FIRST AMENDMENT TO THE MEDICAID MANAGED CARE CONTRACT

This First Amendment (the “Amendment”) to the Medicaid Managed Care Contract (the “Contract”) entered into on July 5, 2011 by and between the Commonwealth of Kentucky, through the Cabinet for Finance and Administration, on behalf of the Cabinet for Heath and Family Services, Department for Medicaid Services (collectively herein “Commonwealth”) and WellCare Health Insurance of Illinois, Inc. d/b/a WellCare of Kentucky, Inc. (“WellCare”), shall be effective the 1^st day of January, 2013 pursuant to Section 39.16 of the Contract. The Commonwealth and WellCare shall hereinafter be referred to collectively as the “Parties”.

WHEREAS, the Parties to this Amendment have examined the experience of the Managed Care Organizations for the period of November 1, 2011 to December 31, 2012; and

WHEREAS, the Parties to this Amendment agree that each have faithfully performed their respective contractual obligations; and

WHEREAS, the Parties are committed to ensuring the long-term stability of the Medicaid managed care program for the provision of quality, accessible and cost effective health care services to the citizens of the Commonwealth; and

WHEREAS, WellCare is committed to participating in the Medicaid managed care program through the completion of the Contract’s initial term ending on June 30, 2014 and, if exercised by the Parties, the one-year extension periods set forth in the Contract; and

WHEREAS, the Parties wish to address the impact on WellCare of program

Cessation Program and Outpatient Reimbursements and concerns WellCare has raised as to the influx of Members to its Plan during the most recent open enrollment period; and

WHEREAS, The Parties recognize that it is in the best interest of the Medicaid managed care program not to allow pending concerns to impede reaching an optimal level of stabilization.

    NOW THEREFORE, in consideration of the mutual promises set forth in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree that the Contract shall be amended as follows:

complying with all material Contract performance measures. The Commonwealth shall not offer WellCare capitation rates that are less than the rates WellCare is receiving at that time, subject to available funding for the State’s 2014-2016 biennium and approval of the rates by CMS. The Parties acknowledge that WellCare’s Contract renewal options will not act as a bar to the Commonwealth soliciting additional Managed Care Contractors for the periods of those renewal options if it is in the best interest of the Commonwealth to do so. If Managed Care Contractors are added, no mass reenrollment of members will occur and the maximum membership thresholds set forth in Section 26.2 will not act as a bar to the assignment of new members to WellCare.

program. WellCare will continue to meet monthly with representatives of provider hospitals to identify general concerns and discuss potential resolutions. Additionally, WellCare will use best efforts to meet regularly with participating provider hospitals on an individual basis. At a minimum, WellCare will schedule monthly meetings to discuss operational matters with the following hospitals, as long as they remain participating providers with WellCare: ARH, KY One, The Medical Center, UK HealthCare, Baptist Health System, St. Elizabeth’s Health System, Owensboro Med Health, Kings Daughter, Murray Calloway, Kentucky River, UHS Psych Facilities.

fully bind themselves, their representatives, agents, principals, predecessors, successors, and privies according to the provisions hereof. This Amendment is a legally valid, binding and enforceable obligation of the Parties in accordance with its terms.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written.

As contemplated in Section 8 of the Amendment, the following provisions amend/add/replace items in the Contract:

Rate Cell means covered eligibility categories segmented into sub-groups based on an analysis of similarities of the per capita costs, age, and gender of various populations. 

Rate Group means rate cell level information aggregated into larger but similarly characterized  groups including 1) Families and Children – Child, 2) Families and Children – Adult, 3) SSI without Medicare Adult, 4)SSI Child and 5) Foster Care and 6) Dual Eligibles.

Substitute the following definition:

State Fair Hearing means the administrative hearing provided by the Cabinet pursuant to KRS Chapter 13B and contained in 907 KAR 17.010E and subsequently 907 KAR 17.010.

