Contract Year Ending 2018 Acute Care Program … Care Program Capitation Rate Certification January 1, ... Acute Care Program Capitation Rate Certification 1 ... Actuary means an individual

January 1, 2018

Contract Year Ending 2018 Acute Care Program Capitation Rate Certification January 1, 2018 through September 30, 2018 Prepared for: The Centers for Medicare & Medicaid Services Prepared by: AHCCCS Division of Health Care Management Prepared by: Stewart Campbell, ASA, MAAA Windy Marks, FSA, MAAA

Table of Contents Introduction and Limitations ................................................................................................................... 1

Section I Medicaid Managed Care Rates .................................................................................................. 2

1. General Information ........................................................................................................................ 4

A. Rate Development Standards........................................................................................................... 4

i. Rating Period ................................................................................................................................... 4

ii. Rate Certification Documentation .................................................................................................... 4

(a) Letter from Certifying Actuary ...................................................................................................... 4

(b) Final and Certified Capitation Rates ............................................................................................. 4

(c) Final and Certified Capitation Rate Ranges ................................................................................... 4

(d) Program Information ................................................................................................................... 4

iii. Rate Development Standards and Federal Financial Participation .................................................... 5

iv. Rate Cell Cross-subsidization............................................................................................................ 5

v. Effective Dates of Changes ............................................................................................................... 5

vi. Generally Accepted Actuarial Principles and Practices ...................................................................... 5

(a) Reasonable, Appropriate, and Attainable Costs ............................................................................ 5

(b) Rate Setting Process..................................................................................................................... 5

(c) Contracted Rates ......................................................................................................................... 5

vii. Rates from Previous Rating Periods .............................................................................................. 5

viii. Rate Certification Procedures....................................................................................................... 6

(a) CMS Rate Certification Requirement for Rate Change .................................................................. 6

(b) CMS Rate Certification Requirement for No Rate Change ............................................................. 6

(c) CMS Rate Certification Circumstances .......................................................................................... 6

(d) CMS Contract Amendment Requirement ..................................................................................... 6

B. Appropriate Documentation ............................................................................................................ 6

i. Elements ............................................................................................................................................. 6

ii. Rate Certification Index ....................................................................................................................... 6

iii. Differences in Federal Medical Assistance Percentage ........................................................................ 6

iv. Rate Ranges ........................................................................................................................................ 6

v. Rate Range Development..................................................................................................................... 7

2. Data ................................................................................................................................................. 8

3. Projected Benefit Costs and Trends.................................................................................................. 9

A. Rate Development Standards........................................................................................................... 9

B. Appropriate Documentation ............................................................................................................ 9

i. Projected Benefit Costs .................................................................................................................... 9

ii. Projected Benefit Cost Development ............................................................................................... 9

(a) Description of the Data, Assumptions, and Methodologies .......................................................... 9

(b) Material Changes to the Data, Assumptions, and Methodologies ............................................... 15

iii. Projected Benefit Cost Trends ........................................................................................................ 15

iv. Mental Health Parity and Addiction Equity Act Compliance ............................................................ 15

v. In-Lieu-Of Services ......................................................................................................................... 15

vi. Retrospective Eligibility Periods ..................................................................................................... 15

vii. Impact of All Material Changes .................................................................................................. 16

(a) Covered Benefits........................................................................................................................ 16

(b) Recoveries of Overpayments...................................................................................................... 16

(c) Provider Payment Requirements................................................................................................ 16

(d) Applicable Waivers .................................................................................................................... 16

(e) Applicable Litigation................................................................................................................... 16

viii. Impact of All Material and Non-Material Changes ...................................................................... 16

4. Special Contract Provisions Related to Payment............................................................................. 17

A. Incentive Arrangements ................................................................................................................. 17

B. Withhold Arrangements ................................................................................................................ 17

C. Risk-Sharing Mechanisms............................................................................................................... 17

i. Rate Development Standards......................................................................................................... 17

ii. Appropriate Documentation .......................................................................................................... 17

(a) Description of Risk-Sharing Mechanisms .................................................................................... 17

(b) Description of Medical Loss Ratio ............................................................................................... 17

(c) Description of Reinsurance Requirements .................................................................................. 17

(i) Reinsurance Requirements ............................................................................................................ 17

(ii) Effect on Development of Capitation Rates ................................................................................ 18

(iii) Development in Accordance with Generally Accepted Actuarial Principles and Practices ........... 18

(iv) Data, Assumptions, Methodology to Develop the Reinsurance Offset ........................................ 19

D. Delivery System and Provider Payment Initiatives .......................................................................... 19

E. Pass-Through Payments ................................................................................................................. 19

5. Projected Non-Benefit Costs .......................................................................................................... 20

A. Rate Development Standards......................................................................................................... 20

B. Appropriate Documentation .......................................................................................................... 20

i. Description of the Development of Projected Non-Benefit Costs ................................................... 20

ii. Projected Non-Benefit Costs by Category ....................................................................................... 20

(a) Administrative Costs .................................................................................................................. 20

(b) Taxes and Other Fees ................................................................................................................. 20

(c) Contribution to Reserves, Risk Margin, and Cost of Capital......................................................... 20

(d) Other Material Non-Benefit Costs .............................................................................................. 20

iii. Health Insurance Provider’s Fee ..................................................................................................... 20

6. Risk Adjustment and Acuity Adjustments ....................................................................................... 21

Section II Medicaid Managed Care Rates with Long-Term Services and Supports ................................... 22

Section III New Adult Group Capitation Rates ........................................................................................ 23

Appendix 1: Actuarial Certification ........................................................................................................ 24

Appendix 2a: Certified Prospective Capitation Rates .............................................................................. 26

Appendix 2b: Certified PPC Capitation Rates .......................................................................................... 27

Appendix 3: Fiscal Impact Summary....................................................................................................... 28

Appendix 4a: CYE 18 (Jan-Sep) Projected Gross Medical Expenses PMPM by MCO, Rate Cell and

Geographic Service Area (GSA), Prospective .......................................................................................... 29

Appendix 4b: CYE 18 (Jan-Sep) Projected Risk Adjustment Factors by MCO, Rate Cell and GSA,

Prospective ........................................................................................................................................... 30

Appendix 4c: CYE 18 (Jan-Sep) Projected RI Offsets PMPM by MCO, Rate Cell and GSA, Prospective ..... 31

Appendix 4d: CYE 18 (Jan-Sep) Projected UW Gain PMPM by MCO, Rate Cell and GSA, Prospective ...... 32

Appendix 4e: CYE 18 (Jan-Sep) Projected Administrative Expenses PMPM by MCO, Rate Cell and GSA,

Prospective ........................................................................................................................................... 33

Appendix 4f: CYE 18 (Jan-Sep) Premium Tax PMPM by MCO, Rate Cell and GSA, Prospective, without

APSI ....................................................................................................................................................... 34

Appendix 4g: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, Prospective, without

APSI ....................................................................................................................................................... 35

Appendix 4h: CYE 18 (Jan-Sep) Projected APSI Payments PMPM by MCO, Rate Cell and GSA, Prospective

.............................................................................................................................................................. 36

Appendix 4i: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, Prospective, including

APSI ....................................................................................................................................................... 37

Appendix 4j: CYE 18 (Jan-Sep) Projected Gross Medical Expenses PMPM by MCO, Rate Cell and GSA, PPC

.............................................................................................................................................................. 38

Appendix 4k: CYE 18 (Jan-Sep) Projected UW Gain PMPM by MCO, Rate Cell and GSA, PPC................... 39

Appendix 4l: CYE 18 (Jan-Sep) Projected Administrative Expenses PMPM by MCO, Rate Cell and GSA, PPC

.............................................................................................................................................................. 40

Appendix 4m: CYE 18 (Jan-Sep) Premium Tax PMPM by MCO, Rate Cell and GSA, PPC, without APSI ..... 41

Appendix 4n: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, PPC, without APSI . 42

Appendix 4o: CYE 18 (Jan-Sep) Projected APSI Payments PMPM by MCO, Rate Cell and GSA, PPC ......... 43

Appendix 4p: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, PPC, including APSI

.............................................................................................................................................................. 44

Appendix 4q: CYE 18 (Jan-Sep) RI Offsets PMPM as a Percentage of Prospective Capitation Rates by

MCO, Rate Cell and GSA, including APSI ................................................................................................. 45

Contract Year Ending 2018 Acute Care Program Capitation Rate Certification 1

Introduction and Limitations The purpose of this rate certification is to provide documentation, including the data, assumptions, and

methodologies, used to develop the amendment to the October 1, 2017 through September 30, 2018

(Contract Year Ending 2018 or CYE 18) actuarially sound capitation rates for the period January 1, 2018

through September 30, 2018 for the Acute Care Program for compliance with the applicable provisions

of 42 CFR Part 438 of 81 FR 27497 (published May 6, 2016 and effective July 5, 2016). This rate

certification was prepared for the Centers for Medicare & Medicaid Services (CMS), or its actuaries, for

review and approval of the actuarially sound certified capitation rates contained herein. This rate

certification may not be appropriate for any other purpose. The actuarially sound capitation rates

represent projections of future events. Actual results may vary from the projections.

