of Job and Family Services to perform an actuarial
review and certification regarding the development of the capitation rates to be effective for
calendar year 2008. The capitation rates were developed for the Aged, Blind, or Disabled managed
care eligible populations. I have experience in the examination of financial calculations for
Medicaid programs and meet the qualification standards for rendering this opinion.
I reviewed the historical claims experience for reasonableness and consistency. I have developed
certain actuarial assumptions and actuarial methodologies regarding the projection of healthcare
expenditures into future periods. I have complied with the elements of the rate setting checklist
CMS developed for its Regional Offices regarding 42 CFR 438.6(c) for capitated Medicaid managed
care plans.
The capitation rates provided with this certification are effective for a one-year rating period
beginning January 1, 2008 through December 31, 2008. At the end of the one-year period, the
capitation rates will be updated for calendar year 2009. The update may be based on
fee-for-service experience, managed care utilization and trend experience, policy and procedure
changes, and other changes in the health care market. A separate certification will be provided
with the updated rates.
The capitation rates provided with this certification are considered actuarially sound, defined as:
| • | the capitation rates have been developed in accordance with generally accepted actuarial principles and practices; | ||
| • | the capitation rates are appropriate for the populations to be covered, and the services to be furnished under the contract; and, | ||
| • | the capitation rates meet the requirements of 42 CFR 438.6(c). |
This actuarial certification has been based on the actuarial methods, considerations, and analyses
promulgated from time to time through the Actuarial Standards of Practice by the Actuarial
Standards Board.
Robert M. Damler, FSA
Member, American Academy of Actuaries
December 4,
2007
Date
Date
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
|
|
FINAL and CONFIDENTIAL |
APPENDIX 3
| Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for ODJFS by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this letter must rely upon their own experts in drawing conclusions about the information presented. |
FINAL AND CONFIDENTIAL
State of Ohio
Department of Job and Family Services
CY2008 ABD Capitation Rate Development
Department of Job and Family Services
CY2008 ABD Capitation Rate Development
| Projected CY | CY 2008 | |||||||||||||||
| 2008 Member | Guaranteed | CY 2008 At | ||||||||||||||
| Region | Months | Rate | Risk Rate | CY 2008 Rate | ||||||||||||
Central |
284,169 | $ | 1,101.26 | $ | 10.62 | $ | 1,111.88 | |||||||||
East Central |
149,045 | 1,091.21 | 10.52 | 1,101.73 | ||||||||||||
Northeast |
287,103 | 1,099.46 | 10.60 | 1,110.06 | ||||||||||||
Northeast
Central |
85,309 | 1,098.34 | 10.59 | 1,108.93 | ||||||||||||
Northwest |
137,407 | 1,107.94 | 10.68 | 1,118.62 | ||||||||||||
Southeast |
152,735 | 981.68 | 9.47 | 991.15 | ||||||||||||
Southwest |
174,390 | 1,120.61 | 10.80 | 1,131.41 | ||||||||||||
West Central |
123,260 | 1,133.13 | 10.93 | 1,144.06 | ||||||||||||
Statewide |
1,393,418 | $ | 1,092.43 | $ | 10.53 | $ | 1,102.96 | |||||||||
| Appendix 3 | Milliman, Inc. | Page 1 |
Appendix F
PREMIUM RATES WITHOUT THE AT-RISK PAYMENT AMOUNTS FOR 01/01/08 THROUGH 06/30/08
MCP’s premiums will be at-risk starting the 25th month of the ABD Medicaid Managed Care Program participation.
MCP: Molina Healthcare of Ohio, Inc.
| Service | ||||
| Enrollment | Risk Adjusted | At-Risk | ||
| Area | Rate | Amounts | ||
Central Region
|
$1,057.00 | $0.00 | ||
| Southeast Region | $962.08 | $0.00 | ||
| Southwest Region | $1,075.63 | $0.00 | ||
| West Central | $1,094.20 | $0.00 |
List of Eligible Assistance Groups (AGs)
Aged, Blind or Disabled:
|
MA-A Aged | |
| MA-B Blind | ||
| MA-D Disabled |
Appendix G
Aged, Blind or Disabled (ABD) population
Page 1
Aged, Blind or Disabled (ABD) population
Page 1
APPENDIX G
COVERAGE AND SERVICES
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
| 1. | Basic Benefit Package | |
| Pursuant to OAC rule 5101:3-26-03(A), with limited exclusions (see section G.2 of this appendix), MCPs must ensure that members have access to medically-necessary services covered by the Ohio Medicaid fee-for-service (FFS) program. For information on Medicaid-covered services, MCPs must refer to the ODJFS website. The following is a general list of the benefits pertinent to the ABD population covered by the MCPs: |
| • | Inpatient hospital services | ||
| • | Outpatient hospital services | ||
| • | Rural health clinics (RHCs) and Federally qualified health centers (FQHCs) | ||
| • | Physician services whether furnished in the physician’s office, the covered person’s home, a hospital, or elsewhere | ||
| • | Laboratory and x-ray services | ||
| • | Family planning services and supplies | ||
| • | Home health and private duty nursing services | ||
| • | Podiatry | ||
| • | Physical therapy, occupational therapy, and speech therapy | ||
| • | Nurse-midwife, certified family nurse practitioner, and certified pediatric nurse practitioner services | ||
| • | Prescription drugs | ||
| • | Ambulance and ambulette services | ||
| • | Dental services | ||
| • | Durable medical equipment and medical supplies | ||
| • | Vision care services, including eyeglasses |
Appendix G
Aged, Blind or Disabled (ABD) population
Page 2
Aged, Blind or Disabled (ABD) population
Page 2
| • | Nursing facility stays as specified in OAC rule 5101:3-26-03 | ||
| • | Hospice care | ||
| • | Behavioral health services (see section G.2.b.iii of this appendix) | ||
| • | Chiropractic services |
| 2. | Exclusions, Limitations and Clarifications |
| a. | Exclusions | ||
| MCPs are not required to pay for Ohio Medicaid FFS program (Medicaid) non-covered services. For information regarding Medicaid noncovered services, MCPs must refer to the ODJFS website. The following is a general list of the services not covered by the Ohio Medicaid fee-for-service program: |
| • | Services or supplies that are not medically necessary | ||
| • | Experimental services and procedures, including drugs and equipment, not covered by Medicaid | ||
| • | Organ transplants that are not covered by Medicaid | ||
| • | Abortions, except in the case of a reported rape, incest, or when medically necessary to save the life of the mother | ||
| • | Infertility services for males or females | ||
| • | Voluntary sterilization if under 21 years of age or legally incapable of consenting to the procedure | ||
| • | Reversal of voluntary sterilization procedures | ||
| • | Plastic or cosmetic surgery that is not medically necessary* | ||
| • | Immunizations for travel outside of the United States | ||
| • | Services for the treatment of obesity unless medically necessary* | ||
| • | Custodial or supportive care not covered by Medicaid | ||
| • | Sex change surgery and related services | ||
| • | Sexual or marriage counseling |
Appendix G
Aged, Blind or Disabled (ABD) population
Page 3
Aged, Blind or Disabled (ABD) population
Page 3
| • | Acupuncture and biofeedback services | ||
| • | Services to find cause of death (autopsy) | ||
| • | Comfort items in the hospital (e.g., TV or phone) | ||
| • | Paternity testing |
MCPs are also not required to pay for non-emergency services or supplies
received without members following the directions in their MCP member
handbook, unless otherwise directed by ODJFS.
*These services could be deemed medically necessary if medical
complications/conditions in addition to the obesity or physical imperfection
are present.
| b. | Limitations & Clarifications |
| i. | Member Cost-Sharing | ||
| As specified in OAC rules 5101:3-26-05(D) and 5101:3-26-12, MCPs are permitted to impose the applicable member co-payment amount(s) for dental services, vision services, non-emergency emergency department services, or prescription drugs, other than generic drugs. MCPs must notify ODJFS if they intend to impose a co-payment. ODJFS must approve the notice to be sent to the MCP’s members and the timing of when the co-payments will begin to be imposed. If ODJFS determines that an MCP’s decision to impose a particular co-payment on their members would constitute a significant change for those members, ODJFS may require the effective date of the co-payment to coincide with the “Open Enrollment” month. | |||
| Notwithstanding the preceding paragraph, MCPs must provide an ODJFS-approved notice to all their members 90 days in advance of the date that the MCP will impose the co-payment. With the exception of member co-payments the MCP has elected to implement in accordance with OAC rules 5101:3-26-05(D) and 5101:3-26-12, the MCP’s payment constitutes payment in full for any covered services and their subcontractors must not charge members or ODJFS any additional co-payment, cost sharing, down-payment, or similar charge, refundable or otherwise. |
Appendix G
Aged, Blind or Disabled (ABD) population
Page 4
Aged, Blind or Disabled (ABD) population
Page 4
| ii. | Abortion and Sterilization | ||
| The use of federal funds to pay for abortion and sterilization services is prohibited unless the specific criteria found in 42 CFR 441 and OAC rules 5101:3-17-01 and 5101:3-21-01 are met. MCPs must verify that all of the information on the required forms (JFS 03197, 03198, and 03199) is provided and that the service meets the required criteria before any such claim is paid. | |||
| Additionally, payment must not be made for associated services such as anesthesia, laboratory tests, or hospital services if the abortion or sterilization itself does not qualify for payment. MCPs are responsible for educating their providers on the requirements; implementing internal procedures including systems edits to ensure that claims are only paid once the MCP has determined if the applicable forms are completed and the required criteria are met, as confirmed by the appropriate certification/consent forms; and for maintaining documentation to justify any such claim payments. | |||
| iii. | Behavioral Health Services | ||
| Coordination of Services: MCPs must have a process to coordinate benefits of and referrals to the publicly funded community behavioral health system. MCPs must ensure that members have access to all medically-necessary behavioral health services covered by the Ohio Medicaid FFS program and are responsible for coordinating those services with other medical and support services. MCPs must notify members via the member handbook and provider directory of where and how to access behavioral health services, including the ability to self-refer to mental health services offered through ODMH community mental health centers (CMHCs) as well as substance abuse services offered through Ohio Department of Alcohol and Drug Addiction Services (ODADAS)-certified Medicaid providers. Pursuant to ORC Section 5111.16, alcohol, drug addiction and mental health services covered by Medicaid are not to be paid by the managed care program when the nonfederal share of the cost of those services is provided by a board of alcohol, drug addiction, and mental health services or a state agency other than ODJFS. MCPs are also not responsible for providing mental health services to persons between 22 and 64 years of age while residing in an institution for mental disease (IMD) as defined in Section 1905(i) of the Social Security Act. | |||
| MCPs must provide Medicaid-covered behavioral health services for members who are unable to timely access services or unwilling |
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| to access services through community providers. | |||
| Mental Health Services: There are a number of Medicaid-covered mental health (MH) services available through ODMH CMHCs. | |||
| Where an MCP is responsible for providing MH services for their members, the MCP is responsible for ensuring access to counseling and psychotherapy, physician/psychiatrist services, outpatient clinic services, general hospital outpatient psychiatric services, pre-hospitalization screening, diagnostic assessment (clinical evaluation), crisis intervention, psychiatric hospitalization in general hospitals (for all ages), and Medicaid-covered prescription drugs and laboratory services. MCPs are not required to cover partial hospitalization, or inpatient psychiatric care in a private or public free-standing psychiatric hospital. However, MCPs are required to cover the payment of physician services in a private or public free-standing psychiatric hospital when such services are billed independent of the hospital. | |||
| Substance Abuse Services: There are a number of Medicaid-covered substance abuse services available through ODADAS-certified Medicaid providers. | |||
| Where an MCP is responsible for providing substance abuse services for their members, the MCP is responsible for ensuring access to alcohol and other drug (AOD) urinalysis screening, assessment, counseling, physician/psychiatrist AOD treatment services, outpatient clinic AOD treatment services, general hospital outpatient AOD treatment services, crisis intervention, inpatient detoxification services in a general hospital, and Medicaid-covered prescription drugs and laboratory services. MCPs are not required to cover outpatient detoxification and methadone maintenance. | |||
| Financial Responsibility for Behavioral Health Services: MCPs are responsible for the following: |
| • | payment of Medicaid-covered prescription drugs prescribed by an ODMH CMHC or ODADAS-certified provider when obtained through an MCP’s panel pharmacy; | ||
| • | payment of Medicaid-covered services provided by an MCP’s panel laboratory when referred by an ODMH CMHC or ODADAS-certified provider; | ||
| • | payment of all other Medicaid-covered behavioral health services obtained through providers other than those who are ODMH CMHCs or ODADAS-certified providers when |
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| arranged/authorized by the MCP. |
| Limitations: |
| • | Pursuant to ORC Section 5111.16, alcohol, drug addiction and mental health services covered by Medicaid are not to be paid by the managed care program when the nonfederal share of the cost of those services is provided by a board of alcohol, drug addiction, and mental health services or a state agency other than ODJFS. As part of this limitation: |
| • | MCPs are not responsible for paying for behavioral health services provided through ODMH CMHCs and ODADAS-certified Medicaid providers; | ||
| • | MCPs are not responsible for payment of partial hospitalization (mental health), inpatient psychiatric care in a private or public free-standing inpatient psychiatric hospital, outpatient detoxification, intensive outpatient programs (IOP) (substance abuse) or methadone maintenance. | ||
| • | However, MCPs are required to cover the payment of physician services in a private or public free-standing psychiatric hospital when such services are billed independent of the hospital. |
| iv. | Pharmacy Benefit: In providing the Medicaid pharmacy benefit to their members, MCPs must cover the same drugs covered by the Ohio Medicaid fee-for-service program. | ||
| MCPs may establish a preferred drug list for members and providers which includes a listing of the drugs that they prefer to have prescribed. Preferred drugs requiring prior authorization approval must be clearly indicated as such. Pursuant to ORC §5111.172, ODJFS may approve MCP-specific pharmacy program utilization management strategies (see appendix G.3.a). | |||
| v. | Organ Transplants: MCPs must ensure coverage for organ transplants and related services in accordance with OAC 5101-3-2-07.1 (B)(4)&(5). Coverage for all organ transplant services, except kidney transplants, is contingent upon review and recommendation by the “Ohio Solid Organ Transplant Consortium” based on criteria established by Ohio organ transplant surgeons and authorization from the ODJFS prior authorization unit. Reimbursement for bone marrow transplant and hematapoietic stem cell transplant services, as defined in OAC 3701:84-01, is contingent upon review and recommendation by the “Ohio |
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| Hematapoietic Stem Cell Transplant Consortium” again based on criteria established by Ohio experts in the field of bone marrow transplant. While MCPs may require prior authorization for these transplant services, the approval criteria would be limited to confirming the consumer is being considered and/or has been recommended for a transplant by either consortium and authorized by ODJFS. Additionally, in accordance with OAC 5101:3-2-03 (A)(4) all services related to organ donations are covered for the donor recipient when the consumer is Medicaid eligible. |
| 3. | Care Coordination |
| a. | Utilization Management Programs | ||
| General Provisions — Pursuant to OAC rule 5101:3-26-03.1(A)(7), MCPs must implement a utilization management (UM) program to maximize the effectiveness of the care provided to members and may develop other UM programs, subject to prior approval by ODJFS. For the purposes of this requirement, the specific UM programs which require ODJFS prior-approval are an MCP’s general pharmacy program, a controlled substances and member management program, and any other program designed by the MCP with the purpose of redirecting or restricting access to a particular service or service location. |
| i. | Pharmacy Programs — Pursuant to ORC Sec. 5111.172 and OAC rule 5101:3-26-03(A) and (B), MCPs may, subject to ODJFS prior-approval, implement strategies for the management of pharmacy utilization. Pharmacy utilization management strategies may include developing preferred drug lists, requiring prior authorization for certain drugs, placing limitations on the type of provider and locations where certain medications may be administered, and developing and implementing a specialized pharmacy program to address the utilization of controlled substances, as defined in section 3719.01 of the Ohio Revised Code. | ||
| Drug Prior Authorizations: MCPs must receive prior approval from ODJFS for the medications that they wish to cover through prior authorization. MCPs must establish their prior authorization system so that it does not unnecessarily impede member access to medically-necessary Medicaid-covered services. As outlined in paragraph 29(i)(ii)(f) of Appendix C, MCPs must adhere to specific prior-authorization limitations to assist with the transition of new ABD members from FFS Medicaid. MCPs must make their approved list of drugs covered only with prior authorization available to members and providers, as outlined in paragraphs 36(b) and (c) of Appendix C. |
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| Beginning January 1, 2008, MCPs may require prior authorization for the coverage of antipsychotic drugs with ODJFS approval. MCPs must, however, allow any member to continue receiving a specific antipsychotic drug if the member is stabilized on that particular medication. The MCP must continue to cover that specific drug for the stabilized member for as long as that medication continues to be effective for the member. MCPs may also implement a drug utilization review program designed to promote the appropriate clinical prescribing of antipsychotic drugs. This can be accomplished through the MCP’s retrospective analysis of drug claims to identify potential inappropriate use and provide education to those providers who are outliers to acceptable standards for prescribing/dispensing antipsychotic drugs. | |||
| MCPs must comply with the provisions of 1927(d)(5) of the Social Security Act, 42 USC 1396r-8(k)(3), and OAC rule 5101:3-26-03.1 regarding the timeframes for prior authorization of covered outpatient drugs. | |||
| Controlled Substances and Member Management Programs: MCPs may also, with ODJFS prior approval, develop and implement Controlled Substances and Member Management (CSMM) programs designed to address use of controlled substances. Utilization management strategies may include prior authorization as a condition of obtaining a controlled substance, as defined in section 3719.01 of the Ohio Revised Code. CSMM strategies may also include processes for requiring MCP members at high risk for fraud or abuse involving controlled substances to have their narcotic medications prescribed by a designated provider/providers and filled by a pharmacy, medical provider, or health care facility designated by the program. | |||
| ii. | Emergency Department Diversion (EDD) — MCPs must provide access to services in a way that assures access to primary, specialist and urgent care in the most appropriate settings and that minimizes frequent, preventable utilization of emergency department (ED) services. OAC rule 5101:3-26-03.1(A)(7)(d) requires MCPs to implement the ODJFS-required emergency department diversion (EDD) program for frequent utilizers. |
Each MCP must establish an ED diversion (EDD) program with the goal
of minimizing frequent ED utilization. The MCP’s EDD program must include
the monitoring of ED utilization, identification of frequent ED
utilizers, and targeted approaches designed to reduce avoidable ED
utilization. MCP EDD programs must, at a minimum, address those ED visits
which could have been prevented through improved education,
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| access, quality or care management approaches. | |||
| Although there is often an assumption that frequent ED visits are solely the result of a preference on the part of the member and education is therefore the standard remedy, it is also important to ensure that a member’s frequent ED utilization is not due to problems such as their PCP’s lack of accessibility or failure to make appropriate specialist referrals. The MCP’s EDD program must therefore also include the identification of providers who serve as PCPs for a substantial number of frequent ED utilizers and the implementation of corrective action with these providers as so indicated. | |||
| This requirement does not replace the MCP’s responsibility to inform and educate all members regarding the appropriate use of the ED. | |||
| MCPs must also implement the ODJFS-required emergency department diversion (EDD) program for frequent users. In that ODJFS has developed the parameters for an MCP’s EDD program, it therefore does not require ODJFS prior approval (Moved). | |||
| b. | Integration of Member Care | ||
| The MCP must ensure that a discharge plan is in place to meet a member’s health care needs following discharge from a nursing facility, and integrated into the member’s continuum of care. The discharge plan must address the services to be provided for the member and must be developed prior to the date of discharge from the nursing facility. The MCP must ensure follow-up contact occurs with the member, or authorized representative, within thirty (30) days of the member’s discharge from the nursing facility to ensure that the member’s health care needs are being met. | |||
| c. | Care Coordination with ODJFS-Designated Providers | ||
| Per OAC rule 5101:3-26-03.1(A)(4), MCPs are required to share specific information with certain ODJFS-designated non-contracting providers in order to ensure that these providers have been supplied with specific information needed to coordinate care for the MCP’s members. Within the first month of operation, after an MCP has obtained a provider agreement, the MCP must provide to the ODJFS-designated providers (i.e., ODMH Community Mental Health Centers, ODADAS-certified Medicaid providers, FQHCs/RHCs, QFPPs, CNMs, CNPs [if applicable], and hospitals) a quick reference information packet which includes the following: |
| i. | A brief cover letter explaining the purpose of the mailing; and |
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| ii. | A brief summary document that includes the following information: |
| • | Claims submission information including the MCP’s Medicaid provider number for each region; | ||
| • | The MCP’s prior authorization and referral procedures or the MCP’s website; | ||
| • | A picture of the MCP’s member identification card (front and back); | ||
| • | Contact numbers and/or website location for obtaining information for eligibility verification, claims processing, referrals/prior authorization, and information regarding the MCP’s behavioral health administrator; | ||
| • | A listing of the MCP’s major pharmacy chains and the contact number for the MCP’s pharmacy benefit administrator (PBM); | ||
| • | A listing of the MCP’s laboratories and radiology providers; and | ||
| • | A listing of the MCP’s contracting behavioral health providers and how to access services through them (this information is only to be provided to non-contracting community mental health and substance abuse providers). |
| d. | Care coordination with Non-Contracting Providers | ||
| Per OAC rule 5101:3-26-05(A)(9), MCPs authorizing the delivery of services from a provider who does not have an executed subcontract must ensure that they have a mutually agreed upon compensation amount for the authorized service and notify the provider of the applicable provisions of paragraph D of OAC rule 5101:3-26-05. This notice is provided when an MCP authorizes a non-contracting provider to furnish services on a one-time or infrequent basis to an MCP member and must include required ODJFS-model language and information. This notice must also be included with the transition of services form sent to providers as outlined in paragraph 29.h. of Appendix C. |
| 4. | Case Management | |
| In accordance with 5101:3-26-03.1(A)(8), MCPs must offer and provide comprehensive case management services which coordinate and monitor the care of members with specific diagnoses, or who require high-cost and/or extensive services. |
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| a. | Each MCP must inform all members and contracting providers of the MCP’s case management services. | ||
| b. | The MCP must assure and coordinate the placement of the member into case management — including identification of the member’s need for case management services, completion of the comprehensive health needs assessment, and timely development of a care treatment plan. This process must occur within the following timeframes for: | ||
| i. newly enrolled members – 90 days from the effective date of enrollment; and | |||
| ii. existing members – 90 days from identifying their need for case management. | |||
| c. | The MCP’s comprehensive case management program must include, at a minimum, the following components: |
| i. | Identification – | ||
| The MCP must have mechanisms in place to identify members potentially eligible for case management services. These mechanisms must include an administrative data review (e.g. diagnosis, cost threshold, and/or service utilization) and may also include telephone interviews; provider/self-referrals; information as reported by the Managed Care Enrollment Center (MCEC) during membership selection; or home visits. | |||
| ii. | Assessment - | ||
| The MCP must arrange for or conduct a comprehensive assessment of the member’s physical and/or behavioral health condition(s) to confirm the results of a positive identification, and to determine the need for case management services. The goals of the assessment are to identify the member’s existing and/or potential health care needs and assess the member’s need for case management services. | |||
| The assessment must be completed by a physician, physician assistant, RN, LPN, licensed social worker, or a graduate of a two or four year allied health program. If the assessment is completed by another medical professional, there should be oversight and monitoring by either a registered nurse or a physician. | |||
| The MCP must have a process to inform members and their PCPs that they have been identified as meeting the criteria for case management, including their enrollment into case management services. | |||
| The MCP must develop a strategy to assign members to risk stratification levels, based on the member’s comprehensive needs assessment. | |||
| iii. | Care Treatment Plan – | ||
| The care treatment plan is defined by ODJFS as the one developed by the MCP for the member. |
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| The development of the care treatment plan must be based on the comprehensive health assessment and reflect the member’s primary medical diagnosis and health conditions, any comorbidities, and the member’s psychological, behavioral health and community support needs. The care treatment plan must also include specific provisions for periodic reviews (i.e., no less than semi-annually) of the member’s condition and appropriate updates to the plan. The member and the member’s PCP must be actively involved in the development of and revisions to the care treatment plan. The designated PCP is the provider, or specialist, who will manage and coordinate the overall care for the member. Ongoing communication regarding the status of the care treatment plan may be accomplished between the MCP and the PCP’s designee (i.e., qualified health professional). Revisions to the clinical portion of the care treatment plan should be completed in consultation with the PCP. | |||
| The elements of a comprehensive care treatment plan include: | |||
| Goals and actions that address medical, social, behavioral and psychological needs; | |||
| Member level interventions, (i.e., referrals and making appointments) that assist members in obtaining services, providers and programs; | |||
| Continuous review, revision and contact follow-up, as needed, to ensure the care treatment plan is adequately monitored including the following: |
| • | Documentation that services are provided in accordance with the care treatment plan; | ||
| • | Re-evaluation to determine if the care treatment plan is adequate to meet the member’s current needs; | ||
| • | Identification of gaps between recommended care and actual care provided; | ||
| • | A change in needs or status from the re-evaluation that requires revisions to the care treatment plan; | ||
| • | Active participation by the member or representative in the care treatment plan development; | ||
| • | Monitoring of specific service delivery including service utilization; and | ||
| • | Re-evaluation of a member’s risk stratification level with adjustment to the level of case management services provided. |
| iv. | Coordination of Care and Communication | ||
| There should be an accountable point of contact at the MCP for each member in case management who can help obtain medically necessary care, assist with health-related services and coordinate care needs, including behavioral health. The MCP must arrange or provide for professional case management services that are performed collaboratively by a team of professionals appropriate for the member’s condition and health care needs. At a minimum, the MCP’s case manager must attempt to coordinate with the member’s case manager from other |
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| health systems, including behavioral health. The MCP must have a process to facilitate, maintain, and coordinate both care and communication with the member, PCP, and other service providers and case managers. The MCP must also have a process to coordinate care for a member that is receiving services from state sub-recipient agencies as appropriate [e.g., the Ohio Department of Mental Health (ODMH); the Ohio Department of Mental Retardation and Developmental Disabilities (ODMR/DD); and the Ohio Department of Alcohol and Drug Addiction Services (ODADAS)]. | |||
| The MCP must have a provision to disseminate information to the member/caregiver concerning the health condition, types of services that may be available, and how to access services. | |||
| The MCP must implement mechanisms to notify all Members with Special Health Care Needs of their right to directly access a specialist. Such access may be assured through, for example, a standing referral or an approved number of visits, and documented in the care treatment plan. | |||
| v. | ODJFS Targeted Case Management Conditions | ||
| The MCP must, at a minimum, case manage members with the following physical and behavioral health conditions: |
| • | Congestive Heart Failure | ||
| • | Coronary Artery Disease | ||
| • | Non-Mild Hypertension | ||
| • | Diabetes | ||
| • | Chronic Obstructive Pulmonary Disease | ||
| • | Asthma | ||
| • | Severe mental illness | ||
| • | High risk or high cost substance abuse disorders | ||
| • | Severe cognitive and/or developmental limitation |
| The MCP must also case manage any member enrolled in an MCP’s CSMM as specified in section G(3)(a)(i). | |||
| The MCP should also focus on all members whose health conditions warrant case management services and should not limit these services only to members with these conditions (e.g., cystic fibrosis, cerebral palsy and sickle cell anemia). | |||
| Refer to Appendix M for the performance measures and standards related to case management. | |||
| vi. | Case Management Program Staffing | ||
| The MCP must identify the staff that will be involved in the operations of the case management program, including but not limited to: case manager supervisors, case managers, and administrative support staff. The MCP must identify the role and functions of each case management staff member as well as the educational |
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| requirements, clinical licensure standards, certification and relevant experience with case management standards and/or activities. The MCP must provide case manager staff/member ratios based on the member risk stratification and different levels of care being provided to members. | |||
| vii. | Case Management Strategies | ||
| The MCP must follow best-practice and/or evidence based clinical guidelines when devising a member’s care treatment plan and coordinating the case management needs. If an MCP uses a disease management methodology to identify and/or stratify members in need of case management services, the methods must be validated by scientific research and/or nationally accepted in the health care industry. | |||
| The MCP must develop and implement mechanisms to educate and equip providers and case managers with evidence-based clinical guidelines or best practice approaches to assist in providing a high level of quality of care to members. | |||
| viii. | Information Technology System for Case Management | ||
| The MCP’s information technology system for its case management program must maximize the opportunity for communication between the plan, PCP, the member, and other service providers and case managers. The MCP must have an integrated database that allows MCP staff that may be contacted by a member in case management to have immediate access to, and review of, the most recent information with the MCP’s information systems relevant to the case. The integrated database may include the following: administrative data, call center communications, service authorizations, care treatment plans, patient assessments, case management notes, and PCP notes. The information technology system must also have the capability to share relevant information with the member, the PCP, and other service providers and case managers. | |||
| ix. | Data Submission |
The MCP must submit a monthly electronic report to the Case Management System
(CAMS) for all members that are case managed. In order for a member to be
submitted as case managed in CAMS, the MCP must: (1) complete the identification
process, a comprehensive health needs assessment and development of a care
treatment plan for the member; and (2) document the member’s written or verbal
confirmation of his/her case management status in the case management record.
ODJFS, or its designated entity, the external quality review vendor, will validate
on an annual basis the accuracy of the information contained in CAMS with the
member’s case management record. The CAMS files are due the 10th
business day of each month.
| d. | Annual Case Management Program Submission | ||
| The MCP must have an ODJFS-approved case management program which includes the items in Section 4. Each MCP must implement an evaluation process |
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to review, revise and/or update the case management program. The MCP must annually
submit its case management program for review and approval by ODJFS. Any subsequent
changes to an approved case management program description must be submitted to
ODJFS in writing for review and approval prior to implementation.
Appendix H
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APPENDIX H
PROVIDER PANEL SPECIFICATIONS
ABD ELIGIBLE POPULATION
| 1. GENERAL PROVISIONS |
MCPs must provide or arrange for the delivery of all medically necessary, Medicaid-covered health
services, as well as assure that they meet all applicable provider panel requirements for their
entire designated service area. The ODJFS provider panel requirements are specified in the charts
included with this appendix and must be met prior to the MCP receiving a provider agreement with
ODJFS. The MCP must remain in compliance with these requirements for the duration of the provider
agreement.
If an MCP is unable to provide the medically necessary, Medicaid-covered services through their
contracted provider panel, the MCP must ensure access to these services on an as needed basis. For
example, if an MCP meets the gastroenterologist requirement but a member is unable to obtain a
timely appointment from a gastroenterologist on the MCP’s provider panel, the MCP will be required
to secure an appointment from a panel gastroenterologist or arrange for an out-of-panel referral to
a gastroenterologist.
MCPs are required to make transportation available to any member requesting transportation when
they must travel 30 miles or more from their home to receive a medically-necessary Medicaid-covered
service. If the MCP offers transportation to their members as an additional benefit and this
transportation benefit only covers a limited number of trips, the required transportation listed
above may not be counted toward this trip limit (as specified in Appendix C).
In developing the provider panel requirements, ODJFS considered, on a county-by-county basis, the
population size and utilization patterns of the Aged, Blind or Disabled (ABD) consumers, as well as
the potential availability of the designated provider types. ODJFS has integrated existing
utilization patterns into the provider network requirements to avoid disruption of care. Most
provider panel requirements are county-specific but in certain circumstances, ODJFS requires
providers to be located anywhere in the region. Although all provider types listed in this appendix
are required provider types, only those listed on the attached charts must be submitted for ODJFS
prior approval.
| 2. PROVIDER SUBCONTRACTING |
Unless otherwise specified in this appendix or OAC rule 5101:3-26-05, all MCPs are required to
enter into fully-executed subcontracts with their providers. These subcontracts must include a
baseline contractual agreement, as well as the appropriate ODJFS-approved Model Medicaid Addendum.
The Model Medicaid Addendum incorporates all applicable Ohio
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Administrative Code rule requirements specific to provider subcontracting and therefore cannot be
modified except to add personalizing information such as the MCP’s name.
ODJFS must prior approve all MCP providers in the ODJFS- required provider type categories before
they can begin to provide services to that MCP’s members. MCPs may not employ or contract with
providers excluded from participation in Federal health care programs under either section 1128 or
section 1128A of the Social Security Act. As part of the prior approval process, MCPs must submit
documentation verifying that all necessary contract documents have been appropriately completed.
ODJFS will verify the approvability of the submission and process this information using the ODJFS
Provider Verification System (PVS), or other designated process. The PVS is a centralized database
system that maintains information on the status of all MCP-submitted providers.
Only those providers who meet the applicable criteria specified in this document, and as determined
by ODJFS, will be approved by ODJFS. MCPs must credential/recredential providers in accordance with
the standards specified by the National Committee for Quality Assurance (or receive approval from
ODJFS to use an alternate industry standard) and must have completed the credentialing review
before submitting any provider to ODJFS for approval. Regardless of whether ODJFS has approved a
provider, the MCP must ensure that the provider has met all applicable credentialing criteria
before the provider can render services to the MCP’s members.
MCPs must notify ODJFS of the addition and deletion of their contracting providers as specified in
OAC rule 5101:3-26-05, and must notify ODJFS within one working day in instances where the MCP has
identified that they are not in compliance with the provider panel requirements specified in this
appendix.
| 3. PROVIDER PANEL REQUIREMENTS |
The provider network criteria that must be met by each MCP are as follows:
| a. Primary Care Providers (PCPs) | ||||
Primary Care Provider (PCP) means an individual physician (M.D. or D.O.), certain physician group
practice/clinic (Primary Care Clinics [PCCs]), or an advanced practice nurse (APN) as defined in
ORC 4723.43 or advanced practice nurse group practice within an acceptable specialty, contracting
with an MCP to provide services as specified in paragraph (B) of OAC rule 5101: 3-26-03.1.
Acceptable specialty types for PCPs include family/general practice, internal medicine, pediatrics,
and obstetrics/gynecology (OB/GYN). Acceptable PCCs include FQHCs, RHCs and the acceptable group
practices/clinics specified by ODJFS. As part of their subcontract with an MCP, PCPs must
stipulate the total Medicaid member capacity that they can ensure for that individual MCP. Each PCP
must have the capacity and agree to serve at least 50 Medicaid members at each practice site in
order to be approved by ODJFS as a PCP. The
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Aged, Blind or Disabled (ABD) population
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capacity-by-site requirement must be met for all ODJFS-approved PCPs.
ODJFS reviews the capacity totals for each PCP to determine if they appear excessive. ODJFS
reserves the right to request clarification from an MCP for any PCP whose total stated capacity for
all MCP networks added together exceeds 2000 Medicaid members (i.e., 1 FTE). ODJFS may allow up to
an additional 750 member capacity for each nurse practitioner or physician’s assistant that is used
to provide clinical support for a PCP.
For PCPs contracting with more than one MCP, the MCP must ensure that the capacity figure stated by
the PCP in their subcontract reflects only the capacity the PCP intends to provide for that one
MCP. ODJFS utilizes each approved PCP’s capacity figure to determine if an MCP meets the provider
panel requirements and this stated capacity figure does not prohibit a PCP from actually having a
caseload that exceeds the capacity figure indicated in their subcontract.
ODJFS expects that MCPs will need to utilize specialty physicians to serve as PCPs for some special
needs members. In these situations it will not be necessary for the MCP to submit these specialists
to the PVS database, or other system, as PCPs, however, they must be submitted to PVS, or other
system, as the appropriate required provider type. Also, in some situations (e.g., continuity of
care) a PCP may only want to serve a very small number of members for an MCP. In these situations
it will not be necessary for the MCP to submit these PCPs to ODJFS for prior approval. These PCPs
will not be included in the ODJFS PVS database, or other system and therefore may not appear as
PCPs in the MCP’s provider directory. These PCPs will, however, need to execute a subcontract with
the MCP which includes the appropriate Model Medicaid Addendum.
The PCP requirement is based on an MCP having sufficient PCP capacity to serve 40% of the eligibles
in the region if three MCPs are serving the region and 55% of the eligibles in the region if two
MCPs are serving the region. Each MCP must meet the PCP minimum FTE requirement for that region.
MCPs must also satisfy a PCP geographic accessibility standard. ODJFS will match the PCP practice
sites and the stated PCP capacity with the geographic location of the eligible population in that
region (on a county-specific basis) and perform analysis using Geographic Information Systems (GIS)
software. The analysis will be used to determine if at least 40% of the eligible population is
located within 10 miles of a PCP with available capacity in urban counties and 40% of the eligible
population within 30 miles of a PCP with available capacity in rural counties. [Rural areas are
defined pursuant to 42 CFR 412.62(f)(1)(iii).]
Until July 1, 2008, MCPs may only use PCPs who are individual physicians (M.D. or D.O.), physician
group practices, or PCCs to meet capacity and FTE requirements.
| b. Non-PCP Provider Network |
In addition to the PCP capacity requirements, each MCP is also required to maintain adequate
capacity in the remainder of its provider network within the following categories: hospitals,
Appendix H
Aged, Blind or Disabled (ABD) population
Page 4
Aged, Blind or Disabled (ABD) population
Page 4
cardiovascular, dentists, gastroenterology, nephrology, neurology, oncology, physical medicine,
podiatry, psychiatry, urology, vision care providers, obstetricians/gynecologists (OB/GYNs),
allergists, general surgeons, otolaryngologists, orthopedists, federally qualified health centers
(FQHCs)/rural health centers (RHCs) and qualified family planning providers (QFPPs). CNMs, CNPs,
FQHCs/RHCs and QFPPs are federally-required provider types.
All Medicaid-contracting MCPs must provide all medically-necessary Medicaid-covered services to
their members and therefore their complete provider network will include many other additional
specialists and provider types. MCPs must ensure that all non-PCP network providers
follow community standards in the scheduling of routine appointments (i.e., the
amount of time members must wait from the time of their request to the first available time when
the visit can occur).
Although there are currently no capacity requirements for the non-PCP required provider types, MCPs
are required to ensure that adequate access is available to members for all required provider
types. Additionally, for certain non-PCP required provider types, MCPs must ensure that these
providers maintain a full-time practice at a site(s) located in the specified county/region (i.e.,
the ODJFS-specified county within the region or anywhere within the region if no particular county
is specified). A full-time practice is defined as one where the provider is available to patients
at their practice site(s) in the specified county/region for at least 25 hours a week. ODJFS will
monitor access to services through a variety of data sources, including: consumer satisfaction
surveys; member appeals/grievances/complaints and state hearing notifications/requests; clinical
quality studies; encounter data volume; provider complaints, and clinical performance measures.
Hospitals — MCPs must contract with the number and type of hospitals specified by ODJFS for each
county/region. In developing these hospital requirements, ODJFS considered, on a county-by-county
basis, the population size and utilization patterns of the Aged, Blind or Disabled (ABD) consumers
and integrated the existing utilization patterns into the hospital network requirements to avoid
disruption of care. For this reason, ODJFS may require that MCPs contract with out-of-state
hospitals (i.e. Kentucky, West Virginia, etc.).
For each Ohio hospital, ODJFS utilizes the hospital’s most current Annual Hospital Registration and
Planning Report, as filed with the Ohio Department of Health, in verifying types of services that
hospital provides. Although ODJFS has the authority, under certain situations, to obligate a
non-contracting hospital to provide non-emergency hospital services to an MCP’s members, MCPs must
still contract with the specified number and type of hospitals unless ODJFS approves a provider
panel exception (see Section 4 of this appendix — Provider Panel Exceptions).
If an MCP-contracted hospital elects not to provide specific Medicaid-covered hospital services
because of an objection on moral or religious grounds, the MCP must ensure that these hospital
services are available to its members through another MCP-contracted
hospital in the specified
county/region.
Appendix H
Aged, Blind or Disabled (ABD) population
Page 5
Aged, Blind or Disabled (ABD) population
Page 5
OB/GYNs - MCPs must contract with the specified number of OB/GYNs for each county/region, all of
whom must maintain a full-time obstetrical practice at a site(s) located in the specified
county/region. Only MCP-contracting OB/GYNs with current hospital delivery privileges at a hospital
under contract with the MCP in the region can be submitted to the PVS, or other system, count
towards MCP minimum panel requirements, and be listed in the MCPs’ provider directory.
Certified Nurse Midwives (CNMs) and Certified Nurse Practitioners (CNPs) - MCPs must ensure access
to CNM and CNP services in the region if such provider types are present within the region. The MCP
may contract directly with the CNM or CNP providers, or with a physician or other provider entity
who is able to obligate the participation of a CNM or CNP. If an MCP
does not contract for CNM or CNP services and such providers are present within the region, the
MCP will be required to allow members to receive CNM or CNP services outside of the MCP’s
provider network.
Only CNMs with hospital delivery privileges at a hospital under contract to the MCP in the region
can be submitted to the PVS, or other system, count towards MCP minimum panel requirements, and be
listed in the MCPs’ provider directory. The MCP must ensure a member’s access to CNM and CNP
services if such providers are practicing within the region.
Vision Care Providers — MCPs must contract with the specified number of
ophthalmologists/optometrists for each specified county/region, all of whom must maintain a
full-time practice at a site(s) located in the specified county/region. All ODJFS-approved vision
providers must regularly perform routine eye exams. (MCPs will be expected to contract with an
adequate number of ophthalmologists as part of their overall provider panel, but only
ophthalmologists who regularly perform routine eye exams can be used to meet the vision care
provider panel requirement.) If optical dispensing is not sufficiently available in a region
through the MCP’s contracting ophthalmologists/optometrists, the MCP must separately contract with
an adequate number of optical dispensers located in the region.
Dental Care Providers - MCPs must contract with the specified number of dentists.
Federally Qualified Health Centers/Rural Health Clinics (FQHCs/RHCs) - MCPs are required to
ensure member access to any federally qualified health center or rural health clinic (FQHCs/RHCs),
regardless of contracting status. Contracting FQHC/RHC providers must be submitted for ODJFS
approval via the PVS process, or other designated process. Even if no FQHC/RHC is available within
the region, MCPs must have mechanisms in place to ensure coverage for FQHC/RHC services in the
event that a member accesses these services outside of the region.
In order to ensure that any FQHC/RHC has the ability to submit a claim to ODJFS for the state’s
supplemental payment, MCPs must offer FQHCs/RHCs reimbursement pursuant to the following:
Appendix H
Aged, Blind or Disabled (ABD) population
Page 6
Aged, Blind or Disabled (ABD) population
Page 6
| • | MCPs must provide expedited reimbursement on a service-specific basis in an amount no less than the payment made to other providers for the same or similar service. | ||
| • | If the MCP has no comparable service-specific rate structure, the MCP must use the regular Medicaid fee-for-service payment schedule for non-FQHC/RHC providers. | ||
| • | MCPs must make all efforts to pay FQHCs/RHCs as quickly as possible and not just attempt to pay these claims within the prompt pay time frames. |
MCPs are required to educate their staff and providers on the need to assure member access to
FQHC/RHC services.
Qualified Family Planning Providers (QFPPs) — All MCP members must be permitted to self-refer to
family planning services provided by a QFPP. A QFPP is defined as any public or not-
for-profit health care provider that complies with Title X guidelines/standards, and
receives either Title X funding or family planning funding from the Ohio Department of Health. MCPs
must reimburse all medically-necessary Medicaid-covered family planning services provided to
eligible members by a QFPP provider (including on-site pharmacy and diagnostic services) on a
patient self-referral basis, regardless of the provider’s status as a panel or non-panel provider.
MCPs will be required to work with QFPPs in the region to develop mutually-agreeable HIPAA
compliant policies and procedures to preserve patient/provider confidentiality, and convey
pertinent information to the member’s PCP and/or MCP.
Behavioral Health Providers— MCPs must assure member access to all Medicaid-covered behavioral
health services for members as specified in Appendix G.b.ii. herein. Although ODJFS is aware that
certain outpatient substance abuse services may only be available through Medicaid providers
certified by the Ohio Department of Drug and Alcohol Addiction Services (ODADAS) in some areas,
MCPs must maintain an adequate number of contracted mental health providers in the region to assure
access for members who are unable to timely access services or unwilling to access services through
community mental health centers. MCPs are advised not to contract with community mental health
centers as all services they provide to MCP members are to be billed to ODJFS.
Other Specialty Types (general surgeons, otolaryngologists, orthopedists, cardiologists,
gastroenterologists, nephrologists, neurologists, oncologists, podiatrists, physiatrists,
psychiatrists, and urologists ) - MCPs must contract with the specified number of all other ODJFS
designated specialty provider types. In order to be counted toward meeting the provider panel
requirements, these specialty providers must maintain a full-time practice at a site(s) located
within the specified county/region. Only contracting general surgeons, orthopedists,
otolaryngologists, cardiologists, gastroenterologists, nephrologists, neurologists, oncologists,
podiatrists, physiatrists, psychiatrists, and urologists with admitting privileges at a hospital
Appendix H
Aged, Blind or Disabled (ABD) population
Page 7
Aged, Blind or Disabled (ABD) population
Page 7
under contract with the MCP in the region can be submitted to the PVS, or other system, count
towards MCP minimum panel requirements, and be listed in the MCPs’ provider directory.
| 4. PROVIDER PANEL EXCEPTIONS |
ODJFS may specify provider panel criteria for a service area that deviates from that specified in
this appendix if:
| - | the MCP presents sufficient documentation to ODJFS to verify that they have been unable to meet or maintain certain provider panel requirements in a particular service area despite all reasonable efforts on their part to secure such a contract(s), and | ||
| - | if notified by ODJFS, the provider(s) in question fails to provide a reasonable argument why they would not contract with the MCP, and | ||
| - | the MCP presents sufficient assurances to ODJFS that their members will have adequate access to the services in question. |
If an MCP is unable to contract with or maintain a sufficient number of providers to meet the
ODJFS-specified provider panel criteria, the MCP may request an exception to these criteria by
submitting a provider panel exception request as specified by ODJFS. ODJFS will review the
exception request and determine whether the MCP has sufficiently demonstrated that all reasonable
efforts were made to obtain contracts with providers of the type in question and that they will be
able to provide access to the services in question.
ODJFS will aggressively monitor access to all services related to the approval of a provider panel
exception request through a variety of data sources, including: consumer satisfaction surveys;
member appeals/grievances/complaints and state hearing notifications/requests; member just-cause
for termination requests; clinical quality studies; encounter data volume; provider complaints, and
clinical performance measures. ODJFS approval of a provider panel exception request does not exempt
the MCP from assuring access to the services in question. If ODJFS determines that an MCP has not
provided sufficient access to these services, the MCP may be subject to sanctions.
| 5. PROVIDER DIRECTORIES |
MCP provider directories must include all MCP-contracted providers [except as specified by ODJFS]
as well as certain non-contracted providers. At the time of ODJFS’ review, the information listed
in the MCP’s provider directory for all ODJFS-required provider types specified on the attached
charts must exactly match the data currently on file in the ODJFS PVS, or other designated process.
Appendix H
Aged, Blind or Disabled (ABD) population
Page 8
Aged, Blind or Disabled (ABD) population
Page 8
MCP provider directories must utilize a format specified by ODJFS. Directories may be
region-specific or include multiple regions, however, the providers within the directory must be
divided by region, county, and provider type, in that order.
The directory must also specify:
| • | provider address(es) and phone number(s); | |
| • | an explanation of how to access providers (e.g. referral required vs. self-referral); | |
| • | an indication of which providers are available to members on a self-referral basis; | |
| • | foreign-language speaking PCPs and specialists and the specific foreign language(s) spoken; | |
| • | how members may obtain directory information in alternate formats that takes into consideration the special needs of eligible individuals including but not limited to, visually-limited, LEP, and LRP eligible individuals; and | |
| • | any PCP or specialist practice limitations. |
Printed Provider Directory
Prior to receiving a provider agreement, all MCPs must develop a printed provider directory that
shall be prior-approved by ODJFS for each population. For example, an MCP who serves CFC and ABD in
the Central Region would have two provider directories, one for CFC and one for ABD. Once
approved, this directory may be regularly updated with provider additions or deletions by the MCP
without ODJFS prior-approval, however, copies of the revised directory (or inserts) must be
submitted to ODJFS prior to distribution to members.
On a quarterly basis, MCPs must create an insert to each printed directory that lists those
providers deleted from the MCP’s provider panel during the previous three months. Although this
insert does not need to be prior approved by ODJFS, copies of the insert must be submitted to ODJFS
two weeks prior to distribution to members.
Internet Provider Directory
MCPs are required to have an internet-based provider directory available in the same format as
their ODJFS-approved printed directory. This internet directory must allow members to
electronically search for MCP panel providers based on name, provider type, and geographic
proximity, and population (e.g. CFC and/or ABD). If an MCP has one
internet-based directory for multiple populations, each provider must include a description of which population they serve.
The internet directory may be updated at any time to include providers who are not one of the
ODJFS-required provider types listed on the charts included with this appendix. ODJFS-required
providers must be added to the internet directory within one week of the MCP’s notification of
ODJFS-approval of the provider via the Provider Verification process. Providers
Appendix H
Aged, Blind or Disabled (ABD) population
Page 9
Aged, Blind or Disabled (ABD) population
Page 9
being deleted from the MCP’s panel must be deleted from the internet directory within one week of
notification from the provider to the MCP. These deleted providers must be included in the inserts
to the MCP’s provider directory referenced above.
| 6. FEDERAL ACCESS STANDARDS |
MCPs must demonstrate that they are in compliance with the following federally defined provider
panel access standards as required by 42 CFR 438.206:
In establishing and maintaining their provider panel, MCPs must consider the following:
| • | The anticipated Medicaid membership. | |
| • | The expected utilization of services, taking into consideration the characteristics and health care needs of specific Medicaid populations represented in the MCP. | |
| • | The number and types (in terms of training, experience, and specialization) of panel providers required to deliver the contracted Medicaid services. | |
| • | The geographic location of panel providers and Medicaid members, considering distance, travel time, the means of transportation ordinarily used by Medicaid members, and whether the location provides physical access for Medicaid members with disabilities. | |
| • | MCPs must adequately and timely cover services to an out-of-network provider if the MCP’s contracted provider panel is unable to provide the services covered under the MCP’s provider agreement. The MCP must cover the out-of-network services for as long as the MCP network is unable to provide the services. MCPs must coordinate with the out-of-network provider with respect to payment and ensure that the provider agrees with the applicable requirements. |
Contracting providers must offer hours of operation that are no less than the hours of operation
offered to commercial members or comparable to Medicaid fee-for-service, if the provider serves
only Medicaid members. MCPs must ensure that services are available 24 hours a day, 7 days a week,
when medically necessary. MCPs must establish mechanisms to ensure that panel providers comply
with timely access requirements, and must take corrective action if there is failure to comply.
In order to demonstrate adequate provider panel capacity and services, 42 CFR 438.206 and 438.207
stipulates that the MCP must submit documentation to ODJFS, in a
format specified by ODJFS, that demonstrates it offers an appropriate range of preventive, primary care and specialty
services adequate for the anticipated number of members in the service area, while maintaining a
provider panel that is sufficient in number, mix, and geographic distribution to meet the needs of
the number of members in the service area.
Appendix H
Page 10
Page 10
This documentation of assurance of adequate capacity and services must be submitted to ODJFS no
less frequently than at the time the MCP enters into a contract with ODJFS; at any time there is a
significant change (as defined by ODJFS) in the MCP’s operations that would affect adequate
capacity and services (including changes in services, benefits, geographic service or payments);
and at any time there is enrollment of a new population in the MCP.
APPENDIX J
FINANCIAL PERFORMANCE
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
Molina
| 1. | SUBMISSION OF FINANCIAL STATEMENTS AND REPORTS | |
| MCPs must submit the following financial reports to ODJFS: |
| a. | The National Association of Insurance Commissioners (NAIC) quarterly and annual Health Statements (hereafter referred to as the “Financial Statements”), as outlined in Ohio Administrative Code (OAC) rule 5101:3-26-09(B). The Financial Statements must include all required Health Statement filings, schedules and exhibits as stated in the NAIC Annual Health Statement Instructions including, but not limited to, the following sections: Assets, Liabilities, Capital and Surplus Account, Cash Flow, Analysis of Operations by Lines of Business, Five-Year Historical Data, and the Exhibit of Premiums, Enrollment and Utilization. The Financial Statements must be submitted to BMHC even if the Ohio Department of Insurance (ODI) does not require the MCP to submit these statements to ODI. A signed hard copy and an electronic copy of the reports in the NAIC-approved format must both be provided to ODJFS; | ||
| b. | Hard copies of annual financial statements for those entities who have an ownership interest totaling five percent or more in the MCP or an indirect interest of five percent or more, or a combination of direct and indirect interest equal to five percent or more in the MCP; | ||
| c. | Annual audited Financial Statements prepared by a licensed independent external auditor as submitted to the ODI, as outlined in OAC rule 5101:3- 26-09(B); | ||
| d. | Medicaid Managed Care Plan Annual Ohio Department of Job and Family Services (ODJFS) Cost Report and the auditor’s certification of the cost report, as outlined in OAC rule 5101:3-26-09(B); | ||
| e. | Medicaid MCP Annual Restated Cost Report for the prior calendar year. The restated cost report shall be audited upon BMHC request; | ||
| f. | Annual physician incentive plan disclosure statements and disclosure of and changes to the MCP’s physician incentive plans, as outlined in OAC rule 5101:3-26-09(B); | ||
| g. | Reinsurance agreements, as outlined in OAC rule 5101:3-26-09(C); |
Appendix J
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Page 2
| h. | Prompt Pay Reports, in accordance with OAC rule 5101:3-26-09(B). A hard copy and an electronic copy of the reports in the ODJFS-specified format must be provided to ODJFS; | ||
| i. | Notification of requests for information and copies of information released pursuant to a tort action (i.e., third party recovery), as outlined in OAC rule 5101:3-26-09.1; | ||
| j. | Financial, utilization, and statistical reports, when ODJFS requests such reports, based on a concern regarding the MCP’s quality of care, delivery of services, fiscal operations or solvency, in accordance with OAC rule 5101:3-26-06(D); | ||
| k. | In accordance with ORC Section 5111.76 and Appendix C, MCP Responsibilities, MCPs must submit ODJFS-specified franchise fee reports in hard copy and electronic formats pursuant to ODJFS specifications. |
| 2. | FINANCIAL PERFORMANCE MEASURES AND STANDARDS | |
| This Appendix establishes specific expectations concerning the financial performance of MCPs. In the interest of administrative simplicity and nonduplication of areas of the ODI authority, ODJFS’ emphasis is on the assurance of access to and quality of care. ODJFS will focus only on a limited number of indicators and related standards to monitor plan performance. The three indicators and standards for this contract period are identified below, along with the calculation methodologies. The source for each indicator will be the NAIC Quarterly and Annual Financial Statements. |
| Report Period: Compliance will be determined based on the annual Financial Statement. | ||||
| a. | Indicator: | Net
Worth as measured by Net Worth Per Member |
||
| Definition: | Net Worth = Total Admitted Assets minus Total
Liabilities divided by Total Members across all lines
of business |
|||
| Standard: | For the financial report that covers calendar year
2008, a minimum net worth per member of $172.00, as
determined from the annual
Financial Statement submitted to ODI and the ODJFS. |
|||
The Net Worth Per Member (NWPM) standard is the
Medicaid Managed Care Capitation amount paid to the
MCP during the preceding calendar year, excluding the
at-risk amount, expressed as a per-member per-month
figure, multiplied by the applicable proportion
below: |
||||
Appendix J
Page 3
Page 3
| 0.75 if the MCP had a total membership of 100,000 or more during that calendar year | ||||
| 0.90 if the MCP had a total membership of less than 100,000 for that calendar year | ||||
| If the MCP did not receive Medicaid Managed Care Capitation payments during the preceding calendar year, then the NWPM standard for the MCP is the average Medicaid Managed Care capitation amount paid to Medicaid-contracting MCPs during the preceding calendar year, excluding the at-risk amount, multiplied by the applicable proportion above. | ||||
| b. | Indicator: | Administrative Expense Ratio | ||
| Definition: | Administrative Expense Ratio = Administrative Expenses minus Franchise Fees divided by Total Revenue minus Franchise Fees | |||
| Standard: | Administrative Expense Ratio not to exceed 15%, as determined from the annual Financial Statement submitted to ODI and ODJFS. | |||
| c. | Indicator: | Overall Expense Ratio | ||
| Definition: | Overall Expense Ratio = The sum of the Administrative Expense Ratio and the Medical Expense Ratio | |||
| Administrative Expense Ratio = Administrative Expenses minus Franchise Fees divided by Total Revenue minus Franchise Fees | ||||
| Medical Expense Ratio = Medical Expenses divided by Total Revenue minus Franchise Fees | ||||
| Standard: | Overall Expense Ratio not to exceed 100% as determined from the annual Financial Statement submitted to ODI and ODJFS. |
Penalty for noncompliance: Failure to meet any standard on 2.a., 2.b., or 2.c. above will result in
ODJFS requiring the MCP to complete a corrective action plan (CAP) and specifying the date by which
compliance must be demonstrated. Failure to meet the standard or otherwise comply with the CAP by
the specified date will result in a new
membership freeze unless ODJFS determines that the deficiency does not potentially jeopardize
access to or quality of care or affect the MCP’s ability to meet administrative requirements (e.g.,
prompt pay requirements). Justifiable reasons for noncompliance may include one-time events (e.g.,
MCP investment in information system products).
If the financial statement is not submitted to ODI by the due date, the MCP
continues to be obligated to submit the report to ODJFS by ODI’s originally
Appendix J
Page 4
Page 4
specified due date unless the MCP requests and is granted an extension by ODJFS.
Failure to submit complete quarterly and annual Financial Statements on a timely basis will
be deemed a failure to meet the standards and will be subject to the noncompliance
penalties listed for indicators 2.a., 2.b., and 2.c., including the imposition of a new
membership freeze. The new membership freeze will take effect at the first of the month
following the month in which the determination was made that the MCP was non-compliant for
failing to submit financial reports timely.
In addition, ODJFS will review two liquidity indicators if a plan demonstrates potential
problems in meeting related administrative requirements or the standards listed above. The
two standards, 2.d and 2.e, reflect ODJFS’ expected level of performance. At this time,
ODJFS has not established penalties for noncompliance with these standards; however, ODJFS
will consider the MCP’s performance regarding the liquidity measures, in addition to
indicators 2.a., 2.b., and 2.c., in determining whether to impose a new membership freeze,
as outlined above, or to not issue or renew a contract with an MCP. The source for each
indicator will be the NAIC Quarterly and annual Financial Statements.
Long-term investments that can be liquidated without significant penalty within 24 hours,
which a plan would like to include in Cash and Short-Term Investments in the next two
measurements, must be disclosed in footnotes on the NAIC Reports. Descriptions and amounts
should be disclosed. Please note that “significant penalty” for this purpose is any penalty
greater than 20%. Also, enter the amortized cost of the investment, the market value of the
investment, and the amount of the penalty.
| d. | Indicator: | Days Cash on Hand | ||
| Definition: | Days Cash on Hand = Cash and Short-Term Investments divided by (Total Hospital and Medical Expenses plus Total Administrative Expenses) divided by 365. | |||
| Standard: | Greater than 25 days as determined from the annual Financial Statement submitted to ODI and ODJFS. | |||
| e. | Indicator: | Ratio of Cash to Claims Payable | ||
| Definition: | Ratio of Cash to Claims Payable = Cash and Short-Term Investments divided by claims Payable (reported and unreported). | |||
| Standard: | Greater than 0.83 as determined from the annual Financial Statement submitted to ODI and ODJFS. |
Appendix J
Page 5
Page 5
| 3. | REINSURANCE REQUIREMENTS | |
| Pursuant to the provisions of OAC rule 5101:3-26-09 (C), each MCP must carry reinsurance coverage from a licensed commercial carrier to protect against inpatient-related medical expenses incurred by Medicaid members. | ||
| The annual deductible or retention amount for such insurance must be specified in the reinsurance agreement and must not exceed $75,000.00, except as provided below. Except for transplant services, and as provided below, this reinsurance must cover, at a minimum, 80% of inpatient costs incurred by one member in one year, in excess of $75,000.00. | ||
| For transplant services, the reinsurance must cover, at a minimum, 50% of inpatient transplant related costs incurred by one member in one year, in excess of $75,000.00. | ||
| An MCP may request a higher deductible amount and/or that the reinsurance cover less than 80% of inpatient costs in excess of the deductible amount. If the MCP does not have more than 75,000 members in Ohio, but does have more than 75,000 members between Ohio and other states, ODJFS may consider alternate reinsurance arrangements. However, depending on the corporate structures of the Medicaid MCP, other forms of security may be required in addition to reinsurance. These other security tools may include parental guarantees, letters of credit, or performance bonds. In determining whether or not the request will be approved, the ODJFS may consider any or all of the following: |
| a. | whether the MCP has sufficient reserves available to pay unexpected claims; | ||
| b. | the MCP’s history in complying with financial indicators 2.a., 2.b., and 2.c., as specified in this Appendix; | ||
| c. | the number of members covered by the MCP; | ||
| d. | how long the MCP has been covering Medicaid or other members on a full risk basis; | ||
| e. | risk based capital ratio of 2.5 or higher calculated from the last annual ODI financial statement; | ||
| f. | graph/chart showing the claims history for reinsurance above the previously approved deductible from the last calendar year. |
| The MCP has been approved to have a reinsurance policy with a deductible amount of $400,000 that covers 80% of inpatient costs in excess of the deductible amount for non-transplant services. |
Appendix J
Page 6
Page 6
| Penalty for noncompliance: If it is determined that an MCP failed to have reinsurance coverage, that an MCP’s deductible exceeds $75,000.00 without approval from ODJFS, or that the MCP’s reinsurance for non-transplant services covers less than 80% of inpatient costs in excess of the deductible incurred by one member for one year without approval from ODJFS, then the MCP will be required to pay a monetary penalty to ODJFS. The amount of the penalty will be the difference between the estimated amount, as determined by ODJFS, of what the MCP would have paid in premiums for the reinsurance policy if it had been in compliance and what the MCP did actually pay while it was out of compliance plus 5%. For example, if the MCP paid $3,000,000.00 in premiums during the period of non-compliance and would have paid $5,000,000.00 if the requirements had been met, then the penalty would be $2,100,000.00. | ||
| If it is determined that an MCP’s reinsurance for transplant services covers less than 50% of inpatient costs incurred by one member for one year, the MCP will be required to develop a corrective action plan (CAP). | ||
| 4. | PROMPT PAY REQUIREMENTS | |
| In accordance with 42 CFR 447.46, MCPs must pay 90% of all submitted clean claims within 30 days of the date of receipt and 99% of such claims within 90 days of the date of receipt, unless the MCP and its contracted provider(s) have established an alternative payment schedule that is mutually agreed upon and described in their contract. The prompt pay requirement applies to the processing of both electronic and paper claims for contracting and non-contracting providers by the MCP and delegated claims processing entities. | ||
| The date of receipt is the date the MCP receives the claim, as indicated by its date stamp on the claim. The date of payment is the date of the check or date of electronic payment transmission. A claim means a bill from a provider for health care services that is assigned a unique identifier. A claim does not include an encounter form. | ||
| A “claim” can include any of the following: (1) a bill for services; (2) a line item of services; or (3) all services for one recipient within a bill. A “clean claim” is a claim that can be processed without obtaining additional information from the provider of a service or from a third party. | ||
| Clean claims do not include payments made to a provider of service or a third party where the timing of payment is not directly related to submission of a completed claim by the provider of service or third party (e.g., capitation). A clean claim also does not include a claim from a provider who is under investigation for fraud or abuse, or a claim under review for medical necessity. | ||
| Penalty for noncompliance: Noncompliance with prompt pay requirements will result in progressive penalties to be assessed on a quarterly basis, as outlined in Appendix N of the Provider Agreement. |
Appendix J
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Page 7
| 5. | PHYSICIAN INCENTIVE PLAN DISCLOSURE REQUIREMENTS | |
| MCPs must comply with the physician incentive plan requirements stipulated in 42 CFR 438.6(h). If the MCP operates a physician incentive plan, no specific payment can be made directly or indirectly under this physician incentive plan to a physician or physician group as an inducement to reduce or limit medically necessary services furnished to an individual. | ||
| If the physician incentive plan places a physician or physician group at substantial financial risk [as determined under paragraph (d) of 42 CFR 422.208] for services that the physician or physician group does not furnish itself, the MCP must assure that all physicians and physician groups at substantial financial risk have either aggregate or per-patient stop-loss protection in accordance with paragraph (f) of 42 CFR 422.208, and conduct periodic surveys in accordance with paragraph (h) of 42 CFR 422.208. | ||
| In accordance with 42 CFR 417.479 and 42 CFR 422.210, MCPs must maintain copies of the following required documentation and submit to ODJFS annually, no later than 30 days after the close of the state fiscal year and upon any modification of the MCP’s physician incentive plan: |
| a. | A description of the types of physician incentive arrangements the MCP has in place which indicates whether they involve a withhold, bonus, capitation, or other arrangement. If a physician incentive arrangement involves a withhold or bonus, the percent of the withhold or bonus must be specified. | ||
| b. | A description of information/data feedback to a physician/group on their: 1) adherence to evidence-based practice guidelines; and 2) positive and/or negative care variances from standard clinical pathways that may impact outcomes or costs. The feedback information may be used by the MCP for activities such as physician performance improvement projects that include incentive programs or the development of quality improvement initiatives. | ||
| c. | A description of the panel size for each physician incentive plan. If patients are pooled, then the pooling method used to determine if substantial financial risk exists must also be specified. | ||
| d. | If more than 25% of the total potential payment of a physician/group is at risk for referral services, the MCP must maintain a copy of the results of the required patient satisfaction survey and documentation verifying that the physician or physician group has adequate stop-loss protection, including the type of coverage (e.g., per member per year, aggregate), the |
Appendix J
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Page 8
| threshold amounts, and any coinsurance required for amounts over the threshold. | |||
| Upon request by a member or a potential member and no later than 14 calendar days after the request, the MCP must provide the following information to the member: (1) whether the MCP uses a physician incentive plan that affects the use of referral services; (2) the type of incentive arrangement; (3) whether stop-loss protection is provided; and (4) a summary of the survey results if the MCP was required to conduct a survey. The information provided by the MCP must adequately address the member’s request. |
| 6. | NOTIFICATION OF REGULATORY ACTION | |
| Any MCP notified by the ODI of proposed or implemented regulatory action must report such notification and the nature of the action to ODJFS no later than one working day after receipt from ODI. The ODJFS may request, and the MCP must provide, any additional information as necessary to assure continued satisfaction of program requirements. MCPs may request that information related to such actions be considered proprietary in accordance with established ODJFS procedures. Failure to comply with this provision will result in an immediate membership freeze. |
Appendix K
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APPENDIX K
QUALITY ASSESSMENT AND PERFORMANCE IMPROVEMENT PROGRAM
AND
EXTERNAL QUALITY REVIEW
ABD ELIGIBLE POPULATION
AND
EXTERNAL QUALITY REVIEW
ABD ELIGIBLE POPULATION
1. As required by federal regulation, 42 CFR 438.240, each managed care plan (MCP) must have an
ongoing Quality Assessment and Performance Improvement Program (QAPI) that is annually
prior-approved by the Ohio Department of Job and Family Services (ODJFS). The program must include
the following elements:
a.
PERFORMANCE IMPROVEMENT PROJECTS
Each MCP must conduct performance improvement projects (PIPs), including those specified by
ODJFS. PIPs must achieve, through periodic measurements and intervention, significant and
sustained improvement in clinical and non-clinical areas which are expected to have a
favorable effect on health outcomes and satisfaction. MCPs must adhere to ODJFS PIP content
and format specifications.
All ODJFS-specified PIPs must be prior-approved by ODJFS. As part of the external quality
review organization (EQRO) process, the EQRO will assist MCPs with conducting PIPs by
providing technical assistance and will annually validate the PIPs. In addition, the MCP
must annually submit to ODJFS the status and results of each PIP.
ODJFS will identify the clinical and/or non-clinical study topics for the SFY 2009 Provider
Agreement. Initiation of the PIPs will begin in the second year of participation in the ABD
Medicaid managed care program.
b.
UNDER- AND OVER-UTILIZATION
Each MCP must have mechanisms in place to detect under- and over-utilization of health care
services. The MCP must specify the mechanisms used to monitor utilization in its annual
submission of the QAPI program to ODJFS.
It should also be noted that pursuant to the program integrity provisions outlined in
Appendix I, MCPs must monitor for the potential under-utilization of services by their
members in order to assure that all Medicaid-covered services are being provided, as
required. If any under-utilized services are identified, the MCP must immediately
investigate and correct the problem(s) which resulted in such under-utilization of
services.
The MCP must conduct an ongoing review of service denials and must monitor utilization on
an ongoing basis in order to identify services which may be under-utilized.
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c. SPECIAL HEALTH CARE NEEDS
Each MCP must have mechanisms in place to assess the quality and appropriateness of care
furnished to members with special health care needs. The MCP must specify the mechanisms
used in its annual submission of the QAPI program to ODJFS.
d.
SUBMISSION OF PERFORMANCE MEASUREMENT DATA
Each MCP must submit clinical performance measurement data as required by ODJFS that
enables ODJFS to calculate standard measures. Refer to Appendix M “Performance Evaluation”
for a more comprehensive description of the clinical performance measures.
Each MCP must also submit clinical performance measurement data as required by ODJFS that
uses standard measures as specified by ODJFS. MCPs will be required to submit Health
Employer Data Information Set (HEDIS) audited data for measures that will be identified by
ODJFS for the SFY 2009 Provider Agreement.
The measures must have received a “report” designation from the HEDIS certified auditor and
must be specific to the Medicaid population. Data must be submitted annually and in an
electronic format. Data will be used for MCP clinical performance monitoring and will be
incorporated into comparative reports developed by the EQRO.
Initiation of submission of performance data will begin in the second year of participation
in the Medicaid managed care program.
e. QAPI PROGRAM SUBMISSION
Each MCP must implement an evaluation process to review, revise, and/or update the QAPI
program. The MCP must annually submit its QAPI program for review and approval by ODJFS.
| 2. | EXTERNAL QUALITY REVIEW |
In addition to the following requirements, MCPs must participate in external quality review
activities as outlined in OAC 5101:3-26-07.
a.
EQRO ADMINISTRATIVE REVIEWS
The EQRO will conduct annual focused administrative compliance assessments for each MCP
which will include, but not be limited to, the following domains as specified by ODJFS:
member rights and services, QAPI program, case management, provider networks, grievance
system, coordination and continuity of care, and utilization management. In addition, the
EQRO will complete a comprehensive administrative compliance assessment every three (3)
years as required by 42 CFR 438.358 and specified by ODJFS.
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In accordance with 42 CFR 438.360 and 438.362, MCPs with accreditation from a national accrediting
organization approved by the Centers for Medicare and Medicaid Services (CMS) may request a
non-duplication exemption from certain specified components of the administrative review.
Non-duplication exemptions may not be requested for SFY 2008.
b. EXTERNAL QUALITY REVIEW PERFORMANCE
In
accordance with OAC rule 5101:3-26-07, each MCP must participate in
an annual external quality
review survey. If the EQRO cites a deficiency in performance, the MCP will be required to complete
a Corrective Action Plan (e.g., ODJFS technical assistance session) or Quality Improvement
Directives depending on the severity of the deficiency. (An example of a deficiency is if an MCP
fails to meet certain clinical or administrative standards as supported by national evidence-based
guidelines or best practices.) Serious deficiencies may result in immediate termination or
non-renewal of the provider agreement. These quality improvement measures recognize the importance
of ongoing MCP performance improvement related to clinical care and service delivery.
Appendix L
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APPENDIX L
DATA QUALITY
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
A high level of performance on the data quality measures established in this appendix is crucial in
order for the Ohio Department of Job and Family Services (ODJFS) to determine the value of the
Aged, Blind or Disabled (ABD) Medicaid Managed Health Care program and to evaluate Medicaid
consumers’ access to and quality of services. Data collected from MCPs are used in key performance
assessments such as the external quality review, clinical performance measures, utilization review,
care coordination and case management, and in determining incentives. The data will also be used in
conjunction with the cost reports in setting the premium payment rates. The following measures, as
specified in this appendix, will be calculated per MCP and include all Ohio Medicaid members
receiving services from the MCP (i.e., Covered Families and Children (CFC) and ABD membership, if
applicable): Incomplete Outpatient Hospital Data, Rejected Encounters, Acceptance Rate, Encounter
Data Accuracy, and Generic Provider Number Usage.
Data sets collected from MCPs with data quality standards include: encounter data; case management
data; data used in the external quality review; members’ PCP data; and appeal and grievance data.
1. ENCOUNTER DATA
For detailed descriptions of the encounter data quality measures below, see ODJFS Methods for the
ABD and CFC Medicaid Managed Care Programs Data Quality Measures.
1.a. Encounter Data Completeness
Each MCP’s encounter data submissions will be assessed for completeness. The MCP is responsible for
collecting information from providers and reporting the data to ODJFS in accordance with program
requirements established in Appendix C, MCP Responsibilities.
Failure to do so jeopardizes the MCP’s ability to demonstrate compliance with other performance
standards.
1.a.i. Encounter Data Volume
Measure: The volume measure for each service category, as listed in Table 2 below, is the rate of
utilization (e.g., discharges, visits) per 1,000 member months (MM) for the ABD program. The
measure will be calculated per MCP.
Report Period: The report periods for the SFY 2008 and SFY 2009 contract periods are listed in
Table 1. below.
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Table 1. Report Periods for the SFY 2008 and 2009 Contract Periods
| Data Source: | ||||||
| Estimated Encounter | Quarterly Report | |||||
| Report Period | Data File Update | Estimated Issue Date | Contract Period | |||
Qtr 1 2007
|
July 2007 | August 2007 | SFY 2008 | |||
Qtr 1, Qtr 2 2007
|
October 2007 | November 2007 | ||||
Qtr 1 thru Qtr 3 2007
|
January 2008 | February 2008 | ||||
Qtr 1 thru Qtr 4 2007
|
April 2008 | May 2008 | ||||
Qtr 1 thru Qtr 4 2007, Qtr 1 2008 |
July 2008 | August 2008 | SFY 2009 | |||
Qtr 1 thru Qtr 4 2007, Qtr 1, Qtr 2 2008 |
October 2008 | November 2008 | ||||
Qtr 1 thru Qtr 4 2007, Qtr 1 thru Qtr 3 2008 |
January 2009 | February 2009 | ||||
Qtr 1 thru Qtr 4 2007, Qtr 1 thru Qtr 4 2008 |
April 2009 | May 2009 |
Qtr1 = January to March
|
Qtr2 = April to June | Qtr3 = July to September | Qtr 4 = October to December |
Data Quality Standard: The utilization rate for all service categories listed in Table 2 must be
equal to or greater than the interim standards established in Table 2. below (Interim Standards -
Encounter Data Volume).
Statewide Approach: Prior to establishment of statewide minimum performance standards, ODJFS will
evaluate MCP performance using the interim standards for Encounter data volume. ODJFS will use the
first four quarters of data (i.e., full calendar year quarters) from all MCPs serving ABD program
membership to determine statewide minimum encounter volume data quality standards.
Appendix L
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Table 2. Interim Standards — Encounter Data Volume
| Standard for | ||||||||
| Dates of | ||||||||
| Service | ||||||||
| Measure per | on or after | |||||||
| Category | 1,000/MM | 1/1/2007 | Description | |||||
Inpatient
Hospital
|
Discharges | 2.7 | General/acute care, excluding newborns and mental health and chemical dependency services | |||||
Emergency
Department
|
25.3 | Includes physician and hospital emergency department encounters | ||||||
Dental
|
25.5 | Non-institutional and hospital dental visits | ||||||
Vision
|
Visits | 5.3 | Non-institutional and hospital outpatient optometry and ophthalmology visits | |||||
Primary and
Specialist Care
|
116.6 | Physician/practitioner and hospital outpatient visits | ||||||
Ancillary
Services
|
66.8 | Ancillary visits | ||||||
Behavioral
Health
|
Service | 5.2 | Inpatient and outpatient behavioral encounters | |||||
Pharmacy
|
Prescriptions | 246.1 | Prescribed drugs | |||||
Determination of Compliance: Performance is monitored once every quarter for the entire report
period. If the standard is not met for every service category in all quarters of the report period,
then the MCP will be determined to be noncompliant for the report period.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of two percent of the current
month’s premium payment. Monetary sanctions will not be levied for consecutive quarters that an
MCP is determined to be noncompliant. If an MCP is noncompliant for three consecutive quarters,
membership will be frozen. Once the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be lifted, if
applicable, and monetary sanctions will be returned.
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1.a.ii. Incomplete Outpatient Hospital Data
ODJFS will be monitoring, on a quarterly basis, the percentage of hospital encounters which contain
a revenue code and CPT/HCPCS code. A CPT/HCPCS code must accompany certain revenue center codes.
These codes are listed in Appendix B of Ohio Administrative Code rule 5101:3-2-21 (fee-for-service
outpatient hospital policies) and in the methods for calculating the completeness measures.
Measure: The percentage of outpatient hospital line items with certain revenue center codes, as
explained above, which had an accompanying valid procedure (CPT/HCPCS) code. The measure will be
calculated per MCP.
Report Period: The report periods for the SFY 2008 and SFY 2009 contract periods are listed in
Table 3. below.
Table 3. Report Periods for the SFY 2008 and 2009 Contract Periods
| Data Source: | ||||||
| Estimated Encounter | Quarterly Report | |||||
| Quarterly Report Periods | Data File Update | Estimated Issue Date | Contract Period | |||
Qtr 3 & Qtr 4 2004, 2005, 2006 |
SFY 2008 | |||||
Qtr 1 2007
|
July 2007 | August 2007 | ||||
Qtr 3 & Qtr 4 2004, 2005, 2006 |
||||||
Qtr 1, Qtr 2 2007
|
October 2007 | November 2007 | ||||
Qtr 4 2004, 2005, 2006 |
||||||
Qtr 1 thru Qtr 3 2007
|
January 2008 | February 2008 | ||||
Qtr 1 thru Qtr 4: 2005, 2006,
2007
|
April 2008 | May 2008 | ||||
Qtr 2 thru Qtr 4 2005, |
SFY 2009 | |||||
Qtr 1 thru Qtr 4: 2006, 2007 |
July 2008 | August 2008 | ||||
Qtr 1 2008
|
||||||
Qtr 3, Qtr 4: 2005, |
||||||
Qtr 1 thru Qtr 4: 2006, 2007
|
October 2008 | November 2008 | ||||
Qtr 1, Qtr 2 2008 |
||||||
Qtr 4: 2005, |
||||||
Qtr 1 thru Qtr 4: 2006, 2007
|
January 2009 | February 2009 | ||||
Qtr 1 thru Qtr 3: 2008 |
||||||
Qtr 1 thru Qtr 4: 2006, 2007,
2008
|
April 2009 | May 2009 |
Qtr1 = January to March
|
Qtr2 = April to June | Qtr3 = July to September | Qtr4 = October to December |
Appendix L
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Data Quality Standard: The data quality standard is a minimum rate of 95%.
Determination of Compliance: Performance is monitored once every quarter for all report periods.
For quarterly reports that are issued on or after July 1, 2007, an MCP will be determined to be
noncompliant for the quarter if the standard is not met in any report period and the initial
instance of noncompliance in a report period is determined on or after July 1, 2007. An initial
instance of noncompliance means that the result for the applicable report period was in compliance
as determined in the prior quarterly report, or the instance of noncompliance is the first
determination for an MCP’s first quarter of measurement.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction.
Upon all subsequent quarterly measurements of performance, if an MCP is again determined to be
noncompliant with the standard, ODJFS will impose a monetary sanction (see Section 6) of one
percent of the current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
1.a.iii. Rejected Encounters
Encounters submitted to ODJFS that are incomplete or inaccurate are rejected and reported back to
the MCPs on the Exception Report. If an MCP does not resubmit rejected encounters, ODJFS’ encounter
data set will be incomplete.
Measure 1 only applies to MCPs that have had Medicaid membership for more than one year.
Measure 1: The percentage of encounters submitted to ODJFS that are rejected. The measure will be
calculated per MCP.
Report Period: For the SFY 2008 contract period, performance will be evaluated using the following
report periods July - September 2007; October - December 2007; January - March 2008; April - June
2008. For the SFY 2009 contract period, performance will be evaluated using the following report
periods July - September 2008; October - December 2008; January - March 2009; April - June 2009.
Data Quality Standard for measure 1: Data Quality Standard 1 is a maximum encounter data
rejection rate of 10% for each file in the ODJFS-specified medium per format. The measure
will be calculated per MCP.
Appendix L
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Files in the ODJFS-specified medium per format that are totally rejected will not be considered in
the determination of noncompliance.
Determination of Compliance: Performance is monitored once every quarter. Compliance determination
with the standard applies only to the quarter under consideration and does not include performance
in previous quarters.
Penalty for noncompliance with the Data Quality Standard for measure 1: The first time an MCP is
noncompliant with a standard for this measure, ODJFS will issue a Sanction Advisory informing the
MCP that any future noncompliance instances with the standard for this measure will result in ODJFS
imposing a monetary sanction. Upon all subsequent measurements of performance, if an MCP is again
determined to be noncompliant with the standard, ODJFS will impose a monetary sanction (see Section
6.) of one percent of the current month’s premium payment. The monetary sanction will be applied
for each file type in the ODJFS-specified medium per format that is determined to be out of
compliance.
Once the MCP is performing at standard levels and violations/deficiencies are resolved to the
satisfaction of ODJFS, the money will be refunded.
Measure 2 only applies to MCPs that have had Medicaid membership for one year or less.
Measure 2: The percentage of encounters submitted to ODJFS that are rejected. The measure will be
calculated per MCP.
Report Period: The report period for Measure 2 is monthly. Results are calculated and performance
is monitored monthly. The first reporting month begins with the third month of enrollment.
Data Quality Standard for measure 2: The data quality standard is a maximum encounter data
rejection rate for each file in the ODJFS-specified medium per format as follows:
Third through sixth month with membership: |
50 | % | ||
Seventh through twelfth month with membership: |
25 | % |
Files in the ODJFS-specified medium per format that are totally rejected will not be considered in
the determination of noncompliance.
Determination of Compliance: Performance is monitored once every month. Compliance determination
with the standard applies only to the month under consideration and does not include performance in
previous quarters.
Penalty for Noncompliance with the Data Quality Standard for measure 2: If the MCP is determined
to be noncompliant for either standard, ODJFS will impose a monetary sanction of one
Appendix L
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percent of the MCP’s current month’s premium payment. The monetary sanction will be applied for
each file type in the ODJFS-specified medium per format that is determined to be out of compliance.
The monetary sanction will be applied only once per file type per compliance determination period
and will not exceed a total of two percent of the MCP’s current month’s premium payment. Once the
MCP is performing at standard levels and violations/deficiencies are resolved to the satisfaction
of ODJFS, the money will be refunded. Special consideration will be made for MCPs with less than
1,000 members.
1.a.iv. Acceptance Rate
This measure only applies to MCPs that have had Medicaid membership for one year or less.
Measure: The rate of encounters that are submitted to ODJFS and accepted (i.e. accepted encounters
per 1,000 member months). The measure will be calculated per MCP.
Report Period: The report period for this measure is monthly. Results are calculated and
performance is monitored monthly. The first reporting month begins with the third month of
enrollment.
Data Quality Standard: The data quality standard is a monthly minimum accepted rate of encounters
for each file in the ODJFS-specified medium per format as follows:
Third through sixth month with
membership: |
||
| 50 encounters per 1,000 MM for NCPDP | ||
| 65 encounters per 1,000 MM for NSF | ||
| 20 encounters per 1,000 MM for UB-92 | ||
Seventh through twelfth month of
membership: |
||
| 250 encounters per 1,000 MM for NCPDP | ||
| 350 encounters per 1,000 MM for NSF | ||
| 100 encounters per 1,000 MM for UB-92 |
Determination of Compliance: Performance is monitored once every month. Compliance determination
with the standard applies only to the month under consideration and does not include performance in
previous months.
Penalty for Noncompliance: If the MCP is determined to be noncompliant with the standard, ODJFS
will impose a monetary sanction of one percent of the MCP’s current month’s premium payment. The
monetary sanction will be applied for each file type in the ODJFS-specified medium per format that
is determined to be out of compliance. The monetary sanction will be applied only once per file
type per compliance determination period and will not exceed a total of two percent of
Appendix L
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the MCP’s current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
Special consideration will be made for MCPs with less than 1,000 members.
1.a.v. Informational Encounter Data Completeness Measure
The ‘Incomplete Data for Last Menstrual Period’ measure is informational only for the ABD
population. Although there is no minimum performance standard for this measure, results will be
reported and used as one component in monitoring the quality of data submitted to ODJFS by the
MCPs.
1.b. Encounter Data Accuracy
As with data completeness, MCPs are responsible for assuring the collection and submission of
accurate data to ODJFS. Failure to do so jeopardizes MCPs’ performance, credibility and, if not
corrected, will be assumed to indicate a failure in actual performance.
1.b.i. Encounter Data Accuracy Study
Measure: This accuracy study will compare the accuracy and completeness of payment data stored in
MCPs’ claims systems during the study period to payment data submitted to and accepted by ODJFS.
The measure will be calculated per MCP.
Payment information found in MCPs’ claims systems for paid claims that does not match payment
information found on a corresponding encounter will be counted as omissions.
Report Period: In order to provide timely feedback on the omission rate of encounters, the report
period will be the most recent from when the measure is initiated. This measure is conducted
annually.
Data Quality Standard for Measure: TBD for SFY 2008 and SFY 2009.
Penalty for Noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction.
Upon all subsequent measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 6.) of one percent of the
current month’s premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money will be refunded.
Appendix L
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1.b.ii. Generic Provider Number Usage
Measure: This measure is the percentage of non-pharmacy encounters with the generic provider
number. Providers submitting claims which do not have an MMIS provider number must be submitted to
ODJFS with the generic provider number 9111115. The measure will be calculated per MCP.
All other encounters are required to have the MMIS provider number of the servicing provider. The
report period for this measure is quarterly.
Report Period: For the SFY 2008 and SFY 2009 contract period, performance will be evaluated using
the report periods listed in 1.a.iii., Table 3.
Data Quality Standard: A maximum generic provider number usage rate of 10%.
Determination of Compliance: Performance is monitored once every quarter for all report periods.
For quarterly reports that are issued on or after July 1, 2007, an MCP will be determined to be
noncompliant for the quarter if the standard is not met in any report period and the initial
instance of noncompliance in a report period is determined on or after July 1, 2007. An initial
instance of noncompliance means that the result for the applicable report period was in compliance
as determined in the prior quarterly report, or the instance of noncompliance is the first
determination for an MCP’s first quarter of measurement.
Penalty for noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of three percent of the current
month’s premium payment. Once the MCP is performing at standard levels and violations/deficiencies
are resolved to the satisfaction of ODJFS, the money will be refunded.
1.c. Timely Submission of Encounter Data
1.c.i. Timeliness
ODJFS recommends submitting encounters no later than thirty-five days after the end of the month in
which they were paid. ODJFS does not monitor standards specifically for timeliness, but the minimum
claims volume (Section 1.a.i.) and the rejected encounter (Section 1.a.iv.) standards are based on
encounters being submitted within this time frame.
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1.c.ii. Submission of Encounter Data Files in the ODJFS-specified medium per format
Information concerning the proper submission of encounter data may be obtained from the ODJFS
Encounter Data File Submission Specifications document. The MCP must submit a letter of
certification, using the form required by ODJFS, with each encounter data file in the
ODJFS-specified medium per format.
The letter of certification must be signed by the MCP’s Chief Executive Officer (CEO), Chief
Financial Officer (CFO), or an individual who has delegated authority to sign for, and who reports
directly to, the MCP’s CEO or CFO.
2. CASE MANAGEMENT DATA
ODJFS designed a case management system (CAMS) in order to monitor MCP compliance with program
requirements specified in Appendix G, Coverage and Services. Each MCP’s case management data
submissions will be assessed for completeness and accuracy. The MCP is responsible for submitting a
case management file every month. Failure to do so jeopardizes the MCP’s ability to demonstrate
compliance with case management requirements. For detailed descriptions of the case management
measures below, see ODJFS Methods for the ABD and CFC Medicaid Managed Care Programs Data Quality
Measures.
2.a. Case Management System Data Accuracy
2.a.i. Open Case Management Spans for Disenrolled Members (this measure will be discontinued as of
January 2008)
Measure: The percentage of the MCP’s case management records in CAMS for the ABD program that have
open case management date spans for members who have disenrolled from the MCP.
Report Period: For the third and fourth quarters of SFY 2007, January - March 2007, and April -
June 2007 report periods. For the SFY 2008 contract period, July - September 2007, and October -
December 2007 report periods.
Data Quality Standard: A rate of open case management spans for disenrolled members of no more than
1.0%.
Statewide Approach: MCPs will be evaluated using a statewide result specific for the ABD program,
including all regions in which an MCP has ABD membership. An MCP will not be evaluated until the
MCP has at least 3,000 ABD members statewide. As the ABD Medicaid managed care program expands
statewide and regions become active in different months, statewide results will
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include every region in which an MCP has membership [Example: MCP AAA has: 6,000 members in the
South West region beginning in January 2007; 7,000 members in the West Central region beginning in
February 2007; and 8,000 members in the South East region beginning in March 2007. MCP AAA’s
statewide results for the April-June 2007 report period will include data for the South West, West
Central, and South East regions.]
Penalty for noncompliance: If an MCP is noncompliant with the standard, then the ODJFS will issue a
Sanction Advisory informing the MCP that a monetary sanction will be imposed if the MCP is
noncompliant for any future report periods. Upon all subsequent semi-annual measurements of
performance, if an MCP is again determined to be noncompliant with the standard, ODJFS will impose
a monetary sanction of one-half of one percent of the current month’s premium payment. Once the MCP
is performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded.
2.b. Timely Submission of Case Management Files
Data Quality Submission Requirement: The MCP must submit Case Management files on a monthly basis
according to the specifications established in ODJFS’ Case Management File and Submission
Specifications.
Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the penalty for
noncompliance with this requirement.
3. EXTERNAL QUALITY REVIEW DATA
In accordance with federal law and regulations, ODJFS is required to conduct an independent quality
review of contracting managed care plans. The OAC rule 5101:3-26-07(C) requires MCPs to submit data
and information as requested by ODJFS or its designee for the annual external quality review.
Two information sources are integral to these studies: encounter data and medical records. Because
encounter data is used to draw samples for these studies, quality must be sufficient to ensure
valid sampling.
An adequate number of medical records must then be retrieved from providers and submitted to ODJFS
or its designee in order to generalize results to all applicable members. To aid MCPs in achieving
the required medical record submittal rate, ODJFS will give at least an eight week period to
retrieve and submit medical records.
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3.a. Independent External Quality Review
Measure: The percentage of requested records for a study conducted by the External Quality Review
Organization (EQRO) that are submitted by the managed care plan.
Report Period: The report period is one year. Results are calculated and performance is monitored
annually. Performance is measured with each review.
Data Quality Standard: A minimum record submittal rate of 85% for each clinical measure.
Penalty for noncompliance for Data Quality Standard: For each study that is completed during this
contract period, if an MCP is noncompliant with the standard, ODJFS will impose a non-refundable
$10,000 monetary sanction.
4. MEMBERS’ PCP DATA
The designated PCP is the provider who will manage and coordinate the overall care for ABD members
including those who have case management needs. The MCP must submit a Members’ Designated PCP file
every month. Specialists may and should be identified as the PCP as appropriate for the member’s
condition per the specialty types specified for the ABD population in ODJFS Member’s PCP Data File
and Submission Specifications; however, no ABD member may have more than one PCP identified for a
given month.
4.a. Timely submission of Member’s PCP Data
Data Quality Submission Requirement: The MCP must submit a Members’ Designated PCP Data files on a
monthly basis according to the specifications established in ODJFS Member’s PCP Data File and
Submission Specifications.
Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the penalty for
noncompliance with this requirement.
4.b. Designated PCP for newly enrolled members (applicable for report periods prior to January
2008)
Measure: The percentage of MCP’s newly enrolled members who were designated a PCP by their
effective date of enrollment.
Report Periods: For the third and fourth quarters of SFY 2007 contract period, performance will be
evaluated quarterly using the January — March 2007 and April — June 2007 report periods. For the
SFY 2008 contract period, performance will be evaluated quarterly using the July-September 2007,
and October — December 2007 report periods.
Data Quality Standard: A minimum rate of 65% of new members with PCP designation by
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their effective date of enrollment for quarter 3 and quarter 4 of SFY 2007. A minimum rate of 75%
of new members with PCP designation by their effective date of enrollment for quarter 1 and quarter
2 of SFY 2008.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has ABD membership. An MCP will not be evaluated until the MCP has at least 3,000 ABD
members statewide.
Penalty for noncompliance: If an MCP is noncompliant with the standard, ODJFS will impose a
monetary sanction of one-half of one percent of the current month’s premium payment. Once the MCP
is performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. As stipulated in OAC rule 5101:3-26-08.2, each new member must
have a designated primary care provider (PCP) prior to their effective date of coverage. Therefore,
MCPs are subject to additional corrective action measures under Appendix N, Compliance Assessment
System, for failure to meet this requirement.
4.b.i. Designated PCP for newly enrolled members (applicable for report periods after December
2007)
Measure: The percentage of MCP’s newly enrolled members who were designated a PCP by their
effective date of enrollment.
Report Periods: For the SFY 2009 contract period, performance will be evaluated annually using CY
2008.
Data Quality Standards: For SFY 2009, a minimum rate of 85% of new members with PCP designation by
their effective date of enrollment.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has ABD membership. An MCP will not be evaluated until the MCP has at least 3,000 ABD
members statewide.
Penalty for noncompliance: If an MCP is noncompliant with the standard, ODJFS will impose a
monetary sanction of one-half of one percent of the current month’s premium payment. Once the MCP
is performing at standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. As stipulated in OAC rule 5101:3-26-08.2, each new member must
have a designated primary care provider (PCP) prior to their effective date of coverage. Therefore, MCPs are subject to additional corrective action measures under Appendix N,
Compliance Assessment System, for failure to meet this requirement.
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5. APPEALS AND GRIEVANCES DATA
Pursuant to OAC rule 5101:3-26-08.4, MCPs are required to submit information at least monthly to
ODJFS regarding appeal and grievance activity. ODJFS requires these submissions to be in an
electronic data file format pursuant to the Appeal File and Submission Specifications and Grievance
File and Submission Specifications.
The appeal data file and the grievance data file must include all appeal and grievance activity,
respectively, for the previous month, and must be submitted by the ODJFS-specified due date. These
data files must be submitted in the ODJFS-specified format and with the ODJFS-specified filename in
order to be successfully processed.
Penalty for noncompliance: MCPs who fail to submit their monthly electronic data files to the ODJFS
by the specified due date or who fail to resubmit, by no later than the end of that month, a file
which meets the data quality requirements will be subject to penalty as stipulated under the
Compliance Assessment System (Appendix N).
6. NOTES
6.a. Penalties, Including Monetary Sanctions, for Noncompliance
Penalties for noncompliance with standards outlined in this appendix, including monetary sanctions,
will be imposed as the results are finalized. With the exception of Sections 1.a.i., 1.a.iii.,
1.a.iv., 1.a.v., and 1.b.ii no monetary sanctions described in this appendix will be imposed if the
MCP is in its first contract year of Medicaid program participation. Notwithstanding the penalties specified
in this Appendix, ODJFS reserves the right to apply the most appropriate penalty to the area of
deficiency identified when an MCP is determined to be noncompliant with a standard. Monetary
penalties for noncompliance with any individual measure, as determined in this appendix, shall not
exceed $300,000 during each evaluation.
Refundable monetary sanctions will be based on the premium payment in the month of the
cited deficiency and due within 30 days of notification by ODJFS to the MCP of the amount.
Any monies collected through the imposition of such a sanction will be returned to the MCP (minus
any applicable collection fees owed to the Attorney General’s Office, if the MCP has been
delinquent in submitting payment) after the MCP has demonstrated full compliance with the
particular program requirement and the violations/deficiencies are resolved to the satisfaction of
ODJFS. If an MCP does not comply within two years of the date of notification of noncompliance,
then the monies will not be refunded.
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6.b. Combined Remedies
If ODJFS determines that one systemic problem is responsible for multiple deficiencies, ODJFS may
impose a combined remedy which will address all areas of deficient performance. The total fines
assessed in any one month will not exceed 15% of the MCP’s monthly premium payment for the Ohio
Medicaid program.
6.c. Membership Freezes
MCPs found to have a pattern of repeated or ongoing noncompliance may be subject to a membership
freeze.
6.d. Reconsideration
Requests for reconsideration of monetary sanctions and enrollment freezes may be submitted as
provided in Appendix N, Compliance Assessment System.
6.e. Contract Termination, Nonrenewals, or Denials
Upon termination either by the MCP or ODJFS, nonrenewal, or denial of an MCP provider agreement,
all previously collected refundable monetary sanctions will be retained by ODJFS.
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APPENDIX M
PERFORMANCE EVALUATION
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
This appendix establishes minimum performance standards for managed care plans (MCPs) in key
program areas, under the Agreement. Standards are subject to change based on the revision or update
of applicable national standards, methods, benchmarks, or other factors as deemed relevant.
Performance will be evaluated in the categories of Quality of Care, Access, Consumer Satisfaction,
and Administrative Capacity. Each performance measure has an accompanying minimum performance
standard. MCPs with performance levels below the minimum performance standards will be required to
take corrective action. All performance measures, as specified in this appendix, will be calculated
per MCP and include only members in the ABD Medicaid managed care program. Selected measures in
this appendix will be used to determine incentives as specified in Appendix O, Pay for Performance
(P4P).
1. QUALITY OF CARE
1.a. Independent External Quality Review
In accordance with federal law and regulations, state Medicaid agencies must annually provide for
an external quality review of the quality outcomes and timeliness of, and access to, services
provided by Medicaid-contracting MCPs [(42 CFR 438.204(d)]. The external review assists the state
in assuring MCP compliance with program requirements and facilitates the collection of accurate and
reliable information concerning MCP performance.
Measure: The independent external quality review covers a review of clinical and non-clinical
performance as outlined in Appendix K.
Report Period: Performance will be evaluated using the reviews conducted during SFY 2008.
Action Required for Deficiencies: For all reviews conducted during the contract period, if the EQRO
cites a deficiency in performance the MCP will be required to complete a Corrective Action Plan or
Quality Improvement Directive, depending on the severity of the deficiency. Serious deficiencies
may result in immediate termination or non-renewal of the Agreement.
1.b. Members with Special Health Care Needs (MSHCN)
Given the substantial proportion of members with chronic conditions and co-morbidities in the ABD
population, one of the quality of care initiatives of the ABD Medicaid managed care program focuses
on case management. In order to ensure state compliance with the provisions of 42 CFR 438.208, the
Bureau of Managed Health Care established Members with Special Health Care Needs (MSHCN) basic
program requirements as set forth in Appendix G, Coverage and Services of the
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Agreement, and corresponding minimum performance standards as described below. The purpose of these
measures is to provide appropriate and targeted case management services to MSHCN who have specific
diagnoses and/or who require high-cost or extensive services. Given the expedited schedule for
implementing the ABD Medicaid managed care program, coupled with the challenges facing a new
Medicaid program in the State of Ohio, the minimum performance standards for the case management
requirements for MSHCN are phased in throughout SFY 2007 and SFY 2008. The minimum standards for
these performance measures will be fully phased in by no later than SFY 2009. For detailed
methodologies of each measure, see ODJFS Methods for the ABD Medicaid Managed Care Program’s Case
Management Performance Measures.
1.b.i Case Management of Members
Measure: The average monthly case management rate for members who have at least three months of
consecutive enrollment in one MCP.
Report Period: For the SFY 2007 contract period, April — June 2007 report period. For the SFY 2008
contract period, July — September 2007, October — December 2007, January — March 2008, and April —
June 2008 report periods. For the SFY 2009 contract period, July — September 2008, October —
December 2008, January — March 2009, and April — June 2009 report periods.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. An MCP will not be evaluated until the MCP has at least 3,000 members
statewide who have had at least three months of continuous enrollment during each month of the
entire report period. As the ABD Medicaid managed care program expands statewide and regions become
active in different months, statewide results will include every region in which an MCP has
membership [Example: MCP AAA has: 6,000 members in the South West region beginning in January
2007; 7,000 members in the West Central region beginning in February 2007; and 8,000 members in the
South East region beginning in March 2007. MCP AAA’s statewide results for the April-June 2007
report period will include case management rates for all members who meet minimum continuous
enrollment criteria for this measure in: the South West region for April 2007’s monthly rate
calculation; the South West and West Central regions for May 2007’s monthly rate calculation; and
the South West, West Central, and South East regions for June 2007’s monthly rate calculation.]
Statewide Target: For the first and second quarters of SFY 2008, a case management rate of 30%. For
the third and fourth quarters of SFY 2008, a case management rate of 35%. For the first and second
quarters of SFY 2009, a case management rate of 40%. For the third and fourth quarters of SFY 2009,
a case management rate of 45%.
Statewide Minimum Performance Standard: The level of improvement must result in at least a 20%
decrease in the difference between the target and the previous report period’s results.
Penalty for Noncompliance: The first time an MCP is noncompliant with a standard for this measure,
ODJFS will issue a Sanction Advisory informing the MCP that any future noncompliance instances with
the standard for this measure will result in ODJFS imposing a monetary sanction. Upon all
subsequent measurements of performance, if an MCP is again determined to be
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noncompliant with the standard, ODJFS will impose a monetary sanction (see Section 5) of two
percent of the current month’s premium payment. Monetary sanctions will not be levied for
consecutive quarters that an MCP is determined to be noncompliant. If an MCP is noncompliant for a
subsequent quarter, new member selection freezes or a reduction of assignments will occur as
outlined in Appendix N of the Provider Agreement. Once the MCP is performing at standard levels and
the violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be
lifted, if applicable, and monetary sanctions will be returned.
1.b.ii. Case Management of Members with an ODJFS-Mandated Condition
Measure 1: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of asthma who have had at
least three consecutive months of enrollment in one MCP that are case managed.
Measure 2: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of chronic obstructive
pulmonary disease who have had at least three consecutive months of enrollment in one MCP that
are case managed.
Measure 3: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of congestive heart failure
who have had at least three consecutive months of enrollment in one MCP that are case managed.
Measure 4: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS mandated case management condition of behavioral health who have had
at least three consecutive months of enrollment in one MCP that are case managed.
Measure 5: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of diabetes who have had at least
three consecutive months of enrollment in one MCP that are case managed.
Measure 6: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of non-mild hypertension who have
had at least three consecutive months of enrollment in one MCP that are case managed.
Measure 7: The percent of members with a positive identification through an ODJFS administrative
review of data for the ODJFS-mandated case management condition of coronary arterial disease who
have had at least three consecutive months of enrollment in one MCP that are case managed.
Report Periods for Measures 1- 7: For the SFY 2007 contract period April — June 2007 report
periods. For the SFY 2008 contract period, July — September 2007, October — December 2007, January
— March 2008, and April — June 2008 report periods. For the SFY 2009 contract period, July —
September 2008, October — December 2008, January — March 2009, and April — June 2009 report
periods.
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Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. An MCP will not be evaluated until the MCP has at least 3,000 members
statewide who have had at least three months of continuous enrollment during each month of the
entire report period. As the ABD Medicaid managed care programs expands statewide and regions
become active in different months, statewide results will include every region in which an MCP has
membership [Example: MCP AAA has: 6,000 members in the South West region beginning in January
2007; 7,000 members in the West Central region beginning in February 2007; and 8,000 members in the
South East region beginning in March 2007. MCP AAA’s statewide results for the April-June 2007
report period will include case management rates for all members in the South West, West Central,
and South East regions who are identified through the administrative data review as having a
mandated condition and are continuously enrolled for at least three consecutive months in one MCP.]
Statewide Target for Measures 1, 2, 3, 5, 6, and 7: For the first and second quarters of SFY 2008,
a case management rate of 60%. For the third and fourth quarters of SFY 2008, a case management
rate of 65%. For SFY 2009, a case management rate of 75%.
Statewide Minimum Performance Standard: The level of improvement must result in at least a 20%
decrease in the difference between the target and the previous report period’s results.
Statewide Target for Measure 4: For the first and second quarters of SFY 2008, a case management
rate of 30%. For the third and fourth quarters of SFY 2008, a case management rate of 35%. For SFY
2009, the case management rate is TBD.
Statewide Minimum Performance Standard: The level of improvement must result in at least a 20%
decrease in the difference between the target and the previous report period’s results.
Penalty for Noncompliance for Measures 1-7: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that any future
noncompliance instances with the standard for this measure will result in ODJFS imposing a monetary
sanction. Upon all subsequent measurements of performance, if an MCP is again determined to be
noncompliant with the standard, ODJFS will impose a monetary sanction (see Section 5) of two
percent of the current month’s premium payment. Monetary sanctions will not be levied for
consecutive quarters that an MCP is determined to be noncompliant. If an MCP is noncompliant for a
subsequent quarter, new member selection freezes or a reduction of assignments will occur as
outlined in Appendix N of the Provider Agreement. Once the MCP is performing at standard levels and
the violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties will be
lifted, if applicable, and monetary sanctions will be returned.
1.c. Clinical Performance Measures
MCP performance will be assessed based on the analysis of submitted encounter data for each year.
For certain measures, standards are established; the identification of these standards is not
intended to limit the assessment of other indicators for performance improvement activities.
Performance on multiple measures will be assessed and reported to the MCPs and others, including
Medicaid consumers.
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The clinical performance measures described below closely follow the National Committee for Quality
Assurance’s (NCQA) Health Plan Employer Data and Information Set (HEDIS). NCQA may annually change
its method for calculating a measure. These changes can make it difficult to evaluate whether
improvement occurred from a prior year. For this reason, ODJFS will use the same methods to
calculate the baseline results and the results for the period in which the MCP is being held
accountable. For example, the same methods are used to calculate calendar year 2008 results (the
baseline period) and calendar year 2009 results. The methods will be updated and a new baseline
will be created during 2009 for calendar year 2010 results. These results will then serve as the
baseline to evaluate whether improvement occurred from calendar year 2009 to calendar year 2010.
Clinical performance measure results will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout. For a comprehensive
description of the clinical performance measures below, see ODJFS Methods for Clinical Performance
Measures, ABD Medicaid Managed Care Program.Performance standards are subject to change, based on
the revision or update of NCQA methods or other national standards, methods or benchmarks.
MCPs will be evaluated using a statewide result, including all regions in which an MCP has
membership. ODJFS will use the first calendar year of an MCP’s ABD managed care program membership
as the baseline year (i.e., CY2007). The baseline year will be used to determine performance
standards and targets; baseline data will come from a combination of FFS claims data and MCP
encounter data. For those performance measures that require two calendar years of baseline data,
the additional calendar year (i.e., the calendar year prior to the first calendar year of ABD
managed care program membership, i.e., CY2006) data will come from FFS claims data.
An MCP’s second calendar year of ABD managed care program membership (i.e., CY2008) will be the
initial report period of evaluation for performance measures that require one calendar year of
baseline data (i.e., CY2007), and for performance measures that require two calendar years of
baseline data (i.e., CY2006 and CY2007).
Report Period: For the SFY 2008 contract period, performance will be evaluated using the January —
December 2007 report period and may be adjusted based on the number of months of ABD managed care
membership. For the SFY 2009 contract period, performance will be evaluated using the January —
December 2008 report period.
1.c.i. Congestive Heart Failure (CHF) — Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the
principal diagnosis was CHF, per thousand member months, for members who had a diagnosis of CHF in
the year prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results. (For example, if last
year’s results were TBD%, then the difference between the target and last year’s results is
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TBD%. In this example, the standard is an improvement in performance of TBD% of this difference or
TBD%. In this example, results of TBD% or better would be compliant with the standard.)
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.ii. Congestive Heart Failure (CHF) — Emergency Department (ED) Utilization Rate
Measure: The number of emergency department visits in the reporting year where the primary
diagnosis was CHF, per thousand member months, for members who had a diagnosis of CHF in the year
prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.iii. Congestive Heart Failure (CHF) — Cardiac Related Hospital Readmission
Measure: The rate of cardiac related readmissions during the reporting period for members who had a
diagnosis of CHF in the year prior to the reporting period. A readmission is defined as a cardiac
related admission that occurs within 30 days of a prior cardiac related admission.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
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1.c.iv. Coronary Artery Disease (CAD) — Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was CAD, per thousand member months, for members who had a diagnosis of CAD in the year
prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.v. Coronary Artery Disease (CAD) – Emergency Department (ED) Utilization Rate
Measure: The number of emergency department visits in the reporting year where the principal
diagnosis was CAD, per thousand member months, for members who had a diagnosis of CAD in the year
prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.vi. Coronary Artery Disease (CAD) – Cardiac Related Hospital Readmission
Measure: The rate of cardiac related readmissions in the reporting year for members who had a
diagnosis of CAD in the year prior to the reporting year. A readmission is defined as a cardiac
related admission that occurs within 30 days of a prior cardiac related admission.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If
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the standard is not met and the results are at or above TBD%, ODJFS will issue a Quality
Improvement Directive which will notify the MCP of noncompliance and may outline the steps that the
MCP must take to improve the results.
1.c.vii. Coronary Artery Disease (CAD) – Beta Blocker Treatment after Heart Attack
The evaluation report period for this measure is CY 2008 only.
Measure: The percentage of members 35 years of age and older as of December 31st of the
reporting year who were hospitalized from January 1 – December 24th of the reporting
year with a diagnosis of acute myocardial infarction (AMI) and who received an ambulatory
prescription for beta blockers within seven days of discharge.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.viii. Persistence of Beta Blocker Treatment after Heart Attack
The initial report period of evaluation for this measure is CY 2009. This measure will replace the
Coronary Artery Disease (CAD) – Beta Blocker Treatment after Heart Attack measure (1.c.vii.) in the
P4P for SFY 2010.
