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HCFA Special Terms and Conditions

VIEWS: 37 PAGES: 70

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Chapter 1
The State shall reiterate the objectives set forth at the time the demonstration was proposed and
provide evidence of how these objectives have been met.

When the State began developing its Medicaid managed care demonstration
design, five broad objectives were identified to guide the process. Today, nearly
four years after the program’s implementation, these five goals remain guiding
objectives for Maryland’s Medicaid managed care demonstration, the
“HealthChoice” program. Following the program’s implementation (June 1, 1997),
HealthChoice has had remarkable success in achieving these recognized
objectives:
   To provide enrollees with a medical home. Every HealthChoice enrollee has an
    assigned primary care provider (PCP), who is charged with keeping the
    enrollee’s medical record, coordinating the enrollee’s care, providing primary
    care services, and making medically necessary referrals for specialty care.
   To build on the strengths of the systems in place in Maryland prior to the
    demonstration’s implementation. The HealthChoice program has built on the
    wealth of high quality medical institutions in the State and the relatively high
    level of managed care penetration in the State. The State has contracted with
    both commercial HMOs and Medicaid-only MCOs to provide Medicaid managed
    care services to HealthChoice enrollees.
   To provide comprehensive, prevention-oriented care. HealthChoice requires
    PCPs to provide preventive care, and to provide individualized notice to
    enrollees of the due dates of preventive care services. MCOs must also notify
    and provide to enrolled children all EPSDT-scheduled immunizations and well-
    child visits.
   To hold managed care organizations accountable. The HealthChoice program
    has the authority to fine, withhold capitation payments from, or suspend from
    the program any MCO that does not meet program requirements. This
    sanctioning authority has been used when MCOs have failed to perform to
    satisfactory levels on their external quality review audits.
   To provide value and predictability to the State Medicaid budget process.
    Prospective risk-based payment is more predictable than retrospective
    payment for services provided as they occur. The HealthChoice program has
    been successful in developing capitation rates that reflect the risk of providing
    comprehensive Medicaid managed care services to the HealthChoice
    population.
                                DRAFT
Maryland’s HealthChoice program has made substantial progress in the last four
years towards each of its objectives. Maryland is encouraged by the gains the
HealthChoice program has achieved in each of these areas, and expects that the
program will continue to make additional improvements towards these objectives
in the years to come.




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                                      DRAFT
Chapter 2
ANNOTATED TERMS AND CONDITIONS
HEALTH CARE FINANCING ADMINISTRATION
SPECIAL TERMS AND CONDITIONS
NUMBER: 11-W-00099/3
TITLE: Maryland Medicaid Section 1115 Health Care Reform Demonstration Proposal
(Maryland Demonstration)
AWARDEE: Department of Health and Mental Hygiene

TABLE OF CONTENTS
I. PREFACE
II. GENERAL CONDITIONS
III. LEGISLATION
IV. PROGRAM DESIGN/ OPERATIONAL PLAN
A. Transition From Other Waivers Or Programs
B. Beneficiary Marketing, Education, And Enrollment
C. Eligibility
D. Benefits
E. Delivery Network
F. Access
G. Quality Assurance
H. Encounter Data Requirements
I. Management Information Systems


V. ATTACHMENTS

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A. General Financial Requirements
B. General Administrative Requirements
C. General Reporting Requirements
D. Monitoring Of Budget Neutrality
E. Access Standards
F. Outline For Operational Protocol
G. Recommended Minimum Data Set
H. Suggested Indicators For Monitoring MCO's Operations




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                                         DRAFT
I. PREFACE
The following are Special Terms and Conditions for the award of the Maryland Medicaid Section
1115 Health Care Reform Demonstration (Maryland Demonstration) waiver request submitted on
May 3, 1996. The Special Terms and Conditions have been arranged into three broad subject
areas: General Conditions for Approval, Legislation, and Program Design/ Operational Plan.
In addition, specific requirements are attached entitled: General Financial Requirements
(Attachment A); General Administrative Requirements (Attachment B); General Reporting
Requirements (Attachment C); Monitoring Of Budget Neutrality (Attachment D); Access
Standards (Attachment E); Outline For Operational Protocol (Attachment F); Recommended
Minimum Data Set (Attachment G); and Indicators For Monitoring Managed Care Organizations
(MCOs) Operations (Attachment H).
The State agrees that it will comply with all applicable Federal statues relating to non-
discrimination. These include, but are not limited to: the Americans with Disabilities Act, Title VI
of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975. As part of the review of the operational protocol that the State is
required to submit, HCFA will examine the State's proposed operational procedures to ensure
their consistency with the requirements set forth in the above Federal statutes.
Letters, documents, reports, or other material that is submitted for review or approval shall be sent
to the Maryland Demonstration Project Officer and the Maryland State Representative from the
Philadelphia Regional Office.

       I      The State has complied with Federal non-discrimination requirements.
              The specific requirements contained in the Attachments to the Terms
              and Conditions will be discussed below.




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                                        DRAFT
II. GENERAL CONDITIONS
A. All Special Terms and Conditions prefaced with an asterisk (*) contain requirements that must
be approved by the Health Care Financing Administration (HCFA) prior to marketing,
enrollment, or implementation. (Implementation is defined as the first date in which beneficiaries
are notified that they are required to select a health plan.) No Federal Financial Participation
(FFP) will be provided for marketing, enrollment, or implementation until HCFA has approved
these requirements. FFP will be available for project development and implementation,
compliance with Special Terms and Conditions, the readiness review, etc. Unless otherwise
specified where the State is required to obtain HCFA approval of a submission, HCFA will make
every effort to respond to the submission in writing within 45 days of receipt of the submission.
HCFA and the State will make every effort to ensure that each submission is approved within 60
days from the date of HCFA's receipt of the original submission.

       IIA.   The State complied with all pre-implementation approval
               requirements.
B.* Within 60 days of award, the State will submit a pre-implementation work plan for approval
by the HCFA Project Officer. The work plan will specify timeframes for major tasks and related
subtasks for program implementation.

       IIB.   The State submitted the pre-implementation work plan for approval
              within 60 days of the waiver award as required.
C.* The State shall prepare one protocol document that represents and provides a single source
for the policy and operating procedures applicable to this demonstration which have been agreed
to by the State and HCFA during the course of the waiver negotiation and approval process. The
protocol must be submitted to HCFA no later than 60 days prior to the implementation date of the
program. HCFA will respond within 30 days of receipt of the protocol regarding any issues or
areas it believes require clarification. During the demonstration, subsequent changes to the
protocol which are the result of major changes in policy or operating procedures should be
submitted no later than 90 days prior to the date of implementation of the change(s) for approval
by HCFA. The Special Terms and Conditions and Attachments include requirements which
should be included in the protocol. Attachment F is an outline of areas that should be included in
the protocol.

       IIC.   The State submitted its Operational Protocol more than 60 days prior
              to implementation of the demonstration. The State is in the process
              of revising the operational protocol to reflect changes in the program
              since implementation and will submit the revised document to HCFA
              as soon as it is complete.
D. The State will submit a phase-out plan of the demonstration to HCFA six months prior to

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                                        DRAFT
initiating normal phase-out activities and, if desired by the State, an extension plan on a timely
basis to prevent disenrollment of beneficiaries if the waiver is extended by HCFA. Nothing herein
shall be construed as preventing the State from submitting a phase-out plan with an
implementation deadline shorter than six months when such action is necessitated by emergent
circumstances. The phase-out plan is subject to HCFA review and approval.

       IID.   Maryland is submitting this request for an extension rather than a
              phase-out plan.
E. HCFA may suspend or terminate any project, in whole or in part, at any time before the date of
expiration whenever it determines that the awardee has materially failed to comply with the terms
of the project. HCFA will promptly notify the awardee in writing of the determination and the
reasons for the suspension or termination, together with the effective date. The State waives none
of its rights to challenge HCFA's finding that the State materially failed to comply. HCFA
reserves the right to withdraw waivers at any time if it determines that continuing the waivers
would no longer be in the public interest. If a waiver is withdrawn, HCFA will be liable for only
normal close-out costs.

       IIE.   Maryland has never materially failed to comply with the terms and
              conditions of the project.
F. The State will comply with:
1. General Financial Requirements (Attachment A)
2. General Administrative Requirements (Attachment B)
3. General Reporting Requirements (Attachment C)
4. Monitoring Of Budget Neutrality (Attachment D)
5. Access Standards (Attachment E)
6. Outline For Operational Protocol (Attachment F)
7. Recommended Minimum Data Set (Attachment G)
8. Suggested Indicators For Monitoring MCO's Operations (Attachment H)


       IIF.    Compliance with Attachments A - H to the Terms and Conditions is
               discussed in Part V, below.




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                                          DRAFT
III. LEGISLATION
A. All requirements of the Medicaid program expressed in laws, regulations, and policy
statements, not expressly waived or identified as not applicable in the award letter of which these
Special Terms and Conditions are part, shall apply to the Maryland Demonstration. To the extent
the enforcement of such laws, regulations, and policy statements would have affected State
spending in the absence of the demonstration in ways not explicitly anticipated in this agreement,
HCFA shall incorporate such effects into a modified budget limit for the Maryland
Demonstration. The modified budget limit would be effective upon enforcement of the law,
regulation, or policy statement. HCFA will have two years after the waiver award date to notify
the State that it intends to take action. The growth rates for the budget neutrality baseline, as
described in Attachment D, are not subject to this Special Term and Condition. If the law,
regulation, or policy statement cannot be linked specifically with program components that are or
are not affected by the Maryland Demonstration (e.g., all disallowances involving provider taxes
or donations), the effect of enforcement on the State's budget limit shall be proportional to the size
of the Maryland Demonstration in comparison to the State's entire Medicaid program (as
measured in aggregate medical assistance payments).
B. The State shall, within the time frame specified in law, come into compliance with any changes
in Federal law affecting the Medicaid program that occur after the waiver award date. To the
extent that a change in Federal law, which does not exempt State section 1115 demonstrations,
would affect State Medicaid spending in the absence of the waiver, HCFA shall incorporate such
changes into a modified budget limit for the Maryland Demonstration. The modified budget limit
will be effective upon implementation of the change in Federal law, as specified in law. If the new
law cannot be linked specifically with program components that are or are not affected by the
Maryland Demonstration (e.g., laws affecting sources of Medicaid funding), the State shall
submit its methodology to HCFA for complying with the change in law. If the methodology is
consistent with Federal law and in accordance with Federal projections of the budgetary effects of
the new law in Maryland, HCFA would approve the methodology. Should HCFA and the State,
working in good faith to ensure State flexibility, fail to develop within 90 days a methodology to
revise the without waiver baseline that is consistent with Federal law and in accordance with
Federal budgetary projections, a reduction in Federal payments shall be made according to the
method applied in non-waiver States.
C. The State may submit to HCFA a request for an amendment to the Maryland Demonstration
program to request exemption from changes in law occurring after the waiver award date. The
cost to the Federal government of such an amendment must be offset to ensure that total projected
expenditures under a modified Maryland Demonstration program do not exceed projected
expenditures in the absence of the Maryland Demonstration (assuming full compliance with the
change in law).

     III A-C Maryland’s operation of the Demonstration is consistent with all

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                      DRAFT
applicable Federal laws, regulations, and policy statements except as
expressly waived in the award letter. There has been no Federal
legislation, regulation or policy enacted or adopted since Maryland
implemented the Demonstration, that has affected the State’s
spending sufficiently to require HCFA’s modification of the State’s
budget limit.
Maryland’s Family Planning waiver program expired in January 2000.
The State has requested an amendment to this section 1115 Medicaid
managed care waiver demonstration to include the population
previously served under the Family Planning waiver. Individuals
covered by the demonstration pursuant to the amendment will receive
the same services as were available under the Family Planning
waiver, and on a fee-for-service basis. They will not be enrolled in
MCOs. Although this proposed action would not be the result of
legislative activity, it may result in a modification of the program’s
budget limit.
Maryland has not requested any amendments to the Demonstration
waiver for the purpose of securing exemption from legislative
changes that have occurred since the Demonstration was
implemented.




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                                         DRAFT
IV. PROGRAM DESIGN/ OPERATIONAL PLAN
A.* Transition From Other Waivers Or Programs
As part of the protocol, the State shall submit a plan for transitioning beneficiaries currently
receiving services as part of a section 1115 waiver demonstration (including the Maryland High
Cost/High Risk demonstration), 1915(b) program (i.e. Maryland Diabetes Program and Maryland
Access to Care), and State Plan targeted case management (i.e., AIDS/HIV). At a minimum, this
should include a plan for educating enrolled beneficiaries about the changes that will occur and
how they will continue to receive the appropriate services (including case management services);
how the State will assure that there is no loss of services (where applicable); how the State will
make the MCOs aware of the additional services that must be provided; and efforts that will be
made to ensure continuity of care.

       IVA.      Maryland submitted a transition plan, as required, at Tab 3 of the
                 original Operational Protocol.
B. Beneficiary Marketing, Education, And Enrollment
(All communication with beneficiaries must be consistent with the Americans with Disabilities
Act's prohibition on unnecessary inquiries into the existence of a disability.)
1. Marketing -
a. All marketing activities will be conducted in accordance with HCFA's marketing guidelines.
All direct marketing materials (State, agent of the State, plan, provider, etc.) will be written in
prose that is easily understandable - at a minimum the materials shall be written at a sixth grade
reading level. (Direct marketing material for the Maryland Demonstration is defined as marketing
materials in all mediums, including brochures and leaflets, newspaper, magazine, radio,
television, billboard, and yellow page advertisements, and presentation materials used by
marketing representatives or MCOs. In addition, it includes materials mailed to, distributed to, or
aimed at Medicaid beneficiaries, and any material that mentions Medicaid, Medical Assistance, or
Title XIX.) Marketing brochures and presentation materials, including handbooks, used by
marketing representatives should follow QARI standard X.D. -- Enrollee Rights and
Responsibilities, Communication of Policies to Enrollees/Members.
b. Bilingual material (including marketing, enrollment, and member handbooks) should be
available, and provided to single-language minority households if approximately five percent or
more (Census Bureau data) of those low-income households in a geographic region are of a
single-language minority. (Single-language minority households refers to households which speak
the same non-English language and which do not contain adult(s) fluent in English as a second
language.)
c.* The State will approve all direct marketing material. Further, the State will submit all
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approved direct marketing materials, or any changes in direct marketing material, to HCFA.
HCFA reserves the right to require modification to marketing materials if deemed necessary. In
addition, the State will submit for prior approval the "boiler plate" marketing material without the
MCO-specific information.
d. All MCOs will have equal opportunity to participate in marketing activities. However, MCOs
are prohibited from conducting door-to-door marketing activities and from marketing in provider
offices. Maryland's regulations and its contracts with MCOs will have provisions that permit
enforcement of these prohibitions.

     IVB.1. The regulations governing the operation of the HealthChoice program
            and the State’s contracts with MCOs are consistent with HCFA’s
            marketing guidelines and prohibitions.
               Managed Care Organizations (MCOs) must obtain prior authorization
               of all marketing activities from the Department. Staff assigned to the
               Provider Operations section of the Department’s Division of
               HealthChoice Management review the submission and respond in
               writing by the second business day following receipt of the materials.
               If the materials submitted are not approved, staff will also notify the
               MCO by telephone so that the material can be corrected and
               resubmitted. The Provider Operations section maintains a record of
               all approved materials. In order to receive approval, MCO marketing
               materials must comply with the following criteria:
           (1) An MCO may not market materials containing false or misleading
               information. This means:

                      An organization may not use the term “MCO” to describe itself
                       unless the State has officially approved the entity’s
                       participation as an MCO in the HealthChoice program.

