Common use of Medical Loss Ratio (MLR) Clause in Contracts

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracy, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission must fully comply with 42 CFR 438.8(d)-(n) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f)). In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 months of the end of the reporting year, reflecting nine months of claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor on the dates of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • Under sub-capitated or sub-contracted arrangements, the Contractor may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracy, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission must fully comply with 42 CFR 438.8(d)-(n) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f)). In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise Care Connect program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 months of the end of the reporting year, reflecting nine months of claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-third party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor on the dates of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • Under sub-capitated or sub-contracted arrangements, the Contractor may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five ninety percent (8590%) for the Hoosier Healthwise Care Connect line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier HealthwiseCare Connect. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five ninety percent (8590%) for the Hoosier Healthwise Care Connect line of business.

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracyaccuracy of, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission calculation must fully comply with 42 CFR 438.8(d)-(n438.8(d)-(f) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f))) as required. In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 a preliminary calculation will be performed with six months of the end of the reporting yearincurred claims run-out, reflecting nine and a final calculation will be performed with 18 months of incurred claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor MCE on the dates date of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • ▪ Under subSub-capitated Capitated or subSub-contracted Contracted arrangements, the Contractor MCE may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor MCE should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the its Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracy, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission must fully comply with 42 CFR 438.8(d)-(n) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f)). In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 months of the end of the reporting year, reflecting nine months of claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited audit ed financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor on the dates of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • Under sub-capitated or sub-contracted arrangements, the Contractor may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracyaccuracy of, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission calculation must fully comply with 42 CFR 438.8(d)-(n438.8(d)-(f) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f))) as required. In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 a preliminary calculation will be performed with six months of the end of the reporting yearincurred claims run-out, reflecting nine and a final calculation will be performed with 18 months of incurred claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor MCE on the dates date of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • ▪ Under subSub-capitated Capitated or subSub-contracted Contracted arrangements, the Contractor MCE may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-sub- contracted payments should be excluded from incurred claims. The Contractor MCE should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the its Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracy, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission must fully comply with 42 CFR 438.8(d)-(n) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f)). In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise Care Connect program shall be calculated separately from other managed care programs. ▪ • For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ • Timing: • ▪ For each MLR reporting year, the Contractor must submit the MLR report within 12 months of the end of the reporting year, reflecting nine months of claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • ▪ The Contractor must require any third-third party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ • The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • ▪ Number of member months in the reporting year • ▪ Premium revenue • ▪ Taxes • ▪ Licensing fees • ▪ Regulatory fees • ▪ Incurred claims • ▪ Expenditures for Quality Improvement activities • ▪ Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • ▪ Non-claims costs • ▪ Any credibility adjustment applied • ▪ Remittance owed to the State, if any • ▪ A comparison of the information reported on the MLR with the audited financial report • ▪ A description of the aggregation method used to calculate total incurred claims • ▪ A description of the methodology used to allocate expenses • ▪ An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ • Incurred Claims: • ▪ Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • ▪ Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor on the dates of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • ▪ Under sub-capitated or sub-contracted arrangements, the Contractor may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ • Expenditures may not be duplicated across expense categories or contracts: • ▪ Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • ▪ Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • ▪ Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. EXHIBIT 1. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.E SCOPE OF WORK

Medical Loss Ratio (MLR). The MLR shall be calculated as follows: Each reporting year, consistent with MLR standards as required in 42 CFR 438.8, the Contractor shall calculate, attest to the accuracyaccuracy of, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission calculation must fully comply with 42 CFR 438.8(d)-(n438.8(d)-(f) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) to the denominator (as defined in accordance with 42 CFR 438.8(f))) as required. In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 a preliminary calculation will be performed with six months of the end of the reporting yearincurred claims run-out, reflecting nine and a final calculation will be performed with 18 months of incurred claims run-out. XXXX should not be included in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ The MLR report submitted by the Contractor for each reporting year must include the following elements, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud prevention activities as defined in 42 CFR 438.8(e)(4) • Non-claims costs • Any credibility adjustment applied • Remittance owed to the State, if any • A comparison of the information reported on the MLR with the audited financial report • A description of the aggregation method used to calculate total incurred claims • A description of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor MCE on the dates date of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • ▪ Under subSub-capitated Capitated or subSub-contracted Contracted arrangements, the Contractor MCE may only include amounts actually paid to providers for covered services servic es and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor MCE should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across expense categories or contracts: • Each expenditure must be reported under only one expense category, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses. • Expenditures that benefit multiple contracts or populations must be reported on a pro rata basis. • Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors may add a credibility adjustment to the calculated MLR if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standards. The Contractor shall maintain, at minimum, a MLR of eighty-five percent (85%) for the its Hoosier Healthwise line of business per 42 CFR 438.8(c). The Contractor is required to submit MLR reporting as described in the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State makes a retroactive change to the capitation payments for the MLR reporting year where the MLR report has already been submitted, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.