Measure: The percentage of members 35 years of age and older as of December 31st of the
reporting year who were hospitalized and discharged alive from July 1 of the year prior to the
reporting year to June 30 of the measurement year with a diagnosis of acute myocardial information
(AMI) and who received persistent beta-blocker treatment for six months after discharge.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of
noncompliance. If the standard is not met and the results are at or above TBD%, ODJFS will issue a
Quality Improvement Directive which will notify the MCP of noncompliance and may outline the steps
that the MCP must take to improve the results.
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| 1.c.ix. | Coronary Artery Disease (CAD) – Cholesterol Management for Patients with Cardiovascular Conditions/LDL-C Screening Performed |
Measure: The percentage of members who had a diagnosis of CAD in the year prior to the reporting
year, who were enrolled for at least 11 months in the reporting year, and who received a lipid
profile during the reporting year.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.x. Hypertension – Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was non-mild hypertension, per thousand member months, for members who had a diagnosis of
non-mild hypertension in the year prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xi. Hypertension – Emergency Department (ED) Utilization Rate
Measure: The number of emergency department visits in the reporting year where the principal
diagnosis was non-mild hypertension, per thousand member months, for members who had a diagnosis of
non-mild hypertension in the year prior to the reporting year.
Target: TBD
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Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xii. Diabetes – Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the
principal diagnosis was diabetes, per thousand member months, for members identified as diabetic in
the year prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xiii. Diabetes – Emergency Department (ED) Utilization Rate
Measure: The number of emergency department visits in the reporting year where the primary
diagnosis was diabetes, per thousand member months, for members identified as diabetic in the year
prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
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1.c.xiv. Diabetes – Eye Exam
Measure: The percentage of diabetic members who were enrolled for at least 11 months during the
reporting year, who received one or more retinal or dilated eye exams from an ophthalmologist or
optometrist during the reporting year.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% increase in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
| 1.c.xv. | Chronic Obstructive Pulmonary Disease (COPD) – Inpatient Hospital Discharge Rate |
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was COPD, per thousand member months, for members who had a diagnosis of COPD in the year
prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
| 1.c.xvi. | Chronic Obstructive Pulmonary Disease (COPD) – Emergency Department (ED) Utilization Rate |
Measure: The number of emergency department visits in the reporting year where the principal
diagnosis was COPD, per thousand member months, for members who had a diagnosis of COPD in the year
prior to the reporting year.
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Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xvii. Asthma – Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was asthma, per thousand member months, for members with persistent asthma.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xviii. Asthma – Emergency Department (ED) Utilization Rate
Measure: The number of emergency department visits in the reporting year where the principal
diagnosis was asthma, per thousand member months, for members with persistent asthma.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xix. Asthma – Use of Appropriate Medications for People with Asthma
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Measure: The percentage of members with persistent asthma who received prescribed medications
acceptable as primary therapy for long-term control of asthma.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
| 1.c.xx. | Mental Health, Severely Mentally Disabled (SMD) – Inpatient Hospital Discharge Rate |
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was SMD, per thousand member months, for members who had a primary diagnosis of SMD in
the year prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
| 1.c.xxi. | Mental Health, Severely Mentally Disabled (SMD) – Emergency Department Utilization Rate |
Measure: The number of emergency department visits in the reporting year where the primary
diagnosis was SMD, per thousand member months, for members who had a primary diagnosis of SMD in
the year prior to the reporting year.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality
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Improvement Directive which will notify the MCP of noncompliance and may outline the steps that the
MCP must take to improve the results.
1.c.xxii. Follow-up After Hospitalization for Mental Illness
Measure: The percentage of discharges for members enrolled from the date of discharge through 30
days after discharge, who were hospitalized for treatment of selected mental health disorders and
who had a follow-up visit (i.e., were seen on an outpatient basis or were in intermediate treatment
with a mental health provider) within:
1) 30 Days of discharge, and
2) 7 Days of discharge.
2) 7 Days of discharge.
Target: TBD.
Minimum Performance Standard For Each Measure: The level of improvement must result in at least a
TBD% decrease in the difference between the target and the previous year’s results.
Action Required for Noncompliance (Follow-up visits within 30 days of discharge): If the standard
is not met and the results are below TBD%, the MCP is required to complete a Corrective Action Plan
to address the area of noncompliance. If the standard is not met and the results are at or above
TBD%, ODJFS will issue a Quality Improvement Directive which will notify the MCP of noncompliance
and may outline the steps that the MCP must take to improve the results.
Action Required for Noncompliance (Follow-up visits within 7 days of discharge): If the standard is
not met and the results are below TBD%, the MCP is required to complete a Corrective Action Plan to
address the area of noncompliance. If the standard is not met and the results are at or above TBD%,
ODJFS will issue a Quality Improvement Directive which will notify the MCP of noncompliance and may
outline the steps that the MCP must take to improve the results.
1.c.xxiii. Mental Health, Severely Mentally Disabled (SMD) – SMD Related Hospital Readmission
Measure: The number of SMD related readmissions for members who had a diagnosis of SMD in the year
prior to the reporting year. A readmission is defined as a SMD related admission that occurs within
30 days of a prior SMD related admission.
Target: TBD.
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
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1.c.xxiv. Substance Abuse – Inpatient Hospital Discharge Rate
Measure: The number of acute inpatient hospital discharges in the reporting year where the primary
diagnosis was alcohol and other drug abuse or dependence (AOD), per thousand member months, for
members who had, in the year prior to the reporting year, a diagnosis
of AOD and one of the
following: AOD-related acute inpatient admission or two AOD related Emergency Department visits.
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xxv. Substance Abuse – Emergency Department Utilization Rate
Measure: The number of emergency department visits in the reporting year where the principal
diagnosis was AOD, per thousand member months, for members who had, in the year prior to the
reporting year, a diagnosis of AOD and one of the following: AOD-related acute inpatient admission
or two AOD related Emergency Department visits .
Target: TBD
Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous report period’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xxvi. Substance Abuse – Inpatient Hospital Readmission Rate
Measure: The number of AOD related readmissions in the reporting year for members who had, in the
year prior to the reporting year, a diagnosis of AOD and one of the following: AOD-related acute
inpatient admission or two AOD related Emergency Department visits. A readmission is defined as an
AOD-related admission that occurs within 30 days of a prior AOD-related admission.
Target: TBD.
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Minimum Performance Standard: The level of improvement must result in at least a TBD% decrease in
the difference between the target and the previous year’s results.
Action Required for Noncompliance: If the standard is not met and the results are below TBD%, the
MCP is required to complete a Corrective Action Plan to address the area of noncompliance. If the
standard is not met and the results are at or above TBD%, ODJFS will issue a Quality Improvement
Directive which will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.
1.c.xxvii. Informational Clinical Performance Measures
The clinical performance measures listed in Table 1 are informational only. Although there are no
performance targets or minimum performance standards for these measures, results will be reported
and used as one component in assessing the quality of care provided by MCPs to the ABD managed care
population.
Table 1. Informational Clinical Performance Measures
| Condition | Informational Performance Measure | |
CHF
|
Discharge rate with age group breakouts | |
CAD
|
Discharge rate with age group breakouts | |
Hypertension
|
Discharge rate with age group breakouts | |
Diabetes
|
Discharge rate with age group breakouts | |
| Comprehensive Diabetes Care (CDC)/HbA1c testing | ||
| CDC/kidney disease monitored | ||
| CDC/LDL-C screening performed | ||
COPD
|
Discharge rate with age group breakouts | |
| Use of Spirometry Testing in the Assessment and Diagnosis of COPD | ||
Asthma
|
Discharge rate with age group breakouts | |
Mental Health (SMD)
|
Discharge rate with age group breakouts | |
| Antidepressant Medication Management | ||
Substance Abuse
|
Discharge rate with age group breakouts | |
| Initiation and Engagement of Alcohol and Other Drug Dependence Treatment |
2. ACCESS
Performance in the Access category will be determined by the following measures: Primary Care
Provider (PCP) Turnover, Adults’ Access to Preventive/Ambulatory Health Services, and Adults’
Access to Designated PCP. For a comprehensive description of the access performance measures below,
see ODJFS Methods for the ABD Medicaid Managed Care Program Access Performance Measures.
2.a. PCP Turnover
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A high PCP turnover rate may affect continuity of care and may signal poor management of providers.
However, some turnover may be expected when MCPs end contracts with providers who are not adhering
to the MCP’s standard of care. Therefore, this measure is used in conjunction with the adult access
and designated PCP measures to assess performance in the access category.
Measure: The percentage of primary care providers affiliated with the MCP as of the beginning of
the measurement year who were not affiliated with the MCP as of the end of the year.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. ODJFS will use the first calendar year of ABD managed care program
membership as the baseline year (i.e., CY2007). The baseline year will be used to determine a
minimum statewide performance standard. An MCP’s second calendar year of ABD managed care program
membership (i.e., CY2008) will be the initial report period of evaluation, and penalties will be
applied for noncompliance.
Report Period: For the SFY 2008 contract period, a baseline level of performance will be
established using the CY 2007 report period (and may be adjusted based on the number of months of
ABD managed care membership). For the SFY 2009 contract period, performance will be evaluated using
the CY 2008 report period. The first reporting period in which MCPs will be held accountable to the
performance standards will be the SFY 2009 contract period.
Minimum Performance Standard: A maximum PCP Turnover rate of TBD.
Action Required for Noncompliance: MCPs are required to perform a causal analysis of the high PCP
turnover rate and assess the impact on timely access to health services, including continuity of
care. If access has been reduced or coordination of care affected, then the MCP must develop and
implement a corrective action plan to address the findings.
2.b. Adults’ Access to Designated PCP
The MCP must encourage and assist ABD members without a designated primary care provider (PCP) to
establish such a relationship, so that a designated PCP can coordinate and manage member’s health
care needs. This measure is used to assess MCPs’ performance in the access category.
Measure: The percentage of members who had a visit through the members’ designated PCPs.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. ODJFS will use the first calendar year of ABD managed care program
membership as the baseline year (i.e., CY2007). The baseline year will be used to determine a
minimum statewide performance standard. An MCP’s second calendar year of ABD managed care program
membership (i.e., CY2008) will be the initial report period of evaluation, and penalties will be
applied for noncompliance.
Report Period: For the SFY 2008 contract period, performance will be
evaluated using the January —
December 2007 report period (and may be adjusted based on the number of months of
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ABD managed care membership). For the SFY 2009 contract period, performance will be evaluated using
the January — December 2008 report period. The first reporting period in which MCPs will be held
accountable to the performance standards will be the SFY 2009 contract period.
Minimum Performance Standards: TBD
Penalty for Noncompliance: If an MCP is noncompliant with the Minimum Performance Standard, then
the MCP must develop and implement a corrective action plan.
2.c. Adults’ Access to Preventive/Ambulatory Health Services
This measure indicates whether adult members are accessing health services.
Measure: The percentage of members who had an ambulatory or preventive-care visit.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. ODJFS will use the first calendar year of ABD managed care program
membership as the baseline year (i.e., CY2007). The baseline year will be used to determine a
minimum statewide performance standard. An MCP’s second calendar year of ABD managed care program
membership (i.e., CY2008) will be the initial report period of evaluation, and penalties will be
applied for noncompliance.
Report
Period: For the SFY 2008 contract period, performance will be
evaluated using the January —
December 2007 report period (and may be adjusted based on the number of months of ABD managed care
membership). For the SFY 2009 contract period,
performance will be evaluated using the January — December 2008 report period. The first reporting
period in which MCPs will be held accountable to the performance standards will be the SFY 2009
contract period.
Minimum Performance Standards: TBD
Penalty for Noncompliance: If an MCP is noncompliant with the Minimum Performance
Standard, then the MCP must develop and implement a corrective action plan.
3. CONSUMER SATISFACTION
MCPs will be evaluated using a statewide result, including all regions in which an MCP has
membership.
In accordance with federal requirements and in the interest of assessing enrollee satisfaction with
MCP performance, ODJFS annually conducts independent consumer satisfaction surveys. Results are
used to assist in identifying and correcting MCP performance overall and in the areas of access,
quality of care, and member services. Results from the SFY 2009 evaluation will be used to set a
standard. For the SFY 2009 contract period, this measure is a reporting only measure. SFY 2010
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will be the first contract period in which MCPs will be held accountable to the performance
standards for this measure.
Measure: TBD. The results of this measure are reported annually.
Report Period: For the SFY 2009 contract period, the measure is under review and the report period
has not been determined.
Minimum
Performance Standard: TBD.
Penalty for noncompliance: If an MCP is determined noncompliant with the Minimum Performance
Standard, then the MCP must develop a corrective action plan and provider agreement renewals may be
affected.
4. ADMINISTRATIVE CAPACITY
The ability of an MCP to meet administrative requirements has been found to be both an indicator of
current plan performance and a predictor of future performance. Deficiencies in administrative
capacity make the accurate assessment of performance in other categories difficult, with findings
uncertain. Performance in this category will be determined by the Compliance Assessment System,
and the emergency department diversion program. For a comprehensive description of the
Administrative Capacity performance measures below, see ODJFS Methods for the ABD Medicaid Managed
Care Program Administrative Capacity Performance Measure, which are incorporated in this Appendix.
4.a. Compliance Assessment System
Measure:
The number of points accumulated during a rolling 12-month period through the Compliance Assessment System.
Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will be evaluated using
a rolling 12-month report period.
Performance Standard: A maximum of 15 points
Penalty for Noncompliance: Penalties for points are established in Appendix N, Compliance
Assessment System.
4.b. Emergency Department Diversion
Managed care plans must provide access to services in a way that assures access to primary and
urgent care in the most effective settings and minimizes inappropriate utilization of emergency
department (ED) services. MCPs are required to identify high utilizers of targeted ED services and
implement action plans designed to minimize inappropriate, preventable and/or primary care
sensitive ED utilization.
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Measure: The percentage of members who had TBD targeted ED visits during the twelve month reporting
period.
Statewide Approach: MCPs will be evaluated using a statewide result, including all regions in which
an MCP has membership. ODJFS will use the first calendar year of ABD managed care membership as the
baseline year (i.e., CY2007). The baseline year will be used to determine a minimum statewide
performance standard and a target. The number of members with an ED visit used to calculate the
measure for the baseline year will be adjusted based on the number of months of ABD managed care
membership in the baseline year. An MCP’s second calendar year of ABD managed care program
membership (i.e., CY2008) will be the initial report period of evaluation, and penalties will be
applied for noncompliance.
Report Period: For the SFY 2008 contract period, a baseline level of performance will be
established using the CY2007 report period (and may be adjusted based on the number of months of
ABD managed care membership). For the SFY 2009 contract period, results will be calculated for the
reporting period of CY2008 and compared to the CY2007 baseline results to determine if the minimum
performance standard is met.
Target: TBD
Minimum Performance Standard: TBD
Penalty for Noncompliance: If the standard is not met and the results are above TBD%, then the MCP
must develop a corrective action plan, for which ODJFS may direct the MCP to develop the components
of their targeted EDD program as specified by ODJFS. If the standard is not met and the results are
at or below TBD%, then the MCP must develop a Quality Improvement Directive.
5. Notes
Given that unforeseen circumstances (e.g., revision or update of applicable national standards,
methods or benchmarks, or issues related to program implementation) may impact performance
assessment as specified in Sections 1 through 4, ODJFS reserves the right to apply the most
appropriate penalty to the area of deficiency identified with any individual measure,
notwithstanding the penalties specified in this Appendix.
5.a. Monetary Sanctions
Penalties for noncompliance with individual standards in this appendix will be imposed as the
results are finalized. Penalties for noncompliance with individual standards for each period of
compliance is determined in this appendix and will not exceed $250,000.
Refundable monetary sanctions will be based on the capitation payment for the month of the cited
deficiency and will be due within 30 days of notification by ODJFS to the MCP of the amount. Any
monies collected through the imposition of such a sanction would be returned to the MCP (minus any
applicable collection fees owed to the Attorney General’s Office, if the MCP has been
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delinquent in submitting payment) after they have demonstrated improved performance in accordance
with this
appendix. If an MCP does not comply within two years of the date of notification of noncompliance,
then the monies will not be refunded.
5.b. Combined Remedies
If ODJFS determines that one systemic problem is responsible for multiple deficiencies, ODJFS may
impose a combined remedy which will address all areas of deficient performance. The total fines
assessed in any one month will not exceed 15% of the MCP’s monthly capitation payment.
5.c. Enrollment Freezes
MCPs found to have a pattern of repeated or ongoing noncompliance may be subject to an enrollment
freeze.
5.d. Reconsideration
Requests for reconsideration of monetary sanctions and enrollment freezes may be submitted as
provided in Appendix N, Compliance Assessment System.
5.e. Contract Termination, Nonrenewals or Denials
Upon termination, nonrenewal or denial of an MCP contract, all monetary sanctions collected under
this appendix will be retained by ODJFS. The at-risk amount paid to the MCP under the current
provider agreement will be returned to ODJFS in accordance with Appendix P, Terminations, of the
provider agreement.
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APPENDIX N
COMPLIANCE ASSESSMENT SYSTEM
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
I. General Provisions of the Compliance Assessment System
A. The Compliance Assessment System (CAS) is designed to improve the quality of each
managed care plan’s (MCP’s) performance through actions taken by the Ohio Department of Job
and Family Services (ODJFS) to address identified failures to meet program requirements.
This appendix applies to the MCP specified in the baseline of this MCP Provider Agreement
(hereinafter referred to as the Agreement).
B. The CAS assesses progressive remedies with specified values (e.g., points, fines, etc.)
assigned for certain documented failures to satisfy the deliverables required by Ohio
Administrative Code (OAC) rule or the Agreement. Remedies are progressive based upon the
severity of the violation, or a repeated pattern of violations. The CAS allows the
accumulated point total to reflect patterns of less serious violations as well as less
frequent, more serious violations.
C. The CAS focuses on clearly identifiable deliverables and sanctions/remedial actions are
only assessed in documented and verified instances of noncompliance. The CAS does not
include categories which require subjective assessments or which are not within the MCPs
control.
D. The CAS does not replace ODJFS’ ability to require corrective action plans (CAPs) and
program improvements, or to impose any of the sanctions specified in OAC rule 5101:3-26-10,
including the proposed termination, amendment, or nonrenewal of the MCP’s Provider
Agreement.
E. As stipulated in OAC rule 5101:3-26-10(F), regardless of whether ODJFS imposes a
sanction, MCPs are required to initiate corrective action for any MCP program violations or
deficiencies as soon as they are identified by the MCP or ODJFS.
F. In addition to the remedies imposed in Appendix N, remedies related to areas of
financial performance, data quality, and performance management may also be imposed
pursuant to Appendices J, L, and M respectively, of the Agreement.
G. If ODJFS determines that an MCP has violated any of the requirements of sections 1903(m)
or 1932 of the Social Security Act which are not specifically identified within the CAS,
ODJFS may, pursuant to the provisions of OAC rule 5101:3-26-10(A), notify the MCP’s members that they may terminate from the MCP without
cause and/or
Appendix N
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suspend any further new member selections.
H. For purposes of the CAS, the date that ODJFS first becomes aware of an MCP’s program
violation is considered the date on which the violation occurred. Therefore, program
violations that technically reflect noncompliance from the previous compliance term will be
subject to remedial action under CAS at the time that ODJFS first becomes aware of this
noncompliance.
I. In cases where an MCP contracted healthcare provider is found to have violated a program
requirement (e.g., failing to provide adequate contract termination notice, marketing to
potential members, inappropriate member billing, etc.), ODJFS will not assess points if:
(1) the MCP can document that they provided sufficient notification/education to providers
of applicable program requirements and prohibited activities; and (2) the MCP takes
immediate and appropriate action to correct the problem and to ensure that it does not
happen again to the satisfaction of ODJFS. Repeated incidents will be reviewed to determine
if the MCP has a systemic problem in this area, and if so, sanctions/remedial actions may
be assessed, as determined by ODJFS.
J. All notices of noncompliance will be issued in writing via email and facsimile to the
identified MCP contact.
II. Types of Sanctions/Remedial Actions
ODJFS may impose the following types of sanctions/remedial actions, including, but not
limited to, the items listed below. The following are examples of program violations and
their related penalties. This list is not all inclusive. As with any instance of
noncompliance, ODJFS retains the right to use their sole discretion to determine the most
appropriate penalty based on the severity of the offense, pattern of repeated
noncompliance, and number of consumers affected. Additionally, if an MCP has received any
previous written correspondence regarding their duties and obligations under OAC rule or
the Agreement, such
notice may be taken into consideration when determining penalties and/or remedial actions.
A. Corrective Action Plans (CAPs) – A CAP is a structured activity/process
implemented by the MCP to improve identified operational deficiencies.
MCPs may be required to develop CAPs for any instance of noncompliance, and CAPs are not
limited to actions taken in this Appendix. All CAPs requiring ongoing activity on the part
of an MCP to ensure their compliance with a program requirement remain in effect for
twenty-four months.
In situations where ODJFS has already determined the specific action which must be
implemented by the MCP or if the MCP has failed to submit a CAP, ODJFS may require the MCP
to comply with an ODJFS-developed or “directed” CAP.
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In situations where a penalty is assessed for a violation an MCP has previously been
assessed a CAP (or any penalty or any other related written correspondence), the MCP may be
assessed escalating penalties.
B. Quality Improvement Directives (QIDs) – A QID is a general instruction that directs
the MCP to implement a quality improvement initiative to improve identified administrative
or clinical deficiencies. All QIDs remain in effect for twelve months from the date of
implementation.
MCPs may be required to develop QIDs for any instance of noncompliance.
In situations where ODJFS has already determined the specific action which must be
implemented by the MCP or if the MCP has failed to submit a QID, ODJFS may require the MCP
to comply with an ODJFS-developed or “directed” QID.
In situations where a penalty is assessed for a violation an MCP has previously been assessed
a QID (or any penalty or any other related written correspondence), the MCP may be assessed
escalating penalties.
C. Points — Points will accumulate over a rolling 12-month schedule. Each month, points
that are more than 12-months old will expire. Points will be tracked and monitored
separately for each Agreement the MCP concomitantly holds with the BMHC, beginning with the
commencement of this Agreement (i.e., the MCP will have zero points at the onset of this
Agreement).
No points will be assigned for any violation where an MCP is able to document that the
precipitating circumstances were completely beyond their control and could not have been
foreseen (e.g., a construction crew severs a phone line, a lightning strike blows a
computer system, etc.).
C.1.
5 Points — Failures to meet program requirements, including but not limited
to, actions which could impair the member’s ability to obtain correct information
regarding services or which could impair a consumer’s or member’s rights, as
determined by ODJFS, will result in the assessment of 5 points.
Examples include, but are not limited to, the following:
Examples include, but are not limited to, the following:
| • | Violations which result in a member’s MCP selection or termination based on inaccurate provider panel information from the MCP. | ||
| • | Failure to provide member materials to new members in a timely manner. | ||
| • | Failure to comply with appeal, grievance, or state hearing requirements, including the failure to notify a member of their right to a state hearing when the MCP proposes to deny, reduce, suspend or |
Appendix N
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Aged, Blind or Disabled (ABD) population
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| terminate a Medicaid-covered service. | |||
| • | Failure to staff 24-hour call-in system with appropriate trained medical personnel. | ||
| • | Failure to meet the monthly call-center requirements for either the member services or the 24-hour call-in system lines. | ||
| • | Provision of false, inaccurate or materially misleading information to health care providers, the MCP’s members, or any eligible individuals. | ||
| • | Use of unapproved marketing or member materials. | ||
| • | Failure to appropriately notify ODJFS or members of provider panel terminations. | ||
| • | Failure to update website provider directories as required. |
C.2. 10 Points — Failures to meet program requirements, including but not
limited to, actions which could affect the ability of the MCP to deliver or the
consumer to access covered services, as determined by ODJFS. Examples include, but
are not limited to, the following:
| • | Discrimination among members on the basis of their health status or need for health care services (this includes any practice that would reasonably be expected to encourage termination or discourage selection by individuals whose medical condition indicates probable need for substantial future medical services). | ||
| • | Failure to assist a member in accessing needed services in a timely manner after request from the member. | ||
| • | Failure to provide medically-necessary Medicaid covered services to members. | ||
| • | Failure to process prior authorization requests within the prescribed time frames. |
D. Fines – Refundable or nonrefundable fines may be assessed as a penalty separate
to or in combination with other sanctions/remedial actions.
D.1. Unless otherwise stated, all fines are nonrefundable.
D.2. Pursuant to procedures as established by ODJFS, refundable and
nonrefundable monetary sanctions/assurances must be remitted to ODJFS within thirty
(30) days of receipt of the invoice by the MCP. In addition, per Ohio Revised Code
Section 131.02, payments not received within forty-five (45) days will be certified
to the Attorney General’s (AG’s) office. MCP payments certified to the AG’s office
will be assessed the appropriate collection fee by the AG’s office.
D.3. Monetary sanctions/assurances imposed by ODJFS will be based on the
most recent premium payments.
Appendix N
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D.4. Any monies collected through the imposition of a refundable fine will
be returned to the MCP (minus any applicable collection fees owed to the Attorney
General’s Office if the MCP has been delinquent in submitting payment) after they
have demonstrated full compliance, as determined by ODJFS, with the particular
program requirement. If an MCP does not comply within one (1) year of the date of
notification of noncompliance involving issues of case management and two (2) years
of the date of notification of noncompliance in issues involving encounter data,
then the monies will not be refunded.
D.5. MCPs are required to submit a written request for refund to ODJFS at
the time they believe is appropriate before a refund of monies will be considered.
E. Combined Remedies — Notwithstanding any other action ODJFS may take under this
Appendix, ODJFS may impose a combined remedy which will address all areas of noncompliance
if ODJFS determines, in its sole discretion, that (1) one systemic problem is responsible
for multiple areas of noncompliance and/or (2) that there are a number of repeated
instances of noncompliance with the same program requirement.
F. Progressive Remedies — Progressive remedies will be based on the number of
points accumulated at the time of the most recent incident. Unless specifically otherwise
indicated in this appendix, all fines are nonrefundable. The designated fine amount will be
assessed when the number of accumulated points falls within the ranges specified below:
0 -15 Points
|
Corrective Action Plan (CAP) | ||
16-25 Points
|
CAP + $5,000 fine | ||
26-50 Points
|
CAP + $10,000 fine | ||
51-70 Points
|
CAP + $20,000 fine | ||
71-100 Points
|
CAP + $30,000 fine | ||
100+ Points
|
Proposed Contract Termination |
G. New Member Selection Freezes — Notwithstanding any other penalty or point assessment
that ODJFS may impose on the MCP under this Appendix, ODJFS may prohibit an MCP from receiving new
membership through consumer initiated selection or the assignment process if: (1) the MCP has
accumulated a total of 51 or more points during a rolling 12-month period; (2) or the MCP fails to
fully implement a CAP within the designated time frame; or (3) circumstances exist which
potentially jeopardize the MCP’s members’ access to care. [Examples of circumstances that ODJFS may
consider
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as jeopardizing member access to care include:
| - | the MCP has been found by ODJFS to be noncompliant with the prompt payment or the non-contracting provider payment requirements; | ||
| - | the MCP has been found by ODJFS to be noncompliant with the provider panel requirements specified in Appendix H of the Agreement; | ||
| - | the MCP’s refusal to comply with a program requirement after ODJFS has directed the MCP to comply with the specific program requirement; or | ||
| - | the MCP has received notice of proposed or implemented adverse action by the Ohio Department of Insurance.] |
Payments provided for under the Agreement will be denied for new enrollees, when and for so
long as, payments for those enrollees are denied by CMS in accordance with the requirements
in 42 CFR 438.730.
H. Reduction of Assignments – ODJFS has sole discretion over how member
auto-assignments are made. ODJFS may reduce the number of assignments an MCP receives to
assure program stability within a region or if ODJFS determines that the MCP lacks
sufficient capacity to meet the needs of the increased volume in membership. Examples of
circumstances which ODJFS may determine demonstrate a lack of sufficient capacity include,
but are not limited to an MCP’s failure to: maintain an adequate provider network;
repeatedly provide new member materials by the member’s effective date; meet the minimum
call center requirements; meet the minimum performance standards for identifying and
assessing children with special health care needs and members needing case management
services; and/or provide complete and accurate appeal/grievance, member’s PCP and CAMS data
files.
I. Termination, Amendment, or Nonrenewal of MCP Provider Agreement - ODJFS can at
any time move to terminate, amend or deny renewal of a provider agreement. Upon such
termination, nonrenewal, or denial of an MCP provider agreement, all previously collected
monetary sanctions will be retained by ODJFS.
J. Specific Pre-Determined Penalties
I.1. Adequate network-minimum provider panel requirements - Compliance with
provider panel requirements will be assessed quarterly. Any deficiencies in the
MCP’s provider network as specified in Appendix H of the Agreement or by ODJFS,
will result in the assessment of a $1,000 nonrefundable fine for each category
(practitioners, PCP capacity, hospitals), for each county, and for each population (e.g., ABD, CFC). For example
if the MCP did not meet the following minimum panel requirements, the MCP would be
assessed (1) a $3,000
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nonrefundable fine for the failure to meet CFC panel requirements; and, (2) a
$1,000 nonrefundable fine for the failure to meet ABD panel requirements).
| • | practitioner requirements in Franklin county for the CFC population | ||
| • | practitioner requirements in Franklin county for the ABD population | ||
| • | hospital requirements in Franklin county for the CFC population | ||
| • | PCP capacity requirements in Fairfield county for the CFC population |
In addition to the pre-determined penalties, ODJFS may assess additional penalties
pursuant to this Appendix (e.g. CAPs, points, fines) if member specific access
issues are identified resulting from provider panel noncompliance.
J.2. Geographic Information System - Compliance with the Geographic
Information System (GIS) requirements will be assessed semi-annually. Any failure
to meet GIS requirements as specified in Appendix H of the Agreement will result a
$1,000 nonrefundable fine for each county and for each population (e.g., ABD, CFC,
etc.). For example if the MCP did not meet GIS requirements in the following
counties, the MCP would be assessed (1) a nonrefundable $2,000 fine for the failure
to meet GIS requirements for the CFC population and (2) a $1,000 nonrefundable fine
for the failure to meet GIS requirements for the ABD population.
| • | GIS requirements in Franklin county for the CFC population | ||
| • | GIS requirements in Fairfield county for the CFC population | ||
| • | GIS requirements in Franklin county for the ABD population |
J.3. Late Submissions - All required submissions/data and documentation
requests must be received by their specified deadline and must represent the MCP in
an honest and forthright manner. Failure to provide ODJFS with a required
submission or any data/documentation requested by ODJFS will result in the
assessment of a nonrefundable fine of $100 per day, unless the MCP requests and is
granted an extension by ODJFS. Assessments for late submissions will be done
monthly. Examples of such program violations include, but are not limited to:
| • | Late required submissions |
| o | Annual delegation assessments | ||
| o | Call center report | ||
| o | Franchise fee documentation | ||
| o | Reinsurance information (e.g., prior approval of changes) | ||
| o | State hearing notifications |
| • | Late required data submissions |
| o | Appeals and grievances, case management, or PCP data |
| • | Late required information requests |
| o | Automatic call distribution reports | ||
| o | Information/resolution regarding consumer or provider |
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| complaint | |||
| o | Just cause or other coordination care request from ODJFS | ||
| o | Provider panel documentation | ||
| o | Failure to provide ODJFS with a required submission after ODJFS has notified the MCP that the prescribed deadline for that submission has passed |
If an MCP determines that they will be unable to meet a program deadline or
data/documentation submission deadline, the MCP must submit a written request to
its Contract Administrator for an extension of the deadline, as soon as possible,
but no later than 3 PM EST on the date of the deadline in question. Extension
requests should only be submitted in situations where unforeseeable circumstances
have occurred which make it impossible for the MCP to meet an ODJFS-stipulated
deadline and all such requests will be evaluated upon this standard. Only written
approval as may be granted by ODJFS of a deadline extension will preclude the
assessment of compliance action for untimely submissions.
J.4. Noncompliance with Claims Adjudication Requirements — If ODJFS finds
that an MCP is unable to (1) electronically accept and adjudicate claims to final
status and/or (2) notify providers of the status of their submitted claims, as
stipulated in Appendix C of the Agreement, ODJFS will assess the MCP with a
monetary sanction of $20,000 per day for the period of noncompliance.
If ODJFS has identified specific instances where an MCP has failed to take the
necessary steps to comply with the requirements specified in Appendix C of the
Agreement for (1) failing to notify non-contracting providers of procedures for
claims submissions when requested and/or (2) failing to notify contracting and
non-contracting providers of the status of their submitted claims, the MCP will be
assessed 5 points per incident of noncompliance.
J.5. Noncompliance with Prompt Payment: - Noncompliance with the prompt pay
requirements as specified in Appendix J of the Agreement will result in progressive
penalties. The first violation during a rolling 12-month period will result in the
submission of quarterly prompt pay and monthly status reports to ODJFS until the
next quarterly report is due. The second violation during a rolling 12-month period
will result in the submission of monthly status reports and a refundable fine equal
to 5% of the MCP’s monthly premium payment or $300,000, whichever is less. The
refundable fine will be applied in lieu of a nonrefundable fine and the money will
be refunded by ODJFS only after the MCP complies with the required standards for
two (2) consecutive quarters.
Subsequent violations will result in an enrollment freeze.
Subsequent violations will result in an enrollment freeze.
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If an MCP is found to have not been in compliance with the prompt pay requirements
for any time period for which a report and signed attestation have been submitted
representing the MCP as being in compliance, the MCP will be subject to an
enrollment freeze of not less than three (3) months duration.
J.6. Noncompliance with Franchise Fee Assessment Requirements - In
accordance with ORC Section 5111.176, and in addition to the imposition of any
other penalty, occurrence or points under this Appendix, an MCP that does not pay
the franchise permit fee in full by the due date is subject to any or all of the
following:
| • | A monetary penalty in the amount of $500 for each day any part of the fee remains unpaid, except the penalty will not exceed an amount equal to 5 % of the total fee that was due for the calendar quarter for which the penalty was imposed; | ||
| • | Withholdings from future ODJFS capitation payments. If an MCP fails to pay the full amount of its franchise fee when due, or the full amount of the imposed penalty, ODJFS may withhold an amount equal to the remaining amount due from any future ODJFS capitation payments. ODJFS will return all withheld capitation payments when the franchise fee amount has been paid in full; | ||
| • | Proposed termination or non-renewal of the MCP’s Medicaid provider agreement may occur if the MCP: |
| a. | Fails to pay its franchise permit fee or fails to pay the fee promptly; | ||
| b. | Fails to pay a penalty imposed under this Appendix or fails to pay the penalty promptly; | ||
| c. | Fails to cooperate with an audit conducted in accordance with ORC Section 5111.176. |
J.7. Noncompliance with Clinical Laboratory Improvement Amendments -
Noncompliance with CLIA requirements as specified by ODJFS will result in the
assessment of a nonrefundable $1,000 fine for each violation.
J.8. Noncompliance with Abortion and Sterilization Payment - Noncompliance
with abortion and sterilization requirements as specified by ODJFS will result in
the assessment of a nonrefundable $2,000 fine for each documented violation.
Additionally, MCPs must take all appropriate action to correct each
ODJFS-documented violation.
J.9. Refusal to Comply with Program Requirements - If ODJFS has instructed
an MCP that they must comply with a specific program requirement and the MCP
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refuses, such refusal constitutes documentation that the MCP is no longer operating
in the best interests of the MCP’s members or the state of Ohio and ODJFS will move
to terminate or nonrenew the MCP’s provider agreement.
III. Request for Reconsiderations
MCPs may request a reconsideration of remedial action taken under the CAS for
penalties that include points, fines, reductions in assignments and/or selection freezes.
Requests for reconsideration must be submitted on the ODJFS required form as follows:
A. MCPs notified of ODJFS’ imposition of remedial action taken under the CAS will have ten
(10) working days from the date of receipt of the facsimile to request reconsideration,
although ODJFS will impose enrollment freezes based on an access to care concern concurrent
with initiating notification to the MCP. Any information that the MCP would like reviewed
as part of the reconsideration request must be submitted at the time of submission of the
reconsideration request, unless ODJFS extends the time frame in writing.
B. All requests for reconsideration must be submitted by either facsimile transmission or
overnight mail to the Chief, Bureau of Managed Health Care, and received by ODJFS by the
tenth business day after receipt of the faxed notification of the imposition of the
remedial action by ODJFS.
C. The MCP will be responsible for verifying timely receipt of all reconsideration
requests. All requests for reconsideration must explain in detail why the specified
remedial action should not be imposed. The MCP’s justification for reconsideration will be
limited to a review of the written material submitted by the MCP. The Bureau Chief will
review all correspondence and materials related to the violation in question in making the
final reconsideration decision.
D. Final decisions or requests for additional information will be made by ODJFS within ten
(10) business days of receipt of the request for reconsideration.
E. If additional information is requested by ODJFS, a final reconsideration decision will
be made within three (3) business days of the due date for the submission. Should ODJFS
require additional time in rendering the final reconsideration decision, the MCP will be
notified of such in writing.
F. If a reconsideration request is decided, in whole or in part, in favor of the MCP, both
the penalty and the points associated with the incident, will be rescinded or reduced, in
the sole discretion of ODJFS. The MCP may still be required to submit a CAP if ODJFS, in
its sole discretion, believes that a CAP is still warranted under the circumstances.
Appendix O
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APPENDIX O
PAY-FOR-PERFORMANCE (P4P)
ABD ELIGIBLE POPULATION
ABD ELIGIBLE POPULATION
This Appendix establishes a Pay-for-performance (P4P) incentive system for managed care plans
(MCPs) to improve performance in specific areas important to the Medicaid MCP members. P4P includes
the at-risk amount included with the monthly premium payments (see Appendix F, Rate Chart), and
possible additional monetary rewards up to $250,000.
To qualify for consideration of any P4P, MCPs must meet minimum performance standards established
in Appendix M, Performance Evaluation on selected measures, and achieve P4P standards established
for selected Clinical Performance Measures, as set forth herein below. For qualifying MCPs, higher
performance standards for three measures must be reached to be awarded a portion of the at-risk
amount and any additional P4P (see Sections 1). An excellent and superior standard is set in this
Appendix for each of the three measures. Qualifying MCPs will be awarded a portion of the at-risk
amount for each excellent standard met. If an MCP meets all three excellent and superior
standards, they may be awarded additional P4P (see Section 2).
ODJFS will use the first calendar year of an MCP’s ABD managed care program membership as the
baseline year (i.e., CY2007). The baseline year will be used to determine performance standards
and targets; baseline data may come from a combination of FFS claims data and MCP encounter data.
As many of the performance measures used in the determination of P4P require two calendar years of
baseline data, the additional calendar year (i.e., the calendar year prior to the first calendar
year of ABD managed care program membership, [i.e., CY2006]) data will come from FFS claims.
An MCP’s second calendar year of ABD managed care program membership (i.e., CY2008) will be the
initial report period of evaluation for performance measures that require one calendar year of
baseline data (i.e., CY2007), and for performance measures that require two calendar years of
baseline data (i.e., CY2006 and CY2007). CY2008 will be the initial report period upon which
compliance with the performance standards will be determined. SFY 2009 will become the first year
an MCP’s performance level for P4P can be determined.
1. SFY 2009 P4P
1.a. Qualifying Performance Levels
To qualify for consideration of the SFY 2009 P4P, an MCP’s performance level must:
| 1) | Meet the minimum performance standards set in Appendix M, Performance Evaluation, for the measures listed below; and | ||
| 2) | Meet the P4P standards established for the Clinical Performance Measures below. |
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| • | A detailed description of the methodologies for each measure can be found on the BMHC page of the ODJFS website. |
Measures for which the minimum performance standard for SFY 2009 established in Appendix M,
Performance Evaluation, must be met to qualify for consideration of incentives are as follows:
| 1. | PCP Turnover (Appendix M, Section 2.a.) |
Report Period: CY 2008
| 2. | Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.) |
Report Period: CY 2008
For each clinical performance measure listed below, the MCP must meet the P4P standard to be
considered for SFY 2009 P4P. The MCP meets the P4P standard if one of two criteria is met. The P4P
standard is a performance level of either:
1) The minimum performance standard established in Appendix M, Performance Evaluation, for five of
eight clinical performance measures listed below; or
2) The Medicaid benchmarks for five of eight clinical performance measures listed below. The
Medicaid benchmarks are subject to change based on the revision or update of applicable national
standards, methods or benchmarks.
| Medicaid | ||||||
| Clinical Performance Measure | Benchmark | |||||
| CHF: Inpatient Hospital Discharge Rate | TBD | |||||
| 1. | CAD: Beta-Blocker Treatment after Heart Attack (AMI -related
admission)
|
TBD | ||||
| 2. | CAD: Cholesterol Management for Patients with Cardiovascular Conditions/LDL-C screening performed |
TBD | ||||
| 3. | Hypertension: Inpatient Hospital Discharge Rate
|
TBD | ||||
| 4. | Diabetes: Comprehensive Diabetes Care (CDC)/Eye exam
|
TBD | ||||
| 5. | COPD: Inpatient Hospital Discharge Rate
|
TBD | ||||
| 6. | Asthma: Use of Appropriate Medications for People with Asthma
|
TBD | ||||
| 7. | Mental Health: Follow-up After Hospitalization for Mental Illness
|
TBD | ||||
1.b. Excellent and Superior Performance Levels
For qualifying MCPs as determined by Section 1.a.. herein, performance will be evaluated on the
measures below to determine the status of the at-risk amount or any additional P4P that may be
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awarded. Excellent and Superior standards are set for the three measures described below. The
standards are subject to change based on the revision or update of applicable national standards,
methods or benchmarks.
A brief description of these measures is provided in Appendix M, Performance Evaluation. A detailed
description of the methodologies for each measure can be found on the BMHC page of the ODJFS
website.
1. Case Management of Members (Appendix M, Section 1.b.i)
Report Period: April – June 2009
Excellent Standard: TBD
Superior Standard: TBD
2. Comprehensive Diabetes Care (CDC)/Eye exam (Appendix M, Section 1.c.xiv.)
Report Period: CY 2008
Excellent Standard: TBD
Superior Standard: TBD
3. Adults’ Access to Preventive/Ambulatory Health Services (Appendix M, Section 2.c.)
Report Period: CY 2008
Excellent Standard: TBD
Superior Standard: TBD
1.c. Determining SFY 2009 P4P
MCPs reaching the minimum performance standards described in Section 1.a. herein, will be
considered for P4P including retention of the at-risk amount and any additional P4P. For each
Excellent standard established in Section 1.b. herein, that an MCP meets, one-third of the at-risk
amount may be retained. For MCPs meeting all of the Excellent and Superior standards established
in Section 1.b. herein, additional P4P may be awarded. For MCPs receiving additional P4P, the amount in the P4P fund (see section 2.) will be divided
equally, up to the maximum additional amount, among all MCPs’ABD and/or CFC programs receiving
additional P4P. The maximum additional amount to be awarded per plan, per program, per contract
year is $250,000. An MCP may receive up to $500,000 should both of the MCP’s ABD and CFC programs
achieve the Superior Performance Levels.
Appendix O
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2. NOTES
2.a. Initiation of the P4P System
For MCPs in their first twenty-four (24) months of Ohio Medicaid ABD Managed Care Program
participation, the status of the at-risk amount will not be determined because compliance with many
of the standards in the ABD program cannot be determined in an MCP’s first two contract years (see
Appendix F., Rate Chart). In addition, MCPs in their first two (2) contract years in the ABD
program are not eligible for the additional P4P amount awarded for superior performance.
Starting with the twenty-fifth (25th) month of participation in the ABD program, the
MCP’s at-risk amount will be included in the P4P system. The determination of the status of this
at-risk amount will occur after two (2) calendar years of ABD membership. Because of this
requirement, the number of months of at-risk dollars to be included in an MCP’s first at-risk
status determination may vary depending on when an MCP starts with the ABD program relative to the
calendar year.
2.b. Determination of at-risk amounts and additional P4P payments
For MCPs that have participated in the Ohio Medicaid ABD Managed Care Program long enough to
calculate performance levels for all of the performance measures included in the P4P system,
determination of the status of an MCP’s at-risk amount will occur within six (6) months of the end
of the contract period. Determination of additional P4P payments will be made at the same time the
status of an MCP’s at-risk amount is determined.
2.c. Statewide P4P system
All MCPs will be included in a statewide P4P system for the ABD program. The at-risk amount will be
determined using a statewide result for all regions in which an MCP serves ABD membership.
2.d. Contract Termination, Nonrenewals, or Denials
Upon termination, nonrenewal or denial of an MCP contract, the at-risk amount paid to the MCP under
the current provider agreement will be returned to ODJFS in accordance with Appendix P.,
Terminations/Nonrenewals/Amendments, of the provider agreement.
Additionally, in accordance with Article XI of the provider agreement, the return of the at-risk
amount paid to the MCP under the current provider agreement will be a condition necessary for
ODJFS’ approval of a provider agreement assignment.
2.e. Report Periods
The report period used in determining the MCP’s performance levels varies for each measure
depending on the frequency of the report and the data source. Unless otherwise noted, the most
Appendix O
Aged, Blind or Disabled (ABD) population
Page 5
Aged, Blind or Disabled (ABD) population
Page 5
recent report or study finalized prior to the end of the contract period will be used in
determining the MCP’s overall performance level for that contract period.
Exhibit 10.30
[SEAL]
|
STATE OF MISSOURI | |
| OFFICE OF ADMINISTRATION | ||
| DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) | ||
| REQUEST FOR BEST AND FINAL OFFER (BAFO) | ||
| FOR REQUEST FOR PROPOSAL (RFP) |
BAFO REQUEST NO.: 002
|
REQ NO.: NR 886 25756004320 | |
RFP NO.: B3Z06118
|
BUYER: Julie Kleffner | |
TITLE: Medicaid Managed Care – Central, Eastern, & Western Regions
|
PHONE NO.: (573) 751-7656 | |
ISSUE DATE: 03/28/06
|
E-MAIL: Julie.Kleffner@oa.mo.gov |
RETURN BAFO RESPONSE NO LATER THAN 03/30/06 AT 5:00 PM CENTRAL TIME
MAILING INSTRUCTIONS:
|
Print or type RFP Number and Return Due Date on the lower left hand corner of the envelope or package. Sealed BAFOs should be in DPMM office (301 W High Street, Room 630) by the return date and time. |
| (U.S. Mail) | (Courier Service) | |||||
RETURN BAFO RESPONSE TO:
|
DPMM | or | DPMM | |||
| PO BOX 809 | 301 WEST HIGH STREET, RM 630 | |||||
| JEFFERSON CITY MO 65102-0809 | JEFFERSON CITY MO 65101 |
CONTRACT PERIOD: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
DELIVER SUPPLIES/SERVICES FOB (Free on Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
The offeror hereby declares understanding, agreement and certification of compliance to provide the
items and/or services, at the prices quoted, in accordance with all terms and conditions,
requirements, and specifications of the original RFP as modified by any previously issued RFP
amendments and by this and any previously issued BAFO requests. The offeror agrees that the
language of the original RFP as modified by any previously issued RFP amendments and by this and
any previously issued BAFO requests shall govern in the event of a conflict with his/his proposal.
The offeror further agrees that upon receipt of an authorized purchase order from the Division of
Purchasing and Materials Management or when a Notice of Award is signed and issued by an authorized
official of the State of Missouri, a binding contract shall exist between the offeror and the State
of Missouri.
SIGNATURE REQUIRED
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
Community CarePlus
|
Alliance for Community Health | |
MAILING ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
10123 Corporate Square Drive
|
10123 Corporate Square Drive | |
CITY, STATE, ZIP CODE
|
CITY, STATE, ZIP CODE | |
St. Louis, MO 63132
|
St. Louis, MO 63132 | |
CONTACT PERSON
|
jlinder@ccphealth.com | |
Jerry Linder or Marcia Albridge
|
malbridge@ccphealth.com | |
PHONE NUMBER
|
FAX NUMBER | |
314-432-9300
|
314-994-9398 |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
43-1743902
|
___X___ FEIN ___ SSN | 817919905 | ||
| VENDOR TAX FILING TYPE WITH IRS (CHECK ONE) | (NOTE: LLC IS NOT A VALID TAX FILING TYPE.) | |||
| __X_ Corporation ___ Individual ___ State/Local Government ___ Partnership ___ Sole Proprietor ___ Other | ||||
AUTHORIZED SIGNATURE
|
DATE | |
| 3/29/06 | ||
PRINTED NAME
|
TITLE | |
Jerry Linder
|
CEO |
| RFP B3Z06118 | BAF0#002 | Page 2 |
Medicaid Managed Care – Central, Eastern, & Western Regions
Department of Social Services, Division of Medical Services
Department of Social Services, Division of Medical Services
Contract Period: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
Offerors are hereby notified that paragraph 2.1.2 a. is hereby revised.
| [SEAL] | STATE OF MISSOURI | |
| OFFICE OF ADMINISTRATION | ||
| DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) | ||
| REQUEST FOR BEST AND FINAL OFFER (BAFO) | ||
| FOR REQUEST FOR PROPOSAL (RFP) |
BAFO REQUEST NO.: 001
|
REQ NO.: NR 886 25756004320 | |
RFP NO.: B3Z06118
|
BUYER: Julie Kleffner | |
TITLE: Medicaid Managed Care — Central, Eastern, & Western Regions
|
PHONE NO.: (573) 751-7656 | |
ISSUE DATE: March 10, 2006
|
E-MAIL: Julie.Kleffner@oa.mo.gov |
RETURN BAFO RESPONSE NO LATER THAN March 15, 2006 AT 5:00 PM CENTRAL TIME
MAILING INSTRUCTIONS:
|
Print or type RFP Number and Return Due Date on the lower left hand corner of the envelope or package. Sealed BAFOs should be in DPMM office (301 W High Street, Room 630) by the return date and time. |
| (U.S. Mail) | (Courier Service) | |||||
RETURN BAFO RESPONSE TO:
|
DPMM | or | DPMM | |||
| PO BOX 809 JEFFERSON CITY MO 65102-0809 |
301 WEST HIGH STREET, RM 630 JEFFERSON CITY MO 65101 |
CONTRACT PERIOD: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
DELIVER SUPPLIES/SERVICES FOB (Free on Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
The offeror hereby declares understanding, agreement and certification of compliance to provide the
items and/or services, at the prices quoted, in accordance with all terms and conditions,
requirements, and specifications of the original RFP as modified by any previously issued RFP
amendments and by this and any previously issued BAFO requests. The offeror agrees that the
language of the original RFP as modified by any previously issued RFP amendments and by this and
any previously issued BAFO requests shall govern in the event of a conflict with his/his proposal.
The offeror further agrees that upon receipt of an authorized purchase order from the Division of
Purchasing and Materials Management or when a Notice of Award is signed and issued by an authorized
official of the State of Missouri, a binding contract shall exist between the offeror and the State
of Missouri.
SIGNATURE REQUIRED
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
MAILING ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
CITY, STATE, ZIP CODE
|
CITY, STATE, ZIP CODE | |
CONTACT PERSON
|
EMAIL ADDRESS | |
PHONE NUMBER
|
FAX NUMBER |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| ___ FEIN ___ SSN |
VENDOR TAX FILING TYPE WITH IRS (CHECK ONE)
|
(NOTE: LLC IS NOT A VALID TAX FILING TYPE.) | |
| ___ Corporation ___ Individual ___ State/Local Government ___ Partnership ___ Sole Proprietor ___ Other ___ | ||
AUTHORIZED SIGNATURE
|
DATE | |
PRINTED NAME
|
TITLE | |
| RFP B3Z06118 | BAFO #001 | Page 2 |
Medicaid Managed Care — Central, Eastern, & Western Regions
Department of Social Services, Division of Medical Services
Department of Social Services, Division of Medical Services
Contract Period: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
Offerors are hereby notified the following paragraphs have been revised:
2.14.4
2.14.4 b. 4)
2.31.1
2.31.3
2.14.4 b. 4)
2.31.1
2.31.3
| [SEAL] | STATE OF MISSOURI | |
| OFFICE OF ADMINISTRATION | ||
| DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) | ||
| REQUEST FOR PROPOSAL (RFP) |
AMENDMENT NO.: 002
|
REQ NO.: NR 886 25756004320 | |
RFP NO.: B3Z06118
|
BUYER: Julie Kleffner | |
TITLE: Medicaid Managed Care — Central, Eastern, & Western Regions
|
PHONE NO.: (573) 751-7656 | |
ISSUE DATE: 02/07/06
|
E-MAIL: Julie.Kleffner@oa.mo.gov |
RETURN PROPOSAL NO LATER THAN: 02/15/06 AT 2:00 PM CENTRAL TIME
MAILING INSTRUCTIONS:
|
Print or type RFP Number and Return Due Date on the lower left hand corner of the envelope or package. Delivered Sealed Proposals must be in DPMM office (301 W High Street, Room 630) by the return date and time. |
RETURN PROPOSAL AND AMENDMENT(S) TO:
| (U.S. Mail) | (Courier Service) | |||||
| DPMM | or | DPMM | ||||
| PO BOX 809 JEFFERSON CITY MO 65102-0809 |
301 WEST HIGH STREET, ROOM 630 JEFFERSON CITY MO 65101 |
CONTRACT PERIOD: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
DELIVER SUPPLIES/SERVICES FOB (Free on Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
The offeror hereby declares understanding, agreement and certification of compliance to provide the
items and/or services, at the prices quoted, in accordance with all terms and conditions,
requirements, and specifications of the original RFP as modified by
this and any previously issued RFP
amendments. The offeror should, as a matter of clarity and assurance, also sign and return all previously
issued RFP amendment(s) and the original RFP document. The offeror agrees that the
language of the original RFP as modified by this and any previously issued RFP amendments shall govern in the event of a conflict with his/her proposal.
The offeror further agrees that upon receipt of an authorized purchase order from the Division of
Purchasing and Materials Management or when a Notice of Award is signed and issued by an authorized
official of the State of Missouri, a binding contract shall exist between the offeror and the State
of Missouri.
SIGNATURE REQUIRED
| LEGAL NAME OF ENTITY/INDIVIDUAL | ||
MAILING ADDRESS |
||
CITY, STATE, ZIP CODE |
||
CONTACT PERSON
|
EMAIL ADDRESS | |
PHONE NUMBER
|
FAX NUMBER | |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| ___ FEIN ___ SSN |
VENDOR TYPE (CHECK ONE) |
||
| ___ Corporation ___ Individual ___ State/Local Government ___ Partnership ___ Sole Proprietor ___ Other ___ | ||
AUTHORIZED SIGNATURE
|
DATE | |
PRINTED NAME
|
TITLE | |
| RFP B3Z06118 | Amendment #002 | Page 2 |
Medicaid Managed Care — Central, Eastern, and Western Regions
Department of Social Services, Division of Medical Services
Department of Social Services, Division of Medical Services
CONTRACT PERIOD: July 1, 2006 through June 30, 2007
(with two additional one-year renewal periods at the State’s sole option)
Prospective offerors are hereby advised of the following:
| 1. | The return by date and time shall be February 15, 2006 at 2:00 PM Central Time in lieu of February 10, 2006 at 2:00 PM Central Time. | |
| 2. | The following have been revised: |
1.3.1 b.
2.12.5 d.
2.14.4
Attachment 6 revised to amend Exhibit 1
Attachment 10 revised to clarify the Annual Audit instructions
2.12.5 d.
2.14.4
Attachment 6 revised to amend Exhibit 1
Attachment 10 revised to clarify the Annual Audit instructions
[SEAL]
|
STATE OF MISSOURI OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) REQUEST FOR PROPOSAL (RFP) |
AMENDMENT NO.: 001
|
REQ NO.: NR 886 25756004320 | |
RFP NO.: B3Z06118
|
BUYER: Julie Kleffner | |
TITLE: Medicaid Managed Care – Central, Eastern, & Western Regions
|
PHONE NO.: (573) 751-7656 | |
ISSUE DATE: 01/31/06
|
E-MAIL: Julie.Kleffner@oa.mo.gov |
Amendment #002 changed the proposal receipt date from February 10, 2006 to February 15, 2006
RETURN PROPOSAL NO LATER THAN: 02/10/06 AT 2:00 PM CENTRAL TIME
| MAILING INSTRUCTIONS: | Print or type RFP Number and Return Due Date on the lower left hand corner of the envelope or package. Delivered sealed proposals must be in DPMM office (301 W High Street, Room 630) by the return date and time. |
RETURN PROPOSAL AND AMENDMENT(S) TO:
| (U.S. Mail) | (Courier Service) | |||||
| DPMM | or | DPMM | ||||
| PO BOX 809 | 301 WEST HIGH STREET, ROOM 630 | |||||
| JEFFERSON CITY MO 65102-0809 | JEFFERSON CITY MO 65101 |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 | |
| (with two additional one-year renewal periods at the State’s sole option) |
DELIVER SUPPLIES/SERVICES FOB (Free on Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
The offeror hereby declares understanding, agreement and certification of compliance to provide the
items and/or services, at the prices quoted, in accordance with all terms and conditions,
requirements, and specifications of the original RFP as modified by this and any previously issued
RFP amendments. The offeror should, as a matter of clarity and assurance, also sign and return all
previously issued RFP amendment(s) and the original RFP document. The offeror agrees that the
language of the original RFP as modified by this and any previously issued RFP amendments shall
govern in the event of a conflict with his/her proposal. The offeror further agrees that upon
receipt of an authorized purchase order from the Division of Purchasing and Materials Management or
when a Notice of Award is signed and issued by an authorized official of the State of Missouri, a
binding contract shall exist between the offeror and the State of Missouri.
SIGNATURE REQUIRED
LEGAL NAME OF ENTITY/INDIVIDUAL |
||
MAILING ADDRESS |
||
CITY, STATE, ZIP CODE |
||
CONTACT PERSON
|
EMAIL ADDRESS | |
PHONE NUMBER
|
FAX NUMBER |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| ___ FEIN ___ SSN | ||||
VENDOR TYPE (CHECK ONE) |
||||
| ___ Corporation ___ Individual ___ State/Local Government ___ Partnership ___ Sole Proprietor ___ Other ___ | ||||
AUTHORIZED SIGNATURE
|
DATE | |
PRINTED NAME
|
TITLE |
| B3Z06118 | Amendment No. 001 | Page 2 |
Medicaid Managed Care – Central, Eastern, and Western Regions
Department of Social Services, Division of Medical Services
Department of Social Services, Division of Medical Services
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 | |
| (with two additional one-year renewal periods at the State’s sole option) |
Prospective offerors are hereby advised of the following:
| 1. | The following have been revised, inserted, deleted or renumbered: |
1.3.1 c.
1.3.1 i.
1.3.1 l.
1.3.1 n.
1.3.1 o.
1.7.2 q.
2.5.5 b.
2.5.5 c.
2.6.2 t. 5)
2.6.2 v.
2.12.10
2.25.5
4.1.1
1.3.1 i.
1.3.1 l.
1.3.1 n.
1.3.1 o.
1.7.2 q.
2.5.5 b.
2.5.5 c.
2.6.2 t. 5)
2.6.2 v.
2.12.10
2.25.5
4.1.1
| Attachment 3 – All references to Attachment 3 shall be deemed to mean revised Attachment 3 | ||
| Attachment 6 – All references to Attachment 6 shall be deemed to mean revised Attachment 6 |
The State of Missouri anticipates that another amendment will be forthcoming at a later date.
[SEAL]
|
STATE OF MISSOURI OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) REQUEST FOR PROPOSAL (RFP) |
RFP NO.: B3Z06118
|
REQ NO.: NR 886 25756004320 | |
TITLE: Medicaid Managed Care – Central, Eastern, & Western Regions
|
BUYER: Julie Kleffner | |
ISSUE DATE: 01/10/06
|
PHONE NO.: (573) 751-7656 | |
| E-MAIL: Julie.Kleffner@oa.mo.gov |
RETURN PROPOSAL NO LATER THAN: 02/10/06 AT 2:00 PM CENTRAL TIME
| MAILING INSTRUCTIONS: | Print or type RFP Number and Return Due Date on the lower left hand corner of the envelope or package. Delivered sealed proposals must be in DPMM office (301 W High Street, Room 630) by the return date and time. |
| (U.S. Mail) | (Courier Service) | |||||
RETURN PROPOSAL TO:
|
DPMM | or | DPMM | |||
| PO BOX 809 | 301 WEST HIGH STREET, RM 630 | |||||
| JEFFERSON CITY MO 65102-0809 | JEFFERSON CITY MO 65101 |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 | |
| (with two additional one-year renewal periods at the State’s sole option) |
DELIVER SUPPLIES/SERVICES FOB (Free on Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
The offeror hereby declares understanding, agreement and certification of compliance to provide the
items and/or services, at the prices quoted, in accordance with all requirements and specifications
contained herein and the Terms and Conditions Request for Proposal (Revised 01/03/06). The offeror
further agrees that the language of this RFP shall govern in the event of a conflict with his/her
proposal. The offeror further agrees that upon receipt of an authorized purchase order from the
Division of Purchasing and Materials Management or when a Notice of Award is signed and issued by
an authorized official of the State of Missouri, a binding contract shall exist between the offeror
and the State of Missouri.
SIGNATURE REQUIRED
LEGAL NAME OF ENTITY/INDIVIDUAL |
||
MAILING ADDRESS |
||
CITY, STATE, ZIP CODE |
||
CONTACT PERSON
|
EMAIL ADDRESS | |
PHONE NUMBER
|
FAX NUMBER |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| ___ FEIN ___ SSN | ||||
VENDOR TYPE (CHECK ONE) |
||||
| ___ Corporation ___ Individual ___ State/Local Government ___ Partnership ___ Sole Proprietor ___ Other ___ | ||||
AUTHORIZED SIGNATURE
|
DATE | |
PRINTED NAME
|
TITLE |
| RFP B3Z06118 | Page 2 |
| 1. | INTRODUCTION AND GENERAL INFORMATION | |
| 1.1 | Introduction: | |
| 1.1.1 | This document constitutes a request for competitive, sealed proposals from the health plan provider community for becoming providers in the Missouri managed care program, hereinafter referred to as “MC+ managed care” in the following regions of the State of Missouri: |
| a. | Central Region: Audrain, Boone, Callaway, Camden, Chariton, Cole, Cooper, Gasconade, Howard, Miller, Moniteau, Monroe, Montgomery, Morgan, Osage, Pettis, Randolph, and Saline counties. | ||
| b. | Eastern Region: Franklin, Jefferson, Lincoln, St. Charles, St. Francois, Ste. Genevieve, St. Louis, Warren, and Washington counties and St. Louis City. | ||
| c. | Western Region: Cass, Clay, Henry, Jackson, Johnson, Lafayette, Platte, Ray, and St. Clair counties. |
| 1.1.2 | Organization — This document, referred to as a Request for Proposal (RFP), is divided into the following parts: |
| 1) | Introduction and General Information | ||
| 2) | Performance Requirements | ||
| 3) | General Contractual Requirements | ||
| 4) | Proposal Submission Information | ||
| 5) | Pricing Pages: The Pricing Pages are a separate link that must be downloaded from the Division of Purchasing and Materials Management’s Internet web site at: https://www.moolb.mo.gov. It shall be the sole responsibility of the offeror to obtain the Pricing Pages. If the pricing page(s) are not downloaded and included with the response, the response could be determined to be non-responsive and eliminated from consideration for award. | ||
| 6) | Exhibits A – B | ||
| 7) | Terms and Conditions | ||
| 8) | Attachments 1 – 14: The offeror is advised that attachments exist to this document which provide additional information and instruction. These attachments are separate links that must be downloaded from the Division of Purchasing and Materials Management’s Internet web site at: https://www.moolb.mo.gov. It shall be the sole responsibility of the offeror to obtain each of the attachments. The offeror shall not be relieved of any responsibility for performance under the contract due to the failure of the offeror to obtain a copy of the attachments. |
| 1.2 | Pre-Proposal Conference and MC+ Managed Care Quality Assessment and Improvement Advisory Groups Meeting: | |
| 1.2.1 | A pre-proposal conference regarding this Request for Proposal will be held on January 24, 2006, at 10:00 a.m. in the Interpretive Center of the James C. Kirkpatrick State Information Center, 600 West Main Street, Jefferson City, Missouri. | |
| 1.2.2 | The MC+ Managed Care Quality Assessment and Improvement Advisory Groups quarterly meeting is scheduled for January 25, 2006 at 10:30 a.m. in room 202 of the Howerton Court Building, 615 Howerton Court, Jefferson City, Missouri. During the meeting, portions of the RFP will be discussed; specifically section 2.28.2 Adjustments for Performance Based on HEDIS Performance Ratings and the Quality Strategy, Attachment 6. | |
| 1.2.3 | All potential offerors are encouraged to attend this conference and the MC+ Managed Care Quality Assessment and Improvement Advisory Groups quarterly meeting in order to ask questions and provide comments on the RFP. Attendance is not required in order to submit a response; however, offerors are encouraged to attend since information relating to this RFP will be discussed in detail. The offeror should bring a copy of the RFP to the pre-proposal conference since it will be used as the agenda for the pre- |
| RFP B3Z06118 | Page 3 |
| proposal conference . The offeror should also bring a copy of the RFP to the MC+ Managed Care Quality Assessment and Improvement Advisory Groups quarterly meeting. | ||
| 1.2.4 | Offerors may submit questions regarding the RFP prior to the Pre-Proposal Conference to allow time for the State of Missouri to prepare answers. However, the offeror should restate each question for verbal response during the Pre-Proposal Conference and/or MC+ Managed Care Quality Assessment and Improvement Advisory Groups quarterly meeting. Only those questions/answers which necessitate changes to the RFP will be included in an amendment, if any. | |
| 1.2.5 | Offerors are strongly encouraged to advise the Division of Purchasing and Materials Management within five (5) working days of the scheduled pre-proposal conference and/or MC+ Managed Care Quality Assessment and Improvement Advisory Groups quarterly meeting of any special accommodations needed for disabled personnel who will be attending the conference and/or meeting so that these accommodations can be made. | |
| 1.3 | Available Documentation and Offeror’s Contact: |
| 1.3.1 | The offeror may request a copy of any of the following documents by contacting Julie Kleffner at the Division of Purchasing and Materials Management. Requests for copies may be sent to Ms. Kleffner via fax at 573-526-9817, or emailed to Julie.Kleffner@oa.mo.gov, or mailed to the Division of Purchasing and Materials Management, P.O. Box 809, Jefferson City, MO 65102. |
| a. | Overview — Division of Medical Services. Available via the Internet at the Division of Medical Services’ website: www.dss.state.mo.us/dms (Look under Missouri Medicaid Description and Missouri Medicaid History). |
Paragraph 1.3.1 b. revised by Amendment #002
| b. | Quality Improvement System for Managed Care (QISMC) |
Paragraph 1.3.1 c. revised by Amendment #001
| c. | Health Plan Record Layout Manual – available electronically at website www.emomed.com (Look under Provider, Electronic Billing Layout, System Manuals, Health Plan Layout Manual) | ||
| d. | Medicaid Fee-for-Service Pricing File available electronically at the Division of Medical Service’ website: http://www.dss.mo.gov/dms/providers/pages/cptagree.htm | ||
| e. | Division of Medical Services MC+ Managed Care Policy Statements | ||
| f. | Missouri’s 1115 Waiver Amendment | ||
| g. | EPSDT Screening Codes and Reporting Methodology | ||
| h. | Historical Enrollment Data |
Paragraph 1.3.1 i(MRDD Waiver Services) deleted by Amendment #001 and all other paragraphs
renumbered accordingly
| i. | Description of Member Satisfaction Survey Data Reporting | ||
| j. | Hospital Per Diem Rates | ||
| k. | Federal regulations regarding home health agencies are available via the Internet at http://www.gpoaccess.gov/cfr/retrieve.html (42 CFR 484, Subpart A, B, C and 42 CFR 441.15). |
Paragraph 1.3.1 l. revised by Amendment #001
| l. | Guidelines for Addressing Fraud and Abuse in managed Care”, is available via the internet at http://new.cms.hhs.gov/FraudAbuseforProfs/02_MedicaidGuidance.asp | ||
| m. | Jackson County Consent Decree and Operational Guide |
| RFP B3Z06118 | Page 4 |
Paragraphs 1.3.1 n. and o. inserted by Amendment #001
| n. | Mercer presentation from the January 24, 2006 Pre-proposal Conference | ||
| o. | Criteria for Post-Payment Review of Specialty Pediatric Hospital Discharges. |
| 1.3.2 | All possible efforts have been made to ensure that the information provided in these relevant documents is complete and current. However, the offeror shall not assume that such information is indeed complete or current. | |
| 1.4 | Questions: | |
| 1.4.1 | All questions regarding this Request for Proposal and/or the competitive procurement process must be directed to Julie Kleffner at the Division of Purchasing and Materials Management. Questions may be faxed to Julie Kleffner at 573-526-9817, or emailed to Julie.Kleffner@oa.mo.gov, or mailed to the Division of Purchasing and Materials Management, P.O. Box 809, Jefferson City, MO 65102. All questions should be submitted three weeks prior to the proposal receipt date specified on Page 1. | |
| 1.5 | Description of Missouri MC+ Managed Care Program: | |
| 1.5.1 | Effective July 1, 2006, the State of Missouri will continue a health care delivery program in Audrain, Boone, Callaway, Camden, Cass, Chariton, Clay, Cole, Cooper, Franklin, Gasconade, Henry, Howard, Jackson, Jefferson, Johnson, Lafayette, Lincoln, Miller, Moniteau, Monroe, Montgomery, Morgan, Osage, Pettis, Platte, Randolph, Ray, Saline, St. Charles, St. Clair, St. Francois, Ste. Genevieve, St. Louis, Warren, and Washington counties and St. Louis City to serve MC+ managed care eligibles meeting specified eligibility criteria. The goal is to improve the accessibility and quality of health care services for Missouri’s MC+ managed care and State aid eligible populations, while controlling the program’s rate of cost increase. |
| a. | The Missouri Department of Social Services, Division of Medical Services intends to achieve this goal by enrolling MC+ managed care eligibles in comprehensive, qualified health plans that contract with the State of Missouri to provide a specified scope of benefits to each enrolled member in return for a capitated payment made on a per member, per month basis. |
| 1.5.2 | The health care delivery program was designed through a collaborative process that included feedback from providers, consumers, health plans, communities, the State of Missouri government agencies, and the Centers for Medicare and Medicaid Services (CMS) (formerly the Health Care Financing Administration). | |
| 1.5.3 | The Missouri Department of Social Services, Division of Medical Services has identified eight (8) guiding principles for Missouri’s Medicaid Program as follows: |
| 1) | All recipients must have a medical home. | ||
| 2) | Attention to wellness of the individual (i.e. education). | ||
| 3) | Chronic care management. | ||
| 4) | Care management – (resources focused towards people receiving the services they need, not necessarily because the service is available). | ||
| 5) | Appropriate setting at the right cost. | ||
| 6) | Emphasis on the individual person. | ||
| 7) | Evidenced based guidelines for improved quality care and use of resources. | ||
| 8) | Encourage responsibility and investment on the part of the recipient to ensure wellness. |
| RFP B3Z06118 | Page 5 |
| 1.6 | Program Management and Oversight: | |
| 1.6.1 | In the State of Missouri, the Department of Social Services, Division of Medical Services is officially designated with administration of the medical assistance and federal Medicaid (Title XIX and Title XXI) programs. In addition to Division of Medical Services’ oversight, CMS also monitors MC+ managed care activities through its Regional Office in Kansas City, Missouri and its Center for Medicaid and State Operations, Division of Integrated Health Systems in Baltimore, Maryland. | |
| 1.7 | Missouri MC+ Managed Care Program Eligibility Groups: | |
| 1.7.1 | For purposes of this Request for Proposal, the MC+ managed care population consists of different eligibility groups which have been combined for the purpose of rate setting. The qualifications for the program are based on a combination of factors, including family composition, income level, insurance status, or pregnancy status depending on the eligibility group in question. The eligibility groups and their current estimated sizes are described below and summarized in Attachment 1. |
| a. | Eligibility of Parents/Caretakers, Children, Pregnant Women, and Refugees: Individuals covered under MC+ managed care within this group are as follows: |
| 1) | Parents/Caretakers and Children eligible under Medical Assistance for Families, and Transitional Medical Assistance. | ||
| 2) | Children eligible under MC+ for Poverty Level Children. | ||
| 3) | Women eligible under Medical Assistance for Pregnant Women and 60 days post-partum. | ||
| 4) | Individuals eligible under Recipients of Refugee Medical Assistance. | ||
| 5) | Individuals eligible under the above groups and are MRDD Waiver participants. | ||
| 6) | Those that are eligible are defined by their MC+ Medical Eligibility (ME) Codes as Specified in Attachment 1. |
| b. | Eligibility of Other MC+ Children In the Care and Custody of the State and Receiving Adoption Subsidy Assistance: All children in the care and custody of the Department of Social Services; all children placed in a not-for-profit residential group home by a juvenile court; all children receiving adoption subsidy assistance; and all children receiving non-medical assistance (i.e., living expenses) that are in the legal custody of the Department of Social Services shall remain the responsibility of the Department of Social Services. Those that are eligible are defined by their MC+ Medical Eligibility code as specified in Attachment 1. | ||
| c. | 1115 Demonstration Waiver: Missouri submitted an amendment to its pending 1115 demonstration waiver on August 26, 1997. The amendment is to Missouri’s 1115 demonstration waiver that was submitted on June 30, 1994. The 1115 demonstration waiver as amended was approved April 28, 1998. The waiver amendment continues Missouri’s commitment to improving medical care to low income children and supports families moving from welfare into jobs. |
| 1) | Uninsured Children Below 200 Percent Under Title XIX, Coordinated with Title XXI Funding: Uninsured children with net family income up to 200 percent of the federal poverty level (300 percent gross income) are covered under an MC+ expansion. The MC+ expansion will occur under a Title XIX 1115 waiver. Children will include individuals birth through age 18. No new eligibles will be excluded because of pre-existing illness or condition. “Uninsured Children” are persons up to nineteen years of age who have not had access to employer-subsidized health care insurance or other health care coverage for six (6) months prior to |
| RFP B3Z06118 | Page 6 |
| application, are residents of the State of Missouri, and have parents or guardians who meet the following requirements: |
| • | Furnish to the Department of Social Services the uninsured child’s social security number or numbers, if the uninsured child has more than one such number; | ||
| • | Cooperate with the Department of Social Services in identifying and providing information to assist the Division of Medical Services in pursuing any third-party health insurance carrier who may be liable to pay for health care; | ||
| • | Cooperate with the Department of Social Services, Family Support Division in establishing paternity and in obtaining support payments, including medical support; | ||
| • | Demonstrate, upon request, their child’s participation in wellness programs including immunizations and a periodic physical examination. (This shall not apply to any child whose parent or legal guardian objects in writing to such wellness programs including immunizations and an annual physical examination because of religious beliefs or medical contraindications); | ||
| • | Demonstrate annually that their total net worth does not exceed two hundred fifty thousand dollars in total value; and | ||
| • | There will be protections against dropping or foregoing private coverage, including a six (6) month waiting period and insurance availability screens through the Division of Medical Services’ Health Insurance Premium Payment (HIPP) program. |
| Ø | Any child identified as having special health care needs defined as a condition which left untreated would result in the death or serious physical injury of a child, that does not have access to affordable employer-subsidized health care insurance will be exempt from the requirement to be without health care coverage for six months in order to be eligible for services. | ||
| Ø | A child shall not be subject to the 30-day waiting period as long as the child meets all other qualifications for eligibility. |
| d. | MC+ managed care eligibles in the above specified eligibility groups may voluntarily disenroll from the MC+ Managed Care Program or choose not to enroll in the MC+ Managed Care Program if they: |
| 1) | Are eligible for Supplemental Security Income (SSI) under Title XVI of the Social Security Act; | ||
| 2) | Are described in Section 501(a)(1)(D) of the Social Security Act; | ||
| 3) | Are described in Section 1902(e)(3) of the Social Security Act; | ||
| 4) | Are receiving foster care or adoption assistance under part E of Title IV of the Social Security Act; | ||
| 5) | Are in foster care or otherwise in out-of-home placement; or | ||
| 6) | Meet the SSI disability definition as determined by the Department of Social Services. |
| 1.7.2 | Not Covered Under the MC+ Managed Care Program: The following individuals are not covered under the MC+ Managed Care Program and receive their services through the Medicaid/MC+ fee-for-service program: |
| RFP B3Z06118 | Page 7 |
| a. | Permanently and Totally Disabled individuals eligible under ME Codes 04 (Permanently and Totally Disabled), 13 (Medical Assistance-PTD), 16 (Nursing Care-PTD), and 11 (Medical Assistance (MA) Spenddown and Non-Spenddown, Old Age Assistance (OAA)). | ||
| b. | Individuals eligible under ME Code 14 (Nursing Care-OAA) residing in a nursing home and receiving cash to apply toward their nursing home costs or a vendor payment directly to a nursing home for their care through the Medicaid program. | ||
| c. | Individuals eligible under ME Codes 23 and 41 (MA ICF-MR Poverty) residing in a State Mental Institution or an Intermediate Care Facility for the Mentally Retarded (ICF/MR). | ||
| d. | Individuals eligible under ME Codes 28, 49, and 67 (Children placed in foster homes or residential care by the Department of Mental Health). | ||
| e. | Pregnant women eligible under ME Code 58 and 59, the Presumptive Eligibility Program for ambulatory prenatal care only. | ||
| f. | Individuals eligible under ME Codes 2, 3, 12, and 15 (Aid to the Blind and Blind Pension). | ||
| g. | AIDS Waiver participants (individuals twenty-one (21) years of age and over). | ||
| h. | Any individual eligible and receiving either or both Medicare Part A and Part B benefits. | ||
| i. | Individuals eligible under ME Codes 33 and 34 (MO Children with Developmental Disabilities Waiver). | ||
| j. | Individuals eligible under ME Code 55 (Qualified Medicare Beneficiary – QMB). | ||
| k. | Children eligible under ME Code 65, placed in residential care by their parents, if eligible for MC+/Medicaid on the date of placement. | ||
| l. | Uninsured women losing their MC+ eligibility 60 days after the birth of their child would be eligible under ME Code 80 for women’s health services for one year plus 60 days, regardless of income level. This population will obtain their services through the MC+ fee-for-service program. | ||
| m. | Individuals with ME code 81 (Temporary Assignment Category). | ||
| n. | Women eligible under ME codes 83 and 84 (Breast and Cervical Cancer Treatment). | ||
| o. | Individuals eligible under ME code 87 (Presumptive Eligibility for Children). | ||
| p. | Individuals eligible under ME code 88 (Voluntary Placement). |
Paragraph 1.7.2 q. inserted by Amendment #001
| q. | Individuals eligible under ME code 82 (MoRx) |
| 1.7.3 | Where economically cost effective, the Division of Medical Services will use the Division of Medical Services’ HIPP program to obtain available coverage through available commercial insurance. Those services included in the comprehensive benefit packages described herein, but not included in the commercial insurance service package, may be obtained through MC+ managed care or fee-for-service as appropriate. |
| RFP B3Z06118 | Page 8 |
| 1.8 | Information: | |
| 1.8.1 | Although an attempt has been made to provide accurate and up-to-date information, the State of Missouri does not warrant or represent that the background information provided herein reflects all relationships or existing conditions related to this Request for Proposal. | |
| 1.8.2 | The State of Missouri has previously contracted for these services through C302226001 through C302226004 for the Eastern and Central Regions and through C303182001 through C303182004 for the Western Region. These contracts expire on June 30, 2006. A copy of the contracts can be viewed and printed from the Division of Purchasing and Materials Management’s Public Record Search and Retrieval System located on the Internet at: http://www.oa.mo.gov/purch. In addition, all proposal and evaluation documentation leading to the award of the expiring contracts may also be viewed and printed from the Division of Purchasing and Materials Management’s Public Record Search and Retrieval System. Please reference the Bid number B3Z02226 and B3Z03182 or any of the contract numbers when searching for these documents. |
| RFP B3Z06118 | Page 9 |
2. CONTRACTUAL REQUIREMENTS
| 2.1.1 | The contractor (hereinafter referred to as the “health plan”) shall provide a managed care medical service delivery system for the Department of Social Services, Division of Medical Services (hereinafter referred to as the “state agency”), located in the State of Missouri pursuant to the requirements contained herein. | |
| 2.1.2 | Prior to performing services in each of the counties, the health plan shall: |
Paragraph 2.1.2 a. revised by BAFO #002
| a. | Have and maintain a certificate of authority from the Department of Insurance to establish and operate a health maintenance organization in all the counties specified herein by no later than April 14, 2006 so the state agency can proceed with open enrollment with only health plans that are appropriately licensed. In the event the health plan is awarded a contract and fails to achieve appropriate licensure by April 14, 2006, the contract shall be cancelled in its entirety; | ||
| b. | Understand that federal approval is required prior to commitment of the federal financing share of funds under the contract; | ||
| c. | Participate in readiness reviews. If the health plan is new to the MC+ managed care program, the state agency shall conduct on-site readiness reviews of the health plan in order to document the status of the health plan with respect to meeting the program requirements outlined herein. If the health plan has an established relationship with the state agency, the state agency shall conduct off-site reviews of the health plan in order to document the status of the health plan with respect to meeting any new program requirements; and | ||
| d. | Submit to the state agency all policies and procedures that require prior approval listed in Attachment 12. The health plan must submit all modifications, additions, or deletions to such policies and procedures to the state agency at least thirty (30) days prior to implementation. The health plan must operate in accordance with such policies and procedures. The health plan must incorporate and implement any revisions identified by the state agency to the health plan’s policies and procedures within the time frame specified by the state agency. All other policies and procedures required herein shall be submitted to the state agency on request. |
| 2.1.3 | The health plan awarded a contract for the Eastern region shall provide services to individuals determined eligible by the state agency for the Missouri MC+ Managed Care Program in all of the following ten areas in the State of Missouri: |
| a. | Franklin County | ||
| b. | Jefferson County | ||
| c. | Lincoln County | ||
| d. | St. Charles County | ||
| e. | St. Francois County | ||
| f. | Ste. Genevieve County | ||
| g. | St. Louis County | ||
| h. | Warren County | ||
| i. | Washington County | ||
| j. | St. Louis City |
| 2.1.4 | The health plan awarded a contract for the Central region shall provide services to individuals determined eligible by the state agency for the Missouri MC+ Managed Care Program in all of the following eighteen areas in the State of Missouri: |
| a. | Audrain County | ||
| b. | Boone County | ||
| c. | Callaway County | ||
| d. | Camden County |
| RFP B3Z06118 | Page 10 |
| e. | Chariton County | ||
| f. | Cole County | ||
| g. | Cooper County | ||
| h. | Gasconade County | ||
| i. | Howard County | ||
| j. | Miller County | ||
| k. | Moniteau County | ||
| l. | Monroe County | ||
| m. | Montgomery County | ||
| n. | Morgan County | ||
| o. | Osage County | ||
| p. | Pettis County | ||
| q. | Randolph County | ||
| r. | Saline County |
| 2.1.5 | The health plan awarded a contract for the Western region shall provide services to individuals determined eligible by the state agency for the Missouri MC+ Managed Care Program in all of the following nine areas in the State of Missouri: |
| a. | Cass County | ||
| b. | Clay County | ||
| c. | Henry County | ||
| d. | Jackson County | ||
| e. | Johnson County | ||
| f. | Lafayette County | ||
| g. | Platte County | ||
| h. | Ray County | ||
| i. | St. Clair County |
2.2 Health Plan Administration:
| 2.2.1 | The health plan shall have in place sufficient administrative staff and organizational structure to comply with all requirements described herein. The health plan must be staffed by qualified persons in numbers appropriate to the health plan’s size of enrollment. At a minimum, the health plan must provide the following staff to perform the responsibilities listed. Unless otherwise specified, the health plan may combine or split the listed responsibilities among the health plan’s staff as long as the health plan demonstrates that the responsibilities are being met. Similarly, the health plan may contract with a third party (subcontractor) to perform one or more of these responsibilities. |
| a. | A full time Medicaid Plan Administrator with clear authority over the general administration and implementation of the requirements set forth herein. | ||
| b. | Clerical and support staff to ensure appropriate functioning of the health plan’s operation. | ||
| c. | A Medical Director who shall be a Missouri-licensed physician. The Medical Director shall be actively involved in all major clinical and quality program components of the health plan. The Medical Director shall devote sufficient time to the health plan to ensure timely medical decisions, including after hours consultation as needed. The Medical Director shall be responsible for the sufficiency and supervision of the health plan provider network. The Medical Director shall ensure compliance with State and local reporting laws on communicable diseases, child abuse, neglect, etc. | ||
| d. | A Dental Consultant who shall be a Missouri-licensed dentist. The Dental Consultant shall devote sufficient time to the health plan to ensure timely dental decisions and claim review. |
| RFP B3Z06118 | Page 11 |
| e. | A full-time Chief Financial Officer to oversee the budget and accounting systems implemented by the health plan. | ||
| f. | A Quality Assessment and Improvement and Utilization Management Coordinator who shall be a Missouri-licensed registered nurse, nurse practitioner, or physician. | ||
| g. | A Special Programs Coordinator who shall be a Missouri-licensed social worker, registered nurse including advanced practice nurse, physician, or physician’s assistant; or have a Master’s degree in health services, public health, or health care administration. In addition, the Special Programs Coordinator should be familiar with the variety of services available through the Missouri human services agencies that interface with health care. The duties of the Special Programs Coordinator shall include care coordination with all stakeholders and providers involved in the care of members. These stakeholders and providers may include, but not be limited to, the state agency, the Department of Health and Senior Services, local public health agencies, the Department of Mental Health, the Department of Elementary and Secondary Education, the Family Support Division, Children’s Division, hospitals, the judicial system, schools, and Community Mental Health Centers. The Special Programs Coordinator shall provide timely and comprehensive facilitation of the identification of medically necessary services and implementation of such when included in a member’s Individualized Education Program/Individual Family Service Plan. The Special Programs Coordinator is the point of contact for members, their representatives, providers, the state agencies, and local public health agencies. | ||
| h. | A Mental Health Coordinator shall be a qualified mental health professional as specified herein and possess, at a minimum, a master’s degree. | ||
| i. | Prior authorization staff shall be available to authorize services twenty-four (24) hours per day, seven (7) days per week. This staff shall be directly supervised by a Missouri-licensed registered nurse, physician, or physician’s assistant. Prior approval functions for mental health services shall be performed by a qualified mental health professional. | ||
| j. | Inpatient certification review staff shall conduct inpatient initial, concurrent, and retrospective reviews. The review staff shall consist of registered nurses, physicians, physician’s assistants, or licensed practical nurses experienced in inpatient reviews and under the direct supervision of a registered nurse, physician, or physician’s assistant. | ||
| k. | Member services staff shall coordinate communications with members and act as member advocates. The health plan shall provide sufficient member services staff to enable members to receive prompt resolution to their problems or inquiries. | ||
| l. | Provider services staff shall coordinate communications between the health plan and providers. The health plan shall provide sufficient provider services staff to enable providers to receive prompt resolution to their problems or inquiries. | ||
| m. | A Complaint, Grievance, and Appeal Coordinator shall manage and adjudicate member and provider complaints, grievances, and appeals in a timely manner. | ||
| n. | Claims Administrator/Management Information System (MIS) Director. | ||
| o. | Compliance Officer. |
| 2.2.2 | The health plan shall inform the state agency in writing within seven (7) calendar days of staffing changes in the following key positions. The health plan shall fill vacancies in any of these key positions with permanent qualified replacements within ninety (90) calendar days of the departure of the former staff member. |
| RFP B3Z06118 | Page 12 |
| a. | Medicaid Plan Administrator | ||
| b. | Medical Director | ||
| c. | Quality Assessment and Improvement and Utilization Management Coordinator | ||
| d. | Special Programs Coordinator | ||
| e. | Mental Health Coordinator | ||
| f. | Chief Financial Officer |
| 2.2.3 | The health plan shall ensure that all staff have appropriate training, education, experience, liability coverage, and orientation to fulfill the requirements of the positions and have met all appropriate licensure requirements. | |
| 2.2.4 | The health plan may not knowingly employ as a director, officer, partner, or person with beneficial ownership of more than 5 percent of the health plan’s equity, a person who is debarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in non-procurement activities under regulations issued pursuant to Executive Order No. 12549 or under guidelines implementing such order; or is an affiliate (as defined in such Act) of such a person. In addition, the health plan may not have an employment, consulting, or other agreement with such a person described above for the provision of items and services that are significant and material to the health plan’s obligations required herein. | |
| 2.2.5 | The health plan shall require each physician providing services to members to have a unique identifier in accordance with the system established under section 1173(b) of the Health Insurance Portability and Accountability Act of 1996. | |
| 2.2.6 | Non-Discrimination in Hiring and Provision of Services: The health plan shall ensure that all federal and state laws, as amended, and policies of non-discrimination in hiring and the provision of services are strictly enforced. The health plan shall comply with Title VI of the Civil Rights Act of 1964, as amended; the Rehabilitation Act of 1973, as amended; Title IX of the Education Amendments of 1972, as amended; the Age Discrimination Act of 1975, as amended; and the American Disabilities Act of 1990, as amended. |
| a. | The health plan shall incorporate in its policies, administration, and delivery of services the values of: |
| 1) | Honoring member’s beliefs; | ||
| 2) | Being sensitive to cultural diversity; and | ||
| 3) | Fostering in staff and providers attitudes and interpersonal communication styles which respect the member’s cultural backgrounds. |
| b. | The health plan shall have specific policy statements on minority inclusion and non-discrimination and procedures to communicate the policy statements and procedures to subcontractors. | ||
| c. | The health plan shall not discriminate in regard to the participation, reimbursement, or indemnification of any provider who is acting within the scope of his or her license or certification under applicable State law, solely on the basis of that license or certification. If a health plan declines to include individual or groups of providers in its network, it must give the affected providers written notice of the reason for its decision. The health plan’s provider selection policies and procedures cannot discriminate against particular providers that serve high risk populations or specialize in conditions that require costly treatment. This section may not be construed to: |
| RFP B3Z06118 | Page 13 |
| 1) | Require the health plan to contract with providers beyond the number necessary to meet the needs of its members; | ||
| 2) | Preclude the health plan from using different reimbursement amounts for different specialties or for different practitioners in the same specialty; or | ||
| 3) | Preclude the health plan from establishing measures that are designed to maintain quality of services, control costs, and are consistent with its responsibilities to members. |
2.3 Health Plan Provider Networks:
| 2.3.1 | The health plan shall establish and maintain health plan provider networks in geographically accessible locations, in accordance with the travel distance standards specified herein, comprised of hospitals, physicians, advanced practice nurses, mental health providers, substance abuse providers, pharmacies, dentists, emergent and non-emergent transportation services, etc., with sufficient capacity to make available all services in accordance with the service accessibility standards specified herein. In order to maintain geographically accessible locations, the health plan should look to providers in contiguous and other counties for full development of the network. | |
| 2.3.2 | Primary Care Provider Responsibilities: The health plan shall have written policies and procedures for linking every member to a primary care provider. The primary care provider must serve as the member’s initial and most important contact. As such, primary care provider responsibilities must include at a minimum: |
| a. | Maintaining continuity of each member’s health care. | ||
| b. | Making referrals for specialty care and other medically necessary services to both in-network and out-of-network providers. | ||
| c. | Maintaining a comprehensive current medical record for the member, including documentation of all services provided to the member by the primary care provider, as well as any specialty or referral services, diagnostic reports, physical and mental health screens, etc. | ||
| d. | Although primary care providers are responsible for the above activities, the health plan must monitor the primary care providers’ actions for compliance with health plan and MC+ Managed Care Program policies. | ||
| e. | Primary care providers may have formalized relationships with other primary care providers to see their members for after hours care, during certain days, for certain services, or other reasons to extend their practice. However, the primary care provider shall be ultimately responsible for the above listed activities. |
| 2.3.3 | Eligible Specialties: The health plan shall limit its primary care providers to licensed residents specializing in family and general practice, pediatrics, obstetrics and gynecology (OB/GYN), and internal medicine; registered nurses who are advanced practice nurses with specialties in family practice, pediatric practice, and OB/GYN practice; and licensed physicians in the following specialties: family and general practitioners, pediatricians, OB/GYN, and internists. |
| a. | To the maximum extent possible, the health plan should include all of these specialties in its health plan provider network. |
| 2.3.4 | Primary Care Provider Teams and Primary Care Clinics: The responsibilities of a primary care provider team and a primary care clinic shall be the same as the responsibilities listed herein for primary care providers. |
| RFP B3Z06118 | Page 14 |
| a. | If the health plan provider network includes institutions with teaching programs, primary care provider teams, comprised of residents and a supervising faculty physician, may serve as a primary care provider. In addition, the health plan should establish primary care provider teams that include advanced practice nurses or physician assistants as recognized by the Board of Healing Arts who, at the member’s discretion, may serve as the point of first contact for the member. In both instances, the health plan shall organize its primary care provider teams so as to ensure continuity of care to members and identify a “lead physician” within the team for each member. The “lead physician” must be an attending physician and not a resident. | ||
| b. | The health plan may also elect to make available clinics to serve as primary care providers. The primary care clinic must provide the range of services required of all primary care providers. A centralized medical record shall be maintained on each member enrolled with the primary care clinic. |
| 2.3.5 | The health plan shall offer its members freedom of choice in selecting a primary care provider. The number of members assigned to a primary care provider shall be decreased by the health plan if necessary to maintain the appointment availability standards. To the degree possible, these shifts should occur prospectively (before care has been initiated) and the health plan should take steps to minimize the need for such shifts. | |
| 2.3.6 | The health plan shall include a mix of mental health and substance abuse providers with experience in treating children, adolescents, and adults in the health plan provider network to ensure a broad range of treatment options are available. |
| a. | To the maximum extent possible, the health plan should include Community Mental Health Centers (CMHC) in the health plan provider network. A listing of CMHC is provided in Attachment 5. | ||
| b. | The mental health provider network may include licensed psychiatrists, licensed psychologists, licensed psychiatric advance practice nurses, provisional licensed professional counselors, licensed professional counselors, provisional licensed clinical social workers, licensed clinical social workers, licensed clinical nurse specialists, licensed home health, licensed psychiatric nurse, and state certified mental health or substance abuse program. To be considered adequate, the mental health provider network must, at a minimum, include Qualified Mental Health Professionals (QMHP), Qualified Substance Abuse Professionals (QSAP), licensed psychiatrists, licensed psychologists, licensed psychiatric nurses, licensed professional counselors, licensed clinical social workers, and licensed clinical nurse specialists. |
| 1) | A QMHP shall be one of the following and provide services within their defined scope of practice: |
| • | A physician, licensed under Missouri state law to practice medicine or osteopathy who has either specialized training in mental health services or one (1) year of experience, under supervision, in treating problems related to mental illness; | ||
| • | A psychiatrist, a physician licensed under Missouri state law, who has successfully completed a training program in psychiatry approved by the American Medical Association, the American Osteopathic Association, or other training program identified as equivalent by the state agency; | ||
| • | A psychologist licensed under Missouri state law to practice psychology with specialized training in mental health services; | ||
| • | A professional counselor licensed under Missouri state law to practice counseling who has specialized training in mental health services; |
| RFP B3Z06118 | Page 15 |
| • | A licensed clinical social worker or a clinical social worker with a Master’s Degree in social work from an accredited program who has specialized training in mental health services; | ||
| • | A psychiatric nurse, a registered professional nurse, licensed under Missouri state law who has at least two (2) years of experience in a psychiatric setting or a Master’s Degree in psychiatric nursing; or | ||
| • | An individual possessing a Master’s Degree or Doctorate Degree in counseling and guidance, rehabilitation counseling, vocational counseling, psychology, pastoral counseling, family therapy, social work, or a related field, who has successfully completed a practicum or has one (1) year of experience under the supervision of a mental health professional. |
| 2) | A QSAP shall be one of the following and provide services within their defined scope of practice: |
| • | A counselor, psychologist, clinical social worker, or physician licensed in Missouri who has at least one (1) year of full-time experience in the treatment or rehabilitation of substance abuse; | ||
| • | A graduate of an accredited college or university with a Master’s Degree in social work, counseling, psychology, psychiatric nursing, or closely related field who has at least two (2) years of full-time experience in the treatment or rehabilitation of substance abuse; | ||
| • | A graduate of an accredited college or university with a Bachelor’s Degree in social work, counseling, psychology, or closely related field who has at least three (3) years of full-time experience in the treatment or rehabilitation of substance abuse; or | ||
| • | An alcohol, drug, or substance abuse counselor certified by the Missouri Substance Abuse Counselors Certification Board, Inc. |
| 2.3.7 | Mental Health and Substance Abuse In-Network Self Referrals: The health plan shall have written policies and procedures that permit members to seek in-network mental health services and substance abuse services without a referral or authorization from the primary care provider. The policies and procedures shall permit members to contact an in-network mental health and substance abuse provider directly and shall provide for the authorization of at least four (4) visits annually without prior authorization requirements. Health plan mental health and substance abuse providers shall complete a health status screen, at the initial point of contact and as part of the re-assessment process for members in treatment. Members with physical health conditions as indicated by the screen shall be referred to their primary care provider for evaluation and treatment of the physical health condition. | |
| 2.3.8 | Physician Specialists: Because of the large number of physician specialties that exist, the health plan is not required to maintain specific member-to-specialist provider ratios. However, the health plan must provide adequate access to physician specialists for primary care provider referrals and employ or contract with physician specialists in sufficient numbers to ensure specialty services can be made available in a timely manner. The health plan shall have protocols for coordinating care between primary care providers and specialists which include the expected response time for consults between primary care providers and specialists. | |
| 2.3.9 | Any Willing Pharmacy Provider: Any pharmacy, licensed without restriction under chapter 338, Revised Statutes of the State of Missouri (RSMo), as amended, and participating as an approved provider in the Missouri Medicaid program, which is qualified under the terms of the health plan and willing to accept the health plan’s operating terms including, but not limited to, its schedule of fees, covered expenses, and quality standards, shall be allowed to participate in the health plan. Nothing shall prevent a |
| RFP B3Z06118 | Page 16 |
| health plan from instituting reasonable credentialing criteria, requiring fee discounts, or establishing any other reasonable measure designed to maintain quality or control costs. | ||
| 2.3.10 | Federally Qualified Health Centers and Rural Health Clinics: The health plan shall include Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) in the health plan provider network, unless the health plan can demonstrate that it has both adequate capacity and an appropriate range of services to provide care for the expected enrollment in the region without contracting with FQHCs or RHCs. (A description of FQHC/RHC services is included in Attachment 2. A listing of FQHCs and RHCs are provided in Attachment 5.) If the health plan is competing against an FQHC or RHC owned health plan, the health plan shall not be required to comply with the previous requirement, although the health plan still must provide the FQHC/RHC services that are within the covered benefits of the MC+ managed care program. The health plan shall have protocols for coordinating care between the primary care provider and the FQHC and RHC provider and indicate the expected response time for consults between the FQHC and RHC and the primary care provider. | |
| 2.3.11 | Family Planning and Sexually Transmitted Disease (STD) Treatment Providers: The health plan should include Title X and sexually transmitted disease treatment providers in the health plan provider network to serve members covered under the comprehensive and extended family planning, women’s reproductive health, and sexually transmitted diseases benefit packages. The health plan shall allow for full freedom of choice for the provisions of these services. A listing of Family Planning and STD treatment providers is provided in Attachment 5. | |
| 2.3.12 | Local Public Health Agencies: The health plan should include local public health agencies in the health plan provider network for the public health services described herein or for other services. (A listing of local public health agencies is provided in Attachment 5.) However, in order to ensure care coordination of members seeking services at a local public health agency, the health plan should establish an agreement with local public health agencies describing, at a minimum, care coordination, medical record management, and billing procedures. Requirements for reimbursement for certain services are specified in the Performance Requirements segment regarding public health programs and mandated health plan reimbursements. Attachment 4 lists a number of conditions for which the health plan shall report to or cooperate with local public health agencies. In addition, the health plan may wish to contract with local public health agencies, as defined above, to provide other health plan covered services. |
| a. | All statutorily mandated disease or condition reporting requirements remain, regardless of the site of the service. The health plan shall provide a list of their contracted laboratories to the Missouri Department of Health and Senior Services by July 1 each year. |
| 2.3.13 | Network Changes: The health plan shall notify the state agency within five (5) business days of first awareness/notification of change to the composition of the health plan provider network or the health care service subcontractors’ provider network that materially affect the health plan’s ability to make available all covered services in a timely manner. The health plan shall have procedures to address changes in the health plan provider network that negatively affect the ability of members to access services, including access to a culturally diverse provider network. Material changes in network composition that negatively affect member access to services may be grounds for contract cancellation or State determined sanctions. | |
| 2.3.14 | Mainstreaming: The state agency considers mainstreaming of MC+ managed care members into the broader health delivery system to be important. The health plan therefore must ensure that all of the in-network providers accept members for treatment. The health plan also must accept responsibility for ensuring that in-network providers do not intentionally segregate members in any way from other persons receiving services. |
| a. | To ensure mainstreaming of members, the health plan shall take affirmative action so that members are provided covered services without regard to race, color, creed, sex, religion, age, national origin, ancestry, marital status, sexual preference, health status, income status, program membership, or |
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| physical or mental disability, except where medically indicated. Examples of prohibited practices include, but are not limited to, the following: |
| 1) | Denying or not providing to a member any covered service or availability of a facility. | ||
| 2) | Providing to a member any covered service which is different, or is provided in a different manner, or at a different time from that provided to other members, other public or private patients, or the public at large. | ||
| 3) | Subjecting a member to segregation or separate treatment in any manner related to the receipt of any covered service. |
| b. | If the health plan knowingly executes a subcontract with a provider with the intent of allowing or permitting the subcontractor to implement barriers to care (i.e., the terms of the subcontract are more restrictive than the contract), the State shall consider the health plan to have breached the provisions and requirements of the contract. In addition, if the health plan becomes aware of any of its existing subcontractors’ failure to comply with this section and does not take action to correct this within thirty (30) calendar days, the State shall consider the health plan to have breached the provisions and requirements of the contract. |
| 2.3.15 | The health plan shall comply with any applicable federal requirements with respect to home health agencies, as amended. | |
| 2.3.16 | School Based Dental Services: The state agency has reimbursed dental providers for the provision of preventive dental services provided to children in a school setting. These preventive services have included dental exams, prophylaxis, and sealants. The state agency is committed to the continuation of such programs for members enrolled with a health plan. The health plan shall contract and reimburse any licensed dental providers who provide such services in a school setting. The dental providers must be qualified under the terms of the health plan and willing to accept the health plan’s operating terms, including but not limited to, its fee schedule, covered expenses, and quality standards, to be allowed to participate in the health plan provider network. Nothing shall prevent a health plan from instituting reasonable credentialing criteria for school-based dental services or establishing other reasonable measures designed to maintain quality of care or control costs. | |
| 2.3.17 | Tertiary Care: Tertiary care is defined as health services provided by highly-specialized providers, such as medical sub-specialists. These services frequently require complex technological and support facilities. The health plan shall provide tertiary care services including trauma centers, burn centers, level III (high risk) nurseries, rehabilitation facilities, and medical sub-specialists available twenty-four (24) hours per day in the region. If the health plan does not have a full range of tertiary care services, the health plan must have a process for providing such services including transfer protocols and arrangements with out-of-network providers. | |
| 2.3.18 | Specialty Pediatric Hospitals: The health plan shall include specialty pediatric hospitals as defined in 13 CSR 70-15.010 (2) (P), as amended, in the health plan provider network. | |
| 2.4 | Payments to Providers: | |
| The state agency believes that one of the advantages of a managed care system is that it permits the health plan and providers to enter into creative payment arrangements intended to encourage and reward effective utilization management and quality of care. The state agency therefore shall give the health plan and providers as much freedom as possible to negotiate mutually acceptable payment rates and payment time frames. All subcontracts shall contain the time frames for paying in-network providers for covered services. However, regardless of the specific arrangements the health plan makes with providers, the health plan shall make timely payments to both in-network and out-of-network providers, subject to the conditions described below. All disputes between the health plan and in-network and out-of-network |
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| providers shall be solely between such providers and the health plan. In the case of any disputes regarding payment for covered services between the health plan and providers, the member shall not be charged for any of the disputed costs. This agreement shall only be overcome by written evidence of an agreement between the provider and the member indicating that the member accepts the status and liabilities of a private pay patient. The health plan shall make it clear to members that all covered services are available to the member at no cost subject to any applicable co-pays. The private pay agreement shall only be for services not included in the comprehensive benefit package. | ||
| 2.4.1 | Retroactive Eligibility Period: Except for newborns, the health plan shall not be responsible for any payments owed to providers for services rendered prior to a member’s enrollment even if they fell within the established period of retroactive eligibility. | |
| 2.4.2 | Claims Processing Requirements: The claim processing requirements are set forth by RSMo 376.383 and RSMo 376.384, as amended. | |
| 2.4.3 | Clean Claims: Clean claim means a claim that can be processed without obtaining additional information from the provider of the service or from a third party. | |
| 2.4.4 | Inappropriate Payment Denials: If the health plan has a pattern of inappropriately denying or delaying payments for services, the health plan may be subject to suspension of new enrollments, withholding in full or in part of capitation payments, contract cancellation, or refusal to contract in a future time period. This applies not only to cases where the state agency has ordered payment after appeal but to cases where no appeal has been made (i.e., the state agency is knowledgeable about the documented abuse from other sources). | |
| 2.4.5 | Copayment Requirements and Member Participation in Pharmacy Professional Dispensing Fee: |
| a. | Copayment requirements do not apply to MC+ Managed Care members. | ||
| b. | Member Participation in Pharmacy Professional Dispensing Fee |
| 1) | Unlike traditional copayment requirements, the current Missouri Medicaid Recipient Pharmacy fee requirement is considered a portion of the professional dispensing fee and is not deducted from the reimbursement to providers. Therefore, the member portion of the pharmacy dispensing fee is required to be collected, according to current Medicaid policy, for pharmacy services provided by the health plan. The provider must charge and collect dispensing fees as specified in accordance with section 208.152 RSMo, as amended. Providers shall not deny or reduce services to members solely on the basis of the member’s inability to pay the fee when charged. A member’s inability to pay a required amount as due and charged when a service is delivered, shall in no way extinguish the member’s liability to pay the amount due. Fee responsibility and amounts collectible shall be as follows: |
| Member Participation in Pharmacy | ||||
| Ingredient Cost for Each Item of Service | Professional Dispensing Fee | |||
$10.00 or Less: |
$0.50 | |||
$10.01 to $25.00: |
$1.00 | |||
$25.01 or More: |
$2.00 | |||
| 2) | Under current pharmacy dispensing fee policy, all Missouri eligible recipients are subject to the fee requirement when provided covered pharmacy services, with the exception of the following: |
| • | Beneficiaries under age 19. |
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| • | Services related to Early Periodic Screening, Diagnosis and Treatment (EPSDT): Those drugs which are prescribed and identified as relating to an EPSDT program screening or referral services must be confirmed as such to the dispensing provider through one of the following methods: |
| Ø | The prescribing provider identifies on the prescription that it relates to an EPSDT examination and treatment; or | ||
| Ø | The prescribing provider verbally states that the prescription relates to an EPSDT examination and treatment in cases of telephone prescribing. This verbal assertion must be included in the dispensing provider’s reduction into writing of the prescription. |
| • | Institutionalized members residing in a skilled nursing facility, psychiatric hospital, residential care facility, or adult boarding home. | ||
| • | Foster Care children. | ||
| • | All Medicare/Medicaid crossover claims as primary coverage as afforded by the Medicare program. | ||
| • | Those services specifically identified as related to Family Planning services. | ||
| • | Emergency services. | ||
| • | Services provided to pregnant women which are directly related to the pregnancy or a complication of the pregnancy. |
| 3) | Participation in the health plan provider network shall be limited to providers who accept, as payment in full, the amounts paid by the health plan plus any fee amount required of the member and collected by the provider. |
| 2.4.6 | Pharmacy Dispensing Fee: The health plan shall pay a pharmacy dispensing fee of $4.09 to each qualifying pharmacy for the first 1,000 prescriptions filled in any calendar quarter. The reimbursement of a pharmacy dispensing fee shall be available only to corporations, partnerships, or individual proprietorships with less than 25 employees who operate pharmacies or pharmacy franchises and to public health entities owned and operated by a state, county, or local government agency and where the entity is a hospital which qualifies as a first-tier 10% add-on disproportionate share hospital in accordance with 13 CSR 70-15.010. The health plan shall identify its pharmacies that qualify. The health plan shall supply the state agency with a list of those pharmacies identified to qualify for a pharmacy dispensing fee reimbursement upon request. | |
| 2.4.7 | Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs): If the health plan includes subcontracted FQHCs or RHCs in the health plan provider network, the FQHC or RHC is entitled to reimbursement of reasonable costs from the state agency and any differential payment paid by the state agency. |
| a. | The health plan shall reimburse the FQHC/RHC at the same reimbursement level as other providers for the same services. The state agency shall perform reconciliation between the health plan reimbursement and the FQHC/RHC’s reasonable costs for the covered services provided under the contract. The FQHC/RHC must fully comply with the state agency’s payment and billing systems, and provide the state agency with all cost reporting information required by the state agency to verify reasonable costs and apply applicable reasonable cost reimbursement principles. The health plan shall submit a list of its contracted FQHCs and RHCs to the state agency annually at the start of each contract period. |
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| b. | If the health plan contracts with FQHCs or RHCs, the health plan shall fulfill the following: |
| 1) | Billing for Services Provided by an FQHC or RHC: The FQHC/RHC must bill using a valid FQHC/RHC’s Medicaid Provider Number. The health plan shall include this Medicaid Provider Number on FQHC/RHC claims as follows: |
| • | FQHC Medical and Dental Claims: The health plan shall submit the FQHC’s Missouri Medicaid Provider Number on the NSF layout, record ‘FAO’, within field number 23. This field is referenced as the Rendering Provider Number. | ||
| • | FQHC Home Health Claims: The health plan shall submit the FQHC’s Missouri Medicaid Provider Number on the UB92 layout, record ‘80’, within field number 11. This field is referenced as the Other Provider. | ||
| • | FQHC Pharmacy Claims: The health plan shall submit the FQHC’s Missouri Medicaid Provider Number on the NCPDP 3C layout, field number 411. This field is referenced as the Prescriber ID. | ||
| • | RHC Claims: The health plan shall submit the RHC’s Missouri Medicaid Provider Number on the UB92 layout, record 80’, within field number 11. This field is referenced as the Other Provider. |
| 2) | The FQHC/RHC must bill its usual and customary amount for all payor classes. The health plan shall include the billed amount when the health plan submits the encounter claims to the state agency. | ||
| 3) | Reporting Requirements for Services Provided by an FQHC or RHC |
| • | The health plan shall submit Schedule M-1 included with Attachment 7 documenting the accepted charges, denied charges, and payments for each contracted RHC/FQHC. The health plan shall submit Schedule M-1 thirty (30) calendar days after the month end for services provided by the contracted FQHC/RHC. Attachment 7 also provides the instructions for completing Schedule M-1. | ||
| • | The health plan shall submit Schedule M-2 included with Attachment 7 documenting the accepted charges, denied charges, and payments for each contracted RHC/FQHC for the FQHC’s/RHC’s entire fiscal year. The health plan shall submit Schedule M-2 within 14 business days of request by the state agency for MC+ managed care services provided by contracted FQHC/RHC during the reporting period requested. Attachment 7 also provides the instructions for completing Schedule M-2. | ||
| • | Health plan records applicable to a FQHC/RHC are subject to audit by the state agency or its contracted agent. |
2.4.8 Payment for Emergency Services and Post-stabilization Care Services:
| a. | The health plan shall cover and pay for emergency services regardless of whether the provider that furnishes the services has a contract with the health plan. |
| 1) | The state agency encourages the health plan and providers to reach agreement on payment for services. | ||
| 2) | The health plan shall pay out-of-network providers for emergency services at the current Missouri Medicaid program rates in effect at the time of service unless the health plan and provider have negotiated a mutually acceptable rate. |
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| b. | The health plan may not deny payment for treatment obtained under either of the following circumstances: |
| 1) | A member had an emergency medical condition, including cases in which the absence of immediate medical attention would not have had the outcomes specified in the definition of emergency medical condition specified herein. | ||
| 2) | A representative of the health plan instructs the member to seek emergency services. |
| c. | The health plan shall not limit what constitutes an emergency medical condition as defined herein on the basis of lists of diagnoses or symptoms. | ||
| d. | The health plan shall not refuse to cover emergency services based on the emergency room provider, hospital, or fiscal agent not notifying the member’s primary care provider or the health plan of the member’s screening and treatment within ten (10) calendar days of presentation for emergency services. | ||
| e. | A member who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the patient. | ||
