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Department of Health Revises Managed Care Provider Contract Guidelines

The Department of Health (DOH) has released new Managed Care Provider Contract Guidelines in response to the value-based payment goals and framework required by the state’s Medicaid waiver. Under the waiver, 80 to 90 percent of all Medicaid managed care payments to providers must be made through value-based arrangements by 2020. The state’s “Value-Based Payment Roadmap” (the Roadmap) describes four types of approved value-based payment (VBP) arrangements and four levels of risk-sharing (from 0 to 3) that may be associated with each of the four types of arrangement. In anticipation of a substantial increase in the volume of managed care provider contract amendments that will require DOH (and possibly Department of Financial Services) approval as a result of the Roadmap, DOH has streamlined its Provider Contract Guidelines (the Guidelines). The revised Guidelines were developed in consultation with stakeholder work groups in which LeadingAge NY participated. 

The new Guidelines provide for a three-tiered approach to the financial review of risk-sharing arrangements:

  • Tier 1 arrangements involve standard (“on-menu”) Roadmap arrangements, annual payments of up to $1 million, and limited risk to the provider (e.g., not more than 25 percent of payments to the provider by the managed care plan are at risk, and not more than 15 percent of the provider’s total Medicaid revenue is derived from the contract). Tier 1 arrangements are subject to “file and use” review.
  • Tier 2 arrangements involve annual payments of $1 million or more, and more than 25 percent of payments under the contract are at risk, or more than 15 percent of the provider’s total Medicaid revenue is derived from the contract, or the contract is not on the Roadmap’s “menu.” Tier 2 arrangements are subject to a detailed financial review, including a provider/IPA financial solvency review. In addition, DOH may require a financial security deposit (i.e., a reserve) or other risk mitigation mechanisms.
  • Tier 3 arrangements are pre-paid capitation arrangements of more than $1 million. They are subject to the existing review requirements set forth in Department of Financial Services (DFS) Regulation 164.

Notably, under the new Guidelines, provider contracts that involve only up-side risk (i.e., shared savings) are no longer considered risk transfers subject to financial review. In addition, contracts relating solely to the following services are not subject to the Guidelines and the related approval requirements:

  • Medicaid Health Home contracts;
  • MLTC Care Management contracts; and
  • Fiscal Intermediary contracts for the Consumer Directed Personal Assistance Program.

A detailed discussion from our attorneys at Hinman Straub of the contracts and amendments subject to review, the review process, managed care plan reporting and monitoring requirements, and revisions to the standard clauses is available here.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383 ext. 124