Common use of Risk Corridor Payment Adjustment Clause in Contracts

Risk Corridor Payment Adjustment. The Net Capitation Payment made to the Contractor for ACA Expansion Members and their associated healthcare costs shall be evaluated against a designated risk corridor to determine whether a Risk Corridor Payment Adjustment is warranted for Calendar Years 2014 and 2015, and from January 1 to June 30 for Calendar Year 2016. A Symmetrical Risk Corridor shall be established around a target Medical Loss Ratio, as defined in Appendix B “Medical Loss Ratio Calculation,” of eighty-seven (87) percent of net capitation paid by the Department on behalf of ACA Expansion members for each Calendar Year. A range of plus or minus five (5) percent, for which no premium adjustment shall be made, will be established around the Medical Loss Ratio target. If the Contractor has a Medical Loss Ratio outside of the target range it shall be subject to an adjustment to total ACA Expansion Members capitation payments for the Calendar Year. The adjustment will be computed as eighty (80) percent of the difference between the actual countable ACA Expansion Members medical expenses of the Contractor and the dollar amount corresponding to the upper or lower risk corridor boundary. Total Medical expenses below the lower risk corridor boundary of eighty-two (82) percent will result in a premium refund from the Contractor to the Department. Total Medical expenses above the upper risk corridor boundary of ninety-two (92) percent will result in an additional premium payment from the Department to the Contractor. The first period of operation subject to this adjustment shall be Calendar Year 2014 and and the last period subject to this adjustment shall be January 1 to June 30, 2016. The preliminary Risk Corridor Payment Adjustment process will begin 6 months after the end of each Calendar year. The Final Risk Corridor Payment Adjustment process will begin 12 months after the end of each Calendar Year. If the contract with the Contractor is not renewed at any time on the July 1st annual contract renewal date or is terminated at any time, the risk corridor process will be unchanged except that the Medical Loss Ratio and Annual Statement will reflect an appropriately reduced number of months of experience instead of the full 12 months. As part of the preliminary and final financial reconciliation process described above, the Contractor will be required to prepare supplemental financial schedules to reconcile Medical Expenses reported on the Annual Statement required by the Kentucky Department of Insurance to medical expenses reported to the Department and additional financial schedules describing how reported expenses were directly attributed or allocated to the ACA Expansion population. These schedules, and any other information the Contractor wants to submit for consideration, will be due to the Department 30 calendar days after the end of the 6 month and 12 month periods described above. The Department will then determine, within 30 days of receipt of all necessary information from all Contractors, if any adjustment is to be paid out or collected. The Contractor will then have 30 days to review the Department’s findings and remit, if applicable, payment to the Department or receive, if applicable, payment from the Department. Items for reconciliation, including non-claim specific items, are further described in Appendix B “Medical Loss Ratio Calculation.” The Contractor shall cooperate with the Department or its contractor by supplying all clarifications and answers to inquiries within the requested timeframe. If the Contractor fails to submit information or respond to a Department request regarding Medical Loss Ratio Calculation within the requested timeframe, it will be subject to a penalty of $500.00 per day until the information or response is received.

Risk Corridor Payment Adjustment. The Net Capitation Payment made to the Contractor for ACA Expansion Members and their associated healthcare costs shall be evaluated against a designated risk corridor to determine whether a Risk Corridor Payment Adjustment is warranted for Calendar Years 2014 and 2015, and from January 1 to June 30 for Calendar Year 2016. While the Symmetrical Risk Corridor is no longer applicable, this provision is contained herein to ensure continuity and to note the Contractor’s obligation under previous contracts to complete a preliminary and final Risk Corridor Adjustment process. A Symmetrical Risk Corridor shall be established around a target Medical Loss Ratio, as defined in Appendix B “Medical Loss Ratio Calculation,” of eighty-eighty- seven (87) percent of net capitation paid by the Department on behalf of ACA Expansion members for each Calendar Year. A range of plus or minus five (5) percent, for which no premium adjustment shall be made, will be established around the Medical Loss Ratio target. If the Contractor has a Medical Loss Ratio outside of the target range range, it shall be subject to an adjustment to total ACA Expansion Members capitation payments for the Calendar Year. The adjustment will be computed as eighty (80) percent of the difference between the actual countable ACA Expansion Members medical expenses of the Contractor and the dollar amount corresponding to the upper or lower risk corridor boundary. Total Medical medical expenses below the lower risk corridor boundary of eighty-two (82) percent will result in a premium refund from the Contractor to the Department. Total Medical medical expenses above the upper risk corridor boundary of ninety-two (92) percent will result in an additional premium payment from the Department to the Contractor. The first period of operation subject to this adjustment shall be Calendar Year 2014 and and the last period subject to this adjustment shall be January 1 to June 30, 2016. The preliminary Risk Corridor Payment Adjustment process will begin 6 six (6) months after the end of each Calendar calendar year. The Final Risk Corridor Payment Adjustment process will begin 12 twelve (12) months after the end of each Calendar Year. If the contract Contract with the Contractor is not renewed at any time on the July 1st annual contract renewal date or is terminated at any time, the risk corridor process will be unchanged except that the Medical Loss Ratio and Annual Statement will reflect an appropriately reduced number of months of experience instead of the full 12 twelve (12) months. As part of the preliminary and final financial reconciliation process described above, the Contractor will be required to prepare supplemental financial schedules to reconcile Medical Expenses reported on the Annual Statement required by the Kentucky Department of Insurance to medical expenses reported to the Department and additional financial schedules describing how reported expenses were directly attributed or allocated to the ACA Expansion population. These schedules, and any other information the Contractor wants to submit for consideration, will be due to the Department 30 thirty (30) calendar days after the end of the 6 6-month and 12 12-month periods described above. The Department will then determine, within 30 thirty (30) days of receipt of all necessary information from all Contractors, Contractors if any adjustment is to be paid out or collected. The Contractor will then have 30 fifteen (15) days to review the Department’s findings and remit, if applicable, remit payment to the Department or receive, if applicable, receive payment from the Department, as applicable. Items for reconciliation, including non-claim specific items, are further described in Appendix B “Medical Loss Ratio Calculation.” The Contractor shall cooperate with the Department or its contractor by supplying all clarifications and answers to inquiries within the requested timeframe. If the Contractor fails to submit information or respond to a Department request regarding Medical Loss Ratio Calculation within the requested timeframe, it will be subject to a penalty of $500.00 per day until the information or response is received.