| f. | The attending emergency physician, or the provider actually treating the member, is responsible for determining when the member is sufficiently stabilized for transfer or discharge, and that determination is binding on the health plan. | ||
| g. | The health plan must be financially responsible for post-stabilization care services obtained within or outside the health plan that are pre-approved by a health plan provider or other health plan representative. | ||
| h. | The health plan must be financially responsible for post-stabilization care services obtained within or outside the health plan that are not pre-approved by a health plan provider or other health plan organization representative, but administered to maintain the enrollee’s stabilized condition within thirty (30) minutes of a request to the health plan for pre-approval of further post-stabilization care services. | ||
| i. | The health plan must be financially responsible for post-stabilization care services obtained within or outside the health plan that are not pre-approved by a health plan provider or other health plan representative, but administered to maintain, improve, or resolve the enrollee’s stabilized condition if: |
| 1) | The health plan does not respond to a request for pre-approval within thirty (30) minutes; | ||
| 2) | The health plan cannot be contacted; or | ||
| 3) | The health plan representative and the treating physician cannot reach an agreement concerning the member’s care and a health plan physician is not available for consultation. In this situation, the health plan must give the treating physician the opportunity to consult with a health plan physician and the treating physician may continue with care of the patient until a health plan physician is reached or one of the criteria in subparagraph l below is met. |
| j. | The health plan must limit charges to members for post-stabilization care services to an amount no greater than what the health plan would charge the member if he or she had obtained the services through the health plan. | ||
| k. | The health plan shall negotiate mutually acceptable payment rates with out-of-network providers for post-stabilization services for which the health plan has financial responsibility. |
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| l. | The health plan’s financial responsibility for post-stabilization care services it has not pre-approved ends when: |
| 1) | A health plan physician with privileges at the treating hospital assumes responsibility for the member’s care; | ||
| 2) | A health plan physician assumes responsibility for the member’s care through transfer; | ||
| 3) | A health plan representative and the treating physician reach an agreement concerning the enrollee’s care; or | ||
| 4) | The member is transferred. |
| 2.4.9 | The health plan shall maintain the fee schedule for dental services located in Attachment 14 at no lower than the Medicaid fee-for-service fee schedule in effect at the time of service. | |
| 2.4.10 | Specialty Pediatric Hospitals. The health plan shall reimburse specialty pediatric hospitals as defined in 13 CSR 70-15.010 (2) (P) at no lower than the Medicaid fee-for-service fee schedule in effect at the time of service unless otherwise negotiated with the provider. | |
| 2.4.11 | A health plan shall pay for services furnished outside their service area to the same extent that it would pay for services furnished within their service area if the services are furnished to a member and any of the following conditions are met: |
| a. | Medical services are needed because of a medical emergency; | ||
| b. | Medical services are needed and the member’s health would be endangered if he were required to travel to member’s residence: | ||
| c. | The health plan determines, on the basis of medical advice, that the needed medical services, or necessary supplementary resources, are more readily available outside the service area. These services are subject to the health plan’s prior authorization and concurrent review process. |
| 2.5 | Eligibility Determinations: | |
| The Missouri Department of Social Services, the Family Support Division performs eligibility determinations. Trained staff are stationed full-time at field offices located throughout the State and on a periodic basis at health care provider sites that serve large numbers of MC+ members. | ||
| 2.5.1 | Health Plan Lock-In: All members will have a twelve (12) month lock-in to provide a solid continuum of care. Once a member chooses a health plan or is assigned to a health plan, the member will have ninety (90) calendar days from the effective date of coverage with the health plan in which to change health plans for any reason. This applies to the member’s initial enrollment and to any subsequent enrollment periods where the member changed health plans. All transfers between health plans that members request during the first ninety (90) calendar days following initial enrollment shall be granted without review by the state agency. Both the 90-day and the 12-month enrollment period begin on the same day. Children in COA 4 shall be allowed automatic and unlimited changes in health plan choice as often as circumstances necessitate. | |
| 2.5.2 | Open Enrollment: The state agency may conduct an open enrollment for the contract period. The state agency may at its sole option adjust enrollment during the transition between contract periods. |
| a. | Annual Open Enrollment: The state agency shall give members an annual open enrollment period prior to their 12-month enrollment anniversary date with the health plan. The state agency shall provide an open enrollment notice to members at least sixty (60) calendar days before each annual enrollment opportunity. |
| 2.5.3 | Enrollment Counseling: The state agency shall make available helpline operators to all program MC+ managed care eligibles to provide assistance in selecting and enrolling into a health plan through the operation of a toll-free telephone line. Helpline operators also shall be available by telephone to assist |
| RFP B3Z06118 | Page 23 |
| MC+ managed care eligibles who would like to change health plans (e.g., during open enrollment). MC+ managed care eligibles shall be offered the assistance of a helpline operator when needed. The helpline operator responsibilities shall include the following: |
| a. | Educating the family about managed care in general, including the requirement to enroll in a health plan, the way services typically are accessed under managed care, the role of the primary care provider, the health plan member’s right to choose a primary care provider subject to the capacity of the provider, the responsibilities of the health plan member, and the member’s rights to file grievances and appeals and to request a State Fair Hearing. | ||
| b. | Educating the family about benefits available through the health plan, both in-network and out-of-network. | ||
| c. | Informing the family of available health plans and outlining criteria that might be important when making a choice (e.g., presence or absence of the family’s existing provider in the health plan provider network). | ||
| d. | Identifying any sources of Third Party Liability that were not identified by the FSD eligibility technician. | ||
| e. | Administering a health plan screen when possible, as designated by the state agency, that collects baseline health status data to be used as part of the health plan program evaluation. Any baseline health status data shall be made available to the health plan. (See Attachment 8 for the most current version.) | ||
| f. | Explaining options for obtaining services outside the health plan network. | ||
| g. | Providing a listing of the health plan primary care providers generated from the provider demographic electronic file submitted by the health plan to the state agency. |
| 2.5.4 | Voluntary Selection of Health Plan: Missouri MC+ managed care eligibles shall be given fifteen (15) calendar days from the time of their eligibility for managed care to select a health plan. All members of a family shall be encouraged to select the same health plan. If a family does not select a health plan within the fifteen (15) day window, the state agency shall automatically assign the family to a health plan. |
| 2.5.5 | Automatic Assignment Into Health Plans: |
| a. | The state agency shall employ an algorithm to assign to the health plan, on a prorated basis, any MC+ managed care eligibles who do not make a voluntary selection of a health plan during open enrollment. The algorithm shall be based on the following: |
| 1) | If the MC+ managed care eligible’s case head is enrolled with a health plan, the MC+ managed care eligible shall be assigned to that health plan. If not, the next step in the algorithm shall be followed. | ||
| 2) | If the MC+ managed care eligible is included in a case where another member is enrolled with a health plan, the MC+ managed care eligible shall be assigned to that health plan. If not, the MC+ managed care eligible shall be assigned randomly. |
Paragraph 2.5.5 b. revised by Amendment #001
| b. | Eastern/Western Regions: The random auto assignment shall be based on the total evaluation determined by the State of Missouri (see Proposal Submission Information section). |
Paragraph 2.5.5 c. inserted by Amendment #001
| c. | Central Region: The random auto assignment shall be based on the inclusion of health plan signed contracts with acute care safety net hospitals, as defined in 13 CSR 70-15.010 of the Code of State |
| RFP B3Z06118 | Page 24 |
| Regulations, as amended. (A listing of safety net hospitals is provided in Attachment 5.) The acute care safety net hospital must be located in the Central region counties. |
| 1) | The health plan including such acute care safety net hospitals in its network shall equally divide seventy percent (70%) of the random auto assignments, while the remaining health plans shall equally share the remaining thirty percent (30%) of the algorithm assignments. | ||
| 2) | In the event all health plans have such acute care safety net hospitals in their networks, all contracted health plans shall equally share one hundred percent (100%) of the random auto assignments. |
| 2.5.6 | Automatic Re-Assignment Following Resumption of Eligibility: Members who are disenrolled from a health plan due to loss of eligibility, shall automatically be re-enrolled, or assigned, into the same health plan and to the same primary care provider should they regain eligibility within sixty (60) calendar days. The member will have ninety (90) calendar days from the effective date of coverage with the health plan in which to change health plans for any reason. If more than sixty (60) calendar days have elapsed, the member shall be permitted to select a health plan and primary care provider through the enrollment process. |
| 2.6 | Member Enrollment and Disenrollment: | |
| 2.6.1 | MC+ Managed Care Marketing Guidelines: The health plan may educate and conduct marketing campaigns for MC+ managed care members, subject to the restrictions and definitions outlined herein. Education activities are efforts directed to current members to provide knowledge or skills. Marketing campaigns are efforts directed to an audience of members and potential health plan members to retain or increase health plan membership. The health plan and subcontractors shall not influence member enrollment. |
| a. | Marketing Guidelines: The health plan shall: |
| 1) | Submit its proposed marketing plan, all marketing materials, and member education materials to the state agency for written approval prior to use. The state agency shall only consider the marketing plan and materials submitted by the health plan, (not subcontractors). The health plan should submit all materials in mock camera-ready form. When submitting marketing and education materials for approval, the health plan shall indicate how and when the material will be used, the time frames for the use, and the media to be used for distribution if approved. All written materials must be at a 6th grade reading level or less. The state agency shall approve, disapprove, or require modifications of education and marketing materials. The state agency shall review and respond as soon as possible, but within thirty (30) calendar days of receipt by the state agency. Marketing and education materials are deemed approved if a response from the state agency is not returned within thirty (30) calendar days following receipt of the materials by the state agency. The health plan shall engage in only those marketing activities which are prior approved in writing. | ||
| 2) | The health plan’s marketing material shall include a listing of their in-network providers identified by specialty and location, as appropriate for the document submitted for approval. | ||
| 3) | The health plan’s marketing and education materials shall include the member’s rights and responsibilities to assistance in obtaining all covered services. | ||
| 4) | Correct problems and errors with the marketing plan and/or materials as identified by the state agency. The health plan shall submit to the state agency a written corrected marketing plan or revised material within ten (10) business days following receipt date of the written notice from the state agency. |
| RFP B3Z06118 | Page 25 |
| 5) | Not display or distribute any marketing materials in any manner at Family Support Division (FSD) offices, or health plan provider sites, unless the health plan has received prior written permission to do so from the state agency. Only approved member handbooks and provider network listing may be distributed to local FSD offices. The health plan shall supply current materials and remove their out-dated materials in public areas at the FSD offices. | ||
| 6) | Review all education and marketing materials at least once a year. The health plan shall provide the state agency with copies of materials and documentation verifying the health plan reviewed their education and marketing material. | ||
| 7) | Submit to the state agency, for prior written approval, all materials used by in-network providers to advise members of the health plans with which they have contracts. The health plan shall provide the following listing of what constitutes approved material to in-network providers. |
| • | A list of all health plans with which they have contracts; | ||
| • | A letter to previous fee-for-service recipients who may be eligible for MC+ managed care, informing them of all health plan(s) with which the provider has contracted; | ||
| • | A display of all contracted health plan logos in an equal fashion; | ||
| • | A listing of all contracted health plan phone numbers; | ||
| • | Access to all contracted health plan directories and member handbooks as a member resource but not for distribution; and | ||
| • | Displaying enrollment helpline phone number. |
| The in-network provider shall provide equal representation of all contracted health plans and shall not favor one health plan over another in displayed information. | |||
| 8) | Show the date the state agency approved the material in the lower right-hand corner of all materials. | ||
| 9) | Use mandatory education, marketing, and member notice language provided by the state agency. The state agency shall provide such language as it deems necessary. Any publicity given to the MC+ Managed Care Program or the MC+ managed care benefits, including but not limited to: notices, pamphlets, press releases, research, reports, signs, and public notices prepared by or for the health plan shall be released only with prior written approval by the state agency. | ||
| 10) | Not use the state agency’s or the Department of Social Services’ name, logo, or other identifying marks on any of the materials produced or issued without the prior written approval of the state agency. | ||
| 11) | Not use any report, graph, chart, picture, or other document produced and included in whole or in part under the MC+ managed care contract which is subject to copyright or the subject of any application for copyright by or on behalf of the health plan. | ||
| 12) | Develop MC+ managed care marketing plans and materials that are accurate and shall not mislead, confuse, defraud, or deceive MC+ managed care eligibles, or otherwise violate Federal or State consumer protection laws or regulations. MC+ managed care benefits must be listed according to the current MC+ managed care contracts. The health plan may not verbally or in writing identify or portray covered benefits as enhanced, additional, or free. | ||
| 13) | Not practice door-to-door, face-to-face, telephonic, or other “cold call” marketing. The offerings of cash, prizes, other items for material gain, or other insurance products as an award for enrollment are prohibited. However, the health plan may offer additional health benefits to their members. If the health plan offers additional health benefits, the health plan must notify |
| RFP B3Z06118 | Page 26 |
| the state agency of these benefits no later than ten (10) calendar days prior to their offering and must notify the state agency no less than thirty (30) calendar days prior to discontinuing such benefits. |
| • | Cold Call Marketing means any unsolicited personal contact by the health plan with a potential member for the purpose of marketing as defined in this paragraph. |
| 14) | Provide notice to the state agency or have prior written approval from the state agency in certain situations to sponsor or participate in community activities, programs, or events. |
| • | Community activities are defined for the purpose of this document as: An activity where people come together to learn about or question health care benefits, responsibilities, and procedures. These community activities require no notice to the state agency, except when held at provider sites. At community activities, the health plan shall only use materials approved by the state agency and must adhere to the ban on engaging in enrollment activities required herein. | ||
| • | Community activities at provider sites require a seven (7) calendar day notice to the state agency prior to sponsoring or participating in an activity. Provider sites may include, but are not limited to pharmacies in discount or grocery stores if the pharmacies are in an MC+ managed care network, local public health agency, provider clinics, hospitals etc. | ||
| • | The health plan may offer the availability of gifts no greater than $10 in value, and only if such gifts are offered during any community activity (i.e. health fair). The nominal items must be offered to all individuals attending the community activity. The gifts must be directly and obviously health related or limited to printed materials, T-shirts, pens or pencils, caps, mugs, key chains, etc. All items must have prior written approval by the state agency and written proof of cost per unit must be provided by the health plan to the state agency prior to approval. Once an item is approved, it does not have to be re-approved for additional community activities. Advertising the availability of such gifts through mailings, TV or radio, posters, and other promotions or publicity is prohibited. |
| 15) | Not offer raffles or conduct lotteries. Door prizes may be offered within the parameters and limits specified for participation in community activities, programs, or events. | ||
| 16) | Request state agency prepared mandatory MC+ managed care materials from the state agency. The health plan and its subcontractors should make the general public aware of the MC+ program by providing any of the following: |
| • | General MC+ eligibility information; or | ||
| • | MC+ applications to complete and mail. |
| 17) | Not conduct or participate in health plan enrollment, disenrollment, transfer, or opt out activities. The health plan and the providers shall not influence a member’s enrollment. Prohibited activities include: |
| • | Requiring or encouraging the member to apply for an assistance category not included in MC+ managed care; | ||
| • | Requiring or encouraging the member and/or guardian to use the opt out as an option in lieu of delivering health plan benefits; | ||
| • | Mailing or faxing health plan enrollment forms; | ||
| • | Aiding the member in filling out health plan enrollment forms; |
| RFP B3Z06118 | Page 27 |
| • | Photocopying blank health plan enrollment forms for potential members; | ||
| • | Distributing blank health plan enrollment forms; | ||
| • | Participating in three way calls to the MC+ managed care enrollment helpline; | ||
| • | Suggesting a member transfer to another health plan; or | ||
| • | Other activities in which the health plan, its representatives, or in-network providers are engaged in activities to enroll a member in a particular health plan or in any way assisting a member to enroll in a health plan (their own or another). |
| 18) | Advise the health plan’s subcontractors of these marketing guidelines and ensure that subcontractors adhere to them. No subcontract shall operate to relieve the health plan of its obligations. The health plan shall have written procedures to ensure subcontractor notification and compliance with these marketing guidelines. | ||
| 19) | Use pre-approved MC+ managed care information and materials for presentations or interviews with print and electronic media. | ||
| 20) | Not use testimonial materials and/or celebrity endorsements. | ||
| 21) | Insert new language in the educational and marketing materials and substitute in a timely manner, as outlined by the state agency, any changes in Federal or State law or regulation, as amended, as the need arises. | ||
| 22) | Make an effort to ensure that presentations shall be available to maximize consumer access to information, including presentation after normal work hours, and at sites other than the Family Support Division offices, such as WIC sites, Head Start centers, health fairs, etc. | ||
| 23) | Make member education available on an ongoing basis to provide guidance on how to use a health plan, and how to assert certain rights with their health plan, if necessary. | ||
| 24) | Market to the entire service area | ||
| 25) | All marketing and educational material shall maintain a member’s right to confidentiality. In particular, post cards must be folded to protect the confidentiality of the member. | ||
| 26) | Not develop marketing materials that contain any assertion or statement (whether written or oral) that: |
| • | The recipient must enroll with the health plan in order to obtain benefits or in order not to lose benefits. | ||
| • | The health plan is endorsed by CMS, the Federal or State government or similar entity. |
| 2.6.2 | Health Plan Enrollment Procedures: |
| a. | The state agency reserves the right to suspend or limit enrollment into a health plan. In the event the health plan’s enrollment reaches sixty-five (65) percent of the total MC+ managed care enrollment in the region, the health plan shall not be offered as a choice for enrollment nor shall the health plan receive members through the automatic assignment algorithm. However, the health plan may receive new members as a result of newborn enrollments, reassignments when a member loses and regains MC+ managed care eligibility within a sixty (60) day period, other family or case members are members of the health plan, for the member’s continuity of care, or for just cause determined by |
| RFP B3Z06118 | Page 28 |
| the state agency. The state agency’s evaluation of a health plan’s enrollment market share shall take place on a calendar quarter. | |||
| b. | The state agency shall conduct enrollment activities for MC+ managed care eligibles. The health plan or its subcontractors shall not conduct or participate in eligibility or enrollment activities. | ||
| c. | The health plan shall have written policies and procedures for enrolling these members within five (5) business days after receiving notification of the member’s anticipated enrollment date from the state agency (e.g., if the health plan is informed of a new member on a Wednesday, it must contact the member by the following Tuesday). | ||
| d. | The health plan shall enroll any MC+ managed care eligible who selects the health plan or is assigned with the health plan. The only exceptions shall be if: |
| 1) | The health plan’s specified enrollment limit has been reached. | ||
| 2) | The member was previously disenrolled from the health plan as the result of a request for disenrollment by the health plan, as allowed herein. |
| e. | Enrollment of Program Newborns: The health plan shall have written policies and procedures for enrolling the newborn children of members effective to the date of birth. Newborns of members enrolled at the time of the child’s birth shall be automatically enrolled with the mother’s health plan. The health plan shall have a procedure in place to refer newborns to the Family Support Division to initiate eligibility determinations. A mother of a newborn may choose a different health plan for her child; unless a different health plan is requested, the child shall remain with the mother’s health plan. |
| 1) | The mother’s health plan shall be responsible for all medically necessary services provided under the comprehensive benefit package to the newborn child of an enrolled mother. The child’s date of birth shall be counted as day one (1). The health plan shall provide services to the child until the child is disenrolled from the health plan. When the newborn is assigned a departmental client number (DCN), the health plan shall receive capitation payment for the month of birth and for all subsequent months the child remains enrolled with the health plan. | ||
| 2) | In the case of an administrative lag in enrolling the newborn and costs are incurred during that period, the health plan shall hold the member harmless for those costs. The health plan shall be responsible for the cost of the newborn including medical services provided prior to completion of the State enrollment process. |
| f. | Changes in Status: The health plan shall encourage its membership to report to the Family Support Division any changes in the status of families or members, including changes in family size, income, insurance coverage, and residence. | ||
| g. | Enrollment and Disenrollment Updates: Every business day, the state agency shall make available, via electronic media, updates on members newly enrolled into the health plan, or newly disenrolled. The health plan shall have written policies and procedures for receiving these updates and incorporating them into the health plan and health care service subcontractors’ management information system each day. | ||
| h. | Weekly Reconciliation: On a weekly basis, the state agency shall make available, via electronic media, a listing of current members. The health plan shall reconcile this membership list against the health plan internal records within thirty (30) business days of receipt and shall notify the state agency of any discrepancies. | ||
| i. | Services for New Members: The health plan shall make available the full scope of benefits to which a member is entitled immediately upon his or her enrollment. |
| RFP B3Z06118 | Page 29 |
| j. | New Member Orientation: The health plan shall have written policies and procedures for orienting new members to their benefits; the role of the primary care provider; how to utilize services; what to do in an emergent or urgent medical situation; how to file a grievance or appeal; and how to report suspected fraud and abuse. |
| 1) | Member Responsibilities: The health plan shall have written policies that address the members’ responsibilities for cooperating with providers. These member responsibility policies must be supplied in writing to all providers and members. These written policies should address the members’ responsibilities for: |
| • | Providing, to the extent possible, information needed by providers in caring for the member. | ||
| • | Contacting their primary care provider as their first point of contact when needing medical care. | ||
| • | Following appointment scheduling processes. | ||
| • | Following instructions and guidelines given by providers. |
| 2) | Member Rights: The health plan shall have written policies regarding member rights as specified below: |
| • | General Rule. Each health plan must comply with any applicable Federal and State laws that pertain to member rights and ensure that its staff and affiliated providers take those rights into account when furnishing services to members. | ||
| • | Dignity and privacy. Each member is guaranteed the right to be treated with respect and with due consideration for his or her dignity and privacy. | ||
| • | Receive information on available treatment options. Each member is guaranteed the right to receive information on available treatment options and alternatives, presented in a manner appropriate to the member’s condition and ability to understand. | ||
| • | Participate in decisions. Each member is guaranteed the right to participate in decisions regarding his or her health care, including the right to refuse treatment. | ||
| • | Free from restraint or seclusion. Each member is guaranteed the right to be free from any form of restraint or seclusion used as a means of coercion, discipline, convenience, or retaliation. | ||
| • | Copy of medical records. Each member is guaranteed the right to request and receive a copy of his or her medical records, and to request that they be amended or corrected, as specified in 45 CFR part 164. | ||
| • | Free exercise of rights. Each member is free to exercise his or her rights, and that the exercise of those rights does not adversely affect the way the health plan and its providers or the state agency treat the member. |
| k. | Assignment of Primary Care Providers: The health plan shall have written policies and procedures for assigning each of the health plan’s members to a primary care provider. The process must include at least the following features: |
| RFP B3Z06118 | Page 30 |
| 1) | The health plan shall contact the member within five (5) business days from the date of the state agency’s notification to the health plan of the member’s anticipated enrollment date. To the extent provider capacity exists, the health plan shall offer freedom of choice to members in making a primary care provider selection. | ||
| At the time of the state agency’s notification to the health plan, the health plan may assign a primary care provider taking into consideration factors such as current provider relationships, language needs, (to the extent they are known), and area of residence. When contacting the member, the health plan shall provide the member with the primary care provider’s name, location, and telephone number. When contacting the member, the health plan shall provide options for selecting a primary care provider other than the primary care provider assigned to the member. The health plan shall inform the member he/she has fifteen (15) calendar days to choose another primary care provider if they do not approve of the primary care provider assigned to them, and if they have not notified the health plan of their preferred primary care provider within that time frame, the member will remain with the primary care provider previously assigned to the member. | |||
| 2) | Prior to becoming effective with the health plan, if a member does not select a primary care provider or the health plan has not already assigned a primary care provider to the member at the time of notification from the state agency of the member’s anticipated enrollment date, the health plan shall make an automatic assignment, taking into consideration such known factors as current provider relationships, language needs (to the extent they are known), and area of residence. The health plan shall then notify the member in writing of his or her primary care provider’s name, location, and office telephone number. The member must have a primary care provider assigned by the time the member is effective with the health plan. If circumstances are such that the member does not have a primary care provider assigned on the effective date with the health plan, the health plan shall not deny services or payment of any service. The health plan shall submit to the state agency the methodology utilized by the health plan to assign primary care providers to members. | ||
| 3) | Members with disabling conditions or chronic illnesses may request that their primary care providers be specialists, such as a psychiatrist, oncologist, obstetrician, gynecologist, or other such specialist. The health plan must have procedures for ensuring access to needed services for those members or the request shall be granted. The specialist must accept the member as a primary care patient and accept the responsibility of a primary care provider as specified herein. The health plan must communicate its decision to the member within ten (10) calendar days of request. The adequacy of these policies shall be reviewed by the state agency. | ||
| 4) | The health plan shall have written policies and procedures for notifying primary care providers of their assigned member prior to the member’s effective date with the primary care provider. |
| l. | Changing Primary Care Providers: The health plan shall have written policies and procedures for allowing members to select or be assigned to a new primary care provider within the health plan when such a change is mutually agreed to by the health plan and member. The health plan shall allow members at least two such changes per year, and shall inform members of the process for initiating these changes. However, children in COA 4 may change primary care providers at will. Possible reasons for a member to change primary care providers include, but are not limited to: |
| 1) | Accessibility — transportation problems, provider office hours, does not return phone calls, waiting times. | ||
| 2) | Acceptability — sees too many doctors, uncomfortable with surroundings or location, provider or staff attitudes, lack of courtesy, following a member’s initial visit to the primary care provider. |
| RFP B3Z06118 | Page 31 |
| 3) | Quality — treatment (medical), referral related, does not explain treatment plan/diagnosis. If provider problem, may request primary care provider changes and second opinion. | ||
| 4) | Enrollment — primary care provider with whom the member has an established patient/provider relationship no longer participates in the health plan. In cases where the primary care provider no longer participates, the health plan shall allow members to select another primary care provider or make a re-assignment within fifteen (15) calendar days of the termination effective date. | ||
| 5) | An act of cultural insensitivity that negatively impacts the member’s ability to obtain care. | ||
| 6) | A primary care provider change is ordered as part of the resolution to the grievance and appeal process. A member’s right to request a change in a primary care provider through the grievance and appeal process or other means shall not be restricted. |
| m. | Identification Cards: The state agency shall issue a plastic, magnetic strip identification card to all Missouri MC+ eligibles. This card is not proof of eligibility, but to be used as a key for accessing the State’s electronic eligibility verification systems by Medicaid enrolled providers. These systems shall contain the most current information available to the state agency, including specific information regarding health plan enrollment. There will be no health plan specific information printed on the card. In addition to the state agency issued card, the health plan should issue a membership card that contains information more specific to the health plan. The health plan issued membership card must be issued to the member prior to the member’s effective date of coverage with the health plan. Upon selection or assignment of a health plan, the member’s effective date shall be 15 calendar days in the future, thereby allowing the health plan to send the appropriate enrollment materials, such as the identification card, to the member prior to the effective date. Exceptions apply to this policy for newborns and emergency enrollments. The state agency recognizes those exceptions and such enrollment materials may be produced as expeditiously as possible, but no later than 15 calendar days from the notification of the enrollment. At a minimum, the health plan issued membership card must contain the member’s name, identification number, primary care provider name and telephone number, instructions for emergencies, and other relevant toll free lines for access such as mental health, dental, pharmacy, and nurse advice lines. | ||
| n. | Member Handbook: The health plan shall mail a member handbook, or other written materials with information on how to access services, to all members within ten (10) business days of being notified of their future enrollment with the health plan. When there are program changes, the health plan shall notify the affected members at least thirty (30) calendar days before implementation of such change. On an annual basis, the health plan shall review the member handbook and shall document that such review occurred. |
| 1) | The member handbook must be written at no higher than a sixth grade level. Suggested reference material to determine whether this requirement is being met are: |
| • | Fry Readability Index | ||
| • | PROSE The Readability Analyst (software developed by Education Activities, Inc.) | ||
| • | Gunning FOG Index | ||
| • | McLaughlin SMOG Index | ||
| • | The Flesch-Kincaid Index or other word processing software approved by the state agency. |
| 2) | At a minimum, the member handbook shall include the information and items listed below. The health plan may include some of the following information as inserts to the member |
| RFP B3Z06118 | Page 32 |
| handbook. The health plan shall include certain passages and language provided by the state agency in the member handbook. The health plan shall comply with all changes regarding member handbook content specified by the state agency in a timely manner as defined by the state agency. |
| • | Table of contents. | ||
| • | Information about choosing and changing primary care providers, including notice of how to determine whether a participating provider is accepting new patients. | ||
| • | Information about what to do when family size changes. | ||
| • | Appointment procedures. | ||
| • | A description of all available health plan services and an explanation of any service limitations or exclusions from coverage and a notice stating that the health plan shall be liable only for those services authorized by the health plan. | ||
| • | A description of all available services outside the comprehensive benefit package. Such information shall include information on where and how members may access benefits not available under the comprehensive benefit package. | ||
| • | The definition of medical necessity used in determining whether benefits will be covered. | ||
| • | A description of all prior authorization or other requirements for treatments and services. | ||
| • | A description of utilization review policies and procedures used by the health plan. | ||
| • | An explanation of a member’s financial responsibility for payment when services are provided by an out-of-network provider or by any provider without required authorization or when a procedure, treatment, or service is not covered by MC+ managed care. | ||
| • | Notice that a member may obtain an out-of network provider when the health plan does not have an in-network provider with appropriate training and experience to meet the particular health care needs of the member and the procedure by which the member can obtain such referral. | ||
| • | Notice that a member with a condition which requires ongoing care from a specialist may request a standing referral to such a specialist and the procedure for requesting and obtaining such a standing referral. | ||
| • | Notice that a member with a life-threatening condition or disease or a degenerative and disabling condition or disease, either of which requires specialized medical care over a prolonged period of time, may request a specialist responsible for providing or coordinating the member’s medical care and the procedure for requesting and obtaining such a specialist. | ||
| • | Notice that a member with a life-threatening condition or disease or a degenerative and disabling condition or disease, either of which requires specialized medical care over a prolonged period of time, may request access to a specialty care center and the procedure by which such access may be obtained. | ||
| • | A description of the mechanisms by which members may participate in the development of the policies of the health plan. |
| RFP B3Z06118 | Page 33 |
| • | Notice of all appropriate mailing addresses and telephone numbers to be utilized by members seeking information or authorization. | ||
| • | Procedures for disenrollment, including an explanation of the member’s right to disenroll with and without cause. | ||
| • | How to contact member services and a description of its function. | ||
| • | Information on grievance, appeal, and fair hearing procedures and timeframes. Such information includes: |
| a) | The right to file grievances and appeals. | ||
| b) | The requirement and timeframes for filing a grievance or appeal. | ||
| c) | The availability of assistance in the filing process. | ||
| d) | The toll-free numbers that the member can use to file a grievance or an appeal by phone. | ||
| e) | The procedures for exercising the rights to appeal or request a State fair hearing. | ||
| f) | That the member may represent himself or use legal counsel, a relative, a friend, or other spokesperson. | ||
| g) | Must explain the specific regulations that support, or the change in Federal or State law that requires the action. | ||
| h) | The fact that, when requested by the member - |
| • | Benefits will continue if the member files an appeal or a request for State fair hearing within the timeframes specified for filing; and | ||
| • | The member may be required to pay the cost of services furnished while the appeal is pending, if the final decision is adverse to the member. |
| i) | The member’s right to request a State fair hearing, or in cases of an action based on change in law, the circumstances under which a hearing will be granted. |
| • | A member may request a State fair hearing within 90 calendar days from the health plan’s notice of action. | ||
| • | The state agency must reach its decisions within the specified timeframes: |
| 1) | Standard resolution: within 90 calendar days of the date the member filed the appeal with the health plan if the member filed initially with the health plan (excluding the days the enrollee took to subsequently file for a State fair hearing) or the date the member filed for direct access to a State fair hearing. | ||
| 2) | Expedited resolution (if the appeal was heard first through the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that: |
| • | Meets the criteria for an expedited appeal process but was not resolved using the health plan’s expedited appeal timeframes, or | ||
| • | Was resolved wholly or partially adversely to the member using the health plan’s expedited appeal timeframes. |
| 3) | Expedited resolution (if the appeal was made directly to the State Fair Hearing process without accessing the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that meets the criteria for an expedited appeal process. |
| j. | Any appeal rights that the state chooses to make available to providers to challenge the failure of the organization to cover a service. |
| • | How to report suspected fraud and abuse activities. |
| RFP B3Z06118 | Page 34 |
| • | Pharmacy dispensing fee requirements (if applicable): The health plan must include a statement that care shall not be denied due to lack of payment of pharmacy dispensing fee requirements. | ||
| • | Provider network listing including a list of the names, specialty, telephone numbers, service site address of all providers available for selection, and in the case of physicians, board certification. The provider network listing can be a separate document apart from the member handbook. | ||
| • | The extent to which, and how, after-hours and emergency coverage are provided, including the following: (a) What constitutes an emergency medical condition, emergency services, and post-stabilization services; (b) The fact that prior authorization is not required for emergency services; (c) The process and procedures for obtaining emergency services, including use of the 911-telephone system or its local equivalent; (d) The locations of any emergency settings and other locations at which providers and hospitals furnish emergency services and post-stabilization services covered herein; (e) The fact that the member has a right to use any hospital or other setting for emergency care; and (f) The post-stabilization care services rules specified herein. | ||
| • | How to obtain emergency transportation and non-emergency medically necessary transportation. | ||
| • | EPSDT services including immunization and lead guidelines designated by the state agency. | ||
| • | Maternity, family planning, and sexually transmitted diseases services. | ||
| • | Mental health and substance abuse services, including information on how to obtain such services, the rights the member has to request such services, and how to access services when in crisis, including the toll free number to be used to access such services. | ||
| • | How to obtain services when out of the member’s geographic region and for after-hours coverage. | ||
| • | Out-of-county and out-of-state moves. | ||
| • | Statement that the health plan shall protect its members in the event of insolvency. The health plan shall not hold its members liable for any of the following: |
| Ø | The debts of the health plan in the case of health plan insolvency; | ||
| Ø | Services provided to a member in the event the health plan failed to receive payment from the state agency for such service; | ||
| Ø | Services provided to a member in the event a health care provider with a contractual referral or other type arrangement with the health plan fails to receive payment from the state agency or the health plan for such services; or | ||
| Ø | Payments to a provider that furnishes covered services under a contractual referral or other type arrangement with the health plan in excess of the amount that would be owed by the member if the health plan had directly provided the services. |
| • | Inform the member that if he or she has a worker’s compensation claim, or a pending personal injury or medical malpractice law suit, or has been involved in an auto accident, to immediately contact the health plan. |
| RFP B3Z06118 | Page 35 |
| • | Inform the member that if he or she has another health insurance policy, all prepayment requirements must be met as specified by the other health insurance plan. The member must notify the health plan of any changes to their other health insurance policy. The member can contact the health plan with any questions. | ||
| • | Inform the member of the Health Insurance Premium Payment program which pays for health insurance for members when it is determined cost effective. | ||
| • | Contributions the member can make towards his or her own health, appropriate and inappropriate behavior, and any other information deemed essential by the health plan or the state agency including the member’s rights and responsibilities. | ||
| • | Inform members that multilingual interpreters will be offered when needed and written information is available in prevalent languages and how to access those services. | ||
| • | Inform the member of the procedures that will be utilized to notify members affected by termination or change in benefits, services, or service delivery office/site. | ||
| • | Inform the member that the health plan shall provide information on the health plan’s physician incentive plan to any member upon request. Enrollment materials/member handbooks should annually disclose to members their right to adequate and timely information related to physician incentives. | ||
| • | With respect to advance directives, inform the member of the following: |
| a) | Their rights under the law of the state. | ||
| b) | The health plan’s policies respecting the implementation of those rights, including a statement of any limitation regarding the implementation of advance directives as a matter of conscience. | ||
| c) | The health plan must inform members that complaints concerning noncompliance with the advance directive requirements may be filed with the State survey and certification agency. |
| • | Additional information that is available upon request, including the following: |
| a) | Information on the structure and operation of the MC+ health plan. |
| • | Inform the member how to obtain one free copy of his or her medical records annually. | ||
| • | Inform the member how to request and obtain an Explanation of Benefits (EOB). |
| o. | The health plan shall submit the member handbook to the state agency for approval prior to distribution to members. The health plan shall make modifications in member handbook language if ordered by the state agency so as to comply with the member handbook requirements. | ||
| p. | The member must receive written notification of changes in health plan operations that affect them at least thirty (30) calendar days before the intended effective date of the change unless otherwise noted. Examples of such changes are as follows: |
| 1) | Network changes such as a new Pharmacy Benefit Manager, mental health subcontractor, or other major subcontractor. Notification is required to all members. | ||
| 2) | Primary care provider or other provider seen on a regular basis leaves the network. The health plan shall provide written notice to the affected members within 15 calendar days after receipt or issuance of the termination notice. |
| RFP B3Z06118 | Page 36 |
| 3) | Comprehensive Benefit Package changes from what is explained in the member handbook. Notification is required to all members. | ||
| 4) | Utilization Management Procedure changes from what is explained in the member handbook. Notification is required to all members. | ||
| 5) | Prior Authorization Procedure changes from what is explained in the member handbook. Notification is required to all members. | ||
| 6) | Advance directive policy changes as a result of changes in State law. |
| q. | All written member notifications must be prior approved by the state agency and written at no higher than a sixth grade level. The health plan shall include certain passages and language provided to the health plan by the state agency in the member notification. The health plan shall comply with all changes regarding member notification content specified by the state agency in a timely manner as defined by the state agency. | ||
| r. | Transferring Members Between Health Plans: It may be necessary to transfer a member between health plans for a variety of reasons. The health plan shall have written policies and procedures for transferring relevant member information, including medical records and other pertinent materials, to or from another health plan. Upon request, a copy of the member’s medical records and supporting documentation must accompany disenrollment and transfer requests from the health plan. The state agency shall monitor, and approve or disapprove all transfer requests for just cause, within sixty (60) calendar days subject to medical record review. Possible reasons for a member to request a transfer include, but are not limited to: |
| • | Member requests health plan transfer during open enrollment. | ||
| • | Member request health plan transfer during the first 90 days enrolled in the health plan. | ||
| • | Transfer is the resolution to a grievance or appeal. | ||
| • | Enrollment — primary care provider or specialist with whom the member has an established patient/provider relationship does not participate in the health plan but does participate in another health plan. | ||
| • | The member is pregnant and her primary care provider or obstetrician does not participate in the health plan but does participate in another health plan. | ||
| • | The member is a newborn and the primary care provider or pediatrician selected by the mother does not participate in the health plan but does in another health plan. | ||
| • | Transfer to another health plan is necessary to ensure continuity of care. | ||
| • | An act of cultural insensitivity that negatively impacts the member’s ability to obtain care and cannot be resolved by health plan. | ||
| • | Other reasons, including but not limited to, poor quality of care, lack of access to services covered under the contract, or lack of access to providers experienced in dealing with the member’s health care needs. |
| 1) | Children in COA 4 shall be allowed automatic and unlimited changes in health plan choice as often as circumstances necessitate. Foster parents will normally have the decision making responsibility for which health plan shall serve the foster child residing with them; however, there will be situations where the Social Service worker or the courts shall select the health plan for a child in State custody or foster care placement. |
| s. | Member Disenrollment: |
| RFP B3Z06118 | Page 37 |
| 1) | The state agency has sole authority for disenrolling members from the health plan. The health plan may request disenrollment of members from health plan providers, subject to the conditions described below: |
| • | A persistent refusal of the member to follow prescribed treatments or comply with health plan requirements that are consistent with federal and state laws and regulations, as amended. | ||
| • | Consistently missed appointments without prior notification to the provider. | ||
| • | Fraudulent misuse of the MC+ managed care program, or abusive or threatening conduct. | ||
| • | Request of a home birth service. |
| 2) | The health plan must not initiate disenrollment because of a medical diagnosis or the health status of a member. The health plan shall not request disenrollment because of the member’s attempt to exercise his or her rights under the grievance system. The health plan shall not request disenrollment because of pre-existing medical conditions or high cost medical bills or an anticipated need for health care. The health plan shall not request a disenrollment due to behaviors resulting from a medical or mental illness/disorder. | ||
| 3) | Prior to requesting a disenrollment or transfer of a member, the health plan shall document at least three interventions over a period of 90 calendar days which occurred through treatment, case management, and care coordination to resolve any difficulty leading to the request, unless the member has demonstrated abusive or threatening behavior in which case only one attempt is required. The health plan shall cite at least one of the above examples of good cause before requesting that the state agency disenroll that member. If the health plan intends to proceed with disenrollment during the ninety (90) calendar day period, the health plan must give a notice citing the appropriate reason to both the member and the state agency at least 30 calendar days before the end of the ninety (90) calendar day period. The health plan must document all notifications regarding requests for disenrollment. |
| • | Members shall have the right to challenge a health plan initiated disenrollment to both the state agency and the health plan through the appeal process within ninety (90) calendar days of the health plan’s request to the state agency for disenrollment of the member. When a member files an appeal, the process must be completed prior to the health plan and the state agency continuing disenrollment procedures. | ||
| • | Within fifteen (15) working days of the final notification (after no appeal or a final hearing decision), members shall be enrolled in another health plan or transferred to another provider. | ||
| 4) | If the health plan recommends disenrollment or transfers for reasons other than those stated above, the State shall consider the health plan to have breached the provisions and requirements of the contract. |
| t. | Reasons for Disenrollment: The state agency may disenroll members from a health plan for any of the following reasons: |
| 1) | Selection of another health plan during open enrollment, the first 90 calendar days of enrollment, or for just cause. | ||
| 2) | Change of residence that places the member outside of the health plan’s service area. |
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| 3) | To implement the decision of a hearing officer in a grievance proceeding by the member against the health plan, or by the health plan against the member. | ||
| 4) | Loss of eligibility for either Medicaid or MC+ managed care. |
Paragraph 2.6.2 t. 5. inserted by Amendment #001
| 5) | Member exercises choice to voluntarily disenroll as specified herein under Missouri MC+ Managed Care Program eligibility groups. This choice can be referred to as opt out. |
| u. | Disenrollment Effective Dates: Member disenrollments outside of the open enrollment process shall become effective on the date specified by the state agency. The health plan shall have written policies and procedures for complying with state agency disenrollment orders. |
Paragraph 2.6.2 v. revised by Amendment #001
| v. | Hospitalization at the Time of Enrollment or Disenrollment: With the exception of newborns, the health plan shall not assume financial responsibility for members who are hospitalized in an acute setting on the effective date of coverage until an appropriate acute inpatient hospital discharge. If the member is in the Medicaid fee-for-service program at the time of acute inpatient hospitalization on the effective date of coverage, the member shall remain in the fee-for-service program until an appropriate acute inpatient hospital discharge. Members, including newborn members, who are in another health plan at the time of acute inpatient hospitalization on the effective date of coverage, shall remain with that health plan until an appropriate acute inpatient hospital discharge. Members, including newborn members, who are hospitalized in an acute setting shall not be disenrolled from a health plan until an appropriate acute inpatient hospital discharge, unless the member is no longer Medicaid or MC+ managed care eligible or opts out. | ||
| For the purpose of a member moving from one health plan to another health plan, in addition to acute inpatient hospitalizations, admissions to facilities that provide a lower level of care in lieu of an acute inpatient admission may be considered as an acute inpatient hospitalization for purposes of this section. The state agency reserves the right to determine if such an admission qualifies as an acute inpatient hospitalization. Only acute inpatient hospitalization shall apply when a new member moves from the Medicaid fee-for-service program to MC+ managed care. The health plan shall provide timely notification to the state agency of a member’s acute inpatient hospitalization on the effective date of coverage to effect a retroactive/prospective adjustment in the coverage dates for MC+ managed care. |
| 2.7 | Comprehensive Benefit Package: | |
| Description of Comprehensive Benefit Package: The health plan shall assume the responsibility for all covered medical conditions of each MC+ managed care member as of the effective date of coverage. The health plan shall make the comprehensive benefit package available to members. Services outside the United States, District of Columbia, and the following territories: Northern Mariana Islands, American Samoa, Guam, Puerto Rico, and the Virgin Islands are not covered. Services must be provided according to the medical needs of the member. The health plan may manage specific services as long as the health plan provides services that are medically appropriate. The health plan shall have a process for allowing exceptions that is in accordance with 13 CSR 70-2.100. The health plan may develop criteria by which the health plan shall review future treatment options, set prior authorization criteria, or exercise other administrative options for the health plan’s administration of medical care benefits. The health plan may place appropriate limits on a service on the basis of criteria such as medical necessity; or for utilization control, provided the services furnished can reasonably be expected to achieve their purpose. The health plan may not arbitrarily deny or reduce the amount, duration, or scope of a required service solely because of the diagnosis, type of illness, or condition. Attachment 3 outlines the comprehensive benefit package for all members and the services they will receive. |
| 2.7.1 | The health plan shall include the following services within the comprehensive benefit package: |
| a. | Inpatient hospital services; |
| RFP B3Z06118 | Page 39 |
| b. | Outpatient hospital services; | ||
| c. | Emergency room services; | ||
| d. | Ambulatory surgical center, birthing center; | ||
| e. | Physician, advanced practice nurse, and certified nurse midwife services; |
| 1) | The health plan shall provide certified nurse midwife services that are medically appropriate either through the health plan provider network or by other means outside the health plan provider network at the health plan’s expense. If the member elects a home birth, the member shall be disenrolled from MC+ managed care according to the MC+ managed care home birth policy statement. The disenrolled member shall then receive services through the MC+ fee-for-service program. |
| f. | Maternity benefits for inpatient hospital and certified nurse midwife. The health plan shall provide coverage for a minimum of forty-eight (48) hours of inpatient hospital services following a vaginal delivery and a minimum of ninety-six (96) hours of inpatient hospital services following a cesarean section for a mother and her newly born child in a hospital or any other health care facility licensed to provide obstetrical care under the provision of Chapter 197, RSMo, as amended. | ||
| The health plan may authorize a shorter length of hospital stay for services related to maternity and newborn care if a shorter inpatient hospital stay meets with the approval of the attending physician after consulting with the mother and is in keeping with federal and state law, as amended. The physician’s approval to discharge shall be made in accordance with the most current version of the “Guidelines for Perinatal Care” prepared by the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists, or similar guidelines prepared by another nationally recognized medical organization and be documented in the member’s medical record. | |||
| The health plan shall provide coverage for post-discharge care to the mother and her newborn. The first post-discharge visit shall occur within twenty-four (24) to forty-eight (48) hours. Post-discharge care shall consist of a minimum of two visits at least one of which shall be in the home, in accordance with accepted maternal and neonatal physical assessments, by a registered professional nurse with experience in maternal and child health nursing or a physician. The location and schedule of the post-discharge visits shall be determined by the attending physician. Services provided by the registered professional nurse or physician shall include, but not be limited to, physical assessment of the newborn and mother, parent education, assistance and training in breast or bottle feeding, education and services for complete childhood immunizations, the performance of any necessary and appropriate clinical tests, and submission of a metabolic specimen satisfactory to the State laboratory. Such services shall be in accordance with the medical criteria outlined in the most current version of the “Guidelines for Perinatal Care”, or similar guidelines prepared by another nationally recognized medical organization. If the health plan intends to use another nationally recognized medical organization’s guidelines, the state agency must approve prior to implementation of its use. | |||
| g. | Family Planning Services — If family planning services are sought out-of-network by a member, the health plan shall be financially liable for payment of those services in accordance with federal freedom of choice provisions. | ||
| h. | Pharmacy benefits excluding protease inhibitors – pharmacy benefits are included in the comprehensive benefit package if the health plan included pharmacy benefits in its awarded proposal; |
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| 1) | The health plan shall submit the information regarding its pharmacy program to the state agency for prior approval in accordance with the MC+ Managed Care Policy Statements, as amended. |
| i. | Dental services related to trauma to the mouth, jaw, teeth or other contiguous sites as a result of injury. Adults age 21 and over receive treatment of a disease/medical condition without which the health of the recipient would be adversely affected through the Fee For Service program. | ||
| j. | Laboratory, radiology, and other diagnostic services; | ||
| k. | Prenatal case management; | ||
| l. | One eye examination every 2 years; | ||
| m. | Home health services; | ||
| n. | Adult day health care services; | ||
| o. | Personal care services; | ||
| p. | Transportation services; |
| 1) | The health plan shall provide emergency transportation (ground and air) for its members. The health plan shall provide non-emergency medical transportation to members who do not have the ability to provide their own transportation (such as their own vehicle, friends, or relatives) to and from services required herein as well as Medicaid/MC+ Fee-For-Service covered services not included in the comprehensive benefit package. |
| q. | Hospice services; | ||
| r. | Durable medical equipment limited to: prosthetic devices (with the exception of artificial larynx), respiratory equipment and oxygen (with the exception of CPAP, BiPAP, and nebulizers), wheelchairs, diabetic supplies and equipment, and ostomy supplies. Members with a Home Health Plan of Care receive all medically necessary durable medical equipment services during the plan of care coverage period. | ||
| s. | Podiatry services with the exception of trimming of nondystrophic nails, any number; debridement of nail(s) by any method(s), one to five; debridement of nail(s) by any method(s), six or more; excision of nail and nail matrix, partial or complete; and strapping of ankle and/or foot. | ||
| t. | Services provided by local public health agencies — The Department of Health and Senior Services and local public health agencies administer certain public health programs which are critical to the protection of the public’s health and, therefore, must be made available to members at local public health agencies whether in-network or out-of-network. The health plan shall reimburse the local public health agency according to the most current Medicaid program fee schedule in effect at the time of service, unless otherwise negotiated. Such services shall include: |
| 1) | All sexually transmitted disease (STD) services including screening, diagnosis, and treatment. In-network providers shall follow current Center for Disease Control (CDC) Sexually Transmitted Diseases Treatment Guidelines and the United States Department of Health and Human Services Chlamydia Control Project Screening Criteria, or their equivalent. The STD guidelines may be found on the Internet at: http://www.dhss.mo.gov/STDSurveillance/. STD screening, diagnosis, and treatment services shall include: |
| • | STD screening exam. |
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| • | Screening, diagnosis, and treatment for the following STDs: gonorrhea, syphilis, chancroid, granuloma inguinale, lymphogranuloma venereum, genital herpes, genital warts, trichomoniasis, chlamydia (cervicitis), chlamydia (urethritis), hepatitis B, and others as may be designated by the state agency. | ||
| • | Screening, diagnosis, and treatment of vaginal or urethral discharge including non-gonococcal urethritis and mucopurulent cervicitis. | ||
| • | Evaluation and initiation of treatment of pelvic inflammatory disease (PID). | ||
| • | Diagnosis and preventive treatment of members who are reported as contacts/sex partners of any person and diagnosed with a STD. The member shall be given the option of seeing an in-network provider first. | ||
| • | The local public health agency shall encourage members to follow-up with their primary care provider; however, if the member chooses follow-up care at the local public health agency for confidentiality reasons, the health plan shall reimburse the local public health agency for follow-up office visits (not to exceed three visits per episode). |
| 2) | Human immunodeficiency virus (HIV) services relating to screening and diagnostic studies. In-network providers shall use current CDC HIV Counseling, Testing, Referral Standards, and Guidelines or their equivalent. The HIV guidelines may be found on the internet at: http://www.dhss.mo.gov/HIV_STD_AIDS/. | ||
| 3) | Tuberculosis services including screening, diagnosis, and treatment. In-network providers shall follow current CDC/American Thoracic Society Guidelines: Treatment of Tuberculosis and Tuberculosis Infection in Adults and Children, or their equivalent, including the use of Mantoux PPD skin test to screen for tuberculosis. The Tuberculosis guidelines may be found on the Internet at: http://www.dhss.mo.gov/Tuberculosis. |
| • | All members diagnosed with tuberculosis infection or tuberculosis disease shall be reported to the local public health agency. | ||
| • | All members receiving treatment for tuberculosis disease shall be referred to the local public health agency’s tuberculosis contact person for directly observed therapy (DOT). The health plan shall communicate with the local public health agency’s tuberculosis contact person to obtain information regarding the member’s health status. The health plan shall communicate this information to the in-network provider. The health plan shall be responsible for care coordination and medically necessary follow-up treatment. | ||
| • | All laboratory tests for tuberculosis shall meet the standards established by the CDC/Missouri Department of Health and Senior Services. Sensitivity tests shall be performed on all initial specimens positive for M. Tuberculosis. Department of Health and Senior Services encourages all sputum specimens to be submitted to the Department of Health and Senior Services’ Tuberculosis Reference Laboratory at the Missouri Rehabilitation Center. Positive cultures for M Tuberculosis isolated at private laboratories must be sent to the TB Reference Laboratory (Required by Missouri Rule 19 CSR 20-20.080). |
| 4) | Childhood Immunizations: In-network providers shall fully immunize their members following the most recent immunization recommendations designated by the state agency. The state agency shall provide the health plan’s Medical Director with copies of the most recent recommendations upon contract award and upon request and when the recommendations change. |
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| • | The health plan and its in-network providers must enroll and must obtain vaccines through the Missouri Department of Health and Senior Services Vaccines for Children (VFC) Program or any such vaccine supply program as designated by the state agency. Any time a member receives immunizations from a local public health agency, or at a Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) site, the health plan shall reimburse only the cost for administration at the current Medicaid program rates in effect at the time of the service, unless otherwise negotiated. | ||
| • | The health plan shall reimburse governmental public health agencies for the cost of both administration and vaccines not available through the VFC program or vaccine supply program as designated by the state agency when the vaccine is deemed medically necessary. | ||
| • | The health plan shall collaborate with the state agency and the Missouri Department of Health and Senior Services to determine the health plan’s aggregate immunization level. The Missouri Department of Health and Senior Services, Immunization Program will offer consultation to the health plan to foster the exchange of immunization information, and to in-network providers for purposes of assessment, reminder/recall, and reporting. | ||
| • | The health plan shall establish, as a quality assessment and improvement measure, a target rate of 90% for the number of two (2) year olds immunized. |
| 5) | Childhood lead poisoning prevention services shall include screening, diagnosis, treatment, and follow-up as indicated. In-network providers shall follow the Centers for Medicare and Medicaid Services (CMS) (formerly the Health Care Financing Administration) guidelines in effect for the specific time period and CDC guidelines: Screening Young Children for Lead Poisoning and Managing Elevated Blood Lead Levels Among Young Children. The Department of Health and Senior Services shall provide the health plan’s Medical Director with copies of current protocols and guidelines upon contract award or at any time upon request. If there is a discrepancy between guidelines, the state agency requires use of the HCY/EPSDT Lead Risk Assessment Guide developed in accordance with CMS guidelines. The HCY/EPSDT Lead Risk Assessment Guide may be used separately or in conjunction with the HCY Screening form. |
| u. | Emergency Medical/Mental Health Services. Emergency medical/mental health services means covered inpatient and outpatient services that are furnished by a provider that is qualified to furnish these services and are needed to evaluate or stabilize an emergency medical condition. |
| 1) | An emergency medical condition means a medical or mental health condition manifesting itself by acute symptoms of sufficient severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in the following: |
| • | Placing the physical or mental health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy; | ||
| • | Serious impairment to bodily functions; | ||
| • | Serious dysfunction of any bodily organ or part; | ||
| • | Serious harm to self or others due to an alcohol or drug abuse emergency; | ||
| • | Injury to self or bodily harm to others; or | ||
| • | With respect to a pregnant woman having contractions: (1) that there is inadequate time to effect a safe transfer to another hospital before delivery, or (2) that transfer may pose a threat to the health or safety of the woman or the unborn. |
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| 2) | Post-stabilization care services means covered services, related to an emergency medical condition that are provided after a member is stabilized in order to maintain the stabilized conditions or to improve or resolve the member’s condition. |
| v. | Early Periodic Screening, Diagnosis, and Treatment Services: The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) mandated that Medicaid cover all medically necessary services listed in Section 1905 (a) of the Social Security Act to children from birth through age 20. In Missouri, this program is known as the Healthy Children and Youth (HCY) Program. In accordance with the health plan’s written policies and procedures, the health plan shall conduct outreach and education of children eligible for the HCY/EPSDT program, provide the full HCY/EPSDT services to all eligible children and young adults under the age of 21, and conduct and document well child visits (screenings) using the State HCY/EPSDT screening form as amended. (The HCY screening form may be found on the Internet at: http://manuals.momed.com/ Look under Missouri Medicaid Provider Manuals, Forms, List of Forms, Healthy Children and Youth Screening [HCY Screening].) The health plan shall provide the full scope of HCY/EPSDT services in accordance with the following: |
| 1) | The health plan shall conduct HCY/EPSDT well child visits on all eligible members under age twenty-one (21) to identify health and developmental problems. The state agency recognizes that the decision to not have a child screened is the right of the parent or guardian of the child. For those children that have not had well child visits in accordance with the periodicity schedule established by the state agency, the health plan shall document its outreach and educational efforts to the parent or guardian informing them of the importance of well child visits, that a well child visits is due, that appointment scheduling assistance is available, and that transportation (except to those children with ME Codes 71-75) is available. (The current periodicity schedule is contained in Attachment 3.) The health plan shall follow the MC+ fee-for-service policies for recognition of completion of all components of a full medical HCY/EPSDT well child visit service. A full HCY/EPSDT well child visits includes all of the components listed below. A partial well child visit includes the first six (6) components listed below. The last three (3) components are individual screens. An interperiodic screen is defined as any encounter with a health care professional acting within his or her scope of practice. |
| • | A comprehensive health and developmental history including assessment of both physical and mental health developments; | ||
| • | A comprehensive unclothed physical exam; | ||
| • | Health education (including anticipatory guidance); | ||
| • | Laboratory tests as indicated (appropriate according to age and health history unless medically contraindicated); | ||
| • | Appropriate immunizations according to age; | ||
| • | Verbal lead assessment beginning at age six (6) months and continuing through age seventy-two (72) months. Blood level testing is mandatory at twelve (12) and twenty-four (24) months or annually if residing in a high-risk area of Missouri as defined by Department of Health and Senior Services regulation 19 CSR 20-8.030; | ||
| • | Vision screening; | ||
| • | Hearing screening; |
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| • | Dental screening (oral exam by primary care provider as part of comprehensive exam). Recommended that preventive dental services begin at age six (6) through twelve (12) months and be repeated every six (6) months. |
| 2) | If a suspected problem is detected during a well child visit, the child must be evaluated as necessary, using the required assessment protocol, for further diagnosis. This diagnosis is used to determine treatment needs. | ||
| 3) | HCY/EPSDT requires coverage for all follow-up diagnostic and treatment services deemed medically necessary to ameliorate or correct a problem discovered during an HCY/EPSDT well child visits. Such medically necessary diagnosis and treatment services must be provided as long as they are Medicaid covered services as defined in the Social Security Act. | ||
| 4) | The health plan shall establish a tracking system that provides information on compliance with HCY/EPSDT service provision requirements in the following areas: |
| • | Initial visit for newborns. The initial HCY/EPSDT well child visits shall be the newborn physical exam in the hospital. | ||
| • | Preventive pediatric visits according to the periodicity schedule inclusive of a verbal lead assessment and blood lead tests. | ||
| • | Diagnosis and/or treatment, or other referrals in accordance with HCY/EPSDT well child visit results. | ||
| • | The health plan shall ensure that the tracking system generates information consistent with the requirements regarding encounter data as specified elsewhere herein. |
| 5) | The health plan shall have an established process for reminders, follow-ups, and outreach to members. This process shall include, but not be limited to, notifying the parent(s) or guardian(s) of children of the needs and scheduling of periodic well child visits according to the periodicity schedule. The health plan shall provide assistance to new members in accessing HCY/EPSDT well child visit services within ninety (90) calendar days of health plan enrollment. The health plan shall provide assistance to members in accessing subsequent HCY/EPSDT well child visits in accordance with the periodicity schedule. At the time of notification, the health plan shall offer transportation and scheduling assistance if necessary. For members with ME Codes 71 through 75, non-emergency medical transportation is not a covered benefit. | ||
| 6) | The health plan should seek innovative, cooperative ways to enhance care coordination and delivery of HCY/EPSDT. This may include the use of a standardized data base system among health plans. | ||
| 7) | The health plan shall report HCY/EPSDT well child visits through encounter data submissions in accordance with the requirements regarding encounter data as specified elsewhere herein. The state agency shall use such encounter data submissions and other data sources to determine health plan compliance with CMS requirements that 80 percent of eligible members under the age of twenty-one are receiving HCY/EPSDT well child visits in accordance with the periodicity schedule. The state agency shall use the participant ratio as calculated using the CMS 416 methodology for measuring the health plan’s performance. |
| • | The health plan shall report HCY/EPSDT well child visits in accordance with the appropriate well child visits codes established by the state agency. HCY/EPSDT screening codes are identified in MC+ Managed Care Policy Statements. Services not reported as |
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| HCY/EPSDT well child visits in accordance with the appropriate codes will not be counted toward the health plan’s participant ratio. |
| • | In the event the state agency uses other data sources submitted by the health plan, the health plan shall certify the data provided. |
| a. | The data must be certified by one of the following: |
| 1) | The health plan’s Chief Executive Officer. | ||
| 2) | The health plan’s Chief Financial Officer. | ||
| 3) | An individual who has delegated authority to sign for, and who reports directly to, the health plan’s Chief Executive Officer or Chief Financial Officer. |
| b. | The certification must attest, based on best knowledge, information, and belief, as to the accuracy, completeness, and truthfulness of the data. | ||
| c. | The health plan must submit the certification concurrently with the data. |
| w. | Mental health and substance abuse services: |
| 1) | For children covered under MC+ managed care within Category of Aid 4, mental health and substance abuse services, if medically necessary, shall not be the financial responsibility of the health plan and shall be provided in accordance with the requirements regarding coordination with services not included in the comprehensive benefit package as specified elsewhere herein. |
| • | For inpatients with dual diagnoses (physical and mental), the health plan shall be financially responsible for all inpatient hospital days if the primary, secondary, or tertiary diagnosis is a combination of physical and mental health. These admissions are subject to the prior authorization and concurrent review process identified by the health plan. |
| 2) | All other members shall receive all medically necessary mental health and substance abuse services included in the comprehensive benefit package. The state agency, in conjunction with the Department of Mental Health, has developed community-based services with an emphasis on the least restrictive setting. The health plan shall consider, when appropriate, using such services in lieu of using an out-of-home placement setting for members. | ||
| 3) | With the member’s or the member’s parent/guardian’s consent, the health plan shall notify the member’s primary care provider when a member is admitted for mental health or substance abuse services. | ||
| 4) | The health plan shall have protocols for coordinating the diagnosis, treatment, and care between primary care providers and mental health and substance abuse providers which include the expected response time for consults between primary care providers and mental health and substance abuse providers. | ||
| 5) | Services shall include, but not be limited to: |
| • | Inpatient hospitalization, when provided by acute hospital, private or state psychiatric hospital. | ||
| • | Outpatient services when provided by a licensed psychiatrist, licensed psychologist, licensed clinical social worker, provisional licensed clinical social worker, licensed counselor, provisional licensed professional counselor, licensed psychiatric advanced practice nurse, licensed home health psychiatric nurse, or state certified mental health or substance abuse program. These services must include outreach efforts on an as needed |
| RFP B3Z06118 | Page 46 |
| basis that recognize the unique mental health challenges of some members. These efforts may include phone contacts and home visits. | |||
| • | Crisis intervention/access services, which may include the provision of a 24-hour hotline staffed by qualified mental health professionals and qualified substance abuse counselors providing intake, evaluation and referral services, including services that are alternatives to out of the home placements and mobile crisis teams for on-site interventions. | ||
| • | Alternative services which are reasonable, cost effective, and related to the member’s treatment plan. |
| 6) | The health plan is responsible for payment of mental health and substance abuse services defined herein that are court ordered, 96 hour detentions, and for involuntary commitments. | ||
| 7) | Mental Health and Substance Abuse Services: To ensure the continuity of care and the transition of members who have received mental health and substance abuse services from an out-of-network provider prior to enrollment with the health plan, the state agency encourages the out-of network provider to contact the health plan to make transition arrangements with the health plan. Upon enrollment, the health plan shall transition the member and provide the immediate continuation of mental health and substance abuse services. The health plan shall authorize out-of-network providers to continue ongoing mental health and substance abuse treatment, services, items, and prescriptions for new members until such time as the new member has been transferred appropriately to the care of an in-network provider. |
| • | If the member transferred from an out-of-network provider to an in-network provider, the health plan shall secure the member’s mental health and substance abuse medical records from the out-of-network provider. The health plan shall pay rates comparable to Medicaid, unless otherwise negotiated, to obtain these records. | ||
| • | Mental Health Out-of-Network Referrals: If the health plan believes that a child or youth may require residential services in order to receive appropriate care and treatment for a serious emotional disorder, the health plan may apply to the Missouri Division of Comprehensive Psychiatric Services (CPS) for placement in accordance with the MC+ managed care policy statement titled, Mental Health and Substance Abuse Fee-For-Service Coordination. | ||
| • | Services provided by a Community Psychiatric Rehabilitation provider shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. | ||
| • | Targeted case management services for mental health services shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. |
| x. | Transplant Related Services: The health plan shall permit and authorize and shall be financially responsible for any inpatient, outpatient, physician, and related support services including presurgery assessment/evaluation prior to the date of the actual bone marrow/stem cell or solid organ transplant surgery. The bone marrow/stem cell or solid organ transplant will be prior authorized by the state agency and must be performed at a state agency’s approved transplant facility in accordance with the MC+ members’ freedom of choice. The health plan shall be responsible for pre-transplant and post-transplant follow-up care and immuno-suppressive pharmacy products prescribed after the inpatient transplant discharge. To ensure continuity of care, the health plan must permit and authorize follow- up services and the health plan shall be responsible for the reimbursement of such services. The primary care provider must be allowed to refer a transplant patient to the performing transplant facility for follow-up transplant care. Reimbursement to out-of-network providers of transplant |
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| support services must be no less than the current Medicaid program rates in effect at the time of the services. |
| 2.7.2 | The health plan shall include all the services specified in the comprehensive benefit package with the exception of non-emergency medical transportation (NEMT), for uninsured children in ME Codes 71 through 75 (Refer to Attachment 1, COA 5). | |
| 2.7.3 | In addition to the services listed in the Comprehensive Benefit Package, herein, the health plan shall include the following additional services for children under 21 years of age and pregnant women with ME codes 18, 43, 44, 45, and 61. |
| a. | Dental Services (Dental services for pregnant women age 21 and over with ME codes 18, 43, 44, 45, and 61 shall be limited to dentures and services related to trauma to the mouth, jaw, teeth or other contiguous sites as a result of injury. Services to prepare the mouth for dentures, such as examinations, X-rays, or extractions will not be covered by the health plan. Ancillary denture services such as relining, rebasing, and repairs will not be covered by the health plan. All other Medicaid State Plan dental services for these pregnant women are covered through the Fee For Service Program); | ||
| b. | Hearing aids and related services; | ||
| c. | Optical services (Pregnant women age 21 and over with ME codes 18, 43, 44, 45, and 61 do not receive eyeglasses except for one pair following cataract surgery. Eye glasses for these pregnant women are covered through the Fee-For-Service program); | ||
| d. | Comprehensive Day Rehabilitation (for certain persons with disabling impairments as the result of a traumatic head injury); | ||
| e. | Durable medical equipment (including but not limited to: orthotic devices, artificial larynx, enteral and parenteral nutrition, walkers, wheelchair accessories and batteries, CPAP, BiPAP, and nebulizers); | ||
| f. | Diabetes self management training for persons with gestational, Type I or Type II diabetes; | ||
| g. | Podiatry services. |
| 2.7.4 | Medically Necessary: The health plan shall determine whether or not a service(s) furnished or proposed to be furnished is (are) reasonable and medically necessary for the prevention, diagnosis or treatment of a physical or mental illness or injury; to achieve age appropriate growth and development; to minimize the progression of disability; or to attain, maintain or regain functional capacity; in accordance with accepted standards of practice in the medical community of the area in which the physical or mental health services are rendered; and service(s) could not have been omitted without adversely affecting the member’s condition or the quality of medical care rendered; and service(s) is (are) furnished in the most appropriate setting. Services must be sufficient in amount, duration, and scope to reasonably achieve their purpose and may only be limited by medical necessity. |
| a. | In reference to medically necessary care, mental health services shall be provided in accordance with a process of mental health assessment that accurately determines the clinical condition of the member and the acceptable standards of practice for such clinical conditions. The process of mental health assessment shall include distinct criteria for children and adolescents. | ||
| b. | The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) mandated that Medicaid provide medically necessary services to children from birth through age 20, which are necessary to treat or ameliorate defects, physical or mental illness, or conditions identified by an HCY/EPSDT screen. |
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| Services must be sufficient in amount, duration, and scope to reasonably achieve their purpose and may only be limited by medical necessity. |
| 2.8 | Multilingual Services: | |
| 2.8.1 | During the enrollment process, members shall be asked if English is their main language. If English is not the member’s main language, the member shall be asked to identify that language. The information gathered by the state agency shall be shared with the health plan. | |
| 2.8.2 | The health plan shall make interpreter services available as necessary to ensure that members are able to communicate with the health plan and providers and receive covered benefits. The health plan shall use certified interpreters. The health plan shall inform members of the availability of interpreter services. If the health plan has more than two hundred (200) members or five (5) percent of its program membership (whichever is less) who speak a single language other than English as a primary language, the health plan shall make available general services and materials, such as the health plan’s member handbook in that language. | |
| 2.8.3 | In addition, the health plan shall develop appropriate methods for communicating with visual and hearing impaired members and accommodating the physically disabled. The health plan shall offer members standard materials, such as the member handbook and enrollment materials in alternative formats (i.e., large print, Braille, cassette, and diskette) immediately upon request from members with sensory impairments. | |
| 2.9 | Member Services: | |
| 2.9.1 | Member Services Staff: The health plan shall provide adequately trained member services staff to operate at least nine (9) consecutive hours during the hours of 7:00 a.m. through 7:00 p.m. (i.e., 8:00 a.m. through 5:00 p.m.), Monday through Friday. The health plan may observe State designated holidays or the holidays designated in its awarded proposal for its operation of member services. The health plan’s member services staff shall be responsible for the following: |
| a. | Explaining the operation of the health plan and assisting members in the selection of a primary care provider. Educating the family about managed care including the way services typically are accessed under managed care and the role of the primary care provider. | ||
| b. | Specifying member’s rights and responsibilities. | ||
| c. | Explaining covered benefits. | ||
| d. | Assisting members to make appointments and obtain services. | ||
| e. | Arranging medically necessary transportation for members. | ||
| f. | Handling, recording, and tracking member inquiries promptly and timely. | ||
| g. | The health plan’s member services staff must have available a complete and up-to-date list of the in-network providers in the health plan provider network. The health plan shall have a policy and procedure for regularly updating the provider listing. Member services staff must provide the following information to members requesting the names of providers: |
| 1) | Whether the provider currently participates in the health plan; | ||
| 2) | Whether the provider is currently accepting new patients; and |
| RFP B3Z06118 | Page 49 |
| 3) | Any restrictions on services, including any referral or prior authorization requirements the member must meet to obtain services from the provider. |
| h. | The health plan’s member services staff shall be trained on fraud and abuse policies and procedures. |
| 2.9.2 | Toll-Free Telephone Number: The health plan shall maintain a toll-free member services telephone number. The toll-free member services telephone or other toll-free voice and telecommunications device for the deaf members must be staffed twenty-four (24) hours per day to provide needed authorization of services during evenings and weekends and holidays. | |
| 2.10 | Provider Services: | |
| 2.10.1 | Provider Services Staff: The health plan shall provide adequately trained provider services staff to operate at least nine (9) consecutive hours during the hours of 7:00 a.m. through 7:00 p.m. (i.e., 8:00 a.m. through 5:00 p.m.) Monday through Friday. The health plan may observe State designated holidays or the holidays designated in its awarded proposal for its operation of provider services. If the health plan observes holidays different than the State’s, the health plan must obtain the prior written approval of the state agency. | |
| 2.10.2 | The health plan’s provider services staff shall be responsible for the following: |
| a. | Establishing a mechanism by which providers may determine in a timely manner whether a member is covered by the health plan and the member’s primary care provider assignment; | ||
| b. | Educating providers on the above mechanism’s use; | ||
| c. | Educating and assisting providers with the health plan service accessibility standards including but not limited to prior authorization, denial, and referral procedures; | ||
| d. | Educating and assisting providers with claims submission and payment procedures; | ||
| e. | Educating providers about conditions under which members may directly access services including, but not limited to, mental health and substance abuse, family planning, and public health services; | ||
| f. | Educating providers about how a member can access emergency care and after-hour services; | ||
| g. | Educating providers about pharmacy benefits and formulary guidelines; and | ||
| h. | Handling provider inquiries and complaints. |
| 2.10.3 | The health plan shall develop, distribute, and maintain a provider manual. The health plan shall obtain and document the approval of the provider manual by the health plan’s Medicaid Plan Administrator and Medical Director and shall review the provider manual at least annually and maintain documentation verifying such. The health plan shall issue a copy of the provider manual to providers at the time of inclusion in the provider network, and shall educate the provider as to its full content and usage. |
| a. | At a minimum, the provider manual shall contain, sections regarding: |
| 1) | Specific covered health services for which the provider shall be responsible, including any limitations or conditions on services; | ||
| 2) | Claims submission instructions and the procedure for review of denied claims; | ||
| 3) | Prior authorization procedures, and referral procedures including exceptions, second, or third opinions; |
| RFP B3Z06118 | Page 50 |
| 4) | Primary care provider responsibilities; | ||
| 5) | Specialist/ancillary provider responsibilities; | ||
| 6) | Provider complaint, grievance, and appeal processes; |
| • | Any State-determined provider appeal rights to challenge the failure of the health plan to cover a service. |
| 7) | Member Grievance System; |
| • | The member’s right to file grievances and appeals and their requirements and timeframes for filing; | ||
| • | The availability of assistance in filing; | ||
| • | The toll-free numbers to file oral grievances and appeals; | ||
| • | The member’s right to request continuation of benefits during an appeal or State fair hearing filing and, if the health plan’s action is upheld in a hearing, the member may be liable for the cost of any continued benefits. | ||
| • | The member’s right to a state fair hearing, how to obtain a hearing, and representation rules at a hearing; |
| (a) | A member may request a State fair hearing within 90 calendar days from the health plan’s notice of action. | ||
| (b) | The State must reach its decisions within the specified timeframes: |
| 1) | Standard resolution: within 90 calendar days of the date the member filed the appeal with the health plan if the member filed initially with the health plan (excluding the days the member took to subsequently file for a State fair hearing) or the date the member filed for direct access to a State fair hearing. | ||
| 2) | Expedited resolution (if the appeal was heard first through the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that: |
| • | Meets the criteria for an expedited appeal process but was not resolved using the health plan’s expedited appeal timeframes, or | ||
| • | Was resolved wholly or partially adversely to the member using the health plan’s expedited appeal timeframes. |
| 3) | Expedited resolution (if the appeal was made directly to the State Fair Hearing process without accessing the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that meets the criteria for an expedited appeal process. |
| 8) | Procedure for obtaining member eligibility status; | ||
| 9) | Appointment/access standards; | ||
| 10) | Multilingual and TDD availability; | ||
| 11) | Quality Assessment and Improvement; | ||
| 12) | Provider Credentialing; |
| RFP B3Z06118 | Page 51 |
| 13) | Management and retention of medical records; | ||
| 14) | Confidentiality; | ||
| 15) | Advance directives; and | ||
| 16) | Fraud and abuse guidelines. |
| 2.10.4 | The health plan shall supply the state agency with the federal tax identification number and professional license number of each provider performing services for the health plan. | |
| 2.10.5 | The health plan should specify in writing the following to out-of-network providers at the time a service is approved to be performed by the out-of-network provider: |
| a. | Claims submission instructions and the procedure for review of denied claims; | ||
| b. | Prior authorization procedures and referral procedures including exceptions, second, or third opinions; | ||
| c. | Provider complaint, grievance, and appeal procedures; |
| 1) | Any State-determined provider appeal rights to challenge the failure of the health plan to cover a service. |
| d. | Member Grievance System; |
| • | The member’s right to file grievances and appeals and their requirements and timeframes for filing; | ||
| • | The availability of assistance in filing; | ||
| • | The toll-free numbers to file oral grievances and appeals; | ||
| • | The member’s right to request continuation of benefits during an appeal or State fair hearing filing and, if the health plan’s action is upheld in a hearing, the member may be liable for the cost of any continued benefits. | ||
| • | The member’s right to a state fair hearing, how to obtain a hearing, and representation rules at a hearing; |
| (a) | A member may request a State fair hearing within 90 calendar days from the health plan’s notice of action. | ||
| (b) | The State must reach its decisions within the specified timeframes: |
| 1) | Standard resolution: within 90 calendar days of the date the member filed the appeal with the health plan if the member filed initially with the health plan (excluding the days the member took to subsequently file for a State fair hearing) or the date the member filed for direct access to a State fair hearing. | ||
| 2) | Expedited resolution (if the appeal was heard first through the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that: |
| • | Meets the criteria for an expedited appeal process but was not resolved using the health plan’s expedited appeal timeframes, or | ||
| • | Was resolved wholly or partially adversely to the member using the health plan’s expedited appeal timeframes. |
| RFP B3Z06118 | Page 52 |
| 3) | Expedited resolution (if the appeal was made directly to the State Fair Hearing process without accessing the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that meets the criteria for an expedited appeal process. |
| e. | Procedure for obtaining member eligibility status; | ||
| f. | Multilingual and TDD availability; and | ||
| g. | Confidentiality. |
| 2.11 | Release for Ethical Reasons: | |
| 2.11.1 | As a condition to participating in, or contracting with the health plan, the health plan may not: |
| a. | Require a provider to perform any treatment or procedure which is contrary to the provider’s conscience, religious beliefs, or ethical principles or policies; or | ||
| b. | Prohibit a provider from making a referral to another health care provider licensed to provide care appropriate to the member’s medical condition. |
| 2.11.2 | The health plan shall have a process by which the provider may refer a member to another health care provider licensed to provide care appropriate to the member’s medical condition or withdraw from the case and the health plan shall assign the member to another provider licensed to provide care appropriate to the member’s medical condition. | |
| 2.11.3 | A health plan that is otherwise required to provide, reimburse for, or provide coverage of, a counseling or referral service because of the requirement herein may object to the service on moral or religious grounds. If the health plan objects to service on moral or religious grounds, the health plan must notify the state agency. Additionally, the health plan shall notify the state agency whenever the health plan adopts the policy during the term of the contract. The health plan agrees that such an objection and subsequent release from providing, reimbursing for, or providing coverage of, a counseling or referral service shall result in a reduction to the applicable capitation rates paid to the health plan to reflect such a release as outlined in paragraph 2.28.4. |
| a. | Information to potential members must be provided prior to enrollment regarding the health plan’s release of provision of such service. | ||
| b. | The health plan shall be required to notify its members 30 calendar days prior to any change in its policy regarding coverage of a counseling or referral service. | ||
| c. | The health plan shall be required to notify its members of how and where to obtain the service. |
| 2.12 | Coordination With Services not Included in the Comprehensive Benefit Package: | |
| The health plan is not obligated to provide or pay for any services not included in the comprehensive benefit package. However, the health plan must perform care coordination of covered services with services not included within the comprehensive benefit package. These services include, but are not limited to, the following: | ||
| 2.12.1 | School Based Services: |
| a. | When communities and school boards agree, schools may operate school based clinics to address unmet medical needs of children. The state agency supports the efforts of such communities. The health plan shall perform care coordination with school based clinic services with comprehensive benefit services that are the responsibility of the health plan. In addition, the health plan shall have a written process for coordination and collaboration with school based clinics. |
| RFP B3Z06118 | Page 53 |
| b. | The health plan shall not be financially liable for physical therapy (PT), occupational therapy (OT), or speech therapy (ST) included in an Individualized Family Service Plan (IFSP) developed under the First Steps Program or included in an Individual Education Plan (IEP) developed by the public school. First Steps is an early intervention program required by the Individuals with Disabilities Education Act (IDEA) — Part C (34 CFR 303 Early Intervention Program for Infants and Toddlers with Disabilities) which also defines the IFSP. IEP services are required by the IDEA Part B (34 CFR 300 and 301). IFSPs and IEPs will include therapies which are needed due to developmental and educational needs. The health plan shall be responsible for all other medically necessary therapy services that are not identified in an IEP or IFSP including maintenance and developmental therapy. The health plan shall be financially responsible for all other Medicaid reimbursable services identified in the IFSP or IEP and are medically necessary. The health plan shall be responsible for medically necessary equipment and supplies used in connection with PT, OT, and ST services for all members. Equipment and supplies are covered as a Durable Medical Equipment benefit. The health plan shall not delay the provision of therapies that are medically necessary pending completion of the IFSP or IEP. |
| 1) | The First Steps program serves children from birth to age three (3) who are developmentally delayed or have diagnosed conditions associated with developmental disabilities. Enrollment in the First Steps program is voluntary at the choice of the child’s parent or guardian. The intent of the program is, through early detection and intervention, to improve functioning or decrease deterioration in order to better prepare the child to participate in school. The Missouri Department of Elementary and Secondary Education (DESE) operates the First Steps program. Service Coordinators who contract with DESE are responsible for determining program eligibility. A multi-disciplinary team determines the child’s service needs including if medical treatment is needed. The team shall include the child’s physician. With the parent/guardian consent, the health plan shall refer children who are potentially eligible for First Steps services to the local First Steps office (System Point of Entry) or call the state-wide toll-free number, 866-583-2392, to make a referral. | ||
| 2) | The health plan shall have written policies and procedures for promptly transferring medical and developmental data and for coordinating ongoing care with special education services. |
| c. | Parents as Teachers (PAT) is a home-school-community partnership which supports parents in their role as their child’s first and most influential teachers. Every parent of a child age 5 or under is eligible for PAT, regardless of income. PAT services include personal visits from certified parent educators, group meetings, developmental screenings, and connections with other community resources from the time the child is born until he/she enters kindergarten. |
| 1) | PAT programs collaborate with other agencies and programs to meet families’ needs, including Head Start, First Steps, the Women Infants and Children Program (nutrition services), local health departments, the Family Support Division, etc. Independent evaluations of PAT show that children served by this program are significantly more advanced in language development, problem solving, and social development at age 3 than comparison children, 99.5% of participating families are free of abuse or neglect, and early gains are maintained in elementary school, based on standardized tests. | ||
| 2) | The PAT program is administered at the local level by each public school district in the state of Missouri. Families interested in PAT may contact their local district directly. PAT also accepts referrals from other sources including medical providers. Providers who have contact with families with children age 5 and under are encouraged to refer those families to PAT. Additional information about PAT is available at the Department of Elementary and Secondary Education’s website at www.dese.state.mo.us. (Look under programs, then Early Childhood Education, then Parents as Teachers.) |
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| 2.12.2 | Public Health Programs: Services offered by the Department of Health and Senior Services and local public health agencies and the method of reimbursement shall include: |
| a. | Environmental lead assessments for health plan children with elevated blood levels shall be reimbursed directly by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. | ||
| b. | State Public Health Laboratory Services to Members: In cases where the health plan is required by law to use the State Public Health Laboratories (e.g., metabolic testing for newborns) and in cases where the State Public Health Laboratory and Department of Health and Senior Services designated local public health agency laboratories perform tests, other than those services listed herein, on members for public health purposes, the laboratory shall be reimbursed directly by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program, and such costs shall not be included in the Medicaid State plan capitated rates. | ||
| c. | Newborn Screening Collection Kits: According to RSMo 191.331, health care providers must purchase pre-paid newborn screening collection kits from the Department of Health and Senior Services. The Department of Health and Senior Services sells the kit to providers. When the provider submits a specimen to the State Department of Health and Senior Services Laboratory, the laboratory shall process the test, determine if the member is MC+ eligible, and bill the state agency for the test. | ||
| d. | Special Supplemental Nutrition for Women, Infants and Children (WIC) Program - Sections 1902(a)(11)(C) and 1902(a)(53) of the Social Security Act and Title 42, CFR 431.635 require coordination between the state agency and the WIC program. While WIC services are not the responsibility of the health plan, the in-network provider shall document and refer eligible members for WIC services. As part of the initial assessment of members, and as a part of the initial evaluation of newly pregnant women, the in-network providers shall provide and document the referral of pregnant, breast-feeding, or postpartum women, or a parent/guardian of a child under the age of five, as indicated, to the WIC Program. Upon contract award and upon request, the Department of Health and Senior Services shall provide the health plan with WIC program eligibility and referral criteria. |
| 2.12.3 | Transplant Services: Solid organ and bone marrow/stem cell transplant services are not included in the comprehensive benefit package as covered benefits. These services will be delivered for all populations through separate arrangements. Transplant services are defined as the hospitalization from the date of transplant procedure until the date of discharge, including solid organ or bone marrow/stem cell procurement charges, and related physician services associated with both procurement and the transplant procedure. The health plan shall be responsible for any services before and after this admission, including the evaluation that may be related to the condition, even though these services may be delivered out-of-network. |
| a. | According to 42 CFR 431.51, Medicaid must insure freedom of choice of providers for services provided to Medicaid beneficiaries when those services are paid on a fee-for-service basis outside the health plan. When in-network providers identify a member as a potential transplant candidate, the member must be referred to a transplant facility of their choice without regard to health plan preference. |
| 2.12.4 | Comprehensive Substance Treatment Abuse and Rehabilitation (C-STAR) programs are carved out of the MC+ managed care program. Services provided by a C-STAR Medicaid provider shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. In order to ensure quality of care, the health plan and its mental health subcontractors shall maintain open and consistent dialogue with C-STAR providers. The health plan shall be responsible for care coordination of services included in the benefit package and C-STAR services in accordance with the MC+ managed care policy statement titled, Mental Health and Substance Abuse Fee-For-Service Coordination. |
| RFP B3Z06118 | Page 55 |
| 2.12.5 | Mental Health Services for Category Of Aid 4: For children covered under the health plan within the COA 4 group, the health plan shall not be financially responsible for the following medically necessary mental health and substance abuse services: |
| a. | Inpatient Mental Health and Substance Abuse Services shall be any psychiatric stay in an acute care hospital, or in a private or State psychiatric hospital. The health plan primary care provider and the child’s caseworker shall coordinate services. Admissions must be in accordance with established guidelines of the Department of Social Services in conjunction with the Department of Mental Health. The Department of Social Services in conjunction with the Department of Mental Health will determine the appropriateness of inpatient placement, appropriate facility, alternative placement, and psychiatric diversion. The state agency’s Medical Review Agency must certify medically necessary inpatient days for mental health and substance abuse services (billable on an inpatient hospital claim form) beyond the days deemed medically necessary for physical health. | ||
| b. | For inpatients with a dual diagnoses (physical and mental) identified at either admission or during the stay, the health plan shall be financially responsible for all inpatient hospital days if the primary, secondary, or tertiary diagnosis is a combination of physical and mental health. These admissions are subject to the health plan’s prior authorization and concurrent review process. | ||
| c. | Outpatient Mental Health and Substance Abuse Services are those services not provided in an inpatient setting. Examples of appropriate settings are outpatient facility, office, or clinic setting. These services must be provided by a licensed psychiatrist, licensed psychologist, licensed clinical social worker, provisional licensed clinical social worker, licensed counselor, provisional licensed professional counselor, licensed psychiatric advanced practice nurse, licensed home health psychiatric nurse, or state certified mental health or substance abuse program. The services will be provided subject to Medicaid program benefits and limitations. |
Paragraph 2.12.5 d. revised by Amendment #002
| d. | Comprehensive Community Support Services: Comprehensive Community Support Services are provided to children in the custody of the Children’s Division and are found to have behavioral conditions which require rehabilitative services at a residential treatment or specialized foster care level of care or who are being discharged from these two treatment levels, and who require comprehensive community support services in order to maintain the rehabilitation treatment outcome in a less restrictive environment. The Children’s Division identifies children in the custody of the Children’s Division qualifying for these services and authorizes provision of comprehensive community support. Comprehensive community support services include any medical or remedial service reasonable and necessary for maximum reduction of a behavioral disability and restoration of the child to his or her best possible functional level. Examples include, but are not limited to: Intake, Assessment, Evaluation and Treatment Planning; Community Support; Specialized Sexual Abuse Treatment: 24-hour Crisis Intervention and Stabilization; Intensive In-Home Services; Medication Management and Monitoring; Day Treatment/Psychosocial Rehabilitation; Therapeutic Counseling or Consultation Services not Covered Separately through the HCY or Physician’s Services Program, Supported Independent Living and Transitional Living Services; and School-Based Behavioral Support Services not included in the IEP. The services will be provided subject to Medicaid program benefits and limitations. The health plan is not financially liable for comprehensive community support services. |
| 2.12.6 | SAFE-CARE Exams: Sexual Assault Forensic Examination and Child Abuse Resource Education (SAFE-CARE) examinations and related diagnostic studies which ascertain the likelihood of sexual or physical abuse performed by SAFE-CARE trained providers shall continue to be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. The state agency shall define which services will continue to be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program when performed or requested by a SAFE-CARE trained provider. Other medically necessary services may be ordered by the SAFE-CARE provider by referring to an in-network provider when possible. The health plan shall be |
| RFP B3Z06118 | Page 56 |
| responsible for these services, regardless whether the SAFE-CARE provider is in or out of the health plan network. |
| 2.12.7 | Pharmacy Services: Pharmacy services not included in the health plan’s awarded proposal shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. | |
| 2.12.8 | Protease Inhibitors: Protease inhibitors shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. | |
| 2.12.9 | Abortion Services: Abortion services subject to Medicaid program benefits and limitations shall continue to be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. |
Paragraph 2.12.10. revised by Amendment #001
| 2.12.10 | Mentally Retarded and Developmental Disabilities (MRDD) Waiver: Home and community based waiver services for persons in the MRDD waiver are carved out of the MC+ managed care program. The health plan shall be responsible for MC+ managed care covered services for MRDD waiver clients enrolled in MC+ managed care, unless specifically excluded. The health plan shall be responsible for care coordination of services included in the benefit package and the Home and Community based waiver. The state agency shall identify the MRDD Waiver participants to the health plan. Information regarding MRDD Waiver Services may be found in Section 19 of the Missouri Medicaid MRDD Waiver Provider Manual and the Missouri Medicaid Provider Bulletins located on the internet at www.dss.mo.gov/dms/providers.htm. | |
| 2.12.11 | Home Birth Services: In accordance with the MC+ managed care home birth policy statement, if a member elects a home birth the member shall be disenrolled from MC+ managed care. The disenrolled member shall then receive services through the MC+ fee-for-service program for the home birth. | |
| 2.12.12 | Services for Children in the Custody of the Jackson County Office of the Missouri Children’s Division: Under court order (G.L. v. Stangler, also called the Consent Decree), children in the custody of the Jackson County office of the Missouri Children’s Division (CD) and residing in Cass, Clay, Henry, Jackson, Johnson, Lafayette, Platte, Ray, or St. Clair counties have additional medical care requirements. |
| a. | In addition to the services outlined herein, the health plan shall provide the following services following the effective date of enrollment with the health plan. If the child is already enrolled with the health plan and enters custody, the health plan shall provide the following services from the time the child enters CD custody. The time frames for these examinations begin with the time and date the child enters CD custody. |
| 1) | A physical examination within 36 hours. The 36 hour exam is due the next working day following entry into custody. (This shall be paid by Medicaid on a fee-for-service basis and arranged by CD if the child is not enrolled in a health plan at the time of entry into CD custody.) A complete physical examination may be replaced by partial physical examination if the CD caseworker and the provider agree that a complete physical examination is unnecessary, repetitive, or would cause undue stress for the child. If agreement is reached that a partial physical examination is adequate, the provider shall decide the scope of the partial physical examination. Agreement that a complete physical examination is not necessary shall be documented in the child’s medical record. In all cases, if a child is enrolled with the health plan prior to the 36-hour deadline, the health plan shall be responsible for providing the examination. If the health plan does not provide the examination, the health plan shall reimburse the provider that performs the examination in accordance with the current Medicaid fee schedule. CD, the Medical Case Management Agency, and the health plan shall work together to establish a notification process so that the health plan receives notification of the enrollment of a Consent Decree-covered child in a timely manner. |
| RFP B3Z06118 | Page 57 |
| 2) | Within 30 calendar days — Follow-up examinations recommended by the provider during the 36-hour examination; i.e.: hearing and eye exams, dental screens or a full HCY screen shall be done in accordance with the most recent periodicity schedule. A partial HCY screening may be administered if the child is current with his or her HCY screening schedule and the CD caseworker and provider agree that a full HCY screening is unnecessary, repetitive, or would cause undue stress for the child. If agreement is reached that a partial HCY screening is adequate, the provider shall decide the scope of the partial HCY screening. Agreement that a full HCY screening is not necessary shall be documented in the child’s medical record. |
| b. | Following the 30 calendar day screening requirements, the HCY schedule shall be followed for children up to five years of age with annual examinations after age five unless the child has physical health, mental health, or developmental health problems identified by the provider that require medically necessary treatment on a more frequent basis. |
| c. | The health plan shall be responsible for determinations regarding medically necessary treatments, medically necessary appointments, and medically necessary services. | ||
| d. | Consent Decree Medical Case Management: Children in the custody of the Jackson County office of the Missouri Children’s Division and residing in Jackson County also receive targeted medical case management services. Medical case management services are intended to facilitate access to medical services for the targeted children. Although this medical case management will be provided through a separate contract between the Department of Social Services and a Medical Case Management agency, the health plan shall provide the medical care required by the Consent Decree and all services specified herein for children in State custody. Per the Consent Decree, G.L. v. Stangler Amended Revised Operational Guide; March 14, 2002, and the contract with Medical Case Management agencies, children are followed at three different levels: Category 1, well children; Category 2, children with behavioral or mental health needs; and Category 3, children with medical needs. Children identified as Category 2 and Category 3 will remain in targeted medical case management during the entire time they are in custody. Category 1 children will be enrolled for targeted medical case management only during the first 30 calendar days of custody. The medical case management services provided by the Medical Case Management Agency include, but are not limited to: |
| 1) | Promoting the effective and efficient access to comprehensive medical services for the targeted children, | ||
| 2) | Facilitating the coordination of medical services, | ||
| 3) | Maintaining confidential centralized files for each child, | ||
| 4) | Assisting in the education of CD staff, caregivers, and health care providers regarding the child’s medical care, | ||
| 5) | Providing information regarding the need for specialized health services, | ||
| 6) | Coordinating and monitoring all primary and specialty care necessary for the child, and | ||
| 7) | Ensuring that essential medical care received by the child complies with the Consent Decree, Part III. |
| e. | The health plan and providers shall cooperate with the Medical Case Management Agency in securing medical histories and providing medical records as required by the Consent Decree. The health plan shall allow case managers to file an appeal immediately (or within 12 hours if a concern arises after regular business hours) to the health plan’s MC+ Medical Director if a Consent Decree case managed child is denied services or has difficulty accessing services covered in the contract. | ||
| f. | The health plan shall designate a person within the health plan as a primary contact for CD staff, caregivers, and health care providers for issues involving these targeted children. The health plan shall also participate and attend medical oversight meetings. |
| RFP B3Z06118 | Page 58 |
| 2.13 | Second Opinion: Members have a right to second opinions from qualified health care professionals, and the health plan shall have policies and procedures for rendering second opinions both in-network and out-of-network when requested by a member. The health plan’s policies and procedures shall address whether there is a need for referral by the primary care provider or self-referral. The adequacy of these policies and procedures shall be examined during quality assessment reviews. Missouri Revised Statutes Section 208.152 states that certain elective surgical procedures require a second medical opinion be provided prior to the surgery. A third surgical opinion, provided by a third provider, shall be allowed if the second opinion fails to confirm the primary recommendation that there is a medical need for the specific surgical operation, and if the member desires the third opinion. | |
| 2.14 | Service Accessibility Standards: | |
| 2.14.1 | Twenty-Four Hour Coverage: The health plan shall provide coverage to members on a twenty-four (24) hour per day, seven (7) day per week basis. The health plan shall have written policies and procedures describing how members and providers can contact the health plan to receive individual instruction or authorization for treatment of an emergent or urgent medical, mental health, or substance abuse problem and instruction regarding receiving care when the member is out of the health plan’s geographic area. The health plan must make the policies and procedures available in an accessible format upon request. The health plan must provide for direct contact with qualified clinical staff through a toll-free member or provider services telephone number and a telecommunication device for the deaf telephone number. Recorded messages are not acceptable. The health plan shall provide an accommodation, if needed, to ensure all members equal access to twenty-four hour per day health care coverage. | |
| 2.14.2 | Prior Authorization: |
| a. | The health plan shall ensure that prior authorization requirements are not applied to emergency medical/mental health services as defined herein. | ||
| b. | The health plan shall specify, in writing, the procedures for prior authorization of non-emergency services and the time frames in which authorizations will be processed (approved or denied) and providers and members are notified. | ||
| c. | If the health plan requires a referral, assessment, or other requirement prior to the member accessing requested medical or mental health services, such requirements shall not be an impediment to the timely delivery of the medically necessary service. The health plan shall assist the member to make any necessary arrangements to fulfill such requirements (i.e., scheduling appointments, providing comprehensive lists of available providers, etc.). If such arrangements cannot be made timely, the requested services shall be approved. | ||
| d. | The health plan shall ensure that its prior authorization procedures meet the following minimum requirements: |
| 1) | All appeals and denials must be reviewed by a professional with experience or expertise comparable to the provider requesting the authorization. | ||
| 2) | There is a set of written criteria for review based on sound medical evidence that is updated regularly and consistently applied and for consultations with the requesting provider when appropriate. | ||
| 3) | Reasons for decisions are clearly documented and assigned a prior authorization number which refers to and documents approvals and denials. | ||
| 4) | Documentation shall be maintained on any alternative service(s) approved in lieu of the original request. |
| RFP B3Z06118 | Page 59 |
| 5) | There is a well-publicized review process for both providers and members. | ||
| 6) | The review process is completed and communicated to the provider in a timely manner, as indicated below, or the denials shall be deemed approved. For the purpose of this section, “necessary information” includes the results of any face-to-face clinical evaluation or second opinion that may be required. |
| • | Approval or denial of non-emergency services when determined as such by emergency room staff shall be provided by the health plan within thirty (30) minutes of request. | ||
| • | Approval or denial shall be provided within twenty-four (24) hours of request for services determined to be urgent by the treating provider. | ||
| • | Approval or denial shall be provided within two (2) business days of obtaining all necessary information for routine services. The health plan shall notify the requesting provider within two business days following the receipt of the request of service regarding any additional information necessary to make a determination. In no case shall a health plan exceed fourteen (14) calendar days following the receipt of the request of service to provide approval or denial. | ||
| • | Involuntary detentions (96 hour detentions or court ordered detentions) or commitments shall not be prior authorized. |
| e. | The health plan shall ensure that members are not without necessary medical supplies, oxygen, nutrition, pharmaceutical products, etc., and must have written procedures for making an interim supply of an item available. | ||
| f. | The health plan shall ensure that the member’s treatment regimens are not interrupted or delayed (i.e. physical, occupational, and speech therapy; psychological counseling; home health services; personal care, etc.) by the prior authorization process. | ||
| g. | If the health plan approves purchase of a custom or power wheelchair, eyeglasses, hearing aids, dentures (excluding orthodontic services), custom HCY/EPSDT equipment, augmentative communication devices placed within six months of approval, etc. which is delivered or placed after enrollment in the health plan ends, the health plan shall be responsible for payment. | ||
| h. | If the health plan requires prior authorization for pharmacy products, the health plan shall provide a response by telephone or other telecommunication device within 24 hours of a request for prior authorization. Approvals must be granted for claims meeting established criteria approved by the state. The state will approve criteria that follows accepted national guidelines for appropriate product use. The criteria shall be based on medical and clinical information and Missouri-specific data, consistent with the predetermined standards set by one or more of the following: |
| • | The American Hospital Formulary Service — Drug Information | ||
| • | The United States Pharmacopoeia Drug Information | ||
| • | Peer-reviewed medical literature. |
| Specific details describing pharmacy prior authorization and step therapy criteria shall be made available to prescribers upon request. Prescribers shall be informed of the availability of the criteria when a prescription is denied. The health plan shall provide for the dispensing of at least a 72-hour supply or a sufficient supply to the next business day of a drug product that requires prior authorization in an emergency situation. |
| RFP B3Z06118 | Page 60 |
| i. | If the health plan prior authorizes health care services, the health plan shall not subsequently retract its authorization after the services have been provided, or reduce payment for an item or service unless: |
| • | The authorization is based on material misrepresentation or omission about the treated person’s health condition or the cause of the health condition; or | ||
| • | The health plan terminates before the health care services are provided; or | ||
| • | The covered person’s coverage under the health plan terminates before the health care services are provided. |