Unless otherwise specified, where the Contractor is required to submit any materials, information, or documentation to the Department for approval, all such submissions will be deemed approved by the Department within (i) thirty (30) days for standard submissions or (ii) five (5) business days for expedited submissions, provided that the Department does not otherwise object or notify the Contractor within such time period.

This Agreement does not, nor is it intended to, create any rights, benefits or interest to any provider, PHO, provider network, subcontractor, delegated subcontractor, supplier, corporation, partnership or other organization of any kind.

In the event a Member appears on the HIPAA 834 but is determined to be ineligible, the Department may request and obtain a refund of, or it may recoup from subsequent payments, any payment previously made to the Contractor. In such instances, for each Member that is determined to be ineligible, the Contractor may recover payment from any Provider who rendered services to Member during the period of ineligibility. The entity to which the Member is retroactively added will assume responsibility for payment of any services provided to Members during the period of adjusted eligibility.

For cases involving member ineligibility due to fraud, waste and abuse, the Department will only recoup the capitation amount and the Contractor shall establish procedures pursuant to Section 11.4 “Contractor Recoupment from Member for Fraud, Waste and Abuse” to recover paid Claims. Any adjustment by the Department hereunder for retroactive disenrollments of Enrollees shall not exceed twelve (12) months from the effective date of disenrollment.

If such adjustment cannot be completed prior to January 1, 2013, the rates will be retroactive to that date.

Contractor shall pass on the full benefit of the payment increase to eligible providers. Contractor shall adhere to the definitions and requirements for eligible providers and services as specified in the Affordable Care Act and federal regulations. Contractor is required to submit sufficient documentation, as specified by the Department, to validate that the enhanced payments were made to eligible providers.

As other provisions of the Affordable Care Act are implemented, the Department’s actuary, in consultation with the Department and

participating MCOs, shall quantify the effect, if any, of a change in the population served or changes in Covered Services offered under this Contract. Capitation rates will be adjusted accordingly.

If the State Medicaid Managed Care Program is determined by federal law or regulation to be “health insurance” under the Affordable Care Act (specifically, if the Contractor is subject to the fees set forth in Section 9010) resulting in the inclusion of this Contract in the computation of the annual fee to be paid by Contractor as a covered entity, the Contractor may request compensation for such additional fees. Beginning in September 2013, the parties will have thirty days to meet and negotiate in good faith the compensation related to these fees. If after thirty days, the Parties cannot agree on such compensation, the Contractor may terminate this Contract without cause and without any penalty including but not limited to liquidated damages defined in Section 39.11. In the event Contractor elects to terminate this Contract subject to this section, Contractor shall provide the Department with 90 days’ notice.

The Utilization Management (UM) program, processes and timeframes shall be in accordance with 42 CFR 456, 42 CFR 431, 42 CFR 438 and the private review agent requirements of KRS 304.17A as applicable. The Contractor shall have a comprehensive UM program that reviews services for Medical Necessity and that monitors and evaluates on an ongoing basis the appropriateness of care and services. A written description of the UM program shall outline the program structure and include a clear definition of authority and accountability for all activities between the Contractor and entities to which the Contractor delegates UM activities. The description shall include the scope of the program; the processes and information sources used to determine service coverage; clinical necessity, appropriateness and effectiveness; policies and procedures to evaluate care coordination, discharge criteria, site of services, levels of care, triage decisions and cultural competence of care delivery; processes to review, approve and deny services, as needed, particularly but not limited to the EPSDT program. The UM program shall be evaluated annually, including an evaluation of clinical and service outcomes. The UM program evaluation along with any changes to the UM program as a result of the evaluation findings, will be reviewed and approved annually by the Medical Director or the QI Committee.

