Bid Event id number: evt0001028 KanCare Medicaid and chip capitated Managed Care Services Preface: High Priority Events and Items

2.3.6.3.2

2.3.6.3.2.1

The Contractor and KDHE-DHCF will share the financial risk for medical expenditures for Contract Year 2012 based on a calculation of the Adjusted Medical Expenditures for all enrolees, by engaging in a risk sharing corridor reconciliation for any amounts due to or from the Contractor as follows:

2.3.6.3.2.

Adjusted Medical Expenditures shall be determined by KDHE-DHCF based on Encounter Data and plan financial data submitted by the Contractor pursuant to Section D below. Risk Sharing Final Settlement for the Contractor’s actual medical expenditures for covered services for Contract Year 2012.

Adjusted Medical Expenditures excludes Non-State Plan services.

2.3.6.3.2.

KDHE-DHCF reserves the right to audit medical expenditures. The data used by KDHE-DHCF for the reconciliation will be the routine Encounter Data. KDHE-DHCF and Contractor agree that to the extent there are differences between medical expenditures as reflected in the encounter data and the financial data submitted by the Contractor, KDHE-DHCF and Contractor will confer and make a good faith effort to reconcile those differences before the calculation of the Final Settlement as described in Section D. Risk Sharing Final Settlement.

2.3.6.3.2.

The risk sharing procedures may include a review of the Contractor’s Routine Encounter Data and an audit, to be performed by KDHE-DHCF or its authorized agent, to verify that all paid claims for the Enrollee by the Contractor are reimbursed in amounts that do not exceed the amounts allowed as described in Section 2.3.6.3.

2.3.6.3.2.

The administrative and privilege fee percentages are multiplied by the adjusted medical expenditure. The administrative percentage will be consistent with the percentage used for setting the Total Capitation Rates for the Contract Year 2012 period. The privilege fee percentage will be consistent with the percentage used for setting the Total Capitation Rates for the Contract Year 2012 period.

2.3.6.3.3

Risk-Sharing Corridor for Contract Year 2012 is as follows:

Min	Max	MCO Share	State Share
0%	80%	100%	0%
80%	94%	0%	100%
94%	98%	50%	50%
98%	102%	100%	0%
102%	106%	50%	50%
106%	120%	0%	100%
120%	+	100%	0%

2.3.6.3.3.1

The risk corridor percentage is calculated as a blended statewide figure for total Adjusted Medical Expenditures, plus a percentage amount for the Contractor to cover administrative costs and privilege fee costs as described in Exhibit 1-3, divided by the Total Capitation Rate, for the Contract Year 2012 period.

2.3.6.3.3.2

Should Total Adjusted Expenditures, as determined by KDHE-DHCF, in the aggregate, be greater than 100% but equal to or less than 102%, of the capitation rate, the Contractor shall assume 100% of the loss greater than 100% but equal to or less than 102% of the Total Capitation Rate, or shall receive 100% of the gain less than 100% but equal to or greater than 98% of the Total Capitation Rate.

2.3.6.3.3.3

Should Total Adjusted Expenditures, as determined by KDHE-DHCF, in the aggregate, be greater than 102% but equal to or less than 106%, of the capitation rate, KDHE-DHCF shall assume 50% of the loss greater than 100% but equal to or less than 106% of the Total Capitation Rate, or shall receive 50% of the gain less than 98% but equal to or greater than 94% of the Total Capitation Rate.

2.3.6.3.3.4

Should Total Adjusted Expenditures, as determined by KDHE-DHCF, in the aggregate, be greater than 80% but equal to or less than 94%, of the capitation rate, KDHE-DHCF shall assume 100% of the loss greater than 80% but equal to or less than 94% of the Total Capitation Rate, or shall receive 100% of the gain less than 120% but equal to or greater than 106% of the Total Capitation Rate.

2.3.6.3.3.5

Should Total Adjusted Expenditures, as determined by KDHE-DHCF, in the aggregate, be less than 80%, of the capitation rate, KDHE-DHCF shall assume 0% of the loss less than 80% of the Total Capitation Rate, or shall receive 0% of the gain greater than 120% of the Total Capitation Rate.

2.3.6.3.4

Risk Sharing Final Settlement

2.3.6.3.4.1

The KDHE-DHCF shall perform a settlement of the payments made by the Contractor to the KDHE-DHCF or by the KDHE-DHCF to the Contractor using the methodology described under this Section. The settlement is the calculated gain or loss determined as the Total Capitation Rates paid to the Contractor less the Total Adjusted Expenditures (sum of the Adjusted Medical Expenditure plus the administrative amount and the privilege fee amount). This amount is subjected to the risk-sharing corridor to determine the final settlement amount.

2.3.6.3.4.2

Within 180 days following the end of the Contract Year 2012, the Contractor shall provide the KDHE-DHCF with a complete and accurate report of Actual Medical Expenditures, by category of service, for enrollees, based on claims incurred for Contract Year 2012 including 5 months of claims run-out, and its best estimate of any claims incurred but not reported (IBNR) for Claims run-out beyond 5 months, and any applicable IBNR completion factor. The report will be a detailed claim-level record.

