Common use of Assumptions and methodology Clause in Contracts

Assumptions and methodology. In developing the administrative costs, we reviewed historical administrative expenses for the MMC program along with national Medicaid health plan administrative expenses. We considered the size of participating health plans and the resulting economies of scale that could be achieved, along with the benefits covered and the demographics of the MMC population. Historical reported administrative expenses were reconciled between the available data sources for the purpose of evaluating the quality of the data provided. CY 2018 and 1H 2019 cost report administrative expenses were analyzed by MCP for reasonableness and completeness of the data provided. This data formed the baseline for projected 2020 administrative expense amounts. There is a significant amount of variation in the reporting of administrative expenses between the five MCPs, both in the magnitude of administrative expenses and in the rate cell allocation methodology utilized. We summarized historical reported values for each MCP and reallocated these values using a percent of revenue before taxes allocation methodology. Separate administrative expense amounts were developed for CFC Children, ABD <21, ABD 21+, Delivery, AFK, and the adult CFC/EXT populations. Effective January 1, 2019, ODM required that MCP contracting arrangements with pharmacy benefit managers (PBM) be structured as a pass-through pricing model, consistent with the definition included in Appendix C of the Provider Agreement. Prior to January 1, 2019, MCP PBM contracts were structured as a spread-pricing arrangement. Effective July 1, 2019, MCPs must assess all newly enrolled members using the ODM standard Health Risk Assessment (HRA) tool within 90 calendar days of enrollment (i.e. 90 days includes the date of enrollment + 89 days). All other members must be assessed using the standardized HRA tool by July 1, 2020. In addition, non-benefit expense amounts were developed with consideration for sub capitated administrative expense amounts included in MCP cost report submissions.