                      In all MCO marketing materials, agencies and organizations
                       must be referred to by name in order to avoid confusion.

                      The word “free” may not be used in any marketing materials,
                       particularly when referring to added benefits offered by the
                       MCO. “At no charge” and “no cost” are acceptable.

                      In any written marketing materials, an MCO may not state or
                       imply that it is better than other MCOs or other agencies or
                       organizations. Materials that describe the MCO and any
                       accreditations it has received are acceptable.


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                         DRAFT
        An MCO may not characterize standard Medicaid benefits that it
         is required to cover as part of the HealthChoice minimum
         benefit package as benefits offered by the MCO.

        When describing benefits offered by the MCO that are
         additional to those it is required to cover as part of the
         HealthChoice minimum benefit package (“added benefits”), an
         MCO must be explicit about exactly what is covered.
(2) MCO brochures that are distributed through the State’s enrollment
    broker must include the phone and TDD number for the enrollment
    broker and must direct recipients to call the enrollment broker for
    enrollment information. Brochures must also include the number for
    the State’s HealthChoice Enrollee Action Line and inform recipients of
    the function of the Action Line. An MCO brochure may provide a
    telephone number for the MCO but must state that this number will
    only provide additional information about the MCO, such as locations
    of providers and added benefits. The MCO may not use contact with
    recipients calling this number to market the MCO.
(3) MCOs may not conduct, directly or through a contractor, door to
    door, telephonic, or other marketing practices that include unsolicited
    personal contact with a potential enrollee by an employee or agent of
    an MCO for the purpose of influencing the individual to enroll in a
    particular MCO.
(4) MCOs are allowed to participate in health fairs and health education
    presentations but must comply with the following conditions:

      At least five business days prior to an event, an MCO must notify
       the State that it will be represented at the event and must submit
       any materials used to notify recipients of the event for approval
       by the State.

      MCOs may not hold health fairs or events in providers’ offices or
       in the lobby of a building in which provider offices are located.

      MCOs must identify their organizations whenever they have
       contact with recipients.

      All materials distributed by an MCO must be approved by the
       State and include a telephone number through which recipients
       can access additional information.

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                                        DRAFT
                  Financial incentives of any kind are prohibited, except for
                   advertising trinkets such as balloons or pens costing $5 or less.
           (5) Providers may conduct marketing activities at their sites only under
               the following conditions:

                  State-approved MCO marketing materials can be displayed at a
                   provider site if all MCOs with which the provider participates are
                   equally represented.

                  Providers must give complete information to recipients about all
                   MCOs with which the provider participates and cannot steer
                   recipients to a particular MCO by furnishing opinions or
                   information about networks or through any other means.
           (6) MCOs are required to provide marketing materials, informational
               materials, and publications in alternative formats with reasonable
               accommodation to individuals with physical, developmental, or other
               disabilities.
           (7) MCOs must provide written materials in the appropriate language for
               service areas with a specific non-English speaking population that is
               5 percent or more of the total population of the area. The MCO must
               provide evidence that the brochure is a certified translation of the
               English version.
           (8) MCOs shall have all marketing materials, informational materials, and
               publications reviewed by individuals with knowledge and familiarity
               of the needs of individuals with disabilities in order to ensure that the
               materials are functional and accessible and comply with the
               requirements of the Americans with Disabilities Act;
           (9) Permissible marketing activities are activities which are directed at
               the entire Medicaid population in a given jurisdiction and include:
               billboards, bus posters, television, radio, newspaper, leaflets,
               informative books at public events, magazines, airborne displays, and
               public conveyances. Mailings are permitted if directed at the entire
               population of the area, not just Medicaid recipients. Use of a
               Medicaid mailing list to send unsolicited marketing materials to
               recipients is not permitted.
2. Beneficiary Education/Enrollment -
a. All enrollment and beneficiary education about enrollment activities will be done by the State

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                                        DRAFT
or its enrollment agent - which excludes any MCO. Maryland's regulations and its contracts with
MCOs will have language that permits enforcement of this provision.
b. The State shall submit to HCFA the Request for Proposal for an enrollment agent at the same
time it is announced in the Maryland Register, which is anticipated to be August 29, 1996. The
State must make changes to the contract in accordance with HCFA's specifications. The State
anticipates that the Board of Public Works will approve the contract on December 18, 1996. The
State will forward the contract to HCFA at that time period.
Any such contract will prohibit incentives for enrollment in any one entity and include training
requirements for employees of contractor. The enrollment agent must be fully trained and in full
operation prior to implementation.
c. At the time of implementation, and throughout the demonstration, the State will maintain a
sufficient number of beneficiary hotlines (with interpretation services) to accommodate concerns
and questions of beneficiaries during standard physician operating hours. During the first 6
months of the demonstration, the State will monitor unnecessary emergency room use and the
messages (and nature of the messages) left on the Hotline's voice mail on weekends to determine
if Hotline hours should be extended. The State will monitor beneficiary hotlines in order to ensure
that acceptable standards are being maintained. Monitoring measures should include components
such as: a) the number of overflow calls, i.e. calls not answered due to a busy signal; b) the
average duration of each call; c) the total number of calls handled per day/week/month; d) the
average calls per day; e) the average hours of use per day; f) the busiest area code; and g) the
busiest day by number of calls.

 IVB.2.a-c     The HealthChoice policies and procedures for enrollment and
               enrollee education comply with the requirements of HCFA. The
               enrollment policies and procedures for HealthChoice are outlined in
               detail at Tab 5 of the Revised Operational Protocol. Outreach and
               education procedures are described at Tab 8.
               Maryland administers a beneficiary hotline, the HealthChoice Enrollee
               Action Line, to assist enrollees. The Enrollee Action Line is
               described at Tab 11 of the Revised Operational Protocol. In order to
               ensure that the hotline is sufficiently staffed and maintains
               acceptable standards, a Call Monitoring System (CMS) tracks the
               following: the exact hours of use, the average response time, the
               number of abandoned calls, the maximum hold time, the average
               duration of a call, the exact number of calls, the busiest time of day,
               and the busiest day of the week. Hotline supervisors review these
               reports on a weekly basis to identify trends and problem areas and
               then take appropriate action.


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                                          DRAFT
d. The State, or contracted enrollment agent, shall send each eligible beneficiary an enrollment
packet. The enrollment packet, at a minimum, shall contain the following information: a
comprehensive listing of MCOs and affiliated providers including primary care providers,
specialists, and sub-specialists such as hospitals, pharmacies, FQHCs, RHCs within the
beneficiary's service area; information regarding the clinical expertise and experience of providers
serving individuals with special needs; information concerning the selection process including a
statement that the beneficiary must choose a MCO in which their primary care provider or
specialist participates with if they wish to continue to obtain services from him/her; information
concerning the ramifications if an MCO selection is not made (default assignment); information
regarding an individual's right to change MCOs and the frequency at which a change can be
made; information concerning the availability of beneficiary hotlines and the grievance and
appeals process; information regarding the beneficiary's right to self-refer for specific service
(family planning, diagnostic and evaluation unit {DEU} visits, etc.); information regarding
available community-based services; information regarding the MCO Special Needs Coordinators
for SNPs; and a statement that informs beneficiaries about additional information that is available
(and how is can be obtained) and special assistance that is available (i.e., enrollment case
managers).

   IVB.2.d     The enrollment procedures for the HealthChoice program comply with
               HCFA’s requirements. They are described in detail at Tab 5 of the
               Revised Operational Protocol.
e.* As part of the protocol, the State must submit to HCFA the default assignment algorithm that
will be utilized to assign eligible beneficiaries who do not select an MCO in which to enroll
(including the efforts that the State shall make to assign SNPs and individuals with a mental
health condition to their established provider if (s)he participates). The effective date of
enrollment into an MCO for an individual who is assigned to an MCO is 10 business days after
the assignment. Prior to effective date of enrollment, the MCO shall provide individuals who are
assigned to it with the name and telephone number of the MCO to which they have been assigned
as well as information regarding their right to change providers. The State will attempt to
administer a health risk assessment of the individual and forward the assessment to the MCO
within 5 business days. Upon its receipt and review of the health risk assessment, the MCO shall
take appropriate action to ensure that new enrollees who need special or immediate health care
services, as identified by the health risk assessment, will receive them in a timely manner. The
State will monitor the default assignment rate. If it is determined that the default assignment rate
is consistently higher than 40 percent, a corrective action plan will be initiated. If it is determined
to be necessary, the 21 days allocated for choosing an MCO will be extended.

   IVB.2.e     The Automatic Assignment/Default Algorithm for the HealthChoice
               program is described at Tab 5 of the Revised Operational Protocol.
               An eligible recipient has 21 days from the date the eligibility notice is
               mailed by the Department to select an MCO before being auto-
               assigned. An eligible recipient who is a child in foster care or kinship
                                                                                                     15
                                         DRAFT
                 care has 60 days to select an MCO.
f. For the first year of the demonstration, each beneficiary will be permitted one disenrollment
from an MCO and enrollment into another MCO for any reason. Thereafter, beneficiaries will be
entitled to change their MCO assignment annually. Beneficiaries will be entitled to change their
MCO assignment at any time, without limitation, for cause. (As part of the enrollment packet,
beneficiaries shall be provided with information concerning their disenrollment rights.) For the
first year of the demonstration, the State will interpret "cause" for disenrollment liberally with
respect to beneficiaries who are members of a SNPs or who have a mental health condition.

    IVB.2.f      The policies and procedures of the HealthChoice program are
                 consistent with these terms and conditions. See Revised Operational
                 Protocol at Tab 5.
g. Once enrollment activities have been initiated, HCFA reserves the right to halt enrollment at
any time if there are serious and uncorrected problems in the beneficiary enrollment/disenrollment
process; if the management information systems necessary to administer the program are
insufficient; if there are problems with beneficiary access or quality; or if there is a serious
problem that jeopardizes the quality or delivery of care to beneficiaries. Prior to halting
enrollment, HCFA will promptly notify the State if a potential problem, or a problem has been
identified and will permit the State to implement a corrective action plan. If the corrective action
plan is unsuccessful and HCFA is forced to stop the program, the State and HCFA will work
expeditiously to resolve the problem(s). Once the problem(s) is resolved, implementation may
proceed.

    IVB.2.g      No response required.
C. Eligibility
1.* Eligibility Process - As part of the protocol, the State must provide a plan for HCFA approval
that describes the eligibility process, including detailed information regarding what activities will
be conducted at hospitals and Federally Qualified Health Centers (FQHCs); the streamlined
eligibility process that will be in place at the Local Health Departments to replace the presumptive
eligibility process for pregnant women; and the special efforts that will be made to assist the
special needs populations (SNPs) and individuals with a mental health condition in the selection
process (i.e. counseling by a case manager). Further, the State must provide assurance that the
provision for retroactive eligibility will remain in effect under the demonstration, as well as
assurance that Medically needy individuals who are currently eligible to receive benefits for more
than six months will continue to be eligible.

    IVC.1.       A description of the eligibility process is provided at Tab 4 of the
                 Revised Operational Protocol.
2. Special Needs Populations (SNPs) - For the purpose of the Maryland Demonstration, SNPs

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shall include: children with special needs, pregnant women, individuals with HIV/AIDS, the
developmentally disabled, the homeless, individuals receiving substance abuse treatment, and
individuals with a physical disability. This definition may be refined at some future point to
include additional populations if deemed appropriate.

   IVC.2.      Maryland’s definition of Special Needs Populations is consistent with
               this requirement and has not changed since the beginning of the
               demonstration. See COMAR 10.09.65.04-.09 and Revised Operational
               Protocol, Tab 7.
3. Pregnant Women and Children - Throughout the demonstration, woman in the Pregnant
Women and Children's Program who are enrolled in MCOs for the duration of their prenatal and
postpartum care shall have guaranteed Medicaid coverage throughout their entire pregnancy and
two-months postpartum. Further, their newborns shall automatically be enrolled in the same MCO
from birth.

   IVC.3.      The policies and procedures of the HealthChoice program are
               consistent with these terms and conditions. See Revised Operational
               Protocol at Tab 7.
4.* Rare and Expensive Case Management (RECM) - As part of the protocol, the State shall
submit the criteria that will be used to carve-out individuals to the RECM component of the
demonstration. Further, the State will include a description of: how referral to the RECM system
will occur and how individuals will be informed; beneficiaries can appeal decisions; how RECM
individuals will receive mental health services if needed; how the State will ensure that an
adequate provider network is in place; the quality assurance standards that will be in place
(including outcome measures and measures to determine appropriateness of care); and how the
State will monitor the RECM component throughout the demonstration.

   IVC.4.      As part of the original Operational Protocol, HCFA approved the
               State’s selection criteria for the Rare and Expensive Case
               Management program (REM), its referral and appeal procedures,
               quality assurance standards, and monitoring procedures. The
               selection criteria (i.e., the list of qualifying diagnoses) for the REM
               component of the demonstration were recently revised. Please refer
               to Maryland’s Revised Operational Protocol, Tab 10, for a detailed
               explanation of the new REM eligibility criteria and a description of
               current REM referral mechanisms, appeal process, access to mental
               health services, provider network requirements, quality assurance
               standards, and monitoring mechanisms.
5. Medicaid Eligibility Quality Control (MEQC) - The State will develop an alternative MEQC
program that will include, at a minimum, quality control reviews of eligibility for Medical

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                                        DRAFT
Assistance. Within 60 days of award, the State must submit a detailed description of the
procedures that will be used in this alternative program for HCFA's review and approval.

   IVC.5.     Maryland submitted a description of the alternative MEQC procedures
              for HCFA’s review and approval as required.
D. Benefits
1. MCO Requirements - Within 30 days of specification in State regulation, the State shall
provide HCFA with the minimum benefit package that an MCO must provide to eligible
beneficiaries of the Maryland Demonstration.

   IVD.1.     Consistent with the pre-implementation approval requirement set
              forth in this Term and Condition, the State promulgated COMAR
              10.09.67 as the demonstration’s minimum benefit package that MCOs
              must provide to eligible beneficiaries. The State submitted these
              regulations to HCFA, which approved them as the demonstration’s
              minimum benefit package.
2.* SNPs - As part of the protocol, the State shall provide the minimum level of benefits that an
MCO must provide to SNPs and individuals with a mental health condition. In addition, the State
shall include a description of how the ability to meet these standards will be determined in the
MCO selection process, and how MCOs will be monitored prior to beneficiary assignment and
throughout the demonstration to ensure that they are able to meet the needs of these vulnerable
populations. The State must describe in the protocol, and have in place throughout the
demonstration, a mechanism for beneficiaries to receive the appropriate care if it is determined
that an MCO is unable to meet their needs.

   IVD.2.     The State fulfilled the pre-implementation requirement set forth above
              by submitting the requested information on special needs
              populations and individuals with a mental health condition as part of
              the demonstration’s original Operational Protocol in a timely manner.
              The ability to serve special needs populations adequately is an
              important element of the HealthChoice MCO qualifications review
              process. This aspect of the review focuses on provider network
              adequacy, case management policies and capabilities, specialty care
              referral policies and requirements, coordination of care, and
              strategies for identifying members of special needs population upon
              enrollment to ensure a timely linkage to appropriate and adequate
              care (including case management services). The review process for
              determining MCOs’ ability to serve special needs populations
              adequately is discussed in detail at Tab 7 of the Revised Operational
              Protocol. This section of the Revised Operational Protocol also
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                     DRAFT
includes a detailed discussion of program requirements designed to
ensure that MCOs adequately serve their enrollees who are members
of special needs populations.
     The minimum benefit package applicable to the HealthChoice
      population as a whole is also available to members of special
      needs populations (including individuals with a developmental
      disability) and to individuals with a mental health condition.
      Specialty provider network and service delivery requirements
      also apply. Special self-referral rules apply to allow members
      of especially vulnerable populations to go outside an MCO’s
      provider network when necessary to secure adequate care or,
      in some cases, to maintain continuity of care. For example,
      individuals with HIV/AIDS may self-refer to their provider of
      choice for annual diagnostic evaluation services (DES). To
      maintain continuity of care, pregnant women who have already
      begun prenatal care with an out-of-network provider at the time
      of their MCO enrollment may continue with that provider
      through delivery and the postpartum period. Physical therapy,
      speech therapy, occupational therapy, and audiology services
      not provided as part of an inpatient hospital stay have been
      removed from the MCO-provided benefit package so that
      children under age 21 can access these services through their
      choice of providers, on a fee-for-service basis.
Benefits and service requirements for MCOs serving members of
special needs populations, benefits available to individuals with a
mental health condition, and benefits available through the REM
program are set forth in regulations (COMAR 10.09.65.04-.11 and
10.09.69-.70) and are discussed in detail in the Revised Operational
Protocol (Tab 6 {pp. 9-10}; Tabs 7 and 10).
Individuals with one of the “rare and expensive” conditions
specifically identified by the program as appropriate grounds for
enrollment into the carve-out “Rare and Expensive Case
Management” (REM) program are eligible for Medical Assistance fee-
for-service benefits and additional REM benefits (e.g., private duty
nursing for adults and assisted living benefits).
In the event that an MCO cannot meet the needs of an individual with
special health care needs through its in-network providers, the
individual can secure the Department’s intervention by means of the
complaint and grievance process. If the complaint has merit, the

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               Department has authority, either as part of a corrective action or
               otherwise, to order the MCO to refer the enrollee for services
               provided by an appropriately qualified out-of-plan provider at the
               MCO’s cost.
3. Family Planning - Under the demonstration, beneficiaries will be allowed to self-refer to
alternative providers for family planning services. The MCOs will be responsible for
reimbursement to the alternative provider according to established Medicaid rates and must have
a process in place for the confidential exchange of patient specific information. The Maryland
regulations and contracts with MCOs shall have specification for enforcement of these provisions.
The State shall include information in the marketing and education material that clearly informs
beneficiaries of their rights. The State will provide HCFA with any amendments to the Title X
provider agreements which occur as a result of the demonstration.

    IVD.3.     Information about the right to self-refer for family planning services is
               included in the Enrollee Handbook that MCOs distribute to new
               members and update annually. MCOs are required by contract and
               regulation to make prompt payment, at the Medicaid fee-for-service
               rate, to providers furnishing self-referred services to their enrollees.
4. Pregnancy Related Services - As part of the demonstration, a pregnant woman who is already
receiving services from an ob/gyn provider who is not in an MCO (excluding an HSCRC
regulated outpatient department) at the time of enrollment, will be entitled to self-refer to that
provider for pregnancy-related services. The MCO will be responsible for reimbursing the ob/gyn
provider based on established Medicaid rates. Beneficiary marketing and enrollment material
must clearly explain this right and the Maryland regulations and contracts with MCOs must have
clear provisions for enforcement of this requirement.

    IVD.4.     A pregnant woman entering an MCO as a new member may self-refer
               to her established provider of prenatal care through the end of the
               pregnancy and postpartum period. (COMAR 10.09.67.28,
               10.09.65.20(A), and Revised Operational Protocol, Tab 6, p. 9)
5. Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) - All MCOs will be
responsible for arranging for the provision of, or providing, the full range of EPSDT services to
recipients under age 21 years. The State is responsible for ensuring that MCOs are aware of this
requirement and fully understand what EPSDT services encompasses. The State must monitor
MCOs to ensure that this is occurring through the use of, at a minimum, encounter data, HEDIS
reports, and medical record reviews.
6. Dental - Each MCO must contract, or subcontract, with an adequate number of dental
professionals to ensure that eligible beneficiaries (i.e. children) are receiving the appropriate level
of dental care. The State will monitor this as part of the MCO monitoring process and quality

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                                          DRAFT
assurance measures and initiate a corrective action plan if it is not occurring.
7.* Pharmacy benefits - The State shall require that MCOs provide drug formularies equivalent to
the standard therapies that were provided in the traditional Medicaid program immediately prior
to implementation of the demonstration. The State shall require that MCOs establish Drug
Utilization Review programs to approve and review appropriateness, safety, and efficiency of
their pharmacy programs and to report these activities to the State. In addition, the State shall
have in place (and describe in the protocol) a mechanism to monitor the adequacy of an MCO's
drug formulary throughout the demonstration. The State will intervene on behalf of the
beneficiary if the beneficiary is having a problem accessing drug treatments, due to less than
comprehensive MCO drug formularies or underlying restrictive policies. The State shall require
that the MCO arrange for providing the necessary drug(s), and that the cost of providing such
drug(s) not be borne by the beneficiary. Further, such a problem shall initiate an MCO corrective
action plan by the State.

    IVD.5-7 HealthChoice program requirements include each of the standards for
            EPSDT, dental, and pharmacy as set out above. These benefits are
            described in detail in the Revised Operational Protocol, Tab 6. Review
            of the MCOs’ pharmacy benefits is coordinated through the Division
            of Pharmacy and Clinic Services (DPCS) within the Office of Health
            Services, HealthChoice and Acute Care Administration. Currently, the
            DPCS contracts with an external review organization for technical
            assistance in assessing MCO policies and procedures regarding
            pharmacy benefits. Pharmacy review procedures are described in
            further detail in the Revised Operational Protocol, Tab 11, p 15.
8. Mental Health -
a. As part of the protocol, the State must submit a detailed plan for the coordination between the
MCO, ASO, and CSA (including information on how information will be exchanged and a
patient's confidentiality will be protected) and a detailed description of the ASO referral system,
including process, timelines, information exchange, complaint procedure, and plan for monitoring
the efficiency of the system. The performance of the ASO should be included in the quarterly
report.

    IVD.8.a The role of the core service agencies (CSAs), MCO-ASO coordination
            protocols, the ASO referral system, and confidentiality policies and
            procedures are described in detail in the Revised Operational
            Protocol, Tab 10, SMHS, #5. A report of the performance of the ASO
            is included in the quarterly reports submitted to HCFA by the State.
b. As part of the demonstration, beneficiaries will be entitled to receive the full scope of specialty
mental health services available to Medicaid beneficiaries immediately prior to implementation of

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                                          DRAFT
the demonstration.

    IVD.8.b Benefits available under the Specialty Mental Health Services System
            (SMHS) are equivalent to the mental health services that were
            available to Medicaid beneficiaries immediately prior to the
            demonstration’s implementation.
c. Information shall be provided to beneficiary at the time of enrollment that clearly explains the
benefits available, grievance procedures, how to access the system, etc. In addition, the State must
have in place outreach activities designed to inform SNPs and individuals with a mental health
condition about the availability of these services.

    IVD.8.c Information about benefits offered by the MCO, including the required
            minimum benefit package, any additional services offered by the
            MCO, as well as services offered through the Specialty Mental Health
            Services System, are included in the Enrollee Handbook that is
            distributed to new enrollees by their MCOs. The Handbooks also
            include information on how to access mental health services through
            the Specialty Mental Health Services System (including information
            on using the Department’s “Toll-Free Help Line), and how to file a
            complaint, grievance, or a formal appeal. (This information is
            included in an “Enrollee Handbook Template” the State provides to
            MCOs to use as a framework for their MCO-specific Enrollee
            Handbooks.) Enrollees can also get information about services
            available through the Specialty Mental Health Services System
            through their PCPs or other providers; MCOs provide their providers
            with a “Provider Handbook” that includes more detailed information
            on covered mental health services and how to access them through
            the Specialty Mental Health Services System.
d.* Prior to implementation, the State must demonstrate that an adequate specialty network is in
place to provide this care. This plan for monitoring the adequacy of the specialty network
throughout the demonstration should be included in the protocol.

    IVD.8.d The State determines the adequacy of an MCO applicant’s specialty
            network as part of the MCO qualification process, which is explained
            in detail in the Revised Operational Protocol, Tab 7. Thereafter,
            specialty network adequacy is monitored through the complaint and
            grievance processes of the MCOs and the Department.
e. A beneficiary is entitled to access specialty mental health services either through a referral by
an MCO or by directly contacting an ASO, CSA, or participating provider.

    IVD.8.e Specialty mental health services may be accessed with or without a
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                                          DRAFT
               referral. MCOs have a responsibility to refer an enrollee who needs
               specialty mental health services, as described at Tab 6, Section 1 of
               the Revised Operational Protocol. An enrollee in need of specialty
               mental health services may seek a referral from the enrollee’s PCP or
               other MCO provider; or may directly contact the SMHS administrative
               services organization (ASO), a core service agency (CSA), or a
               participating SMHS provider. The policies and procedures for
               accessing specialty mental health services are explained in detail in
               the Revised Operational Protocol, Tab 10.
f. Except for the Baltimore Mental Health System (BMHS) Partial Capitation Project, the State
shall provide reimbursement for this specialty mental health care on a fee-for-service basis. Any
deviation from this payment methodology requires prior HCFA approval.
The State shall submit its contract with BMHS to HCFA for its review. Prior to the State's
changing the design of the BMHS partial capitation project, the State will consult with HCFA.

    IVD.8.f    Maryland has made no exceptions to or deviations from the fee-for-
               service reimbursement payment methodology other than the
               Baltimore Mental Health System (BMHS) Partial Capitation Project.
               Additionally, Maryland has made no changes to the design of the
               BMHS partial capitation project since HealthChoice was implemented.
g.* As part of the protocol, the State must describe the system that will be in place to ensure that
payments are not made to an MCO and specialty mental health provider for the provision of the
same service.

    IVD.8.g The Benefits section (Tab 6, pp 9-11) of the Revised Operational
            Protocol specifically describes the mental health services that are to
            be provided by MCOs as part of the standard benefit package, and the
            Specialty Mental Health Services provided and paid for outside of the
            capitated MCO system. The Specialty Mental Health Services System
            section of the Revised Operational Protocol (Tab 10) further describes
            how these two systems coordinate services.
9. Institutions for Mental Disease (IMDs) - FFP for enrolled managed care beneficiaries residing
in an IMD (excluding beneficiaries who are in an IMD at the time of implementation of the
demonstration until they are discharged at which time they may be eligible for participation in the
demonstration). This is limited for beneficiaries 21-64 to up to 30 consecutive days per episode
and for up to 60 inpatient days per year.
10. Coordination of Services -
a. Linkage Agreements - As part of the protocol, the State will develop, and submit for approval,

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                                           DRAFT
a detailed plan that describes how MCOs are expected to develop linkage agreements and
coordinate care for their beneficiaries with such entities as: school-based health clinics, family
planning clinics, entities critical to the care of SNPs, and other pertinent entities. The plan shall
include the process for exchanging patient specific information while protecting the
confidentiality of the patient.

   IVD.10.a Each enrollee’s MCO-assigned primary care provider (PCP) is
            responsible for maintaining the enrollee’s medical records and for
            coordinating the enrollee’s comprehensive medical care. With
            respect to special needs populations, MCO special needs
            coordinators and case managers are also responsible for
            coordination of services provided by the MCO and those accessed
            through self-referral. (See Revised Operational Protocol, Tabs 6 and
            7)
               An MCO must reimburse out-of-plan providers for specified self-
               referred services provided to the MCO’s enrollees. (The specific
               services authorized for self-referral are listed in COMAR 10.09.67.28
               and are discussed in more detail in the Revised Operational Protocol,
               Tab 6.) Regulations require that school-based health centers
               providing self-referred services transmit medical record information
               to the MCO within 2 business days of providing self-referred services
               to an enrollee, and encounter data and billing information within 60
               days of providing the service. (COMAR 10.09.68.03C)
b. SNPs - MCOs will be responsible for reimbursement of care provided outside the network if
there is no affiliated network provider with appropriate training and expertise to meet the needs of
the enrolled SNPs. In addition, if there is no sub-contract for particular types of medically
necessary specialist services for which the MCO is liable, the MCO will be responsible for
arranging for the provision of such services (including appropriate referrals) and reimbursing the
specialty providers on a fee-for-service basis.

  IVD.10.b An MCO’s special needs coordinator, in collaboration with the MCO’s
           case managers, is responsible for coordinating the services provided
           to members of special needs populations by the MCO and those
           accessed through self-referral. (See Revised Operational Protocol,
           Tab 7) Each MCO is required to include in its network specialists with
           appropriate training and expertise to meet the needs of enrollees who
           are members of special needs populations. The specialty care
           provider network of applicant MCOs, its adequacy for serving
           members of special needs populations, and how the MCO will
           coordinate care delivered to members of special needs populations
           are focal elements of the HealthChoice MCO qualifications review

                                                                                                        24
                                        DRAFT
               process. (See Revised Operational Protocol, Tab 7, p. 11ff)
               In the event that an MCO cannot meet the needs of an enrollee with
               special health care needs through its in-network providers, the
               enrollee can secure the Department’s intervention through the
               complaint and grievance process. If the complaint has merit, the
               Department has authority to:
                     Either as part of a corrective action or otherwise, order the
                      MCO to refer the enrollee for services provided by an
                      appropriately qualified out-of-network provider at the MCO’s
                      expense; or
                     Disenroll the enrollee from the current MCO, then reenroll the
                      enrollee in a different MCO that can provide appropriate and
                      adequate care to meet the enrollee’s individual service needs.
c. Diagnostic Evaluation Unit (DEU) Visit - Under the Maryland Demonstration, HIV positive
beneficiaries will be permitted to self-refer to a DEU for assessment one time a year. At the time
of enrollment, the beneficiary shall be informed of this right. MCOs shall also make HIV positive
enrollees aware of this right and document their acceptance or declination of services. Through
the DEU visit, a beneficiary shall receive a comprehensive medical and psychosocial assessment.
The DEU is responsible for sharing the results of the assessment with the beneficiary's primary
care provider while protecting the patient's confidentiality. MCOs must review the results of the
assessment to ensure that a multi-disciplinary, patient-oriented, family- centered plan of care is
developed. The MCO will adopt all appropriate section of the DEU treatment plan and discuss
any areas of difference with the DEU provider. A beneficiary can complain to, or file a grievance
with, the MCO, State hotline representative/Ombudsman if the MCO refuse a provision of
treatment recommended through the DEU that the beneficiary desires.

   IVD.10.c. The State, consistent with the criteria included in these Terms and
             Conditions, requires MCOs to have in place adequate linkage
             agreements to coordinate care of members of special needs
             populations, including individuals with HIV/AIDS who choose to
             access DEU services through self-referral. These requirements are
             enforced through the State’s initial MCO qualifications review
             processes, and ad-hoc clinical care reviews, and through the State’s
             and MCOs’ complaint and grievance systems.
d.* Coordination of Care for Enrollees in Need of Mental Health and Substance Abuse Treatment
Services - The State shall ensure that mental health and substance abuse conditions are
systematically identified and addressed by the beneficiary's primary care provider. As part of the
protocol, the State shall provide a description detailing how MCOs will meet the requirements for

                                                                                                25
                                         DRAFT
actively identifying beneficiaries in need of mental health and substance abuse treatment services.
Further, the protocol shall include a description of how MCOs are expected to target high-risk
populations; utilize screening tools; coordinate primary care provider services with mental health
and substance abuse treatment services; and what function(s) the ASO and CSA will serve. In
addition, the protocol there is no affiliated network provider with appropriate training and
expertise to meet the needs of the enrolled SNPs. In addition, the protocol must include a
description of how monitoring will occur to ensure that MCOs are carrying out their
responsibilities and double payment does not occur.

   IV.D.10.d. Please refer to Attachment F of Tab 10 of the Revised Operational
             Protocol for a detailed description of how mental health and
             substance abuse services are coordinated.
11. Cost Sharing - The demonstration will not involve the implementation of copayments,
premiums, or deductibles of any kind.

   IVD.11.     The HealthChoice program does not require enrollees to pay
               copayments, premiums, deductibles, or other form of cost-sharing of
               any kind.
E. Delivery Network
1. MCO Contracting -
a. MCO Qualification Process - The State shall enter into an MCO provider agreement with any
corporation that demonstrates the ability to comply with the requirements for MCOs in the State's
regulations and provider agreement. As part of the qualification process, the State shall provide
MCO applicants with sufficient data on cost and utilization, as well as information on how the
assumption regarding cost and caseload were derived in order for the entity to be able to make a
knowledgeable and informed decision regarding participation. The State submitted a copy of its
draft regulations to HCFA on August 16, 1996. The State expects to forward its final regulations
to HCFA no later than November 1, 1996.

    IVE.1.a The original regulations for the HealthChoice program were approved
            by the Administrative, Executive, and Legislative Review (AELR)
            Committee of the Maryland General Assembly on November 8, 1996,
            and immediately forwarded to HCFA by the Department. The State
            developed and performed a rigorous MCO qualifications review
            process to determine whether applicants were capable of delivering
            the full range of program-covered benefits to enrollees according to
            the program’s requirements, as specified in regulations and the MCO
            contract. Representatives from HCFA’s Central and Regional offices
            have participated in nearly all of the site visits conducted by the State
            as part of the HealthChoice MCO evaluation process. This process is
                                                                                                 26
                                        DRAFT
               described in detail at Tab 3 of the Revised Operational Protocol.
b.* Contracts & Agreements - Prior approval is required by HCFA for model provider agreements
with MCOs and any significant deviation from the model contract. HCFA will have 30 days to
provide comments. Contracts shall incorporate regulations which shall contain a clear description
of the services that the State expects the MCO to provide (including those for the SNPs and
individuals with a mental health condition) and the requirements that the State expects the MCO
to perform, as well as standards that they must meet. This should include items such as the State's
requirement that 80 percent of State payments go to medical services during calendar year 1997
and 85 percent thereafter, and the financial responsibility assumed by MCOs for beneficiary's
self-referral for such services as family planning and annual DEU visits for HIV/AIDS patients.

    IVE.1.b The State has submitted its model MCO contracts to HCFA for prior
            approval as required. The model MCO contract used by the State
            does incorporate program regulations. Program regulations include a
            clear description of covered services that MCOs are required to
            provide (COMAR 10.09.67), including services for SNPs and
            individuals with a mental health condition. The regulations also
            specify requirements and standards that MCOs must meet, including
            the 85 percent loss ratio requirement (COMAR 10.09.65.19B) and
            financial responsibility for self-referred services (COMAR
            10.09.65.20).
c. SNP Coordinator - As part of its regulations and contracts with MCOs, the State will fully
inform the MCOs regarding their requirement to provide special needs case management for
SNPs, as well as what functions this individual(s) will be responsible for performing, and what
actions will be taken if the MCO does not fulfill this requirement. MCO's adherence to this
requirement will be included in the State's overall quality assurance and monitoring plan.

    IVE.1.c Program regulations (COMAR 10.09.65.04C(9)), which are
            incorporated by reference into the State’s contract with each
            participating MCO, specify that the MCO must employ a special needs
            coordinator, and enumerates a special needs coordinator’s basic
            functions:

                  Serves as a point of contact for health care services information
                   and referrals;

                  Communicates effectively and in a sensitive manner with
                   members of special needs populations, their families, and
                   caregivers;

                  Represents special needs populations on the MCO’s consumer
                   advisory board;
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                                        DRAFT
                  Serves as a resource for providers and enrollees on the
                   requirements of the Americans with Disabilities Act; and

                  Maintains a log of treatment denials and outcomes of associated
                   utilization reviews.
               Beyond these core functions, special needs coordinators’ duties may
               vary from MCO to MCO. A special needs coordinator may have
               additional responsibilities such as developing and implementing
               strategies for identifying new enrollees who are members of special
               needs populations, and overseeing the MCO’s special needs case
               management services. The qualifications and responsibilities of an
               MCO applicant’s special needs coordinator are carefully evaluated as
               part of the State’s MCO evaluation process.
               The MCO’s overall responsibilities to members of special needs
               populations are specified in COMAR 10.09.65.04-11, and are
               discussed in detail in the Revised Operational Protocol, Tab 7. An
               MCO that fails to fulfill these requirements is subject to sanctions as
               specified in COMAR 10.09.73. Monitoring of MCO compliance with
               requirements for serving special needs populations is the subject of a
               number of SNP-specific quality assurance methodologies detailed in
               the Revised Operational Protocol, Tab 7, p.19ff.
d. Subcontracts - Copies of subcontracts or individual provider agreements with MCOs shall be
provided to HCFA upon request. The State will approve all MCO model subcontracts related to
medical services, assignment of risk, and data reporting functions and any substantial deviations
from these model subcontracts.

     IVE.1.d The State reviews all MCO model subcontracts as part of the MCO
             qualifications review process. Model subcontracts that are deficient
             (e.g., fail to include all the standard provisions required by regulation
             to be included) are disapproved and returned to the applicant for
             correction and amendment of subcontracts already executed. After
             the State has approved an MCO’s standard subcontracts, the MCO is
             thereafter required to submit substantive changes to the Department
             for review prior to implementation.
e. Selection Process - Prior to being designated as an MCO and being permitted to enroll any
Medicaid beneficiaries under the Maryland Demonstration, each organization that is interested in
participating in the demonstration (regardless of the fact that they may be an HMO licensed in the
State) must undergo a rigorous qualifications review by the State, or a State agent. The standards
for meeting this qualification review must be submitted to HCFA for approval as part of the

                                                                                                28
                                         DRAFT
protocol and shall include, at a minimum, qualification measures in the following areas: MCO
capacity and patient access, quality assurance systems, data systems, reporting capabilities,
solvency standards, and ability to meet the needs of SNPs. HCFA reserves the right to request the
results of a specific entity's qualifications review and to require re-evaluation if deemed
necessary. MCOs must be made aware of these qualification standards as part of the qualification
process.

    IVE.1.e The State subjects MCO applicants to a rigorous qualifications review
            process that evaluates a potential MCO’s capabilities with regard to
            all aspects of the program. The review includes an assessment of the
            applicant’s capacity, patient access, quality assurance systems, data
            systems, reporting capabilities, solvency standards (evaluated by the
            Maryland Insurance Administration and reported to the Department),
            and ability to meet the needs of SNPs. MCOs are informed of the
            qualification standards through program regulations. The
            Department also provides applicants with a written guidance as to
            formatting special needs populations information to be included in
            their written applications. Specifics of the MCO qualifications review
            process are reviewed in detail at Tab 3 of the Revised Operational
            Protocol.
2. Beneficiary Choice - In areas of the State where there is only one MCO participating, the State
must submit a plan for HCFA approval that details how a beneficiary will have choice for health
care services prior to initiating enrollment in that area.

    IVE.2      There are at least two MCOs participating in the HealthChoice
               program in every jurisdiction in the State.
3. Historic Community Providers -
a. Federally Qualified Health Centers (FQHCs) - FQHCs that are established prior to
implementation will be considered by the State as a Historic Community Providers and as such,
the State will assure that at least one health plan within the FQHC's service area contracts with the
FQHC. If an FQHC(s) forms its own MCO, health plans will not have to contract with the
FQHC(s).
The State will have to assure that beneficiaries enrolled in the Maryland Demonstration have the
opportunity to access FQHC services consistent with current HCFA 1915(b) policy. This
requirement for access is met so long as an FQHC is available in the beneficiary's service area as
either a MCO or contracting entity with an MCO. The FQHC source must be accessible and the
FQHC cannot be at, or over its provider capacity. If availability of FQHC services is not achieved
through the participation of at least one FQHC, it will be necessary for the State to assure that
additional FQHC services are available (e.g. either as a MCO or subcontractor to a MCO) until

                                                                                                  29
                                          DRAFT
sufficient access to FQHC services has been achieved.
Reimbursement to the FQHCs will be on either a capitated (risk) basis (with appropriate
adjustments for risk factors) or on a cost-related basis. A description of the payment methodology
shall be provided by the State. Alternatively, the FQHCs and the State may mutually agree to a
different payment system. If during the demonstration, the MCO changes its payment
methodology to an FQHC, the changes must be submitted by the State to HCFA for approval.

    IVE.3.a The State has revised its regulations governing reimbursement of
            FQHCs for services provided to HealthChoice enrollees. MCOs are
            now required to pay FQHCs with which they subcontract at least
            $48.96 per visit for Medicaid covered services other than dental, and
            at least $14.81 per visit for dental services (to enrollees who are
            pregnant or under age 21). The State will make a monthly
            supplementary payment to the FQHC equal to the difference between
            the MCO payment amount and the FQHC’s established per visit rate
            for Medicaid-covered FQHC services for each visit provided and
            recorded through encounter data. See COMAR 10.09.65.21.
b. Mental health providers who have been providing care to beneficiaries under the traditional
Medicaid program prior to the implementation of the Maryland Demonstration shall continue to
be approved programs and the State shall permit them to participate in the Specialty Mental
Health System, provided they meet the participation requirements of the State.

    IVE.3.b All providers delivering Medicaid-reimbursable mental health services
            prior to the implementation of HealthChoice were given an
            opportunity to continue to provide services under the new program.
            Many of the providers elected to change their regulatory status to
            comport with the standards of care governing the Public Mental
            Health System. Today, mental health services are provided through
            the program at more than 5,000 locations across the State, thus
            assuring freedom of choice and access to care.
4. Provider Reimbursement - No later than October 1, 1996, the State will submit to HCFA the
State's regulation section that contains the State's capitation rates. Included in this regulation will
be the methodology for determining special rate adjustments (including rates for all SNPs
categories.) In addition, no later than October 1, 1996, the State shall submit the fee-for-service
upper payment limits from which all capitation rates are derived. The State shall include an
analysis and certification that its upper payment limits and capitation rates are actuarially sound in
accordance with the State's current fee-for-service payment system.

    IVE.4.     The State complied with the pre-implementation submission
               requirements enumerated above. For a detailed explanation of the

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                                        DRAFT
               State’s rate-setting process, see the Revised Operational Protocol,
               Tab 13.
5. Solvency Requirements - Upon request, the State shall provide to HCFA copies of all financial
statements and audits performed by certified public accountants filed with the Maryland
Department of Insurance and/or the Department of Health and Mental Hygiene by MCOs. If a
State audit of an MCO reveals evidence that an entity is experiencing solvency difficulties, within
30 days of completion of the audit, the audit results and related documentation shall be sent to
HCFA. Further, the State shall provide to HCFA, upon request, copies of all audits conducted by
the State under the Federal Single Audit Act. If an MCO becomes insolvent, no FFP will be
available for direct payment by the State to any provider for services provided to the MCO's
enrollees if those services were provided in the time period covered by the capitation payment
paid to the MCO for that enrollee.

    IVE.5.     The State will provide the referenced financial statements and audits
               to HCFA upon request.
6. Disclosure Requirements - The State will meet the usual Medicaid disclosure requirements at
42 CFR 455, Subpart B prior to the implementation date of the demonstration. Such requirements
include disclosure of ownership and completion of the standard HCFA disclosure form.

    IVE.6.     The State has complied with the pre-implementation Medicaid
               disclosure requirements.
    7. Provider Hot Lines - Beginning with program implementation, and throughout the
    demonstration, the State will operate a sufficient number of provider hotlines during standard
    physician operating hours to accommodate concerns and questions of providers. The State
    will monitor the hotlines to determine that an acceptable standard for hotline access is being
    met and initiate a corrective action plan if it is determined that it is not. Monitoring efforts
    should include such items as: a) the number of overflow calls, i.e. calls not answered due to a
    busy signal; b) the average duration of each call; c) the total number of calls handled per
    day/week/month; d) the average calls per day; e) the average hours of use per day; f) the
    busiest area code; and g) the busiest day by number of calls.

    IVE.7.     Maryland administers a Provider Hotline to address inquiries and
               complaints from MCO providers regarding enrollee access, quality of
               care, MCO assignment patterns, and other provider concerns
               regarding HealthChoice. In order to ensure that the hotline is
               sufficiently staffed and maintains acceptable standards, a Call
               Monitoring System (CMS) tracks the following: the exact hours of use,
               the average response time, the number of abandoned calls, the
               maximum hold time, the average duration of a call, the exact number
               of calls, the busiest time of day, and the busiest day of the week.

                                                                                                 31
                                          DRAFT
               Hotline supervisors review these reports on a weekly basis to identify
               trends and problem areas and then take appropriate action.
8. Administrative Service Organization (ASO) - The State shall submit to HCFA the Request for
Proposal for an Administrative Service Organization at the same time it is announced in the
Maryland Register, which is anticipated to be September 2, 1996. The State must make changes
in accordance with HCFA's specifications. The State anticipates that the Board of Public Works it
will approve the contract on/about December 18, 1996. The State will forward the contract to
HCFA at that time.

    IVE.8      Maryland submitted the ASO RFP to HCFA as required and made all
               requested changes according to HCFA’s specifications. MHA has
               recently released a new RFP for the ASO contract.
F. Access
1. Access Standards -
a.* The State must demonstrate prior to enrollment, and on an ongoing basis thereafter, that
beneficiaries have an adequate number of accessible institutional facilities, service sites (including
dental), and allied professional services. The methodology for conducting this analysis shall be
submitted as part of the protocol and should, at a minimum, take into consideration the incidence
of providers affiliated with multiple MCOs, the commercial caseload of providers, and the
geographic distribution of beneficiaries in relationship to providers. If HCFA decides to run a
computer mapping program, the State shall make available (electronically) addressees of
demonstration eligibles and providers. (Specific access standards are listed in Attachment D.)

    IVF.1.a Please see Tab 9 of the Revised Operational Protocol for a detailed
            description of Maryland’s geographic access and capacity
            determination methodology.
b.* As part of the protocol, the State must provide the methodology it is using as part of the plan
evaluation and selection process to determine whether each MCO has sufficient capacity
(including capacity to meet appropriate care standards for SNPs and individuals with a mental
health condition) for participation in the Maryland Demonstration. This methodology should take
into consideration the geographic distribution of beneficiaries in relationship to the available
caseload for providers, as well as the incidence of providers enrolled with multiple MCOs and
their commercial caseload.

    IVF.4.b     Please see Tab 9 of the Revised Operational Protocol for a detailed
                description of Maryland’s geographic access and capacity
                determination methodology.
c. Prior to implementation, and annually thereafter, the State must provide HCFA with an updated

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                                         DRAFT
listing of all participating MCOs and their providers (primary and specialty).

    IVF.4.c     Provider network updates are submitted to HCFA.
d.* The State will notify HCFA on a timely basis of any significant changes to any provider
network which affect access and quality of care, and the State shall define within its protocol
contingency plans for assuring continued access to care for enrollees in the case of contract
termination and/or insolvency.

    IVF.4.d Since the implementation of HealthChoice in 1997, Maryland’s
            program has experienced four significant MCO transitions: the
            closing of New American in 1998; the sale of Prudential to Americaid
            in 1999; the withdrawal of FreeState in 2000-2001; and the sale of
            PrimeHealth to Americaid effective May 1, 2001. In each of these
            cases the State has worked closely with HCFA to assure that the
            transitions occurred as smoothly as possible and in accordance with
            HCFA’s regulations and policy.
e. The State shall maintain the current fee-for-service delivery system in areas where provider
access is determined to be insufficient.

    IVF.4.e Provider access is generally sufficient in all areas of the State. To the
            extent that provider coverage is not adequate in certain specialty or
            geographic areas, MCOs are required to refer enrollees to out-of-
            network providers.
f. The State must monitor MCOs to ensure that they are conforming with the standards outlined in
the Americans with Disabilities Act for purposes of communicating with, and providing
accessible services to hearing and vision impaired, and physically disabled beneficiaries.

    IVF.4.f    Compliance with the Americans with Disability Act is expressly
               required as a condition of program participation in COMAR
               10.09.65.02H.
G. Quality Assurance
1.* Monitoring Plan for MCOs - As part of the protocol, the State shall provide its overall quality
assurance monitoring plan for the MCOs, including the required access and quality standards
which they must meet to provide services to beneficiaries (including SNPs). This plan shall
include provisions that are being taken to assure that SNPs are able to obtain appropriate services
from a qualified provider. The State shall submit to HCFA copies of all quality assessment
reviews of these MCOs. The State shall establish a quality improvement process for bringing
MCOs which score below the State's performance benchmarks up to an acceptable level. The
State will specify the benchmarks in the protocol. (Suggestions for monitoring MCO operations

                                                                                                  33
                                        DRAFT
are attached at Attachment H.)

    IVG.1.     The quality assurance standards and monitoring methodologies for
               MCOs are described in Tab 11 of the Revised Operational Protocol.
2.* RECM and Mental Health Providers - As part of the protocol, the State shall submit a quality
assurance and monitoring plan for RECM providers and mental health care providers. The plan
must include measures to assure that beneficiaries have sufficient access to appropriate care and
relevant outcome measures.

    IVG.2. A detailed description of the quality assurance and monitoring plan for
           the REM Program is included in Tab 10 of the Revised Operational
           Protocol. As part of the original waiver, Maryland’s Mental Hygiene
           Administration submitted to HCFA and continues to follow a detailed
           quality assurance plan for the Specialty Mental Health System. This
           plan was submitted to HCFA in September 1997.
3. External Quality Review Organization (EQRO) - The State will meet all applicable Federal
periodic medical audit requirements for contracted MCOs participating in the demonstration, as
articulated in Federal regulations at 42 CFR 434.53. The State shall submit the RFP for the EQRO
to HCFA for review a minimum of 45 days prior to release. The selected contractor shall perform
an annual medical audit on all MCOs and submit to the State, for review by HCFA, the annual
audit report for each entity within 60 days of completion of the audit.

    IVG.3      The annual audit reports have been submitted to HCFA as required
               and are included in chapter 5 of this Proposal.
4. Guidelines for MCO Monitoring of Providers - MCOs will require, by contract, that affiliated
providers meet specified standards as required by the State regulations and contract. MCOs will
monitor, on a periodic or continuous basis, providers' adherence to these standards.

    IVG.4      The regulations governing the HealthChoice program reflect these
               standards. MCOs’ and providers’ adherence to these standards are
               monitored according to the Quality Assurance Monitoring Plan
               described at Tab 11 of Maryland’s Revised Operational Protocol and
               by monitoring the provider and enrollee hotlines.
5. Beneficiary Survey - Within 15 months of implementation, the State shall conduct a
beneficiary survey (including beneficiaries in the RECM component of the demonstration) that
includes target areas for SNPs and individuals with a mental health condition. The survey shall be
generally described in the operational protocol and provided to HCFA for review a minimum of
60 days prior to use. At a minimum, the survey will include such measures as the beneficiary's
satisfaction with program administration and care provided and include: measures of out-of-plan
use, to include use of emergency rooms; average waiting time for appointments (primary care,

                                                                                                34
                                        DRAFT
specialists, and mental health); average time and distance to reach providers; access to special
providers; and the number of times and reasons that a provider change was made. Results of the
survey must be provided to HCFA by the 18th month of project implementation. Thereafter, the
State shall conduct annual beneficiary surveys. Such surveys shall be designed to produce
statistically valid results.

    IVG.5      Maryland has conducted beneficiary surveys as required by the
               Special Terms and Conditions and as described in the Quality
               Assurance Monitoring Plan at Tab 11 of the Revised Operational
               Protocol. Results are currently available for surveys conducted for
               calendar years 1998 and 1999. These results are included in chapter
               3 of this Proposal.
6. Provider Survey - Within 15 months of implementation, the State shall conduct a provider
survey. The survey shall generally be described in the operational protocol and provided to HCFA
for review a minimum of 60 days prior to use. At a minimum, the survey will measure such
measures as a provider's satisfaction with program administration and compensation. Results of
the survey must be provided to HCFA by the 18th month of project implementation. Thereafter,
the State shall conduct annual provider surveys. Such survey shall be designed to produce
statistically valid results.

    IVG.6      Maryland has conducted provider surveys as described in the Quality
               Assurance Monitoring Plan, Tab 11 of the Revised Operational
               Protocol. Results are available for 1998 and 1999 and are included at
               Chapter 3 of this Proposal.
7. Complaint/Grievance Process - The State shall monitor the complaint/grievance process to
assure that beneficiaries' and providers' concerns are resolved timely; that confidentiality is
protected; and that coordination between the MCO, hotline representative, Ombudsman, and State
is occurring in an efficient and effective manner. At a minimum, as part of this monitoring effort,
the State shall collect and review quarterly reports on grievances received by each MCO which
describe the resolution of each formal grievance. Quarterly reports must also include an analysis
of logs of informal complaints (which may be verbally reported to customer service personnel) as
well as descriptions of how formal (written) grievances and appeals were handled. Similar
monitoring shall occur for the mental health and RECM component of the demonstration.

    IVG.7      The Division of HealthChoice Customer Relations reviews on a
               quarterly basis a sample of the complaints received and resolved by
               each MCO. Each MCO must send on a timely basis a list of all
               complaints received and resolved during a given quarter. A
               supervisor in the Division reviews the list and chooses a random
               sample consisting of six percent of the total number of complaints or
               35 complaints, whichever is greater, for review. MCOs then have two

                                                                                                   35
                                        DRAFT
               weeks to send to the State the complete details of the cases included
               in the sample. A supervisory team within the Division then reviews
               each case to determine if the complaint was appropriately identified
               and recorded, if all components of the resolution process were
               followed, if the complainant has been informed of the resolution, and
               if the resolution was accomplished in a timely manner. The team also
               reviews the complaint format used by each MCO for clarity and
               consistency. The sample is reviewed to verify that a variety of call
               sources are included, and the total volume of calls reported by each
               MCO is examined for large discrepancies compared to the complaints
               received by the State Hotline. Upon completion, but not later than the
               end of the reviewing quarter, the State sends the MCO a summary of
               the evaluation. If necessary, follow-up activity occurs in meetings
               between the State and MCO staff.
               Monitoring of the complaint and grievance process for the REM
               program and the Specialty Mental Health Services System complies
               with HCFA’s requirements and is described at Tab 10 of the Revised
               Operational Protocol.
H. Encounter Data Requirements
1. Minimum Data Set - The State shall define a minimum data set (which at least includes all
inpatient and physician services) and require (as part of their regulations and contract) that all
providers submit these data. (The recommended minimum data set is attached - Attachment G.)
The State must perform periodic reviews, including annual validation studies, in order to ensure
compliance and shall have contractual provisions in place to impose financial penalties if accurate
data are not submitted in a timely fashion. Prior to implementation, the State shall submit the
proposed minimum data set and a workplan showing how collection of this encounter data will be
implemented, monitored, and validated as well as how the State will use the encounter data to
monitor implementation of the project, set rates, and feed findings directly into program
enhancement on a timely basis. If the State fails to provide reasonably accurate and complete
encounter data for any MCO, it will be responsible for providing to the designated HCFA
evaluator data abstracted from medical records comparable to the data which would be available
from encounter reporting requirements.
2. Quality Improvement - The State, in collaboration with MCOs and other appropriate parties,
will develop and submit to HCFA a detailed plan, for using encounter data to pursue health care
quality improvement within 90 days of implementation of the demonstration. At a minimum, the
plan shall include: how the baseline for comparison will be developed; what indicators of quality
will be used to determine if the desired outcomes are achieved (e.g. HEDIS 3.0); where the data
will be stored; how data will be validated and how monitoring will occur; and what penalties will
be incurred if information is not provided. At a minimum, the State's plan for using encounter

                                                                                                36
                                         DRAFT
data to pursue health care quality improvement must describe how the data will be used to study
1) individuals in the RECM program, each SNP category, and individuals with a mental health
condition, and 2) the following priority areas:
%    childhood immunizations;
%    prenatal care and birth outcomes;
%    pediatric asthma;
%    dentistry;
% and two additional clinical conditions to be determined by the State based upon the
population(s) served.

    IVH.1-2. Maryland is a leader among State Medicaid programs in the collection
             and use of encounter data; today, in fact, Maryland is using encounter
             data in rate setting. A detailed description of Maryland’s Encounter
             Data Plan is provided at Tab 12 of the Revised Operational Protocol.
             This description includes the minimum data set, the data collection
             process, data validation activities, and an encounter data quality
             assurance work plan. Further, an Encounter Data Collection report,
             originally prepared as a report to the Maryland Legislature, is
             included in chapter 4 of this Proposal. Encounter data collection and
             use is also described in detail in the HealthChoice Annual Reports
             previously submitted to HCFA.
I. Medicaid Management Information Systems (MMIS)
1.* Implementation Schedule - As part of the protocol, the State will develop a detailed
implementation schedule addressing the State's approach to achieving changes, modifications, and
enhancements to its MMIS, eligibility system, and other systems. The schedule should include the
components set forth in State Medicaid Manual (SMM) section 11237.
2.* System Readiness - Prior to implementation, the State must submit evidence to HCFA that a
management information system is in place which meets the minimum standards of performance,
to include the ability to:
a. Collect, process, and maintain recipient eligibility information necessary to support recipient
enrollment;
b. Collect, process, and maintain health plan information necessary to support plan enrollment;
and
c. Process and pay capitation fees and other required compensation to participating plans.

                                                                                                     37
                        DRAFT
I   Maryland’s HealthChoice program complied with these requirements
    prior to implementation.




                                                                   38
                                          DRAFT
ATTACHMENT A
GENERAL FINANCIAL REQUIREMENTS
1. The State shall provide quarterly expenditure reports using the Form HCFA-64 to separately
report expenditures for services provided under the Medicaid program and those provided through
the Maryland Demonstration under section 1115 authority. HCFA will provide Federal Financial
Participation (FFP) only for allowable Maryland Demonstration expenditures that do not exceed
the pre-defined limits as specified in Attachment D.
2a. In order to track expenditures under this demonstration, the State will report Maryland
Demonstration expenditures through MBES, following routine HCFA-64 reporting instructions
outlined in Section 2500 of the State Medicaid Manual. In this regard, expenditures subject to the
budget neutrality cap will be differentiated from other Medicaid expenditures by identifying them
on separate Forms HCFA-64.9 and/or 64.9p, with the demonstration project number assigned by
HCFA (including the project number extension, which indicate the demonstration year in which
services were rendered or for which capitation payments were made). For monitoring purposes,
cost settlements must be recorded on Line 10.b, in lieu of Lines 9 or 10.C. For any other cost
settlements (i.e., those not attributable to this demonstration), the adjustments should be reported
on lines 9 or 10.c, as instructed in the State Medicaid Manual. The term, "expenditures subject to
the budget neutrality cap," is defined below in item 2.c.
b. For each demonstration year, three separate Forms HCFA-64.9 and/or 64.9p should be
submitted reporting expenditures subject to the budget neutrality cap. On the first form, all
expenditures for capitation payments Maryland Demonstration enrollees (as defined in 3.d) shall
be reported. On the second, report wraparound FFS expenditures for Maryland Demonstration
enrollees. On the other, report expenditures for demonstration eligibles which are not enrolled in a
MCO under the Maryland Demonstration. The sum of these sheets should represent the
expenditures subject to the budget neutrality cap reported in that quarter.
c. For the purpose of this section, the term "expenditures subject to the budget neutrality cap"
shall include all Medicaid expenditures on behalf of Maryland Demonstration eligibles (as
defined in 3.d, below), which shall include the following: (1) capitation payments to Managed
Care Organizations (MCOs); (2) FFS expenditures for specialty mental health services and carve-
out services, which will include: personal care and medical day care services, services provided to
children under an Individualized Education Plan (IEP) or Individualized Family Service Plan
(IFSP); and enhanced transportation services reimbursed on a FFS basis; and (3) FFS
expenditures for Maryland demonstration eligibles that have not yet enrolled in a MCO

    1, 2a-c    Maryland has provided the specified reports in the required format, in
               accordance with HCFA’s directions.
d. The costs of protease inhibitor (PI) drugs and viral load testing services shall be counted as an

                                                                                                   39
                                         DRAFT
expenditure against the overall expenditure limit of the Maryland Health Reform Demonstration.
However, HCFA recognizes that the net cost of protease inhibitors may place an onerous burden
on the State that is not accounted for in the without-waiver baseline agreed upon on October 22,
1996. Based on a study of the net costs, HCFA will adjust the without-waiver baseline in all five
years of the demonstration, as appropriate.
Specifically, HCFA will make appropriate retrospective and prospective adjustment of annual
budget estimates for the net cost of PI services. HCFA believes that Maryland has a data system
that permits the necessary analysis.
Using service utilization and the drug therapy data from the 01 and 02 years, the State shall
submit a report to HCFA on the net Title XIX cost of including PI therapy for the treatment of
HIV and AIDS patients. The net cost analysis of protease inhibitor therapy shall include the direct
costs of protease inhibitor therapy, and the estimated impact of protease inhibitor therapy on the
cost of other drug therapies and on other chronic and acute care service utilization. Following
receipt of the State's report, HCFA will consider the appropriate adjustment of the overall
expenditure limit, which may include retrospective adjustment to the 01 and 02 budget estimates.
Prior to 365 days after award, the State shall submit for HCFA's approval a description of the
methodology to be used in preparing the report on protease inhibitor therapy.

       2.d     Adjustments for costs of protease inhibitor drugs, viral load testing.
               Maryland submitted the required methodology for approval within 365
               days of the award. The program’s original capitation rate-setting
               methodology did not include reimbursement for the cost of protease
               inhibitor drugs or viral load testing. The Department reimbursed
               providers of these services directly, on a fee-for-service basis.
               Effective January 1, 2001, protease inhibitor drugs are now included
               in capitation rates. Viral load testing remains a “carve-out” service.
e. Administrative costs will not be included in budget neutrality, but the State must separately
track and report additional administrative costs that are attributable to the demonstration.
f. All claims for expenditures subject to the budget neutrality cap (including any cost settlements)
must be made within two years after the calendar quarter in which the State made the
expenditures. During the period following the conclusion or termination of the demonstration, the
State must continue to separately identify expenditures subject to the budget neutrality cap, using
the procedures addressed above.
g. The procedures related to this reporting process, including procedures regarding the tracking
and reporting of administrative costs, shall be included in the Operational Protocol to be
submitted by the State to HCFA under Attachment F.



                                                                                                   40
                                        DRAFT
       2.e-g)         Administrative costs and budget neutrality.
                      Maryland has tracked and reported administrative costs
                      attributable to the demonstration as required. Budget
                      neutrality is discussed in the Revised Operational Protocol and
                      under Tab 6.
3. a. For the purpose of calculating the budget neutrality expenditure cap described in Attachment
D, the State shall provide to HCFA on an quarterly basis the actual number of eligible
member/months (as defined in 3.b) for each Medicaid eligibility group (MEGs) defined in 3.c.
These shall include only member/months for Maryland Demonstration eligibles (as defined in
Item 3.d below). This information should be provided to HCFA 30 days after the end of each
quarter as part of the HCFA 64 submission under the narrative section of the MBES or as a stand
alone report. If a quarter overlaps the end of one demonstration year (DY) and the beginning of
another, member/months pertaining to the first DY shall be distinguished from those pertaining to
the second. (Demonstration year are defined as the years beginning on the first day of the
demonstration, or the anniversary of that day.) Procedures for reporting eligible member/months
shall be defined in the Operational Protocol.
b. The term, "eligible member/months" shall refer to the number of months in which persons are
eligible to receive services. For example, a person who is eligible for three months contributes
three eligible member/months to the total. Two individuals who are eligible for two months each
contribute two eligible member months to the total, for a total of four eligible member/months.
c. The AFDC MEG consists of persons whose Medicaid eligibility derives from their status as a
minor child, a relative caring for a child, or a pregnant woman. The SSI: BD MEG consists of
persons whose Medicaid eligibility derives from their status as blind or disabled. The Medically
Needy (MN) category pertains to individuals whose income and resources exceed the
categorically needy limits but are within State limits. The SOBRA category consists of income
eligible children born after and September 30, 1983 and pregnant women.
d. The term " Maryland Demonstration eligibles" includes all Medicaid enrollees irrespective of
their enrollment in Maryland Demonstration MCOs, EXCEPT for the following: eligibles dually
entitled to Medicare and Medicaid; short term eligibles in a spend down status; individuals who
have been institutionalized for an extended period of time in nursing homes, ICF/MRs, chronic
hospitals, rehabilitation hospitals, psychiatric hospitals; Family Planning Waiver eligibles;
children in the Maryland Kids Count Program; and individuals in the Home and Community-
Based Services Waivers for Senior Assisted Housing Residents and Model Waiver Children.
Individuals who are ineligible for the Maryland Demonstration may be able to voluntarily enroll
in MCOs, but will not contribute member months or expenses against the demonstration budget
limit defined in Attachment D. The term " Maryland Demonstration enrollee" includes only
Maryland Demonstration eligibles actually enrolled in the Maryland Demonstration MCOs.


                                                                                                41
                                         DRAFT
    3.a-d      Maryland submitted quarterly reports of eligible member months to
               HCFA, in accordance with the terms of Attachment A of the Special
               Terms and Conditions.
4. The standard Medicaid funding process will be used during the demonstration. Maryland must
estimate matchable Medicaid expenditures on the quarterly Form HCFA-37. The State must
provide supplemental schedules that clearly distinguish between at-risk estimates subject to the
cap (by major component) and Medicaid estimates that are not at-risk. HCFA will make Federal
funds available each quarter based upon the State's estimates, as approved by HCFA. Within 30
days after the end of each quarter, the State must submit the Form HCFA-64 quarterly Medicaid
expenditure report, showing Medicaid expenditures made in the quarter just ended. HCFA will
reconcile expenditures reported on the Form HCFA-64 with Federal funding previously made
available to the State for that quarter, and include the reconciling adjustment in a separate grant
award to the State.
5. HCFA will provide Federal Financial Participation (FFP) at the applicable Federal matching
rate for the following, subject to the limits described in Attachment D:
a. Administrative costs, including those associated with the administration of the Maryland
Demonstration;
b. Net expenditures of the Medicaid program and prior period adjustments which are paid in
accordance with the approved State Plan (including disproportionate share hospital payments);
c. Net medical assistance expenditures made under Section 1115 and 1915 waiver authority,
including those made in conjunction with the Maryland Demonstration; and
d. At the enhanced Federal match rate (75%), for costs related to the performance of annual
independent, external reviews of the quality of services furnished by Managed Care Organizations
conducted by organizations which are determined by HCFA to meet the definition of a utilization
and quality control peer review organization (PRO) contained in section 1152 of the Social
Security Act. The entity must be either a physician-sponsored organization or a physician-access
organization, and must demonstrate the ability to perform required review functions as described
in 42 CFR 462.101 -- 42 CFR 462.104. Additionally, the organization's governing body must
have at least one individual who is a representative of consumers. Enhanced FFP may be claimed
subject to HCFA's determination that the organization does or does not meet the above criteria.
6. The State will certify State/local monies used as matching funds for the Maryland
Demonstration and will further certify that such funds will not be used as matching funds for any
other federal grant or contract, except as permitted by federal law.
7. The State shall continue to submit form HCFA 2082 in hard copy. However, if the State elects,
and is accepted by HCFA to participate in the Medicaid Statistical Information System (MSIS),
the State may be exempt from the requirement for filing the hard copy 2082. Form HCFA 2082

                                                                                                 42
                                        DRAFT
summarizes Medicaid eligibility and expenditure information for the Federal Fiscal Year (October
1 through September 30). (Section 2700 of the State Medicaid Manual details the requirements
for reporting on the HCFA 2082). If the State elects to include any expanded eligibility groups in
the demonstration at some later date, the expansion group will need to be reported on a separate
Form HCFA 2082 in addition to reporting the statistics for any expanded eligibility groups in the
overall total Statewide 2082 statistics.
8. In addition to reporting the disproportionate share hospital (DSH) payments made by the State
under the fee-for-service and mental health programs on the HCFA 64 for purposes of tracking
these expenditures against the State's DSH allotment, the State will also report on the HCFA 64
any payments it makes to MCOs which represent DSH expenditures. These expenditures will also
be counted against the State's DSH allotment. A plan for tracking and reporting DSH payments
made by MCOs shall be developed and submitted to HCFA by 60 days post-implementation of
the demonstration, which shall be subject to review and approval by the Project Officer.
Also, in compliance with the hospital specific DSH limitations put in place by the Omnibus
Budget Reconciliation Act of 1993, the State will also need to track by hospital, the amount of
uncompensated care costs each hospital has on an annual basis, and assure that the amounts paid
by the MCOs, in addition to the amounts paid by the State through the fee-for-service program
and mental health programs, do not exceed each hospital-specific uncompensated care cost limit.
The State should have this information available to the regional office and the Medicaid Bureau
upon their request. The State should consult the All-State Medicaid Directors letter dated August
17, 1994, for reporting requirements and the formula for determining the hospital-specific limit

Maryland has complied with the reporting requirements and spending limitations
specified in the sections above.




                                                                                                43
                                         DRAFT
ATTACHMENT B
GENERAL PROGRAM REQUIREMENTS
1.* To be included as part of the State's regulations and contract with an MCO, the State shall
develop detailed requirements for MCOs to observe that protect the confidentiality of all project-
related information that identifies individuals. The provisions must specify that such information
is confidential and, that it may not be disclosed directly or indirectly except for purposes directly
connected with the conduct of the project or the administration of the Medicaid program,
including evaluations conducted by the independent evaluator selected by the State and/or HCFA,
or evaluations performed or arranged by State agencies. Informed written consent of the
individual must be obtained for any other disclosure.

There are provisions requiring the protection of confidential information of
enrollees in the HealthChoice regulations, as well as in MCO contracts with the
State.
2. The State's regulations and MCO contracts and subcontracts for services related to the
Maryland Demonstration must provide that the State agency and the U.S. Department of Health
and Human Services may: (1) evaluate through inspection or other means the quality,
appropriateness, and timeliness of services performed and (2) inspect and audit any financial
records, including reimbursement rates, of such contractor/subcontractors.

The HealthChoice regulations and the State’s contracts with MCOs governing their
participation in the HealthChoice program both include provisions permitting
Federal and State officials to evaluate, inspect, and audit the contractor and its
subcontractors for compliance with program requirements regarding quality of
care and financial standards. The regulations also require these provisions to be
included in the subcontracts between MCOs and their providers.
3. HCFA will contract with an independent contractor to evaluate the demonstration. The State
agrees to cooperate with the evaluator (at no cost), by responding in a timely manner to requests
for interviews, providing access to records, and sharing data, including the claims, encounter, and
eligibility files. The State has the right to review reports and the right to comment on reports
prepared by the evaluator.

Maryland’s HealthChoice program was evaluated by Mathematica Policy Research
in a case study that was funded and published by the Henry J. Kaiser Family
Foundation. Entitled Managed Care and Low-Income Populations: A Case Study of
Managed Care in Maryland, the study examined the first sixteen months of the
program (through the fall of 1998) and was published in May 1999. The State will
cooperate fully with any future evaluations requested by HCFA.


                                                                                                  44
                                         DRAFT
4. HCFA may suspend or terminate any project in whole or in part at any time before the date of
expiration, whenever it determines that the State has materially failed to comply with the terms of
the project. HCFA will promptly notify the State in writing of the determination and the reasons
for the suspension or termination, together with the effective date. HCFA reserves the right to
withhold waivers pending or to withdraw waivers at any time if it determines that granting or
continuing the waivers would no longer be in the public interest. If the waiver is withdrawn,
HCFA will be liable for only normal close-out costs.
5. The State may suspend or terminate this demonstration in whole or in part at any time before
the date of expiration. The State will promptly notify HCFA in writing of the reasons for the
suspension or termination, together with the effective date. If the waiver is withdrawn, HCFA will
be liable for only normal close-out costs.

4-5.   The State has never materially failed to comply with the terms of the project,
       and has no intention of suspending or terminating the demonstration.




                                                                                                 45
                                         DRAFT
ATTACHMENT C
GENERAL REPORTING REQUIREMENTS
1. By April 1 of each year, the State will submit Form HCFA-416, EPSDT program reports for
the previous Federal fiscal year. These reports will follow the format specified in section 2700.4
of the State Medicaid Manual, with data for each line item arrayed by age group and basis of
eligibility. All data reported will be supported by documentation consistent with the general
requirements of these terms and conditions.
2. Through the first six months after implementation, HCFA and the State will hold monthly calls
to discuss progress. Further, the State will submit quarterly progress reports which are due 60
days after the end of each quarter. The reports should include a discussion of events occurring
during the quarter that affect health care delivery, including carve-outs and out-of- plan services;
the RECM and mental health component of the demonstration; SNPs; enrollment and outreach
activities; default assignments; quality of care; access; MCO financial performance; grievances;
beneficiary and provider telephone hot line performance; the referral system; the benefit
package(s); and other operational and policy issues. The report should include a separate
discussion of State efforts related to the collection and verification of encounter data. The report
should also include proposals for addressing any problems identified in each report.
3. The State will submit a draft annual report documenting accomplishments, project status,
quantitative and case study findings, and policy and administrative difficulties no later than 120
days after the end of its operational year. Within 30 days of receipt of comments from HCFA, a
final annual report will be submitted.

       The State has submitted all the reports as required by these sections.
       Although item 2 requires that monthly calls be held to discuss progress
       through the first six months of the demonstration, the practice has been
       continued beyond the implementation period as a regular opportunity to
       maintain open and constructive communication between the State and
       HCFA. In addition, the State submits the minutes and handouts for all
       special committees (Medicaid Advisory Committee, Special Needs Children
       Advisory Committee, REM Medical Review Panel) to HCFA on a monthly
       basis to keep HCFA informed of the issues that are addressed in those
       meetings.
4. At the end of the demonstration, a draft final report should be submitted to HCFA for
comments. HCFA's comments must be taken into consideration by the State for incorporation into
the final report. The State should use HCFA, Office of Research and Demonstrations' Author's
Guidelines: Grants and Contracts Final Reports (copy attached) in the preparation of the final
report. The final report is due no later than 90 days after the termination of the project.


                                                                                                     46
                                         DRAFT
5. The State will submit a phase-out plan of the demonstration to HCFA six months prior to
initiating normal phase-out activities or, if desired by the State, an extension plan on a timely
basis to prevent disenrollment of members if the waiver is extended by HCFA. Nothing herein
shall be construed as preventing the State from submitting a phase-out plan with an
implementation deadline shorter than six months when such action is necessitated by emergency
circumstances. The phase-out plan is subject to HCFA review and approval.
6. The State shall submit a continuation application 270 days after the effective date of the award
and yearly thereafter.

4-6    Maryland has submitted continuation applications as required by item 6.
       Inasmuch as this application for an extension of the waiver demonstration
       seeks authority to continue the program for an additional three years after
       June 1, 2002; no continuation application is required.




                                                                                                 47
                                         DRAFT
ATTACHMENT D
MONITORING BUDGET NEUTRALITY FOR THE MARYLAND
DEMONSTRATION
The following describes the method by which budget neutrality will be assured under the
Maryland Demonstration. Maryland will be subject to a limit on the amount of Federal Title XIX
funding that the State may receive on selected Medicaid expenditures during the waiver period.
This limit will be determined using a per capita cost method. In this way, Maryland will be at risk
for the per capita cost (as determined by the method described below) for Medicaid eligibles, but
not at risk for the number of eligibles. By providing FFP for all eligibles, HCFA will not place
Maryland at risk for changing economic conditions. However, by placing Maryland at risk for the
per capita costs of Medicaid eligibles, HCFA assures that the demonstration expenditures do not
exceed the levels that would have been realized had there been no demonstration.
For the purpose of calculating the overall expenditure limit for the demonstration, separate budget
estimates will be calculated for each year on a demonstration year (DY) basis. The annual
estimates will then be added together to obtain an expenditure estimate for the entire
demonstration period. The Federal share of this estimate will represent the maximum amount of
FFP that the State may receive during the 5-year period for the types of Medicaid expenditures
described below. For each DY, the Federal share will be calculated using the FMAP rate(s)
applicable to that year.
Projecting Service Expenditures
Each yearly estimate of Medicaid service expenditures will be calculated as the sum of separate
cost projections for each Medicaid eligibility groups (MEGs) defined in Attachment A section
3.c. The yearly cost projection for each MEG will be the product of the projected per member/per
month (PMPM) cost for that MEG, times the actual number of eligible as reported to HCFA by
the State under the guidelines set forth in Attachment A section 3.a.
Projecting PMPM Cost
Projected PMPM cost for each MEG will be calculated by using a pre-determined trend factor of
5.5% to convert base year per capita costs into current year projected per capita costs for each
year of the demonstration. The monthly equivalent growth rate is .4472%, which will be used to
convert SFY PMPM cost estimates to DY estimates. The agreement to use the 5.5% trend factor
is based on analysis of State and National data.
Base year
The State shall submit to HCFA base year PMPM cost for each MEG and the blended overall
PMPM cost, which will be subject to the approval of the Project Officer. The base year for

                                                                                                 48
                                         DRAFT
projecting service expenditures shall be State fiscal year (SFY) 1996 (July 1, 1995 to June 30,
1996). By December 31, 1996, preliminary base year PMPM cost shall be reported to HCFA.
Final PMPM cost shall be reported to HCFA by September 30, 1997. The base year PMPM costs
must conform to the following requirements:
% Base year PMPM cost for each MEG shall be computed by dividing the total Medicaid
expenditure for Medicaid eligibles in that MEG by the number of eligible member/months for that
MEG. Only eligible member/months and service expenditures related to persons who would have
been Maryland Demonstration eligibles, had the demonstration been in existence in SFY 1996,
shall be counted for the purpose of calculating base year PMPM costs. The term, " Maryland
Demonstration eligibles" is defined in Attachment A, Item 3.
% The base year PMPM costs must reflect all expenditures as defined in Attachment A,
Item 2.c.
% The base year PMPM costs must be net of DSH. The State will submit the method for
removing DSH, which is consistent with Maryland's "All-Payer" System.
% The base year shall reflect services performed during SFY 1996 (i.e., the expenditures should
be totaled on a date of service basis.)
If the State delays implementation of the demonstration till after December 31, 1997, the SFY
1996 base year will be revised to a time period more current to the date of implementation, such
as SFY 1997. The base year time period to be selected would begin 18 months prior to
implementation of the demonstration. Final base year per capita costs would be reported to HCFA
6 months after implementation.
Phase-in
Expenditures for Maryland Demonstration eligibles in the AFDC, SSI: BD, MN and SOBRA
groups will be subject to the budget neutrality cap beginning with the day the demonstration is
first implemented.
Using the trend rates to produce non-Federal fiscal year PMPM cost estimates
Because the beginning and end of the demonstration are unlikely to coincide with either the
Federal or State fiscal year, the following methodology will be used to produce DY estimates of
PMPM cost. Using the monthly equivalent growth rate, the appropriate number of monthly trend
factors will be used to convert SFY 1996 base year PMPM costs to PMPM costs for the first DY.
After the first DY, the annual trend factor will be used to trend forward from one year to the next.
(This procedure is described more fully in the sample calculations presented below.)
Sample Calculations


                                                                                                  49
                                         DRAFT
First Demonstration Year:
As an example, assume that the base year (SFY 1996) per capita cost for the AFDC MEG is
$175.83, and the first year of the demonstration (DY 1997) is the year beginning 1/1/97 and
ending 12/31/97. DY 1997 is six months in time beyond SFY 1997, therefore, the annual trend
factor must be applied to trend SFY 1996 cost forward to SFY 1997, and SFY 1997 must be
grown an additional 6 months forward to DY 1997. Applying the annual trend factor of 5.5% to
bring the base year estimate forward to SFY 1997, and six additional months of trending to bring
the estimate forward to DY 1997, results in a DY 1997 PMPM cost for AFDC of $190.53.
($190.53 = $175.83 X 1.055 X (1.004472)6)
Second and Subsequent Demonstration Years:
Since DY 1998 is twelve months beyond DY 1997, twelve months of growth factor are needed.
Applying the 5.5% growth factors to the estimated DY 1997 PMPM cost of $190.53 gives a DY
1998 PMPM cost of $201.01.
Impermissible DSH, Taxes or Donations
If any health care related tax which was in effect during the base period, or provider related
donation that occurred during the base year, is determined by HCFA to be in violation of the
provider donation and health care related tax provisions of section 1903(w) of the Social Security
Act, HCFA reserves the right to make adjustments to the budget neutrality cap.
How the limit will be applied
The limit calculated above will apply to actual expenditures for Medical services, as reported by
the State under Attachment A. If at the end of the demonstration period the budget neutrality
provision has been exceeded, the excess Federal funds will be returned to HCFA. There will be
no new limit placed on the FFP that the State can claim for expenditures for recipients and
program categories not listed. If the demonstration is terminated prior to the 5- year period, the
budget neutrality test will be based on the time period through the termination date.
Expenditure Review
HCFA shall enforce budget neutrality over the life of the demonstration, rather than on an annual
basis. However, no later than six months after the end of each demonstration year, the HCFA will
calculate an annual expenditure target for the completed year. This amount will be compared with
the actual FFP claimed by the State under budget neutrality. Using the schedule below as a guide,
if the State exceeds the cumulative target, they shall submit a corrective action plan to HCFA for
approval. The State will subsequently implement the approved program.
Year Cumulative target definition Percentage
Year 1 Year 1 budget neutrality cap plus 8 percent
                                                                                                 50
                                       DRAFT
Year 2 Years 1 and 2 combined budget neutrality cap plus 3 percent
Year 3 Years 1 through 3 combined budget neutrality cap plus 1 percent
Year 4 Years 1 through 4 combined budget neutrality cap plus 0.5 percent
Year 5 Years 1 through 5 combined budget neutrality cap plus 0 percent


Please refer to the State’s response to “Supporting Documentation” Item 6,
“Compliance with the Budget Neutrality Cap,” located in chapter 6 of this
Proposal.




                                                                             51
                                          DRAFT
ATTACHMENT E
ACCESS STANDARDS
Contractors shall provide available, accessible, comprehensive quality care to eligible
beneficiaries through the use of an adequate number of institutional facilities, service locations,
service sites, and professional, allied, and paramedical personnel (including dental) for the
provision of all covered services. These services must be available on an emergency basis, 24-
hours-a-day, 7- days-a-week. Unless Maryland can demonstrate that they surpass the following
standards, at a minimum, the standards for making this care available shall include:
1. Primary Care
a. Distance/Time: No more than 30 miles or 30 minutes for all enrollees in an urban service area,
and no more than 45 miles or 45 minutes for all enrollees in a rural service area.
b. Patient Load: A patient/primary care physician ratio to be determined by Maryland and
approved by HCFA 30 days prior to implementation that takes into account the primary care
physician's participation in several plans and commercial market caseload.
c. Appointment Times: Not to exceed 30 days from the date of a beneficiary's request for routine
and preventive care and 48 hours for urgent care. As a result of the initial health assessment, for
the first six months of active enrollment in the demonstration, appointment times for routine and
preventive care may exceed this limit, not to exceed 60 days.
d. Waiting Times: Beneficiaries with appointments shall not routinely be made to wait longer than
one hour.
Tracking: All MCOs must have a system in place for confidential exchange of beneficiary
information with the primary care provider if a provider other than the primary care provider
delivers health care services to the beneficiary.

Primary Care. HealthChoice regulations meet or exceed the access standards set
forth in Attachment E for: distance/time (COMAR 10.09.66.06); patient load
(COMAR 10.09.66.05); appointment times and waiting times (COMAR 10.09.66.07);
and tracking (COMAR 10.09.66.05). The State monitors MCO compliance with
access standards by means of provider network data (which MCOs must update
on a quarterly basis), consumer satisfaction surveys, and chart reviews performed
as part of the State’s External Quality Review Organization’s (EQRO’s) annual
quality of care audit.
2. Specialty Care
a. Transport Time: Usual and customary community practice standards*, not to exceed one hour,
                                                                                                      52
                                         DRAFT
except in rural areas where community standards* and documentation requirements will apply.
b. Appointment/Waiting Time: Appointments for a specialist (e.g., specialty physician services,
hospice care, home health care, and rehabilitation services, etc.) shall be made in accordance to
the timeframe appropriate for the needs of the beneficiary.
Further, a beneficiary, or physician on behalf of a beneficiary, shall be able to obtain an
appointment with a specialist within 30 days of their request for routine care and 48 hours for
urgent care if so desired. As exception, appointments to a specialist providing mental health or
substance abuse services shall be in accordance to the usual and customary community practice
standard*.
3. Emergency Care/Shock Trauma
All emergency care must be provided on an immediate basis, at the nearest equipped facility
available, regardless of contract affiliation.
4. Hospitals
Transport time will be in accordance to the usual and customary community practice standard*
not to exceed 30 minutes, except in rural areas where access time may be greater and for mental
health and physical rehabilitative services, but not to exceed 60 minutes. If greater, the standard
needs to be the usual and customary community practice standard* for accessing care and must be
justified to the State.
5. Dental, Optometry, Lab, and X-Ray Services
a. Transport Time: Usual and customary community practice standards*, not to exceed one hour,
except in rural areas where community standards* and documentation requirements will apply.
b. Appointment/Waiting Time: Not to exceed 30 days for regular appointments and 48 hours for
urgent care.
6. Pharmacy Services
Transport time will be in accordance to the usual and customary community practice standards*,
not to exceed one hour, except in rural areas where community practice standards and
documentation requirements will apply.
7. Other
All other services not specified here shall meet the usual and customary practice standards* for
the community.

2.-7. Specialty Care, Dental, Optometry, Lab, X-Ray, Hospitals, Pharmacy, and
Other Services. The HealthChoice regulations include access standards that meet
                                                                                                    53
                                  DRAFT
or exceed access standards for the listed services specified in Attachment E. The
State monitors MCO compliance with these standards through provider network
data updates and consumer satisfaction surveys, and chart reviews performed as
part of the State’s External Quality Review Organization’s (EQRO’s) annual quality
of care audit.
Transport time: The HealthChoice program established specific transport
time/distance standards for services as to which geographical proximity is
considered especially important. For pharmacy services, the standard is 10
minutes/5 miles in urban areas, and 30 minutes/30 miles in rural areas. For primary
care, pharmacy, OB/GYN, dental services for children, diagnostic lab and X-ray,
the standard is 30 minutes/10 miles in urban areas, and 30 minutes/30 miles in
rural areas. (COMAR 10.09.66.06). Reasonable geographic access to optometry,
hospital, and other covered services is addressed with a regulation requiring an
MCO to provide the transportation to a covered service when the MCO chooses to
provide through a provider located beyond the closest county in which the service
is available. (COMAR 10.09.67.27B(10)(b)). This policy is consistent with the
“customary practice standard for the community,” as specified in Attachment E.
Appointment times. Maryland’s HealthChoice regulations for scheduling
appointments (for all types of covered services) in response to an enrollee’s
request. Requests for routine primary and specialty care appointments must be
satisfied within 30 days; urgent care visits must be scheduled to occur within 48
hours. There are separate standards that apply to MCOs’ duties to schedule new
enrollees for initial PCP assessments. Initial assessments must be scheduled in a
timely manner for a new enrollee who needs special or immediate health care
services, as identified in the Health Risk Assessment performed by the enrollment
broker. Otherwise, health risk assessments should be completed within 90 days
of enrollment, unless a more specific standard applies. These include initial
assessments of: a new enrollee identified to be at high risk (within 15 days of MCO
receipt of Health Risk Assessment); an enrollee requesting family planning (10
days); pregnant and postpartum women (10 days); and newborns (Physician’s
discretion, not more than 14 or 30 days after discharge, depending on whether or
not a home visit has occurred). (COMAR 10.09.66.07)
Emergency Care/Shock Trauma. MCOs are responsible for providing emergency
care services 24 hours a day, 7 days a week. Enrollees may self-refer to the
nearest adequately equipped facility for emergency services, regardless of
contractual status. The enrollee’s MCO is required to reimburse, within 30 days of
invoice, undisputed claims of hospital emergency facilities and providers for
emergency services, and medical screening services based on EMTALA
standards, and non-emergency services accessed through an emergency facility
because the MCO failed to provide 24-hour access to a physician. (COMAR
                                                                                 54
                                         DRAFT
10.09.66.08)
8. Documentation
All entities providing care to beneficiaries (MCOs, specialists, etc.) must have a general system in
place to document adherence to the appropriate access standards (e.g. physicians - waiting times
and appointment waiting times). The State must utilize statistically valid sampling methods for
monitoring compliance with these standards (e.g. beneficiary and provider survey).

COMAR 10.09.65.03 makes MCOs subject to the quality improvement standards
established in The Health Care Quality Improvement System for Medicaid
Managed Care (HCQIS). Availability and Accessibility Standard (# XI) requires
MCOs and providers to monitor and document compliance with program access
standards. The State monitors compliance with Standard #XI as part of the
EQRO’s annual systems performance review.
The State also uses Beneficiary and Provider Satisfaction surveys to monitor MCO
and provider compliance with program access standards. The Department
developed a statistically valid, Beneficiary Satisfaction Survey was developed
using the Consumer Assessment of Health Plan Survey (CAHPS) and the Child
Medicaid Managed Care Survey as the base documents. The statistical validity of
the Beneficiary Satisfaction Survey has been demonstrated. It includes questions
that measure beneficiary satisfaction relating to: waiting time in providers’ office;
difficulty and waiting time for scheduling an appointment; practitioner spending
adequate time with the enrollee, helpfulness of plan’s member services call-in line,
helpfulness of office staff responding to enrollee’s call during office hours, and
timeliness of emergency or urgent care.
The State’s Provider Satisfaction survey assesses provider satisfaction with
identified aspects of the program. These include: MCO administration and
reimbursement; the MCO referral process; case management services; and
formulary management. The Provider Satisfaction Survey was not designed to
include all the elements necessary for statistical validity. Its purpose is to collect
experience-based information on how specified MCO systems perform in practice,
as viewed from the perspective of participating providers. As such, the annual
Provider Surveys have proven to be a source of interesting and useful information
about the plans and the program.
In rural areas where documentation is required, the entity providing service must justify to the
State, for State approval, why they can not meet the minimum requirement.
Any exceptions to these standards must be justified to the State, and approved by the State. The
State shall notify HCFA of any exceptions.


                                                                                                   55
                                         DRAFT
   (b-c)       The State has granted no exceptions to minimum access
               requirements.
*"Usual and Customary" = access that is equal to or greater than the currently existing practice in
the fee-for-service system.




                                                                                                 56
                                         DRAFT
ATTACHMENT F
OPERATIONAL PROTOCOL
The State will be responsible for developing a detailed protocol describing the Maryland
Demonstration. The protocol will serve as a stand alone document that reflects the operating
policies and administrative guidelines of the demonstration. The protocol will be submitted for
approval no later than 60 days prior to implementation. HCFA will respond within 30 days of
receipt of the protocol. The State shall assure and monitor compliance with the protocol. The
protocol will include all requirements specified within the Special Terms and Conditions to
include:
1. The organizational and structural administration that will be in place to implement, monitor,
and run the demonstration, and the tasks that each will perform.
2. A complete description of Medicaid services covered under the demonstration, including those
subject to capitation and those otherwise reimbursed, e.g.. family planning.
3. A detailed plan for monitoring the coordination of care, utilization, and payment for carve- out
and out-of-plan services. (This must ensure that all necessary services are provided to clients
without duplicate payments being made, including a quarterly report requirement.)
4. Marketing and outreach strategies including the permissible marketing activities by MCOs.
5. Description of the State's client education process (public forums, focus groups, community
meetings, hotline inquiries) and State-sponsored marketing materials (news media releases, CER
scripts, presentations and handouts, slides/overheads, Q and A brochures, other brochures,
posters/flyers, alternative methods for SNPs and individuals with a mental health condition), as
well as a plan for implementing the client education activities.
6. A comprehensive description of the enrollment and disenrollment process with specifics on the
default assignment process (including the process for determining which MCO receives the
assignment) and issuing of MCO membership identification cards.
7. Selection policies and MCO contracting requirements.
8. Capitation (including risk adjustments) and claims payment mechanisms.
9. Risk-sharing provisions or incentive plans.
10. A description of the participation provisions for the Historic Community Providers.
11. MCO financial and solvency reporting, and monitoring requirements including: (a) the
ongoing plan for monitoring MCO, (b) the hold harmless provisions that will be imposed on
MCOs , (c) any reinsurance options the State is offering managed care contractors to help reduce
                                                                                                   57
                                         DRAFT
the burden of catastrophic costs, and (d) contingency plans for assuring continued access to care
for enrollees in the case of an MCO contract termination and/or insolvency.
12. An overall quality assurance monitoring plan that includes a discussion of all quality
indicators to be employed and methodology for measuring such indicators; surveys to be
conducted, and the monitoring and corrective action plans to be triggered by the surveys; the
credentialing requirements and monitoring; fraud control provisions and monitoring; and the
proposed provider-enrollee ratios, access standards, etc.
13. The proposed minimum data set, and a work plan showing how collection of plan encounter
data will be implemented and monitored; measures that will be in place for ensuring accuracy and
validity; what resources will be assigned to this effort; and how the State will use the encounter
data to monitor implementation of the project and feed findings directly into program change on a
timely basis.
14. The complaint, grievance, and appeal policies that will be in place at the State and MCO level,
including a detailed description of the Ombudsman program.
15. Basic features of the administrative and management data system, enhancements, capabilities,
testing results, and timelines.
16. Description of all referral authorization plans, and policies and procedures relating to them.
17. Description of the elements and process of the MCO readiness review to be jointly conducted
by HCFA and the State prior to the beginning of client marketing and enrollment.

On March 7, 1997, the State submitted its operational protocol for the
HealthChoice program. The protocol addressed each of the criteria set forth in
Attachment F to the Terms and Conditions. After review of the document and the
State’s responses HCFA’s questions, the HealthChoice Operational Protocol was
approved on April 15, 1997. Maryland is in the process of revising the document
to reflect programmatic changes that have occurred since implementation. The
new version, like the old, will address all the elements listed in Attachment F and
will be submitted to HCFA as soon as it is completed.




                                                                                                     58
                                 DRAFT
ATTACHMENT G
Encounter Data Set Elements

                                 TYPE OF RECORD

                                 PHYS & OTHER     HOS LTC DRUG DENTA
ELEMENTS                         PROVS            P       S    L

Beneficiary/Enrollee ID          X                X   X   X   X

Beneficiary/Enrollee Name        X                X   X   X   X

Beneficiary/Enrollee DOB         X                X   X   X   X

Plan ID                          X                X   X   X   X

Physician/Supplier/Provider ID   X                X   X   X   X

Attending/Ordering/Referring     X                X   X   X   X
Performing Physician ID

Provider Location                X                X   X   X   X
Code/Address

Place of Service Code            X                X   X   -   X

Specialty Code                   X                -   X   -   -

Date(s) of Service               X                X   X   X   X

Units of Service/Quantity        X                X   X   X   X

Principal Diagnosis Code         X                X   -   -   -

Other Diagnosis Code(s)          X                X   -   -   -

Procedure Code                   X                X   X   -   -

EPSDT Indicator                  X                -   -   -   X

Patient Status Code              -                X   X   -   -

                                                                   59
                                DRAFT
Revenue Code                     -                   X    X   -       -

National Drug Code               -                   -    X   X       -

Dental Quadrant                  -                   -    -   -       X

Tooth Number                     -                   -    -   -       X




The State requires MCOs to submit encounter data in accordance with
instructions in the “MCO-DHMH Data Exchange Handbook.” A copy of the
Handbook, and a general discussion of HealthChoice encounter data requirements
are found in the Revised Operational Protocol (Tab 14). The Handbook is
consistent with the minimum data set requirements presented in Attachment G to
the Terms and Conditions.




                                                                            60
                                        DRAFT
ATTACHMENT H
SUGGESTED INDICATORS FOR MONITORING MCO OPERATIONS
Enrollments/Disenrollments
1. Number of enrollments to the MCO.
2. Number autoassigned to the MCO.
3. Number of disenrollments requested and number approved, by reason for request.
4. Number of autoassigned members who disenrolled from the MCO.
5. Number of members autoassigned to a PCP.
6. Average time between enrollment in MCO and assignment of a PCP.
7. Total number of current enrollees in the MCO.
Providers
8. Number of PCPs and number of members assigned to each.
9. Number of enrolled providers by class or specialty.
Services
10. Number of PCP encounters.
11. Number of referrals from PCPs to network specialists, by type of specialty.
12. Number of completed EPSDT screens.
13. Number of service exception requests, by type: approved, denied , pending (e.g., out-of-plan
coverage requests based on medical necessity, requests for the services of an out-of-network
specialist, or for emergent/urgent care)
14. Length of time between request and decision.
15. Number of hospital admissions.
16. Number of paid hospital days.
17. Number of denied hospital days.
Financial Information

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18. Total cash payouts by the MCO.
19. Inventory of received but unpaid claims and incurred but not reported claims (number and
amount).
20. Denied claims by type (number and amount).
21. Income statement (expenditures for medical costs, administrative costs, loss ratio) -- quarterly
Inquiries and Complaints
22. Number and type of telephone complaints received by the State hotline, enrollment agent, and
or Ombudsman program about the MCO.
23. Number and type of telephone inquiries received by the MCO.
24. Number of grievances filed.
25. Number of grievances appealed, and the disposition of these grievances.

Enrollments/Disenrollments. As explained in the Revised Operational Protocol
(Tab 5), the Department tracks MCO enrollments by MCO; recipient choice of MCO
versus autoassignments; enrollee disenrollment requests, disenrollments
approved (by MCO and reason for disenrollment). Weekly reports on each of
these are submitted to the Beneficiary Services Administration of the Department
for appropriate action.
Providers. MCOs must update their provider network data submission to the
Department each month, indicating which primary care provider panels are
accepting new enrollees. Providers listed in the data are designated by specialty
and by whether they serve as PCPs. The Department uses an MCO’s provider data
to determine capacity (generally based on a ration of 1 PCP: 200 enrollees), and
will enroll no more recipients into an MCO that does not have available capacity.
MCOs are also required to provide an updated list of the enrollees assigned to
each PCP at least monthly.
Services. Specialty care referrals, both in and out-of-network, as well as waiting
time for preauthorization decisions, are monitored through Consumer and
Provider Satisfaction Surveys and through the consumer complaint and grievance
resolution process. The Maryland Health Services Cost Review Commission
monitors the number of hospital admissions, and of paid and denied hospital
days. The number of PCP encounters, as well as the other services monitoring
indicators listed in Attachment H will be part of the Department’s HealthChoice
Comprehensive Evaluation, which is now being developed and is expected to be
completed in January 2002. Once it is in final form, the Department will share the
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                                  DRAFT
results of the evaluation with HCFA.
Financial Information. MCOs are required to file quarterly and annual financial
reports with the Maryland Insurance Administration. These include total cash
payout (MIA Underwriting and Investment Exhibit, Part II (medical expense)
(attached)); inventory of received but unpaid claims and incurred but not reported
claims (MIA Underwriting and Investment Exhibit, Part 2A, column 4); and income
statement (expenditures for medical costs, administrative costs, loss ratio (MIA
Report #2, attached).
Inquiries and Complaints. The functions of the HealthChoice program’s Enrollee
Action Line and Provider Hotline are described in the Revised Operational
Protocol (Tab 11). They are centrally operated and monitored by the Department.
Information as to the number and type of telephone complaints they receive are
logged and tracked. Information is analyzed monthly and quarterly to determine if
specific intervention with a particular MCO, or changes in State policies and
procedures are necessary. Enrollee Action Line and Provider Hotline staff
intervene to resolve complaints in individual cases as appropriate. Enrollee
complaints and grievances submitted to MCOs are logged and reported to the
Department on a quarterly basis, along with a description of the resolution of
complaints and grievances. The Ombudsman program is operated locally in each
county of the State, usually by the local health department under the direction of
the HealthChoice program and the Acute Care Administration of the Division of
Outreach and Assistance. The Ombudsman program works to resolve disputes
between enrollees and their MCOs referred from the Division of Consumer
Relations (the Enrollee Action Line). The Department conducts a periodic review
of the Ombudsman Program activities as part of the quarterly and annual
complaint review process.




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                                        DRAFT

Chapter 3
Evidence of Beneficiary Satisfaction
The State shall provide summaries of the results of any beneficiary surveys performed during the
period of the demonstration, along with the results of any baseline surveys performed prior to the
implementation. In addition, summaries of complaints, grievances, and appeals and their
resolution should be provided.


3.1 HealthChoice Enrollee and Provider Satisfaction Surveys for 1998
3.2 HealthChoice Enrollee Satisfaction Survey for 1999
3.3 HealthChoice Enrollee Satisfaction Survey, Comparison of 1998 and 1999
3.4 HealthChoice Provider Satisfaction Survey for 1999
3.5 Summary of Complaints and Grievances for July 1997 through June 1998
3.6 Summary of Complaints and Grievances for July 1998 through June 1999




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                                              DRAFT

Chapter 4
Documentation of Adequacy and Effectiveness of the Service Delivery
System (Including Subcontractor Performance)
The State shall provide evidence of sufficient availability under the demonstration, utilizing, where
possible, Geo-Access or other geographically-based systems to support this conclusion. Also, the State
shall provide summaries of provider monitoring or other reports documenting whether services have been
delivered in a timely and effective manner.

The following documents are offered in support of this requirement:
4.1    MCO capacity by Local Access Area as of May 20, 1998
4.2    MCO capacity by Local Access Area as of March 7, 2000
4.3    MCO Capacity/Enrollment Chart: Shows Capacity and Enrollment for each MCO as
       of December 1, 2000
4.4    HealthChoice Encounter Data Collection: Challenges, Accomplishments, and Plan
       Performance 1999-2000
4.5    Prompt Payment Study




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                                       DRAFT
Chapter 5
Quality
The State shall provide summaries of External Quality Review Organization (EQRO) reports,
managed care organization (MCO) and State quality assurance monitoring, focused clinical
reviews and any other documentation of the quality of care provided under the demonstration.

The following documents are offered in support of this requirement:


5.1 Executive Summary of the Annual Quality of Care Audit (performed by the
    External Quality Review Organization) for July 1 through December 31, 1997
5.2 Factsheet and Executive Summary of the Annual Quality of Care Audit for 1998
5.3 Factsheet and Executive Summary of the Annual Quality of Care Audit for 1999
5.4 Quality Assurance and Oversight section of the First Annual Report
5.5 Quality Assurance section of the Second Annual Report
5.6 Study of Dental Services in Medicaid Managed Care, Included in the First
    Annual Report
5.7 Study of Anti-Infective Formulary Evaluation of Managed Care Organizations
    Participating in the HealthChoice Program, Included in the Second Annual
    Report




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                                        DRAFT
Chapter 6
Compliance with the Budget Neutrality Cap
The State shall provide financial data (as set forth in the Budget Neutrality Terms and Conditions)
demonstrating that the State has maintained and will maintain budget neutrality for the requested
period of extension. HCFA will work with the State to ensure that Federal expenditures under the
extension of this project do not exceed the Federal expenditures that would otherwise have been
made. In doing so, HCFA will take into account the best estimate of current trend rates at the
time of the extension.

As Maryland’s quarterly reports to HCFA show, the demonstration is in
compliance with the budget neutrality cap and expenditure targets established by
HCFA in the Terms and Conditions. The calculations required by Attachment D to
the Terms and Conditions are reflected in the tables set out below. As shown in
Table A, the Maryland demonstration’s spending exceeded the budget cap in
Years 1 and 2 by 1.69 percent and 3.62 percent, respectively. But the Year 1 and
Year 2 deficits were more than offset in Year 3, when spending was 12.61 percent
lower than the cap. When the first three years of the demonstration are combined,
budget neutrality is satisfied, with aggregate spending at 3.5 percent below the
budget neutrality cap. Maryland expects that HealthChoice expenditures during
the rest of the five-year demonstration period will remain below the budget
neutrality cap.
Table A. HealthChoice Spending Years 1-3, Percentage of Budget Cap
                                                                                   Combined
                        Year 1               Year 2              Year 3
                                                                                     Years
                      (FY 1998)            (FY 1999)           (FY 2000)
                                                                                    1,2, & 3

   Member
                           3,896,318           4,315,368            4,829,216         13,040,902
   months
 Budget Caps         $1,111,431,741      $1,347,501,759       $1,687,549,001      $4,146,482,501
  Spending*          $1,130,267,299      $1,396,227,578       $1,474,828,354      $4,001,323,231
    Balance            ($18,835,558)       ($48,725,819)        $212,720,647        $145,159,270
  Spending as
                              101.69              103.62                87.39               96.50
   % of Cap
   *Spending is actual for Year 1, combined (actual and projected for Years 2 and 3, as of
   September 30, 2000.
Table B, below, illustrates cumulative spending targets for the first three years of

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                                 DRAFT
the demonstration, compared to cumulative spending as of September 30, 2000.
Table B shows that Maryland has not exceeded its annual expenditure target for
any year of the demonstration.
Table B. Cumulative HealthChoice Spending Years 1-3, Percentage of Targets
                           Year 1             Year 2              Year 3
                         (FY 1998)          (FY 1999)           (FY 2000)
                        Year 1 budget   (Year 1 + 2 budget     (Year 1+ 2 +3
                          cap + 8%         caps) + 3%        budget caps) +1%)

 Cumulative Target     $1,200,346,280     $2,532,701,505       $4,187,947,326

Cumulative Spending    $1,130,267,299     $2,526,494,877       $4,001,323,231

Cumulative Balance        $70,078,981          $6,206,628        $186,624,095

     % of Target                94.16               99.75                95.54




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                                         DRAFT
Chapter 7
Adequacy of Financing and Reimbursement.
The State shall provide evidence such as levels of provider participation, cost analyses, or other
means which illustrate the adequacy of financing of the demonstration.

Fortunately, Maryland’s observance of budget neutrality has not interfered with
the State’s ability to offer managed care organizations capitation rates that
adequately reflect the financial risk attendant to serving the demonstration
population. The adequacy of financing and reimbursement for HealthChoice
contractors is ensured, in part, by capitation rates that are certified to be
actuarially sound. As a practical matter, the rates’ adequacy is demonstrated by
the program’s success in maintaining its contracts with seven (soon to be six)
managed care organizations. HealthChoice-contracting MCOs, between them,
have provider networks that are more than sufficient to serve the number of
individuals currently enrolled in the demonstration.
Nevertheless, Maryland is concerned that the current trend factor of 5.5 percent
now used in calculating budget neutrality for the HealthChoice program may
unduly limit the State’s flexibility to respond in the future to recognized medical
expense trends.
The State of Maryland therefore requests an increase in the trend factor used to
compute the budget neutrality caps from the current 5.5 percent to 7.5 percent.
This request is based upon the increases in health care inflation that have been
realized in the past two years and are projected to continue in the future. The trend
increases granted the MCOs in the last HealthChoice rate setting cycle are
consistent with the trend factor we are requesting here. These trend increases
were developed by the actuarial consulting firm, William M. Mercer.
These trend increases were fueled primarily by significant increases in
pharmaceutical costs, which show no signs of abating. In the past several years,
pharmacy costs have been increasing at an annual rate of 20 percent. These
trends are the result of dramatically higher costs for new drugs that have been
introduced and increases in utilization. This experience is expected to continue
as the number of new drugs awaiting introduction have been holding constant.
The impact of pharmaceutical trends is expected to be even more significant in the
future with the recent innovations in AIDS drug therapy prolonging the life
expectancy of AIDS/HIV members enrolled in the program.




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