The Contractor shall adopt Interqual, Milliman, nationally recognized criteria approved by the Department or utilization management standards approved by the Kentucky Insurance Commissioner. The Contractor shall include providers in Contractor’s Network in the review and adoption of Medical Necessity criteria. The Contractor shall have in place mechanisms to check the consistency of application of review criteria. The written clinical criteria and protocols shall provide for mechanisms to obtain all necessary information, including pertinent clinical information, and consultation with the attending physician or other health care provider as appropriate. The Medical Director shall supervise the UM program and shall be accessible and available for consultation as needed. Decisions to deny a service authorization request or to authorize a service in an amount, duration, or scope that is less than requested, must be made by a physician who has appropriate clinical expertise in treating the Member’s condition or disease. The reason for the denial shall be cited. Physician consultants from appropriate medical and surgical specialties shall be accessible and available for consultation as needed. The Medical Necessity review process shall be timely and shall include a provision for expedited reviews in urgent decisions.

Each subcontract must provide that consistent with 42 CFR Sections 438.6(h) and 422.208, compensation to individuals or entities that conduct UM activities is not structured so as to provide incentives for the individual or entity to deny, limit, or discontinue medically necessary services to a Member.

The program shall identify and describe the mechanisms to detect under-utilization as well as over-utilization of services. The written program description shall address the procedures used to evaluate Medical Necessity, the criteria used, information sources, timeframes and the process used to review and approve the provision of medical services. The Contractor shall evaluate Member satisfaction (using the CAHPS survey) and provider satisfaction with the UM program as part of its satisfaction surveys. The UM program will be evaluated by the Department on an annual basis.

The Contractor shall provide the Member written notice that meets the language and formatting requirements for Member materials, of any action (not just service authorization actions) within the timeframes for each type of action pursuant to 42 CFR 438.210(c). The notice must explain:

The Contractor shall have a grievance system in place for Members that includes a grievance process related to “dissatisfaction” and an appeals process related to a Contractor “action,” including the opportunity to request a State Fair Hearing pursuant to KRS Chapter 13B.

The Contractor shall implement written policies and procedures describing how the Member may submit a request for a grievance or an appeal with the Contractor and submit a request for a State Fair Hearing with the State after the appeal with the Contractor has been

exhausted. The policy shall include a description of how the Contractor resolves the grievance or appeal.

The Contractor shall provide to all Providers in the Contractor’s network a written description of its grievance and appeal process and how providers can submit a grievance or appeal for a Member or on their own behalf.

The Contractor shall make available reasonable assistance in completing forms and taking other procedural steps. This includes, but is not limited to, providing interpreter services and toll-free numbers that have adequate TTY/TDD and interpreter capability.

The Contractor shall name a specific individual(s) designated as the Contractor’s Medicaid Member grievances or appeals coordinator with the authority to administer the policies and procedures for resolution of a grievance or appeal, to review patterns/trends in grievances or appeals, and to initiate corrective action.

The Contractor shall ensure that the individuals who make decisions on grievances or appeals are not involved in any previous level of review or decision-making. The Contractor shall also ensure that health care professionals with appropriate clinical expertise shall make decisions for the following:

The Contractor shall provide Members, separately or as a part of the Member handbook, information on how they or their representative(s) can file a grievance or an appeal, and the resolution process. The Member information shall also advise Members of their right to file a request for a State Fair Hearing with the Cabinet.

The Contractor shall ensure that punitive or retaliatory action is not taken against a Member or service provider that files a grievance or an appeal, or a provider that supports a Member’s grievance or appeal.

A grievance is an expression of dissatisfaction about any matter or aspect of the Contractor or its operation, other than a Contractor action as defined in this contract.

A Member may file a grievance either orally or in writing with the Contractor within thirty (30) calendar days of the date of the event causing the dissatisfaction. The legal guardian of the Member for a minor or an incapacitated adult, a representative of the Member as designated in writing to the Contractor, or a service provider acting on behalf of the Member and with the Member’s written consent, have the right to file a grievance on behalf of the Member.

Within five (5) working days of receipt of the grievance, the Contractor shall provide the grievant with written notice that the grievance has been received and the expected date of its resolution.

