10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to

Commission File Number 001-31574

AMERIGROUP Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	54-1739323 (I.R.S. Employer Identification No.)
4425 Corporation Lane,	23462
Virginia Beach, VA	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:
(757) 490-6900

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of October 23, 2008, there were 52,964,101 shares outstanding of AMERIGROUP’s common stock, par value $0.01 per share.

AMERIGROUP Corporation And Subsidiaries

Table of Contents

Part I. Financial Information
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007	3
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007	4
Condensed Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2008	5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	25
Part II. Other Information
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Submission of Matters to a Vote of Security Holders	29
Item 5. Other Information	29
Item 6. Exhibits	29

2

Part I. Financial Information

Item 1. Financial Statements

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share data)

(Unaudited)

	September 30,			December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	684,856		$	487,614
Short-term investments		161,660			199,947
Restricted investments held as collateral		—			351,318
Premium receivables		72,460			82,940
Deferred income taxes		25,517			23,475
Provider and other receivables		23,816			43,913
Prepaid expenses and other		28,440			39,001
Total current assets		996,749			1,228,208
Long-term investments		412,486			379,733
Investments on deposit for licensure		94,042			89,485
Property, equipment and software, net		102,431			97,933
Deferred income taxes		10,683			12,075
Other long-term assets		17,402			18,178
Goodwill and other intangible assets, net		250,567			263,009
Total assets	$	1,884,360		$	2,088,621
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Claims payable	$	528,042		$	541,173
Accounts payable		3,200			6,775
Unearned revenue		41,543			55,937
Accrued payroll and related liabilities		54,758			47,965
Accrued expenses and other		57,838			71,894
Contractual refunds payable		61,111			47,329
Current portion of long-term debt		500			27,567
Current portion of capital lease obligations		11			368
Total current liabilities		747,003			799,008
Long-term convertible debt		260,000			260,000
Long-term debt less current portion		49,500			101,458
Other long-term liabilities		14,150			14,248
Total liabilities		1,070,653			1,174,714
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 100,000,000 shares; issued and outstanding 52,652,179 and 53,129,928 at September 30, 2008 and December 31, 2007, respectively		535			532
Additional paid-in capital		425,390			412,065
Accumulated other comprehensive loss		(2,030	)		—
Retained earnings		414,171			502,182
		838,066			914,779
Less treasury stock at cost (886,547 and 25,713 shares at September 30, 2008 and December 31, 2007, respectively)		(24,359	)		(872	)
Total stockholders’ equity		813,707			913,907
Total liabilities and stockholders’ equity	$	1,884,360		$	2,088,621

See accompanying notes to condensed consolidated financial statements.

3

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008			2007
Revenues:
Premium	$	1,105,759	$	1,013,620	$	3,282,706		$	2,819,166
Investment income and other		17,624		19,091		58,696			49,634
Total revenues		1,123,383		1,032,711		3,341,402			2,868,800
Expenses:
Health benefits		885,774		840,749		2,672,166			2,342,905
Selling, general and administrative		161,520		129,941		454,134			357,459
Litigation settlement		—		—		234,205			—
Depreciation and amortization		8,811		7,744		26,459			23,596
Interest		2,746		3,969		9,099			8,332
Total expenses		1,058,851		982,403		3,396,063			2,732,292
Income (loss) before income taxes		64,532		50,308		(54,661	)		136,508
Income tax expense		25,097		19,060		33,350			51,180
Net income (loss)	$	39,435	$	31,248	$	(88,011	)	$	85,328
Net income (loss) per share:
Basic net income (loss) per share	$	0.75	$	0.59	$	(1.66	)	$	1.63
Weighted average number of common shares outstanding		52,694,077		52,697,920		52,914,156			52,477,798
Diluted net income (loss) per share	$	0.74	$	0.58	$	(1.66	)	$	1.59
Weighted average number of common shares and dilutive potential common shares outstanding		53,494,690		53,816,534		52,914,156			53,682,928

See accompanying notes to condensed consolidated financial statements.

4

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

Nine months Ended September 30, 2008

(Dollars in thousands)

(Unaudited)

									Accumulated
						Additional			Other											Total
	Common Stock					Paid-in			Comprehensive			Retained			Treasury Stock					Stockholders’
	Shares			Amount		Capital			Loss			Earnings			Shares		Amount			Equity
Balances at December 31, 2007		53,129,928		$	532	$	412,065		$	—		$	502,182			25,713	$	(872	)	$	913,907
Common stock issued upon exercise of stock options, vesting of restricted stock grants, and purchases under the employee stock purchase plan		383,085			3		4,587			—			—			—		—			4,590
Compensation expense related to share-based payments		—			—		7,702			—			—			—		—			7,702
Tax benefit from exercise of stock options		—			—		1,201			—			—			—		—			1,201
Common stock redeemed for payment of employee taxes		(17,965	)		—		—			—			—			17,965		(597	)		(597	)
Common stock repurchases		(842,869	)		—		—			—			—			842,869		(22,890	)		(22,890	)
Deferred tax asset related to convertible hedge instruments		—			—		(165	)		—			—			—		—			(165	)
Unrealized loss on available-for-sale securities, net of tax		—			—		—			(2,030	)		—			—		—			(2,030	)
Net loss		—			—		—			—			(88,011	)		—		—			(88,011	)
Balances at September 30, 2008		52,652,179		$	535	$	425,390		$	(2,030	)	$	414,171			886,547	$	(24,359	)	$	813,707

See accompanying notes to condensed consolidated financial statements.

5

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2008			2007
Cash flows from operating activities:
Net (loss) income	$	(88,011	)	$	85,328
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		26,459			23,596
Loss on disposal of property, equipment and software		442			34
Deferred tax expense (benefit)		357			(5,617	)
Compensation expense related to share-based payments		7,702			10,152
Impairment of goodwill		8,808			—
Changes in assets and liabilities increasing (decreasing) cash flows from operations:
Premium receivables		10,480			(16,937	)
Prepaid expenses, provider and other receivables and other current assets		27,610			(16,332	)
Other assets		(942	)		(2,954	)
Claims payable		(13,131	)		120,510
Accounts payable, accrued expenses and other current liabilities		5,342			23,354
Unearned revenue		(14,394	)		23,477
Other long-term liabilities		(98	)		5,947
Net cash (used in) provided by operating activities		(29,376	)		250,558
Cash flows from investing activities:
Purchase of restricted investments held as collateral		—			(402,812	)
Release of restricted investments held as collateral		351,318			51,494
Purchase of convertible note hedge instruments		—			(52,702	)
Proceeds from sale of warrant instruments		—			25,662
Proceeds from sale of available-for-sale securities		105,677			455,399
Purchase of available-for-sale securities		(89,502	)		(516,336	)
Proceeds from redemption of held-to-maturity securities		437,215			319,641
Purchase of held-to-maturity securities		(451,058	)		(334,966	)
Purchase of property, equipment and software		(27,547	)		(28,313	)
Proceeds from redemption of investments on deposit for licensure		44,494			34,419
Purchase of investments on deposit for licensure		(49,051	)		(49,841	)
Net cash provided by (used in) investing activities		321,546			(498,355	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes		—			260,000
Borrowings under credit facility		—			351,318
Repayment of borrowings under credit facility		(79,025	)		(221,318	)
Payment of debt issuance costs		—			(11,510	)
Net increase (decrease) in bank overdrafts		1,553			(1,397	)
Payment of capital lease obligations		(357	)		(676	)
Proceeds from exercise of common stock options		4,590			8,147
Repurchase of common stock shares		(22,890	)		—
Tax benefit related to exercise of stock options		1,201			3,387
Net cash (used in) provided by financing activities		(94,928	)		387,951
Net increase in cash and cash equivalents		197,242			140,154
Cash and cash equivalents at beginning of period		487,614			176,718
Cash and cash equivalents at end of period	$	684,856		$	316,872
Non-cash disclosures:
Common stock redeemed for payment of employee taxes	$	(597	)	$	(791	)
Unrealized loss on available-for-sale securities, net of tax	$	(2,030	)	$	—
Cumulative effect of adoption of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes	$	—		$	9,185
Deferred tax asset related to convertible note hedge instruments	$	(165	)	$	19,343

See accompanying notes to condensed consolidated financial statements.

6

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

(Unaudited)

     1. Basis of Presentation

     The accompanying Condensed Consolidated Financial Statements as of September 30, 2008 and for the three and nine months ended September 30, 2008 and 2007 of AMERIGROUP Corporation and its subsidiaries (“the Company”), are unaudited and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position at September 30, 2008 and operating results for the interim periods ended September 30, 2008 and 2007. The December 31, 2007 condensed consolidated balance sheet information was derived from the audited consolidated financial statements as of that date.

     The Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and accompanying notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2007 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 22, 2008. The results of operations for the three and nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2008.

     2. Earnings per Share

     Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding plus other potentially dilutive securities. The following table sets forth the calculation of basic and diluted net income (loss) per share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008			2007
Basic net income (loss) per share:
Net income (loss)	$	39,435	$	31,248	$	(88,011	)	$	85,328
Weighted average number of common shares outstanding		52,694,077		52,697,920		52,914,156			52,477,798
Basic net income (loss) per share	$	0.75	$	0.59	$	(1.66	)	$	1.63
Diluted net income (loss) per share:
Net income (loss)	$	39,435	$	31,248	$	(88,011	)	$	85,328
Weighted average number of common shares outstanding		52,694,077		52,697,920		52,914,156			52,477,798
Dilutive effect of stock options, convertible senior notes and warrants (as determined by applying the treasury stock method)		800,613		1,118,614		—			1,205,130
Weighted average number of common shares and dilutive potential common shares outstanding		53,494,690		53,816,534		52,914,156			53,682,928
Diluted net income (loss) per share	$	0.74	$	0.58	$	(1.66	)	$	1.59

     Potential common stock equivalents representing 900,306 shares for the nine months ended September 30, 2008 were not included in the computation of diluted net loss per share because of the net loss for the period. Including such shares would have been anti-dilutive. Additionally, potential common stock equivalents representing 2,689,102 and 2,634,735 shares with a weighted-average exercise price of $35.09 and $37.05 for the three and nine months ended September 30, 2008, respectively, were not included in the computation of diluted net income (loss) per share because to do so would have been anti-dilutive for the periods presented. Potential common stock equivalents representing 1,981,446 and 1,941,446 shares with a weighted-average exercise price of $37.25 and $37.43

7

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

for the three and nine months ended September 30, 2007, respectively, were not included in the computation of diluted net income per share because to do so would have been anti-dilutive for the periods presented.

     The shares issuable upon conversion of the Company’s 2.0% Convertible Senior Notes due May 15, 2012 (See Note 6) issued effective March 28, 2007 in the aggregate principal amount of $260,000 were not included in the computation of diluted net loss per share for the nine months ended September 30, 2008 because of the net loss for the period. Including the securities would have been anti-dilutive. For the three months ended September 30, 2008 and the three and nine months ended September 30, 2007, those securities were not included in the computation of diluted net income (loss) per share because the conversion price of $42.53 was greater than the average market price of shares of the Company’s common stock for the periods presented; therefore, to include the shares issuable upon conversion of the notes would have been anti-dilutive. The Company’s warrants to purchase shares of its common stock sold on March 28, 2007 and April 9, 2007 were not included in the computation of diluted net loss per share for the nine months ended September 30, 2008 because of the net loss for the period. Including the securities would have been anti-dilutive. For the three months ended September 30, 2008 and the three and nine months ended September 30, 2007, those securities were not included in the computation of diluted net income (loss) per share because the warrants’ exercise price of $53.77 was greater than the average market price of the Company’s common stock for the periods presented; therefore, to include the warrants would have been anti-dilutive.

     3. Recent Accounting Standards

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, Fair Value Measurements (“FASB Statement No. 157”). FASB Statement No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. The Company has adopted the provisions of FASB Statement No. 157 as of January 1, 2008, for financial instruments. Although the adoption of FASB Statement No. 157 did not materially impact our financial condition, results of operations, or cash flows, the Company is now required to provide additional disclosures as part of its financial statements.

     FASB Statement No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In October 2008, the FASB issued FASB Staff Position (“FSP”) 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, which clarifies the application of FASB No. 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The Company’s assumptions underlying its adoption of FASB Statement No. 157 were not materially impacted by the provisions of FSP 157-3.

     In May 2008, the FASB issued FSP APB 14-a, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). The FSP requires the proceeds from the issuance of convertible debt instruments that may be settled in cash upon conversion to be allocated between a liability component and an equity component. The resulting debt discount will be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The FSP is effective for fiscal years beginning after December 15, 2008, and is applied retrospectively to prior periods. This FSP will change the accounting treatment for our $260,000 2.0% Convertible Senior Notes due May 15, 2012, which were issued effective March 28, 2007. The impact of this new accounting treatment will be significant to our results of operations and will result in an increase to non-cash interest expense beginning in fiscal year 2009 for financial statements covering past and future periods. We estimate that our 2007, 2008 and 2009 earnings could decrease by approximately $0.08, $0.11 and $0.12 per diluted share, respectively, as a result of the adoption of this FSP.

     In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations (“FASB Statement No. 141(R)”), which establishes principles and requirements for how an acquirer determines and recognizes in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. FASB Statement No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. FASB Statement No. 141(R) is effective for any transaction occurring in fiscal years beginning after December 15, 2008; therefore, it will have no impact on our current results of operations and financial condition; however, future acquisitions will be accounted for under this guidance.

8

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

     4. Fair Value Measurements

     As of September 30, 2008, we held certain assets that are required to be measured at fair value on a recurring basis. We have invested in auction rate securities, which are classified as available-for-sale securities and reflected at fair value. However, the auction events for these securities failed during the first quarter of 2008 and have not resumed. Therefore, the fair values of these securities are estimated utilizing a discounted cash flow analysis or other type of valuation model as of September 30, 2008. These analyses consider, among other items, the collateral underlying the security, the creditworthiness of the issuer, the timing of the expected future cash flows, including the final maturity, and an assumption of when the next time the security is expected to have a successful auction. These securities were also compared, when possible, to other observable and relevant market data which is limited at this time.

     We have recorded an unrealized loss of $3,202, or $2,030 net of the related income tax effect for the nine months ended September 30, 2008 to accumulated other comprehensive loss as a result of the temporary declines in fair value for auction rate securities. The auction rate securities held by us at September 30, 2008, totaling $85,198, were in securities issued by student loan corporations which are municipalities of various U.S. state governments. The majority of the student loans backing these securities fall under the Federal Family Education Loan program which is supported and guaranteed by the United States Department of Education. Because there is no assurance that auctions for these securities will be successful in the near term, as of September 30, 2008, $81,198 of auction rates securities are classified as long-term investments. Any future fluctuation in the fair value related to these securities that we deem to be temporary, including any recoveries of previous write-downs, would be recorded to accumulated other comprehensive loss. If we determine that any future valuation adjustment was other than temporary, we will record a charge to earnings as appropriate. During the three months ended September 30, 2008, we were notified by several of our brokers from whom we purchased auction rate securities that they would be repurchasing those securities over the course of 2009 and 2010. We expect our brokers to purchase, at par, up to $27,500 of our auction rate securities in 2009 and 2010.

     The Company’s assets measured at fair value on a recurring basis subject to the disclosure requirements of FASB Statement No. 157 at September 30, 2008, were as follows:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
			(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	684,856	$	684,856	$	—	$	—
Auction rate securities		85,198		4,000		—		81,198
Total assets measured at fair value	$	770,054	$	688,856	$	—	$	81,198

     Based on market conditions, we changed our valuation methodology for auction rate securities to a discounted cash flow analysis or other type of valuation model during the first quarter of 2008. Accordingly, these securities changed from Level 1 to Level 3 within FASB Statement No. 157’s hierarchy since our initial adoption of FASB Statement No. 157 at January 1, 2008.

9

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

     The following table presents the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in FASB Statement No. 157 at September 30, 2008:

	Fair Value
	Measurements
	Using Significant
	Unobservable Inputs
	(Level 3)
	Auction
	Rate
	Securities
Balance at December 31, 2007	$	—
Transfers to Level 3		92,550
Total unrealized losses included in other comprehensive loss		(990	)
Balance at March 31, 2008		91,560
Total unrealized losses included in other comprehensive loss		(3,527	)
Settlements		(4,150	)
Balance at June 30, 2008	$	83,883
Total unrealized gains included in other comprehensive loss		1,315
Settlements		(4,000	)
Balance at September 30, 2008	$	81,198

     5. Market Exits

     On April 22, 2008, AMERIGROUP Tennessee, Inc. was notified that it had not been awarded a contract to provide full-risk managed care services to TennCare recipients in West Tennessee. As a result, the existing administrative services only (“ASO”) arrangement for the West Tennessee region terminates on October 31, 2008 under its current terms with claims run-out and transition activities continuing into 2009. Goodwill acquired as part of the November 1, 2007 acquisition of substantially all of the assets of Memphis Managed Care Corporation (“MMCC”) of $8,044, net of a purchase price adjustment of $1,500 for early termination of the ASO contract or $0.08 per diluted share, was written-off during the nine months ended September 30, 2008. Additional costs to discontinue operations in West Tennessee are not expected to be material.

     On March 10, 2008, AMERIGROUP Maryland, Inc. d/b/a AMERIGROUP Community Care of the District of Columbia (“AMERIGROUP DC”), was notified that it was one of four successful bidders in the reprocurement of the District of Columbia’s Medicaid managed care business for the contract period beginning May 1, 2008. On April 2, 2008, AMERIGROUP DC elected not to participate in the District’s new contract due to premium rate and programmatic concerns. AMERIGROUP DC’s contract with the District of Columbia, as amended, terminated on June 30, 2008. As a result of discontinuing operations in the DC market, the Company has written-off $2,264 or $0.03 per diluted share in acquired goodwill during the nine months ended September 30, 2008. Additional costs recorded and to be recorded to discontinue operations are not expected to be material.

     6. Long-Term Obligations

     Credit Agreement

     As of September 30, 2008, we had $50,000 outstanding under the senior secured synthetic letter of credit facility portion of our Credit and Guaranty Agreement (the “Credit Agreement”). The Credit Agreement terminates on March 15, 2012. As of September 30, 2008, we had no outstanding borrowings under the senior secured revolving credit facility portion of our Credit Agreement, but have caused to be issued irrevocable letters of credit in the aggregate face amount of $16,504.

     The borrowings under the Credit Agreement accrue interest at our option at a percentage, per annum, equal to the adjusted Eurodollar rate plus 2.0% or the base rate plus 1.0%. We are required to make payments of interest in arrears on each interest payment

10

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

date (to be determined depending on interest period elections made by the Company) and at maturity of the loans, including final maturity thereof. The applicable interest rate was 5.75% at September 30, 2008.

     The Credit Agreement includes customary covenants and events of default. If any event of default occurs and is continuing, the Credit Agreement may be terminated and all amounts owing there under may become immediately due and payable. The Credit Agreement also includes the following financial covenants: (i) maximum leverage ratios as of specified periods, (ii) a minimum interest coverage ratio and (iii) a minimum statutory net worth ratio.

     Borrowings under the Credit Agreement are secured by substantially all of our assets and the assets of our wholly-owned subsidiary, PHP Holdings, Inc., including a pledge of the stock of each of our respective wholly-owned managed care subsidiaries, in each case, subject to carve-outs.

     Convertible Senior Notes

     As of September 30, 2008, we had an outstanding aggregate of $260,000 in principal amount of 2.0% Convertible Senior Notes due May 15, 2012 (the “Notes”). In May 2007, we filed an automatic shelf registration statement on Form S-3 with the SEC covering the resale of the Notes and common stock issuable upon conversion of the Notes. The Notes are governed by an Indenture dated as of March 28, 2007 (the “Indenture”). The Notes are senior unsecured obligations of the Company and rank equally with all of our existing and future senior debt and senior to all of our subordinated debt. The Notes are effectively subordinated to all existing and future liabilities of our subsidiaries and to any existing and future secured indebtedness, including the obligations under our Credit Agreement. The Notes bear interest at a rate of 2.0% per year, payable semiannually in arrears in cash on May 15 and November 15 of each year, beginning on May 15, 2007. The Notes mature on May 15, 2012, unless earlier repurchased or converted in accordance with the Indenture.

     Concurrent with the issuance of the Notes, we purchased convertible note hedges covering, subject to customary anti-dilution adjustments, 6,112,964 shares of our common stock. The convertible note hedges allow us to receive shares of our common stock and/or cash equal to the amounts of common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion. These convertible note hedges will terminate at the earlier of the maturity dates of the Notes or the first day on which none of the Notes remain outstanding due to conversion or otherwise.

     The convertible note hedges are expected to reduce the potential dilution upon conversion of the Notes in the event that the market value per share of our common stock, as measured under the convertible note hedges, at the time of exercise is greater than the strike price of the convertible note hedges, which corresponds to the initial conversion price of the Notes and is subject to certain customary adjustments. If, however, the market value per share of our common stock exceeds the strike price of the warrants (discussed below) when such warrants are exercised, we will be required to issue common stock. Both the convertible note hedges and warrants provide for net-share settlement at the time of any exercise for the amount that the market value of our common stock exceeds the applicable strike price.

     Also concurrent with the issuance of the Notes, we sold warrants to acquire, subject to customary anti-dilution adjustments, 6,112,964 shares of our common stock at an exercise price of $53.77 per share. If the average price of our common stock during a defined period ending on or about the settlement date exceeds the exercise price of the warrants, the warrants will be settled, at our option, in cash or shares of our common stock.

     The convertible note hedges and warrants are separate transactions which will not affect holders’ rights under the Notes.

     7. Share Repurchase Program

     Shares purchased by the Company and placed in treasury are valued at cost. Subsequent sales of treasury stock at amounts in excess of their cost, if any, will be credited to additional paid-in capital.

     Pursuant to the Company’s existing share repurchase program, we repurchased 142,669 and 842,869 shares of our common stock and placed them into treasury during the three and nine months ended September 30, 2008, respectively, for a total cost of $3,630 and $22,890, respectively.

11

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

     8. Contingencies

     Legal Proceedings

     Qui Tam

     On August 13, 2008, we finalized our previously announced agreement in principle to settle claims related to the conduct alleged (the “Covered Conduct”) in the civil qui tam action styled as United States of America and the State of Illinois, ex rel. Cleveland A. Tyson v. AMERIGROUP Illinois, Inc., U.S. District Court for the Northern District of Illinois, Eastern Division (the “Court”), Case No. 02-C-6074 (the “Qui Tam Litigation”). In connection with the settlement, the Company and the United States of America acting through the United States Department of Justice and on behalf of the Office of the Inspector General of the Department of Health and Human Services (the “OIG”), the State of Illinois acting through the Office of the Illinois Attorney General, and Cleveland A. Tyson (the “Relator”) entered into a definitive settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, we paid an aggregate amount of $225,000 (the “Settlement Payment”) to the United States of America and the State of Illinois without any admission of wrongdoing by the Company or our subsidiaries or affiliates. The United States of America and the State of Illinois each paid a portion of the Settlement Payment to the Relator. In addition to the Settlement Payment, the Company paid approximately $9,200 to the Relator for legal fees.

     As a result of the settlement, we recorded a one-time expense in the amount $234,200 for the nine months ending September 30, 2008. Net of the related tax benefit, earnings per diluted share was reduced by $3.76 for the nine months ending September 30, 2008 as a result of this settlement.

     Pursuant to the Settlement Agreement, (i) the United States of America and the State of Illinois released the Company and its current and former subsidiaries, parents, directors, officers, employees, agents, attorneys, predecessors, successors and assigns from civil and administrative monetary claims for the Covered Conduct, (ii) the OIG provided a release agreeing not to institute, direct or maintain any administrative action seeking civil monetary penalties or exclusion from Medicare, Medicaid and/or other Federal health care programs against the Company and its subsidiaries and certain of its affiliates for the Covered Conduct, (iii) the Relator released the Company and its current and former subsidiaries, parents, directors, officers, employees, agents, attorneys, predecessors, successors and assigns from any and all causes of action, whether known or unknown, of any kind or character, that the Relator or his heirs, successors or certain affiliated persons had or may have had, (iv) the Company released the United States of America and the State of Illinois, and any of their respective agencies, employees, servants, and agents, from any and all causes of action, whether known or unknown, that the Company or its successors or affiliated persons have or may have for the Covered Conduct, (v) the Company released the Relator, his heirs, successors, attorneys, agents, and assigns from any and all causes of action, whether known or unknown, that the Company or its successors or affiliated persons have or may have for the Covered Conduct, and (vi) the Company dismissed its appeal of the judgment in the Qui Tam Litigation.

     Certain claims are specifically excluded from the scope of the Settlement Agreement as to any entity or person, including: (i) any civil, criminal, or administrative liability arising under the Internal Revenue Code and under Chapter 35 Illinois Compiled Statutes; (ii) any criminal liability; (iii) except as explicitly stated in the Settlement Agreement, any administrative liability, including mandatory exclusion from Federal health care programs; (iv) any liability to the United States or the State of Illinois (or their respective agencies) for any conduct other than the Covered Conduct; (v) any liability under the Settlement Agreement; and (vi) any liability of the Company’s current or former officers, directors, employees, and agents for conduct other than Covered Conduct.

     The Qui Tam Litigation, filed in 2002 by the Relator, a former employee of our former Illinois subsidiary, alleged that AMERIGROUP Illinois, Inc. submitted false claims under the Medicaid program by maintaining a scheme to discourage or avoid the enrollment into the health plan of pregnant women and other recipients with special needs. Subsequently, the State of Illinois and the United States of America intervened and the plaintiffs amended their complaint to add AMERIGROUP Corporation as a party. On October 30, 2006, a jury returned a verdict against us and AMERIGROUP Illinois, Inc. in the amount of $48,000 which under applicable law would be trebled to $144,000 plus penalties, and attorney’s fees, costs and expenses. The jury also found that there were 18,130 false claims. The statutory penalties allowable under the False Claims Act range between $5.5 and $11.0 per false claim. The statutory penalties allowable under the Illinois Whistleblower Reward and Protection Act, 740 ILC 175/3, range between $5.0 and $10.0 per false claim. On March 13, 2007, the Court entered a judgment against AMERIGROUP Illinois, Inc., and AMERIGROUP Corporation in the amount of approximately $334,000 which included $144,000 of damages and approximately $190,000 in false claim penalties. Following entry of the judgment, we posted the necessary irrevocable letter of credit to stay the enforcement of the judgment pending appeal. We filed a notice of appeal with the United States Court of Appeals for the Seventh Circuit and the appeal

12

AMERIGROUP Corporation And Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

was fully briefed by the parties. While the appeal was pending, the parties engaged in voluntary mediation and reached the Settlement Agreement. As contemplated by the Settlement Agreement, on September 12, 2008, the Court of Appeals dismissed our appeal of the trial court judgment in the Qui Tam Litigation.

     As part of the settlement, we entered into a five-year corporate integrity agreement with the OIG (the “Corporate Integrity Agreement”). The Corporate Integrity Agreement acknowledges the existence of our comprehensive compliance program and enhancements that were made to the program prior to the entry into the Corporate Integrity Agreement. The Corporate Integrity Agreement also provides that the Company shall, among other things, keep in place and continue its current compliance program, including a corporate compliance officer and compliance officers at its health plans, a corporate compliance committee and compliance committees at its health plans, a compliance committee of the Company’s Board of Directors, a code of conduct, comprehensive compliance policies, training and monitoring, a compliance hotline, an open door policy and a disciplinary process for compliance violations. The Corporate Integrity Agreement further provides that the Company shall provide periodic reports to the OIG, appoint a benefits rights ombudsman responsible for addressing concerns raised by health plan members and potential enrollees and engage an independent review organization to assist the Company in assessing and evaluating its compliance with the requirements of the Federal health care programs and other obligations under the Corporate Integrity Agreement. In the event of an uncured material breach or deliberate violation of the Corporate Integrity Agreement, the Company could be excluded from participation in Federal health care programs and/or subject to prosecution.

     Risk Sharing Receivable

          AMERIGROUP Texas, Inc. previously had an exclusive risk-sharing arrangement in the Fort Worth service area with Cook Children’s Health Care Network (“CCHCN”) and Cook Children’s Physician Network (“CCPN”), which includes Cook Children’s Medical Center (“CCMC”) that expired by its own terms as of August 31, 2005. Under this risk-sharing arrangement the parties had an obligation to perform annual reconciliations and settlements of the risk pool for each contract year. The contract with CCHCN prescribes reconciliation procedures which have been completed. CCHCN subsequently engaged external auditors to review all medical claim payments made for the 2005 contract year and the preliminary results challenged payments made on certain claims. The parties participated in voluntary non-binding mediation but were unable to resolve this matter. Following the conclusion of the mediation, on August 27, 2008, AMERIGROUP Texas, Inc. filed suit against CCHCN and CCPN in the District Court for the 153rd Judicial District in Tarrant County, Texas, case no. 153-232258-08, alleging breach of contract and seeking compensatory damages in the amount of $10,800 plus pre- and post-judgment interest and attorney’s fees and costs. On October 3, 2008, CCHCN and CCPN filed a counterclaim against AMERIGROUP Texas, Inc. alleging breach of contract and seeking an amount to be determined at trial plus pre- and post-judgment interest and attorney’s fees and costs.

          The accompanying Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007, include a receivable balance related to this issue. We believe that the amount at issue is a valid receivable and that we have a favorable legal position with respect to the above described litigation. However, we may incur significant costs in our efforts to reach a final resolution of this matter. Further, in the event that we are unable to resolve this matter in a favorable manner or obtain an outcome at trial resulting in payment in full to us, our results of operations may be adversely affected.

     Other Litigation

     We are involved in various other legal proceedings in the normal course of business. Based upon our evaluation of information currently available, we believe that the ultimate resolution of any such proceedings will not have a material adverse effect, either individually or in the aggregate, on our liquidity, financial condition or results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

     This Quarterly Report on Form 10-Q, and other information we provide from time-to-time, contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements regarding our expected future financial position, membership, results of operations or cash flows, our continued performance improvements, our ability to service our debt obligations and refinance our debt obligations, our ability to finance growth opportunities, our ability to respond to changes in government regulations and similar statements including, without limitation, those containing words such as “believes,” “anticipates,” “expects,” “may,” “will,” “should,” “estimates,” “intends,” “plans” and other similar expressions are forward-looking statements.

     Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors:

• local, state and national economic conditions, including their effect on the rate increase process and timing of payments;

• the effect of government regulations and changes in regulations governing the healthcare industry;

• changes in Medicaid and Medicare payment levels and methodologies;

• liabilities and other claims asserted against us;

• our ability to attract and retain qualified personnel;

• our ability to maintain compliance with all minimum capital requirements;

• the availability and terms of capital to fund acquisitions and capital improvements;

• the competitive environment in which we operate;

• our ability to maintain and increase membership levels;

• demographic changes;

• increased use of services, increased cost of individual services, epidemics, the introduction of new or costly treatments and technology, new mandated benefits, insured population characteristics and seasonal changes in the level of healthcare use;

• our ability to enter into new markets or remain in our existing markets;

• our inability to operate new products and markets at expected levels, including, but not limited to, profitability, membership and targeted service standards;

• changes in market interest rates, actions by the Federal Reserve or any disruptions in the credit markets;

• catastrophes, including acts of terrorism or severe weather; and

• the unfavorable resolution of pending litigation.

     Investors should also refer to our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on February 22, 2008, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed with the SEC on April 29, 2008, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed with the SEC on July 29, 2008 and Part II — Other Information — Item 1A. — “Risk Factors” for a discussion of risk factors. Given these risks and uncertainties, we can give no assurances that any forward-looking statements will, in fact, transpire, and therefore caution investors not to place undue reliance on them.

14

Overview

     We are a multi-state managed healthcare company focused on serving people who receive healthcare benefits through publicly sponsored programs, including Medicaid, State Children’s Health Insurance Program (“SCHIP”), FamilyCare, and Medicare Advantage programs. We believe that we are better qualified and positioned than many of our competitors to meet the unique needs of our members and government partners because of our focus, medical management programs and community-based education and outreach programs. We design our programs to address the particular needs of our members, for whom we facilitate access to healthcare benefits pursuant to agreements with the applicable regulatory authority. We combine medical, social and behavioral health services to help our members obtain quality healthcare in an efficient manner. Our success in establishing and maintaining strong relationships with our government partners, providers and members has enabled us to obtain new contracts and to establish and maintain a leading market position in many of the markets we serve.

     Summary highlights of our third quarter of 2008 include:

• Membership increased 12.2% to approximately 1,714,000 from September 30, 2007 to September 30, 2008;

• Total revenues of $1.1 billion, an 8.8% increase over the third quarter of 2007;

• Health benefits ratio (“HBR”) of 80.1% of premium revenue;

• Selling, general and administrative expense ratio of 14.4% of total revenues; and

• Began operations on August 1, 2008 in New Mexico’s new Coordinated Long-Term Services (CoLTS) program that constitutes one of the Nation’s first comprehensive programs to coordinate long-term care for individuals.

Revenue Growth

     During the three months ended September 30, 2008, our premium revenue was $1,105.8 million, an increase of $92.1 million or 9.1% compared to the three months ended September 30, 2007. This increase is due to premium rate increases, member mix changes and membership growth in new and existing markets, including our entry into the New Mexico market in August 2008, offset by the impact of our exit from the District of Columbia market effective June 30, 2008.

     Investment income and other decreased by $1.5 million to $17.6 million for the three months ended September 30, 2008 from $19.1 million for the three months ended September 30, 2007. The decrease in investment income and other was primarily due to a decrease in average yield on our fixed income securities portfolio due to the ongoing reinvestment of maturing fixed income securities at current market rates, which are lower than the yields on the maturing securities.

     Our investment portfolio is comprised of fixed income securities and cash and cash equivalents, which generated investment income totaling $11.7 million for the three months ended September 30, 2008. The performance of our portfolio is interest rate driven, consequently, volatility in interest rates, such as any actions by the Federal Reserve, affects our returns on, and the market value of our portfolio. This factor or any disruptions in the credit markets could materially adversely affect our results of operations.

Operating Costs

Health Benefits

     Expenses relating to health benefits for the three months ended September 30, 2008 increased $45.0 million, or 5.4%, to $885.8 million from $840.7 million for the three months ended September 30, 2007. Our HBR was 80.1% for the three months ended September 30, 2008 versus 82.9% in the same period of the prior year. This decrease in HBR for the three months ended September 30, 2008 from the HBR for the three months ended September 30, 2007, primarily results from operations in our Tennessee market. For the three months ended September 30, 2008, our Tennessee health plan received a premium rate increase and experienced favorable reserve development.

15

Selling, general and administrative expenses

     Selling, general and administrative expenses (“SG&A”) were 14.4% of total revenue for the three months ended September 30, 2008 compared to 12.6% for the three months ended September 30, 2007. Total SG&A increased $31.6 million or 24.3% to $161.5 million for the three months ended September 30, 2008 from $129.9 million for the three months ended September 30, 2007. Our SG&A ratio increased in the current period primarily as a result of increased experience rebate expense in our Texas market and an increase in salaries and benefits related to an increase in the number of associates, annual merit increases and increased variable compensation as a result of earnings performance.

Litigation Settlement

     On August 13, 2008, we finalized our previously announced agreement in principle to settle the Qui Tam Litigation for a cash payment of $225.0 million without any admission of wrongdoing by us or our subsidiaries or affiliates. We also paid approximately $9.2 million to the Relator for legal fees. Both payments were made during the three months ended September 30, 2008. As a result, we recorded a one-time expense in the amount of $234.2 million during the three months ending June 30, 2008 in connection with the settlement. Net of the related tax benefit, earnings per diluted share was reduced by $3.76, as a result of this settlement for the nine months ended September 30, 2008.

     For more information on the Qui Tam Litigation see Part II. Other Information, Item 1. Legal Proceedings.

Market Updates

     On August 1, 2008, we began serving individuals in New Mexico’s new Coordinated Long-Term Services (CoLTS) program, a comprehensive program to coordinate long-term care for individuals.

     Effective September 1, 2008, AMERIGROUP Texas, Inc. entered into an amendment to the Health & Human Services Commission Agreement for Health Services to the STAR, STAR+PLUS, CHIP, CHIP Perinatal programs effectively extending the contract through August 31, 2010 and revising premium rates for the new contract period.

     Effective September 1, 2008, AMERIGROUP Florida, Inc. entered into an amendment to the Agency for HealthCare Administration Contract No. FA614. This amendment is in connection with the annual renewal of the contract and sets premium rates for the new contract period.

Results of Operations

     The following table sets forth selected operating ratios. All ratios, with the exception of the HBR, are shown as a percentage of total revenues. We operate in one business segment with a single line of business.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Premium revenue		98.4	%		98.2	%		98.2	%		98.3	%
Investment income and other		1.6			1.8			1.8			1.7
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%
Health benefits (1)		80.1	%		82.9	%		81.4	%		83.1	%
Selling, general and administrative expenses		14.4	%		12.6	%		13.6	%		12.5	%
Income (loss) before income taxes		5.7	%		4.9	%		(1.6)	%		4.8	%
Net income (loss)		3.5	%		3.0	%		(2.6)	%		3.0	%

(1) The HBR is shown as a percentage of premium revenue because there is a direct relationship between the premium received and the health benefits provided.

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Three and Nine months Ended September 30, 2008 Compared to Three and Nine months Ended September 30, 2007

     Summarized comparative financial information for the three and nine months ended September 30, 2008 and September 30, 2007 are as follows ($ in millions, except per share data) (totals in the table below may not equal the sum of individual line items as all line items have been rounded to the nearest decimal):

	Three Months Ended September 30,							Nine Months Ended September 30,
					% Change								% Change
	2008		2007		2008-2007			2008			2007		2008-2007
Revenues:
Premium	$	1,105.8	$	1,013.6		9.1	%	$	3,282.7		$	2,819.2		16.4	%
Investment income and other		17.6		19.1		(7.7	)%		58.7			49.6		18.3	%
Total revenues		1,123.4		1,032.7		8.8	%		3,341.4			2,868.8		16.5	%
Expenses:
Health benefits		885.8		840.7		5.4	%		2,672.2			2,342.9		14.1	%
Selling, general and administrative		161.5		129.9		24.3	%		454.1			357.5		27.0	%
Litigation settlement		—		—		*			234.2			—		*
Depreciation and amortization		8.8		7.7		13.8	%		26.5			23.6		12.3	%
Interest		2.7		4.0		(30.8	)%		9.1			8.3		9.6	%
Total expenses		1,058.9		982.4		7.8	%		3,396.1			2,732.3		24.3	%
Income (loss) before income taxes		64.5		50.3		28.3	%		(54.7	)		136.5		*
Income tax expense		25.1		19.1		31.7	%		33.4			51.2		(34.8	)%
Net income (loss)	$	39.4	$	31.2		26.2	%	$	(88.0	)	$	85.3		*
Diluted net income (loss) per common share	$	0.74	$	0.58		27.6	%	$	(1.66	)	$	1.59		*

* Not meaningful.

Revenues

     Premium revenue for the three months ended September 30, 2008 increased $92.1 million, or 9.1%, over the three months ended September 30, 2007. This increase is due to premium rate increases and member mix changes and membership growth in new and existing markets, including our entry into the New Mexico market. Premium revenue for the third quarter also reflects the impact of our exit from the District of Columbia market effective June 30, 2008.

     For the nine months ended September 30, 2008, premium revenue increased $463.5 million, or 16.4%, over the nine months ended September 30, 2007. This increase is due primarily to our entry into the Middle Tennessee market in April 2007 in addition to one-time premium adjustments in Tennessee and Georgia of $47.3 million and $10.4 million, respectively, recorded in 2008. Additionally, the majority of our remaining existing markets contributed further to revenue growth through growth in membership, premium rate increases and yield increases resulting from changes in membership mix. Offsetting these increases was our exit from the District of Columbia market effective June 30, 2008 and a decrease in Georgia premium revenue due to decreased membership.

     Investment income and other decreased by $1.5 million for the three months ended September 30, 2008 over the three months ended September 30, 2007 primarily due to a decrease in average yield on our fixed income securities portfolio due to the ongoing reinvestment of maturing fixed income securities at current market rates, which are lower than the yields on the maturing securities. Investment income and other increased $9.1 million for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 as a result of our acquisition of Memphis Managed Care Corporation (“MMCC”) which serves Medicaid members in West Tennessee under an administrative services only (“ASO”) arrangement. Revenues from this arrangement totaled approximately $17.1 million for the nine months ended September 30, 2008. Offsetting this revenue was a decrease in investment income as a result of a decrease in the average yield over the prior year as discussed above.

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Membership

     The following table sets forth the approximate number of members we served in each state as of September 30, 2008 and 2007. Because we receive two premiums for members that are in both the Medicare Advantage and Medicaid products, these members have been counted twice in the states where we operate Medicare Advantage plans. We offered Medicare Advantage products in Maryland and Texas in 2007. Beginning in 2008, we began operating Medicare Advantage products in Tennessee, Florida, New York, New Jersey and New Mexico.

	September 30,
	2008			2007
Texas (1)		462,000			453,000
Tennessee (2)		352,000			185,000
Florida		228,000			200,000
Georgia		201,000			218,000
Maryland		161,000			147,000
New York		111,000			114,000
New Jersey		103,000			99,000
Ohio		56,000			52,000
Virginia		24,000			22,000
South Carolina		9,000			—
New Mexico		7,000			—
District of Columbia (3)		—			38,000
Total		1,714,000			1,528,000
Percentage growth from September 30, 2007 to September 30, 2008		12.2	%

(1)	Membership includes approximately 13,000 aged, blind and disabled (“ABD”) members under an ASO contract in Texas as of September 30, 2007.
(2)	Membership includes approximately 165,000 members under an ASO contract in Tennessee as of September 30, 2008. As of October 31, 2008, we will cease providing services to these members.
(3)	The contract with the District of Columbia terminated June 30, 2008.

     As of September 30, 2008, we served approximately 1,714,000 members, reflecting an increase of approximately 186,000 members compared to September 30, 2007. The increase is primarily a result of the acquisition of MMCC on November 1, 2007 that increased our Tennessee membership by approximately 165,000 members as of September 30, 2008. As of October 31, 2008, we will cease providing services to these members. Membership at September 30, 2008, also reflects a decrease in our Georgia markets as a result of an overall decrease in eligible members in the state and our exit from the District of Columbia market effective June 30, 2008, which was offset by growth in our Florida and Maryland markets.

18

     The following table sets forth the approximate number of members in each of our products as of September 30, 2008 and 2007. Because we receive two premiums for members that are in both the Medicare Advantage and Medicaid product, these members have been counted in each product.

	September 30,
Product	2008		2007
Temporary Assistance to Needy Families (Medicaid) (1)		1,167,000		1,040,000
SCHIP		279,000		270,000
ABD (Medicaid) (2)		218,000		172,000
FamilyCare (Medicaid)		41,000		41,000
Medicare Advantage		9,000		5,000
Total		1,714,000		1,528,000

(1)	Membership includes approximately 124,000 members under an ASO contract in Tennessee as of September 30, 2008.
(2)	Membership includes approximately 41,000 members under an ASO contract in Tennessee in 2008 and 13,000 ASO contract members in Texas in 2007.

Health benefits expenses

     Expenses relating to health benefits for the three months ended September 30, 2008 increased $45.0 million, or 5.4%, over the three months ended September 30, 2007. Our HBR was 80.1% for the three months ended September 30, 2008 versus 82.9% in the same period of the prior year. This decrease in HBR for the three months ended September 30, 2008 compared to the three months ended September 30, 2007, primarily results from operations in our Tennessee market. For the three months ended September 30, 2008, our Tennessee health plan received a premium rate increase and experienced favorable reserve development.

     For the nine months ended September 30, 2008, expenses related to health benefits increased $329.3 million, or 14.1%, over the nine months ended September 30, 2007. For the nine months ended September 30, 2008, and 2007, our HBR was 81.4% and 83.1%, respectively. The decrease in HBR for the nine months ended September 30, 2008 over that for the nine months ended September 30, 2007 is due to premium growth outpacing the growth of health benefits expenses. Premium growth of 16.4% was primarily due to increased membership, annual premium rate increases, a retro-active premium rate increase in Georgia and a one-time premium payment in Tennessee associated with private duty nursing costs.