| 2.14.3 | Travel Distance: The health plan shall comply with travel distance standards as set forth by the Department of Insurance in 20 CSR 400-7.095 regarding Provider Network Adequacy Standards. For those providers not addressed under 20 CSR 400-7.095, the health plan shall ensure members have access to those providers within a reasonable travel distance. For those providers addressed under 20 CSR 400-7.095 but not applicable to the MC+ Managed Care Program (e.g. chiropractors), the health plan shall not be held accountable for the distance standards for those providers. |
Paragraph 2.14.4 revised by Amendment #002 and BAFO #001
| 2.14.4 | Appointment Standards: |
| a. | The average waiting times for primary care appointments shall not exceed one hour from scheduled appointment time. This includes time spent both in the lobby and in the examination room prior to being seen by a provider. Providers can be delayed when they “work in” urgent cases, when a serious problem is found, or when the member had an unknown need that requires more services or education than was described at the time the appointment was made. | ||
| b. | The health plan shall have procedures in place that ensure: |
| 1) | Urgent care appointments for illness injuries which require care immediately but do not constitute emergencies, within 24 hours (e.g. high temperature, persistent vomiting or diarrhea, symptoms which are of sudden or severe onset but which do not require emergency room services). | ||
| 2) | Routine care, with symptoms, appointments must be available within one (1) week or five (5) business days whichever is earlier (e.g. persistent rash, recurring high grade temperature, nonspecific pain, fever). | ||
| 3) | Routine care, without symptoms, appointments must be available within thirty (30) calendar days (e.g. well child exams, routine physical exams). |
Paragraph 2.14.4 b. 4) revised by BAFO #001
| 4) | For mental health and substance abuse services, aftercare appointments shall occur within seven (7) calendar days after hospital discharge. |
| c. | For maternity care, the health plan shall be able to provide initial prenatal care appointments for enrolled pregnant members as follows: |
| 1) | First trimester, must be available within seven (7) calendar days of first request. | ||
| 2) | Second trimester, must be available within seven (7) calendar days of first request. | ||
| 3) | Third trimester, must be available within three (3) calendar days of first request. | ||
| 4) | High risk pregnancies, must be available within three (3) calendar days of identification of high risk to the health plan or maternity care provider, or immediately if an emergency exists. |
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| d. | Policies and Procedures: The health plan shall disseminate its appointment standards to the network. The health plan shall monitor the adequacy of its appointment standards to ensure the reduction of unnecessary use of emergency room visits. |
| 1) | The health plan shall have written policies and procedures concerning educating the provider network about appointment standards. The health plan shall monitor compliance with appointment standards and shall have a corrective action plan when appointment standards are not met. |
| 2.14.5 | The health plan shall have established written policies and procedures concerning how a member may obtain a referral to an out-of-network provider when the health plan does not have a health care provider with appropriate training or experience in the network to meet the particular health care needs of the member. | |
| 2.14.6 | The health plan shall have established written policies and procedures concerning how a member, with a condition which requires on-going care from a specialist, may request a standing referral to such a specialist. | |
| 2.14.7 | The health plan shall have established written policies and procedures concerning how a member, with a life-threatening condition or disease either of which requires a specialized medical care over a prolonged period of time, may request and obtain access to a specialty care center. | |
| 2.14.8 | In accordance with State law, the health plan must allow members direct access to the services of the in-network OB/GYN of their choice for the provision of covered services. | |
| 2.14.9 | In accordance with State law, the health plan must notify the member on an annual basis, in writing, of cancer screenings covered by the health plan and provide the current American Cancer Society guidelines for all cancer screenings. | |
| 2.14.10 | The health plan shall have policies and procedures concerning how it will appropriately work with an out-of-network provider and/or the previous health plan to effect a transfer of care to appropriate in-network providers when a newly enrolled member has an existing relationship with a provider that is not in the health plan’s network. For continuity of care, there are instances in which care shall continue with the out-of-network provider (e.g. third trimester pregnancy, in the middle of a course of treatment for cancer, etc.) | |
| 2.14.11 | Care Management: The health plan shall provide care management to members. Care management is coordination of care provided to members. |
| a. | The health plan shall coordinate and deliver services designed to achieve the following outcomes: |
| 1) | Improved patient care; | ||
| 2) | Improved health outcomes; | ||
| 3) | Reduction of inappropriate inpatient hospitalization; | ||
| 4) | Reduction of inappropriate utilization of emergent services; | ||
| 5) | Lower total costs; and | ||
| 6) | Better educated providers and patients. |
| b. | The health plan should have the following components in the care management program: |
| 1) | Use of clinical practice guidelines; 2) Provider and patient profiling; | ||
| 3) | Specialized physician and other practitioner care targeted to meet members special needs; | ||
| 4) | Provider education; | ||
| 5) | Patient education; |
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| 6) | Claims analyses; and | ||
| 7) | Quarterly and yearly outcome measurement and reporting. The reporting requirements specified in Attachment 6 will satisfy this component. (Definition used with permission of The Center for Case Management, 6 Pleasant Street, South Natick, MA 01760.) |
| c. | The health plan must have implemented and effective policies and procedures for case management, care coordination, and disease management: |
| 1) | Case management is a clinical system that focuses on the accountability of an identified individual or group for coordinating a patient’s care (or group of patients) across an episode or continuum of care; negotiating, procuring, and coordinating services and resources needed by patients/families with complex issues; insuring and facilitating the achievement of quality, clinical, and cost outcomes; intervening at key points for individual patients; addressing and resolving patterns of issues that have a negative quality cost impact; and creating opportunities and systems to enhance outcomes. (Definition used with permission of The Center for Case Management, 6 Pleasant Street, South Natick, MA 01760.) Case management is understood as including, but not limited to the development of individualized treatment plans and ongoing communication and coordination with other systems of care. The treatment plans must be: |
| • | Developed by the member’s primary care provider with member participation, and in consultation with any specialists caring for the member; | ||
| • | Approved by the entity in a timely manner, if this approval is required; and | ||
| • | In accord with any applicable State quality assurance and utilization review standards. |
| 2) | Care Coordination is a method of coordinating the provision of health care so as to improve its continuity and quality. (Definition used with permission of the Center for Health Care Strategies, Inc., Princeton, New Jersey. “Case Management in Managed Care For People With Developmental Disabilities: Models, Cost and Outcomes. January, 1999”.) | ||
| 3) | Disease Management is the process of intensively managing a particular disease or syndrome. Disease management encompasses all settings of care and places a heavy emphasis on prevention and maintenance. It is similar to case management, but more focused on a defined set of problems relative to an illness or syndrome. (Definition used with permission of Center for Health Care Strategies, Inc., Princeton, New Jersey, “Case Management in Managed Care For People With Developmental Disabilities: Models, Costs and Outcomes, January, 1999”.) |
| 2.14.12 | Certification Review: |
| a. | The health plan shall specify, in writing, the procedures for obtaining initial, concurrent, and retrospective reviews for inpatient admissions and the time frames in which authorizations will be processed (approved or denied) and providers and members are notified. The health plan shall ensure that the procedures meet the following minimum requirements: |
| • | A professional with experience or expertise comparable to the provider requesting the authorization must review all appeals and denials. | ||
| • | There are standard policies and procedures for inpatient hospital admissions, continued stay reviews, and retrospective reviews and for making determinations on certifications or extensions of stays based on sound medical evidence that is updated regularly and consistently applied and for consultations with the requesting provider when appropriate. |
| Ø | For inpatient hospital admissions, continued stay reviews, and retrospective reviews to specialty pediatric hospitals, the health plan must use the same criteria as Medicaid fee-for-service. | ||
| Ø | For psychiatric inpatient hospital admissions, continued stay reviews, and retrospective reviews, the health plan must use the same criteria as Medicaid fee-for-service (LOCUS/CALOCUS). |
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| • | Reasons for decisions are clearly documented and assigned a certification number, which refers to and documents approvals and denials. | ||
| • | Documentation shall be maintained on any alternative service approved in lieu of the original request. | ||
| • | There are fair and unbiased policies and procedures for reconsideration requests when the attending physician, the hospital, or the member disagrees with the health plan’s determination regarding inpatient hospital admission or continued stays. | ||
| • | There are written policies and procedures followed to address the failure or inability of a provider or a member to provide all necessary information for review. In cases where the provider or a member will not release necessary information, the health plan may deny certification of an admission. | ||
| • | There is a well-publicized review process for both provider and members. | ||
| • | To the extent known, inform inpatient providers of the enrollees recent health care service history at the time of authorization of a psychiatric inpatient admission. Such information shall include psychiatric inpatient admissions and emergency room visits for the prior year, psychiatric outpatient services for the prior six months, and medications for the prior 90 calendar days. Information about specific episodes of care shall include date, diagnosis, provider, and procedure. Services related to substance abuse or HIV disorders are exempt from this requirement. |
| b. | The review process shall be completed and communicated to the provider and member in a timely manner, as indicated below, or the denials shall be deemed approved. For the purpose of this section, “necessary information” includes the results of any face-to-face clinical evaluation or second opinion that may be required. |
| • | Approval or denial for initial determinations shall be provided by the health plan within two (2) working days of obtaining all necessary information. | ||
| • | Approval or denial for concurrent review determinations shall be provided by the health plan within one (1) working day of obtaining all necessary information. | ||
| • | Approval or denial for retrospective review determinations shall be provided by the health plan within thirty (30) working days of receiving all necessary information. | ||
| • | The health plan shall notify the requesting provider within two (2) working days following the receipt of the request of service regarding any additional information necessary to make a determination. | ||
| • | In no case shall a health plan exceed fourteen (14) calendar days following the receipt of the request of service to provide approval or denial for an initial or concurrent review. |
| 2.15 | Member Grievance System: The health plan shall have a system in place for members which includes a grievance process, an appeal process, and access to the state agency’s fair hearing system. | |
| 2.15.1 | For purposes of the health plan’s grievance system, the following definitions shall apply: | |
| Action — The denial or limited authorization of a requested service, including the type or level of service; the reduction, suspension, or termination of a previously authorized service; the denial, in whole or in part, of payment for a service; the failure of the health plan to provide services in a timely manner as defined in the appointment standards described herein; or the failure of the health plan to act within timeframes for the health plan’s Prior Authorization review process specified herein. | ||
| Appeal — A request for review of an action, as action is defined in this section. | ||
| Appeal Process — The health plan’s process for handling of appeals that complies with the requirements specified herein, including, but not limited to, the procedural steps for a member to file an appeal, the process for resolution of an appeal, the right to access the State fair hearing system, and the timing and manner of required notifications. |
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| Grievance — An expression of dissatisfaction about any matter other than an action, as action is defined in this section. Possible subjects for grievances include, but are not limited to, the quality of care or services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the member’s rights. | ||
| Grievance Process — The health plan process for handling of grievances that complies with the requirements specified herein, including, but not limited to, the procedural steps for a member to file a grievance, the process for disposition of a grievance, and the timing and manner of required notifications. | ||
| Grievance System — The overall system in place for members that includes a grievance process, an appeal process, and access to the State fair hearing system. | ||
| Inquiry - A request from a member for information that would clarify health plan policy, benefits, procedures, or any aspect of health plan function but does not express dissatisfaction. | ||
| 2.15.2 | General Requirements: The health plan shall develop and implement written policies and procedures that detail the operation of the grievance system and provides simplified instructions on how to file a grievance or appeal and how to request a state fair hearing. |
| a. | The policies and procedures must be approved by the state agency prior to implementation. | ||
| b. | The policies and procedures shall be approved by the health plan’s governing body and be the direct responsibility of the governing body. | ||
| c. | The health plan shall distribute an information packet to members upon enrollment which contains the grievance system policies and procedures, specific instructions regarding how to contact the health plan’s member services, and identifies the person from the health plan who receives and processes grievances and appeals. The health plan shall also distribute the information packet to all in-network providers at the time they enter into a contract and to out-of-network providers within ten (10) calendar days of prior approval of a service or the date of receipt of a claim whichever is earlier. | ||
| d. | The policies and procedures shall identify specific individuals who have authority to administer the grievance system policies. | ||
| e. | The grievance system policies and procedures shall be readily available verbally and in the member’s primary language. In addition, the health plan shall demonstrate that they have procedures in place to notify all members in their primary language of grievance dispositions and appeal resolutions. | ||
| f. | As part of the grievance system, the health plan shall ensure that health plan executives with the authority to require corrective action are involved in the grievance and appeal processes. | ||
| g. | The health plan shall thoroughly investigate each grievance and appeal using applicable statutory, regulatory, contractual provisions, and the health plan’s written policies and procedures. Pertinent facts from all parties must be collected during the investigation. | ||
| h. | The health plan shall probe inquiries so as to validate the possibility of any inquiry actually being a grievance or appeal. The health plan shall identify any inquiry pattern. | ||
| i. | The health plan’s grievance system shall not be a substitute for the State fair hearing process. The state agency shall maintain an independent State fair hearing process as required by federal law and regulation, as amended. The State fair hearing process shall provide members an opportunity for a State fair hearing before an impartial hearing officer. The parties to the State fair hearing include the health plan as well as the member and his or her representative or the representative of a deceased member’s estate. The health plan shall comply with decisions reached as a result of the State fair hearing process. Health plan members shall have the right to request information regarding: |
| RFP B3Z06118 | Page 65 |
| • | The right to request a State fair hearing. | ||
| • | The procedures for exercising the rights to appeal or request a State fair hearing. | ||
| • | Representing themselves or use legal counsel, a relative, a friend, or other spokesperson. | ||
| • | The specific regulations that support or the change in Federal or State law that requires the action. | ||
| • | The individual’s right to request a state fair hearing, or in cases of an action based on change in law, the circumstances under which a hearing will be granted. | ||
| • | A State fair hearing within 90 calendar days from the health plan’s notice of action. |
| j. | The State must reach its decisions within the specified timeframes: |
| 1) | Standard resolution: within 90 calendar days of the date the member filed the appeal with the health plan if the member filed initially with the health plan (excluding the days the enrollee took to subsequently file for a State fair hearing) or the date the member filed for direct access to a State fair hearing. | ||
| 2) | Expedited resolution (if the appeal was heard first through the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that: |
| • | Meets the criteria for an expedited appeal process but was not resolved using the health plan’s expedited appeal timeframes, or | ||
| • | Was resolved wholly or partially adversely to the member using the health plan’s expedited appeal timeframes. |
| 3) | Expedited resolution (if the appeal was made directly to the State Fair Hearing process without accessing the health plan appeal process): within 3 working days from the state agency’s receipt of a hearing request for a denial of a service that meets the criteria for an expedited appeal process. |
| 2.15.3 | Record Keeping and Reporting Requirements: |
| a. | The health plan shall log and track all inquiries, grievances, and appeals. | ||
| b. | The health plan shall maintain records of grievances, whether received verbally or in writing, that include a short, dated summary of the problems, name of the grievant, date of grievance, date of decision, and the disposition. If the health plan does not have a separate log for MC+ managed care members, the log shall distinguish MC+ managed care members from other health plan members. | ||
| c. | The health plan shall maintain records of appeals, whether received verbally or in writing, that include a short, dated summary of the issues, name of the appellant, date of appeal, date of decision, and the resolution. If the health plan does not have a separate log for MC+ managed care members, the log shall distinguish MC+ managed care members from other health plan members. | ||
| d. | The health plan must report grievances and appeals to the state agency in the format and frequency specified by the state agency. The state agency shall provide the health plan with no less than ninety (90) days notice of any change in the format or frequency requested. | ||
| e. | The state agency may publicly disclose summary information regarding the nature of grievances and appeals and related dispositions or resolutions in consumer information materials. |
| 2.15.4 | Notice of Action Requirements: |
| RFP B3Z06118 | Page 66 |
| a. | The health plan’s notice must be in writing and must meet the language and content requirements specified herein to ensure ease of understanding. | ||
| b. | The health plan’s notice must explain the following: |
| 1) | The action the health plan has taken or intends to take. | ||
| 2) | The reasons for the action. | ||
| 3) | The member’s or the provider’s right to file an appeal. | ||
| 4) | The member’s right to request a State fair hearing. | ||
| 5) | The procedures for exercising the rights to appeal or request a State fair hearing. | ||
| 6) | That the member may represent himself or use legal counsel, a relative, a friend, or other spokesperson. | ||
| 7) | Must explain the specific regulations that support, or the change in Federal or State law that requires the action. | ||
| 8) | The member’s right to request a state agency hearing, or in cases of an action based on change in law, the circumstances under which a hearing will be granted. | ||
| 9) | The circumstances under which expedited resolution is available and how to request it. | ||
| 10) | The member’s right to have benefits continue pending resolution of the appeal, how to request that benefits be continued, and the circumstances under which the member may be required to pay the costs of these services. |
| c. | The health plan must mail the notice to the member within the following timeframes: |
| 1) | For termination, suspension, or reduction of previously authorized covered services, at least ten (10) calendar days before the date of action. The health plan may mail a notice not later than the date of action under the following circumstances: |
| • | The health plan has factual information confirming the death of a member. | ||
| • | The health plan receives a clear written statement signed by the member that he or she no longer wishes services or gives information that requires termination or reduction of services and indicates that he or she understands that this must be the result of supplying that information. | ||
| • | The member’s whereabouts are unknown and the post office returns health plan mail directed to the member indicating no forwarding address (refer to 42 CFR 431.231 (d) for procedures if the member’s whereabouts become known). | ||
| • | The member’s physician prescribes a change in the level of medical care. | ||
| • | The health plan may shorten the period of advance notice to 5 calendar days before date of action if the health plan has facts indicating that action should be taken because of probable fraud by the member and the facts have been verified, if possible, through secondary sources. | ||
| • | The member’s admission to an institution where he is ineligible for further services. | ||
| • | The member has been accepted for Medicaid services by another local jurisdiction. |
| 2) | For denial of payment decisions that result in member liability, at the time of any action affecting the claim. | ||
| 3) | For service authorization decisions that deny or limit services, within the timeframes required by the service accessibility standards for prior authorization specified herein. |
| 2.15.5 | Grievance Process: |
| a. | A member may file a grievance either orally or in writing. A member’s authorized representative including the member’s provider may file a grievance on behalf of the member. |
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| b. | The health plan shall give members any reasonable assistance in completing forms and taking other procedural steps. This includes, but is not limited to, providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capability. | ||
| c. | The health plan shall acknowledge receipt of each grievance in writing within ten (10) business days after receiving a grievance. | ||
| d. | The health plan shall ensure that the individuals who make decisions on grievances are individuals who were not involved in any previous level of review or decision-making; and who, if deciding any of the following, are health care professionals who have the appropriate clinical expertise, as determined by the state agency, in treating the member’s condition or disease: |
| 1) | A grievance regarding denial of expedited resolution of an appeal. | ||
| 2) | A grievance that involves clinical issues. |
| e. | The health plan shall dispose of each grievance and provide written notice of the disposition of the grievance, as expeditiously as the member’s health condition requires but shall not exceed thirty (30) calendar days of the filing date. | ||
| f. | The health plan may extend the timeframe for disposition of a grievance for up to fourteen (14) calendar days if the member requests the extension or the health plan demonstrates (to the satisfaction of the state agency, upon its request) that there is need for additional information and how the delay is in the member’s interest. If the health plan extends the timeframe, it must, for any extension not requested by the member, give the member written notice of the reason for the delay. |
| 2.15.6 | Appeal Process: |
| a. | A member may file an appeal and may request a State fair hearing within 90 calendar days from the date on the health plan’s notice of action. A provider, acting on behalf of the member and with the member’s written consent, may file an appeal. | ||
| b. | The member or provider may file an appeal either orally or in writing. Unless he or she requests expedited resolution, must follow an oral filing with a written, signed appeal. | ||
| c. | The health plan shall give members any reasonable assistance in completing forms and taking other procedural steps. This includes, but is not limited to, providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capability. | ||
| d. | Appeals shall be filed directly with the health plan’s governing body, or its delegated representatives. The governing body may delegate this authority to an appeal committee, but the delegation must be in writing. | ||
| e. | The health plan shall acknowledge receipt of each appeal in writing within ten (10) business days after receiving an appeal. | ||
| f. | The health plan shall ensure that the individuals who make decisions on appeals are individuals who were not involved in any previous level of review or decision-making; and who, if deciding any of the following, are health care professionals who have the appropriate clinical expertise, as determined by the state agency, in treating the member’s condition or disease: |
| 1) | An appeal of a denial that is based on lack of medical necessity. | ||
| 2) | An appeal that involves clinical issues. |
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| g. | The appeals process must provide that oral inquiries seeking to appeal are treated as appeals (to establish the earliest possible filing date for the appeal) and must be confirmed in writing, unless the member or the provider requests expedited resolution. | ||
| h. | The appeals process must provide the member a reasonable opportunity to present evidence, and allegations of fact or law, in person as well as in writing. The health plan must inform the member of the limited time available for this in the case of expedited resolution. | ||
| i. | The appeals process must provide the member and his or her representative opportunity, before and during the appeals process, to examine the member’s case file, including medical records, and any other documents and records considered during the appeals process. | ||
| j. | The appeals process must include as parties to the appeal the member and his or her representative or the legal representative of a deceased member’s estate. | ||
| k. | The health plan shall resolve each appeal and provide written notice of the appeal resolution, as expeditiously as the member’s health condition requires but shall not exceed forty-five (45) calendar days from date the health plan receives the appeal. For expedited resolution of an appeal and notice to affected parties, the health plan has no longer than three (3) working days after the health plan receives the appeal. For notice of an expedited resolution, the health plan must also make reasonable efforts to provide oral notice. | ||
| l. | The health plan may extend the timeframe for standard or expedited resolution of the appeal by up to fourteen (14) calendar days if the member requests the extension or the health plan demonstrates (to the satisfaction of the state agency, upon its request) that there is need for additional information and how the delay is in the member’s interest. If the health plan extends the timeframe, it must, for any extension not requested by the member, give the member written notice of the reason for the delay. | ||
| m. | The written notice of the appeal resolution must include the following: |
| 1) | The results of the resolution process and the date it was completed. | ||
| 2) | For appeals not resolved wholly in the favor of the members the right to request a State fair hearing, and how to do so; the right to request to receive benefits while the hearing is pending, and how to make the request; and that the member may be held liable for the cost of those benefits if the hearing decision upholds the health plan’s action. |
| n. | The health plan must establish and maintain an expedited review process for appeals when the health plan determines (for a request from the member) or the provider indicates (in making the request on the member’s behalf) that taking the time for a standard resolution could seriously jeopardize the member’s life or health or ability to attain, maintain, or regain maximum function. The health plan must ensure that punitive action is neither taken against a provider who requests an expedited resolution or supports a member’s appeal. | ||
| o. | If the health plan denies a member’s request for expedited resolution, it must transfer the appeal to the timeframe for standard resolution specified herein and must make reasonable efforts to give the member prompt oral notice of the denial, and follow up within two (2) calendar days with a written notice. | ||
| p. | Continuation of benefits while the health plan appeal and State fair hearing are pending. |
| 1) | As used in this section, “timely” filing means filing on or before the later of the following: |
| • | Within ten (10) calendar days of the health plan mailing the notice of action. | ||
| • | The intended effective date of the health plan’s proposed action. |
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| 2) | The health plan must continue the member’s benefits if the member or the provider files the appeal timely; the appeal involves the termination, suspension, or reduction of a previously authorized course of treatment; the services were ordered by an authorized provider; the original period covered by the original authorization has not expired; and the member requests extension of the benefits. | ||
| 3) | If, at the member’s request, the health plan continues or reinstates the member’s benefits while the appeal is pending, the benefits must be continued until one of the following occurs: |
| • | The member withdraws the appeal. | ||
| • | Ten (10) calendar days pass after the health plan mails the notice, providing the resolution of the appeal against the member, unless the member, within the ten (10) calendar day timeframe, has requested a State fair hearing with continuation of benefits until a State fair hearing decision is reached. | ||
| • | A State fair hearing officer issues a hearing decision adverse to the member. | ||
| • | The time period or service limits of a previously authorized service has been met. |
| 4) | If the final resolution of the appeal is adverse to the member, that is, upholds the health plans action, the health plan may recover the cost of the services furnished to the member while the appeal is pending, to the extent that they were furnished solely because of the requirements of this section. |
| q. | If the health plan or the State fair hearing officer reverses a decision to deny, limit, or delay services that were not furnished while the appeal was pending, the health plan must authorize or provide this disputed services promptly, and as expeditiously as the member’s health condition requires. | ||
| r. | If the health plan or the State fair hearing officer reverses a decision to deny authorization of services, and the member received the disputed services while the appeal was pending, the health plan must pay for those services. |
| 2.16 | Provider Inquiries, Complaints, Grievances, and Appeals: | |
| The health plan shall establish a complaint, grievance, and appeal process that guarantees the right for a review to any provider of medical services for a member of the health plan. | ||
| 2.16.1 | For purposes of this document, the following definitions shall apply: | |
| Inquiry - A request from a provider regarding information that would clarify health plan policy benefits, procedures, or any aspect of health plan function that may be in question. | ||
| Complaint - A verbal or written expression by a provider which indicates dissatisfaction or dispute with health plan policy, procedure, claims, or any aspect of health plan functions. All complaints must be logged and tracked whether received by telephone, in person or in writing. | ||
| Grievance - A written request for further review of a provider’s complaint that remains unresolved after completion of the complaint process. | ||
| Appeal - The formal mechanism which allows a provider the right to appeal a grievance decision. | ||
| 2.16.2 | The health plan shall develop written policies and procedures which detail the operation of the provider inquiry, complaint, grievance, and appeal process and provides instructions on how to file a complaint, grievance, or appeal. |
| a. | The policies and procedures must be approved by the state agency prior to implementation. |
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| b. | The policies and procedures shall be approved by the health plan governing body and be the direct responsibility of the governing body. | ||
| c. | The health plan shall distribute an information packet to providers containing the complaint, grievance, and appeal policies and procedures, specific instructions regarding how to contact the health plan’s provider services, and identifies the person from the health plan who receives and processes complaints, grievances, and appeals. The health plan shall distribute the policies and procedures to in-network providers at time of subcontract and to out-of-network providers with the remittance advice of the processed claim. | ||
| d. | The process must be addressed in the provider manual. | ||
| e. | The policies and procedures shall identify specific individuals who have authority to administer the inquiry, complaint, grievance, and appeal process. |
| 2.16.3 | Provider Inquiry, Complaint, Grievance, and Appeal Process: |
| a. | Inquiry: The health plan shall operate a provider services function, which providers can use to ask questions, file inquiries and complaints, and get problems resolved. The health plan’s provider services function shall be adequately staffed to receive telephone calls and meet personally with providers. The health plan shall identify a person from the health plan specifically designated to receive and process complaints, grievances, and appeals. The health plan shall probe the inquiries so as to validate the possibility of any inquiry actually being a complaint. The health plan shall identify any inquiry patterns. | ||
| b. | Complaint: A complaint can be filed verbally or in writing within one year of the incident that resulted in a complaint. Complaints shall be resolved within ten (10) calendar days of their filing. The provider(s) and health plan should attempt to resolve complaints before proceeding to a grievance. |
| 1) | At the time of the health plan’s decision regarding a complaint, the health plan shall notify providers in writing of their right to file a grievance with the health plan. This notification must be prior approved by the state agency. |
| c. | Grievance: The health plan shall provide a grievance process which providers can use to file their dissatisfaction with the complaint resolution. If a provider is dissatisfied with the complaint resolution, the provider may file a grievance in writing with the health plan within ninety (90) calendar days of the complaint resolution. The provider must deliver a written, substantiated disagreement with the complaint resolution to the health plan. The health plan must acknowledge the receipt of grievances in writing within ten (10) business days after receiving a grievance. Grievances shall be investigated by the health plan and reviewed by a designated authority within the health plan. The health plan shall reach decisions on grievances within thirty (30) calendar days of their filing date. |
| 1) | At the time of the health plan’s decision regarding a grievance, the health plan shall notify the provider in writing of their right to file an appeal with the health plan. This notification must be prior approved by the state agency. |
| d. | Appeal: The health plan shall operate an appeals process through which providers can challenge a negative decision to their grievances. Providers shall have ninety (90) calendar days following written notification of a grievance decision to appeal. The appeal must be filed in writing either by the provider or the provider’s representative, or through the provider’s instruction to the health plan’s representative that the provider wishes to appeal. The health plan shall acknowledge receipt of each appeal in writing within ten (10) business days after receiving an appeal. Appeals shall be filed directly to the health plan’s governing body, or its delegated representatives (The governing body |
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| may delegate this authority to an appeal committee, but the delegation must be in writing.). The appeal process shall include an opportunity for providers or their representatives to present their cases in person to the appellate body. The health plan shall reach a final decision on an appeal and provide written notice of the appeal resolution within sixty (60) calendar days of receipt of the appeal, with extensions possible if approved by the state agency. | |||
| e. | Expedited Review: The health plan shall have a procedure for expedited review of the complaint or grievance if the standard time frame could seriously jeopardize the member’s life, physical or mental health, or the member’s ability to regain maximum function. The expedited review shall be resolved no later than 72 hours or as expeditiously as the member’s physical or mental health requires. |
| 2.16.4 | As a part of the provider complaint, grievance, and appeal process, the health plan shall: |
| a. | Ensure that health plan executives with the authority to require corrective action are involved in the complaint, grievance, and appeal process. | ||
| b. | Thoroughly investigate each complaint, grievance, and appeal using applicable statutory, regulatory, contractual provisions, and the health plan’s written policies and procedures. Pertinent facts from all parties must be collected during the investigation. |
| 2.16.5 | Records/Reporting: |
| a. | The health plan shall log and track all inquiries. | ||
| b. | The health plan shall maintain records of complaints that include a short, dated summary of each of the questions or problems, name of the complainant, date of complaint, the response, and the resolution. If the health plan does not have a separate log for in-network providers, the log shall distinguish in-network providers from other health plan providers. | ||
| c. | The health plan shall maintain grievance records that include a copy of the original grievance, the response, and the resolution. This system shall distinguish in-network providers from other health plan providers and identify the grievant and the date of filing. | ||
| d. | The health plan must report provider complaints, grievances, and appeals to the state agency in the format requested by the state agency. | ||
| e. | The health plans must maintain records of all provider complaints, grievances, appeals, and resolutions. |
| 2.17 | Quality Assessment and Improvement: | |
| 2.17.1 | The state agency regulates the quality assessment and improvement functions of the health plan. The health plan therefore must comply with all the state agency’s quality assessment and improvement programs as described herein. The health plan shall participate in the State’s efforts to promote the delivery of services in a culturally competent manner to all members, including those with limited English proficiency and diverse cultural and ethnic backgrounds. The health plan shall be held accountable for the ongoing monitoring, evaluation, and actions as necessary to improve the health of its members and the care delivery systems for those members. The health plan shall be held accountable for the quality of care delivered by providers. The state agency’s quality assessment and improvement program shall consist of internal monitoring by the health plan, oversight by federal and state governments, and evaluations by an independent, external review organization. The health plan shall have a quality assessment and improvement program which integrates an internal quality assessment process that conforms to Quality Improvement System for Managed Care (QISMC) and additional current standards and guidelines prescribed by CMS. The health plan shall adhere to the requirements contained within the state agency’s, Quality Management Plan located in Attachment 6. The health plan shall have a quality assessment and improvement program composed of: |
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| a. | An internal system of monitoring, analysis, evaluation, and improvement of the delivery of care that includes care provided by all providers; | ||
| b. | Designated staff with expertise in quality assessment, utilization management and continuous quality improvement; | ||
| c. | Written policies and procedures for quality assessment, utilization management, and continuous quality improvement that are periodically analyzed and evaluated for impact and effectiveness; | ||
| d. | Results, conclusions, team recommendations, and implemented system changes which are reported to the health plan’s governing body at least quarterly, and | ||
| e. | Reports that are evaluated, recommendations that are implemented when indicated, and feedback provided to providers and members. |
| 2.17.2 | Internal Staff: The health plan shall designate a Quality Assessment and Improvement and Utilization Management Coordinator(s). Specifically, the Quality Assessment and Improvement and Utilization Management Coordinator must: |
| a. | Be a registered nurse, nurse practitioner, or physician. The registered nurse or nurse practitioner must be licensed in the State of Missouri. The physician must be Missouri licensed and practice medicine in the United States. He/she must be board-certified, board-eligible, or have sufficient experience in his or her field or specialty to be determined competent by the health plan’s Medical Director or the Credentials Committee. | ||
| b. | Be responsible for assisting the governing body and their designee in the process of continually developing, implementing, evaluating, and improving the written quality assessment and improvement program. The continuous improvement process shall include care delivery objectives, specific activities implemented from issues identified as a result of the on-going monitoring process, systems methodologies for continuous tracking of care delivery, and provider review. The process must include a focus on health outcomes and action plans for improvement of those outcomes. | ||
| c. | Be responsible for the health plan’s utilization management and quality assessment committee, assist the governing board in directing the development and implementation of the health plan’s internal quality assessment and improvement program, and monitor the quality of care that members receive. | ||
| d. | Oversee the development of clinical care standards and practice guidelines and protocols for the health plan. The health plan must adopt practice guidelines that meet the following requirements: |
| 1) | Are based on valid and reliable clinical evidence or a consensus of health care professionals in the particular field; | ||
| 2) | Consider the needs of the members; | ||
| 3) | Are adopted in consultation with contracting health care professionals; and | ||
| 4) | Are reviewed and updated periodically as appropriate. | ||
| 5) | Dissemination of the guidelines to all affected providers and, upon request, to members and potential members. | ||
| 6) | Ensure that decisions for utilization management, member education, coverage of services, and other areas to which the guidelines apply should be consistent with the guidelines. |
| e. | Review all potential quality of care problems, both physical and mental health, and oversee development and implementation of continuous assessment and improvement of the quality of care provided to members. | ||
| f. | Maintain current medical information pertaining to clinical practice and guidelines. |
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| g. | Ensure that health education resources are available for the provision of proper medical care to members. | ||
| h. | Utilize staff in an effective and efficient manner to monitor and assess care delivery. | ||
| i. | Specify clinical or health services areas to be monitored. | ||
| j. | Specify the use of quality indicators that are objective, measurable, and based on current knowledge and clinical experience for priority areas selected by the state agency as well as for areas the health plan selects. | ||
| k. | Monitor and report on the management of the health plan’s EPSDT program. | ||
| l. | Monitor and report on the health plan’s referral process for specialty and out-of-network services. | ||
| m. | Ensure that all denied services are reviewed by a physician, physician assistant, or advanced nurse practitioner. The reason for the denial must be documented and logged. Any alternative services authorized must be documented. All denials must identify appeal rights of the member. | ||
| n. | Monitor and report on the health plan’s credentialing and recredentialing activities. | ||
| o. | Monitor and report on the health plan’s process for prior authorizing and denying services. | ||
| p. | Monitor and report on the health plan’s process for ensuring the confidentiality of medical records and member information. | ||
| q. | Monitor and report on the health plan’s process for ensuring the confidentiality of the appointments, treatments, and required state agency reporting of adolescent STDs. | ||
| r. | Monitor provider for compliance that reports of disease and conditions are made to the State Department of Health and Senior Services in accordance with all applicable State statutes, rules, guidelines, and policies and with all metropolitan ordinances and policies. | ||
| s. | Monitor provider for compliance that control measures for tuberculosis, STDs, and communicable diseases are carried out in accordance with applicable laws and guidelines and such measures are defined in the provider manual. | ||
| t. | Serve as a liaison between the health plan and the in-network providers and communicate at least quarterly with the in-network providers, including oversight of provider education, in service training, and orientation. Newsletter, web sites, and other media may be used to meet this criteria. | ||
| u. | Be available to the health plan’s medical staff for consultation on referrals, denials, grievances and appeals, and problems. | ||
| v. | Monitor and report at least annually 24-hour access and after hours availability of primary care providers. |
| 2.17.3 | In addition to internal monitoring of quality of care, the health plan shall submit to the state agency reports regarding the results of their internal monitoring, evaluation, and action plan implementation. The reports shall include targeted health indicators monitored by the state agency and specific quality data periodically requested by the federal government. The reports may be required on a monthly, quarterly or annual basis or as specified by the state agency. (Refer to the Quality Management Plan located at Attachment 6 for the current report format.) The report format shall be periodically reviewed and updated by the state agency. The state agency shall provide the health plan with no less than ninety (90) calendar |
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| days notice of any changes in the format requested. The health plan shall comply with all subsequent changes specified by the state agency. The health plan shall provide access to documentation, medical records, premises, and staff as deemed necessary by the state agency. | ||
| 2.17.4 | The state agency shall contract with independent, external evaluators to examine the quality of care provided by the health plan. The health plan shall provide access to documentation, medical records, premises, and staff as deemed necessary by the state agency for the independent external review. | |
| 2.17.5 | Internal Procedures: The health plan shall have an internal written quality assessment and improvement program. The health plan shall include monitoring, assessment, evaluation, and improvement of the quality of care for all clinical and health service delivery areas. Emphasis should be placed on, but need not be limited to, clinical areas relating to maternity, pediatric and adolescent development, EPSDT, family planning, and well woman care, as well as on key access or other priority issues for members such as reducing the incidence of STDs, acquired immune deficiency syndrome, and smoking related illnesses. The health plan must have implemented mechanisms to assess the quality and appropriateness of care furnished to members with special health care needs. The health plan’s quality review mechanisms shall address members with special needs as well as COA 1, COA 4, and COA 5 members in the written monitoring, assessment, evaluation, and improvement plan. |
| a. | Internal policies and procedures must: |
| 1) | Ensure that the utilization management and quality assessment committees have established operating parameters. The committees shall meet at least quarterly, on a regular schedule. Committee members must be clearly identified and representative of the health plan’s providers. The committee shall be accountable to the Medical Director and governing body. The committees must maintain appropriate documentation of the committees’ activities, findings, recommendations, actions, and follow up. | ||
| 2) | Provide for regular utilization management and quality assessment reporting to the health plan management and health plan providers, including profiling of provider utilization patterns. | ||
| 3) | Be developed and implemented by professionals with adequate and appropriate experience in quality assessment and improvement: quality assessment, utilization management, and continuous improvement processes. | ||
| 4) | Provide for systematic data collection, analysis, and evaluation of performance and member results. | ||
| 5) | Provide for interpretation of this data to practitioners. | ||
| 6) | Provide timelines for correction, and assign a specific staff person to be responsible for ensuring compliance and follow up. | ||
| 7) | Clearly define the roles, functions, and responsibilities of the quality assessment committee and the Medical Director. |
| b. | Utilization Management: The health plan shall have written utilization management policies and procedures that include protocols for denial of services, prior approval, hospital discharge planning, physician profiling, and concurrent, prospective, and retrospective review of claims that comply with federal and state laws and regulations, as amended. The utilization management policies and procedures must be clearly specified in provider contracts or provider manuals and consistently applied in accordance with the established utilization management guidelines. As part of the health plan’s utilization management function, the health plan also must have processes to identify both over and under utilization problems for inpatient and outpatient services, undertake corrective action, and follow up. This review must consider the expected utilization of services regarding the |
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| characteristics and health care needs of the member population. In addition, the health plan shall use an emergency room log, or equivalent method, to track emergency room services. Compensation to individuals or entities that conduct utilization management activities shall not be structured so as to provide incentives for the individual or entity to deny, limit, or discontinue medically necessary services to any member. |
| c. | Provider Credentialing: The health plan shall have written credentialing and re-credentialing policies and procedures for determining and assuring that all in-network providers are licensed by the state in which they practice and qualified to perform their services. The health plan shall have written policies and procedures for monitoring the in-network providers, reporting the results of the monitoring process, and disciplining in-network providers found to be out-of-compliance with the health plan’s medical management standards. The health plan shall use the Missouri Standardized Credentialing Form (MoSCF), pursuant to RSMo 354.442.1 (15) and 20 CSR 400.7.180, as amended. | ||
| d. | Performance Improvement Projects: The health plan must conduct performance improvement projects that are designed to achieve, through ongoing measurements and intervention, significant improvement, sustained over time, in clinical care and nonclinical care areas that are expected to have a favorable effect on health outcomes and member satisfaction. The health plan must report the status and results of each project to the state agency as requested. The performance improvement projects must involve the following: |
| 1) | Measurement of performance using objective quality indicators. | ||
| 2) | Implementation of system interventions to achieve improvement in quality. | ||
| 3) | Evaluation of the effectiveness of the interventions. | ||
| 4) | Planning and initiation of activities for increasing or sustaining improvement. | ||
| 5) | Completion of the performance improvement project in a reasonable time period so as to generally allow information on the success of performance improvement projects in the aggregate to produce new information on quality of care every year. | ||
| 6) | Performance measures and topics for performance improvement projects specified by CMS in consultation with the state agency and other stakeholders. |
| e. | Member Incentives: The health plan may offer member incentives with a value of $30.00 or less per eligible member per month. All member incentives must be prior approved by the state agency. The purpose of the health plan’s member incentives: |
| • | Must be directly related to a health plan quality initiative | ||
| • | Must be measurable via the quality activity | ||
| • | Cannot have any relationship to the health plan’s marketing activities | ||
| • | Cannot be convertible to cash or redemption in any way for alcohol, tobacco products, firearms or ammunition. |
| 1) | The health plan must monitor their member incentives program to ensure that the program has met the health plan’s quality initiative and to evaluate on an ongoing basis the effectiveness of the member incentive program. | ||
| 2) | The health plan must report the status and results of member incentives to the state agency as requested. |
| 2.18 | Community Health Assessment: | |
| 2.18.1 | The health plan shall participate in a community health status assessment and improvement initiative as approved by the Department of Health and Senior Services. The health status assessment and improvement initiative shall be developed by a community-based coalition and include community |
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| benchmarks for measuring access, quality, and health status. The Department of Health and Senior Services shall provide a list of active community-based health status assessment and improvement initiatives to the health plan. If there is no approved health status assessment and improvement initiative in the health plan’s region, the Department of Health and Senior Services shall provide technical assistance to the health plan to develop the health status assessment and improvement initiative. Participation in a health status assessment and improvement initiative shall include: |
| a. | Becoming a member of a community-wide planning coalition. Community means a geographic entity (a county(ies) for the most part) with broad based representation from community providers, businesses, local organizations, schools, etc. The Department of Health and Senior Services would notify the health plan of coalitions that meet the community standard. Where no such coalition exists, the Department of Health and Senior Services shall work with the health plan to develop one. The health plan shall not be required to be the lead agency in establishing a coalition. | ||
| b. | Assisting with the collection and/or analysis of relevant health data and information as defined by the coalition. | ||
| c. | Active involvement in the assessment process including prioritizing community problems. | ||
| d. | Active involvement in the development and implementation of the community strategic plan to implement health improvement programs. | ||
| e. | Providing feedback on the community strategic plan and its effectiveness. |
| 2.19 | State and Federal Reviews: | |
| 2.19.1 | The health plan shall make available to the state agency or its outside reviewers, on an annual basis and on an as needed basis, medical and other records for review of quality of care, access, financial, and other issues. The state agency’s quality assessment and improvement review may include but is not limited to: |
| a. | On-site visits and inspections of facilities; | ||
| b. | Staff and member interviews; | ||
| c. | Review of utilization, denial of services, and other areas that will indicate quality of care delivered to members; | ||
| d. | Medical records reviews; | ||
| e. | Financial records reviews; | ||
| f. | Review of all quality assessment procedures, reports, committee activities and recommendations, and corrective actions; | ||
| g. | Review of staff and provider qualifications; | ||
| h. | Review of the complaint, grievance, and appeal process and resolutions; | ||
| i. | Review of requests for transfers between primary care providers within each health plan; | ||
| j. | Review of fraud and abuse detection, prevention, and review process, procedures, cases, and reports; and | ||
| k. | Evaluation and analysis of coordination and continuity of care. |
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| 2.19.2 | External Reviews: The state agency contracts with independent external evaluators to examine the quality of care provided by the health plan. CMS designates an outside review agency to conduct an evaluation of the program and its progress toward achieving program goals. The health plan shall make available to CMS’s outside review agency and the state agency’s external evaluator medical and other records for review as requested. The health plan shall provide information for External Quality Reviews in the format specified by the state agency. | |
| 2.20 | Financial Reporting: | |
| 2.20.1 | The health plan shall not hold a member liable for the following: |
| a. | The debts of the health plan, in the event of the health plan’s insolvency; | ||
| b. | Services provided to the member in the event the health plan fails to receive payment from the state agency for such services; | ||
| c. | Services provided to the member in the event a health care provider with a contractual, referral, or other arrangement with the health plan fails to receive payment from the state agency or health plan for such services; or | ||
| d. | Payments to a provider that furnishes covered services under a contractual, referral, or other arrangement with the health plan in excess of the amount that would be owed by the member if the health plan had directly provided the services. | ||
| e. | In the case of insolvency, the health plan shall continue to cover services to members during insolvency for the duration of period for which payment has been made by the state agency, as well as for inpatient admissions up until discharge. |
| 2.20.2 | Financial Data Reporting: The health plan shall submit unaudited semi-annual reports and an unaudited and audited annual report for their MC+ managed care book of business to the state agency. The health plan shall submit the semi-annual and annual reports in the format and audit guidelines specified by the state agency. The current report format and audit guidelines can be found in Attachment 10. Changes to the report format must be approved by the state agency prior to submission. |
| a. | The semi-annual and unaudited and audited annual reports must be certified by one of the following: |
| 1) | The health plan’s Chief Executive Officer. | ||
| 2) | The health plan’s Chief Financial Officer. | ||
| 3) | An individual who has delegated authority to sign for, and who reports directly to, the health plan’s Chief Executive Officer or Chief Financial Officer. |
| b. | The certification must attest, based on best knowledge, information, and belief, as follows: |
| 1) | To the accuracy, completeness, and truthfulness of the data. | ||
| 2) | To the accuracy, completeness, and truthfulness of the semi-annual and annual reports. |
| c. | The health plan must submit the certification concurrently with the semi-annual and annual reports. |
| 2.20.3 | Physician Incentive Plan Requirements: The Department of Health and Human Services published a federal regulation regarding physician incentive plans in the March 27, 1996, Federal Register. This regulation is designed to protect beneficiaries enrolled in Medicare and Medicaid Managed Care Organizations by placing certain limitations on physician incentive plans that could influence a physician’s care decisions. |
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| a. | In addition, the physician incentive plan regulation applies to all subcontractors, including any health care services subcontractors. The physician incentive plan regulation does not apply outside the scope of incentive plans for physicians providing services to Medicare or MC+ managed care members. | ||
| b. | The health plan shall not offer financial incentives to induce physicians to limit or reduce medically necessary services to a specific member. The health plan shall not offer non-financial incentives to limit or reduce medically necessary services to a specific member. | ||
| c. | A physician group is at “substantial” financial risk if more than 25% of its potential payment is at risk for services it does not provide. |
| 1) | If the physician group is at “substantial” financial risk, the health plan shall provide adequate protection to limit financial losses. The health plan has the option of: 1) retaining the risk in its direct provider contracts, or 2) the MCO, intermediate entity, physician or physician group can reinsure the risk through a reinsurance carrier. Stop-loss protection must cover at least ninety percent (90%) of the costs of referral amounts that exceed 25% of the total potential payment on either a per member per year or an aggregate basis. | ||
| For the purposes of the PIP regulation, the term “physician” is defined as: Doctors of medicine, doctors of osteopathy, doctors of dental surgery or dental medicine, doctors of podiatric medicine, doctors of optometry, chiropractors, and any limited practice provider that provides services on State authority to perform such services. | |||
| 2) | If the physician group is at “substantial risk”, the health plan must conduct annual member surveys. The health plan shall survey enrolled and disenrolled members with questions on satisfaction, quality, and access to services. The result should be submitted to the state agency. |
| d. | In compliance with the federal regulation, the health plan shall disclose to the members, upon request, whether the health plan used a physician incentive plan, what type of physician incentive plan it uses, whether stop-loss insurance is provided, and a summary of any survey results if a survey was required to be conducted. | ||
| e. | On an annual basis and in compliance with the federal regulation, the health plan must disclose physician incentive plans to CMS, and the state agency. The information to be disclosed shall include the following: |
| 1) | Effective date of the physician incentive plan; | ||
| 2) | The type of incentive arrangement; | ||
| 3) | The amount and type of stop-loss protection; | ||
| 4) | The patient panel size; | ||
| 5) | If pooled, a description of the method; | ||
| 6) | The computations of significant financial risk; | ||
| 7) | Whether the health plan does not have a physician incentive plan; and | ||
| 8) | Name, address, phone number, and other contact information for a person from the health plan who may be contacted with questions regarding the physician incentive plan. |
| f. | The health plan shall notify the state agency within five (5) business days of any change to the health plan or the subcontractors’ physician incentive plan(s). |
| 2.20.4 | The health plan shall provide quarterly reports to the state agency detailing third party savings in a format prescribed by the state agency. The state agency shall provide the health plan with no less than ninety (90) calendar days notice of any change in the format requested. These reports are due on the thirtieth (30) day following the close of the quarter. The health plan shall maintain records in such a manner as to ensure that all money collected from third party resources may be identified on behalf of members. The |
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| health plan shall make these records available for audit and review and certify that all third party collections are identified and used as a source of revenue. |
| a. | The quarterly reports must be certified by one of the following: |
| 1) | The health plan’s Chief Executive Officer. | ||
| 2) | The health plan’s Chief Financial Officer. | ||
| 3) | An individual who has delegated authority to sign for, and who reports directly to, the health plan’s Chief Executive Officer or Chief Financial Officer. |
| b. | The certification must attest, based on best knowledge, information, and belief, as follows: |
| 1) | To the accuracy, completeness, and truthfulness of the data. | ||
| 2) | To the accuracy, completeness, and truthfulness of the quarterly reports. |
| c. | The health plan must submit the certification concurrently with the quarterly reports. |
| 2.20.5 | The health plan shall report the categories of all third party liability collections to the state agency and shall include a complete disclosure demonstrating its efforts to obtain payment from liable third parties and the amounts and nature of all third party payments recovered for members including, but not limited to, payments for services and conditions which are: |
| a. | Employment related injuries or illnesses; | ||
| b. | Related to motor vehicle accidents, whether injured as pedestrians, drivers, passengers, or bicyclists; and | ||
| c. | Contained in diagnosis codes 800 through 999 (ICD 9-M), with the exception of Code 994.6. |
| The reports must be certified by one of the following: |
| a. | The health plan’s Chief Executive Officer. | ||
| b. | The health plan’s Chief Financial Officer. | ||
| c. | An individual who has delegated authority to sign for, and who reports directly to, the health plan’s Chief Executive Officer or Chief Financial Officer. |
| The certification must attest, based on best knowledge, information, and belief, as follows: |
| a. | To the accuracy, completeness, and truthfulness of the data. | ||
| b. | To the accuracy, completeness, and truthfulness of the reports. |
| The health plan must submit the certification concurrently with the reports. |
| 2.21 | Operational Data Reporting: | |
| 2.21.1 | To measure the MC+ managed care program’s actual accomplishments in the areas of access to care, utilization, medical outcomes, health status, and satisfaction, the health plan shall provide the state agency with information concerning uniform utilization, quality assessment and improvement, member satisfaction, complaint, grievance, and appeal, and fraud and abuse detection data on a regular basis. On a periodic basis, the health plan shall make available clinical outcome data in areas of concern to the state agency. The health plan shall cooperate with the state agency in carrying out data validation steps. | |
| 2.21.2 | The state agency shall provide report formats and variable definitions for the health plan to use in reporting operational data. Data elements and reporting requirements are outlined in the Performance Requirements segment. Final formats will be made available as finalized. |
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| 2.21.3 | Quarterly Complaint, Grievance, and Appeal Report: On a quarterly basis, the health plan shall submit to the state agency a Quarterly Complaint, Grievance, and Appeal Report, in accordance with the State Management Plan included as Attachment 6. | |
| 2.21.4 | Quality Assessment and Improvement Evaluation and Reports: The health plan shall submit an annual Quality Assessment and Improvement Evaluation and Report. The format will be periodically reviewed and updated by the state agency. The health plan shall comply with all changes as specified by the state agency. The state agency shall provide the health plan with no less than ninety (90) calendar days notice of any change in the format requested. | |
| 2.21.5 | Member Satisfaction Report: The Department of Health and Senior Services has authority under RSMo 192.068, as amended, to collect the member satisfaction survey data from the health plan. To reduce duplication and ensure consistent survey methodology, the state agency shall rely upon the member satisfaction survey data from this process. The health plan shall submit member satisfaction data to the Department of Health and Senior Services in accordance with 19 CSR 10-5.010, as amended. The health plan shall use the survey instrument specified by the Department of Health and Senior Services and must fund the cost of the survey. | |
| 2.21.6 | Presentation of Findings: The health plan shall obtain the state agency’s approval prior to publishing or making formal public presentations of statistical or analytical material based on the health plan’s MC+ managed care membership. | |
| 2.22 | Third Party Liability: Third Party Liability is defined as any individual, entity, or program that is or may be liable to pay all or part of the health care expenses of a Medicaid beneficiary. Under Section 1902(a) (25) of the Social Security Act, the State is required to take all reasonable measures to identify legally liable third parties and treat third party liability as a resource of the Medicaid beneficiary. | |
| 2.22.1 | Coordination of Benefits: By law, Medicaid is the payer of last resort. Therefore, the health plan shall be used as a source of payment for covered services only after all other sources of payment have been exhausted. The two methods used in the coordination of benefits are cost avoidance and post-payment recovery (i.e., “pay and chase “). The health plan shall act as an agent of the state agency for the purpose of coordination of benefits. |
| a. | If health plan has established the probable existence of liability of a third party health insurance carrier at the time a claim is filed, the health plan shall reject the claim and return it to the provider for a determination of the amount of liability except in certain defined situations referenced below. This rejection is called cost avoidance. If a service is medically necessary, the health plan shall ensure that its cost avoidance efforts do not prevent a member from receiving such service and that the member is not required to pay any cost-sharing for use of the other insurer’s providers. | ||
| b. | The establishment of liability takes place when the health plan receives confirmation from the provider or the third party health insurance carrier indicating the extent of liability taking into account any agreement between the provider and third party health insurance carrier regarding acceptance of the carrier’s payment as payment in full with the exception of any patient cost-sharing. If the probable existence of a liable third party cannot be established or third party benefits are not available to pay the member’s medical expenses at the time the claim is filed, the health plan shall pay the full amount allowed under the health plan’s payment schedule. When the amount of liability is determined, the health plan shall pay the claim to the extent that payment allowed under the health plan’s payment schedule exceeds the amount of the third party health insurance carrier’s payment taking into account any agreement between the provider and the third party health insurance carrier regarding acceptance of the carrier’s payment as payment in full with the exception of any patient cost-sharing. If a third party health insurance carrier (other than Medicare) requires the member to pay any cost-sharing (such as copayment, coinsurance, or deductible) the health plan shall pay the cost-sharing amounts, even if services were provided by an out-of-network provider. The health plan may require prior authorization of out-of-network services. The health plan’s liability for such cost- |
| RFP B3Z06118 | Page 81 |
| sharing amounts shall not exceed the amount the health plan would have paid under the health plan’s payment schedule for the service. The out-of-network provider must agree in writing to accept the amount of the health plan’s payment as payment in full prior to the service being provided. If the out-of-network provider does not agree to accept the health plan’s payment as payment in full, the health plan shall inform the member verbally and in writing that due to lack of such agreement, the member will be liable for the cost sharing amounts to the out-of-network provider or the member may seek services without charge from an in-network provider. |
| 1) | For additional clarity on establishment of the health plan’s liability, the following examples are provided: |
| • | A provider submits a charge for $100 to the health plan for which the health plan’s allowable is $80. The provider received $75 from the third party insurance carrier. There is no agreement between the provider and third party insurance carrier that the amount paid by the carrier is payment in full. The provider normally bills all patients with this carrier the remaining balance of $25. The provider would submit a claim to the health plan indicating the remaining balance of $25 is owed after receiving $75 from the third party carrier. The amount the health plan pays the provider is the difference between the health plan’s allowable ($80) and the carrier’s payment ($75) or $5. | ||
| • | A provider has a charge of $100.00. The third party carrier and provider have agreed that the amount paid by the carrier is payment in full except for any cost-sharing. The carrier has an allowable of $50 with the remaining $25 to be a contractual write-off. The member has a co-payment of $25.00. The provider bills all patients with this carrier only the co-payment amount. The provider bills the health plan the $25 co-payment. The health plan’s liability is not $30 ($80-$50) in this situation as there exists an agreement between the provider and third party carrier that there is no liability by the patient other than cost-sharing. The health plan’s pays the provider $25 as the co-payment does not exceed its allowable of $80. |
| c. | The requirement of cost avoidance applies to all covered services except claims for labor and delivery and postpartum care (costs associated with the inpatient hospital stay for labor and delivery and postpartum care must be cost avoided); prenatal care for pregnant women; preventive pediatric services; or if the claim is for a service that is provided to a member on whose behalf child support enforcement is being carried out by the Missouri Department of Social Services, Family Support Division. For these services, the health plan shall provide such service and then recover payment from the third party health insurance carrier (“pay and chase”). | ||
| d. | The health plan may retain up to 100 percent of its third party collections if all of the following conditions exist: |
| 1) | Total collections received do not exceed the total amount of the health plan’s financial liability for the member. | ||
| 2) | There are no payments made by the state agency related to fee-for-service. | ||
| 3) | Such recovery is not prohibited by Federal or State law. |
| e. | The state agency shall provide the health plan with a daily file of third party health insurance carrier information (other than Medicare) for the purpose of updating the health plan’s files. The state agency shall continue to perform verification of the health insurance information. The state agency does not warrant that the information is complete or accurate. The file is to be considered a “lead” file to assist the health plan in identifying legally liable third parties. The health plan shall timely notify the state agency of any known changes, additions, or deletions of coverage in a format prescribed by the state agency. |
| RFP B3Z06118 | Page 82 |
| f. | The state agency shall annually perform a data match with the United States Department of Defense to identify members covered by TRICARE. The state agency shall provide the health plan with the results of the data match annually and in a format specified by the state agency. The health plan shall perform post-payment recovery and cost avoidance activities as appropriate based on the information supplied by the data match. |
| 2.22.2 | Casualty/Tort: The health plan shall act as an agent of the state agency for purposes of third party reimbursement pursuant to RSMo 208.215, as amended. In addition to coordination of benefits, the health plan shall pursue reimbursement in the following circumstances: Workers’ Compensation, Tortfeasors, Motorist Insurance, and Liability/Casualty Insurance. |
| a. | The health plan shall take action to identify those paid claims for members that contain diagnosis codes 800 through 999 (ICD 9-CM), with the exception of 994.6, for the purpose of determining the legal liability of third parties so that the health plan may process claims under the third party liability payment procedures specified in 42 CFR 433.139 (b) through (f), as amended. | ||
| b. | The state agency shall perform a data match with the Department of Labor, Division of Workers’ Compensation to identify members that the Division of Workers’ Compensation has a record of a work-related injury claim. The state agency shall provide the health plan with the results of the data match monthly and in a format specified by the state agency. The health plan shall perform post payment recovery and cost avoidance activities as appropriate based on the information supplied by the data match. If the probable existence of third party liability cannot be established or third party benefits are not available to pay the member’s medical expenses at the time the claim is filed, the health plan shall pay the full amount allowed under the health plan’s payment schedule. | ||
| c. | The state agency shall perform a data match with the State Traffic Accident Reporting System (STARS) of the Missouri Highway Patrol to identify members that the STARS system has a record of a member involved in a motor vehicle accident. The state agency shall provide the health plan with the results of the match monthly and in a format specified by the state agency. The health plan shall perform further validation activities when using information supplied by the data match to ensure the member is in fact the person referenced in the match. If the probable existence of third party liability cannot be established or third party benefits are not available to pay the member’s medical expenses at the time the claim is filed, the health plan shall pay the full amount allowed under the health plan’s payment schedule. | ||
| d. | The health plan shall perform all research, investigations, and payment of lien-related costs, including but not limited to, attorney fees and costs related to such cases. | ||
| e. | If a member initiates a legal action as a result of an injury that occurred during the health plan contract period, the health plan may file a lien for reimbursement for medical services provided to treat the injury that occurred during the contract period even after the contract period has ended. | ||
| f. | If the health plan initiates a lien during the contract period but the case remains unsettled at the end of the contract period, the health plan may continue pursuit of the action for the medical services related to the injury that were provided during the contract period. | ||
| g. | If the member enrolls with a new health plan while legal action is pending, each health plan may file separate liens to recover reimbursement for medical services related to the injury that were provided during the respective contract periods. |
| 2.23 | Reinsurance: The state agency will not administer a reinsurance program funded from capitation payment withholdings. | |
| 2.24 | Reserving: As part of its accounting and budgeting function, the health plan shall establish an actuarially sound process for estimating and tracking incurred but not reported costs. The health plan should reserve |
| RFP B3Z06118 | Page 83 |
| funds by major categories of service (e.g., hospital inpatient; hospital outpatient) to cover both incurred but not reported, and reported but unpaid claims. As part of its reserving methodology, the health plan should conduct annual reviews to assess its reserving methodology and make adjustments as necessary. |
| 2.25 | Claims Processing and Management Information System: | |
| 2.25.1 | The health plan shall have a Claims Processing and Management Information System (MIS) capable of meeting the MC+ managed care program requirements and maintaining satisfactory performance throughout the life of the contract. The health plan shall have the capability to transmit and receive data, support provider payments, and data reporting requirements as specified herein. The health plan shall have the capability to process claims, retrieve and integrate enrollment data, assign primary care providers, maintain provider network data, and submit encounter data. The Claims Processing and MIS should be of sufficient capacity to expand as needed due to member enrollment or program changes. | |
| 2.25.2 | The health plan shall transmit encounter data and all required files in accordance with the Health Plan Record Layout Manual, as amended. The health plan shall maintain an encounter overall acceptance rate of at least 95 % as measured by the state agency. |
| a. | The health plan shall submit encounter data for all services provided including those services that are reimbursed by the health plan through a capitated arrangement or other subcontracted arrangement. |
| 1) | The encounter data must be certified by one of the following: |
| • | The health plan’s Chief Executive Officer. | ||
| • | The health plan’s Chief Financial Officer | ||
| • | An individual who has delegated authority to sign for, and who reports directly to, the health plan’s Chief Executive Officer or Chief Financial Officer. |
| 2) | The certification must attest, based on best knowledge, information, and belief, as to the accuracy, completeness, and truthfulness of the encounter data. | ||
| 3) | The health plan must submit the certification concurrently with the encounter data. |
| b. | The health plan shall transmit primary care provider assignments and changes or additions to the provider demographic file. |
| 2.25.3 | The health plan shall accept claims electronically from all providers. The health plan shall make every effort to encourage providers to submit claims electronically using HIPAA compliant formats. | |
| 2.25.4 | The health plan shall employ or have available, the resources necessary to make modifications to claims processing edits or expansion of MIS capabilities as a result of changes in MC+ managed care policies and/or procedures. The state agency shall make every effort to give the health plan 60 calendar days notice of changes in the MC+ managed care program that may require the health plan to make system changes in order to comply. |
Paragraph 2.25.5 inserted by Amendment #001
| 2.25.5 | Timeliness of Claim Adjudication Report: On a quarterly basis, the health plan shall submit to the state agency a “Timeliness of Claims Adjudication Report” in accordance with the quarterly reporting schedule outlined in Attachment 6 in a format specified by the state agency. | |
| 2.26 | Records Retention: | |
| 2.26.1 | The health plan shall maintain books and records relating to MC+ managed care services and expenditures, including reports to the state agency and source information used in preparation of these reports. The books and records shall include, but are not limited to, financial statements, records relating to quality of care, medical records, and prescription files. |
| RFP B3Z06118 | Page 84 |
| 2.26.2 | The health plan shall also comply with all standards for record keeping specified by the state agency. | |
| 2.26.3 | The health plan shall maintain and retain all financial and programmatic records, supporting documents, statistical records, and other records of members for five (5) years. If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the five (5) year period, the health plan shall retain the records until completion of the action and resolution of all issues which arise from it or until the end of the regular five (5) year period, whichever is later. | |
| 2.26.4 | The health plan shall retain the source records for the health plan’s data reports for a minimum of five (5) years and must have written policies and procedures for storing this information. | |
| 2.26.5 | Medical Records: The health plan shall have written policies and procedures for the maintenance of medical records so that the records are documented accurately and in a timely manner, are readily accessible, and permit prompt and systematic retrieval of information. Complete medical records shall include but are not limited to medical charts, health status screens, prescription files, hospital records, physician specialists, consultant and other health care professionals’ findings, and other documentation sufficient to disclose the quantity, quality, appropriateness, and timeliness of services provided. The health plan shall make such medical records available to duly authorized representatives of the state agency and the United States Department of Health and Human Services to evaluate, through inspections or other means, the quality, appropriateness, and timeliness of services performed. The health plan must have procedures to provide for prompt transfer of member records upon request to other in-network or out-of-network providers for the medical management of the member. |
| a. | In accordance with Senate Bill No. 1024, enacted by the General Assembly of the State of Missouri, Section A., Chapter 334, RSMo, amended to be known as Section 334.097, physicians shall maintain an adequate and complete patient record for each patient and may maintain electronic records provided the record keeping format is capable of being printed for review. An adequate and complete patient record shall include documentation of the following information: |
| • | Identification of the patient, including name, birthdate, address and telephone number; | ||
| • | The date or dates the patient was seen; | ||
| • | The current status of the patient, including the reason for the visit; | ||
| • | Observation of pertinent physical findings; | ||
| • | Assessment and clinical impression of diagnosis; | ||
| • | Plan for care and treatment, or additional consultations or diagnostic testing, if necessary. If treatment includes medication, the physician shall include in the patient record the medication and dosage of any medication prescribed, dispensed or administered; and | ||
| • | Any informed consent for office procedures. | ||
| 1) | Patient records remaining under the care, custody, and control of the physician shall be maintained by the physician, or the physician’s designee, for a minimum of seven (7) years from the date of when the last professional service was provided. | ||
| 2) | Any correction, addition, or change in any patient record made more than forty-eight hours after the final entry is entered in the record and signed by the physician shall be clearly marked and identified as such, and the date, time, and name of the person making the correction, addition, or change shall be included, as well as the reason for the correction, addition, or change. | ||
| 3) | A consultative report shall be considered an adequate medical record for a radiologist, pathologist, or a consulting physician. |
| b. | The member’s medical record is the property of the provider who generates the record. Upon the written request of a member, guardian, or legally authorized representative of a member the health |
| RFP B3Z06118 | Page 85 |
| plan shall furnish a copy of the medical records of the member’s health history and treatment rendered. Such medical records shall be furnished within a reasonable time of the receipt of the written request. Each member is entitled to one free copy of his or her medical records annually. The fee for additional copies shall not exceed the actual cost of time and materials used to compile, copy, and furnish such records. | |||
| c. | The health plan shall provide the state agency with access to all members’ medical records, whether electronic or paper, within thirty (30) calendar days of receipt of written request at no charge. The health plan shall provide the state agency with access to a single or small volume of medical records within five (5) calendar days of receipt of written request at no charge. The health plan shall provide the state with immediate access for on-site review of medical records. For on-site review of medical records, the state agency may provide the health plan with an advance notice of a partial list of medical records. The health plan shall fax or send by overnight mail to the state agency all medical records involving an emergency or urgent care issue when requested by the state agency at no charge. Access to record requirements applies to the health plan and all providers. | ||
| d. | The health plan shall have written standards for documentation on the medical record for legibility, accuracy, and plan of care. | ||
| e. | The health plan shall require its providers to maintain medical records in a detailed and comprehensive manner which conforms to good professional medical practice, permits effective professional medical review and medical audit processes, and facilitates an adequate system for follow-up treatment. Medical records must be legible, signed and dated. | ||
| f. | When a member changes primary care providers, upon request, his or her medical records or copies of medical records must be forwarded to the new primary care provider within ten (10) business days from receipt of request or prior to the next scheduled appointment to the new primary care provider whichever is earlier. | ||
| g. | The state agency is not required to obtain written approval from a member before requesting the member’s record from the provider. | ||
| h. | If the state agency requests, the health plan shall gather all medical records from their providers. |
| 2.27 | Health Plan Disputes With Other Providers: All disputes between the health plan and any affiliated or unaffiliated provider, or between the health plan and any other subcontractors, shall be solely between such provider or subcontractors and the health plan. The health plan shall indemnify, defend, save and hold harmless the State of Missouri, the Department of Social Services and its officers, employees and agents and enrolled MC+ managed care members from any and all actions, claims, demands, damages, liabilities, or suits of any nature whatsoever arising out of the contract because of any breach of the contract by the health plan, its subcontractors, agents, providers or employees, including but not limited to any negligent or wrongful acts, occurrence of omission of commission or negligence of the health plan, its subcontractors, agents, providers or employees. | |
| 2.28 | Rate Adjustments for Performance Based on HCY/EPSDT Participant Ratio and Remedies for Violation, Breach, or Non-Compliance of Contract Requirements: | |
| 2.28.1 | Rate Adjustments for Performance Based on HCY/EPSDT Participant Ratio: In accordance with CMS guidelines, the state agency requires 80 percent of eligible members to have HCY/EPSDT well child visits and, accordingly, has included an 80 percent participant ratio in the rates paid to the health plan. In accordance with CMS 416 reporting methodology, the state agency shall measure the health plan’s performance regarding the percentage of eligible members having HCY/EPSDT well child visits (participant ratio). The state agency applies state specific criteria to the CMS methodology to reflect the MC+ managed care program. The state specific criteria reflects performance by Category of Aid and rate cell, the measurement schedule in Attachment 11, and recognition of a month to be greater than 27 days. |
| RFP B3Z06118 | Page 86 |
| The participant ratio is defined as the number of total eligibles receiving at least one initial or periodic well child visit divided by the number of total eligibles who should receive at least one initial or periodic well child visit. The current HCY/EPSDT Measurement Schedule is reflected in Attachment 11. The state agency reserves the right to amend the HCY/EPSDT Measurement Schedule and shall give the health plan prior written notice of such amendment. |
| a. | In the event that the HCY/EPSDT participant ratio is not equal to 80 percent of eligible members having an HCY/EPSDT well child visit as calculated using the HCFA 416 reporting methodology, the state agency shall with five (5) calendar days prior notice make a pro rata adjustment to the monthly capitation payment to the health plan for each percentage point above or below 80 percent, but not to exceed 100 percent. This pro rata adjustment shall be based on the portion of the monthly capitation payment related to HCY/EPSDT well child visits and shall be applied to each rate cell in which well child visits are required. Refer to Attachment 13. The state agency shall continue making such adjusted monthly capitation payments until the next scheduled measurement. | ||
| b. | If the health plan is new to a MC+ managed care region, the health plan shall agree that its capitation rate shall reflect the average participant ratio of the MC+ managed care health plans that are not new to the region by rate cell and category of assistance for the applicable measurement period reflected in Attachment 11. Beginning January 2007, the new health plan shall agree that their future capitation rates shall be adjusted by the health plan’s actual 12-month HCY/EPSDT participant ratio. |
| 2.28.2 | Adjustments for Performance Based on HEDIS Performance Ratings: The health plan’s results of HEDIS performance measures as identified in Attachment 6 shall annually be rated by the state agency as high (HI), average (AV), low (LO), Not Applicable (NA), or Not Reported (NR). This rating shall be determined by computing the statewide average of all health plans in all regions and determining whether a health plan’s individual results, from a statistical level of confidence, vary from the statewide average and to what degree the results are precise and accurate. Those HEDIS performance measures that are rated as high shall be assigned a numeric value of three (3). Those HEDIS performance measures that are rated as average shall be assigned a numeric value of two (2). Those HEDIS performance measures that are rated as low shall be assigned a numeric value of one (1). Any performance measure that according to HEDIS specifications should not be reported shall be rated as Not Applicable and shall be assigned a value of zero (0). Any performance measure not reported due to the health plan’s failure shall be rated as Not Reported and assigned a value of negative one (-1). The state agency shall then total the numeric value of each HEDIS measure. The HEDIS measures relating to the CAHPS member satisfaction shall not be included in the total. The state agency shall use only combined measures, where applicable, when computing the total. The totals are then averaged ignoring values of zero (0) and rounded to the nearest whole number. The health plan shall maintain a minimum performance standard of an overall score of average with a value of two (2). |
| a. | The first annual rating shall occur upon receipt of the HEDIS measures due June 30, 2007. | ||
| b. | The second annual rating shall occur upon receipt of the HEDIS measured due June 30, 2008. | ||
| c. | The third annual rating shall occur upon receipt of the HEDIS measured due June 30, 2009. | ||
| d. | The first time a health plan achieves an average of low with a value of one (1), the health plan shall develop and implement a corrective action to improve the substandard performance. |
| 1) | The state agency shall inform enrollees in enrollment materials that the health plan failed to achieve the minimum performance standard. | ||
| 2) | The state agency shall reduce the random auto assignment percentage assigned to the health plan by one half (1/2). The random auto assignment percentage that was removed from the low performing health plan shall be distributed to the highest rated health plan(s) within the same MC+ Managed Care region. |
| RFP B3Z06118 | Page 86 |
| e. | The first time a health plan achieves an average of high with a value of three (3), the state agency shall inform enrollees in enrollment materials that the health plan(s) achieved above the minimum performance standard. | ||
| f. | The second time a health plan achieves an average of low with a value of one (1), the health plan shall develop and implement a corrective action to improve the substandard performance. |
| 1) | The state agency shall inform enrollees in enrollment materials that the health plan failed to achieve the minimum performance standard. | ||
| 2) | The state agency shall reduce the random auto assignment percentage assigned to the health plan by one half (1/2). The random auto assignment percentage that was removed from the low performing health plan shall be distributed to the highest rated health plan(s) within the same MC+ Managed Care region. |
| g. | The second time a health plan achieves an average of high with a value of three, the state agency shall inform enrollees in enrollment materials that the health plan or health plans achieved above the minimum performance standard. | ||
| h. | The third time a health plan achieves an average of low with a value of one (1), the state agency shall with five (5) calendar days prior notice make a .25 percent reduction to the total amount paid the health plan in monthly capitation payments. |
| 1) | The state agency shall inform enrollees in enrollment materials that the health plan failed to achieve the minimum performance standard. | ||
| 2) | The reduction of total monthly capitation payments from any low performing health plan shall be distributed equally to the health plan(s) rated high within the same MC+ Managed Care region. |
| i. | The third time a health plan achieves an average of high with a value of three (3), the state agency shall inform enrollees in enrollment materials that the health plan achieved above the minimum performance standard. |
| 2.28.3 | Federal Sanctions: Section 1903(m)(5)(A) and (B) of the Social Security Act vests the Secretary of the Department of Health and Human Services with the authority to deny Medicaid payments to a health plan for members who enroll after the date on which the health plan has been found to have committed one or more of the violations identified below. Therefore, whenever, and for so long as, federal payments are denied, the state agency shall deduct the total amount of federal payments denied from the next monthly capitation payment made to the health plan. |
| a. | Substantial failure to provide required medically necessary items or services when the failure had adversely affected (or has substantial likelihood of adversely affecting) a member, | ||
| b. | Discrimination among members with respect to enrollment, re-enrollment, or disenrollment on the basis of the member’s health status or requirements for health care services, | ||
| c. | Misrepresentation or falsification of certain information, or | ||
| d. | Failure to comply with the requirements for physician incentive plans as specified herein. |
| 2.28.4 | Liquidated Damages for Failure to Provide Covered Services: In the event the state agency determines the health plan failed to provide one or more of the covered services, the state agency shall direct the health plan to provide such service. If the health plan continues to refuse to provide the covered |
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| service(s), the state agency shall authorize the member to obtain the covered service from another source and shall notify the health plan in writing that the health plan shall be charged the actual amount of the cost of such service. In such event, the charges to the health plan shall be obtained by the state agency in the form of deductions of that amount from the next monthly capitation payment made to the health plan. With such deductions, the state agency shall provide a list of the members from whom payments were deducted, the nature of the service(s) denied, and payments the state agency made or will make to provide the medically necessary covered services. | ||
| 2.28.5 | Remedies for Failure to Perform Administrative Services: Whenever the state agency determines that the health plan has failed to perform an administrative function required per the requirements of the contract, the state agency shall notify the health plan of the health plan’s failure to perform required administrative services pursuant to the requirements of the contract and shall give the health plan five (5) working days to develop an acceptable action plan for correcting the administrative services failure. For the purposes these provisions, “administrative services” are defined as any contract requirements other than the actual provision of covered services. |
| a. | If the health plan submits an action plan for correcting the failure and if the plan is acceptable to the state agency, no action shall be taken at that time, provided that the health plan implements the corrective action as approved by the state agency. | ||
| b. | If the health plan fails to submit an action plan within the five working days or if the health plan does not implement the corrective action plan within the time frame stated in the action plan, the state agency shall withhold payment from the next capitation payment due the health plan as stated below: |
| 1) | The amount withheld shall be up to three percent (3%) of the total amount of the next capitation payment due the health plan. | ||
| 2) | The state agency shall continue to withhold up to three percent (3%) until successful correction of the administrative services failure by the health plan. | ||
| 3) | After successful correction of the administrative services failure, the state agency shall pay the health plan the total amount of all payments withheld. |
| c. | If the health plan implements the corrective action according to the approved plan but does not successfully correct the administrative services failure within the time frame approved in the action plan, the state agency shall withhold payment from the next capitation payment due the health plan according to the same provisions as stated above. |
| 2.28.6 | Remedies for Failure to Comply with Marketing Requirements: In the event the state agency determines that the health plan has failed to comply with any of the marketing requirements of the contract, one or more of the remedial actions listed below shall apply. The state agency shall notify the health plan in writing of the determination of the non-compliance, of the action(s) that must be taken, and of any other conditions related thereto such as the length of time the remedial actions shall continue and of the corrective actions that the health plan must perform. |
| a. | The state agency shall require the health plan to recall the previously authorized marketing materials. | ||
| b. | The state agency shall suspend enrollment of new members to the health plan. | ||
| c. | The state agency shall deduct the amount of capitation payment for members enrolled as a result of non-compliant marketing practices from the next monthly capitation payment made to the health plan and shall continue to deduct such payment until correction of the failure. | ||
| d. | The state agency shall require the health plan to contact each member who enrolled during the period while the health plan was out of compliance, in order to explain the nature of the non-compliance and inform the member of his or her right to transfer to another health plan. |
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| e. | The state agency shall prohibit future marketing activities by the health plan for an amount of time specified by the state agency. |
| 2.28.7 | Attorney Fees: In the event the state agency should prevail in any legal action arising out of the performance or non-performance of the contract, the health plan shall pay, in addition to any damages, all expenses of such action including reasonable attorney’s fees and costs. The term “legal action” shall be deemed to include administrative proceedings of all kinds, as well as all actions at law or equity. | |
| 2.28.8 | Remedial Actions: The state agency may pursue all remedial actions with the health plan that are taken with fee-for-service providers. The state agency will work with the health plan and the health plan providers to change and correct problems and will recoup funds only if the health plan fails to correct a problem within a timely manner. | |
| 2.28.9 | In addition to above referenced described rate adjustments and remedies, if the state agency determines that the health plan is not taking proper action to correct the identified failures, the state agency shall have the right to implement any other legal processes deemed necessary including cancellation of the contract, recovery of damages, suspension of enrollment to the health plan, etc. | |
| 2.28.10 | Intermediate Sanctions. The state agency may establish and specify intermediate sanctions that may be imposed when a health plan acts or fails to act as specified below. The state agency may require a corrective action plan, as referenced in section 2.28.5, to be developed and approved by the state agency in situations where intermediate sanctions may be imposed. The state agency shall approve and monitor implementation of such a plan and set appropriate timelines to bring activities of the health plan into compliance with state and federal regulations. The state agency may monitor via required reporting on a specified basis and/or through on-site evaluations, the effectiveness of the plan. Before imposing intermediate sanctions, the state agency shall give the health plan timely written notice that explains the basis and nature of the sanction and any other due process protections that the state agency elects to provide. |
| a. | Fails substantially to provide medically necessary services that the health plan is required to provide, under law or under the contract, to a member covered under the contract. | ||
| b. | Imposes on members premiums or charges that are in excess of the premiums or charges permitted under the Medicaid program. | ||
| c. | Acts to discriminate among members on the basis of their health status or need for health care services. | ||
| d. | Misrepresents or falsifies information that it furnishes to CMS or to the state agency. | ||
| e. | Misrepresents or falsifies information that it furnishes to a member, potential member, or a health care provider. | ||
| f. | Fails to comply with the requirements for physician incentive plans, as set forth (for Medicare) in 42 CFR 422.208 and 422.210. | ||
| g. | Distributes directly, or indirectly through any agent or independent contractor, marketing materials that have not been approved by the state agency or that contain false or materially misleading information. | ||
| h. | Violates any of the other applicable requirements of sections 1903(m) or 1932 of the Act and any implementing regulations. |
| RFP B3Z06118 | Page 90 |
| i. | Violates any of the other applicable requirements of sections 1932 or 1905(t)(3) of the Act and any implementing regulations. |
| 2.28.11 | Intermediate Sanctions: Types. The types of intermediate sanctions that the state agency may impose upon the health plan include: |
| a. | Civil monetary penalties in the following specified amounts: |
| 1) | A maximum of $25,000 for each determination of failure to provide services; misrepresentation or falsification of statements to members, potential members or health care providers; failure to comply with physician incentive plan requirements; or marketing violations. | ||
| 2) | A maximum of $100,000 for each determination of discrimination among members on the basis of their health status or need for services; or misrepresentation or falsification to CMS or the state agency. | ||
| 3) | A maximum of $15,000 for each member the state agency determines was discriminated against based on the member’s health status or need for services (subject to the $100,000 limit above). | ||
| 4) | A maximum of $25,000 or double the amount of the excess charges (whichever is greater), for charging premiums or charges in excess of the amounts permitted under the Medicaid program. The state agency shall return the amount of overcharge to the affected member(s). |
| b. | Appointment of temporary management for a health plan as provided in 42 CFR 438.706. | ||
| c. | Granting members the right to terminate enrollment without cause and notifying the affected members of their right to disenroll. | ||
| d. | Suspension of all new enrollment, including default enrollment, after the effective date of the sanction. | ||
| e. | Suspension of payment for members enrolled after the effective date of the sanction and until CMS or the state agency is satisfied that the reason for imposition of the sanction no longer exists and is not likely to recur. | ||
| f. | Additional sanctions allowed under state statutes or regulations that address areas of noncompliance described above. |
| 2.28.12 | Sanction by Centers for Medicare and Medicaid Services: Special Rules for MCOs and Denial of Payment. Payments provided for under the contract for new members when, and for so long as payment for those members is denied by CMS in accordance with the requirements in 42 CFR 438.730. | |
| 2.28.13 | Special Rules for Temporary Management. The state agency shall specify the circumstances under which the sanction of temporary management will be imposed upon the health plan. |
| a. | Optional: Temporary management may be imposed by the state agency only if it finds that: |
| 1) | There is continued egregious behavior by the health plan, including, but not limited to behavior that is described in 42 CFR 438.700, or that is contrary to any requirements of sections 1903(m) and 1932 of the Act; or | ||
| 2) | There is substantial risk to members’ health; or | ||
| 3) | The sanction is necessary to ensure the health of the health plan’s members while improvements are made to remedy violations under 42 CFR 438.700 or until there is an orderly termination or reorganization of the health plan. |
| RFP B3Z06118 | Page 91 |
| b. | Required: The state agency shall impose temporary management if it finds that the health plan has repeatedly failed to meet substantive requirements in section 1903(m) or section 1932 of the Act. The state agency shall also grant members the right to terminate enrollment without cause and shall notify the affected members of their right to terminate enrollment. | ||
| c. | The state agency’s election to appoint temporary management shall not act as an implied waiver of the state agency’s right to terminate the contract, suspend enrollment, or to pursue any other remedy available to the state agency under the contract. |
| 2.28.14 | Termination of a Health Plan Contract: |
| a. | Nothing in this section shall limit the state agency’s right to terminate the contract or to pursue any other legal or equitable remedies. Pursuant to 42 CFR 438.708, the state agency may terminate the contract as a sanction and enroll that health plan’s members in other health plans or provide their benefits through other options included in the state plan if the state agency, at its sole discretion, determines that the health plan has failed to: |
| 1) | Carry out the substantive terms of the contract. | ||
| 2) | Meet applicable requirements in sections 1932, 1903(m) and 1905(t) of the Act. |
| b. | After a state agency notifies the health plan that it intends to terminate the contract, the state agency may do the following: |
| 1) | Give the health plan’s members written notice of the state agency’s intent to terminate the contract. | ||
| 2) | Allow members to disenroll immediately without cause. |
| c. | Before terminating a health plan’s contract under 42 CFR 438.708, the state agency shall provide the health plan a pre-termination hearing. The state agency shall: |
| 1) | Give the health plan written notice of its intent to terminate, the reason for termination, and the time and place of hearing; | ||
| 2) | Give the health plan (after the hearing) written notice of the decision affirming or reversing the proposed termination of the contract, and for an affirming decision, the effective date of termination; and | ||
| 3) | For an affirming decision, give members of the health plan notice of the termination and information, consistent with 42 CFR 438.10, on their options for receiving Medicaid services following the effective date of termination. |
| 2.29 | Access to Premises: During normal business hours (defined as 8:00 a.m. through 5:00 p.m., Monday through Friday, except State designated holidays), the health plan shall allow duly authorized agents or representatives of the Federal or State government access to the health plan’s premises or the health plan’s subcontractor’s premises to inspect, audit, monitor, or otherwise evaluate the performance of the health plan or its subcontractors. | |
| 2.30 | Advance Directives: | |
| 2.30.1 | The health plan shall maintain written policies and procedures related to advance directives. At the time of enrollment, the health plan shall provide written information to all adult members regarding the member’s rights under the Missouri law to make decisions concerning medical care. | |
| 2.30.2 | As part of recredentialing, the health plan shall audit records of primary care provider, hospitals, home health agencies, personal care providers, and hospices to determine whether the provider is following the policies and procedures related to advance directives. |
| RFP B3Z06118 | Page 92 |
| 2.30.3 | The health plan shall provide education to the health plan’s staff and members on issues concerning advance directives. | |
| 2.30.4 | The above provisions shall not be construed to prohibit the application of any Missouri law which allows for an objection on the basis of conscience for any provider or agent of such provider. | |
| 2.31 | Fraud and Abuse: |
Paragraph 2.31.1 revised by BAFO #001
| 2.31.1 | The following definitions are taken from “Guidelines for Addressing Fraud and Abuse in Medicaid Managed Care”, A Product of the National Medicaid Fraud and Abuse Initiative, Health Care Financing Administration National Initiative, October 2000. These definitions are provided to assist the health plan in preventing, coordinating, detecting, investigating, enforcing, and reporting fraud and abuse: | |
| Medicaid Managed Care Fraud: Any type of intentional deception or misrepresentation made by an entity or person in a capitated MCO, PCCM program, or other managed care setting with the knowledge that the deception could result in some unauthorized benefit to the entity, himself, or some other person. | ||
| Medicaid Managed Care Abuse: Practices in a capitated MCO, PCCM program, or other managed care setting that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards or contractual obligations for health care. The abuse can be committed by an MCO, contractor, subcontractor, provider, State employee, Medicaid beneficiary, or Medicaid managed care enrollee, among others. It also includes beneficiary practices in a capitated MCO, PCCM program, or other managed care setting that result in unnecessary cost to the Medicaid program or MCO, contractor, subcontractor, or provider. It should be noted that Medicaid funds paid to an MCO, then passing to subcontractors, are still Medicaid funds from a fraud and abuse perspective | ||
| 2.31.2 | The health plan shall implement internal controls, policies, and procedures designed to prevent, detect, review, report to the state agency, and assist in the prosecution of fraud and abuse activities by providers, subcontractors, and members. The policies and procedures shall articulate the health plan’s commitment to comply with all applicable Federal and State standards. In order to implement the above, the health plan must submit a written fraud and abuse plan to the state agency for approval prior to implementation. Any changes to the approved fraud and abuse plan must have state agency approval prior to implementation. |
| a. | The health plan’s fraud and abuse plan must include, but is not limited to the following components: |
| 1) | The designation of a compliance officer and a compliance committee that are responsible for the health plan’s fraud and abuse program and activities. The compliance officer is supervised by and reports to the Chief Executive Officer (CEO), health plan administrator, or the governing body; | ||
| 2) | Provision for a data system, resources and staff to perform the fraud, abuse, and other compliance responsibilities; | ||
| 3) | Procedures for internal prevention, detection, reporting, review, and corrective action; | ||
| 4) | Procedures for prompt response to detected offenses; | ||
| 5) | Procedures for reporting to the state agency, including timelines and use of state approved forms; | ||
| 6) | Written standards for organizational conduct; |
| RFP B3Z06118 | Page 93 |
| 7) | A compliance committee that periodically meets and documents review of compliance issues. These issues include fraud, abuse, and regulatory and contractual compliance. | ||
| 8) | Effective training and education for the compliance officer and the organization’s employees, management, board members, and subcontractors; | ||
| 9) | Inclusion of information about fraud and abuse identification and reporting in provider and member materials; and | ||
| 10) | Enforcement of standards through well-publicized disciplinary guidelines. |
| b. | The health plan’s fraud and abuse activities should include, but not be limited to the following: |
| 1) | Conducting regular reviews and audits of operations to guard against fraud and abuse; | ||
| 2) | Assessing and strengthening internal controls to ensure claims are submitted and payments are made properly; | ||
| 3) | Educating employees, network providers, and beneficiaries about fraud and abuse and how to report it; | ||
| 4) | Effective organizational resources to respond to complaints of fraud and abuse; | ||
| 5) | Establishing procedures to process fraud and abuse complaints; | ||
| 6) | Establishing procedures for reporting information to the state agency; and | ||
| 7) | Developing procedures to monitor utilization/service patterns of providers, subcontractors, and beneficiaries. |
Paragraph 2.31.3 revised by BAFO #001
| 2.31.3 | The health plan must quarterly report suspected fraud or abuse cases to the state agency. The health plan must initiate an immediate investigation to gather facts regarding the suspected fraud or abuse. In addition, the health plan shall provide reports of its investigative, corrective, and legal activities to the state agency in accordance with contractual and regulatory requirements. | |
| 2.31.4 | The health plan and its subcontractors shall cooperate fully in any state reviews or investigations and in any subsequent legal action. The health plan must implement corrective actions in instances of fraud and abuse detected by the state agency, or other authorized agencies or entities. | |
| 2.31.5 | The health plan must also provide a quarterly report of fraud and abuse activities to the state agency. The report must be submitted in accordance with state agency guidelines contained within the fraud and abuse policy statement. An annual evaluation of the effectiveness of the fraud and abuse program must be provided to the state agency. This evaluation must be a component of the annual evaluation of the effectiveness of the quality assessment and improvement program. | |
| 2.31.6 | Identification of Debarred Individuals or Excluded Providers in Health Plans: The health plan shall exclude providers from the health plan network that have been identified as having Office of Inspector General (OIG) sanctions, having failed to renew license or certification registration, having a revoked professional license or certification, or have been terminated by the state agency. The health plan can access debarred and OIG sanction information on the Internet. The health plan should also access information from the Professional Registration Boards Internet site to identify State initiated terminations. The state agency or its authorized agent shall conduct a periodic review to determine if appropriate exclusions and corrective action have occurred. |
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| 2.31.7 | Health Plan Pharmacy Lock-In: The health plan must submit its lock-in policies and procedures to the state agency for approval prior to implementation. The policies and procedures must include the member and provider communication documents that shall be utilized for the lock-in process. The lock-in policy must comply with the requirements located in 13 CSR 70-4.070, Title XIX Recipient Lock-In Program. | |
| The health plan must provide services in accordance with the requirements located in Attachment 3, Managed Care Policies Governing MC+ Services. If the health plan determines inappropriate utilization of pharmacy services by a member, the health plan may restrict the member to obtaining pharmacy services from one pharmacy provider. The health plan must initiate an investigation to identify the extent of the fraud or abuse. When a member is suspected of fraud or abuse (i.e., presenting an altered prescription), the health plan should notify the state agency within ten (10) calendar days of identification of the suspected activity in accordance with 2.31.2 and 2.31.3. | ||
| 2.31.8 | Member Explanation of Benefits (EOB): The health plan must provide an EOB to members upon request. The EOB will consist of a list of services that were billed to the health plan. The list shall contain paid and unpaid claims; for any unpaid claims, the list shall provide the reason the claim was not paid. | |
| 2.32 | Other Requirements: | |
| 2.32.1 | Unless otherwise specified herein, the health plan shall furnish all materials, labor, facilities, equipment, and supplies necessary to perform the service required herein. | |
| 2.32.2 | Within five (5) business days after issuance of the Notice of Award by the Division of Purchasing and Materials Management, the health plan shall submit a written identification and notification to the state agency of the name, title, address, and telephone number of one (1) individual within its organization as a duly authorized representative to whom all correspondence, official notices, and requests related to the health plan’s performance under the contract shall be addressed. The health plan shall have the right to change or substitute the name of the individual described above as deemed necessary provided that the state agency is notified immediately. | |
| 2.32.3 | The health plan shall understand and agree that the contract, in part, shall implement the MC+ managed care program. Therefore, the health plan shall conform to such requirements or regulations as the United States Department of Health and Human Services issues. | |
| 2.32.4 | If the state agency receives written notice from the United States Department of Health and Human Services that the health plan does not meet the definition of a Health Maintenance Organization as set forth in the Medicaid State Plan and 42 CFR 434 or receives written notice from the Department of Insurance that the health plan does not have a certificate of authority to establish or operate a HMO, the Division of Purchasing and Materials Management may cancel the contract with the health plan pursuant to contract cancellation provisions contained herein. | |
| 2.32.5 | In the event that changes in federal or state law require the Division of Purchasing and Materials Management to modify the contract, a written amendment shall be issued to the health plan pursuant to provisions for contract amendment stated herein. |
| a. | The terms of the contract and any amendment thereto must receive the approval of the United States Department of Health and Human Services. The United States Department of Health and Human Services failure to approve a provision of the contract shall render the provision null and void. The contract is contingent on the health plan meeting the definition of a Health Maintenance Organization as set forth in the Medicaid State Plan and 42 CFR 434. |
| 2.32.6 | The health plan shall guarantee and certify that no State of Missouri legislator or State of Missouri employee holds a controlling interest in the health plan. |
| RFP B3Z06118 | Page 95 |
| 2.32.7 | The health plan shall guarantee and certify that no funds paid to the health plan by the state agency shall be used for the purpose of influencing or attempting to influence an officer or employee of any Federal or State agency, a member of the United States Congress, or State Legislature. The health plan shall disclose if any funds other than those paid to the health plan by the state agency have been used or will be used to influence the persons or entities indicated above and will assist the state agency in making such disclosures to CMS. | |
| 2.32.8 | Termination or cancellation of the contract does not eliminate the health plan’s responsibility to the state agency for overpayments made to the health plan. If the contract is terminated or canceled, the health plan shall return to the state agency any payments advanced to the health plan for coverage of members for periods after the date of contract termination or cancellation. The health plan shall return such payments to the state agency within ninety (90) calendar days of contract termination/cancellation. |
| a. | If the contract is terminated, the health plan shall promptly supply all information necessary for the reimbursement of any outstanding claims. |
| 2.32.9 | In the event the contract is canceled, the state agency shall notify all members of the date of cancellation and process by which the members will continue to receive contract services and the health plan shall be responsible for all expenses related to said notification under these circumstances. In the event the contract is terminated by mutual consent, the state agency shall notify all members of the date of termination and process by which the members will continue to receive contract services; and the state agency shall be responsible for all expenses relating to said notification. | |
| 2.32.10 | The health plan shall have a written policy regarding the illegality of sexual harassment. At a minimum, the policy shall include: |
| a. | The definition of sexual harassment under federal and state law, as amended; | ||
| b. | The health plan’s internal complaint process including penalties; | ||
| c. | The legal recourse, investigative, and complaint process available for members through the state agency and for employees through the Missouri Commission on Human Rights; and | ||
| d. | Instructions on how to contact the state agency and the Missouri Commission on Human Rights. |
| 2.32.11 | The health plan shall understand and agree that the State of Missouri (its departments and employees) does not maintain commercial liability insurance. | |
| 2.32.12 | If the performance of any part of the contract is prevented, hindered or delayed by fire, flood or an act of God, then the health plan or the state agency shall be excused from such performance during the continuance of such events. This clause shall not become operative until the party whose performance is hindered notifies the other party of the occurrence and the reasons for the delay. | |
| 2.32.13 | Members are the intended beneficiaries of the contracts and as such are entitled to the remedies accorded to third party beneficiaries under the law. | |
| 2.32.14 | The health plan is prohibited from using MC+ managed care funds for services provided in the following circumstances: |
| a. | Non-emergency services provided by or under the direction of an excluded individual, | ||
| b. | Any funds not used under the Assisted Suicide Funding Restriction Act of 1997, |
||
| c. | Any amount expended for roads, bridges, stadiums, or any other item. |
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| 2.32.15 | The Missouri Department of Insurance regulates the health plans licensed in Missouri including their financial stability. Therefore, the health plan must comply with all Department of Insurance applicable standards. | |
| 2.33 | Invoicing and Payment Requirements: On a monthly basis, as near as practical to the fifth day of the calendar month following the month for which services have been performed and for which payment is being made, the state agency shall make payments to the health plan via electronic funds transfer in accordance with the following: | |
| 2.33.1 | For each member enrolled on the first of the month, the state agency shall pay the health plan the firm fixed per member, per month net capitation amount specified on the specific region’s Pricing Page for the Category of Aid Rate Subgroup for the member. The per member, per month net capitation amount shall reflect any reduction or increase pursuant to the health plan’s performance in screening 80 percent of eligible members as measured in accordance with the CMS 416 reporting methodology. |
| a. | The state agency shall pro-rate the net capitation amount when the member’s birth date necessitates a change to a different Category of Aid or Rate Subgroup in a given month. | ||
| b. | For members enrolled at any time after the beginning of the month’s payment cycle, the state agency shall pro-rate the net capitation amount for the first partial month. | ||
| c. | For members whose enrollment lapses for any period of a month in which a capitation payment was made due to loss of eligibility, death, or other circumstance, the state agency shall adjust its next monthly capitation payment to recoup the portion of the capitation payment to which it is due a refund. | ||
| d. | Any payment pro-rations shall be on a daily basis. |
| 2.33.2 | The health plan shall accept capitation payments as specified herein and must have written policies and procedures for receiving and processing the capitation payments. | |
| 2.33.3 | The health plan shall agree and understand that the capitation payments specified herein shall be the only payments made to the health plan for all services required herein and that no other payment or reimbursement for any reason whatsoever shall be made to the health plan. In exchange for the capitation payments, the health plan shall be liable or “at risk” for the costs of all covered services. | |
| 2.33.4 | In the event that the Missouri General Assembly appropriates funds expressly for the services required herein, the State of Missouri shall amend the contract. In such event, the health plan shall pass fee increases to its providers commensurate with the Missouri General Assembly’s intent. It must clearly be the intent of the Missouri General Assembly that increases be added during an ongoing contract period for any such amendment to take place | |
| 2.34 | Business Associate Provisions: | |
| 2.34.1 | Health Insurance Portability and Accountability Act of 1996 (HIPAA) — The state agency is subject to and must comply with provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and all regulations promulgated pursuant to authority granted therein. The health plan constitutes a “Business Associate” of the state agency as such term is defined in the Code of Federal Regulations (CFR) at 45 CFR 160.103. Therefore, the term, “health plan” as used in this section shall mean “Business Associate.” |
| a. | The health plan shall agree and understand that for purposes of the Business Associate Provisions contained herein, terms used but not otherwise defined shall have the same meaning as those terms defined in 45 CFR parts 160 and 164, including, but not limited to the following: |
| RFP B3Z06118 | Page 97 |
| 1) | “Privacy Rule” shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR part 160 and part 164, subparts A and E. | ||
| 2) | “Security Rule” shall mean the Security Standards for the Protection of Electronic Protected Health Information at 45 CFR part 164, subpart C. | ||
| 3) | “Individual” shall have the same meaning as the term “individual” in 45 CFR 164.501 and shall include a person who qualifies as a personal representative in accordance with 45 CFR 164.502 (g). | ||
| 4) | “Protected Health Information” shall mean individually identifiable health information: |
- (1) Except as provided in paragraph (2) of this definition, that is: (i)
Transmitted by electronic media; or (ii) Maintained in electronic media; or
(iii) Transmitted or maintained in any other form or medium.