The investigation and final Contractor resolution process for grievances shall be completed within thirty (30) calendar days of the date the grievance is received by the Contractor and shall include a resolution letter to the grievant.

The Contractor may extend by of up to fourteen (14) calendar days if the Member requests the extension, or the Contractor determines that there is need for additional information and the extension is in the Member’s interest. For any extension not requested by the Member, the Contractor shall give the Member written notice of the reason for the extension within two working days of the decision to extend the timeframe.

Upon resolution of the grievance, the Contractor shall mail a resolution letter to the Member. This resolution letter may not take the place of the acknowledgment letter referred to above, unless the resolution of the grievance has been completed and can be communicated to the Member in the same correspondence acknowledging receipt of the grievance. The resolution letter shall include, but not be limited to, the following:

The notice shall be mailed within ten (10) days of the date of the action for previously authorized services as permitted under 42 CFR 431.213 and 431.214, and within fourteen (14) days of the date of the action for newly requested services. Denials of Claims that may result in Member financial liability require immediate notification.

The written notice of the appeal resolution shall include, but not be limited to, the following information:

An expedited resolution of an appeal is an expedited review by the Contractor of a Contractor action.

jeopardize the Member’s life or health or ability to attain, maintain, or regain maximum function. Such a determination is based on:

The Contractor shall ensure that the expedited review process is convenient and efficient for the Member.

A Member may request a State Fair Hearing if he or she is dissatisfied with an Action that has been taken by the Contractor, within thirty (30) days of the final appeal decision by the Contractor. A Member may request a State Fair Hearing for an Action taken by the Contractor that denies or limits an authorization of a requested service or reduces, suspends, or terminates a previously authorized service. A Member may not request a State Fair Hearing for

A Provider may be appointed the authorized representative of a Member as defined in as such term is defined in 907 KAR 17:005, Section 1(6) and 907 KAR 170:010, Section 4(4) and 4(5). The Member’s request for a State Fair Hearing must include a notice, issued by the Department, that the Member has obtained a final appeal decision from the Contractor.

All documents supporting the Contractor’s Action must be received by the Department no later than five (5) business days from the date

the Contractor receives notice from the Department that a State Fair Hearing has been filed. These records shall be made available to the Member upon request by either the Member or the Member’s legal counsel. The Department will provide the Member with a hearing process that shall adhere to 907 KAR 1:563, 42 CFR 438 Subpart F and 42 CFR 431 Subpart E.

Failure of the Contractor to comply with the appeals’ requirements or to participate in and present evidence will result in an automatic ruling in favor of the Member.

X.In Subsection 26.8, Persons Eligible for Enrollment, amend the fourth full paragraph to read in its entirety as follows:

The Contractor shall also be responsible for providing coverage to individuals who are retro-actively determined eligible for Medicaid. Retro-active Medicaid coverage is defined as a period of time up to three (3) months prior to the application month. For SSI Members, Medicaid coverage shall begin the first day of the month following enrollment with the Contractor.

Any marketing materials referring to the Contactor must be approved in writing by the Department prior to dissemination, including mailings sent only to Members. The Contractor agrees to engage only in marketing activities that are pre-approved in writing by the Department. The Contractor shall require its Subcontractors and Providers to submit any marketing or information materials that refer to this Contractor by name to it prior to disseminating same. The Department shall have the same approval authority over such materials as over Contractor’s materials. The Contractor must use its best efforts to correct problems and errors subsequently identified by the Department after notification by the Department.

The Contractor shall also be responsible for providing coverage to individuals who are retro-actively determined eligible for Medicaid. Retro-active Medicaid coverage is defined as a period of time up to

three (3) months prior to the application month. For SSI Members, Medicaid coverage shall begin the first day of the month following enrollment with the Contractor.

The Department shall notify the Contractor of suspension, termination, and exclusion actions taken against Medicaid providers by the Kentucky Medicaid program within three (3) business days via e-mail. The Contractor shall terminate the Provider effective upon receipt of notice by the Department.

