Common use of MCP delegated entities Clause in Contracts

MCP delegated entities.

MCP delegated entities. In that MCPs are ultimately responsible for meeting program requirements, the BMHC will not discuss MCP issues Appendix D 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. October 20, 2006 Xx. Xxx Xxxxxx State of Ohio Bureau of Managed Health Care Ohio Department of Job and Family Services 000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx Columbus.OH43215.5222 Subject: Dear Xxx: The Ohio Department of Job and Family Services (State) contracted with Xxxxxx Government Human Services Consulting (Xxxxxx) to develop actuarially sound capitation rates for Calendar Year (CY) 2007 for the Healthy Families and Healthy Start (CFC) managed care populations. Xxxxxx developed CY 2007 capitation rates for the following seven managed care regions: Central, East Central. Northeast, Northwest. Southeast. Southwest, and West Central. At this time, Xxxxxx has not developed rates for the eighth region, Northeast Central, because managed care implementation has been put on hold for this region. Once the implementation date is determined for Northeast Central, a supplemental certification with the Northeast Central rates will be provided. The basic rate-setting methodology is similar to the county-specific rate methodology used in previous years. This methodology letter outlines the rate-setting process, provides information on data adjustments, and includes a final rate summary. The key components in the CY 2007 rate-setting process are: • Base data development, • Managed care rate development, and • Centers for Medicare and Medicaid Services (CMS) documentation requirements. Each of these components is described further throughout the document and is depicted in the flowchart included as Appendix X. October 20, 2006 Xx. Xxx Xxxxxx Ohio Department of Job and Family Services The major steps in the development of the base data are similar to previous years. Xxxxxx and the State have discussed the available data sources for rate development and the applicability of these data sources for each region. The data sources used for CY 2007 rate setting were: • Ohio historical FFS data, • MCP encounter data, and • MCP financial cost report data. Validation Process As part of the rate-setting process. Xxxxxx validated each of the data sources that were used to develop rates. The validations included a review of the data to be used in the rate setting process. During the validation process. Xxxxxx adjusted the data for any data miscodes (e.g., males in the delivery rate cohort) that were found. Data Sources As Ohio's Medicaid program matures, the rate-setting methodology for those counties within each region with stable managed care programs can focus more on plan-reported managed care data, including encounter data and cost reports. For counties within each region without established managed care programs. Xxxxxx continued to use the FFS data as a direct data source. The data sources used in each region depended on the most credible data sources available within the region. In regions where there are stable managed care programs, managed care data for those counties was combined with the FFS data for those counties without established managed care programs. The process to prepare these three data sources for rate-setting is detailed below. Appendix B includes a chart detailing how each region's counties have been bucketed into mandatory, Preferred Option, voluntary, or new based on the delivery system in place during the base period. This determined which data sources were used in determining regional CY 2007 rates. Also included in Appendix B is a map that shows the counties included within each region. Other sources of information that were used, as necessary, included state enrollment reports, state financial reports, projected managed care penetration rates, information from prior MCP surveys, encounter data issues log, and other ad hoc sources. October 20, 2006 Xx. Xxx Xxxxxx Ohio Department of Job and Family Services FFS experience from the base time period of State Fiscal Year (SFY) 2004 (July 1, 2003-June 30, 2004) and SFY 2005 (July 1, 2004-June 30, 2005) was used as a direct data source for the counties described below: • Those that had a voluntary managed care program during the base time period, and • Those that did not have a managed care program during the base time period. In addition to the SFY 2004 and SFY 2005 data, SFY 2003 data supplemented the FFS base data development as a reasonability measure. For the above counties, the FFS data was considered the most credible data source and, in some cases, was the only data available for rate setting. As in previous years, adjustments were applied to the FFS data to reflect the actuarially equivalent claims experience for the population that will be enrolled in the managed care program. The State Medicaid Management Information System (MM1S) includes data for populations and/or services excluded from managed care and the actual FFS paid claims may be net or gross of certain factors (e.g., gross adjustments or third party liability (TPL)). As a result, it is necessary to make adjustments to the FFS base data as documented in Appendix C and outlined in Appendix A. MCP encounter experience from the base time period of SFY 2004 and SFY 2005 was used as a direct data source for the counties described below: • Those that had a mandatory managed care program during the base time period, and • Those that had a Preferred Option managed care program during the base time period. For the above counties, the encounter data was considered a credible data source and was used along with the financial cost report data as a direct data source. Although encounter data is generally reflective of the populations and services that are the responsibility of the MCPs, adjustments were applied to the encounter data, as appropriate. Those adjustments, and other considerations, include the following items: • Claims completion factors, October 20, 2006 Xx. Xxx Xxxxxx Ohio Department of Job and Family Services • Program changes in the historical base time period (SFY 2004-SFY 2005), and • Other actuarially appropriate adjustments, as needed, and according to the State's direction to reflect such things as incomplete encounter reporting or other known data issues. The adjustments to the encounter data are further documented in Appendix C and outlined in Appendix A. During the rate setting process, shadow pricing was used to assign unit costs to the encounter data. This process was necessary since, during the base period, paid amounts were not a required field for reporting encounters. Additional information on shadow pricing is presented on page six of this letter.

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. 300 Xxxxx 0xx Xxxxxx, Xxxxx 0000 Xxxxxxxxxxx, XX 00000-0000 wxx.xxxxxxXX.xxx November 17, 2006 Mx. Xxx Xxxxxx Bureau of Managed Health Care Ohio Department of Job and Family Services 200 Xxxx Xxxx Xxxxxx, 0xx Xxxxx Xxxxxxxx, XX 00000-0000 Subject: ABD Rate-Setting Methodology & Capitation Rate Certification for the 2007 Contract Period Dear Jxx: The Ohio Department of Job and Family Services (State) contracted with Mxxxxx Government Human Services Consulting (Mxxxxx) to develop actuarially sound regional capitation rates for the Aged, Blind or Disabled (ABD) managed care population. During calendar year (CY) 2007, the State will roll out statewide ABD mandatory managed care on a regional basis. It is anticipated that managed care will be implemented in all eight regions by May 2007. The specific contract period and effective dates vary by region. A summary of the regional rates for each region is included in Appendix E. This summary will be updated each time the contract period for a new region is determined. This methodology letter outlines the rate-setting process, provides information on the data adjustments and provides a final rate summary. The key components in the rate-setting process are: • Base data development, • Managed care rate development, and • Centers for Medicare and Medicaid Services (CMS) documentation requirements. Each of these components is described further throughout the document and is depicted in the flowchart included as Appendix A. The following ABD individuals are not eligible to enroll in the managed care program. • Children under twenty-one years of age, • Individuals who are dually eligible under both the Medicaid and Medicare programs, • Institutionalized individuals, • Individuals eligible for Medicaid by spending down their income or resources to a level that meets the Medicaid program’s financial eligibility requirements, or • Individuals receiving Medicaid services through a Medicaid Waiver. In addition, for managed care eligible individuals who enter a nursing facility, managed care plans (MCPs) are responsible for nursing facility payment and payment for all covered services until the last day of the second calendar month following the nursing facility admission. Data Sources Since ABD managed care has not yet been implemented in Ohio, FFS data was the only available data source for rate-setting. Mxxxxx used FFS claims and eligibility data from State Fiscal Year (SFY) 2003 and from SFY 2004 as the basis for rate development. Once mandatory managed care is implemented and the program becomes stable, Mxxxxx will incorporate plan-reported managed care data, including encounter and cost report data. Other sources of information used, as necessary, included State enrollment projections, State financial reports, projected managed care penetration rates and other ad hoc sources. Validation Process Mxxxxx’x validation process included reviewing SFY 2003 and SFY 2004 dollars, utilization and member months. Mxxxxx also performed additional reasonability checks to ensure the base data was accurate