This rate certification may also be made available publicly on the Arizona Health Care Cost Containment

System (AHCCCS) website or distributed to other parties. If this rate certification is made available to

third parties, then this rate certification should be provided in its entirety. Any third party reviewing this

rate certification should be familiar with the AHCCCS Medicaid managed care program, the provisions of

42 CFR Part 438 of 81 FR 27497 applicable to this rate certification, the 2018 Medicaid Managed Care

Rate Development Guide (2018 Guide), Actuarial Standards of Practice, and generally accepted actuarial

principles and practices.

The 2018 Guide describes the rate development standards and appropriate documentation to be

included within Medicaid managed care rate certifications. This rate certification has been organized to

follow the 2018 Guide to help facilitate the review of this rate certification by CMS.


Section I Medicaid Managed Care Rates The capitation rates included with this rate certification are considered actuarially sound according to

the following criteria from 42 CFR § 438.4 at 81 FR 27858:

§ 438.4(a) Actuarially sound capitation rates defined. Actuarially sound capitation rates are

projected to provide for all reasonable, appropriate, and attainable costs that are required

under the terms of the contract and for the operation of the MCO, PIHP, or PAHP for the time

period and the population covered under the terms of the contract, and such capitation rates

are developed in accordance with the requirements in paragraph (b) of this section.

§ 438.4(b) CMS review and approval of actuarially sound capitation rates. Capitation rates for

MCOs, PIHPs, and PAHPs must be reviewed and approved by CMS as actuarially sound. To be

approved by CMS, capitation rates must:

§ 438.4(b)(1) Have been developed in accordance with standards specified in § 438.5 and

generally accepted actuarial principles and practices. Any proposed differences among

capitation rates according to covered populations must be based on valid rate development

standards and not based on the rate of Federal financial participation associated with the

covered populations.

§ 438.4(b)(2) Be appropriate for the populations to be covered and the services to be furnished

under the contract.

§ 438.4(b)(5) Payments from any rate cell must not cross-subsidize or be cross-subsidized by

payments for any other rate cell.

§ 438.4(b)(6) Be certified by an actuary as meeting the applicable requirements of this part,

including that the rates have been developed in accordance with the requirements specified in §

438.3(c)(1)(ii) and (e).

§ 438.4(b)(7) Meet any applicable special contract provisions as specified in § 438.6.

§ 438.4(b)(8) Be provided to CMS in a format and within a timeframe that meets requirements

in § 438.7.

Additionally, the term actuarially sound is defined in Actuarial Standard of Practice (ASOP) 49, “Medicaid

Managed Care Capitation Rate Development and Certification,” as:

“Medicaid capitation rates are “actuarially sound” if, for business for which the certification is

being prepared and for the period covered by the certification, projected capitation rates and

other revenue sources provide for all reasonable, appropriate, and attainable costs. For

purposes of this definition, other revenue sources include, but are not limited to, expected

reinsurance and governmental stop-loss cash flows, governmental risk adjustment cash flows,

and investment income. For purposes of this definition, costs include, but are not limited to,

expected health benefits, health benefit settlement expenses, administrative expenses, the cost

of capital, and government-mandated assessments, fees, and taxes.”


As stated on page 2 of the 2018 Guide, CMS will also use these three principles in applying the

regulation standards:

the capitation rates are reasonable and comply with all applicable laws (statutes and

regulations) for Medicaid managed care;

the rate development process complies with all applicable laws (statutes and regulations)for the

Medicaid program, including but not limited to eligibility, benefits, financing, any applicable

waiver or demonstration requirements, and program integrity; and

the documentation is sufficient to demonstrate that the rate development process meets the

requirements of 42 CFR Part 438 and generally accepted actuarial principles and practices.


1. General Information This section provides documentation for the General Information section of the 2018 Guide.

A. Rate Development Standards

i. Rating Period

The amended CYE 18 capitation rates for the Acute Care Program are effective for

the nine month time period from January 1, 2018 through September 30, 2018.

ii. Rate Certification Documentation

This rate certification includes the following items and information:

(a) Letter from Certifying Actuary

The actuarial certification letter for the CYE 18 capitation rates for the Acute

Care Program, signed by Matthew C. Varitek, FSA, MAAA, is in Appendix 1. Mr.

Varitek meets the requirements for the definition of an Actuary described at 42

CFR § 438.2 at 81 FR 27854 provided below for reference.

Actuary means an individual who meets the qualification standards established

by the American Academy of Actuaries for an actuary and follows the practice

standards established by the Actuarial Standards Board. In this part, Actuary

refers to an individual who is acting on behalf of the State when used in

reference to the development and certification of capitation rates.

Mr. Varitek certifies that the CYE 18 capitation rates for the Acute Care Program

contained in this rate certification are actuarially sound and meet the standards

within the applicable provisions of 42 CFR Part 438 of 81 FR 27497.

(b) Final and Certified Capitation Rates

The final and certified capitation rates by rate cell are located in Appendices 2a

and 2b. Additionally, the Acute Care Program contract includes the final and

certified capitation rates by rate cell in accordance with 42 CFR § 438.3(c)(1)(i)

at 81 FR 27856. The Acute Care contract uses the term risk group instead of

rate cell. This rate certification will use the term rate cell to be consistent with

the applicable provisions of 42 CFR Part 438 of 81 FR 27497 and the 2018 Guide.

(c) Final and Certified Capitation Rate Ranges

Not Applicable. Rate ranges were not developed for the amended CYE18

capitation rates for the Acute Care Program.

(d) Program Information

For more information, please refer to the Contract Year Ending 2018 Acute Care

Program Rate Certification dated October 1, 2017.


iii. Rate Development Standards and Federal Financial Participation

Proposed differences among the amended CYE 18 capitation rates for the Acute Care

Program are based on valid rate development standards and are not based on the

rate of Federal Financial Participation for the populations covered under the Acute

Care Program.

iv. Rate Cell Cross-subsidization

The amended CYE 18 capitation rates were developed at the rate cell level. Payments

from rate cells do not cross-subsidize payments from other rate cells.

v. Effective Dates of Changes

The effective dates of changes to the Acute Care Program are consistent with the

assumptions used to develop the amended CYE 18 capitation rates for the Acute

Care Program.

vi. Generally Accepted Actuarial Principles and Practices

(a) Reasonable, Appropriate, and Attainable Costs

In the actuary’s judgement, all adjustments to the capitation rates, or to any

portion of the capitation rates, reflect reasonable, appropriate and attainable

costs. To the actuary’s knowledge, all reasonable, appropriate and attainable

costs have been included in the rate certification.

(b) Rate Setting Process

Adjustments to the rates or rate ranges that are performed outside of the rate

setting process described in the rate certification are not considered actuarially

sound under 42 CFR §438.4. There are no adjustments to the rates performed

outside the rate setting process.

(c) Contracted Rates

Consistent with 42 CFR §438.7(c), the final contracted rates in each cell must

either match the capitation rates or be within the rate ranges in the rate

certification. This is required in total and for each and every rate cell. The

amended CYE 18 capitation rates certified in this report represent the

contracted rates by rate cell.

vii. Rates from Previous Rating Periods

Not Applicable. Capitation rates from previous rating periods are not used in the

development of the amended CYE 18 capitation rates for the Acute Care Program.


viii. Rate Certification Procedures

(a) CMS Rate Certification Requirement for Rate Change

This is a new rate certification that documents the Acute Care Program

capitation rates are changing effective January 1, 2018.

(b) CMS Rate Certification Requirement for No Rate Change

Not Applicable. This rate certification will change the Acute Care Program

capitation rates effective January 1, 2018.

(c) CMS Rate Certification Circumstances

This section of the 2018 Guide provides information on when CMS would not

require a new rate certification, and is not applicable to this certification.

(d) CMS Contract Amendment Requirement

CMS requires a contract amendment be submitted whenever capitation rates

change for any reason other than application of an approved payment term

(e.g. risk adjustment methodology) which was included in the initial managed

care contract. The capitation rates are changing due to prospective program

changes effective January 1, 2018 and thus a contract amendment is required to

be submitted.

