907 KAR 17:030. Managed care organization operational and related requirements and policies.

 

      RELATES TO: 194A.025(3), 42 U.S.C. 1396n(c), 42 C.F.R. 438

      STATUTORY AUTHORITY: KRS 194A.010(1), 194A.025(3), 194A.030(2), 194A.050(1), 205.520(3), 205.560, 42 U.S.C. 1396n(b), 42 C.F.R. Part 438

      NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and Family Services, Department for Medicaid Services, has responsibility to administer the Medicaid Program. KRS 205.520(3) authorizes the cabinet, by administrative regulation, to comply with a requirement that may be imposed or opportunity presented by federal law to qualify for federal Medicaid funds. 42 U.S.C. 1396n(b) and 42 C.F.R. Part 438 establish requirements relating to managed care. This administrative regulation establishes the Medicaid managed care organization operational and related requirements and policies.

 

      Section 1. Prompt Payment of Claims. (1) In accordance with 42 U.S.C. 1396a(a)(37), an MCO shall have prepayment and postpayment claims review procedures that ensure the proper and efficient payment of claims and management of the program.

      (2) An MCO shall:

      (a) Comply with the prompt payment provisions established in

      1. 42 C.F.R. 447.45; and

      2. KRS 205.593, KRS 304.14-135, and KRS 304.17A-700 to 304.17A-730; and

      (b) Notify a requesting provider of a decision to:

      1. Deny a claim; or

      2. Authorize a service in an amount, duration, or scope that is less than requested.

      (3) The payment provisions in this section shall apply to a payment to:

      (a) A provider within the MCO network; and

      (b) An out-of-network provider.

 

      Section 2. Payments to an MCO. (1) The department shall provide an MCO a per enrollee, per month capitation payment whether or not the enrollee receives a service during the period covered by the payment except for an enrollee whose eligibility is determined due to being unemployed in accordance with 45 C.F.R. 233.100.

      (2) The monthly capitation payment for an enrollee whose eligibility is determined due to being unemployed shall be prorated from the date of eligibility.

      (3) A capitation rate referenced in subsection (1) of this section shall:

      (a) Meet the requirements of 42 C.F.R. 438.6(c); and

      (b) Be approved by the Centers for Medicare and Medicaid Services.

      (4)(a) The department shall apply a risk adjustment to a capitation rate in an amount that shall be budget neutral to the department.

      (b) The department shall use the latest version of the Chronic Illness and Disability Payment System to determine the risk adjustment referenced in paragraph (a) of this subsection.

 

      Section 3. Recoupment of Payment from an Enrollee for Fraud, Waste, or Abuse. (1) If an enrollee is determined to be ineligible for Medicaid through an administrative hearing or adjudication of fraud by the CHFS OIG, the department shall recoup a capitation payment it has made to an MCO on behalf of the enrollee.

      (2) An MCO shall request a refund from the enrollee referenced in subsection (1) of this section of a payment the MCO has made to a provider for the service provided to the enrollee.

      (3) If an MCO has been unable to collect a refund referenced in subsection (2) of this section within six (6) months, the Commonwealth shall have the right to recover the refund from the enrollee.

 

      Section 4. MCO Administration. An MCO shall have executive management responsible for operations and functions of the MCO that shall include:

      (1) An executive director who shall:

      (a) Act as a liaison to the department regarding a contract between the MCO and the department;

      (b) Be authorized to represent the MCO regarding an inquiry pertaining to a contract between the MCO and the department;

      (c) Have decision making authority; and

      (d) Be responsible for following up regarding a contract inquiry or issue;

      (2) A medical director who shall be:

      (a) A physician licensed to practice medicine in Kentucky;

      (b) Actively involved in all major clinical programs and quality improvement components of the MCO; and

      (c) Available for after-hours consultation;

      (3) A dental director who shall be:

      (a) Licensed by a dental board of licensure in any state;

      (b) Actively involved in all oral health programs of the MCO; and

      (c) Available for after-hours consultation;

      (4)(a) A finance officer who shall oversee the MCO’s budget and accounting systems; and