and complete. FFS Data FFS experience from the base time period of SFY 2003 and SFY 2004 was used as a direct data source for rate-setting. Adjustments were applied to the FFS data to reflect the actuarially equivalent claims experience for the population that will be enrolled in the managed care program. Mxxxxx excluded claims and eligibility data for the ineligible populations outlined on the previous page. The State Medicaid Management Information System (MMIS) includes data for FFS paid claims, which may be net or gross of certain factors (e.g., gross adjustments or third party liability (TPL)). As a result of these conditions, it was necessary to make adjustments to the FFS base data as documented in Appendix C and outlined in Appendix A. This section explains how Mxxxxx developed the final capitation rates for each of the eight managed care regions, as defined in Appendix B. After the FFS base data was developed and the two years were blended, Mxxxxx applied trend, program changes and managed care adjustments to project the program cost into the contract year. Next, the MCP administrative component was applied. Appendix A outlines the managed care rate development process. Appendix D provides more detail behind each of the following adjustments. Blending Multiple Years of Data Prior to blending the two years of FFS data, the base time period experience was trended to a common time period of SFY 2004. Mxxxxx applied greater credibility to the most recent year of data to reflect the expectation that the most recent year may be more reflective of future experience and to reflect that fewer adjustments are needed to bring the data to the effective contract period. Managed Care Assumptions for the FFS Data Source In developing managed care savings assumptions, Mxxxxx applied generally accepted actuarial principles that reflect the impact of MCP programs on FFS experience. Mxxxxx reviewed Ohio’s historical FFS experience and other state Medicaid managed care experience to develop managed care savings assumptions. These assumptions have been applied to the FFS data to derive managed care cost levels. The assumptions are consistent with an economic and efficiently operated Medicaid managed care plan. The managed care savings assumptions vary by region and Category of Service (COS). Specific adjustments were made in this step to reflect the differences between pharmacy contracting for the State and contracting obtained by the MCPs. Mxxxxx reviewed information related to discount rates, dispensing fees, and rebates to make these adjustments. The rates are reflective of MCP contracting for these services. In addition, Mxxxxx considered the impact of two pharmacy management restrictions on the MCPs when determining pharmacy managed care assumptions. These restrictions include the prohibition to prior authorize any prescriptions during the first ninety days of managed care implementation and the restriction on prior authorization of any atypical antipsychotics (as defined by the State). Prospective Policy Changes CMS also requires that the rate-setting methodology incorporates the impact of any programmatic changes that have taken place, or are anticipated to take place, between the base period (SFY 2004) and the 2007 contract period. The State staff provided Mxxxxx with a detailed list of program changes that may have a material impact on the cost, utilization, or demographic structure of the program prior to, or within, the contract period and whose impact was not included within the base period data. Final programmatic changes approved for SFY 2006 and SFY 2007 are reflected in the rates, as appropriate. Please refer to Appendix D for more information on these programmatic changes. Clinical Measures/Incentives As the ABD managed care program matures, the State will require MCPs to meet minimum performance standards for a defined set of clinical measures. The State expects the first full calendar year of the program will be used as a baseline year to determine performance standards and targets. Since the MCPs will not be at risk for this period, the rates have not been adjusted to account for improvement in performance on the clinical measures. Caseload Historically, the State has experienced significant changes in its Medicaid caseload. These shifts in caseload have affected the demographics of the remaining Medicaid population. Mxxxxx evaluated these caseload variations to determine if an adjustment was necessary to account for demographic changes. Based on the data provided by the State, Mxxxxx determined no adjustments were necessary. Selection Issue Mxxxxx made an adjustment for voluntary selection, which accounts for the fact that costs associated with individuals who participate in managed care are generally lower than the remaining FFS population. Therefore, the voluntary selection adjustment adjusts for the risk of only those members participating in managed care. This adjustment