B. Appropriate Documentation

i. Elements

This rate certification documents all the elements (data, assumptions, and

methodologies) used to develop the amended CYE 18 capitation rates for the Acute

Care Program.

ii. Rate Certification Index

The table of contents that follows the cover page within this rate certification serves

as the index. The table of contents includes the relevant section numbers from the

2018 Guide. Sections of the 2018 Guide that do not apply will be marked as “Not

Applicable” and will be included in this rate certification as requested by CMS.

iii. Differences in Federal Medical Assistance Percentage



iv. Rate Ranges

Not Applicable. Rate ranges were not developed for the amended CYE 18 capitation

rates for the Acute Care Program.


v. Rate Range Development

Not Applicable. Rate ranges were not developed for the amended CYE 18 capitation

rates for the Acute Care Program.


2. Data For more information regarding base data, please refer to the Contract Year Ending 2018

Acute Care Program Rate Certification dated October 1, 2017.


3. Projected Benefit Costs and Trends This section provides documentation for the Projected Benefit Costs and Trends section of the

2018 Guide.


For more information, please refer to the Contract Year Ending 2018 Acute Care Program

Rate Certification dated October 1, 2017.


i. Projected Benefit Costs

The projected CYE 18 gross medical expenses by rate cell, Contractor and GSA can be

found in Appendix 4a and 4j.

ii. Projected Benefit Cost Development

This section provides information on the projected benefit costs included in the

amended CYE 18 capitation rates for the Acute Care Program.

(a) Description of the Data, Assumptions, and Methodologies

DRG Reimbursement Rate Changes

AHCCCS will transition from version 31 to version 34 of the All Patient Refined

Diagnostic Related Groups (APR-DRG) payment classification system on January

1, 2018. AHCCCS has used v31 APR-DRG national weights published by 3M since

the initial implementation of the system on October 1, 2014 until present. To

make the APR-DRG grouper fully ICD-10 code compliant, AHCCCS will rebase the

inpatient system and update to APR-DRG v34 effective January 1, 2018.

Rebasing involves updating the DRG grouper version, relative weights and DRG

base rates via payment simulation modeling using more recent data.

Navigant Consulting did the rebase of the AHCCCS DRG system. Their modeling

approach: “Rebasing calculations included updated base rates (both

standardized amounts and wage indices), relative weights, and addition and

change of policy adjusters. Outlier identification and payment methodology has

not changed nor has any other underlying claim pricing calculation

(notwithstanding the above noted changes to factors, indices, and statewide

standardized base rate).

To affect a budget neutral payment system change, Navigant first repriced the

FFY 2016 claims under current APR-DRG v31 FFS rates, including changes to the

payment system which have occurred since the FFY 2016 claims period (such as

the removal of the transition factor, coding improvement factor, and the

increase of the high acuity pediatric adjuster to 1.945). Navigant then repriced


the same claims set using the APR-DRG v34 grouper and weights and calculated

a statewide standardized amount (adjusted to each facility’s labor cost using

CMS’s published FFY 2017 Final Rule Wage Indices). The statewide standardized

amount was calculated to result in total simulated rebased payments equal to

current system payments.

The next modeling step was to increase select policy adjusters to meet program

funding goals, as determined by AHCCCS. These adjustments included an

increase of the high acuity pediatric policy adjuster to 2.30, the addition of a

service policy adjuster for burn cases (as identified by APR-DRG groups 841-844)

of 2.70, the increase of the policy adjuster for other adult services to 1.025, and

the increase of the existing High Volume Hold Harmless adjuster to 1.11.”

The PMPM adjustments to apply to each rate cell were then developed as the

total simulated APR-DRG rebased payments with the new policy adjuster factors

applied to each inpatient hospital admission during FFY 16 by members in each

rate cell, minus the total actual payments associated with those admissions,

divided by the FFY 16 member months for each rate cell.

The AHCCCS Division of Health Care Management (DHCM) Actuarial Team relied

upon Navigant and AHCCCS DHCM Rates & Reimbursement Team for the

reasonableness of these assumptions. The estimated nine month impact to

inpatient medical expenditures is approximately $17.07 million, and the impact

to reinsurance payments approximately $4.77 million (see section I.4.C.ii.(c) for

additional information), for a combined impact of $12.30 million to medical

expenditures net of reinsurance. Table 1 below provides the PMPM impact by

GSA and Prospective rate cell of increases to inpatient expenditures, increases

to the reinsurance offsets, and net impact to medical expenditures. Table 2

below provides the PMPM impact by GSA and PPC rate cell of increases to

inpatient expenditures. Reinsurance does not apply to PPC.


Table 1: PMPM Impact (1/1/18-9/30/18) to Inpatient (IP) Expenditures and Reinsurance (RI) Offsets, Prospective

Adjustment to Prospective Inpatient Expenditures PMPM for DRG Rebase

GSA

TANF/ Kidscare <1, M/F

TANF/ Kidscare

1-13, M/F

TANF/ Kidscare 14-44, F

TANF/ Kidscare 14-44,

M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Delivery Supplement

Adults <=

106% FPL

Adults > 106% FPL

02 $10.31 $0.26 $3.01 $0.79 $1.90 $0.86 $7.51 $0.00 $2.80 $1.69

04 $6.35 $0.22 $1.07 $0.27 $1.10 $0.30 $4.74 $0.00 $1.55 $1.00

06 $1.08 $0.49 ($0.27) $0.01 ($0.40) ($0.32) ($0.69) $0.00 ($0.95) ($0.71)

08 $3.38 $0.42 $0.09 $0.23 $0.66 ($0.03) $1.18 $0.00 $0.51 ($0.07)

10 $11.35 $0.37 $2.19 $0.70 $1.54 $0.56 $8.62 $0.00 $2.20 $1.47

12 $6.20 $0.43 $0.84 $0.49 $0.52 $0.19 $3.93 $0.00 $0.99 $0.51

14 $16.39 $0.34 $2.09 $4.06 $2.33 $0.56 $6.90 $0.00 $3.10 $2.15

Adjustment to Prospective RI Offsets PMPM for DRG Rebase

GSA


TANF/ Kidscare

1-13, M/F



M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Delivery Supplement

Adults <=

106% FPL

Adults > 106% FPL

02 ($2.17) ($0.07) ($0.07) ($0.34) ($0.33) ($0.07) ($2.10) $0.00 ($0.57) ($0.22)

04 ($2.92) ($0.07) ($0.04) ($0.06) ($0.22) $0.02 ($2.16) $0.00 ($0.47) ($0.29)

06 ($0.83) ($0.23) ($0.00) $0.05 ($0.04) $0.10 ($0.19) $0.00 $0.31 $0.29

08 ($1.57) ($0.16) ($0.03) ($0.13) ($0.34) $0.03 ($0.39) $0.00 ($0.20) $0.04

10 ($3.76) ($0.05) ($0.21) ($0.20) ($0.36) ($0.12) ($4.53) $0.00 ($0.61) ($0.36)

12 ($2.30) ($0.14) ($0.10) ($0.20) ($0.12) ($0.03) ($2.21) $0.00 ($0.37) ($0.16)

14 ($8.07) ($0.07) ($0.17) ($3.43) ($0.61) ($0.02) ($2.29) $0.00 ($0.91) ($0.63)

Combined Impact to Prospective Net Medical Expenditures PMPM for DRG Rebase

GSA


TANF/ Kidscare

1-13, M/F



M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Delivery Supplement

Adults <=

106% FPL

Adults > 106% FPL

02 $8.14 $0.19 $2.95 $0.46 $1.57 $0.79 $5.41 $0.00 $2.23 $1.47

04 $3.43 $0.15 $1.03 $0.20 $0.88 $0.31 $2.58 $0.00 $1.08 $0.70

06 $0.24 $0.26 ($0.27) $0.06 ($0.44) ($0.22) ($0.88) $0.00 ($0.64) ($0.42)

08 $1.81 $0.26 $0.06 $0.11 $0.32 ($0.00) $0.79 $0.00 $0.31 ($0.02)

10 $7.58 $0.32 $1.98 $0.51 $1.18 $0.44 $4.09 $0.00 $1.59 $1.11

12 $3.91 $0.29 $0.74 $0.29 $0.39 $0.16 $1.72 $0.00 $0.62 $0.35

14 $8.32 $0.28 $1.93 $0.63 $1.72 $0.55 $4.61 $0.00 $2.19 $1.53


Table 2: PMPM Impact (1/1/18-9/30/18) to IP Expenditures, PPC Adjustment to PPC Inpatient Expenditures PMPM for DRG Rebase

GSA TANF

<1, M/F TANF

1-13, M/F TANF

14-44, F TANF/

14-44, M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Adults <= 106% FPL

Adults > 106% FPL

02 $29.09 $0.67 $3.86 $5.33 $8.68 $1.23 $81.09 $22.70 $8.13

04 $11.60 $0.00 $1.11 $1.22 $1.85 $0.48 $1.41 $8.56 $1.05

06 ($20.80) $1.04 ($1.35) ($0.12) ($5.34) ($0.27) $3.29 ($12.13) ($6.89)

08 $8.05 $1.91 $0.07 $0.84 $0.70 ($0.05) $0.35 $1.29 $0.16

10 $36.41 $1.29 $3.38 $6.03 $1.98 $0.30 $11.91 $11.44 $5.90

12 $19.71 $1.22 $1.56 $2.00 $1.70 $0.33 $7.68 $8.81 $2.84

14 $89.80 $0.92 $1.89 $2.31 $1.39 $0.07 $18.23 $16.57 $10.82

Hepatitis C (HCV) Treatment

The AHCCCS Pharmacy and Therapeutics (P&T) Committee reviewed the HCV Direct Acting Antiviral Agents (DAA) and recommended Mavyret as the sole preferred agent to treat HCV based on both clinical efficacy and cost effectiveness. AHCCCS has accepted the P&T’s recommendation.