      (b) An internal auditor who shall ensure compliance with adopted standards and review expenditures for reasonableness and necessity;

      (5) A quality improvement director who shall be responsible for the operation of:

      (a) The MCO’s quality improvement program; and

      (b) A subcontractor’s quality improvement program;

      (6) A behavioral health director who shall be:

      (a) A behavioral health practitioner;

      (b) Actively involved in all of the MCO’s programs or initiatives relating to behavioral health; and

      (c) Responsible for the coordination of behavioral health services provided by the MCO or any of its behavioral health subcontractors;

      (7) A case management coordinator who shall be responsible for coordinating and overseeing case management services and continuity of care for MCO enrollees;

      (8) An early and periodic screening, diagnosis, and treatment (EPSDT) coordinator who shall coordinate and arrange for the provision of EPSDT services and EPSDT special services for MCO enrollees;

      (9) A foster care and subsidized adoption care liaison who shall serve as the MCO’s primary liaison for meeting the needs of an enrollee who is:

      (a) A child in foster care; or

      (b) A child receiving state-funded adoption assistance;

      (10) A guardianship liaison who shall serve as the MCO’s primary liaison for meeting the needs of an enrollee who is a ward of the Commonwealth;

      (11) A management information systems director who shall oversee, manage, and maintain the MCO’s management information system;

      (12) A program integrity coordinator who shall coordinate, manage, and oversee the MCO’s program integrity functions;

      (13) A pharmacy director who shall coordinate, manage, and oversee the MCO’s pharmacy program;

      (14) A compliance director who shall be responsible for the MCO’s:

      (a) Financial and programmatic accountability, transparency, and integrity; and

      (b) Compliance with:

      1. All applicable federal and state law;

      2. Any administrative regulation promulgated by the department relating to the MCO; and

      3. The requirements established in the contract between the MCO and the department;

      (15) A member services director who shall:

      (a) Coordinate communication with MCO enrollees; and

      (b) Respond in a timely manner to an enrollee seeking a resolution of a problem or inquiry;

      (16) A provider services director who shall:

      (a) Coordinate communication with MCO providers and subcontractors; and

      (b) Respond in a timely manner to a provider seeking a resolution of a problem or inquiry; and

      (17) A claims processing director who shall ensure the timely and accurate processing of claims.

 

      Section 5. Health Care Data Submission and Penalties. (1)(a) An MCO shall submit an original encounter record and denial encounter record, if any, to the department weekly.

      (b) An original encounter record or a denial encounter record shall be considered late if not received by the department within four (4) calendar days from the weekly due date.

      (c) Beginning on the fifth calendar day late, the department shall withhold $500 per day for each day late from an MCO’s total capitation payments for the month following non-submission of an original encounter record and denial encounter record.

      (2)(a) The department shall transmit to an MCO an encounter record with an error for correction by the MCO.

      (b) An MCO shall have ten (10) days to submit a corrected encounter record to the department.

      (c) If an MCO fails to submit a corrected encounter record within the time frame specified in paragraph (b) of this subsection, the department shall be able to assess and withhold for the month following the non-submission, an amount equal to one-tenth of a percent of the MCO’s total capitation payments per day until the corrected encounter record is received and accepted by the department.

 

      Section 6. Program Integrity. An MCO shall comply with:

      (1) 42 C.F.R. 438.608; and

      (2) 42 U.S.C. 1396a(a)(68).

 

      Section 7. Third Party Liability and Coordination of Benefits. (1) Medicaid shall be the payer of last resort for a service provided to an enrollee.

      (2) An MCO shall:

      (a) Exhaust a payment by a third party prior to payment for a service provided to an enrollee;

      (b) Be responsible for determining a legal liability of a third party to pay for a service provided to an enrollee;

      (c) Actively seek and identify a third party liability resource to pay for a service provided to an enrollee in accordance with 42 C.F.R. 433.138; and

      (d) Assure that Medicaid shall be the payer of last resort for a service provided to an enrollee.