Selling, general and administrative expenses

     SG&A for the three months ended September 30, 2008 increased $31.6 million, or 24.3%, over the three months ended September 30, 2007. Our SG&A to total revenues ratio was 14.4% and 12.6% for the three months ended September 30, 2008 and 2007, respectively. For the nine months ended September 30, 2008, SG&A increased $96.7 million, or 27.0%, over the nine months ended September 30, 2007. Our SG&A to total revenues ratio was 13.6% and 12.5% for the nine months ended September 30, 2008 and 2007, respectively. The increase in total SG&A expenses in both periods was a result of: (1) increased salary and benefits expenses from an increase in the number of associates, merit increases and increased variable compensation as a result of earnings performance; and (2) increases in experience rebate expense in our Texas market. The SG&A ratio increase in the three months ended September 30, 2008 was primarily a result of the increases in both of these expenses. The SG&A ratio increase in the nine months ended September 30, 2008 was primarily a result of the increase in the experience rebate expense.

     Premium taxes were $23.9 million and $22.4 million for the three months ended September 30, 2008 and September 30, 2007, respectively, and $68.1 million and $62.6 million for the nine months ended September 30, 2008 and September 30, 2007, respectively. The increase in both periods is primarily a result of increased revenues in states where we pay premium tax.

Litigation Settlement

     During the nine months ended September 30, 2008, we recorded a one-time expense in the amount of $234.2 million in connection with the settlement of the Qui Tam Litigation. For more information on the Qui Tam Litigation see Part II. Other Information, Item 1. Legal Proceedings.

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Depreciation and amortization expense

     Depreciation and amortization expense increased approximately $1.1 million or 13.8% from $7.7 million for the three months ended September 30, 2007 to $8.8 million for the three months ended September 30, 2008. Depreciation and amortization expense increased approximately $2.9 million or 12.1% from $23.6 million for the nine months ended September 30, 2007 to $26.5 million for the nine months ended September 30, 2008. The increase in both periods is a result of an increase in depreciable assets.

Interest expense

     Interest expense was $2.7 million and $4.0 million for the three months ended September 30, 2008 and September 30, 2007, respectively, and $9.1 million and $8.3 million for the nine months ended September 30, 2008 and September 30, 2007, respectively. The decrease in interest expense in the three months ended September 30, 2008, compared to the three months ended September 30, 2007 is a result of a reduction in the outstanding balance under the Credit Agreement as a result of scheduled and voluntary principal payments as well as fluctuating interest rates for borrowings under the Credit Agreement. The increase in interest expense for the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007 is a result of borrowings under our Credit Agreement and the issuance of the 2.0% Convertible Senior Notes due May 15, 2012 which were issued effective March 28, 2007.

Provision for income taxes

     Income tax expense for the three months ended September 30, 2008 was $25.1 million with an effective tax rate of 38.9% compared to $19.1 million income tax expense with an effective tax rate of 37.9% for the three months ended September 30, 2007. Income tax expense for the nine months ended September 30, 2008 and 2007 was $33.4 million and $51.2 million, respectively with an effective tax rate of (61.0)% and 37.5%, respectively. The increase in tax rate for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 is attributable to an increase in non-deductible expenses and a decrease in tax exempt interest income. The primary driver of the difference in the effective tax rate for the nine months ended September 30, 2008 versus the nine months ended September 30, 2007 is the fact that a portion of the settlement payment in connection with the Qui Tam Litigation is not deductible for income tax purposes. The estimated tax benefit related to the non-recurring Qui Tam Litigation settlement payment was $35.0 million.

Net income (loss)

     Net income increased to $39.4 million for the three months ended September 30, 2008 compared to $31.2 million for the three months ended September 30, 2007 primarily as a result of a lower health benefits ratio in 2008. Net income for the nine months ended September 30, 2008 decreased to a net loss of $88.0 million from net income of $85.3 million for the nine months ended September 30, 2007 due to the one-time expense recorded in connection with the Qui Tam Litigation equal to $234.2 million or $199.2 million, net of the related tax benefit. This expense was partially offset by a lower health benefits ratio due to premium growth outpacing the growth in health benefits expenses.

Liquidity and Capital Resources

     We manage our cash, investments and capital structure so we are able to meet the short- and long-term obligations of our business while maintaining financial flexibility and liquidity. We forecast, analyze and monitor our cash flows to enable prudent investment management and financing within the confines of our financial strategy.

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     Our primary sources of liquidity are cash and cash equivalents, short- and long-term investments, cash flows from operations and borrowings under our Credit Agreement. As of September 30, 2008, we had cash and cash equivalents of $684.9 million, short and long-term investments of $574.1 million and restricted investments on deposit for licensure of $94.0 million. Cash, cash equivalents, and investments which are unrestricted and unregulated totaled $282.9 million at September 30, 2008.

Credit Agreement

     During the three and nine months ended September 30, 2008, the Company paid $52.2 million and $79.0 million, respectively, in scheduled and voluntary principal payments of outstanding balances under the Credit Agreement. The Company elected to make voluntary payments of principal in the three months ended September 30, 2008 as a result of cash received from the release of the restricted investments held as collateral in excess of the amount needed to fund the litigation settlement. As of September 30, 2008, we had $50.0 million outstanding under the senior secured synthetic letter of credit facility portion of our Credit Agreement. As of September 30, 2008, we had no outstanding borrowings under the senior secured revolving credit facility portion of our Credit Agreement but have caused to be issued irrevocable letters of credit in the aggregate face amount of $16.5 million.

     The borrowings under the Credit Agreement accrue interest at our option at a percentage per annum equal to the adjusted Eurodollar rate plus 2.0% or the base rate plus 1.0%. We are required to make payments of interest in arrears on each interest payment date (to be determined depending on interest period elections made by the Company) and at maturity of the loans, including final maturity thereof. The applicable interest rate was 5.75% at September 30, 2008.

     The Credit Agreement includes customary covenants and events of default. If any event of default occurs and is continuing, the Credit Agreement may be terminated and all amounts owing there under may become immediately due and payable. The Credit Agreement also includes the following financial covenants: (i) maximum leverage ratios as of specified periods, (ii) a minimum interest coverage ratio and (iii) a minimum statutory net worth ratio. Borrowings under the Credit Agreement are secured by substantially all of our assets and the assets of our wholly-owned subsidiary, PHP Holdings, Inc., including a pledge of the stock of each of our respective wholly-owned managed care subsidiaries, in each case, subject to carve-outs.

Convertible Senior Notes

     As of September 30, 2008, we had $260.0 million outstanding of our 2.0% Convertible Senior Notes due May 15, 2012 (the “Notes”). The Notes are senior unsecured obligations of the Company and rank equally with all of our existing and future senior debt and senior to all of our subordinated debt. The Notes are effectively subordinated to all existing and future liabilities of our subsidiaries and to any existing and future secured indebtedness, including the obligations under our Credit Agreement. The Notes bear interest at a rate of 2.0% per year, payable semiannually in arrears in cash on May 15 and November 15 of each year, beginning on May 15, 2007. The Notes mature on May 15, 2012, unless earlier repurchased or converted in accordance with an Indenture dated March 27, 2007 which governs the Notes.

     Except as provided in the Indenture upon conversion of the Notes, we will pay cash up to the principal amount of the Notes converted. With respect to any conversion value in excess of the principal amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our common stock.

     Concurrent with the issuance of the Notes, we purchased convertible note hedges covering, subject to customary anti-dilution adjustments, 6,112,964 shares of our common stock. The convertible note hedges allow us to receive shares of our common stock and/or cash equal to the amounts of common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion. These convertible note hedges will terminate at the earlier of the maturity dates of the Notes or the first day on which none of the Notes remain outstanding due to conversion or otherwise.

     The convertible note hedges are expected to reduce the potential dilution upon conversion of the Notes in the event that the market value per share of our common stock, as measured under the convertible note hedges, at the time of exercise is greater than the strike price of the convertible note hedges, which corresponds to the initial conversion price of the Notes and is subject to certain customary adjustments. If, however, the market value per share of our common stock exceeds the strike price of the warrants (discussed below) when such warrants are exercised, we will be required to issue common stock. Also concurrent with the issuance of the Notes, we sold warrants to acquire, subject to customary anti-dilution adjustments, 6,112,964 shares of our common stock at an exercise price of $53.77 per share. If the average price of our common stock during a defined period ending on or about the settlement date exceeds the exercise price of the warrants, the warrants will be settled, at our option, in cash or shares of our common stock. Both the convertible note hedges and warrants provide for net-share settlement at the time of any exercise for the amount that the market value of our

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common stock exceeds the applicable strike price. The convertible note hedges and warrants are separate transactions which will not affect holders’ rights under the Notes.

Shelf Registration

     On May 23, 2005, our shelf registration statement was declared effective with the SEC covering the issuance of up to $400.0 million of securities including common stock, preferred stock and debt securities. No securities have been issued under the shelf registration. Under this shelf registration, we may publicly offer such registered securities from time-to-time at prices and terms to be determined at the time of the offering.

Share Repurchase Program

     Pursuant to the Company’s existing share repurchase program, we repurchased 142,669 and 842,869 shares of our common stock and placed them into treasury during the three and nine months ended September 30, 2008, respectively, for a total cost of $3.6 million and $22.9 million, respectively. The Company’s share repurchase program has approximately 1.2 million shares remaining under the limit authorized to be repurchased, subject to limits imposed by our Credit Agreement.

Cash and Investments

     Cash used in operating activities was $29.4 million for the nine months ended September 30, 2008 compared to cash provided by operating activities of $250.6 million for the nine months ended September 30, 2007. The decrease in cash flows was primarily due to the net loss for the period as a result of the litigation settlement. Additionally, cash flows decreased due to a decrease in cash flows provided by working capital changes of $118.2 million, offset in part by cash flows generated by an increase in net income prior to the litigation settlement, depreciation, amortization and other non-cash items of $41.5 million. Cash provided by operating activities for working capital changes was $15.9 million for the nine months ended September 30, 2008 compared to cash provided by operating activities for working capital changes of $134.1 million for the nine months ended September 30, 2007. The decrease in cash provided by working capital changes primarily resulted from the increase in claims payable in 2007 as a result of the entry into the Tennessee market with no comparable increase in 2008.

     Cash provided by investing activities was $321.5 million for the nine months ended September 30, 2008 compared to cash used in investing activities of $498.4 million for the nine months ended September 30, 2007. This change results primarily from net purchases of restricted investments held as collateral in the amount of $351.3 million in 2007 compared to the release of that collateral in 2008. We currently anticipate total capital expenditures for 2008 to be between approximately $39.0 million to $41.0 million related to technological infrastructure development and the expansion of our medical management system. For the nine months ended September 30, 2008, total capital expenditures were $27.5 million.

     Our investment policies are designed to preserve capital, provide liquidity and maximize total return on invested assets. As of September 30, 2008, our investment portfolio consisted primarily of fixed-income securities. The weighted-average maturity is approximately nine months excluding our auction rate securities which are discussed below. We utilize investment vehicles such as money market funds, commercial paper, certificates of deposit, municipal bonds, debt securities of government sponsored entities, corporate bonds, auction rate securities and U.S. Treasury instruments. The states in which we operate prescribe the types of instruments in which our subsidiaries may invest their funds. The weighted-average taxable equivalent yield on consolidated investments as of September 30, 2008 was approximately 3.33%. As of September 30, 2008 we had total cash and investments of $1.35 billion. Approximately 52% of our investment portfolio was invested in a diversified array of money market funds. Approximately 38% of our portfolio was invested in debt obligations of government sponsored entities or treasuries, all of which carried an AAA credit rating. Approximately 4% of our portfolio was invested in investment grade corporate bonds with a weighted average credit rating of AA and approximately 6% of our portfolio is in long-term municipal student loan corporation auction rate securities that carried a weighted average credit rating of AAA.

     As discussed in Note 3 to the Condensed Consolidated Financial Statements, the Company adopted the provisions of FASB Statement No. 157 effective January 1, 2008. We have determined that we utilize unobservable (Level 3) inputs in determining the fair value of certain auction rate securities totaling $81.2 million at September 30, 2008.

     As of September 30, 2008, $85.2 million of our investments were comprised of securities issued by student loan corporations which are municipalities of various U.S. state governments. The majority of the student loans backing these securities fall under the Federal Family Education Loan program which is supported and guaranteed by the United States Department of Education. Liquidity for these

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auction rate securities is typically provided by an auction process which allows holders to sell their notes and resets the applicable interest rate at pre-determined intervals, usually every 28 or 35 days. Starting in mid-February, auctions have failed on these auction rate securities and there is no assurance that auctions for these securities will succeed in the future. An auction failure means that the parties wishing to sell their securities could not be matched with an adequate volume of buyers. In the event that there is a failed auction the indenture governing the security requires the issuer to pay interest at a contractually defined rate that is generally above market rates for other types of similar short-term instruments. The securities for which auctions have failed will continue to accrue interest at the contractual rate and be auctioned every 28 or 35 days until the auction succeeds, the issuer calls the securities, or they mature. Because there is no assurance that auctions for these securities will be successful in the near term, $81.2 million of auction rate securities are classified as long-term investments in our Condensed Consolidated Financial Statements as of September 30, 2008.

     Our auction rate securities are classified as available-for-sale securities and reflected at fair value. In prior periods, due to the auction process which took place every 28-35 days for most securities, quoted market prices were readily available, which would qualify as Level 1 under FASB Statement No. 157. However, the auction events for these securities failed during early 2008 and have not resumed. Therefore, we have determined the estimated fair values of these securities utilizing a discounted cash flow analysis or other type of valuation model as of September 30, 2008. These analyses consider, among other items, the creditworthiness of the issuer, the timing of the expected future cash flows, including the final maturity, associated with the securities, and an assumption of when the next time the security is expected to have a successful auction. These securities were also compared, when possible, to other observable and relevant market data which is limited at this time. Due to these events, we reclassified these instruments as Level 3 during 2008 and recorded a temporary unrealized decline in fair value of approximately $3.2 million, with an offsetting entry to accumulated other comprehensive loss. We currently believe that this temporary decline in fair value is primarily due to liquidity concerns, because the underlying assets for the majority of these securities are student loans supported and guaranteed by the United States Department of Education. In addition, our holdings of auction rate securities represented less than ten percent of our total cash, cash equivalent, and investment balance at September 30, 2008, which we believe allows us sufficient time for the securities to return to full value. Because we believe that the current decline in fair value is temporary and based primarily on liquidity issues in the credit markets, any difference between our estimate and an estimate that would be arrived at by another party would have no impact on our earnings, since such difference would also be recorded to accumulated other comprehensive loss. We will re-evaluate each of these factors as market conditions change in subsequent periods.

     During the three months ended September 30, 2008 we were notified by several of our brokers from whom we purchased auction rate securities that they would be repurchasing those securities over the course of 2009 and 2010. We expect our brokers to purchase, at par, up to $27.5 million of our auction rate securities in 2009 and 2010. The weighted-average life of our auction rate securities portfolio, based on the final maturity, is approximately 25 years. We currently have the ability to hold our auction rate securities to maturity, if required, or if and when market stability is restored with respect to these investments.

     Cash used in financing activities was $94.9 million for the nine months ended September 30, 2008, compared to cash provided by financing activities of $388.0 million for the nine months ended September 30, 2007. The change in cash related to financing activities was primarily related to net proceeds received from the issuance of the Notes and borrowings under the Credit Agreement of $378.5 million in 2007 compared to net repayments of debt of $79.0 million and repurchases of stock of $22.9 million in 2008. The Company elected to make voluntary payments of principal in the three months ended September 30, 2008 as a result of cash received from the release of the restricted investments held as collateral in excess of the amount needed to fund the litigation settlement.

     We believe that existing cash and investment balances, internally generated funds and available funds under our Credit Agreement will be sufficient to support continuing operations, capital expenditures and our growth strategy for at least 12 months. However, as a result of borrowings under the Credit Agreement and the related debt service and issuance of the Notes, our access to additional capital may be limited which could restrict our ability to acquire new businesses or enter new markets and could impact our ability to maintain statutory net worth requirements in the states in which we do business. Our debt-to-total capital ratio at September 30, 2008 was 27.6%.

Regulatory Capital and Dividend Restrictions

     Our operations are conducted through our wholly-owned subsidiaries, which include health maintenance organizations (“HMOs”), one health insuring corporation (“HIC”) and one Prepaid Health Services Plan (“PHSP”). HMOs, HICs and PHSPs are subject to state regulations that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state, and restrict the timing, payment and amount of dividends and other distributions that may be paid to their stockholders. Additionally, certain state regulatory agencies may require individual regulated entities to maintain statutory capital levels higher than the state regulations. As of September 30, 2008, we believe our subsidiaries are in compliance with all minimum statutory capital requirements.

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The parent company may be required to fund minimum net worth shortfalls for certain of our subsidiaries during the remainder of 2008 using unregulated cash, cash equivalents and investments. We believe that we will continue to be in compliance with these requirements at least through the end of 2008.

Recent Accounting Standards

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, Fair Value Measurements (“FASB Statement No. 157”). FASB Statement No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. The Company has adopted the provisions of FASB Statement No. 157 as of January 1, 2008, for financial instruments.

     Although the adoption of FASB Statement No. 157 did not materially impact our financial condition, results of operations, or cash flow, the Company is now required to provide additional disclosures as part of its financial statements.

     FASB Statement No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In October 2008, the FASB issued FASB Staff Position (“FSP”) 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, which clarifies the application of FASB No. 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The Company’s assumptions underlying our adoption of FASB Statement No. 157 were not materially impacted by the provisions of FSP 157-3.

     In May 2008, the FASB issued FASB Staff Position (“FSP”) APB 14-a, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). The FSP requires the proceeds from the issuance of convertible debt instruments that may be settled in cash upon conversion to be allocated between a liability component and an equity component. The resulting debt discount will be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The FSP is effective for fiscal years beginning after December 15, 2008, and is applied retrospectively to prior periods. This FSP will change the accounting treatment for our $260.0 million 2.0% Convertible Senior Notes due May 15, 2012, which were issued effective March 28, 2007. The impact of this new accounting treatment will be significant to our results of operations and will result in an increase to non-cash interest expense beginning in 2009 for financial statements covering past and future periods. We estimate that our 2007, 2008 and 2009 earnings could decrease by approximately $0.08, $0.11 and $0.12 per diluted share, respectively, as a result of the adoption of this FSP.

     In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations (“FASB Statement No. 141(R)”). FASB Statement No. 141(R) establishes principles and requirements for how an acquirer determines and recognizes in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree, and the goodwill acquired. FASB Statement No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. FASB Statement No. 141(R) is effective for any transaction occurring in fiscal years beginning after December 15, 2008; therefore, it will have no impact on our current results of operations and financial condition; however, future acquisitions will be accounted for under this guidance.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     Our Condensed Consolidated Balance Sheets include a certain amount of assets whose fair values are subject to market risk. Due to our significant investment in fixed-maturity investments, interest rate risk represents a market risk factor affecting our consolidated financial position. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. In addition, the credit markets have experienced significant disruptions during the year. Liquidity on many financial instruments has declined, the creditworthiness of many issuers have declined, defaults have increased, along with other disruptions. While we do not believe we have experienced material adverse changes in the value of our cash, cash equivalents and investments, further disruptions could impact the value of these assets and other financial assets we may hold in the future. There can be no assurance that future changes in interest rates, creditworthiness of issuers, prepayment activity, liquidity available in the market and other general market conditions will not have a material adverse impact on our results of operations, liquidity or financial position.

     As of September 30, 2008 and December 31, 2007, substantially all of our investments were in high quality securities that have historically exhibited good liquidity which include U.S. Treasury securities, debt securities of government sponsored entities, municipal bonds, commercial paper, auction rate securities, corporate bonds and money market funds. We do not hold any investments classified as trading or derivative financial instruments.

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     The fair value of the fixed maturity investment portfolio is exposed to interest rate risk — the risk of loss in fair value resulting from changes in prevailing market rates of interest for similar financial instruments. However, we have the ability to hold fixed maturity investments to maturity. We rely on the experience and judgment of senior management to monitor and mitigate the effects of market risk. The allocation among various types of securities is adjusted from time to time based on market conditions, credit conditions, tax policy, fluctuations in interest rates and other factors. In addition, we place the majority of our investments in high-quality, liquid securities and limit the amount of credit exposure to any one issuer. As of September 30, 2008, an increase of 1% in interest rates on securities with maturities greater than one year would reduce the fair value of our marketable securities portfolio by approximately $4.1 million. Conversely, a reduction of 1% in interest rates on securities with maturities greater than one year would increase the fair value of our marketable securities portfolio by approximately $2.7 million. As of December 31, 2007, an increase of 1% in interest rates on securities with maturities greater than one year would have reduced the fair value of our marketable securities portfolio by approximately $4.6 million. Conversely, a reduction of 1% in interest rates on securities with maturities greater than one year would have increased the fair value of our marketable securities portfolio by approximately $2.7 million. The above changes in fair value are impacted by securities in our portfolio that have a call provision feature. In a decreasing rate environment, these instruments may not see as significant a potential for fair value increases as non-callable instruments due to the expectation that the issuer will call the instrument to take advantage of lower rates. We believe this fair value presentation is indicative of our market risk because it evaluates each investment based on its individual characteristics. Consequently, the fair value presentation does not assume that each investment reacts identically based on a 1% change in interest rates.

Item 4.  Controls and Procedures

     (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

     (b) Changes in Internal Controls over Financial Reporting. During the third quarter of 2008, in connection with our evaluation of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, we concluded there were no changes in our internal control procedures that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II.  Other Information

Item 1.  Legal Proceedings

Qui Tam

     On August 13, 2008, we finalized our previously announced agreement in principle to settle claims related to the conduct alleged (the “Covered Conduct”) in the civil qui tam action styled as United States of America and the State of Illinois, ex rel. Cleveland A. Tyson v. AMERIGROUP Illinois, Inc., U.S. District Court for the Northern District of Illinois, Eastern Division (the “Court”), Case No. 02-C-6074 (the “Qui Tam Litigation”). In connection with the settlement, the Company and the United States of America acting through the United States Department of Justice and on behalf of the Office of the Inspector General of the Department of Health and Human Services (the “OIG”), the State of Illinois acting through the Office of the Illinois Attorney General, and Cleveland A. Tyson (the “Relator”) entered into a definitive settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, we paid an aggregate amount of $225.0 million (the “Settlement Payment”) to the United States of America and the State of Illinois without any admission of wrongdoing by the Company or our subsidiaries or affiliates. The United States of America and the State of Illinois each paid a portion of the Settlement Payment to the Relator. In addition to the Settlement Payment, the Company paid approximately $9.2 million to the Relator for legal fees.

     As a result of the settlement, we recorded a one-time expense in the amount $234.2 million for the nine months ending September 30, 2008. Net of the related tax benefit, earnings per diluted share was reduced by $3.76 for the nine months ending September 30, 2008 as a result of this settlement.

     Pursuant to the Settlement Agreement, (i) the United States of America and the State of Illinois released the Company and its current and former subsidiaries, parents, directors, officers, employees, agents, attorneys, predecessors, successors and assigns from civil and administrative monetary claims for the Covered Conduct, (ii) the OIG provided a release agreeing not to institute, direct or maintain any administrative action seeking civil monetary penalties or exclusion from Medicare, Medicaid and/or other Federal health care programs against the Company and its subsidiaries and certain of its affiliates for the Covered Conduct, (iii) the Relator released the Company and its current and former subsidiaries, parents, directors, officers, employees, agents, attorneys, predecessors, successors and assigns from any and all causes of action, whether known or unknown, of any kind or character, that the Relator or his heirs, successors or certain affiliated persons had or may have had, (iv) the Company released the United States of America and the State of Illinois, and any of their respective agencies, employees, servants, and agents, from any and all causes of action, whether known or unknown, that the Company or its successors or affiliated persons have or may have for the Covered Conduct, (v) the Company released the Relator, his heirs, successors, attorneys, agents, and assigns from any and all causes of action, whether known or unknown, that the Company or its successors or affiliated persons have or may have for the Covered Conduct, and (vi) the Company dismissed its appeal of the judgment in the Qui Tam Litigation.

     Certain claims are specifically excluded from the scope of the Settlement Agreement as to any entity or person, including: (i) any civil, criminal, or administrative liability arising under the Internal Revenue Code and under Chapter 35 Illinois Compiled Statutes; (ii) any criminal liability; (iii) except as explicitly stated in the Settlement Agreement, any administrative liability, including mandatory exclusion from Federal health care programs; (iv) any liability to the United States or the State of Illinois (or their respective agencies) for any conduct other than the Covered Conduct; (v) any liability under the Settlement Agreement; and (vi) any liability of the Company’s current or former officers, directors, employees, and agents for conduct other than Covered Conduct.

     The Qui Tam Litigation, filed in 2002 by the Relator, a former employee of our former Illinois subsidiary, alleged that AMERIGROUP Illinois, Inc. submitted false claims under the Medicaid program by maintaining a scheme to discourage or avoid the enrollment into the health plan of pregnant women and other recipients with special needs. Subsequently, the State of Illinois and the United States of America intervened and the plaintiffs amended their complaint to add AMERIGROUP Corporation as a party. On October 30, 2006, a jury returned a verdict against us and AMERIGROUP Illinois, Inc. in the amount of $48.0 million which under applicable law would be trebled to $144.0 million plus penalties, and attorney’s fees, costs and expenses. The jury also found that there were 18,130 false claims. The statutory penalties allowable under the False Claims Act range between $5,500 and $11,000 per false claim. The statutory penalties allowable under the Illinois Whistleblower Reward and Protection Act, 740 ILC 175/3, range between $5,000 and $10,000 per false claim. On March 13, 2007, the Court entered a judgment against AMERIGROUP Illinois, Inc., and AMERIGROUP Corporation in the amount of approximately $334.0 million which included $144.0 million of damages and approximately $190.0 million in false claim penalties. Following entry of the judgment, we posted the necessary irrevocable letter of credit to stay the enforcement of the judgment pending appeal. We filed a notice of appeal with the United States Court of Appeals for

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the Seventh Circuit and the appeal was fully briefed by the parties. While the appeal was pending, the parties engaged in voluntary mediation and reached the Settlement Agreement. As contemplated by the Settlement Agreement, on September 12, 2008, the Court of Appeals dismissed our appeal of the trial court judgment in the Qui Tam Litigation.

     As part of the settlement, we entered into a five-year corporate integrity agreement with the OIG (the “Corporate Integrity Agreement”). The Corporate Integrity Agreement acknowledges the existence of our comprehensive compliance program and enhancements that were made to the program prior to the entry into the Corporate Integrity Agreement. The Corporate Integrity Agreement also provides that the Company shall, among other things, keep in place and continue its current compliance program, including a corporate compliance officer and compliance officers at its health plans, a corporate compliance committee and compliance committees at its health plans, a compliance committee of the Company’s Board of Directors, a code of conduct, comprehensive compliance policies, training and monitoring, a compliance hotline, an open door policy and a disciplinary process for compliance violations. The Corporate Integrity Agreement further provides that the Company shall provide periodic reports to the OIG, appoint a benefits rights ombudsman responsible for addressing concerns raised by health plan members and potential enrollees and engage an independent review organization to assist the Company in assessing and evaluating its compliance with the requirements of the Federal health care programs and other obligations under the Corporate Integrity Agreement. In the event of an uncured material breach or deliberate violation of the Corporate Integrity Agreement, the Company could be excluded from participation in Federal health care programs and/or subject to prosecution.

Risk Sharing Receivable

     AMERIGROUP Texas, Inc. previously had an exclusive risk-sharing arrangement in the Fort Worth service area with Cook Children’s Health Care Network (“CCHCN”) and Cook Children’s Physician Network (“CCPN”), which includes Cook Children’s Medical Center (“CCMC”) that expired by its own terms as of August 31, 2005. Under this risk-sharing arrangement the parties had an obligation to perform annual reconciliations and settlements of the risk pool for each contract year. The contract with CCHCN prescribes reconciliation procedures which have been completed. CCHCN subsequently engaged external auditors to review all medical claim payments made for the 2005 contract year and the preliminary results challenged payments made on certain claims. The parties participated in voluntary non-binding mediation but were unable to resolve this matter. Following the conclusion of the arbitration, on August 27, 2008, AMERIGROUP Texas, Inc. filed suit against CCHCN and CCPN in the District Court for the 153rd Judicial District in Tarrant County, Texas, case no. 153-232258-08, alleging breach of contract and seeking compensatory damages in the amount of $10.8 million plus pre- and post-judgment interest and attorney’s fees and costs. On October 3, 2008, CCHCN and CCPN filed a counterclaim against AMERIGROUP Texas, Inc. alleging breach of contract and seeking an amount to be determined at trial plus pre- and post-judgment interest and attorney’s fees and costs.

     The accompanying Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007 include a receivable balance related to this issue. We believe that the amount at issue is a valid receivable and that we have a favorable legal position with respect to the above described litigation. However, we may incur significant costs in our efforts to reach a final resolution of this matter. Further, in the event that we are unable to resolve this matter in a favorable manner or obtain an outcome at trial resulting in payment in full to us, our results of operations may be adversely affected.

Other Litigation

     Additionally, we are involved in various other legal proceedings in the normal course of business. Based upon our evaluation of information currently available, we believe that the ultimate resolution of any such proceedings will not have a material adverse effect, either individually or in the aggregate, on our liquidity, financial condition or results of operations.

Item 1A.  Risk Factors

     Certain risk factors may have a material adverse effect on our business, financial condition and results of operations and you should carefully consider them. The following risk factors were identified or reevaluated by the Company during the third quarter and are a supplement to those risk factors included as part of Item 1A., Risk Factors, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2008, as updated by Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed with the SEC on April 29, 2008 and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed with the SEC on July 29, 2008.

27

   The value of our investments is influenced by varying economic and market conditions, and a decrease in value could have an adverse effect on our results of operations, liquidity and financial condition.

     Our investment portfolio is comprised primarily of investments classified as held-to-maturity. The balance of our portfolio is held in our available-for-sale investment securities. Available-for-sale investments are carried at fair value, and the unrealized gains or losses are included in accumulated other comprehensive loss as a separate component of shareholders’ equity, unless the decline in value is deemed to be other-than-temporary and we do not have the intent and ability to hold such securities until their full cost can be recovered. For our available-for-sale investments and held-to-maturity investments, if a decline in value is deemed to be other-than-temporary and we do not have the intent and ability to hold such security until its full cost can be recovered, the security is deemed to be other-than-temporarily impaired and it is written down to fair value and the loss is recorded as an expense.

     In accordance with applicable accounting standards, we review our investment securities to determine if declines in fair value below cost are other-than-temporary. This review is subjective and requires a high degree of judgment. We conduct this review on a quarterly basis, using both quantitative and qualitative factors, to determine whether a decline in value is other-than-temporary. Such factors considered include, the length of time and the extent to which market value has been less than cost, financial condition and near term prospects of the issuer, recommendations of investment advisors and forecasts of economic, market or industry trends. This review process also entails an evaluation of our ability and intent to hold individual securities until they mature or full cost can be recovered.

     The current economic environment and recent volatility of the securities markets increase the difficulty of assessing investment impairment and the same influences tend to increase the risk of potential impairment of these assets. During the nine months ended September 30, 2008, we did not record any charges for other-than-temporary impairment of securities. Over time, the economic and market environment may further deteriorate or provide additional insight regarding the fair value of certain securities, which could change our judgment regarding impairment. This could result in realized losses relating to other-than-temporary declines recorded as an expense. Given the current market conditions and the significant judgments involved, there is continuing risk that further declines in fair value may occur and material other-than-temporary impairments may result in realized losses in future periods which could have an adverse effect on our results of operations, liquidity and financial condition.

   Adverse credit market conditions may have a material adverse affect on our liquidity or our ability to obtain credit on acceptable terms.

     The securities and credit markets have been experiencing extreme volatility and disruption. In some cases, the markets have exerted downward pressure on the availability of liquidity and credit capacity. In the event we need access to additional capital to pay our operating expenses, make payments on our indebtedness, pay capital expenditures or fund acquisitions, our ability to obtain such capital may be limited and the cost of any such capital may be significant. Our access to additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity, as well as the possibility that lenders could develop a negative perception of our long- or short-term financial prospects. Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. If a combination of these factors were to occur, our internal sources of liquidity may prove to be insufficient, and in such case, we may not be able to successfully obtain additional financing on favorable terms.

   Compliance with the terms and conditions of our Corporate Integrity Agreement requires significant resources and, if we fail to comply, we could be subject to penalties or excluded from participation in government healthcare programs, which could seriously harm our results of operations, liquidity and financial results.

     In August 2008, as part of our settlement of the Qui Tam Litigation, we entered into a five-year corporate integrity agreement with the Office of Inspector General of the United States Department of Health and Human Services (“OIG”). For additional information on the Qui Tam Litigation and the Corporate Integrity Agreement, please see Part II. Other Information, Item 1. Legal Proceedings.

     Maintaining the broad array of processes, policies, and procedures necessary to comply with the Corporate Integrity Agreement is expected to continue to require a significant portion of management’s attention as well as the application of significant resources. Failing to meet the Corporate Integrity Agreement obligations could have material adverse consequences for us including monetary penalties for each instance of non-compliance. In addition, in the event of an uncured material breach or deliberate violation of the Corporate Integrity Agreement, the Company could be excluded from participation in Federal healthcare programs and/or subject to prosecution, which could seriously harm our results of operations, liquidity and financial results.

28

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

							Maximum number
					Total number of		Shares (or Units)
			Average		Shares (or Units)		that May Yet Be
	Total Number of		Price Paid		Purchased as Part of		Purchased Under
	Shares (or Units)		per Share		Publicly Announced		the Plans or
Period	Purchased		(or Unit)		Plans or Programs (1)		Programs (1)
July 1 - July 31, 2008		23,600	$	25.27		23,600		1,276,200
August 1 - August 31, 2008		53,900		25.66		53,900		1,222,300
September 1 - September 30, 2008		65,169		25.34		65,169		1,157,131
Total		142,669	$	25.45		142,669		1,157,131

(1)  All of the shares purchased during the third quarter of 2008 were purchased as part of the Company’s existing authorized share repurchase program. The share repurchase program provides for the repurchase of up to two million shares of our common stock, subject to certain limitations imposed by our Credit Agreement. On August 7, 2008, the Company entered into a trading plan in accordance with Rule 10b5-1 of the Exchange Act, to facilitate repurchases of its common stock pursuant to its share repurchase program (the “Rule 10b5-1 plan”). The Rule 10b5-1 plan became effective on September 8, 2008 and expires on January 10, 2009, unless terminated earlier in accordance with its terms.

Item 3.  Defaults Upon Senior Securities

     None.

Item 4.  Submission of Matters to a Vote of Security Holders

     None.

Item 5.  Other Information

     On October 23, 2008, AMERIGROUP Corporation, through its subsidiary, AMGP Georgia Managed Care Company, Inc., received an executed amendment to its State of Georgia Department of Community Health contract for the provision of HMO services to Georgia Healthy Families. The amendment, among other things, revises capitation rates effective for the 2008-2009 contract year beginning July 1, 2008.

Item 6.  Exhibits

Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to exhibit 3.1 to our Registration Statement on Form S-3 (No. 333-108831)).
3.2	Amended and Restated By-Laws of the Company (incorporated by reference to exhibit 3.1 to our Current Report on Form 8-K filed on February 14, 2008).
4.1	Form of share certificate for common stock (incorporated by reference to exhibit 4.1 to our Registration Statement on Form S-1 (No. 333-347410)).
4.2	Indenture related to the 2.0% Convertible Senior Notes due 2012 dated March 28, 2007, between AMERIGROUP Corporation and The Bank of New York, as trustee (including the form of 2.0% Convertible Senior Note due 2012) (incorporated by reference to exhibit 4.1 to our Current Report on Form 8-K filed on April 2, 2007).

29

Exhibit
Number	Description
4.3	Registration Rights Agreement dated March 28, 2007, between AMERIGROUP Corporation, Goldman Sachs, & Co., as representative of the initial purchasers (incorporated by reference to exhibit 4.2 to our Current Report on Form 8-K filed on April 2, 2007).
*10.1	Amendment effective September 1, 2008, to the Health & Human Services Commission Agreement for Health Services to the STAR, STAR+PLUS, CHIP, CHIP Perinatal programs effectively extending the contract through August 31, 2009, filed herewith.
*10.2	Contract dated August 26, 2008 between the State of New Mexico and AMERIGROUP New Mexico, Inc. for the period from August 1, 2008 through June 30, 2012, filed herewith.
10.3	Amendment effective September 1, 2008, to the Agency for HealthCare Administration Contract No. FA614 (AHCA Contract No. FA614 Amendment No. 9) effectively extending the contract through August 31, 2009 (incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed on September 8, 2008).
10.4	Amendment No. 3 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
10.5	Amendment No. 4 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
*10.6	Amendment No. 5 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
10.7	AMERIGROUP Corporation Amended and Restated Change in Control Benefit Policy dated July 30, 2008, filed herewith.
10.8	Settlement Agreement dated as of August 13, 2008, by and among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services; the State of Illinois acting through the Office of the Illinois Attorney General; Cleveland A. Tyson; AMERIGROUP Corporation; and AMERIGROUP Illinois, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K on August 14, 2008).
10.7	AMERIGROUP Corporation Corporate Integrity Agreement (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 14, 2008).
14.1	AMERIGROUP Corporation Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to our Current Report on Form 8-K filed on August 14, 2008).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.

* The Company has requested confidential treatment of the redacted portions of this exhibit pursuant to Rule 24b-2, under the Securities Exchange Act of 1934, as amended, and has separately filed a complete copy of this exhibit with the Securities and Exchange Commission.

30

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERIGROUP Corporation
By:	/s/  James G. Carlson
	James G. Carlson
	Chairman and Chief Executive Officer

Date: October 28, 2008

By:	/s/  James W. Truess
	James W. Truess
	Executive Vice President and Chief Financial Officer

Date: October 28, 2008

31

EXHIBITS

Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to exhibit 3.1 to our Registration Statement on Form S-3 (No. 333-108831)).
3.2	Amended and Restated By-Laws of the Company (incorporated by reference to exhibit 3.1 to our Current Report on Form 8-K filed on February 14, 2008).
4.1	Form of share certificate for common stock (incorporated by reference to exhibit 4.1 to our Registration Statement on Form S-1 (No. 333-347410)).
4.2	Indenture related to the 2.0% Convertible Senior Notes due 2012 dated March 28, 2007, between AMERIGROUP Corporation and The Bank of New York, as trustee (including the form of 2.0% Convertible Senior Note due 2012) (incorporated by reference to exhibit 4.1 to our Current Report on Form 8-K filed on April 2, 2007).
4.3	Registration Rights Agreement dated March 28, 2007, between AMERIGROUP Corporation, Goldman Sachs, & Co., as representative of the initial purchasers (incorporated by reference to exhibit 4.2 to our Current Report on Form 8-K filed on April 2, 2007).
*10.1	Amendment effective September 1, 2008, to the Health & Human Services Commission Agreement for Health Services to the STAR, STAR+PLUS, CHIP, CHIP Perinatal programs effectively extending the contract through August 31, 2009, filed herewith.
*10.2	Contract dated August 26, 2008 between the State of New Mexico and AMERIGROUP New Mexico, Inc. for the period from August 1, 2008 through June 30, 2012, filed herewith.
10.3	Amendment effective September 1, 2008, to the Agency for HealthCare Administration Contract No. FA614 (AHCA Contract No. FA614 Amendment No. 9) effectively extending the contract through August 31, 2009, (incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed on September. 8, 2008).
10.4	Amendment No. 3 dated October 23, 2008 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
10.5	Amendment No. 4 dated October 23, 2008 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
*10.6	Amendment No. 5 dated October 23, 2008 between Georgia Department of Community Health and AMGP Georgia Managed Care Company, Inc. for the period from July 1, 2008 through June 30, 2009, filed herewith.
10.7	AMERIGROUP Corporation Amended and Restated Change in Control Benefit Policy dated July 30, 2008, filed herewith.
10.8	Settlement Agreement dated as of August 13, 2008, by and among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services; the State of Illinois acting through the Office of the Illinois Attorney General; Cleveland A. Tyson; AMERIGROUP Corporation; and AMERIGROUP Illinois, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K on August 14, 2008).
10.7	AMERIGROUP Corporation Corporate Integrity Agreement (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 14, 2008).
14.1	AMERIGROUP Corporation Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to our Current Report on Form 8-K filed on August 14, 2008).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002, dated October 28, 2008.

* The Company has requested confidential treatment of the redacted portions of this exhibit pursuant to Rule 24b-2, under the Securities Exchange Act of 1934, as amended, and has separately filed a complete copy of this exhibit with the Securities and Exchange Commission.

32

EX-10.1

Exhibit 10.1

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)
Subject: HHSC Managed Care Contract	HHSC Contract No. 529-06-0280-00002-K

Part 1: Parties to the Contract:

This Contract Amendment (the “Amendment”) is between the Texas Health and Human Services Commission (HHSC), an administrative agency within the executive department of the State of Texas, having its principal office 4900 North Lamar Boulevard, Austin, Texas 78751, and Amerigroup Texas, Inc. (HMO) a corporation organized under the laws of the State of Texas, having its principal place of business at: 1200 East Copeland Road, Suite 200, Arlington, Texas 76011. HHSC and HMO may be referred to in this Amendment individually as a “Party” and collectively as the “Parties.”

The Parties hereby agree to amend their original contract, HHSC contract number 529-06-0280-00002 (the “Contract”) as set forth herein. The Parties agree that the terms will remain in effect and continue to except to the extent modified of in this Amendment.

This Amendment is executed by the Parties in accordance with the authority granted in Attachment A to the HHSC Managed Care Contract document, “HHSC Uniform Managed Care Contract Terms & Conditions,” Article 8, “Amendments and Modifications.”

Part 2: Effective Date ofAmendment:	Part 3: Contract Expiration Date	Part 4 Operational Start Date:
September 1, 2008	August 31, 2010	STAR and CHIP HMOs: September 1, 2006
		STAR+PLUS HMOs: February 1, 2007
		CHIP Perinatal HMOs: January 1, 2007

Part 5: Project Managers:

HHSC:	HMO:
Scott Schalchlin	Aileen McCormick
Director, Health Plan Operations 11209 Metric Boulevard, Building H Austin, Texas 78758 Phone: 512-491-1866 Fax: 512-491-1969	Amerigroup Texas, Inc.      6700 West Loop South, Suite 200  Bellaire, Texas 77401 Phone: 713-218-5101 Fax: 713-218-8692 E-mail: amccorm@amerigroupcorp.com

Part 6: Deliver Legal Notices to:

HHSC:	HMO:
General Counsel	Amerigroup Texas, Inc.
4900 North Lamar Boulevard, 4th Floor	6700 West Loop South, Suite 200
Austin, Texas 78751	Bellaire, Texas 77401
Fax: 512-424-6586	Fax: 713-218-8692

Part 7: HMO Programs and Service Areas:

This Contract applies to the following HHSC HMO Programs and Service Areas (check all that apply). All references in the Contract Attachments to HMO Programs or Service Areas that are not checked are superfluous and do not apply to the HMO.

Page 1 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)
Subject: HHSC Managed Care Contract	HHSC Contract No. 529-06-0280-00002-K

     Medicaid STAR HMO Program

     Service Areas:

o	Bexar	o	Lubbock
þ	Dallas	þ	Nueces
o	El Paso	þ	Tarrant
þ	Harris	þ	Travis

See Attachment B-6, “Map of Counties with HMO Program Service Areas,” for listing of counties included within the STAR Service Areas.

Medicaid STAR+PLUS HMO Program

     Service Areas:

þ	Bexar	o	Nueces
þ	Harris	þ	Travis

See Attachment B-6.1, “Map of Counties with STAR+PLUS HMO Program Service Areas,” for listing of counties included within the STAR+PLUS Service Areas.

CHIP HMO Program

Core Service Areas:

o	Bexar
þ	Dallas	þ	Nueces
o	El Paso	þ	Tarrant
þ	Harris	o	Travis
o	Lubbock	o	Webb

Optional Service Areas:

o	Bexar	o	Lubbock
o	El Paso	o	Nueces
o	Harris	o	Travis

See Attachment B-6, “Map of Counties with HMO Program Service Areas,” for listing of counties included within the CHIP Core Service Areas and CHIP Optional Service Areas.

Page 2 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)
Subject: HHSC Managed Care Contract	HHSC Contract No. 529-06-0280-00002-K

CHIP
	Perinatal Program
	Core Service Areas:	o	Bexar	o	Nueces
		o	Dallas	þ	Tarrant
		o	El Paso	o	Travis
		o	Harris	o	Webb
		o	Lubbock
	Optional Service Areas:
		o	Bexar	o	Lubbock
		o	El Paso	o	Nueces
		o	Harris	o	Travis

See attachment B-6.2, “Map of Counties with CHIP Perinatal HMO Program Service Areas,” for a list of counties included within the CHIP Perinatal Areas.

     Part 8: Payment

     PART 8 of the HHSC Managed Care Contract document, “Payment,” is modified to add the capitation rates for Rate Period 3.