The AHCCCS Policy Committee (APC) reviewed the AHCCCS Medical Policy Manual, Policy 320 N, Hepatitis C Prior Authorization Requirements for Direct Acting Antiviral Medication and removed the fibrosis level requirements that were previously necessary in order to access treatment. The APC also removed the one treatment per lifetime limitation from the policy and added retreatment guidelines. These changes are effective January 1, 2018.

The actuary extracted data for encounters and enrollment, grouped by rate cell

and GSA for dates of service from October 1, 2016 through June 30, 2017. It

was assumed that the encounter data required no adjustment for completion

given historical run out patterns specific to HCV DAAs. The actuary then applied

the anticipated unit cost for Mavyret treatment as provided by AHCCCS, in

conjunction with the P&T Committee, to the encounter data to calculate a

revised expenditure for the existing utilization. The actuary inflated the

expected Mavyret utilization by 50%, relying on an assumption from the P&T

Committee regarding the impact of removing the liver fibrosis requirement, to

calculate a revised expenditure for the time period of encounter data and used

the enrollment data from the time period of the encounter data to convert to

the PMPM. The adjustment to Acute Care capitation rates is therefore the

calculated PMPM expenditure by rate cell and GSA using the new assumptions

less the observed PMPM expenditure by rate cell and GSA from encounter data.


Table 3 contains the PMPM adjustments applied by rate cell and GSA. The

statewide estimated nine month impact to the Acute Care program is a

decrease of approximately $12.3 million.

Table 3: PMPM Impact (1/1/18-9/30/18) to Prospective Pharmacy Expenditures Adjustment to Prospective Rx Expenditures PMPM for Hep C Change

GSA


TANF/ Kidscare

1-13, M/F


TANF/ Kidscare 14-44, M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Adults <= 106% FPL

Adults > 106% FPL

02 $0.00 $0.00 $0.00 $0.00 ($1.73) $0.00 ($6.25) ($2.56) ($1.19)

04 $0.00 $0.00 $0.00 ($0.26) ($1.40) $0.00 ($4.00) ($2.77) ($2.78)

06 $0.00 $0.00 $0.00 ($0.15) $0.00 $0.00 ($10.14) ($5.51) ($5.33)

08 $0.00 $0.00 $0.00 $0.00 ($5.35) $0.00 ($10.15) ($3.89) ($2.92)

10 $0.00 $0.00 $0.00 $0.00 ($0.82) $0.00 ($2.26) ($1.98) ($1.61)

12 $0.00 $0.00 ($0.06) ($0.35) ($1.67) $0.03 ($5.87) ($3.02) ($1.96)

14 $0.00 $0.00 $0.00 ($0.90) $0.00 $0.00 ($1.43) ($1.89) $0.00

Medication-Assisted Treatment (MAT)

Effective, January 1, 2018, the Contractor shall reimburse PCPs who are

providing medication management of opioid use disorder (OUD) within their

scope of practice. The PCP must refer the member to a behavioral health

provider for the psychological and/or behavioral therapy component of the

MAT model and coordinate care with the behavioral health provider. The

Contractor shall include the AHCCCS preferred drugs on the Contractor’s drug

list for the treatment of OUD.

To develop the FFY 18 projected costs, the number of members on the Program

with a primary diagnosis of opioid dependence was determined by the AHCCCS

Clinical Quality Management Team. This was based off of historical encounter

experience. The AHCCCS Clinical Quality Management Team also determined

the current MAT utilization and projected increase in MAT utilization due to

allowing Contractors to reimburse PCPs for MAT. The AHCCCS Clinical Quality

Management Team then projected the cost of this program based on the

increase in members using MAT and the average treatment and average cost of

MAT. The AHCCCS DHCM Actuarial Team relied upon the AHCCCS Clinical

Quality Management Team for the reasonableness for these assumptions.

Table 4 contains the PMPM adjustments applied by rate cell and GSA. The

statewide estimated nine month impact to the Acute Care program is a

decrease of approximately $5.0 million.


Table 4: PMPM Impact (1/1/18-9/30/18) to Medical Expenditures, Prospective Adjustment to Prospective Medical Expenditures PMPM for MAT Change

GSA


TANF/ Kidscare

1-13, M/F


TANF/ Kidscare 14-44, M

TANF 45+, M/F

SSI w/ Medicare

SSI w/o Medicare

Adults <= 106% FPL

Adults > 106% FPL

02 $0.00 $0.00 $0.03 $0.01 $0.03 $0.00 $0.36 $0.24 $0.03

04 $0.00 $0.00 $0.44 $0.35 $0.60 $0.01 $1.38 $0.70 $0.51

06 $0.00 $0.00 $0.29 $0.61 $0.35 $0.00 $1.75 $1.10 $0.48

08 $0.00 $0.00 $0.31 $0.40 $0.10 $0.02 $1.18 $0.74 $0.41

10 $0.00 $0.00 $0.76 $0.70 $0.62 $0.03 $1.30 $1.72 $1.02

12 $0.00 $0.00 $0.41 $0.33 $0.40 $0.00 $0.50 $0.90 $0.36

14 $0.00 $0.00 $0.25 $0.48 $0.76 $0.00 $0.74 $0.53 $0.18

Severe Combined Immunodeficiency (SCID)

Arizona Revised Statutes (A.R.S.) § 36-694 establishes a newborn screening

program within the Arizona Department of Health Services (ADHS) which

contains requirements for ordering tests for certain congenital disorders and for

reporting congenital disorder test results and hearing test results to the ADHS.

The ADHS has implemented this statute in Arizona Administrative Code (A.A.C.)

Title 9, Chapter 13, Article 2. As part of a 2015 exempt rulemaking, the ADHS

included in the rules in 9 A.A.C. 13, Article 2, notice that the ADHS may include

screening for SCID as part of a newborn bloodspot test when the ADHS has

funding available to cover the costs for activities related to screening for SCID.

Laws 2017, Ch. 339 increases the fee cap for the first newborn screening test

from $30.00 to $36.00, which will allow the ADHS to test for SCID as part of

newborn screening. This increase in fee is effective January 1, 2018.

To estimate the impact of the increase in the first newborn screening test the

AHCCCS DHCM Actuarial Team used encounter data for the time frame October

1, 2014 to current for HCPCS code S3620 (Newborn Metabolic Screening Panel).

This is the code that will be seeing the increase in fee to account for the SCID

screening.

To develop the projected costs of this increase, the historical units for HCPCS

code S3620 were multiplied by the $6 increase. This method was followed for all

programs to which this benefit change was applicable. The estimated nine

month impact to medical expenditures is approximately $111,000 for the TANF

<1 rate cell.


Differential Adjusted Payments (DAP)

AHCCCS has implemented DAP to distinguish providers who have committed to

supporting designated actions that improve the patient care experience,

improve member health and reduce cost of care growth. Most of the providers

eligible for DAP had an effective implementation date of October 1, 2017.

Qualifying providers for other hospitals and inpatient services (hospitals not

subject to APR-DRG reimbursement) have a January 1, 2018 effective

implementation date.

The AHCCCS DHCM Rates & Reimbursement Team provided the AHCCCS DHCM

Actuarial Team with data for the impact of DAP. The data used by the AHCCCS

DHCM Rates & Reimbursement Team to develop the DAP was the CYE 16

encounter data across all programs for the providers who qualify for DAP. The

AHCCCS DHCM Rates & Reimbursement Team applied the percentage increase

earned under DAP to the AHCCCS provider payments resulting from the fee

schedule changes, for all services subject to DAP, to determine what the impacts

would be for the CYE 18 time period. The AHCCCS DHCM Actuarial Team then

reviewed the results and applied the impacts by program when material.

For the DAP providers with a January 1, 2018 implementation date, the

calculated impact to the Acute Care Program of the DAP increase was

immaterial at less than $0.01 PMPM. As such, no adjustment was made to the

Acute Care capitation for this benefit.

(b) Material Changes to the Data, Assumptions, and Methodologies



iii. Projected Benefit Cost Trends



iv. Mental Health Parity and Addiction Equity Act Compliance



v. In-Lieu-Of Services



vi. Retrospective Eligibility Periods




vii. Impact of All Material Changes

This section of the 2018 Guide provides information on what must be documented

for all material changes to covered benefits or services since the last rate

certification.

