Bill Text: IL SB1965 | 2023-2024 | 103rd General Assembly | Engrossed

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Bill Title: Amends the Medical Assistance Article of the Illinois Public Aid Code. In provisions requiring the Department of Healthcare and Family Services to implement a capitation base rate setting process for payments to managed care organizations (MCOs), removes the following requirements: (i) that any quality incentive or other incentive withholding of any portion of the actuarially certified capitation rates must be budget-neutral; (ii) that the entirety of any aggregate withheld amounts must be returned to the MCOs in proportion to their performance on the relevant performance metric; and (iii) that no amounts shall be returned to the Department if all performance measures are not achieved to the extent allowable by federal law and regulations.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Engrossed) 2024-04-15 - Chief Sponsor Changed to Sen. Don Harmon [SB1965 Detail]

Download: Illinois-2023-SB1965-Engrossed.html

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AN ACT concerning public aid.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Public Aid Code is amended by
changing Section 5-30.8 as follows:
(305 ILCS 5/5-30.8)
Sec. 5-30.8. Managed care organization rate transparency.
(a) For the establishment of managed care organization
(MCO) capitation base rate payments from the State, including,
but not limited to: (i) hospital fee schedule reforms and
updates, (ii) rates related to a single State-mandated
preferred drug list, (iii) rate updates related to the State's
preferred drug list, (iv) inclusion of coverage for children
with special needs, (v) inclusion of coverage for children
within the child welfare system, (vi) annual MCO capitation
rates, and (vii) any retroactive provider fee schedule
adjustments or other changes required by legislation or other
actions, the Department of Healthcare and Family Services
shall implement a capitation base rate setting process
beginning on July 27, 2018 (the effective date of Public Act
100-646) which shall include all of the following elements of
transparency:
(1) The Department shall include participating MCOs

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and a statewide trade association representing a majority
of participating MCOs in meetings to discuss the impact to
base capitation rates as a result of any new or updated
hospital fee schedules or other provider fee schedules.
Additionally, the Department shall share any data or
reports used to develop MCO capitation rates with
participating MCOs. This data shall be comprehensive
enough for MCO actuaries to recreate and verify the
accuracy of the capitation base rate build-up.
(2) The Department shall not limit the number of
experts that each MCO is allowed to bring to the draft
capitation base rate meeting or the final capitation base
rate review meeting. Draft and final capitation base rate
review meetings shall be held in at least 2 locations.
(3) The Department and its contracted actuary shall
meet with all participating MCOs simultaneously and
together along with consulting actuaries contracted with
statewide trade association representing a majority of
Medicaid health plans at the request of the plans.
Participating MCOs shall additionally, at their request,
be granted individual capitation rate development meetings
with the Department.
(4) (Blank). Any quality incentive or other incentive
withholding of any portion of the actuarially certified
capitation rates must be budget-neutral. The entirety of
any aggregate withheld amounts must be returned to the

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MCOs in proportion to their performance on the relevant
performance metric. No amounts shall be returned to the
Department if all performance measures are not achieved to
the extent allowable by federal law and regulations.
(5) Upon request, the Department shall provide written
responses to questions regarding MCO capitation base
rates, the capitation base development methodology, and
MCO capitation rate data, and all other requests regarding
capitation rates from MCOs. Upon request, the Department
shall also provide to the MCOs materials used in
incorporating provider fee schedules into base capitation
rates.
(b) For the development of capitation base rates for new
capitation rate years:
(1) The Department shall take into account emerging
experience in the development of the annual MCO capitation
base rates, including, but not limited to, current-year
cost and utilization trends observed by MCOs in an
actuarially sound manner and in accordance with federal
law and regulations.
(2) No later than January 1 of each year, the
Department shall release an agreed upon annual calendar
that outlines dates for capitation rate setting meetings
for that year. The calendar shall include at least the
following meetings and deadlines:
(A) An initial meeting for the Department to

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review MCO data and draft rate assumptions to be used
in the development of capitation base rates for the
following year.
(B) A draft rate meeting after the Department
provides the MCOs with the draft capitation base rates
to discuss, review, and seek feedback regarding the
draft capitation base rates.
(3) Prior to the submission of final capitation rates
to the federal Centers for Medicare and Medicaid Services,
the Department shall provide the MCOs with a final
actuarial report including the final capitation base rates
for the following year and subsequently conduct a final
capitation base review meeting. Final capitation rates
shall be marked final.
(c) For the development of capitation base rates
reflecting policy changes:
(1) Unless contrary to federal law and regulation, the
Department must provide notice to MCOs of any significant
operational policy change no later than 60 days prior to
the effective date of an operational policy change in
order to give MCOs time to prepare for and implement the
operational policy change and to ensure that the quality
and delivery of enrollee health care is not disrupted.
"Operational policy change" means a change to operational
requirements such as reporting formats, encounter
submission definitional changes, or required provider

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interfaces made at the sole discretion of the Department
and not required by legislation with a retroactive
effective date. Nothing in this Section shall be construed
as a requirement to delay or prohibit implementation of
policy changes that impact enrollee benefits as determined
in the sole discretion of the Department.
(2) No later than 60 days after the effective date of
the policy change or program implementation, the
Department shall meet with the MCOs regarding the initial
data collection needed to establish capitation base rates
for the policy change. Additionally, the Department shall
share with the participating MCOs what other data is
needed to estimate the change and the processes for
collection of that data that shall be utilized to develop
capitation base rates.
(3) No later than 60 days after the effective date of
the policy change or program implementation, the
Department shall meet with MCOs to review data and the
Department's written draft assumptions to be used in
development of capitation base rates for the policy
change, and shall provide opportunities for questions to
be asked and answered.
(4) No later than 60 days after the effective date of
the policy change or program implementation, the
Department shall provide the MCOs with draft capitation
base rates and shall also conduct a draft capitation base

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rate meeting with MCOs to discuss, review, and seek
feedback regarding the draft capitation base rates.
(d) For the development of capitation base rates for
retroactive policy or fee schedule changes:
(1) The Department shall meet with the MCOs regarding
the initial data collection needed to establish capitation
base rates for the policy change. Additionally, the
Department shall share with the participating MCOs what
other data is needed to estimate the change and the
processes for collection of the data that shall be
utilized to develop capitation base rates.
(2) The Department shall meet with MCOs to review data
and the Department's written draft assumptions to be used
in development of capitation base rates for the policy
change. The Department shall provide opportunities for
questions to be asked and answered.
(3) The Department shall provide the MCOs with draft
capitation rates and shall also conduct a draft rate
meeting with MCOs to discuss, review, and seek feedback
regarding the draft capitation base rates.
(4) The Department shall inform MCOs no less than
quarterly of upcoming benefit and policy changes to the
Medicaid program.
(e) Meetings of the group established to discuss Medicaid
capitation rates under this Section shall be closed to the
public and shall not be subject to the Open Meetings Act.

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Records and information produced by the group established to
discuss Medicaid capitation rates under this Section shall be
confidential and not subject to the Freedom of Information
Act.
(Source: P.A. 100-646, eff. 7-27-18; 101-81, eff. 7-12-19.)