     X            Medicaid STAR HMO PROGRAM

Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the STAR Program. The following Rate Cells and Capitation Rates will apply to Rate Period 3:

	Service Area: DALLAS
		Rate. Period 3 ,,
	Rate Cell	Capitation Rates
1	TANF Child >12 months	*****************REDACTED**************
2	TANF child < 12 months
3	TANF Adult
4	Pregnant Woman
5	Newborn < 12 months
6	Expansion Child >12 months
7	Expansion child < 12 months
8	Federal Mandate child
9	Delivery Supplemental Payment

Page 3 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

	Service Area: HARRIS
		Rate Period 3
	Rate Cell	Capitation Rates
1	TANF Child >12 months	*****************REDACTED**************
2	TANF child < 12 months
3	TANF Adult
4	Pregnant Woman
5	Newborn < 12 months
6	Expansion Child >12 months
7	Expansion child < 12 months
8	Federal Mandate child
9	Delivery Supplemental Payment

	Service Area NUECES
		Rate Period 3
	Rate Cell	Capitation Rates
1	TANF Child >12 months	*****************REDACTED**************
2	TANF child < 12 months
3	TANF Adult
4	Pregnant Woman
5	Newborn < 12 months
6	Expansion Child >12 months
7	Expansion child < 12 months
8	Federal Mandate child
9	Delivery Supplemental Payment

Page 4 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

	Service Area: TARRANT
		Rate Period 3
	Rate Cell	Capitation Rates
1	TANF Child >12 months	*****************REDACTED**************
2	TANF child < 12 months
3	TANF Adult
4	Pregnant Woman
5	Newborn < 12 months
6	Expansion Child >12 months
7	Expansion child < 12 months
8	Federal Mandate child
9	Delivery Supplemental Payment

Service Area TRAVIS
		Rate Period 3
	Rate Cell	Capitation Rates
1	TANF Child >12 months	*****************REDACTED**************
2	TANF child < 12 months
3	TANF Adult
4	Pregnant Woman
5	Newborn < 12 months
6	Expansion Child >12 months
7	Expansion child < 12 months
8	Federal Mandate child
9	Delivery Supplemental Payment

STAR SSI Administrative Fee: HHSC will pay a STAR HMO a monthly Administrative Fee of $14.00 per SSI Beneficiary who voluntarily enrolls in the HMO in accordance with Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10.

Delivery Supplemental Payment: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the methodology for establishing the Delivery Supplemental Payment for the STAR Program.

Page 5 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

     X Medicaid STAR+PLUS HMO Program

     Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the STAR+PLUS Program. The following Rate Cells and Capitation Rates will apply to Rate Period 3:

STAR+PLUS Service Area BEXAR
	Rate Cell	Rate Period 3 Capitation Rates
1.	Medicaid Only Standard Rate	*****************REDACTED************
2.	Medicaid Only 1915(C) Nursing Facility Waiver Rate
3.	Dual Eligible Standard Rate
4.	Dual Eligible 1915(C) Nursing Facility Waiver Rate
5.	Nursing Facility — Medicaid Only
6.	Nursing Facility — Dual Eligible

STAR+PLUS Service Area: HARRIS (Harris Co & Rains Contiguous)
	Rate Cell	Rate Period 3 Capitation Rates
1.	Medicaid Only Standard Rate	*****************REDACTED************
2.	Medicaid Only 1915(C) Nursing Facility Waiver Rate
3.	Dual Eligible Standard Rate
4.	Dual Eligible 1915(C) Nursing Facility Waiver Rate
5.	Nursing Facility — Medicaid Only
6.	Nursing Facility — Dual Eligible

Page 6 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract

HHSC Contract No. 529-06-0280-00002-K

STAR+PLUS Service Area: TRAVIS
	Rate Cell	Rate Period 3 Capitation Rates
1.	Medicaid Only Standard Rate	*****************REDACTED*************
2.	Medicaid Only 1915(C) Nursing Facility Waiver Rate
3.	Dual Eligible Standard Rate
4.	Dual Eligible 1915(C) Nursing Facility Waiver Rate
5.	Nursing Facility — Medicaid Only
6.	Nursing Facility — Dual Eligible

X CHIP HMO PROGRAM

Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the CHIP Program. The following Rate Cells and Capitation Rates will apply to Rate Period 3:

	Service Area DALLAS
		Rate Period 3
	Rate Cell	Capitation Rates
1	< Age 1	*****************REDACTED**************
2	Ages 1 through 5
3	Ages 6 through 14
4	Ages 15 through 18

Page 7 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

	Service Area: HARRIS
		Rate Period 3
	Rate Cell	Capitation Rates
1	< Age 1	*****************REDACTED**************
2	Ages 1 through 5
3	Ages 6 through 14
4	Ages 15 through 18

	Service Area NUECES
		Rate Period 3
	Rate Cell	Capitation Rates
1	< Age 1	*****************REDACTED**************
2	Ages 1 through 5
3	Ages 6 through 14
4	Ages 15 through 18

	Service Area TARRANT
		Rate Period3
	Rate Cell	Capitation Rates
1	< Age 1	*****************REDACTED**************
2	Ages 1 through 5
3	Ages 6 through 14
4	Ages 15 through 18

Delivery Supplemental Payment: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the methodology for establishing the Delivery Supplemental Payment for the CHIP Program. The CHIP Delivery Supplemental Payment is $3,100.00 for all Service Areas.

Page 8 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

X CHIP Perinatal Program

Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the CHIP Perinatal Program.

	Service Area: TARRANT
		Rate Period 3
	Rate Cell	Capitation Rates
1	Perinate Newborn 0% — 185%	*****************REDACTED**************
2	Perinate Newborn 186% — 200%
3	Perinate 0% — 185%
4	Perinate 186% — 200%

Delivery Supplemental Payment: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the methodology for establishing the Delivery Supplemental Payment for the CHIP Perinatal Program. The CHIP Perinatal Delivery Supplemental Payment is $3,100.00 for Perinates between 186% and 200% of the Federal Poverty Level for all Service Areas.

Part 9: Contract Attachments:

Modifications to Part 9 of the HHSC Managed Care Contract document, “Contract Attachments,” are italicized below:

A: HHSC Uniform Managed Care Contract Terms & Conditions — Version 1.10 is replaced with Version 1.11

B: Scope of Work/Performance Measures — Version 1.10 is replaced with Version 1.11 for all attachments, except if noted.

B-1: HHSC RFP 529-04-272, Sections 6-9

B-2: Covered Services

B-2.1 STAR+PLUS Covered Services

B-2.2 CHIP Perinatal Program Covered Services

B-3: Value-added Services

B-3.1 STAR+PLUS Value-added Services

B-3.2 CHIP Perinatal Program Value-added Services

B-4: Performance Improvement Goals

B-4.1 SFY 2008 Performance Improvement Goals

B-5: Deliverables/Liquidated Damages Matrix

B-6: Map of Counties with STAR and CHIP HMO Program Service Areas

B-6.1 STAR+PLUS Service Areas

B-6.2 CHIP Perinatal Program Service Areas

B-7: STAR+PLUS Attendant Care Enhanced Payment Methodology

C: HMO’s Proposal and Related Documents

C-1: HMO’s Proposal

C-2: HMO Supplemental Responses

C-3: Agreed Modifications to HMO’s Proposal

Page 9 of 10

Contractual Document (CD)

Responsible Office: HHSC Office of General Counsel (OGC)

Subject: HHSC Managed Care Contract HHSC Contract No. 529-06-0280-00002-K

Section 10.04(b) added by Version 1.8

Part 10: Special Provision for Nueces Service Area

Attachment A, Section 10.04 is amended to include sub-part (b) as follows:

(b) In addition to the reasons set forth in Section 10.04(a), the Parties expressly understand and agree that HHSC may, at any time, unilaterally adjust the Rate Period 2 STAR Program Capitation Rates for the Nueces Service Area. HHSC is entitled to unilaterally adjust such rates, prospectively and/or retrospectively, if it determines that: (1) the cumulative Rate Period 2 Encounter Data for all HMOs in the Nueces Service Area does not support the Capitation Rates; or (2) economic factors in the Nueces Service Area significantly and measurably impact providers or the delivery of Covered Services to Members. For adjustments made pursuant to this Section 10.04(b), HHSC will provide written notice at least ten (10) Business Days before: (1) the effective date of a prospective adjustment; (2) offsetting Capitation Payments to recover retrospective adjustments. Any adjustments to the Rate Period 2 Capitation Rates must meet the actuarial soundness requirements of Attachment A, Section 10.03, “Certification of Capitation Rates.”

Part 11: Signatures:

The Parties have executed this Contract Amendment in their capacities as stated below with authority to bind their organizations on the dates set forth by their signatures. By signing this Amendment, the Parties expressly understand and agree that this Amendment is hereby made part of the Contract as though it were set out word for word in the Contract.

Texas Health and Human Services Commission	Amerigroup Texas, Inc.
/S/ C.E. Bell, MD	/S/ Aileen McCormick
Charles E. Bell, M.D.	By: Aileen McCormick
Deputy Executive Commissioner for Health Services	Title: President and CEO
Date: 8/29/08	Date: 8/5/08

Page 10 of 10

EX-10.2

Exhibit 10.2

MEDICAID LONG-TERM SERVICES
AGREEMENT

BETWEEN

THE STATE OF NEW MEXICO

HUMAN SERVICES DEPARTMENT
AND
AGING & LONG-TERM SERVICES
DEPARTMENT

AND

AMERIGROUP COMMMUNITY
CARE OF NEW MEXICO, INC.

DATED: July 1, 2008

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Table of Contents

Article 1. Recitals	7
Article 2. Definitions	9
Article 3. Contractor Responsibilities	17
3.1 Compliance	17
3.2 Contract Management	17
3.3 Member Enrollment	19
A. Maximum Medicaid Enrollment	19
B. Enrollment Requirements	19
C. Eligibility	20
D. State Exemptions	20
E. Special Situations	21
F. Enrollment Process for Members	21
G. Member Disenrollment, Request by CONTRACTOR	24
H. Member Initiated Disenrollment	25
I. State Initiated Disenrollment	25
J. Retroactive Reenrollment	25
3.4 Member Services	26
A. Policies and Procedures	26
B. Member Education	27
C. MCO Enrollment Information	28
D. Member Handbook	28
E. Benefit Information	29
F. Maintenance of Toll-Free Line	31
G. Member Identification Card	31
H. Member Bill of Rights and Responsibilities	31
3.5 Quality Assurance	32
A. Consumer Advisory Board Member	32
B. Quality Management and Quality Improvement (QM/QI) Program	32
C. Performance Measures and Tracking Measures	34
D. Member Satisfaction Survey	35
E. External Quality Review	36
F. Reports	37
G. Standards for ISP Development	38
H. Standards for Participant Safety	40
I. Standards for Consumer/Participant Direction	41
J. Standards for Access	41
K. Coordination	42
L. Disease Management Programs	45
M. Clinical Practice Guidelines for ISHCN	46
N. Utilization Management (UM)	46
O. Authorization and Notice of Services	47
P. Denials and Notice of Adverse Action	49

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3.6 Providers	49
A. Required Policies and Procedures	50
B. General Information Submitted to the State	51
C. The Primary Care Provider (PCP)	51
D. Primary Care Responsibilities	51
E. CONTRACTOR Responsibility for PCP Services	52
F. Selection or Assignment to a PCP	52
G. Long-Term Services (LTS) Providers	53
H. CONTRACTOR Responsibility for LTS	54
I. Specialty Providers	54
J. Other Provider Types	54
K. Shared Responsibility between the CONTRACTOR and Public Health Offices	55
L. Indian Health Services (IHS) & Tribal Health Centers	55
M. Family Planning Services and Providers	56
N. State Operated Long-Term Care Facilities	57
O. Standards for Provider Credentialing and Re-Credentialing	57
P. Organizational Providers	58
Q. Primary Source Verification	58
3.7 Covered Services, Supports, and Goods; Excluded Benefits; and Value Added Services	58
3.8 Culturally Competent Services	59
3.9 Individuals with Special Heath Care Needs (ISHCN)	61
A. General Requirements	61
3.10 Grievance and Appeals	61
A. General Requirements for Grievance and Appeals	62
B. Grievance	63
C. Appeal	64
D. Expedited Resolution of Appeals	65
E. Special Rule for Certain Expedited Service Authorization Decisions	68
F. Information about Grievance System to Network Providers	68
G. Grievance and/or Appeal Files	68
H. Reporting	68
I. Provider Grievance and Appeals	68
3.11 Fiduciary Responsibilities	69
A. Financial Viability	69
B. Financial Stability	69
C. Other Financial Requirements	71
D. Other Fiduciary Requirements	73
E. Reinsurance	73
3.12 Program Integrity	74
3.13 System Requirements	75
A. General Requirements	75

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B. System Hardware, Software and Information System Requirements	75
C. Provider Network Information Requirements	77
D. Claims Processing Requirements	77
E. Member Information Requirements	78
F. Encounter and Network Provider Reporting Requirements	79
Article 4 – Limitation of Cost	81
Article 5 – HSD/MAD and ALTSD Responsibilities	81
Article 6 – Payments and Financial Provisions	83
6.1 General Financial Provisions	83
6.2 Cohort Categories	85
6.3 Year-One Risk Adjustment to Capitation Rates for NF LOC Members	85
A. General Provisions	85
B. Timing of Risk Adjusted Capitation Rates in Year One	86
C. NF LOC Cohorts Year One Risk Adjusted Capitation Rates for April, 2009-June 30, 2009	86
D. Risk Adjustment Factors	86
E. Mix of Members	87
6.4 Payment Methodology	88
A. Capitation Rate Development	88
B. Capitation Payment Process and Terms of Service	88
6.5 Supplemental Payments for Services to Native Americans	90
6.6 Administrative Costs	90
A. Administrative Structure	90
6.7 Special Payment Requirements	92
A. Reimbursement of Federally Qualified Health Centers (FQHCS)	92
B. Reimbursement for Family Planning Services	93
C. Reimbursement for Women in the Third-Trimester of Pregnancy	93
D. Reimbursement for State Operated Long-Term Care Facilities	93
E. Other Special Payment Requirements.	94
F. Compensation for UM Activities	94
G. Special Circumstances for Pharmacy Reimbursement	94
6.8 Reimbursement for Emergency Services	95
6.9 Assignment of Responsibility for Member Care	96
6.10 Coordination of Benefits	97
Article 7 – State Contract Administrator	98

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Article 8 – Enforcement	98
8.1	98
8.2 State Sanctions	98
8.3 Federal Sanctions	103
Article 9 – Termination	104
Article 10 – Termination Agreement	106
Article 11 – Rights upon Termination or Expiration	108
Article 12 – Contract Modification	109
Article 13 – Intellectual Property and Copyright	109
Article 14 – Appropriations	110
Article 15 - Disputes	110
Article 16 – Applicable Law	111
Article 17 – Status of CONTRACTOR	112
Article 18 –Assignments	112
Article 19 - Subcontracts	112
Article 20 - Release	115
Article 21 – Records and Audit	116
Article 22 - Indemnification	118
Article 23 – Liability	120
Article 24 – Equal Opportunity Compliance	120
Article 25 – Rights to Property	120
Article 26 – Erroneous Issuance of Payment or Benefits	120
Article 27 – Excusable Delays	120
Article 28 - Marketing	121
Article 29 – Prohibition of Bribes, Gratuities & Kickbacks	123

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Article 30 - Lobbying	123
Article 31 – Conflict of Interest	124
Article 32 - Confidentiality	124
Article 33 – Cooperation with the Medicaid Fraud Control Unit	125
Article 34 - Waivers	126
Article 35 – Provider Availability	126
Article 36 - Notice	127
Article 37 - Amendments	127
Article 38 – Suspension, Debarment, and other Responsibility Matters	127
Article 39 – New Mexico Employees Health Coverage	129
Article 40 – Entire Agreement	130
Article 41 – Authorization for Care	130
Article 42 – Duty To Cooperate	130
Article 43 – Merger	130
Article 44 – Penalties for Violation of Law	130
Article 45 – Workers Compensation	131
Article 46 – Invalid Term or Condition	131
Article 47 – Enforcement of Agreement	131
Article 48 – Authority	131
Appendix A (BENEFITS/SERVICES EXCLUDED BENEFITS AND VALUE ADDED BENEFITS/SERVICES)
Appendix B (Reports)
Appendix C (Money Follows the Person)
Appendix D (Megs and Cohorts)

6

This Agreement (“Agreement”) between the New Mexico Human Services Department (“HSD”), the New Mexico Aging & Long-Term Services Department (“ALTSD”), jointly referred to as “the State” and AMERIGROUP Community Care of New Mexico, Inc. (“CONTRACTOR”) is entered into by and between the parties on this ___ day of                                         , 200___.

Upon becoming effective, the term of this Agreement shall be from July 1, 2008 through June 30, 2012, or at an effective date determined by the United States Department of Health and Human Services’ Centers for Medicare and Medicaid Services (“CMS”), or otherwise amended or terminated pursuant to its terms. Under no circumstances shall this Agreement exceed a total of four (4) years in duration. Further, this Agreement shall not become effective until approved in writing by the New Mexico Department of Finance and Administration and CMS.

The terms “contract” and “agreement” are used interchangeably throughout this Agreement.

ARTICLE 1 – RECITALS

1.1 All services provided pursuant to this Agreement are subject to the New Mexico Procurement Code and 1.4.1 NMAC, unless specifically provided otherwise herein.

1.2 All services purchased under this Agreement shall be subject to the following provisions for administration of the New Mexico Medicaid program, which are incorporated herein by reference and shall include:

(A) the Human Services Department, Medical Assistance Division (“HSD/MAD”) program eligibility and provider policy manuals, including all updates, revision, substitutions and replacements;

(B) Title XIX and Title XXI of the Social Security Act and Code of Federal Regulations, Title 42 Parts 430 to end, as revised or otherwise amended;

(C) The Request for Proposal (“RFP”), all RFP Amendments, CONTRACTOR’s Questions and State’s Answers, and the State’s written Clarifications;

(D) the CONTRACTOR’s Best and Final Offer;

(E) the CONTRACTOR’s Proposal (including any and all written materials presented in the oral portions of the procurement process) where not inconsistent with this Agreement and subsequent amendments to this Agreement;

(F) All applicable statutes, regulations and rules implemented by the Federal Government, the State of New Mexico, and HSD/MAD, concerning Medicaid services, managed care organizations (“MCOs”), health maintenance organizations, fiscal and fiduciary responsibilities applicable under the New Mexico Insurance Code of New Mexico, NMSA 1978, §§59A-1-1, et seq., and any other applicable statutes and regulations;

(G) The HSD/MAD Policy Manual, including all updates and revisions thereto, or substitutions and replacements thereof, duly adopted in accordance with applicable law. All defined terms used within the Agreement shall have the meanings given them in the Policy Manual;

7

(H) The HSD/MAD MCO/SCP Systems Manual, including all updates and revisions, submissions and replacements; and

(I) The parties recognize that this Agreement reflects a shift and reorganization of the programs under the jurisdiction and management of HSD/MAD and ALTSD. It is specifically understood and agreed that references to specific laws, regulations, dates and other matters of a similar nature to currently existing and known laws, regulations, and dates. The parties understand and agree that such existing laws, rules, regulations and dates may change after execution of this Agreement, and that new enactments, adoptions, amendments, substitutions, replacements, successors, or the like will be given full force and effect and will govern this Agreement in the spirit in which this Agreement is made.

1.3	Due to increased budgetary constraints, a desire to increase efficiency and reduce fragmentation of long-term services, the State shall require that most Medicaid recipients of long-term care services, specifically full dual eligibles (those individuals that qualify for both Medicare and Medicaid services), nursing facility residents, Personal Care Option consumers, and individuals currently receiving Disabled & Elderly (D&E) Home and Community Based Waiver services enroll in the State’s Coordinated Long-Term Services (“CLTS”) program.
1.4	The State shall award a risk-based contract to the CONTRACTOR with statutory authority to enter into capitated agreements, assume risk and meet applicable requirements and/or standards delineated under State and Federal laws and regulations, including Title VI of the Civil Rights Act of 1964; Title IX of the Education Amendments of 1972 (regarding education programs and activities); the Age Discrimination Act of 1975; the Rehabilitation Act of 1973; and the Americans with Disabilities Act.
1.5	The CONTRACTOR possesses the required authorization and expertise to meet the terms of this Agreement.
1.6	The CLTS program is intended to coordinate program services for dual eligible recipients. In order to achieve this goal, the CONTRACTOR shall be in active pursuit, as of the effective date of this Agreement, of becoming a Medicare Special Needs Plan (SNP) or offer Medicare products in all counties agreed to by the parties. For purposes of this Section, “active pursuit” is defined as having applied to CMS to become a SNP or offer other Medicare products.
1.7	The parties acknowledge the need to work cooperatively to address and resolve problems that may arise in the administration and performance of this Agreement. The parties agree to document any amendments in writing prior to implementation of any new contract requirements.
1.8	The State may, in the administration of this Agreement, seek input on health and long-term service related issues from advisory groups, steering committees, or other consultants. The State may seek input from the CONTRACTOR on issues raised by such advisory groups, steering committees, or consultants that may affect the CONTRACTOR’s performance of its obligations under this Agreement.
1.9	The CONTRACTOR shall notify the State of the CONTRACTOR’s or its subcontractors’ potential public relations issues of which the CONTRACTOR becomes aware that could affect the State or this Agreement.
1.10	The parties recognize that the CLTS Program is contingent on approval by CMS of the State’s submission of a 1915(b) waiver for providing State Plan services utilizing a managed care approach and a 1915(c) home and-community based waiver for other services as presented by the State and permitted

8

by CMS, including all amendments thereto. The parties further recognize that 1915(c) home and-community based waiver services are dependent on funding requirements in order to provide such services. Therefore, the State shall determine access to CLTS 1915(c) home and-community based waiver services and shall notify the CONTRACTOR of Members deemed eligible for 1915(c) home and community-based waiver services.

1.11 This Agreement and its enforcement is contingent on the parties’ agreeing to the Capitation Rates for the first year of the CLTS Program.

NOW THEREFORE, in consideration of the mutual promises contained herein. HSD/MAD, ALTSD, and the CONTRACTOR agree as follows:

ARTICLE 2 — DEFINITIONS

2.1 Terms used throughout this Agreement have the following meaning, unless the context clearly indicates otherwise or as may be further defined herein:

“Abuse” means: (1) any intentional, knowing or reckless act or failure to act that produces or is likely to produce physical or great mental or emotional harm, unreasonable confinement, sexual abuse or sexual assault consistent with NMSA 1978, §30-47-1; or (2) provider practices that are inconsistent with sound fiscal, business, medical or service related practices and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care. Abuse also includes Member practices that result in unnecessary cost to the Medicaid program pursuant to 42 C.F.R. §455.2.

“Activities of Daily Living” means eating, dressing, oral hygiene, bathing, mobility, toileting, grooming, taking medications, transferring from a bed or chair and walking, consistent with NMSA 1978, §28-17-3.

“Advance Directive” means written instructions such as an Advance Directive, Mental Health Advance Directive, living will, durable health care power of attorney, durable mental health care power of attorney, or Advance Health Directive, relating to the provision of health care when an adult is incapacitated. [See generally, NMSA, 1978, §§27-7A-1 — 27-7A-18, and §§24-7B-1 — 24-7B-16].

“Adverse Determination” means a determination by the CONTRACTOR or CONTRACTOR’s utilization review agent that the health care services furnished, or proposed to be furnished to a Member, are not medically necessary or not appropriate. [See, 42 C.F.R. §438.408].

“Agency” means a New Mexico government department, such as the New Mexico Human Services Department, the New Mexico Children Youth and Families Department, the New Mexico Department of Health, the New Mexico Aging & Long-Term Services Department, or any of the departments participating in Medicaid managed care.

“ALTSD” means the New Mexico Aging & Long-Term Services Department of the State of New Mexico.

“Assignment Algorithm” means a mathematically weighted pre-determined method for assigning to MCOs Members who have not proactively selected an MCO during the required Selection Period. [See, NMAC 8.305.1.1, and NMAC 8.305.5.9].

9

“Assisted Living Services” are residential services that include personal support services, companion services, assistance with medication administration as set forth in Department of Health Regulations, 7.8.2 RESIDENTIAL HEALTH FACILITIES.

“At Risk” means the period of time that a Member is enrolled with the CONTRACTOR during which time the CONTRACTOR is responsible for providing Covered Services under Capitation. [See, NMAC 8.305.11.9].

“Begin Date” means the first day of the first full month following selection or assignment except in the following circumstances:

(1) Members who were in a NF prior to the LOC determination but not enrolled in Salud! for whom their Medicaid financial eligibility covers retroactive months. The Begin Date in this instance will be the first of the month in which both NF LOC and Medicaid eligibility coexist.

“Behavioral Health” means both mental health (MH), including emotional disorders, and substance abuse (SA), including chemical dependency disorders. Behavioral Health includes co-occurring MH and SA disorders.

“Benefit Package” means Medicaid Covered Services, including home and community-based services, which shall be furnished by the CONTRACTOR. [See, NMAC 8.305.7, 8.310.2, 8.311.1, et seq.].

“Capitation” means a method of payment to the CONTRACTOR by an Agency of a fixed amount of money each month for each enrolled Member, regardless of the amount of Covered Services used by the Member. [See, NMAC 8.305.1.7, 8.305.11.9].

“Claim” means a bill for services submitted to the CONTRACTOR manually or electronically; a line item of service on a bill; or all services for one Member within a bill.

“Claim Dispute” means a dispute, filed by a provider or CONTACTOR as applicable, involving payment of a claim, denial of a claim, or imposition of a sanction.

“Clean Claim” means a manually or electronically submitted claim from a participating provider that contains substantially all the required data elements necessary for accurate adjudication without the need for additional information from outside the CONTRACTOR’s system. A Clean Claim may include errors originating in the State’s system. It does not include a claim from a provider who is under investigation for fraud or abuse, or a claim under review for medical necessity. A Clean Claim is not materially deficient or improper, such as one that lacks substantiating documentation currently required by the CONTRACTOR. A Clean Claim has no particular or unusual circumstances requiring special treatment that prevents payment from being made by the CONTRACTOR within 30 days of the date of receipt if submitted electronically or 45 days if submitted manually. [See, NMAC 8.305.1.7, 8.305.11.9].

“CMS” means the Centers for Medicare and Medicaid Services, which is the federal agency responsible for administering Medicare and overseeing state administration of Medicaid.

“Complaint” means an expression of dissatisfaction expressed by a Complainant, orally or in writing to the CONTRACTOR or to the State about any matter related to the CONTRACTOR other than an Action. The term “Action” is further defined in Section 3.10 of this Agreement. As provided for in 42 C.F.R. §438.400, possible subjects for Complaints, include, but are not limited to, the quality of care of services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the Member’s rights.

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“Concurrent Review” means a process of updating clinical information from the provider to the CONTRACTOR regarding a Member who is already receiving a Covered Service to evaluate whether the service continues to be medically necessary.

“Consumer/Participant Direction” means the ability of the Member to be actively involved in and in control of, to the extent possible, in all aspects of the Member’s Individual Service Plan (ISP), to identify and include others in the ISP planning process, and to hire and direct personal assistance services as desired.

“Continuous Quality Improvement” means a process for improving quality that: (1) assumes opportunities of improvement are unlimited; (2) is Member-oriented; (3) is data driven; (4) results in implementation of improvements; (5) requires continual measurement of implemented improvements; and (6) requires modification of improvements as indicated. [See, NMAC 8.305.1.7].

“Contractor” means a person or entity that has a prepaid capitated contract with the State pursuant to NMAC 8.305 to provide health care to Members under this article either directly or through subcontracts with providers.

“Copayment” means a monetary amount specified by the State that the Member pays directly to the provider at the time Covered Services are rendered consistent with 42 C.F.R. §§447.53 through 447.56. [See also, NMAC 8.200.430].

“Covered Services” means those services listed in Appendix A of this Agreement delivered in accordance with this Agreement.

“Critical Incident” means a reportable incident that may include, but is not limited to, abuse, neglect, or exploitation; death; environmental hazards; law enforcement intervention; and emergency services, that encompasses the full range of physical health, other State Plan services, and home and community-based services.

“Cultural Competence” means a set of congruent behaviors, attitudes and polices that come together in a system, agency or among professionals, that enables them to work effectively in cross-cultural situations. Cultural competency involves the integration and transformation of knowledge, information and data about individuals and groups of people into specific clinical standards, service approaches, techniques and marketing programs that match an individual’s culture to increase the quality and appropriateness of health care and outcomes. [See, NMAC 8.305.1.7].

“Day or Days” means calendar day, unless specified otherwise. The first day is included and the last day is excluded. Timeliness or due dates falling on a weekend or State or Federal holiday shall be extended to the first business day after the weekend or holiday.

“Delegation” means a formal process by which the CONTRACTOR gives another entity the authority to perform certain functions on its behalf. The CONTRACTOR retains full accountability for the delegated functions. [See, NMAC 8.305.1.7].

“Denial, Administrative/Technical” means a denial of authorization requests due to the requested procedure, service or item not being covered by Medicaid or due to provider noncompliance with administrative policies and procedures established by an Agency. [See, 42 C.F.R. §456, and NMAC 8.305.1.7].

“Denial, Clinical” means a decision not to authorize a service because the Member does not meet the clinical level of care criteria for a requested service. Utilization Management (UM) staff may recommend an alternative

11

service based on a Member’s medical, functional, or social need. If the requesting provider accepts this alternative service, it is considered a new request for the alternative service and a denial of the original request. [See, 42 C.F.R. §456, NMSA 1978, §59A-57-4, NMAC 8.305.7].

“Disease Management” means a strategy of delivering health services using interdisciplinary clinical teams, continuous analysis of relevant data, and cost-effective technology to improve the health outcomes of Members with specific diseases. MCOs must provide for a disease management program for Members through close coordination with and assistance from PCPs and seek to adopt uniform key health status indicators. Examples of chronic diseases that may be included are diabetes, cardiovascular disease, chronic obstructive pulmonary disease, asthma, and obesity. This list is not exclusive. [See, NMSA 1978, §27-2-12].

“Disenrollment, Member Initiated” means a request by a Member to be disenrolled for a substantial reason(s); or transfer of a Member as determined by State on a case-by-case basis from the MCO to a different MCO during a Member lock-in period. [See, NMAC 8.305.5].

“Dual Eligible(s)” means individuals, who, by reason of age, income and/or disability qualify for Medicare and full-Medicaid benefits under section 1902(a)(10)(A) or 1902(a)(10)(C), by reason of section 1902(f), or under any other category of eligibility for medical assistance for full benefits..

“Durable Medical Equipment” means equipment that can withstand repeated use, is primarily used to serve a medical purpose, is minimally or not useful to individuals in the absence of an illness or injury and is appropriate for use at home.

“Emergency Medical Condition” means a medical or behavioral health condition manifesting itself by acute symptoms of sufficient severity (including severe pain), such that a prudent layperson, who possesses an average knowledge of health and medicine could reasonably expect the absence of immediate medical care could result in:

(1)      placing the Members’ health in serious jeopardy;

(2)      serious impairment to bodily functions;

(3)      serious dysfunction of any bodily organ or part; or

(4)      serious disfigurement to the Member.

[See, NMAC 8.305.1].

“Encounter” means a Covered Service or group of Covered Services delivered by a provider to a Member during a visit between the Member and provider.

“Encounter Data” means data elements from Encounters, for fee-for-service claims or capitated services proxy claims. Encounter Data elements are a combination of those elements required by HIPAA-compliant transaction formats, which comprise a minimum core data set for states and MCOs and those required by CMS, or the State for use in managed care. [See, NMAC 8.305.1.7, 8.305.10].

“Enrollee” means a Medicaid recipient who is currently enrolled in an MCO managed care program.

“Exemption” means the removal of an eligible Medicaid Member from mandatory enrollment in CLTS and placement in the Medicaid fee-for-service program. Such action is only used in extraordinary circumstances, as determined by the State on a case-by-case basis.

“Expedited Situation” means a living situation or circumstances from which a Potential Enrollee or Member might reasonably result in placing the Potential Enrollee or Member’s health in serious jeopardy, serious impairment to bodily functions, serious dysfunction of any bodily organ or part.

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“External Quality Review Organization (EQRO)” means an organization contracted with CMS to serve as an external quality review entity, Quality Improvement Organization or Independent Review Entity in accordance with the Social Security Act, Section 1902(a)(30)(C).

“FQHC” mean a Federally Qualified Health Center, an entity which meets the requirements and receives a grant and funding pursuant to Section 330 of the Public Health Service Act. An FHQC includes an outpatient health program or facility operated by a tribe or tribal organization under the Indian Self-Determination Act (PL 93-638) or an urban Indian organization receiving funds under Title V of the Indian Health Care Improvement Act. [See also, NMAC 8.305.11.9].

“Fraud” means an intentional deception or misrepresentation by a person or an entity with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable federal or state law, consistent with NMAC 8.305.13.10. [See, NMAC 8.305.1.7].

“Full Benefit Dual Eligible” means individuals enrolled in Medicare and eligible for full Medicaid benefits, not limited to covering costs, such as Medicare premiums.

“Grievance, Member” means an oral or written statement by a Member expressing dissatisfaction with any aspect of the CONTRACTOR’s administration of CLTS or its operations that is not an Action. “Action” is defined in Section 3.10 of this Agreement. [See, NMAC 8.305.1.7, 8.305. 12.9].

“Grievance, Provider” means an oral or written statement by a provider expressing dissatisfaction with any aspect of the CONTRACTOR’s administration of CLTS or its operations that is not an Action. “Action” is defined in Section 3.10 of this Agreement. [See, NMAC 8.305.1.7].

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §160, et seq., as amended or modified.

“Human Services Department, Medical Assistance Division (HSD/MAD)” means the administrative agency within the executive department of New Mexico state government established under Chapter 9, New Mexico Statutes Annotated 1978, or its designee, including but not limited to agencies of the Human Services Department.

“Individualized Service Plan (ISP)” means an individualized service plan developed with and for Members who have chronic or complex conditions. A Service Plan includes, but is not limited to, the following:

(1)	A Member’s history;
(2)	A summary of current medical and social needs and concerns;
(3)	Short and long term care needs and goals; and

(4) A list of services required and their frequency, and a description of who will provide the services.

In addition, and ISP means a plan developed by a team of professionals in consultation with the Member and others involved in the Member’s care to improve functional outcomes, including the standards in NMAC 8.314.3.15. The ISP must be in accordance with the approved CMS CLTS Home and Community Based Waiver program or New Mexico State Plan.

“Individuals with Special Health Care Needs (ISHCN)” means persons who have, or are at an increased risk for, a chronic physical, developmental, behavioral, neurobiological or emotional condition, or who have low to

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severe functional limitation and who also require health and related services of a type or amount beyond that required by individuals generally.

“Level of care” means the level of nursing care needed by an individual.

“Long-Term Services” is a continuum of services and assistance, ranging from in-home and community based services for elderly and individuals with disabilities who need help in maintaining their independence to institutional services for those who require an institutional level of support. Throughout the continuum of long-term services and supports, the goal is to provide needed services and supports for the Member while striving to maintain the Member’s independence to the greatest extent possible. Long-term Services are listed in Appendix A.

“Managed Care Organization (MCO)” means an organization under contract to assist the Agency to meet the requirements established under NMSA 1978, §27-2-12.

“Marketing” means the act or process of promoting a business or commodity. Marketing materials include brochures, leaflets, billboard materials and information or ads placed on or with the internet, newspapers, magazines, radio, phone book, and any other presentation materials used by the MCO, MCO representative, or MCO subcontractor to attract or retain Medicaid enrollment. [See, NMAC 8.305.1.7, 8.305.5.13].

“Medically Necessary Services” means clinical and rehabilitative physical, mental or behavioral health services that:

(1)	Are essential to prevent, diagnose or treat medical conditions or are essential to enable the Member to attain, maintain or regain the Member’s optimal functional capacity;
(2)	Are delivered in the amount, duration, scope and setting that is both sufficient and effective to reasonably achieve their purposes and clinically appropriate to the specific physical, mental and behavioral health care needs of the Member;
(3)	Are provided within professionally accepted standards of practice and national guidelines; and
(4)	Are required to meet the physical, mental and behavioral health needs of the Member and are not primarily for the convenience of the Member, the provider or the CONTRACTOR.

“Member” means a person who is entitled to benefits under Title XIX of the Social Security Act and Medicaid, is in a Medicaid eligibility category included in the Program, and is enrolled in the Medicaid Program with the CONTRACTOR.

“Mi Via” is the State’s self-directed waiver program pursuant to a 1915(c) home and community-based waiver.

“Network Provider” means an individual provider, clinic, group, association or facility employed by or contracted with the CONTRACTOR to furnish medical or long-term care services to the CONTRACTOR’s Members under the provisions of this Agreement.

“NF LOC” means Nursing Facility Level of Care.

“Non-Contracted Provider (Non-Network Provider)” means an individual provider, clinic, group, association or facility who provides Covered Services as described in NMAC 8.305.7 and who does not have a contract with the CONTRACTOR.

“Nursing Facility” means a licensed Medicare/Medicaid facilitycertified in accordance with 42 C.F.R. 483 to provide inpatient room, board and nursing services to Members who require these services on a continuous basis but who do not require hospital care or direct daily care from a physician.

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“Potential Enrollee” means a person who is determined eligible for the CLTS Program but has not yet enrolled.

“Post-stabilization Care Services” means Covered Services related to an Emergency Medical Condition that are provided after a Member is medically stabilized in order to maintain the stabilized condition, or, under the circumstances described in 42 C.F.R. §438.114(b) & (e) and 42 C.F.R. §422.113(c)(iii) to improve or resolve the Member’s condition.

“Primary Care Physician or Primary Care Provider (PCP)” means, for purposes of this Agreement, an individual who meets the requirements of NMAC 8.305.6.12, and is a Network Provider who has the responsibility for supervising, coordinating and providing primary health care to Members, initiating referrals for specialist care and maintaining the continuity of the Member’s care. A PCP may be a physician, certified nurse practitioner or physician assistant [see, NMAC 8.310.2.10, 8.310.2.13, and NMSA 1978, §§61-6-7, et seq.]; may include a specialist determined by the CONTRACTOR on an individualized basis for Members whose care is more appropriately managed by a specialist; faculty-led primary care teams consisting of residents and a supervising faculty physician; or other Network Providers who meet the CONTRACTOR’s credentialing requirements as a PCP. [See, NMAC 8.305.6.12].

“Primary Care” means all health services and laboratory services customarily furnished by or through a general practitioner, family physician, internal medicine physician, obstetrician/gynecologist, pediatrician, physician assistant, or certified nurse practitioner. [See, NMAC 8.305.1.7].

“Provider Lock-In (PCP Lock-in)” means a situation in which the CONTRACTOR requires that a Member see a specific identified Network Provider, while ensuring reasonable access to additional services, when the CONTRACTOR identifies utilization of unnecessary services or a Member’s behavior is detrimental or indicates a need to provide case continuity. [See, NMAC 8.305.6.12].

“Quality Assurance” means a process that is adopted by a health care entity that follows written standards and criteria. The process includes the activities of a health care entity or any of its committees that: investigate the quality of health care through the review of professional practices, training and experience; investigate patient cases or conduct of licensed health care providers, or encourage proper utilization of health care services and facilities, as required by NMAC 8.305.8. Quality Assurance follows a process of discovery, both prospective and retrospective to evaluate the program; identification of areas, for remediation; and implementation of quality improvement strategies to ensure that appropriate and timely action is taken, as indicated.

“Related Party” means a party that has, or may have, the ability to control or significantly influence the CONTRACTOR, or a party that is, or may be, controlled or significantly influenced by the CONTRACTOR. “Related Parties” include, but are not limited to, agents, managing employees, persons with an ownership or controlling interest in the disclosing entity, and their immediate families, subcontractors, wholly-owned subsidiaries or suppliers, parent companies, sister companies, holding companies, or other entities controlled or managed by any such entities or persons.

“Salud!”means the State’s managed care program for low-income eligible individuals not included in the State’s CLTS Program. The State operates Salud! pursuant to a 1915(b) waiver granted by CMS.

“Service Coordination” means a specialized service management that is performed by a Service Coordinator, in collaboration with the Member (and/or his/her family and representatives, as appropriate), and that includes but is not limited to:

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(1)	Identification of the Member’s needs, including physical health services, mental health services, social services, and long term support services; and development of the Member’s Individualized Service Plan (ISP) or treatment plan to address those needs;
(2)	Assistance to ensure timely and a coordinated access to an array of providers and services;
(3)	Attention to addressing unique needs of Members; and
(4)	Coordination with other services delivered outside the ISP, as necessary and appropriate.

Service Coordination operates independently within the MCO using recognized professional standards adopted by the CONTRACTOR and approved by the State, based on the Service Coordinator’s independent judgment to support the needs of the Member and is structurally linked to the other MCO systems, such as quality assurance, member services and grievances. Clinical and other decisions shall be based on the Medical Necessity of Covered Services and not fiscal consideration. [See, NMAC 8.305.1.7(7)].

“Service Coordinator” means an employee or subcontractor of CONTRACTOR with primary responsibility for providing service coordination/management to Members who have complex care needs including long term service and supports or needs, or who otherwise want assistance with service planning. The Service Coordinator need not be a medical professional. This person is authorized by the CONTRACTOR to approve the provision and delivery of Covered Services.

“State Fiscal Year (SFY)” means July 1^st through June 30^th.

“Single Statewide Entity (SE)” means the managed behavioral health organization that is contracted to deliver behavioral heath services to eligible Medicaid recipients.

“Special Needs Individual” means a Medicare Advantage (MA) eligible individual who is institutionalized, is entitled to medical assistance under a State plan under Title XIX, or has a severe or disabling chronic condition(s) and would benefit from enrollment in a specialized MA plan. [See, 42 C.F.R. §422.2].

“Special Needs Plan (SNP)” means a specialized Medicare Advantage coordinated care plan for special needs individuals, that exclusively or disproportionately serves special needs individuals under 42 C.F.R. §§422.2 and 422.52].

“State” means HSD/MAD and/or ALTSD, as applicable throughout this Agreement.

“State Plan” means a state-wide plan for Medicaid services submitted for approval to CMS under Title XIX of the federal Social Security Act.

“Subcontract (Third-Party Contract)” means a written agreement between the CONTRACTOR and a third-party, or between a subcontractor and another subcontractor, to provide services to the CONTRACTOR or subcontractor.

“Suspension or Suspended Provider” means that items or services furnished by a specified provider who has been convicted of a program-related offense in a Federal, State, or local court will not be reimbursed under Medicaid. [42 C.F.R. §455.2].

“Third Party Assessor” is a contracted entity with HSD/MAD that shall perform level of care assessments and re-assessments and/or utilization review(s) to determine eligibility into CLTS.

“Third Party Liability” means an individual, entity or program, which is or may be liable to pay all or part of the expenditures for Medicaid Members for services furnished under the New Mexico State Plan. [See, NMAC 8.305.1.7, and 8.305.11.9].

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“Tribal Facility 638” means a facility operated by a Native American/Indian tribe authorized to provide services pursuant to the Indian Self-Determination and Education Assistance Act. [See, 25 C.F.R. §900, as amended].

“Tribal Provider or IHS Provider” means a facility that is operated by a Native American/Alaskan Indian tribe authorized to provide services as defined in the Indian Health Care Improvement Act, 25 U.S.C. §§1601, et seq.

“Utilization Management (UM)” means a system for reviewing the appropriate and efficient allocation of health care services given or proposed to be given to a Member. [See, NMSA 1978, §59A-57-3].

“Value Added Service” means any service or benefit offered by the CONTRACTOR that is beyond the required Medicaid and home and community-based services.

“Waiver Program” means one or more of the State of New Mexico Medicaid home and community-based waiver programs authorized by CMS.

ARTICLE 3 — CONTRACTOR RESPONSIBILITIES

The CONTRACTOR shall perform professional services, including but not limited to, the following:

3.1 COMPLIANCE

     The CONTRACTOR must, to the satisfaction of the State, comply with:

(A) All provisions set forth in this Agreement;

(B) All applicable provisions of federal and state laws, regulations, waivers, and variances, as may be amended, including the implementation of a compliance plan; and

(C) All provisions relating to criminal history screening pursuant to 7.1.9 NMAC and NMSA 1978, §§29-17-2, et seq. of the Caregivers Criminal History Screening Act.