(a) Covered Benefits

Material adjustments related to covered benefits are discussed in Section I.3.B.ii

of this rate certification.

(b) Recoveries of Overpayments

There were no adjustments were made to reflect recoveries of overpayments

made to providers by health plans in accordance with 42 CFR §438.608(d). The

AHCCCS DHCM Actuarial Team will be working with the AHCCCS Office of

Inspector General (OIG) Team to collect historical and current recoveries of

overpayments to determine if adjustments will need to be included in future

rate development processes.

(c) Provider Payment Requirements

Adjustments related to provider reimbursement changes are discussed in

Section I.3.B.ii.(a).

(d) Applicable Waivers

There were no material changes since the last rate certification related to

waiver requirements or conditions.

(e) Applicable Litigation

There were no material changes since the last rate certification related to

litigation.

viii. Impact of All Material and Non-Material Changes

Documentation regarding all changes for this rate revision, whether material or non-

material, has been provided above in Section I.3.B.ii. The aggregate impact of all non-

material items not included as an adjustment to the capitation rates is 0.00021% of

capitation rates.


4. Special Contract Provisions Related to Payment

A. Incentive Arrangements



B. Withhold Arrangements



C. Risk-Sharing Mechanisms

i. Rate Development Standards

This section of the 2018 Guide provides information on the requirements for risk-

sharing mechanisms.

ii. Appropriate Documentation

(a) Description of Risk-Sharing Mechanisms



(b) Description of Medical Loss Ratio



(c) Description of Reinsurance Requirements

(i) Reinsurance Requirements

AHCCCS provides a reinsurance program to the Acute Care Contractors for

the partial reimbursement of covered medical services incurred during the

contract year. This reinsurance program is similar to what is seen in

commercial reinsurance programs with a few differences. The deductible is

lower than a standard commercial reinsurance program. AHCCCS has

different reinsurance case types - with the majority of the reinsurance

cases falling into the regular reinsurance case type. Regular reinsurance

cases cover partial reimbursement of inpatient facility medical services.

Most of the other reinsurance cases fall under catastrophic, including

reinsurance for biotech drugs. Additionally, rather than the Contractors

paying a premium, the capitation rates are instead adjusted by subtracting

the reinsurance offset from the gross medical. One could view the

reinsurance offset as a premium. Historical reinsurance experience is the

basis of the reinsurance offset.


The AHCCCS reinsurance program has been in place for more than twenty

years and is funded with General Fund for State Match and Federal

Matching authority. AHCCCS is self-insured for the reinsurance program,

which is characterized by an initial deductible level and a subsequent

coinsurance percentage. The coinsurance percentage is the rate at which

AHCCCS reimburses Acute Care Contractors for covered services incurred

above the deductible. The deductible is the responsibility of the Acute Care

Contractors. There has been no change to the deductible or coinsurance

factors since the last rate setting period.

The actual reinsurance case amounts are paid to the Acute Care

Contractors whether the actual amount is above or below the reinsurance

offset in the capitation rates. This can result in a loss or gain by an Acute

Care Contractor based on actual reinsurance payments versus expected

reinsurance payments.

The projected reinsurance offset PMPM assumed in the CYE 18 capitation

rates varies by rate cell and GSA. The tables in Appendix 4c and Appendix

4q include the projected reinsurance payments assumed in the amended

CYE 18 capitation rates and the percentage of the total capitation rate for

each Prospective rate cell. Reinsurance does not apply to PPC. These

reinsurance offsets were revised due to the DRG reimbursement rebase

effective January 1, 2018.

For additional information, including all deductibles and coinsurance

amounts, on the reinsurance program refer to the Reinsurance section of

the Acute Care Program contract.

(ii) Effect on Development of Capitation Rates

The reinsurance offset (expected PMPM of reinsurance payments for the

rate setting period) is subtracted from the gross medical expense PMPM

calculated for the rate setting period. It is a separate calculation and does

not affect the methodologies for development of the gross medical

capitation PMPM rate.

(iii) Development in Accordance with Generally Accepted Actuarial

Principles and Practices

Projected reinsurance offsets are developed in accordance with generally

accepted actuarial principles and practices.


(iv) Data, Assumptions, Methodology to Develop the Reinsurance

Offset

The data used to develop the adjustments to the previously submitted CYE

18 reinsurance offsets are the repriced FFY 16 inpatient admissions as

described in Section I.3.B.(ii).(a). The actuary calculated expected

reinsurance payments associated with the actual health plan paid amount

for each admission, and expected reinsurance payments associated with

the repriced amount for each admission. The sums of the expected and

repriced payments by rate cell and GSA were converted into PMPMs using

FFY 16 member months by rate cell and GSA, and the arithmetic

differences in the PMPMs represent the adjustments applied to the

previously submitted reinsurance offsets PMPM by rate cell and GSA. The

PMPM adjustments by rate cell and GSA are shown in Table 1 in Section

I.3.B.ii, and the revised reinsurance offsets PMPM by rate cell and GSA are

shown in Appendix 4c.

D. Delivery System and Provider Payment Initiatives



E. Pass-Through Payments




5. Projected Non-Benefit Costs


This section of the 2018 Guide provides information on the non-benefit component of the

capitation rates.


i. Description of the Development of Projected Non-Benefit Costs



ii. Projected Non-Benefit Costs by Category

(a) Administrative Costs



(b) Taxes and Other Fees

The amended CYE 18 capitation rates for the Acute Care Program include a

provision for premium tax of 2.0% of capitation. The premium tax is applied to

the total capitation.

(c) Contribution to Reserves, Risk Margin, and Cost of Capital

The amended CYE 18 capitation rates for the Acute Care Program includes a

provision of 1% for margin (i.e. underwriting gain).

(d) Other Material Non-Benefit Costs

No other material or non-material non-benefit costs are reflected in the

amended CYE 18 capitation rates for the Acute Care Program.

iii. Health Insurance Provider’s Fee




6. Risk Adjustment and Acuity Adjustments For more information, please refer to the Contract Year Ending 2018 Acute Care Program Rate

Certification dated October 1, 2017.


Section II Medicaid Managed Care Rates with Long-Term Services and

Supports Section II of the 2018 Guide is not applicable to the Acute Care Program. Managed long-term services

and supports, as defined at 42 CFR § 438.2(a) at 81 FR 27855, are not covered services under the Acute

Care Program. The Acute Care Program does cover nursing facility services, and related home and

community based services, for 90 days of short-term convalescent care.


Section III New Adult Group Capitation Rates Section III of the 2018 Guide is applicable to the Acute Care Program. For more information, please

refer to the Contract Year Ending 2018 Acute Care Program Rate Certification dated October 1, 2017.


Appendix 1: Actuarial Certification I, Matthew C. Varitek, am an employee of Arizona Health Care Cost Containment System (AHCCCS). I am

a Member of the American Academy of Actuaries and a Fellow of the Society of Actuaries. I meet the

qualification standards established by the American Academy of Actuaries and have followed the

practice standards established by the Actuarial Standards Board.

The capitation rates included with this rate certification are considered actuarially sound according to

the following criteria from 42 CFR § 438.4 at 81 FR 27858:

§ 438.4 (a) Actuarially sound capitation rates defined. Actuarially sound capitation rates are

projected to provide for all reasonable, appropriate, and attainable costs that are required

under the terms of the contract and for the operation of the MCO, PIHP, or PAHP for the time

period and the population covered under the terms of the contract, and such capitation rates

are developed in accordance with the requirements in paragraph (b) of this section.

§ 438.4 (b) CMS review and approval of actuarially sound capitation rates. Capitation rates for

MCOs, PIHPs, and PAHPs must be reviewed and approved by CMS as actuarially sound. To be

approved by CMS, capitation rates must:

§ 438.4 (b) (1) Have been developed in accordance with standards specified in § 438.5 and

generally accepted actuarial principles and practices. Any proposed differences among

capitation rates according to covered populations must be based on valid rate development

standards and not based on the rate of Federal financial participation associated with the

covered populations.

§ 438.4 (b) (2) Be appropriate for the populations to be covered and the services to be furnished

under the contract.

§ 438.4 (b) (5) Payments from any rate cell must not cross-subsidize or be cross-subsidized by

payments for any other rate cell.

§ 438.4 (b) (6) Be certified by an actuary as meeting the applicable requirements of this part,

including that the rates have been developed in accordance with the requirements specified in §

438.3(c)(1)(ii) and (e).

§ 438.4 (b) (7) Meet any applicable special contract provisions as specified in § 438.6.

§ 438.4(b) (8) Be provided to CMS in a format and within a timeframe that meets requirements

in § 438.7.