2.3.6.3.5

Prior to 10 months following Contract Year 2012, KDHE-DHCF shall provide the Contractor with a final reconciliation under the risk share program for Contract Year 2012. Any balance due between KDHE-DHCF and the Contractor, as the case may be, will be paid within 60 days of receiving the final reconciliation from KDHE-DHCF.
2.3.6.4

Refund of Overpayments and Restitution - The State may recover Contractor(s) monthly payments when the CONTRACTOR(s) actually provided service, even if the member is subsequently determined to be ineligible for the month in question. Consideration may be given in instance where the CONTRACTOR(S) has paid for services.

2.3.6.4.1

In instance where enrollment is disputed between two CONTRACTORS, the State will be the final arbitrator of CONTRACTOR(S) membership and reserves the right to recover an inappropriate capitation payment. The State also reserves the right to recover other types of inappropriate capitation payments, including but not limited to, untimely notice from the CONTRACTOR(S) to the Administrative Services contractor of a member’s request to disenroll, which had been submitted to the CONTRACTOR(S).

2.3.6.4.2

Recoveries from risk corridor/quality measure calculations will be subtracted from the PMPM payment issued in the following month(s). If no further PMPM payments are due, the CONTRACTOR(S) will issue a check payable to the Medicaid single state agency of Kansas.

Amendment Process – Rate Setting for Years Subsequent to Contract Year 2012: Bidders shall provide their proposed LCE (cost proposal) for the first contract period (November 1, 2012 through December 31, 2013) at the same time they submit their technical proposals. Rates for succeeding contract years (January 1 through December 31) shall be set annually by the State of Kansas and their actuaries. These rates shall be adjusted annually from the preceding year for inflation, trends, utilization, and policy changes and must be approved by the Centers for Medicare and Medicaid Services (CMS).

Minimum Reimbursement to In-Network Providers - For in-network providers, the published Medicaid fee-for-service rate shall be the rate that would be received in the fee-for-service Medicaid program inclusive of options for quality and outcomes incentive payments. Hereafter in this Section, unless otherwise specified, the above reimbursement arrangement is referred to as the “Medicaid rate.” the State will notify CONTRACTOR(S)s of updates to the Medicaid fee schedule and payment rates.

FQHC/RHC/CAH Contracting and Reimbursement - A CONTRACTOR(S) must offer to contract with all FQHCs, RHCs and CAHs in its service area. If an agreement cannot be reached between the CONTRACTOR(S) and FQHC/RHC/CAH, the CONTRACTOR(S) shall inform the State.

2.3.6.7.1

The CONTRACTOR(S) shall not enter into alternative reimbursement arrangements with FQHCs or RHCs or CAHs without prior approval from the State.

2.3.6.7.2

The CONTRACTOR(S) shall reimburse an FQHC/RHC/CAH the Prospective Payment System (PPS) rate in effect on the date of service for each encounter.

Inpatient hospitals and nursing facilities are entitled to three (3) reasonable offers at or above the FFS rates unless another payment structure is negotiated. If they do not CONTRACT with the MCO, out of network providers will receive 90% of FFS rates.

Nursing Facility (NF) rates

2.3.6.9.1

The state will retain ultimate responsibility for setting rates for NFs utilizing acuity-based methodology. The CONTRACTOR(S) will be required to pay each facility the rate as set by the State.

2.3.6.4.9.1

Kansas Medicaid nursing facility providers are paid a daily rate that is based on their historical costs subject to limits, and adjustments for the level of acuity of their residents. Each Kansas nursing facility submits an annual cost report to the KDOA where it is reviewed for accuracy. Cost data from the three (3) most recent cost reports for each home are combined to calculate the nursing facility rates. Data from each cost report is inflated to the midpoint of the rate setting period (the current fiscal year) using an industry-specific market basket index. Inflated per diem costs are determined for three (3) cost centers; Operating (administrative and plant operating expenses), Indirect Healthcare (room and board, housekeeping, dietary, and other non-direct healthcare costs), and Direct Healthcare (nursing supplies and salaries, and salaries for aides). Limits are imposed on each cost center based on a median plus percentage and providers receive the lower of their inflated per diem costs or the per diem cost center limit. The direct health care per diem for each facility is adjusted quarterly for changes in the acuity of the home’s Medicaid residents. A separate per diem component called the Real and Personal Property Fee (RPPF) is included for ownership expenses and is determined from historical costs and inflation with a limit also set based on a median plus percentage. There are additional per diem add-ons for an incentive factor and pass-throughs for costs not reflected in the cost report data. The total of the cost center per diems, the RPPF, and add-ons is the facility-specific reimbursement rate. Reimbursement rates for qualifying ventilator dependent residents are determined separately from the regular nursing facility reimbursement methodology.

2.3.6.9.2

The CONTRACTOR(S) can negotiate higher rates for situations including but not limited to dually-certified facilities, limited provider access areas, and difficult or expensive cases. All higher rates must be reviewed and approved by the State.

2.3.6.9.3

The CONTRACTOR(S) has the right to audit case mix information and the supporting medical records and to recommend adjustments/corrections to that data; however, the State retains ultimate authority in deciding whether to implement those adjustments. The CONTRACTOR(S) must request any adjustment affecting the case mix from the State no later than 30 days prior to the rate effective date. The CONTRACTOR(S) will provide documentation and details relative to how it will audit case mix data.