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DEPARTMENT OF HEALTH & HUMAN SERVICES
Health Care Financing Administration
Center for Medicaid and State Operations
=
Family and Children= s Health Programs Group
Division of Integrated Health Systems
7500 Security Boulevard
Baltimore, Maryland 21244-1850
Ms. Feather O. Houstoun
Secretary
Department of Public Welfare
P.O. Box 2675
Harrisburg, Pennsylvania 17105
Dear Ms. Houstoun:
This letter is to inform you that the Health Care Financing Administration (HCFA) is approving the
Commonwealth of Pennsylvania=s request to modify its HealthChoices waiver for the Southwest
Zone to include the previously approved HealthChoices waiver in the Southeast Zone and request
renewal for a 2-year period. Approval of the State’s request would result in one consolidated
waiver instead of separate waivers which currently exist. This approval is authorized under
Sections 1915(b)(1), (2), (3) and (4) of the Social Security Act (the Act), and provides for the
waiver of the following Sections of Title XIX of the Act: Section 1902(a)(1) Statewideness,
1902(a)(10)(B) Comparability of Services, Section 1902(a)(23), Freedom of Choice, and
1902(a)(30), Upper Payment Limits.
This waiver allows the Commonwealth of Pennsylvania to require Medicaid beneficiaries eligible
for the HealthChoices managed care waiver program to be mandatorily enrolled to fully capitated,
risk comprehensive Managed Care Organizations (MCO) or Prepaid Health Plans (PHP) which
will be responsible for providing, prior authorizing, or making referrals for all medically necessary
and appropriate primary care, behavioral, specialty, and rehabilitation services. Medicaid
beneficiaries eligible for mandatory enrollment in the HealthChoices program include Temporary
Assistance for Needy Families (TANF), TANF-related, Supplemental Security Income (SSI), and
SSI-related and some other related Medical Assistance beneficiaries.
In consultation with States, we are reviewing the Federal regulations at 45 CFR Part 74 and
policies related to the open procurement process for Medicaid contracts. We may issue new
policy or regulations, and if so, would reevaluate the Medicaid contracting process, prospectively,
in light of the changes. We would notify all States about the changes.
Under authority of Federal regulations at 42 CFR 430.30(h)(2)(ii), this approval is for the 2-year
period effective December 19, 1999 through December 18, 2001, contingent upon the following
Conditions of Approval.
Conditions of Approval:
1. The Department of Public Welfare will ensure that contracts with the physical health managed
care organizations (PH-MCO) and their subcontractors, the behavioral health managed care
organizations (BH-MCO), counties, and their subcontractors, and the independent enrollment
assistant (IEA) are consistent with the assurances provided to HCFA in the approved waiver. The
PH-MCO, county contracts, behavioral health contracts, and any county subcontracts with
managed care entities under this waiver will be submitted to HCFA for prior approval, i.e., at least
30 days before implementation. No Federal financial participation (FFP) will be allowed, or
claimed, for the operation of an MCO contract unless the contract has been approved by HCFA.
Furthermore, FFP will also be contingent upon the contracts operating in compliance with the
terms and conditions of the waiver.
2. The Department of Public Welfare must ensure that each PH-MCO, county or behavioral
health contractor has an adequate provider network in place to meet the health care needs of all
recipients including special population groups. Beginning April 1, 2000, and annually thereafter,
the Department must report to the HCFA regional office the specific situations in which access
requirements approved under this waiver and the contracts are not met based upon its
comprehensive analysis of the MCOs’ networks as of the previous January 1. For any such
specific situation, the Department will report the corrective actions under way, and update that
report at six-month intervals until the problems are resolved. If any new MCO contracts are
implemented prior to the expiration of this waiver, the Department must notify the HCFA regional
office whether access requirements approved under this waiver and the contracts are met 30 days
before the first date services are to be furnished under those contracts. For any requirements that
are not being met by any plan, the Department must report the actions being taken by the plan to
come into compliance.
3. In order to allow sufficient time for the Department and its contractors to prepare for the
enrollment process, PH-MCO and county contracts, and any county subcontracts with managed
care organizations, must be signed by both parties and in place at least 30 days prior to the
beginning of the process, unless the Department can satisfactorily demonstrate that the enrollment
process will not be affected by a delay in the signing of the contract(s). The IEA contract must be
signed by both parties and in place at least 60 days prior to the beginning of the enrollment
process.
4. The Department of Public Welfare will ensure that recipients have accurate information
concerning their rights to complain about, formally grieve, and appeal decisions by a PH-MCO, a
county and/or its subcontractor, or the Commonwealth. The Commonwealth will process requests
for fair hearings arising under the waiver according to Federal regulations at 42 CFR 431, Subpart
E.