Additionally, the term actuarially sound is defined in Actuarial Standard of Practice (ASOP) 49, “Medicaid

Managed Care Capitation Rate Development and Certification,” as:

“Medicaid capitation rates are “actuarially sound” if, for business for which the certification is

being prepared and for the period covered by the certification, projected capitation rates and

other revenue sources provide for all reasonable, appropriate, and attainable costs. For

purposes of this definition, other revenue sources include, but are not limited to, expected

reinsurance and governmental stop-loss cash flows, governmental risk adjustment cash flows,


and investment income. For purposes of this definition, costs include, but are not limited to,

expected health benefits, health benefit settlement expenses, administrative expenses, the cost

of capital, and government-mandated assessments, fees, and taxes.”

The data, assumptions, and methodologies used to develop the amended CYE 18 capitation rates for the

Acute Care Program have been documented according to the guidelines established by CMS in the 2018

Guide. The amended CYE 18 capitation rates for the Acute Care Program are effective for the nine

month time period from January 1, 2018 through September 30, 2018.

The actuarially sound capitation rates are based on projections of future events. Actual results may vary

from the projections. In developing the actuarially sound capitation rates, I have relied upon data and

information provided by AHCCCS and the Acute Care Contractors. I have relied upon AHCCCS and the

Acute Care Contractors for the accuracy of the data and I have accepted the data without audit, after

checking the data for reasonableness and consistency.

SIGNATURE ON FILE January 1, 2018

Matthew C. Varitek Date

Fellow, Society of Actuaries

Member, American Academy of Actuaries


Appendix 2a: Certified Prospective Capitation Rates

Contractor GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13

TANF/ Kidscare

14-44 Female

TANF/ Kidscare

14-44 Male

TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 $391.89 $122.02 $243.49 $144.62 $390.67 $170.01 $1,009.06 $5,655.07 $459.71 $312.47

University Family Care 02 $387.30 $109.84 $215.72 $121.32 $324.04 $145.43 $935.29 $5,607.72 $453.22 $318.12

United Health Care 04 $396.14 $97.94 $205.02 $135.31 $360.46 $124.35 $933.56 $5,825.80 $435.23 $338.18

Health Choice Arizona 04 $406.32 $98.74 $215.54 $144.35 $388.51 $128.89 $1,007.31 $5,778.88 $465.13 $339.23


University Family Care 06 $392.62 $112.06 $247.49 $201.75 $400.85 $152.12 $1,094.83 $5,912.46 $482.24 $391.61


Health Choice Arizona 08 $428.61 $102.68 $257.67 $153.60 $542.52 $147.86 $957.61 $5,522.25 $493.06 $367.01




Care 1st 10 $448.00 $102.22 $225.20 $134.01 $354.14 $102.68 $910.58 $5,582.00 $375.67 $299.96

Mercy Care Plan 10 $397.32 $110.26 $238.66 $140.51 $398.57 $125.45 $1,001.79 $5,563.79 $402.64 $312.44


Care 1st 12 $450.24 $108.34 $251.15 $155.86 $414.31 $134.93 $971.13 $6,323.05 $498.02 $354.02


Mercy Care Plan 12 $457.81 $114.86 $267.97 $173.93 $489.14 $165.77 $1,101.10 $6,279.40 $554.70 $365.52

Health Net 12 $445.19 $102.48 $235.28 $151.08 $361.66 $118.92 $944.87 $6,316.03 $459.07 $341.56



Notes: The certified capitation rates include APSI amounts.


Appendix 2b: Certified PPC Capitation Rates

Contractor GSA TANF

<1 TANF 1-

13

TANF 14-44

Female

TANF 14-44 Male

TANF 45+

SSI with Medicare

SSI w/o Medicare

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 $447.28 $31.67 $176.22 $204.86 $191.84 $168.55 $1,059.56 $718.20 $372.27

University Family Care 02 $447.28 $31.67 $176.22 $204.86 $191.84 $168.55 $1,059.56 $718.20 $372.27

United Health Care 04 $417.09 $59.46 $174.54 $131.74 $235.01 $60.42 $457.62 $636.93 $421.74

Health Choice Arizona 04 $417.09 $59.46 $174.54 $131.74 $235.01 $60.42 $457.62 $636.93 $421.74


University Family Care 06 $452.87 $48.81 $205.29 $182.45 $367.18 $81.53 $420.59 $700.32 $383.74






Care 1st 10 $448.25 $54.64 $200.52 $182.02 $167.76 $92.70 $485.67 $514.99 $304.70

Mercy Care Plan 10 $448.25 $54.64 $200.52 $182.02 $167.76 $92.70 $485.67 $514.99 $304.70


Care 1st 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99


Mercy Care Plan 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99

Health Net 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99



Notes: The certified capitation rates include APSI amounts.


Appendix 3: Fiscal Impact Summary

Contract Type Rate Cell

Proj Member Months

Jan-Sep 18

Submitted Weighted

CYE 18 (10/1/17) Cap Rate

Jan-Sep 18 Proj Expenditures

Revised Weighted

CYE 18 (1/1/18) Cap

Rate

Revised Jan-Sep 18 Proj

Expenditures

Difference Expenditures

% Increase Revised CYE

18 over Submitted

CYE 18

Title XIX Prospective TANF <1 429,961 $442.67 $190,332,409 $447.65 $192,472,408 $2,140,000 1.1%

Title XIX Prospective TANF 1-13 4,504,559 $111.33 $501,491,553 $111.62 $502,793,121 $1,301,568 0.3%

Title XIX Prospective TANF 14-44 Female 2,375,839 $251.32 $597,084,487 $252.84 $600,704,704 $3,620,217 0.6%

Title XIX Prospective TANF 14-44 Male 1,254,872 $161.84 $203,093,987 $162.32 $203,694,009 $600,022 0.3%

Title XIX Prospective TANF 45+ 487,560 $443.36 $216,165,737 $442.88 $215,932,632 -$233,105 -0.1%

Title XIX Prospective SSI with Medicare 835,774 $146.11 $122,111,187 $146.41 $122,364,535 $253,348 0.2%

Title XIX Prospective SSI w/o Medicare 447,457 $1,042.12 $466,305,005 $1,039.86 $465,293,612 -$1,011,393 -0.2%

Title XIX Prospective Delivery Supplement 26,365 $6,042.82 $159,318,910 $6,042.82 $159,318,910 $0 0.0%

Title XIX Prospective Adults <= 106% FPL 2,546,462 $488.09 $1,242,898,393 $487.09 $1,240,367,242 -$2,531,151 -0.2%

Title XIX Prospective Adults > 106% FPL 717,495 $346.04 $248,283,503 $345.05 $247,568,912 -$714,590 -0.3%

Total Title XIX Prospective 13,626,343 $3,947,085,172 $3,950,510,086 $3,424,915 0.1%

Title XIX PPC TANF <1 15,159 $409.22 $6,203,230 $431.79 $6,545,311 $342,081 5.5%

Title XIX PPC TANF 1-13 94,860 $51.37 $4,872,820 $52.56 $4,985,733 $112,914 2.3%

Title XIX PPC TANF 14-44 Female 58,307 $198.32 $11,563,659 $200.12 $11,668,591 $104,932 0.9%

Title XIX PPC TANF 14-44 Male 30,874 $156.51 $4,832,004 $159.19 $4,914,642 $82,639 1.7%

Title XIX PPC TANF 45+ 10,082 $252.10 $2,541,522 $254.00 $2,560,719 $19,197 0.8%

Title XIX PPC SSI with Medicare 12,223 $101.83 $1,244,597 $102.17 $1,248,833 $4,236 0.3%

Title XIX PPC SSI w/o Medicare 10,349 $521.41 $5,396,139 $533.11 $5,517,169 $121,030 2.2%

Title XIX PPC Adults <= 106% FPL 98,560 $694.18 $68,418,726 $703.34 $69,321,363 $902,637 1.3%

Title XIX PPC Adults > 106% FPL 24,906 $367.95 $9,164,303 $371.32 $9,248,234 $83,931 0.9%

Total Title XIX PPC 355,319 $114,236,999 $116,010,594 $1,773,595 1.6%

Total Title XIX 13,981,662 $4,061,322,171 $4,066,520,681 $5,198,510 0.1%

Title XXI Prospective Kidscare <1 3,156 $442.67 $1,397,000 $447.65 $1,412,707 $15,707 1.1%

Title XXI Prospective Kidscare 1-13 194,070 $111.33 $21,605,779 $111.62 $21,661,855 $56,076 0.3%

Title XXI Prospective Kidscare 14-44 Female 31,507 $251.32 $7,918,311 $252.84 $7,966,321 $48,010 0.6%

Title XXI Prospective Kidscare 14-44 Male 31,980 $161.84 $5,175,812 $162.32 $5,191,103 $15,291 0.3%

Total Title XXI 260,714 $36,096,902 $36,231,986 $135,084 0.4%

State Only Transplants 43 $16.50 $707 $16.50 $707 $0 0.0%

Grand Total Capitation 14,242,418 $4,097,419,780 $4,102,753,374 $5,333,594 0.1%

Notes: The submitted and revised capitation rates include APSI amounts. The submitted rates are from the 10/1/2017 submission.