3.2 CONTRACT MANAGEMENT

(A) The CONTRACTOR must employ a qualified individual to serve as the Contract Manager for New Mexico operations. The Contract Manager must be primarily dedicated to the CONTRACTOR’s programs, hold a senior management position in the CONTRACTOR’s organization, and be authorized and empowered to represent the CONTRACTOR on all matters pertaining to the CONTRACTOR’s program and specifically this Agreement. The Contract Manager must act as a liaison between the CONTRACTOR, the State, and other state agencies and has responsibilities that include but are not limited to the following:

(1) ensuring the CONTRACTOR’s compliance with the terms of this Agreement, including securing and coordinating resources necessary for such compliance;

(2) implementing all action plans, strategies, and timeliness, including but not limited to the State’s work plan(s) in implementing its Money Follows the Person initiatives, see Appendix C;

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(3) overseeing all activities by the CONTRACTOR and its subcontractors;

(4) receiving and responding to all inquiries and requests by the State, or any State or Federal agency, in time frames and formats reasonably acceptable to the parties;

(5) meeting with representatives of HSD/MAD, ALTSD, and other Agencies, on a periodic or as-needed basis and resolving issues that arise;

(6) attending and participating in regular meetings with HSD/MAD, ALTSD and other Agencies and attending and participating in stakeholder meetings;

(7) making best efforts to promptly resolve any issues related to this Agreement identified by the State, or the CONTRACTOR; and

(8) working cooperatively with other State of New Mexico contracting partners, including but not limited to: (1) SALUD! Managed Care Organizations; (2) SE; (3) Mi Via contractors; (4) MMIS contractor, which is currently ACS; (5) the TPA, and (6) other identified contractors as, from time-to-time may be identified by the State.

(B) The State reserves the right to require the CONTRACTOR to make changes in its staff assignments, subject to applicable laws, regulations and reasonable CONTRACTOR employment policies as uniformly applied to CONTRACTOR’s staff with thirty (30) days notice.

(C) The CONTRACTOR may not have an employment, consulting or other agreement with a person who has been convicted of crimes specified in Section 1128 of the Social Security Act for the provision of items and services that are significant and material to the CONTRACTOR’s obligations under this Agreement.

(D) Compliance. The CONTRACTOR shall:

(1) designate a compliance officer and a compliance committee that are accountable to senior management;

(2) provide effective training and education for the compliance officer and the CONTRACTOR’s employees;

(3) implement effective lines of communication between the compliance officer and the CONTRACTOR’s employees;

(4) require enforcement of standards through well-publicized disciplinary guidelines; and

(5) have a provision for prompt response to detected offenses and for development of corrective action initiatives relating to compliance with the this Agreement.

(E) Delegation. The CONTRACTOR shall:

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(1) not assign, transfer or delegate key management functions such as utilization review, utilization management or care coordination without the explicit written approval of the State;

(2) oversee and be held accountable for any function and responsibility, including claims submission requirements, that it delegates to any subcontractor;

(3) evaluate the prospective subcontractor’s ability to perform the activities to be delegated;

(4) have a written agreement between the CONTRACTOR and the subcontractor that specifies the activities and report responsibilities delegated to the subcontractor and provides for revoking delegation or imposing other sanctions if the subcontractor’s performance is inadequate;

(5) monitor the subcontractor on an ongoing basis and subject it to review on a periodic basis as agreed upon by CONTRACTOR and State; and

(6) ensure that if deficiencies or areas for improvement are identified, corrective action must be taken by CONTRACTOR and the subcontractor.

3.3 MEMBER ENROLLMENT

(A)

Maximum Medicaid Enrollment

The State and the CONTRACTOR may mutually agree in writing to establish a maximum Medicaid enrollment level for Members, which may vary throughout the term of this Agreement. The maximum Medicaid enrollment also may be established by the State on a statewide or county-by-county basis based on the capacity of the CONTRACTOR’s provider network, or to ensure that the CONTRACTOR has the capacity to provide statewide Covered Services to its Members. Subsequent to the establishment of this limit, if the CONTRACTOR wishes to change its maximum enrollment level, the CONTRACTOR shall notify the State in writing ninety (90) calendar days prior to the desired effective date of the proposed change. The State shall approve all requests for changing maximum enrollment levels before implementation. Should a maximum enrollment level be reduced to below the actual enrollment level, the State may disenroll Members to establish compliance with the new limit. The State may reduce the maximum enrollment levels for reasons such as imposing a sanction for not having sufficient Network Providers to guarantee access, violating marketing regulations, or for a material breach of this Agreement.

(B)	Enrollment Requirements
	As required by 42 C.F.R. §434.25, the CONTRACTOR shall accept eligible individuals, in the order in which they apply and:

(1)	without restriction, and pursuant to waiver authority, unless authorized by CMS Regional Administrator;
(2)	up to the limits established pursuant to this Agreement;

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(3) the CONTRACTOR shall not discriminate against eligible individuals on the basis of health status, need for health services, disability, race, color, national origin, sexual orientation, religion, and gender, and will not use any policy or practice that has the effect of discriminating on the basis of race, color, or national origin; and

(4) the CONTRACTOR shall assume responsibility for all covered medical conditions of each Member inclusive of pre-existing conditions as of the effective date of enrollment.

(C) Eligibility

The State, or its designee, including but not limited to a TPA shall determine eligibility for enrollment into the CLTS program. Continued eligibility for the CLTS program shall be done annually and shall include a re-assessment by the State, or its designee, including but not limited to a TPA. Mandatory populations include:

(1) Full benefit Dual Eligible Members;

(2)	Members, 21 years of age or older who are receiving or who qualify for current Medicaid State Plan Personal Care Option services;
(3)	Members residing in a Nursing Facility;

(4) Members currently receiving, or who qualify for, D&E Home and Community-Based waiver services; and

(5) Members in the Mi Via 1915(c) waiver who meet current D&E or Brain Injury categories of eligibility. The CONTRACTOR will only be at-risk and financially responsible for 1915(b) waiver services for these Members. Members will self-direct any 1915(c) waiver services.

Individuals of any age who meet eligibility criteria set forth in New Mexico’s 1915(c) Developmental Disabilities and/or New Mexico’s 1915(c) Medically Fragile and/or New Mexico’s 1915(c) HIV/AIDS Home and Community-Based Waivers are not eligible.

The State, or its designee, shall further determine eligibility for CLTS 1915(c) home and community-based waiver services through an allocation process and notification of eligibility to the CONTRACTOR. Such allocation and notification from the State to the CONTRACTOR shall be outlined in a Letter of Direction (LOD) issued by the State prior to implementation of the CLTS Program and after consultation with the CONTRACTOR.

For re-assessments, the State shall send reassessment reminder lists to the CONTRACTOR who shall assist the Member and facilitate in gathering the necessary documentation required to the State, or its designee, including but not limited to a TPA for the level of care determination and continued eligibility for the CLTS program.

(D) State Exemptions

The State shall grant exemptions to mandatory enrollment based upon criteria established by it. A Member or his/her representative, parent, or legal guardian shall submit a request for such an exemption in writing to the State, including a description of the special circumstances justifying

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an exemption. Requests are evaluated by the State and forwarded to the HSD/MAD Medical Director or his/her designee for final determination.

(E) Special Situations

(1)

Hospitalized Members. For a Member who is hospitalized at the time of disenrollment from the CONTRACTOR, whether disenrollment is due to disenrollment from CLTS or an approved switch to another CLTS MCO, the CONTRACTOR shall be responsible until the date of discharge for payment for all covered facility and professional services provided within a licensed acute care facility or non-psychiatric specialty unit as designated by the New Mexico Department of Health. The payer at the date of hospital admission (MCO or FFS) remains responsible for services until the date of discharge.

(2)

Members Receiving Hospice Services. Members who have elected and are receiving hospice services prior to enrollment in CLTS shall be exempt from enrolling in an MCO unless they revoke their hospice election.

(F) Enrollment Process for Members

(1)	Enrollment Choice Period. A new Member shall have no less than sixteen (16) calendar days to select an MCO. This shall constitute the “Minimum Selection Period” for new Members. If the new Member does not make a selection during this selection period, the State shall assign the new Member to an MCO.
(2)	Begin Date of Enrollment. Enrollment shall begin the first day of the first full month following selection, unless the Member entered the Nursing Facility while not in Salud! and both the Member’s NF LOC and Medicaid eligibility precede the first full month following selection. The CONTRACTOR’s coverage for Members with a NF LOC with retroactive eligibility is limited to a maximum period of six (6) months. Members with a NF LOC with retroactive eligibility with a mid-month effective date will be covered under the fee-for-service program until the first day of the first full month of CLTS eligibility. The CONTRACTOR will be paid a capitation rate at the appropriate cohort rate for any period of retroactive coverage. Additionally, for any period of retroactive coverage where the CONTRACTOR is responsible for services for which prior authorization and/or utilization management policies were unable to be enforced, payment to providers for medically necessary Covered Services will be made at the lesser of a negotiated rate or the Medicaid fee-for-services rate.
(3)	Member Switch and Loss of Medicaid Eligibility.

(a) A current CONTRACTOR Member has the opportunity to change MCOs without cause during the first ninety (90) calendar days of a twelve-month period. The State shall notify the CONTRACTOR’s Member of this opportunity to select a new MCO by sending notice of eligibility and enrollment materials to the Member. A Member is limited to one ninety-day switch period per MCO. After exercising the switching rights, and returning to a previously selected MCO, the Member shall remain with the MCO until his/her twelve-month lock-in period expires before being permitted to switch MCOs.

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(b) If a Member loses Medicaid eligibility for a period of six (6) months or less, he/she will be automatically reenrolled with the former MCO, as long as a NF level of care is in place; assuming the Member requires NF level of care in order to meet enrollment criteria. If the Member misses the annual enrollment choice opportunity during this six-month time-period, he/she may request to be assigned to another MCO.

(4) Mass Transfer Process. The mass transfer process is initiated by the State when the State determines that the transfer of CONTRACTOR’s Members from one CONTRACTOR to another is appropriate. Such mass transfers shall be conducted in accordance with HSD/MAD regulations.

(5) Transition of Care. The implementation of CLTS will involve a phasing in of enrollment during the first fiscal year. The CONTRACTOR shall have the resources and policies and procedures related to transition of care in place, and shall ensure transition of care, including continuity of care, without disruption in service to Members. At a reasonable time prior to each transition period, the CONTRACTOR will provide the State with adequate assurances of the CONTRACTOR’s readiness to implement the transition. These assurances may include copies of its agreements with providers, providers’ policies and procedures, as well as the CONTRACTOR’s readiness plans, as specified below. The CONTRACTOR shall:

(a) develop a detailed plan that addresses the clinical transition issues and transfer of potentially large numbers of Members into or out of its organization. This transition may be to or from either an MCO, a Salud! MCO, or a fee-for-service provider. This plan shall include how the CONTRACTOR proposes to identify services currently received by the Member;

(b) develop a detailed plan for the transition of an individual Member, which includes Member and provider education about the CONTRACTOR and the CONTRACTOR’s process to ensure any existing courses of treatment are revised as necessary;

(c) be able to identify Members and provide necessary data and information to a future CONTRACTOR for Members switching MCOs, either individually or in large numbers, to avoid unnecessary delays in treatment that could be detrimental to the Members;

(d) honor all prior approvals granted by the State for the first sixty (60) calendar days of enrollment or until the CONTRACTOR has made other arrangements for the transition of services. Providers associated with these services shall be reimbursed by the CONTRACTOR. The CONTRACTOR is expected to work with the Member, the TPA, and other State representatives on the re-assessment of transitioning Members within the time periods allowed under this Agreement;

(e) reimburse providers and facilities approved by the State, if a donor organ becomes available during the first thirty (30) days of enrollment and transplant services previously approved by HSD/MAD;

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(f) fill prescriptions for drug refills for the first ninety (90) days or until the CONTRACTOR has made other arrangements, for newly enrolled Members who are eligible for the Medicaid prescription drug benefit;

(g) pay for Durable Medical Equipment (DME) costing two thousand dollars ($2,000) or more, approved by the CONTRACTOR but delivered after disenrollment;

(h) be responsible for Covered Services provided to the Member for any month the CONTRACTOR received a capitated payment, even if the Member has lost Medicaid eligibility, provided that if the State recovers premium payments for any month from the CONTRACTOR as a result of a Member’s loss of eligibility, the CONTRACTOR may recover payments made to providers for such Covered Services furnished during such month;

(i) be responsible for payment of all inpatient services provided by a general acute-care or rehabilitation hospital until discharge from the hospital if the Member is hospitalized in such a facility at the time the Member becomes exempt or switches MCO;

(j) cooperate with the SE in the transition of services and the provision of records necessary for behavioral health services;

(k) accept prior authorization for long-term nursing facility placement and D&E and PCO services as per the State’s enrollment roster request; and

(l) reimburse Non-Network Providers during the Transition of Care at the Medicaid Fee-for-Service rates as determined by the State.

(6) Newly Eligible Enrollment and Expedited Service Requests. For potential enrollees eligible for the first time and not transitioning from an existing home and-community based waiver, PCO, nursing facility, or Salud!, the CONTRACTOR shall perform assessment of the Member’s acute care, long-term care, behavioral health, and social supports within the first thirty (30) calendar days of enrollment. Authorized Covered Services shall be initiated within fourteen (14) calendars day following the assessment.

If the TPA, or other State designee, determines that the Member has an emergent need for Covered Services, the TPA, or other State designee shall coordinate with the CONTRACTOR to have an assessment performed within seven (7) business days and services initiated within seven (7) calendar days following the assessment.

(7) Geographic Roll-Out. The State intends to geographically roll-out the CLTS Program as follows:

(a) Phase one shall include: Bernalillo County, Sandoval County, Torrance County, Valencia County, Santa Fe County, and Los Alamos County;

(b) Phase two shall include: Sierra County, Dona Ana County, Catron County, Luna County, Grant County, Hidalgo County, and Otero County;

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(c) Phase three shall include: Cibola County, San Juan County, McKinley County, and Socorro County; and

(d) Phase four shall include: Curry County, DeBaca County, Lincoln County, Chaves County, Eddy County, Lea County, Quay County, Roosevelt County, San Miguel County, Guadalupe County, Taos County, Rio Arriba County, Mora County, Colfax County, Union County, and Harding County.

(8) Re-Assessment of Members Enrolled in CLTS for Long-Term Services. An annual re-assessment of Members is required for all Members enrolled in CLTS with a Nursing Facility Level of Care and will be completed by the TPA. If the TPA is unable to complete the re-assessment prior to the end date provided to the TPA and the CONTRACTOR on the LTC Re-Assessment Reminder file due to lack of information or cooperation provided by the CONTRACTOR, the CONTRACTOR will not receive capitation for that Member until such time as the CONTRACTOR receives information needed to perform the re-assessment is provided to the TPA. The Member will continue to be enrolled with the CONTRACTOR and remain the CONTRACTOR’s responsibility until such time as the State receives either a termination of Level of Care or a renewal of the Level of Care. The CONTRACTOR will continue to receive capitation payments for any Members whose re-assessment is delayed to reasons unrelated to the CONTRACTOR’s cooperation with the TPA.

(G)

Member Disenrollment, Requests by CONTRACTOR

Member disenrollment shall only be considered in rare circumstances. The CONTRACTOR may request that a particular Member be disenrolled. Disenrollment requests shall be submitted in writing to the State, with all supporting documentation meeting the State’s requirements. If the disenrollment request is granted, the CONTRACTOR retains responsibility for the Member’s care until such time as the Member is enrolled with a new MCO. If a request for disenrollment is granted, the Member shall not be re-enrolled with the CONTRACTOR for a period of time to be determined by the State. Conditions that may permit lock-out or disenrollment are:

(1) the CONTRACTOR demonstrates that it has made a good faith effort to accommodate the Member’s health care or other medically necessary covered needs, but such efforts have been unsuccessful;

(2) the conduct of the Member is such that it is not feasible, safe, or prudent to provide Covered Services;

(3) the CONTRACTOR has offered to the Member in writing and other means, reasonably calculated to apprise the Member of the opportunity to utilize the grievance process; or

(4) the CONTRACTOR has received threats or attempts of intimidation from the Member to the CONTRACTOR, its Network Providers, or its own employees.

The CONTRACTOR shall not request disenrollment because of an adverse change in the Member’s health status, or because of the Member’s utilization of Covered Services, diminished mental capacity, or uncooperative or disruptive behavior resulting from his or her special needs (except when his/her continued enrollment with the CONTRACTOR seriously impairs the CONTRACTOR’s ability to furnish services to either this particular Member or other Members).

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	The CONTRACTOR shall provide adequate documentation that the CONTRACTOR’s request for termination is proper.
(H)	Member Initiated Disenrollment
	A Member who is required to participate in CLTS may request to be disenrolled from the CONTRACTOR “for cause” at any time, even during a lock-in period. The Member or his or her representative, must submit an oral or written request to the State. The following are causes for disenrollment:

(1) the Member moves out of the CONTRACTOR’s service area, if applicable;

(2) the CONTRACTOR does not, because of moral or religious objections, cover the service the Member seeks;

(3) the Member needs related Covered Services (for example, a caesarian section and a tubal ligation) to be performed at the same time, there is no Network Provider able to do this and another provider determines that receiving the services separately would subject the Member to unnecessary risk; and

(4) other reasons, including but not limited to, poor quality of care, lack of access to Covered Services, or lack of access to Network Providers experienced in dealing with the Member’s needs.

The effective date of an approved enrollment must be no later than the first day of the second month following the month in which the Member or the CONTRACTOR files for the request. If the State fails to made a disenrollment determination within this timeframce, the disenrollment is considered approved. If a Member is dissatisfied with the State’s determination denying a request to transfer/disenroll, access to a Fair Hearing will be provided.

(I)	State Initiated Disenrollment
	The State may initiate disenrollment in three (3) circumstances:

(1) if a Member loses Medicaid eligibility and/or loses level of care eligibility;

(2) if the Member is re-categorized into a Medicaid coverage category not included in the CLTS initiative; or

(3) the CONTRACTOR’s enrollment maximum is reduced to below levels established in this Agreement.

After the State becomes aware of, or is alerted to, the existence of one of the reasons listed herein, the State shall immediately notify the Member or family and the CONTRACTOR and shall update the enrollment roster.

(J) Retroactive Reenrollment

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A Member who is no longer enrolled with the CONTRACTOR for a period of six (6) months or less, whether in error or otherwise, shall be retroactively reenrolled by the CONTRACTOR only when the following criteria are met:

(1) Member continues to meet nursing facility level of care; and

(2) Member has been in a NF LOC setting during the period of disenrollment; and

(3) Medicaid eligibility has been re-determined retroactively.

Members in CLTS through their status of dual eligibility or the Mi Via Home and-Community Based Waiver will not be eligible for retroactive reenrollment, unless they meet the criteria found in (1) — (3) above..

The State will notify the CONTRACTOR on a daily enrollment file which will list retroactive enrollments. Reenrollment will be confirmed and any retro-capitation payments will be generated during the monthly cycle.

3.4	MEMBER SERVICES
	The CONTRACTOR shall adhere to procedures developed by the State governing the following activities: (1) development of information and educational materials; (2) provisions of materials explaining the enrollment options and process to potential Members; and (3) provisions of informational presentations to eligible enrollees, Members, Member advocates and other interested parties.
	The CONTRACTOR shall employ sufficient staff to coordinate communication with Members and perform other Member Services functions as designated. There should be sufficient staff to allow Members to resolve problems or inquiries.

(A)

Policies and Procedures

The CONTRACTOR shall have and comply with written policies and procedures regarding the treatment of minors; adults who are in the custody of the State; children and adolescents who are under the jurisdiction of the Children, Youth and Families Department (CYFD); and any individual who is unable to exercise rational judgment or give informed consent, under applicable federal and state laws and regulations. The CONTRACTOR shall maintain and comply with written policies and procedures:

(1) that describe a process to detect, measure, and eliminate operational bias or discrimination against enrolled Members by the CONTRACTOR or its subcontractors;

(2) regarding Member’s and/or legal guardians’ right to select a PCP and to make decisions regarding needed social services and supports;

(3) governing the development and distribution of marketing materials for Members. Such written polices and procedures must be submitted to the State for approval;

(4) that are specifically mandated in the CLTS Medicaid regulations that shall be available upon request to Members and their representatives for review during normal business hours;

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(5) with respect to advance directives, the CONTRACTOR shall provide adult Members with written information on advance directive policies that includes a description of applicable state law and regulation. The information must reflect changes in state law and regulation as soon as possible, but no later than ninety (90) calendar days after the effective date of such change; and

(6) to ensure through its Network Providers that:

(a) written information is provided to adult Members concerning their rights to accept or refuse medical or surgical treatment and to formulate advance directives, and includes the CONTRACTOR’s policies and procedures with respect to the implementation of such rights;

(b) documentation exists in the Member’s record whether or not the Member has executed an advance directive;

(c) discrimination is prohibited against a Member in the provision of care or in any other manner discriminating against a Member based on whether the Member has executed an advance directive;

(d) compliance with federal and state law and regulation is met;

(e) education is provided for staff and the community on issues concerning advance directives; and

(f) Members are informed that complaints concerning noncompliance with the advance directive requirements may be filed with the State survey and certification agency, currently DOH; and

(7) to ensure provider notification to the Member regarding abnormal results of diagnostic laboratory, diagnostic imaging, and other testing and, if clinically indicated, informing the Member of a scheduled follow-up visit. Confirmation of this shall be documented in the Member’s record at the provider’s office.

(8) to ensure that its Network Providers and facilities are in compliance with the applicable provisions of the Americans with Disabilities Act, 42 U.S.C. §§12101, et seq., (“ADA”), and its regulations;

(B)

Member Education

Members and/or their legal guardian shall be educated about their rights, responsibilities, service availability and administrative rules, the meaning of Consumer/Participant Direction and how to exercise their right to make choices. Member education is initiated when Members become eligible for Medicaid and is augmented by information from the State and the CONTRACTOR. The State will be responsible for developing materials and disseminating information about Medicaid programs generally and CLTS specifically. The CONTRACTOR will be responsible for any materials about the requirements and benefits of its available plans and services. The State must grant prior approval of all informational materials used by the CONTRACTOR, including the Handbook and benefits information described in subparagraph (D) and (E) below.

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(C)

MCO Enrollment Information

Once a Member is determined to be a CLTS Member, the State provides specific information about Covered Services, MCOs from which the Member can choose, and enrollment of the Member(s), including information about the Member’s disenrollment rights at the time of enrollment and annually thereafter. The CONTRACTOR shall have written policies and procedures regarding the utilization of information on race, ethnicity, and primary language spoken, as provided by the State to the CONTRACTOR at the time of enrollment in the MCO of each Member.

(D) Member Handbook

(1) The CONTRACTOR is responsible for providing Members with a Member handbook and Provider Directory within thirty (30) calendar days of the CONTRACTOR being notified by the State of the Member’s enrollment or upon request by the Member or the State. The CONTRACTOR must notify all Members at least once per year, in a newsletter or other written form of correspondence, of their right to request and obtain this information.

(2) The CONTRACTOR shall include language in the Member Handbook to clearly explain that a Native American Member may self-refer to an Indian Health Service (IHS) or Tribal health care facility for services. The Provider Directory shall include a separate section with a listing of all IHS and Tribal facilities, including hospitals, outpatient clinics, pharmacies, and dental clinics.

(3) The CONTRACTOR may direct a person requesting a Member handbook or Provider Directory to an Internet site, unless the person makes a specific request for a printed document.

(4) The Member handbook and Provider Directory must meet all requirements:

(a) set forth in 42 C.F.R. §438.10(f)(2) and §438.10(g), regarding the grievance process, advance health directives, and any physician incentive plans;

(b) set forth in 42 C.F.R. §438.10(f)(6) and NMAC 8.305.2.9, regarding language accessibility; and

(c) regarding Grievance and Appeals and how Members and/or their representatives can file a Grievance and/or an Appeal, and the resolution process. The Member Handbook shall also advise Members of their right to file a request for an administrative hearing with the HSD/MAD Hearings Bureau, upon notification of a CONTRACTOR action, or concurrent with or following an Appeal of the CONTRACTOR action. The information shall meet the standards for communication set forth in the HSD/MAD Program Manual.

(5) The CONTRACTOR shall provide potential Members, upon request, and enrolled Members with a Member Handbook that includes the CONTRACTOR’s addresses and telephone numbers. The CONTRACTOR shall also provide, upon request, a listing of PCP and Specialty Providers with the identity, location, phone number, and qualifications

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that include area of specialty, board certification, and any other useful information that would be helpful to individuals deciding to enroll with the CONTRACTOR. This material must be available in an easily understood manner and format.

(6) Other requirements. All educational material shall:

(a) be prepared in a manner and format that is clear and understandable to an individual who has completed no more than the sixth grade;

(b) be available in alternative formats and in an appropriate manner that takes into consideration the special needs of those who, for example, are visually limited or have limited reading proficiency and have a process in place for notifying potential enrollees and Members of the availability of these alternative formats;

(c) have an oral interpretation available free of charge to potential members or Members. Oral interpretations shall be available in all non-English languages, not just those languages the CONTRACTOR or the State determine to be prevalent. The CONTRACTOR shall notify potential members that oral interpretation is available in any language, that written information is available in prevalent languages and about how to access this information; and

(d) ensure that all Members are notified at least once per year of their right to request and obtain this information.

(E) Benefit Information

(1) The CONTRACTOR shall provide each Member or potential enrollees and/or legal guardian with written information in English or prevalent language, i.e., prevalent language are all languages in any service area spoken by approximately five percent (5%) or more of the population, about benefits including:

(a) all benefits, services, and goods, as well as preventive and long-term services, included in, and excluded from coverage; such information shall be made available in a one-page, two-sided summary format, distinguishing between services available pursuant to the State’s approved 1915(b) and 1915(c) home and community-based waivers;

(b) services for which prior authorization or a referral is required, and the method of obtaining both;

(c) any restrictions on the Member’s freedom of choice among Network Providers;

(d) the CONTRACTOR’s policy on referrals for specialty care, long-term services, and other benefits;

(e) information regarding the Member’s right of access to and coverage of emergency services which include:

(i) the fact that the Member has a right to use any hospital or other setting for emergency care; and

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(ii) what constitutes emergency medical condition, emergency services, and post-stabilization services; and

(f) information that provides potential Members, upon request, and enrolled Members with a list of all items and services that are available to Members covered directly or through a method of referral and/or prior authorization. This material must be available in an easily understood manner and format.

(2) The CONTRACTOR shall send out a questionnaire within thirty (30) calendar days of enrollment to all new Members which must include a question regarding the new Member’s primary language spoken and/or written. The CONTRACTOR shall make a good faith effort to obtain this information.

(3) The CONTRACTOR shall provide affected Members and/or legal guardians with written updated information within thirty (30) calendar days of the intended effective date of any material change. In addition, the CONTRACTOR must make a good faith effort to give written notice of termination of a Network Provider, within fifteen (15) calendar days after receipt or issuance of termination notice to each Member who received his or her primary care from, or was treated at least four (4) times within the last twelve (12) calendar months prior to the termination by the terminated provider.

(4) The CONTRACTOR shall not prohibit or otherwise restrict a Network Provider or Non-Network Provider from advising a Member who is a patient of the provider about the health status of the Member or medical care or treatment for the Member’s condition of disease, regardless of whether Covered Benefits for such care or treatment are provided for under the contract, if the provider is acting within the lawful scope of practice. This subsection, however, shall not be construed as requiring the CONTRACTOR to provide, reimburse, or provide coverage of any service if the CONTRACTOR:

(a)	objects to the provision of a counseling or referral service on moral or religious grounds, provided that the CONTRACTOR notifies Members of these objections at the earliest possible time, optimally during the enrollment process whether the service in question is covered or not;
(b)	notifies the State within ten (10) business days after the effective date of this Agreement of its current policies and procedures regarding it’s objection to providing such counseling or referral services based on moral or religious grounds, or within fifteen (15) calendar days after it adopts a change in policy regarding such counseling or referral services; or
(c)	makes available information on its policies regarding such service to prospective Members within thirty (30) calendar days after the date the CONTRACTOR adopts a change in policy regarding such a counseling or referral service; or

(d) can demonstrate that the service in question is not included as a Covered Service required by this Agreement; or

(e) determines that the recommended service is not Medically Necessary as defined by the State Plan in effect with CMS as of the time the service is delivered, under

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the CONTRACTOR’s policies and procedures, and in accordance with the definition set forth above.

(5) For Member access to second opinions, the CONTRACTOR:

(a) shall provide Members with the option of receiving a second opinion from another Network Provider when Members need additional information regarding recommended treatment or when requested care, service, or good has been denied by a Network Provider;

(b) may select the Network Provider giving the second opinion in accordance with a method established by the CONTRACTOR to equitably distribute these duties, provided that the Network Provider selected practices in an area that provides expertise appropriate to the Member’s specific treatment or condition; and

(c) shall provide for a second opinion from a qualified Network Provider, or arrange for the Member to receive a second opinion from a non-Network Provider if there is not another qualified Network Provider, at no cost to the Member.

(F)

Maintenance of Toll-Free Line

The CONTRACTOR shall maintain one (1) or more toll-free telephone line(s) accessible twenty-four (24) hours a day, seven (7) days a week, to facilitate Member access to qualified clinical staff. Members may also leave a voice mail message to obtain the CONTRACTOR’s policy information and/or to register Grievances with the CONTRACTOR. The phone call shall be returned the next business day by an appropriate CONTRACTOR staff person. The CONTRACTOR will maintain adequate staff trained and dedicated to the specific purpose of receiving and answering and/or resolving issues raised by Members. The CONTRACTOR will identify such staff as “consumer specialists.”

(G)	Member Identification Card
	The CONTRACTOR shall issue to each Member a Member Identification Card within thirty (30) calendar days of Enrollment. The card shall be substantially the same as the card issued to commercial enrollees and shall not include the Member’s social security number.
(H)	Member Bill of Rights and Responsibilities
	The CONTRACTOR shall comply with 42 C.F.R. §438.100 and NMAC 8.305.8 regarding Member Education and Member Bill of Rights. The CONTRACTOR shall provide each Member with written information, in English or the prevalent language, as appropriate, that encompass all the provisions regarding Member Bill of Rights. The CONTRACTOR must ensure that each Member is free to exercise his or her rights and that the exercise of these rights does not adversely affect the way the CONTRACTOR and its Network Providers or the State treats the Member. The CONTRACTOR must have written policies regarding the Member’s rights including:

(1) each Member is guaranteed the right to be treated with respect and with due consideration for his or her dignity and privacy;

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(2) each Member is guaranteed the right to receive information on available treatment options and alternatives, presented in a manner appropriate to the Member’s condition and ability to understand;

(3) each Member is guaranteed the right to participate in decisions regarding his or her health care, including the right to refuse treatment;

(4) each Member is guaranteed the right to be free from any form of restraint or seclusion used as a means of coercion, discipline, convenience or retaliation; and

(5) each Member is guaranteed the right to request and receive a copy of his or her medical records and to request that they be amended or corrected as specified in 45 C.F.R. part 164.

3.5 QUALITY ASSURANCE

(A) Consumer Advisory Board

(1) The CONTRACTOR shall comply with 8.305.3.11 NMAC regarding Organizational Structure and all Consumer Advisory Board requirements and responsibilities.

(2) The CONTRACTOR’s Consumer Advisory Board shall keep a written record of all attempts to invite and include its members in its meetings. The Board roster and minutes shall be made available to the State, upon request.

(3) The Consumer Advisory Board shall consist of an equitable representation of the CONTRACTOR’s Members in terms of race, gender, special populations, and New Mexico’s geographic areas.

(B)	Quality Management and Quality Improvement (QM/QI) Program
	The CONTRACTOR shall base its management and service delivery on principles of Continuous Quality Improvement/Total Quality Management (CQI/TQM) including: the recognition that opportunities for improvement are unlimited; that the QI process shall be data driven; requiring continual measurement of clinical and non-clinical effectiveness and programmatic improvements of clinical and non-clinical processes driven by such measurements; re-measurement of effectiveness and continuing development and implementation of improvements as appropriate; and reliance upon Member input.
	The CONTRACTOR shall comply with 8.305.8.12 NMAC, including:

(1) Have QM/QI programs based on a model of continuous quality improvement, including, but not limited to the following:

(a) demonstrate to the State that the results of QM/QI projects and reviews are used to improve the quality of service delivery with appropriate individual practitioners, community-based service providers, as well as institutional providers;

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(b) take appropriate action and document action to address provider and performance problems, as identified;

(c) incorporate sound quality studies, apply statistical analysis to data, and derive meaning from the statistical analysis; and

(d) perform a performance improvement project specific to ISHCN.

(2) Encompass acute and long-term health and social service delivery and coordination.

(3) Ensure that QM/QI program is applied to the entire range of Covered Services provided through the CONTRACTOR to identified populations to include relevant diagnosis, care settings, and demographics.

(4) Have an annual QM/QI work plan, approved by the State, that includes, at a minimum the following:

(a) immediate objectives for each contract period and long-term objectives for the entire Term of this Agreement;

(b) the scope of the objectives, projects, or activities planned, timeframes and data indicators for tracking performance;

(c) performance improvement projects, plans and activities consistent with federal and state laws and regulations, pursuant to 42 C.F.R. §438.240; and

(d) at least one (1) Member safety indicator.

(5) Institute QM/QI policies and procedures that emphasize and promote wellness and prevention, disease management of chronic illnesses, and complex service coordination;

(6) Develop and comply with written QM/QI policies and procedures to address the following requirements:

(a)	QM/QI program;
(b)	QM/QI committee;

(c) an annual QM/QI work plan and an annual program evaluation that includes goals, objectives and structure, and that results in continuous quality improvement for Members;

(d) confidentiality, including a provision that all materials concerning the care and treatment of Members shall be made available to the State;

(e) medical records and other records documentation;

(f) protocols for working with school-age Members;

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(g) Member and Network Provider satisfaction surveys and other relevant Member and family/caregiver surveys;

(h) disease management protocols;

(i) continuity and coordination of services;

(j) tracking and trending of Member and provider grievances for early identification and resolution of systems’ issues and potential trends;

(k) service coordination protocols for ISHCN that reflect their comprehensive needs and service plan priorities, including coordination and integration of home and community-based waiver services, if the ISHCN Member is authorized to receive the State’s 1915(c) waiver services; and

(l) provide quality oversight of Assisted Living Facilities as may be necessary to ensure the quality and well being of CONTRACTOR’s Members in the normal course of CONTRACTOR’s duties under this Agreement but in no way as a replacement for the licensing and certification oversight otherwise provided by the State.

(7) Establish a committee to oversee and implement QM/QI requirements.

(8) Have an annual QM/QI evaluation of overall effectiveness to demonstrate improvements in the quality of clinical care and service to its Members. The CONTRACTOR shall submit its written evaluation that includes, but is not limited to the following:

(a) a description of on-going and completed QI activities;

(b) trending of measures to assess performance in quality of clinical care and service;

(c) an analysis of whether or not there have been demonstrable improvements in the quality of clinical care and service; and

(d) incorporation of findings of overall effectiveness in the development of the following year’s plan.

(9) Designate an individual within the company responsible for compliance with all the QM/QI requirements.

(10) The ultimate responsibility for QM/QI is with the CONTRACTOR and shall not be delegated to subcontractors.

(C)	Performance Measures and Tracking Measures
	The CONTRACTOR shall:

(1) Implement performance measures and tracking measures defined by the State in collaboration with the CONTRACTOR. The CONTRACTOR shall monitor these measures on an on-going basis and report results to the State.

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(2) Identify and monitor performance measures and tracking measures of home and community-based service delivery and implement activities designed to improve the coordination of CLTS services. Performance Measures and Tracking Measures are set forth herein or in the attached Appendices.

(3) Demonstrate consistent and sustainable patterns of improvement or maintain mutually agreed upon level of performance from year to year in the overall Member satisfaction survey results, disease management initiatives, and based on agreed upon performance measures.

(4) Review outcome data at least quarterly for performance improvement recommendations and interventions.

(5) Provide mechanisms for monitoring, addressing and correcting any evidence of cost-shifting practices by Network Providers, including information on pharmaceutical cost-shifting of behavioral health medication that are currently being prescribed by PCPs and cost-shifting of Medicare to Medicaid.

(6) In the event the CONTRACTOR fails to obtain the results described in this Section, as reasonably negotiated and mutually agreed between the State and CONTRACTOR, the State may provide written notice to the CONTRACTOR of the default and specify a reasonable period of time in which the CONTRACTOR shall advise the State of specific steps that it will take to achieve these results in the future and the timetable for implementation. Nothing in this paragraph shall be construed to prevent the State from exercising its rights to terminate this Agreement as set forth further herein.

(D) Member Satisfaction Survey

(1) As part of the QM/QI Program, the CONTRACTOR shall conduct at least one (1) annual survey of Member satisfaction which shall be designed by the CONTRACTOR from input from the Consumer Advisory Board and the State and which shall assess Member satisfaction with the quality, availability, and accessibility of services. The survey shall provide a statistically valid sample with at least six (6) months of continuous enrollment of all CONTRACTOR Members, including Members who have requested to change their PCPs and all Members who have voluntarily disenrolled during the ninety-day open enrollment period and Members who disenroll after the ninety (90) day open enrollment period will be noted. The Member survey shall address Member receipt of educational materials and the Members use and usability of the provided education materials. Specific topics/issues to be included in the survey include at least one (1) question each relating to the ability of ISHCN to participate in their service plan and goals; the convenience of service locations and appointment times for Members; Service Coordinator helpfulness getting Members what they need; level of satisfaction with MCOs; satisfaction with Member participation in treatment decisions; and degree to which Members feels they can manage day-to-day lives. The CONTRACTOR shall follow all Federal and State confidentiality laws and regulations in conducting this Member Satisfaction Survey.

(2) The CONTRACTOR shall:

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(a) use the most current version of the Agency for Healthcare Quality and Research’s (AHRQ) CAHPS Medicaid Adult and Child Survey Instruments (most current version) to assess all Members’ (including Dual Eligibles) satisfaction as part of the HEDIS requirements and report the results of the CAHPS survey to the State. The CONTRACTOR shall utilize the annual CAHPS results in the CONTRACTOR’s internal QI Program by using areas of decreased satisfaction as areas for targeted improvement;

(b) use Medicare’s Health Outcomes Survey (HOS) to assess issues related to physical and behavioral health status;

(c) add questions about ISHCN to all Consumer Surveys, as appropriate;

(d) work with the National Committee for Quality Assurance (NCQA), if applicable, to obtain approval to use additional survey questions from the CAHPS relevant to the CLTS population;

(e) disseminate results of the Member satisfaction survey to practitioners, providers, the State, and Members;

(f) participate in the design of an annual Member satisfaction survey to be conducted by an independent entity determined by the State. The survey itself shall not be the financial responsibility of the CONTRACTOR; and

(g) cooperate with the State in conducting a Network Provider satisfaction survey, including making available a current, unduplicated provider file(s) available to the State or its External Quality Review Organization (EQRO), upon request.

(E) External Quality Review

(1) The State shall retain the services of an EQRO in accordance with the Social Security Act, §1902(c)(30)(C), and the CONTRACTOR shall cooperate fully with that organization and demonstrate to that organization the CONTRACTOR’s adherence to HSD/MAD’s managed care regulations and quality standards as set forth in MAD Policy.

(2) The State shall also contract with an EQRO to audit a statistically valid sample of the CONTRACTOR’s physical health and long-term care services, UM decisions, including authorizations, reductions, terminations and denials. This audit is intended to determine if authorized service levels are appropriate with respect to accepted standards of clinical care. The EQRO shall audit the CONTRACTOR’s QM/QI Program and review performance measures and performance improvement projects, based on CMS criteria.

(3) The CONTRACTOR shall participate in various other tasks identified by the State that shall enable it to gauge performance in a variety of areas, including Service Coordination, Medicaid/Medicare compliance coordination, and treatment of special populations.

(4) The CONTRACTOR shall utilize technical assistance and guidelines offered by the EQRO, unless otherwise agreed upon by the parties.

(5) The EQRO retained by the State shall not be a direct competitor of the CONTRACTOR.

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(F) Reports

(1) QM/QI Reports. The CONTRACTOR shall:

(a) be able to provide QI related reports for various public forums that are easily understandable to the lay person;

(b) be able to collect, manage and report to the State, data necessary to support the QI activities; and

(c) submit annual New Mexico specific HEDIS performance data as required by the State.

(2) Critical Incident Reports. The CONTRACTOR shall:

(a) develop and implement policies and procedures for Critical Incident Reporting;

(b) track, analyze, and report to the State as required, those reporting indicators identified by the State, specific to physical health and/or behavioral health visits handled by the PCPs that shall enable the State to determine potential problem areas, including but not limited to, quality of care, access to care, provider payment timeliness or service delivery issues;

(c) utilize the report formats provided by the State and provide monthly analysis report findings no later than fifteen (15) business days after reporting month ends;

(d) utilize critical indicator monitoring for early identification and interventions of quality of care and/or health and safety issues;.

(e) analyze the data, including the identification of any significant trends;

(f) address negative trend in the analysis and develop appropriate CQI initiatives. Examples of negative trends may include increases in grievances related to a specific issue; increases in hospital or nursing facility readmission rates; decrease in health screens or other indicators of performance issues that would benefit from targeted CQI initiatives;

(g) follow all due dates and reporting format requirements set forth in the Appendices, unless specifically provided for herein; and

(h) conduct annual provider reviews of all Network Providers on data collected by the Network Provider on medication management to identify harmful practices.

(3)	Publication of Audit Findings.
	At its discretion, the State shall release all aggregate results of the QI/audit functions to the public and to the Federal Government.
(4)	Utilization Management Reports. The CONTRACTOR shall:

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(a) comply with 8.305.14.13 NMAC related to Utilization and Quality Management Reporting, including monthly utilization review activity reports that provide service-specific data related to requests, approval, clinical denials, termination of care, reductions of care, administrative denials and “pends,” reports related to all Member and provider appeals, expedited appeals, and Fair Hearings. The State and CONTRACTOR shall agree on reporting elements, formats, and submission templates by an agreed upon date that will allow CONTRACTOR sufficient time to program such reports.

(G)	Standards for ISP Development
	The CONTRACTOR shall:

(1) Provide an ISP for each Member who receives 1915(c) waiver services in accordance with State requirements and this Agreement and a treatment plan for Members receiving 1915(b) waiver services as directed by the State and agreed to by the parties. Treatment and Service Plans may be documented using a form submitted by the CONTRACTOR and approved by the State.

(2) Have and comply with written policies and procedures for the development of the ISP, including ensuring that: the Member is involved and in control, to the extent possible and desired by the Member in development of the ISP; individuals whom the Member wishes to participate in the planning process are included in the planning process; the Member’s needs are assessed and services and goods are identified to meet those needs; the Member’s desired level of direct management is agreed upon; and responsibilities for implementation of the ISP are identified.

(3) Educate each Member (and/or family or legal representatives, as indicated) about the person-centered planning process, the range of Covered Services; and, depending on the Member’s desired level of self-management, any additional information to assist the Member during development of the ISP.

(4) Complete a comprehensive assessment within seven (7) calendar days of the date of the Member’s enrollment for Members in expedited situations; within thirty (30) calendar days of the Member’s enrollment for routine and newly eligible persons presenting for enrollment; or within sixty (60) calendar days for transitioning Members. Expedited situations shall be provided to the CONTRACTOR by the State and are intended to address emergent needs of Members. During the assessment, the CONTRACTOR shall identify the Member’s holistic needs, including primary, acute, and long-term services and supports needs. The comprehensive assessment shall include, at a minimum:

(a) elements typical to both physical and long-term service assessments, but may vary depending on the Member’s health status and risk;

(b) demographic information, including the Member’s preferred language and mode of communications;

(c) Member’s self-assessment of strengths, capacities, needs, personal preferences, desired outcomes for the future, risk factors, and goals for services;

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(d) Member’s capacity to provide informed consent;

(e) Member’s information including PCP, other physicians, medical diagnosis, and history;

(f) current medical treatment regime and medication information, including consistency of taking prescribed medications;

(g) allergies to medications, foods and/or environment;

(h) medical risk factors, including recent hospitalizations and emergency room visits;

(i) available support and social resources, including primary caregiver, living arrangements, and need for supervision with specification of the type and frequency of the available supports and needed supports;

(j) availability and use of existing medical equipment and need for additional medical equipment;

(k) environmental assessment with health and safety risks, and accessibility issues in the Member’s home and community;

(l) nutritional needs, including weight, height, recent changes in weight, eating habits, swallowing problems, and required and preferred diets;

(m) communication and cognition abilities and concerns including memory, decision making, and compliance with care;

(n) behavior and mental health issues with substance abuse, health and safety risks, and potential for abuse, neglect, and exploitation;

(o)	risks for falls and injuries;
(p)	skin care dermatological needs;
(q)	elimination status, including continence issues;

(r) ability to complete independently activities of daily living and instrumental activities of daily living;

(s) identification of advance directives, guardianship, and living wills; and

(t) other assessment details pertinent to the Member’s needs and circumstances.