5. The Department of Public Welfare will affirm to HCFA in writing, separately for each new PH-
MCO or county for behavioral health, that the PH-MCO or the county and, if applicable, its
subcontractor, is prepared to implement and operate the waiver program consistent with the
assurances specified in the waiver. The Department will make this affirmation no less than 10 days
prior to the date that the contractor begins furnishing services. Also, the Department will provide
the HCFA regional office with the results of its readiness reviews prior to the date that the
contractor begins furnishing services.
6. To assist HCFA in monitoring the waiver, the Department of Public Welfare will provide the
following information:
• Reports of the External Quality Review Organization on the annual external quality assurance
reviews of the PH-MCOs and BH-MCO counties/ subcontractors.
• HEDIS reports concerning each PH-MCO.
• Annual member satisfaction survey data pertaining to each PH-MCO and BH-MCO
county/subcontractors.
• Indicators for monitoring the operations of PH-MCOs and BH-MCOs, counties/
subcontractors (enclosed). HCFA and the Department of Public Welfare shall agree on the final
indicators to be collected by February 15, 2000.
• An annual report on the timeliness of HMO claims payments that describes each HMO’s
performance against contracted standards and actions taken, i.e., sanctions and corrective
actions. – by February 15, 2000 for the preceding calendar year, and every year, thereafter.
7. The Department of Public Welfare will ensure the safe transition into HealthChoices of those
individuals with special health care needs who are currently under a plan of treatment for a medical
condition. At a minimum, DPW must allow persons whose providers are not in a MCO=s
network to continue to receive services from these providers until the MCO can safely transition
these persons into a plan of care within the MCO=s network. DPW must also ensure that
providers and members are informed of the process for requesting that a plan of treatment be
continued.
8. The Department of Public Welfare must ensure that the counties maintain separate fiscal
accountability for Medicaid funding under the waiver apart from mental health and substance abuse
programs funded by State, county, and/or other Federal program monies. Further, the
Commonwealth must ensure that where Federal Medicaid rules are applicable under the waiver,
the counties do not supplant Federal Medicaid requirements with local program requirements for
mental health and substance abuse programs.
9. The Department of Public Welfare will have the organizational capacity necessary to manage
and monitor the HealthChoices waiver for access, quality, consumer satisfaction and cost.
10. The Department of Public Welfare will implement and coordinate any waiver of the Federal
upper payment limit (UPL) in cooperation with HCFA according to the procedures enclosed with
this letter.
11. Payments for Medicare cost-sharing amounts by the PH-MCOs, counties and/or behavioral
health contractors will be made consistent with the policy in HCFA=s August 18, 1998, letter to
the Department of Public Welfare on this subject.
12. Within 1 month of the waiver approval, please submit information that describes how the
upper payment limit was developed for individuals with AIDs or symptomatic HIV enrolled in the
1915(c) waiver. The information should include a list of Medicaid state plan and 1915(c) home
and community based waiver services and associated costs used to construct the UPL, and how
those services and costs are accounted for in the State's UPL submission.
Special Needs Terms and Conditions
1. The State will submit to HCFA on an annual basis the number of children participating in the
waiver who are included in categories 1, 3, 4, and 5 of the BBA’s definition of special needs
children. Identification through either aid code analysis or manual review is acceptable. With respect
to those children in category 5 of the BBA definition, the State will provide to HCFA by February
28, 2000 a workplan and timeframes regarding the identification of these children.
2. The State will review complaints and grievances and track those cases involving children
identified in categories 1, 3, 4, and 5 of the BBA definition of children with special health care needs.
(A manual review is acceptable.) On an annual basis, the State will report to HCFA the number of
complaints and grievances for these groups, and submit an analysis, stratified by group, of type and
number of complaints and grievances filed, and their resolution.
3. The State will submit to HCFA on an annual basis the number children identified in categories 1,
3, 4, and 5 of the BBA definition who voluntarily disenroll from a physical health MCO, and the
number of children in those categories that voluntarily change providers within the behavioral health
MCO.
4. With respect to quality of care, the State will conduct a study which will stratify its analyses such
that outcomes for children in categories of 1, 3, 4, and 5 of the BBA definition are discussed and
addressed. Or, the State may perform a quality study that focuses solely on children in categories 1,
3, 4, and 5 of the BBA definition. Also, no more than six months after the renewal of this program,
the State will provide to HCFA a workplan and timeframes regarding the its anticipated surveys,
which will supplement current performance measures for special needs children.