is a reduction to paid claims and utilization. Appendix D provides more detail around the vol untary selection adjustment. Non-State Plan Services According to the CMS Final Medicaid Managed Care Rule that was implemented August 13, 2003, non-state plan services may not be included in the base data for rate setting. The FFS data does not include costs for non-state plan services. Therefore, no adjustment was necessary. Prospective Trend Development Trend is an estimate of the change in the overall cost of providing a specific benefit service over a finite period of time. A trend factor is necessary to estimate the expenses of providing health care services in some future year, based on expenses incurred in prior years. Trend was applied by COS to the blended costs for SFY 2004 to project the data forward to the 2007 contract period. Mxxxxx integrated the FFS trend analysis with a broader analysis of other trend resources. These resources included health care economic factors (e.g., Consumer Price Index (CPI) and Data Resource, Inc. (DRI)), trends in neighboring states, the State FFS trend expectations and any Ohio market changes. Moreover, the trend component was comprised of both unit cost and utilization components. Mxxxxx discussed all trend recommendations with State staff. We reviewed the potential impact of initiatives targeted to slow or otherwise affect the trends in the program. Final trend amounts were determined from the many trend resources and this additional program information. Appendix D provides more information on trend. Administration/Contingencies Since ABD managed care has not yet been implemented, other ABD Medicaid program administration/contingencies allowances and the State’s expectations were factors that were taken into consideration in determining the final administration/contingencies percentages. Appendix D provides further detail on the allowance. Risk Adjustment The FFS data was not categorized by age/sex cohort because the base regional rates will undergo risk adjustment. Risk adjustment takes into account the demographics and diagnoses of the population. The risk adjusted rates (RAR) will be implemented into the ABD managed care program using a generally accepted risk adjustment method to adjust base capitation rates to reflect the different health status of the members enrolled in each MCP’s program. ODJFS and its actuarial consultant will develop each MCP’s risk score to reflect the health status of members enrolled in the contractor’s program within a region. During the initial months of managed care implementation in each region, it is anticipated that ODJFS and its actuaries will calculate regional MCP case mix scores monthly until the enrollment in the region becomes relatively stable. Because enrollment for these months will not be known until after the start of the month, the initial payment will be made assuming the base capitation rates for all MCPs. An adjustment will be made in the subsequent month to reflect the appropriate risk adjustment reimbursement for the prior month. Once regional enrollment has stabilized, it is anticipated that the MCP case mix scores will be updated semi-annually. In the event that the ABD implementation is delayed or a change in methodology is required, the risk assessment schedule may be revised. Base capitation rates were developed for the eight managed care regions, and a rate summary is provided in Appendix E. Upon receiving final contract period information for each region, Mxxxxx will update Appendix E accordingly. Mxxxxx certifies the attached rates were developed in accordance with generally accepted actuarial practices and principles by actuaries meeting the qualification standards of the American Academy of Actuaries for the populations and services covered under the managed care contract. Rates developed by Mxxxxx are actuarial projections of future contingent events. Actual MCP costs will differ from these projections. Mxxxxx has developed these rates on behalf of the State to demonstrate compliance with the CMS requirements under 42 CFR 438.6(c) and to demonstrate that rates are in accordance with applicable law and regulations. MCPs are advised that the use of these rates may not be appropriate for their particular circumstance and Mxxxxx disclaims any responsibility for the use of these rates by MCPs for any purpose. Mxxxxx recommends any MCP considering contracting with the State should analyze its own projected medical expense, administrative expense, and any other premium needs for comparison to these rates before deciding whether to contract with the State. Use of these rates for purposes beyond that stated may not be appropriate. Sincerely, Wxxxx Xxxxxx, FSA, MAAA Axxxxx XxxXxxx, ASA, MAAA Copy: Cxxxx Xxxxxx, Mxxxxx Xxxxxx, Txxxx Xxxxxxxx — ODJFS Dxxxxx Xxxxx, Kxxxx Xxxxxx — Mxxxxx Please refer to the map below, which defines the counties within each of the eight managed care regions.