- (2) Protected Health Information excludes individually identifiable health
information in (i) Education records covered by the Family Educational Rights
and Privacy Act, as amended, 20 U.S.C. 1232g; (ii) Records described at 20
U.S.C. 1232g(a)(4)(B)(iv); and (iii) Employment records held by a covered entity
[state agency] in its role as employer.
| 5) | “Electronic Protected Health Information” shall mean information that comes within paragraphs (1)(i) or (1)(ii) of the definition of protected health information as specified above. |
| b. | The health plan shall agree and understand that wherever in this document the term Protected Health Information is used, it shall also be deemed to include Electronic Protected Health Information. | ||
| c. | The health plan shall agree the state agency must comply with 45 CFR 160 and 45 CFR 164, as currently in effect and as may be amended at some later date, and that to achieve such compliance, the health plan must appropriately safeguard Protected Health Information (as that term is defined in 45 CFR 164.501), which the health plan receives from or creates or receives on behalf of the state agency. To provide reasonable assurance of appropriate safeguards, the health plan shall comply with the business associate provisions stated herein. | ||
| d. | The state agency and the health plan agree to amend the contract as is necessary for the state agency to comply with the requirements of the Privacy Rule and HIPAA requirements. |
| 2.34.2 | Permitted uses and disclosures of Protected Health Information: |
| a. | The health plan may use or disclose Protected Health Information to perform functions, activities, or services for, or on behalf of, the state agency as specified in the contract, provided that such use or disclosure would not violate the Privacy Rule as the Privacy Rule applies to the state agency. | ||
| b. | The health plan may use Protected Health Information to report violations of law to appropriate Federal and State authorities, consistent with 45 CFR 164.502(j)(1) and shall notify the state agency by no later than ten (10) calendar days after the health plan becomes aware of the disclosure of the Protected Health Information. | ||
| c. | If required to properly perform the contract and subject to the terms of the contract, the health plan may use or disclose Protected Health Information if necessary for the proper management and administration of the health plan’s business. | ||
| d. | If the disclosure is required by law, the health plan may disclose Protected Health Information to carry out the legal responsibilities of the health plan. | ||
| e. | The health plan may use Protected Health Information to provide Data Aggregation services to the state agency as permitted by 45 CFR 164.504(e)(2)(i)(B). |
| 2.34.3 | Obligations of the Health plan: |
| RFP B3Z06118 | Page 98 |
| a. | The health plan shall not use or disclose Protected Health Information other than as permitted or required by the contract or as otherwise required by law. | ||
| b. | The health plan shall use appropriate safeguards to prevent use or disclosure of the Protected Health Information other than as provided for by the contract. Such safeguards may include, but shall not be limited to: |
| 1) | Workforce training on the appropriate uses and disclosures of Protected Health Information pursuant to the terms of the contract. | ||
| 2) | Policies and procedures implemented by the health plan to prevent inappropriate uses and disclosures of Protected Health Information by its workforce. | ||
| 3) | Any other safeguards necessary to prevent the inappropriate use or disclosure of Protected Health Information. |
| c. | With respect to Electronic Protected Health Information, the health plan shall implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity and availability of the Electronic Protected Health Information that health plan creates, receives, maintains or transmits on behalf of the state agency. | ||
| d. | The health plan shall require that any agent or subcontractor to whom the health plan provides any Protected Health Information received from, created by, or received by the health plan pursuant to the contract, also agrees to the same restrictions and conditions stated herein that apply to the health plan with respect to such information. | ||
| e. | By no later than ten (10) calendar days of receipt of a written request from the state agency, or as otherwise required by state or federal law or regulation, or by another time as may be agreed upon in writing by the state agency, the health plan shall make the health plan’s internal practices, books, and records, including policies and procedures and Protected Health Information, relating to the use and disclosure of Protected Health Information received from, created by, or received by the health plan on behalf of the state agency available to the state agency and/or to the Secretary of the Department of Health and Human Services or designee for purposes of determining compliance with the Privacy Rule. | ||
| f. | The health plan shall document any disclosures and information related to such disclosures of Protected Health Information as would be required for the state agency to respond to a request by an individual for an accounting of disclosures of Protected Health Information in accordance with 45 CFR 164.528. By no later than five (5) calendar days of receipt of a written request from the state agency, or as otherwise required by state or federal law or regulation, or by another time as may be agreed upon in writing by the state agency, the health plan shall provide an accounting of disclosures of Protected Health Information regarding an individual to the state agency. | ||
| g. | In order to meet the requirements under 45 CFR 164.524, the health plan shall, within five (5) calendar days following a state agency request, or as otherwise required by state or federal law or regulation, or by another time as may be agreed upon in writing by the state agency, provide the state agency access to the Protected Health Information in an individual’s Designated Record Set. However, if requested by the state agency, the health plan shall provide access to the Protected Health Information in a Designated Record Set directly to the individual for whom such information relates. | ||
| h. | At the direction of the state agency, the health plan shall promptly make any amendment(s) to Protected Health Information in a Designated Record Set pursuant to 45 CFR 164.526. | ||
| i. | The health plan shall report to the state agency’s Security Officer any security incidents no later than five (5) calendar days of becoming aware of such incident. For purposes of this paragraph, security |
| RFP B3Z06118 | Page 99 |
| incident shall mean the unauthorized access, use, modification or destruction of information or interference with systems operations in an information system. | |||
| j. | By no later than five (5) calendar days after the health plan becomes aware of any use or disclosure of the Protected Health Information not permitted or required as stated herein, the health plan shall notify the state agency’s Privacy Officer, in writing, of the unauthorized use or disclosure and shall take immediate action to stop the unauthorized use or disclosure. The health plan shall include a description of any remedial action taken to mitigate any harmful effect of such disclosure. The health plan shall also provide the state agency’s Privacy Officer with a proposed written plan of action for approval that describes plans for preventing any such future unauthorized uses or disclosures. |
| 2.34.4 | Obligations of the State Agency: |
| a. | The state agency shall notify the health plan of limitation(s) that may affect the health plan’s use or disclosure of Protected Health Information, by providing the health plan with the state agency’s notice of privacy practices in accordance with 45 CFR 164.520. | ||
| b. | The state agency shall notify the health plan of any changes in, or revocation of, authorization by an Individual to use or disclose Protected Health Information. | ||
| c. | The state agency shall notify the health plan of any restriction to the use or disclosure of Protected Health Information that the state agency has agreed to in accordance with 45 CFR 164.522. | ||
| d. | The state agency shall not request the health plan to use or disclose Protected Health Information in any manner that would not be permissible under the Privacy Rule as the Privacy Rule applies to the state agency. |
| 2.34.5 | Expiration/Termination/Cancellation — Except as provided in the subparagraph below, upon the expiration, termination, or cancellation of the contract for any reason, the health plan shall return to the state agency or shall destroy all Protected Health Information received by the health plan from the state agency, or created or received by the health plan on behalf of the state agency, and shall not retain any copies of such Protected Health Information. This provision shall also apply to Protected Health Information that is in the possession of subcontractors or agents of the health plan. |
| a. | In the event the health plan determines and the state agency agrees that returning or destroying the Protected Health Information is not feasible, the health plan shall extend the protections of the contract to the Protected Health Information for as long as the health plan maintains the Protected Health Information and shall limit the use and disclosure of the Protected Health Information to those purposes that made return or destruction of the information infeasible. If at any time it becomes feasible to return or destroy any such Protected Health Information maintained pursuant to this paragraph, the health plan must notify the state agency and obtain instructions from the state agency for either the return or destruction of the Protected Health Information. |
| 2.34.6 | Breach of Contract – In the event the health plan is in breach of contract with regard to the business associate provisions included herein, the health plan shall agree and understand that in addition to the requirements of the contract related to cancellation of contract, if the state agency determines that cancellation of the contract is not feasible, the State of Missouri may elect not to cancel the contract, but the state agency shall report the contractual breach to the Secretary of the Department of Health and Human Services. |
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| 3. | GENERAL CONTRACTUAL REQUIREMENTS: | |
| 3.1 | Contract : A binding contract shall consist of: (1) the RFP, amendments thereto, and any Best and Final Offer (BAFO) request(s) with RFP changes/additions, (2) the health plan’s proposal including any BAFOs and (3) the Division of Purchasing and Materials Management’s acceptance of the proposal by “notice of award” or by “purchase order”. All Exhibits and Attachments included in the RFP shall be incorporated into the contract by reference. | |
| 3.1.1 | The notice of award does not constitute a directive to proceed. Before providing equipment, supplies and/or services, the health plan must receive a properly authorized purchase order unless the purchase is equal to or less than $3,000. Purchases equal to or less than $3,000 may be processed with a purchase order at the discretion of the state agency. | |
| 3.1.2 | The contract expresses the complete agreement of the parties and performance shall be governed solely by the specifications and requirements contained therein. | |
| 3.1.3 | Any change to the contract, whether by modification and/or supplementation, must be accomplished by a formal contract amendment signed and approved by and between the duly authorized representative of the health plan and the Division of Purchasing and Materials Management or by a modified purchase order prior to the effective date of such modification. The health plan expressly and explicitly understands and agrees that no other method and/or no other document, including correspondence from the state agency, acts, and oral communications by or from any person, shall be used or construed as an amendment or modification to the contract. | |
| 3.2 | Contract Period: The original contract period shall be as stated on page 1 of the Request for Proposal (RFP). The contract shall not bind, nor purport to bind, the state for any contractual commitment in excess of the original contract period. The Division of Purchasing and Materials Management shall have the right, at its sole option, to renew the contract for two (2) additional one-year periods, or any portion thereof. In the event the Division of Purchasing and Materials Management exercises such right, all terms and conditions, requirements and specifications of the contract shall remain the same and apply during the renewal period, pursuant to the following: | |
| 3.2.1 | The state agency will include in each year’s budget request to the Office of Administration, Division of Budget and Planning, a rate change based on the state agency’s review of recent health plan financial experience, medical trends from other state Medicaid programs and national trend indices (CPI/DRI), and pharmacy market trends including specific drug introductions and expiring patents. The rate changes will be reflective of anticipated programmatic changes. | |
| 3.2.2 | If the State of Missouri elects to renew the contract for the first renewal option, the health plan shall accept the amount appropriated by the Governor and the Missouri General Assembly. | |
| 3.2.3 | If the State of Missouri elects to renew the contract for the second renewal option and if the health plan intends to renew the contract for the second renewal option, the State of Missouri and the health plan shall negotiate the firm, fixed rates applicable to the second renewal period. The State of Missouri shall commence such negotiation process approximately six months prior to the expiration of the first renewal period. Individual negotiations shall be conducted with each health plan in accordance with the negotiation provisions provided elsewhere herein. |
| a. | The health plan must submit information which establishes and supports the actuarial soundness of the proposed rates and a certification of said soundness from an Associate of the Society of Actuaries (ASA), a Fellow of Society of Actuaries (FSA), or a Member of the American Academy of Actuaries (MAAA). | ||
| b. | If the State of Missouri and the health plan are unable to agree upon the firm, fixed rates for the second renewal period, the pending contract renewal shall be canceled. In the event of such, the |
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State of Missouri reserves its right to extend the contract at the current firm, fixed
rates for no more than 180 days from the date such determination is made.
| c. | If the health plan does not intend to renew the contract for the second renewal option and does not desire to enter into the negotiation process, the health plan shall provide written notification to the State of Missouri of such within at least 180 calendar days prior to the expiration of the contract period. |
| 3.2.4 | During the second and final renewal option, the State of Missouri may issue a public notice of the pending contract expiration and the upcoming opportunity to contract with the State of Missouri for MC+ managed care services. If no health plans, other than the health plans the State of Missouri currently contracts with, indicate interest in contracting with the State of Missouri for such, the State of Missouri may elect to renew the contract with the health plan for the continuation of the MC+ managed care services. In the event of such, the State of Missouri and the health plan shall negotiate the firm, fixed rates applicable to the renewal period. The State of Missouri shall have the option of issuing such notification on an annual basis. | |
| 3.3 | Price: All prices shall be as indicated on the specific region’s Pricing Page. The state shall not pay nor be liable for any other additional costs including but not limited to taxes, shipping charges, insurance, interest, penalties, termination payments, attorney fees, liquidated damages, etc. | |
| 3.4 | Termination: The Division of Purchasing and Materials Management reserves the right to terminate the contract at any time, for the convenience of the State of Missouri, without penalty or recourse, by giving written notice to the health plan at least thirty (30) calendar days prior to the effective date of such termination. In the event of termination pursuant to this paragraph, all documents, data, reports, supplies, equipment, and accomplishments prepared, furnished or completed by the health plan pursuant to the terms of the contract shall, at the option of the Division of Purchasing and Materials Management, become the property of the State of Missouri. The health plan shall be entitled to receive just and equitable compensation for services and/or supplies delivered to and accepted by the State of Missouri pursuant to the contract prior to the effective date of termination. | |
| 3.5 | Transition: | |
| 3.5.1 | Upon expiration, termination, or cancellation of the contract, the health plan shall assist the state agency to insure an orderly transfer of responsibility and/or the continuity of those services required under the terms of the contract to an organization designated by the state agency, if requested in writing. At a minimum, the health plan shall perform the following related to transition: |
| a. | For a period not to exceed ninety (90) calendar days after the expiration, termination, or cancellation of the contract, the health plan shall continue providing any part or all of the services in accordance with the terms and conditions, requirements, and specifications of the contract for a price not to exceed those prices set forth in the contract. | ||
| b. | In addition, for 365 calendar days after expiration, termination, or cancellation of the contract, the health plan shall provide those administration functions that cannot be completed prior to the expiration, termination, or cancellation of the contract due to the nature of the function. Such administrative functions, shall include, but are not limited to, payment of claims for service dates prior to expiration, termination, or cancellation of the contract; operation of the member grievance system and provider complaints, grievances, and appeals; operational data reporting, financial reporting, and communication links with the state agency. | ||
| c. | The health plan shall deliver, FOB destination, all records, documentation, reports, data, recommendations, master, or printing elements, etc., which were required to be produced under the terms of the contract to the state agency and/or to the state agency’s designee within thirty (30) days after receipt of the written request. |
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| d. | The state agency, at its sole option, may discontinue enrolling new membership to the health plan, on a date specified by the state agency, prior to expiration, cancellation, or termination of the contract. |
| 3.6 | Health Plan Liability: The health plan shall be responsible for any and all personal injury (including death) or property damage as a result of the health plan’s negligence involving any equipment or service provided under the terms and conditions, requirements and specifications of the contract. In addition, the health plan assumes the obligation to save the State of Missouri, including its agencies, employees, and assignees, from every expense, liability, or payment arising out of such negligent act. |
| a. | The health plan also agrees to hold the State of Missouri, including its agencies, employees, and assignees, harmless for any negligent act or omission committed by any subcontractor or other person employed by or under the supervision of the health plan under the terms of the contract. | ||
| b. | The health plan shall not be responsible for any injury or damage occurring as a result of any negligent act or omission committed by the State of Missouri, including its agencies, employees, and assignees. | ||
| c. | Under no circumstances shall the health plan be liable for any of the following: (1) third party claims against the state for losses or damages (other than those listed above); (2) loss of, or damage to, the state’s records or data; or (3) economic consequential damages (including lost profits or savings) or incidental damages, even if the health plan is informed of their possibility. |
| 3.7 | Insurance: The health plan shall understand and agree that the State of Missouri cannot save and hold harmless and/or indemnify the health plan or employees against any liability incurred or arising as a result of any activity of the health plan or any activity of the health plan’s employees related to the health plan’s performance under the contract. Therefore, the health plan shall maintain adequate liability insurance in the form(s) and amount(s) sufficient to protect the State of Missouri, its agencies, its employees, its clients, and the general public against any loss, damage, and/or expense related to his/her performance under the contract. |
| a. | The insurance coverage shall include, but shall not necessarily be limited to, general liability, professional liability, etc. In addition, automobile liability coverage for the operation of any motor vehicle must be maintained if the terms of the contract require any form of transportation services. | ||
| b. | The limits of liability for all types of coverage shall not be less than $2,000,000 per occurrence. | ||
| c. | The health plan shall provide written evidence of the insurance to the state agency. Such evidence shall include, but shall not necessarily be limited to: effective dates of coverage, limits of liability, insurer’s name, policy number, endorsement by representatives of the insurance company, etc. Evidence of self-insurance coverage or of another alternate risk financing mechanism may be utilized provided that such coverage is verifiable and irrevocably reliable. The evidence of insurance coverage must be submitted before or upon award of the contract. The contract number must be identified on the evidence of insurance coverage. | ||
| d. | In the event the insurance coverage is canceled, the state agency must be notified immediately. |
| 3.8 | Subcontractors: Any subcontracts for the products/services described herein must include appropriate provisions and contractual obligations to ensure the successful fulfillment of all contractual obligations agreed to by the health plan and the State of Missouri and to ensure that the State of Missouri is indemnified, saved, and held harmless from and against any and all claims of damage, loss, and cost (including attorney fees) of any kind related to a subcontract in those matters described in the contract between the State of Missouri and the health plan. |
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| 3.8.1 | The health plan shall expressly understand and agree that he/she shall assume and be solely responsible for all legal and financial responsibilities related to the execution of a subcontract. | |
| 3.8.2 | The health plan shall agree and understand that utilization of a subcontractor to provide any of the products/services in the contract shall in no way relieve the health plan of the responsibility for providing the products/services as described and set forth herein. The health plan must obtain acknowledgement from the State of Missouri prior to establishing any new subcontracting arrangements and before changing any subcontractors. | |
| 3.8.3 | All subcontracts for health care services must be in writing and shall comply with all provisions of the contract and shall include at least the items listed below. In addition, all subcontractors shall comply with the applicable provisions of federal and state laws and regulations, as amended, and policies. Before any delegation of any functions and responsibilities to any subcontractor, the health plan shall evaluate the prospective subcontractor’s ability to perform the activities to be delegated. The health plan shall have policies and procedures to monitor the performance of health care service subcontractors to ensure that such subcontractors comply with the provisions of the RFP. The health plan shall prepare and issue an annual report to the state agency regarding the results of its monitoring activities in previous calendar year for each health care service subcontractor and any corrective actions implemented as a result of its monitoring activities. The annual report shall be due by November 30 of each year. In addition, the health plan shall fully investigate and timely respond to issues involving subcontractors upon request of the state agency. |
| a. | A description of services to be provided or other activities performed. This description shall be in such form as to permit the state agency to ascertain definitively which contractual obligations have been subcontracted. | ||
| b. | Provision(s) for release to the health plan of any information necessary for the health plan to perform any of its obligations under the contract including but not limited to compliance with all reporting requirements (for example encounter data reporting requirements), timely payment requirements, and quality assessment requirements. | ||
| c. | The provision available to a health care provider to challenge or appeal the failure of the health plan to cover a service. | ||
| d. | Provision(s) that (1) the subcontractor’s facilities and records shall be open to inspection by the health plan and appropriate federal and state agencies and, (2) the medical records, or copies thereof, shall be provided to the health plan, upon request, for transfer to subsequent subcontractors for review by the state agency. | ||
| e. | Provisions that require each health care provider to maintain comprehensive medical records for a minimum of five years. | ||
| f. | A provision that when no member co-payment is required, the subcontractor shall look solely to the health plan for compensation for services provided to member. | ||
| g. | Provision(s) that prohibit any financial incentive arrangement to induce subcontractors to limit medically necessary services. A description of all financial incentive arrangements shall be included in the subcontract. In the event of a change to these financial incentive arrangements, the subcontractor shall immediately notify the health plan of such change so the health plan can meet its requirement to notify the state agency. | ||
| h. | Provisions that the health plan may not prohibit, or otherwise restrict, a health care professional acting within the lawful scope of practice, from advising or advocating on behalf of a member who is his or her patient: |
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| 1) | For the member’s health status, medical care, or treatment options, including any alternative treatment that may be self-administered. | ||
| 2) | For any information the member needs in order to decide among all relevant treatment options. | ||
| 3) | For the risks, benefits, and consequences of treatment or non-treatment. | ||
| 4) | For the member’s right to participate in decisions regarding his or her health care, including the right to refuse treatment, and to express preferences about future treatment decisions. |
| i. | Provisions that subcontractors shall not conduct or participate in health plan enrollment, disenrollment, transfer, or opt out activities. The subcontractors shall not influence a member’s enrollment. Prohibited activities include: |
| 1) | Requiring or encouraging the member to apply for an assistance category not included in MC+ managed care; | ||
| 2) | Requiring or encouraging the member and/or guardian to use the opt out provision as an option in lieu of delivering health plan benefits; | ||
| 3) | Mailing or faxing health plan enrollment forms; | ||
| 4) | Aiding the member in filling out health plan enrollment forms; | ||
| 5) | Photocopying blank health plan enrollment forms for potential members; | ||
| 6) | Distributing blank health plan enrollment forms; | ||
| 7) | Participating in three way calls to the MC+ managed care enrollment helpline; | ||
| 8) | Suggesting a member transfer to another health plan; or | ||
| 9) | Other activities in which subcontractors are engaged in to enroll a member in a particular health plan or in any way assisting a member to enroll in a health plan. |
| j. | If a subcontract is with a federally qualified health center (FQHC) or rural health clinic (RHC) to provide services to members under a prepayment arrangement, a provision that the state agency shall reimburse the FQHC or RHC 100% of its reasonable cost for covered services. | ||
| k. | All hospital subcontracts must require that the hospital subcontractor notify the health plan of births where the mother is a member. The subcontracts must specify which entity is responsible for notifying the Family Support Division of the birth. | ||
| l. | For contracted services, the subcontractor shall follow the claim processing requirements set forth by RSMo 376.383 and 376.384, as amended. | ||
| m. | Provisions in accordance with federal and state laws and regulations, as amended, and policy regarding termination of the subcontract between the health plan and the subcontractor. | ||
| n. | Provisions that in the event of the subcontractor’s insolvency or other cessation of operations, covered services to members shall continue through the period for which a capitation payment has been made to the health plan or until the member’s discharge from an inpatient facility, whichever time is greater. | ||
| o. | The health plan and its subcontractors shall establish reasonable timely filing requirements for claims to be filed by a provider for reimbursement. The subcontractor shall inform its provider network of the timely filing requirements. |
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| 1) | In the case of capitated arrangements with providers, the subcontractor shall establish reasonable reporting of encounters to the health plan in sufficient detail to meet the health plan’s encounter data reporting requirements. | ||
| 2) | In the case of services provided by out-of-network providers, the health plan shall comply with state law regarding timely filing requirements. |
| p. | Provision for revoking the subcontract agreement or imposing other sanctions if the subcontractor’s performance is inadequate. | ||
| q. | The health plan shall agree and understand that consumer protection shall be integral to the MC+ managed care program. All contracts between the health plan and providers shall ensure that the provider complies with the consumer protection provisions outlined in the marketing guidelines. | ||
| r. | Provision(s) that entitle each member to one free copy of his or her medical records annually. The fee for additional copies shall not exceed the actual cost of time and materials used to compile, copy, and furnish such records. |
| 3.9 | Assignment: | |
| 3.9.1 | The health plan shall not transfer any interest in the contract, whether by assignment or otherwise, without the prior written consent of the Division of Purchasing and Materials Management. | |
| 3.9.2 | The health plan shall agree and understand that, in the event the Division of Purchasing and Materials Management consents to a financial assignment of the contract in whole or in part to a third party, any payments made by the State of Missouri pursuant to the contract, including all of those payments assigned to the third party, shall be contingent upon the performance of the prime health plan in accordance with all terms and conditions, requirements and specifications of the contract. | |
| 3.10 | Substitution of Personnel: The health plan agrees and understands that the State of Missouri’s agreement to the contract is predicated in part on the utilization of the specific individual(s) and/or personnel qualifications identified in the proposal. The health plan further agrees that any substitution made pursuant to this paragraph must be equal or better than originally proposed. | |
| 3.11 | Health Plan Status: The health plan represents himself or herself to be an independent health plan offering such services to the general public and shall not represent himself/herself or his/her employees to be an employee of the State of Missouri. Therefore, the health plan shall assume all legal and financial responsibility for taxes, FICA, employee fringe benefits, workers compensation, employee insurance, minimum wage requirements, overtime, etc., and agrees to indemnify, save, and hold the State of Missouri, its officers, agents, and employees, harmless from and against, any and all loss; cost (including attorney fees); and damage of any kind related to such matters. | |
| 3.12 | Coordination: The health plan shall fully coordinate all contract activities with those activities of the state agency. As the work of the health plan progresses, advice and information on matters covered by the contract shall be made available by the health plan to the state agency or the Division of Purchasing and Materials Management throughout the effective period of the contract. | |
| 3.13 | Property of State: | |
| 3.13.1 | All reports, documentation, and material developed or acquired by the health plan as a direct requirement specified in the contract shall become the property of the State of Missouri. | |
| 3.13.2 | The health plan shall agree and understand that all discussions with the health plan and all information gained by the health plan as a result of the health plan’s performance under the contract, including member information, medical records, data, and data elements established, collected, maintained, or used |
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in the administration of the contract shall be confidential and
that no reports, documentation, or material prepared as required by the contract shall be
released to the public without the prior written consent of the state agency.
| a. | The health plan shall provide safeguards that restrict the use or disclosure of information concerning members to purposes directly connected with the administration of the contract. | ||
| b. | The health plan shall not disclose the contents of member information or records to anyone other than the state agency, the member or the member’s legal guardian, or other parties with the member’s written consent. | ||
| c. | In complying with the requirements of this section, the health plan and the state agency shall follow the requirements of 42 Code of Federal Regulations Part 431, Subpart F, as amended, regarding confidentiality of information concerning applicants and members of public assistance and 42 Code of Federal Regulations Part 2, as amended, regarding confidentiality of alcohol and drug abuse patient records. | ||
| d. | The health plan shall have written policies and procedures for maintaining the confidentiality of data, including medical records, member information, and appointment records for adult and adolescent STDs and adolescent family planning services. |
| 3.14 | Performance Security Deposit: The health plan must furnish a performance security deposit in the form of an original bond issued by a surety company authorized to do business in the State of Missouri (no copy or facsimile is acceptable), check, cash, bank draft, or irrevocable letter of credit to the Office of Administration, Division of Purchasing and Materials Management within thirty (30) days after award of the contract and prior to performance of service under the contract. |
| a. | The performance security deposit must be made payable to the State of Missouri in an amount equal to the in the amount of $1,000,000. In the event the health plan is awarded a contract for more than one region, the health plan shall provide a separate performance security deposit in the amount of $1,000,000.00 for each region. | ||
| b. | The contract number and contract period must be specified on the performance security deposit. | ||
| c. | In the event the Division of Purchasing and Materials Management exercises an option to renew the contract for an additional period, the health plan shall maintain the validity and enforcement of the security deposit for the said period, pursuant to the provisions of this paragraph, in an amount stipulated at the time of contract renewal | ||
| d. | Additionally, during the 365 day transition period, the health plan shall maintain the validity and enforcement of the performance security deposit for performance of the administrative functions pursuant to the provisions of this paragraph, in an amount stipulated via written notification by DPMM. |
| 3.15 | Federal Funds Requirements — The health plan shall understand and agree that the contract may involve the use of federal funds. | |
| 3.15.1 | Steven’s Amendment — In accordance with the Departments of Labor, Health and Human Services, and Education and Related Agencies Appropriations Act, Public Law 101-166, Section 511, “Steven’s Amendment”, the health plan shall not issue any statements, press releases, and other documents describing projects or programs funded in whole or in part with Federal money unless the prior approval of the state agency is obtained and unless they clearly state the following as provided by the state agency: |
| a. | The percentage of the total costs of the program or project which will be financed with Federal money; |
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| b. | The dollar amount of Federal funds for the project or program; and | ||
| c. | The percentage and dollar amount of the total costs of the project or program that will be financed by nongovernmental sources. |
| 3.16 | Terminology | |
| 3.16.1 | All references to the term “contractor” as used in the Terms and Conditions attached hereto shall mean “health plan”. |
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| 4. | PROPOSAL SUBMISSION INFORMATION | |
| 4.1 | Submission of Proposals: | |
| 4.1.1 | ELECTRONIC SUBMISSION OF PROPOSALS THROUGH THE ON-LINE BIDDING WEB SITE IS NOT AVAILABLE FOR THIS RFP. | |
| 4.1.2 | Proposal Security Deposit Required: The offeror must furnish a proposal security deposit in the form of an original bond (copies or facsimiles shall not be acceptable), check, cash, bank draft, or irrevocable letter of credit to the Office of Administration, Division of Purchasing and Materials Management by the proposal opening date and time. The Request for Proposal number must be specified on the proposal security deposit. |
| a. | The proposal security deposit must be made payable to the State of Missouri in the amount of $500,000 for each proposed region. | ||
| b. | Any proposal security deposit submitted shall remain in force until such time as the health plan submits a performance security deposit pursuant to the contract requirements specified elsewhere herein. Failure to submit a performance security deposit in the time specified or failure to accept award of the contract shall be deemed sufficient cause to forfeit the proposal security deposit. | ||
| c. | If the proposal security deposit is submitted in the form of cash or a check, it will be deposited. However, the Division of Purchasing and Materials Management shall issue a check in the same amount as the offeror’s proposal security deposit to the offeror either once the performance security deposit is received if the offeror is awarded the contract, or at the time of award of the contract if the offeror is not awarded a contract. |
| 4.1.3 | When submitting a proposal, the offeror should include nine (9) additional copies along with their original proposal. The front cover of the original proposal should be labeled “original” and the front cover of all copies should be labeled “copy”. |
| a. | In addition the offeror should provide one (1) copy of their entire proposal, including all attachments, in Microsoft compatible format on diskette(s) or CD(s). | ||
| b. | Both the original and the copies should be printed on recycled paper and double sided. | ||
| c. | Imaging Ready — In addition, all proposals are scanned into the Division of Purchasing and Materials Management imaging system after a contract is executed, or all proposals are rejected. |
| 1) | The scanned information will be able to be viewed through the Internet from the Public Record Search system. Therefore, the offeror is advised not to include personal identifying information such as social security numbers in the proposal. | ||
| 2) | In preparing a proposal, the offeror should be mindful of document preparation efforts for imaging purposes and storage capacity that will be required to image the proposals. Glue bound materials should not be used. |
| 4.1.4 | To facilitate the evaluation process, the offeror is encouraged to organize their proposal into distinctive sections that correspond with the individual evaluation categories described herein. The offeror is cautioned that it is the offeror’s sole responsibility to submit information related to the evaluation categories and that the State of Missouri is under no obligation to solicit such information if it is not included with the proposal. The offeror’s failure to submit such information may cause an adverse impact on the evaluation of the proposal. |
| a. | Each distinctive section should be titled with each individual evaluation category and all material related to that category should be included therein. | ||
| b. | The proposal should be page numbered. |
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| c. | The signed page one from the original RFP and all signed amendments should be placed at the beginning of the proposal. |
| 4.1.5 | The offeror should complete and submit Exhibit A, Miscellaneous Information. | |
| 4.1.6 | Offeror’s Contacts: |
| a. | Offerors and their agents (including subcontractors, employees, consultants, or anyone else acting on their behalf) must direct all of their questions or comments regarding the RFP, the evaluation, etc. to the buyer of record indicated on the first page of this RFP. The buyer may be contacted via e-mail or phone as shown on the first page, or via facsimile to 573-526-9817. | ||
| b. | Offerors and their agents may not contact any other state employee regarding any of these matters during the solicitation and evaluation process. Inappropriate contacts are grounds for suspension and/or exclusion from specific procurements. Offerors and their agents who have questions regarding this matter should contact the buyer of record. | ||
| c. | Offerors are advised that any questions received less than three weeks prior to the RFP opening date may not be answered. |
| 4.2 | Competitive Negotiation of Proposals — The offeror is advised that under the provisions of this Request for Proposal, the Division of Purchasing and Materials Management reserves the right to conduct negotiations of the proposals received or to award a contract without negotiations. If such negotiations are conducted, the following conditions shall apply: | |
| 4.2.1 | Negotiations may be conducted in person, in writing, or by telephone. | |
| 4.2.2 | Negotiations will only be conducted with potentially acceptable proposals. The Division of Purchasing and Materials Management reserves the right to limit negotiations to those proposals which received the highest rankings during the initial evaluation phase. All offerors involved in the negotiation process will be invited to submit a best and final offer. | |
| 4.2.3 | Terms, conditions, prices, methodology, or other features of the offeror’s proposal may be subject to negotiation and subsequent revision. As part of the negotiations, the offeror may be required to submit supporting financial, pricing and other data in order to allow a detailed evaluation of the feasibility, reasonableness, and acceptability of the proposal. |
| a. | The offeror must submit information which establishes and supports the actuarial soundness of the proposed rates and a certification of said soundness from an Associate of the Society of Actuaries (ASA), a Fellow of Society of Actuaries (FSA), or a Member of the American Academy of Actuaries (MAAA). | ||
| b. | The offeror shall understand that the decision of the State of Missouri regarding whether or not a rate is within actuarially sound rate ranges and does not exceed the cost to the state agency of providing those same services on a fee-for-service basis shall be final and without recourse. |
| 4.2.4 | The mandatory requirements of the Request for Proposal shall not be negotiable and shall remain unchanged unless the Division of Purchasing and Materials Management determines that a change in such requirements is in the best interest of the State of Missouri. |
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| 4.3 | Evaluation and Award Process: | |
| 4.3.1 | After determining that a proposal was submitted by a responsible and reliable offeror and after confirming that the offeror is responsive to the mandatory requirements stated in the Request for Proposal, a subjective evaluation and an objective analysis of the proposals shall be conducted in accordance with the evaluation criteria stated below and further described elsewhere herein. . |
| a. | Objective Criteria: |
| 1) Cost Evaluation | 20 points | |
| 2) Blind/Sheltered Workshops | 5 points |
| b. | Subjective Criteria: |
| 1) Organizational Experience | 45 points | |
| 2) Proposed Method of Performance | 30 points |
| 4.3.2 | After an initial screening process, a question and answer conference, interview, and/or negotiation discussion may be conducted with the offeror, if deemed necessary by the Division of Purchasing and Materials Management. In addition, the offeror may be asked to make an oral presentation of their proposal during the conference. Attendance cost at the conference shall be at the offeror’s expense. All arrangements and scheduling shall be coordinated by the Division of Purchasing and Materials Management. | |
| 4.3.3 | Separate evaluations shall be conducted by each area (East, Central, and West). One subjective evaluation shall be conducted as identified in the Subjective Criteria section of the RFP and points assigned accordingly. Two separate cost evaluations shall be conducted as identified in the Objective Criteria, Evaluation of Cost. The first evaluation of cost shall be for those offerors proposing to include pharmacy services from the MC+ managed care benefit package benefits and points assigned accordingly. The second evaluation of cost shall be for those offerors proposing to exclude the pharmacy services from the MC+ managed care benefit package and points assigned accordingly. For auto assign purposes, the sum of the subjective points and cost points for all offerors in an area will be grouped together. |
Paragraph 4.1.1 renumbered correctly by Amendment #001
| 4.3.4 | The State of Missouri shall award multiple contracts. | |
| 4.4 | Offeror’s Organization (Responsible and Reliable): | |
| 4.4.1 | If the offeror is not Federally qualified, the offeror must disclose the following information on certain types of business transactions the offeror has with a “party in interest” as defined in the Public Health Services Act. |
| a. | Any sale, exchange, or lease of any property between the offeror and a “party in interest”; | ||
| b. | Any lending of money or other extension of credit between the offeror and a “party in interest”; and | ||
| c. | Any furnishing for consideration of goods, services (including management services), or facilities between the offeror and a “party in interest”. This does not include salaries paid to employees for services provided in the normal course of their employment. | ||
| d. | If the offeror has operated previously in the commercial or Medicare markets, the offeror must disclose the information listed below regarding business transactions for the previous year. The offeror must report all of the offeror’s business transactions, not just the transactions relating to serving the Medicaid enrollment. |
| 1) | The name of the “party in interest” for each business transaction; |
| RFP B3Z06118 | Page 111 |
| 2) | A description of each business transaction and the quantity or units involved; | ||
| 3) | The accrued dollar value of each business transaction during the fiscal year; and | ||
| 4) | Justification of the reasonableness of each business transaction. |
| e. | For purposes of the above information, a “party in interest” shall be defined as: |
| 1) | Any director, officer, partner, or employee responsible for management or administration of an HMO; any person who is directly or indirectly the beneficial owner of more than 5% of the equity of the HMO; any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than 5% of the HMO; or, in the case of an HMO organized as a nonprofit corporation, an incorporator or member of such corporation under applicable State corporation law; | ||
| 2) | Any organization in which a person as described above is director, officer, or partner; has directly or indirectly a beneficial interest of more than 5% of the equity of the HMO; or has a mortgage, deed of trust, note, or other interest valuing more than 5% of the assets of the HMO. | ||
| 3) | Any person directly or indirectly controlling, controlled by, or under common control with a HMO; or | ||
| 4) | Any spouse, child, or parent of a person as described in above. |
| 4.4.2 | The offeror must provide full and complete information by disclosing the following related to the identity of each “person or corporation with an ownership or control interest” in the offeror, or any health service subcontractor in which the offeror has a 5% or more ownership interest for the prior 12-month period. The offeror may satisfy this requirement by providing a completed Form CMS-855 (Medicare and Other Federal Health Care Programs Provider/Supplier Enrollment Application). |
| a. | The name and address of each person with an ownership or controlling interest of 5% or more in the offeror or in any subcontractor in which the offeror has direct or indirect ownership of 5% or more; | ||
| b. | A statement as to whether any such person with ownership or control interest is related to any other of the persons named with ownership or control interest; as spouse, parent, child, or sibling, and | ||
| c. | The name of any other organization in which the person also has ownership or control interest. This is required to the extent that the offeror can obtain this information by requesting it in writing. The offeror must keep copies of all of these requests and responses to them, make them available upon request, and advise the State of Missouri when there is no response to a request. | ||
| d. | For purposes of providing the above information, the offeror shall understand that a “person with an ownership or control interest” shall mean a person or corporation that (1) owns directly or indirectly, 5% or more of the offeror’s capital or stock or received 5% or more of its profits; or (2) has an interest in any mortgage, deed of trust, note, or other obligation secured in whole or in part by the offeror or by its property or assets, and that interest is equal to or exceeds 5% of the total property and assets of the offeror, or (3) is an officer or director of the offeror (if it is organized as a corporation) or is a partner in the offeror (if it is organized as a partnership). |
| 1) | The percentage of direct ownership or control is calculated by multiplying the percent of interest which a person owns by the percent of the offeror’s assets used to secure the obligation (e.g., if a person owns 10 percent of a note secured by 60 percent of the offeror’s assets, the person owns 6% of the offeror). | ||
| 2) | The percentage of indirect ownership or control is calculated by multiplying the percentages of ownership in each organization (e.g., if a person owns 10 percent of the stock in a corporation which owns 80 percent of the stock of the offeror, the person owns 8% of the offeror). |
| e. | Financial statements for all owners with 5% or more shall be submitted. |
| RFP B3Z06118 | Page 112 |
| 4.4.3 | The offeror must provide the following financial information pertaining to the offeror’s organization (the legal entity that is submitting the proposal and that will be the party responsible for any contract awarded). |
| a. | Audited financial statements and balance sheets for the previous three (3) years, or as many years up to three (3) years that the entity has been in operation. If the offeror has not been in operation for at least one year, the offeror must submit unaudited financial statements and balance sheets. If the offeror is an existing Health Maintenance Organization, a financial statement must be submitted on the form as prescribed by the National Association of Insurance (NAIC) and must include an actuarial certification. | ||
| b. | Financial plan for the offeror’s current fiscal year. | ||
| c. | Information about the offeror’s financial forecasts for the contract period and possible contract renewal periods. These forecasts shall include at least income statements and enrollment forecasts. | ||
| d. | Names and addresses of independent auditors. | ||
| e. | Documentation of insurance coverage such as a list of the insurers used (including contact person and address) and the type and amounts of each policy held. | ||
| f. | Proof of reinsurance. | ||
| g. | Documentation of any outstanding litigation and malpractice settlements since January 1, 1998. |
| 4.4.4 | Debarment Certification — The offeror certifies by signing the signature page of this original document and any amendment signature page(s) that the offeror is not presently debarred, suspended, proposed for debarment, declared ineligible, voluntarily excluded from participation, or otherwise excluded from or ineligible for participation under federal assistance programs. The offeror should complete and return the attached certification regarding debarment, etc., Exhibit B with the proposal. This document must be satisfactorily completed prior to award of the contract. | |
| 4.4.5 | Business Compliance — The offeror must be in compliance with the laws regarding conducting business in the State of Missouri. The offeror certifies by signing the signature page of this original document and any amendment signature page(s) that the offeror and any proposed subcontractors are presently in compliance with such laws. The offeror shall provide documentation of compliance upon request by the Division of Purchasing and Materials Management. The compliance to conduct business in the state shall include, but not necessarily be limited to: |
| a. | Registration of business name (if applicable) | ||
| b. | Certificate of authority to transact business/certificate of good standing (if applicable) | ||
| c. | Taxes (e.g., city/county/state/federal) | ||
| d. | State and local certifications (e.g., professions/occupations/activities) | ||
| e. | Licenses and permits (e.g., city/county license, sales permits) | ||
| f. | Insurance (e.g., worker’s compensation/unemployment compensation) |
| 4.5 | Confirmation of Compliance with Requirements: |
The offeror must submit all of the following information in order to determine if the
offeror satisfies the mandatory requirements of the Request for Proposal. The State of
Missouri reserves the right to reject any offeror’s proposal which does not include the
required information.
In addition, the offeror should address the requirements contained in the Performance
Requirements section of the RFP. Specifically, the offeror should address the individual
requirements in the
| RFP B3Z06118 | Page 113 |
Performance Requirements section of the RFP and provide a description of
how, when, by whom, with what, to what degree, why, where, etc., the requirement will be
satisfied.
The offeror should not provide a separate response to both the Performance Requirements
section and this section. Rather, the offeror’s response to the following items should be
included within the offeror’s response to the Performance Requirements.
To the extent possible, the specific paragraph number of the applicable section of the
Performance Requirements is provided with the following items and is denoted in parenthesis.
The State does not guarantee that all references have been provided.
| 4.5.1 | The offeror shall submit proof that the offeror has a Certificate of Authority from the Missouri Department of Insurance to operate a Health Maintenance Organization in each county specified herein. (2.1.2.a) |
| a. | If the offeror does not currently have a certificate for a certain county, the offeror shall provide documentation that the offeror has or will submit an application to the Department of Insurance for such certification. |
| 4.5.2 | Physician Incentive Plans: The offeror must provide a minimum of the following information regarding each of the offeror’s physician incentive plans (PIP) and each of the offeror’s subcontractor’s PIPs with their downstream providers, if the PIPs place the providers at significant financial risk (SFR). (2.20.3) |
| a. | Effective date of the physician incentive plan, | ||
| b. | The type of incentive arrangement, | ||
| c. | The amount and type of stop-loss protection, | ||
| d. | The patient panel size, | ||
| e. | If the patient panel is pooled, provide a description of the method, | ||
| f. | The computations of significant financial risk, and | ||
| g. | The name, address, telephone number, and other contact information for a person from the offeror’s organization who may be contacted with questions regarding the physician incentive plan. |
If the offeror does not have any PIPs with the health care service providers, the offeror
must confirm in the proposal that no such arrangements exist. If the offeror’s
subcontractors do not have any PIPs with their downstream providers, the offeror must
confirm in the proposal that no such arrangements exist and maintain documentation that
demonstrates that no such arrangements exist.
| 4.5.3 | Networks |
| a. | The offeror shall submit documentation demonstrating that the offeror’s networks comply with travel distance access standards as set forth by the Department of Insurance in 20 CSR 400-7.095 regarding Provider Network Adequacy Standards. For any demonstrated access that differs from these standards, the offeror must submit proof of approval of the differences by the Department of Insurance. (2.14.3) | ||
| b. | The offeror shall provide documentation verifying that the offeror’s network has adequate capacity. Such documentation shall include, but it is not limited to, appointment availability, 24 hour/7 days a week access, sufficient experienced providers to serve special needs populations, waiting times, open panels, and PCP to member rations. (2.3.1) | ||
| c. | The offeror shall describe how it will provide tertiary care providers including trauma centers, burn centers, level III (high risk) nurseries, rehabilitation facilities, and medical sub-specialists available twenty-four (24) hours per day in the region. If the offeror does not have a full range of tertiary care providers, the offeror shall describe how the services will be provided including transfer protocols and arrangements with out of network facilities. (2.3.17) |
| RFP B3Z06118 | Page 114 |
| 4.5.4 | The offeror shall list each proposed health care service subcontractor to whom the offeror proposes to delegate contract requirements. Examples include, but are not limited to, mental health services, vision, dental, or pharmacy. The offeror shall describe the services and activities that will be provided by such health service subcontractor. (3.8.3) | |
| 4.5.5 | Personnel/Staffing: The offeror shall submit information related to the qualifications of the proposed personnel concerning their experience in serving the Medicaid population including education, training, and previous work assignments. In particular, the offeror must submit the following: |
| a. | Resumes, job descriptions, and full time equivalent status for the offeror’s Medicaid Plan Administrator, medical director, quality assessment and improvement and utilization management coordinator, special programs coordinator, mental health coordinator, and chief financial officer. (2.2.2) | ||
| b. | Information for other personnel, including dental consultant, grievance and appeal coordinator, MIS director, and compliance officer. (2.2.1) | ||
| c. | Information on staffing levels, job descriptions, and qualifications for prior authorization staff, concurrent review staff, member services staff, and providers service staff. (2.2.1) |
| 4.5.6 | Claims Payment Processes — The offeror must submit the following information regarding the offeror’s claims payment processes: (2.25) |
| a. | Information describing the offeror’s claim adjudication processes — The offeror shall provide a flow chart or written description that details the flow of claims from receipt until payment. Information shall be provided documenting the offeror’s audit trail of all claims that enter the system and any review processes that are in place. | ||
| b. | The offeror shall document the offeror’s past and current performance with regard to the timely payment to in-network and out-of-network providers. | ||
| c. | A description of the offeror’s claims processing and management information system functions, including, but not limited to information about the offeror’s liability management practices regarding its “Incurred But Not Reported Claims” and “Received But Unadjudicated Claims”. |
| 4.5.7 | Additional Benefits — The offeror must provide a listing, description, and conditions under which it will offer additional benefits to its members. Examples of such services are nurse advice lines; non-emergency transportation (NEMT) for those members who do not have NEMT as part of their benefit package; sponsorship in youth programs such as Boy Scouts or YMCA; or smoking cessation programs. This is not an exhaustive list of such services but only provides examples of the types of services that may qualify as an additional benefit. (2.6.1.a. 13)) |
| a. | Member Services and Provider Services — The offeror shall describe the hours of operation, holiday schedule, member and provider communication and education plans, and staff training plans for member services and provider services. (2.9 and 2.10) | ||
| b. | Member Grievance System — The offeror shall describe the offeror’s member grievance system being sure to address the grievance process, the appeal process, expedited resolution process, and process for ensuring that members receive proper notice of action. (2.15) | ||
| c. | Release for Ethical Reasons — The offeror must state if reimbursement for, or provider coverage, of a counseling or referral service will be objected to based on moral or religious grounds. (2.11.3) |
| RFP B3Z06118 | Page 115 |
| 4.6 | Objective Criteria: | |
| 4.6.1 | Preference for Organizations for the Blind and Sheltered Workshops — Pursuant to 34.165 RSMo, a five (5) bonus point preference shall be granted to offerors including products and/or services manufactured, produced or assembled by a qualified nonprofit organization for the blind established pursuant to 41 U.S.C. sections 46 to 48c or a sheltered workshop holding a certificate of approval from the Department of Elementary and Secondary Education pursuant to section 178.920 RSMo. Five bonus points will be added to the total evaluation points for offerors qualifying for the preference. |
| a. | If the offeror is an organization for the blind or sheltered workshop, the offeror should provide evidence of qualifications (i.e., copy of certificate or certificate number). | ||
| b. | If the offeror is utilizing an organization for the blind or a sheltered workshop as a subcontractor, the offeror should submit: (1) a letter of intent signed by the organization for the blind or sheltered workshop describing the products/services they will provide and indicating their commitment to aid the contractor’s performance under the prospective state contract and (2) evidence that the subcontractor qualifies as an organization for the blind or sheltered workshop. | ||
| c. | A list of Missouri sheltered workshops can be found at the following internet address: |
http://www.dese.mo.gov/divspeced/shelteredworkshops/index.html.
| 4.6.2 | Evaluation of Cost: |
| a. | The objective evaluation of cost shall be computed by using the firm, fixed Per Member Per Month (PMPM) Net Capitation Rates for each Category of Aid Rate Subgroup as quoted by the offeror on the Pricing Pages multiplied by the corresponding projected member months stated in UPL/Rate Development Process (see Attachment 9). The State shall not consider awarding a contract to any offeror with a rate for any Category of Aid rate subgroup which exceeds the State’s Maximum Net Capitation Rate listed in Column 1 on the Pricing Page. | ||
| b. | Requirements promulgated by the federal government stipulate that the State of Missouri can only contract for services at rates that are within actuarially sound rate ranges. The actuarial soundness of rates differing from those of the state shall be reviewed by the State of Missouri during the formal evaluation of proposals. | ||
| c. | The offeror must submit information which establishes and supports the actuarial soundness of the proposed rates and a certification of said soundness from an Associate of the Society of Actuaries (ASA), a Fellow of Society of Actuaries (FSA), or a Member of the American Academy of Actuaries (MAAA). | ||
| d. | The offeror shall understand that the decision of the State of Missouri regarding whether or not a rate is within actuarially sound rate ranges shall be final and without recourse. | ||
| e. | Cost points shall be calculated based on the sum from the above calculation using the following formula: |
Lowest Responsive Offeror’s Price
|
X | 20 | = | Cost evaluation points |
| RFP B3Z06118 | Page 116 |
| 4.7 | Subjective Criteria: | |
| 4.7.1 | Organizational Experience: The offeror’s organization and the offeror’s health care service subcontractor’s organizations shall be subjectively judged. Therefore, the offeror should submit sufficient information to document successful and reliable experience in past/current performances of the offeror and the offeror’s health care service subcontractor’s. The offeror should document experience with a Missouri Medicaid population, or if not available, document experience with another State’s Medicaid population. |
| a. | The offeror should document its experience in positively impacting the healthcare status of Missouri Medicaid population, or if not available, another State’s Medicaid population. Examples of areas of interest include, but are not limited to the following: |
| 1) | EPSDT | ||
| 2) | Lead | ||
| 3) | Children with special health care needs | ||
| 4) | Asthma | ||
| 5) | Reduction of inappropriate utilization of emergent services | ||
| 6) | Case management | ||
| 7) | Pre-natal care | ||
| 8) | Dental | ||
| 9) | Mental health | ||
| 10) | Partnering with stakeholders (e.g. community based service providers, local public health agencies, schools, state agencies, FQHCs, consumer groups, etc.) for delivery of care | ||
| 11) | Reduction of racial and ethnic health care disparities to improve health status | ||
| 12) | Complaints, Grievances, and Appeals | ||
| 13) | Denials | ||
| 14) | Access |
| b. | The offeror should provide a description of focus studies performed, quality improvement projects, and any improvements the offeror has implemented and their outcomes. Such outcomes should include cost savings realized, process efficiencies, and improvements to member health status. Such descriptions should address such activities since 1998. The offeror should address how issues and root causes were identified, and what was changed. |
| 4.7.2 | Proposed Method of Performance — |
| a. | The offeror’s proposed Quality Improvement Programs shall be subjectively evaluated. Therefore, the offeror should address the Quality Improvement Programs proposed to be implemented during the term of the contract. The offeror should address how the proposed Quality Improvement Programs will expand the quality improvement services beyond what the offeror is currently providing (as addressed in response to item 4.7.1 a. and b.) and the difference between the offeror’s current programs and the proposed programs. The offeror should also indicate how the proposed Quality Improvement Program will improve the health care status of the Missouri Medicaid population. The offeror should address the rationale for selecting the particular programs including the identification of particular health care problems and issues within the Missouri Medicaid population that each program will address and the underlying cause(s) of such problems and issues. The proposed Quality Improvement programs may include, but is not necessarily, limited to the following: |
| 1) | New innovative programs and processes. | ||
| 2) | New contracts and/or partnerships being established to enhance the delivery of health care such as contracts/partnerships with school districts. | ||
| 3) | The continuation, expansion, and/or increase of the current quality improvement programs as listed in response to 4.7.1 a. and b. |
| RFP B3Z06118 | Page 117 |
| b. | Economic Impact to Missouri: |
| 1) | The offeror should provide a description of the proposed services that will be performed and/or the proposed products that will be provided by Missourians and/or Missouri products. | ||
| 2) | The offeror should provide a description of the economic impact returned to the State of Missouri through tax revenue obligations. | ||
| 3) | The offeror should provide a description of the company’s economic presence within the State of Missouri, including employee status. |
| RFP B3Z06118 | Page 118 |
5. PRICING PAGES
| 5.1 | Instructions for Completing Pricing Page: The offeror shall provide firm, fixed prices for providing all required services for all specified counties within a region pursuant to the requirements of this Request for Proposal. The offeror must choose to include Pharmacy services as a MC+ managed care benefit or choose to exclude Pharmacy services from the MC+ managed care benefit package. The offeror shall provide either a firm, fixed Per Member Per Month (PMPM) Net Capitated Rate for each Category of Aid rate subgroup with Pharmacy services included in the MC+ managed care benefit package or a firm, fixed PMPM Net Capitated Rate for each Category of Aid rate subgroup with Pharmacy services excluded from the MC+ managed care benefit package. All costs associated with providing the required services shall be included in the offeror’s quoted rates. | |
| If the offeror is proposing to provide services for the Western region, the offeror must complete Pricing Page 5.2. | ||
| If the offeror is proposing to provide services for the Eastern region, the offeror must complete Pricing Page 5.3. | ||
| If the offeror is proposing to provide services for the Central region, the offeror must complete Pricing Page 5.4. | ||
| 5.1.1 | Requirements promulgated by the federal government stipulate that the State of Missouri can only contract for services at rates that are actuarially sound. Column 1A on the Pricing Pages lists the State’s Maximum Net Capitation Rate for each Category of Aid rate subgroup with Pharmacy service costs included in the MC+ managed care benefit package. Each rate listed in Column 1A is actuarially sound, compliant with federal regulations, and is the maximum amount that the State will allow. Column 2A on the Pricing Pages lists the State’s maximum Net Capitation Rate for each Category of Aid rate subgroup with Pharmacy service costs excluded from the MC+ managed care benefit package. Each rate listed in the Column 2A is actuarially sound, compliant with federal regulations, and is the maximum amount that the State will allow. | |
| 5.1.2 | To assist the offeror in completion of the Pricing Page, the offeror should use the information provided in Attachment 9. However, the offeror is advised that this information should not be used as the only source of information in making pricing decisions. The offeror is solely responsible for research, preparation, and documentation of the offeror’s proposal including the offeror’s rates as quoted on the Pricing Page. | |
| 5.1.3 | The offeror must complete either Column 1B or 2B on the Pricing Page by providing a firm, fixed PMPM rate for each Category of Aid rate subgroup. |
| a. | The offeror’s firm, fixed rates must not include: |
| 1) | Estimates for services which are not the offeror’s responsibility. | ||
| 2) | Cost of marketing as an administrative expense. | ||
| 3) | Cost for Pharmacy services, if the offeror chooses to exclude Pharmacy services from the MC+ managed care benefit package. |
| b. | The offeror’s firm, fixed rates shall be net of Third Party Liability recoveries. | ||
| c. | The offeror should calculate medical expenses by specific Category of Aid rate subgroup and make adjustments for administrative, profit, and contingency and risk charges to obtain the proposed Firm Fixed Net Capitation rates. | ||
| d. | The offeror’s firm, fixed PMPM Net Capitated Rate for each Category of Aid rate subgroup must not exceed the State’s Maximum Net Capitation Rate listed in Column 1A or 2A. The State shall |
| RFP B3Z06118 | Page 119 |
| not consider awarding a contract to an offeror with any quoted rate which exceeds the State’s Maximum Net Capitation Rate list in Column 1A or 2A. |
******The Pricing Pages are a separate link in Excel Format that must be downloaded separately from
the Division of Purchasing and Materials Management’s Internet web site at:
https://www.moolb.mo.gov. There is separate tab in the excel spreadsheet for each region. ******
| RFP B3Z06118 | Page 120 |
EXHIBIT A
MISCELLANEOUS INFORMATION
Organizations for the Blind or Sheltered Workshop
If the offeror qualifies as either a nonprofit organization for the blind or a sheltered workshop,
or if the offeror is proposing to include products and/or services manufactured, produced, or
assembled by such an organization, the offeror should identify the name of the organization in the
space below and should attach all supporting documentation, as referenced elsewhere herein.
Name & Address of Organization for Blind/Sheltered |
||
Workshop: |
||
Outside United States
If any products and/or services offered under this RFP are being manufactured or performed at sites
outside the continental United States, the offeror MUST disclose such fact and provide details in
the space below or on an attached page.
Are products and/or services
being manufactured or performed
at sites outside the
continental United States? |
Yes __ | No __ | ||||||
Describe and provide details: |
||||||||
Employee Bidding/Conflict of Interest
Offerors who are employees of the State of Missouri, a member of the General Assembly or a
statewide elected official must comply with Sections 105.450 to 105.458 RSMo regarding conflict of
interest. If the offeror and/or any of the owners of the offeror’s organization are currently an
employee of the State of Missouri, a member of the General Assembly or a statewide elected
official, please provide the following information.
Name of State Employee, General Assembly Member, or
Statewide Elected Official: |
||||||||
In what office/agency are they
employed? |
||||||||
Employment Title: |
||||||||
Percentage of ownership interest in offeror’s
organization: |
____________ | % |
| RFP B3Z06118 | Page 121 |
EXHIBIT B
Certification Regarding
Debarment, Suspension, Ineligibility and Voluntary Exclusion
Lower Tier Covered Transactions
Debarment, Suspension, Ineligibility and Voluntary Exclusion
Lower Tier Covered Transactions
This certification is required by the regulations implementing Executive Order 12549, Debarment and
Suspension, 29 CFR Part 98 Section 98.510, Participants’ responsibilities. The regulations were
published as Part VII of the May 26, 1988, Federal Register (pages 19160-19211).
(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS FOR CERTIFICATION)
| (1) | The prospective recipient of Federal assistance funds certifies, by submission of this proposal, that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any Federal department or agency. | |
| (2) | Where the prospective recipient of Federal assistance funds is unable to certify to any of the statements in this certification, such prospective participant shall attach an explanation to this proposal. |
Name and Title of Authorized Representative
Signature
|
Date |
Instructions for Certification
| 1. | By signing and submitting this proposal, the prospective recipient of Federal assistance funds is providing the certification as set out below. | |
| 2. | The certification in this clause is a material representation of fact upon which reliance was placed when this transaction was entered into. If it is later determined that the prospective recipient of Federal assistance funds knowingly rendered an erroneous certification, in addition to other remedies available to the Federal Government, the Department of Labor (DOL) may pursue available remedies, including suspension and/or debarment. | |
| 3. | The prospective recipient of Federal assistance funds shall provide immediate written notice to the person to which this proposal is submitted if at any time the prospective recipient of Federal assistance funds learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances. | |
| 4. | The terms “covered transaction,” “debarred,” “suspended,” “ineligible,” “lower tier covered transaction,” “participant,” “person,” “primary covered transaction,” “principal,” “proposal,” and “voluntarily excluded,” as used in this clause, have the meanings set out in the Definitions and Coverage sections of rules implementing Executive Order 12549. You may contact the person to which this proposal is submitted for assistance in obtaining a copy of those regulations. | |
| 5. | The prospective recipient of Federal assistance funds agrees by submitting this proposal that, should the proposed covered transaction be entered into, it shall not knowingly enter into any lower tier covered transaction with a person who is debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, unless authorized by the DOL. | |
| 6. | The prospective recipient of Federal assistance funds further agrees by submitting this proposal that it will include the clause titled “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion — Lower Tier Covered Transactions,” without modification, in all lower tier covered transactions and in all solicitations for lower tier covered transactions. | |
| 7. | A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier covered transaction that it is not debarred, suspended, ineligible, or voluntarily excluded from the covered transaction, unless it knows that the certification is erroneous. A participant may decide the method and frequency by which it determines the eligibility of its principals. Each participant may but is not required to check the List of Parties Excluded from Procurement or Nonprocurement Programs. | |
| 8. | Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render in good faith the certification required by this clause. The knowledge and information of a participant is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings. | |
| 9. | Except for transactions authorized under paragraph 5 of these instructions, if a participant in a covered transaction knowingly enters into a lower tier covered transaction with a person who is suspended, debarred, ineligible, or voluntary excluded from participation in this transaction, in addition to other remedies available to the Federal Government, the DOL may pursue available remedies, including suspension and/or debarment. |
| B3Z06118 | Page 122 |
STATE OF MISSOURI
DIVISION OF PURCHASING AND MATERIALS MANAGEMENT
TERMS AND CONDITIONS — REQUEST FOR PROPOSAL
DIVISION OF PURCHASING AND MATERIALS MANAGEMENT
TERMS AND CONDITIONS — REQUEST FOR PROPOSAL
1. TERMINOLOGY/DEFINITIONS
| Whenever the following words and expressions appear in a Request for Proposal (RFP) document or any amendment thereto, the definition or meaning described below shall apply. | ||
| a. | Agency and/or State Agency means the statutory unit of state government in the State of Missouri for which the equipment, supplies, and/or services are being purchased by the Division of Purchasing and Materials Management (DPMM). The agency is also responsible for payment. | |
| b. | Amendment means a written, official modification to an RFP or to a contract. | |
| c. | Attachment applies to all forms which are included with an RFP to incorporate any informational data or requirements related to the performance requirements and/or specifications. | |
| d. | Proposal Opening Date and Time and similar expressions mean the exact deadline required by the RFP for the receipt of sealed proposals. | |
| e. | Offeror means the person or organization that responds to an RFP by submitting a proposal with prices to provide the equipment, supplies, and/or services as required in the RFP document. | |
| f. | Buyer means the procurement staff member of the DPMM. The Contact Person as referenced herein is usually the Buyer. | |
| g. | Contract means a legal and binding agreement between two or more competent parties, for a consideration for the procurement of equipment, supplies, and/or services. | |
| h. | Contractor means a person or organization who is a successful offeror as a result of an RFP and who enters into a contract. | |
| i. | Exhibit applies to forms which are included with an RFP for the offeror to complete and submit with the sealed proposal prior to the specified opening date and time. | |
| j. | Request for Proposal (RFP) means the solicitation document issued by the DPMM to potential offerors for the purchase of equipment, supplies, and/or services as described in the document. The definition includes these Terms and Conditions as well as all Pricing Pages, Exhibits, Attachments, and Amendments thereto. | |
| k. | May means that a certain feature, component, or action is permissible, but not required. | |
| l. | Must means that a certain feature, component, or action is a mandatory condition. | |
| m. | Pricing Page(s) applies to the form(s) on which the offeror must state the price(s) applicable for the equipment, supplies, and/or services required in the RFP. The pricing pages must be completed and submitted by the offeror with the sealed proposal prior to the specified proposal opening date and time. | |
| n. | RSMo (Revised Statutes of Missouri) refers to the body of laws enacted by the Legislature which govern the operations of all agencies of the State of Missouri. Chapter 34 of the statutes is the primary chapter governing the operations of DPMM. | |
| o. | Shall has the same meaning as the word must. | |
| p. | Should means that a certain feature, component and/or action is desirable but not mandatory. |
2. APPLICABLE LAWS AND REGULATIONS
| a. | The contract shall be construed according to the laws of the State of Missouri. The contractor shall comply with all local, state, and federal laws and regulations related to the performance of the contract to the extent that the same may be applicable. | |
| b. | To the extent that a provision of the contract is contrary to the Constitution or laws of the State of Missouri or of the United States, the provisions shall be void and unenforceable. However, the balance of the contract shall remain in force between the parties unless terminated by consent of both the contractor and the DPMM. | |
| c. | The contractor must be registered and maintain good standing with the Secretary of State of the State of Missouri and other regulatory agencies, as may be required by law or regulations. | |
| d. | The contractor must timely file and pay all Missouri sales, withholding, corporate and any other required Missouri tax returns and taxes, including interest and additions to tax. | |
| e. | The exclusive venue for any legal proceeding relating to or arising out of the RFP or resulting contract shall be in the Circuit Court of Cole County, Missouri. |
3. OPEN COMPETITION/REQUEST FOR PROPOSAL DOCUMENT
| a. | It shall be the offeror’s responsibility to ask questions, request changes or clarification, or otherwise advise the DPMM if any language, specifications or requirements of an RFP appear to be ambiguous, contradictory, and/or arbitrary, or appear to inadvertently restrict or limit the requirements stated in the RFP to a single source. Any and all communication from offerors regarding specifications, requirements, competitive proposal process, etc., must be directed to the buyer from the DPMM, unless the RFP specifically refers the offeror to another contact. Such communication should be received at least ten calendar days prior to the official proposal opening date. | |
| b. | Every attempt shall be made to ensure that the offeror receives an adequate and prompt response. However, in order to maintain a fair and equitable procurement process, all offerors will be advised, via the issuance of an amendment to the RFP, of any relevant or pertinent information related to the procurement. Therefore, offerors are advised that unless specified elsewhere in the RFP, any questions received less than ten calendar days prior to the RFP opening date may not be answered. | |
| c. | Offerors are cautioned that the only official position of the State of Missouri is that which is issued by the DPMM in the RFP or an amendment thereto. No other means of communication, whether oral or written, shall be construed as a formal or official response or statement. | |
| d. | The DPMM monitors all procurement activities to detect any possibility of deliberate restraint of competition, collusion among offerors, price-fixing by offerors, or any other anticompetitive conduct by offerors which appears to violate state and federal antitrust laws. Any suspected violation shall be referred to the Missouri Attorney General’s Office for appropriate action. | |
| e. | The RFP is available for viewing and downloading on the state’s On-Line Bidding/Vendor Registration System website. Premium registered offerors are electronically notified of the proposal opportunity based on the information maintained in the State of Missouri’s vendor database. If a Premium registered offeror’s e-mail address is incorrect, the offeror must update the e-mail address themselves on the state’s On-Line Bidding/Vendor Registration System website. | |
| f. | The DPMM reserves the right to officially amend or cancel an RFP after issuance. Premium registered offerors who received e-mail notification of the proposal opportunity when the RFP was established and Premium registered offerors who have responded to the RFP on-line prior to an amendment being issued will receive e-mail notification of the amendment(s). Premium registered offerors who received e-mail notification of the proposal opportunity when the RFP was established and Premium registered offerors who have responded to the proposal on-line prior to a cancellation being issued will receive e-mail notification of a cancellation issued prior to the exact closing time and date specified in the RFP. |
4. PREPARATION OF PROPOSALS
| a. | Offerors must examine the entire RFP carefully. Failure to do so shall be at offeror’s risk. | |
| b. | Unless otherwise specifically stated in the RFP, all specifications and requirements constitute minimum requirements. All proposals must meet or exceed the stated specifications and requirements. | |
| c. | Unless otherwise specifically stated in the RFP, any manufacturer names, trade names, brand names, information and/or catalog numbers listed in a specification and/or requirement are for informational purposes only and are not intended to limit competition. The offeror may offer any brand which meets or exceeds the specification for any item, but must state the manufacturer’s name and model number for any such brands in the proposal. In addition, the offeror shall explain, in |
| B3Z06118 | Page 123 |
| detail, (1) the reasons why the proposed equivalent meets or exceeds the specifications and/or requirements and (2) why the proposed equivalent should not be considered an exception thereto. Proposals which do not comply with the requirements and specifications are subject to rejection without clarification. | ||
| d. | Proposals lacking any indication of intent to offer an alternate brand or to take an exception shall be received and considered in complete compliance with the specifications and requirements as listed in the RFP. | |
| e. | In the event that the offeror is an agency of state government or other such political subdivision which is prohibited by law or court decision from complying with certain provisions of an RFP, such a offeror may submit a proposal which contains a list of statutory limitations and identification of those prohibitive clauses which will be modified via a clarification conference between the DPMM and the offeror, if such offeror is selected for contract award. The clarification conference will be conducted in order to agree to language that reflects the intent and compliance of such law and/or court order and the RFP. Any such offeror needs to include in the proposal, a complete list of statutory references and citations for each provision of the RFP which is affected by this paragraph. | |
| f. | All equipment and supplies offered in a proposal must be new, of current production, and available for marketing by the manufacturer unless the RFP clearly specifies that used, reconditioned, or remanufactured equipment and supplies may be offered. | |
| g. | Prices shall include all packing, handling and shipping charges FOB destination, freight prepaid and allowed unless otherwise specified in the RFP. | |
| h. | Prices offered shall remain valid for 90 days from proposal opening unless otherwise indicated. If the proposal is accepted, prices shall be firm for the specified contract period. | |
| i. | Any foreign offeror not having an Employer Identification Number assigned by the United States Internal Revenue Service (IRS) must submit a completed IRS Form W-8 prior to or with the submission of their proposal in order to be considered for award. |
5. SUBMISSION OF PROPOSALS
| a. | Proposals may be submitted by delivery of a hard copy to the DPMM office. Electronic submission of proposals by Premium registered offerors through the State of Missouri’s On-Line Bidding/Vendor Registration System website is not available unless stipulated in the RFP. Delivered proposals must be sealed in an envelope or container, and received in the DPMM office located at 301 West High St, Rm 630 in Jefferson City, MO no later than the exact opening time and date specified in the RFP. All proposals must (1) be submitted by a duly authorized representative of the offeror’s organization, (2) contain all information required by the RFP, and (3) be priced as required. Hard copy proposals may be mailed to the DPMM post office box address. However, it shall be the responsibility of the offeror to ensure their proposal is in the DPMM office (address listed above) no later than the exact opening time and date specified in the RFP. | |
| b. | The sealed envelope or container containing a proposal should be clearly marked on the outside with (1) the official RFP number and (2) the official opening date and time. Different proposals should not be placed in the same envelope, although copies of the same proposal may be placed in the same envelope. | |
| c. | A proposal submitted electronically by a Premium registered offeror may be modified on-line prior to the official opening date and time. A proposal which has been delivered to the DPMM office, may be modified by signed, written notice which has been received by the DPMM prior to the official opening date and time specified. A proposal may also be modified in person by the offeror or its authorized representative, provided proper identification is presented before the official opening date and time. Telephone or telegraphic requests to modify a proposal shall not be honored. | |
| d. | A proposal submitted electronically by a Premium registered offeror may be canceled on-line prior to the official opening date and time. A proposal which has been delivered to the DPMM office, may only be withdrawn by a signed, written notice or facsimile which has been received by the DPMM prior to the official opening date and time specified. A proposal may also be withdrawn in person by the offeror or its authorized representative, provided proper identification is presented before the official opening date and time. Telephone, e-mail, or telegraphic requests to withdraw a proposal shall not be honored. | |
| e. | When submitting a proposal electronically, the Premium registered offeror indicates acceptance of all RFP terms and conditions by clicking on the “Submit” button on the Electronic Bid Response Entry form. Offerors delivering a hard copy proposal to DPMM must sign and return the RFP cover page or, if applicable, the cover page of the last amendment thereto in order to constitute acceptance by the offeror of all RFP terms and conditions. Failure to do so may result in rejection of the proposal unless the offeror’s full compliance with those documents is indicated elsewhere within the offeror’s response. |
6. PROPOSAL OPENING
| a. | Proposal openings are public on the opening date and at the opening time specified on the RFP document. Only the names of the respondents shall be read at the proposal opening. Premium registered vendors may view the same proposal response information on the state’s On-Line Bidding/Vendor Registration System website. The contents of the responses shall not be disclosed at this time. | |
| b. | Proposals which are not received in the DPMM office prior to the official opening date and time shall be considered late, regardless of the degree of lateness, and normally will not be opened. Late proposals may only be opened under extraordinary circumstances in accordance with 1 CSR 40-1.050. |
7. PREFERENCES
| a. | In the evaluation of proposals, preferences shall be applied in accordance with Chapter 34 RSMo. Contractors should apply the same preferences in selecting subcontractors. | |
| b. | By virtue of statutory authority, a preference will be given to materials, products, supplies, provisions and all other articles produced, manufactured, made or grown within the State of Missouri and to all firms, corporations or individuals doing business as Missouri firms, corporations or individuals. Such preference shall be given when quality is equal or better and delivered price is the same or less. | |
| c. | In accordance with Executive Order 05-30, contractors are encouraged to utilize certified minority and women-owned businesses in selecting subcontractors. |
8. EVALUATION/AWARD
| a. | Any clerical error, apparent on its face, may be corrected by the buyer before contract award. Upon discovering an apparent clerical error, the buyer shall contact the offeror and request clarification of the intended proposal. The correction shall be incorporated in the notice of award. Examples of apparent clerical errors are: 1) misplacement of a decimal point; and 2) obvious mistake in designation of unit. | |
| b. | Any pricing information submitted by an offeror shall be subject to evaluation if deemed by the DPMM to be in the best interest of the State of Missouri. | |
| c. | The offeror is encouraged to propose price discounts for prompt payment or propose other price discounts that would benefit the State of Missouri. However, unless otherwise specified in the RFP, pricing shall be evaluated at the maximum potential financial liability to the State of Missouri. | |
| d. | Awards shall be made to the offeror whose proposal (1) complies with all mandatory specifications and requirements of the RFP and (2) is the lowest and best proposal, considering price, responsibility of the offeror, and all other evaluation criteria specified in the RFP and any subsequent negotiations and (3) complies with Sections 34.010 and 34.070 RSMo and Executive Order 04-09. | |
| e. | In the event all offerors fail to meet the same mandatory requirement in an RFP, DPMM reserves the right, at its sole discretion, to waive that requirement for all offerors and to proceed with the evaluation. In addition, the DPMM reserves the right to waive any minor irregularity or technicality found in any individual proposal. | |
| f. | The DPMM reserves the right to reject any and all proposals. | |
| g. | When evaluating a proposal, the State of Missouri reserves the right to consider relevant information and fact, whether gained from a proposal, from a offeror, from offeror’s references, or from any other source. | |
| h. | Any information submitted with the proposal, regardless of the format or placement of such information, may be considered in making decisions related to the responsiveness and merit of a proposal and the award of a contract. | |
| i. | Negotiations may be conducted with those offerors who submit potentially acceptable proposals. Proposal revisions may be permitted for the purpose of obtaining best and final offers. In conducting negotiations, there shall be no disclosure of any information submitted by competing offerors. |
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| j. | Any award of a contract shall be made by notification from the DPMM to the successful offeror. The DPMM reserves the right to make awards by item, group of items, or an all or none basis. The grouping of items awarded shall be determined by DPMM based upon factors such as item similarity, location, administrative efficiency, or other considerations in the best interest of the State of Missouri. | |
| k. | Pursuant to Section 610.021 RSMo, proposals and related documents shall not be available for public review until after a contract is executed or all proposals are rejected. | |
| l. | The DPMM posts all proposal results on the On-line Bidding/Vendor Registration System website for Premium registered offerors to view for a reasonable period after proposal award and maintains images of all proposal file material for review. Offerors who include an e-mail address with their proposal will be notified of the award results via e-mail. | |
| m. | The DPMM reserves the right to request clarification of any portion of the offeror’s response in order to verify the intent of the offeror. The offeror is cautioned, however, that its response may be subject to acceptance or rejection without further clarification. | |
| n. | Any proposal award protest must be received within ten (10) calendar days after the date of award in accordance with the requirements of 1 CSR 40-1.050 (10). | |
| o. | The final determination of contract(s) award shall be made by DPMM. |
9. CONTRACT/PURCHASE ORDER
| a. | By submitting a proposal, the offeror agrees to furnish any and all equipment, supplies and/or services specified in the RFP, at the prices quoted, pursuant to all requirements and specifications contained therein. | |
| b. | A binding contract shall consist of: (1) the RFP, amendments thereto, and/or Best and Final Offer (BAFO) request(s) with RFP changes/additions, (2) the contractor’s proposal including the contractor’s BAFO, and (3) DPMM’s acceptance of the proposal by “notice of award” or by “purchase order.” | |
| c. | A notice of award issued by the State of Missouri does not constitute an authorization for shipment of equipment or supplies or a directive to proceed with services. Before providing equipment, supplies and/or services for the State of Missouri, the contractor must receive a properly authorized purchase order unless the purchase is equal to or less than $3,000. State purchases equal to or less than $3,000 may be processed with a purchase order or other form of authorization given to the contractor at the discretion of the state agency. | |
| d. | The contract expresses the complete agreement of the parties and performance shall be governed solely by the specifications and requirements contained therein. Any change, whether by modification and/or supplementation, must be accomplished by a formal contract amendment signed and approved by and between the duly authorized representative of the contractor and the DPMM or by a modified purchase order prior to the effective date of such modification. The contractor expressly and explicitly understands and agrees that no other method and/or no other document, including correspondence, acts, and oral communications by or from any person, shall be used or construed as an amendment or modification. |
10. INVOICING AND PAYMENT
| a. | The State of Missouri does not pay state or federal taxes unless otherwise required under law or regulation. | |
| b. | The statewide financial management system has been designed to capture certain receipt and payment information. For each purchase order received, an invoice must be submitted that references the purchase order number and must be itemized in accordance with items listed on the purchase order. Failure to comply with this requirement may delay processing of invoices for payment. | |
| c. | The contractor shall not transfer any interest in the contract, whether by assignment or otherwise, without the prior written consent of the DPMM. | |
| d. | Payment for all equipment, supplies, and/or services required herein shall be made in arrears unless otherwise indicated in the RFP. | |
| e. | The State of Missouri assumes no obligation for equipment, supplies, and/or services shipped or provided in excess of the quantity ordered. Any unauthorized quantity is subject to the state’s rejection and shall be returned at the contractor’s expense. | |
| f. | All invoices for equipment, supplies, and/or services purchased by the State of Missouri shall be subject to late payment charges as provided in Section 34.055 RSMo. | |
| g. | The State of Missouri reserves the right to purchase goods and services using the state purchasing card. |
11. DELIVERY
| Time is of the essence. Deliveries of equipment, supplies, and/or services must be made no later than the time stated in the contract or within a reasonable period of time, if a specific time is not stated. |
12. INSPECTION AND ACCEPTANCE
| a. | No equipment, supplies, and/or services received by an agency of the state pursuant to a contract shall be deemed accepted until the agency has had reasonable opportunity to inspect said equipment, supplies, and/or services. | |
| b. | All equipment, supplies, and/or services which do not comply with the specifications and/or requirements or which are otherwise unacceptable or defective may be rejected. In addition, all equipment, supplies, and/or services which are discovered to be defective or which do not conform to any warranty of the contractor upon inspection (or at any later time if the defects contained were not reasonably ascertainable upon the initial inspection) may be rejected. | |
| c. | The State of Missouri reserves the right to return any such rejected shipment at the contractor’s expense for full credit or replacement and to specify a reasonable date by which replacements must be received. | |
| d. | The State of Missouri’s right to reject any unacceptable equipment, supplies, and/or services shall not exclude any other legal, equitable or contractual remedies the state may have. |
13. WARRANTY
| a. | The contractor expressly warrants that all equipment, supplies, and/or services provided shall: (1) conform to each and every specification, drawing, sample or other description which was furnished to or adopted by the DPMM, (2) be fit and sufficient for the purpose expressed in the RFP, (3) be merchantable, (4) be of good materials and workmanship, and (5) be free from defect. | |
| b. | Such warranty shall survive delivery and shall not be deemed waived either by reason of the state’s acceptance of or payment for said equipment, supplies, and/or services. |
14. CONFLICT OF INTEREST
| a. | Officials and employees of the state agency, its governing body, or any other public officials of the State of Missouri must comply with Sections 105.452 and 105.454 RSMo regarding conflict of interest. | |
| b. | The contractor hereby covenants that at the time of the submission of the proposal the contractor has no other contractual relationships which would create any actual or perceived conflict of interest. The contractor further agrees that during the term of the contract neither the contractor nor any of its employees shall acquire any other contractual relationships which create such a conflict. |
15. REMEDIES AND RIGHTS
| B3Z06118 | Page 125 |
| a. | No provision in the contract shall be construed, expressly or implied, as a waiver by the State of Missouri of any existing or future right and/or remedy available by law in the event of any claim by the State of Missouri of the contractor’s default or breach of contract. | |
| b. | The contractor agrees and understands that the contract shall constitute an assignment by the contractor to the State of Missouri of all rights, title and interest in and to all causes of action that the contractor may have under the antitrust laws of the United States or the State of Missouri for which causes of action have accrued or will accrue as the result of or in relation to the particular equipment, supplies, and/or services purchased or procured by the contractor in the fulfillment of the contract with the State of Missouri. |
16. CANCELLATION OF CONTRACT
| a. | In the event of material breach of the contractual obligations by the contractor, the DPMM may cancel the contract. At its sole discretion, the DPMM may give the contractor an opportunity to cure the breach or to explain how the breach will be cured. The actual cure must be completed within no more than 10 working days from notification, or at a minimum the contractor must provide DPMM within 10 working days from notification a written plan detailing how the contractor intends to cure the breach. | |
| b. | If the contractor fails to cure the breach or if circumstances demand immediate action, the DPMM will issue a notice of cancellation terminating the contract immediately. | |
| c. | If the DPMM cancels the contract for breach, the DPMM reserves the right to obtain the equipment, supplies, and/or services to be provided pursuant to the contract from other sources and upon such terms and in such manner as the DPMM deems appropriate and charge the contractor for any additional costs incurred thereby. | |
| d. | The contractor understands and agrees that funds required to fund the contract must be appropriated by the General Assembly of the State of Missouri for each fiscal year included within the contract period. The contract shall not be binding upon the state for any period in which funds have not been appropriated, and the state shall not be liable for any costs associated with termination caused by lack of appropriations. |
17. COMMUNICATIONS AND NOTICES
| Any notice to the contractor shall be deemed sufficient when deposited in the United States mail postage prepaid, transmitted by facsimile, transmitted by e-mail or hand-carried and presented to an authorized employee of the contractor. |
18. BANKRUPTCY OR INSOLVENCY
| a. | Upon filing for any bankruptcy or insolvency proceeding by or against the contractor, whether voluntary or involuntary, or upon the appointment of a receiver, trustee, or assignee for the benefit of creditors, the contractor must notify the DPMM immediately. | |
| b. | Upon learning of any such actions, the DPMM reserves the right, at its sole discretion, to either cancel the contract or affirm the contract and hold the contractor responsible for damages. |
19. INVENTIONS, PATENTS AND COPYRIGHTS
| The contractor shall defend, protect, and hold harmless the State of Missouri, its officers, agents, and employees against all suits of law or in equity resulting from patent and copyright infringement concerning the contractor’s performance or products produced under the terms of the contract. |
20. NON-DISCRIMINATION AND AFFIRMATIVE ACTION
| In connection with the furnishing of equipment, supplies, and/or services under the contract, the contractor and all subcontractors shall agree not to discriminate against recipients of services or employees or applicants for employment on the basis of race, color, religion, national origin, sex, age, disability, or veteran status. If the contractor or subcontractor employs at least 50 persons, they shall have and maintain an affirmative action program which shall include: |
| a. | A written policy statement committing the organization to affirmative action and assigning management responsibilities and procedures for evaluation and dissemination; | |
| b. | The identification of a person designated to handle affirmative action; | |
| c. | The establishment of non-discriminatory selection standards, objective measures to analyze recruitment, an upward mobility system, a wage and salary structure, and standards applicable to layoff, recall, discharge, demotion, and discipline; | |
| d. | The exclusion of discrimination from all collective bargaining agreements; and | |
| e. | Performance of an internal audit of the reporting system to monitor execution and to provide for future planning. | |
| If discrimination by a contractor is found to exist, the DPMM shall take appropriate enforcement action which may include, but not necessarily be limited to, cancellation of the contract, suspension, or debarment by the DPMM until corrective action by the contractor is made and ensured, and referral to the Attorney General’s Office, whichever enforcement action may be deemed most appropriate. |
21. AMERICANS WITH DISABILITIES ACT
| In connection with the furnishing of equipment, supplies, and/or services under the contract, the contractor and all subcontractors shall comply with all applicable requirements and provisions of the Americans with Disabilities Act (ADA). |
22. FILING AND PAYMENT OF TAXES
| The commissioner of administration and other agencies to which the state purchasing law applies shall not contract for goods or services with a vendor if the vendor or an affiliate of the vendor makes sales at retail of tangible personal property or for the purpose of storage, use, or consumption in this state but fails to collect and properly pay the tax as provided in chapter 144, RSMo. For the purposes of this section, “affiliate of the vendor” shall mean any person or entity that is controlled by or is under common control with the vendor, whether through stock ownership or otherwise. Therefore offeror’s failure to maintain compliance with chapter 144, RSMo may eliminate their proposal from consideration for award. |
23. TITLES
| Titles of paragraphs used herein are for the purpose of facilitating reference only and shall not be construed to infer a contractual construction of language. |
Revised 01/03/06
|
 |
NOTICE OF AWARD
State Of Missouri
Office Of Administration
Division Of Purchasing And Materials Management
PO Box 809
Jefferson City, MO 65102
http://www.oa.mo.gov/purch
Office Of Administration
Division Of Purchasing And Materials Management
PO Box 809
Jefferson City, MO 65102
http://www.oa.mo.gov/purch
CONTRACT NUMBER |
CONTRACT TITLE | |
C306118003 |
Medicaid Managed Care – Central, Eastern, and | |
| Western Regions | ||
AMENDMENT NUMBER |
CONTRACT PERIOD | |
Amendment #001 |
July 1, 2006 through June 30, 2007 | |
REQUISITION NUMBER |
VENDOR NUMBER | |
NR 886 25757001820 |
4317439020 2 | |
CONTRACTOR NAME AND ADDRESS |
STATE AGENCY’S NAME AND ADDRESS | |
Mercy CarePlus |
Department of Social Services | |
10123 Corporate Square Drive |
Division of Medical Services | |
St. Louis MO 63132 |
PO Box 6500 | |
| Jefferson City MO 65102-6500 | ||
| ACCEPTED BY THE STATE OF MISSOURI AS FOLLOWS: | ||
| Contract C306118003 is hereby amended pursuant to the attached Amendment #001 dated 07/31/06. | ||
BUYER |
BUYER CONTACT INFORMATION | |
| E-Mail: laura.ortmeyer@oa.mo.gov | ||
Laura Ortmeyer |
Phone: (573) 751-4579 Fax: (573) 526-9817 | |
SIGNATURE OF BUYER |
DATE | |
/s/ Laura Ortmeyer |
8/10/06 | |
DIRECTOR OF PURCHASING AND MATERIALS MANAGEMENT |
||
/s/ James Miluski |
||
|
|
STATE OF MISSOURI OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) CONTRACT AMENDMENT |
|
AMENDMENT NO.: 001
|
REQ NO.: NR 886 25757001820 | |
CONTRACT NO.: C306118003
|
BUYER: Laura Ortmeyer | |
TITLE: Medicaid Managed Care — Central, Eastern, & Western Regions
|
PHONE NO.: (573) 751-4579 | |
ISSUE DATE: 07/24/06
|
E-MAIL: Laura.Ortmeyer@oa.mo.gov |
TO: Alliance for Community Health
RETURN AMENDMENT NO LATER THAN: August 4, 2006 AT 5:00 PM CENTRAL TIME
RETURN AMENDMENT TO:
| (U.S. Mail) | (Courier Service) | |||||
| Div of Purchasing & Matls Mgt (DPMM) | OR | Div of Purchasing & Matls Mgt (DPMM) | ||||
| PO BOX 809 | 301 WEST HIGH STREET, ROOM 630 | |||||
| JEFFERSON CITY MO 65102-0809 | JEFFERSON CITY MO 65101 | |||||
OR FAX TO: (573) 526-9817 (either mail or fax, not both)
DELIVER SUPPLIES/SERVICES FOB (Free On Board) DESTINATION TO THE FOLLOWING ADDRESS:
| Department of Social Service | ||||
| Division of Medical Services | ||||
| P.O. Box 6500 | ||||
| Jefferson City, MO 65102-6500 | RCVD AUG 1’06 AM 9:44 OA-DPMM | |||
| SIGNATURE REQUIRED |
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
Mercy CarePlus
|
Alliance for Community Health | |
MAILING ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
10123 Corporate Square DR.
|
10123 Corporate Square DR. | |
CITY, STATE, ZIP CODE
|
CITY, STATE, ZIP CODE | |
St. Louis, MO 63132
|
St. Louis, MO 63132 |
CONTACT PERSON
|
EMAIL ADDRESS | |
Jerry Linder/Marcia Albridge
|
Malbridge@mercycareplus.com
jlinder@mercycareplus.com |
|
PHONE NUMBER
|
FAX NUMBER | |
314- 432-9300
|
314-994-9398 |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
43-1743902
|
þ FEIN o SSN | 43-17439020 2 |
| VENDOR TAX FILING TYPE WITH IBS (CHECK ONE) | (NOTE: LLC IS NOT A
VALID TAX FILING TYPE.) |
|||||||||
þ Corporation
|
o Individual | o State/Local Government | o Partnership | o Sole Proprietor | o Other | |||||
AUTHORIZED SIGNATURE
|
DATE | |
/s/ Jerry Linder
|
7/31/06 | |
PRINTED NAME
|
TITLE | |
Jerry Linder
|
CEO |
| Contract C306118003 | Page 2 |
AMENDMENT #001 TO CONTRACT C306118003
CONTRACT TITLE:
|
Medicaid Managed Care — Central, Eastern, & Western Regions | |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 |
In accordance with the attached Agreement and Consent document and effective July 1, 2006, the
State of Missouri hereby assigns the above-referenced contract from Alliance for Community Health
LLC d/b/a Community CarePlus (4317439020 1) to Mercy CarePlus. All references to Community CarePlus
or CCP shall be replaced with Mercy CarePlus.
As a result of such assignment, the response to section 4.4.2 a. is replaced with the following:
The name and address of each person with an ownership or controlling interest of 5% or more in
Mercy CarePlus is as follows:
| • | CCP Acquisition Limited, a MO Corporation (“CAL”) has a 40.050 % direct ownership interest. CCP Acquisition Limited is located at 101 S. Hanley, Suite 1250, Clayton, MO 63105 | ||
| • | Mercy Health Plans, Inc. (MHP), a Delaware corporation, has a 50% direct ownership interest. MHP is located at 14528 South Outer 40 Drive, Chesterfield MO 63017. |
The above documents those entities with ownership of 5% or greater.
Missouri Physicians Associates, a MO Domestic Insurance Company (“MPA”) owns all of the capital
stock of CAL; therefore, for purposes of this response, MPA is deemed to own an indirect
interest of ownership or control in Mercy CarePlus. The address for MPA is 101 S. Hanley, Suite
1250, Clayton, MO 63105.
Also, the attached documentation from the Missouri Department of Insurance dated June 23, 2006 is
included as an addition to Attachment 1 (reference the response to 4.5.1).
Additionally, the response to section 4.4.2 e and the originally submitted Attachment 10 is
replaced with the Revised Attachment 10 attached hereto.
All other terms, conditions and provisions of the contract, including all prices, shall remain the
same and apply hereto.
The contractor shall sign and return this document, on or before the date indicated, signifying
acceptance of the amendment.
| Contract C306118003 | Page 3 |
AGREEMENT AND CONSENT
TO ASSIGNMENT OF CONTRACT
ALLIANCE FOR COMMUNITY HEALTH
|
Alliance for community Health | |||
dba COMMUNITY CAREPLUS
|
dba : Mercy CarePlus | |||
10123 CORPORATE SQUARE DRIVE |
||||
ST LOUIS, MO 63132
|
||||
(Assignor)
|
(Assignee) |
RE: Contract C306118003
The Assignor, as named above, assigns the contract in its entirety to the Assignee, as named
above.
The Assignee shall honor and comply with all terms and conditions, requirements and
specifications of the contract, and hereby entitles the State of Missouri to performance by
Assignee of all obligations under the contract. This assignment does not entitle the
Assignee to receive payment in any amount above that which the Assignor would otherwise
receive. In addition, the Assignee releases the State of Missouri from all responsibilities
for payment made previously to the Assignor pursuant to the contract.
The Assignee agrees that any payments made by the State of Missouri pursuant to the
contract, including all payments assigned to the Assignee, shall be contingent upon the
performance of the Assignee in accordance with all terms and conditions, requirements and
specifications of the contract, and the approval and acceptance of such performance by the
State of Missouri.
This Agreement and Consent shall not be final until it is incorporated into the subject
contract by formal amendment subject to approval and acceptance by the State of Missouri,
Division of Purchasing and Materials Management.
IN WITNESS THEREOF, the parties hereto have executed this Agreement and Consent on the date
as stated below.
| (ASSIGNOR) | (ASSIGNEE) | |||||||||
BY:
|
BY: | /s/ Jerry Linder | ||||||||
NAME:
|
NAME: | |||||||||
TITLE:
|
TITLE: | CEO | ||||||||
DATE:
|
DATE: | 7/31/06 | ||||||||
| FEIN: | 43-1743902 | |||||||||
|
|
STATE OF MISSOURI
OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) CONTRACT AMENDMENT |
 |
AMENDMENT
NO.: 002
|
REQ NO.: NR 886 25757002046 | |
CONTRACT
NO.: C306118003
|
BUYER: Laura Ortmeyer | |
| TITLE: Medicaid Managed Care — Central, Eastern, and Western Regions | PHONE NO.: (573)751-4579 | |
ISSUE
DATE: 07/27/06
|
E-MAIL: Laura.Ortmeyer@oa.mo.gov |
TO:
MERCY CARE PLUS
RETURN
AMENDMENT NO LATER THAN: August 14, 2006 AT 5:00 PM CENTRAL
TIME
RETURN
AMENDMENT TO:
| (U.S. Mail) | (Courier Service) | |||
Div of Purchasing & Matls Mgt (DPMM)
|
OR | Div of Purchasing & Matls Mgt (DPMM) | ||
PO
BOX 809
|
301 WEST HIGH STREET, ROOM 630 | |||
JEFFERSON
CITY MO 65102-0809
|
JEFFERSON CITY MO 65101 |
OR FAX
TO: (573) 526-9817 (either mail or fax, not both)
DELIVER SUPPLIES/SERVICES FOB (Free On Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Service
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
SIGNATURE REQUIRED
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
MAILING ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
CITY, STATE, ZIP CODE
|
CITY, STATE, ZIP CODE |
CONTACT PERSON
|
EMAIL ADDRESS | |
PHONE NUMBER
|
FAX NUMBER |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| o FEIN o SSN |
| (VENDOR TAX FILING TYPE WITH IRS (CHECK ONE) | (NOTE: LLC IS NOT A VALID TAX FILING TYPE.) |
o
Corporation o
Individual o
State/Local Government o
Partnership o
Sole
Proprietor
o
Other
AUTHORIZED SIGNATURE
|
DATE | |
PRINTED NAME
|
TITLE |
| Contract C306118003 | Page 2 |
AMENDMENT
#002 TO CONTRACT C306118003
CONTRACT TITLE:
|
Medicaid Managed Care — Central, Eastern, and Western Regions | |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 |
The State of Missouri hereby desires to amend the above-referenced contract, as follows, effective
July 1,2006:
| 1. | Paragraph 2.4.9 is hereby amended as follows: |
| 2.4.9 | The health plan shall maintain the fee schedule for office visit services and dental services located in Attachment 14 at no lower than the Medicaid fee-for-service fee schedule in effect at the time of service. |
| 2. | Paragraph 2.7.l 1. is hereby amended as follows: |
| 2.7.1 l. | Optical services include one comprehensive or one limited eye examination every two years for refractive error, services related to trauma or treatment of disease/medical condition (including eye prosthetics), and one pair eyeglasses following cataract surgery. |
| 3. | Paragraphs 2.7.1 r. is hereby amended as follows: |
| 2.7.1 r. | Durable medical equipment limited to: prosthetic devices (with the exception of artificial larynx), respiratory equipment and oxygen (with the exception of CPAP, BiPAP, and nebulizers), wheelchairs (including accessories and batteries), diabetic supplies and equipment, and ostomy supplies. Members with Home Health Plan of Care receive all medically necessary durable medical equipment services during the plan of care coverage period. |
| 4. | Paragraph 2.7.2 is hereby amended as follows: |
| 2.7.2 | The health plan shall include all the services specified in the comprehensive benefit package with the exception of non-emergency medical transportation (NEMT) for uninsured children in ME Codes 71-75 (Refer to Attachment 1, COA 5) and children in state custody with the following ME Codes 08, 52, 57, and 64 (Refer to Attachment 1, COA 4). |
| 5. | Paragraph 2.7.3 c is hereby amended as follows: |
| 2.7.3 c. | Optical services for children under age 21 include one comprehensive or one limited eye examination per year for refractive error, eyeglasses, and HCY/EPSDT optical screens and services. Optical services for pregnant women age 21 and over with ME codes 18, 43, 44, 45, or 61 include one comprehensive or one limited eye examination per year for refractive error. Eyeglasses (except the one pair following cataract surgery covered by the health plan) for these pregnant women are covered through the Fee for Service program. |
| 6. | Paragraph 2.7.3 e. is hereby amended as follows |
| 2.7.3 e. | Durable medical equipment (including but not limited to: orthotic devices, artificial larynx, enteral and parenteral nutrition, walkers, CPAP, BiPAP, and nebulizers); |
| 7. | Paragraph 2.12.7 is hereby amended as follows: |
| Contract C306118003 | Page 3 |
| 2.12.7 | Pharmacy Services: Pharmacy services (including physician injections) not included in the health plan’s awarded proposal shall be reimbursed by the state agency on a fee-for-service basis according to the terms and conditions of the Medicaid program. |
| 8. | Attachment 3 is hereby revised. | ||
| 9. | Attachment 6 is hereby revised. | ||
| 10. | Attachment 12 is hereby revised. | ||
| 11. | Attachment 14 is hereby revised. |
The contractor shall indicate in Column 2 on the attached Pricing page, any changes to the firm
fixed prices of the contract for performing the required services in accordance with the terms,
conditions, and provisions of the contract, including the above stated changes. The contractor’s
firm, fixed PMPM Net Capitation Rate for Each Category of Aid (COA) Rate subgroup must not exceed
the State’s Maximum Net Capitation Rate Listed in Column 1.
All other terms, conditions and provisions of the contract shall remain the same and apply hereto.
The contractor shall sign and return this document, on or before the date indicated, signifying
acceptance of the amendment.
REVISED ATTACHMENT 3
MANAGED CARE POLICIES GOVERNING MC+ SERVICES
The following are brief descriptions of the services included in the standard benefit package
and the various programs and policies governing the delivery of services for the MC+ Managed
Care Program, These policies follow the amount, duration, and scope of services covered under
the Missouri Medicaid State Plan. For those services included in the MC+ Managed Care benefit
package, the MC+ Managed Care health plan must offer, at a minimum, the amount, duration, and
scope of that service included in the Medicaid State Plan. The state agency produces and up
dates MC+ Managed Care policy statements governing the delivery of services under MC+
managed care. The MC+ Managed Care health plan shall comply with such policies governing the
delivery of services and as amended by the state agency. Detailed information regarding MC+
fee-for-service services is contained in the fee-for-service provider manuals and bulletins, and
the deluxe pricing file.
ADULT DAY HEALTH CARE
Adult Day Health Care is a covered benefit for members.
Adult Day Health Care is a program of organized therapeutic, medical, rehabilitative, and social
activities provided outside of the home. MC-t+ fee-for-service eligible persons are assessed to
be eligible for the program by the Missouri Department of Health and Senior Services (DHSS). They
must have functional impairments requiring nursing home level of cafe, but with the provision of
this service and perhaps other supports, they may safely remain in their home. Adult Day Health
Care must be provided in a DHSS licensed facility or be exempt from licensure by way of
regulation.
AMBULATORY SURGICAL CENTERS (INCLUDING BIRTHING CENTERS)
Ambulatory Surgical Center services are a covered benefit. MC+ Managed Care health plans may
utilize Ambulatory Surgical Centers as an alternative to outpatient hospital services. The
Ambulatory Surgical Center provides a place for operative procedures to be accomplished that can
be safely performed in an outpatient setting and be able to be completed within 90 minutes. This
is the maximum length of time that a person may be placed under anesthetic in an Ambulatory
Surgical Center.
Birthing Centers are also licensed as Ambulatory Surgical Centers and are appropriate settings
for the delivery of services provided by a physician, advanced practice nurse, or certified
nurse midwife. MC+ Managed Care health plans are responsible for Birthing Center services.
ANESTHESIA SERVICES
Anesthesia services are a covered benefit. Anesthesia services are covered when performed by an
Anesthesiologist or Certified Registered Nurse Anesthetist (CRNA). Medical direction of
anesthetists by an anesthesiologist is also a covered service.
CASE MANAGEMENT
Case management is a clinical system that focuses on the accountability of an identified
individual or group for coordinating a patient’s care (or group of patients) across an episode or
continuum of care; negotiating, procuring, and coordinating services and resources needed by
patients/families with complex issues; insuring and facilitating the achievement of quality,
clinical, and cost outcomes; intervening at key points for individual patients; addressing and
resolving patterns of issues that have a negative quality cost impact; and creating opportunities
and systems to enhance outcomes. (Definition used with permission of The Center for Case
Management, 6 Pleasant Street, South Natick, MA 01760.) Case management is understood as
including, but not limited to the
development of individualized treatment plans and ongoing communication and coordination with
other systems
of care. The treatment plans must be:
| • | Developed by the member’s primary care provider with member participation, and in consultation with any specialists caring for the member; | ||
| • | Approved by the MC+ Managed Care health plan in a timely manner, if this approval is required; and | ||
| • | In accord with any applicable State quality assurance and utilization review standards. |
MC+ Managed Care health plans shall provide case management to members with special health care
needs and maintain a detailed case management record on each member. Members with special health
care needs are those members who have ongoing special conditions that require a course of
treatment or regular care monitoring. The Case Management MC+ Managed Care Policy Statement shall
include a list of diagnoses for children and adults that, at a minimum, the MC+ Managed Care
health plan shall use for identification of members with special health care needs requiring case
management and criteria for maintaining a detailed case management record. The following groups of
individuals are at high risk of having a special health care need:
| • | Individuals eligible for Supplemental Security Income (SSI); | ||
| • | Individuals in foster care or other out-of-home placement; | ||
| • | Individuals receiving foster care or adoption subsidy; and | ||
| • | Individuals receiving services through a family-centered community-based coordinated care system that receives grant funds under Section 501(a)(l)(D) of Title V, as defined by the state agency in terms of either program participant or special health care needs. |
At the time of enrollment, the MC+ Managed Care health plan shall perform an initial health
assessment of members with special health care needs and members who are at high risk of having a
special health care need and implement appropriate case management based upon that assessment
appropriate to the member’s needs.
The MC+ Managed Care health plan shall be responsible for providing members with special health
care needs all services covered under the contract beginning with the effective date of
enrollment. All services authorized prior to enrollment in an MC+ Managed Care health plan shall
be terminated only after a case-specific, clinical decision has been
made by an MC- Managed Care
health plan provider. The MC+ Managed Care health plan shall have a mechanism in place to allow
members direct access to a specialist as appropriate for the member’s condition and identified
needs.
HCY CASE MANAGEMENT: MC+ Managed Care health plans are required to provide medically
necessary HCY case management services for members under the age of 21. Healthy Children and Youth
(HCY) Case Management is an activity under which responsibility for locating, coordinating, and
monitoring necessary and appropriate services for members under age 21, rests with an MC+ Managed
Care Health Plan or an organization or individual that the MC+ Managed Care Health Plan has
contracted with. HCY Case Management is the process of collecting information on the health needs
of the child, making (and following up on) referrals as needed, maintaining a health history,
activating the Early Periodic Screening and Diagnostic Treatment (EPSDT) program and ensuring
collaboration between providers.
LEAD CASE MANAGEMENT: The MC+ Managed Care health plan is responsible for the provision of
lead case management for those children with elevated blood lead levels. The MC+ Managed Care
health plan must screen children for elevated blood lead levels as part of the requirement for the
EPSDT/HCY program. When a child is identified with an elevated blood
lead level, the MC+
Managed Care health plan is responsible for providing medically necessary services including
case management for the child.
CASE MANAGEMENT — PREGNANT WOMEN
MC+ Managed Care health plans are required to provide prenatal case management services for at risk pregnant women enrolled in their MC+ Managed Care health plan. Based on the prenatal risk assessment, the case manager will formulate an individualized plan of management designed to accomplish the intended objectives.
MC+ Managed Care health plans are required to provide prenatal case management services for at risk pregnant women enrolled in their MC+ Managed Care health plan. Based on the prenatal risk assessment, the case manager will formulate an individualized plan of management designed to accomplish the intended objectives.
CHILDREN WITH SPECIAL HEALTH CARE NEEDS
Children with special health care needs are likely to require the services of the MC+ Managed Care health plan’s special programs coordinator. These children may also be served by the Departments of Health and Senior Services, Mental Health, or Elementary and Secondary Education in early intervention programs (Individuals with Disabilities Education Act — Part C), school-based services, etc.
Children with special health care needs are likely to require the services of the MC+ Managed Care health plan’s special programs coordinator. These children may also be served by the Departments of Health and Senior Services, Mental Health, or Elementary and Secondary Education in early intervention programs (Individuals with Disabilities Education Act — Part C), school-based services, etc.
Without services such as private duty nursing, personal care, home health, durable medical
equipment/supplies, and case management these children may require hospitalization or
institutionalization. Nursing homes are not usually an option for children due to their intense
needs as well as their age. Some examples of children with
special health care needs include: children with special needs due to physical and/or mental
illnesses, foster care children, homeless children, children with serious and persistent mental
illness and/or substance abuse, and children who are disabled or chronically ill with developmental
or physical disabilities. The following information identifies some of the special health care
needs of this population.
| X | Requires vital functions to be sustained through unusual support such as oxygen, respirator support, total parenteral nutrition, inhalation therapy, and postural drainage. | ||
| X | Requires continuous nursing attention as the result of a surgical or medical procedure such as tracheostomy, ileostomy, colostomy, gastrostomy, nephrotomy, cast, or shunt. | ||
| X | Requires continuous maintenance because of gavage feedings, frequent oral suctioning, elimination care, and positioning needs. | ||
| X | Requires therapy such as physical, occupational, and/or speech therapy to reach their greatest potential and to minimize progression of disability as in children with cerebral palsy, rheumatoid arthritis, and spinabifida. | ||
| X | Require continuous medical monitoring of underlying disease and its therapy. | ||
| X | Requires monitoring of indicators of vital functions such as heart rate, respiration, blood sugar, oxygen levels, blood pressure, and urine output. | ||
| X | Requires assistance in bathing, toileting, eating, or other activities of daily living because of a medical condition. |
COMPREHENSIVE DAY REHABILITATION
Comprehensive Day Rehabilitation services are a covered benefit for children under the age of 21
and pregnant women with ME codes 18, 43, 44, 45, and 61. Coverage for comprehensive day
rehabilitation services is required for certain persons with disabling impairments as the result
of a traumatic head injury. Comprehensive day rehabilitation services are services beginning early
post trauma as part of a coordinated system of care. Rehabilitation services must be based on an
individualized, goal-oriented, comprehensive and coordinated treatment plan. The treatment plan
must be developed, implemented, and monitored through an interdisciplinary assessment designed to
restore an individual to optimal level of physical, cognitive, and behavioral function (See RSMo
208.152). MC+ Managed Care health plans are responsible for providing rehabilitation services to
survivors of a Traumatic Brain Injury (TBI).
DENTAL
All MC+ Managed Care members receive dental care related to trauma to the mouth, jaw, teeth or
other contiguous sites as a result of injury. Adults age 21 and over receive treatment of a
disease/medical condition without which the health of the recipient would be adversely affected
through the fee for service program. Medically necessary covered dental services provided by a
dentist, doctor of medicine, osteopathy or dentistry are the responsibility of the MC+ Managed
Care health plan. Medications prescribed by a dentist for MC+ Managed Care health plan members are
the responsibility of the MC+ Managed Care health plan. The MC+ Managed Care health plan is not
responsible for dental services which are exclusively for cosmetic reasons.
DENTAL — CHILDREN UNDER AGE 21
Dental screens, dental services, and orthodontic services are covered for members under age 21.
It is recommended that preventive dental services and oral treatment for children begin at age
6-12 months and be repeated every six months or as medically indicated.
DENTAL — PREGNANT WOMEN AGE 21 AND OVER WITH ME CODES 18, 43, 44, 45, AND 61: Dental
services for pregnant women age 21 and over with ME codes 18, 43, 44, 45, and 61 shall be limited
to dentures and services related to trauma to the mouth, jaw, teeth or other contiguous sites as a
result of injury. Services to prepare the mouth for dentures, such as examinations, X-rays, or
extractions will not be covered by the health plan. Ancillary denture services such as relining,
rebasing, and repairs will not be covered by the health plan. All other Medicaid State Plan dental
services for this population is covered through the fee for service program and is not the
responsibility of the MC+ Managed Care health plan.
DIABETES SELF-MANAGEMENT TRAINING
Coverage of self management training must be provided to all children under age 21 and pregnant
women in ME Codes 18, 43, 44, 45, and 61 used in the management and treatment of gestational, Type
I, and Type II diabetes as prescribed by a health care provider licensed by law to prescribe such
services.
DURABLE MEDICAL EQUIPMENT (DME)
MC+ Managed Care health plans are required to provide medically necessary DME items to children
under the age of 21, pregnant women with ME codes 18,43, 44, 45, and 61, and members with a Home
Health Plan of Care. MC+ Managed Care health plans are required to provide limited medically
necessary DME items to all other MC+ Managed Care members.
CHILDREN UNDER THE AGE OF 21 AND PREGNANT WOMEN WITH ME CODES 18, 43, 44, 45, AND 61 AND THOSE
WITH A HOME HEALTH PLAN OF CARE REGARDLESS OF AGE: Medically necessary equipment such as
hospital beds, walkers, commodes, decubitus care equipment, hoyer lifts, augmentative communication
devices when prior authorized by the MC+ Managed Care health plan, trapeze equipment, canes, and
crutches, etc. will be provided to children under the age of 21 and pregnant women with ME codes
18, 43, 44, 45, and 61 and those with a home health plan of care regardless of age. The recipient
must be MC+ eligible on the date the equipment is delivered or dispensed. Equipment that is
purchased becomes the property of the recipient. Those with a home health plan of care receive
covered DME items during the plan of care coverage period.
In addition to the above-mentioned DME items, the MC+ Managed Care health plans are required to
provide the following:
| X | HCY DME items and services to members under the age of 21. This includes medically necessary items such as diapers, medical supplies, enteral nutrition, PKU nutrition, and positioning equipment. MC+ Managed Care health plans must arrange for continuation of coverage of HCY equipment and supplies presently being reimbursed under the HCY program. | ||
| X | All medically necessary Total Parenteral Nutrition (TPN) items and services. This includes TPN pumps, nutritional solutions, and supplies. | ||
| X | All medically necessary non-sterile ostomy supplies. | ||
| X | All medically necessary orthotic and prosthetic devices. | ||
| X | All medically necessary diabetic supplies and equipment. | ||
| X | All medically necessary oxygen and respiratory equipment. This includes oxygen and oxygen delivery systems, ventilators, nebulizers, Apnea monitors, suction pumps, etc. A summary of oxygen and respiratory equipment benefits and limitations may be found in the MC+ Durable Medical Equipment Policy Statement. | ||
| X | Augmentative communication evaluations, devices, and training. Medically necessary communication devices prescribed as a result of the augmentative evaluation are covered as a Durable Medical Equipment (DME) benefit when the augmentative communication device is prior authorized by the MC+ Managed Care health plan. |
LIMITED DURABLE MEDICAL EQUIPMENT FOR MC+ MANAGED CARE ELIGIBLE INDIVIDUALS WHO ARE NOT
CHILDREN UNDER THE AGE OF 21. PREGNANT WOMEN WITH ME CODES 18, 43, 44, 45, AND 61, OR THOSE WITH A
HOME HEALTH PLAN OF CARE INCLUDES:
| • | Diabetic supplies and equipment (insulin and needles are considered Pharmaceuticals), | ||
| • | Manual and power wheelchairs including wheelchair accessories and batteries, | ||
| • | Prosthetic devices (artificial larynx is not covered), | ||
| • | Respiratory equipment and oxygen. (Nebulizers, CPAP and BiPAP are not covered services unless medical necessity is determined through the MC+ Managed Care health plan’s exception process. If services are currently authorized, the MC+ Managed Care health plan may only discontinue or reduce these services after a determination of medical necessity is made through the MC+ Managed Care health plan’s exception process.) | ||
| • | Ostomy supplies. |
EPSDT/HCY
The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) mandated that MC+ fee-for-service provide
medically necessary services to children from birth through age 20 which are necessary to treat or
ameliorate detects, physical or mental illness, or conditions identified by an Early Periodic
Screening, Diagnosis, and Treatment (EPSDT) well child visit (screen) regardless of whether or not
the services are covered under the MC+ fee-for-service state plan. This program is referred to
nationally as the EPSDT Program. In Missouri this program is referred to as the Healthy Children
and Youth (HCY) Program. Services must be sufficient in amount, duration, and scope to
reasonably achieve their purpose and may only be limited by medical necessity. The MG+ Managed Care
health plans are responsible for providing EPSDT/HCY services for all members. If a problem is
detected during a well child visit (screening examination), the child must be evaluated as
necessary for further diagnosis and treatment services. The MC+ Managed Care health plan is
responsible for the treatment services.
EPSDT/HCY WELL CHILD (SCREENING) SERVICES: MC+ Managed Care health plans are responsible
for ensuring that HCY well child visits (screens) are performed on all members under the age of
21. Missouri has adopted the American Academy of Pediatrics’ (AAP) Schedule for Preventive
Pediatric Health Care as a minimum standard for frequency of providing full HCY well child visits.
Immunizations are recommended in accordance with the Advisory Committee on Immunization Practices
(ACIP) guidelines. MC+ Managed Care health plans are required to keep immunizations and well child
visits current according to schedules as specified by the state agency. The current schedules are
as follows:
Children should receive HCY/EPSDT well child visits regularly, at the ages listed below.
o Newborn
|
o 15-17 months | o 8-9 years | ||
o By age one month
|
o 18-23 months | o 10-11 years | ||
o 2-3 months
|
o 24 months | o 12-13 years | ||
o 4-5 months
|
o 3 years | o 14-15 years | ||
o 6-8 months
|
o 4 years | o 16-17 years | ||
o 9-11 months
|
o 5 years | o 18-19 years | ||
o 12- 14 months
|
o 6-7 years | o 20 years |
EPSDT/HCY LEAD SCREENING SERVICES: All children from 6 to 72 months of age are considered
at risk and must be assessed for lead poisoning. A verbal risk assessment must be completed at
each HCY visit and if at high risk, the child must have a blood lead test. A blood lead test is
required at 12 and 24 months, regardless of risk or annually if residing in a high-risk area of
Missouri as defined by Department of Health and Senior Services regulation 19 CSR 20-8.030. The
Division of Medical Services requires the use of the Lead Screening Guide (MO 886-2998) when
providing services to MC+ eligible children.
Childhood Immunization Schedule: Children should receive childhood immunizations regularly,
at the ages listed on the Recommended Childhood Immunization Schedule, as a mended. The current
schedule appears in the Missouri Medicaid Provider Manuals that may be found on the Internet at the
Division of Medical Services website, http://www.medicaid.state.irio.us/indexl.html (Look
under Missouri Medicaid Provider Manuals, List of Forms, Recommended Childhood Immunization
Schedule.)
FAMILY PLANNING/STERILIZATIONS
Family planning services are a covered benefit. MC+ Managed Care health plans are required to
provide freedom of choice for family planning and reproductive health services which may be
accessed out-of-network. Examples of reproductive health services are: contraception management,
insertion of Norplant, intrauterine devices, Depo-Provera injections, pap test, pelvic exams,
sexually transmitted disease testing, and family planning counseling/education on various methods
of birth control. For family planning purposes, sterilizations shall only be those elective
sterilization procedures performed for the purpose of rendering an individual permanently incapable
of reproducing and must always be reported as family planning services in accordance with mandated
federal regulations 42 CFR 441.250-441.259.
HEARING AID - Limited to Children under the age of 21 and Pregnant Women with ME codes 18, 43,
44, 45, and 61
MC+ Managed Care health plans are required to provide medically necessary hearing aids and related
services. This includes medically necessary audiometric and hearing aid services for all MC+
Managed Care members under the age of 21 including but not limited to hearing aid batteries, FM
system, diagnostic testing, post cochlear implant training, aural habilitation, auditory trainers,
etc.
HOME HEALTH
MC+ Managed Care health plans are responsible for covering medically necessary, physician ordered
home health benefits. M C+ Managed C are health plans shall not terminate such services without a
case-specific, clinical decision made by a provider. Home health services provide primarily
medically oriented treatment or supervision to members with an acute illness, or an exacerbation
of a chronic or long term illness which can be therapeutically managed at home. The delivered care
should follow a written plan of treatment established and periodically reviewed by a physician.
The home health program is divided into two distinct segments based on the age of the member.
Members who are 21 years of age and older are defined as adults within the home health program.
Members 20 and under are classified as children and are eligible to receive expanded home health
services as part of the EPSDT federal mandate. Services include skilled nursing, aide visits,
psychiatric nursing, physical, occupational, and speech therapy and supplies.
HOSPICE
MC+ Managed Care health plans are required to provide hospice services when a terminally ill
member elects those services. The hospice benefit is designed to meet the needs of members with
life-limiting illnesses and to help their families cope with related problems and feelings. To be
eligible to elect hospice care, members must be certified by a physician as being terminally ill
with a life expectancy of six months or less. Hospice care cannot be prescribed or ordered by a
physician. The member must elect hospice care and agree to seek only palliative care for the
duration of the hospice election.
HYSTERECTOMY SERVICES
In order to be in compliance with 42 CFR 441.256, the MC+ Managed Care health plan must require a
completed copy of the “Acknowledgement of Receipt of Hysterectomy Information” form from the
performing provider. The MC+ Managed Care health plan must assure that the “Acknowledgement of
Receipt of Hysterectomy Information” form meets all of the criteria required by HCFA in 42 CFR
441.250 through 441.259.
INPATIENT/OUTPATIENT HOSPITAL including MENTAL HEALTH
Inpatient hospitalization and outpatient services for physical health needs are the responsibility
of the MC+ Managed Care health plan for all members, based on medical necessity. This includes
charges for the pretransplant and post discharge follow-up for transplant recipients (see
Transplants).
MATERNITY PRE-NATAL CARE AND DELIVERY
MC+ Managed Care health plans are required to cover maternity pre-natal care and delivery.
MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES
MC+ Managed Care health plans are responsible for all medically necessary mental health and
substance abuse services available in the fee-for-service program for members. Mental health and
substance abuse services shall
include court ordered, 96 hour detentions and involuntary commitments. Mental health and substance
abuse services may be provided by an acute care hospital (for a psychiatric stay), private or state
psychiatric hospital, community mental health or substance abuse treatment program certified or
licensed by the joint commission, Commission for Accreditation of Rehabilitation Facilities (CARF),
or the Missouri Department of Mental Health including qualified mental health professionals,
licensed and provisionally licensed psychologists, licensed and provisionally licensed clinical
social workers, licensed and provisionally licensed professional counselors, psychiatrist,
psychiatric advance practice nurse or home health psychiatric nurse.
Mental health and substance abuse services (including inpatient and outpatient) for children in
Category of Aid 4 (primarily children in state custody) are not the financial
responsibility of the MC+ Managed Care health plan and
will be reimbursed to MC+ fee-for-service enrolled providers on a fee-for-service basis. For
inpatients with dual diagnoses (physical and mental) identified at admission or during the stay,
the MC+ Managed Care health plans will be financially responsible for all inpatient hospital days
if the primary, secondary, or tertiary diagnosis is a combination of physical and mental health.
OPTICAL
MC+ Managed Care health plans are required to provide medically necessary optical services for
members as described herein.
Optical services include one comprehensive or one limited eye examination every two years for
refractive error, services related to trauma or treatment of disease/medical condition (including
eye prosthetics), and one pair eyeglasses following cataract surgery. Additionally:
| § | Children under age 21 services include one comprehensive or one limited eye examination per year for refractive error, eyeglasses, HCY/EPSDT optical screens and services. | |
| § | Pregnant women age 21 and over with ME codes 18, 43, 44, 45, and 61 services include one comprehensive or one limited eye examination per year for refractive error. Eyeglasses (except the one pair following cataract surgery covered by the health plan) for these pregnant women are covered through the Fee for Service program. |
When it is medically necessary for an optical procedure to be performed in an inpatient or
outpatient hospital facility, emergency room, or ambulatory surgical center, the facility charges
and ancillary services associated with the optical procedure are the responsibility of the MC+
Managed Care health plan.
If the MC+ Managed Care health plan approves optical items which are delivered or placed after
enrollment in the MC+ Managed Care health plan ends, the MC+ Managed Care health plan that approves
the optical item(s) is responsible for payment.
PERSONAL CARE
Personal care services are covered benefits for all members. Personal care services are medically
oriented tasks that may be reviewed by a physician. Personal care services are not physician
driven. Personal care services are tasks which assist an individual in activities of daily living
due to a stable, chronic condition. Personal care services are provided as a cost effective
alternative to nursing home placement.
Basic personal care services are services related to an MC+ enrollee’s physical
requirements, such as assistance with eating, bathing, dressing, personal hygiene, and activities
of daily living. They also include services essential to the health and welfare of the MC+
enrollee, such as housekeeping chores like preparing meals, bedmaking, dusting, and vacuuming.
Advanced personal care tasks are maintenance services provided to assist MC+ enrollees
with stable, chronic conditions when such assistance requires devices and procedures related to
altered body functions.
Nurse visits provided by an RN or LPN in the personal care program are authorized to
provide increased supervision of the aid, assessment of the MC+ enrollee’s health and the
suitability of the care plan to meet the patient’s needs as well as referral and/or follow-up
action. In addition, nurse visits may be authorized for skilled tasks that must be performed by a
nurse, such as filling insulin syringes, setting up oral medications, monitoring skin conditions,
providing nail care for diabetic patients, etc.
If personal care services have been authorized prior to a member enrolling in an MC+ Managed Care
health plan, the MC+ Managed Care health plan may only discontinue or reduce these services
based on an assessment performed by the Department of Health and Senior Services.
PERSONAL CARE (HCY): Children, ages 0 through 20, are determined to be in need of
personal care by medical necessity. Personal care needs (including advanced personal care needs)
for children are demonstrated by
their need for extra assistance in bathing, toileting, eating, or other activities of daily living
because of a medical condition. The fact that a child has a caretaker does not make him or her
ineligible for personal care services. The primary caretaker may not be present to deliver the
required services or may lack the time or ability to deliver the essential care. A family member
may not be reimbursed for the delivery of personal care services.
PHARMACY
MC+ Managed Care health plans are required to provide pharmacy services if the health plan
included pharmacy benefits in its proposal. Under the current Missouri MC+ Fee-For-Service
Pharmacy Program, nearly all products of manufacturers participating in the national rebate
program are reimbursable, including many over-the-counter preparations. Insulin syringes are also
reimbursable under this program.
Some products have been excluded from coverage under the current Missouri MC+ Fee-For-Service
Pharmacy Program. MC+ Managed Care health plans may elect to exclude these, but may not exclude
from coverage any product not excluded from the current Fee-For-Service Pharmacy Program (see the
MC+ Pharmacy Policy Statement for a list of products excluded from coverage). Protease inhibitors
will be reimbursed by the state agency on a fee-for-service basis.
It is not essential that MC+ Managed Care health plans cover pharmaceutical products without
restriction to the same extent that current fee-for-service policy dictates. However, any product
that is reimbursable by the current Fee-For-Service Pharmacy Program must be made available to
members, regardless of whether or not the prescriber is in the MC+ Managed Care health plan’s
network. MC+ Managed Care health plans may elect to have a restricted formulary; however,
products not included on that formulary that are covered or allowed through prior authorization by
the current Fee-For-Service Pharmacy Program must be made available to members when medically
necessary. MC+ Managed Care health plans may also require that prior authorization be obtained for
prescriptions generated by an out-of-network prescriber. MC+ Managed Care health plans may have a
more extensive list of products requiring prior authorization, but MC+ Managed Care health plans
may not exclude from coverage any products not excluded under the current Fee-For-Service Pharmacy
Program.
