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2017 Session

Budget Amendments - HB1500 (Member Request)

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Chief Patron: O'Bannon
Co-Patron(s): Landes
Medicaid's Cap on Managed Care Organization Profits

Item 306 #3h

Item 306 #3h

First Year - FY2017 Second Year - FY2018
Health and Human Resources
Department of Medical Assistance Services FY2017 $0 FY2018 $250,000 GF

Language
Page 284, line 40, strike "$9,714,745,576" and insert "$9,714,995,576".

Page 311, after line 41, insert:

"WWWW.a. The Department of Medical Assistance Services shall make the changes to maintain and improve cost efficiency of Medicaid managed care expenditures in the Medallion program. These changes shall include (1) maintaining the underwriting gain cap in any changes to the Medallion contract, and (2) requiring any changes in the Medallion contract to include provisions that managed care organizations return at least a portion of underwriting gain in excess of three percent of Medicaid premium income, and increase the percentage of excess underwriting gain that must be returned as the underwriting gain level increases.

b. The Department of Medical Assistance Services shall annually incorporate findings on unallowable administrative expenses from audits of managed care organizations into its calculations of underwriting gain and administrative loss ratio for the purposes of ongoing financial monitoring, including enforcement of the underwriting gain cap.

c. The Department of Medical Assistance Services shall adjust its calculations of underwriting gain and medical loss ratio by classifying as profit medical spending that is higher than market value due to related-party arrangements.

d. The Department of Medical Assistance Services shall require in any contract for managed long term services and supports (MLTSS) that managed care organizations return at least a portion of underwriting gain in excess of three percent of Medicaid premium income, and increase the percentage of excess underwriting gain that must be returned as the underwriting gain level increases.

e. The Department of Medical Assistance Services shall annually incorporate findings on unallowable administrative expenses from audits of managed care organizations into its calculations of underwriting gain and administrative loss ratio for the purposes of ongoing financial monitoring, including enforcement of the underwriting gain cap.

f. The Department of Medical Assistance Services shall adjust its calculations of underwriting gain and medical loss ratio by classifying as profit medical spending that is higher than market value due to related-party arrangements.

g. The Department of Medical Assistance Services shall require in the MLTSS contract that managed care organizations return at least a portion of underwriting gain in excess of three percent of Medicaid premium income, and increase the percentage of excess underwriting gain that must be returned as the underwriting gain level increases."



Explanation

(This amendment adds $250,000 from the general fund the second year and language to implement recommendations from a recent review of the Virginia Medicaid Program by the Joint Legislative Audit and Review Commission to improve cost efficiency in the Medicaid managed care program.)