5. The Core Teams will conduct ongoing monitoring with respect to the adequacy of the MCOs’
execution of the requirement for an assessment and implementation of a treatment plan for
BBA-defined special needs children based on that assessment. The State will report to HCFA on
the results of this monitoring on a basis no less than annually.
Approval of the renewal of the HealthChoices waiver is contingent upon the Commonwealth of
Pennsylvania=s arranging for an independent, comprehensive evaluation of the waiver program, to
be submitted 3 months prior to the end of the waiver period, with special emphasis on beneficiary
access to quality health care and the terms and conditions indicated above.
I look forward to working with you in meeting the conditions of approval and wish you success in
the operation of the HealthChoices waiver program.
Sincerely,
Mike Fiore
Director
cc:
Director, CMSO, HCFA
Regional Administrator, Philadelphia
INDICATORS FOR MONITORING HEALTHCHOICES - PH-MCO OPERATIONS
Enrollments/Disenrollments
1. Number of enrollments to the MCO.
2. Number autoassigned to the MCO.
3. Number of disenrollments by reason for request. (Categories as discussed with State)
4. Number of members’ autoassigned to a PCP.
5. Number of members who changed PCPs.
6. Total number of current enrollees in the MCO.
7. Description and disposition of each involuntary disenrollments requests
Financial Information
8. Inventory of received but unpaid claims and incurred but not reported claims (number
and amount).
9. Income statement (expenditures for medical costs, administrative costs, loss ratio)
Inquiries and Complaints
10. Number and type of telephone complaints and inquiries by the State and Benefits
Consultant about the MCO. (Categories as discussed with state) Member and other
(provider, etc.) Included in this will be data from the clinical sentinel function.
11. Number and type of telephone inquiries and complaints received by the CO (Categories
as discussed with state). Member and provider.
12. Number of grievances filed.
13. Number of requests for expedited grievances.
14. Median length of time for processing expedited grievances
INDICATORS FOR MONITORING HEALTHCHOICES - BH-MCO OPERATIONS
The following data should be reported separately for each county:
1. Enrollees: Number eligible and number enrolled, as of report date.
2. Providers: The number (by type) of providers participating in the waiver. The same data should be provided for
providers participating in FFS immediately prior to the waiver. The latter data will be used for comparison
purposes.
3. PHP/County Claims Workload Data: Provider claims inventory including claims received, processed and
opening/closing pending counts during the reporting period by bill type (reported by number of claims).
4. Payment for Services: Provider payments by type of service during the reporting period and year to date.
5. Payment Denied: Dollar amount of provider claims by type of service denied during the reporting period and year
to date.
6. Prior Authorization: Requests received, approved, and denied by type of service during the reporting period.
7. County/PHP Financial Reports
8. Monthly Capitation Payment Amounts
9. Recipient Complaints and grievances: Number received, completed and pending during the reporting period.
10. Provider Complaints: Number received, completed and pending during the reporting period.
Federal Upper Payment Limit Exception Procedures
for HealthChoices Waiver
1. The Federal upper payment limit (FUL) for specific PHP/MCO contracts is waived during the 2 years of the
waiver. This waiver is contingent upon the requirement that aggregate actual expenditures for the 2-year waiver
period will not exceed the maximum expenditures allowed by the application of the FULs to such contracts. FFP
will not be available for expenditures which exceed the aggregate FUL.
Definitions:
Aggregate expenditures: The total actual expenditures paid to the HealthChoices contractors for the 2-year
waiver period.
Aggregate FUL: The sum of the FULs applicable to the individual contracts for both years of the waiver.
2. The FULs must be re-calculated annually and submitted to the Regional Office for approval before or at the same
time the PHP/HMO contracts are submitted.
3. For each year of the waiver, all PHP/MCO contracts must be submitted to the Regional Office for prior approval.
At that time DPW will identify which contracts, if any, have an exception to the FULs and explain the scope of
the exception. Further, DPW will project the total expenditures for the contracts submitted to HCFA and
estimate whether or not this amount will exceed the aggregate FULs for the contracts over the 2-year waiver
period.
4. On a quarterly basis, DPW will provide the Regional Office with actual expenditure data for each contract and the
maximum allowable expenditure for each contract as allowed by the FUL. This data will be prepared as
described in DPW=s letter to HCFA dated August 18, 1998, (see page 4, item III). These reports should be
submitted with the quarterly HCFA-64 reports and cross-walked to same.
5. DPW and HCFA staff will meet as needed to exchange information and validate data when deemed necessary to
ensure that expenditure targets designed to keep actual expenditures within the aggregate FULs are met.
6. At the end of the 2-year waiver period, DPW will prepare a final report for HCFA demonstrating whether or not
aggregate expenditures are less than or equal to the aggregate FULs.
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