It is acceptable for MC+ Managed Care health plans to implement a drug authorization program in
order to provide this access. Any drug prior authorization program implemented by an MC+ Managed
Care health plan must meet the following criteria:
| X | MC+ Managed Care health plans must provide response by telephone or other telecommunication device within 24 hours of a request for prior authorization. | ||
| X | MC+ Managed Care health plans must provide for the dispensing of at least a 72-hour supply of a drug product that requires prior authorization in an emergency situation. | ||
| X | Approvals must be granted for any medically accepted use. Medically accepted use is defined as any use for an FDA approved drug product which appears in peer-reviewed literature or which is accepted by one or more of the following compendia: the American Hospital Formulary Service — Drug Information and the United States Pharmacopeia — Drug Information and DRUGDEX. |
In addition, MC+ Managed Care health plans must have a mechanism whereby drugs can be
prior-authorized if a member is out of the MC+ Managed Care health plans’ service area and during
the time lag between the date of a members’ effective enrollment and that members’ assignment to a
primary care provider.
PHARMACY DISPENSING FEES: The recipient portion of the pharmacy dispensing fee is to be
collected according to current fee-for-service policy. Unlike traditional copayment requirements,
the current Fee-For-Service Pharmacy fee requirement is considered a portion of the professional
dispensing fee and is not deducted from reimbursement to providers. Therefore, the recipient
portion of the dispensing fees is required to be collected for pharmacy services provided by MC+
Managed Care health plans. Providers of service may not deny or reduce services to MC+ members
solely on the basis of the member’s inability to pay the fee when
charged, A member’s inability to pay a required amount as due and charged when a service is
delivered, shall in no way extinguish the member’s liability to pay the amount due. Fee
responsibility and amounts collectible shall be as follows:
| MC+ Fee-For-Service Maximum Allowable | Beneficiary Participation in Professional | |
| Ingredient Cost for Each Prescription | Dispensing Fee | |
| $10.00 or less | $0.50 | |
| $10.01 to $25.00 | $1.00 | |
| $25.01 or greater | $2.00 |
Under the current pharmacy dispensing fee policy all Missouri eligible beneficiaries are subject
to the fee requirement when provided covered pharmacy services, with the exception of the
following which are excluded:
| X | Beneficiaries under age 19; | ||
| X | Services related to Early Periodic Screening, Diagnosis and Treatment (EPSDT); | ||
| X | Institutionalized beneficiaries who are residing in a skilled nursing facility, a psychiatric hospital, a residential care facility, or an adult boarding home; | ||
| X | Foster Care children up to 21 years of age; | ||
| X | All Medicare/MC+ Fee-For-Service crossover claims as primary coverage is afforded by the Medicare Program; | ||
| X | Those services specifically identified as relating to Family Planning services; | ||
| X | Emergency services; and | ||
| X | Services provided to pregnant women which are directly related to the pregnancy or a complication of the pregnancy. |
Participation in each MC+ Managed Care health plan’s pharmacy network shall be limited to
providers who accept, as payment in full, the amounts paid by the MC+ Managed Care health plan
plus any fee amount required of the member and collected by the provider.
PHARMACY — GENERIC DRUG REIMBURSEMENT OVERRIDE POLICY: The current MC+ Fee-For-Service
Pharmacy Program reimbursement methodology limits payment at a generic level for many drugs that
are available generically from multiple sources. The majority of these reimbursement limitations
are established as federal upper limits by the Centers for Medicare and Medicaid Services (CMS).
Other such limitations have been established by the state agency (Missouri Maximum Allowable Cost
or MAC).
Both CMS and the Missouri Division of Medical Services recognize that there are situations in
which trade name products are necessary for patient’s treatment. There is currently a generic
reimbursement override procedure. If the MC+ Managed Care health plan intends to implement similar
generic reimbursement limitations on multiple source products, a mechanism must exist so that
trade name reimbursement is available when it is medically necessary. This mechanism may not be
more restrictive than current fee-for-service policy.
PHYSICIAN INJECTIONS: Under the current Fee-For-Service Pharmacy Program, all FDA approved
injectable products are reimbursable when billed by National Drug Code (NDC) on a pharmacy claim
form by a private physician for administration in his/her office. MC+ Managed Care health plans
are required to provide pharmacy services (including physician injections) if the health plan
included pharmacy benefits in it’s proposal. In addition, certain non-injectable products are also
reimbursable when billed by a private physician. These products include Norplant and irrigation
solutions. Every product that is reimbursable by the current Fee-For-Service Pharmacy Program
either without restriction or through prior authorization, must be covered by the MC+ Managed Care
health plans either without restriction or through prior authorization except for protease
inhibitors which are excluded from MC+ Managed Care. However, it is not essential that health
plans cover injectable pharmaceutical products without restriction to the same extent that current
policy dictates. Coverage must be granted for any medically accepted use.
PHYSICAL, OCCUPATIONAL AND SPEECH THERAPY FOR ADULT PREGNANT WOMEN WITH ME CODES 18, 43,44, 45,
AND 61
MC+ Managed Care health plans are required to provide physical therapy (PT), occupational therapy
(OT), and speech therapy (ST) services for adult pregnant women with ME codes 18, 43, 44, 45, and
61 as follows.
Medically necessary physical therapy (PT) benefits are covered in the outpatient hospital setting
and as part of home health when the patient is medically homebound. PT is covered in a
rehabilitation center if the services are for adaptive training for a prosthetic or orthotic
device.
Occupational therapy (OT) is covered in a rehabilitation center for adaptive training for a
prosthetic or orthotic device. Medically necessary OT is covered as part of home health if the
patient is medically homebound.
Speech therapy (ST) is covered in a rehabilitation center for adaptive training for an artificial
larynx. Medically necessary ST is covered in as part of home health if the patient is medically
homebound.
PHYSICAL, OCCUPATIONAL AND SPEECH THERAPY (HCY)
MC+ Managed Care health plans are required to provide medically necessary physical (PT),
occupational (OT), and speech (ST) therapy and supplies used for casting and splinting to children
age 20 and under. Physical, occupational, and speech therapy services identified in a child’s
Individual Education Plan (IEP) or Individualized Family Service Plan (IFSP) will not be the
responsibility of the MC+ Managed Care health plan. These services will be paid fee-for-service by
the state agency. Medically necessary PT, OT, and ST services beyond the scope identified in a
child’s IEP or IFSP are the responsibility of the MC+ Managed Care health plan. This includes
developmental as well as maintenance therapy.
Medically necessary equipment and supplies used in connection with PT, OT, and ST services are the
responsibility of the MC+ Managed Care health plan.
PHYSICIAN/ADVANCED PRACTICE NURSE SERVICES
MC+ Managed Care health plans are required to provide medically necessary physician/advanced
practice nurse services within their scope of practice.
FEDERALLY QUALIFIED HEALTH CENTER (PQHC): Federally Qualified Health Center (FQHC)
services are the responsibility of the MC+ Managed Care health plans. FQHC core services that must
be performed in an FQHC setting are listed in Attachment 2. To receive FQHC provider status, a
health center must be certified by the Public Health Services, be certified for participation in
MC+ Fee-For-Service and enrolled with Missouri MC+ Fee-For-Service as an FQHC. FQHCs are entitled
to cost-based reimbursement from the state agency for FQHC services provided to MC+ enrollees.
The cost settlement will be performed by the state agency through an FQHC MC+ Fee-For-Service cost
report.
PODIATRY SERVICES
MC+ Managed Care health plans are required to provide medically necessary podiatry services that
are within the scope of practice of the podiatrist for children under the age of 21 or pregnant
women with ME codes 18, 43, 44, 45, and 61. All other MC+ Managed Care enrollees are eligible
for podiatry services with the exception of trimming of nondystrophic nails, any number;
debridement of nail(s) by any method(s), one to five; debridement of nail(s) by any method(s), six
or more; excision of nail and nail matrix, partial or complete; and strapping of ankle and/or
foot.
PRIVATE DUTY NURSING (HCY)
Private Duty Nursing services are covered under the Healthy Children and Youth (HCY) program. The
HCY program serves children age 20 and under. Private duty nursing is shift care delivered either
by an R.N. or an L.P.N acting within the scope of the Missouri Nurse Practice Act according to an
individualized plan of care approved by a physician. The duration of care can extend up to
twenty-four (24) hours per day. The duration and frequency of care is dependent upon the child’s
need and physician orders. Children receiving private duty nursing care are high risk children that
are medically fragile. The MC+ Managed Care health plans shall only terminate such services after a
case-specific, clinical decision has been reached by a provider.
RADIOLOGY AND LABORATORY SERVICES
MC+ Managed Care health plans are required to provide medically necessary radiology and laboratory
services. The MC+ Managed Care health plan must assure that the criteria required by CMS defined
under the CLIA Act of 1988 as defined in 42 CFR 493.2 and Section 2303 of the Deficit Reduction Act
of 1984 (P.L. 98-369) for Clinical Diagnostic Laboratory Procedures are met.
TRANSPLANTS
MC+ Managed Care health plans are responsible for the pre-surgery assessment/evaluation, care
(excluding the solid organ procurement or bone marrow/stem cell harvest), post-transplant
discharge follow-up care, and immuno-suppressive pharmacy products prescribed after the inpatient
transplant discharge.
The transplant must be prior authorized by the Division of Medical Services (DMS) and must be
performed at a DMS approved transplant facility. DMS will continue to cover the solid organ/stem
cell/bone marrow procurement costs, the inpatient stay for the transplant from the date of the
transplant through the date of discharge and the transplant surgeon’s fee, all physician, lab etc.
charges incurred during the transplant stay (date of transplant through the date of discharge).
TRANSPORTATION
The MC+ Managed Care health plan must provide emergency (ground or air) medical transportation.
The MC+ Managed Care health plan must provide necessary non-emergency medical transportation
(NEMT) for members accessing health care services included in the comprehensive benefit package as
well as health care services that are carved out of the MC+ Managed Care contract. The MC+ Managed
Care health plan must arrange the least expensive and most appropriate mode of transportation
based on the MC+ Managed Care member’s medical needs.
MC+ Managed Care health plans are not required to provide transportation to MC+ Managed Care
members with access to free transportation at no cost to them, however, such members may be
eligible for ancillary services. Also, MC+ Managed Care health plans are not required to provide
NEMT services to Durable Medical Equipment providers that provide free delivery or mail order
services nor to a pharmacy.
An offer of transportation assistance must be made to all children prior to periodic screenings
required under EPSDT/HCY. Parents/guardians must be informed of this transportation benefit.
NEMT services are not covered for those MC+ enrollees with ME Codes 71 through 75.
VACCINE FOR CHILDREN (VFC)
VFC services are a covered benefit. Under the provision of the Omnibus Budget Reconciliation Act
(OBRA) of 1993, vaccines are available free to providers who enroll with the VFC Program. MC+
Managed Care health plans and their subcontractors must enroll in the VFC Program administered by
the Missouri Department of Health and Senior Services and must use the free vaccines when
administering vaccines to members. A separate administration fee will not be paid to the MC+
Managed Care health plans as the reimbursement is included in the capitation payment. If a vaccine
is medically necessary and not covered through the VFC program, the MC+ Managed Care health plan is
responsible for the vaccine and the administration costs.
Revised Attachment 6
The following is the state agency’s Quality Improvement (QI) Strategy. The state agency produces
and updates the MC+ Managed Care Quality Improvement (QI) Strategy, MC+ Managed Care contract
and the MC+ Managed Care policy statements. The MC+ Managed Care health plan shall comply with
the Quality Improvement (QI) Strategy, MC+ Managed Care policy statements and the MC+ Managed
Care contract.
MISSOURI DEPARTMENT OF SOCIAL SERVICES
DIVISION OF MEDICAL SERVICES
DIVISION OF MEDICAL SERVICES
QUALITY IMPROVEMENT
(Q I) STRATEGY
(Q I) STRATEGY
1. DEPARTMENT OF SOCIAL SERVICES MISSION STATEMENT
To maintain or improve the quality of life for people in the state of Missouri by providing the
best possible services to the public, with respect, responsiveness and accountability which
will enable individuals and families to better fulfill their potential.
Purpose
The Department of Social Services (DSS), Division of Medical Services (DMS) seeks to assure access
and availability of quality health care services for MC+ Managed Care members through a Managed
Care delivery system, standards setting and enforcement, and education of providers and members.
This QI strategy supports the following DMS objectives:
| o | Assessment of the quality and appropriateness of care and services furnished to members,including those with special health care needs, centered on evidenced based practice; | ||
| o | Use of care management with emphasis on the individual member to ensure that members have a medical home which focuses attention on the wellness of the member and includes personal responsibility and investment on the part of the member; | ||
| o | Use of data regarding the race, ethnicity, and primary language spoken of each member to improve care delivery; | ||
| o | Use of national performance measures and levels when identified and developed by CMS in consultation with states and other relevant stakeholders; | ||
| o | An effective information system that supports initial and ongoing operation and review of the quality strategy; | ||
| o | A process for public input that provides for the integration of various perspectives and priorities and will facilitate improvements in member health status; | ||
| o | Appropriate use of sanctions, including intermediate sanctions, to assure appropriate delivery of care to members; and | ||
| o | Compliance with regulatory and contractual requirements. |
Goal
The goal is to ensure that:
| o | Quality health care services are provided to MO Managed Care members; | ||
| o | MC+ Managed Care health plans are in compliance with Federal, State, and contract requirements; and | ||
| o | A collaborative process is maintained to collegially work with the MC+ Managed Care health plans to improve care. |
Overview
This strategy will be annually evaluated for effectiveness. This process includes obtaining
input from stakeholders, the State Quality Assessment & Improvement Advisory Group, Consumer
Advisory Committee, and approval from CMS prior to implementation. In the instance there is
significant change in outcome or indicator status that is not self-limiting and impacts on
more than one area of the population’s health status, modifications will be made to the
strategy reporting process. These modifications may include changes to the monthly, quarterly
and annual MC+ Managed Care health plan reports, on-site review topics, and MC+ Managed Care
performance measures.
Each MC+ Managed Care health plan must meet program standards for monitoring and evaluation of
systems as outlined in the MC+Managed Care contract to meet Federal and State regulations.
Each MC+ Managed Care health plan must implement a QI strategy that addresses the standards as noted
but is not
limited to the requirements within the MC+ Managed Care Quality Improvement (QI) Strategy or
the MC+ Managed Care contract. The MC+ Managed Care health plan’s strategy shall include
components to monitor, evaluate, and implement the contract standards and processes to
improve:
| o | Quality management; | ||
| o | Utilization management; | ||
| o | Records management; | ||
| o | Information management; | ||
| o | Care management; | ||
| o | Member services; | ||
| o | Provider services; | ||
| o | Organizational structure; | ||
| o | Credentialing; | ||
| o | Network Performance; | ||
| o | Fraud and abuse detection and prevention; | ||
| o | Access and availability; and | ||
| o | Data collection, analysis and reporting. |
1.1 Program Components
I. MC+ Managed Care Health Plans Reports of Quality Assessment and Improvement
The MC+ Managed Care health plans will provide the DMS with regular reports of utilization
and quality assessment. These reports will be provided in accordance with the:
| o | MC+ Managed Care Policy Statements; | ||
| o | MC+ Managed Care contract; | ||
| o | MC+ Managed Care Performance Measures (Exhibit 1); and | ||
| o | MC+ Managed Care QA & I Program, Reporting Period Schedule, (Exhibit 2). |
The frequency and types of reports include:
| A. | Monthly Reports: Monthly reports regarding special needs and lead poisoning prevention will be submitted to DMS in a format specified by the state agency. Monthly reports will be due the last working day of each month. | ||
| B. | Quarterly Reports: Quarterly reports of member grievances and appeals, provider complaints, grievances, and appeals, and fraud and abuse detection will be submitted to DMS in a format specified by the state agency. | ||
| C. | Annual Evaluation: An annual evaluation of the MC+ Managed Care health plan’s quality assessment and improvement program specific to the Missouri MC+ Managed Care Program is to be submitted in the format specified by the state agency (Exhibit 4). The evaluation shall contain information concerning the effectiveness and impact of the health plan’s MC+ Managed Care quality assessment and improvement strategy. The annual evaluation report must provide information that indicates that data is collected, analyzed and reported, and health operations are in compliance with State, federal and MC+ Managed Care contractual requirements. The annual evaluation of the health plan’s QA &I program must incorporate multiple year outcomes and trends. The evaluation must show the health plan’s QA & I program is ongoing, continuous and based upon evaluation of past outcomes. The evaluation will, at a minimum, contain information from subcontractors and internal processes including: |
| a. | An analysis and evaluation of member grievances and appeals and provider complaints, grievances and appeals; | ||
| b. | An analysis and evaluation of how the health plan incorporates race, ethnicity, and primary language into the health plan’s quality strategy. The DSS asks each potential enrollee their race, ethnicity and primary language at the time of application in accordance with Medicaid eligibility rules. DSS uses the federally recognized categories for race, ethnicity and language. The state agency shall electronically provide race, ethnicity and language to the health plan upon member enrollment. | ||
| c. | An analysis and evaluation of utilization and clinical performance data that supports use of evidenced based practice; | ||
| d. | An analysis and evaluation of 24 access/after hours availability, appointment availability and open/closed panels; | ||
| e. | An analysis and evaluation of the MC+ Managed Care health plan’s provider network including provider/enrollee ratios; | ||
| f. | An analysis and evaluation of all MC+ Managed Care quality indicators: |
| 1. | Trends in Missouri Medicaid Quality Indicators provided by the Department of Health and Senior Services (DHSS) (Exhibit 3); | ||
| 2. | HEDIS Indicators by Missouri MC+ Managed Care Health Plans Within Regions, Live Births provided by the Department of Health and Senior Services (DHSS) (Exhibit 3); and | ||
| 3. | MC+ Managed Care Performance Measures (Exhibit 1). |
| h. | An analysis and evaluation of quality is sues and actions identified through the quality strategy and how these efforts were used to improve systems of care and health outcomes; | ||
| i. | An analysis and evaluation of action items documented in the meeting minutes of the MC+ Managed Care health plan’s quality and compliance committee(s) including: |
| 1. | Trends identified for focused study; results of focused studies; corrective action taken; evaluation of the effectiveness of the actions and outcomes. |
| j. | An analysis and evaluation of Performance Improvement Projects (PIP) that addresses clinical and non-clinical PIPs and the requirement for on-going interventions and improvement; | ||
| k. | An analysis and evaluation of subcontractor relationships that addresses integration with the health plan’s QA&I program. This analysis and evaluation is not a replication of the Subcontractor Oversight Annual Evaluation report; | ||
| l. | An analysis and evaluation of the health plan’s fraud and abuse program; |
| m. | An analysis and evaluation of care management that includes case management, disease management and care coordination for both medical and mental health services; and | ||
| n. | An analysis and evaluation of the health plan’s claims processing and Management Information System. |
| D. | Periodic Reports of Quality and Utilization: The MC+ Managed Care health plan will provide periodic reports regarding case management, quality initiatives, and other quality analysis reports per DMS request. | ||
| E. | An annual report regarding multilingual services for members who speak a language other than English and the MC+ Managed Care health plan’s methods for communicating with members with visual and hearing impairments and accommodating for the physically disabled. The health plan’s report shall include but not be limited to the following: |
| 1. | A count by language of how many members declared a language other than English as their primary language. | ||
| 2. | A summary by language of translation services provided to members (oral and in-person). | ||
| 3. | A count of members identified as needing communication accommodations due to visual or hearing impairments or a physical .disability. | ||
| 4. | A summary of services provided to members with visual or hearing impairments or members who are physically disabled (Braille, large print, cassette, sign interpreters-, etc.). | ||
| 5. | An inventory by language of member material translated. | ||
| 6. | An inventory of member materials available in alternative formats. | ||
| 7. | A summarization of grievances regarding multilingual issues and dispositions. |
| F. | Annual subcontractor oversight reports that reflect the health plan’s monitoring activities in the previous year for each health care service subcontractor and any corrective actions implemented as a result of its monitoring activities. The annual subcontractor oversight reports shall be submitted in the format specified by the state agency (Exhibit 5). |
II. DMS Analysis and Evaluation
DMS will analyze and evaluate data from a variety of sources including the state agency’s
Medicaid Management Information System (MMIS) to assess the quality and appropriateness of care
delivery to the MC+ Managed Care population. The DMS will analyze and evaluate the following:
| • | Monthly reports, quarterly reports, periodic reports, annual reports, and the annual evaluations submitted by MC+ Managed Care health plans. | ||
| • | Encounter data. | ||
| • | Performance measures. | ||
| • | Performance improvement projects. | ||
| • | Compliance with the MC+ Managed Care contract. | ||
| • | Enrollment, transfer and disenrollment activity. |
Results from the analysis and evaluation activities will be compiled and presented through
regularly scheduled meetings of the State Quality Assessment & Improvement Advisory Group. The
QA & I Advisory Group will review these results to identify opportunities for improvement.
III. External Quality Review
An external quality review of the MC+ Managed Care health plans will be conducted annually
in accordance with the “Medicaid Program; External Quality Review of Medicaid Managed Care
Organizations; Final Rule, 42 CFR Part 438, Subpart E”. External quality review means the
analysis and evaluation by an External Quality Review Organization (EQRO) of aggregated
information on quality, timeliness, and access to health care services. The EQRO will
provide an annual evaluation report to the QA & I Advisory Group regarding, but not limited
to, the following:
| 1. | Validation of two (2) performance improvement projects that were underway during the preceding 12 months for each MC+ Managed Care health plan. | ||
| 2. | Validation of three (3) performance measures reported during the preceding 12 months. | ||
| 3. | A review every three years to determine the MC+ Managed Care health plan’s compliance with standards as listed within the MC+ Managed Care contract. | ||
| 4. | Validation of encounter data. |
IV. Compliance
| A. | Intermediate Sanctions. The DMS may establish and specify intermediate sanctions that may be imposed when a MC+ Managed Care health plan acts or fails to act as specified below. The DMS may require a corrective action plan, as referenced in section 2.28.5, to be developed and approved by the DMS in situations where intermediate sanctions may be imposed. The DMS shall approve and monitor implementation of such a plan and set appropriate timelines to bring activities of the MC+ Managed Care health plan into compliance with state and federal regulations. The DMS may monitor via required reporting on a specified basis and/or through on-site evaluations, the effectiveness of the plan. Before imposing intermediate sanctions, the DMS shall give the MC+ Managed Care health plan timely written notice that explains the basis and nature of the sanction and any other due process protections that the DMS elects to provide. |
| 1. | Fails substantially to provide medically necessary services that the MC+ Managed Care health plan is required to provide, under law or under this contract, to a member covered under the contract. | ||
| 2. | Imposes on members premiums or charges that are in excess of the premiums or charges permitted under the Medicaid program. | ||
| 3. | Acts to discriminate among members on the basis of their health status or need for health care services. | ||
| 4. | Misrepresents or falsifies information that it furnishes to CMS or to the DMS. | ||
| 5. | Misrepresents or falsifies information that it furnishes to a member, potential member, or a health care provider. | ||
| 6. | Fails to comply with the requirements for physician incentive plans, as set forth (for Medicare) in 42 CFR 422.208 and 422.210. | ||
| 7. | Distributes directly, or indirectly through any agent or independent contractor, marketing materials that have not been approved by the DMS or that contain false or materially misleading information. | ||
| 8. | Violates any of the other applicable requirements of sections 1903(m) or 1932 of the Act and any implementing regulations. | ||
| 9. | Violates any of the other applicable requirements of sections 1932 or 1905(t)(3) of the Act and any implementing regulations. |
| B. | Intermediate Sanctions: Types. The types of intermediate sanctions that the DMS may impose include: |
| 1. | Civil monetary penalties in the following specified amounts: |
| a. | A maximum of $25,000 for each determination of failure to provide services; misrepresentation or falsification of statements to members, potential members or health care providers; failure to comply with physician incentive plan requirements; or marketing violations. | ||
| b. | A maximum of $100,000 for each determination of discrimination among members on the basis of their health status or need for services; or misrepresentation or falsification to CMS or the DMS. | ||
| c. | A maximum of $15,000 for each member the DMS determines was discriminated against based on the member’s health status or need for services (subject to the $100,000 limit above). | ||
| d. | A maximum of $25,000 or double the amount of the excess charges (whichever is greater), for charging premiums or charges in excess of the amounts permitted under the Medicaid program. The DMS shall return the amount of overcharge to the affected member(s). |
| 2. | Appointment of temporary management for a health plan as provided in 42 CFR 438.706. | ||
| 3. | Granting members the right to terminate enrollment without cause and notifying the affected members of their right to disenroll. | ||
| 4. | Suspension of all new enrollment, including default enrollment, after the effective date of the sanction. | ||
| 5. | Suspension of payment for members enrolled after the effective date of the sanction and until CMS or the DMS is satisfied that the reason for imposition of the sanction no longer exists and is not likely to recur. | ||
| 6. | Additional sanctions allowed under state statutes or regulations that address areas of noncompliance described above. |
Exhibit 1
MC+
MANAGED CARE PERFORMANCE MEASURES
a. EFFECTIVENESS OF CARE
| 1. | (H) Childhood Immunization Status (CIS)* | |
| 2. | (H) Adolescent Immunization Status (AIS)* | |
| 3. | (H) Cervical Cancer Screening (CCS)* | |
| 4. | (H) Chlamydia Screening in Women (CHL)* | |
| 5. | (H) Follow-up After Hospitalization For Mental Health Disorders (FUH) | |
| 6. | (H) Use of Appropriate Medications for People with Asthma (ASM)* |
1) ACCESS/AVAILABILITY OF CARE
| 7. | (H) Prenatal and Postpartum Care (PPC) | |
| 8. | (H) Annual dental visit (ADV)* |
2) SATISFACTION WITH THE EXPERIENCE OF CARE
| 9. | (H) CAHPS 3.OH Child/Adult Survey* |
3) USE OF SERVICES
| 10. | (H) Well child Visits in the First 15 Months of Life (W15) | |
| 11. | (H) Well Child Visits in the Third, Fourth, Fifth, and Sixth Year of Life (W34) | |
| 12. | (H) Adolescent Well-Care Visits (AWC)* | |
| 13. | (H) Ambulatory Care (AMB) |
| 14. | (H) Mental Health Utilization — Percentage of Members Receiving Inpatient, Intermediate Care and Ambulatory Services (MPT) |
| 15. | (H) Identification of Alcohol and Other Drug Services (IAD) |
(H) = HEDIS Measure
* DHSS required measure. Follow the instructions provided within 19 CSR 10-5.010.
Note: The measures shall be collected and reported in accordance with HEDIS specifications. In the
event that NCQA retires a DMS required measure, the Division will inform the health plan whether
the DMS will require the health plan to collect and report using HEDIS specifications in effect
prior to the measurement’s retirement or whether the Division will follow NCQA’a retirement of the
measure. NCQA rotates certain measures every year. As approved by DMS, rotated measures shall be
reported in accordance with current HEDIS technical specifications for reporting rotated measures.
DMS shall not approve rotation of CAHPS. DHSS measures shall be reported according to DHSS
specifications as provided in 19 CSR 100-5.010. MC+ Managed Care health plans contracted for more
than one region shall submit region specific data. All MC+ Managed Care health plans shall submit
the measures in an electronic format utilizing tables provided by the DMS and DHSS.
Exhibit 2
MC+ Managed Care Quality Assessment and Improvement
Reporting Periods
Reporting Periods
The following reporting periods have been defined for reporting of monthly, quarterly and
annual reports by MC+ Managed Care health plans participating in the MC+ Managed Care
Program.
MONTHLY REPORTING
| Time Period | Due Date | |
Calendar month
|
Last working day of the month |
QUARTERLY REPORTING
| Time Period | Due Date | |
1st Quarter (July thru September)
|
December 1st of each year | |
2nd Quarter (October thru December)
|
March 1st of each year | |
3rd Quarter (January thru March)
|
June 1st of each year | |
4th Quarter (April thru June)
|
September 1st of each year |
ANNUAL REPORTS — ANNUAL EVALUATION, MULTILINGUAL SERVICES,
SUBCONTRACTOR OVERSIGHT
SUBCONTRACTOR OVERSIGHT
| Time Period | Due Date | |
July 1 thru June 30
|
November 30, 2007 and on November 30 of each subsequent year |
PERFORMANCE MEASURES
| Time Period | Due Date | |
January 1 thru December 31 |
June 30 of each year |
Exhibit 3
Trends in Missouri Medicaid Quality Indicators
(Secondary-Source Reporting)
(Secondary-Source Reporting)
| 1. | Trimester Prenatal Care Began: |
| a. | First | ||
| b. | Second | ||
| c. | Third | ||
| d. | None | ||
| e. | Total |
| 2. | Inadequate Prenatal Care | |
| 3. | Birth weight (grams) — total number of births by weight category For each live birth. |
| a. | <500Gms. | ||
| b. | 500-1499 Gms. | ||
| c. | 1500-1999 Gms. | ||
| d. | 2000-2499 Gms. | ||
| e. | .2500 Gms. | ||
| f. | Stillborn fetuses |
| 4. | Low Birth Weight (<2500 grams) | |
| 5. | Method of Delivery |
| a. | C-Section | ||
| b. | VBAC | ||
| c. | Repeat C-Section |
| 6. | Smoking During Pregnancy | |
| 7. | Spacing <18 months since last birth | |
| 8. | Births to mothers <18 years of age | |
| 9. | Repeat teen births | |
| 10. | Fetal Deaths (20+weeks)* | |
| 11. | Total live birth or stillbirth fetuses 500 grams or more** | |
| 12. | Percent of pregnant women on Women’s Infants and Children Program (WIC) | |
| 13. | Percent of prenatals on WIC | |
| 14. | VLBW not delivered in level 111 hospitals | |
| 15. | Average maternal length of stay (days), Inpatient admissions | |
| 16. | Average behavioral health length of stay (days), Inpatient admissions | |
| 17. | Asthma inpatient admissions ages 4-17** | |
| 18. | Asthma emergency room visits ages 4-17** | |
| 19. | Asthma admissions under age 16, Inpatient admissions** | |
| 20. | Asthma admissions ages 18 — 64, Inpatient admissions** | |
| 21. | Emergency room visits under age 18** | |
| 22. | Emergency room visits ages 18 — 64** | |
| 23. | Hysterectomies** | |
| 24. | Vaginal hysterectomies | |
| 25. | Preventable hospitalization under age 18** |
| * | Rate per 1000 live births | |
| ** | Rate per 1000 population |
Exhibit 3
HEDIS Indicators by Missouri MC+ Managed Care Health Plans Within Regions, Live Births
(Secondary-Source Reporting)
(Secondary-Source Reporting)
| 1. | C-Sections | |
| 2. | VBACs | |
| 3. | Adequacy of Prenatal Care | |
| 4. | Early Prenatal Care | |
| 5. | Low Birth Weight | |
| 6. | Low Birth Weight Delivered in Level II/III Hospitals | |
| 7. | Very Low Birth Weight Delivered in Level II/III Hospitals | |
| 8. | Smoking During Pregnancy | |
| 9. | Spacing Less Than 18 Months | |
| 10. | Births to Mothers Less Than 18 | |
| 11. | Repeat Births to Teen Mothers | |
| 12. | Prenatal WIC Participants |
Exhibit 4
MC+ MANAGED CARE ANNUAL EVALUATION REPORT FORMAT
TABLE OF CONTENTS
EXECUTIVE SUMMARY
Overview of the Quality Improvement Program
Overview of the Effectiveness of the Quality Improvement Program
DEVELOPMENT, APPROVAL AND MONITORING OF THE QI PROGRAM
Quality and Compliance Committee
Analysis of Quality Improvement Process
Overall Effectiveness of the Quality Improvement Program
Strengths and Accomplishments
Opportunities for Improvement
POPULATION CHARACTERISTICS
Race/Ethnicity
Special Needs
Languages Identified
Opt Outs
QUALITY INDICATORS
Performance Measures
Trends in Missouri Medicaid Quality Indicators
HEDIS Indicators by Missouri MC+ Managed Care Health Plans Within Regions, Live Births
ACCESSIBILITY OF SERVICES
Average Speed of Answer
Call Abandonment Rate
Non-Routine Needs Appointments
Routine Needs Appointments
Access to Emergent and Urgent Care
Network Adequacy — Provider/Enrollee Ratios
24 Hour Access/After Hours Availability
Open/Closed Panels
Cultural Competency
Requests to Change Practitioners
FRAUD AND ABUSE
Prevention, Detection, Investigation
Training and Education
INFORMATION MANAGEMENT
Claims Processing — Timeliness of Claims Payment
Membership
Providers
QUALITY MANAGEMENT
Provider Satisfaction
Care Coordination
Case Management
Disease Management Program
Mental Health Care Management including Case Management
Clinical Practice Guidelines
Credentialing and Re-Credentialing
Medical Record Review
Subcontractor Monitoring
RIGHTS AND RESPONSIBILITIES
EXECUTIVE SUMMARY
Overview of the Quality Improvement Program
Overview of the Effectiveness of the Quality Improvement Program
DEVELOPMENT, APPROVAL AND MONITORING OF THE QI PROGRAM
Quality and Compliance Committee
Analysis of Quality Improvement Process
Overall Effectiveness of the Quality Improvement Program
Strengths and Accomplishments
Opportunities for Improvement
POPULATION CHARACTERISTICS
Race/Ethnicity
Special Needs
Languages Identified
Opt Outs
QUALITY INDICATORS
Performance Measures
Trends in Missouri Medicaid Quality Indicators
HEDIS Indicators by Missouri MC+ Managed Care Health Plans Within Regions, Live Births
ACCESSIBILITY OF SERVICES
Average Speed of Answer
Call Abandonment Rate
Non-Routine Needs Appointments
Routine Needs Appointments
Access to Emergent and Urgent Care
Network Adequacy — Provider/Enrollee Ratios
24 Hour Access/After Hours Availability
Open/Closed Panels
Cultural Competency
Requests to Change Practitioners
FRAUD AND ABUSE
Prevention, Detection, Investigation
Training and Education
INFORMATION MANAGEMENT
Claims Processing — Timeliness of Claims Payment
Membership
Providers
QUALITY MANAGEMENT
Provider Satisfaction
Care Coordination
Case Management
Disease Management Program
Mental Health Care Management including Case Management
Clinical Practice Guidelines
Credentialing and Re-Credentialing
Medical Record Review
Subcontractor Monitoring
RIGHTS AND RESPONSIBILITIES
Provider Complaint, Grievance and Appeal Management
Member Grievance and Appeal Management
Confidentiality
UTILIZATION MANAGEMENT
Utilization Improvement Program Scope
Discharges Per Year*
Inpatient Visits*
Average Length of Stay
Re-Admissions*
Emergency Department Utilization*
Outpatient Visits* .
Over/Under Utilization
Inter-Rater Reliability
Timeliness of Care Delivery
Timeliness of Prior Authorization/Certification Decision Making
*Per 1000 members
PERFORMANCE IMPROVEMENT PROJECTS (PIP)
Clinical
Non- Clinical
On-going Interventions and Improvements
Effect on Health Outcomes and Member Satisfaction
WORKPLAN FOR NEXT YEAR
APPENDICES
Member Grievance and Appeal Management
Confidentiality
UTILIZATION MANAGEMENT
Utilization Improvement Program Scope
Discharges Per Year*
Inpatient Visits*
Average Length of Stay
Re-Admissions*
Emergency Department Utilization*
Outpatient Visits* .
Over/Under Utilization
Inter-Rater Reliability
Timeliness of Care Delivery
Timeliness of Prior Authorization/Certification Decision Making
*Per 1000 members
PERFORMANCE IMPROVEMENT PROJECTS (PIP)
Clinical
Non- Clinical
On-going Interventions and Improvements
Effect on Health Outcomes and Member Satisfaction
WORKPLAN FOR NEXT YEAR
APPENDICES
Exhibit 5
SUBCONTRACTOR OVERSIGHT ANNUAL EVALUATION REPORT TEMPLATE
(Complete for each subcontractor- 2-5pages)
(Complete for each subcontractor- 2-5pages)
Subcontractor Name
| A. | Overview of subcontractor including contract effective dates | |
| B. | Description of delegated services/products/activities | |
| C. | Description of MC+ Managed Care health plan’s oversight process (must include, but shall not be limited to, the following:) |
| 1) | Review of subcontractor contract documents compliance with requirements included in the MC+ Managed Care contract with state (Refer to Section 3.8.3 of MC+ Managed Care contract) | ||
| 2) | Subcontractor policies and procedures comply with subcontractor/MC+ Managed Care health plan’s/state contract requirements | ||
| 3) | Implementation of policies/procedures/contract requirements |
| D. | Oversight outcomes/findings (must include, but shall not be limited to, the following:) |
| 1) | Access/availability | ||
| 2) | Fraud and abuse | ||
| 3) | Grievances and appeals | ||
| 4) | Performance projects and measures | ||
| 5) | Encounter data | ||
| 6) | Prior authorization denials | ||
| 7) | Timely payment |
| E. | Work plan for next year |
Revised Attachment 14
Page 1 of 5
Page 1 of 5
OFFICE VISIT SERVICES
| Allowable Fee for | ||||
| Dates of Service | ||||
| July 1, 2006 and | ||||
| Procedure Code | Program Type | after | ||
99201 |
Medical Services | $21.52 | ||
99201 GE |
Medical Services | $21.52 | ||
99201 GT |
Medical Services | $21.52 | ||
99201 |
Nurse Midwife | $21.52 | ||
99201 |
Podiatry | $21.52 | ||
99201 GE |
Podiatry | $21.52 | ||
99201 W2 |
Podiatry | $21.52 | ||
99201 |
Other Medical | $21.52 | ||
99201 GE |
Other Medical | $21.52 | ||
99202 |
Medical Services | $38.23 | ||
99202 EP |
Medical Services | $38.23 | ||
99202 GT |
Medical Services | $38.23 | ||
99202 GT EP |
Medical Services | $38.23 | ||
99202 GE |
Medical Services | $38.23 | ||
99202 GE EP |
Medical Services | $38.23 | ||
99202 |
Nurse Midwife | $38.23 | ||
99202 EP |
Nurse Midwife | $38.23 | ||
99202 |
Podiatry | $38.23 | ||
99202 W2 |
Podiatry | $38.23 | ||
99202 GE |
Podiatry | $38.23 | ||
99202 |
Other Medical | $38.23 | ||
99202 EP |
Other Medical | $38.23 | ||
99202 GE |
Other Medical | $38.23 | ||
99202 GE EP |
Other Medical | $38.23 | ||
99203 |
Medical Services | $56.93 | ||
99203 EP |
Medical Services | $56.93 | ||
99203 GE |
Medical Services | $56.93 | ||
99203 GE EP |
Medical Services | $56.93 | ||
99203 GT |
Medical Services | $56.93 | ||
99203 GT EP |
Medical Services | $56.93 | ||
99203 |
Nurse Midwife | $56.93 | ||
99203 EP |
Medical Services | $56.93 | ||
99203 |
Podiatry | $56.93 | ||
99203 W2 |
Podiatry | $56.93 | ||
99203 |
Other Medical | $56.93 | ||
99203 EP |
Other Medical | $56.93 | ||
99203 GE |
Other Medical | $56.93 |
Revised Attachment 14
Page 2 of 5
Page 2 of 5
OFFICE VISIT SERVICES
| Allowable Fee for | ||||||||
| Dates of Service | ||||||||
| July 1, 2006 and | ||||||||
| Procedure Code | Program Type | after | ||||||
99203 GE EP |
Other Medical | $56.93 | ||||||
99204 |
Medical Services | $80.62 | ||||||
99204 EP |
Medical Services | $80.62 | ||||||
99204 GT |
Medical Services | $80.62 | ||||||
99204 GT EP |
Medical Services | $80.62 | ||||||
99204 |
Nurse Midwife | $80.62 | ||||||
99204 EP |
Nurse Midwife | $80.62 | ||||||
99204 |
Podiatry | $80.62 | ||||||
99204 W2 |
Podiatry | $80.62 | ||||||
99204 |
Other Medical | $80.62 | ||||||
99204 EP |
Other Medical | $80.62 | ||||||
99205 |
Medical Services | $102.58 | ||||||
99205 EP |
Medical Services | $102.58 | ||||||
99205 GT |
Medical Services | $102.58 | ||||||
99205 GT EP |
Medical Services | $102.58 | ||||||
99205 |
Nurse Midwife | $102.58 | ||||||
99205 EP |
Nurse Midwife | $102.58 | ||||||
99205 |
Podiatry | $102.58 | ||||||
99205 W2 |
Podiatry | $102.58 | ||||||
99205 |
Other Medical | $102.58 | ||||||
99205 EP |
Other Medical | $102.58 | ||||||
99211 |
Medical Services | $12.55 | ||||||
99211 GE |
Medical Services | $12.55 | ||||||
99211 GT |
Medical Services | $12.55 | ||||||
99211 |
Nurse Midwife | $12.55 | ||||||
99211 |
Podiatry | $12.55 | ||||||
99211 W2 |
Podiatry | $12.55 | ||||||
99211 GE |
Podiatry | $12.55 | ||||||
99211 |
Other Medical | $12.55 | ||||||
99211 GE |
Other Medical | $12.55 | ||||||
99212 |
Medical Services | $22.60 | ||||||
99212 GT |
Medical Services | $22.60 | ||||||
99212 GE |
Medical Services | $22.60 | ||||||
99212 |
Nurse Midwife | $22.60 | ||||||
99212 |
Podiatry | $22.60 | ||||||
99212 W2 |
Podiatry | $22.60 | • | |||||
99212 GE |
Podiatry | $22.60 |
Revised Attachment 14
Page 3 of 5
Page 3 of 5
OFFICE VISIT SERVICES
| Allowable Fee for | ||||
| Dates of Service | ||||
| July 1, 2006 and | ||||
| Procedure Code | Program Type | after | ||
99212 |
Other Medical | $22.60 | ||
99212 GE |
Other Medical | $22.60 | ||
99213 |
Medical Services | $30.86 | ||
99213 GE |
Medical Services | $30.86 | ||
99213 GT |
Medical Services | $30.86 | ||
99213 |
Nurse Midwife | $30.86 | ||
99213 |
Podiatry | $30.86 | ||
99213 W2 |
Podiatry | $30.86 | ||
99213 GE |
Podiatry | $30.86 | ||
99213 |
Other Medical . | $30.86 | ||
99213 GE |
Other Medical | $30.86 | ||
99214 |
Medical Services | $48.45 | ||
99214 EP |
Medical Services | $48.45 | ||
99214 GT |
Medical Services | $48.45 | ||
99214 GT EP |
Medical Services | $48.45 | ||
99214 |
Nurse Midwife | $48.45 | ||
99214 EP |
Nurse Midwife | $48.45 | ||
99214 |
Podiatry | $48.45 | ||
99214 W2 |
Podiatry | $48.45 | ||
99214 |
Other Medical | $48.45 | ||
99214 EP |
Other Medical | $48.45 | ||
99215 |
Medical Services | $70.63 | ||
99215 EP |
Medical Services | $70.63 | ||
99215 GT |
Medical Services | $70.63 | ||
99215 GT EP |
Medical Services | $70.63 | ||
99215 |
Nurse Midwife | $70.63 | ||
99215 EP |
Nurse Midwife | $70.63 | ||
99215 |
Podiatry | $70.63 | ||
99215 W2 |
Podiatry | $70.63 | ||
99215 |
Other Medical | $70.63 | ||
99215 EP |
Other Medical | $70.63 |
Revised Attachment 14
Page 4 of5
Page 4 of5
DENTAL SERVICES
| Procedure Code | Age | |
D0210 |
0-125 | |
D0270 |
0-125 | |
D0272 |
0-125 | |
D0330 |
0-125 | |
D0340 |
0-20 | |
D0350 |
0-20 | |
D1110 |
13-125 | |
D1203 |
0-20 | |
D1204 |
21-125 | |
D1351 |
0-20 | |
D2140 |
0-125 | |
D2150 |
0-125 | |
D2160 |
0-125 | |
D2161 |
0-125 | |
D2330 |
0-125 | |
D2331 |
0-125 | |
D2332 |
0-125 | |
D2335 |
0-125 | |
D2910 |
0-125 | |
D2920 |
0-125 | |
D2930 |
0-125 | |
D2931 |
0-125 | |
D2932 |
0-125 | |
D2940 |
0-125 | |
D3220 |
0-125 | |
D3310 |
0-125 | |
D3320 |
0-125 | |
D3330 |
0-125 | |
D3346 |
0-125 | |
D3347 |
0-125 | |
D3348 |
0-125 | |
D3410 |
0-125 | |
D3421 |
0-125 | |
D3425 |
0-125 | |
D4210 |
0-125 | |
D5510 |
0-125 | |
D5520 |
0-125 | |
D5610 |
0-125 | |
D5630 |
0-125 | |
D5640 |
0-125 |
Revised Attachment 14
Page 5 of 5
Page 5 of 5
DENTAL SERVICES
| Procedure Code | Age | |
D5650 |
0-125 | |
D5660 |
0-125 | |
D5710 |
0-125 | |
D5711 |
0-125 | |
D5721 |
0-125 | |
D5730 |
0-125 | |
D5731 |
0-125 | |
D5740 |
0-125 | |
D5741 |
0-125 | |
D5750 |
0-125 | |
D5751 |
0-125 | |
D5760 |
0-125 | |
D5761 |
0-125 | |
D5820 |
0-125 | |
D5821 |
0-125 | |
D6930 |
0-125 | |
D7220 |
0-125 | |
D7230 |
0-125 | |
D7240 |
0-125 | |
D7241 |
0-125 | |
D7960 |
0-125 | |
D7970 |
0-125 | |
D9110 |
0-125 | |
D9241 |
0-125 | |
D9910 |
0-125 | |
D9951 |
0-125 |
NOTE: The health plan shall review provider bulletins posted on the DMS website for future code
changes due to HCPCS and HIPAA.
5.2 West Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||
| of | Capitation Rate | Capitation Rate | ||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||
1 |
Newborn < 01 | Male and Female | $677.81 | $ | ||||
1 |
01 - 06 | Male and Female | $125.63 | $ | ||||
1 |
07 - 13 | Male and Female | $107.39 | $ | ||||
1 |
14 - 20 | Female | $265.58 | $ | ||||
1 |
14 - 20 | Male | $121.43 | $ | ||||
1 |
21 - 44 | Female | $353.42 | $ | ||||
1 |
21 - 44 | Male | $196.90 | $ | ||||
1 |
45 - 99 | Male and Female | $402.91 | $ | ||||
4 |
00 - 20 JC | Male and Female | $206.11 | $ | ||||
4 |
00 - 20 OSJC | Male and Female | $249.74 | $ | ||||
5 |
00 - 06 | Male and Female | $159.62 | $ | ||||
5 |
07 - 13 | Male and Female | $128.99 | $ | ||||
5 |
14 - 18 | Male and Female | $172.28 | $ | ||||
5.3 East Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||
| of | Capitation Rate | Capitation Rate | ||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||
1 |
Newborn < 01 | Male and Female | $777.07 | $ | ||||
1 |
01 - 06 | Male and Female | $113.59 | $ | ||||
1 |
07 - 13 | Male and Female | $90.07 | $ | ||||
1 |
14 - 20 | Female | $240.17 | $ | ||||
1 |
14 - 20 | Male | $114.66 | $ | ||||
1 |
21 - 44 | Female | $333.06 | $ | ||||
1 |
21 - 44 | Male | $172.85 | $ | ||||
1 |
45 - 99 | Male and Female | $399.40 | $ | ||||
4 |
00 - 20 | Male and Female | $207.76 | $ | ||||
5 |
00 - 06 | Male and Female | $ 140.03 | $ | ||||
5 |
07 - 13 | Male and Female | $ 108.12 | $ | ||||
5 |
14 - 18 | Male and Female | $158.18 | $ | ||||
5.4 Central Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||
| of | Capitation Rate | Capitation Rate | ||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||
1 |
Newborn < 01 | Male and Female | $581.95 | $ | ||||
1 |
01 - 06 | Male and Female | $126.99 | $ | ||||
1 |
07 - 13 | Male and Female | $103.08 | $ | ||||
1 |
14 - 20 | Female | $301.80 | $ | ||||
1 |
14 - 20 | Male | $123.65 | $ | ||||
1 |
21 - 44 | Female | $405.35 | $ | ||||
1 |
21 - 44 | Male | $ 194.98 | $ | ||||
1 |
45 - 99 | Male and Female | $416.76 | $ | ||||
4 |
00 - 20 | Male and Female | $207.15 | $ | ||||
5 |
00 - 06 | Male and Female | $162.54 | $ | ||||
5 |
07 - 13 | Male and Female | $124.27 | $ | ||||
5 |
14 - 18 | Male and Female | $178.45 | $ | ||||
REVISED ATTACHMENT 12
| Policies and Procedures Requiring Prior Approval | ||||||||||||||||
| Contract | Contract | Contract | ||||||||||||||
| Required Policy | Reference | Required Policy | Reference | Required Policy | Reference | |||||||||||
Non-Discrimination in Hiring
and Provisions of Services
|
2.2.6 | 24-Hour Coverage | 2.14.1 | Provider C, G & A | 2.16 | |||||||||||
Linking Members to PCPs
|
2.3.2 | Prior Authorization | 2.14.2 | QA&I | 2.17.1 | |||||||||||
Marketing Guidelines
|
2.6.1 a.18) | Appointment Standards Edu. | 2.14.4 d.1) | Utilization Management | 2.17.5 b | |||||||||||
Member Rights
|
2.6.2 j.2) | Referral to non-network provider | 2.14.5 | Provider Credentialing | 2. 17.5 c | |||||||||||
Assignment of PCP
|
2.6.2 k. | Standing Referral to Specialist | 2.14.6 | Monitoring Providers | 2.17.5 c. | |||||||||||
Assignment of PCP
|
2.6.2 k.4) | Referral to Specialty Care Cntr. | 2.14.7 | Records Retention | 2.26.4 | |||||||||||
Transfers Between Health Plans
|
2.6.2 r. | Transitioning of Care | 2.14.10 | Medical Records | 2.26.5 | |||||||||||
Disenrollment Effective Dates
|
2.6.2 u. | Care Management | 2.14.11 c. | Fraud & Abuse | 2.31 | |||||||||||
Provider Listing Updates
|
2.9.1 g. | Certification Review | 2.14.12 | Subcontractor Oversight | 3.8.3 | |||||||||||
Second Opinion
|
2.13 | Member Grievance System | 2.15 | |||||||||||||
|
|
STATE OF MISSOURI OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) CONTRACT AMENDMENT |
AMENDMENT NO.: 003
|
REQ NO.: NR 886 25757007159 | |
CONTRACT NO.: C306118003
|
BUYER: Laura Ortmeyer | |
| TITLE: Medicaid Managed Care — Central, Eastern, and Western Regions | PHONE NO.: (573) 751-4579 | |
ISSUE DATE: 02/23/07
|
E-MAIL: laura.ortmeyer@oa.mo.gov |
| TO: | MERCY CAREPLUS 10123 CORPORATE SQUARE DR ST LOUIS, MO 63132 |
RETURN AMENDMENT NO LATER THAN: March 7, 2007 AT 5:00 PM CENTRAL TIME
RETURN AMENDMENT TO:
| (U.S. Mail) | (Courier Service) | |||
Div of Purchasing & Matls Mgt (DPMM)
|
OR | Div of Purchasing & Matls Mgt (DPMM) | ||
PO BOX 809
|
301 WEST HIGH STREET, ROOM 630 | |||
JEFFERSON CITY MO 65102-0809
|
JEFFERSON CITY MO 65101 |
OR FAX
TO: (573) 526-9817 (either mail or fax, not both)
DELIVER SUPPLIES/SERVICES FOB (Free On Board) DESTINATION TO THE FOLLOWING ADDRESS:
Missouri Department of Social Service
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
SIGNATURE REQUIRED
DOING
BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
Mercy CarePlus
|
Alliance for Community Health, LLC | |
MAILING
ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
10123 Corporate Square Drive
|
10123 Corporate Square Drive | |
CITY,
STATE, ZIP CODE
|
CITY, STATE, ZIP CODE | |
St. Louis, MO 63132
|
St. Louis, MO 63132 |
CONTACT
PERSON
|
EMAIL ADDRESS | |
Jerry Linder
|
jlinder@mercycareplus.com | |
PHONE
NUMBER
|
FAX NUMBER | |
(314) 432-9300 Ext. 202
|
(314) 432-9203 or (314) 994-9398 |
| TAXPAYER ID NUMBER (TIN) | TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
| 43-1743902 | þ FEIN o SSN | 4317439020 2 |
| VENDOR TAX FILING TYPE WITH IRS (CHECK ONE) | (NOTE: LLC IS NOT A VALID TAX FILING TYPE.) |
| þ Corporation | o Individual | o State/Local Government | o Partnership | o Sole Proprietor | o Other |
AUTHORIZED
SIGNATURE
|
DATE | |
/s/ Jerry Linder
|
February 27, 2007 | |
PRINTED
NAME
|
Chief Executive Officer - President | |
Jerry Linder |
| Contract C306118003 | Page 2 |
AMENDMENT #003 TO CONTRACT C306118003
CONTRACT TITLE:
|
Medicaid Managed Care - Central, Eastern, and Western Regions | |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 |
The State of Missouri hereby desires to amend the above-referenced contract, as follows, effective
July 1, 2006:
In order to determine the impact of the eligibility changes implemented effective with fiscal year
2007 on the overall birth rate, the state agency’s actuary consultant conducted an analysis
specific to the female child bearing rate cells in order to ensure the actuarially soundness of the
rates. The attached Pricing Page reflects the actuarially sound rates determined as a result of the
analysis.
The contractor shall indicate in Column 2 on the attached Pricing Page, any changes to the firm
fixed prices of the contract for performing the required services in accordance with the terms,
conditions, and provisions of the contract. The contractor’s firm, fixed PMPM Net Capitation Rate
for Each Category of Aid (COA) Rate subgroup must not exceed the State’s Maximum Net Capitation
Rate Listed in Column 1.
All other terms, conditions and provisions of the contract, including all prices, shall remain the
same and apply hereto.
The
contractor shall sign and return this document, on or before the date indicated, signifying
acceptance of the amendment.
5.2 West Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||||||
| 1 | Newborn < 01 |
Male and Female | $ | 677.81 | $ | 677.81 | ||||||||||
| 1 | 01 - 06 |
Male and Female | $ | 125.63 | $ | 125.63 | ||||||||||
| 1 | 07 - 13 |
Male and Female | $ | 107.39 | $ | 107.39 | ||||||||||
| 1 | 14 - 20 |
Female | $ | 270.37 | $ | 270.37 | ||||||||||
| 1 | 14 - 20 |
Male | $ | 121.43 | $ | 121.43 | ||||||||||
| 1 | 21 - 44 |
Female | $ | 368.58 | $ | 368.58 | ||||||||||
| 1 | 21 - 44 |
Male | $ | 196.90 | $ | 196.90 | ||||||||||
| 1 | 45 - 99 |
Male and Female | $ | 402.91 | $ | 402.91 | ||||||||||
| 4 | 00 - 20 JC |
Male and Female | $ | 249.74 | $ | 249.74 | ||||||||||
| 4 | 00 - 20 OSJC |
Male and Female | $ | 206.11 | $ | 206.11 | ||||||||||
| 5 | 00 - 06 |
Male and Female | $ | 159.62 | $ | 159.62 | ||||||||||
| 5 | 07 - 13 |
Male and Female | $ | 128.99 | $ | 128.99 | ||||||||||
| 5 | 14 - 18 |
Male and Female | $ | 172.28 | $ | 172.28 | ||||||||||
5.3 East Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||||||
| 1 | Newborn < 01 |
Male and Female | $ | 777.07 | $ | 777.07 | ||||||||||
| 1 | 01 - 06 |
Male and Female | $ | 113.59 | $ | 113.59 | ||||||||||
| 1 | 07 - 13 |
Male and Female | $ | 90.07 | $ | 90.07 | ||||||||||
| 1 | 14 - 20 |
Female | $ | 269.72 | $ | 269.72 | ||||||||||
| 1 | 14 - 20 |
Male | $ | 114.66 | $ | 114.66 | ||||||||||
| 1 | 21 - 44 |
Female | $ | 368.27 | $ | 368.27 | ||||||||||
| 1 | 21 - 44 |
Male | $ | 172.85 | $ | 172.85 | ||||||||||
| 1 | 45 - 99 |
Male and Female | $ | 399.40 | $ | 399.40 | ||||||||||
| 4 | 00 - 20 |
Male and Female | $ | 207.76 | $ | 207.76 | ||||||||||
| 5 | 00 - 06 |
Male and Female | $ | 140.03 | $ | 140.03 | ||||||||||
| 5 | 07 - 13 |
Male and Female | $ | 108.12 | $ | 108.12 | ||||||||||
| 5 | 14 - 18 |
Male and Female | $ | 158.18 | $ | 158.18 | ||||||||||
5.4 Central Region — Firm Fixed Net Capitation Pricing Page
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||||||
| 1 | Newborn < 01 |
Male and Female | $ | 581.95 | $ | 581.95 | ||||||||||
| 1 | 01 - 06 |
Male and Female | $ | 126.99 | $ | 126.99 | ||||||||||
| 1 | 07 - 13 |
Male and Female | $ | 103.08 | $ | 103.08 | ||||||||||
| 1 | 14 - 20 |
Female | $ | 314.36 | $ | 314.36 | ||||||||||
| 1 | 14 - 20 |
Male | $ | 123.65 | $ | 123.65 | ||||||||||
| 1 | 21 - 44 |
Female | $ | 427.42 | $ | 427.42 | ||||||||||
| 1 | 21 - 44 |
Male | $ | 194.98 | $ | 194.98 | ||||||||||
| 1 | 45 - 99 |
Male and Female | $ | 416.76 | $ | 416.76 | ||||||||||
| 4 | 00 - 20 |
Male and Female | $ | 207.15 | $ | 207.15 | ||||||||||
| 5 | 00 - 06 |
Male and Female | $ | 162.54 | $ | 162.54 | ||||||||||
| 5 | 07 - 13 |
Male and Female | $ | 124.27 | $ | 124.27 | ||||||||||
| 5 | 14 - 18 |
Male and Female | $ | 178.45 | $ | 178.45 | ||||||||||
|
|
STATE OF MISSOURI OFFICE OF ADMINISTRATION DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) CONTRACT AMENDMENT |
AMENDMENT NO.: 004
|
REQ NO.: NR 886 25757006928 | |
CONTRACT NO.: C306118003
|
BUYER: Laura Ortmeyer | |
| TITLE: Medicaid Managed Care — Central, Eastern, and Western Regions | PHONE NO.: (573) 751-4579 | |
ISSUE DATE: 02/23/07
|
E-MAIL: laura.ortmeyer@oa.mo.gov |
| TO: | MERCY CAREPLUS 10123 CORPORATE SQUARE DR ST LOUIS, MO 63132 |
RETURN AMENDMENT NO LATER THAN: March 7, 2007 AT 5:00 PM CENTRAL TIME
RETURN AMENDMENT TO:
| (U.S. Mail) | (Courier Service) | |||
Div of Purchasing & Matls Mgt (DPMM)
|
OR | Div of Purchasing & Matls Mgt (DPMM) | ||
PO BOX 809
|
301 WEST HIGH STREET, ROOM 630 | |||
JEFFERSON CITY MO 65102-0809
|
JEFFERSON CITY MO 65101 |
OR FAX TO: (573) 526-9817 (either mail or fax, not both)
DELIVER SUPPLIES/SERVICES FOB (Free On Board) DESTINATION TO THE FOLLOWING ADDRESS:
Missouri Department of Social Service
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
Division of Medical Services
P.O. Box 6500
Jefferson City, MO 65102-6500
SIGNATURE REQUIRED
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
Mercy CarePlus MAILING ADDRESS |
Alliance for Community Health, LLC IRS FORM 1099 MAILING ADDRESS |
|
10123 Corporate Square Drive CITY, STATE, ZIP CODE |
10123 Corporate Square Drive CITY, STATE, ZIP CODE |
|
St. Louis, MO 63132
|
St. Louis, MO 63132 |
CONTACT PERSON
|
EMAIL ADDRESS | |
Jerry Linder PHONE NUMBER |
jlinder@mercycareplus.com FAX NUMBER |
|
(314) 432-9300 Ext. 202
|
(314)432-9203 or (314) 994-9398 |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER(IF- KNOWN) | ||
43-1743902
|
þ FEIN o SSN | 4317439020 2 |
| VENDOR TAX FILING TYPE WITH IRS (CHECK ONE) | (NOTE: LLC IS NOT A VALID TAX FILING TYPE.) |
þ
Corporation
o
Individual
o State/Local Government
o Partnership
o Sole
Proprietor
o Other
AUTHORIZED SIGNATURE
|
DATE | |
/s/
Jerry Linder PRINTED NAME |
February 27, 2007 TITLE |
|
Jerry Linder
|
Chief Executive Officer — President |
| Contract C306118003 | Page 2 |
AMENDMENT #004 TO CONTRACT C306118003
CONTRACT TITLE:
|
Medicaid Managed Care — Central, Eastern, and Western Regions | |
CONTRACT PERIOD:
|
July 1, 2006 through June 30, 2007 |
The State of Missouri hereby desires to amend the above-referenced contract in accordance with the
following:
| 1. | Paragraph 2.4.8 a. 2) is hereby amended effective January 1, 2007: |
| 2) | The health plan shall pay out-of-network providers for emergency services at the current Missouri Medicaid program rates in effect at the time of service. |
| 2. | Paragraph 2.28.1 b. is hereby amended effective July 1, 2006: |
| b. | If the health plan is new to a MC+ managed care region, the health plan shall agree that its capitation rate shall reflect the average participant ratio of the MC+ managed care health plans that are not new to the region by rate cell and category of assistance for the applicable measurement period reflected in Attachment 11. Beginning January 2008, the new health plan shall agree that their future capitation rates shall be adjusted by the health plan’s actual 12-month HCY/EPSDT participant ratio. |
All other terms, conditions and provisions of the contract, including all prices, shall remain the
same and apply hereto.
The contractor shall sign and return this document, on or before the date indicated, signifying
acceptance of the amendment.
(SEAL)
NOTICE OF AWARD
State Of Missouri
Office Of Administration
Division Of Purchasing And Materials Management
PO Box 809
Jefferson City, MO 65102
http://www.oa.mo.gov/purch
Office Of Administration
Division Of Purchasing And Materials Management
PO Box 809
Jefferson City, MO 65102
http://www.oa.mo.gov/purch
CONTRACT NUMBER
|
CONTRACT TITLE | |
C306118003
|
Medicaid Managed Care-Central, Eastern, and Western Regions | |
AMENDMENT NUMBER
|
CONTRACT PERIOD | |
005
|
July 1, 2007 through June 30, 2008 | |
REQUISITION NUMBER
|
VENDOR NUMBER | |
MR 886 25757008216
|
4317439020 2 | |
CONTRACTOR NAME AND ADDRESS
|
STATE AGENCY’S NAME AND ADDRESS | |
Mercy Careplus
|
Department of Social Services | |
10123 Corporate Square Dr
|
Division of Medical Services | |
St. Louis, MO 63132
|
Jefferson City, MO 65102-6500 PO Box 6500 | |
| ACCEPTED BY THE STATE OF MISSOURI AS FOLLOWS: | ||
| Contract C306118003 is hereby amended pursuant to the attached Amendment #005 dated April 16, 1007. | ||
BUYER
|
BUYER CONTACT INFORMATION | |
Laura Ortmeyer
|
Email: laura.ortmeyer@oa.mo.gov | |
| Phone: (573) 751-4579 | ||
| Fax: (573)526-9817 | ||
SIGNATURE OF BUYER
|
DATE | |
/s/ Laura Ortmeyer
|
April 24, 2007 | |
DIRECTOR
OF PURCHASING AND MATERIALS MANAGEMENT |
||
/s/
James Milvsk |
||
(SEAL)
|
STATE OF MISSOURI | |
| OFFICE OF ADMINISTRATION | ||
| DIVISION OF PURCHASING AND MATERIALS MANAGEMENT (DPMM) | ||
| CONTRACT RENEWAL |
AMENDMENT NO.: 005
|
REQ NO.: NR 886 25757008216 | |
CONTRACT NO.: C306118003
|
BUYER: Laura Ortmeyer | |
TITLE: Medicaid Managed Care — Central, Eastern, and Western Regions
|
PHONE NO.: (573) 751-4579 | |
ISSUE DATE: 04/10/07
|
E-MAIL: laura.ortmeyer@oa.mo.gov |
TO:
|
MERCY CAREPLUS | |
| 10123 CORPORATE SQUARE DR | ||
| ST LOUIS MO 63132 |
RETURN AMENDMENT NO LATER THAN: 04/24/07 AT 5:00 PM CENTRAL TIME
RETURN AMENDMENT TO:
| (U.S. Mail) | (Courier Service) | |||
Div of Purchasing & Matls Mgt (DPMM)
|
OR | Div of Purchasing & Matls Mgt (DPMM) | ||
PO BOX 809
|
301 WEST HIGH STREET, ROOM 630 | |||
JEFFERSON CITY MO 65102-0809
|
JEFFERSON CITY MO 65101 |
OR FAX
TO: (573) 526-9817 (either mail or fax, not both)
DELIVER SUPPLIES/SERVICES FOR (Free On Board) DESTINATION TO THE FOLLOWING ADDRESS:
Department of Social Services
Division of Medical Services
PO Box 6500
Jefferson City MO 65102-6500
Division of Medical Services
PO Box 6500
Jefferson City MO 65102-6500
SIGNATURE REQUIRED
DOING BUSINESS AS (DBA) NAME
|
LEGAL NAME OF ENTITY/INDIVIDUAL FILED WITH IRS FOR THIS TAX ID NO. | |
Mercy CarePlus
|
Alliance for Community Health, LLC dba Mercy CarePlus | |
MAILING ADDRESS
|
IRS FORM 1099 MAILING ADDRESS | |
10123 Corporate Square Drive
|
10123 Corporate Square Drive | |
CITY, STATE, ZIP CODE
|
CITY, STATE, ZIP CODE | |
St. Louis, MO 63132
|
St. Louis, MO 63132 | |
CONTACT PERSON
|
EMAIL ADDRESS | |
Jerry Linder
|
jlinder@mercycareplus. com | |
PHONE NUMBER
|
FAX NUMBER | |
(314) 432-9300 ext. 202
|
(314) 994-9389 |
TAXPAYER ID NUMBER (TIN)
|
TAXPAYER ID (TIN) TYPE (CHECK ONE) | VENDOR NUMBER (IF KNOWN) | ||
43-1743902
|
þ FEIN o SSN | 4317439020 2 |
| VENDOR TAX FILING TYPE WITH IRS (CHECK ONE) | (NOTE: LLC IS NOT A VALID TAX FILING TYPE.) | |||||||||
þ Corporation
|
o Individual | o State/Local Government | o Partnership | o Sole Proprietor o Other | ||||||
AUTHORIZED SIGNATURE
|
DATE | |
/s/ Jerry Linder
|
4-16-07 | |
PRINTED NAME
|
TITLE | |
Jerry Linder
|
CEO |
| Contract C306118003 |
Page 2 |
AMENDMENT #005 TO CONTRACT C306118003
CONTRACT TITLE:
|
Medicaid Managed Care — Central, Eastern, and Western Regions | |
CONTRACT PERIOD:
|
July 1, 2007 through June 30, 2008 |
The State of Missouri hereby exercises its option to renew the above-referenced contract.
The contractor shall indicate in Column 2 on the attached Pricing page, any changes to the firm,
fixed prices of the contract for performing the required services in accordance with the terms,
conditions, and provisions of the contract. The contractor’s firm, fixed PMPM Net Capitation Rate
for Each Category of Aid (COA) Rate subgroup must not exceed the State’s Maximum Net Capitation
Rate listed in Column 1.
The contractor must furnish a performance security deposit in accordance with the terms and
conditions stated in the original contract in the amount of $1,000,000.00 for each region. The
performance security deposit must specify the contract number and contract period.
All other terms, conditions and provisions of the previous contract period shall remain and apply
hereto. The contractor shall sign and return this document, along with completed pricing and the
applicable bond, on or before the date indicated.
| NOTE: | The contractor’s failure to complete and return this document shall not stop the action specified herein. If the contractor fails to complete and return this document prior to the return date specified or the effective date of the contract period stated above, whichever is later, the state may renew the contract at the same price(s) as the previous contract period or at the price(s) allowed by the contract, whichever is lower. |
C306118003
5.3 East Region — Firm Fixed Net Capitation Pricing Page
| Column 1 | Column 2 | |||||||||||
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||
1
|
Newborn < 01 | Male and Female | $ | 863.53 | $ | 863.53 | ||||||
1
|
01 - 06 | Male and Female | $ | 125.55 | $ | 125.55 | ||||||
1
|
07 - 13 | Male and Female | $ | 98.44 | $ | 98.44 | ||||||
1
|
14 - 20 | Female | $ | 306.93 | $ | 306.93 | ||||||
1
|
14 - 20 | Male | $ | 126.73 | $ | 126.73 | ||||||
1
|
21 - 44 | Female | $ | 418.80 | $ | 418.80 | ||||||
1
|
21 - 44 | Male | $ | 191.64 | $ | 191.64 | ||||||
1
|
45 - 99 | Male and Female | $ | 436.77 | $ | 436.77 | ||||||
4
|
00 - 20 | Male and Female | $ | 233.97 | $ | 233.97 | ||||||
5
|
00 - 06 | Male and Female | $ | 152.68 | $ | 152.68 | ||||||
5
|
07 - 13 | Male and Female | $ | 117.88 | $ | 117.88 | ||||||
5
|
14 - 18 | Male and Female | $ | 175.38 | $ | 175.38 | ||||||
C306118003
5.2 West Region — Firm Fixed Net Capitation Pricing Page
| Column 1 | Column 2 | |||||||||||
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||
1
|
Newborn < 01 | Male and Female | $ | 758.67 | $ | 758.67 | ||||||
1
|
01 - 06 | Male and Female | $ | 147.55 | $ | 147.55 | ||||||
1
|
07 - 13 | Male and Female | $ | 119.08 | $ | 119.08 | ||||||
1
|
14 - 20 | Female | $ | 312.64 | $ | 312.64 | ||||||
1
|
14 - 20 | Male | $ | 149.02 | $ | 149.02 | ||||||
1
|
21 - 44 | Female | $ | 469.35 | $ | 469.35 | ||||||
1
|
21 - 44 | Male | $ | 229.66 | $ | 229.66 | ||||||
1
|
45 - 99 | Male and Female | $ | 447.06 | $ | 447.06 | ||||||
4
|
00 - 20 JC | $ | 284.16 | $ | 284.16 | |||||||
4
|
00 - 20 OSJC | Male and Female | $ | 230.99 | $ | 230.99 | ||||||
5
|
00 - 06 | Male and Female | $ | 177.17 | $ | 177.17 | ||||||
5
|
07 - 13 | Male and Female | $ | 142.71 | $ | 142.71 | ||||||
5
|
14 - 18 | Male and Female | $ | 191.75 | $ | 191.75 | ||||||
C306118003
5.4 Central Region — Firm Fixed Net Capitation Pricing Page
| Column 1 | Column 2 | |||||||||||
| Category | State’s Maximum Net | Firm Fixed Net | ||||||||||
| of | Capitation Rate | Capitation Rate | ||||||||||
| Aid | Age | Sex | (Per Member Per Month) | (Per Member Per Month) | ||||||||
1
|
Newborn < 01 | Male and Female | $ | 687.17 | $ | 687.17 | ||||||
1
|
01 - 06 | Male and Female | $ | 143.61 | $ | 143.61 | ||||||
1
|
07 - 13 | Male and Female | $ | 116.00 | $ | 116.00 | ||||||
1
|
14 - 20 | Female | $ | 340.24 | $ | 340.24 | ||||||
1
|
14 - 20 | Male | $ | 144.98 | $ | 144.98 | ||||||
1
|
21 - 44 | Female | $ | 483.82 | $ | 483.82 | ||||||
1
|
21 - 44 | Male | $ | 230.15 | $ | 230.15 | ||||||
1
|
45 - 99 | Male and Female | $ | 470.57 | $ | 470.57 | ||||||
4
|
00 - 20 | Male and Female | $ | 227.94 | $ | 227.94 | ||||||
5
|
00 - 06 | Male and Female | $ | 175.25 | $ | 175.25 | ||||||
5
|
07 - 13 | Male and Female | $ | 134.72 | $ | 134.72 | ||||||
5
|
14 - 18 | Male and Female | $ | 193.45 | $ | 193.45 | ||||||
Exhibit 10.32
Contract with Eligible Medicare Advantage (MA) Organization Pursuant to
Sections 1851 through 1859 of the Social Security Act for the Operation
of a Medicare Advantage Coordinated Care Plan(s)
Sections 1851 through 1859 of the Social Security Act for the Operation
of a Medicare Advantage Coordinated Care Plan(s)
CONTRACT
(# )
Between
Centers for Medicare & Medicaid Services (hereinafter referred to as CMS)
and
(hereinafter referred to as the MA Organization)
CMS and the MA Organization, an entity which has been determined to be an eligible Medicare
Advantage Organization by the Administrator of the Centers for Medicare & Medicaid Services under
42 CFR 422.503, agree to the following for the purposes of sections 1851 through 1859 of the Social
Security Act (hereinafter referred to as the Act):
(NOTE: Citations indicated in brackets are placed in the text of this contract to note the
regulatory authority for certain contract provisions. All references to Part 422 are to 42 CFR Part
422.)
You must check off AND initial each required Addendum type to reflect the coverage
offered under the H (or R) number associated with this contract
| Addendum Type | Initials | |||
| Part D Addendum | ||||
| Employer-Only MA-PD Addendum (800 Series) | ||||
| Employer-Only MA Only Addendum (800 Series) | ||||
| Variances/Waivers (Provided directly to Demonstration Organizations by CMS) | ||||
| Regional Preferred Provider Organization Addendum (Provided directly to RPPOs by CMS) | ||||
Article I
Term of Contract
The term of this contract shall be from the date of signature by CMS’ authorized representative
through December 31, 2007, after which this contract may be renewed for successive one-year periods
in accordance with 42 CFR 422.505(c) and as discussed in Paragraph A in Article VII below.
[422.505]
This contract governs the respective rights and obligations of the parties as of the effective date
set forth above, and supersedes any prior agreements between the MA Organization and CMS as of such
date. MA organizations offering Part D also must execute an Addendum to the Medicare Managed Care
Contract Pursuant to Sections 1860D-1 through 1860D-42 of the Social Security Act for the Operation
of a Voluntary Medicare Prescription Drug Plan (hereafter the “Part D Addendum”). For MA
Organizations offering MA-PD plans, the Part D Addendum governs the rights and obligations of the
parties relating to the provision of Part D benefits, in accordance with its terms, as of its
effective date.
Article II
Coordinated Care Plan
A. The Medicare Advantage Organization agrees to operate one or more coordinated care plans
as defined in 42 CFR 422.4(a)(1)(iii)), including at least one MA-PD plan as required under 42
CFR 422.4(c), as described in its final Plan Benefit Package (PBP) bid submission (benefit and
price bid) proposal as approved by CMS and as attested to in the Medicare Advantage
Attestation of Benefit Plan and Price, and in compliance with the requirements of this contract
and applicable Federal statutes, regulations, and policies.
B. Except as provided in paragraph (C) of this Article, this contract is deemed to incorporate any
changes that are required by statute to be implemented during the term of the contract and any
regulations or policies implementing or interpreting such statutory
provisions.
C. CMS will not implement, other than at the beginning of a calendar year, requirements under
42 CFR Part 422 that impose a new significant cost or burden on MA organizations or plans,
unless a different effective date is required by statute. [422.521]
Article III
Functions To Be Performed By Medicare Advantage Organization
A. PROVISION OF BENEFITS
1. The MA Organization agrees to provide enrollees in each of its MA plans the basic benefits as
required under §422.101 and, to the extent applicable, supplemental benefits under §422.102 and as
established in the MA Organization’s final benefit and price bid proposal as approved by CMS and
listed in the MA Organization Plan Attestation of Benefit Plan and Price, which is attached to this
contract. The MA Organization agrees to provide access to such benefits as
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required under subpart C in a manner consistent with professionally recognized standards of health
care and according to the access standards stated in §422.112.
2. The MA Organization agrees to provide post-hospital extended care services, should an MA
enrollee elect such coverage, through a skilled nursing home facility according to the requirements
of section 1852(1) of the Act and §422.133. A skilled nursing home facility is a facility in which
an MA enrollee resided at the time of admission to the hospital, a facility that provides services
through a continuing care retirement community, a facility in which the spouse of the enrollee is
residing at the time of the enrollee’s discharge from the hospital, or hospital, or wherever the
enrollee resides immediately before admission for extended care services. [422.133; 422.504(a)(3)]
B. ENROLLMENT REQUIREMENTS
1. The MA Organization agrees to accept new enrollments, make enrollments effective, process
voluntary disenrollments, and limit involuntary disenrollments, as provided in subpart B of
part 422,
2. The MA Organization shall comply with the provisions of §422.110 concerning prohibitions
against discrimination in beneficiary enrollment, other than in enrolling eligible beneficiaries in
a
CMA-approved special needs plan that exclusively enrolls special needs individuals as consistent
with §§422.2,422.4(a)(l)(iv) and 422.52.
[422.504(a)(2)]
C. BENEFICIARY PROTECTIONS
1. The MA Organization agrees to comply with all requirements in subpart M of part 422,
governing coverage determinations, grievances, and appeals. [422.504(a)(7)]
2. The MA Organization agrees to comply with the confidentiality and enrollee record accuracy
requirements in §422.118.
3. Beneficiary Financial Protections. The MA Organization agrees to comply with the
following
requirements:
(a) Each MA Organization must adopt and maintain arrangements satisfactory to CMS to
protect its enrollees from incurring liability for payment of any fees that are the legal
obligation
of the MA Organization, To meet this requirement the MA Organization must—
(i) Ensure that all contractual or other written arrangements with providers prohibit the
Organization’s providers from holding any beneficiary enrollee liable for payment of any fees that
are the legal obligation of the MA Organization; and
(ii) Indemnify the beneficiary enrollee for payment of any fees that are the legal obligation
of the MA Organization for services furnished by providers that do not contract, or that have not
otherwise entered into an agreement with the MA Organization, to provide services to the
organization’s beneficiary enrollees.
[422.504(g)(1)]
(b) The MA Organization must provide for continuation of enrollee health care benefits-
(i) For all enrollees, for the duration of the contract period for which CMS payments have
been made; and
(ii) For enrollees who are hospitalized on the date its contract with CMS terminates, or, in
the event of the MA Organization’s insolvency, through the date of discharge. [422.504(g)(2)]
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(c) In meeting the requirements of this section (C), other than the provider contract requirements
specified in paragraph (C)(3)(a) of this Article, the MA Organization may use—
(i) Contractual
arrangements;
(ii) Insurance acceptable to CMS;
(iii) Financial reserves acceptable to CMS; or
(iv)
Any other arrangement acceptable to CMS. [422.504(g)(3)]
D. PROVIDER PROTECTIONS
1. The MA Organization agrees to comply with all applicable provider requirements in 42 CFR
Part 422 Subpart E, including provider certification requirements, anti-discrimination
requirements, provider participation and consultation requirements, the prohibition on
interference with provider advice, limits on provider indemnification, rules governing payments
to providers, and limits on physician incentive plans.
[422.504(a)(6)]
2. Prompt Payment.
(a) The MA Organization must pay 95 percent of “clean claims” within 30 days of receipt
if they are claims for covered services that are not furnished under a written agreement
between
the organization and the provider.
(i) The MA Organization must pay interest on clean claims that are not paid within 30 days
in accordance with sections 1816(c)(2) and 1842(c)(2) of the Act.
(ii) All other claims from non-contracted providers must be paid or denied within 60
calendar days from the date of the request [422.520(a)]
(b) Contracts or other written agreements between the MA Organization and its providers
must contain a prompt payment provision, the terms of which are developed and agreed to by
both the MA Organization and the relevant provider. [422.520(b)]
(c) If CMS determines, after giving notice and opportunity for hearing, that the MA
Organization has failed to make payments in accordance with subparagraph (2)(a) of this
section,
CMS may provide—
(i) For direct payment of the sums owed to providers; and
(ii) For appropriate reduction in the amounts that would otherwise be paid to the MA
Organization, to reflect the amounts of the direct payments and the cost of making those
payments. [422.520(c)]
E. QUALITY IMPROVEMENT PROGRAM
1. The MA Organization agrees to operate, for each plan that it offers, an ongoing quality
improvement program as stated in accordance with Section 1852(e) of the Social Security Act
and 42 CFR 422.152.
2. Chronic Care Improvement Program
(a) Each MA organization (other than MA private-fee-for-service plans) must have a
chronic care improvement program and must establish criteria for participation in the program.
The CCIP must have a method for identifying enrollees with multiple or sufficiently severe
chronic conditions who meet the criteria for participation in the program and a mechanism for
monitoring enrollees’ participation in the program.
(b) Plans have flexibility to choose the design of their program; however, in addition to
meeting the requirements specified above, the CCIP selected must be relevant to the plan’s MA
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population. MA organizations are required to submit annual reports on their CCIP program to CMS.
3. Performance Measurement and Reporting: The MA Organization shall measure performance
under its MA plans using standard measures required by CMS, and report (at the organization
level) its performance to CMS. The standard measures required by CMS during the term of this
contract will be uniform data collection and reporting instruments, to include the Health Plan and
Employer Data Information Set (HEDIS), Consumer Assessment of Health Plan Satisfaction
(CAHPS) survey, and Health Outcomes Survey (HOS). These measures will address clinical
areas, including effectiveness of care, enrollee perception of care and use of services; and non-clinical areas including access to and availability of services, appeals and grievances, and
organizational characteristics. [422.152(b)(1), (e)]
4. Utilization Review:
(a) An MA Organization for an MA coordinated care plan must use written protocols for
utilization review and policies and procedures must reflect current standards of medical
practice
in processing requests for initial or continued authorization of services and have in effect
mechanisms to detect both underutilization and over utilization of services. [422.152(b)]
mechanisms to detect both underutilization and over utilization of services. [422.152(b)]
(b) For MA regional preferred provider organizations (RPPOs) and MA local preferred
provider organizations (PPOs) that are offered by an organization that is not licensed or
organized under State law as an HMOs, if the MA Organization uses written protocols for
utilization review, those policies and procedures must reflect current standards of medical
practice in processing requests for initial or continued authorization of services and include
mechanisms to evaluate utilization of services and to inform enrollees and providers of
services
of the results of the evaluation. [422.152(e)]
5. Information Systems:
(a) The MA Organization must:
(i) Maintain a health information system that collects, analyzes and integrates the data
necessary to implement its quality improvement program;
(ii) Ensure that the information entered into the system (particularly that received from
providers) is reliable and complete;
(iii) Make
all collected information available to CMS. [422.152(f)(1)]
6. External Review
The MA Organization will comply with any requests by Quality Improvement Organizations to review
the MA Organization’s medical records in connection with appeals of discharges from hospitals,
skilled nursing facilities, and home health agencies.
F. COMPLIANCE PLAN
The MA Organization agrees to implement a compliance plan in accordance with the
requirements of §422.503(b)(4)(vi). [422.503(b)(4)(vi)]
G. COMPLIANCE DEEMED ON THE BASIS OF ACCREDITATION
CMS may deem the MA Organization to have met the quality improvement requirements of §1852(e) of
the Act and §422.152, the confidentiality and accuracy of
enrollee records requirements of §1852(h)
of the Act and §422.118, the anti-discrimination requirements of §1852(b) of the Act and §422.110,
the access to services requirements of §1852(d) of the Act and §422.112, and the advance directives
requirements of §1852(i) of the Act and §422.128, the
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provider participation requirements of § 1852(j) of the Act and 42 CFR Part 422, Subpart F, and the
applicable requirements described in §423.165, if the MA Organization is fully accredited (and
periodically reaccredited) by a private, national accreditation organization approved by CMS and
the accreditation organization used the standards approved by CMS for the purposes of assessing the
MA Organization’s compliance with Medicare requirements. The provisions of §422.156 shall govern
the MA Organization’s use of deemed status to meet MA program requirements.
H. PROGRAM INTEGRITY
1. The MA Organization agrees to provide notice based on best knowledge, information, and
belief to CMS of any integrity items related to payments from governmental entities, both federal
and state, for healthcare or prescription drug services. These items include any investigations,
legal actions or matters subject to arbitration brought involving the MA Organization (or MA
Organization’s firm if applicable) and its subcontractors (excluding contracted network
providers), including any key management or executive staff, or any major shareholders (5% or
more), by a government agency (state or federal) on matters relating to payments from
governmental entities, both federal and state, for healthcare and/or prescription drug services. In
providing the notice, the sponsor shall keep the government informed of when the integrity item
is initiated and when it is closed. Notice should be provided of the details concerning any
resolution and monetary payments as well as any settlement agreements or corporate integrity
agreements.
2. The MA Organization agrees to provide notice based on best knowledge, information, and
belief to CMS in the event the MA Organization or any of its subcontractors is criminally
convicted or has a civil judgment entered against it for fraudulent activities or is sanctioned
under any Federal program involving the provision of health care or prescription drug services.
I. MARKETING
1. The MA Organization may not distribute any marketing materials, as defined in 42 CFR
422.80(b) and in the Marketing Materials Guidelines for Medicare Advantage-Prescription Drug
Plans and Prescription Drug Plans (Medicare Marketing Guidelines), unless they have been filed
with and not disapproved by CMS in accordance with §422.80. The file and use process set out
at §422.80(a)(2) must be used, unless the MA organization notifies CMS that it will not use this
process.
2. CMS and the MA Organization shall agree upon language setting forth the benefits,
exclusions and other language of the Plan. The MA Organization bears full responsibility for the
accuracy of its marketing materials. CMS, in its sole discretion, may order the MA Organization
to print and distribute the agreed upon marketing materials, in a format approved by CMS. The
MA Organization must disclose the information to each enrollee electing a plan as outlined in 42
CFR 422.111.
3. The MA Organization agrees that any advertising material, including that labeled promotional
material, marketing materials, or supplemental literature, shall be truthful and not misleading.
All marketing materials must include the Contract number. All membership identification cards
must include the Contract number on the front of the card.
4. The MA Organization must comply with the Medicare Marketing Guidelines, as well as all
applicable statutes and regulations, including and without limitation Section 1851(h) of the Act
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and 42 CFR §§422.80, 422.111 and 423.50. Failure to comply may result in sanctions as provided
in 42 CFR Part 422 Subpart O.
Article IV
CMS Payment to MA Organization
A. The MA Organization agrees to develop its annual benefit and price bid proposal and submit
to CMS all required information on premiums, benefits, and cost sharing, as required under 42
CFR Part 422 Subpart F. [422.504(a)(10)]
B. Methodology. CMS agrees to pay the MA Organization under this contract in accordance
with the provisions of section 1853 of the Act and 42 CFR
Part 422 Subpart G. [422.504(a)(9)]
C. Attestation of payment data (Attachments A, B, and C).
As a condition for receiving a monthly payment under paragraph B of this article, and 42 CFR Part
422 Subpart G, the MA Organization agrees that its chief executive officer (CEO), chief financial
officer (CFO), or an individual delegated with the authority to sign on behalf of one of these
officers, and who reports directly to such officer, must request payment under the contract on the
forms attached hereto as Attachment A (enrollment attestation) and Attachment B (risk adjustment
data) which attest to (based on best knowledge, information and belief, as of the date specified on
the attestation form) the accuracy, completeness, and truthfulness of the data identified on these
attachments. The Medicare Advantage Plan Attestation of Benefit Plan and Price must be signed and
attached to the executed version of this contract.
1. Attachment A requires that the CEO, CFO, or
an individual delegated with the authority to sign on behalf of one of these officers, and who
reports directly to such officer, must attest based on best knowledge, information, and belief that
each enrollee for whom the MA Organization is requesting payment is validiy enrolled, or was
validly enrolled during the period for which payment is requested, in an MA plan offered by the MA
Organization. The MA Organization shall submit completed enrollment attestation forms to CMS, or
its contractor, on a monthly basis. (NOTE: The forms included as attachments to this contract are
for reference only. CMS will provide instructions for the completion and submission of the forms in
separate documents. MA Organizations should not take any action on the forms until appropriate CMS
instructions become available.)
2. Attachment B requires that the CEO, CFO, or an individual delegated with the authority to sign
on behalf of one of these officers, and who reports directly to such officer, must attest to (based
on best knowledge, information and belief, as of the date specified on the attestation form) that
the risk adjustment data it submits to CMS under §422.310 are accurate, complete, and truthful. The
MA Organization shall make annual attestations to this effect for risk adjustment data on
Attachment B and according to a schedule to be published by CMS. If such risk adjustment data are
generated by a related entity, contractor, or subcontractor of an MA Organization, such entity,
contractor, or subcontractor must similarly attest to (based on best knowledge, information, and belief, as of the date specified on the attestation form) the accuracy, completeness, and
truthfulness of the data. [422.504(1)]
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3. The Medicare Advantage Plan Attestation of Benefit Plan and Price (which is attached hereto)
requires that the CEO, CFO, or an individual delegated with the authority to sign on behalf of one
of these officers, and who reports directly to such officer, must attest (based on best knowledge,
information and belief, as of the date specified on the attestation form) that the information and
documentation comprising the bid submission proposal is accurate, complete, and truthful and fully
conforms to the Bid Form and Plan Benefit Package requirements; and that the benefits described in
the CMS-approved proposal bid submission agree with the benefit package the MA Organization will
offer during the period covered by the proposal bid submission. This document is being sent
separately to the MA Organization and must be signed and attached to the executed version of this
contract, and is incorporated herein by reference. [422.502(1)]
Article V
MA Organization Relationship with Related Entities, Contractors, and Subcontractors
A. Notwithstanding any relationship(s) that the MA Organization may have with related
entities, contractors, or subcontractors, the MA Organization maintains full responsibility for
adhering to and otherwise fully complying with all terms and conditions of its contract with
CMS. [422.504(i)(1)]
B. The MA Organization agrees to require all related entities, contractors, or subcontractors to
agree that—
(1) HHS, the Comptroller General, or their designees have the right to inspect, evaluate,
and audit any pertinent contracts, books, documents, papers, and records of the related
entity(s),
contractor(s), or subcontractor(s) involving transactions related to this contract; and
(2) HHS, the Comptroller General, or their designees have the right to inspect, evaluate,
and audit any pertinent information for any particular contract period for 10 years from the
final
date of the contract period or from the date of completion of any audit, whichever is later.
[422.504(i)(2)]
[422.504(i)(2)]
C. The MA Organization agrees that all contracts or written arrangements into which the MA
Organization enters with providers, related entities, contractors, or subcontractors (first tier
and
downstream entities) shall contain the following elements:
(1) Enrollee protection provisions that provide—
(a) Consistent with Article III(C), arrangements that prohibit providers from holding an
enrollee liable for payment of any fees that are the legal obligation of the MA Organization;
and
(b) Consistent with Article III(C), provision for the continuation of benefits.
(2) Accountability provisions that indicate that the MA Organization may only delegate
activities or functions to a provider, related entity, contractor, or subcontractor in a
manner
consistent with requirements set forth at paragraph D of this article.
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(3) A provision requiring that any services or other activity performed by a related entity,
contractor or subcontractor in accordance with a contract or written agreement between the related
entity, contractor, or subcontractor and the MA Organization will be consistent and comply with the
MA Organization’s contractual obligations to CMS. [422.504(i)(3)]
D. If any of the MA Organization’s activities or responsibilities under this contract with CMS is
delegated to other parties, the following requirements apply to any related entity, contractor,
subcontractor, or provider:
(1) Written arrangements must specify delegated activities and reporting responsibilities.
(2) Written arrangements must either provide for revocation of the delegation activities
and reporting requirements or specify other remedies in instances where CMS or the MA
Organization determine that such parties have not performed satisfactorily.
(3) Written arrangements must specify that the performance of the parties is monitored by
the MA Organization on an ongoing basis.
(4) Written arrangements must specify that either—
(a) The credentials of medical professionals affiliated with the party or parties will be
either reviewed by the MA Organization; or
(b) The credentialing process will be reviewed and approved by the MA Organization
and the MA Organization must audit the credentialing process on an ongoing basis.
(5) All contracts or written arrangements must specify that the related entity, contractor,
or subcontractor must comply with all applicable Medicare laws, regulations, and CMS
instructions.[422.504(i)(4)]
E. If the MA Organization delegates selection of the providers, contractors, or subcontractors to
another organization, the MA Organization’s written arrangements with that organization must
state that the MA Organization retains the right to approve, suspend, or terminate any such
arrangement. [422.504(i)(5)]
F. As of the date of this contract and throughout its term, the MA Organization
(1) Agrees that any physician incentive plan it operates meets the requirements of
§422.208, and
(2) Has assured that all physicians and physician groups that the MA Organization’s
physician incentive plan places at substantial financial risk have adequate stop-loss
protection in
accordance with §422.208(f). [422.208]
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Article VI
Records Requirements
A. MAINTENANCE OF RECORDS
1. The MA Organization agrees to maintain for 10 years books, records, documents, and other
evidence of accounting procedures and practices that—
(a) Are sufficient to do the following:
(i) Accommodate periodic auditing of the financial records (including data related to Medicare
utilization, costs, and computation of the benefit and price bid) of the MA Organization.
(ii) Enable CMS to inspect or otherwise evaluate the quality, appropriateness and timeliness
of services performed under the contract, and the facilities of the
MA Organization.
(iii) Enable CMS to audit and inspect any books and records of the MA Organization that
pertain to the ability of the organization to bear the risk of potential financial losses, or to
services performed or determinations of amounts payable under the contract.
(iv) Properly reflect all direct and indirect costs claimed to have been incurred and used in
the preparation of the benefit and price bid proposal.
(v) Establish component rates of the benefit and price bid for determining additional and
supplementary benefits.
(vi) Determine the rates utilized in setting premiums for State insurance agency purposes and
for other government and private purchasers; and
(b) Include at least records of the following:
(i) Ownership and operation of the MA Organization’s financial, medical, and other
record keeping systems.
(ii) Financial statements for the current contract period and six prior periods.
(iii) Federal income tax or informational returns for the current contract period and six
prior periods.
(iv) Asset acquisition, lease, sale, or other action.
(v) Agreements,
contracts (including, but not limited to, with related or unrelated prescription drug benefit managers) and subcontracts.
(vi) Franchise, marketing, and management agreements.
(vii) Schedules of charges for the MA Organization’s fee-for-service patients.
(viii) Matters pertaining to costs of operations.
(ix) Amounts of income received, by source and payment.
(x) Cash flow statements.
(xi) Any financial reports filed with other Federal programs or State authorities.[422.504(d)]
2. Access to facilities and records. The MA Organization
agrees to the following:
(a) The Department of Health and Human Services (HHS), the Comptroller General, or their
designee may evaluate, through inspection or other means—
(i) The quality, appropriateness, and timeliness of services furnished to Medicare
enrollees under the contract;
(ii) The facilities of the MA Organization; and
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(iii) The enrollment and disenrollment records for the current contract period and ten prior
periods.
(b) HHS, the Comptroller General, or their designees may audit, evaluate, or inspect any
books, contracts, medical records, documents, papers, patient care documentation, and other
records of the MA Organization, related entity, contractor, subcontractor, or its transferee
that pertain to any aspect of services performed, reconciliation of benefit liabilities, and
determination of amounts payable under the contract, or as the Secretary may deem necessary to
enforce the contract.
(c) The MA Organization agrees to make available, for the purposes specified in section
(A) of this article, its premises, physical facilities and equipment, records relating to its
Medicare enrollees, and any additional relevant information that CMS may require, in a manner that
meets CMS record maintenance requirements.
(d) HHS, the Comptroller General, or their designee’s right to inspect, evaluate, and audit
extends through 10 years from the final date of the contract period or completion of audit,
whichever is later unless-
(i) CMS determines there is a special need to retain a particular record or group of records
for a longer period and notifies the MA Organization at least 30 days before the normal disposition
date;
(ii) There has been a termination, dispute, or fraud or similar fault by the MA
Organization, in which case the retention may be extended to 10 years from the date of any
resulting final resolution of the termination, dispute, or fraud or similar fault; or
(iii) HHS, the Comptroller General, or their designee determines that there is a reasonable
possibility of fraud, in which case they may inspect, evaluate, and audit the MA Organization at
any time. [422.504(e)]
B. REPORTING REQUIREMENTS
1. The MA Organization shall have an effective procedure to develop, compile, evaluate, and
report to CMS, to its enrollees, and to the general public, at the times and in the manner that
CMS requires, and while safeguarding the confidentiality of the doctor-patient relationship,
statistics and other information as described in the remainder of this section (B). [422.516(a)]
2. The MA Organization agrees to submit to CMS certified financial information that must
include the following:
(a) Such information as CMS may require demonstrating that the organization has a
fiscally sound operation, including:
(i) The cost of its operations;
(ii) A description, submitted to CMS annually and within 120 days of the end of the fiscal
year, of significant business transactions (as defined in §422.500) between the MA Organization and
a party in interest showing that the costs of the transactions listed in paragraph (2)(a)(v) of
this section do not exceed the costs that would be incurred if these transactions were with someone
who is not a party in interest; or
(iii) If they do exceed, a justification that the higher costs are consistent with
prudent management and fiscal soundness requirements.
(iv) A combined financial statement for the MA Organization and a party in interest if either
of the following conditions is met:
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(aa) Thirty-five percent or more of the costs of operation of the MA Organization go to a
party in interest.
(bb) Thirty-five percent or more of the revenue of a party in interest is from the MA
Organization. [422.516(b)]
(v) Requirements for combined financial statements.
(aa) The combined financial statements required by paragraph (2)(a)(iv) must display in
separate columns the financial information for the MA Organization and each of the parties in
interest.
(bb) Inter-entity transactions must be eliminated in the consolidated column.
(cc) The statements must have been examined by an independent auditor in accordance with
generally accepted accounting principles and must include appropriate opinions and notes.
(dd) Upon written request from the MA Organization showing good cause, CMS may waive the
requirement that the organization’s combined financial statement include the financial information
required in paragraph (2)(a)(v) with respect to a particular entity. [422.516(c)]
(vi) A description of any loans or other special financial arrangements the MA
Organization makes with contractors, subcontractors, and related entities.
(b) Such information as CMS may require pertaining to the disclosure of ownership and
control of the MA Organization. [422.504(f)(1)(ii)]
(c) Patterns of utilization of the MA Organization’s services.
3. The MA Organization agrees to participate in surveys required by CMS and to submit to CMS all
information that is necessary for CMS to administer and evaluate the program and to simultaneously
establish and facilitate a process for current and prospective beneficiaries to exercise choice in
obtaining Medicare services. This information includes, but is not limited to:
(a) The benefits covered under the MA plan;
(b) The MA monthly basic beneficiary premium and MA monthly supplemental
beneficiary premium, if any, for the plan.
(c) The service area and continuation area, if any, of each plan and the enrollment
capacity of each plan;
(d) Plan quality and performance indicators for the benefits under the plan including —
(i) Disenrollment rates for Medicare enrollees electing to receive benefits through the
plan for the previous 2 years;
(ii) Information on Medicare enrollee satisfaction;
(iii) The patterns of utilization of plan services;
(iv) The availability, accessibility, and acceptability of the plan’s services;
(v) Information on health outcomes and other performance measures required by CMS;
(vi) The recent record regarding compliance of the plan with requirements of this part, as
determined by CMS; and
(vii) Other information determined by CMS to be necessary to assist beneficiaries in
making an informed choice among MA plans and traditional Medicare;
(e) Information about beneficiary appeals and their disposition;
(f) Information regarding all formal actions, reviews, findings, or other similar actions by
States, other regulatory bodies, or any other certifying or accrediting organization;
(g) Any other information deemed necessary by CMS for the administration or evaluation
of the Medicare program. [422.504(f)(2)]
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4. The MA Organization agrees to provide to its enrollees and upon request, to any individual
eligible to elect an MA plan, all informational requirements under §422.64 and, upon an
enrollee’s, request, the financial disclosure information required under §422.516. [422.504(f)(3)]
5. Reporting and disclosure under ERISA.
(a) For any employees’ health benefits plan that includes an MA Organization in its
offerings, the MA Organization must furnish, upon request, the information the plan needs to
fulfill its reporting and disclosure obligations (with respect to the MA Organization) under
the Employee Retirement Income Security Act of 1974 (ERISA).
(b) The MA Organization must furnish the information to the employer or the employer’s
designee, or to the plan administrator, as the term “administrator” is defined in ERISA.
[422.516(d)]
6. Electronic communication. The MA Organization must have the capacity to communicate
with CMS electronically. [422.504(b)]
7. Risk Adjustment data. The MA Organization agrees to comply with the requirements
in §422.310 for submitting risk adjustment data to CMS. [422.504(a)(8)]
Article VII
Renewal of the MA Contract
A. Renewal of contract: In accordance with §422.505, following the initial contract period,
this contract is renewable annually only if-
(1) The MA Organization has not provided CMS with a notice of intention not to renew;
[422.506(a)]
(2) CMS and the MA Organization reach agreement on the bid under 42 CFR Part 422,
Subpart F; and [422.505(d)]
(3) CMS informs the MA Organization that it authorizes a renewal.
B. Nonrenewal of contract
(1) Nonrenewal by the Organization.
(a) In accordance with §422.506, the MA Organization may elect not to renew its
contract with CMS as of the end of the term of the contract for any reason, provided it meets
the time frames for doing so set forth in subparagraphs (b) and (c) of this paragraph.
(b) If the MA Organization does not intend to renew its contract, it must notify—
(i) CMS, in writing, by the first Monday in June of the year in which the contract would
end, pursuant to §422.506
(ii) Each Medicare enrollee, at least 90 days before the date on which the nonrenewal is
effective. This notice must include a written description of all alternatives available for
obtaining Medicare services within the service area including alternative MA plans, Medigap
options, and original Medicare and prescription drug plans and must receive CMS approval prior to
issuance.
(iii) The general public, at least 90 days before the end of the current calendar year, by
publishing a CMS-approved notice in one or more newspapers of general circulation in each community
located in the MA Organization’s service area.
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(c) CMS may accept a nonrenewal notice submitted after the applicable annual non-
renewal notice deadline if —
(i) The MA Organization notifies its Medicare enrollees and the public in accordance
with subparagraph (l)(b)(ii) and (l)(b)(iii) of this section; and
(ii) Acceptance is not inconsistent with the effective and efficient administration of the
Medicare program.
(d) If the MA Organization does not renew a contract under subparagraph (1), CMS will
not enter into a contract with the Organization for 2 years from the date of contract
separation unless there are special circumstances that warrant special consideration, as determined by
CMS. [422.506(a)]
(2) CMS decision not to renew.
(a) CMS may elect not to authorize renewal of a contract for any of the following
reasons:
(i) The MA Organization’s level of enrollment, growth in enrollment, or insufficient number of
contracted providers is determined by CMS to threaten the viability of the organization under the
MA program and or be an indicator of beneficiary dissatisfaction with the MA plan(s) offered by the
organization.
(ii) For any of the reasons listed in §422.510(a) [Article VIII, section (B)(l)(a) of this
contract], which would also permit CMS to terminate the contract.
(iii) The MA Organization has committed any of the acts in §422.752(a) that would support the
imposition of intermediate sanctions or civil money penalties under 42 CFR Part 422 Subpart O.
(iv) The MA Organization did not submit a benefit and price bid or the benefit and price bid
was not acceptable [422.505(d)]
(b) Notice. CMS shall provide notice of its decision whether to authorize renewal of
the contract as follows:
(i) To the MA Organization by May 1 of the contract year, except in the event of
(2)(a)(iv) above, for which notice will be sent by September 1.
(ii) To the MA Organization’s Medicare enrollees by mail at least 90 days before the end of
the current calendar year.
(iii) To the general public at least 90 days before the end of the current calendar year, by
publishing a notice in one or more newspapers of general circulation in each community or county
located in the MA Organization’s service area.
(c) Notice of appeal rights. CMS shall give the MA Organization written notice of its
right to reconsideration of the decision not to renew in accordance with § 422.644. [422.506(b)]
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Article VIII
Modification or Termination of the Contract
A. Modification or Termination of Contract by Mutual Consent
1. This contract may be modified or terminated at any time by written mutual consent.
(a) If the contract is modified by written mutual consent, the MA Organization must
notify its Medicare enrollees of any changes that CMS determines are appropriate for
notification within time frames specified by CMS. [422.508(a)(2)]
(b) If the contract is terminated by written mutual consent, except as provided in section
(A)(2) of this Article, the MA Organization must provide notice to its Medicare enrollees and
the general public as provided in section B(2)(b)(ii) and B(2)(b)(iii) of this Article.
[422.508(a)(1)]
2. If this contract is terminated by written mutual consent and replaced the day following such
termination by a new MA contract, the MA Organization is not required to provide the notice
specified in section B of this article. [422.508(b)]
B. Termination of the Contract by CMS or the MA Organization
1. Termination by CMS.
(a) CMS may terminate a contract for any of the following reasons:
(i) The MA Organization has failed substantially to carry out the terms of its contract with
CMS.
(ii) The MA Organization is carrying out its contract with CMS in a manner that is
inconsistent with the effective and efficient implementation of 42 CFR Part 422.
(iii) CMS determines that the MA Organization no longer meets the requirements of 42 CFR Part
422 for being a contracting organization.
(iv) There is credible evidence that the MA Organization committed or participated in false,
fraudulent or abusive activities affecting the Medicare program, including submission of false or
fraudulent data.
(v) The MA Organization experiences financial difficulties so severe that its ability to make
necessary health services available is impaired to the point of posing an imminent and serious risk
to the health of its enrollees, or otherwise fails to make services available to the extent that
such a risk to health exists.
(vi) The MA Organization substantially fails to comply with the requirements in 42 CFR Part
422 Subpart M relating to grievances and appeals.
(vii) The MA Organization fails to provide CMS with valid risk adjustment data as
required under §422.310 and 423.329(b)(3).
(viii) The MA Organization fails to implement an acceptable quality improvement program
as required under 42 CFR Part 422 Subpart D.
(ix) The MA Organization substantially fails to comply with the prompt payment
requirements in §422.520.
(x) The MA Organization substantially fails to comply with the service access
requirements in §422.112.
(xi) The MA Organization fails to comply with the requirements of §422.208 regarding physician
incentive plans.
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(xii) The MA Organization substantially fails to comply with the marketing requirements in
422.80.
(b) Notice. If CMS decides to terminate a contract for reasons other than the
grounds specified in section (B)(l)(a) above, it will give notice of the termination as
follows:
(i) CMS will notify the MA Organization in writing 90 days before the intended date of the
termination.
(ii) The MA Organization will notify its Medicare enrollees of the termination by mail at
least 30 days before the effective date of the termination.
(iii) The MA Organization will notify the general public of the termination at least 30 days
before the effective date of the termination by publishing a notice in one or more newspapers of
general circulation in each community or county located in the MA Organization’s service area.
(c) Immediate termination of contract by CMS.
(i) For terminations based on violations prescribed in paragraph (B)(l)(a)(v) of this article,
CMS will notify the MA Organization in writing that its contract has been terminated effective the
date of the termination decision by CMS. If termination is effective in the middle of a month, CMS
has the right to recover the prorated share of the capitation payments made to the MA Organization
covering the period of the month following the contract termination.
(ii) CMS will notify the MA Organization’s Medicare enrollees in writing of CMS’ decision to
terminate the MA Organization’s contract. This notice will occur no later than 30 days after CMS
notifies the plan of its decision to terminate this contract. CMS will simultaneously inform the
Medicare enrollees of alternative options for obtaining Medicare services, including alternative MA
Organizations in a similar geographic area and original Medicare.
(iii) CMS will notify the general public of the termination no later than 30 days after
notifying the MA Organization of CMS’ decision to terminate this contract. This notice will be
published in one or more newspapers of general circulation in each community or county located in
the MA Organization’s service area.
(d) Corrective action plan
(i) General. Before terminating a contract for reasons other than the grounds
specified in section (B)(l)(a)(v) of this article, CMS will provide the MA Organization with
reasonable opportunity, not to exceed time frames specified at 42 CFR Part 422 Subpart N, to
develop and receive CMS approval of a corrective action plan to correct the deficiencies that are
the basis of the proposed termination.
(ii) Exception. If a contract is terminated under section (B)(l)(a)(v) of this
article, the MA Organization will not have the opportunity to submit a corrective action plan.
(e) Appeal rights. If CMS decides to terminate this contract, it will send written
notice to the MA Organization informing it of its termination appeal rights in accordance with 42 CFR
Part 422 Subpart N. [422.510]
2. Termination by the MA Organization
(a) Cause for termination. The MA Organization may terminate this contract if CMS
fails to substantially carry out the terms of the contract.
(b) Notice. The MA Organization must give advance notice as follows:
(i) To CMS, at least 90 days before the intended date of termination. This notice must
specify the reasons why the MA Organization is requesting contract termination.
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(ii) To its Medicare enrollees, at least 60 days before the termination effective date. This
notice must include a written description of alternatives available for obtaining Medicare services
within the service area, including alternative MA and MA-PD plans, PDP plans, Medigap options, and
original Medicare and must receive CMS approval.
(iii) To the general public at least 60 days before the termination effective date by
publishing a CMS-approved notice in one or more newspapers of general circulation in each community
or county located in the MA Organization’s geographic area.
(c) Effective date of termination. The effective date of the termination
will be determined by CMS and will be at least 90 days after the date CMS receives the MA
Organization’s notice of intent to terminate.
(d) CMS’ liability. CMS’ liability for payment to the MA Organization ends as of the
first day of the month after the last month for which the contract is in effect, but CMS shall make
payments for amounts owed prior to termination but not yet paid.
(e) Effect of termination by the organization. CMS will not enter into an agreement
with the MA Organization for a period of two years from the date the Organization has terminated
this contract, unless there are circumstances that warrant special consideration, as determined by
CMS. [422.512]
Article IX
Requirements of Other Laws and Regulations
A. The MA Organization agrees to comply with—
(1) Federal laws and regulations designed to prevent or ameliorate fraud, waste, and
abuse, including, but not limited to, applicable provisions of Federal criminal law, the False
Claims Act (31 USC 3729 et seq.), and the anti-kickback statute (section 1128B(b) of the Act):
and
(2) HIPAA administrative simplification rules at 45 CFR parts 160, 162, and 164.