(5) The CONTRACTOR shall:

(a) begin the ISP development process following the assessment. The Member shall be the center of the planning process, in collaboration with the CONTRACTOR’s Service Coordinator and other individuals of the Member’s planning team. The

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planning team shall include the Member (and/or his/her family, legal guardian, or representative, as indicated), any others the Member chooses, the CONTRACTOR’s Service Coordinator and others, such as medical professionals, identified by the CONTRACTOR as necessary to adequate planning;

(b) convene the planning team to develop and implement the ISP within fourteen (14) calendar days from the date of the Member’s comprehensive assessment or within seven (7) calendar days for expedited situations. At the outset of the meeting, the CONTRACTOR shall review the planning process, emphasizing its person-centered focus and the importance of ensuring that the Member’s health needs, preferences, and desired outcomes, as identified by the Member, are addressed. The CONTRACTOR shall inform and educate the Member (and/or his/her family, legal guardian, or representative, as indicated), about CLTS 1915(c) waiver services and other resources available to meet the Member’s needs, and provide the Member with a list of specific wavier service Network Providers available in the Member’s area from which the Member may select;

(c) ensure that the Member (and/or his/her family, legal guardian, or representative, as indicated), in collaboration with his/her planning team, identifies preferred outcomes for services, goals, and the supports necessary to reach the Member’s desired goals and outcomes. Risks associated with the outcomes, and methods to mitigate those risks shall be identified, while acknowledging and promoting the Member’s independence; and

(d) list specific interventions in the ISP for implementing each goal including measurable objectives, services, supports, timelines, and assignments for individuals who are responsible for implementation, and methods of measuring and evaluating outcomes of the ISP. The ISP shall address all services provided to the Member, including through CLTS, Medicare, community resources, natural supports, and other resources.

(6) The ISP shall be reviewed and updated annually, or more frequently, if needed, or when one of the following circumstances occurs:

(a)	the Member or caregiver requests;
(b)	the Member is at risk of significant harm;

(c) the Member experiences a significant medical event or change in condition/functioning, e.g., hospitalization, frequent falls, serious accident or illness;

(d) the Member experiences a significant change in social supports or environment, e.g., caretaker becomes ill, home is damaged; and

(e) the Member has been referred to Adult Protective Services because of abuse, neglect, or exploitation.

(H) Standards for Participant Safety

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The CONTRACTOR shall:

(1) Identify actual or potential health, behavioral, or personal safety risk to Members during the initial and on-going comprehensive assessment process;

(2) Discuss such risks with the Member (and/or family or legal representative, as indicated), including the benefits and consequences of the Member’s individual services choices, during the initial and ongoing comprehensive assessment process;

(3) Document discussions regarding identified risks and interventions to mitigate such risks;

(4) On an annual basis, conduct home safety evaluations for each Member, or more frequent if needed;

(5) Have and comply with written policies and procedures regarding risk mitigation, including the following elements:

(a) coordination with the Member’s PCP, acute, and long-term service practitioners;

(b) identification of risks for each Member, system wide risks, and aggregation of risk trends; and

(c) identification of special risks to Members transitioning from institutional to home and community-based settings.

(I)	Standards for Consumer/Participant Direction
	The CONTRACTOR shall:

(1) Have and comply with written policies and procedures to ensure that a Member (also known as a consumer or participant), has direct involvement, control, and choice in assessing his/her own needs and identifying, accessing, and managing services and supports to meet those needs. When appropriate, families or representatives shall be involved in the process. In consumer/participant direction, the process shall also include a Member’s active participation in making key service plan and service priority decisions as well as evaluating the quality of the services rendered.

(2) Recognize a continuum of different levels of informed decision-making authority, control and autonomy, to the extent desired by the Member, at any given point in the course of his/her participation in CLTS. These levels shall range from a Member choosing not to direct his/her services and instead deferring to trusted family members or representatives of his/her choosing; and

(3) Ensure that a Member can move across the continuum of decision-making, depending upon his/her needs and circumstances, and shall support the Member in his/her decision regarding the level of consumer/participant direction chosen.

(J)	Standards for Access
	The CONTRACTOR shall:

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(1) Comply with 8.305.6.14 and 8.305.8.18 NMAC regarding Standards for Access; and

(2) Develop and track real time quality indicators for monitoring access to clinical and social services and community integration across all service settings.

(K)	Coordination
(1)	Referral and Coordination. The CONTRACTOR shall:

(a) have and comply with written policies and procedures for Service Coordination. The CONTRACTOR’s policies and procedures shall ensure that referrals to other specialists, Non-Network Providers, and all publicly supported providers for Medically Necessary and Home and Community-Based Covered Services are available to Members, if such services are not reasonably available in the CONTRACTOR’s network. The CONTRACTOR’s referral policy for Non-Network Providers shall require the CONTRACTOR to coordinate with the Non-Network Provider with regard to payment unless otherwise agreed to by the parties.

(2) General Service Coordination Requirements. The CONTRACTOR shall:

(a) provide statewide Service Coordination by licensed or otherwise qualified professionals for Members with multiple and complex special health care needs. Service Coordinators can be licensed RNs, LPN, or social workers, or have a bachelor’s degree from an accredited college or university in nursing, social work, counseling, special education, or a closely related field and have a minimum of one (1) year’s experience in working with disabled and elderly individuals; this requirement may be waived by the State if the CONTRACTOR demonstrates that no persons with these qualifications are available in a specific service area. In this circumstance, the CONTRACTOR must provide a Service Coordinator with alternative credentials upon approval by the State.

(b) empower Members and their family or caregivers to make informed Service Coordination decisions based on their ISP priorities;

(c) provide support for transition and community reintegration and/or the least restrictive environment based on the Member’s ISP goals;

(d) ensure Service Coordinators are meeting face-to-face or telephonically with those individuals receiving long-term support services as frequently as appropriate to support the Member’s goals and to foster independence, and in accordance with the ISP or treatment plan developed by the Service Coordinator consistent with professional standards or care and agreed to by the Member. Face-to-face meetings shall occur at least once quarterly and telephone contact shall occur at least once monthly;

(e) develop and implement written policies and procedures approved by the State, which govern how Members with multiple and/or complex special health care needs shall be identified;

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(f) develop and implement written policies and procedures governing how Service Coordination shall be provided for Members with special health care needs, as required by federal regulation. These policies shall address the development of the Member’s ISP, based on a comprehensive assessment of the goals, capacities and Member’s condition and the needs and goals of the family. Also included shall be the criteria for evaluating a Member’s response to care and revising the ISP when indicated. A Member and/or his representative shall be involved in the development of the ISP, as appropriate. A Member and/or his/her representative shall have the right to refuse Service Coordination;

(g) adhere to clear expectations and requirements related to individuals with special health care needs (ISHCN) that may include but are not limited to: direct access to specialists, as needed; relevant CLTS specialty providers for ISHCNs; relevant CLTS emergency resource requirements for ISHCNs; relevant CLTS rehabilitation therapy services to maintain functionality for ISHCNs; relevant CLTS clinical practice guidelines for provision of care and services to ISHCNs; and relevant CLTS utilization management for services to ISHCNs;

(h) develop and implement written policies and procedures that ensure that health and social service delivery is coordinated across providers, service systems, and varied levels of care maximizing the Member’s ISP goals, as well as outcomes;

(i) develop and implement written policies and procedures that ensure that all transitions of care from institutional to community-based services be proactively coordinated with all providers involved in the Member’s ISP;

(j) develop and implement written policies and procedures that ensure that comprehensive service delivery, across varied funding sources such as Medicare and Medicaid for dually eligible Members, is seamless to the Member;

(k) develop and implement written policies and procedures which define Service Coordination according to the State’s policy;

(l) measure and evaluate outcomes and monitor progress of Members to ensure that Covered Services are received and assist in resolution of identified problems that prevent duplication of Covered Services;

(m) specify how Service Coordination shall be supported by an internal information system;

(n) develop and implement written policies and procedures to establish a working relationship between Service Coordinators, Network Providers, Members and caregivers; and

(o) continue to work with School Based Health Center providers to identify and coordinate with the child’s and adolescent’s PCP.

(3) Special Coordination Requirements. The CONTRACTOR shall:

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(a) ensure that a written report of the outcome of any referral, containing sufficient information to coordinate the Member’s care, is forwarded to the PCP by the specialty provider within seven (7) calendar days after the screening and evaluation visit unless the Member does not agree to release this information;

(b) ensure appropriate ongoing reporting, with the Member’s consent, between the PCP and the specialty care health providers regarding drug therapy, laboratory and radiology results, medical consultations, and sentinel events, such as hospitalization and emergencies;

(c) have and comply with written policies and procedures governing referrals from behavioral health providers for physical health consultation and treatment and to behavioral health providers for behavioral health consultation and treatment;

(d) have written polices and procedures requiring coordination with CYFD Protective Services and Juvenile Justice Divisions to ensure that Members receive Medically Necessary Covered Services regardless of the Member’s custody status. These policies and procedures shall specifically address compliance with the New Mexico Children’s Code. If Child Protective Services (CPS), Juvenile Justice, or ALTSD’s Adult Protective Services (APS), has an open case on a Member, the social worker, probation officer, or case manager assigned to the case shall be involved in the assessment and planning for the course of treatment, including decisions regarding the provision of Covered Services to the Member. The CONTRACTOR shall designate a single contact person for these cases. The CONTRACTOR has the right to demand a release of information from CYFD or APS that is consistent with information sharing through a Joint Powers Agreement (JPA) between HSD/MAD and CYFD or HSD/MAD and ALTSD;

(e) have written policies and procedures regarding coordination with the schools for those Members receiving services excluded from managed care as specified in the Individualized Education Program (IEP) or Individualized Family Service Plan (IFSP);

(f) coordinate with the SE as necessary to manage the delivery of the transportation benefit to Members receiving behavioral health services. Such coordination will include receiving information from and providing information to the SE regarding Members, Network Providers, and services; meeting with the SE to resolve Member and provider issues to improve services, communication, and coordination; contacting the SE as necessary to provide quality transportation services; and maintaining and distributing statistical information and data as may be required;

(g) coordinate with the SE regarding pharmaceuticals, including editing claims to assure any authorizations given and claims paid are within the scope of the responsibility of the pharmacy contractor. The CONTRACTOR shall ensure that the pharmacy contractor appropriately informs Members and Network Providers when the claim falls within the scope of responsibility of the SE for behavioral health services. Such determination will be made primarily on the basis of the prescriber and other criteria as may be provided by the State.

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(h) have policies and procedures to ensure that physical and behavioral health services are provided through a clinically coordinated and collaborative system between the CONTRACTOR and the SE, when the Member has both physical and behavioral health needs. The CONTRACTOR shall facilitate access to relevant medical records of mutually served Members between physical and behavioral health providers subject to applicable law to ensure the maximum benefit of services to the Member;

(i) coordinate and collaborate with Medicare Advantage plans for all dually eligible Members who do not elect to enroll with a CLTS CONTRACTOR’s Special Needs Plan; and

(j) coordinate and collaborate with the Mi Via Consultant Contractor Agency and the Financial Management Agent contractors for all Members receiving 1915(c) home-and community based waiver services through the State’s Mi Via program to ensure the maximum benefit of services to the Member.

(L)	Disease Management Programs
	The State seeks to improve the health status of all individuals in the CLTS population with specific diseases. Disease Management programs and Performance Measures are two of the tools that the State has chosen to use to measure the CONTRACTOR’s ability to impact health outcomes. In that regard, the CONTRACTOR shall:

(1) improve its ability to manage chronic illnesses/diseases through Disease Management protocols in order to meet goals based on jointly established targets;

(2) provide comprehensive Disease Management for a minimum of two (2) chronic diseases using strategies consistent with nationally recognized Disease Management guidelines, such as those available through Agency of Healthcare Research and Quality’s (AHRQ), NQMC web site, or Disease Management Association of America. Examples of chronic diseases include but are not limited to: asthma, diabetes, hypertension, coronary artery disease, and COPD;

(3) submit cumulative data-driven measurements from each of its Disease Management programs with written analysis describing the effectiveness of its Disease Management interventions as well as any modifications implemented by the CONTRACTOR to improve its Disease Management performance. All disease management data submitted to the State shall be New Mexico Medicaid-specific;

(4) submit to the State by September 1^st of the current contract year the CONTRACTOR’s Disease Management plan, which includes a program description, the overall program goals, measurable objectives, and targeted interventions. The CONTRACTOR shall also submit to the State its methodology used to identify other diseases for potential Disease Management programs;

(5) submit to the State by August 30^th of the following contract year a quantitative evaluation of the efficacy of the prior year’s Disease Management Program; and

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(6) demonstrate consistent improvement in the overall Disease Management program goals annually or maintain mutually agreed upon level of performance with a report to the State as set forth further in the Appendices.

(M)	Clinical Practice Guidelines for ISHCN
	The CONTRACTOR shall develop clinical practice guidelines, practice parameters, and/or other specific criteria that consider the needs of ISHCN and provide guidance in the provision of acute and chronic medical health care services to this population. The guidelines should be professionally accepted standards of practice and national guidelines, be adopted in consultation with contracting health care professionals, reviewed and updated periodically, as appropriate, and provided to the State upon initiation of the Agreement, and thereafter, upon request. The CONTRACTOR must disseminate the guidelines to all affected providers and, upon request, to Members and Potential Members.
(N)	Utilization Management (UM)
	The CONTRACTOR shall:

(1) Comply with NMAC 8.305.8.13 regarding Standards for Utilization Management. The CONTRACTOR shall manage the use of limited resources, maximize the effectiveness of care by evaluating clinical appropriateness, and authorize the type and volume of services through fair, consistent and culturally competent decision making processes while ensuring equitable access to care and a successful link between care and outcomes. The Member’s ISP priorities and prolonged service authorizations applicable for individuals with chronic conditions shall be considered in the decision-making process.

(2) Define and submit annually to the State a written copy of the UM program description, UM plan, and UM evaluation, which shall include but is not limited to:

(a) a description of the program structure and accountability mechanisms;

(b) specific indicators that will be used for periodic performance tracking and trending as well as processes or mechanisms used for assessment and intervention; and

(c) an evaluation of the overall effectiveness of the UM plan, an overview of the UM activities and the impact of the UM plan on the quality of management and administrative activities. The review and analysis shall be incorporated in the development of the following year’s UM plan.

(3) Shall submit for review and approval to the State upon request all UR clinical and social service criteria to be utilized for prior authorization decision.

(4) Submit copies of updated or changed criteria to the State within two (2) business days upon request.

(5) Develop and implement written policies and procedures for review of utilization decisions to ensure their basis in sound clinical evidence and that they conform to Medical Necessity criteria.

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(6) Develop written policies and procedures to issue extended prior authorization any Covered Service or goods expected to be required on an on-going basis to exceed six (6) months. These services shall be authorized for an extended period of time and the CONTRACTOR will provide for a review and periodic update of the course of treatment, as indicated.

(7) Ensure the involvement of appropriate, practicing practitioners in the development of UM procedures.

(8) Comply with the State’s standards, and applicable provisions of the Balanced Budget Act, related to timeliness of decisions including routine/non-routine urgent and emergent situations.

(9) Approve or deny Covered Services for routine/non-urgent and urgent care requests within the timeframes stated in regulation. These required timeframes are not to be affected by a “pend” decision. The decision-making timeframes must accommodate the clinical urgency of the situation and not delay the provision of Covered Services to Members for lengthy periods of time.

(10) Develop and implement policies and procedures by which UM decisions may be appealed by Members or their representatives in a timely manner, which must include all necessary requirements and timeframes for submission based on CMS and State law and regulations.

(11) Ensure that, consistent with 42 C.F.R. §§438.6(h) and 422.208 compensation to individuals or entities that conduct UM activities is not structured so as to provide incentives for the individual or entity to deny, limit, or discontinue services to any Member.

(12) Evaluate member and Network Provider satisfaction with the UM process as part of its Member satisfaction survey and Provider Satisfaction Survey while maintaining the federal and state confidentiality requirements set forth in federal and state laws and regulations of surveyed Members and forward compiled survey results and analyzes to the State.

(13) Provide the State access to the CONTRACTOR’s UM review documentation for purposes of compliance audits and/or other contract oversight activities.

(O) Authorization and Notice of Services

(1) Authorization of Covered Services. The CONTRACTOR shall:

(a) identify, define and specify the amount, duration and scope of each Covered Service;

(b) require that the services be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope for the same services furnished to beneficiaries under Medicaid fee-for-service, as set forth in 42 C.F.R. §440.230,

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and in the services and goods set forth in the approved 1915(c) waiver submitted to CMS for the CLTS program;

(c) ensure that the services are sufficient in amount, duration, or scope to reasonably be expected to achieve the purpose for which the services are furnished;

(d) not arbitrarily deny or reduce the amount, duration, or scope of a Covered Service solely because of diagnosis, type of illness, or Member’s condition;

(e) place appropriate limits on service:

(i) on the basis of criteria approved by the State; or

(ii) for the purpose of utilization control, provided the services furnished can reasonably be expected to achieve their purpose.

(f) specify what constitutes “Medically Necessary Services” in a manner that:

(i) is no more restrictive than that used by the State as indicated in state law and regulations, the Medicaid State Plan, and other State policy and procedures; and

(ii) addresses the extent to which the CONTRACTOR is responsible for covering services related to the prevention, diagnosis, and treatment of health impairments and the ability to attain, maintain, or regain functional capacity.

(g) specify what constitutes “waiver services” [approved 1915(c) home and community-based waiver, as amended] in a manner that:

(i) is no more restrictive than that used by the State as indicated in state law and regulations, the Medicaid State Plan, and other State policy and procedures; and

(ii) is no more restrictive than that used by the State as indicated in its 1915(c) waiver approved by CMS; and

(h) ensure that prior authorization, including an appropriate level of care determination, is granted for each Member that is deemed eligible for NF LOC; and, that such authorization is reviewed within twelve (12) months after a Member is deemed eligible for continuation of such services.

(2) Authorization of Services. For the processing of requests for initial and continuing authorization of services, the CONTRACTOR shall:

(a) require that its subcontractors have in place and follow written policies and procedures regarding authorization of services;

(b) have in effect mechanisms to ensure consistent application of review criteria for authorization decisions;

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(c) consult with Network Provider and Non-Network Providers when appropriate; and

(d) require that any decision to deny a service authorization request or to authorize a service in an amount, duration, or scope that is less than requested, be made by a health or social services professional who has appropriate expertise in treating the Member’s specific condition or disease.

(P) Denials and Notice of Adverse Action

(1) Denials. The CONTRACTOR shall:

(a) clearly document in English or other prevalent language, as appropriate, on a form agreed to by the State, and communicate in writing the reasons for such denial to requesting Network Providers, Non-Network Providers, and the Member;

(b) establish and maintain a well-publicized internal and accessible Grievance and Appeal mechanism for both Providers and Members, the notification of a denial shall include a description of how to file a Grievance and Appeal in the CONTRACTOR’s system and how to obtain an HSD/MAD Fair Hearing, see 42 C.F.R. §438, subparts (H) and (F); and

(c) recognize that a UR decision resulting from HSD/MAD Fair Hearing conducted by the designated HSD/MAD official is final and shall be honored by the CONTRACTOR. However, the CONTRACTOR shall have the right to dispute the financial responsibility for the decision through the dispute resolution process set forth in this Agreement and seek judicial review of HSD/MAD’s Fair Hearing decision.

(2) Notice of Adverse Action. The CONTRACTOR shall:

(a) notify the requesting Network Provider or Non-Network Provider, and give the Member written notice of any decision by the CONTRACTOR to deny a service authorization request or to authorize a service in an amount, duration, or scope that is less than requested. The notice must meet the requirements set forth in 42 C.F.R. §438.404.

3.6

PROVIDERS

The CONTRACTOR shall establish and maintain a comprehensive network of providers capable of serving all Members who enroll in CLTS. Pursuant to Section 1932(b)(7) of the Social Security Act, the CONTRACTOR shall not discriminate against providers that serve high-risk populations or specialize in conditions that require costly treatment. In addition, the CONTRACTOR shall not discriminate against providers with respect to participation, reimbursement or indemnification for any providers acting within the scope of that provider’s license or certification under applicable state law solely on the basis of the provider’s license or certification. The CONTRACTOR shall use reasonable efforts to secure at least a Memorandum of Understanding, single case agreement with all current Medicaid nursing facility, D&E Waiver, and PCO providers as either out of network or contracted providers for at least the minimum sixty (60) calendar days during which the prior authorization for these services is being

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honored. If any Medicaid nursing facility refuses to enter into an agreement with CONTRACTOR, CONTRACTOR’s maximum liability for services rendered to a member at such nursing facility shall be 100% of the Medicaid Fee-For-Service reimbursement rate. If the CONTRACTOR declines to include individuals or groups or providers in its network, it must give the affected providers written notice of the reason for its decision. The CONTRACTOR shall not be required to contract with providers beyond the number necessary to meet the needs of its Members. The CONTRACTOR shall be allowed to use different reimbursement amounts for different specialties or for different practitioners in the same specialty. The CONTRACTOR shall be allowed to establish measures that are designed to maintain quality of services and control of costs and are consistent with its responsibilities to Members. The CONTRACTOR agrees that it will not make payment to any provider who has been barred from participation based on existing Medicare, Medicaid or SCHIP sanctions, except for emergency services.

(A)	Required Policies and Procedures
	The CONTRACTOR shall:

(1) maintain written policies and procedures on provider recruitment and termination of provider participation with the CONTRACTOR. The State shall have the right to review these policies and procedures upon demand. The recruitment policies and procedures shall describe how a CONTRACTOR responds to a change in the network that affects access and its ability to deliver services in a timely manner.

(2) require that each provider either billing or rendering services to Members has a unique identifier in accordance with the provisions of Section 1173(b) of the Social Security Act;

(3) require that subcontracted direct care agencies initiate and maintain records of criminal history/background investigations for employees providing services as specified in 7.1.9 NMAC, Caregivers Criminal History Screening Requirements;

(4) annually develop and implement a training plan to educate providers and their staff on CLTS, provide technical assistance as needed on CLTS, the State policies and procedures, or the CONTRACTOR’s processes and procedures and provide technical assistance as needed on CLTS. The plan shall be submitted to the State for review and approval on or before July 1^st of each year;

(5) consider, in establishing and maintaining a network of appropriate providers, its:

(a) anticipated enrollment;

(b) expected utilization of services, taking into consideration the characteristics and needs of specific CLTS populations;

(c) numbers and types (in terms of training, experience, and specialization) of providers required to furnish Covered Services;

(d) numbers of Network Providers who are not accepting new Members; and

(e) geographic location of Providers and Members, considering distance, travel time, the means of transportation ordinarily used by Members and whether the location provides physical access for Members with disabilities;

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(6) ensure that Network Providers’ office hours of operation are no less than the hours of operation to commercial enrollees or comparable to Medicaid fee-for-service, if the provider serves only Medicaid enrollees. The CONTRACTOR shall:

(a)	establish mechanisms such as notices or training materials to ensure that Network Providers comply with the timely access requirements;
(b)	monitor regularly to determine compliance; and
(c)	take corrective action if there is a failure to comply.

(7) require that Network Providers are conducting abuse registry screenings in accordance with the Employee Abuse Registry Act, and §§7.1.12 and 8.11.6.1 NMAC.

(B)	General Information Submitted to the State
	The CONTRACTOR shall maintain an accurate list of all active PCPs, specialists, hospitals, long-term services providers and other Network Providers. The CONTRACTOR shall submit the list to the State on a quarterly basis and include clear delineation of all additions and terminations that have occurred the prior quarter. This requirement is in addition to the requirement for submission of a Network Provider file to be used in the processing of encounters. The CONTRACTOR’s agreements with Network Providers must include language stating that the Network Providers will report any changes in their capacity to take new Medicaid clients or serve current clients.
(C)	The Primary Care Provider (PCP)
	These PCP policies apply to all Members except dually eligible Members whose primary and acute physical health care is covered by Medicare. For the dual eligible Members, the CONTRACTOR will be responsible for coordinating the primary, acute, and long-term care services with the Medicare PCP. For all other Members, the PCP shall be a medical provider participating with the CONTRACTOR who has the responsibility for supervising, coordinating, and providing primary health care to Members, initiating referrals for specialty care, and maintaining the continuity of the Member’s care. The CONTRACTOR shall distribute information to the Network Providers that explains the Medicaid-specific policies and procedures relating to PCP responsibilities. The CONTRACTOR is prohibited from excluding providers as PCPs based on the proportion of high-risk patients in their caseloads.
(D)	Primary Care Responsibilities
	The CONTRACTOR shall ensure that the following are met by the PCP, or in another manner:

(1) the PCP shall provide twenty-four hour, seven day a week access;

(2) the PCP shall ensure coordination and continuity of care with providers who participate with the CONTRACTOR’s network and with providers outside the CONTRACTOR’s network according to the CONTRACTOR’s policy; and

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(3) the PCP shall ensure that the Member receives appropriate prevention services for the Member’s age group.

	The CONTRACTOR shall have a formal process for provider education regarding Medicaid, the conditions of participation in the network and the provider’s responsibilities to the CONTRACTOR and its Members. The State shall be provided documentation upon request that such provider education is being conducted.
(E)	CONTRACTOR Responsibility for PCP Services
	The CONTRACTOR shall retain responsibility for monitoring PCP activities to ensure compliance with the CONTRACTOR’s and the State’s policies. The CONTRACTOR shall establish mechanisms to ensure that Network Providers comply with the timely access requirements, monitor regularly to determine compliance and take corrective action if there is a failure to comply. The CONTRACTOR shall educate PCPs about special populations and their service needs. The CONTRACTOR shall ensure that PCPs successfully identify and refer Members to Specialty Providers as Medically Necessary.
(F)	Selection or Assignment to a PCP
	The CONTRACTOR shall maintain and comply with written policies and procedures governing the process of Member selection of a PCP and requests for changes.

(1) At the time of initial enrollment, the CONTRACTOR shall ensure that each Member has the freedom to choose a PCP in the plan’s network within a reasonable distance from the Member’s primary residence. The process whereby a CONTRACTOR assigns Members to PCPs shall include at least the following:

(a) the CONTRACTOR shall provide the Member and/or his/her representative with the means for selecting a PCP within five (5) business days of processing the enrollment file;

(b) the CONTRACTOR shall make auto-assignments no later than five (5) business days from enrollment for any Member who has not selected a PCP in that timeframe and the CONTRACTOR shall notify the Member in writing of his/her PCP’s name, location, and office telephone number, while providing the Member with an opportunity to select a different PCP if he/she is dissatisfied with the assignment; and

(c) the CONTRACTOR shall assign a PCP based on factors such as Member’s age, residence, and if known, current provider relationships.

(2) Members may initiate a PCP change at any time, for any reason. The request can be made in writing or by telephone. If a request is made by the 20^th of a month, it becomes effective no later than the first of the following month. If a request is made after the 20^th of the month, the change becomes effective no later than the first of the second following month.

(3) the CONTRACTOR may initiate a PCP change for a Member under the following circumstances:

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(a) the Member and the CONTRACTOR agree that assignment to a different PCP in the CONTRACTOR’s network is in the Member’s best interest, based on the Member’s medical condition;

(b) a Member’s PCP ceases to participate in the CONTRACTOR’s network;

(c) a Member’s behavior toward the PCP is such that it is not feasible for the PCP to safely or prudently provide medical care and the PCP has made all reasonable efforts to accommodate the Member;

(d) a Member has initiated legal action against the PCP; or

(e) the PCP is suspended for potential quality or fraud and abuse issues.

(4) In instances where a PCP has been terminated, the CONTRACTOR shall notify and allow affected Members to select another PCP or make an assignment within fifteen (15) calendar days of the termination effective date.

(5) PCP Lock-In. The State shall allow the CONTRACTOR to require that a Member see a certain PCP when utilization of unnecessary services has been identified and a need to provide case continuity is indicated. Prior to placing the Member on PCP Lock-In, the CONTRACTOR shall inform the Member and/or his/her representative of the intent to lock-in. The CONTRACTOR’s grievance procedure shall be made available to any Member being designated for PCP Lock-In. The PCP Lock-In shall be reviewed and documented by the CONTRACTOR and reported to the State every quarter. The Member shall be removed from PCP Lock-In when the CONTRACTOR has determined that the utilization problem has been solved and that recurrence of the problems is judged to be improbable. The State shall be notified of all lock-in removals.

(6) Pharmacy Lock-In. The State shall allow the CONTRACTOR to require that a Member see a certain Pharmacy provider for whom compliance or drug seeking behavior is suspected. Prior to placing the Member on Pharmacy Lock-In, the CONTRACTOR shall inform the Member and/or his/her representative of the intent to lock-in. The CONTRACTOR’s grievance procedure shall be made available to the Member being designated for Pharmacy Lock-In. The Pharmacy Lock-In shall be reviewed and documented by the CONTRACTOR and reported to the State every quarter. The Member shall be removed from Pharmacy Lock-In when the CONTRACTOR has determined that the compliance or drug seeking behavior has been solved and the recurrence of the problems is judged to be improbable. The State shall be notified of all lock-in removals.

(G)	Long-Term Services (“LTS”) Providers
	The LTS provider shall be a medical provider, home and community-based provider or an institutional provider participating with the CONTRACTOR who has the responsibility for supervising and coordinating the provision of LTS to Members.

(1) The CONTRACTOR is prohibited from excluding providers as LTS providers based on the proportion of high-risk Members in their caseloads; and

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(2) The CONTRACTOR shall have a formal process for provider education regarding the CLTS program, the conditions of participation in the program and the provider’s responsibilities to the CONTRACTOR and its Members. The State shall be provided documentation upon request that such provider education is being conducted.

(H)	CONTRACTOR Responsibility for LTS
	The CONTRACTOR shall retain responsibility for monitoring LTS activities to ensure compliance with the CONTRACTOR’s policies, the State policies and federal regulations. The CONTRACTOR shall educate LTS providers about special populations and their service needs. The CONTRACTOR shall ensure that LTS providers successfully identify and refer Members to PCPs for referral to Specialty Providers as Medically Necessary.
(I)	Specialty Providers
	The CONTRACTOR shall contract with a sufficient number of specialists with the applicable range of expertise to ensure that the needs of CONTRACTOR Members shall be met within the CONTRACTOR’s network of providers. The CONTRACTOR shall also have a system to refer Members to providers who are not Network Providers if providers with the necessary qualifications or certifications do not participate in the network. Out-of-Network Providers must coordinate with the CONTRACTOR with respect to payment. The CONTRACTOR must ensure that the cost to the Member is no greater than it would be if the services were furnished within the network.
(J)	Other Provider Types
	The CONTRACTOR shall contract with the following:

(1) Federally Qualified Health Centers and Rural Health Centers to the extent that access is required under federal law and pursuant to New Mexico regulations;

(2) Public Health Providers, including local and district public health offices pursuant to New Mexico law and regulations;

(3)	Children’s Medical Services pursuant to New Mexico regulations;
(4)	School-Based Providers pursuant to New Mexico regulations;

(5) Assisted Living Facilities as Network Providers. The CONTRACTOR shall require that Assisted Living Network Providers meet the fundamental principals of practice for home and community-based services including the following:

(a)	offering quality care that is personalized for the Member’s needs;
(b)	fostering independence for each Member;
(c)	treating each Member with dignity and respect;
(d)	promoting the individuality of each Member;

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(e)	allowing each Member choices in care and life style;
(f)	protecting each Member’s right to privacy;
(g)	nurturing the spirit of each Member;

(h)	involving family and friends in service planning and implementation;
(i)	providing a safe residential environment;
(j)	providing safe community outings or activities; and

(k) making the assisted living resident a valuable community asset.

(6) Other providers, as needed, to provide services identified in the Member’s ISP.

(K)	Shared Responsibility between the CONTRACTOR and Public Health Offices
	The CONTRACTOR shall coordinate with public health offices regarding the following services:

(1)	sexually transmitted disease services, including screening, diagnosis, treatment, follow-up and contact investigations;
(2)	HIV prevention counseling, testing, and early intervention;
(3)	Tuberculosis screening, diagnosis, and treatment;

(4) disease outbreak prevention and management, including reporting according to New Mexico law and regulations, responding to epidemiology requests for information and coordination with epidemiology investigations and studies;

(5) referral and coordination to ensure maximum participation in the Supplemental Food Program for Women, Infants, and Children (WIC);

(6) health education services for individuals and families with a particular focus on injury prevention including car seat use, domestic violence, and lifestyle issues, including tobacco use, exercise, nutrition, and substance use;

(7) development and support for family support programs, such as home visiting programs for families of newborns and other at-risk families and parenting education; and

(8) participation and support for local health councils to create healthier and safer communities with a focus on coordination of efforts, such as DWI councils, maternal and child health councils, tobacco coalitions, safety counsel, safe kids, and others.

(L) Indian Health Services (IHS) & Tribal Health Centers

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(1) The CONTRACTOR shall allow Members who are Native American to seek care from any IHS or Tribal Provider defined in the Indian Health Care Improvement Act, 25 U.S.C. §§1601, et seq.), whether or not the provider participates in the CONTRACTOR’s provider network.

(2) The CONTRACTOR shall not prevent Members who are IHS beneficiaries from seeking care from IHS, Tribal and Urban Indian Providers, or from Network Providers due to their status as Native Americans.

(3) The CONTRACTOR shall make good-faith efforts to contract with IHS and Tribal 638 facilities and other Tribal programs.

(4) The CONTRACTOR shall track IHS utilization and expenditures by Native American Members.

(5) The CONTRACTOR shall not require prior authorization for services provided within the IHS and Tribal 638 network.

(6) The CONTRACTOR shall accept an individual provider employed by the IHS or Tribal 638 facility who holds a current license to practice in the United States or its territories as meeting licensure requirements.

(M) Family Planning Services and Providers

(1) Federal law prohibits restricting access to family planning services for Medicaid recipients. The CONTRACTOR shall implement written policies and procedures defining how Members are educated about their right to family planning services, freedom of choice, and methods of accessing such services.

(2) The CONTRACTOR shall give each Member, including adolescents, the opportunity to use his or her own PCP or go to any family planning center for family planning services without requiring a referral. Each female Member shall also have the right to self-refer to a women’s health specialist within the network for covered care necessary to provide women’s routine and preventive health care services. This right to self-refer is in addition to the Member’s designated source of primary care if that source is not a women’s health specialist. Clinics and providers, including those funded by Title X of the Public Health Service Act, shall be reimbursed by the CONTRACTOR for all family planning services, regardless of whether they are Network Providers or non-Network Providers. Unless otherwise negotiated, the CONTRACTOR shall reimburse providers of family planning services at the Medicaid rate.

(3)	Non-participating providers are responsible for keeping family planning information confidential in favor of the individual patient even if the patient is a minor. The CONTRACTOR is not responsible for the confidentiality of medical records maintained by non-participating providers.
(4)	Family planning services are defined as follows:

(a) health education and counseling necessary to make informed choices and understand contraceptive methods;

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(b) limited history and physical examination;

(c) laboratory tests if medically indicated as part of the decision making process for choice of contraceptive methods;

(d) diagnosis and treatment of sexually transmitted diseases (STDs) if medically indicated;

(e) screening, testing and counseling of at-risk individuals for human immunodeficiency virus (HIV) and referral for treatment;

(f)	follow-up care for complications associated with contraceptive methods issued by the family planning provider;
(g)	provision of, but not payment for, contraceptive pills;
(h)	provision of devices/supplies;
(i)	tubal ligations;
(j)	vasectomies; and
(k)	pregnancy testing and counseling.

(5) If a non-participating provider of family planning services detects a problem outside of the scope of services listed above, the provider should refer the Member back to the CONTRACTOR. The CONTRACTOR is not under any State initiated obligation to reimburse non-participating family planning providers for non-emergent services outside the scope of these defined services.

(N)	State Operated Long-Term Care Facilities
	The CONTRACTOR shall contract with the Department of Health to provide Covered Services with those Members residing in State operated long-term care facilities.
(O)	Standards for Provider Credentialing and Re-credentialing
	For individual professional practitioners:

(1) The CONTRACTOR shall have written policies and procedures for the credentialing process, which include the CONTRACTOR’s initial credentialing of practitioners, as well as its subsequent re-credentialing, recertifying and/or re-appointment of practitioners.

(2) The CONTRACTOR shall designate a credentialing committee or other peer review body to make recommendations regarding credentialing decisions.

(3) The CONTRACTOR shall identify those practitioners who fall under the scope of credentialing authority and action. This shall include, at a minimum, all physicians,

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dentists, and other licensed independent practitioners. This will provide an indication of those practitioners whose service to Members is contracted or anticipated.

(4) At the time of credentialing, the CONTRACTOR shall comply with all HSD/MAD standards for credentialing and re-credentialing and requirements in the HSD/MAD Policy Manual.

(5) The CONTRACTOR shall formally re-credential Network Providers at least every three (3) years.

(P)	Organizational Providers
	The CONTRACTOR shall:

(1) have written policies and procedures for the initial and ongoing assessment of all organizational providers with which it intends to contract with or with which it is contracted. Providers include, but are not limited to, hospitals, home health agencies, nursing facilities, and free-standing surgical centers;

(2) confirm that the provider is in good standing with state and federal regulatory bodies;

(3) confirm that the provider has been reviewed and approved by an accrediting body; and

(4) develop and implement standards of participation that demonstrate the provider is in compliance with provider participation requirements under federal law and regulations, if the provider has not been approved by an accrediting body.

(Q) Primary Source Verification.

(1) The State and the CONTRACTOR shall mutually agree to a single primary source verification entity to be used by the CONTRACTOR and its subcontractors in its provider credentialing process. All MCOs shall use one standardized credentialing form. The State shall have the right to mandate a standard credentialing application to be used by the CONTRACTOR and its subcontractors in its provider credentialing process.

(2) The CONTRACTOR shall provide the State copies of all Medicaid provider specific forms used in its health system operations and credentialing/re-credentialing process for prior approval. The forms shall be user friendly. The CONTRACTOR shall participate in a workshop to consolidate and standardize forms across all MCOs and for its credentialing/re-credentialing process and applications.

3.7

COVERED SERVICES, SUPPORTS, AND GOODS; EXCLUDED BENEFITS; AND VALUE ADDED SERVICES.

The CONTRACTOR shall be required to provide a comprehensive coordinated and fully integrated system of health care services, supports, and goods for Members. The CONTRACTOR does not have the option of deleting benefits or Covered Services from the CLTS benefit package. All CLTS Members must receive benefits and services approved by CMS as set forth in the State’s 1915(b) waiver. Benefits and services approved by CMS as set forth in the State’s 1915(c) home and-community based waiver are to be provided to Members identified by the State with notification of

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eligibility to the CONTRACTOR. Such benefits, Covered Services, supports and goods are set forth in Appendix A. Excluded benefits and Value Added Services are also set forth in Appendix A.

The CONTRACTOR is required to provide Medically Necessary Services. The CONTRACTOR shall apply the definition of Medically Necessary Services consistent with the following:

(1) A determination that a health care service is medically necessary does not mean that the health care service is a Covered Service or an amendment, modification or expansion of a Covered Service;

(2) The CONTRACTOR making the determination of medical necessity of clinical, rehabilitative and supportive services consistent with the Medicaid covered benefit package applicable to an eligible individual shall do so by:

(A) evaluating individual physical, mental and behavioral health information provided by qualified professionals who have personally evaluated the individual within their scope of practice, who have taken into consideration the individual’s clinical history including the impact of previous treatment and service interventions and who have consulted with other qualified health care professionals with applicable specialty training, as appropriate:

(B) considering the views and choices of the individual or the individual’s legal guardian, agent or surrogate decision maker regarding the proposed Covered Service as provided by the clinician or through independent verification of those views; and

(C) considering the services being provided concurrently by other service delivery systems.

(3) Physical, mental and behavioral health services shall not be denied solely because the Member has poor prognosis. Required services may not be arbitrarily denied or reduced in amount, duration or scope to an otherwise eligible individual solely because of the diagnosis, type of illness or condition; and

(4) Decisions regarding benefit coverage for children shall be governed by EPSDT coverage rules to the extent they are applicable.

[See, 42 U.S.C. §1396b(a)(13, 42 C.F.R. §440.230, NMAC 8.305.1.7]

3.8 CULTURALLY COMPETENT SERVICES

(A) The CONTRACTOR shall develop and implement a Cultural Competency/Sensitivity Plan through which the CONTRACTOR shall ensure that it provides, both directly and through its Network Providers and subcontractors, culturally competent services to its Members. The CONTRACTOR shall participate with the State’s efforts to promote the delivery of Covered Services in a culturally competent manner to all CLTS Members, including those with limited English proficiency and diverse cultural and ethnic backgrounds. The CONTRACTOR shall:

(1) develop a Cultural Competency Plan that describes how the CONTRACTOR shall ensure that Covered Services provided to Members are culturally competent and shall submit the plan to the State on an annual basis for approval;

(2) develop written policies and procedures that implement the Cultural Competency Plan;

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(3) target cultural competency training to PCP, Service Coordinators, home health care staff and ensure that staff at all levels receive on-going education and training in culturally and linguistically appropriate service delivery;

(4) develop and implement a plan for interpretive services including oral translation services and written materials to meet the needs of Members, potential enrollees, and their decision-makers whose primary language is not English, using qualified medical interpreters, if available, and make available easily understood Member-oriented materials and post signage in the languages of the commonly encountered group and/or groups represented in the service area;

(5) identify community advocates and agencies that could assist non-English and limited-English speaking individuals and/or that provide other culturally appropriate and competent services, which include methods of outreach and referral;

(6) incorporate cultural competence into utilization management, quality improvement and planning for the course of treatment;

(7) identify resources and interventions for high-risk health conditions found in certain cultural groups;

(8) develop and incorporate contract language to cultural competency requirements for inclusion in contracts between the CONTRACTOR and its Network Providers and subcontractors;

(9) recruit and train a diverse staff and leadership that are representative of the demographic characteristics of the CONTRACTOR’s service area; and

(10) ensure that new Member assessment forms contain questions related to primary language preference and cultural expectations and that information received is maintained in the Member’s file.

(B) The CONTRACTOR shall conduct initial and annual organizational self-assessments of culturally and linguistically competent-related activities and are encouraged to integrate cultural and linguistic competence-related measures into their internal audits, performance improvement programs, Member satisfaction assessments and outcomes-based evaluations.

(C) The CONTRACTOR shall identify a “tribal liaison” to assist the CONTRACTOR with issues specifically related to Native Americans and IHS and Tribal facilities and report such “tribal liaison” to the State for approval.

(D) The CONTRACTOR shall hold semi-annual meetings with Native American representatives from around the State of New Mexico that represent geographic and Member diversity. Minutes of such meetings shall be transmitted to the State within thirty (30) calendar days of such meetings, identifying:

(1) how the CONTRACTOR determined the representation of Native American representatives;

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(2)	how notice of such meeting was delivered to Native American representatives that were asked to attend the meeting;
(3)	matters discussed at the meeting;

(4)	action items and/or recommendations to the CONTRACTOR and/or the State; and
(5)	the date, time and location of the next meeting.

3.9 INDIVIDUALS WITH SPECIAL HEALTH CARE NEEDS (ISHCN)

(A)	General Requirements
	The CONTRACTOR must have a method for identifying individuals with Special Health Care Needs (ISHCN). References in this Agreement to ISHCN are specifically directed to Members that currently have special care needs. ISHCN require a board range of primary, specialized, medical, behavioral and social services. The CONTRACTOR shall:

(1) incorporate into its Member handbook a description of Network Providers and programs available to ISHCN;

(2) identify ISHCN among its Membership, using the criteria for identification and information provided by the State to MCOs;

(3) work with the State to develop and implement written policies and procedures, which govern how Members with multiple and complex physical health care needs shall be identified;

(4) have an internal operational process, in accordance with policy and procedure, to target Members for the purpose of applying stratification criteria to ISHCN;

(5) have a mechanism to assess each Member identified as having special health care needs in order to identify any ongoing special conditions of the Member that require a course of treatment or regular care monitoring. The assessment mechanism must use appropriate health care professionals;

(6) develop a service plan, in accordance with any applicable state quality assurance and utilization review standards, by the Member’s PCP with Member participation and in consultation with any specialists caring for the Member; and

(7) have a mechanism in place to allow Members to directly access specialists as appropriate for the Member’s condition and identified needs.