The Contractor shall notify the Department of termination from Contractor’s network taken against a Provider under this subsection within three (3) business days via email. The Contractor shall indicate in its notice to the Department the reason or reasons for which the PCP ceases participation.

The Contractor shall notify any Member of a PCP or hospital termination provided such Member has received a service from the terminated Provider within the previous six months. Such notice shall be mailed within fifteen (15) days of the action taken.

The Contractor shall notify any Member of a PCP or hospital termination provided such Member has received a service from the terminating Provider within the previous six months. Such notice

shall be mailed within fifteen (15) days of receiving notice of the termination.

If at any time, the Contractor or the Department determines that its Contractor Network is not adequate to comply with the access standards specified above for 95% of its Members by region, the Contractor or Department shall notify the other of this situation and within fifteen (15) business days the Contractor shall submit a corrective action plan to remedy the deficiency. The corrective action plan shall describe the deficiency in detail, including the geographic location where the problem exists, and identify specific action steps to be taken by the Contractor and time-frames to correct the deficiency.

XVI.In Subsection 29.2, Payment to Out-of-Network Providers, replace with the following:

The Contractor shall reimburse Out-of-Network Providers in accordance with Section 29.1 Claims Payments for the following Covered Services:

The above listed Covered Services shall be reimbursed at no more than 100 percent of the Medicaid fee schedule/rate.

XVII.    Strike Subsection 29.10, Supplemental Payments, and replace with the following:

The Department and Contractor recognize the Department’s desire to provide enhanced reimbursement to provider entities through

supplemental payments in order to preserve the ability of the provider entities to provide essential services to Commonwealth residents.

The Department currently makes supplemental payments in addition to adjudicated claims payments to a number of provider entities. Those categories of providers receiving supplemental payments are as follows:

Descriptions of these payments are found in other sections of the contract. State owned or operated university teaching hospitals include a hospital operated by a related party organization as defined in 42 CFR 413.17, which is operated as part of an approved School of Medicine or Dentistry.

Contractor is required to make monthly supplemental payments to the specified providers on or before the last business day of the month of service for which capitation is paid. The payment shall be an amount equal to the amount included in the data book by region and by rate cell for each respective provider entity multiplied by the Contractor’s share of monthly enrollment by region and rate cell as calculated by the Department and reported to the Contractor.

The Department shall provide the detailed amounts by provider entity included in the data book upon Contractor request. In addition, July 1 of each year under this Contract, the Department shall provide the Contractor with the adjusted supplemental payments increase, if any, and the Department shall provide the Contractor with an adjusted capitation rate in order to pay this increase.

The Contractor agrees, upon the request of the Department, to submit to the Department claims-level cost data for payment verification purposes. Contractor will work with the Department to assure that information is provided to allow for provider entities to remit the state matching portion of the payments to the Department, as applicable.

XVIII.    In Subsection 32.10, Lock-In Program, replace with the following:    

The Contractor shall develop a program to address and contain Member over utilization of services, for pharmacy and non-emergent care provided in an emergency setting. The criteria for this program shall be submitted to the Department for approval.

The Contractor shall provide to the Department managerial, financial, delegation, utilization, quality, Program Integrity and enrollment reports. The parties acknowledge that CMS has requested Department to provide certain reports concerning Contractor. Contractor agrees to provide Department with the reports CMS has requested or does request. Additionally, the parties agree for Contractor to provide any additional reports requested by Department upon mutual agreement of the parties. The parties agree that Appendix K may be amended outside the scope of this agreement. The Department may require the Contractor to prepare and submit ad hoc reports and the Contractor shall be given a reasonable time to complete such reports.

  

The Contractor shall develop a program to address and contain Member over utilization of services, for pharmacy and non-emergent care provided in an emergency setting. The criteria for this program shall be submitted to the Department for approval.