[422.504(h)]
B. The MA Organization maintains ultimate responsibility for adhering to and otherwise fully
complying with all terms and conditions of its contract with CMS, notwithstanding any
relationship(s) that the MA organization may have with related entities, contractors, or
subcontractors. [422.504(i)]
C. In the event that any provision of this contract conflicts with the provisions of any statute or
regulation applicable to an MA Organization, the provisions of the statute or regulation shall
have full force and effect.
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Article X
Severability
The MA Organization agrees that, upon CMS’ request, this contract will be amended to exclude any MA
plan or State-licensed entity specified by CMS, and a separate contract for any such excluded plan
or entity will be deemed to be in place when such a request is made. [422.504(k)]
Article XI
Miscellaneous
A. Definitions. Terms not otherwise defined in this contract shall have the meaning given to
such terms in 42 CFR Part 422.
B. Alteration to Original Contract Terms. The MA Organization agrees that it has not altered in
any way the terms of this contract presented for signature by CMS. The MA Organization
agrees that any alterations to the original text the MA Organization may make to this contract
shall not be binding on the parties.
C. Approval to Begin Marketing and Enrollment. The MA Organization agrees that it must
complete CMS operational requirements prior to receiving CMS approval to begin Part C
marketing and enrollment activities. Such activities include, but are not limited to, establishing
and successfully testing connectivity with CMS systems to process enrollment applications (or
contracting with an entity qualified to perform such functions on the MA Organization’s
Sponsor’s behalf) and successfully demonstrating capability to submit accurate and timely price
comparison data. To establish and successfully test connectivity, the MA Organization must,
1) establish and test physical connectivity to the CMS data center, 2) acquire user identifications
and passwords, 3) receive, store, and maintain data necessary to perform enrollments and send and
receive transactions to and from CMS, and 4) check and receive transaction status information.
D. Incorporation of Applicable Addenda. All addenda checked off and initialed on the cover
sheet of this contract by the MA Organization are hereby incorporated by reference.
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In witness whereof, the parties hereby execute this contract.
FOR THE MA ORGANIZATION
Signature
|
Date | |||
Organization
|
Address |
FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
Acting Director |
||||
Medicare Advantage Group |
||||
Center for Beneficiary Choices |
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ADDENDUM TO MEDICARE MANAGED CARE CONTRACT PURSUANT TO
SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT
FOR THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION
DRUG PLAN
SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT
FOR THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION
DRUG PLAN
The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and
, a Medicare
managed care organization (hereinafter referred to as the MA-PD Sponsor) agree to amend the
contract (INSERT “H” OR “R” NUMBER) governing the MA-PD Sponsor’s operation of a Part C plan
described in Section 1851(a)(2)(A) of the Social Security Act (hereinafter referred to as “the
Act”) or a Medicare cost plan to include this addendum under which the MA-PD Sponsor shall operate
a Voluntary Medicare Prescription Drug Plan pursuant to sections 1860D-1 through 1860D-42 (with the
exception of section 1860D-22 and 1860D-31) of the Act.
This addendum is made pursuant to Subpart L of 42 CFR Part 417 (in the case of cost plan sponsors
offering a Part D benefit) and Subpart K of 42 CFR Part 422 (in the case of an MA-PD Sponsor
offering a Part C plan).
NOTE: For purposes of this addendum, unless otherwise noted, reference to an “MA-PD Sponsor” or
“MA-PD Plan” is deemed to include a cost plan sponsor or a MA private fee-for-service contractor
offering a Part D benefit.
Article I
Medicare Voluntary Prescription Drug Benefit
Medicare Voluntary Prescription Drug Benefit
| A. | The MA-PD Sponsor agrees to operate one or more Medicare Voluntary Prescription Drug Plans as described in its application and related materials, including but not limited to all the attestations contained therein and all supplemental guidance, for Medicare approval and in compliance with the provisions of this addendum, which incorporates in its entirety the Solicitation For Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors, released on January 24, 2006 [applicable to Medicare Part C contractors] or the Solicitation for Applications for New Cost Plan Sponsors, released on January 24, 2006 [applicable to Medicare cost plan contractors] (hereinafter collectively referred to as “the addendum”). The MA- PD Sponsor also agrees to operate in accordance with the regulations at 42 CFR §423.1 through 42 CFR §423.910 (with the exception of Subparts Q, R, and S), sections 1860D-1 through 1860D-42 (with the exception of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable solicitation identified above, as well as all other applicable Federal statutes, regulations, and policies. This addendum is deemed to incorporate any changes that are required by statute to be implemented during the term of this addendum and any regulations or policies implementing or interpreting such statutory provisions. |
| B. | CMS agrees to perform its obligations to the MA-PD Sponsor consistent with the regulations at 42 CFR §423.1 through 42 CFR §423.910 (with the exception of Subparts Q, R, and S), sections 1860D-1 through 1860D-42 (with the exception of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable solicitation, as well as all other applicable Federal statutes, regulations, and policies. |
| C. | CMS agrees that it will not implement, other than at the beginning of a calendar year, regulations under 42 CFR Part 423 that impose new, significant regulatory requirements on the MA-PD Sponsor. This provision does not apply to new requirements mandated by statute. |
| D. | This addendum is in no way intended to supersede or modify 42 CFR, Parts 417, 422 or 423. Failure to reference a regulatory requirement in this addendum does not affect the applicability of such requirements to the MA-PD Sponsor and CMS. |
Article II
Functions to be Performed by the MA-PD Sponsor
Functions to be Performed by the MA-PD Sponsor
| A. | ENROLLMENT |
| 1. | MA-PD Sponsor agrees to enroll in its MA-PD plan only Part D-eligible beneficiaries as they are defined in 42 CFR §423.30(a) and who have elected to enroll in MA-PD Sponsor’s Part C or Section 1876 benefit. |
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| 2. | If the MA-PD Sponsor is a cost plan sponsor, the MA-PD Sponsor acknowledges that its Section 1876 plan enrollees are not required to elect enrollment in its Part D plan. |
| B. | PRESCRIPTION DRUG BENEFIT |
| 1. | MA-PD Sponsor agrees to provide the required prescription drug coverage as defined under 42 CFR §423.100 and, to the extent applicable, supplemental benefits as defined in 42 CFR §423.100 and in accordance with Subpart C of 42 CFR Part 423. MA-PD Sponsor also agrees to provide Part D benefits as described in the MA-PD Sponsor’s Part D bid(s) approved each year by CMS (and in the Attestation of Benefit Plan and Price, attached hereto). | ||
| 2. | MA-PD Sponsor agrees to calculate and collect beneficiary Part D premiums in accordance with 42 CFR §§423.286 and 423.293. | ||
| 3. | If the MA-PD Sponsors is a cost plans sponsor, it acknowledge that its Part D benefit is offered as an optional supplemental service in accordance with 42 CFR §417.440(b)(2)(ii). |
| C. | DISSEMINATION OF PLAN INFORMATION |
| 1. | MA-PD Sponsor agrees to provide the information required in 42 CFR §423.48. | ||
| 2. | MA-PD Sponsor agrees to disclose information related to Part D benefits to beneficiaries in the manner and the form specified by CMS under 42 CFR §§423.128 and 423.50 and in the “Marketing Materials Guidelines for Medicare Advantage-Prescription Drug Plans (MA-PDs) and Prescription Drug Plans (PDPs).” | ||
| 3. | MA-PD Sponsor certifies that all materials it submits to CMS under the File and Use Certification authority described in the Marketing Materials Guidelines are accurate, truthful, not misleading, and consistent with CMS marketing guidelines. |
| D. | QUALITY ASSURANCE/UTILIZATION MANAGEMENT | |
| MA-PD Sponsor agrees to operate quality assurance, cost, and utilization management, medication therapy management programs, and support electronic prescribing in accordance with Subpart D of 42 CFR Part 423. | ||
| E. | APPEALS AND GRIEVANCES | |
| MA-PD Sponsor agrees to comply with all requirements in Subpart M of 42 CFR Part 423 governing coverage determinations, grievances and appeals, and formulary exceptions. MA-PD Sponsor acknowledges that these requirements are separate and distinct from the appeals and grievances requirements applicable to the MA-PD Sponsor through the operation of its Part C or cost plan benefits. |
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| F. | PAYMENT TO MA-PD SPONSOR |
| 1. | MA-PD Sponsor and CMS agree that payment paid for Part D services under the addendum will be governed by the rules in Subpart G of 42 CFR Part 423. | ||
| 2. | If the MA-PD Sponsor is participating in the Part D Reinsurance Payment Demonstration, described in 70 FR 9360 (Feb. 25, 2005), it affirms that it will not seek payment under the demonstration for services provided to employer group enrollees. |
| G. | BID SUBMISSION AND REVIEW | |
| If the MA-PD Sponsor intends to participate in the Part D program for the future year, MA-PD Sponsor agrees to submit a future year’s Part D bid, including all required information on premiums, benefits, and cost-sharing, by the applicable due date, as provided in Subpart F of 42 CFR Part 423 so that CMS and the MA-PD Sponsor may conduct negotiations regarding the terms and conditions of the proposed bid and benefit plan renewal. MA-PD Sponsor acknowledges that failure to submit a timely bid under this section may affect the sponsor’s ability to offer a Part C plan, pursuant to the provisions of 42 CFR §422.4(c). |
| H. | COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE |
| 1. | MA-PD Sponsor agrees to comply with the coordination requirements with State Pharmacy Assistance Programs (SPAPs) and plans that provide other prescription drug coverage as described in Subpart J of 42 CFR Part 423. | ||
| 2. | MA-PD Sponsor agrees to comply with Medicare Secondary Payer procedures as stated in 42 CFR §423.462. |
| I. | SERVICE AREA AND PHARMACY ACCESS |
| 1. | The MA-PD Sponsor agrees to provide Part D benefits in the service area for which it has been approved by CMS to offer Part C or cost plan benefits utilizing a pharmacy network and formulary approved by CMS that meet the requirements of 42 CFR §423.120. | ||
| 2. | The MA-PD Sponsor agrees to ensure adequate access to Part D-covered drugs at out-of-network pharmacies according to 42 CFR §423.124. | ||
| 3. | MA-PD Sponsor agrees to provide benefits by means of point-of-service systems to adjudicate prescription drug claims in a timely and efficient manner in compliance with CMS standards, except when necessary to provide access in underserved areas, I/T/U pharmacies (as defined in 42 CFR §423.100), and long-term care pharmacies (as defined in 42 CFR §423.100). |
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| 4. | MA-PD Sponsor agrees to contract with any pharmacy that meets the MA-PD Sponsor’s reasonable and relevant standard terms and conditions. If MA-PD Sponsor has demonstrated that it historically fills 98% or more of its enrollees’ prescriptions at pharmacies owned and operated by the MA-PD Sponsor (or presents compelling circumstances that prevent the sponsor from meeting the 98% standard or demonstrates that its Part D plan design will enable the sponsor to meet the 98% standard during the contract year), this provision does not apply to MA-PD Sponsor’s plan. | ||
| 5. | The provisions of 42 CFR §423.120(a) concerning the TRICARE retail pharmacy access standard do not apply to MA-PD Sponsor if the Sponsor has demonstrated to CMS that it historically fills more than 50% of its enrollees’ prescriptions at pharmacies owned and operated by the MA-PD Sponsor. MA-PD Sponsors excused from meeting the TRICARE standard are required to demonstrate retail pharmacy access that meets the requirements of 42 CFR §422.112 for a Part C contractor and 42 CFR §417.416(e)for a cost plan contractor. |
| J. | COMPLIANCE PLAN/PROGRAM INTEGRITY | |
| MA-PD Sponsor agrees that it will develop and implement a compliance plan that applies to its Part D-related operations, consistent with 42 CFR §423.504(b)(4)(vi). |
| K. | LOW-INCOME SUBSIDY | |
| MA-PD Sponsor agrees that it will participate in the administration of subsidies for low-income individuals according to Subpart P of 42 CFR Part 423. |
| L. | BENEFICIARY FINANCIAL PROTECTIONS | |
| The MA-PD Sponsor agrees to afford its enrollees protection from liability for payment of fees that are the obligation of the MA-PD Sponsor in accordance with 42 CFR §423.505(g). |
| M. | RELATIONSHIP WITH RELATED ENTITIES, CONTRACTORS, AND SUBCONTRACTORS |
| 1. | The MA-PD Sponsor agrees that it maintains ultimate responsibility for adhering to and otherwise fully complying with all terms and conditions of this addendum. | ||
| 2. | The MA-PD Sponsor shall ensure that any contracts or agreements with subcontractors or agents performing functions on the MA-PD Sponsor’s behalf related to the operation of the Part D benefit are in compliance with 42 CFR §423.505(i). |
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| N. | CERTIFICATION OF DATA THAT DETERMINE PAYMENT |
MA-PD Sponsor must provide certifications in accordance with 42 CFR §423.505(k).
Article III
Record Retention and Reporting Requirements
Record Retention and Reporting Requirements
| A. | MAINTENANCE OF RECORDS | |
| MA-PD Sponsor agrees to maintain records and provide access in accordance with 42 CFR §§423.504(d) and 505(d) and (e). |
| B. | GENERAL REPORTING REQUIREMENTS | |
| The MA-PD Sponsor agrees to submit to information to CMS according to 42 CFR §§423.505(f), 423.514, and the “Final Medicare Part D Reporting Requirements,” a document issued by CMS and subject to modification each program year. |
| C. | CMS LICENSE FOR USE OF PLAN FORMULARY |
PDP Sponsor agrees to submit to CMS each plan’s formulary information, including any
changes to its formularies, and hereby grants to the Government[, and any person or entity
who might receive the formulary from the Government,] a non-exclusive license to use all or
any portion of the formulary for any purpose related to the administration of the Part D
program, including without limitation publicly distributing, displaying, publishing or
reconfiguration of the information in any medium, including www.medicare.gov, and
by any electronic, print or other means of distribution.
Article IV
HIPAA Transactions/Privacy/Security
HIPAA Transactions/Privacy/Security
| A. | MA-PD Sponsor agrees to comply with the confidentiality and enrollee record accuracy requirements specified in 42 CFR §423.136. | |
| B. | MA-PD Sponsor agrees to enter into a business associate agreement with the entity with which CMS has contracted to track Medicare beneficiaries’ true out-of-pocket costs. |
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Article V
Addendum Term and Renewal
Addendum Term and Renewal
| A. | TERM OF ADDENDUM | |
| This addendum is effective from the date of CMS’ authorized representative’s signature through December 31, 2007. This addendum shall be renewable for successive one-year periods thereafter according to 42 CFR §423.506. MA-PD Sponsor shall not conduct Part D-related marketing activities prior to October 1, 2006 and shall not process enrollment applications prior to November 15, 2006. MA-PD Sponsor shall begin delivering Part D benefit services on January 1, 2007. |
| B. | QUALIFICATION TO RENEW ADDENDUM |
| 1. | In accordance with 42 CFR §423.507, the MA-PD Sponsor will be determined qualified to renew this addendum annually only if— |
| (a) | CMS informs the MA-PD Sponsor that it is qualified to renew its addendum; and | ||
| (b) | The MA-PD Sponsor has not provided CMS with a notice of intention not to renew in accordance with Article VII of this addendum. |
| 2. | Although MA-PD Sponsor may be determined qualified to renew its addendum under this Article, if the MA-PD Sponsor and CMS cannot reach agreement on the Part D bid under Subpart F of 42 CFR Part 423, no renewal takes place, and the failure to reach agreement is not subject to the appeals provisions in Subpart N of 42 CFR Parts 422 or 423. (Refer to Article XI for consequences of non renewal on the Part C contract and the ability to enter into a Part C contract.) |
Article VI
Nonrenewal of Addendum
Nonrenewal of Addendum
| A. | NONRENEWAL BY THE MA-PD SPONSOR |
| 1. | MA-PD Sponsor may non-renew this addendum in accordance with 42 CFR 423.507(a). | ||
| 2. | If the MA-PD Sponsor non-renews this addendum under this Article, CMS cannot enter into a Part D addendum with the organization for 2 years unless there are special circumstances that warrant special consideration, as determined by CMS. |
| B. | NONRENEWAL BY CMS | |
| CMS may non-renew this addendum under the rules of 42 CFR 423.507(b). (Refer to Article X for consequences of non-renewal on the Part C contract and the ability to enter into a Part C contract.) |
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Article VII
Modification or Termination of Addendum by Mutual Consent
Modification or Termination of Addendum by Mutual Consent
This addendum may be modified or terminated at any time by written mutual consent in accordance
with 42 CFR 423.508. (Refer to Article X for consequences of non-renewal on the Part C contract
and the ability to enter into a Part C contract.)
Article VIII
Termination of Addendum by CMS
Termination of Addendum by CMS
CMS may terminate this addendum in accordance with 42 CFR 423.509. (Refer to Article X for
consequences of non-renewal on the Part C contract and the ability to enter into a Part C
contract.)
Article IX
Termination of Addendum by the MA-PD Sponsor
Termination of Addendum by the MA-PD Sponsor
| A. | The MA-PD Sponsor may terminate this addendum only in accordance with 42 CFR 423.510. | |
| B. | CMS will not enter into a Part D addendum with an organization that has terminated its addendum within the preceding 2 years unless there are circumstances that warrant special consideration, as determined by CMS. | |
| C. | If the addendum is terminated under section A of this Article, the MA-PD Sponsor must ensure the timely transfer of any data or files. (Refer to Article X for consequences of non-renewal on the Part C contract and the ability to enter into a Part C contract.) |
Article X
Relationship Between Addendum and Part C Contract or 1876 Cost Contract
Relationship Between Addendum and Part C Contract or 1876 Cost Contract
| A. | MA-PD Sponsor acknowledges that, if it is a Medicare Part C contractor, the termination or nonrenewal of this addendum by either party may require CMS to terminate or non-renew the Sponsor’s Part C contract in the event that such nonrenewal or termination prevents the MA-PD Sponsor from meeting the requirements of 42 CFR §422.4(c), in which case the Sponsor must provide the notices specified in this contract, as well as the notices specified under Subpart K of 42 CFR Part 422. MA-PD Sponsor also acknowledges that Article X.B. of this addendum may prevent the sponsor from entering into a Part C contract for two years following an addendum termination or non-renewal where such non-renewal or termination prevents the MA-PD Sponsor from meeting the requirements of 42 CFR §422.4(c). |
8
| B. | The termination of this addendum by either party shall not, by itself, relieve the parties from their obligations under the Part C or cost plan contracts to which this document is an addendum. | |
| C. | In the event that the MA-PD Sponsor’s Part C or cost plan contract (as applicable) is terminated or nonrenewed by either party, the provisions of this addendum shall also terminate. In such an event, the MA-PD Sponsor and CMS shall provide notice to enrollees and the public as described in this contract as well as 42 CFR Part 422, Subpart K or 42 CFR Part 417, Subpart K, as applicable. |
Article XI
Intermediate Sanctions
Intermediate Sanctions
The MA-PD Sponsor shall be subject to sanctions and civil monetary penalties, consistent
with Subpart O of 42 CFR Part 423.
Article XII
Severability
Severability
Severability of the addendum shall be in accordance with 42 CFR §423.504(e).
Article XIII
Miscellaneous
Miscellaneous
| A. | DEFINITIONS: Terms not otherwise defined in this addendum shall have the meaning given such terms at 42 CFR Part 423 or, as applicable, 42 CFR Part 422 or Part 417. | |
| B. | ALTERATION TO ORIGINAL ADDENDUM TERMS: The MA-PD Sponsor agrees that it has not altered in any way the terms of the MA-PD addendum presented for signature by CMS. MA-PD Sponsor agrees that any alterations to the original text the MA-PD Sponsor may make to this addendum shall not be binding on the parties. | |
| C. | ADDITIONAL CONTRACT TERMS: The MA-PD Sponsor agree to include in this addendum other terms and conditions in accordance with 42 CFR §423.505(j). | |
| D. | CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES: The MA-PD Sponsor agrees that it must complete CMS operational requirements related to its Part D benefit prior to receiving CMS approval to begin MA-PD plan marketing activities relating to its Part D benefit. Such activities include, but are not limited to, establishing and successfully testing connectivity with CMS systems to process enrollment applications (or contracting with an entity qualified to perform |
9
such functions on MA-PD Sponsor’s behalf) and successfully demonstrating the capability to submit
accurate and timely price comparison data. To establish and successfully test connectivity, the PDP
Sponsor must, 1) establish and test physical connectivity to the CMS data center, 2) acquire user
identifications and passwords, 3) receive, store, and maintain data necessary to perform
enrollments and send and receive transactions to and from CMS, and 4) check and receive transaction
status information.
10
PART C/D BENEFIT PLAN(S) DESCRIPTION
TO BE ATTACHED TO MA CONTRACT
TO BE ATTACHED TO MA CONTRACT
SECTION 1876/PART D OPTIONAL SUPPLEMENTAL BENEFIT PLAN
DESCRIPTION TO BE ATTACHED TO SECTION 1876 CONTRACT
DESCRIPTION TO BE ATTACHED TO SECTION 1876 CONTRACT
11
ATTACHMENT A
ATTESTATION
OF ENROLLMENT INFORMATION
RELATING TO CMS PAYMENT
TO A MEDICARE ADVANTAGE ORGANIZATION
Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services (CMS) and
(INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA Organization, governing
the operation of the following Medicare Advantage plans (INSERT PLAN IDENTIFICATION NUMBERS
HERE), the MA Organization hereby requests payment under the contract, and in doing so, makes
the following attestation concerning CMS payments to the MA Organization. The MA Organization
acknowledges that the information described below directly affects the calculation of CMS payments
to the MA Organization and that misrepresentations to CMS about the accuracy of such information
may result in Federal civil action and/or criminal prosecution. This attestation shall not be
considered a waiver of the MA Organization’s right to seek payment adjustments from CMS based on
information or data which does not become available until after the date the MA Organization
submits this attestation.
1. The MA Organization has reported to CMS for the month of (INDICATE MONTH AND YEAR)
all new enrollments, disenrollments, and changes in enrollees’ institutional status with respect to
the above-stated MA plans. Based on best knowledge, information, and belief as of the date
indicated below, all information submitted to CMS in this report is accurate, complete, and
truthful.
2. The MA Organization has reviewed the CMS monthly membership report and reply listing for
the month of (INDICATE MONTH AND YEAR) for the above-stated MA plans and has reported to
CMS any discrepancies between the report and the MA Organization’s records. For those portions of
the monthly membership report and the reply listing to which the MA Organization raises no
objection, the MA Organization, through the certifying CEO/CFO, will be deemed to have attested,
based on best knowledge, information, and belief as of the date indicated below, to their accuracy,
completeness, and truthfulness.
| on behalf of | ||||
20
ATTACHMENT B
ATTESTATION OF RISK ADJUSTMENT DATA INFORMATION RELATING TO
CMS PAYMENT TO A MEDICARE ADVANTAGE ORGANIZATION
CMS PAYMENT TO A MEDICARE ADVANTAGE ORGANIZATION
Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services (CMS) and
(INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA Organization, governing
the operation of the following Medicare Advantage plans (INSERT PLAN IDENTIFICATION NUMBERS
HERE), the MA Organization hereby requests payment under the contract, and in doing so, makes
the following attestation concerning CMS payments to the MA Organization. The MA Organization
acknowledges that the information described below directly affects the calculation of CMS payments
to the MA Organization or additional benefit obligations of the MA Organization and that
misrepresentations to CMS about the accuracy of such information may result in Federal civil action
and/or criminal prosecution.
The MA Organization has reported to CMS during the
period of (INDICATE DATES) all
(INDICATE TYPE OF DATA — INPATIENT HOSPITAL, OUTPATIENT
HOSPITAL, OR PHYSICIAN) risk
adjustment data available to the MA Organization with respect to the above-stated MA plans. Based
on best knowledge, information, and belief as of the date indicated below, all information
submitted to CMS in this report is accurate, complete, and truthful.
| on behalf of | ||||
21
[SAMPLE — DO NOT USE -
THIS DOCUMENT WILL BE SENT DIRECTLY TO THE MAO THROUGH HPMS]
ATTACHMENT C - Medicare Advantage Plan Attestation of Benefit Plan and Price
ATTACHMENT C - Medicare Advantage Plan Attestation of Benefit Plan and Price
<Legal Entity Name>
<Contract#>
<Contract#>
Date: <XX/XX/XXXX>
I attest that the following plan numbers as established in the final Plan Benefit
Package (PBP) will be operated by the above-stated organization and made available to
eligible Medicare beneficiaries in the approved service area during program year 2007.
| Plan | Segment | Transaction | MA | PartD | CMS | Effective Date | ||||||||||||
| ID | ID | Version | Plan Name | Plan Type | Type | Premium | Premium | Approval | Date | |||||||||
<xxx>
|
<x> | <x> | <Plan Name> | <Plan Type> | <Transaction Type> | $<Plan Premium> | $<Plan D Premium> | <xx/xx/xx> | <xx/xx/xx> | |||||||||
<xxx>
|
<x> | <x> | <Plan Name> | <Plan Type> | <Transaction Type> | $<Plan Premium> | $<Plan D Premium> | <xx/xx/xx> | <xx/xx/xx> | |||||||||
<xxx>
|
<x> | <x> | <Plan Name> | <Plan Type> | <Transaction Type> | $<Plan Premium> | $<Plan D Premium> | <xx/xx/xx> | <xx/xx/xx> |
<Name of CFO> <Title> |
Date | <Name of CFO> <Title> |
Date | |||
<Address 1>
|
<Address 1> | |||||
<Address 2>
|
<Address 2> | |||||
<City, State Zip>
|
<City, State Zip> | |||||
<Phone #>
|
<Phone #> |
22
EXHIBIT
10.34
PACIFIC TOWERS ASSOCIATES
OFFICE LEASE
ARCO CENTER
LONG BEACH, CALIFORNIA
LANDLORD:
|
PACIFIC TOWERS ASSOCIATES, a California Limited Partnership |
|
TENANT:
|
MOLINA HEALTHCARE, INC., a California corporation |
| Dated for reference purposes as of: July 10, 2002 |
TABLE OF CONTENTS
| Page | ||||||
1. |
PREMISES | 3 | ||||
2. |
TERM | 3 | ||||
3. |
RENT | 3 | ||||
4. |
ADDITIONAL RENT FOR INCREASED OPERATING EXPENSES AND TAXES | 4 | ||||
5. |
LATE CHARGES | 9 | ||||
6. |
LANDLORD’S WORK | 9 | ||||
7. |
CONDUCT OF BUSINESS BY TENANT | 10 | ||||
8. |
ALTERATIONS AND TENANT’S PROPERTY | 10 | ||||
9. |
REPAIRS | 11 | ||||
10. |
LIENS | 12 | ||||
11. |
COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS | 12 | ||||
12. |
SUBORDINATION | 13 | ||||
13. |
INABILITY TO PERFORM | 14 | ||||
14. |
DESTRUCTION | 14 | ||||
15. |
EMINENT DOMAIN | 15 | ||||
16. |
ASSIGNMENT | 16 | ||||
17. |
UTILITIES | 17 | ||||
18. |
DEFAULT | 19 | ||||
19. |
INDEMNITY | 20 | ||||
20. |
TENANT’S INSURANCE | 21 | ||||
21. |
LIMITATION OF LANDLORD’S LIABILITY | 22 | ||||
22. |
ACCESS TO PREMISES | 22 | ||||
23. |
NOTICES | 23 | ||||
24. |
NO WAIVER | 23 | ||||
25. |
CERTIFICATES | 23 | ||||
26. |
RULES AND REGULATIONS | 24 | ||||
27. |
TAX ON TENANT’S PERSONAL PROPERTY AND BUILDING NON-STANDARD WORK | 24 | ||||
28. |
SECURITY DEPOSIT | 24 | ||||
29. |
AUTHORITY | 25 | ||||
30. |
MISCELLANEOUS | 25 | ||||
| ADDENDUM | ||||||
| EXHIBIT A — FLOOR PLAN | ||||||
| EXHIBIT B — WORKLETTER | ||||||
| EXHIBIT C — RULES AND REGULATIONS | ||||||
| EXHIBIT D — PARKING AGREEMENT | ||||||
| EXHIBIT E — NON-DISTURBANCE AGREEMENT | ||||||
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
1
ARCO CENTER OFFICE LEASE
Basic Lease Information
Basic Lease Information
| Lease Date | July 10, 2002 | |||
| Tenant | Molina Healthcare, Inc., a California corporation | |||
| Address | Attn: Mr. C. Joseph Heinz | |||
| One Golden Shore, Long Beach, CA 90802 | ||||
| Telephone | (562) 435-3666 | |||
| with a copy to: | ||||
| eRealty Commercial, Attn: Mr. Damian McKinney | ||||
| 12780 High Bluff Drive, Suite 100, San Diego, CA 92130 | ||||
| Telephone | (858) 350-5580 | |||
| Landlord | Pacific Towers Associates, a California Limited Partnership | |||
| Address | 200 Oceangate, Suite 310 | |||
| Long Beach, California 90802 | ||||
| Contact Person | Building Manager | |||
| Telephone | (562) 435-8200 | |||
| Building | Arco Center, Long Beach, California | |||
| Building Rentable Area | 459,636 rentable square feet | |||
Premises |
||||
| Tower Designation | 200 Oceangate, Long Beach, California | |||
| Suite | 200, 600 & 700 | |||
| Floor(s) | 2nd, 6th & 7th | |||
| Rentable Square Footage | 49,456 rentable square feet | |||
| See Article 1 for expansion into 8th Floor | ||||
Term |
||||
| Commencement Date | See Article 2 | |||
| Expiration Date | See Article 2 | |||
| Monthly Base Rental | See Article 3 | |||
| Tenant’s Share (of increased operating expenses and taxes) | Calculated in accordance with Article 4 | |||
| Base Tax Amount | ||||
| The greater of $55,000,000 or the assessed value of the Building as finally determined by the County of Los Angeles for the 2002-2003 fiscal tax year, after all appeals and other challenges thereto have been exhausted. | ||||
| Base Expense Year | Calendar year 2003 | |||
| Use | General office use consistent with Class A office building | |||
| Security Deposit | See Article 28 | |||
| Parking | See Paragraph 5 of Addendum | |||
| Broker | CB Richard Ellis and eRealty Commercial | |||
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
2
ARCO CENTER
OFFICE LEASE
OFFICE LEASE
This Lease is made and entered into this 10th day of July, 2002, by and between PACIFIC
TOWERS ASSOCIATES, a California limited partnership (herein called “Landlord”) and MOLINA
HEALTHCARE, INC., a California corporation (herein called “Tenant”).
WITNESSETH:
Landlord and Tenant hereby covenant and agree as follows:
1. PREMISES
1.1 Upon and subject to the terms, covenants and conditions hereinafter set forth, Landlord hereby
leases to Tenant and Tenant hereby hires from Landlord those premises (herein called the
“Premises”) located in the building (herein called the “Building”) and on the floors specified in
the Basic Lease Information attached hereto and comprising the area substantially as shown on the
floor plan or plans attached hereto as Exhibit A.
Commencing on the earlier of (i) one year after the Commencement Date or (ii) the date that Tenant
commences its business operations therein, the Premises shall be expanded to include the entire
8th Floor of 200 Oceangate, containing 16,575 rentable square feet, and at which time
the Premises shall contain a total of 66,031 rentable square feet. Landlord shall deliver
possession of the entire 8th Floor Premises to Tenant for the purpose of constructing
its Tenant Improvements therein at least four (4) months prior to said one year anniversary of the
Commencement Date, but Landlord may be delayed in delivering the 8th Floor by said date
as a result of the occupancy by the current tenant and subtenants. To the extent Landlord is so
delayed in delivering the entire 8th Floor Premises, the time period in (i) above shall
be extended by the number of days of delay; provided, however, in the event the entire
8th Floor Premises is not delivered within 420 days following the Commencement Date,
Tenant may elect, by written notice to Landlord prior to the date said 8th Floor
Premises are delivered, not to expand into said 8th Floor Premises.
The term “Building” includes the entire complex consisting of two office buildings and a parking
garage currently known as the Arco Center and the land and improvements surrounding the complex and
designated from time to time by Landlord as land or common areas appurtenant to the complex
together with utilities, facilities, drives, walkways and other amenities appurtenant to or
servicing the complex. Each office building is designated herein by its address of 200 Oceangate or
300 Oceangate.
1.2 As used in this Lease, the term “rentable area” shall be computed by Landlord in accordance
with its modified standards of the Building Owners and Managers Association (BOMA). In all events,
the rentable area of a floor shall be computed by measuring to the inside surface of the exterior
glass building surface and no deductions shall be made for columns, projections, and penetrations
necessary to the Building. The rentable area of an office on a floor shall be computed by
multiplying the usable area of the office by the quotient of the division of the rentable area of
the floor by the usable area of the floor.
2. TERM
2.1 The Premises are leased for a term (herein called the “Term”) to commence and expire on the
following dates: The Commencement Date of the Term shall be the later of November 1, 2002 or four
(4) months after Landlord has delivered possession of Floors 2, 6 and 7 to Tenant. Landlord shall
deliver possession of Floors 2, 6 and 7 to Tenant at such time as this Lease has been fully
executed. If Landlord does not deliver possession of any portion of the Premises to Tenant at such
time as this Lease is fully executed, then Tenant shall not be obligated to pay Monthly Base Rental
or Additional Rent with respect to the entire floor(s) related thereto until four (4) months after
the delivery of possession of said entire full floor. The expiration date of the Term shall be the
10th anniversary of the Commencement Date, unless the Term shall sooner terminate as
hereinafter provided
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
3
2.2 The dates upon which the Term shall commence and expire are herein called the “Commencement
Date” and the “Expiration Date,” respectively.
2.3 Notwithstanding anything to the contrary herein contained, in the event that Landlord shall not
have delivered possession of Floors 2, 6 and 7 to Tenant on or before August 1, 2002, or 14 days
after this Lease is fully executed, whichever occurs later, Tenant shall have the right, by written
notice to Landlord delivered before possession is so delivered, to terminate this Lease and both
parties hereto shall thereupon be released from all obligations hereunder.
3. RENT
3.1 Tenant shall pay to Landlord throughout the Term, the Monthly Base Rental specified below
(herein called the “Monthly Base Rental”), which sum shall be payable by Tenant on or before the
first day of each month, in advance, at the address specified for Landlord in the Basic Lease
Information, or such other place as Landlord shall designate, without any notice or prior demand
therefor and without any deductions or set-off whatsoever. If the Commencement Date should occur on
a day other than the first day of a calendar month, or the Expiration Date should occur on a day
other than the last day of a calendar month, then the Monthly Base Rental for such fractional month
shall be prorated upon a daily basis based upon a thirty (30) day month. Upon Tenant’s execution of
this Lease, Tenant shall deliver to Landlord the Monthly Base Rental for the first full month of
the Term.
The Monthly Base Rental for the Premises shall be based on its then rentable square footage and
shall be as follows:
| Lease Term Months | ||
| Commencing on the Commencement Date | Monthly Base Rental | |
Months 1 — 30
|
$1.55 per rentable square foot of Premises | |
Months 31 — 60
|
$1.75 per rentable square foot of Premises | |
Months 61 — 90
|
$1.95 per rentable square foot of Premises | |
Months 91 — 120
|
$2.15 per rentable square foot of Premises |
3.2 In addition to the Monthly Base Rental, Tenant shall pay to Landlord all charges and other
amounts required under this Lease (herein called “Additional Rent”), including, without limitation,
additional rent resulting from increased operating expenses and taxes pursuant to the provisions of
Article 4 hereof. All such Additional Rent shall be payable to Landlord at the place where the
Monthly Base Rental is payable, shall be considered “rent” for all legal purposes and Landlord
shall have the same remedies for a default in the payment of Additional Rent as for a default in
the payment of Monthly Base Rental.
4. ADDITIONAL RENT FOR INCREASED OPERATING EXPENSES AND TAXES
4.1 For purposes of this Article 4, the following terms shall have the meanings hereinafter set
forth:
(a) “Tenant’s Share” shall mean the percentage figure computed by dividing the rentable area of the
Premises, as the same may increase or decrease from time to time, by the total rentable area of the
office space in the Building. In the event that the total rentable area of the office space of the
Building is changed by Landlord in its commercially reasonable discretion, Landlord shall give
Tenant at least six months advance notice of any such change and shall provide Tenant with the
formulas and basis of such change. Tenant’s Share may, at Landlord’s election and upon said six
months prior notice to Tenant, be appropriately adjusted, and, as to the Tax Year or Expense Year
(as said terms are hereinafter defined) in which such adjustment occurs, Tenant’s Share shall be
determined on the basis of the number of days during such Tax Year and Expense Year at each such
percentage.
(b) “Tax Year” shall mean each twelve (12) month consecutive period commencing January 1st of each
year during the Term, including any partial years during which the Lease may commence or end;
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
4
provided that Landlord, upon notice to Tenant, may change the Tax Year from time to time to any
other twelve (12) month consecutive period and, in the event of any such change, Tenant’s Share of
Excess Taxes (as hereinafter defined) shall be equitably adjusted for the Tax Years involved in any
such change.
(c) “Real Estate Taxes” shall mean all taxes, assessments and charges levied upon or with respect
to the Building or any personal property of Landlord used in the operation thereof, or Landlord’s
interest in the Building or such personal property. Real Estate Taxes shall include, without
limitation, all general real property taxes and general and special assessments, charges, fees or
assessments for transit, housing, police, fire, improvement districts, or other governmental
services or purported benefits to the Building, service payments in lieu of taxes, and any tax, fee
or excise on the act of entering into this Lease or any other lease of space in the Building, or on
the use or occupancy of the Building or any part thereof, or on the rent payable under any lease or
in connection with the business of renting space in the Building, that are now or hereafter levied
or assessed against Landlord by the United States of America, the State of California, or any
political subdivision, public corporation, district or other political or public entity, and shall
also include any other tax, fee or other excise, however described, that may be levied or assessed
as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes,
whether or not now customary or in the contemplation of the parties on the date of this Lease. Real
Estate Taxes shall not include franchise, transfer, inheritance or capital stock taxes or income
taxes measured by the net income of Landlord from all sources, unless, due to a change in the
method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for,
or as an addition to, in whole or in part, any other tax that would otherwise constitute a Real
Estate Tax. Real Estate Taxes shall also include reasonable legal fees, costs and disbursements
incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes.
Notwithstanding the foregoing, the following percentage of increases in Real Estate Taxes which
Landlord may incur solely as a result of a sale, refinance, or transfer of ownership of the
Building during the initial Lease Term shall be excluded during the applicable months of the
initial Term from the total amount upon which Tenant’s Share is based:
| Months of Lease Term | ||||
| Commencing with the | Percentage of increased Real Estate | |||
| Commencement Date | Taxes which are excluded | |||
Months 1-60 |
100 | % | ||
Months 61-end of initial Lease Term |
0 | % | ||
(d) “Excess Taxes” with respect to any Tax Year shall mean the amount, if any, by which Real
Estates Taxes for such Tax Year exceed the Base Tax Amount set forth in the Basic Lease
Information.
(e) “Expense Year” shall mean each twelve (12) month consecutive period commencing January 1st of
each year during the Term, including any partial years during which the Lease may commence or end;
provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any
other twelve (12) month consecutive period, and, in the event of any such change, Tenant’s Share of
Excess Expenses (as hereinafter defined) shall be equitably adjusted for the Expense Years involved
in any such change.
(f) “Expenses” shall mean all reasonable costs and expenses paid or incurred by Landlord in
connection with the management, operation, maintenance and repair of the Building, including,
without limitation, (i) the cost of air conditioning, electricity, steam, heating, mechanical,
ventilating, escalator and elevator systems and all other utilities and the cost of supplies and
equipment and maintenance and service contracts in connection therewith, (ii) the cost of repairs
and general maintenance cleaning, (iii) the cost of fire, extended coverage, boiler, sprinkler,
public liability, property damage, rental interruption, earthquake and other insurance together
with any deductibles charged to or paid by Landlord, (iv) wages, salaries and other labor costs,
including taxes, insurance, retirement, medical and other employee benefits, (v) management fees
(which for off-site management services shall not exceed 5% of scheduled Building gross annual
revenue for a 95% occupied Building), consulting fees, legal fees and accounting fees, of all
independent contractors engaged by Landlord or reasonably charged by Landlord if Landlord performs
management services in connection with the Building, (vi) the cost of supplying, replacing and
cleaning employee uniforms, (vii) the fair market rental value of Landlord’s and the property
manager’s offices in the
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
5
Building, (viii) the cost of any capital improvements made to the Building as a labor-saving device
or to effect other economies in the operation or maintenance of the Building, or that are required
under a governmental law or regulation that was not applicable to the Building at the time that
permits for the construction thereof were obtained, such cost to be amortized over such period as
is similar to the period used by other comparable office buildings in the Long Beach area, together
with interest on the unamortized balance at the rate of ten percent (10%) per annum, and (ix) any
other commercially reasonable expenses of any other kind whatsoever reasonably incurred in
managing, operating, maintaining, and repairing the Building. For purposes of computing Tenant’s
Additional Rent pursuant to this Article 4, Expenses for the entire Building that are not, in
Landlord’s sole discretion, allocable or chargeable solely to either the office or retail space of
the Building shall be allocated between and charged to the office and retail space of the Building
on an equitable basis as determined by Landlord. To the extent the Building is less than 95%
occupied, Expenses shall be adjusted to reflect a ninety-five percent (95%) occupancy of the
Building during any period in which the Building is not at least ninety-five percent (95%)
occupied.
(g) The following are specifically excluded from the definition of Expenses:
(i) Any ground lease rental;
(ii) Costs of items considered capital repairs, replacements, improvements and equipment under
generally accepted accounting principles consistently applied or otherwise (“Capital Items”),
except for (1) the annual amortization (amortized over the useful life) of costs, including
financing costs, if any, incurred by Landlord after the Commencement Date for any capital
improvements installed or paid for by Landlord and required by any new (or change in) laws, rules
or regulations of any governmental or quasi-governmental authority which are enacted after the
Commencement Date; and (2) the annual amortization (amortized over the useful life) of costs,
including financing costs, if any, or any equipment, device or capital improvement purchased or
incurred in connection with normal Building maintenance and repair or as a labor-saving measure or
to affect other economics in the operation or maintenance of the Building;
(iii) Rentals for items (except when needed in connection with normal repairs and maintenance)
which if purchased, rather than rented, would constitute a Capital Item which is specifically
excluded under Subsection (ii) above (excluding, however, equipment not affixed to the Building);
(iv) Costs incurred by Landlord for the repair of damage to the Building, to the extent that
Landlord is reimbursed by insurance proceeds, and the cost of earthquake repairs in excess of
$250,000 per earthquake (which for this purpose an earthquake is defined collectively as the
initial earthquake and the aftershocks related thereto);
(v) Costs, including permit, license and inspection costs, incurred with respect to the
installation of tenants’ or other occupants’ improvements in the Building or incurred in renovating
or otherwise improving, decorating, painting or redecorating vacant space for tenants or other
occupants of the Building;
(vi) Depreciation;
(vii) Marketing costs including without limitation leasing commissions, attorneys’ fees in
connection with the negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs and other costs and expenses incurred in
connection with lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Building;
(viii) Expenses in connection with services or other benefits which are not offered to Tenant or
for which Tenant is charged for directly but which are provided to another tenant or occupant of
the Building;
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
6
(ix) Costs incurred by Landlord due to violation by Landlord or any tenant of the terms and
conditions of any lease of space in the Building;
(x) Overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for
goods and/or services in the Building to the extent the same exceeds the costs of such goods and/or
services rendered for comparable buildings;
(xi) Interest, principal, points and fees on debts or amortization on any mortgage or mortgages or
any other debt instrument encumbering the Building or the Land (except as permitted in subsection
(ii) above);
(xii) Landlord’s general corporate overhead and general and administrative expenses except to the
extent reasonably allocated to the Building and to the extent the cost does not exceed the costs of
such services at comparable buildings;
(xiii) Any compensation paid to clerks, attendants or other persons in commercial concessions
operated by Landlord;
(xiv) Advertising and promotional expenditures and costs of signs in or on the Building that are
for the sole purpose of identifying the owner of the Building or other tenant’s signs;
(xv) The cost of any electric power used by any tenant in the Building in excess of the
Building-standard amount to the extent Landlord is reimbursed therefor, or electric power costs for
which any tenant directly contracts with the local public service company or of which any tenant is
separately metered or sub-metered and pays Landlord directly;
(xvi) Costs incurred in connection with upgrading the Building to comply with the interpretation,
as of the Commencement Date, of disability, life, fire and safety codes, ordinances, statutes or
other laws in effect prior to the Commencement Date, including without limitation, the Americans
With Disabilities Act, and including penalties or damages incurred due to such non-compliance;
(xvii) Tax penalties incurred as a result of Landlord’s negligence, inability or unwillingness to
make payments and/or to file any tax or informational returns when due;
(xviii) Costs arising from the negligence or fault of Landlord, or from the negligence or fault of
other tenants if such cost is reimbursed to Landlord;
(xix) Any and all costs arising from the release of hazardous materials or substances in or about
the Building in violation of applicable law including, without limitation, hazardous substances in
the ground water or soil, not placed in the Building by Tenant;
(xx) Costs arising from Landlord’s charitable or political contributions;
(xxi) Costs arising during the contractual warranty period from construction defects in the base,
shell or core of the Building or improvements installed by Landlord;
(xxii) Costs in connection with the initial construction of the Building arising from any mandatory
or voluntary special assessment on the Building by any transit district authority or any other
governmental entity having the authority to impose such assessment;
(xxiii) Costs for sculpture, paintings or other objects of art unless of a commercially reasonably
nature and in a commercially reasonably amount;
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(xxiv) Costs (including in connection therewith all attorneys’ fees and costs of settlement
judgments and payments in lieu thereof) arising from claims, disputes, or potential disputes in
connection with potential or actual claims, litigation or arbitration pertaining to the Landlord
and/or the Building and/or the Land;
(xxv) Costs associated with the operation of the business of the partnership or entity which
constitutes Landlord as the same are distinguished from the costs of operation of the Building,
including partnership accounting and legal matters, costs of defending any lawsuits with any
mortgagee (except as the actions of Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the Building, costs of any
disputes between Landlord and its employees (if any) not engaged in Building operation, disputes of
Landlord with Building management, or outside fees paid in connection with disputes with other
tenants;
(xxvi) Costs of any “tap fees” or any sewer or water connection fees for the benefit of any
particular tenant in the Building;
(xxvii) Any entertainment, dining or travel expenses of Landlord for any purpose not related to the
operation or management of the Building;
(xxviii) Any “validated” parking for any entity;
(xxix) Any “finders fees,” brokerage commissions, job placement costs or job advertising cost,
other than with respect to the Building management, maintenance, and other staff;
(xxx) Any “above-standard” cleaning related to private parties/events and specific tenant
requirements in excess of service provided to Tenant, including related trash collection, removal,
hauling and dumping;
(h) “Excess Expenses” with respect to any Expense Year shall mean the amount, if any, by which
Expenses for such Expense Year exceed the amount of Expenses for the Base Expense Year set forth in
the Basic Lease Information.
4.2 Tenant shall pay to Landlord as Additional Rent one twelfth (1/12th) of Tenant’s Share of the
Excess Taxes of each Tax Year on or before the first day of each month during such Tax Year, in
advance, in an amount estimated by Landlord and billed by Landlord to Tenant; provided that
Landlord shall have the right initially to determine monthly estimates and to revise such estimates
from time to time. With reasonable promptness after Landlord has received the tax bills for any Tax
Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Tax Statement”)
setting forth the amount of Real Estate Taxes for such Tax Year, and Tenant’s Share, if any, of
Excess Taxes. If the actual Excess Taxes for such Tax Year exceed the estimated Excess Taxes paid
by Tenant for such Tax Year, Tenant shall pay to Landlord the difference between the amount paid by
Tenant and the actual Excess Taxes within thirty (30) days after the receipt of Landlord’s Tax
Statement, and if the total amount paid by Tenant for any such Tax Year shall exceed the actual
Excess Taxes for such Tax Year, such excess shall be credited against the next installment of
Excess Taxes due from Tenant to Landlord hereunder.
4.3 Tenant shall pay to Landlord as Additional Rent one-twelfth (l/12th) of Tenant’s Share of the
Excess Expenses for each Expense Year on or before the first day of each month of such Expense
Year, in advance, in an amount estimated by Landlord and billed by Landlord to Tenant; provided
that Landlord shall have the right initially to determine monthly estimates and to revise such
estimates from time to time. With reasonable promptness after the expiration of each Expense Year,
Landlord shall furnish Tenant with a statement (herein called “Landlord’s Expense Statement”),
setting forth in reasonable detail the Expenses for the Expense Year, and Tenant’s Share, it any,
of Excess Expenses. If the actual Excess Expenses for such Expense Year exceed the estimated Excess
Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the difference between
the amount paid by Tenant and the actual Excess Expenses within thirty (30) days after the receipt
of Landlord’s Expense Statement, and if the total amount paid by Tenant for any such Expense Year
shall exceed the actual Excess
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Expenses for such Expense Year, such excess shall be credited against the next installment of the
estimated Excess Expenses due from Tenant to Landlord hereunder.
4.4 If the Expiration Date of the Term shall occur on a date other than the end of a Tax Year or
Expense Year, Tenant’s Share of Excess Taxes, if any, and Excess Expenses, if any, for the Tax Year
and the Expense Year in which the Expiration Date falls shall be in the proportion that the number
of days from and including the first day of the Tax Year or Expense Year in which the Expiration
Date occurs to and including the Expiration Date bears to 365; provided, however, Landlord may,
pending the determination of the amount, if any, of Excess Taxes and Excess Expenses for such
partial Tax Year and Expense Year, furnish Tenant with statements of estimated Excess Taxes,
estimated Excess Expenses, and Tenant’s Share of each thereof for such partial Tax Year and Expense
Year. Within thirty (30) days after receipt of such estimated statement, Tenant shall remit to
Landlord, as Additional Rent, the amount of Tenant’s Share of such Excess Taxes and Excess
Expenses. After such Excess Taxes and such Excess Expenses have been finally determined and
Landlord’s Tax Statement and Landlord’s Expense Statement have been furnished to Tenant pursuant to
Articles 4.2 and 4.3 hereof, if there shall have been an underpayment of Tenant’s Share of Excess
Taxes or Excess Expenses, Tenant shall remit the amount of such underpayment to Landlord within
thirty (30) days of receipt of such statements, and if there shall have been an overpayment,
Landlord shall remit the amount of any such overpayment to Tenant, but only if Tenant has provided
Landlord with a valid forwarding address, within thirty (30) days of the issuance of such
statements.
4.5 Landlord shall maintain adequate records of Expenses and Real Estate Taxes in accordance with
accounting principles similar to those used by landlords of similar buildings in the Long Beach
area. Any statements provided by Landlord in connection with Tenant’s Share thereof shall be final
and binding on Tenant unless Tenant, within one year of its receipt thereof, shall contest any item
therein by giving written notice to Landlord, specifying each item contested and the reasons
therefor. In such event, Landlord and Tenant shall endeavor in good faith to promptly resolve any
disagreement set forth in Tenant’s notice provided that Tenant shall not withhold payment of any
contested or disputed item.
5. LATE CHARGES
Tenant hereby acknowledges that late payment by Tenant to Landlord of any Monthly Base Rental,
Additional Rent, or other sums due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage or deed of trust covering the Building. Accordingly, if any
installment of Monthly Base Rental, Additional Rent, or any other sum due from Tenant shall not be
received by Landlord or Landlord’s designated agent within three (3) days after such amount shall
be due, then, so long as Landlord has delivered written notice to Tenant specifying the payment
amount not received and Tenant fails to pay such amount within five (5) days of receipt of said
written notice, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such
overdue amount. The foregoing written notice shall only be required two (2) times per calendar
year. The parties hereby agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge
by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue
amount, nor prevent Landlord from exercising any of the other rights and remedies granted
hereunder. Notwithstanding any other provision in this Lease, Tenant shall have thirty (30) days
from receipt of any invoice for payment of Additional Rent prior to incurring any late charges
under this Article 5.
6. LANDLORD’S WORK
6.1 Except as set forth in the Workletter attached to this Lease as Exhibit B, Landlord is
performing no work in connection with its delivery of the Premises to Tenant and Tenant is
accepting the Premises in its “AS-IS condition.
6.2 The manner in which the common areas are maintained and operated and the expenditures therefor
shall be at the reasonable discretion of Landlord, but such common areas shall be maintained and
operated consistent with Class “A” buildings in Long Beach, and the use of such areas and
facilities shall be subject to such reasonable rules and regulations as Landlord shall make from
time to time. The term “common areas” as used herein shall mean
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the pedestrian sidewalks, malls, truckways, loading docks, hallways, lobbies, corridors, delivery
areas, parking areas, elevators and escalators and stairs not contained in the leased areas, public
bathrooms and comfort stations and all other areas or improvements that may be provided by Landlord
for the convenience and use of the tenants of the Building and their respective sub-tenants,
agents, employees, customers, invitees and any other licensees of Landlord. Landlord reserves the
rights, from time to time, to utilize portions of the common areas for entertainment, displays,
product shows, the leasing of kiosks or such other uses that, in Landlord’s judgment, do not
unreasonably interfere with Tenant’s use and enjoyment of the Premises.
6.3 The purpose of attached Exhibit A is to show the approximate location of the Premises in the
Building and Landlord hereby reserves the right, at any time and from time to time, to make
alterations or additions to the Building and the common areas. Landlord also reserves the right at
any time and from time to time to construct other improvements in the Building (including within
the common areas) and to enlarge same and make alterations therein or additions thereto.
6.4 Notwithstanding anything in this Lease to the contrary, Landlord shall maintain the common
areas and the Building in substantially the same physical condition as exists on the Commencement
Date and so as to not permanently and unreasonably interfere with Tenant’s use and enjoyment
thereof.
7. CONDUCT OF BUSINESS BY TENANT
7.1 Tenant shall use and occupy the Premises during the Term of this Lease solely for the use
specified in the Basic Lease Information and for no other use or uses without the prior written
consent of Landlord.
7.2 Tenant shall not use or occupy, or permit the use or occupancy of, the Premises or any part
thereof for any use other than the use specifically set forth in Article 7.1 hereof, or in any
manner that, in Landlord’s sole judgment, would adversely affect or interfere with any services
required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building,
or with proper and economical rendition of any such service, or with the use or enjoyment of any
part of the Building by any other tenant or occupant.
8. ALTERATIONS AND TENANT’S PROPERTY
8.1 Tenant shall make no changes or alterations in or to the Premises of any nature without
Landlord’s prior written approval, except for the following: provided Landlord has been given
advance written notice, Tenant may make changes or alterations costing less than $50,000 per full
floor but only if (i) they are of a non-structural nature, (ii) they do not affect or involve
Building systems, (ii) they do not involve demolition or construction of walls, and (iv) they do
not involve any electrical, mechanical, plumbing or fire/life-safety work. Prior to commencing any
work in the Premises, Tenant shall submit to Landlord complete drawings, plans and specifications
(herein collectively referred to as “Tenant’s Plan”) for the improvements and installations to be
made by Tenant (herein collectively referred to as “Tenant’s Work”). Tenant’s Plan shall be fully
detailed and shall show complete dimensions, shall not be in conflict with Landlord’s basic plans
for the Building, shall not require any changes in the structure of the Building or result in
Landlord incurring any cost or having to perform any work in connection therewith, and shall not be
in violation of any laws, orders, rules or regulations of any governmental department or bureau
having jurisdiction over the Premises.
After submission to Landlord of Tenant’s Plan, Landlord shall either approve same or shall set
forth in writing the particulars in which Landlord does not approve same, in which latter case
Tenant shall, within 5 days after Landlord’s notification, return to Landlord appropriate
corrections thereto. Such corrections shall be subject to Landlord’s approval. Tenant shall pay to
Landlord, promptly upon being billed and as Additional Rent, any charges or expenses Landlord may
incur in reviewing Tenant’s Plan. Tenant agrees that any review or approval by Landlord of Tenant’s
Plan is solely for Landlord’s benefit, and without any representation or warranty whatsoever to
Tenant with respect to the adequacy, correctness or efficiency thereof or otherwise.
Tenant further agrees that if Tenant makes any changes in Tenant’s Plan subsequent to its approval
by Landlord and if Landlord consents to such changes, Tenant shall pay to Landlord all costs and
expenses incurred by Landlord and caused by such changes; it being understood and agreed, however,
that Landlord shall have the right
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to refuse to consent to any such changes. Any charges payable under this Section 8.1 shall be paid
by Tenant from time to time upon demand as Additional Rent, whether or not the Lease Term shall
have commenced.
Following compliance by Tenant with its obligations under the foregoing sections of this article,
Tenant shall timely commence Tenant’s Work in order to complete same within a reasonable period of
time. Tenant’s Work shall be diligently pursued and shall be performed in a good and workmanlike
manner.
Tenant agrees that in the performance of Tenant’s Work (i) neither Tenant nor its agents or
employees shall interfere with any work being done by Landlord and its agents and employees, (ii)
that Tenant shall comply with any reasonable work schedule, rules and regulations imposed by
Landlord, its agents and employees, (iii) that the labor employed by Tenant shall be harmonious and
compatible with the labor employed by Landlord in the Building, it being agreed that if in
Landlord’s judgment the labor is incompatible Tenant shall forthwith upon Landlord’s demand
withdraw such labor from the Premises, (iv) that Tenant shall procure and deliver to Landlord
worker’s compensation, public liability, property damage and such other insurance policies, in such
amounts as shall be reasonably acceptable to Landlord in connection with Tenant’s Work, and shall
upon Landlord’s request cause Landlord to be named as an insured thereunder, (v) that Tenant shall
hold Landlord harmless from and against any costs Landlord may incur in connection with or as a
result of Tenant’s Work and all claims arising from or in connection with any act or omission of
Tenant or its agents or employees, (vi) that Tenant’s Work shall be performed in accordance with
the approved Tenant’s Plan and in compliance with the laws, orders, rules and regulations of any
governmental department or bureau having jurisdiction over the Premises, and (vii) that Tenant
shall promptly pay for Tenant’s Work in full and shall not permit any lien to attach to the
Premises or the Building. As a condition precedent to any such written consent of Landlord, Tenant
shall deliver to Landlord written and unconditional waivers of mechanics’ and materialmen’s liens
upon the Building for all work, labor and services to be performed and material to be furnished in
connection with the proposed alterations.
With respect to any changes or alterations that requires Landlord’s approval (with the exception of
the initial improvement of the Premises) Tenant shall pay to Landlord upon demand, as compensation
to Landlord for its services in overseeing the work performed pursuant to this Paragraph 8.1, and
regardless of whether the work is performed by Landlord’s or Tenant’s contractor, an administrative
fee equal to 5% of the first $100,000 of the cost of the work and 2.5% of the cost of the work in
excess of $100,000, calculated on a per project basis. In addition to the foregoing, with respect
to all changes or alterations, Tenant shall reimburse Landlord for all direct expenses actually
incurred in connection therewith, including but not limited to after hours access control,
additional janitorial, after hours engineering, etc.
8.2 All appurtenances, fixtures, improvements, additions and other property attached to or
installed in the Premises, whether by Landlord or by or on behalf of Tenant, and whether at
Landlord’s expense or Tenant’s expense, or at the joint expense of Landlord and Tenant, shall be
and remain the property of Landlord. Any trade fixtures, furnishings and personal property placed
in the Premises by Tenant, whether the properly of Tenant or leased by Tenant, are herein sometimes
called “Tenant’s Property.” Any replacements of any property of Landlord, whether made at Tenant’s
expense or otherwise, shall be and remain the property of Landlord.
8.3 Any of Tenant’s Property remaining on the Premises at the expiration of the Term shall be
removed by Tenant at Tenant’s cost and expense, and Tenant shall, at its cost and expense, repair
any damage to the Premises or the Building caused by such removal. Any of Tenant’s Property not
removed from the Premises prior to the expiration of the Term shall, at Landlord’s option, become
the property of Landlord or Landlord may remove such Tenant’s Property, and Tenant shall pay to
Landlord, Landlord’s cost of removal and of any repairs in connection therewith within ten (10)
days after the receipt of a bill therefor. Tenant’s obligation to pay any such costs shall survive
any termination of this Lease.
9. REPAIRS
9.1 Except to the extent Landlord is obligated to do so pursuant to Paragraph 9.2 hereof, Tenant
shall, when and if needed or whenever requested by Landlord to do so, at Tenant’s sole cost and
expense, maintain and make repairs to the Premises and every part thereof and keep, maintain and
preserve the Premises in first class condition and repair, normal wear and tear excepted. Any such
maintenance and repair shall be performed by
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Landlord’s contractor, or by such contractor or contractors as Tenant may choose from an approved
list to be submitted to Landlord following Tenant’s request. All costs and expenses incurred in
such maintenance and repair shall be paid by Tenant as Additional Rent within ten (10) days after
billing by Landlord or such contractor or contractors. Landlord shall not be liable for and, except
as provided in Article 14 hereof, there shall be no abatement of Rent with respect to any injury to
or interference with Tenant’s business arising from any repairs, maintenance, alteration or
improvement in or to any portion of the Building, including the Premises, or in or to the fixtures,
appurtenances and equipment therein. Tenant hereby waives and releases its right to make repairs at
Landlord’s expense under Sections 1941 and 1942 of the California Civil Code or under any similar
law, statute or ordinance now or hereafter in effect.
9.2 Notwithstanding anything contained in subparagraph 9.1 to the contrary, (except for Tenant’s
cabling wherever located, Tenant’s light fixtures, Tenant’s trade fixtures and other non-standard
Building items, supplemental HVAC units, and items within the inside perimeter of the Premises
which are below the ceiling tiles and above the slab; all of which shall be maintained by Tenant at
its sole cost and expense) Landlord shall replace, repair and maintain all aspects of the Building,
the Building structure, the Building plumbing, heating, ventilating, air-conditioning and
electrical systems installed or furnished by Landlord, and the common areas in a manner consistent
with other Class “A” office buildings in Long Beach, unless such maintenance or repairs are caused
in part or in whole by the act, neglect, fault or omission of any duty by Tenant, its agents,
servants, employees or invitees, in which case Landlord shall cause the necessary maintenance or
repair to be performed and Tenant shall pay to Landlord on demand as Additional Rent, the
reasonable cost of such maintenance and repairs.
9.3 All repairs and replacements made by or on behalf of Tenant or any person claiming through or
under Tenant shall be made and performed (a) at Tenant’s cost and expense and at such time and in
such manner as Landlord may designate, (b) by contractors or mechanics approved by Landlord, (c) so
that same shall be at least equal in quality, value, and utility to the original work or
installation, and (d) in accordance with the Rules and Regulations for the Building adopted by
Landlord from time to time and in accordance with all applicable laws and regulations of
governmental authorities having jurisdiction over the Premises. If Landlord gives Tenant notice of
the necessity of any repairs or replacements required to be made by Tenant under Articles 9.1 and
9.2 above and Tenant fails to commence diligently to effect the same within 10 days thereafter,
Landlord may proceed to make such repairs or replacements and the expenses incurred by Landlord in
connection therewith shall be due and payable from Tenant upon demand as Additional Rent; provided
that Landlord’s making any such repairs or replacements shall not be deemed a waiver of Tenant’s
default in failing to make the same.
10. LIENS
Tenant shall keep the Premises free from any liens arising out of any work performed, material
furnished or obligations incurred by or for Tenant or any person or entity claiming through or
under Tenant. In the event that Tenant shall not, within ten (10) days following the imposition of
any such lien, cause same to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other remedies provided herein and by law, the right but not the
obligation to cause same to be released by such means as it shall deem proper, including payment of
the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it
in connection therewith shall be considered Additional Rent and shall be payable to it by Tenant on
demand. Any such action by Landlord shall not in any event be deemed a waiver of Tenant’s default
with respect thereto. Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or that Landlord shall deem proper, for the
protection of Landlord, the Premises, the Building, and any other party having an interest therein,
from mechanics’ and materialmen’s liens, and Tenant shall give to Landlord at least ten (10)
business days’ prior notice of commencement of any construction on the Premises.
11. COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS
11.1 Tenant, at Tenant’s cost and expense, shall comply with all laws, orders and regulations of
federal, state, county and municipal authorities, and with all directions, pursuant to law, of all
public officers, that shall impose any duty upon Landlord or Tenant with respect to the Premises,
except that (i) Tenant shall not be required to make any structural Alterations in order to comply
unless such Alterations shall be necessitated or occasioned, in whole or in part, by the acts,
omissions or negligence of Tenant or any person claiming through or under Tenant, or
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any of their servants, employees, contractors, agents, visitors or licensees, by Tenant’s Work, or
by use or occupancy or manner of use of occupancy of the Premises by Tenant or any such person, and
(ii) Landlord shall keep and maintain the Premises elevator signage and controls as well as the
restrooms within the Premises in compliance with applicable laws pertaining to the disabled. All
costs incurred by Landlord in connection therewith shall be treated as an Expense to the extent
such costs comply with the requirements of Article 4 hereof. Any work or installations made or
performed by or on behalf of Tenant or any person claiming through or under Tenant pursuant to the
provisions of this Article 11 shall be made in conformity with, and subject to the provisions of,
Article 9 hereof.
11.2 Tenant shall not do anything, or permit anything to be done, in or about the Premises which
shall (a) invalidate or be in conflict with the provisions of any fire or other insurance policies
covering the Building or any property located therein, or (b) result in a refusal by fire insurance
companies of good standing to insure the Building or any such property in amounts reasonably
satisfactory to Landlord, or (c) subject Landlord to any liability or responsibility for injury to
any person or property by reason of any business operation being conducted in the Premises, or (d)
cause any increase in the fire insurance rates applicable to the Building or property located
therein at the beginning of the Term or at any time thereafter. Tenant, at Tenant’s expense, shall
comply with all rules, orders, regulations or requirements of the American Insurance Association
(formerly the National Board of Fire Underwriters) and with any similar body that shall hereafter
perform the function of such Association.
12. SUBORDINATION
Within 30 days following the full execution of this Lease, Landlord shall supply Tenant with a
non-disturbance agreement from the current mortgagee of the Building on the mortgagee’s standard
form, a copy of which is attached hereto as Exhibit E. In addition, as a condition to any future
subordination by Tenant, Landlord shall supply Tenant with a non-disturbance agreement from the
applicable mortgagee or lienholder containing substantially the same protections for Tenant as are
contained in the form attached as Exhibit E. Provided Landlord has complied with the aforesaid
condition, Tenant agrees to execute and return any requested subordination agreements within 14
business days of Landlord’s demand.
Provided Landlord has complied with its obligations under the foregoing paragraph, then, without
the necessity of any additional document being executed by Tenant for the purpose of effecting a
subordination, Tenant agrees that at Landlord’s option, this Lease and Tenant’s tenancy hereunder
are and shall be automatically subject and subordinate at all times to (a) all ground leases or
underlying leases that may now exist or hereafter be executed affecting the Building, (b) the lien
of any mortgage, deed or trust or similar security instrument that may now exist or hereafter be
executed in any amount for which the Building, ground leases or underlying leases, or Landlord’s
interest or estate in any of said items is specified as security, and (c) all renewals,
modifications, consolidations, replacements and extensions of any of the foregoing. Notwithstanding
the foregoing, upon 30 days prior written notice from Landlord to Tenant, Landlord shall have the
right to subordinate or cause to be subordinated any such ground leases or underlying leases or any
such liens to this Lease. In the event that any ground lease or underlying lease is terminated for
any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is
made for any reason, Tenant shall, notwithstanding any subordination of this Lease to any ground
lease, underlying lease or lien, attorn to and become the tenant of the successor in interest to
Landlord at the option of such successor in interest. Upon such attornment this Lease shall
continue in full force and effect as a direct Lease between the successor landlord and Tenant upon
all of the terms, conditions and covenants as are set forth in this Lease, except that, unless
otherwise agreed to in the applicable non-disturbance agreement, the successor landlord shall not
(a) be liable for any previous act or omission of Landlord; (b) be subject to any offset not
expressly provided for in this Lease, which theretofore shall have accrued to Tenant against
Landlord; or (c) be bound by any previous modification of this Lease or by any previous prepayment
of more than one month’s Monthly Base Rental or Additional Rent, unless such modification or
prepayment shall have been expressly approved in writing by the lessor of the superior lease or the
holder of the superior mortgage through or by reason of which the successor Landlord shall have
succeeded to the rights of Landlord under this Lease. Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any such ground leases or
underlying leases or the lien of any such mortgage or deed of trust. Notwithstanding anything in
this Lease to the contrary, Tenant’s Monthly Base Rental and Share of Increased Expenses shall not
increase by way of Landlord entering into a ground lease relating to the Building or land
underlying the Building.
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13. INABILITY TO PERFORM
If Landlord is unable to furnish or is delayed in furnishing any utility or service required to be
furnished by Landlord under the provisions of Article 17 or of any other Article of this Lease or
of any collateral instrument, or is unable to perform or make or is delayed in performing or making
any installations, decorations, repairs, alterations, additions or improvements, whether required
to be performed or made under this Lease or under any collateral instrument, or is unable to
fulfill or is delayed in fulfilling any of Landlord’s other obligations under this Lease or any
collateral instrument, no such inability or delay shall constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Monthly Base
Rental or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or
impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant
or by reason of injury to or interruption of Tenant’s business, or otherwise; provided, however if
such inability or occurrence renders the Premises unusable, was not the result of Tenant’s
negligent act or intentional misconduct, and is not remedied within 30 days from the date of the
inability or occurrence, Tenant’s Monthly Base Rental shall thereafter be abated to the extent and
for the period of time that the Premises continue to be unusable. Tenant hereby waives and releases
its right to terminate this Lease under Section 1932(1) of the California Civil Code or under any
similar law, statute or ordinance now or hereafter in effect.
14. DESTRUCTION
14.1 If the Premises shall be damaged by fire or other casualty insured against by Landlord’s fire
and extended coverage insurance policy covering the Building, Landlord, at Landlord’s expense,
shall repair such damage; provided, however, that Landlord shall have no obligation to repair any
damage to or to replace Tenant’s Property, Tenant’s Work or any other property or effects of
Tenant. Except as otherwise provided in this Article 14, if the entire Premises shall be rendered
untenantable by reason of any such damage, the Monthly Base Rental and Additional Rent shall abate
for the period from the date of such damage to the date when such damage to the Premises shall have
been repaired, and if only a part of the Premises shall be rendered untenantable, the Monthly Base
Rental and Additional Rent shall abate for such period in the proportion that the rentable area of
the part of the Premises so rendered untenantable bears to the total rentable area of the Premises;
provided, however, if, prior to the date when all of such damage shall have been repaired, any part
of the Premises so damaged shall be rendered tenantable or shall be used or occupied by Tenant or
any person or persons claiming through or under Tenant, then the amount by which the Monthly Base
Rental and Additional Rent shall abate shall be equitably apportioned for the period from the date
of any such use or occupancy to the date when all such damage shall have been repaired.
14.2 Notwithstanding the provisions of Article 14.1 hereof, if, prior to or during the Term (a) the
Premises shall be totally damaged or rendered wholly untenantable by fire or other casualty, and if
Landlord shall determine, in its sole discretion, not to restore the Premises, or (b) the Building
shall be so damaged by fire or other casualty that, in Landlord’s opinion, substantial alteration,
demolition or reconstruction of the Building shall be required (whether or not the Premises shall
have been damaged or rendered untenantable), then, in any of such events, Landlord, at Landlord’s
option, may give to Tenant, within ninety (90) days after such fire or other casualty, a thirty
(30) days’ notice of termination of this Lease and, in the event such notice is given, this Lease
and the Term shall terminate upon the expiration of such thirty (30) days with the same effect as
if the date of expiration of such thirty (30) days were the Expiration Date; and the Rent and
Additional Rent shall be apportioned as of such date and any prepaid portion of Rent or Additional
Rent for any period after such date shall be refunded by Landlord to Tenant.
14.3 Landlord shall attempt to obtain and maintain, throughout the Term, in Landlord’s property
insurance policies, provisions to the effect that such policies shall not be invalidated should the
insured waive, in writing, prior to loss, any or all right of recovery against any party for loss
occurring to the Building. In the event that at any time Landlord’s property insurance carriers
shall exact an additional premium for the inclusion of such or similar provisions, Landlord shall
give Tenant notice thereof. In such event, if Tenant agrees in writing to reimburse Landlord for
such additional premium for the remainder of the Term, Landlord shall require the inclusion of such
or similar provisions by Landlord’s property insurance carriers. Tenant and Landlord, as long as
such or similar provisions are included in Landlord’s property insurance policies then in force,
hereby waive any right of recovery against each other for any loss occasioned by fire or other
casualty that is covered by insurance. In the event that at
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any time Landlord’s property insurance carriers shall not include such or similar provisions in
Landlord’s property insurance policies, the waiver by Landlord, as set forth in the foregoing
sentence shall be deemed of no further force or effect.
14.4 Except to the extent expressly provided in Article 14.3 hereof, nothing contained in this
Lease shall relieve Tenant of any liability to Landlord or to its insurance carriers which Tenant
may have under law or under the provisions of this Lease in connection with any damage to the
Premises or the Building by fire or other casualty.
14.5 Notwithstanding the provisions of Article 14.1 hereof, if any such damage is due to the fault
or neglect of Tenant, any person claiming through or under Tenant, or any of their servants,
employees, agents, contractors, visitors or licensees, then there shall be no abatement of Monthly
Base Rental or Additional Rent by reason of such damage, and Tenant shall be liable to Landlord for
any insurance deductible payable in connection therewith, unless Landlord is reimbursed for such
abatement of Monthly Base Rental or Additional Rent or deductibles pursuant to any rental insurance
policies or other insurance policies that Landlord may, in its sole discretion, elect to carry.
14.6 The provisions of this Lease, including this Article 14, constitute an express agreement
between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any
part of the Premises or any other portion of the Building, and any statute or regulation of the
State of California, including, without limitations, Sections 1932(2) and 1933(4) of the California
Civil Code, with respect to any rights or obligations, concerning damage or destruction in the
absence of any express agreement between the parties, and any other statute or regulation, now or
hereafter in effect, shall have no application to this Lease or to any damage or destruction to all
or any part of the Premises or the Building.
14.7 Notwithstanding anything in this Lease to the contrary, in the event any such damage to the
Premises was not caused by Tenant’s negligence or intentional misconduct, and the repairs that
Landlord is required to make so as to render the Premises usable will not be substantially
completed within two hundred and seventy (270) days from the date the damage occurred, Tenant shall
have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord,
provided such notice is given to Landlord within 30 days from the date Tenant is informed by
Landlord in writing that such repairs will not be substantially completed within said 270 day
period.
15. EMINENT DOMAIN
15.1 If all of the Premises is condemned or taken in any manner for public or quasi-public use,
including but not limited to a conveyance or assignment in lieu of a condemnation or taking, this
Lease shall automatically terminate as of the earlier of the date of the vesting of title or the
date of dispossession of Tenant as a result of such condemnation or other taking. If a part of the
Premises is so condemned or taken, this Lease shall automatically terminate as to the portion of
the Premises so taken as of the earlier of the date of the vesting of title or the date of
dispossession of Tenant as a result of such condemnation or taking. If such portion of the Building
is condemned or otherwise taken so as to require, in the opinion of Landlord, a substantial
alteration or reconstruction of the remaining portions thereof, this Lease may be terminated by
Landlord, as of the earlier of the date of the vesting of title or the date of dispossession of
Tenant as a result of such condemnation or taking, by written notice to Tenant within sixty (60)
days following notice to Landlord of the date on which said vesting or dispossession will occur. If
such portion of the Premises is taken so as to render the remaining portion untenantable and
unusable by Tenant, or greater than 20% of the Premises is condemned and Landlord does not make
other reasonably comparable space available to Tenant at the same time Tenant’s right to use the
condemned portion of the Premises is lost, this Lease may be terminated by Tenant as of the earlier
of the date of the vesting of title or the date of dispossession of Tenant as a result of such
condemnation or taking, by written notice to Landlord within sixty (60) days following notice to
Tenant of the date on which said vesting or dispossession will occur.
15.2 Landlord shall be entitled to the entire award in any condemnation proceeding or other
proceeding for taking for public or quasi-public use, including, without limitation, any award made
for the value of the leasehold estate created by this Lease; provided, however any bonus value
attributable to the leasehold estate created hereby shall be divided equally between Landlord and
Tenant. No award for any partial or entire taking shall be
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apportioned, and Tenant hereby assigns to Landlord any award that may be made in such condemnation
or other taking, together with any and all rights of Tenant now or hereafter arising in or to same
or any part thereof; provided, however, that nothing contained herein shall be deemed to give
Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant
specifically for its relocation expenses or the taking of personal property and fixtures belonging
to Tenant.
15.3 In the event of a partial condemnation or other taking that does not result in a termination
of this Lease as to the entire Premises, the Monthly Base Rental and Additional Rent shall abate in
proportion to the portion of the Premises taken by such condemnation or other taking.
15.4 If all or any portion of the Premises is condemned or otherwise taken for public or
quasi-public use for a limited period of time, this Lease shall remain in full force and effect and
Tenant shall continue to perform all of the terms, conditions and covenants of this Lease;
provided, however, the Monthly Base Rental and Additional Rent shall abate during such limited
period in proportion to the portion of the Premises that is rendered untenantable and unusable as a
result of such condemnation or other taking. Landlord shall be entitled to receive the entire award
made in connection with any such temporary condemnation or other taking.
16. ASSIGNMENT
16.1 Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign,
encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant’s
leasehold estate hereunder (collectively, “Assignment”), or permit the Premises or any portion
thereof to be occupied by anyone other than Tenant or sublet the Premises (collectively,
“Sublease”) without Landlord’s prior written consent in each instance, and which consent shall not
be unreasonably withheld or delayed; provided, however, Landlord shall have the right at its
option, to recapture and terminate this Lease with respect to (i) the entire Premises in the event
of a proposed Assignment of this Lease or (ii) any space Tenant is proposing to Sublease to an
existing tenant in the Building that Landlord has been negotiating to take additional space during
the prior six months, or (iii) any space Tenant is proposing to Sublease if Tenant’s occupancy in
the Building will be less than 49,000 rentable square feet as a result of said Sublease.
16.2 Notwithstanding the foregoing, but provided that the subtenant or assignee is of good
character and business reputation, will use the Premises for a use permitted by this Lease, and
will not potentially overburden the Building facilities or require an increased level of services,
Tenant shall have the right to Assign this Lease or Sublease any portion of the Premises to (i)
Tenant’s parent company or any wholly-owned subsidiary thereof, (ii) any entity “doing business
with Tenant”, (iii) any entity controlled by (meaning more than a 25% ownership interest in such
entity) any controlling principals of Tenant (meaning principals with at least 25% ownership
interest in Tenant) or (iv) an entity acquiring all of Tenant’s assets and business; provided in
(i), (iii) and (iv) above that the acquiring entity’s net worth is equal to or greater than Tenant
as of the Commencement Date, and provided that (ii) above shall only apply to Subleases which in
the aggregate, at any one time, cover less than 20% of the Premises (collectively, “Affiliate”) by
notifying Landlord in writing at least 30 days in advance thereof, but without having to obtain
Landlord’s prior written consent thereto. For purposes of this paragraph, the term entity “doing
business with Tenant” shall mean: (i) Tenant has entered into a significant business relationship
with the entity; (ii) Tenant has delivered to Landlord a copy of the written documentation
illustrating the significant business relationship with the entity; and (iii) Landlord has been
given the opportunity to meet with Tenant and the entity to fully understand the extent of the
business relationship between Tenant and the entity. In the event the significant business
relationship is terminated or expires, such entity shall be deemed a Sublessee or Assignee, as
appropriate, and shall be required to vacate the Premises or be subject to Landlord’s right to
consent thereto in accordance with the Section 16.3 below. Any such transfer shall not be deemed an
Assignment or Sublease for purposes of this Lease so long as the “Affiliate” relationship between
the two entities continues. Any profits attributable to a transfer to an Affiliate shall be
retained by Tenant.
16.3 If Tenant desires at any time to enter into an Assignment of this Lease or a Sublease of the
Premises or any portion thereof, it shall first give written notice to Landlord of its desire to do
so, which notice shall contain (a) the name of the proposed assignee or subtenant, (b) the nature
of the proposed assignee’s or subtenant’s business to be carried on in the Premises, (c) the
portion(s) (including all) of the Premises to be subject to such
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Assignment or Sublease and the other terms and conditions of the proposed Assignment or Sublease,
and (d) such financial information as Landlord may reasonably request concerning the proposed
assignee or subtenant. Each such notice shall be given to Landlord together with a non-refundable
deposit of One Thousand Dollars ($1,000) as reasonable consideration for Landlord’s considering and
processing the request for consent.
16.4 Landlord shall not be obligated to consent to any proposed Assignment or Sublease if it has
reasonable objections thereto, including but not limited to if the subtenant or assignee does not
meet Landlord’s financial requirements, or if the subtenant or assignee is not of good character
and business reputation, will use the Premises for a use not permitted by this Lease, or will
potentially overburden the Building facilities or require an increased level of services. In
addition, Tenant shall not be permitted to Sublease any portion of the Premises or Assign this
Lease to any then existing tenant of the Building or to any other party which Landlord has been in
active lease negotiations during the prior six months.
16.5 At any time within fifteen (15) days after Landlord’s receipt of the notice specified in
Article 16.3 hereof, Landlord shall by written notice to Tenant elect either to (a) consent to the
Sublease or Assignment, or (b) disapprove the Sublease or Assignment with reasonable basis
therefor, or (c) recapture the space or Premises if permitted to do so as set forth above. If
Landlord consents to the Sublease or Assignment, Tenant may thereafter within ninety (90) days
after Landlord’s consent, but not later than the expiration of said ninety (90) days, enter into
such Assignment or Sublease of the Premises or portion thereof, upon the terms and conditions set
forth in the notice furnished by Tenant to Landlord pursuant to Article 16.3 hereof.
16.6 No consent by Landlord to any Assignment or Sublease by Tenant shall relieve Tenant of any
obligation to be performed by Tenant under this Lease, whether arising before or after the
Assignment or Sublease. The consent by Landlord to any Assignment or Sublease shall not relieve
Tenant from the obligation to obtain Landlord’s express written consent to any other Assignment or
Sublease. Any Assignment or Sublease that is not in compliance with this Article 16 shall be void
and, at the option of Landlord, shall constitute a material default by Tenant under this Lease. The
acceptance of Rent or Additional Rent by Landlord from a proposed assignee or sublessee shall not
constitute the consent to such Assignment or Sublease by Landlord.
16.7 Each assignee, sublessee, or other transferee, other than Landlord, shall assume, as provided
in this Article 16.7, all obligations of Tenant under this Lease and shall be and remain liable
jointly and severally with Tenant for the payment of Monthly Base Rental and Additional Rent, and
for the performance of all the terms, covenants, conditions and agreements herein contained on
Tenant’s part to be performed for the Term; provided, however, that the assignee, subleases,
mortgagee, pledges or other transferee shall be liable to Landlord for Monthly Base rental and
Additional Rent only in the amount set forth in the Assignment or Sublease. No Assignment shall be
binding on Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart of the
Assignment and an instrument in recordable form that contains a covenant of assumption by the
assignee satisfactory in substance and form to Landlord, consistent with the requirements of this
Article 16.7, but the failure or refusal of the assignee to execute such instrument of assumption
shall not release or discharge the assignee from its liability as set forth above.
16.8 Any net profits attributable to any Assignment or Sublease shall be shared equally by Tenant
and Landlord. Net profits shall be determined by subtracting from the rent and other consideration
to be paid by the subtenant or assignee, the Monthly Base Rental and Additional Rent due to
Landlord for the applicable period; provided however that Tenant shall be entitled to
reimbursement, out of such net profits, for any reasonable amount expended by Tenant for subleasing
brokers commissions, abated rent, and costs of demising or otherwise improving the space for the
particular subtenant or assignee.
16.9 In no event shall this Lease be assigned or assignable by operation of law or by voluntary or
involuntary bankruptcy proceedings or otherwise, and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, reorganization or
other debtor relief proceedings.
17. UTILITIES
17.1 Tenant shall have access to and use of the Premises (including Building elevator usage, access
to the parking garage, and use of electricity and water) 365 days per year, 24 hours per day,
subject to Articles 17.2,
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17.3 and 17.4 hereof. Landlord shall furnish to the Premises during the period from 8:00 a.m. to
6:00 p.m., Monday through Friday, except for New Year’s Day, Washington’s Birthday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, Christmas and such other holidays as are generally
recognized in the area where the Building is located, and subject to reasonable rules and
regulations from time to time established by Landlord, heating, air conditioning and ventilation in
amounts required, in Landlord’s reasonable judgment, for the use and occupancy of the Premises.
Heating, air conditioning and ventilation shall also be provided in accordance with Building
procedures from 8:00 a.m. to 12:00 noon on Saturdays, holidays excepted. Landlord shall also
provide janitorial service five days per week (excluding holidays) generally consistent with that
furnished in other first-class office buildings in the area in which the Building is located, and
window washing as determined by Landlord. Anything contained herein to the contrary
notwithstanding, Tenant shall not permit the electrical current for the lighting devices located
upon the Premises, including, without limitation, building standard lighting fixtures, non-building
standard lighting fixtures and task lighting, to at any time exceed an average of 2.2 watts per
Gross Square Foot of Conditioned Floor Area (as said term is defined in the California
Administrative Code, Title 24, Part 6, Division T-20, Chapter 2, Subchapter 4) of the Premises, or
such higher amount as is generally permitted in first class office buildings in Long Beach.
17.2 Landlord may impose a reasonable charge and establish reasonable rules and regulations
consistent with first class office buildings in Long Beach for the use of any heating, air
conditioning, ventilation or electric current by Tenant at any time other than during the hours set
forth in Article 17.1, and for the usage of any additional or unusual janitorial services required
because of any non-building standard improvements in the Premises, the carelessness of Tenant, the
nature of Tenant’s business and the removal of any refuse and rubbish from the Premises except for
discarded material placed in wastepaper baskets and left for emptying as an incident to Landlord’s
normal cleaning of the Premises. To the extent Landlord incurs additional janitorial costs,
Landlord shall not be required to provide janitorial services for portions of the Premises used for
preparing or consuming food or beverages, for storage, as a mail room or as a lavatory other than
the lavatory rooms shown on Exhibit A attached hereto.
17.3 Landlord shall not be liable for any interruption in or failure to furnish any services or
utilities when such interruption or failure is caused by acts of God, accidents, breakage, repairs,
strikes, lockouts, other labor disputes, the making of repairs, alterations or improvements to the
Premises or the Building, the inability to obtain an adequate supply of fuel, steam, water,
electricity, labor or other supplies or by any other condition beyond Landlord’s reasonable
control, including, without limitation, any governmental energy conservation program, and Tenant
shall not be entitled to any damages resulting from such failure nor shall such failure relieve
Tenant of the obligation to pay the full Monthly Base Rental and Additional Rent reserved
hereunder, except as otherwise provided in Article 13, or constitute or be construed as a
constructive or other eviction of Tenant. In the event any governmental entity promulgates or
revises any statute, ordinance or building, fire or other code or imposes mandatory or voluntary
controls or guidelines on Landlord or the Building or any part thereof, relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of automobile or other
emissions or the provision of any other utility or service provided with respect to this Lease or
in the event Landlord is required or elects to make alterations to any part of the Building in
order to comply with such mandatory or voluntary controls or guidelines, Landlord may, in its sole
discretion, comply with such mandatory or voluntary controls or guidelines or make such alterations
to the Building. Such compliance and the making of such alterations shall in no event entitle
Tenant to any damages, relieve Tenant of the obligation to pay the full Monthly Base Rental and
Additional Rent reserved hereunder or constitute or be construed as a constructive or other
eviction of Tenant.
17.4 If Tenant shall consumes electricity in excess of that typically consumed by normal office
usage, Landlord shall have the right to install an electric current meter in the Premises to
measure the amount of electric current consumed on the Premises. The cost of any such meter and
separate conduit, wiring or panel requirements and the installation, maintenance and repair thereof
shall be paid for by Tenant and Tenant agrees to reimburse Landlord promptly upon demand therefor
by Landlord for all such excess electric current as shown by said meter, at the rates charged for
such services by the city in which the Building is located or the local public utility furnishing
the same, plus any additional expense incurred in keeping the account of the electric current so
consumed. If the temperature otherwise maintained in any portion of the Premises by the heating,
air conditioning or ventilation systems is affected as a result of (a) any lights, machines or
equipment (including without limitation electronic data processing machines) used by Tenant in the
Premises, (b) the occupancy of the Premises by more than one person per one hundred seventy-five
(175) square feet of rentable area therein, or (c) an electrical load in excess of three (3)
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watts per square foot of rentable area of the Premises, Landlord shall have the right to install
any machinery and equipment that Landlord reasonably deems necessary to restore temperature
balance, including, without limitation, modifications to the standard air conditioning equipment,
and the cost thereof, including the cost of installation (including design and engineering) and any
additional cost of operation and maintenance incurred thereby, shall be paid by Tenant to Landlord
as Additional Rent hereunder upon demand by Landlord.
17.5 Tenant shall also be separately billed for all electricity and other utilities consumed by
non-Building Standard HVAC equipment, which usage shall be metered by submeters installed at
Tenant’s sole cost and expense.
18. DEFAULT
18.1 The occurrence of any of the following shall constitute an event of default on the part of
Tenant:
(a) Failure to pay any installment of Monthly Base Rental or Additional Rent when due and payable
hereunder; such failure continuing for three (3) days after written notice of such failure;
(b) Failure to perform any obligations, agreements or covenants under this Lease other than those
matters specified in subparagraph (a) of this Article 18.1, such failure continuing for five (5)
days after written notice of such failure or such longer period as may be reasonably necessary to
cure such failure;
(c) Abandonment (without payment of Rent) of the Premises for a continuous period in excess of five
(5) business days. Tenant waives any right to notice Tenant may have under Section 1951.3 of the
Civil Code of the State of California, the terms of this subparagraph (c) being deemed such notice
to Tenant as required by said Section 1951.3;
(d) A general assignment by Tenant for the benefit of creditors;
(e) The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary
petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of ten
(10) business days;
(f) The employment of a receiver to take possession of substantially all of Tenant’s assets or the
Premises, if such receivership remains undissolved for a period often (10) business days after
creation thereof;
(g) The attachment, execution or other judicial seizure of all or substantially all of Tenant’s
assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for
a period of ten (10) business days after the levy thereof; and
(h) The admission by Tenant in writing of its inability to pay its debts as they become due, the
filing by Tenant of a petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute, law or regulation,
the filing by Tenant of any answer admitting or failing timely to contest a material allegation of
a petition filed against Tenant in any such proceeding or, if within ten (10) days after the
commencement of any proceeding against Tenant seeking any reorganization, or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any present or future
statute, law or regulation, such proceeding shall not have been dismissed.
18.2 Upon the occurrence of any event of default by Tenant which is not cured by Tenant within the
grace periods specified in Article 18.1 hereof, Landlord shall have the following rights and
remedies in addition to all other rights or remedies available to Landlord in law or equity:
(a) The rights and remedies provided by California Civil Code Section 1951.2, including but not
limited to the right to terminate Tenant’s right to possession of the Premises and to recover the
worth at the time of award of the amount by which the unpaid Monthly Base Rental and Additional
Rent for the balance of the Term after the time of award exceeds the amount of rental loss for the
same period that the Tenant proves could be
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reasonably avoided. The “worth at the time of award” of the amounts referred to in Paragraphs (1)
and (2) of subdivision (a) of Section 1951.2 shall be computed by allowing interest at the maximum
lawful rate. The “worth at the time of award” of the amount referred to in Paragraph (3) of
subdivision (a) of Section 1951.2 shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%);
(b) The rights and remedies provided by California Civil Code Section 1951.4, that allows Landlord
to continue this Lease in effect and to enforce all of its rights and remedies under this Lease,
including the right to recover Monthly Base Rental and Additional Rent as they become due, for so
long as Landlord does not terminate Tenant’s right to possession; provided, however, if Landlord
elects to exercise its remedies described in this subsection (b) and Landlord does not terminate
this Lease, and if Tenant requests Landlord’s consent to an Assignment of this Lease or a Sublease
of the Premises at such time as Tenant is in default, Landlord shall not unreasonably withhold its
consent to such assignment or sublease. Acts of maintenance or preservation, efforts to relet the
Premises or the appointment of a receiver upon the Landlord’s initiative to protect its interest
under this Lease shall not constitute a termination of Tenant’s right to possession;
(c) The right to terminate this Lease by giving notice to Tenant in accordance with applicable law;
(d) The right and power, as attorney-in-fact for Tenant, to enter the Premises and remove therefrom
all persons and property, to store such property in a public warehouse or elsewhere at the cost of
and for the account of Tenant, and to sell such property and apply the proceeds therefrom pursuant
to applicable California law. Landlord, as attorney-in-fact for Tenant, may from time to time
sublet the Premises or any part thereof for such term or terms (which may extend beyond the Term)
and at such rent and at such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each such subletting, (i)
Tenant shall be immediately liable for payment to Landlord of, in addition to indebtedness other
than Monthly Base rental and Additional Rent due hereunder, the cost of such subletting and such
alterations and repairs incurred by Landlord in the amount, if any, by which the Monthly Base
Rental and Additional Rent for the period of such subletting (to the extent such period does not
exceed the Term) exceeds the amount to be paid as Monthly Base Rental and Additional Rent for the
Premises for such period, or (ii) at the option of Landlord, rents received from such subletting
shall be applied, first, to payment of any indebtedness other than Monthly Base Rental and
Additional Rent due hereunder from Tenant to Landlord; second, to the payment of any costs of such
subletting and of such alterations and repairs; third, to payment of Monthly Base Rental and
Additional Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Monthly Base Rental and Additional Rent as the same become due
hereunder. If Tenant has been credited with any rent to be received by such subletting under clause
(i) and such rent shall not be promptly paid to Landlord by the subtenant(s), or if such rentals
received from such subletting under clause (ii) during any month are less than those to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. For all purposes set forth in this Article
18.2(d), Landlord is hereby irrevocably appointed attorney-in-fact for Tenant, with power of
substitution. No taking possession of the Premises by Landlord, as attorney-in-fact for Tenant,
shall be construed as an election on its part to terminate this Lease unless a written notice of
such intention is given to Tenant. Notwithstanding any such subletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for such previous breach;
(e) The right to have a receiver appointed for Tenant, upon application by Landlord, to take
possession of the Premises and to apply any rental collected from the Premises and to exercise all
other rights and remedies granted to Landlord as attorney-in-fact for Tenant pursuant to Article
18.2(d) hereof; and
(f) The right, without notice, to remedy default for Tenant’s account and at Tenant’s expense,
without thereby waiving any other rights or remedies of Landlord with respect to such default.
19. INDEMNITY
19.1 Tenant agrees to indemnify, defend and hold Landlord harmless from any and all loss, cost,
liability, damage and expense including, without limitation, penalties, fines and reasonable
counsel fees, incurred in
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connection with or arising from any act or omission of Tenant in or about the Premises, including,
without limiting the generality of the foregoing, (a) any default by Tenant in the observance or
performance of any of the items, covenants or conditions of this Lease on Tenant’s part to be
observed or performed, or (b) the use or occupancy or manner of use or occupancy of the Premises by
Tenant or any person claiming through or under Tenant, or (c) the condition of the Premises for
which Tenant is responsible or any occurrence or happening on the Premises, or (d) any acts,
omissions or negligence of Tenant or any person claiming through or under Tenant, or of the
contractors, agents, servants, employees, visitors or licensees of Tenant or any such person, in or
about the Premises or the Building, either prior to, during, or after the expiration of, the Term
including, without limitation, any acts, omissions or negligence in the making or performing of any
alterations.
19.2 Tenant further agrees that Tenant shall not cause or permit any Hazardous Materials, as
hereinafter defined, to be brought upon, kept or used in or about the Premises by Tenant, its
agents, employees, contractors or invitees. If Tenant breaches the obligations stated in the
preceding sentence, then Tenant shall indemnify, defend and hold Landlord harmless from and against
any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including,
without limitation, diminution in value of the Premises and the Building generally, damages for the
loss or restriction on use of space or of any amenity of the Building generally, damages from any
adverse impact on marketing of space in the Building, and sums paid in settlement of claims,
reasonable attorneys’ fees, reasonable consultant fees and reasonable expert fees) which arise
during or after the Term as a result of such breach. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any investigation of site
conditions and any cleanup, remedial, removal or restoration work required by any governmental
authority because of Hazardous Material present in the soil or ground water or under the Premises
or the Building generally. As used herein (i) “Environmental Laws” means the Clean Air Act, the
Resource Conservation Recovery Act of 1976, the Hazardous Material Transportation Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Occupational Safety and Health
Act, the Consumer Product Safety Act, the Clean Water Act, the Federal Water Pollution Control Act,
the National Environmental Policy Act, as each of the foregoing shall be amended from time to time,
and any similar or successor laws, federal, state or local, or any rules or regulations promulgated
thereunder; and (ii) “Hazardous Materials” means and includes asbestos, oil, petroleum products and
their by-products; hazardous substances; hazardous wastes and toxic substances, as those terms are
used in Environmental Laws; or any substances or materials listed as hazardous or toxic by the
United States Department of Transportation, or by the Environmental Protection Agency or any
successor agency under any Environmental Laws but excluding immaterial quantities of substances
customarily and prudently used in the normal course of general office use, so long as any such use
is lawful and not otherwise disturbing to the use and enjoyment of the Building by other tenants.
20. TENANT’S INSURANCE
Tenant shall procure at its sole cost and expense and keep in effect from the date of this Lease
until the end of the Term, Commercial General Liability insurance applying to the use and occupancy
of the Premises or the Building, or any part of either, or any areas adjacent thereto, and the
business operated by Tenant, or any other occupant, on the Premises. Such insurance shall include
Broad Form Contractual liability insurance coverage insuring all of Tenant’s indemnity obligations
under this Lease. Such coverage shall have a minimum combined single limit of liability of at least
Two Million Dollars ($2,000,000.00), and a general aggregate limit of liability of at least Five
Million Dollars ($5,000,000.00). All such policies shall be written to apply to all bodily injury,
property damage, personal injury and other covered losses, however occasioned, occurring during the
policy term, shall be endorsed to add Landlord as an additional insured, to provide that such
coverage shall be primary and that any insurance maintained by Landlord shall be excess insurance
only. Such coverage shall also contain endorsements: (i) deleting any employee exclusion on
personal injury coverage; (ii) including employees as additional insureds; (iii) deleting any
liquor liability exclusion; (iv) providing coverage for fire legal liability in an amount of not
less than $300,000; and (v) providing for coverage of employer’s automobile non-ownership
liability. All such insurance shall provide for severability of interests; shall provide that an
act or omission of one of the named insureds shall not reduce or avoid coverage for all claims
based on acts, omissions, injury and damage, which claims occurred or arose (or the onset of which
occurred or arose) in whole or in part during the policy period. Tenant shall also maintain (i)
Workers’ Compensation insurance in accordance with California law, (ii) employers liability
insurance with a limit no less than $1,000,000 per employee and $1,000,000 per occurrence, and
(iii) replacement cost fire and extended
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coverage insurance, with vandalism and malicious mischief, sprinkler leakage and earthquake
sprinkler leakage endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Tenant’s personal property,
fixtures, equipment and tenant improvements. All coverages described in this Section shall be
endorsed to waive the insurer’s right of subrogation against Landlord and to provide Landlord with
30 days’ notice of cancellation or change in terms, and with 10 day’s notice of cancellation for
non-payment of premium. If at any time during the Term, the amount or coverage of insurance which
Tenant is required to carry under this Section is, in Landlord’s reasonable judgment, materially
less than the amount or type of insurance coverage typically carried by owners or lessees of
properties located in Los Angeles/Long Beach, California, which are similar to and operated for
similar purposes as the Building, Landlord shall have the right to require Tenant to increase the
amount or change the types of insurance coverage required under this Section.
All insurance policies required to be carried under this Lease shall (i) be written by companies
rated A-VII or better in “Best’s Insurance Guide” and authorized to do business in California, and
(ii) name any parties designated by Landlord as additional insureds. Tenant shall deliver to
Landlord on or before the Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies, certified copies of its insurance policies, or a certificate
evidencing the same issued by the insurer thereunder, showing that all premiums have been paid for
the full policy period; and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates, Landlord may, at its option and in addition to Landlord’s
other remedies in the event of a default by Tenant hereunder, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord upon demand as Additional Rent.
21. LIMITATION OF LANDLORD’S LIABILITY
Unless caused by the gross negligence or intentional misconduct of Landlord, Landlord shall not be
responsible for or liable to Tenant for any loss or damage that may be occasioned by or through the
acts or omissions of persons occupying adjoining premises or any part of the Building or for any
loss or damage resulting to Tenant or its property from burst, stopped or leaking water, gas, sewer
or steam pipes or for any damage or loss of property within the Premises from any causes
whatsoever, including theft.
22. ACCESS TO PREMISES
Landlord reserves and shall have the right to enter the Premises at all reasonable times to supply
any service to be provided by Landlord to Tenant hereunder, or in the event of an emergency. In
addition, upon 24 hours notice and subject to Tenant’s representative having the right to be
present, Landlord shall have the right to enter the Premises to show the Premises to prospective
purchasers, mortgagees or tenants, to post notices of non-responsibility, to inspect the same and
to alter, improve or repair the Premises and any portion of the Building, without abatement of Rent
or Additional Rent, and may for that purpose erect, use and maintain scaffolding, pipes, conduits
and other necessary structures in and through the Premises where reasonably required by the
character of the work to be performed, provided that the entrance to the Premises shall not be
blocked thereby, and further provided that the business of Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages for any injury or inconvenience to or
interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises or
any other loss occasioned thereby, for each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant’s vaults and safes, or special security areas (designated in advance), and
Landlord shall have the right to use any and all means that Landlord may deem necessary or proper
to open said doors in an emergency. In order to obtain entry to any portion of the Premises, and
any entry to the Premises or portions thereof obtained by Landlord by any of said means, or
otherwise, shall not under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from
the Premises or any portion thereof. Landlord shall also have the right at any time, without same
constituting an actual or constructive eviction and without incurring any liability to Tenant
therefor, to change the arrangement and/or location of entrances or passageways, doors and
doorways, and corridors, elevators, stairs, toilets and other public parts of the Building.
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23. NOTICES
Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands,
requests or other communications given or required to be given under this Lease shall be effective
only if rendered or given in writing, sent by registered or certified mail or delivered personally,
(or if given by Landlord, by regular first-class U.S. mail) (a) to Tenant (i) at Tenant’s address
set forth in the Basic Lease Information, if sent prior to Tenant’s taking possession of the
Premises, or (ii) at the Building if sent subsequent to Tenant’s taking possession of the Premises,
or (iii) at any place where Tenant or any agent or employee of Tenant may be found if sent
subsequent to Tenant’s vacating, deserting, abandoning or surrendering the Premises, or (b) to
Landlord at Landlord’s address set forth in the Basic Lease Information, or (c) to such other
address as either Landlord or Tenant may designate as its new address for such purpose by notice
given to the other in accordance with the provisions of this Article 23. Any such bill, statement,
notice, demand, request or other communication shall be deemed to have been rendered or given two
(2) days after the date when it shall have been mailed as provided in this Article 23 or upon the
date personal delivery is made. If Tenant is notified of the identity and address of Landlord’s
mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or ground or
underlying lessor notice of any default by Landlord under the terms of this Lease in writing sent
by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a
reasonable opportunity to cure such default prior to Tenant exercising any remedy available to it.
24. NO WAIVER
No failure by Landlord to insist upon the strict performance of any obligation of Tenant under this
Lease or to exercise any right, power or remedy consequent upon a breach thereof, no acceptance of
full or partial Monthly Base Rental or Additional Rent during the continuance of any such breach,
and no acceptance of the keys to or possession of the Premises prior to the termination of the Term
by any employee of Landlord shall constitute a waiver of any such breach or of such term, covenant
or condition or operate as a surrender of this Lease. No payment by Tenant or receipt by Landlord
of a lesser amount than the aggregate of all Monthly Base Rental and Additional Rent then due under
this Lease shall be deemed to be other than on account of the first items of such Monthly Base
Rental and Additional Rent then accruing or becoming due, unless Landlord elects otherwise; and no
endorsement or statement on any check and no letter accompanying any check or other payment of
Monthly Base Rental or Additional Rent in any such lesser amount and no acceptance of any such
check or other such payment by Landlord shall constitute an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord’s right to recover the balance of
such Monthly Base Rental or Additional Rent or to pursue any other legal remedy.
25. CERTIFICATES
Tenant, at any time and from time to time, within ten (10) days from receipt of written notice from
Landlord, shall execute, acknowledge and deliver to Landlord and, at Landlord’s request, to any
prospective purchaser, ground or underlying lessor or mortgagee of any part of the Building, a
certificate of Tenant stating: (a that Tenant has accepted the Premises (or, it Tenant has not done
so, that Tenant has not accepted the Premises and specifying the reasons therefor), (b) the
Commencement and Expiration Dates of this Lease, (c) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that same is in full force and effect as
modified and stating the modifications), (d) whether or not there are then existing any defenses
against the enforcement of any of the obligations of Tenant under this Lease (and, if so,
specifying same), (e) whether or not there are then existing any defaults by Landlord in the
performance of its obligations under this Lease (and, if so, specifying same), (f) the dates, if
any, to which the Monthly Base Rental and Additional Rent and other charges under this Lease have
been paid, and (g) any other information that may reasonably be required by any of such persons. It
is intended that any such certificate of Tenant delivered pursuant to this Article 25 may be relied
upon by Landlord and any prospective purchaser, ground or underlying lessor or mortgagee of any
part of the Building.
At Tenant’s request, and within the same time period specified above, Landlord shall execute and
deliver to Tenant a certificate of Landlord, confirming such matters with respect to this Lease as
may be reasonably requested by Tenant.
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26. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the rules and regulations attached to this Lease as
Exhibit C and all modifications thereof and additions thereto from time to time put into effect by
Landlord. Landlord shall not be responsible for the nonperformance by any other tenant or occupant
of the Building of any said rules and regulations. In the event of an express and direct conflict
between the terms, covenants, agreements and conditions of this Lease and the terms, covenants,
agreements and conditions of such rules and regulations, as modified and amended from time to time
by Landlord, this Lease shall control.
27. TAX ON TENANT’S PERSONAL PROPERTY AND BUILDING NON-STANDARD WORK
27.1 At least ten (10) days’ prior to delinquency, Tenant shall pay all taxes levied or assessed
upon Tenant’s equipment, furniture, fixtures and other personal property located in or about the
Premises. If the assessed value of Landlord’s property is increased by the inclusion therein of a
value placed upon Tenant’s equipment, furniture, fixtures or other personal property, Tenant shall
pay to Landlord, upon written demand, the taxes so levied against Landlord, or the portion thereof
resulting from said increase in assessment.
27.2 Tenant shall pay to Landlord, upon written demand, such portion of all real estate taxes
levied or assessed against Landlord that are attributable to the value of the tenant improvements
placed in the Premises in excess of the value of the Building Standard Work for the Premises. If
the assessing authority allocated a specific value to said Building Non-Standard Work, the amount
payable by Tenant shall be the tax attributable to such specific value. If the assessing authority
does not allocate a specific value to said Building Non-Standard Work, the amount payable by Tenant
pursuant to this Article 27.2 shall be an amount equal to the total tax assessed against
improvements that include said Tenant improvements multiplied by a fraction, the numerator of which
is the cost of said Building Non-Standard Work in excess of the cost of the Building Standard Work
for the Premises and the denominator of which is the total cost of the improvements covered by
assessment.
27.3 The portion of real estate taxes payable by Tenant pursuant to Article 27.1 and 27.2 hereof
and by other tenants of the Building pursuant to similar provisions in their leases shall be
excluded from Real Estate Taxes for purposes of computing the Additional Rent to be paid under
Article 4 hereof.
28. SECURITY DEPOSIT
Upon the full execution of this Lease, no security deposit shall be required of Tenant. However, in
the event (i) Tenant ever becomes more than 30 days delinquent in the payment of Monthly Base
Rental or Additional Rent or (ii) Tenant’s annual “net income”, as shown on any annual audited
financial statement of Tenant, is less than $9,500,000.00, or (iii) Tenant’s ratio of “current
assets” to “current liabilities”, as shown on any annual audited financial statement of Tenant, is
less than 1.3:1, Tenant shall deliver to Landlord within 5 days of Landlord’s request, a cash
amount equal to 2 month’s Monthly Base Rental then payable hereunder, to be held by Landlord as
security for the faithful performance of all terms, covenants and conditions of this Lease. The
amount of any security deposit delivered to Landlord shall be increased from time to time so as to
always equal 2 month’s Monthly Base Rental. In connection therewith, Tenant shall deliver to
Landlord, within 30 days of the close of each year, Tenant’s annual financial statements prepared
by Tenant’s independent accounting firm, certified as true and correct by Tenant’s Chief Financial
Officer, and disclosing Tenant’s current financial condition and “net worth”.
Tenant shall also pay such reasonable additional security deposit that Landlord may require for the
issuance of each “key card” Landlord may issue to Tenant.