      (3) In accordance with 907 KAR 1:011 and KRS 205.624, an enrollee shall:

      (a) Assign, in writing, the enrollee’s rights to an MCO for a medical support or payment from a third party for a medical service provided by the MCO; and

      (b) Cooperate with an MCO in identifying and providing information to assist the MCO in pursuing a third party that shall be liable to pay for a service provided by the MCO.

      (4) If an MCO becomes aware of a third party liability resource after payment for a service provided to an enrollee, the MCO shall seek recovery from the third party resource.

 

      Section 8. Management Information System. (1) An MCO shall:

      (a) Have a management information system that shall:

      1. Provide support to the MCO operations; and

      2. Except as provided in subsection (2) of this section, include a:

      a. Member subsystem;

      b. Third party liability subsystem;

      c. Provider subsystem;

      d. Reference subsystem;

      e. Claim processing subsystem;

      f. Financial subsystem;

      g. Utilization and quality improvement subsystem; and

      h. Surveillance utilization review subsystem; and

      (b) Transmit data to the department in accordance with 42 C.F.R. 438.242.

      (2) An MCO’s management information system shall not be required to have the subsystems listed in subsection (1)(a)2. of this section if the MCO’s management information system:

      (a) Has the capacity to:

      1. Capture and provide the required data captured by the subsystems listed in subsection (1)(a)2. of this section; and

      2. Provide the data in formats and files that shall be consistent with the subsystems listed in subsection (1)(a)2. of this section; and

      (b) Meets the requirements established in paragraph (a) of this subsection in a way which shall be mapped to the subsystem concept established in subsection (1)(a)2. of this section.

      (3) If an MCO subcontracts for services, the MCO shall provide guidelines for its subcontractor to the department for approval.

 

      Section 9. Kentucky Health Information Exchange (KHIE). (1) An MCO shall:

      (a) Make an attempt to have a PCP in the MCO’s network connect to KHIE within:

      1. One (1) year of enrollment in the MCO’s network; or

      2. A timeframe approved by the department if greater than one (1) year; and

      (b) Encourage a provider in its network to establish connectivity with the KHIE.

      (2) The department shall:

      (a) Administer an electronic health record incentive payment program; and

      (b) Inform an MCO of a provider that has received an electronic health record incentive payment.

 

      Section 10. MCO Qualifications and Maintenance of Records. (1) An MCO shall:

      (a) Be licensed by the Department of Insurance as a health maintenance organization or an insurer;

      (b) Have a governing body;

      (c) Have protection against insolvency in accordance with:

      1. 806 KAR 3:190; and

      2. 42 C.F.R. 438.116;

      (d) Maintain all books, records, and information related to MCO providers, recipients, or recipient services, and financial transactions for:

      1. A minimum of five (5) years in accordance with 907 KAR 1:672; and

      2. Any additional time period as required by federal or state law; and

      (e) Submit a request for disclosure of information subject to open records laws, KRS 61.870 to 61.884, received from the public to the department within twenty-four (24) hours.

      (2) Information shall not be disclosed by an MCO pursuant to a request it received pursuant to subsection (1)(e) of this section without prior written authorization from the department.

      (3) The books, records, and information referenced in subsection (1)(d) of this section shall be available upon request of a reviewer or auditor during routine business hours at the MCO’s place of operations.

      (4) MCO staff shall be available upon request of a reviewer or auditor during routine business hours at the MCO’s place of operations.

 

      Section 11. Prohibited Affiliations. The policies or requirements:

      (1) Imposed on a managed care entity in 42 U.S.C. 1396u-2(d)(1) shall apply to an MCO; and

      (2) Established in 42 C.F.R. 438.610 shall apply to an MCO.

 

      Section 12. Termination of MCO Participation in the Medicaid Program. If necessary, a contract with an MCO shall be terminated and the termination shall be in accordance with KRS Chapter 45A.

 

      Section 13. Centers for Medicare and Medicaid Services Approval and Federal Financial Participation. A policy established in this administrative regulation shall be null and void if the Centers for Medicare and Medicaid Services:

      (1) Denies or does not provide federal financial participation for the policy; or

      (2) Disapproves the policy. (39 Ky.R. 1846; eff. 6-27-2013.)