Appendix 4a: CYE 18 (Jan-Sep) Projected Gross Medical Expenses PMPM by MCO, Rate Cell and

Geographic Service Area (GSA), Prospective

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13

TANF/ Kidscare 14-44 Female

TANF/ Kidscare

14-44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $391.44 $100.91 $213.68 $140.32 $369.56 $110.55 $1,093.78 $5,034.72 $374.84 $280.33

Mercy Care Plan 10 $391.44 $100.91 $213.68 $140.32 $369.56 $110.55 $1,093.78 $5,034.72 $374.84 $280.33


Care 1st 12 $429.99 $102.90 $239.44 $159.31 $423.66 $137.12 $1,058.93 $5,708.95 $492.70 $321.73


Mercy Care Plan 12 $429.99 $102.90 $239.44 $159.31 $423.66 $137.12 $1,058.93 $5,708.95 $492.70 $321.73

Health Net 12 $429.99 $102.90 $239.44 $159.31 $423.66 $137.12 $1,058.93 $5,708.95 $492.70 $321.73




Appendix 4b: CYE 18 (Jan-Sep) Projected Risk Adjustment Factors by MCO, Rate Cell and GSA,

Prospective

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare 1-

13

TANF/ Kidscare

14-44 Female

TANF/ Kidscare

14-44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 1.0004 1.0232 1.0272 1.0385 1.0398 1.0288 1.0180 1.0000 1.0022 0.9946

University Family Care 02 0.9989 0.9257 0.9122 0.8735 0.8633 0.8773 0.9531 1.0000 0.9949 1.0139


Health Choice Arizona 04 1.0133 1.0065 1.0236 1.0281 1.0345 1.0251 1.0323 1.0000 1.0357 1.0015








Care 1st 10 1.0307 0.9253 0.9396 0.9007 0.8703 0.8241 0.9027 1.0000 0.9210 0.9579

Mercy Care Plan 10 0.9133 1.0040 1.0019 0.9477 0.9885 1.0282 0.9854 1.0000 0.9939 1.0005


Care 1st 12 0.9697 0.9549 0.9555 0.9210 0.8914 0.8663 0.9293 1.0000 0.9513 0.9997


Mercy Care Plan 12 0.9935 1.0226 1.0299 1.0371 1.0690 1.0929 1.0533 1.0000 1.0676 1.0342

Health Net 12 0.9684 0.9032 0.8934 0.8961 0.7737 0.7548 0.9109 1.0000 0.8780 0.9622




Appendix 4c: CYE 18 (Jan-Sep) Projected RI Offsets PMPM by MCO, Rate Cell and GSA,

Prospective

MCO GSA TANF/

Kidscare <1 TANF/

Kidscare 1-13


TANF/ Kidscare 14-

44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 -$24.15 -$3.04 -$1.63 -$3.20 -$6.62 -$0.48 -$80.14 $0.00 -$5.76 -$3.98

University Family Care 02 -$24.15 -$3.04 -$1.63 -$3.20 -$6.62 -$0.48 -$80.14 $0.00 -$5.76 -$3.98


Health Choice Arizona 04 -$39.73 -$0.94 -$1.30 -$3.91 -$4.13 -$0.25 -$89.07 $0.00 -$11.96 -$7.02








Care 1st 10 -$18.72 -$1.68 -$2.20 -$7.14 -$5.83 -$1.15 -$170.71 $0.00 -$9.09 -$6.74

Mercy Care Plan 10 -$18.72 -$1.68 -$2.20 -$7.14 -$5.83 -$1.15 -$170.71 $0.00 -$9.09 -$6.74


Care 1st 12 -$23.63 -$1.54 -$3.31 -$7.16 -$6.97 -$1.39 -$105.69 $0.00 -$18.01 -$9.05


Mercy Care Plan 12 -$23.63 -$1.54 -$3.31 -$7.16 -$6.97 -$1.39 -$105.69 $0.00 -$18.01 -$9.05

Health Net 12 -$23.63 -$1.54 -$3.31 -$7.16 -$6.97 -$1.39 -$105.69 $0.00 -$18.01 -$9.05



*Note: RI does not apply to PPC capitation rates.


Appendix 4d: CYE 18 (Jan-Sep) Projected UW Gain PMPM by MCO, Rate Cell and GSA,

Prospective

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13

TANF/ Kidscare 14-44

Female


Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 $3.68 $1.15 $2.24 $1.36 $3.64 $1.52 $9.98 $51.46 $4.27 $2.82

University Family Care 02 $3.68 $1.04 $1.99 $1.14 $3.02 $1.29 $9.34 $51.46 $4.24 $2.88


Health Choice Arizona 04 $4.03 $0.90 $1.96 $1.34 $3.57 $1.18 $10.09 $52.73 $4.38 $3.07








Care 1st 10 $4.03 $0.93 $2.01 $1.26 $3.22 $0.91 $9.87 $50.35 $3.45 $2.69

Mercy Care Plan 10 $3.58 $1.01 $2.14 $1.33 $3.65 $1.14 $10.78 $50.35 $3.73 $2.80


Care 1st 12 $4.17 $0.98 $2.29 $1.47 $3.78 $1.19 $9.84 $57.09 $4.69 $3.22


Mercy Care Plan 12 $4.27 $1.05 $2.47 $1.65 $4.53 $1.50 $11.15 $57.09 $5.26 $3.33

Health Net 12 $4.16 $0.93 $2.14 $1.43 $3.28 $1.03 $9.65 $57.09 $4.33 $3.10




Appendix 4e: CYE 18 (Jan-Sep) Projected Administrative Expenses PMPM by MCO, Rate Cell and

GSA, Prospective

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13


TANF/ Kidscare 14-

44 Male

TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $32.10 $5.77 $14.11 $8.76 $24.13 $9.76 $53.74 $385.29 $23.18 $25.29

Mercy Care Plan 10 $30.91 $5.48 $13.46 $8.35 $23.02 $9.28 $50.69 $367.45 $21.60 $25.29


Care 1st 12 $36.61 $7.33 $16.65 $10.88 $30.12 $13.65 $58.95 $430.55 $30.61 $29.81


Mercy Care Plan 12 $33.53 $6.60 $15.00 $9.80 $27.18 $12.49 $53.12 $387.77 $28.03 $29.81

Health Net 12 $32.27 $7.02 $16.22 $10.22 $29.07 $13.40 $52.97 $423.67 $29.09 $29.81




Appendix 4f: CYE 18 (Jan-Sep) Premium Tax PMPM by MCO, Rate Cell and GSA, Prospective,

without APSI

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13


TANF/ Kidscare

14-44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $8.59 $2.01 $4.38 $2.64 $7.00 $2.05 $17.96 $111.64 $7.40 $5.91

Mercy Care Plan 10 $7.62 $2.17 $4.64 $2.77 $7.88 $2.51 $19.77 $111.28 $7.93 $6.16


Care 1st 12 $8.86 $2.14 $4.99 $3.10 $8.26 $2.70 $19.33 $126.46 $9.92 $7.05


Mercy Care Plan 12 $9.01 $2.27 $5.32 $3.46 $9.75 $3.32 $21.92 $125.59 $11.05 $7.28

Health Net 12 $8.76 $2.03 $4.67 $3.01 $7.21 $2.38 $18.81 $126.32 $9.14 $6.81




Appendix 4g: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA,

Prospective, without APSI

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13


TANF/ Kidscare

14-44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $429.47 $100.40 $219.07 $131.90 $350.16 $102.68 $898.23 $5,582.00 $370.18 $295.68

Mercy Care Plan 10 $380.90 $108.29 $232.13 $138.28 $394.05 $125.45 $988.32 $5,563.79 $396.71 $307.98


Care 1st 12 $442.99 $107.17 $249.39 $155.01 $412.83 $134.93 $966.48 $6,323.05 $495.92 $352.66


Mercy Care Plan 12 $450.38 $113.61 $266.07 $172.98 $487.36 $165.77 $1,095.83 $6,279.40 $552.35 $364.11

Health Net 12 $437.95 $101.37 $233.64 $150.26 $360.37 $118.92 $940.31 $6,316.03 $457.14 $340.25




Appendix 4h: CYE 18 (Jan-Sep) Projected APSI Payments PMPM by MCO, Rate Cell and GSA,

Prospective

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare 1-

13


TANF/ Kidscare 14-

44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplemen

t

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $18.16 $1.78 $6.00 $2.07 $3.90 $0.00 $12.09 $0.00 $5.39 $4.19