Tenant agrees that Landlord may, without waiving any of Landlord’s other rights and remedies under
this Lease upon the occurrence of any of the events of default described in Article 18 hereof,
apply the security deposit to remedy any failure by Tenant to pay Monthly Base Rental or Additional
Rent, to repair or maintain the Premises, or to perform any other terms, covenants or conditions
contained herein. If Tenant has kept and performed all terms, covenants and conditions of this
Lease during the Term, Landlord will within thirty (30) days following the termination hereof
return said sum to Tenant or the last permitted assignee of Tenant’s interest hereunder at the
expiration of the Term. Should Landlord use any portion of the security deposit to cure any default
by Tenant hereunder, Tenant shall forthwith upon demand replenish the security deposit to the
original amount. Landlord shall
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not be required to keep the security deposit separate from its general funds, and Tenant shall not
be entitled to interest on any such security deposit.
29. AUTHORITY
If Tenant signs as a corporation or a partnership, each of the persons executing this Lease on
behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing
entity, that Tenant has and is qualified to do business in California, that Tenant has full right
and authority to enter into this Lease, and that each and both of the persons signing on behalf of
Tenant are authorized to do so. Upon Landlord’s request, Tenant shall provide Landlord with
evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties.
30. MISCELLANEOUS
30.1 The words “Landlord” and “Tenant” as used herein shall include the plural as well as the
singular. The words used in the neuter gender include the masculine and feminine. If there is more
than one person or entity comprising Tenant, the obligations under this Lease imposed on Tenant
shall be joint and several. The captions preceding the articles of this Lease have been inserted
solely as a matter of convenience and such captions in no way define or limit the scope or intent
of any provision of this Lease.
30.2 The terms, covenants and conditions contained in this Lease shall bind and inure to the
benefit of Landlord and Tenant and, except as otherwise provided herein, their respective personal
representatives and successors and assigns; provided, however, upon the sale, assignment or
transfer by the Landlord named herein (or by any subsequent landlord) of its interest in the
Building, including any transfer by operation of law, the Landlord (or subsequent landlord) shall
be relieved from all subsequent obligations or liabilities under this Lease, and all obligations
subsequent to such sale, assignment or transfer (but not any obligations or liabilities that have
accrued prior to the date of such sale, assignment or transfer) shall be binding upon the grantee,
assignee or other transferee, who, by accepting such interest, shall be deemed to have assumed such
subsequent obligations and liabilities.
30.3 If any provision of this Lease or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such
provision to persons or circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby, and each provision of this Lease shall be valid and enforceable to
the fullest extent permitted by law.
30.4 This Lease shall be construed and enforced in accordance with the laws of the State of
California.
30.5 Submission of this instrument for examination or signature by Tenant does not constitute a
reservation of or an option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
30.6 This instrument, including the Exhibits hereto, which are made a part of this Lease, contains
the entire agreement between the parties and all prior negotiations and agreements are merged
herein. Neither Landlord nor Landlord’s agents have made any representations or warranties with
respect to the Premises, the Building or this Lease except as expressly set forth herein, and no
rights, easements or licenses are or shall be acquired by Tenant by implication or otherwise unless
expressly set forth herein.
30.7 The review, approval, inspection or examination by Landlord of any item to be reviewed,
approved, inspected or examined by Landlord under the terms of this Lease or the exhibits attached
hereto shall not constitute the assumption of any responsibility by Landlord for either the
accuracy or sufficiency of any such item or the quality or suitability of such item for its
intended use. Any such review, approval, inspection or examination by Landlord is for the sole
purpose of protecting Landlord’s interests in the Building and under this Lease, and no third
parties, including, without limitation, Tenant or any person or entity claiming through or under
Tenant, or the contractors, agents, servants, employees, visitors or licensees of Tenant or any
such person or entity, shall have any rights hereunder.
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30.8 In the event that either Landlord or Tenant fails to perform any of its obligations under this
Lease or in the event a dispute arises concerning the meaning or interpretation of any provision of
this Lease, the defaulting party or the party not prevailing in such dispute, as the case may be,
shall pay any and all costs and expenses incurred by the other party in enforcing or establishing
its rights hereunder, including, without limitation, court costs and reasonable counsel fees.
30.9 Upon the expiration or sooner termination of the Term, Tenant will quietly and peacefully
surrender to Landlord the Premises in the condition in which they are required to be kept as
provided in Article 9 hereof, ordinary wear and tear and the provisions of Article 14 excepted.
30.10 Upon Tenant paying the Monthly Base Rental and Additional Rent and performing all of Tenant’s
obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term
as against all persons or entities lawfully claiming by or through Landlord; subject, however, to
the provisions of this Lease and to any mortgages or ground or underlying leases referred to in
Article 12 hereof.
30.11 Tenant covenants and agrees that no diminution of light, air or view by any structure that
may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of
Monthly Base Rental or Additional Rent under this Lease, result in any liability of Landlord to
Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder.
30.12 Any holding over after the expiration of the Term with the consent of Landlord shall be
construed to be a tenancy from month to month at one hundred seventy-five percent (175%) of the
Monthly Base Rental herein specified (prorated on a monthly basis), unless Landlord shall specify a
different rent in its sole discretion, together with an amount estimated by Landlord for the
monthly Additional Rent payable under this Lease, and shall otherwise be on the terms and
conditions herein specified so far as applicable. Any holding over without Landlord’s consent shall
constitute a default by Tenant and entitle Landlord to reenter the Premises and pursue its remedies
as provided in Article 18 hereof.
30.13 Neither this Lease nor any term or provision hereof may be changed, waived, discharged or
terminated orally, and no breach thereof shall be waived, altered or modified, except by a written
instrument signed by the party against which the enforcement of the change, waiver, discharge or
termination is sought. No waiver of any breach shall affect or alter this Lease, but each and every
term, covenant and condition of this Lease shall continue in full force and effect with respect to
any other then existing or subsequent breach thereof.
30.14 Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns,
and all persons claiming under or through it, and this Lease is made and accepted upon and subject
to the following conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, sex, marital status, age,
handicap, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy,
tenure or enjoyment of the Premises herein leased nor shall the Tenant itself, or any person
claiming under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use or occupancy, of tenants,
lessees, subtenants, sublessees or vendees in the Premises herein leased.
30.15 Tenant shall look only to Landlord’s estate in the Building for the satisfaction of Tenant’s
remedies or for the collection of a judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default by Landlord hereunder, and no other property or
assets of Landlord or its partners or principals, disclosed or undisclosed, shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or
with respect to this Lease, the relationship of Landlord and Tenant hereunder or Tenant’s use or
occupancy of the Premises.
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30.16 If Tenant shall request Landlord’s consent and Landlord shall fail or refuse to give such
consent, Tenant shall not be entitled to any damages for any withholding by Landlord of its
consent, it being intended that Tenant’s sole remedy shall be an action for specific performance or
injunction, and that such remedy shall be available only in those cases where Landlord has
expressly agreed in writing not to unreasonably withhold its consent or where as a matter of law
Landlord may not unreasonably withhold its consent.
| PACIFIC TOWERS ASSOCIATES, a California Limited Partnership |
MOLINA HEALTHCARE, INC., a California corporation | |||||||||
By:
|
SIC — Long Beach, a California Limited Partnership, General Partner of Pacific Towers Associates | By: | /s/ Illegible |
|||||||
By:
|
The Swig Company, a California Corporation, General Partner of SIC — Long Beach | By: | /s/ C. Joseph Heinz |
|||||||
| By: | /s/ Kennard P. Perry |
If Tenant is a corporation, this Lease must be executed by (1) the Chairman, President, or Vice-President and (2) the Secretary, any Assistant Secretary, the Chief Financial Officer or any Assistant Treasurer. | ||||||||
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PACIFIC TOWERS ASSOCIATES LEASE ADDENDUM
TENANT: MOLINA HEALTHCARE, INC.,
a California corporation
TENANT: MOLINA HEALTHCARE, INC.,
a California corporation
THIS ADDENDUM is attached to and is a part of the Standard Form Office Lease (“Lease”) dated July
10th 2002, between Pacific Towers Associates and the aforenamed Tenant. Any conflict
between the terms of the printed form Lease and this Addendum shall be resolved in favor of the
provisions of this Addendum. For purposes of this Addendum, the term “Building” refers to the
entire ARCO Center, Long Beach California, as designated and defined in Paragraph 1.1 of the Lease,
and each building therein is designated by its address of 200 Oceangate or 300 Oceangate.
1. TENANT’S RIGHT TO REDUCE SIZE OF PREMISES. Provided Tenant is not then in default under the
Lease and the Lease is in full force and effect, effective at the conclusion of the sixth
(6th) year of the initial Lease Term, Tenant shall have a one (1) time option to give
back to Landlord a portion of the Premises consisting of the lesser of (i) 20% of the Premises then
leased by Tenant or (ii) one (1) full floor. In addition, Tenant shall not be able to give back any
space below the 6th Floor. Tenant shall be responsible for any and all costs associated
with demising the proposed Premises to be given back, including but not limited to the construction
of corridors and any other applicable code compliance items, and as may be needed in order for the
space given back and Tenant’s remaining space to be leaseable by Landlord and comply with
applicable building, life safety and other codes, laws, and regulations. Tenant shall propose the
location of any space to be given back and Landlord shall reasonably approve said location. All
space to be given back shall be contiguous.
In the event Tenant does give back space, Tenant shall be required to pay to Landlord (in addition
to any demising and other costs outlined above) a termination fee equal to the sum of (i) the
unamortized portion (using an interest rate of 10% per annum) of the Tenant Improvement Allowance
applicable to the space, assuming the Tenant Improvement Allowance was being amortized over the
initial Lease Term, and (ii) the unamortized portion (using an interest rate of 10% per annum) of a
pro-rata portion of all brokerage commissions paid in connection with the space assuming they were
being amortized over the initial Lease Term therefor, and (iii) the rent differential of the
overall effective Monthly Base Rental rate for the space for the initial Lease Term versus the
effective Monthly Base Rental rate Tenant has paid up to the termination date. Tenant shall pay
said termination fee within 30 days following its notice of contraction as set forth below.
If Tenant decides to exercise the contraction option set forth in this Paragraph 1, Tenant must
provide Landlord with written notice thereof no later than twelve (12) months prior to the
effective date therefor. Upon Tenant’s surrender of the Premises pursuant to this option, Tenant’s
parking privileges shall be reduced accordingly by the parking ratio of 4.5 per 1,000 rentable
square feet.
2. TENANT’S OPTION TO EXTEND LEASE TERM. Provided Tenant is not then in default under the Lease and
the Lease is in full force and effect, and further provided that Tenant has not assigned its
interest in this Lease or subleased any portion of the Premises and is then leasing a minimum of
40,000 rentable square feet in the Building, Tenant shall have the option to extend the term of
this Lease for all space it is then leasing in the Building for two consecutive five-year periods,
commencing at the expiration of the initial term. In order to exercise said options, written notice
thereof (“Renewal Option Notice”) must be delivered to and received by Landlord not more than
twenty four (24) months and not less than fifteen (15) months prior to the then expiration date of
the term, with time being of the essence with respect to such notice. In the event one or both such
options are exercised, Tenant’s occupancy shall continue on all the same terms and conditions
contained herein, but (i) with no options to further extend the term, (ii) the Monthly Base Rental
shall be increased to reflect the then Fair Market Rental for the Premises, as determined below;
but in no event shall said Monthly Base Rental be less than that payable by Tenant upon the
expiration of the Lease term then in effect, (iii) Landlord shall have no obligation to perform or
pay for any tenant improvement work in connection with the extension of the term, (iv) there shall
be no abatement of rent or parking charges, and (v) there shall be no rights of expansion, rights
of first refusal, rights of first negotiation, rights of contraction or rights of early
termination.
a. Procedure for Determining Fair Market Rental. “Fair Market Rental” shall be defined as
the
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rate being charged non-equity tenants for comparable space in comparable office buildings in the
surrounding Downtown Long Beach area during the proposed extension period, based on highest and
best use and taking into consideration when evaluating comparables: location, tenant improvements
provided or to be provided, rental abatements and other forms of rental concessions, lease term,
and any other relevant factors. Fair Market Rental for the extension term shall be determined by
Landlord by written notice given to Tenant not later than ninety (90) days prior to the
commencement date of the extension term, subject to Tenant’s right of arbitration set forth below.
Failure on the part of Tenant to demand arbitration within thirty (30) days after receipt of notice
from Landlord of Landlord’s determination of Fair Market Rental shall bind Tenant to the Fair
Market Rental as determined by Landlord. Should Tenant elect to arbitrate and should the
arbitration not have been concluded as of the commencement date of the extension term, Tenant shall
pay as Rent the Fair Market Rental as determined by Landlord. If the Fair Market Rental as
determined by arbitration is greater or less than Landlord’s determination, any adjustment required
to correct the amount previously paid shall be paid by the appropriate party within ten (10) days
after such determination of the Fair Market Rental.
b. Arbitration Procedure. If Tenant disputes the amount claimed by Landlord as Fair Market
Rental, Tenant may require that the dispute be submitted to binding arbitration. The judgment or
the award rendered in any such arbitration may be entered in any court having jurisdiction and
shall be final and binding between the parties. The arbitration shall be conducted and determined
in the City of Long Beach and County of Los Angeles in accordance with the then prevailing rules of
the American Arbitration Association or its successor for arbitration of commercial disputes except
that the procedures mandated by such rules shall be modified as follows:
(i) Tenant shall make demand for arbitration in writing within thirty (30) days after receipt of
Landlord’s determination of Fair Market Rental specifying the name and address of the person to act
as the arbitrator on Tenant’s behalf. The arbitrator selected by Tenant shall be qualified as a
real estate broker with at least seven (7) years experience with office leasing in Long Beach,
California, Failure on the part of Tenant to make a timely and proper demand for such arbitration
shall constitute a waiver of the right thereto. Within ten (10) business days after receipt of the
demand for arbitration, Landlord shall give notice to Tenant of the name and address of the person
selected by Landlord to act as arbitrator on its behalf who shall be similarly qualified.
(ii) When the two (2) arbitrators are chosen, they shall meet within ten (10) business days after
the second arbitrator is appointed and, if within ten (10) business days after such first meeting
the two arbitrators shall be unable to agree promptly upon a determination of Fair Market Rental,
they shall appoint a third arbitrator, who shall be a competent and impartial person who satisfies
the qualifications set forth above. In the event they are unable to agree upon such appointment
within five (5) business days after expiration of such ten (10) business day period, the third
arbitrator shall be selected by the parties themselves, if they can agree thereon, within a further
period of ten (10) business days. If the parties do not so agree, either party, on behalf of both,
may request appointment of such a qualified person by the then Presiding Judge of the Los Angeles
County Superior Court, and the other party shall not raise any question as to such Judge’s full
power and jurisdiction to entertain the application for and make the appointment. The three (3)
arbitrators shall decide the dispute by following the procedure set forth below.
(iii) In the event a third arbitrator is selected, the arbitrators selected by each of the parties
shall state in writing his determination of the Fair Market Rental supported by the reasons
therefor with counterpart copies to each party. The arbitrators shall arrange for a hearing at
which the proposed determinations of the two arbitrators shall be simultaneously exchanged and at
which hearing testimony may be presented and which shall be conducted in accordance with the rules
of the American Arbitration Association. The role of the third arbitrator shall be to determine the
Fair Market Rental based on the proposed determinations submitted by the two arbitrators. The third
arbitrator shall be required to select which of the two determinations most closely determines the
Fair Market Rental and his decision shall be final and binding upon the parties.
(iv) The arbitrators appointed by Landlord and Tenant shall have the right to consult with experts
and competent authorities in order to obtain factual information or evidence pertaining to a
determination of Fair Market Rental, but any such consultation shall be made in the presence of
both parties and with full right on their part to cross-examine. The arbitrators shall have no
power to modify the provisions of this Lease.
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(v) In the event of a failure, refusal or inability of any arbitrator to act, his successor shall
be appointed by the party who appointed him and in the case of the third arbitrator, his successor
shall be appointed in the same manner as provided for appointment of the third arbitrator. Any
decision in which the arbitrator appointed by Landlord and the arbitrator appointed by Tenant
concur shall be binding and conclusive upon the parties. Each party shall pay the fee and expenses
of its respective arbitrator and both shall share the fee and expenses of the third arbitrator, if
any. The attorneys’ fees and expenses of counsel for the respective parties and of witnesses shall
be paid by the respective party engaging such counsel or calling such witnesses.
3. TENANT’S RIGHT OF FIRST NEGOTIATION. Provided that Tenant has not assigned its interest in this
Lease or subleased any portion of the Premises, and further provided that Tenant is not in default
under this Lease; then, subject to continued occupancy by the existing tenant or occupant and/or
the rights of other existing tenants, Landlord agrees that at such time as other office space
becomes vacant and available for lease on Floors 3, 4, 5, 9 or 10 in 200 Oceangate during the
initial term or any extensions thereof, Landlord shall advise Tenant of the availability thereof.
Tenant shall have fifteen (15) business days after its receipt of Landlord’s notice within which to
notify Landlord that it desires to lease such space. Landlord shall thereafter notify Tenant of the
rental and other terms and conditions Landlord is seeking with respect to such space, which (i)
with respect to the first 16,575 rentable square feet of space leased by Tenant during the initial
36 months of the Term, shall be at the same Monthly Base Rental and Additional Rental as applies to
the initial Premises leased hereunder and with the same per square foot Tenant Improvement
Allowance as applies to the initial Premises leased hereunder, prorated to the extent the initial
term applicable to the offered space is less than 10 full years, and (ii) with respect to all other
space offered under this paragraph, shall be at the then prevailing fair market rental rate for
such space in the Building, as determined by Landlord in accordance with the definition of fair
market rental rate set forth in Paragraph 2a above, and which shall be for a term that is
coterminous with the remainder of the Premises, but in no event less than 3 years. Tenant shall
then have fifteen (15) business days within which to accept or reject in writing any proposals
submitted by Landlord, and, unless a binding written agreement to lease such space is reached
within such fifteen (15) business day period, Tenant’s right of first negotiation with respect to
such space shall terminate and be of no further force or effect, and Landlord shall be entitled to
pursue negotiations with any other party on any terms and at any rent Landlord deems appropriate
and which may differ from what was offered to Tenant This right of first negotiation is intended
solely to allow the parties an opportunity to negotiate for such space and is not intended to
restrict the rights of either party in the event a final and binding agreement does not result
within fifteen (15) business days as a result of negotiations initiated pursuant to this Paragraph.
In addition to and in amplification of the foregoing, this Paragraph shall not apply and Tenant
shall have no right of first negotiation with respect to any space in which the then current tenant
or occupant is negotiating an extension or renewal of its lease.
4. PARKING. Tenant shall be provided with a parking ratio of four and one-half (4.5) parking passes
per 1,000 square feet of rentable square footage of Tenant’s initial Premises and 8th
Floor Premises. Said parking passes shall include single reserved, single unreserved and tandem
parking, with the allocation as follows: 40% tandem, 8% reserved, and 52% unreserved.
Landlord shall provide Tenant with additional parking on a month-to-month basis, as needed and as
available.
Beginning at the Commencement Date of the Lease term and throughout the first five (5) years of the
initial lease term, the monthly parking costs for parking allocated in connection with the
2nd, 6th, 7th and 8th Floor Premises then leased by
Tenant shall be in accordance with the following schedule: $70.00 per non reserved parking pass per
month; $125.00 per reserved parking pass per month; $45.00 per tandem parking pass per month.
Thereafter, the rates shall be the then prevailing ARCO Center rates in accordance with Exhibit D
of the Lease.
Parking ratios and rates for all parking allocated in connection with any expansion of the
2nd, 6th, 7th and 8th Floor Premises leased hereunder
shall be in the ratio of 4 passes per 1,000 rentable square feet of expansion premises, for the
first 16,575 rentable square feet of expansion premises, and thereafter in the ratio of three
passes per 1,000 rentable square feet of expansion premises, and shall be at the prevailing ARCO
Center rates. The allocation of such passes to the categories of parking shall be subject to
Landlord’s reasonable discretion with respect to the first 16,575 rentable square feet of expansion
premises and shall thereafter be in compliance with ARCO Center standards.
Notwithstanding anything to the contrary, Landlord reserves the right to fulfill all or a portion
of Tenant’s
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parking allocation with staffed valet parking.
5. SIGNAGE. From and after the Commencement Date and throughout the term, Tenant shall have the
right to install one sign at its sole cost and expense on the existing can sign on the concrete
wall signage area in front of 200 Oceangate, identifying Tenant and in a size, style and location
that is acceptable to Landlord. In addition, in the event and during such time as Tenant (but not
any Subtenant or Assignee (as defined in Article 16 of the Lease) of Molina Healthcare, Inc.) is
contractually committed to both leasing and personally occupying at least five full floors in 200
Oceangate, Tenant, at Tenant’s cost and expense, shall have the right to install one sign on the
top of the exterior facade of 200 Oceangate, identifying Tenant and in a size, style and location
that is acceptable to Landlord. All signage is subject to all municipal codes, the approval of all
applicable governmental agencies, and Landlord’s review and approval, which approval shall not be
unreasonably withheld, conditioned or delayed. All signage rights related to the top of the
exterior facade of 200 Oceangate granted to Tenant under this Paragraph are non-assignable with the
exception that Tenant may assign such rights in accordance with Article 16.2 and Tenant may assign
such rights to an Assignee who is to both leasing and personally occupying at least five full
floors in 200 Oceangate, who is of good reputation and whose business is of an institutional
nature, whose identification on the Building will not, in Landlord’s good faith determination,
result in a loss of reputation or value to the Building, conflict with any rights given to other
tenant’s or be objectionable to other tenants of the Building or Landlord’s lender, or otherwise be
objectionable to Landlord. All access to signage on the Building facade shall be coordinated with
the Building Manager through the office of the Building. At the expiration of this Lease, all
signage shall be removed and all damage related thereto shall be restored at Tenant’s sole cost and
to Landlord’s satisfaction.
During any period that Tenant has the right to install signage of the top of the exterior facade of
200 Oceangate, Landlord agrees that no other companies competing with Tenant and providing health
maintenance services shall be granted the right by Landlord to install their signage on the
exterior facades of either 200 Oceangate or 300 Oceangate. Within 10 business days of Landlord’s
written request, Tenant shall inform Landlord in writing as to whether any particular company
identified by Landlord falls within the parameters of the foregoing sentence.
6. INSTALLATION OF ROOF ANTENNA. Subject to Landlord’s prior approval which shall not be
unreasonably withheld, conditioned or delayed, at any point during the term or extension thereof,
Tenant shall have the right to install and use in connection with Tenant’s business operations, on
the roof of 200 Oceangate, at no monthly rental charge, a roof mounted antenna and/or satellite
dish in an area not to exceed 6 feet in diameter, provided there is room on the roof at that time.
Landlord will guarantee that there is roof space available up to one year from the Commencement
Date, although Landlord does not guarantee the availability of any exact location or that the
available location will be suitable for Tenant’s equipment. Tenant shall conform with all
applicable laws and ordinances and with Landlord’s reasonable rules and regulations with regard to
use, installation and maintenance of the device requested by Tenant. All access to the roof shall
be arranged and coordinated with the Building Manager through the office of the Building. Tenant’s
roof top equipment shall not interfere with any equipment in the Building or with any equipment
that exists on the roof at the time of installation and any existing equipment at that time shall
not be relocated in order to accommodate Tenant. All permits, application fees, and all
installation, repair, and maintenance costs associated with the aforementioned shall be the
responsibility of Tenant. Tenant shall be responsible for repair and maintenance of the roof where
the equipment has been installed, as well as all damage to other portions caused by the
installation, maintenance or removal of such equipment. The rights of Tenant as set forth in this
Paragraph are personal to Molina Healthcare, Inc., and Molina Healthcare, Inc. shall not have the
right to transfer, assign, or license the roof rights granted hereunder.
7. TERMINATION RIGHT. Landlord and Tenant are executing this Lease prior to the finalization of the
Workletter (Exhibit B) and the execution and delivery of a non-disturbance agreement from
Landlord’s current lender. Landlord and Tenant shall diligently pursue the finalization of the
Workletter and non-disturbance agreement but in the event (i) the Workletter has not been finalized
and executed by Landlord and Tenant within 30 days following the full execution of this Lease, or
(ii) the non-disturbance agreement referred to in the first sentence of Article 12 of this Lease
has not been fully executed within 30 days following the full execution of this Lease, Tenant may
terminate this Lease prior to the execution of said Workletter and non-disturbance agreement by
written notice to Landlord. In addition, in the event the Workletter and non-disturbance agreement
have not been fully executed within 45 days following the full execution of this Lease, Landlord
may terminate this Lease prior to the execution of said Workletter and non-disturbance agreement by
written notice to Tenant.
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Except as set forth in this Addendum, the Lease shall remain unamended and in full force and
effect.
PACIFIC TOWERS ASSOCIATES, a California Limited Partnership
By:
|
SIC — Long Beach, a California Limited Partnership, General Partner of Pacific Towers Associates | |||
By:
|
The Swig Company, a California Corporation, General Partner of SIC — Long Beach | |||
By:
|
/s/ Kennard P. Perry | |||
| Title: VICE PRESIDENT | ||||
| MOLINA HEALTHCARE, INC., a California corporation |
||||
By:
|
/s/ C. Joseph Heinz | |||
| Its: AVP/CAO | ||||
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A1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT A
FLOOR PLAN
200 TOWER — 2ND FLOOR
A1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT A
FLOOR PLAN
200 TOWER — 6TH FLOOR
A1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT A
EXHIBIT A
FLOOR PLAN
200 TOWER — 7TH FLOOR
C1
PACIFIC TOWERS ASSOCIATES
OFFICE LEASE
EXHIBIT C
RULES AND REGULATIONS
1. BUILDING RULES AND REGULATIONS
(a The sidewalks, halls, passages, exits, entrances, elevators, shopping areas, escalators and
stairways of the Building (“common areas”) shall not be obstructed by Tenant or used by it for any
purpose other than for ingress to and egress from the Premises. The common areas are not for the
use of the general public, and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence in the judgment of Landlord would be prejudicial to
the safety, character, reputation and interests of the Building and its tenants. Tenant shall not
go upon the roof of the Building.
(b No sign, placard, picture, name, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted, affixed or otherwise displayed by Tenant on any part of the
Building. Landlord will furnish to Tenant general Building Standard guidelines relating to signs
inside the Building, in both the main lobby and on the office floors. Tenant agrees to conform to
such guidelines. All Building Standard approved signs shall be ordered and installed by Landlord at
the expense of Tenant.
(c The Premises shall not be used for the storage of merchandise held for sale to the general
public or for lodging. No cooking shall be done or permitted by Tenant on the Premises, except that
use by Tenant of Underwriters’ Laboratory approved equipment for brewing coffee, tea, hot chocolate
and similar beverages shall be permitted, provided that such use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and regulations.
(d Tenant shall not employ any person or persons other than the janitor of Landlord for the purpose
of cleaning the Premises, unless otherwise agreed to by Landlord in writing. No person or persons
other than those approved by Landlord shall be permitted to enter the Building for the purpose of
cleaning the Premises or any portion of the Building. Tenant shall not cause any unnecessary labor
by reason of Tenant’s carelessness or indifference in the preservation of good order and
cleanliness. Janitorial service will not be furnished on nights when rooms are occupied after 9:30
P.M. unless, by agreement in writing, service is extended to a later hour for specifically
designated rooms.
(e Landlord will furnish Tenant with two (2) keys to the Premises free of charge. No additional
locking devices shall be installed without the prior written consent of Landlord. Landlord may
impose a reasonable charge for any additional lock or any bolt installed on any door of the
Premises without the prior consent of Landlord. Tenant shall in each case furnish Landlord with a
key for any such lock. Tenant, upon the termination of its tenancy, shall deliver to Landlord all
keys to doors in the Premises.
(f The freight elevator shall be available for use by Tenant, subject to such reasonable scheduling
as Landlord shall deem appropriate. The persons employed by Tenant to move equipment or other items
in or out of the Building must be acceptable to Landlord. Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, supplies, furniture or other
property brought into the Building. Heavy objects shall, if considered necessary by Landlord, stand
on wood strips of such thickness as is necessary to properly distribute the weight of such objects,
Landlord will not be responsible for loss of or damage to any such property from any cause, and all
damage done to the Building by moving or maintaining Tenant’s property shall be repaired at the
expense of Tenant.
(g Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or flammable
or combustible fluid or materials or use any method of heating or air conditioning other than that
supplied
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C2
by Landlord. Tenant shall not use, keep or permit or suffer the Premises to be occupied or used in
a manner offensive or objectionable to Landlord or other occupants of the Building by reason of
noise, odors, and/or vibrations, or interfere in any way with other tenants or those having
business in the Building.
(h Landlord reserves the right to exclude from the Building between the hours of 6 P.M. and 8 A.M.
and at all hours on Saturdays, Sundays, and legal holidays all persons who do not present a pass to
the Building signed by Landlord. Landlord will furnish passes to persons for whom Tenant requests
same in writing. Tenant shall be responsible for all persons for whom it requests passes and shall
be liable to Landlord for all acts of such persons. Landlord shall in no case be liable for damages
for any error with regard to the admission to or exclusion from the Building of any person. In the
case of invasion, mob, riot, public excitement or other circumstances rendering such action
advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Building
during the continuance of same by such action as Landlord may deem appropriate, including closing
doors.
(i The directory of the Building will be provided for the display of the name and location of
tenants and a reasonable number of the principal officers and employees of tenants, and Landlord
reserves the right to exclude any other names therefrom. Any additional name that Tenant shall
desire to place upon the directory must first be approved by Landlord and, if so approved, a charge
will be made therefor.
(j No curtains, draperies, blinds, shutters, shades, screens or other coverings, hangings or
decorations shall be attached to, hung or placed in, or used in connection with any window of the
Building without the prior written consent of Landlord. In any event, with the prior written
consent of Landlord, such items shall be installed on the office side of Landlord’s standard window
covering and shall in no way be visible from the exterior of the Building.
(k Tenant shall not obtain for use in the Premises ice, drinking water, food, beverage, towel or
other similar services, except at such reasonable hours and under such reasonable regulations as
may be established by Landlord.
(l Tenant shall see that the doors of the Premises are closed and locked and that all water
faucets, water apparatus, equipment, and utilities are shut off before Tenant or Tenant’s employees
leave the Premises, so as to prevent waste or damage, and for any default or carelessness in this
regard Tenant shall make good all injuries sustained by other tenants or occupants of the Building
or Landlord. On multiple-tenancy floors, all tenants shall keep the doors to the Building corridors
closed at all times except for ingress and egress.
(m The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any
purpose other than for which they were constructed. No foreign substance of any kind whatsoever
shall be deposited therein, and any damage resulting to same from Tenant’s misuse thereof shall be
paid by Tenant.
(n Except with the prior consent of Landlord, Tenant shall not sell, or permit the sale from the
Premises of, or use or permit the use of any sidewalk or area adjacent to the Premises for the sale
of, newspapers, magazines, periodicals, theater tickets or any other goods, merchandise or service,
nor shall the Premises be used for manufacturing of any kind, or for any business or activity other
than that specifically provided for in Tenant’s lease.
(o Tenant shall not install any radio or television antenna, satellite dish, communication
equipment, loudspeaker, or other device on the roof or exterior walls of the Building.
(p Tenant shall not use in any space, or in the common areas of the Building, any hand trucks
except those equipped with rubber tires and side guards or such other material handling equipment
as Landlord may approve. No bicycle or vehicle of any kind shall be brought by Tenant into the
Building or kept in or about the Premises.
(q Tenant shall store all its trash and garbage within the Premises until removal of same to such
location in the Building as may be designated from time to time by Landlord, No material shall be
placed in the Building trash boxes or receptacles if such material is of such nature that it may
not be disposed of in the ordinary
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C3
and customary manner of removing and disposing of trash and garbage in the City of Long Beach
without being in violation of any law or ordinance governing such disposal.
(r All loading and unloading of merchandise, supplies, materials, garbage and refuse shall be made
only through such entryways and elevators and at such time as Landlord shall designate. In its use
of the loading areas, Tenant shall not obstruct or permit the obstruction of said loading areas,
and at no time shall Tenant park vehicles therein except for loading and unloading.
(s Canvassing, soliciting, peddling or distribution of handbills or any other written material in
the Building is prohibited.
(t Tenant shall immediately, upon request from Landlord (which request need not be in writing),
reduce its lighting and other electricity usage in the Premises for temporary periods designated by
Landlord, when required in Landlord’s judgment to prevent overloads of the mechanical or electrical
systems of the Building.
(u Landlord reserves the right to select the name of the Building and to make such change or
changes of name as it may deem appropriate from time to time, and Tenant shall not refer to the
Building by any name other than: (1) the name selected by Landlord (as same may be changed from
time to time), or (2) the postal address approved by the United States Post Office. Tenant shall
not use the name of the Building in any respect other than as an address of its operation in the
Building without the prior written consent of Landlord.
(v The requirements of Tenant will be attended to only upon application by telephone or writing or
in person at the office of the Building. Employees of Landlord shall not perform any work or do
anything outside of their regular duties unless under special instructions from Landlord.
(w Landlord may waive any one or more of these Rules and Regulations for the benefit of any
particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of
these Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all of the tenants of the
Building.
(x Wherever the word “Tenant” occurs in these Rules and Regulations, it is understood and agreed
that it shall include Tenant’s assigns, agents, contractors, employees and visitors. Wherever the
word “Landlord” occurs in these Rules and Regulations, it is understood and agreed that it shall
include Landlord’s assigns, agents, contractors, employees and visitors.
(y These Rules and Regulations are in addition to and shall not be construed in any way to modify,
alter or amend, in whole or part, the terms, covenants, agreements and conditions of any lease of
premises in the Building.
(z Landlord reserves the right to make such other and reasonable rules and regulations as in its
judgment may from time to time be needed for the safety, care and cleanliness of the Building, and
for the preservation of good order therein.
2. PARKING RULES AND REGULATIONS
Tenant and its agents, employees, invitees and other authorized users (collectively “Authorized
Users”) shall strictly comply at all times with the following rules and regulations in their use of
the Arco Center parking facilities.
(a Tenant and its Authorized Users shall not park vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building.
(b Tenant and Authorized Users shall not leave vehicles in the Building parking areas overnight nor
park any vehicles in the Building parking areas other than automobiles, motorcycles, motor driven
or
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C4
non-motor driven bicycles or four-wheeled trucks; said non-authorized vehicles shall be subject to
towing at Tenant’s expense. Landlord may, in its sole discretion, designate separate areas for
bicycles and motorcycles.
(c Cars must be parked entirely within the stall lines painted on the floor.
(d All directional signs and arrows must be observed.
(e The speed limit shall be 5 miles per hour.
(f Parking is prohibited, unless a floor parking attendant approved by Landlord directs otherwise:
(i In areas not striped for parking;
(ii In aisles;
(iii Where “No Parking” or “Handicap” signs are posted;
(iv On ramps;
(v In crosshatched areas; or
(vi In such other areas as may be designated by Landlord.
(g Parking stickers or any other device or form of identification supplied by Landlord shall remain
the property of Landlord. Such parking identification device must be displayed as requested and may
not be mutilated in any manner. The serial number of the parking identification device may not be
obliterated. Devices are not transferable, and any device in the possession of an unauthorized
holder will be void. There will be a nominal non-refundable fee for the issuance of each magnetic
parking card and a minimum replacement charge of $35.00 for loss of any magnetic parking card or
other parking identification device. Tenant acknowledges that Tenant shall not be entitled a
greater number of parking stickers or other devices or forms of identification than parking
privileges allotted to Tenant.
(h Garage managers or attendants are not authorized to make or allow any exceptions to these Rules
and Regulations.
(i Every Authorized User is requested to park and lock his own car. All responsibility for damage
or theft to cars is assumed by Authorized Users, and in no event will any claim be made against
Landlord, the garage attendants or managers with respect thereto. Tenant shall repair or cause to
be repaired at its sole cost and expense any and all damage to the Building parking facility or any
part thereof caused by Tenant or its Authorized Users.
(j Loss or theft of parking identification devices from automobiles must be reported to the garage
manager immediately. Any parking identification devices found on any unauthorized car will be
confiscated and the illegal holder will be subject to prosecution. Lost or stolen devices
previously reported and then found must be reported to the garage manager immediately.
(k Spaces are for the express purpose of one automobile per space unless a parking attendant
approved by Landlord directs otherwise. Washing, waxing, cleaning or servicing of any vehicle by
the Authorized Users and/or his agents is prohibited.
(l Landlord reserves the right to refuse the issuance of monthly stickers or other parking
identification devices to any Tenant or Authorized User who willfully refuses to comply with these
Rules and Regulations or any city, state or federal ordinance, law or agreement.
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
C5
(m Authorized Users shall not load or unload in areas other than those designated by Landlord for
such activities.
(n Authorized Users and unauthorized users parked in prohibited areas are subject to towing at
their own expense.
(o Landlord reserves the right to revoke parking privileges for vehicles creating or causing a
nuisance, as such shall be determined by Landlord in Landlord’s sole discretion.
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
C6
PACIFIC TOWERS ASSOCIATES
OFFICE LEASE
EXHIBIT D
PARKING AGREEMENT
THIS CONTRACT LIMITS OUR LIABILITY — READ IT
The undersigned, as Landlord and Tenant respectively, are executing, simultaneously with this
Parking Agreement, a written Lease covering Premises as described in the Lease and hereby attach
this Parking Agreement to said Lease as Exhibit D thereto.
Landlord shall make available to Tenant the right to park in the Building (on a non-reserved,
self-parking basis or on such other basis as may be determined by Landlord) throughout the Term of
this Lease up to at least the number of parking spaces specified in the Basic Lease Information.
Tenant must specify in writing to Landlord no later than the commencement of the Term of this Lease
the number of parking spaces desired by Tenant during the Term of this Lease. Tenant shall pay to
Landlord at the beginning of the Lease Term the monthly amount specified in the Basic Lease
Information per parking space, and thereafter the then current fair market rental as defined below.
In the event that Tenant, at any time, is not utilizing its full parking allowance, Landlord shall
have the right to make such unused spaces available to other tenants of the Building and Tenant’s
allowance of parking spaces shall be reduced accordingly. Landlord may individually contract with
Tenant or Tenant’s employees for the parking spaces referred to above. The “fair market rental” for
parking in the Building shall be that rent which is reasonably determined by Landlord to be the
then current fair market rental rate for such spaces giving consideration to the parking charges
for similar space in buildings within the same community boundaries as the Building. All parking by
Tenant and its agents, employees, and invitees, shall be in accordance with the Parking Rules and
Regulations, which are contained in Exhibit C to the Lease, IN NO EVENT WILL LANDLORD OR ITS AGENTS
BE RESPONSIBLE FOR ANY FIRE, THEFT, DAMAGE OR LOSS TO ANY VEHICLE OR ITS CONTENTS.
| PACIFIC TOWERS ASSOCIATES, a California Limited Partnership |
MOLINA HEALTHCARE, INC., a California corporation |
||||||||||
By: |
SIC — Long Beach, a California Limited | By: | /s/ C. Joseph Heinz | ||||||||
| Partnership, General Partner of Pacific Towers Associates | Its: | AVP/CAO | |||||||||
By: |
The Swig Company, a California Corporation, General | By: | /s/ Illegible | ||||||||
Partner of SIC - Long Beach |
Its: | EVP | |||||||||
By: |
/s/ Kennard P.Perry |
If Tenant is a corporation, this Lease must be executed by
(1) the Chairman, President, or Vice-President and (2) the Secretary, any Assistant Secretary, the Chief Financial Officer or any Assistant Treasurer. |
|||||||||
| Title: | VICE PRESIDENT | ||||||||||
| Initials /s/ Illegible | Initials /s/ Illegible | |||
| 07/17/02 |
FIRST AMENDMENT TO OFFICE LEASE
This First Amendment to Office Lease is entered into as of the 5th day of November 2002,
by and between PACIFIC TOWERS ASSOCIATES, a California Limited Partnership, as “Landlord”, and
MOLINA HEALTHCARE, INC., a California corporation, as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant entered into that certain Office Lease (“Lease”) dated July 10, 2002
for premises (“Premises”) commonly known as Suites 200, 600 and 700, Arco Center, 200 Oceangate,
Long Beach, California; and
WHEREAS, Landlord and Tenant now desire to amend the Lease in connection with certain details
pertaining to the Tenant Improvement Allowance and the improvement obligations of Tenant, and to
confirm the satisfaction of certain obligations under the Lease.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. Additional Tenant Improvement Allowance. Paragraph 10(b) of the Tenant Improvement
Workletter is hereby amended by increasing the Tenant Improvement Allowance (i) by the sum of
$26,000 for each full Floor of the Premises initially leased by Tenant (Floors 2, 6 and 7) and (ii)
with respect to the 8th Floor, when leased by Tenant pursuant to the second paragraph of
Article 1.1 of the Lease, by the sum of $26,000. In the event Tenant is obligated to pay back to
Landlord, as part of a termination fee pursuant to Paragraph 1 of the Lease Addendum or otherwise,
a portion of the Tenant Improvement Allowance, said Tenant Improvement Allowance shall include the
increased amounts as set forth above.
In return for said increased Tenant Improvement Allowance, Tenant agrees that Tenant shall complete
the following work on the 2nd, 6th and 7th Floors (and on the
8th Floor if that Floor is leased by Tenant pursuant to the second paragraph of Article
1.1 of the Lease) of 200 Oceangate, in accordance with ARCO Center Building Standards and using
current ARCO Center Building Standard materials and finishes, at its sole cost and expense.
Elevator Lobby
Install soffit and recessed lighting, refinish elevator lobby walls, refinish elevator.
doors/jambs and casings.
Reconstruct walls around new elevator lobby doors per ADA requirements.
Install new elevator lobby carpet consistent with other refurbished ADA compliant.
elevator lobbies in the Building.
Replace elevator lobby fire doors and associated hardware (ADA compliant).
Install soffit and recessed lighting, refinish elevator lobby walls, refinish elevator.
doors/jambs and casings.
Reconstruct walls around new elevator lobby doors per ADA requirements.
Install new elevator lobby carpet consistent with other refurbished ADA compliant.
elevator lobbies in the Building.
Replace elevator lobby fire doors and associated hardware (ADA compliant).
Corridors
Replace bathroom doors from corridor and associated hardware (ADA compliant).
Replace storage room door and hardware (ADA compliant).
Paint stairwell doors (the side inside the tenant suite only; not the side in the stairwell).
Replace bathroom doors from corridor and associated hardware (ADA compliant).
Replace storage room door and hardware (ADA compliant).
Paint stairwell doors (the side inside the tenant suite only; not the side in the stairwell).
Replace all VAV boxes (including controls) and thermostats; together with all associated high
and low pressure ducts from the main trunk loop.
and low pressure ducts from the main trunk loop.
Replace electric strip heaters for supplemental heat for northwest perimeter zones.
1
All work shall be completed in conjunction with Tenant’s initial occupancy of the applicable Floor.
2. Delivery and Acceptance of Possession of Premises. In accordance with the terms and
conditions of the Lease, Tenant confirms that the Lease has been fully executed by both Landlord
and Tenant, that Tenant has received a copy of the fully executed lease, and that possession of
Floors 2, 6 and 7 was delivered to Tenant on August 5, 2002. In addition, Landlord and Tenant
hereby confirm (i) that the Workletter, as referred to in the Lease, has been fully executed, (ii)
that the non-disturbance agreement, as referred to in the Lease, has been fully executed, (iii)
that no default exists on the part of Landlord or Tenant under the Lease, and (iv) that the Lease
is in full force and effect and that the Termination Right, as set forth in Paragraph 7 of the
Lease Addendum, has expired and is no longer applicable.
Except as set forth in this First Amendment to Lease, the Lease shall remain unamended and in full
force and effect.
PACIFIC TOWERS ASSOCIATES, a California Limited Partnership
| By: | SIC — Long Beach, a California Limited Partnership, | |||
| General Partner of Pacific Towers Associates | ||||
| By: | The Swig Company, a California Corporation, | |||
| General Partner of SIC — Long Beach | ||||
| By: | /s/ Kennard P. Perry | |||
| Title: VICE PRESIDENT | ||||
| MOLINA HEALTHCARE, INC., a California corporation |
||||
| By: | /s/ Illegible | |||
| Its: Executive Vice President | ||||
| By: | /s/ C. Joseph Heinz | |||
| Its: Associate V.P./ CAO | ||||
2
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
AND WHEN RECORDED RETURN TO:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Jesse Sharf
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Jesse Sharf
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
ATTORNMENT AGREEMENT
| NOTICE: | THE SUBORDINATION PROVIDED FOR IN THIS AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE SECURITY INTEREST IN THE PROPERTY CREATED BY SOME OTHER OR LATER INSTRUMENT. |
WHEREAS, RED RIVER LIMITED PARTNERSHIP, a Delaware limited partnership, successor in interest to
Teacher Retirement System of Texas, a public pension fund created under the laws of the state of
Texas (“Lienholder”), is the holder and owner of that certain Second Amended and Restated
Promissory Note executed by Pacific Towers Associates, a California limited partnership
(“Landlord”), effective January 1, 2001 (“Note”), which is secured by a Deed of
Trust and Fixture Filing of even date therewith, filed for record in the official records of Los
Angeles County, California, as thereafter amended from time to time (“Deed of Trust”),
which covers, among other property, certain property and improvements in Los Angeles County,
California, more particularly described in Exhibit A attached hereto and in the Deed of
Trust (“Building Site”); and
WHEREAS, Landlord’s predecessor in interest entered into a Lease Agreement dated as of July 15,
2002 (said lease, as amended with the prior written approval of Lienholder, being herein referred
to as “Lease”) with Molina Healthcare Inc., a California corporation (“Tenant”) covering a
portion of the improvements on the Building Site (“Leased Premises”); and
WHEREAS, Lienholder and Tenant desire that the Lease remain in effect notwithstanding any
foreclosure or other proceedings for enforcement of the Deed of Trust or foreclosure of any other
lien securing the Note and held by Lienholder on all or any portion of the Building Site;
WHEREAS, Lienholder requires that the Deed of Trust be and unconditionally remain a lien on the
Building Site, prior and superior to all rights of Tenant under the lease;
NOW, THEREFORE, in consideration of the premises and good and valuable considerations each to the
other paid, the parties hereto agree as follows:
WITNESSETH
Section 1. Lienholder agrees, for the benefit of Landlord, Tenant and Lienholder, that
notwithstanding any foreclosure by Lienholder under the Deed of Trust or foreclosure by Lienholder
under any other lien, assignment of leases, assignment of rents or other instrument securing the
Note now owned and held by Lienholder covering all or any Portion of the Building Site, and
notwithstanding any exercise by Lienholder of any prior rights of Lienholder with respect to the
Building Site. Tenants right of possession of the Leased Premises shall not be disturbed or
affected by Lienholder so long as no default by Tenant exists under the terms of the Lease (after
notice and an opportunity to cure, if any, as provided in the Lease) as would enable Landlord to
terminate the Lease or would cause termination of the Lease or would entitle Landlord to dispossess
Tenant under the Lease. Except as herein expressly provided to the contrary and subject to the
further terms and provisions hereof, in the event of foreclosure under the Deed of Trust or any
other lien or instrument in favor of
Lienholder or exercise of any other prior rights of Lienholder with respect to the Building Site,
or in the event of a deed in lieu of foreclosure under the Deed of Trust, Lienholder or the
purchaser at such foreclosure sale, shall be deemed to have assumed and agreed to perform the
duties of Landlord under the Lease during such period, if any, as Lienholder or such purchaser is
collecting or entitled to collect rent from Tenant thereunder, except that the person acquiring the
interests of Lienholder and Landlord, or of either of them, as a result of any such action or
proceeding, shall not be (a) liable for, nor subject to, any offsets or defenses or defaults
arising prior to the date of Leinholder’s acquisition of title except to the extent: (i)
such offsets, defenses or defaults continue after the date of Lienholder’s acquisition of title but
only to the extent of liabilities arising after the date of Lienholder’s acquisition of title (by
example, failure to continue to provide janitorial or other building services after the date of
Lienholder’s acquisition of title), or (ii) such offsets, defenses or defaults arise out
of acts or omissions by Lienholder occurring from and after the date of Lienholder’s
acquisition of title; (b) bound by any rent or additional rent which Tenant might have paid for
more than one month in advance of the due dates under the terms of the Lease; (c) liable for any
security deposit which Tenant might have paid pursuant to the Lease unless such security deposit
has been paid over to Lienholder or such purchaser and if not paid over to the Lienholder or such
purchaser, Tenant shall have rent abated at the end of Term to receive a credit for said Security
Deposit; or (d) bound by any amendment or modification of the Lease made without Lienholder’s prior
written consent.
Section 2.
(a) Landlord and Tenant declare and acknowledge that each hereby intentionally waives, relinquishes
and subordinates the priority and superiority of the Lease, the leasehold interests and estates
created thereby, and the rights, privileges and powers of the Landlord and Tenant thereunder, in
favor of the Deed of Trust, and that each understands that in reliance upon, and in consideration
of, this waiver, relinquishment and subordination, Lienholder is making the loan referred to
hereinabove, which would not be made but in said reliance upon this waiver, relinquishment and
subordination.
(b) It is expressly understood and agreed that this Agreement shall supersede, to the extent
inconsistent herewith, the provisions of the Lease relating to the subordination of the Lease and
the leasehold interests and estates created thereby to the lien or charge of the Deed of Trust.
(c) Tenant further agrees with Lienholder that a foreclosure, acceptance of a deed in lieu of
foreclosure or other action or proceeding under the Deed of Trust, or under any other deed of trust
affecting the Building Site which is subordinate to the Deed of Trust, shall not terminate the
Lease and Tenant shall not be relieved of the Tenant’s obligations thereunder, unless Lienholder or
any purchaser at foreclosure under the Deed of Trust, or any other proceedings for enforcement of
the Deed of Trust, elects to terminate the Lease pursuant to any right to do so under Section 1
above. So long as the Lease remains in effect as above provided, Tenant shall be bound to perform
all of its obligations under the Lease for the term thereof, and Lienholder in possession or any
purchaser or purchasers at any sale under the Deed of Trust shall have all rights of Landlord under
the Lease (including without limitation, any extensions or renewals thereof that may be effected in
accordance with any option therefor in the Lease) and Tenant shall be deemed to have attorned to
Lienholder or such purchaser or purchasers (including without limitation, Lien—holder if it be the
purchaser) as such landlord, and for the duration of possession by such purchaser or by Lienholder,
then, subject to the limitations on liability set forth in the Lease, Tenant shall have the same
rights against such Lienholder in possession or purchaser or purchasers as it has against Landlord
under the Lease, except as otherwise provided in Section 1 above. The attornment of Tenant provided
for in the immediately preceding sentence hereof is to be effective and self-operative without the
execution of any further instruments by Lienholder or a purchaser or purchasers succeeding to the
interest of Landlord under the Lease, but Tenant agrees to execute and acknowledge such documents
as Lienholder or a purchaser or purchasers succeeding to the interest of Landlord under the Lease
or of Lienholder under the Lease may reasonably request to evidence Tenant’s attornment hereunder.
(d) Tenant will make no payments or prepayments of rent more than one (1) month in advance of the
time when the same becomes due under the lease.
Section 3. Notwithstanding any provisions of the Lease to the contrary, after any
foreclosure (or any deed in lieu of foreclosure) of any first lien mortgage or deed of
trust, the purchaser in foreclosure (or
otherwise) shall have no personal liability for the obligations of the landlord, and the tenant
shall have the right to enforce any monetary judgment against the successor to the landlords
interest under the Lease only against such successor’s interest in the real property and
improvements.
Section 4. The provisions hereof shall inure to the benefit of and be binding upon the
undersigned parties and their respective successors and assigns.
Section 5. This agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
EXECUTED in multiple counterparts, each of which shall have the force and effect of an original, as
of the ___day of ___, 2002.
| “Lienholder” RED RIVER LIMITED PARTNERSHIP, a Delaware limited partnership |
||||
| By: | /s/ Illegible | |||
| Name: | Illegible | |||
| Title: | Illegible | |||
| “Tenant” MOLINA HEALTHCARE INC., a California corporation |
||||
| By: | /s/ Joseph M. Molina MD | |||
| Name: | JOSEPH M. MOLINA MD | |||
| Title: | CHAIRMAN | |||
| By: | /s/ C. Joseph Heinz | |||
| Name: | C. Joseph Heinz | |||
| Title: | ASSOCIATIVE V.P./CAO | |||
| “Landlord” PACIFIC TOWERS ASSOCIATES, a California limited partnership |
||||
| By: | SIC—Long Beach, a California limited | |||
| partnership, which is a general partner of | ||||
| Pacific Towers Associates | ||||
| By: | The Swig Company, a California | |||
| corporation, which is the sole | ||||
| general partner of SIC — Long Beach | ||||
| By: | /s/ Jeanne Myerson | |||
| Jeanne Myerson President |
||||
EXHIBIT A TO
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
Description of the Land
Parcels 2 and 3, located in the City of Long Beach, County of Los Angeles, State of California, as
shown on Parcel Map No. 5196, filed in Book 71, Page 14 of Parcel Maps, in the Office of the County
Recorder of said County.
EXCEPT therefrom, all oil, gas, hydrocarbon substances and minerals of every kind and character
lying more than 500 feet below the surface of said land, together with the right to drill into,
through and to use and occupy all parts of said land lying more than 500 feet below the surface
thereof for any and all purposes incidental to the exploration for and production of oil, gas,
hydrocarbon substances or minerals from said or other land or any portion of said land within 500
feet of the surface for any purpose or purposes whatsoever as, reserved by various Deeds of Record,
among them, being the Deed recorded July 19, 1965, in Book D—2981, at Page 153, as Instrument No.
885, Official Records.
State of California
|
) | |||||
| ) | ss. | |||||
County of Los Angeles
|
) |
On August 19, 2002 before me, Lydia Leyn
Date Name and Title “Notary Public”
personally appeared C. Joseph Heinz þ personally known to me o proved to
Name(s) of Signer(s)
me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
persons(s), or the entity upon behalf of which the person(s), acted, executed the instrument.
WITNESS my hand and official seal.
| /s/ Lydia Leyn |
|
(Seal of Notary) |
State of California
|
) | ||||
| ) | ss. | ||||
County of Los Angeles
|
) |
On August 19, 2002 before me, Lydia Leyn
Date Name and Title “Notary Public”
personally
appeared Joseph M.Molina,MD þ personally known to me o proved to
Name(s) of Signer(s)
me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the persons(s),
or the entity upon behalf of which the person(s), acted, executed the instrument.
WITNESS my hand and official seal.
| /s/ Lydia Leyn |
|
(Seal of Notary) |
State of Maryland
County of Carroll
On this 22nd day of August, 2002, before me, the undersigned officer, personally
appeared Rinse A. Brink, known to me (or satisfactorily proven) to be the person(s) whose name(s)
is/are subscribed to within the instrument and acknowledged that he/she/they executed the same for
the purpose therein contained.
| As Witness,my hand and notarial seal. | ||||
| /s/ Debra Jarrell-Crabbs | ||||
| Debra Jarrell-Crabbs | ||||
| [Notary Seal] | Notary Public | |||
| My commission expires 10/27/04 |
ARCO CENTER
NOTICE OF DELIVERY OF POSSESSION
Molina Healthcare, Inc.
Attn: Mr. C. Joseph Heinz
One Golden Shore Drive
Long Beach, CA 90802
Attn: Mr. C. Joseph Heinz
One Golden Shore Drive
Long Beach, CA 90802
Re: Lease between Pacific Towers Associates and Molina
Healthcare, Inc., dated July 10, 2002, Arco Center, Long
Beach, CA
Healthcare, Inc., dated July 10, 2002, Arco Center, Long
Beach, CA
Dear Mr. Heinz:
In accordance with the terms and conditions of the above references lease (“Lease”), this letter
will confirm that the Lease has now been fully executed by both the Landlord and the Tenant, that
you have received a copy of the fully executed lease, and that possession of Floors 2, 6 and 7 has
been delivered to Molina Healthcare, Inc. as of this date, August 5, 2002.
Please confirm the foregoing and return a copy of this letter to the undersigned.
Cory J. Kristoff, CPM®, RPA
General Manager
Pacific Towers Associates
The Swig Company
200 Oceangate, Suite 310
Long Beach, CA 90802
General Manager
Pacific Towers Associates
The Swig Company
200 Oceangate, Suite 310
Long Beach, CA 90802
Tenant hereby confirms the foregoing and acknowledges that possession of Floors 2, 6 and 7 has been
delivered to Tenant as of the date set forth above.
| MOLINA HEALTHCARE, INC. |
||||
| By: | ||||
cc: eRealty Commercial
Attn: Damian McKinney
12780 High Bluff Drive, Suite 100
San Diego, Ca 92130
Attn: Damian McKinney
12780 High Bluff Drive, Suite 100
San Diego, Ca 92130
SECOND AMENDMENT TO OFFICE LEASE
This Second Amendment to Office Lease is entered into as of the 5th day of December
2002, by and between PACIFIC TOWERS ASSOCIATES, a California Limited Partnership, as “Landlord”,
and MOLINA HEALTHCARE, INC., a California corporation, as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant entered into that certain Office Lease (“Lease”) dated July 10, 2002,
as amended by that certain First Amendment to Office Lease dated November 5, 2002, for premises
(“Premises”) commonly known as Suites 200, 600 and 700, Area Center, 200 Oceangate, Long Beach,
California; and
WHEREAS,
Landlord and Tenant now desire to amend the Lease in connection with (i) Tenant’s
Expansion onto the 3rd and 4th Floors, and (ii) Tenant’s “must take” space.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. Expansion of Premises to Include Entire 3rd and 4th Floors.
Subject to the terms and conditions contained herein, the Premises are hereby expanded to include
the entire 3rd and 4th Floors of 200 Oceangate, comprising a total expansion
of 33,150 rentable square feet (the “Expansion Premises”). The Expansion Premises are leased to
Tenant for a term (“Expansion Premises Lease Term”) commencing 120 days after the date Landlord
delivers possession thereof to Tenant, or upon Tenant commencing business operations therein,
whichever occurs first, and expiring on December 4, 2012.
2. Monthly Base Rental for Expansion Premises. Beginning on the first day of the Expansion
Premises Lease Term and continuing throughout the Expansion Premises Lease Term, the Monthly Base
Rental for the Expansion Premises shall be the same per rentable square foot Monthly Base Rental
(with the same increases) as is then applicable to the Premises originally leased by Tenant under
the Lease.
3. Tenant Improvement Allowance. In connection with Tenant’s leasing of the Expansion
Premises, Landlord shall provide the same $20.00 per usable square foot Tenant Improvement
Allowance that Landlord is providing in connection with the initial Premises leased under the
Lease. Said Tenant Improvement Allowance for the Expansion Premises shall be delivered to Tenant on
the same terms and conditions as provided for the original Premises, as set forth in the
Workletter, but any reference therein to the Commencement Date shall mean the commencement date of
the Lease term for the Expansion Premises.
4. Additional Tenant Improvement Allowance. In addition to the Tenant Improvement Allowance
set forth above, Landlord shall provide, with respect to the 3rd and 4th
Floors, the same $26,000 per floor additional Tenant Improvement Allowance that was provided to
Tenant pursuant to the First Amendment to Office Lease. Said additional Tenant Improvement
Allowance shall be delivered to Tenant on the same terms and conditions, and with Tenant having the
same improvement obligations on the applicable Floor, as set forth in said First Amendment to
Office Lease, but said $26,000 per Floor amount shall be reduced by $6,000 with respect to the
3rd floor to reflect the fact that on the 3rd Floor the elevator lobby fire
doors, related walls and associated hardware are already in place and are ADA code compliant.
5. Additional Terms and Condition. Except as set forth in this Second Amendment to Office
Lease, the 3rd and 4th Floors shall be leased to Tenant on the same terms and
conditions as the original Premises; provided however, (i) parking provided in connection with the
leasing of the 3rd and 4th Floors shall be in the ratio of 4.5/1,000 rentable
square feet for the 3rd Floor and 4.0/1,000 rentable square feet
1
for the 4th Floor, and (ii) on the 3rd and 4th Floors, as well as
on the “Must Take” Floor (as defined below) the total connected electrical load shall not exceed 6
watts per usable square foot, determined on a Floor by Floor basis. Landlord shall supply
electrical current as is needed to meet said connected electrical load of up to 6 watts per usable
square foot of 3rd and 4th Floor Premises, as well as on the “Must Take”
Floor, in accordance with the terms and conditions of the Lease.
6. Amendments Pertaining to 8th Floor “Must Take” Floor.
Landlord and Tenant agree that the “must take” Floor that Tenant is currently obligated to take
pursuant to Article 1.1 of the Lease shall be modified so that Landlord can deliver either the
5th Floor or the 8th Floor, and that the delivery date therefor shall be
sometime in the calendar year 2005. Landlord shall give Tenant at least 120 days prior written
notice of the approximate intended delivery date and shall provide Tenant with updates as to the
exact delivery date, as such information becomes available to Landlord.
Accordingly, the second paragraph of Article 1.1 of the Lease is hereby deleted in its entirety and
is replaced with the following:
“Commencing on the earlier of (i) four months following the date that Landlord delivers possession
thereof to Tenant, or (ii) the date that Tenant commences business operations therein, the Premises
shall be further expanded to include the entire 5th Floor or 8th Floor(at
Landlord’s election) of 200 Oceangate, containing, in either case, 16,575 rentable square feet. The
target date for Landlord’s delivery of possession is sometime in the calendar year 2005, (with
Landlord giving Tenant at least 120 days prior written notice of the approximate intended delivery
date) but Landlord may be delayed in delivering the Floor by said date as a result of the occupancy
by the current tenants and subtenants, but in no event shall the delay extend beyond December 31,
2006. To the extent Landlord is so delayed beyond December 31, 2005 in delivering the entire
5th or 8th Floor Premises. Tenant may elect, by written notice to Landlord
prior to March 31, 2007 or such earlier date as possession of said 5th or 8th
Floor Premises are delivered, not to expand into said 5th or 8th Floor
Premises.”
In connection with the foregoing, the reference to the 8th Floor in the Basic Lease
Information, the references to the 8th Floor in Paragraph 10 of the Tenant Improvement
Workletter, and the references to the 8th Floor in the First Amendment to Office Lease
are hereby amended by replacing the words “8th Floor” with the words “5th
Floor or 8th Floor, depending on which Floor Tenant expands into pursuant to the second
paragraph of Article 1.1 of the Lease, as amended by the Second Amendment to Office Lease”.
7. Amendments in Parking Provisions. As a result of the amendments made to the Lease
pursuant to this Second Amendment to Office Lease, Paragraph 4 of the Lease Addendum is hereby
deleted in its entirety and is replaced with the following.
“4. PARKING. Tenant shall be provided with a parking ratio of four and one-half (4.5) parking
passes per 1,000 square feet of rentable square footage of the 2nd, 3rd,
6th and 7th Floor Premises and in the ratio of four (4) parking passes per
1,000 rentable square feet with respect to the 4th Floor Premises. Said parking passes
shall include single unreserved and tandem parking, with the allocation as follows: 40% tandem and
60% single unreserved. Landlord shall provide Tenant with additional parking on a month-to-month
basis, as needed and as available, and at prevailing ARCO Center rates.
From December 5, 2002 through December 4, 2007, the monthly parking costs for parking allocated in
connection with the 2nd, 3rd, 6th, and 7th Floor
Premises then leased by Tenant shall be in accordance with the following schedule: $70.00 per
single unreserved parking pass per month and $45.00 per tandem parking pass per
2
month. Thereafter, the rates shall be the then prevailing ARCO Center rates in accordance with
Exhibit D of the Lease.
The monthly parking costs for parking allocated in connection with the 4th Floor
Premises shall be the then prevailing ARCO Center rates in accordance with Exhibit D of the Lease.
Parking ratios and rates for all parking allocated in connection with any expansion beyond the
2nd, 3rd, 4th, 6th, and 7th Floor Premises
leased hereunder shall be in the ratio and at rates as are negotiated between Landlord and Tenant;
provided, however, in no event shall the parking ratio be less than 3.0 passes per 1,000 rentable
square feet of expansion space. Landlord shall use its reasonable efforts to provide 3.5 passes per
1,000 rentable square feet of expansion space if and to the extent Landlord and the Building is not
adversely affected thereby and Landlord does not incur any additional cost, loss of revenue or loss
of parking for anticipated Building needs, including but not limited to the needs of existing or
future tenants, or visitors, as a result thereof. Under no circumstances shall Tenant have any
right to dispute any determination of Landlord in connection with the quantity of parking passes
provided.
Notwithstanding anything to the contrary, Landlord reserves the right to fulfill all or a portion
of Tenant’s parking allocation with staffed valet parking.
Except as set forth in this Second Amendment to Lease, the Lease as previously amended shall remain
unamended and in full force and effect.
PACIFIC TOWERS ASSOCIATES, a California Limited Partnership
| By: | SIC — Long
Beach, a California Limited Partnership, General Partner of Pacific Towers Associates |
|||
| By: | The Swig Company,
a California Corporation, General Partner of SIC — Long Beach |
|||
| By: | /s/ Kennard P. Perry | |||
| Title: VICE PRESIDENT | ||||
MOLINA HEALTHCARE, INC., a California corporation
| By: | /s/ Illegible | |||
| Its: Executive V.P. | ||||
| By: | /s/ C. Joseph Heinz | |||
| Its: Associate V.P./CAO | ||||
3
| The Swig Company | Ph (415) 291.1100 | |||
| 220 Montgomery Street | Fx (415) 291.8373 | |||
November 16, 2004
|
San Francisco | |||
| California 94104 |
Mr. C. Joseph Heinz
Associate Vice President / Chief Administrative Officer
Molina Healthcare, Inc.
One Golden Shore
Long Beach, CA 90802
Associate Vice President / Chief Administrative Officer
Molina Healthcare, Inc.
One Golden Shore
Long Beach, CA 90802
Re: ARCO Center, 200 Oceangate Via Personal Delivery
Must Take Space, 5th Floor
Must Take Space, 5th Floor
Dear Joe,
Pursuant to the Lease Agreement dated July 10, 2002, paragraph 1.1 and the Second Amendment to
Lease dated December 5, 2002, paragraph 6, pertaining to the “Must Take Floor”, the Landlord will
deliver to Molina Healthcare the entire 5th floor in the 200 Oceangate tower consisting
of 16,575 rentable square feet. The approximate intended delivery date is April 1, 2005 with rent
commencing on the earlier of (i) four months following the date that Landlord delivers possession,
or (ii) the date that Tenant commences business operations therein.
| Sincerely, |
||||
| /s/ Cory J. Kristoff | ||||
| Cory J. Kristoff, CPM®, RPA | ||||
200 Oceangate, LLC,
a Delaware limited liability company
a Delaware limited liability company
| By: | Pacific Towers Associates, A California Lin | |||
| Its: Sole Member | ||||
| By: | SIC — Long Beach, A California Lin | |||
| Its: General Partner | ||||
| By: | The Swig Company, a California corporation | |||
| Its: General Partner | ||||
| By: | /s/ Kennard P. Perry | |||
| Name: | Kennard P. Perry | |||
| Its: Chief Investment Officer / Head of Asset Management | ||||
cc: Damian McKinney / e Realty
| The Swig Company | Ph (415) 291.1100 | |||
| 220 Montgomery Street | Fx (415) 291.8373 | |||
| San Francisco | ||||
November 16, 2004
|
California 94104 |
Mr. C. Joseph Heinz
Associate Vice President / Chief Administrative Officer
Molina Healthcare, Inc.
One Golden Shore
Long Beach, CA 90802
Associate Vice President / Chief Administrative Officer
Molina Healthcare, Inc.
One Golden Shore
Long Beach, CA 90802
Re: ARCO Center, 200 Oceangate Via Personal Delivery
Must Take Space, 5th Floor
Must Take Space, 5th Floor
Dear Joe,
Pursuant to the Lease Agreement dated July 10, 2002, paragraph 1.1 and the Second Amendment to
Lease dated December 5, 2002, paragraph 6, pertaining to the “Must Take Floor”, the Landlord will
deliver to Molina Healthcare the entire 5th floor in the 200 Oceangate tower consisting
of 16,575 rentable square feet. The approximate intended delivery date is April 1, 2005 with rent
commencing on the earlier of (i) four months following the date that Landlord delivers possession,
or (ii) the date that Tenant commences business operations therein.
| Sincerely, |
||||
| /s/ Cory J. Kristoff | ||||
| Cory J. Kristoff, CPM®, RPA | ||||
200 Oceangate, LLC,
a Delaware limited liability company
a Delaware limited liability company
| By: | Pacific Towers Associates, A California Limited Partnership | ||||
| Its: Sole Member | |||||
| By: | SIC — Long Beach, A California Limited Partnership | ||||
| Its: General Partner | |||||
| By: | The Swig
Company, a California corporation |
||||
| Its: General Partner | |||||
| By: | /s/ Kennard P. Perry | |||
| Name: | Kennard P. Perry | |||
| Its: Chief Investment Officer / Head of Asset Management | ||||
cc: Damian McKinney / e Realty
SECOND AMENDMENT TO OFFICE LEASE
This Second Amendment to Office Lease is entered into as of the 5th day of December
2002, by and between PACIFIC TOWERS ASSOCIATES, a California Limited Partnership, as “Landlord”,
and MOLINA HEALTHCARE, INC., a California corporation, as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant entered into that certain Office Lease (“Lease”) dated July 10, 2002,
as amended by that certain First Amendment to Office Lease dated November 5, 2002, for premises
(“Premises”) commonly known as (Illegible) 200, 600 and 700, Arco Center, 200 Oceangate, Long
Beach, California; and
WHEREAS, Landlord and Tenant now desire to amend the Lease in connection with (i) Tenant’s
expansion onto the 3rd and 4th Floors, and (ii) Tenant’s “must take” space.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. Expansion of Premises to Include Entire 3rd and 4th Floors.
Subject to the terms and conditions contained herein, the Premises are hereby expanded to include
the entire 3rd and 4th Floors of 200 Oceangate, comprising a total expansion
of 33,150 rentable square feet (the “Expansion Premises”). The Expansion Premises are leased to
Tenant for a term (“Expansion Premises Lease Term”) commencing 120 days after the date Landlord
delivers possession thereof to Tenant, or upon Tenant commencing business operations therein,
whichever occurs first, and expiring on December 4, 2012.
2. Monthly Base Rental for Expansion Premises. Beginning on the first day of the Expansion
Premises Lease Term and continuing throughout the Expansion Premises Lease Term, the Monthly Base
Rental for the Expansion Premises shall be the same per rentable square foot Monthly Base Rental
(with the same increases) as is then applicable to the Premises originally leased by Tenant under
the Lease.
3. Tenant Improvement Allowance. In connection with Tenant’s leasing of the Expansion
Premises, Landlord shall provide the same $20.00 per usable square foot Tenant Improvement
Allowance that Landlord is providing in connection with the initial Premises leased under the
Lease. Said Tenant Improvement Allowance for the Expansion Premises shall be delivered to Tenant on
the same terms and conditions as provided for the original Premises, as set forth in the
Workletter, but any reference therein to the Commencement Date shall mean the commencement date of
the Lease term for the Expansion Premises.
4. Additional Tenant Improvement Allowance. In addition to the Tenant Improvement Allowance
set forth above, Landlord shall provide, with respect to the 3rd and 4th
Floors, the same $26,000 per floor additional Tenant Improvement Allowance that was provided to
Tenant pursuant to the First Amendment to Office Lease. Said additional Tenant Improvement
Allowance shall be delivered to Tenant on the same terms and conditions, and with Tenant having the
same improvement obligations on the applicable Floor, as set forth in said First Amendment to
Office Lease, but said $26,000 per Floor amount shall be reduced by $6,000 with respect to the
3rd floor to reflect the fact that on the 3rd Floor the elevator lobby fire
doors, related walls and associated hardware are already in place and are ADA code compliant.
5. Additional Terms and Conditions. Except as set forth in this Second Amendment to Office
Lease, the 3rd and 4th Floors shall be leased to Tenant on the same terms and
conditions as the original Premises; provided however, (i) parking provided in connection with the
leasing of the 3rd and 4th Floors shall be in the ratio of 4.5/1,000 rentable
square feet for the 3rd Floor and 4.0/1,000 rentable square feet
1
for the 4th Floor, and (ii) on the 3rd and 4th Floors, as well as
on the “Must Take” Floor (as defined below) the total connected electrical load shall not exceed 6
watts per usable square foot, determined on a Floor by Floor basis. Landlord shall supply
electrical current as is needed to meet said connected electrical load of up to 6 watts per usable
square foot of 3rd and 4th Floor Premises, as well as on the “Must Take”
Floor, in accordance with the terms and conditions of the Lease.
6.
Amendments (Illegible) To 8th Floor “Must Take” Floor.
Landlord and Tenant agree that the “must take” Floor that Tenant is currently obligated to take
pursuant to Article 1.1 of the Lease shall be modified so that Landlord can deliver either the
5th Floor or the 8th Floor, and that the delivery date therefore shall be
sometime in the calendar year 2005. Landlord shall give Tenant at least 120 days prior written
notice of the approximate intended delivery date and shall provide Tenant with updates as to the
exact delivery date, as such information becomes available to Landlord.
Accordingly, the second paragraph of Article 1.1. of the Lease is hereby (Illegible) and is
replaced with the following:
“Commencing on the earlier of (i) four months following the date that Landlord delivers possession
thereof in Tenant, or (ii) the date that Tenant commences business operations therein, the Premises
shall be further expanded to include the entire 5th Floor or 8th Floor (at
Landlord’s election) of 200 Oceangate, containing, in either case, 16,575 rentable square feet. The
target date for Landlord’s delivery of possession is sometime in the calendar year 2005, (with
Landlord giving Tenant at least 120 days prior written notice of the approximate(Illegible)
delivery date) but Landlord may be delayed in delivering the Floor by said date as a result of the
occupancy by the current Tenants and subtenants, but in no event shall the delay extend beyond
December 31, 2006. To the(Illegible) Landlord is so delayed beyond December 31, 2005 in delivering
the entire 5th or 8th Floor Premises. Tenant may elect, by written notice to
Landlord prior to March 31, 2007 or such earlier date as possession of said 5th or
8th Floor Premises are delivered, not to expand into said 5th or
8th Floor Premises.”
In connection with the foregoing, the reference to the 8th Floor in the Basic Lease
Information, the references to the 8th Floor in Paragraph 10 of the Tenant Improvement
Workletter, and the references to the 8th Floor in the First Amendment to Office Lease
are hereby amended by replacing the words “8th Floor” with the words “5th
Floor or 8th Floor, depending on which Floor Tenant expands into pursuant to the second
paragraph of Article 1.1 of the Lease, as amended by the Second Amendment to Office Lease”.
7. Amendments to Parking Provisions. As a result of the amendments made to the Lease
pursuant tot this Second Amendment to Office Lease, Paragraph 4 of the Lease Addendum is hereby
deleted in its entirely and is replaced with the following.
4. PARKING. Tenant shall be provided with a parking ratio of four and one half (4.5) parking
passes per 1,000 square feet of rentable square footage of the 2nd, 3rd,
6th and 7th Floor Premises, and in the ratio of four (4) parking passes per
1,000 rentable square feet with respect to the 4th Floor Premises. Said parking passes
shall include single unreserved and (Illegible) parking, with the allocation as follows: 40%
(Illegible) and 60% single unreserved. Landlord shall provide Tenant with additional parking on a
month-to-month basis, as needed and as available and at prevailing ARCO Center rates.
From December 5, 2002 through December 4, 2007, the monthly parking costs for parking allocated in
connection with the 2nd, 3rd, 6th, and 7th Floor
Premises then leased by Tenant shall be in accordance with the following schedule: $70.00 per
single unreserved parking pass per month and $45.00 per (Illegible) parking pass per
2
month. Therefore, the rates shall be the then prevailing ARCO Center rates in accordance with
Exhibit D of the Lease.
The monthly parking costs for parking allocated in connection with the 4th Floor
Premises shall be the then prevailing ARCO Center rates in accordance with Exhibit D of the Lease.
Parking
ratios and rates for all parking allocated in connection with any expansion beyond the
2nd,3rd,4th, 6th and 7th Floor Premises
leased hereunder shall be in the ratio and at rates as are negotiated between Landlord and Tenant:
provided, however, in no event shall the parking ratio be less than 3.0 passes per 1,000 rentable
square feet of expansion space. Landlord shall use its reasonable efforts to provide 3.5 passes per
1,000 rentable square feet of expansion space if and to the extent Landlord and the Building is not
adversely affected thereby and Landlord does not incur any additional cost, loss of revenue or loss
of parking for anticipated Building needs, including but not limited to the needs of existing or
future tenants, or visitors, as a result thereof. Under no circumstances shall Tenant have any
right to dispute any determination of Landlord in connection with the
quantity of parking passes
provided.
Notwithstanding anything to the (Illegible), Landlord reserves the right to fulfill all or a
portion of Tenant’s parking allocation with staffed valet parking”.
Except as set forth in this Second Amendment to Lease, the Lease as previously amended shall remain
unamended and in full force and effect.
| PACIFIC TOWERS ASSOCIATES, a California Limited Partnership |
||||
| By: | SIC
— Long Beach, a California Limited Partnership, General Partner of Pacific Towers Associates |
|||
| By: | The
Swig Company, a California Corporation, General Partner of SIC — Long Beach |
|||
| By: | /s/ Kennard P. Perry | |||
| Title: VICE PRESIDENT | ||||
| MOLINA HEALTHCARE, INC., a California corporation |
||||
| By: | /s/ Illegible | |||
| Its: Executive V.P. | ||||
| By: | /s/ C. Joseph Heinz | |||
| Its: Associate V.P./CAO | ||||
3
THIRD AMENDMENT TO OFFICE LEASE
MOLINA HEALTHCARE, INC.
This Third Amendment to Office Lease (“Amendment”) is entered into as of the 5th day of April 2006,
by and between 200 OCEANGATE, LLC, a Delaware limited liability company, successor to Pacific
Towers Associates, a California limited partnership, as “Landlord” and MOLINA HEALTHCARE, INC., a
California corporation, as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant are parties to that certain Office Lease dated July 10, 2002, as
amended by that certain First Amendment to Office Lease dated November 5, 2002, and by that certain
Second Amendment to Office Lease dated December 5, 2002 (collectively, the “Lease”), for premises
(“Premises”) commonly known as Suites 200, 300, 400, 500, 600 and 700, Arco Center, 200 Oceangate,
Long Beach, California, containing approximately 99,181 rentable square feet (the “Current
Premises”); and
WHEREAS, Landlord and Tenant now desire to amend the Lease in connection with (i) Tenant’s
expansion onto the 11th, 14th and Ground Floors of 200 Oceangate and (ii) the extension of the
Lease Term to December 31, 2018; and
WHEREAS, for the purpose of this Third Amendment to Office Lease, capitalized terms, to the extent
they are not defined herein, shall have the same meaning as set forth in the Lease.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
AGREEMENT
1. Expansion of Premises to Include Entire 11th, 14th and Ground Floors. Subject to the
terms and conditions contained herein, the Premises are hereby expanded to include the entire 11th
Floor of 200 Oceangate (“11th Floor Expansion Premises”), the entire 14th Floor of 200 Oceangate
(“14th Floor Expansion Premises”) and the entire Ground Floor of 200 Oceangate (“Ground Floor
Expansion Premises”), comprising a total expansion of 47,713 rentable square feet (collectively,
the “Expansion Premises”). The rentable square footage of each portion of the Expansion Premises is
as follows: 11th Floor Expansion Premises: 16,575 rentable square feet; 14th Floor Expansion
Premises: 16,575 rentable square feet; Ground Floor Expansion Premises: 14,563 rentable square
feet. The location of said Expansion Premises is more particularly shown on Exhibit A, attached
hereto.
2. Term; Delivery of Possession.
a. Commencement Date of Term for Expansion Premises. The Expansion Premises are leased to
Tenant for a Term commencing on the following dates:
14th Floor Expansion Premises:
|
August 1, 2006 | |
11th Floor Expansion Premises:
|
April 1, 2007 | |
Ground Floor Expansion Premises:
|
July 1, 2008 |
Upon the commencement date for each portion of the Expansion Premises, Landlord shall prepare, and
Landlord and Tenant shall execute, a Commencement Date Memorandum which shall
1
specify, among other things, the exact commencement date for the applicable portion of the
Expansion Premises and the increase to Tenant’s Share resulting therefrom.
b. Expiration Date of Term for Expansion Premises. The Expansion Premises are leased to
Tenant for a Term expiring on December 31, 2018.
c. Extension of Term for Current Premises. The Term of the Lease for the Current Premises
(99,181 rentable square feet) is hereby extended and shall have an expiration date of December 31,
2018. In connection therewith, Tenant’s option to extend the Term of the Lease pursuant to
Paragraph 2 of the Lease Addendum shall be for two consecutive five-year periods commencing on
January 1, 2019.
d. Delivery of Possession. Possession of the Expansion Premises shall be delivered to
Tenant on the following dates:
14th Floor Expansion Premises:
|
Upon the full execution of this Amendment | |
11th Floor Expansion Premises:
|
February 1, 2007 | |
Ground Floor Expansion Premises:
|
May 1, 2008 |
Said possession prior to the applicable commencement dates shall be on all of the terms and
conditions set forth herein with the exception of the obligation to pay rent.
In the event Landlord is delayed in delivering any portion of the Expansion Premises, the portion
shall be delivered as soon as reasonably possible and the commencement date therefor shall be
extended by a like number of days.
3. Monthly Base Rental. Beginning on the commencement date of the Lease Term for each
portion of the Expansion Premises and continuing through November 30, 2012, the Monthly Base Rental
for each portion of the Expansion Premises shall be the same per rentable square foot Monthly Base
Rental (with the same increases) as is then applicable to the Current Premises. On December 1, 2012
and on each subsequent December 1 throughout the remainder of the Term, the Monthly Base Rental for
the entire Premises (both the Expansion Premises and the Current Premises) shall be increased by
three percent (3%) of the Monthly Base Rent then in effect.
4. Condition of Expansion Premises. Each portion of the Expansion Premises shall be
delivered to and accepted by Tenant in its then existing “as-is”, “where-is” condition and state of
repair. Tenant acknowledges that Landlord has no obligation to make any improvements or
modifications to the Expansion Premises or to pay for any improvements made thereto.
5. Tenant’s Work. Tenant shall improve the Expansion Premises at its sole cost and expense
in accordance with the terms and conditions of the Workletter, together with its exhibits, attached
hereto as Exhibit B, and Tenant shall be solely responsible throughout the Term for the maintenance
and repair of all improvements it constructs and existing improvements it modifies.
Accordingly, prior to the improvement of each portion of the Expansion Premises, Landlord and
Tenant shall enter into a Workletter in the form of said Exhibit B but updated to reflect any
changes that have occurred in Building polices following the date of this Amendment.
Within 30 days following the issuance of the Certificate of Occupancy for each portion of the
Expansion Premises, or six months after Tenant occupies the space, whichever occurs first, Tenant
shall provide to Landlord the documentation required by Landlord’s “Close Out Package” attached to
the Workletter as Attachment D.
2
6. Additional Terms and Conditions. The following additional terms and conditions shall
apply to Tenant’s leasing of the Expansion Premises:
a. Parking. Parking passes provided in connection with the leasing of the Expansion
Premises shall be in the ratio of 3/1,000 rentable square feet, provided to Tenant in increments at
such time as the Term commencement date occurs for each portion of the Expansion Premises. Said
parking passes shall include single unreserved and tandem parking, with the allocation determined
by Landlord, as follows: up to 40% tandem and the balance single unreserved, and the rates shall be
at the then and thereafter prevailing ARCO Center rates in accordance with Exhibit D of the Lease.
Notwithstanding anything to the contrary, Landlord reserves the right to fulfill all or a portion
of Tenant’s parking allocation with staffed valet parking.
b. Additional Key Cards. When requested by Tenant, Landlord shall provide additional key
cards to access the Building, at the Building Standard rate, currently $15.00 per card, but at no
monthly charge. Said key cards shall not enable the holder to access the parking area.
c. Electrical. The total connected electrical load in the Expansion Premises shall not
exceed 6 watts per usable square foot, determined on a Floor by Floor basis.
d. Operating Expenses and Taxes.
i. Base Year.
A. The Base Expense Year for Operating Expenses for the 14th Floor Expansion Premises shall be
2006. Notwithstanding the foregoing, there shall be no Operating Expense pass throughs for the 14th
Floor Expansion Premises before August 1, 2007.
B. The Base Expense Year for Operating Expenses for the 11th Floor Expansion Premises shall be
2007. Notwithstanding the foregoing, there shall be no Operating Expense pass throughs for the 11th
Floor Expansion Premises before April 1, 2008.
C. The Base Expense Year for Operating Expenses for the Ground Floor Expansion Premises shall be
2008. Notwithstanding the foregoing, there shall be no Operating Expense pass throughs for the
Ground Floor Expansion Premises before July 1, 2009.
ii. Tenant’s Share. Tenant’s Share of increased Operating Expenses and Taxes shall be
increased in accordance with the Lease as the Term commences with respect to each portion of the
Expansion Premises.
iii. Other Terms and Conditions. All other terms and conditions regarding Operating
Expenses and Taxes shall be as set forth in the Lease.
e. Rent to be Paid Upon Execution. Upon the full execution of this Amendment, Tenant shall
pay Monthly Base Rental for August 2006 for the 14th Floor Expansion Premises.
3
f. Signage. Landlord, at its sole cost and expense, shall provide Tenant with reasonable
Building Standard directory signage for the Expansion Premises. Suite signage shall be at Tenant’s
sole cost and expense.
g. Commissions. In connection with Tenant’s leasing of the Expansion Premises, Tenant shall
pay any and all procuring side broker’s commission and/or finder’s fees.
h. Option to Extend. The Expansion Premises shall be included in and subject to the Option
to Extend provision as contained in the Paragraph 2 of the Lease Addendum.
7. Expansion of Right of First Negotiation. Tenant’s existing Right of First Negotiation
contained in Paragraph 3 of the Addendum to Lease is hereby expanded to include all space in 200
Oceangate.
8. Molina Healthcare, Inc.’s Right of First Offer to Purchase Building. Prior to selling
the Building to any unaffiliated third party, Landlord shall notify Molina Healthcare, Inc. of the
availability of the Building for sale and the price and terms at which Landlord would be willing to
sell the Building to Molina Healthcare, Inc.. Molina Healthcare, Inc. shall have twenty (20) days
after receipt of such offer to notify Landlord in writing as to whether it desires to purchase the
Building. If Molina Healthcare, Inc. so notifies Landlord, Landlord and Molina Healthcare, Inc.
shall negotiate in good faith the terms of a purchase agreement. If Molina Healthcare, Inc. does
not so notify Landlord or if, despite such good faith efforts, Landlord and Molina Healthcare, Inc.
are unable to fully negotiate and execute a purchase agreement within thirty (30) days after Molina
Healthcare, Inc.’s notice that it desires to purchase the Building, Landlord may thereafter sell
the Building to any third party on any terms acceptable to Landlord, but at a price of not less
than 97% of the price that was offered to Molina Healthcare, Inc. If Landlord fails to consummate
such sale to a third party within nine (9) months after its most recent offer to Molina Healthcare,
Inc. or if Landlord desires to sell the Building at a price that is less than 97% of the price that
was most recently offered to Molina Healthcare, Inc., Landlord must first re-offer the Building to
Molina Healthcare, Inc. in accordance with this Paragraph prior to selling the Building. This right
of first offer shall terminate upon (i) the expiration or other termination of this Lease, (ii) the
sale of the Building to an unaffiliated third party, or (iii) the transfer of the Building by
foreclosure or deed in lieu of foreclosure, and thereafter this Paragraph shall be of no further
force or effect. This right of first offer shall not apply to (i) foreclosure sales, (ii) deeds in
lieu of foreclosure, (iii) sales by reason of condemnation or threatened condemnation, (iv) sales
of partial interests in the Building and sales or other transfers of interests in 200 Oceangate,
LLC or in the entities that own or are affiliated with the ownership of 200 Oceangate, LLC, but
only if the Swig family continues to directly or indirectly own a majority interest in the
Building, and (v) other sales or transfers which are not bona-fide full market value voluntary
sales to unaffiliated third parties.
The rights of Molina Healthcare, Inc. pursuant to this Paragraph 8 are personal to Molina
Healthcare, Inc. and are non-assignable. At such time as the Right of First Offer is no longer of
any force and effect, Molina Healthcare, Inc. shall execute an Acknowledgement of Termination of
Right of First Offer in such reasonable form as is prescribed by Landlord.
9. No Additional Terms and Conditions. Except as set forth in this Third Amendment to
Office Lease, the Expansion Premises shall be leased to Tenant on the same terms and conditions as
apply to the Current Premises.
4
10. No Further Amendments; Lease to Continue in Full Force and Effect. Except as set forth
in this Third Amendment to Office Lease, the Lease as previously amended shall remain unamended and
in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Third Amendment to
Office Lease as of the day and year first set forth above.
| 200 OCEANGATE, LLC, a Delaware limited liability company |
||||
| By: Pacific Towers Associates, a California limited partnership, its sole member |
||||
| By: SIC — Long Beach, a California limited partnership, its general partner |
||||
| By: The Swig Company, a California corporation, its general partner |
||||
| By: | /s/ Kennard P. Perry | |||
| Title: CHIEF INVESTMENT OFFICER | ||||
| MOLINA HEALTHCARE, INC., a California corporation |
||||
| By: | /s/ Illegible | |||
| Its: EVP & CFO | ||||
| By: | /s/ C. Joseph Heinz | |||
| Its: VP & CAO | ||||
5
FOURTH AMENDMENT TO OFFICE LEASE
MOLINA HEALTHCARE, INC.
This Fourth Amendment to Office Lease (“Amendment”), dated for reference purposes as of the 1st day
of June 2006, is made and entered into by and between 200 OCEANGATE, LLC, a Delaware limited
liability company, successor to Pacific Towers Associates, a California limited partnership, as
“Landlord” and MOLINA HEALTHCARE, INC., a California corporation, as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant are parties to that certain Office Lease dated July 10, 2002, as
amended by that certain First Amendment to Office Lease dated November 5, 2002, by that certain
Second Amendment to Office Lease dated December 5, 2002 and by that certain Third Amendment to
Office Lease (“Third Amendment”) dated April 5, 2006 (collectively, the “Lease”), for Premises
located in the Arco Center, 200 Oceangate, Long Beach, California; and
WHEREAS, Landlord and Tenant now desire to further amend the Lease in connection with (i) Tenant’s
occupancy and leasing of a portion of the Ground Floor Expansion Premises prior to the May 1, 2008
delivery date and July 1, 2008 Term Commencement Date that were set forth and established in the
Third Amendment, and (ii) Tenant’s leasing of additional space commonly known as Suite 1050 in 200
Oceangate; and
WHEREAS, for the purpose of this Fourth Amendment to Office Lease, capitalized terms, to the extent
they are not defined herein, shall have the same meaning as set forth in the Lease.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
AGREEMENT
1. Amendments Pertaining to Ground Floor Expansion Premises.
a. Early Delivery of Possession and Leasing of a Portion of Ground Floor Expansion
Premises. Paragraph 2d of the Third Amendment is hereby amended so that the delivery of
possession of the Ground Floor Expansion Premises shall be as follows:
i. Possession of 9,575 rentable square feet of the Ground Floor Expansion Premises, as shown on
Exhibit A attached hereto, (the 9,575 RSF Space”) shall be delivered to Tenant upon the full
execution of this Fourth Amendment.
ii. Possession of the remaining portion of the Ground Floor Expansion Premises, containing 4,988
rentable square feet (the “4,988 RSF Space”) and as shown on Exhibit B attached hereto, shall be
delivered to Tenant on May 1, 2008.
In the event Landlord is delayed in delivering any portion of the Ground Floor Expansion Premises,
the portion shall be delivered as soon as reasonably possible and the commencement date of the term
therefore shall be extended by a like number of days.
b. Commencement Date of Term for Ground Floor Expansion Premises. Paragraph 2a of the Third
Amendment is hereby amended so that the Ground Floor Expansion Premises are leased to Tenant for a
Term commencing on the following dates:
1
| 9,575 RSF Space: | September 1, 2006 | |||
| 4,988 RSF Space: | July 1, 2008 |
c. Base Year for Operating Expenses. Paragraph 6(d)(i)C of the Third Amendment is hereby
amended so that the Base Expense Year for Operating Expenses for the 9,575 RSF Space shall be 2006
and for the 4,988 RSF Space shall be 2008. Notwithstanding the foregoing, there shall be no
Operating Expense pass throughs for the 9,575 RSF Space before September 1, 2007 and for the 4,988
RSF Space before July 1, 2009.
2. Tenant’s Leasing of Suite 1050. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord Suite 1050, 200 Oceangate, containing 7,608 rentable square feet, as shown on
Exhibit C attached hereto (“Suite 1050”). Possession of Suite 1050 shall he delivered to Tenant in
its “AS-IS” condition upon the full execution hereof. The Commencement Date of the Term of the
lease therefore and the rent commencement date applicable to Suite 1050 shall be September 1, 2006.
The Base Year applicable to said Suite shall be 2006 although there shall be no Operating Expense
pass throughs for Suite 1050 before September 1, 2007. Said Suite shall otherwise be leased to
Tenant upon all of the terms and conditions, including at the same Monthly Base Rental rate per
rentable square foot, as apply to the Expansion Premises.
3. No Further Amendments; Lease to Continue in Full Force and Effect. Except as set forth
in this Fourth Amendment to Office Lease, the Lease previously amended shall remain unamended and
in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Fourth Amendment to
Office Lease as of the dates set forth below.
| 200 OCEANGATE, LLC, a Delaware limited liability company |
||||
| By: | Pacific Towers Associates, a California limited partnership, its sole member |
|||
| By: | SIC — Long Beach, a California limited partnership, its general partner |
|||
| By: | The Swig Company, a California corporation, its general partner |
|||
| By: | /s/ Kennard P.Perry | |||
| Title: CIO | ||||
| Date of Execution: | ||||
| MOLINA HEALTHCARE, INC., a California corporation |
||||
| By: | /s/ Illegible | |||
| Its: CFO | ||||
| By: | /s/ C.Joseph Heinz | |||
| Its: VP & CFO | ||||
| Date of Execution: 06-14-06 | ||||
2
200 OCEANGATE, LLC
STANDARD FORM OFFICE LEASE
EXHIBIT A
FLOOR PLAN
GROUND FLOOR, SUITE 100
GROUND FLOOR, SUITE 100
200 TOWER
200 OCEANGATE, LLC
STANDARD FORM OFFICE LEASE
EXHIBIT B
FLOOR PLAN
GROUND FLOOR, SUITE 100
GROUND FLOOR, SUITE 100
200 TOWER
200 OCEANGATE, LLC
STANDARD FORM OFFICE LEASE
EXHIBIT C
FLOOR PLAN
10TH FLOOR, SUITE 1050
10TH FLOOR, SUITE 1050
200 TOWER
FIFTH AMENDMENT TO OFFICE LEASE
MOLINA HEALTHCARE, INC.
This Fifth Amendment to Office Lease (“Amendment”), dated for reference purposes as of the 1st day
of July 2006, is made and entered into by and between 200 OCEANGATE, LLC, a Delaware limited
liability company, successor to Pacific Towers Associates, a California limited partnership, as
“Landlord” and MOLINA HEALTHCARE, INC., a Delaware corporation (formerly a California corporation),
as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant are parties to that certain Office Lease dated July 10, 2002, as
amended by that certain First Amendment to Office Lease dated November 5, 2002, by that certain
Second Amendment to Office Lease dated December 5, 2002, by that certain Third Amendment to Office
Lease (“Third Amendment”) dated April 5, 2006 and by that certain Fourth Amendment to Office Lease
dated June 1, 2006 (collectively, the “Lease”), for Premises located in the Arco Center, 200
Oceangate, Long Beach, California; and
WHEREAS, Landlord and Tenant now desire to further amend the Lease in connection with Tenant’s
occupancy and leasing of the 11th Floor Expansion Premises prior to the February 1, 2007 delivery
date and April 1, 2007 Term Commencement Date that were set forth and established in the Third
Amendment, and
WHEREAS, for the purpose of this Fifth Amendment to Office Lease, capitalized terms, to the extent
they are not defined herein, shall have the same meaning as set forth in the Lease.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
AGREEMENT
| 1. | Amendments Pertaining to 11th Floor Expansion Premises. |
a. Early Delivery of Possession and Leasing of 11th Floor Expansion Premises. Paragraph 2d
of the Third Amendment is hereby amended so that possession of the 11th Floor Expansion Premises
shall be delivered to Tenant on approximately September 1, 2006. In the event Landlord is delayed
in delivering the 11th Floor Expansion Premises, said Expansion Premises shall be delivered as soon
as reasonably possible.
b. Commencement Date of Term for 11th Floor Expansion Premises. Paragraph 2a of the Third
Amendment is hereby amended so that the 11th Floor Expansion Premises are leased to Tenant for a
Term commencing on the later of (i) November 1, 2006, or (ii) sixty (60) days after delivery of
possession thereof.
c. Base Year for Operating Expenses. Paragraph 6(d)(i)B of the Third Amendment is hereby
amended so that the Base Expense Year for Operating Expenses for the 11th Floor Expansion Premises
shall be 2006. Notwithstanding the foregoing, there shall be no Operating Expense pass throughs for
the 11th Floor Expansion Premises before November 1, 2007.
1
2. Identity of Tenant. Tenant has recently informed Landlord that Tenant has become a
Delaware corporation and is no longer a California corporation. Accordingly, the Tenant under the
Lease is Molina Healthcare, Inc., a Delaware corporation.
3. No Further Amendments; Lease to Continue in Full Force and Effect. Except as set forth
in this Fifth Amendment to Office Lease, the Lease as previously amended shall remain unamended and
in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Fifth Amendment to
Office Lease as of the dates set forth below.
| 200 OCEANGATE, LLC, a Delaware limited liability company |
||||
| By: | Pacific Towers Associates, a California limited partnership, its sole member | |||
| By: | SIC — Long Beach, a California limited partnership, its general partner | |||
| By: | The Swig Company, a California corporation, its general partner | |||
| By: | /s/ Kennard P. Perry | |||
| Title: CEO | ||||
| Date of Execution: 8/18/2006 | ||||
| MOLINA HEALTHCARE, INC., a Delaware corporation |
||||
| By: | /s/ Illegible | |||
| Its: CFO | ||||
| By: | /s/ C. Joseph Heinz | |||
| Its: VP & CAO | ||||
| Date of Execution: 8-16-06 | ||||
2
SIXTH AMENDMENT TO OFFICE LEASE
MOLINA HEALTHCARE, INC.
This Sixth Amendment to Office Lease (“Sixth Amendment”), dated for reference purposes as of the
21st day of May 2007, is made and entered into by and between 200 OCEANGATE, LLC, a
Delaware limited liability company, successor to Pacific Towers Associates, a California limited
partnership, as “Landlord” and MOLINA HEALTHCARE, INC., a Delaware corporation (formerly a
California corporation), as “Tenant”.
RECITALS
WHEREAS, Landlord and Tenant are parties to that certain Office Lease dated July 10, 2002, as
amended by that certain First Amendment to Office Lease dated November 5, 2002, by that certain
Second Amendment to Office Lease dated December 5, 2002, by that certain Third Amendment to Office
Lease dated April 5, 2006, by that certain Fourth Amendment to Office Lease dated June 1, 2006
(“Fourth Amendment”) and by that certain Fifth Amendment to Office Lease dated July 1, 2006
(collectively, the “Lease”), for Premises located in the Arco Center, 200 Oceangate, Long Beach,
California; and
WHEREAS, pursuant to the Fourth Amendment, a portion of the Ground Floor Expansion Premises
consisting of 9,575 rentable square feet was delivered to Tenant upon the full execution of said
Fourth Amendment and the remaining portion of the Ground Floor Expansion Premises consisting of
4,988 rentable square feet is to be delivered to Tenant on May 1, 2008; and
WHEREAS, Landlord and Tenant now desire to further amend the Lease in order to document an increase
in the square footage of the 9,575 portion of the Ground Floor Expansion Premises that was
delivered to Tenant; and
WHEREAS, for the purpose of this Sixth Amendment, capitalized terms, to the extent they are not
defined herein, shall have the same meanings as set forth in the Lease.
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
AGREEMENT
1. Amendments Pertaining to Ground Floor Expansion Premises.
a. As a result of the expansion of the Ground Floor Expansion Premises into part of the Building’s
main lobby, effective June 1, 2007 (the “418 RSF Effective Date”), the rentable square footage of
the 9,575 RSF Space, as referenced and defined in the Fourth Amendment, shall be increased from
9,575 to 9,993 rentable square feet by the addition of approximately 418 rentable square feet as
shown on Exhibit A, attached hereto (the “418 RSF Space”).
b. Effective on 418 RSF Effective Date, the 418 RSF Space is leased by Tenant at the same Monthly
Base Rental rate per rentable square foot, for the same term, and on the same other terms and
conditions as apply to the 9,575 RSF Space, and Tenant’s Share shall be increased to reflect the
increased rentable square footage.
c. The 418 RSF Space is leased to Tenant in its AS-IS condition and Landlord shall have no
obligation to provide or pay for any improvements to such space.
1
2. No Further Amendments; Lease to Continue in Full Force and Effect. Except as set forth
in this Sixth Amendment to Office Lease, the Lease as previously amended shall remain unamended and
in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Sixth Amendment to
Office Lease as of the date set forth above.
| 200 OCEANGATE, LLC, a Delaware limited liability company |
||||
| By: | Pacific Towers Associates, a California limited partnership, its sole member | |||
| By: | SIC — Long Beach, a California limited partnership, its general partner | |||
| By: | The Swig Company, a California corporation, its general partner | |||
| By: | /s/ Kennard P. Perry | |||
| Title: CIO | ||||
| MOLINA HEALTHCARE, INC., a Delaware corporation |
||||
| By: | /s/ C. Joseph Heinz | |||
| Its: | ||||
| By: | ||||
| Its: | ||||
2
200 OCEANGATE, LLC
STANDARD FORM OFFICE LEASE
EXHIBIT A
FLOOR PLAN
Exhibit 10.35
Summary of 2008 Base Salary and Bonus Targets for CEO and CFO
On February 19, 2008, the Compensation Committee of the Molina Healthcare Board of Directors
determined that Dr. J. Mario Molina’s fiscal year 2008 base salary as Chief Executive Officer (CEO)
shall be $850,000, and that John Molina’s fiscal year 2008 base salary as Chief Financial Officer
shall be $775,000.
The Compensation Committee also established Dr. Molina’s fiscal year 2008 bonus opportunity
pursuant to the same general formula under the 2005 Incentive Compensation Plan as had been used to
establish his bonus opportunity for fiscal year 2007, subject to
appropriate adjustment of the particular metrics. Under the
2005 Incentive Compensation Plan, the Compensation Committee established three independent
performance measures for fiscal year 2008: (i) earnings per
diluted share (EPS), (ii) premium and other
operating revenue (excluding interest income), and (iii) return on equity (ROE). Each of the three
measures corresponds to a baseline bonus opportunity equal to one-third of the CEO’s 2008 base
salary, or $283,333. If the “threshold” amount of a performance measure is achieved, the CEO shall
receive 80% of his possible bonus payout for that particular measure, or $226,667. If the “target”
amount of a performance measure is achieved, the CEO shall receive 100% of the possible bonus
payout for that measure, or $283,333. If the “maximum” amount of a performance measure is achieved
or exceeded, the CEO shall receive 120% of the possible bonus payout for that measure, or $340,000.
The bonus amounts shall be interpolated linearly to correspond with the achievement of each of the
measures between the 80% and 120% or greater levels, and normalized on a pro rata basis for
acquisitions occurring during the course of the year. None of the three bonus amounts shall exceed
the 120% payout level. The performance measures are as follows:
| Performance goals and payout as % of opportunity | ||||||||||||
| Threshold | Target | Maximum | ||||||||||
| Measure | (80% payout) | (100% payout) | (120% payout) | |||||||||
EPS |
$ 2.25 | $ 2.35 | $ 2.45 | |||||||||
Premium and other operating revenue |
$2,784 million | $2,900 million | $3,016 million | |||||||||
ROE |
12.4% | 12.9% | 13.4% | |||||||||
The potential bonus of John Molina as CFO for fiscal year 2008 shall be subject to the same three
performance measures and payout formula as with the CEO, only the baseline bonus opportunity for
each of the three performance measures shall be equal to one-third of
75% of his
2008 base salary, or $193,750.
Each of the CEO and CFO were also granted under the Company’s 2002 Equity Incentive Plan 15,600
shares of restricted stock, vesting in one-quarter increments over 4 years.
Exhibit 12.1
Molina Healthcare, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
| 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
Earnings: |
||||||||||||||||||||
Income before income taxes |
$ | 93,696 | $ | 73,458 | $ | 43,851 | $ | 87,685 | $ | 66,413 | ||||||||||
Add: fixed charges |
8,619 | 5,035 | 4,381 | 3,274 | 3,183 | |||||||||||||||
Total earnings |
$ | 102,315 | $ | 78,493 | $ | 48,232 | $ | 90,959 | $ | 69,596 | ||||||||||
Fixed charges: |
||||||||||||||||||||
Interest expense, including
amortization of debt issuance
costs |
$ | 4,631 | $ | 2,353 | $ | 1,529 | $ | 1,049 | $ | 1,452 | ||||||||||
Interest component of rent expense |
3,988 | 2,682 | 2,852 | 2,225 | 1,731 | |||||||||||||||
Total fixed charges |
$ | 8,619 | $ | 5,035 | $ | 4,381 | $ | 3,274 | $ | 3,183 | ||||||||||
Ratio of earnings to fixed charges |
11.9x | 15.6x | 11.0x | 27.8x | 21.9x | |||||||||||||||
Exhibit 21.1
LIST OF SUBSIDIARIES
| Name | Jurisdiction of Incorporation | |
Molina Healthcare of California
|
California | |
Molina Healthcare of California Partner Plan, Inc.
|
California | |
Molina Healthcare of Washington, Inc.
|
Washington | |
Molina Healthcare of Michigan, Inc.
|
Michigan | |
Molina Healthcare of Utah, Inc.
|
Utah | |
Health Care Horizons, Inc.
|
Michigan | |
Molina Healthcare of New Mexico, Inc. (indirect)
|
New Mexico | |
Molina Healthcare of Ohio, Inc.
|
Ohio | |
Molina Healthcare of Texas, Inc.
|
Texas | |
Molina Healthcare of Nevada, Inc.
|
Nevada | |
Molina Healthcare Insurance Company
|
Ohio | |
Alliance for Community Health LLC, dba Mercy CarePlus |
Missouri | |
Molina Healthcare of Missouri, Inc.
|
Missouri | |
Molina Healthcare of Florida, Inc.
|
Florida | |
Molina Healthcare of Arizona, Inc.
|
Arizona | |
Molina Healthcare of Virginia, Inc.
|
Virginia | |
Molina Healthcare of Georgia, Inc.
|
Georgia | |
Molina Healthcare of Indiana, Inc.
|
Indiana | |
HCLB, Inc.
|
Michigan |
EXHIBIT 23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration
Statements
(Forms S-8,
No. 333-108317
and
No. 333-138552)
pertaining to the Molina Healthcare, Inc. 2000 Omnibus Stock and
Incentive Plan, 2002 Equity Incentive Plan, and 2002 Employee
Stock Purchase Plan, and to the Registration Statement
(Form S-3,
No. 333-123783)
and related Prospectus of Molina Healthcare, Inc. for the
registration of $300,000,000 of its securities, of our reports
dated March 17, 2008, with respect to the consolidated
financial statements of Molina Healthcare, Inc. and the
effectiveness of internal control over financial reporting of
Molina Healthcare, Inc., included in its Annual Report
(Form 10-K)
for the year ended December 31, 2007, filed with the
Securities and Exchange Commission.
/s/ Ernst &
Young LLP
Los Angeles, California
March 17, 2008
EXHIBIT 31.1
SECTION 302
CERTIFICATION
I, Joseph M. Molina, M.D., certify that:
1. I have reviewed this annual report on
Form 10-K
for the fiscal year ended December 31, 2007 of Molina
Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act Rules
13a-15(f)
and
15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period for which this report
is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the
registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and
report information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ Joseph
M. Molina
Joseph M. Molina
Chief Executive Officer and President
March 17, 2008
EXHIBIT 31.2
SECTION 302
CERTIFICATION
I, John C. Molina, certify that:
1. I have reviewed this annual report on
Form 10-K
for the fiscal year ended December 31, 2007, of Molina
Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act Rules
13a-15(f)
and
15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period for which this report
is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the
registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and
report information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ John
C. Molina
John C. Molina, J.D.
Chief Financial Officer and Treasurer
March 17, 2008
EXHIBIT 32.1
CERTIFICATE
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Molina Healthcare, Inc.
(the “Company”) on
Form 10-K
for the period ending December 31, 2007 as filed with the
Securities and Exchange Commission (the
“Report”), I, J. Mario Molina, M.D., Chief
Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Joseph
M. Molina
Joseph M. Molina, M.D.
Chief Executive Officer and President
March 17, 2008
This certification accompanies this report pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of
2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as
amended. A signed original of this written statement required by
Section 906 has been provided to Molina Healthcare, Inc.
and will be retained by Molina Healthcare, Inc. and furnished to
the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATE
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Molina Healthcare, Inc.
(the “Company”) on
Form 10-K
for the period ending December 31, 2007 as filed with the
Securities and Exchange Commission (the
“Report”), I, John C. Molina, J.D., Chief
Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ John
C. Molina
John C. Molina, J.D.
Chief Financial Officer and Treasurer
March 17, 2008
This certification accompanies this report pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of
2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as
amended. A signed original of this written statement required by
Section 906 has been provided to Molina Healthcare, Inc.
and will be retained by Molina Healthcare, Inc. and furnished to
the Securities and Exchange Commission or its staff upon request.