HFS – 2011 Annual Report Page 54
XVII. REIMBURSING MANAGED CARE ORGANIZATIONS
Managed Care Organizations (MCOs)
MCOs participating in the Department’s Voluntary Managed Care Program and Integrated Care Program are reimbursed on a capitation basis. The Department’s actuary develops the MCO rates based on fee-for-service claims experience and enrollment data for a comparable fee-for-service population. There are adjustments for healthcare management, trend and health plan administration. The capitation rate (per member per month) is paid based on age/gender rate cells.
Voluntary Managed Care Program
In the Voluntary Managed Care Program, the capitation is for the provision of all covered services required to be provided through the MCO, including physician, inpatient and outpatient hospital, clinic services and many additional services. Excluded from the capitation are payments for hospital deliveries. The Department reimburses MCOs separately for each hospital delivery paid by the MCO. The payments for deliveries are generated by the Department based on the MCO’s hospital encounter data that groups into specific diagnostic related groupings (DRGs). Other services excluded from the capitation, and reimbursed by the Department’s fee-for-service system, include pharmacy services provided through a pharmacy, dental services, optical services, including services provided by an optometrist, nursing facilities services after the first 90 days, and several minor specialized services.
Integrated Care Program
Under the Integrated Care Program, the MCOs are reimbursed on a capitation basis for the entire spectrum of Medicaid covered services, including physician and specialist care, hospitalization, pharmacy, laboratory, dental, behavioral health, substance abuse and many other services. The capitation rate is paid based on 6 different population rate cells, which are broken out based on the type of enrollee (community residents, nursing facility residents, enrollees in waivers, etc.).
HFS ensures that quality safeguards are in place by contractually requiring:
• pay-for-performance measures to incentivize spending on care that produces healthy quality-of-life outcomes;
• payment withholds when the MCOs do not spend their capitation payments on care that produces quality outcomes, and;
$ a medical loss ratio (MLR) of 88 percent, meaning that 88 percent of the revenue from the contract must be spent on healthcare services to enrollees.
ICP Incentive Pool Payments
In addition to the monthly capitation payments, the integrated care plans can earn incentive pool payments based on their performance of 15 quality metrics. The incentive pool is funded through a withhold of a portion of the capitation rate, 1 percent in the first measurement year, 1.5 percent in the second measurement year, and 2 percent the third measurement year. The withheld amount is combined with an additional bonus amount funded by the Department to equal 5 percent of the capitation rate. Calendar year 2012 will be the first measurement year using calendar year 2010 baseline measurements. The integrated care plans are not eligible to earn incentive pool payments if they do not meet a minimum performance standard.