Mercy Care Plan 10 $16.09 $1.93 $6.40 $2.18 $4.43 $0.00 $13.20 $0.00 $5.81 $4.37


Care 1st 12 $7.11 $1.15 $1.72 $0.83 $1.45 $0.00 $4.56 $0.00 $2.05 $1.33


Mercy Care Plan 12 $7.28 $1.23 $1.85 $0.93 $1.74 $0.00 $5.16 $0.00 $2.30 $1.38

Health Net 12 $7.10 $1.09 $1.61 $0.81 $1.26 $0.00 $4.47 $0.00 $1.89 $1.29




Appendix 4i: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, Prospective,

including APSI

MCO GSA TANF/

KIdscare <1

TANF/ KIdscare

1-13


TANF/ Kidscare

14-44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $448.00 $102.22 $225.20 $134.01 $354.14 $102.68 $910.58 $5,582.00 $375.67 $299.96

Mercy Care Plan 10 $397.32 $110.26 $238.66 $140.51 $398.57 $125.45 $1,001.79 $5,563.79 $402.64 $312.44


Care 1st 12 $450.24 $108.34 $251.15 $155.86 $414.31 $134.93 $971.13 $6,323.05 $498.02 $354.02


Mercy Care Plan 12 $457.81 $114.86 $267.97 $173.93 $489.14 $165.77 $1,101.10 $6,279.40 $554.70 $365.52

Health Net 12 $445.19 $102.48 $235.28 $151.08 $361.66 $118.92 $944.87 $6,316.03 $459.07 $341.56




Appendix 4j: CYE 18 (Jan-Sep) Projected Gross Medical Expenses PMPM by MCO, Rate Cell and

GSA, PPC

MCO GSA TANF <1 TANF 1-13 TANF 14-

44 Female TANF 14-44 Male

TANF 45+ SSI with

Medicare SSI w/o

Medicare Adults <= 106% FPL

Adults > 106% FPL












Care 1st 10 $382.63 $47.60 $174.71 $159.54 $147.65 $83.37 $422.19 $448.41 $266.49

Mercy Care Plan 10 $382.63 $47.60 $174.71 $159.54 $147.65 $83.37 $422.19 $448.41 $266.49


Care 1st 12 $376.82 $46.11 $186.56 $139.46 $258.67 $100.35 $474.56 $695.98 $345.77


Mercy Care Plan 12 $376.82 $46.11 $186.56 $139.46 $258.67 $100.35 $474.56 $695.98 $345.77

Health Net 12 $376.82 $46.11 $186.56 $139.46 $258.67 $100.35 $474.56 $695.98 $345.77




Appendix 4k: CYE 18 (Jan-Sep) Projected UW Gain PMPM by MCO, Rate Cell and GSA, PPC



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $3.83 $0.48 $1.75 $1.60 $1.48 $0.83 $4.22 $4.48 $2.66

Mercy Care Plan 10 $3.83 $0.48 $1.75 $1.60 $1.48 $0.83 $4.22 $4.48 $2.66


Care 1st 12 $3.77 $0.46 $1.87 $1.39 $2.59 $1.00 $4.75 $6.96 $3.46


Mercy Care Plan 12 $3.77 $0.46 $1.87 $1.39 $2.59 $1.00 $4.75 $6.96 $3.46

Health Net 12 $3.77 $0.46 $1.87 $1.39 $2.59 $1.00 $4.75 $6.96 $3.46




Appendix 4l: CYE 18 (Jan-Sep) Projected Administrative Expenses PMPM by MCO, Rate Cell and

GSA, PPC



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $27.11 $3.38 $13.35 $12.16 $11.57 $6.65 $32.29 $34.96 $20.73

Mercy Care Plan 10 $27.11 $3.38 $13.35 $12.16 $11.57 $6.65 $32.29 $34.96 $20.73


Care 1st 12 $28.47 $3.57 $14.78 $11.00 $20.53 $7.96 $37.35 $54.97 $27.43


Mercy Care Plan 12 $28.47 $3.57 $14.78 $11.00 $20.53 $7.96 $37.35 $54.97 $27.43

Health Net 12 $28.47 $3.57 $14.78 $11.00 $20.53 $7.96 $37.35 $54.97 $27.43




Appendix 4m: CYE 18 (Jan-Sep) Premium Tax PMPM by MCO, Rate Cell and GSA, PPC, without

APSI



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $8.44 $1.05 $3.87 $3.54 $3.28 $1.85 $9.36 $9.96 $5.92

Mercy Care Plan 10 $8.44 $1.05 $3.87 $3.54 $3.28 $1.85 $9.36 $9.96 $5.92


Care 1st 12 $8.35 $1.02 $4.15 $3.10 $5.75 $2.23 $10.54 $15.47 $7.69


Mercy Care Plan 12 $8.35 $1.02 $4.15 $3.10 $5.75 $2.23 $10.54 $15.47 $7.69

Health Net 12 $8.35 $1.02 $4.15 $3.10 $5.75 $2.23 $10.54 $15.47 $7.69




Appendix 4n: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, PPC,

without APSI



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $422.00 $52.51 $193.68 $176.83 $163.97 $92.70 $468.07 $497.81 $295.80

Mercy Care Plan 10 $422.00 $52.51 $193.68 $176.83 $163.97 $92.70 $468.07 $497.81 $295.80


Care 1st 12 $417.41 $51.17 $207.35 $154.95 $287.54 $111.54 $527.20 $773.38 $384.35


Mercy Care Plan 12 $417.41 $51.17 $207.35 $154.95 $287.54 $111.54 $527.20 $773.38 $384.35

Health Net 12 $417.41 $51.17 $207.35 $154.95 $287.54 $111.54 $527.20 $773.38 $384.35




Appendix 4o: CYE 18 (Jan-Sep) Projected APSI Payments PMPM by MCO, Rate Cell and GSA,

PPC



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $25.72 $2.09 $6.70 $5.08 $3.71 $0.00 $17.25 $16.84 $8.72

Mercy Care Plan 10 $25.72 $2.09 $6.70 $5.08 $3.71 $0.00 $17.25 $16.84 $8.72


Care 1st 12 $9.31 $1.21 $1.93 $1.61 $2.03 $0.00 $6.99 $7.87 $3.57


Mercy Care Plan 12 $9.31 $1.21 $1.93 $1.61 $2.03 $0.00 $6.99 $7.87 $3.57

Health Net 12 $9.31 $1.21 $1.93 $1.61 $2.03 $0.00 $6.99 $7.87 $3.57




Appendix 4p: CYE 18 (Jan-Sep) Capitation Rates PMPM by MCO, Rate Cell and GSA, PPC,

including APSI



TANF 45+ SSI with

Medicare SSI w/o


Adults > 106% FPL












Care 1st 10 $448.25 $54.64 $200.52 $182.02 $167.76 $92.70 $485.67 $514.99 $304.70

Mercy Care Plan 10 $448.25 $54.64 $200.52 $182.02 $167.76 $92.70 $485.67 $514.99 $304.70


Care 1st 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99


Mercy Care Plan 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99

Health Net 12 $426.92 $52.40 $209.32 $156.59 $289.60 $111.54 $534.33 $781.41 $387.99




Appendix 4q: CYE 18 (Jan-Sep) RI Offsets PMPM as a Percentage of Prospective Capitation Rates

by MCO, Rate Cell and GSA, including APSI

MCO GSA TANF/

Kidscare <1

TANF/ Kidscare

1-13


Female

TANF/ Kidscare 14-

44 Male TANF 45+

SSI with Medicare

SSI w/o Medicare

Delivery Supplement

Adults <= 106% FPL

Adults > 106% FPL

United Health Care 02 6.2% 2.5% 0.7% 2.2% 1.7% 0.3% 7.9% 0.0% 1.3% 1.3%

University Family Care 02 6.2% 2.8% 0.8% 2.6% 2.0% 0.3% 8.6% 0.0% 1.3% 1.3%


Health Choice Arizona 04 9.8% 0.9% 0.6% 2.7% 1.1% 0.2% 8.8% 0.0% 2.6% 2.1%








Care 1st 10 4.2% 1.6% 1.0% 5.3% 1.6% 1.1% 18.7% 0.0% 2.4% 2.2%

Mercy Care Plan 10 4.7% 1.5% 0.9% 5.1% 1.5% 0.9% 17.0% 0.0% 2.3% 2.2%


Care 1st 12 5.2% 1.4% 1.3% 4.6% 1.7% 1.0% 10.9% 0.0% 3.6% 2.6%


Mercy Care Plan 12 5.2% 1.3% 1.2% 4.1% 1.4% 0.8% 9.6% 0.0% 3.2% 2.5%

Health Net 12 5.3% 1.5% 1.4% 4.7% 1.9% 1.2% 11.2% 0.0% 3.9% 2.6%



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