Medical Loss Ratio (MLR). 12.2.1 The DMO shall track and report to DHS actual medical expenditures against an MLR of eighty-five percent (85%). The report shall be made in accordance with Section 9.3 of this Amendment. 12.2.2 The MLR shall will be calculated as follows: Each reporting year, consistent with MLR standards as required in monitored per 42 CFR 438.8, the Contractor shall calculate, attest to the accuracy, and submit to FSSA its Medical Loss Ratio (MLR). The MLR submission must fully comply with 42 CFR 438.8(d)-(n) which specifies that the MLR calculation is the ratio of the numerator (as defined in accordance with 42 CFR 438.8(e)) will be used to the denominator (as defined in accordance with 42 CFR 438.8(f)). In accordance with 42 CFR 438.604(a)(3), 42 CFR 438.606, and 42 CFR 438.8, the Contractor is required to submit data on the basis of which the State determines the compliance with MLR requirements. In addition, the State provides the following clarifications: (a) ▪ The MLR calculation shall be performed separately for each program. The MLR for the Hoosier Healthwise program shall be calculated separately from other managed care programs. ▪ For purposes of MLR reporting, the Contractor should aggregate data for all Medicaid eligibility groups covered under the Contract with the State. ▪ Timing: • For each MLR reporting year, the Contractor must submit the MLR report within 12 months of enforce a rebate at the end of the reporting year, reflecting nine months of claims run-out. XXXX should not be included . 12.2.3 The risk corridor set forth in the MLR calculation as the State will apply appropriate completion factors to the reported claims. • The Contractor must require any third-party vendor providing claims adjudication services to provide all underlying data associated with MLR reporting to the Contractor within 180 days Section 3.16(H) of the end of the MLR reporting year or within 30 days of being requested by the Contractor, whichever comes sooner. ▪ Agreement will no longer be enforced. 12.2.4 The MLR report submitted by the Contractor for each reporting year to DHS must include the following elementsinclude: a. Total incurred claims; b. Expenditures on quality improvement activities; c. Expenditures on program integrity activities, as defined in 42 CFR 438.8: • Number of member months in the reporting year • Premium revenue • Taxes • Licensing fees • Regulatory fees • Incurred claims • Expenditures for Quality Improvement activities • Expenditures for Fraud including permissible fraud prevention activities as defined in 42 CFR 438.8(e)(4) • activities; d. Non-claims costs • costs; e. Premium revenue; f. Taxes; g. Licensing fees; h. Regulatory fees; i. Methodologies for allocation of expenditures; j. Any credibility adjustment applied • Remittance adjustments applied; k. The calculated MLR; l. Any remittance owed to the Statestate, if any • applicable; m. A comparison of the information reported on the MLR with the audited financial report • report; n. A description of the aggregation method used to calculate total incurred claims • A description claims; and o. The number of the methodology used to allocate expenses • An attestation as to the accuracy of the calculation, in accordance with MLR standards. ▪ Incurred Claims: • Incurred claims submitted for each reporting year should include total incurred claims for the reporting year, and should not include claims incurred in prior years, regardless of when they were paid. • Incurred claims reported in the MLR should relate only to members who were enrolled with the Contractor on the dates of service, based on data and information available on the reporting date. (Claims for members who were retroactively disenrolled should be recouped from providers and excluded from MLR reporting). • Under sub-capitated or sub-contracted arrangements, the Contractor may only include amounts actually paid to providers for covered services and supplies as incurred claims. The non-benefit portion of sub-capitated and sub-contracted payments should be excluded from incurred claims. The Contractor should ensure all subcontracts provide for sufficient transparency to allow for this required reporting. ▪ Expenditures may not be duplicated across Enrolled Member months. 12.2.5 Each DMO expense categories or contracts: • Each expenditure must be reported included only under only one type of expense category, (services/quality improvement or administrative) unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must may be pro-rated prorated between types of expenses. • expense types. a. Expenditures that benefit multiple contracts or populations populations, or contracts other than those being reported, must be reported on a pro rata basis. • Shared . b. Allocation between expense types must be based on a generally accepted accounting method that is expected to yield the most accurate results. c. Share expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense. • . d. Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are may not to be apportioned to any other entities. • Expense allocation must be based on a generally accepted accounting method that is expected to yield the most accurate results. ▪ Credibility adjustment: • Contractors may not add a credibility adjustment to the calculated MLR if the reporting year experience under the Contract is fully credible. • Contractors entity. 12.2.6 The DMO may add a credibility adjustment adjustment, based on the methodology in 42 CFR 438.8(h)(4), to the calculated MLR MLR, if the MLR reporting year experience under the Contract is partially credible. • The credibility adjustment should be calculated using credibility factors published by CMS, as specified in 42 CR 438.8(h)(4). • The credibility adjustment should be added to the reported MLR calculation before calculating the remittance, if any. • If the Contractor’s DMO's experience under the contract is non-credible, it is presumed to meet or exceed the MLR calculation standardsstandard. The Contractor shall maintaincredibility adjustment cannot be added to the calculated MLR, at minimum, a if the MLR of eighty-five percent (85%) for the Hoosier Healthwise line of business per 42 CFR 438.8(c)reporting year is fully credible. The Contractor credibility adjustment shall be added to the MLR calculation before the MLR report is required submitted. 12.2.7 The DMO shall aggregate data for all Medicaid eligibility groups covered under the Agreement, unless separate reporting is otherwise required. 12.2.8 The DMO must require any third-party vendor claims adjudication activities to submit provide all underlying data associated with MLR reporting as described to the DMO within enough time to calculate the MLR and validate the accuracy of MLR reporting in accordance with Section 9.3 of this Amendment. 12.2.9 If the MCE Reporting Manual and the MCE Policies and Procedures Manual for Hoosier Healthwise. In any instance where the State state makes a retroactive change to the capitation payments Capitation Payment for the an MLR reporting year where year, and the MLR report has already been submittedsubmitted to DHS, the Contractor must re-calculate the MLR for all reporting years affected by the change and submit a new MLR report meeting the applicable requirements per 42 CFR 438.8(m) and 42 CFR 438.8(k). FSSA shall recoup excess capitation paid to the Contractor in the event that the Contractor’s MLR is less than eighty-five percent (85%) for the Hoosier Healthwise line of business.DMO must: