Kaiser Family Foundation Survey on State Medicaid Managed Care ...

Under Illinois’ Pay for Performance Bonus/Incentive program, MCOs may receive an additional compensation ofup to.5 percent of its annual capitation payments for reaching the most recent 75th percentile for specifiedHEDIS measures. Each performance measure is eligible for one-eighth of the maximum additionalcompensation. MCOs may have no more than three measures with rates below the minimum performance level(MPL) in order to qualify for the additional P4P bonus.Pennsylvania’s P4P program includes 12 specific performance measures. MCOs can earn up to 1.5 percent oftheir total annual revenue (however, each measure also has a 25 percent offset if the MCO does not exceed the50th percentile based on national HEDIS benchmarks).Texas is increasing its withhold from one percent to five percent of the capitation amount in 2012. At the end ofeach rate period, MCO performance is evaluated. If an MCO does not meet targets, future monthly capitationpayments are adjusted by the appropriate portion of the five percent at-risk amount. Texas’ goal is for all MCOsto receive the full at-risk amount. However, if any MCOs do not receive the full 5 percent, the funds arereallocated through a “Quality Challenge Award” to other MCOs that demonstrate superior clinical quality,service delivery, access to care and member satisfaction. The number of MCOs that receive the QualityChallenge Award annually is based on the amount of funds to be reallocated.Appendix 5 provides additional state-specific detail on MCO rate-setting methods and P4P strategies.A limited number of states have a minimum medical loss ratio (MLR) requirement for MCOsparticipating in Medicaid. A medical loss ratio is the share of premium dollars an insurer or health planspends on health services, as opposed to administration, executive salaries, marketing, and profits. TheACA places new limits on commercial insurer and plan profits and administrative spending by requiringthat 80 to 85 percent of premium dollars be spent on medical care and health care quality improvementactivities. Some Medicaid programs have a minimum MLR requirement for MCOs.Of 33 states responding, only 11 reported minimum MLR requirements for Medicaid MCOs; 21 statesreported no MLR. The 11 states with minimum MLR requirements are Arizona, California, DC, Hawaii,Illinois, Indiana, Maryland, New Jersey, New Mexico, Ohio, Virginia, and Washington. MLRs ranged from80 percent in Illinois, New Jersey and Washington, to 91.5 percent for Hawaii’s QUEST plans and 93percent for plans in the Hawaii QUEST Expanded Access program for the aged and disabled population.Six of the 11 states (DC, Hawaii, Maryland, New Jersey, New Mexico and Virginia) indicated that theyinclude direct care management as a medical cost in computing the MLR. Three states – California,Michigan, and Minnesota – reported that they plan to require a minimum MLR for MCOs in the future.MCO acute-care benefit “carve-outs”All states with MCOs except Minnesota reported that they carve out at least one acute-care benefit.Although MCOs are at risk for providing a comprehensive set of acute-care services, nearly all stateselect to exclude or “carve out” certain services, which are provided and financed through anothercontractual arrangement (e.g., through a non-comprehensive prepaid health plan, or “PHP”) or in thefee-for-service delivery system. 1515 Because states largely provide and finance long-term care (both institutional and community-based servicesand supports) outside the MCO delivery system, only acute-care benefit carve-outs are discussed here.24 00