3.10	GRIEVANCE AND APPEALS
	The CONTRACTOR shall have a grievance system in place for Members that includes a grievance process related to dissatisfaction, and an appeals process related to a CONTRACTOR action, including the opportunity to request an HSD/MAD Fair Hearing.
	For purposes of this Article, the following definitions apply:

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“Appeal” is a request for review by the CONTRACTOR of a CONTRACTOR Action.

“Action” is the denial or limited authorization of a requested service, including the type or level of service; the reduction, suspension, or termination of a previously authorized service; the denial, in whole or in part, of payment for a service; the failure to provide services in a timely manner; or the failure of the CONTRACTOR to complete the authorization request in a timely manner as defined in 42 C.F.R. §438408. An untimely service authorization constitutes a denial and is thus considered an Action.

“Expedited Resolution of an Appeal” means an expedited review by the CONTRACTOR of a CONTRACTOR Action.

“Grievance” is a Member’s expression of dissatisfaction about any matter or aspect of the CONTRACTOR or its operation other than a CONTRACTOR Action.

“Notice” of a CONTRACTOR Action must contain: (1) the Action the CONTRACTOR has taken or intends to take; (2) the reasons for the Action; (3) the Member’s or the provider’s right to file an appeal of the CONTRACTOR’s Action through the CONTRACTOR; (4) the Member’s right to request an HSD/MAD Fair Hearing and what that process would be; (5) the procedures for exercising the rights specified; (6) the circumstances under which Expedited Resolution of an appeal is available and how to request it; and (7) the Member’s right to have benefits continue pending resolution of the Appeal, how to request the benefits be continued, and the circumstances under which the Member may be required to pay the costs of these services.

The Member, legal guardian if the Member is a minor or is an incapacitated adult, or a representative of the Member as designated in writing to the CONTRACTOR, or the representative of a deceased Member’s estate, has the right to file a Grievance; an Appeal of a CONTRACTOR Action; or request an HSD/MAD Fair Hearing, on behalf of the Member or deceased Member. A provider acting on behalf of the Member and with the Member’s written consent may file a Grievance and/or Appeal of a CONTRACTOR Action. An HSD/MAD Fair Hearing may be requested prior to, concurrent with, subsequent to, or in lieu of a Grievance.

(A)	General Requirements for Grievance and Appeals
	The CONTRACTOR shall:

(1) implement written policies and procedures describing how the Member may register a Grievance or an Appeal with the CONTRACTOR and how the CONTRACTOR resolves the Grievance or Appeal and meet all the requirements in the HSD/MAD Program Manual;

(2) provide a copy of its policies and procedures for resolution of a Grievance and/or Appeal to all Network Providers;

(3) have available reasonable assistance in completing forms and taking other procedural steps. This includes, but is not limited to, providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capacity;

(4) name a specific individual designated as the CONTRACTOR’s Medicaid Member Grievance Coordinator with the authority to administer the policies and procedures for

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resolution of a Grievance and/or Appeal, to review patterns/trends in Grievances and/or Appeals, and to initiate corrective action;

(5) ensure that the individuals who make decisions on Grievance and/or Appeals are not involved in any previous level of review or decision-making. The CONTRACTOR shall also ensure that health care professionals with appropriate clinical expertise will make decisions for the following:

(a) an Appeal of a CONTRACTOR denial that is based on lack of Medical Necessity;

(b)	a CONTRACTOR denial that is upheld in an Expedited Resolution; and
(c)	a Grievance or Appeal that involves clinical issues; and

(6) ensure that punitive or retaliatory action is not taken against a Member or provider that files a Grievance and/or Appeal, or against a provider that supports a Member’s Grievance and/or Appeal.

(B) Grievance

(1) A Member may file a Grievance either orally or in writing with the CONTRACTOR within ninety (90) calendar days of the date the dissatisfaction occurred. The legal guardian of the Member for minor or incapacitated adult, a representative of the Member as designated in writing to the CONTRACTOR, or a provider acting on behalf of the Member and with the Member’s written consent, has the right to file a Grievance on the Member’s behalf.

(2) Within five (5) business days of receipt of the Grievance, the CONTRACTOR shall provide the grievant with written notice that the Grievance has been received and the expected date of its resolution.

(3) The investigation and final CONTRACTOR resolution process for Grievances shall be completed within thirty (30) calendar days of the date the Grievance is received by the CONTRACTOR and shall include a resolution letter to the grievant.

(4)

The CONTRACTOR may request an extension from HSD/MAD of up to fourteen (14) calendar days if the Member requests the extension, or the CONTRACTOR demonstrates to HSD/MAD that there is a need for additional information, and the extension is in the Member’s best interests. For any extension not requested by the Member, the CONTRACTOR shall give the Member written notice of the reason for the extension within two (2) business days of the decision to extend the timeframe.

(5)

Upon resolution of the Grievance, the CONTRACTOR shall mail a resolution letter to the Member. The resolution letter must include, but is not limited to, the following:

(a)	all information considered in investigating the Grievance;
(b)	findings and conclusions based on the investigation;
(c)	the disposition of the Grievance; and

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(d) the right to appeal the resolution, if applicable.

(C) Appeal

(1) Notice of CONTRACTOR Action. The CONTRACTOR shall mail a notice of Action to the Member or provider and all those interested parties affected by the decision within fifteen (15) business days of the date of an Action except for denial of claims which may result in Member financial liability which requires immediate notification. Exceptions to the fifteen (15) day notification requirement include the following:

(a)	the period of advanced notice is shortened to five (5) business days if recipient fraud has been verified;
(b)	by the date of the Action for the following:

(i) in the death of a Member;

(ii) a signed written statement from the Member requesting service termination or giving information requiring termination or reduction of Covered Services (where the Member understands that this must be the result of supplying that information);

(iii) the Member’s admission to an institution where he is ineligible for further services;

(iv) the Member’s address is unknown and mail directed to the Member has no forwarding address;

(v) the Member has been accepted for Medicaid services in another jurisdiction;

(vi) the Member’s physician prescribes the change in level of medical care;

(vii) an adverse determination made with regard to preadmission screening requirements for nursing facility admissions on or after January 1, 1989; or

(viii) the safety and health of individuals in the facility would be endangered, the Member’s health improves significantly to allow a more immediate transfer or discharge, an immediate transfer or discharge is required by the Member’s urgent medical needs, or a Member has not resided in the nursing facility for thirty (30) calendar days (which applies only to adverse Actions for nursing facility transfers).

(2) A Member may file an Appeal of a CONTRACTOR action within ninety (90) calendar days of receiving the CONTRACTOR’s Notice of Action. The legal guardian of the Member for minors or incapacitated adults, a representative of the Member as designated in writing to the CONTRACTOR, or a provider acting on a Member’s behalf with the Member’s written consent, has the right to file an Appeal of an Action on behalf of the

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Member. The CONTRACTOR shall consider the Member, representative, or estate representative of a deceased Member as parties to the Appeal.

(3) The CONTRACTOR has thirty (30) calendar days from the date the oral or written Appeal is received by the CONTRACTOR to resolve the Appeal.

(4) The CONTRACTOR shall have a process in place that assures that an oral inquiry from a Member seeking to Appeal an Action is treated as an Appeal (to establish the earliest possible filing date of the Appeal). An oral appeal must be followed by a written Appeal that is signed by the Member.

(5) Within five (5) business days of receipt of the Appeal, the CONTRACTOR shall provide the appellant with written notice that the Appeal has been received and the expected date of its resolution. The CONTRACTOR shall confirm, in writing, receipt of oral Appeals, unless the Member or the provider requests an Expedited Resolution.

(6) The CONTRACTOR may extend the thirty (30)-day timeframe by fourteen (14) calendar days if the Member requests the extension, or if the CONTRACTOR demonstrates to HSD/MAD that there is need for additional information, and the extension is in the Member’s best interest. For any extension not requested by the Member, the CONTRACTOR must give the Member written notice of the extension and the reason for the extension within two (2) business days of the decision to extend the timeframe.

(7) The CONTRACTOR shall provide the Member and/or the representative a reasonable opportunity to present evidence, and allegations of the fact or law, in person, as well as in writing.

(8) The CONTRACTOR shall provide the Member and/or the representative the opportunity, before and during the Appeals process, to examine the Member’s case file, including medical records, any other documents and records considered during the Appeals process. The CONTRACTOR shall include as parties to the Appeal, the Member and his/her representative, or the legal representative of a deceased Member’s estate.

(9) For all Appeals, the CONTRACTOR shall provide written notice within the thirty (30)-day timeframe of the Appeal resolution to the Member and the provider, if the provider filed the Appeal. The written notice of the Appeal resolution in the Member’s favor, must include, but is not limited to, the following: (a) the result(s) of the Appeal resolution; and (b) the date it was completed. The written notice of the Appeal resolution not resolved wholly in favor of the Member must include, but is not limited to, the following information: (a) the right to request an HSD/MAD Fair Hearing and how to file for a Fair Hearing; (b) the right to request receipt of benefits while the Fair Hearing is pending, and how to make the request; and (c) that the Member may be held liable for the cost of those benefits if the Fair Hearing decision upholds the CONTRACTOR’s Action.

(10) The CONTRACTOR may continue Covered Services and other benefits while the Appeal and/or the HSD/MAD Fair Hearing process is pending. The CONTRACTOR shall continue the Member’s Covered Services and other benefits if all of the following are met:

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(a) the Member or the provider files a timely Appeal of the CONTRACTOR Action (within thirteen (13) calendar days of the date the CONTRACTOR mails notice of Action);

(b)	the Appeal involves the termination, suspension, or reduction of a previously authorized course of treatment. This does not include a new annual authorization for services which may be lower than provided in the previous year;
(c)	the services were ordered by an authorized provider;

(d)	the time period covered by the original authorization has not expired; and
(e)	the Member requests an extension of the benefits.

(11) The CONTRACTOR shall provide Covered Service and other benefits until one of the following occurs:

(a) the Member withdraws the Appeal;

(b) ten (10) business days have passed since the date the CONTRACTOR mailed the resolution letter, providing the resolution of the Appeal was against the Member and the Member has taken no further action;

(c) HSD/MAD issues a hearing decision adverse to the Member; or

(d) the time period or service limits or a previously authorized service has expired.

(12) If the final resolution of the Appeal is adverse to the member, that is, the CONTRACTOR’s Action is upheld, the CONTRACTOR may recover the cost of the services furnished to the Member while the Appeal was pending to the extent that services were furnished solely because of the requirements of this section, and in accordance with the policy set forth in 42 C.F.R. §431.230(b).

(13) If the CONTRACTOR or HSD/MAD reverses a decision to deny, limit, or delay services and these services were not furnished while the Appeal was pending, the CONTRACTOR must authorize or provide the disputed services promptly and as expeditiously as the Member’s health condition requires.

(14) If the CONTRACTOR or HSD/MAD reverses a decision to deny, limit, or delay services and the Member received the disputed services while the Appeal was pending, the CONTRACTOR must pay for these services.

(D) Expedited Resolution of Appeals

(1) The CONTRACTOR shall establish and maintain an Expedited Review process for Appeals when the CONTRACTOR determines that taking the time for a standard resolution could seriously jeopardize the member’s life or health or ability to attain, maintain, or regain maximum function. Such a determination is based on:

(a) a request from a Member;

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(b)	a provider’s support of the Member’s request;
(c)	a provider’s request on behalf of the Member; or
(d)	the CONTRACTOR’s independent determination.

(2) The CONTRACTOR shall ensure that the Expedited Review process is convenient and efficient for the Member.

(3) The CONTRACTOR shall resolve the appeal within three (3) business days of receipt of the request for an Expedited Appeal, if the request meets the definition of an Expedited Appeal. In addition to written resolution notice, the CONTRACTOR shall also make reasonable efforts to provide and document oral notice.

(4) The CONTRACTOR may extend the timeframe by up to fourteen (14) calendar days if the Member requests the extension, or the CONTRACTOR demonstrates to HSD/MAD that there is need for additional information, and the extension is in the Member’s best interests. For any extension not requested by the Member, the CONTRACTOR shall make reasonable efforts to give the Member prompt verbal notification and follow-up with a written notice within two (2) business days.

(5) The CONTRACTOR shall ensure that punitive action is not taken against a Member or a provider who requests an Expedited Resolution or a provider who requests an Expedited Resolution or supports a Member’s Expedited Appeal.

(6) The CONTRACTOR shall provide Expedited Resolution of an Appeal, if it meets expedited criteria, in response to an oral or written request from the Member or provider on behalf of a Member.

(7) The CONTRACTOR shall inform the Member of the limited time available to present evidence and allegations in fact or law.

(8) If the CONTRACTOR denies a request for an Expedited Resolution of an Appeal, it shall:

(a) transfer the Appeal to the thirty (30)-day timeframe for standard resolution, in which the thirty (30)-day period begins on the date the CONTRACTOR received the request;

(b) make reasonable efforts to give the Member prompt oral notice of the denial, and follow-up with a written notice within two (2) business days; and

(c) inform the Member in the written notice of the right to file an Appeal if the Member is dissatisfied with the CONTRACTOR’s decision to deny an Expedited Resolution.

(9) The CONTRACTOR shall document in writing all oral requests for Expedited Resolution and shall maintain the documentation in the case file.

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(E)	Special Rule for Certain Expedited Service Authorization Decisions
	In the case of Expedited Service Authorization decisions that deny or limit services, the CONTRACTOR shall, within seventy-two (72) hours of receipt of the request for service, automatically file an appeal on behalf of the Member, make best effort to give the Member oral notice of the decision of the automatic Appeal, and make a best effort to resolve the Appeal. For purpose of this section, an “Expedited Service Authorization” is a certification requesting for urgently needed care or services.
(F)	Information About Grievance System to Network Providers
	The CONTRACTOR must provide information specified in 42 C.F.R. §438.10(g)(1) about its grievance system to all providers and subcontractors at the time they enter into a contract.
(G)	Grievance and/or Appeal Files

(1) All Grievance and/or Appeal files shall be maintained in a secure, designated area and be accessible to the State upon request, for review. Grievance and/or Appeal files shall be retained for ten (10) years following the final decision by the CONTRACTOR, HSD/MAD, judicial appeal, or closure of a file, whichever occurs later.

(2) The CONTRACTOR shall have procedures for assuring that files contain sufficient information to identify the Grievance and Appeal, the date it was received, the nature of the Grievance and/or Appeal, all correspondence between the CONTRACTOR and the Member, the date the Grievance and/or Appeal is resolved, the resolution, and notices of final decision to the Member and all other pertinent information.

(3) Documentation regarding the grievance shall be made available to the Member, if requested.

(H) Reporting

(1) The CONTRACTOR shall provide information requested or required by the State or CMS.

(2) The CONTRACTOR shall provide the State monthly reporting of all provider and Member Grievances, Appeals, and Fair Hearings utilizing the State provided reporting templates and Grievance codes. The CONTRACTOR shall provide a monthly report to the State of the analysis of all provider and Member Grievances, Appeals, and Fair Hearings received from or about Members, by the CONTRACTOR or its subcontractors, during the quarter. The analysis will include the identification of any indications of trends as well as any interventions taken to address those trends. This reporting will adhere to the timelines and procedures set forth in the Reporting Matrix, Appendix B.

(I)	Provider Grievance and Appeals
	The CONTRACTOR shall establish and maintain written policies and procedures for the filing of provider grievances and appeals. A provider shall have the right to file a grievance or an appeal with the CONTRACTOR. Provider grievances or appeals shall be resolved within thirty (30) calendar days. If the provider grievance or appeal is not resolved within thirty (30) calendar

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days, the CONTRACTOR shall request a fourteen (14) day extension from the provider. If the provider requests the extension, the extension shall be approved by the CONTRACTOR. A provider shall have the right to file an appeal with the CONTRACTOR regarding provider payment issues and/or utilization management decisions.

3.11 FIDUCIARY RESPONSIBILITIES

(A) Financial Viability

(1) Net Worth. The CONTRACTOR shall, at all times, be in compliance with the net worth requirements set for in the New Mexico Insurance Code, NMSA 1978, §§59A-1-1, et seq.

(2) Working Capital Requirements. The CONTRACTOR must demonstrate and maintain working capital as specified below. For purposes of this Agreement, working capital is defined as current assets minus current liabilities. Throughout the terms of this Agreement, the CONTRACTOR must maintain a positive working capital, subject to the following conditions:

(a) If a CONTRACTOR’s working capital falls below zero, the CONTRACTOR must submit a written plan to reestablish a positive working capital balance for approval by the State.

(b) The State may take any action they deem appropriate, including termination of this Agreement, if the CONTRACTOR:

(i) does not propose a plan to reestablish a positive working-capital balance within a reasonable period of time;

(ii) violates a corrective action plan; or

(iii) the State determines that the negative working capital cannot be corrected within a reasonable time.

(B) Financial Stability

(1) Financial Stability Plan. Throughout the term of this Agreement, the CONTRACTOR must:

(a)

comply with and is subject to all applicable state and federal laws and regulations including those regarding solvency and risk standards. In addition to the requirements imposed by state and federal law, the CONTRACTOR shall be required to meet specific Medicaid financial requirements and to present to the State or its agent, any information and records deemed necessary to determine its financial condition. The response to requests for information and records shall be delivered to the State, at not cost to the State, in a reasonable time from the date of the request or as specified herein;

(b)

remain financially stable;

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(c) immediately notify the State when the CONTRACTOR has reason to consider insolvency or otherwise has reason to believe it or any subcontractor is other than financially sound and stable, or when financial difficulties are significant enough for the Chief Executive Officer or Chief Financial Officer to notify the CONTRACTOR’s board of the potential for insolvency; and

(d) procure and maintain such insurance as is required by current applicable state and federal law and regulations. Such insurance shall include, but is not limited to, the following:

(i)	Liability insurance for loss, damage, or injury (including death) of third parties arising from acts or omissions on the part of the CONTRACTOR, its agents and employees;
(ii)	Workers’ compensation;
(iii)	Unemployment insurance;
(iv)	Reinsurance, unless waived by the State pursuant to Article 3.11(B);

(v) Automobile insurance to the extent applicable to the CONTRACTOR’s operations; and

(vi) Health insurance for employees as further set forth in Article 39.

(2) Insolvency Reserve Requirement

(a) The CONTRACTOR shall maintain a reserve account to ensure that the provisions of Covered Services to Members are not at risk in the event of the CONTRACTOR’s insolvency. The CONTRACTOR shall comply with all state and federal laws and regulations regarding solvency, risk, and audit and accounting standards.

(b) Per Member Cash Reserve. The CONTRACTOR shall deposit an amount equal to three percent (3%) of the monthly capitated payments per Member into a reserve account with an independent trustee during each month of the first year of this Agreement. The CONTRACTOR shall maintain this cash reserve for the duration of this Agreement. The State shall adjust this cash reserve requirement annually, as needed, based on the number of CONTRACTOR’s Members. The cash reserve account may be accessed solely for payment for Covered Services to the CONTRACTOR’s Members in the event that CONTRACTOR becomes insolvent. Money in the cash reserve account remains the property of the CONTRACTOR, including any interest earned. The CONTRACTOR shall be permitted to invest its cash reserves with the State’s approval and consistent with the Division of Insurance regulations and guidelines.

(c) The CONTRACTOR may satisfy all or part of the Insolvency Reserve Requirement in Section 3.11(B)(2)(b) in writing with evidence of adequate protection through any combination of the following that are approved by the

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State: net worth of the CONTRACTOR (exclusive of any restricted cash reserve); performance guarantee; insolvency insurance; irrevocable letter of credit; surety bond; and/or a formal written guarantee from the CONTRACTOR’s parent organization. At least fifty percent (50%) of the total Insolvency Reserve must be in restricted cash reserves.

(3) Fidelity Bond Requirements. The CONTRATOR shall maintain in force a fidelity bond in the amount specified under the Insurance Code, NMSA 1978, §§59A-1-1, et seq.

(C) Other Financial Requirements

(1) Auditing and Financial Requirements. The CONTRACTOR must:

(a) ensure that an independent financial audit of the CONTACTOR is performed annually. This audit must comply with the following requirements:

(i) provide the State with the CONTRACTOR’s most recent audited financial statements; and

(ii) provide an independent auditor’s report on the processing of the transactions.

(b) submit on an annual basis after each audit a representation letter signed by the CONTRACTOR’s Chief Financial Officer and its independent auditor certifying that its organization is in sound financial condition and that all issues have been fully disclosed;

(c) immediately notify the State of any material negative change in the CONTRACTOR’s financial status that could render the CONTRACTOR unable to comply with any requirement of this Agreement, or that is significant enough for the Chief Executive Officer or Chief Financial Officer to notify its Board of the potential for insolvency;

(d) notify the State in writing of any default of its obligations under this Agreement, or any default by a parent corporation on any financial obligation to a third party that could in any way affect the CONTRACTOR’s ability to satisfy its payment or performance obligations under this Agreement;

(e) advise the State no later than thirty (30) calendar days prior to execution of any significant organizational changes, new contracts, or business ventures, being contemplated by the CONTRACTOR that may negatively impact the CONTRACTOR’s ability to perform under this Agreement; and

(f) refrain from investing funds in, or loaning funds to, any organization in which a director or principal officer of the CONTRACTOR has an interest.

(2) Inspection and Audit for Solvency Requirements. The CONTRACTOR shall meet all requirements for licensure within the State with respect to inspection and auditing of financial records. The CONTRACTOR shall also cooperate with the State or its designee, and provide all financial records required by the State or its designee so that

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they may inspect and audit the CONTRACTOR’s financial records at least annually or at the State’s discretion.

(3)

Third-Party Liability. THE CONTRACTOR is responsible for identification of third-party coverage of Members and coordination of benefits with applicable third-parties, including Medicare. The CONTRACTOR shall inform the State of any Member who has other health care coverage. The CONTRACTOR shall provide documentation to the State enabling the State to pursue its rights under state and federal law and regulations. Documentation includes payment information on enrolled Members as requested by the State, to be delivered within twenty (20) business days from receipt of the request. Other documentation to be provided by the CONTRACTOR includes a quarterly listing of potential accident and personal injury cases that are known or should have been known to the CONTRACTOR. The CONTRACTOR has the sole right of subrogation, for twelve (12) months from the initial date of service to a Member, to initiate recovery or attempt to recover any third-party resources available to Members.

The CONTRACTOR and the State shall jointly develop and agree upon a reporting format to carry out the requirements of this Section. However, if the agreed upon format cannot be developed, the State retains the right to make a final determination of the reporting format.

(4) Timely Payments. The CONTRACTOR shall make timely payments to both its Network Providers and Non-Network Providers as follows:

(a) The CONTRACTOR shall promptly pay for all covered emergency services, including Medically Necessary testing to determine if a medical emergency exists, that are furnished by Non-Network Providers. This includes all covered emergency services provided by a nonparticipating provider, including those when the time required to reach the CONTRACTOR’s facilities or the facilities of a provider with which the CONTRACTOR has contracted, would mean risk of permanent damage to the Member’s health. The CONTRACTOR shall pay at least the HSD/MAD fee-for-service rates for services provided to Members unless otherwise negotiated with a provider.

(b) The CONTRACTOR shall pay ninety percent (90%) of all Clean Claims from practitioners who are in individual or group practice or who practice in shared health facilities within thirty (30) calendar days of date of receipt, and shall pay ninety-nine percent (99%) of all such Clean Claims within ninety (90) calendar days of receipt. The CONTRACTOR must abide by the following specifications: the date of receipt is the date the CONTRACTOR receives the claim as indicated by its date stamp on the claims; and the date of payment is the date of the check of other form of payment.

(c) The CONTRACTOR shall submit monthly Clean Claim timeliness reporting as required by the State.

(d) Consistent with the requirements of HSD/MAD Program Manual, which applies to Clean Claims submitted electronically, and New Mexico law and regulations, the CONTRACTOR shall pay interest at the rate of one and one-half percent (1 ¹/2%) a month on:

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(i) the amount of a Clean Claim electronically submitted by a Network Provider and not paid within thirty (30) calendar days of date of receipt; and

(ii)	the amount of a Clean Claim manually submitted by a Network Provider and not paid within forty-five (45) calendar days of date of receipt.
Interest payments shall accrue and begin on the 31st day for electronic submissions and the 46th day for manual submissions.

(e) At the inception of this Agreement, the CONTRACTOR shall provide the State with its proposed turn-around time for processing Clean Claims, such turn-around time shall meet or exceed the turnaround times identified in subsection (b) above except that for claims from day activity providers, assisted living providers, and home care agencies including PCO and D&E waiver providers such turnaround times shall be ninety-five percent (95%) of claims within a time period of no greater than fourteen (14) calendar days and ninety-nine percent (99%) of clams within a time period of no greater than twenty-one (21) calendar days, provided that such claims meet the definition of Clean Claims, are submitted electronically and meet all HIPAA transaction standards. Based on this information, the State shall prepare a Letter of Direction (LOD) setting forth acceptable turn-around times for processing Clean Claims and payment to these specified providers. Failure to comply with prompt payment standards identified in subsection (b) above is subject to State Sanctions outlined in this Agreement. Interest payments on claims will accrue in accordance with subsection (d) above

(D)	Other Fiduciary Requirements
	Special contract provisions as required by 42 C.F.R. §438.6(c)(5), relating to reinsurance, stop-loss limits or other risk-sharing methodologies must be computed on an actuarially sound basis.
(E)	Reinsurance
	The CONTRACTOR shall have and maintain a minimum of one million dollars ($1,000,000.00) in reinsurance protection against financial loss due to outlier (catastrophic) cases or maintain self-insurance acceptable to the State. The CONTRACTOR shall submit to the State such documentation as is necessary to prove the existence of this protection, which may include policies and procedures of reinsurance. Information provided to the State on the CONTRACTOR’s reinsurance must be computed on an actuarially sound basis. The CONTRACTOR may request that the State remove this requirement by providing sufficient documentation to the State that the CONTRACTOR has adequate protection against financial loss due to outlier (catastrophic) cases. The State shall review such documentation and at is discretion, deem this requirement to be met.
(F)	Financial Reporting
	The CONTRACTOR shall provide to the State financial reports in accordance with the schedule, definitions, format, assumptions, and other specifications required by the State, including those financial reports described in Appendix B.

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3.12	PROGRAM INTEGRITY
	The CONTRACTOR shall:

(A) have written policies and procedures to address prevention, detection, preliminary investigation, and reporting of potential and actual Medicaid fraud and abuse that articulate the CONTRACTOR’s commitment to comply with all state and federal standards. The policies and procedures shall address how coordination with DOH will occur in the case of fraud and abuse in nursing facilities;

(B) have a comprehensive internal program that includes the designation of a compliance officer ands a compliance committee that are accountable to senior management to prevent, detect, preliminarily investigate and report potential and actual program violations to help recover funds misspent due to fraudulent actions while enforcing standards through well-publicized disciplinary guidelines;

(C) have an effective training and education program for the compliance officer and the CONTRACTOR’s employees and have specific controls for prevention, such as claim edits, post processing, review of claims, provider profiling and credentialing, prior authorizations, utilization/quality management and relevant provisions in the CONTRACTOR’s contracts with its Network Providers and subcontractors;

(D) cooperate with the Medicaid Fraud Control Unit (MFCU), DOH, DEA, FBI and other investigatory agencies;

(E) comply with the CMS Medicaid Integrity Program and the Deficit Reduction Act of 2005;

(F) establish effective lines of communication between the compliance officer and the CONTRACTOR’s employees to facilitate the oversight of systems that can monitor service utilization and encounters for fraud and abuse and have a provision for a prompt response to detected offenses, and for the development of corrective action initiatives relating to the CONTRACTOR’s contract. The CONTRACTOR shall demonstrate how coordination with DOH will occur as related to the monitoring of nursing facilities;

(G) immediately report to the State any activity giving rise to a reasonable suspicion of fraud and abuse, including aberrant utilization derived from provider profiling. The CONTRACTOR shall promptly conduct a preliminary investigation and report the results of the investigation to the State. A formal investigation shall not be conducted by the CONTRACTOR but the full cooperation of the CONTRACTOR as mutually agreed to in writing between the parties during the formal investigation will be required; and

(H) send to the State as required, the names of all providers identified with aberrant utilization according to provider profiling the cause of the aberrancy, and not use the CONTRACTOR’s determination as to whether questionable patterns in provider profiles are acceptable or not, as a basis to withhold this information from the State. As required in 42 C.F.R. §455.17, the CONTRACTOR shall report to the State:

(a) the number of complaints of fraud and abuse made that warranted preliminary investigation; and

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(b) for each complaint which warrants investigation, supply the: (1) name and ID number; (2) source of complaint; (3) type of provider; (4) nature of complaint; (5) approximate dollars involved; and (6) legal and administrative disposition of the case.

(I) The CONTRACTOR and all its subcontractors shall:

(a) establish written policies and for all their employees, agents, or contractors; provide detailed information regarding the New Mexico Medicaid False Claims Act, NMSA 1978, §§27-14-1, et seq.; and the Federal False Claims Act established under sections 3729 through 3733 of title 31, United States Code; administrative remedies for false claims and statement established under chapter 38 of Title 31, United States Code, including but not limited to, preventing and detecting fraud, waste, and abuse in Federal health care programs (as defined in Section 1128B(f) of the Social Security Act);

(b) include as part of such written policies, detailed provisions regarding the entity’s policies and procedures for detecting and preventing fraud, waste, and abuse, and

(c) include in any employee handbook, a specific discussion of the laws described in subparagraph (a), the rights of employees to be protected as whistleblowers, and the CONTRACTOR’s or subcontractor’s policies and procedures for detecting and preventing fraud, waste, and abuse.

(d)	The State, at its sole discretion, may exempt the CONTRACTOR from the requirements set forth in this section; however, the State shall not exclude a CONTRACTOR or subcontractor that receives at least $5,000,000 in annual payments from the State.
(e)	The following definitions apply to this section:

(i) an “employee” includes any officer or employee of the CONTRACTOR;

(ii) a “subcontractor” or “vendor” includes any agent or person which or who, on behalf of the CONTRACTOR, furnishes, or otherwise authorizes the furnishing of Medicaid or other health care program items or services, performs billing or coding functions or is involved in monitoring of health care provided by the provider.

3.13 SYSTEM REQUIREMENTS

(A)

General Requirements

The CONTRACTOR’s Management Information System (MIS) shall be capable of accepting, processing, maintaining, and reporting specific information necessary to the administration of the CLTS program by a date specified by the State to be no later than one (1) month prior to program implementation. The CONTRACTOR is required to use the file layouts and data requirements included in the MCO/CSP Systems Manual, along with any HIPAA requirements and implementation and companion guides. The CONTRACTOR will work with the State to implement the HIPAA standard x12 transaction formats (834 and 820/835).

(B) System Hardware, Software and Information Systems Requirements

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The CONTRACTOR is required to maintain system hardware, software, and information systems (IS) resources sufficient to provide the capacity to:

(1) accept, transmit, maintain, and store electronic data and enrollment roster files;

(2) accept, process, maintain, and report specific information necessary to CLTS program administration and other contracted service arrangements, including but not limited to, data pertaining to providers, Members, claims, encounters, grievance and appeals, disenrollment for other than loss of Medicaid eligibility and HEDIS and other quality measures; comply with the most current federal standards for encryption of any data that is transmitted via the internet by the CONTRACTOR or its subcontractors.

(3) conduct automated claims processing in current HIPAA compliant formats;

(4) accept and maintain at least a ten (10) digit Member identification number to be used for all communication to the State and is cross-walked to the CONTRACTOR’s assigned universal Member number, and which is used by the Member and Providers for identification, eligibility verification, and claims adjudication by the CONTRACTOR and all subcontractors;

(5) estimate the number of records to be received from providers and subcontractors; monitor and transmit electronic encounter data to the State according to encounter data submission standards, in order to monitor the completeness of the data being received and to detect providers or subcontractors who are transmitting partial or no records;

(6) disseminate electronically enrollment information to Network Providers and subcontractors/vendors within twenty-four (24) hours of receipt of information or, at a minimum, ensure that current eligibility information is available to Network Providers for eligibility verification within twenty-four (24) hours of receiving this information, via a website, automated voice response system, or other means. Network Providers must be able to verify eligibility on weekends, holidays, and after normal business hours;

(7)	maintain a website for dispersing information to Network Providers and Members, and be able to receive comments electronically and respond when appropriate, including responding to practitioner e-prescribing transactions for eligibility and formulary information;
(8)	transmit data electronically over a web-based FTP server;

(9) receive data elements associated with identifying Members who are receiving ongoing Covered Services under fee-for-service Medicaid or from another MCO and using, where possible, the formats that the State uses to transmit similar information to an MCO;

(10) transmit to the State or another MCO data elements associated with its Members who have been receiving ongoing Covered Services within its organization or under another contractual arrangement;

(11) have an automatic access system for Network Providers to obtain Member enrollment information. Address the cross-reference capability of the system to the Member’s ten-

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	digit identification number designated by the State to the Member’s social security number, and the Member’s most current category of eligibility; and
(12)	maintain a system backup and recovery plan.

(C)	Provider Network Information Requirements
	The CONTRACTOR’s provider network capabilities shall include, but not be limited, to:

(1) maintaining complete provider information for all Network Providers with the CONTRACTOR and its subcontractors and any other non-Network Providers who have provided services to date, including the provider’s Medicare number for processing Medicare crossover claims;

(2) transmitting an initial Provider Network File, if the CONTRACTOR has not previously submitted a Provider Network File to HSD/MAD and on an ongoing basis, which must be sent along with encounter files, to include new Network Providers, new non-Network servicing providers, changes to existing providers and termination of provider status including provider type and specialties assigned according to HSD/MAD criteria and definitions;

(3) providing a complete and accurate designation of each Network Provider according to data elements and definitions included in the MCO/CSP Systems Manual, including assignment of unique provider numbers to each type of certification the provider organization has, according to national standards (National Provider Identifier (NPI));

(4) providing automated access to Members and providers of a Member’s PCP assignment;

(5) using the NPI to identify health care providers and send a separate provider network file record for each unique combination of NPI, provider type, and ZIP code;

(6) sending the tax ID (FEIN or SSN) for all providers and, for atypical providers, send a separate network file record for each unique combination of FEIN/SSN, provider type, and ZIP code;

(7) ensuring that the provider type file contains no duplicate combinations of NPI or FEIN/SSN, provider type, and ZIP code; and

(8) determining and reporting both billing and servicing provider types and specialties according to Medicaid provider type and specialty codes which are based on the provider’s licensure/certification and not the service that the provider is rendering.

(D)	Claims Processing Requirements
	The CONTRACTOR and any of its Network Providers or subcontractors paying their own claims are required to maintain claims processing capabilities to include, but are not limited to:

(1) accepting NPI and HIPAA-compliant formats for electronic claims submission;

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(2)	accepting crossover claims from the COBA contractor via COBA files provided by the State’s Translator;
(3)	assigning unique identifiers for all claims received from providers;

(4) standardizing protocol for the transfer of claims information between the CONTRACTOR and its Network Providers and subcontractors, audit trail activities, and the communication of data transfer tools and dates;

(5)	date stamping all claims in a manner that will allow determination of the calendar date of receipt;
(6)	meeting both federal and state standards for processing claims;
(7)	generating remittance advice to providers;

(8) participating on a committee with the State to discuss and coordinate systems-related issues;

(9) accepting from Network Providers and subcontractors only national HIPAA-compliant standard codes;

(10) editing claims to ensure that services being billed are provided by providers licensed to render these services, that services are appropriate in scope and amount, that Members are eligible to receive the service, and that services are billed in a manner consistent with national coding criteria (e.g., discharge type of bill includes discharge date, rendering provider is always identified for facility and group practices, services provided in any inpatient/residential setting are coded with an inpatient type of bill, etc.);

(11) developing and maintaining a HIPAA-compliant electronic billing systems for all providers submitting bills directly to the CONTRACTOR and requiring all subcontractor benefit managers to meet the same standards; and

(12) using the Third Party Liability (TPL) file and the Medicare information provided on a monthly basis by HSD/MAD to coordinate benefits with other payers.

(E)	Member Information Requirements
	The CONTRACTOR’s Member information requirements shall include, but are not limited to,

(1) accepting, maintaining, and transmitting all required Member information;

(2) generating Member information to Network Providers within twenty-four (24) hours of receipt of the enrollment roster from HSD/MAD. The CONTRACTOR must ensure that current eligibility information is available to subcontractors for eligibility verification on weekends and holidays;

(3) assigning as the key Medicaid client ID number, the RECIP-MCD-CARD-ID-NO that is sent on the Enrollment Roster file, but accepting and using all four (4) occurrences of the Medicaid client ID number sent to the CONTRACTOR on the Enrollment Roster file for

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identification, eligibility verification and claims adjudication by the CONTRACTOR or any subcapitated contractors that pay claims. These numbers will be cross-referenced to the Member’s social security number and any internal number used in the CONTRACTOR’s system to identify Members;

(4) meeting federal CMS and HIPAA standards for release of Member information, such requirement applying to all Network Providers and subcontractors. Standards are specified in the Medicaid Systems Manual and 42 C.F.R. §431.306(b);

(5)	tracking changes in the Member’s category of eligibility to ensure appropriate services are covered and appropriate application of co-payments;
(6)	maintaining accurate Member eligibility and demographic data;

(7) providing automated access to Network Providers regarding Member eligibility. Automated Voice response systems, electronic verifications systems, and the use of swipe cards or smart cards would all be considered automated access. It is expected that the information would always be current, or if the information is out of date, that the information still be honored because the error would originate with the CONTRACTOR; and

(8) transmitting an electronic interface file to HSD/MAD monthly no later than the 15^th of the month to communicate the setting of care (nursing facility, PCO, and 1915(c) waiver) and Provider ID for Members with NF Level of Care.

(F)	Encounter and Network Provider Reporting Requirements
	CMS requires that encounter data be used for rate-setting purposes and for reporting cost neutrality for services rendered under the 1915(C) waiver. Encounter data will also be used to determine compliance with performance measures and other requirements found in this Agreement, as appropriate. Therefore, submission of accurate and complete encounter data is a mandatory requirement.
	HSD/MAD maintains oversight responsibility for evaluating and monitoring the volume, timeliness, and quality of encounter data submitted by the CONTRACTOR. If the CONTRACTOR elects to contract with a third party contractor to process and submit encounter data, the CONTRACTOR remains responsible for the quality, accuracy, and timeliness of the encounter data submitted to HSD/MAD. HSD/MAD shall communicate directly with the CONTRACTOR any requirements and/or deficiencies regarding quality, accuracy and timeliness of encounter data, and not with the third party contractor. The CONTRACTOR shall submit encounter data to HSD/MAD in accordance with the following:

(1) Encounter Submission Media. The CONTRACTOR shall provide encounter data to HSD/MAD by electronic media, such as magnetic tape or direct file transmission. Paper submission is not permitted.

(2) Encounter Submission Requirements. The CONTRACTOR shall meet the requirements of NMAC 8.305.10 and NMAC 8.306.10, with noted exceptions as stated in 3.13(F)(3).

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The following Encounter and Network Provider File Submission and Reporting capabilities shall include, but are not limited to,

(3) submitting to HSD/MAD fifty percent (50%) of the CONTRACTOR’s encounters within sixty (60) days of the date of service, at least seventy percent (70%) of its encounters within ninety (90) days and a total of ninety percent (90%) submitted within one hundred and twenty (120) days of the date of service, according to the specifications included in the MCO/CSP Systems Manual regardless of whether the encounter is from a subcontractor or sub-capitated arrangement.

(4)	submitting encounter files with no more than three percent (3%) error rate; submit corrections to ninety percent (90%) of any encounters that are denied by HSD/MAD within ten (10) business days of the notice of denial, with one hundred percent (100%) of corrections made within thirty (30) calendar days;
(5)	including the CONTRACTOR paid amount on each encounter submitted;

(6) submitting adjustments/voids to encounters that have previously been accepted by HSD/MAD within thirty (30) days of the adjustment or voided claim by the CONTRACTOR;

(7) having a written contractual requirement of its Network Providers and subcontractors that pay their own claims to submit encounters to the CONTRACTOR on a timely basis, which ensures that the CONTRACTOR can meet its timeline requirements for encounter submissions;

(8) editing encounters prior to submission to prevent or decrease submission of duplicate encounters, encounters from providers not on the CONTRACTOR’s provider network file, and other types of encounter errors;

(9) having a formal monitoring and reporting system to reconcile submissions and resubmission of encounter data between the CONTRACTOR and HSD/MAD to assure timeliness of submissions, resubmissions and corrections and completeness of data. The CONTRACTOR shall be required to report the status of its encounter data submissions overall on a form developed by the State;

(10) complying with the most current federal standards for encryption of any data that is transmitted via the internet (also applies to subcontractors). A summary of the current CMS and HIPAA guidelines is included in the Medicaid Systems Manual;

(11) complying with CMS standards for electronic transmission, security, and privacy, as may be required by HIPAA (also applies to subcontractors);

(12) reporting all data noted as “required” in the HIPAA Implementation Guide and HSD/MAD’s Encounter Companion Guide; and

(13) making necessary adjustments to the CONTRACTOR’s system capabilities in order to submit both paid and denied encounters when HSD/MAD is capable of accepting denied encounters.

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ARTICLE 4 — LIMITATION OF COST

In no event shall capitation fees or other payments provided for in this Agreement exceed payment limits set forth in 42 C.F.R. §§447.361 and 447.362. In no event shall the State pay twice for the provision of services.

ARTICLE 5 — HSD/MAD AND ALTSD RESPONSIBILITIES

5.1 The State shall:

(A) establish and maintain Medicaid eligibility information and transfer eligibility and enrollment information to ensure appropriate enrollment in and assignment to the CONTRACTOR. Eligibility and enrollment information shall consist of the Member’s name and social security number, the Member’s address and telephone number, the Member’s date of birth and gender, the availability of third-party coverage and the Member’s rate category, the Member’s State assigned identification number, and the Medicare number for dual eligibles, if known. This information shall be transferred electronically. The CONTRACTOR shall have the right to rely on eligibility and enrollment information transmitted by the State. Either party shall notify the other of possible errors or problems as soon as reasonably practicable;

(B) support implementation deadlines by providing technical information at the required level of specificity in a timely fashion;

(C) compensate the CONTRACTOR as specified in Article 6 — Compensation and Payment Reimbursement for CLTS;

(D)	provide a mechanism for Fair Hearings to review denials and UM decisions made by the CONTRACTOR;
(E)	monitor the effectiveness of the CONTRACTOR’s Quality Assurance Program;
(F)	review the CONTRACTOR’s grievance files, as necessary;

(G) establish requirements for review and make decisions concerning the CONTRACTOR’s requests for disenrollment;

(H) determine the period of time within which a Member cannot be reenrolled with a CONTRACTOR that successfully has required his/her disenrollment;

(I) provide potential Members and Members with specific information about Covered Services, benefits, and MCOs from which to choose and Member enrollment;

(J) have the right to receive solvency and reinsurance information from the CONTRACTOR, and to inspect the CONTRACTOR’s financial records as frequently as possible, but at least annually;

(K) have the right to receive all information regarding third-party liability from the CONTRACTOR so that it may pursue its rights under state and federal laws and regulations and the State will provide the CONTRACTOR with information it possesses regarding third-party liability relating to the CONTRACTOR’s Members;

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(L)	review the CONTRACTOR’s policies and procedures concerning Medicaid fraud and abuse until they are deemed acceptable;
(M)	provide the content, format, and schedule for the CONTRACTOR’s report submission;

(N) inspect, examine, and review the CONTRACTOR’s financial records as necessary to ensure compliance with all applicable State and Federal laws and regulations;

(O) monitor encounter data submitted by the CONTRACTOR and provide data elements for reporting;

(P) provide the CONTRACTOR with specifications related to data reporting requirements;

(Q) amend its fee-for-service and other provider agreements, or take such other action as may be necessary to encourage health care providers paid by the State to enter into contracts with the CONTRACTOR at the applicable Medicaid reimbursement rate for the provider, absent other negotiated arrangements, and encourage any Medicaid participating provider who is not contracted with the CONTRACTOR to accept the applicable Medicaid reimbursement as payment in full for Covered Services provided to a Member who is enrolled with the CONTRACTOR. The applicable Medicaid reimbursement rate is defined to exclude disproportionate share and medical education payments;

(R) establish maximum enrollment levels to ensure that all MCOs maintain statewide enrollment capacity;

(S) ensure that no requirement or specification established or provided by the State under this Agreement conflicts with the requirements or specifications established pursuant to HIPAA and is regulations; and

(T) cooperate with the CONTRACTOR in the CONTRACTOR’s efforts to achieve compliance with HIPAA requirements. The CONTRACTOR shall be held harmless for implementation delays when the CONTRACTOR is not responsible for the cause of the delay.

5.2 The State and/or its fiscal agent shall implement electronic data standards for transactions related to managed health care. In the event that the State and/or its fiscal agent requests that the CONTRACTOR or its subcontractors deviate from or provide information called for in required and optional fields included in the standard transaction code sets established under HIPAA, such request shall be made by amendment to this Agreement.

5.3 Performance by the CONTRACTOR shall not be contingent upon time availability of State personnel or resources with the exception of specific responsibilities stated in the RFP and the normal cooperation that can be expected under this Agreement. The CONTRACTOR’s access to State personnel shall be granted as freely as possible. However, the competency/sufficiency of HSD/MAD or ALTSD staff shall not be a reason for relieving the CONTRACTOR of any responsibility for failing to meet required deadlines or producing unacceptable deliverables. To the extent the CONTRACTOR is unable to perform any obligation or meet any deadline under this Agreement because of the failure of the State to perform its specific responsibilities under this Agreement, the CONTRACTOR’s performance shall be excused or delayed, as appropriate. The CONTRACTOR shall provide the State with written notice as soon as possible, but in no event later than the expiration of any deadline or date for performance, that

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identifies the specific responsibility that the State has failed to meet, as well as the reason that the State’s failure impacts the CONTRACTOR’s ability to meet its performance obligations under this Agreement.

5.4 Upon becoming aware of any claim or information that may have an impact on the CONTRACTOR or the services to be performed by the CONTRACTOR under this Agreement, the State shall promptly provide the CONTRACTOR with written notice of such claim or information.

ARTICLE 6 — PAYMENT AND FINANCIAL PROVISIONS

6.1 General Financial Provisions

(A) The State shall pay to the CONTRACTOR in full payment for services satisfactorily performed pursuant to the Scope of Work an amount, including all applicable taxes and expenses not to exceed                      for SFY09.

(B) Capitation Rates. The State will make payments to the CONTRACTOR for the CLTS Benefit Package provided under this Agreement that are properly delivered to eligible Members in accordance with and subject to all applicable federal and state laws, regulations, rules, billing instructions, bulletins, as amended, and in accordance with the payment and financial provisions in this Article 6 and the Capitation Rates contained in the attached schedule.

(1) The State shall meet with the CONTRACTOR annually to explain the Capitation Rates offered by the State.

(2) The Capitation Rates developed, discussed and negotiated between the State and the CONTRACTOR are considered confidential.

(3) On an annual basis, the State shall incorporate by amendment the Capitation Rates by Cohort into the Agreement as provided on the attached schedule; provided, however, that the State may, subject to notification to the CONTRACTOR, amend the Capitation Rates by Cohort and/or add additional Cohorts at such other times as may be necessary to reflect changes in federal or state law, including but not limited to those relating to eligibility, Covered Services, or copayments.

(C) Financial Risk. The CONTRACTOR shall assume full financial risk for all medical and administrative expenditures for all Medicaid benefits provided to the applicable Cohort Members State Fiscal Year 2009 and for any and all costs incurred by the CONTRACTOR in excess of the capitation payments. Interest generated through investment of funds paid to the CONTRACTOR pursuant to this Agreement shall be considered as revenue earned by the CONTRACTOR.

(D) Quarterly Payments. The State will make quarterly payments to the CONTRACTOR in accordance with the rates of payments set forth herein for services rendered to Native Americans Members at IHS or Tribal 638 facilities in accordance with and subject to all applicable federal and state laws, regulations, rules, billing instructions, and bulletins, as amended. The amount of such quarterly payments will be determined through the submission by the CONTRACTOR of data that documents the expenses in a format specified by the State.

(E) Capitation Rates for Future Contract Years. The Capitation Rates awarded with this RFP shall be effective for the time period shown on the attached rate sheet. The State will establish the rate for any and all future years under this Agreement based on the experience of year one (1) and

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other changes, including changes in the Scope of Work, new or amended federal or state laws or regulations, and adequate and sufficient funding.

(F) Failure to Agree upon Capitation Rates. If the CONTRACTOR and the State fail to agree upon Capitation Rates at any time during the term of this Agreement, the CONTRACTOR shall have the option to terminate this Agreement or to agree to the final Capitation Rates proposed by the State within thirty (30) calendar days of receipt of the proposed amendment. If the CONTRACTOR terminates this Agreement, the CONTRACTOR shall be obligated to continue to provide Covered Services to Members, until such time as all Members are disenrolled from the CONTRACTOR’s plan but in no event longer than one-hundred eighty (180) days. The State reserves the right to adjust the contracted Capitation Rate(s) in an actuarially sound manner in order to account for changes in the factors from which those rates were established. The CONTRACTOR shall accept the current Capitation Rates set forth in this Agreement, as adjusted by the State in an actuarially sound manner as necessary to account for changes in eligibility, CLTS Benefit Package, adequate and sufficient funding, as payment in full for the Covered Services delivered to Members during a transition.

(G) Performance Incentives and Sanctions. The State may provide incentives to the CONTRACTOR that receives exceptional grading during the procurement process and for ongoing performance under the Agreement for quality assurance standards, performance indicators, enrollment processing, fiscal solvency, access standards, encounter data submission, reporting requirements, Third Party Liability collections and marketing plan requirements as determined by the State by automatically assigning a greater number of Members to the CONTRACTOR determined by the State to warrant greater assignments of such Medicaid recipients. The State shall determine whether the CONTRACTOR has met, exceeded, or fallen below any and all such performance standards and shall provide the CONTRACTOR with written notice of such determinations. The CONTRACTOR shall be entitled to review the data resulting in such determination and shall respond within thirty (30) calendar days with any errors found. The CONTRACTOR may initiate negotiations to correct the errors. Any resulting negotiations and modifications shall be limited to correction of such errors, and shall not subject the entire Agreement to be reopened as provided for in this Agreement. If the CONTRACTOR does not request the State to open discussions regarding error corections, within forty-five (45) calendar days from the date of notice from the State, the incentives or sanctions may be implemented. The CONTRACTOR shall be entitled to dispute resolution under Article 15 for such incentives or sanctions.

(H) Taxing Authority. To the extent, if any, it is determined by the appropriate taxing authority that performance of this Agreement by the COINTRACTOR is subject to taxation, the amounts paid by the State to the CONTRACTOR under this Agreement include such tax(es) and no additional amount shall be due by the State. Therefore, the amount paid by the State shall include all taxes that may be due and owing by the CONTRACTOR. The CONTRACTOR is responsible for reporting and remitting all applicable taxes to the appropriate taxing agency.

(I) Funding and Approval. The parties to this Agreement understand and agree that the compensation and payment reimbursement for managed care is dependent upon federal and state funding and regulatory approvals. The parties further understand that program changes affecting the rate of compensation for CLTS are likely to occur during the term of this Agreement and further agree to the following if such program changes are implemented by the State during the term of this Agreement:

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(1) In the event that the State initiates a programmatic change affecting compensation and payment reimbursement for CLTS, the State shall, prior to initiating any such change, provide the CONTRACTOR with as much notice as is possible, given the circumstance, of the contemplated change and the effect it will have on compensation and payment reimbursement.

(2) Upon notice of a (i) proposed program change; (ii) a change in government costs, taxes, or fees; or (iii) a benefit modification, e.g., a change or a final judicial decision affecting reimbursement rates, the CONTRACTOR may initiate negotiations for a modification of this Agreement concerning changes in compensation and payment reimbursement. Such programmatic changes and any resulting negotiations and modifications shall be limited to the change in compensation and payment reimbursement for CLTS Program changes, and shall not subject the entire Agreement to being reopened as provided for in this Agreement.

(3) If the CONTRACTOR does not request the State to open discussions regarding a modification of this Agreement concerning the change in compensation and payment reimbursement for the CLTS Program changes within forty-five (45) calendar days from the date of notice from the State, then the change shall be implemented and become effective under the terms of this Agreement, subject to the continued actuarial soundness of such rates.

(J) Treatment of Members. Members shall be held harmless against any liability for debts of the CONTRACTOR that were incurred within the Agreement in providing the CLTS benefit package to the Member, excluding any Member’s liability for copayments or Member’s liability for overpayment resulting from benefits paid pending the result of a Fair Hearing. The CONTRACTOR’s Network Providers have no obligation to continue to see Members for treatment if the Member fails to meet copayment obligations except in emergency situations.

6.2	Cohort Categories
	The State will pay the CONTRACTOR, in accordance with this Article by Cohorts for Members for CLTS Covered Services according to Cohorts set forth in Appendix D.
6.3	Year-One Risk Adjustment to Capitation Rates for NF LOC Members

(A) General Provisions

(1) For year one of this Agreement, the State may elect to risk adjust the Capitation Rates for the mix of Members enrolled in the CONTRACTOR’s plan in the NF LOC Cohorts across level of care (NF Resident, PCO, and 1915(c) waiver service recipients). This provision will be a temporary feature of the CLTS Program in the first year of the program and will be one-time only.

(2) If the State elects to implement this Section (Year-One Risk Adjustment to Capitation Rates for NF LOC Members), it will be accomplished using the methodology described in this Section. The State may elect to implement this feature for one or all of the NF LOC Cohorts.

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(3) The State will make effective any adjustments to the Capitation Rates in the seventh (7^th) month of the CONTRACTOR’s receiving capitation payments for Members. Any adjustments determined under the terms of this Section will remain in effect until June 30, 2009, based upon actual and projected Membership.

(4) The State will risk adjust Capitation Rates for the NF LOC Cohorts based upon Risk Adjustment Factors (RAFs), as calculated by the State’s actuaries from the PMPMs for each of the NF LOC populations (NF Resident, PCO, and 1915(c) waiver service recipients) that comprise the NF LOC Cohorts.

(5) The State will ensure that any and all adjustments to the Capitation Rates for the NF LOC Cohorts meet the State’s test of budget neutrality through the use of an algorithm to scale total Capitation Rate payments for year one across both CONTRACTORS to previously-approved Capitation Rates by CMS. In order to be budget neutral, the State shall recoup prior overpayments from one MCO and adjust the other MCO’s Capitation Rates to reflect this recoupment.

(6) The State shall immediately notify the CONTRACTOR of its intent to invoke the provisions set forth in Section 6.3, but no later November 30, 2008.

(B) Timing of Risk Adjusted Capitation Rates in Year One

(1) The Capitation Rates for the NF LOC Cohorts will not be risk adjusted for dates-of-service from the initial enrollment date through the end of the first geographic roll-out period set forth in Section 3.3(F)(7).

(2) For the months from January 1, 2009 through June 30, 2009, the Capitation Rates will reflect a risk adjustment based on the methodology described below.

(C) NF LOC Cohorts Year One Risk Adjusted Capitation Rates for Januaryl 1, 2009 - June 30, 2009. A “Risk Adjusted Capitation Rate” for the NF LOC Cohorts will take effect in the final quarter of the first year of this Agreement. Based upon the State’s calculations, this Risk-Adjusted Capitation Rate could be higher, lower, or the same as the Capitation Rate paid to the CONTRACTOR for the months prior to January 1, 2009.

(D) Risk Adjustment Factors. The State will use a Risk-Adjusted Factors (RAFs) that are actuarially sound and reflect the relative cost differential in PMPMs among Members of the NF LOC Cohorts, respectively, across NF LOC (NF Resident, PCO, and 1915(c) waiver service recipients). These RAFs are as follows:

CLTS RISK ADJUSTMENT FACTORS (RAFs)

	Dual NF LOC		Medicaid-Only
NF LOC	Cohort		NF LOC Cohort
NF RAF		1.23		1.23
PCO RAF		0.80		0.80
1915(c) RAF		0.80		0.80

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(E) Mix of Members. Prior to the beginning of the final quarter of the first year of this Agreement, the State will establish the total mix of Members for the first year for NF LOC Cohorts. This data will be used to calculate the Risk-Adjusted Capitation Rates for the period from January 1, 2009 through June 30, 2009 under this Section.

(1) Cohort Mix A: First, the State will establish the mix of Members for the period prior to January 1, 2009, based upon the actual mix of Members from the initial enrollment date through the end of the first geographic roll-out period set forth in Section 3.3(F)(7). This data will be compared to the estimated mix of Members assumed when setting Capitation Rates paid to the CONTRACTOR for the initial phase of the enrollment period of the first contract year (i.e., the mix upon which the Capitation Rates from the initial enrollment month through the end of the first geographic roll-out period set forth in Section 3.3(F)(7).

(2) Cohort Mix B: Second, the State will establish the mix of Members for the period of January 1, 2009 through June 30, 2009, based upon the projected mix of Members likely to enroll in the CONTRACTOR’s plan based upon the experience to date and the total CLTS eligible Membership. This mix will be used to set the Capitation Rates paid to the CONTRACTOR for the final three months of the first contract year.

(F) The State will pay the CONTRACTOR the Risk Adjusted Capitation Rate for dates-of-service January 1, 2009 through June 30, 2009 of the first contract year.

(G) The State will calculate a “Risk Adjusted Capitation Rate” for each Cohort in accordance with the following methodology:

(1) The State will establish a “Risk-Adjusted Capitation Rate” for each Cohort based upon weighting two separate Capitation Rates (Capitation Rates A and B) by the mix of the total Membership across time periods. That weighted Capitation Rate shall be the new Capitation Rate paid to the CONTRACTOR for the date-of-service period January 1, 2009 through June 30, 2009 of the first contract year.

(2) Capitation Rate A. The State will establish a new Capitation Rate for the initial period through the end of the first geographic roll-out period set forth in Section 3.3(F)(7) by multiplying: (1) the sum of the products of multiplying the mix of Members based upon Cohort Mix A by the Risk Adjustment Factor for each NF LOC, by (2) the Capitation Rate for this initial period of the first year (“Unadjusted Capitation Rate”)

Capitation Rate A = [(% NF * NF Resident RAF) + (%PCO * PCO RAF) + (%1915(c) recipients + 1915(c) RAF)] * Unadjusted Capitation Rate

(3) Capitation Rate B. The State will establish a new Capitation Rate for the period beginning January 1, 2009 through June 30, 2009, by multiplying: (1) the sum of the products of multiplying the mix of Members based upon Cohort Mix B by the Risk Adjustment Factor for each NF LOC, by (2) the Capitation Rate for the initial period (i.e., Unadjusted Capitation Rate).

Capitation Rate B = [(% NF * NF Resident RAF) + (%PCO * PCO RAF) + (%1915(c) recipients + 1915(c) RAF)] * Unadjusted Capitation Rate

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(4) Risk Adjusted Capitation Rate. The State will establish a Risk-Adjusted Capitation Rate for the final quarter of the first year by weighing Capitation Rates A and B for the relative mix of total member months between the initial period and the projected final 6 months of the fiscal year.

Risk Adjusted Capitation Rate = [(Capitation Rate A * %Cohort A Member Months) + (Capitation Rate B * %Cohort B Member Months)}

(H) The State will ensure that the Risk Adjusted Capitation Rate for the CONTRACTOR meets the test of budget neutrality as required by CMS. The State reserves the right to downwardly adjust the results of the methodology to establish Risk Adjusted Capitation Rates across the CONTRACTOR’s Cohorts through the use of an algorithm specifically designed to ensure that any and all adjustments to the Capitation Rates meet tests of budget neutrality as required by CMS.

(I) The State’s execution of the risk methodology, as set forth in this Section, is subject to approval by CMS to grant a risk adjustment to the CONTRACTOR.

6.4 Payment Methodology

(A) Capitation Rate Development

(1) Actuarial Soundness. In determining Capitation Rates for all Cohorts, as described in this Article, the State shall calculate Actuarially-Sound Capitation Rates in accordance with all federal laws and regulations for which the CONTRACTOR provides the CLTS benefits package. The State shall make payments under capitated risk contracts, which are actuarially sound. Capitation Rates shall be developed in accordance with generally accepted actuarial principles and practices. Capitation Rates must be appropriate for the populations to be covered, the Covered Services to be furnished under this Agreement and be certified as meeting the foregoing requirements by actuaries. The actuaries must meet the qualification standards established by the American Academy of Actuaries and follow the practice standards established by the Actuarial Standards Board. Accordingly, the State’s offer of all Capitation Rates referred to in the attached schedule of this Agreement is contingent on both certification by the State’s actuary for actuarial soundness and final approval by CMS, prior to becoming effective for payment purposes. In the event such certification of approval is not obtained for any of all Capitation Rates, the State reserves the right to renegotiate or set these rates. The State’s decision to renegotiate or set the rates under this provision is binding on the CONTRACTOR.

(2) FQHCs. In determining the Capitation Rate for each Cohort, the State shall include for the CLTS benefit package provided by FQHCs, the amount that would be paid by the HSD/MAD for such services on a fee-for-service basis.

(B) Capitation Payment Process and Terms of Services

(1) Timing of Capitation Payments. The State will make capitation payments to the CONTRACTOR on the first Friday of the enrollment month for all Members enrolled in that month and for any retroactive enrollments being made.

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(2) A Member can change from one Cohort to another due to a change in eligibility and status. Any change in the Member’s eligibility and status will occasion a change in the Member’s Cohort for which the CONTRACTOR is paid. The capitation payment to the CONTRACTOR will be based on the Member’s Cohort on the first day of the month that the NF LOC application is submitted on behalf of the Member. This may result in a retroactive capitation payment not to exceed six (6) months.

(3) The State may recoup capitations paid previously for a Member if it is determined that the Member was ineligible during that period or did not receive the services in accordance with their service plan and assessed needs, or that the Member moved out of a covered region, or expired.

(4) Monthly Capitation Amounts. The State shall pay the CONTRACTOR a monthly capitation amount for the provision of the CLTS benefit package for all services except for those rendered at IHS or Tribal 638 facilities.

(5) Payment Reconcilliations. The State shall have the discretion to recoup capitation payments made by the State pursuant to the time periods governed by this Agreement for the following circumstances:

(a) Member incorrectly enrolled with more than one MCO;

(b) Members who die prior to the Enrollment month for which payment was made;

(c) Members whom the State later determines were not eligible for Medicaid during the enrollment month for which payment was made;

(d) In the event of an error which causes payment(s) to the CONTRACTOR to be issued by the State, the State shall recoup the full amount of the payment. Interest shall accrue at the statutory rate on any amounts not paid and determined to be due after the thirtieth (30^th) day following the notice. Any process that automates the recoupment procedures will be discussed in advance by the State and the CONTRACTOR and documented in writing, prior to implementation of this new process. The CONTRACTOR has the right to dispute any recoupment action in accordance with this Agreement; and

(e) For individuals who were enrolled in more than one MCO, the MCO from whom the capitation payment is recouped shall have the right to recoup incurred expenses from the MCO who retains the capitation payments.

(6) Retroactive Payments for Members Reinstated

(a) If a Member loses eligibility for any reason and is reinstated as eligible by the State before the end of the six (6) month period as described in Section 3.3(J), the CONTRACTOR must accept a capitation payment, made retroactively, for that month of eligibility and assume financial responsibility for all Covered Services received by the Member. The CONTRACTOR shall be paid a capitation rate at the appropriate cohort rate for any period of retroactive coverage. Additionally, for any period of retroactive coverage where the CONTRACTOR is responsible for services for which prior authorization and/or utilization management policies

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were unable to be enforced, payment to providers for Covered Services will be made at the lesser of a negotiated rate or the Medicaid fee-for-service rate.

(b) The State must notify the CONTRACTOR of this retroactive capitation payment by the last day of the month.

(c) If this notification if not made by the last day of the month, the CONTRACTOR may choose to refuse the retro capitation.

6.5 Supplemental Payments for Services to Native Americans

(A) The State will pay the CONTRACTOR, on a quarterly basis, for the costs of services of Native Americans provided at IHS and Tribal 638 facilities. This payment shall be separate from the Capitation Rate process and be based upon the State’s validation of data provided by the CONTRACTOR to the State.

(B) The payment that the State makes to the CONTRACTOR on a quarterly basis shall represent the State’s calculation of the reimbursement owed to the CONTRACTOR for payments made to the IHS or Tribal 638 facilities for those services. Reimbursement for these services is not included in the determination of Capitation Rates. If an IHS or Tribal 638 provider delivers services to the CONTRACTOR’s Member who is Native American, the CONTRACTOR shall reimburse the provider at the rate currently established for IHS facilities for federally leased facilities by the Office of Management and Budget (OMB), or, if the OMB rate does not apply, then the rate as developed by the State. OMB rates are published annually in the federal register.

(C) The State shall make the first payment to the CONTRACTOR within six (6) weeks of the receipt of the CONTRACTOR’s validation of services paid to IHS or Tribal 638 facilities after the close of each quarter of providing services to Native Americans under this Section.

(D) The CONTRACTOR shall submit a quarterly report to the State, including claims data, in a format specified by the State within thirty (30) calendar days of the end of the quarter of their payment for services provided to Native Americans under this Section.

(E) The State shall make the final payment for the first contract year to the CONTRACTOR after the second quarter of the following fiscal year, when nearly all claims have been paid to prevent any under or over payment to the CONTRACTOR based on the State’s calculation of reimbursement to the CONTRACTOR.

6.6 Administrative Costs

(A) Administrative Structure

(1) Ceiling on Administrative Spending. The State shall set a ceiling on Administrative Spending under the terms of this Agreement. This ceiling shall be negotiated by the parties and shall be set forth in the attached Rate Sheet.

(2) Report on Administrative Expenses. The CONTRACTOR will submit to the State, within forty-five (45) calendar days of the end of the state fiscal year, a report on all administrative expenses paid during the contract period. Such data, including claims

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data, shall be submitted in the format specified by the State to determine if the ceiling on administrative expenses has been exceeded by the CONTRACTOR.

(3) Administrative Expenses. The following are the State’s designated administrative expense functions:

(a)	network development and contracting;
(b)	direct provider contracting;
(c)	credentialing/re-credentialing;
(d)	information systems;
(e)	encounter data collection and submission;
(f)	claims processing for select contractors;
(g)	Consumer Advisory Board;
(h)	Member Services;
(i)	training and education for providers and consumers;
(j)	financial reporting;
(k)	licenses;
(l)	taxes;
(m)	plant expense;
(n)	staff travel;
(o)	legal and risk management;
(p)	recruiting and staff training;
(q)	salaries and benefits;
(r)	non-medical supplies;
(s)	non-medical purchase service;
(t)	depreciation and amortization;
(u)	audits;
(v)	grievances and appeals;

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(w)	capital outlay;
(x)	reporting and data requirements;
(y)	compliance;
(z)	profit;
(aa)	surveys;
(bb)	Quality Assurance;
(cc)	QI/QM;
(dd)	marketing and outreach;
(ee)	criminal background checks;
(ff)	Nurse Aide Training;

(gg)	Insurance premiums and associated costs for insurance coverage other than reinsurance; and
(hh)	postage costs.

(4) Renegotiation. Upon mutual agreement of the parties, this requirement may be renegotiated pursuant to Article 12 due to revision of governmental or regulatory costs, taxes, or fees.

(5) Special Mention of Certain Health Expenses. The State agrees that payments made by the CONTRACTOR to providers, including but not limited to payments relating to costs incurred by delegated providers in furnishing Covered Services and payments made through a provider quality incentive program are to be categorized as medical health expenses or services under this Agreement and are properly included by the CONTRACTOR in meeting the requirement that no less than the specified percentage of revenues are expended on medical health services under this Agreement. The CONTRACTOR agrees that any provider quality incentive program will be submitted to the State for approval and will utilize performance measures designed to provide an incentive to the CONTRACTOR’s provider network to improve quality, access, and satisfaction for Members.

6.7	Special Payment Requirements
	This Section lists special payment requirements by provider type:

(A)	Reimbursement of Federally Qualified Health Centers (FQHCs)
	FQHCs are reimbursed at one hundred percent (100%) of reasonable cost, as determined by the State or federal government, under a Medicaid fee-for-service or managed care program. The FQHC can waive its right to reasonable cost and elect to receive the rate negotiated with the

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CONTRACTOR. During the course of the contract negotiations with the CONTRACTOR, the FQHC shall state explicitly that it elects to receive one hundred percent (100%) of reasonable costs or waive this requirement.

	If the FQHC does not waive its right to receive reasonable costs, the CONTRACTOR shall be required to reimburse the FQHC at the Prospective Payment System rates. The Prospective Payment rate meets the CONTRACTOR’s responsibility toward the State’s obligation to reimburse FQHCs at 100% of reasonable costs as determined by the State’s external audit agenty.
	The FQHC shall report annually to the State’s audit agent the reimbursement received from the CONTRACTOR. The State’s audit agent will perform a reconciliation annually based upon FQHC revenue and encounters. The State’s audit agent will submit an Accounting Transaction Request (ATR) to the State to initiate additional funding required to meet the 100% threshold or request recoupment of payments in excess of the 100% threshold.
(B)	Reimbursement for Family Planning Services
	The CONTRACTOR shall reimburse Non-Network family planning providers for provision of services to the CONTRACTOR’s Members at a rate, which at a minimum equals the applicable Medicaid fee-for-service rate appropriate to the provider type.
(C)	Reimbursement for Women in the Third-Trimester of Pregnancy
	If a pregnant Member in the third trimester of pregnancy has an established relationship with an obstetrical provider and desires to continue that relationship, and the provider is a Non-Network Provider, the CONTRACTOR shall reimburse the Non-Network Provider at the applicable Medicaid fee-for-service rate appropriate to the provider type.
(D)	Reimbursement for State Operated Long-Term Care Facilities
	For year one of this Agreement, the CONTRACTOR shall pay the DOH for Members residing in the State’s Long-Term Care Facilities at no less than the current charge paid by Medicaid fee-for-service. For year two and remaining years of this Agreement, the CONTRACTOR shall pay DOH a negotiated rate.
(E)	Other Special Payment Requirements
	In the event that the State obtains additional funding identified for increased reimbursement to specific service providers, the CONTRACTOR agrees that it will pass on all such additional funding less applicable taxes following the receipt of the additional funding by CONTRACTOR from the State. The CONTRACTOR shall make such payments only to those types of service providers identified by the State in writing and who are Network Providers, or through a delegated arrangement, with the CONTRACTOR. The CONTRACTOR and the State agree that the CONTRACTOR’s obligation under this Section to pass through any additional funding will require at least thirty (30) days prior written notice. The State and CONTRACTOR agree that no payments will be required to be made pursuant to this Section until the State has provided written approval of the payment process to be utilized by the CONTRACTOR to ensure that the process will meet the State’s audit requirements. The State reserves the right to direct payments to providers if the CONTRACTOR fails to comply with the pass-through requirements. The State

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and the CONTRACTOR shall develop a mechanism to report outcomes associated with the pass-through of funds.

(F)	Compensation For UM Activities
	The CONTRACTOR shall ensure that, consistent with 42 C.F.R. §438.6(h) and §422.08, compensation to individuals or entities that conduct UM activities is not structured so as to provide incentives for the individual or entity to deny, limit, or discontinue services to any Member.
(G)	Special Circumstances for Pharmacy Reimbursement
	Pharmacy services are reimbursed at the lower of an estimated acquisition cost, the negotiated contract rate for such services, or the Network Provider’s usual and customary charge. The acquisition cost is estimated as the lower of the Average Wholesale Price (AWP) minus fourteen percent (14%), the federal Maximum Allowable Cost (MAC) usually referred to as the Federal Upper Limit (FUL), or a State Allowed Cost (SAC).
	The CONTACTOR may determine its formula for estimating acquisition cost and establishing pharmacy reimbursement. The CONTRACTOR must comply with the provisions of NMSA 1978, §27-2-16(B).
	The CONTRACTOR is not required to cover all multi-source generic over-the-counter items. Coverage of over-the-counter items may be restricted in instances for which a practitioner has written a prescription and for which the item is an economical or preferred therapeutic alternative to prescription drug items. The CONTRACTOR shall:

(1) cover brand name drugs and drug items not on the CONTRACTOR’s formulary or PDL when determined to be Medically Necessary by the CONTRACTOR, where an appropriate alternative drug is not on the CONTRACTOR’s formulary, or through a Fair Hearing process;

(2) include on the CONTRACTOR’s formulary or PDL all multi-source generic drug items with the exception of items used for cosmetic purposes, items consisting of more than one therapeutic ingredient, anti-obesity items, items which are not Medically Necessary, and cough, cold, and allergy medications. This requirement does not preclude a CONTRACTOR from requiring authorization prior to dispensing a multi-source generic item;

(3) cover Plan B as an over-the-counter drug for up to six (6) doses in a calendar year, and not require a physician’s signature; and

(4) reimburse Family Planning Clinics, School-Based Health Clinics, and Department of Health Public Health Clinics for oral contraceptive agents and Plan B when dispensed to Members and billed using HCPC codes and CMS 1500 forms.

The CONTRACTOR shall make good faith efforts to subcontract with Pharmacy providers that offer Medicare Part D.

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(H) Provider Fee Increases. During the term of this Agreement, additional money may be made available by the State for provider fee increases. These increases may be for specific services, specific provider types, or a general fee increase for all providers. The CONTRACTOR is required to pay these fee increases as directed by the State within the applicable time period. Failure to comply with this Section may result in sanctions set forth in Article 8.2.

6.8 Reimbursement for Emergency Service

(A) The CONTRACTOR shall ensure that acute general hospitals are reimbursed for Emergency Services which are provided pursuant to federal mandates, such as the “anti-dumping” law in the Omnibus Budget Reconciliation Act of 1989, PL 101-239 and 42 U.S.C. §1395(dd) (Section 1867 of the Social Security Act).

(B) The CONTRACTOR may not refuse to cover Emergency Services based on an emergency room provider, hospital or fiscal agent not notifying the Member’s PCP, MCO, or applicable state agency of the Member’s screening and treatment within ten (10) calendar days of presentation for Emergency Services. If the screening examination leads to a clinical determination by the examining physician that an actual emergency medical condition exists, the CONTRACTOR shall pay for both the services involved in the screening examination and the services required to stabilize the Member. The Member who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the Member as provided in 42 C.F.R. §438.114(d).

(C) The CONTRACTOR is required to pay for all Emergency Services and post-stabilization care services that are medically necessary until the emergency medical condition is stabilized and maintained such that within reasonable medical probability, no material deterioration of the Member’s condition is likely to result from or occur during discharge of the Member or transfer of the Member to another facility. The attending emergency physician, or the provider actually treating the Member, is responsible for determining when the Member is sufficiently stabilized for transfer or discharge, and that determination is binding on the CONTRACTOR as responsible for coverage and payments pursuant to 42 C.F.R. §438.114.

(D) If the screening examination leads to a clinical determination by the examining physician that an actual emergency medical condition does not exist, then the determining factor for payment liability is whether the Member had acute symptoms of sufficient severity at the time of presentation. In these cases, the CONTRACTOR shall review the presenting symptoms of the Member and shall pay for all services involved in the screening examination where the present symptoms (including severe pain) were of sufficient severity to have warranted emergency attention under the prudent layperson standard. If the Member believes that a claim for Emergency Services has been inappropriately denied by the CONTRACTOR, the Member may seek recourse through the CONTRACTOR or the State’s appeal process.

(E) When the Member’s PCP or other CONTRACTOR representative instructs the Member to seek emergency care in network or out of network, the CONTRACTOR is responsible for payment at least at the negotiated network rate or for out of network providers, the Medicaid Fee-for-Service Fee Schedule, for the medical screening examination and for other medically necessary Emergency Services intended to stabilize the Member without regard to whether the Member meets the prudent layperson standard.

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(F) Any provider of Emergency Services that does not have in effect a contract with an MCO that establishes payment amounts for services furnished to a beneficiary enrolled in the MCO’s CLTS program must accept as payment in full no more than the amounts (less any payments for indirect costs of medical education and direct costs of graduate medical education) that it could collect if the beneficiary received medical assistance under this title other than through enrollment in such an MCO. In a State where rates paid to hospitals under the State Plan are negotiated by contract and not publicly released, the payment amount applicable under this subparagraph shall be the average contract rate that would apply under the State Plan for general acute care hospitals or the average contract rate that would apply under such plan for tertiary hospitals.

6.9 Assignment of Responsibility for Member Care

(A) The State is responsible for payment of all inpatient facility and professional services provided from date of admission until the date of discharge, if a Member is hospitalized prior to the date of enrollment.

(B) If the Member is hospitalized at the time of disenrollment from CLTS or upon an approved switch from one MCO to another, the CONTRACTOR shall be responsible for payment for all covered inpatient facility and professional services provided within a licensed acute care facility, or a non-psychiatric specialty unit or hospitals designated by the New Mexico Department of Health. The payer at date of admission (MCO or FFS) remains responsible for services until the date of discharge. Services provided within a psychiatric unit of an acute care hospital are the responsibility of the SE and are excluded under this Agreement.

(1) For purposes of this Agreement:

(a) When a Member is moved from or to a Prospective Payment System (“PPS”) exempt unit within an acute care hospital, the move is considered a “discharge.”

(b) When a Member is moved from or to a specialty hospital as designated by DOH or HSD/MAD, the move is considered a “discharge.”

(c) When a Member is moved from or to a PPS exempt hospital, the moved is considered a “discharge.”

(d) When a Member leaves the acute care hospital setting to a home/community setting, the move is considered a “discharge.”

(e) When a Member leaves the acute care hospital setting to an institutional setting, the “discharge” date is based upon approval of the abstract by the State or its designee.

NOTE: It is not a “discharge” when a Member is moved from one acute care facility to another acute care facility, including out-of-state acute care facilities.

(2) If a Member is hospitalized and is disenrolled from Medicaid due to a loss of Medicaid coverage, the MCO or FFS, respectively, is only financially liable for the inpatient hospitalization and associated professional services until such time the individual is determined to be ineligible for Medicaid.

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(3) If a Member is in a nursing home at the time of disenrollment (not including loss of Medicaid eligibility), the CONTRACTOR shall be responsible for payment of all Covered Services for a period not longer than the last day of the month in which the Member is disenrolled.

6.10 Coordination of Benefits

(A) On a periodic basis, the State shall provide the CONTRACTOR with coordination of benefits information for Members. The CONTRACTOR shall:

(1)	not refuse or reduce Covered Services under this Agreement solely due to the existence of similar benefits provided under other health care contracts;
(2)	have the sole right of subrogation as set forth in Article 3.11(C);

(3) notify the State as set forth below when the CONTACTOR learns that a Member has TPL (Third Party Liability) for medical care (when it was not identified on the enrollment roster):

(a) within fifteen (15) business days when a Member is verified as having dual coverage under its MCO; and

(b) within sixty (60) calendar days when a Member is verified as having coverage with any other MCO or health carrier.

(4) not charge members for services provided for under the terms of this Agreement, except as set forth in the HSD/MAD Provider Policy Manual or NMAC 8.302.3, ACCEPTANCE OF RECIPIENT OR THIRD PARTY PAYMENTS;

(5) deny payments provided for under this Agreement for new Members when, and for so long as, payment for those Members is denied under 42 C.F.R. §438, Subpart I; and

(6) communicate and ensure compliance with the requirements of Article 6.6(A) by subcontractors that provide services under the terms of this Agreement.

(B) Except as provided in Section 6.6(C), in those instances where a duplicate payment is identified either by the CONTRACTOR, or by the State, the State retains the ability to recoup these payments within the time periods allowed by law.

(C) For HSD/MAD payments to the CONTRACTOR that are based on data submitted by the CONTRACTOR, the CONTRACTOR shall certify the data pursuant to 42 C.F.R. §438.606. The data that shall be certified includes, but is not limited to, all documents specified by the State, enrollment information, encounter data, and other information contained in this Agreement or the RFP. The certification shall attest, based on best knowledge, information and belief, as to the accuracy, completeness and truthfulness of the documentation and data. The CONTRACTOR shall submit the certification concurrently with the certified data and documents. The data and documents the CONTRACTOR submits to the State, shall be certified by one of the following:

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(1)	the CONTRACTOR’s Chief Executive Officer;
(2)	the CONTRACTOR’s Chief Financial Officer; or

(3) an individual who has been delegated authority to sign for, and who reports directly to, the CONTRACTOR’s Chief Executive Officer or Chief Financial Officer.

ARTICLE 7 — STATE CONTRACT ADMINISTRATOR

7.1 The Contract Administrator is, and his/her successor shall be, designated by the Secretary of HSD in consultation with the Secretary of ALTSD. The State shall notify the CONTRACTOR of any changes in the identity of the Contract Administrator. The Contract Administrator is empowered and authorized as the agent of the State to represent HSD and ALTSD in all matters related to this Agreement except those reserved to other State personnel by this Agreement. Notwithstanding the above, the Contract Administrator does not have the authority to amend the terms and conditions of this Agreement. All events, problems, concerns or requests affecting this Agreement shall be reported by the CONTRACTOR to the Contract Administrator.

ARTICLE 8 — ENFORCEMENT

8.1 The parties acknowledge and agree that efficient implementation and operation of the CLTS Program is enhanced through a cooperative relationship between the parties. The State and the CONTRACTOR agree to first attempt to resolve any dispute involving the parties’ respective performance through good faith informal negotiations. To that end, the State shall stress communication, notice and corrective action as the preferred method for initiating action related to the CONTRACTOR’s performance hereunto; provided that nothing in this Section shall preclude the State from initiating the sanctions set forth in Article 8 if damages to the State and the CONTRACTOR’s Members cannot be avoided or cured through the informal negotiations contemplated hereunder.

8.2 State Sanctions.

(A) Unless otherwise required by law, the level or extent of sanctions shall be based on the frequency or pattern of conduct, or the severity or degree of harm posed to (or incurred by) Members or to the integrity of the Medicaid program.

(B) If the State determines, after notice and opportunity by the CONTRACTOR to be heard in accordance with Article 15, that the CONTRACTOR or any agent or employee of the CONTRACTOR, or any persons with an ownership interest in the CONTRACTOR, or any related party of the CONTRACTOR, has or have failed to comply with any applicable law, regulation, term of this Agreement, policy, standard, rule, or for other good cause, the State may impose any or all of the following in accordance with applicable law.

(1) Plans of Correction. The CONTRACTOR shall be required to provide to the State, within fourteen (14) days, a plan of correction to remedy any defect in its performance.

(2) Directed Plans of Correction. The CONTRACTOR shall be required to provide to the State, within fourteen (14) days, a response to the directed plan of correction as directed by the State.

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(3) Civil or Administrative Monetary Penalties: The State may impose upon the CONTRACTOR civil or administrative monetary penalties to the extent authorized by Federal or State law.

(a) the State retains the right to apply progressively strict sanctions against the CONTRACTOR, including an assessment of a monetary penalty against the CONTRACTOR, for failure to perform in any contract areas.

(b) Unless otherwise required by law, the level or extent of sanctions shall be based on the frequency or pattern of conduct, or the severity or degree of harm posed to or incurred by Members or to the integrity of the CLTS program. The State shall impose liquidated damages consistent with this Agreement where appropriate, the State will seek corrective action of any defect in the CONTRACTOR’s performance prior to resorting to financial penaltiies.

(c) The limit on, or specific amount of, civil monetary penalties that the State may impose upon the CONTRACTOR varies, depending upon the nature and severity of the CONTRACTOR’S action or failure to act, as specified below:

(i) a maximum of twenty-five thousand dollars ($25,000) for each of the following determinations: failure to provide medically necessary services; misrepresentation or false statements to Members, potential Members, or health care provider(s); or failure to comply with physician incentive plan requirements and marketing violations;

(ii) a maximum of one hundred thousand dollars ($100,000) for each of the following determinations: for acts of discrimination against Members or for material misrepresentation or false statements to the State, or CMS;

(iii) a maximum of fifteen thousand dollars ($15,000) for each Member the State determines was not enrolled, or was not reenrolled, or whose enrollment was terminated because of a discriminatory practice. This is subject to an overall limit of one hundred thousand dollars ($100,000) under (ii) above; and

(iv) a maximum of twenty-five thousand dollars ($25,000) or double the amount of excess charges, whichever is greater, for premiums or charges in excess of the amount permitted under the Medicaid program. The State will deduct from the penalty the amount of overcharge and return it to the affected Member(s).

(d) Any withholding of capitation payments in the form of a penalty assessment does not constitute just cause for the CONTRACTOR to interrupt services provided to Members.

(e) Any withholding of monthly capitation payments in the form of a penalty assessment may not exceed five percent (5%) of the entire monthly capitation payment made to the CONTRACTOR.

(f) All other administrative, contractual or legal remedies available to the State shall

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be employed in the event that the CONTRACTOR violates or breaches the terms of the Agreement.

(4) Adjustment of Automated Assignment Formula. The State may selectively assign members who have not selected a CONTRACTOR to an alternative CONTRACTOR in response to the CONTRACTOR’s failure to fulfill its duties.

(5) Suspension of New Enrollment. The State may suspend new enrollment to the CONTRACTOR.

(6) Appointment of a State Monitor. Should the State be required to appoint a State Monitor to assure the CONTRACTOR’s performance, the CONTRACTOR shall bear the reasonable cost of the State intervention.

(7) Payment Denials. The State may deny payment for all Members or deny payment for new Members.

(8) Rescission. The State may rescind marketing consent and require that the CONTRACTOR cease any and all marketing efforts.

(9) Actual Damages. The State may assess to the CONTRACTOR actual damages to the State or its Members resulting from the CONTRACTOR’s non-performance of its obligations.

(10) Liquidated Damages. The State may pursue liquidated damages in an amount equal to the costs of obtaining alternative health benefits to the Member in the event of the CONTRACTOR’S non-performance. The damages shall include the difference in the capitated rates that would have been paid to the CONTRACTOR and the rates paid to the replacement health plan. The State may withhold payment to the CONTRACTOR for liquidated damages until such damages are paid in full.

(11)	Removal. The State may remove Members with third-party coverage from enrollment with the CONTRACTOR.
(12)	Temporary Management.

(a) Optional imposition of sanction. The State may impose temporary management to oversee the operations of the CONTRACTOR upon a finding by the State that there is continued egregious behavior by the CONTRACTOR, including but not limited to, behavior that is described in 42 CFR Section 438.700, or that is contrary to any requirements of 42 USC, Sections 42 USC 1396b (m) or 1396u-2; there is substantial risk to Member’s health; or the sanction is necessary to ensure the health of the CONTRACTOR’s Members while improvement is made to remedy violations under 42 CFR Section 438.700; or until there is an orderly termination or reorganization of the CONTRACTOR.

(b) The CONTRACTOR does not have the right to a predetermination hearing prior to the appointment of temporary management if the conditions set forth in 8.2(B)(12)(a) are met;

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(c) Required imposition of sanction. The State shall impose temporary management (regardless of any other sanction that may be imposed) if it finds that the CONTRACTOR has repeatedly failed to meet substantive requirements in 42 USC §§ 1396b (m) or 1396u-2 or 42 C.F.R 438, Subpart I (Sanctions).

(d) Hearing. The State shall not delay imposition of temporary management to provide a hearing before imposing this sanction.

(e) Duration of Sanction. The State shall not terminate temporary management until it determines that the CONTRACTOR can ensure that the sanctioned behavior will not recur.

(13) Terminate Enrollment. The State shall grant Members the right to terminate enrollment without cause as described in 42 C.F.R. §438.702 (a) (3), and shall notify the affected members of their right to terminate enrollment.

(14) Intermediate Sanctions. The State may issue an intermediate sanction in the form of administrative order requiring the CONTRACTOR to cease or modify any specified conduct or practice engaged in by it or its employees, subcontractors or agents to fulfill its contractual obligations in the manner specified in the order; to provide Covered Services that have been denied or take steps to provide or arrange for the provision of any services that it has agreed to or is otherwise obligated to make available.

(a) Basis for imposition of sanctions. The State will impose the foregoing sanctions if the State determines that the CONTRACTOR acts or fails to act as follows:

(i) fails substantially to provide Medically Necessary services and items that the CONTRACTOR is required to provide, under law or under this Agreement with the State, to a Member;

(ii) imposes on Members’ premiums or charges that are in excess of the premiums or charges permitted under the CLTS program;

(iii) acts to discriminate among Members on the basis of their health status or need for health care services. This includes termination of enrollment or refusal to reenroll a Member, except as permitted under this Agreement, or any practice that would reasonably be expected to discourage enrollment by Members whose medical condition or history indicate probable need for substantial future medical services;

(iv) intentionally misrepresents or falsifies information that it furnishes to the State, or CMS;

(v) intentionally misrepresents or falsifies information that it furnishes to a Member, potential Member, or health care provider;

(vi) fails to comply with Federal requirements for physician incentive plans, including disclosures;

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(vii)	has distributed directly, or becomes aware of and fails to make efforts to correct material distributed indirectly through any agent or independent subcontractor, marketing materials that have not been approved by HSD/MAD or ALTSD or that contain false or materially misleading information; or
(viii)	fails to perform a material part of this Agreement.

(b) The State’s determination of any of the above may be based on findings from onsite reviews; surveys or audits; member or other complaints; financial status; or any other source.

(c) The State retains authority to impose additional sanctions under state statutes or state regulations that address areas of noncompliance specified in 42 C.F.R. § 438.700, as well as additional areas of noncompliance.

(15) Suspension: Unless the State determines that this Agreement shall remain in full force and effect to meet requirements imposed or needs of the State to fulfill obligations under any other law, rule, regulation, agreement or compact of the State of New Mexico or the State, then, in addition to the foregoing provisions, this Agreement may be suspended by the parties in the following manner by written Agreement of the parties; and/or

(16) Termination. The State has the authority to terminate the contract and enroll the CONTRACTOR’S Members in another MCO or other MCOs, or provide Covered Services through other options included in the State plan, if the State determines that the CONTRACTOR has failed to do either of the following:

(a) carry out the substantive terms of this Agreement; or

(b) meet applicable requirements in Sections 1932, 1903 (m), and 1905(t) of the Social Security Act.

(17) Notice of Sanction. Except as provided in subsection (12) of this Article regarding Temporary Management, before imposing any of the intermediate sanctions specified, the State must give the CONTRACTOR timely written notice that explains the basis and nature of the sanction and any other due process protections that the State elects to provide.

(a) Pre-termination hearing: Before terminating this Agreement, the State must provide the CONTRACTOR a
pre-termination hearing within thirty (30) calendar days after written notice, which consist of the following procedures;

(i) the State shall give the CONTRACTOR written notice of its intent to terminate, the reason for the termination, and the time and place of the hearing;

(ii) after the hearing, the State shall give the CONTRACTOR written notice of the decision affirming or reversing the proposed-termination of the contract and, for an affirming decision, the effective date of termination;

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(iii) for an affirming decision, give CONTRACTOR’s Members notice of the termination and information, consistent with their options for receiving Covered Services following the effective date of termination; and

(iv) the pre-termination hearing procedures shall proceed according to the Dispute Procedures of this Agreement.

(b) HSD/MAD will give the CMS Regional Office written notice whenever it imposes or lifts a sanction for one of the violations listed herein. The notice will be given no later than thirty (30) calendar days after the State imposes or lifts a sanction and must specify the affected CONTRACTOR, the kind of sanction, and the reason for the State’s decision to impose or lift the sanction.

8.3 Federal Sanctions

(A) Section 1903 (m)(5)(A) and (B) of the Social Security Act vests the Secretary of Health and Human Services with the authority to deny Medicaid payments to a health plan for Members who enroll after the date on which the health plan has been found to have committed one of the violations set forth in the Agreement. State payments for the CONTRACTOR’s Members are automatically denied whenever, and for so long as, Federal payment for such Members has been denied as a result of the commission of such violations and in accordance with the requirements of 42 C.F.R. §438.730. The following violations can trigger denial of payment pursuant to §1903(m)(5) of the Social Security Act:

(1) substantial failure to provide required Medically Necessary items or necessary social services when the failure has adversely affected or has substantial likelihood of adversely affecting a Member;

(2) imposition of premiums on CONTRACTOR’s Members in excess of any permitted premium;

(3)	discrimination among Members with respect to enrollment, re-enrollment, or disenrollment on the basis of Member’s health status or requirements for health care services;
(4)	misrepresentation or falsification of certain information; or

(5) failure to cover emergency services under §1932(b)(2) of the Social Security Act when the failure affects or has a substantial likelihood of adversely affecting a Member.

(B) The State may also deny payment if the State learns that a CONTRACTOR subcontracts with an individual provider, an entity, or an entity with an individual who is an officer, director, agent or manager or person with more than five percent (5%) of beneficial ownership of an entity’s equity, that has been convicted of crimes specified in the §1128 of the Social Security Act, or who has a contractual relationship to provide services hereunder with an entity convicted of a crime specified in §1128.

(C) The State shall notify the Secretary of Health and Human Services of noncompliance with the provisions of this Section. The State may allow continuance of the Agreement unless the Secretary directs otherwise but may not renew or otherwise extend the duration of the existing

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Agreement with the CONTRACTOR unless the Secretary provides to the State and Congress a written statement describing the compelling reasons that exist for renewing and extending the Agreement.

(D) This Section is subject to the “Non-exclusivity of Remedy” language below.

ARTICLE 9 — TERMINATION

9.1 All terminations shall be effective at the end of a month, unless otherwise specified in this Article. This Agreement may be terminated under the following circumstances:

(A) by mutual written agreement of the State, and the CONTRACTOR upon such terms and conditions as they may agree;

(B) by either party for convenience, upon not less than one hundred and eighty (180) calendar days written notice to all other parties to this Agreement;

(C) this Agreement shall terminate on the Agreement termination date. The CONTRACTOR shall be paid solely for services provided prior to the termination date. The CONTRACTOR is obligated to pay all claims for all dates of service prior to the termination date. In the event of the Agreement termination date or if the CONTRACTOR terminates this Agreement prior to the Agreement termination date, and, if a Member is hospitalized at the time of termination, the CONTRACTOR shall be responsible for payment of all covered inpatient facility and professional services from the date of admission to the date of discharge. Similarly, in the event of the Agreement termination date or if the CONTRACTOR terminates this Agreement prior to the Agreement termination date and a Member is in a nursing home at the time of termination, the CONTRACTOR shall be responsible for payment of all Covered Services from the date of admission up to six (6) months. In the event that the State terminates this Agreement prior to the agreement termination date and a Member is hospitalized at the time of termination, the CONTRACTOR shall be responsible for payment of all covered inpatient facility and professional services from the date of admission to sixty (60) calendar days after the effective date of termination. Similarly, in the event that the State terminates this Agreement prior to the Agreement termination date, and a Member is in a nursing home at the time of the effective date of termination the CONTRACTOR shall be responsible for payment of all Covered Services until sixty (60) calendar days after the effective date of termination or the time the nature of the Member’s care ceases to be sub acute or skilled nursing care, whichever occurs first. Payment to the CONTRACTOR based upon termination of this Agreement is set forth in Article 11.5.

(D) by the State for cause upon failure of the CONTRACTOR to materially comply with the terms and conditions of this Agreement. The State shall give the CONTRACTOR written notice specifying the CONTRACTOR’S failure to comply. The CONTRACTOR shall correct the failure within thirty (30) days or begin in good faith to correct the failure and thereafter proceed diligently to complete or cure the failure. If within thirty (30) days the CONTRACTOR has not initiated or completed corrective action, the State may serve written notice stating the date of termination and work stoppage arrangements.

(E) by the State, if required by modification, change, or interpretation in State or Federal law or CMS waiver terms, because of court order, or because of insufficient funding from the Federal or State government(s), if Federal or State appropriations for Medicaid managed care are not obtained, or are withdrawn, reduced, or limited, or if Medicaid managed care expenditures are

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greater than anticipated such that funds are insufficient to allow for the purchase of services as required by this Agreement. The State’s decision as to whether sufficient funds are available shall be accepted by the CONTRACTOR and shall be final. If the State proposes an amendment to the Agreement to unilaterally reduce funding, the CONTRACTOR shall have the option to terminate this Agreement or to agree to the reduced funding, within thirty (30) calendar days of receipt of the proposed amendment;

(F) by the State, in the event of default by the CONTRACTOR, which is defined as the inability of the CONTRACTOR to provide services described in this Agreement or the CONTRACTOR’S insolvency. With the exception of termination due to insolvency, the CONTRACTOR shall be given thirty (30) calendar days to cure any such default, unless such opportunity would result in immediate harm to Members or the improper diversion of CLTS program funds;

(G) by the State, in the event of notification by the Public Regulation Commission or other applicable regulatory body that the certificate of authority under which the CONTRACTOR operates has been revoked, or that it has expired and shall not be renewed;

(H) by the State, in the event of notification that the owners or managers of the CONTRACTOR, or other entities with substantial contractual relationships with the CONTRACTOR, have been convicted of Medicare or Medicaid fraud or abuse or received certain sanctions as specified in §1128 of the Social Security Act;

(I) by the State, in the event it determines that the health or welfare of CONTRACTOR’s Members is in jeopardy should the Agreement continue. For purposes of this paragraph, termination of the Agreement requires a finding by the State that a substantial number of Members face the threat of immediate and serious harm;

(J) by the State, in the event of the CONTRACTOR’S failure to comply with the composition of enrollment requirement contained in 42 C.F.R. §434.26 and the Scope of Work. The CONTRACTOR shall be given fourteen (14) calendar days to cure any such enrollment composition requirement, unless such opportunity would violate any federal law or regulation;

(K) by the State in the event a petition for bankruptcy is filed by or against the CONTRACTOR;

(L) by the State if the CONTRACTOR fails substantially to provide Medically Necessary items and services that are required under this Agreement;

(M) by the State, if the CONTRACTOR discriminates among Members on the basis of their health status or requirements for Covered Services, including expulsion or refusal to reenroll a Member, except as permitted by this Agreement and Federal law or regulation, or engages in any practice that would reasonably be expected to have the effect of denying or discouraging enrollment with the CONTRACTOR by the eligible Member or by Members whose medical condition or history indicates a need for substantial future medical services;

(N) by the State, if the CONTRACTOR intentionally misrepresents or falsifies information that is furnished to the Secretary of Health and Human Services, the State, or Members, potential Members or health care providers under the Social Security Act or pursuant to this Agreement;

(O) by the State, if the CONTRACTOR fails to comply with applicable physician incentive prohibitions of §1903(m)(2)(A)(x) of the Social Security Act;

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(P) by the CONTRACTOR, on at least sixty (60) calendar days prior written notice, in the event the State fails to pay any amount due the CONTRACTOR hereunder within thirty (30) calendar days of the date such payments are due;

(Q) by the CONTRACTOR, on at least sixty (60) calendar days prior written notice, in the event that the State is unable to make future payments of undisputed capitation payments due to a lack of a state budget or legislative appropriation; and

(R) by any party, upon ninety (90) calendar days written notice, in the event of a material change in the Medicaid managed care program, regardless of the cause of or reason for such change, if the parties after negotiating in good faith are unable to agree on the terms of an amendment to incorporate such change.

9.2.

If the State terminates this Agreement pursuant to this Article and unless otherwise specified in this Article, the State shall provide the CONTRACTOR written notice of such termination at least sixty (60) calendar days prior to the effective date of the termination. If the State determines a reduction in the scope of work is necessary, it shall notify the CONTRACTOR and proceed to amend this Agreement pursuant to its provisions.

9.3

By termination pursuant to this Article, no party may nullify obligations already incurred for performance of services prior to the date of notice or, unless specifically stated in the notice, required to be performed through the effective date of termination. Any agreement or notice of termination shall incorporate necessary transition arrangements.

ARTICLE 10 — TERMINATION AGREEMENT

10.1 When the State has reduced to writing and delivered to the CONTRACTOR a notice of termination, the effective date, and reasons therefore, if any, the State, in addition to other rights provided in this Agreement, may require the CONTRACTOR to transfer, deliver, and/or make readily available to the State, property in which the State has a financial interest. Prior to invoking the provisions of this paragraph, the State shall identify that property in which it has a financial interest, provided that, subject to the State’s recoupment rights herein, property acquired with capitation or other payments made for Members properly enrolled shall not be considered property in which the State has a financial interest.

10.2 In the event this Agreement is terminated by the State, immediately as of the notice date, the CONTRACTOR shall:

(A) incur no additional financial obligations for materials, services, or facilities under this Agreement, without prior written approval of the State;

(B) comply with all directives issued by the State in the notice of termination as to the performance of work under this Agreement;

(C) terminate all purchase orders or procurements and subcontracts and stop all work to the extent specified in the notice of termination, except as the State may direct for orderly completion and transition or as required to prevent CONTRACTOR from being in breach of its existing contractual obligations;

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(D) agree that the State is not liable for any costs of the CONTRACTOR arising out of termination unless the CONTRACTOR establishes that the Agreement was terminated due to the State’s negligence, wrongful act, or breach of the Agreement;

(E) take such action as the State may reasonably direct, for protection and preservation of all property and all records related to and required by this Agreement;

(F) cooperate fully in the closeout or transition of any activities so as to permit continuity in the administration of the State programs; and

(G) allow the State, its agents and representatives full access upon reasonable notice and during normal business hours to the CONTRACTOR’s facilities and records to arrange the orderly transfer of the contracted activities. These records include the information necessary for the reimbursement of any outstanding CLTS claims.

10.3. Dispute Procedure Involving Contract Termination Proceedings. In the event the State seeks to terminate this Agreement with the CONTRACTOR, the CONTRACTOR may appeal the termination directly to the Secretary of the Human Services Department within ten (10) business days of receiving the State’s termination notice and proceed as follows:

(A) the Secretary of the Human Services Department shall acknowledge receipt of the CONTRACTOR’s appeal request within three (3) calendar days of the date the appeal request is received;

(B) the Secretary of the Human Services Department will conduct a formal hearing on the termination issues raised by the CONTRACTOR within thirty (30) calendar days after receipt of the written appeal;

(C)	the CONTRACTOR, the State, or its successor, shall be allowed to present evidence in the form of documents and testimony;
(D)	the parties to the hearing are the CONTRACTOR, the State, or its successor;

(E)	the hearing shall be recorded by a court reporter paid for equally by the State and the CONTRACTOR. Copies of transcripts of the hearing shall be paid by the party requesting the copies;
(F)	the court reporter shall swear witnesses under oath;

(G) the Secretary of the Human Services Department shall determine which party presents its issues first and shall allow both sides to question each other’s witnesses in the order determined by the Secretary;

(H) the Secretary of the Human Services Department may, but is not required to, allow opening statements from the parties before taking evidence;

(I) the Secretary of the Human Services Department may, but is not required to, request written findings of fact, conclusions of law and closing arguments or any combination thereof. The Secretary may, but is not required to, allow oral closing argument only;

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(J) the Secretary of the Human Services Department shall render a written decision and mail the decision to the CONTRACTOR within sixty (60) calendar days of the date the request for a hearing is received;

(K) the State, or their successors, and the CONTRACTOR may be represented by counsel or another representative of choice at the hearing. The legal or other representatives shall submit a written request for an appearance with the Secretary of the Human Services Department within fifteen (15) calendar days of the date of the hearing request;

(L) the civil rules of procedure and rules of evidence for the District Courts for the District of New Mexico shall not apply, but the Secretary of the Human Services Department may limit evidence that is redundant or not relevant to the contract termination issues presented for review; and

(M) the Secretary of the Human Services Department’s written decision shall be mailed by certified mail, postage prepaid, to the CONTRACTOR. Another copy of the decision shall be sent to the Secretary of ALTSD and the HSD/MAD director.

ARTICLE 11 — RIGHTS UPON TERMINATION OR EXPIRATION

11.1	Upon termination or expiration of this Agreement, the CONTRACTOR shall, upon request of the State, make available to the State, or to a person authorized by the State, all records and equipment that are the property of the State.
11.2	Upon termination or expiration, the State shall pay the CONTRACTOR all amounts due for service through the effective date of such termination. The State may deduct from amounts otherwise payable to the CONTRACTOR monies determined to be due to the State from the CONTRACTOR. Any amounts in dispute at the time of termination shall be placed by the State in an interest-bearing escrow account with an escrow agent mutually agreed to by HSD/MAD and the CONTRACTOR.
11.3	In the event that the State terminates the Agreement for cause in full or in part, the State may procure services similar to those terminated and the CONTRACTOR shall be liable to the State for any excess costs for such similar services for any calendar month for which the CONTRACTOR has been paid for providing services to Members. In addition, the CONTRACTOR shall be liable to the State for administrative costs incurred by the State in procuring such similar services. The rights and remedies of the State provided in this paragraph shall not be exclusive and are in addition to any other rights and remedies provided by law or under this Agreement.
11.4	The CONTRACTOR is responsible for any claims from subcontractors or other providers, including emergency service providers, for services provided prior to the termination date. The CONTRACTOR shall promptly notify the State of any outstanding claims which the State may owe, or be liable for fee-for-service payment, which are known to the CONTRACTOR prior to termination.
11.5	Any payments advanced to the CONTRACTOR for coverage of Members for periods after the date of termination shall be promptly returned to the State. For termination of an Agreement, which occurs mid-month, the capitation payments for that month shall be apportioned on a daily basis. The CONTRACTOR shall be entitled to capitation payments for the period of time prior to the date of termination, and the State shall be entitled to a refund for the balance of the month. All terminations shall include a final accounting of capitation payment received and number of Members during the month in which termination is effective. The State shall pay the CONTRACTOR for each Member continuing to receive services after the effective date of termination as required in Article 9.1(C).

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11.6	The CONTRACTOR shall ensure the orderly and reasonable transfer of Member’s care in progress, whether or not those Members are hospitalized or in long-term treatment.
11.7	The CONTRACTOR shall be responsible to the State for liquidated damages arising out of CONTRACTOR’s breach of this Agreement.
11.8	In the event the State proves that the CONTRACTOR’s course of performance has resulted in reductions in the State’s receipt of Federal program funds, as a Federal sanction, the CONTRACTOR shall remit to the State, as liquidated damages, such funds as are necessary to make the State whole, but only to the extent such damages are caused by the actions of the CONTRACTOR. This provision is subject to Article 15, Disputes.

ARTICLE 12 — CONTRACT MODIFICATION

12.1

In the event that changes in Federal or State statute, regulation, rules, policy, or changes in Federal or State appropriation(s) or other circumstances require a change in the way HSD/MAD manages its Medicaid program, this Agreement shall be subject to substantial modification by amendment. Such election shall be effected by HSD/MAD sending written notice to the CONTRACTOR and ALTSD. HSD/MAD’s decision as to the requirement for change in the scope of the program shall be final and binding.

12.2

The amendment(s) shall be implemented by Agreement renegotiation in accordance with Article 37, (Amendment). In addition, in the event that approval of HSD/MAD’s CLTS waiver is contingent upon amendment of this Agreement, the CONTRACTOR agrees to make any necessary amendments to obtain such waiver approval, provided that CONTRACTOR shall not be required to agree if the modification is a substantial change to the business arrangement anticipated by CONTRACTOR in executing this Agreement. For the purposes of this Section, failure of the parties to agree upon capitations payment rates to be incorporated by amendment will be deemed a substantial change to the business arrangement anticipated by the parties. Notwithstanding the foregoing, any material change in the cost to the CONTRACTOR of providing the Covered Services herein that is caused by CMS in granting the waiver shall be negotiated and mutually agreed to between the State and the CONTRACTOR. The results of the negotiations shall be placed in writing in compliance with Article 37, (Amendment) of this Agreement.

ARTICLE 13 — INTELLECTUAL PROPERTY AND COPYRIGHT

13.1	In the event the CONTRACTOR shall elect to use or incorporate in the materials to be produced any components of a system already existing, the CONTRACTOR shall first notify the State, who after investigation may direct the CONTRACTOR not to incorporate such components. If the State fails to object, and after the CONTRACTOR obtains written consent of the party owning the same, and furnishes a copy to the State, the CONTRACTOR may incorporate such components.
13.2	The CONTRACTOR warrants that all materials produced hereunder shall not infringe upon or violate any patent, copyright, trade secret or other property right of any third party, and the CONTRACTOR shall indemnify and hold HSD/MAD and ALTSD harmless from and against any loss, cost, liability, or expense arising out of breach or claimed breach of this warranty.
13.3	All materials developed or acquired by the CONTRACTOR under this Agreement shall become the property of the State of New Mexico and shall be delivered to the State no later than the termination date

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of this Agreement. Nothing developed or produced, in whole or in part, by the CONTRACTOR under this Agreement shall be the subject of an application for copyright or other claim of ownership by or on behalf of the CONTRACTOR. Notwithstanding such requirement, if any material of any type used by CONTRACTOR for the performance of this Agreement is a derivative of or otherwise uses preexisting CONTRCTOR-owned intellectual property, CONTRACTOR shall be entitled to its preexisting rights in all such intellectual property.

ARTICLE 14 — APPROPRIATIONS

14.1

The terms of this Agreement are contingent upon sufficient appropriations or authorizations being made by either the Legislature of New Mexico, CMS, or the U.S. Congress for the performance of this Agreement. If sufficient appropriations and authorizations are not made by either the Legislature, CMS, or the Congress, this Agreement shall be subject to termination or amendment. Subject to the provisions of Article 27 of this Agreement, the State’s decision as to whether sufficient appropriations or authorizations exist shall be accepted by the CONTRACTOR and shall be final and binding. Any changes to the Scope of Work and compensation to CONTRACTOR affected pursuant to this Section 14.1 shall be negotiated, reduced to writing and signed by the parties in accordance with Article 37 (Amendments) of this Agreement and any other applicable State or Federal statutes, rules or regulations.

14.2

To the extent CMS, legislation or congressional action impacts the amount of appropriation available for performance under this Agreement, the State has the right to amend the Scope of Work, in their discretion, which shall be effected by the State sending written notice to the CONTRACTOR. Any changes to the Scope of Work and compensation to CONTRACTOR affected pursuant to this Section 14.2 shall be negotiated, reduced to writing and signed by the parties in accordance with Article 37 (Amendments) of this Agreement and any other applicable State or Federal statutes, rules or regulations.

ARTICLE 15 — DISPUTES

15.1

The entire agreement shall consist of: (1) this Agreement, including all Appendices and any amendments; (2) the Request for Proposal, the State’s written clarifications to the Request for Proposal and CONTRACTOR’s responses to RFP questions where not inconsistent with the terms of this Agreement or its amendments; (3) The CONTRACTOR’s Best and Final Offer, and (4) the CONTRACTOR’s additional responses to the Request for Proposal where not inconsistent with the terms of this Agreement or its amendments, all of which are incorporated herein or by reference.

15.2

In the event of a dispute under this Agreement, the various documents shall be referred to for the purpose of clarification or for additional detail in the order of priority and significance, specified below:

(A)	amendments to the Agreement in reverse chronological order followed by;
(B)	the Agreement, including all Appendices followed by;
(C)	the CONTRACTOR’s Best and Final Offer followed by;
(D)	the Request for Proposal, including attachments thereto and HSD/MAD’s written responses to written questions and HSD/MAD’s written clarifications, and the CONTRACTOR’s response to the Request for Proposal, including both technical and cost portions of the response (but only those portions of the CONTRACTOR’s response including both technical and cost portions of the response that do not conflict with the terms of this Agreement and its amendments).

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15.3 Dispute Procedures for Other than Contract Termination Proceedings

(A) Except for termination of this Agreement, any dispute concerning sanctions imposed under this Agreement shall be reported in writing to the HSD/MAD Director within fifteen (15) calendar days of the date the reporting party receives notice of the sanctions. The decision of the Director regarding the dispute shall be delivered to the parties in writing within thirty (30) calendar days of the date the Director receives the written dispute. The decision shall be final and conclusive unless, within fifteen (15) calendar days from the date of the decision, either party files with the Secretary of the HSD a written appeal of the decision of the Director.

(B) Any other dispute concerning performance of the Agreement shall be reported in writing to the HSD/MAD Director within thirty (30) calendar days of the date the reporting party knew of the activity or incident giving rise to the dispute. The decision of the Director shall be delivered to the parties in writing within thirty (30) calendar days and shall be final and conclusive unless, within fifteen (15) calendar days from the date of the decision, either party files with the Secretary of the HSD a written appeal of the decision of the Director.

(C) Failure to file a timely appeal shall be deemed acceptance of the HSD/MAD Director’s decision and waiver of any further claim.

(D) In any appeal under this Article, the CONTRACTOR and the State shall be afforded an opportunity to be heard and to offer evidence and argument in support of their position to the Secretary of the Human Services Department or his/her designee. The appeal is an informal hearing which shall not be recorded or transcribed, and is not subject to formal rules of evidence or procedure.

(E) The Secretary of the Human Services Department or his/her designee shall review the issues and evidence presented and issue a determination in writing within thirty (30) calendar days of the of the informal hearing which shall conclude the administrative process available to the parties. The Secretary shall notify the parties of the decision within thirty (30) calendar days of the notice of the appeal, unless otherwise agreed to by the parties in writing or extended by the Secretary for good cause.

(F) Pending decision by the Secretary of the HSD, both parties shall proceed diligently with performance of the Agreement, in accordance with the Agreement.

(G) Failure to initiate or participate in any part of this process shall be deemed waiver of any claim.

ARTICLE 16 — APPLICABLE LAW

16.1	This Agreement shall be governed by the laws of the State of New Mexico. All legal proceedings arising from unresolved disputes under this Agreement shall be brought before the First Judicial District Court in Santa Fe, New Mexico.
16.2	Each party agrees that it shall perform its obligations hereunder in accordance with all applicable Federal and State laws, rules and regulations now or hereafter in effect including the Deficit Reduction Act, the Clean Air Act and the Federal Water Pollution Act..
16.3	If any provision of this Agreement is determined to be invalid, unenforceable, illegal or void, the remaining provisions of this Agreement shall not be affected, and providing the remainder of the

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Agreement is capable of performance, and does not as so modified materially impact the underlying business arrangement between the parties, the remaining provisions shall be binding upon the parties hereto, and shall be enforceable, as though said invalid, unenforceable, illegal, or void provision were not contained herein.

ARTICLE 17 — STATUS OF CONTRACTOR

17.1	The CONTRACTOR is an independent CONTRACTOR performing professional services for the State and is not an employee of the State of New Mexico. The CONTRACTOR shall not accrue leave, retirement, insurance, bonding, use of State vehicles, or any other benefits afforded to employees of the State of New Mexico as a result of this Agreement. The CONTRACTOR acknowledges that all sums received hereunder are reportable by the CONTRACTOR for tax purposes.
17.2	The CONTRACTOR shall be solely responsible for all applicable taxes, insurance, licensing and other costs of doing business. Should the CONTRACTOR default in these or other responsibilities, jeopardizing the CONTRACTOR’s ability to perform services, this Agreement may be terminated for cause in accordance with Article 9.
17.3	The CONTRACTOR shall not purport to bind the State, its officers or employees nor the State of New Mexico to any obligation not expressly authorized herein unless the State has expressly given the CONTRACTOR the authority to so do in writing.

ARTICLE 18 — ASSIGNMENT

18.1 With the exception of provider subcontracts or other subcontracts expressly permitted under this Agreement, the CONTRACTOR shall not assign, transfer or delegate any rights, obligations, duties or other interest in this Agreement or assign any claim for money due or to become due under this Agreement except with the prior written consent of the State.

ARTICLE 19 — SUBCONTRACTS

19.1	The CONTRACTOR is solely responsible for fulfillment of this Agreement. The State shall make Agreement payments only to the CONTRACTOR.
19.2	The CONTRACTOR shall remain solely responsible for performance by any subcontractor under such subcontract(s).
19.3	The State may undertake or award other agreements for work related to the tasks described in this document or any portion therein if the CONTRACTOR’s available time and/or priorities do not allow for such work to be provided by the CONTRACTOR. The CONTRACTOR shall fully cooperate with such other contractors, and with the State in all such cases.
19.4	Subcontracting Requirements

(A) Except as otherwise provided in this Agreement, the CONTRACTOR may subcontract to a qualified individual or organization for the provision of any service defined in the benefit package or for any other required CONTRACTOR function. The CONTRACTOR remains legally responsible to the State for all work performed by any subcontractor. The CONTRACTOR shall submit to the State boilerplate contract language and/or sample contracts for various types of subcontracts during the procurement process. Changes to contract templates

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that may materially affect Medicaid Members shall be approved by the State prior to execution by any subcontractor.

(B) The State reserves the right to review and disapprove all subcontracts and/or any significant modifications to previously approved subcontracts to ensure compliance with requirements set forth in 42 C.F.R. §434.6 or in this Agreement. The CONTRACTOR is required to give the State prior notice with regard to its intent to subcontract certain significant contract requirements as specified herein or in writing by the State, including, but not limited to, credentialing, utilization review, and claims processing. The State reserves the right to disallow a proposed subcontracting arrangement if the proposed subcontractor has been formally restricted from participating in a Federal entitlement program (i.e., Medicare, Medicaid) for good cause.

(C) The CONTRACTOR shall not contract with an individual provider, an entity, or an entity with an individual who is an officer, director, agent, manager or person with more than five percent (5%) of beneficial ownership of an entity’s equity, that has been convicted of crimes specified in the Section 1128 of the Social Security Act, or who has a contractual relationship with an entity convicted of a crime specified in Section 1128.

(D) The CONTRACTOR shall include a provision in its subcontracts requiring subcontractors to perform criminal background checks for all required individuals providing services under this Agreement, as specified in 7.1.9 NMAC, Caregivers Criminal History Screening Requirements.

(E) Pursuant to 42 C.F.R. §422.08 and §422.210, the CONTRACTOR may operate a Physician Incentive Plan (PIP) as defined in such regulations only if no specific payment can be made directly or indirectly under a PIP to a physician or physician group as an inducement to reduce or limit Medically Necessary services furnished to a Member. If the CONTRACTOR chooses to have a PIP the CONTRACTOR must disclose to the State the following:

(1)	whether services not furnished by the physician/group are covered by the incentive plan. No further disclosure required if the PIP does not cover services not furnished by the physician/group;
(2)	type of incentive arrangement, e.g., withhold, bonus, capitation;
(3)	percent of withhold or bonus (if applicable);

(4) panel size, and if Members are pooled, the approved method used; and

(5) if the CONTRACTOR is at substantial financial risk, the CONTRACTOR must report proof the physician/group has adequate stop loss coverage, including amount and type of stop loss.

If there is substantial risk for services not provided by the physician/group, the CONTRACTOR must ensure adequate stop loss protection to individual physicians and conduct annual Member surveys. If a survey is conducted, the CONTRACTOR must disclose the results to the State and, upon request, to Members. In addition, the CONTRACTOR shall provide information on its PIP to any Medicaid Member upon request.

(F) In its subcontracts, the CONTRACTOR shall ensure that subcontractors agree to hold harmless the State, and the CONTRACTOR’s Members in the event that the CONTRACTOR cannot or

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shall not pay for services performed by the subcontractor pursuant to the subcontract. The hold harmless provision shall survive the effective termination of the CONTRACTOR/subcontractor contract for authorized services rendered prior to the termination of the contract, regardless of the cause giving rise to termination and shall be construed to be for the benefit of the Members.

(G) The CONTRACTOR shall have a written document (agreement), signed by both parties, that describes the responsibilities of the CONTRACTOR and the delegate; the delegated activities; the frequency of reporting (if applicable) to the CONTRACTOR; the process by which the CONTRACTOR evaluates the delegate; and the remedies, including the revocation of the delegation, available to the CONTRACTOR if the delegate does not fulfill its obligations.

(H) The CONTRACTOR shall have policies and procedures to ensure that the delegated agency meets all standards of performance mandated by the State for the CLTS program. These include, but are not limited to, use of appropriately qualified staff, application of clinical practice guidelines and utilization management, reporting capability, and ensuring Members’ access to care.

(I) The CONTRACTOR shall have policies and procedures for the oversight of the delegated agency’s performance of the delegated functions.

(J) The CONTRACTOR shall have policies and procedures to ensure consistent statewide application of all UM (Utilization Management) criteria when UM is delegated.

(K) Credentialing Requirements: The CONTRACTOR shall maintain policies and procedures for verifying that the credentials of all its providers and subcontractors meet applicable standards as stated in this Agreement, including all Appendices. For nursing facilities, the CONTRACTOR shall coordinate with DOH related to Medicare certification and subsequent Medicaid certification.

(L) Review Requirements: The CONTRACTOR shall maintain fully executed originals of all subcontracts, which shall be accessible to the State, upon request.

(M) Minimum Requirements: Subcontracts shall contain at least the following provisions:

(1) subcontracts shall be executed in accordance with all applicable Federal and State laws, regulations, policies, procedures and rules;

(2) subcontracts shall identify the parties of the subcontract and their legal basis of operation in the State of New Mexico;

(3) subcontracts shall include the procedures and specific criteria for terminating the subcontract;

(4) subcontracts shall identify the services to be performed by the subcontractor and those services performed under any other subcontract(s). Subcontracts shall include provision(s) describing how services provided under the terms of the subcontract are accessed by Members;

(5) subcontracts shall include the reimbursement rates and risk assumption, if applicable;

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(6) subcontractors shall maintain all records relating to services provided to members for a ten (10)-year period and shall make all enrollee medical records or other service records available for the purpose of quality review conducted by the State, or their designated agents both during and after the contract period;

(7) subcontracts shall require that member information be kept confidential, as defined by Federal and State law;

(8) subcontracts shall include a provision that authorized representatives of the State have reasonable access to facilities and records for financial and medical audit purposes both during and after the contract period;

(9) subcontracts shall include a provision for the subcontractor to release to the CONTRACTOR any information necessary to perform any of its obligations and that the CONTRACTOR shall be monitoring the subcontractor’s performance on an ongoing basis and subjecting the subcontractor to formal periodic review;

(10) subcontracts shall state that the subcontractor shall accept payment from the CONTRACTOR as payment for any services included in the benefit package, and cannot request payment from the State for services performed under the subcontract;

(11) subcontracts shall state that if the subcontract includes primary care, provisions for compliance with PCP requirements delineated in this Agreement shall apply;

(12) subcontracts shall require the subcontractor shall comply with all applicable State and Federal statutes, rules, and regulations;

(13) subcontracts shall include provisions for termination for any violation of applicable HSD/MAD, State or Federal statutes, rules, and regulations;

(14) subcontracts may not prohibit a provider or other subcontractor (with the exception of third-party administrators) from entering into a contractual relationship with another CONTRACTOR;

(15) subcontracts may not include any incentive or disincentive that encourages a provider or other subcontractor not to enter into a contractual relationship with another CONTRACTOR;

(16) subcontracts cannot contain any gag order provisions that prohibit or otherwise restrict covered health professionals from advising patients about their health status or medical care or treatment as provided in Section 1932(b)(3) of the Social Security Act or in contravention of NMSA 1978, § 59A-57-1 to 57-11, the Patient Protection Act; and

(17) subcontracts for pharmacy providers shall include a payment provision consistent with 1978 NMSA § 27-2-16B unless there is a change in law or regulation.

ARTICLE 20 — RELEASE

20.1 Upon final payment of the amounts due under this Agreement, unless the CONTRACTOR objects in writing to such payment within 180 calendar days, the CONTRACTOR shall release the State, their

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	officers and employees and the State of New Mexico from all such payment obligations whatsoever under this Agreement. The CONTRACTOR agrees not to purport to bind the State of New Mexico. If CONTRACTOR timely objects to such payment, such objection shall be addressed in accordance with the Dispute provisions provided for in this Agreement.
20.2	Payment to the CONTRACTOR by the State shall not constitute final release of the CONTRACTOR. Should audit or inspection of the CONTRACTOR’s records or the CONTRACTOR’s Member complaints subsequently reveal outstanding CONTRACTOR liabilities or obligations, the CONTRACTOR shall remain liable to the State for such obligations. Any payments by HSD/MAD to the CONTRACTOR shall be subject to any appropriate recoupment by the State.
20.3	Notice of any post-termination audit or investigation of complaint by the State shall be provided to the CONTRACTOR, and such audit or investigation shall be initiated in accordance with CMS requirements. The State shall notify the CONTRACTOR of any claim or demand within thirty (30) calendar days after completion of the audit or investigation or as otherwise authorized by CMS. Any payments by the State to the CONTRACTOR shall be subject to any appropriate recoupment by the State in accordance with the provisions of Article 6 of this Agreement.

ARTICLE 21 — RECORDS AND AUDIT

21.1	Compensation Records
	After final payment under this Agreement or ten (10) years after a pending audit is completed and resolved, whichever is later, the State or its designee shall have the right to audit billings both before and after payment. The CONTRACTOR shall maintain all necessary records to substantiate the services it rendered under this Agreement. These records shall be subject to inspection by the State, the Department of Finance and Administration, the State Auditor and/or any authorized State or Federal entity and shall be retained for ten (10) years. Payment under this Agreement shall not foreclose the right of the State to recover excessive or illegal payments as well as interest, attorney fees and costs incurred in such recovery.
21.2	Other Records
	In addition, the CONTRACTOR shall retain all Member medical records, social service records, collected data, and other information subject to the State and Federal reporting or monitoring requirements for ten (10) years after the contract is terminated under any provisions of Article 11 of this Agreement or ten (10) years after any pending audit is completed and resolved, whichever is later. These records shall be subject to inspection by the State, and/or the Department of Finance and Administration and/or any authorized State or Federal entity. The Health and Human Services (HHS) awarding agency, the U.S. Comptroller General, or any representatives, shall have access to any books, documents, papers and records of the CONTRACTOR which are directly pertinent to a specific program for the purpose of making audits, examinations, excerpts and transcriptions. This right also includes timely and reasonable access to CONTRACTOR’s personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period but shall last as long as records are retained. Payment under this Agreement shall not foreclose the right of the State, to recover excessive or illegal payments and if such excessive or illegal payments are recovered then the State shall also be entitled to interest, attorney fees and costs incurred in such recovery.
21.3	Standards for Medical Records

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(A) The CONTRACTOR shall require medical records to be maintained on paper and/or in electronic format in a manner that is timely, legible, current, and organized, and that permits effective and confidential patient care and quality review.

(B) The CONTRACTOR shall have written medical record confidentiality policies and procedures that implement the requirements of State and Federal law and policy and of this Agreement. These policies and procedures shall be consistent with confidentiality requirements in 45 C.F.R. parts 160 and 164 for all medical records and any other health and enrollment information that identifies a particular Member. Medical record contents must be consistent with the utilization control required in 42 C.F.R. Part 456.

(C) The CONTRACTOR shall establish, and shall require its practitioners to have, an organized medical record keeping system and standards for the availability of medical records appropriate to the practice site.

(D) The CONTRACTOR shall include provisions in its contracts with providers requiring appropriate access to the medical records of the CONTRACTOR’s Members for purposes of quality reviews to be conducted by the State, or agents thereof, and requiring that the medical records be available to health care practitioners for each clinical encounter.

21.4	The CONTRACTOR shall comply with the State’s reasonable requests for records and documents as necessary to verify that the CONTRACTOR is meeting its obligations under this Agreement, or for data reporting legally required of the State. However, nothing in this Agreement shall require the CONTRACTOR to provide the State with information, records, and/or documents which are protected from disclosure by any law, including, but not limited to, laws protecting proprietary information as a trade secret, confidentiality laws, and any applicable legal privileges (including but not limited to, attorney/client, physician/patient, quality assurance and peer review), except as may otherwise be required by law or pursuant to a legally adequate release from the affected Member(s).
21.5	The CONTRACTOR shall provide the State of New Mexico, and any other legally authorized governmental entity, or their authorized representatives, the right to enter at all reasonable times the CONTRACTOR’s premises or other places where work under this Agreement is performed to inspect, monitor or otherwise evaluate the quality, appropriateness, and timeliness of services performed under this contract. The CONTRACTOR shall provide reasonable facilities and assistance for the safety and convenience of the persons performing those duties (e.g. assistance from the CONTRACTOR’s staff to retrieve and/or copy materials). The State and its authorized agents shall schedule access with the CONTRACTOR in advance within a reasonable period of time except in the case of suspected fraud and abuse. All inspection, monitoring and evaluation shall be performed in such a manner as not to unduly interfere with the work being performed under this Agreement.
21.6	In the event right of access is requested under this section, the CONTRACTOR or subcontractor shall upon request provide and make available staff to assist in the audit or inspection effort, and shall provide adequate space on the premises to reasonably accommodate the State or Federal representatives conducting the audit or inspection effort.
21.7	All inspections or audits shall be conducted in a manner as shall not unduly interfere with the performance of the CONTRACTOR’s or any subcontractor’s activities. The CONTRACTOR shall be given ten (10) busniess days to respond to any findings of an audit before the State shall finalize its

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findings. All information so obtained shall be accorded confidential treatment as provided in applicable law.

21.8	Retention Requirements for Records.
	Financial records, supporting documents, statistical records, and all other records pertinent to this Agreement shall be retained for a period of three (3) years from the date of submission of the final expenditure report. The only exceptions are the following:

(A) if any litigation, claim, financial management review or audit is started before the expiration of the three-year period, the records shall be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken;

(B) records for real property and equipment acquired with federal funds shall be retained for three (3) years after final disposition;

(C) when records are transferred to or retained by the HHS awarding agency, the three (3) year retention requirement is not applicable; and

(D) indirect cost rate proposals, cost allocations plan, etc., as specified in 42 C.F.R. part 74.53(g).

ARTICLE 22 — INDEMNIFICATION

22.1

The CONTRACTOR agrees to indemnify, defend and hold harmless the State of New Mexico, its officers, agents and employees from any and all claims and losses accruing or resulting from any and all CONTRACTOR employees, agents, or subcontractors, in connection with the breach or failure to perform or erroneous or negligent acts or omissions in the performance of this Agreement, and from any and all claims and losses accruing or resulting to any person, association, partnership, entity or corporation who may be injured or damaged by the CONTRACTOR in the performance or failure in performance of this Agreement resulting from such acts of omissions. The provisions of this Section 22.1 shall not apply to any liabilities, losses, charges, costs or expenses caused by, or resulting from, in whole or in part the acts of omissions of the State of New Mexico, HSD/MAD, ALTSD, or any of its officers, employees or agents.

22.2

The CONTRACTOR shall at all times during the term of this Agreement, indemnify and hold harmless the State against any and all liability, loss, damage, costs or expenses which the State may sustain, incur or be required to pay (1) by reason of any Member suffering personal injury, death or property loss or damage of any kind as a result of the erroneous or negligent acts or omissions of the CONTRACTOR either while participating with or receiving care or services from the CONTRACTOR under this Agreement, or (2) while on premises owned, leased, or operated by the CONTRACTOR or while being transported to or from said premises in any vehicle owned, operated, leased, chartered, or otherwise contracted for or in the control of the CONTRACTOR or any officer, agent, subcontractor or employee thereof. The provisions of this Section shall not apply to any liabilities, losses, charges, costs or expenses caused by, or resulting from, the acts or omissions of the State of New Mexico, or any of its officers, employees, or agents. In the event that any action, suit or proceeding related to the services performed by the CONTRACTOR or any officer, agent, employee, servant or subcontractor under this Agreement is brought against the CONTRACTOR, the CONTRACTOR shall, as soon as practicable but no later than two (2) business days after it receives notice thereof, notify the legal counsel of the HSD and the legal counsel of ALTSD and the Risk Management Division of the New Mexico General Services Department by certified mail.

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22.3 The CONTRACTOR shall agree to indemnify and hold harmless the State, its agents, and its employees from any and all claims, lawsuits, administrative proceedings, judgments, losses, or damages, including court costs and attorney fees, or causes of action, caused by reason of the CONTRACTOR’S erroneous or negligent acts or omissions, including the following:

(A) any claims or losses attributable to any persons or firm injured or damaged by erroneous or negligent acts, including without limitation, disregard of Federal or State Medicaid regulations or statutes by the CONTRACTOR, its officers, its employees, or subcontractors in the performance of the Agreement, regardless of whether the State knew or should have known of such erroneous or negligent acts; unless the State of New Mexico, or any of its officers, employees or agents directed in writing to the performance of such acts; and

(B) any claims or losses attributable to any person or firm injured or damaged by the publication, translation, reproduction, delivery, performance, use, or disposition of any data processed under the Agreement in a manner not authorized by the Agreement or by Federal or State regulations or statutes, regardless of whether the State knew or should have known of such publication, translation, reproduction, delivery, performance, use, or disposition unless the State of New Mexico, or any of its officers, employees or agents directed or affirmatively consented in writing to such publication, translation, reproduction, delivery, performance, use or disposition.

	The provisions of this Article 22.3 shall not apply to any liabilities, losses, charges, costs or expenses caused by, or resulting from, the acts or omissions of the State of New Mexico, or any of its officers, employees, or agents.
22.4	The CONTRACTOR, including its subcontractors, agrees that in no event, including but not limited to nonpayment by the CONTRACTOR, insolvency of the CONTRACTOR or breach of this Agreement, shall the CONTRACTOR or its subcontractor bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from or have any recourse against a Member or a person (other than the CONTRACTOR) acting on a Member’s behalf for services provided pursuant to this Agreement except for any Medicaid population required to make co-payments under HSD/MAD policy. In no case shall the State and/or any Member be liable for any debts of the CONTRACTOR.
22.5	The CONTRACTOR agrees that the above indemnification provisions shall survive the termination of this Agreement, regardless of the cause giving rise to termination. This provision is not intended to apply to services provided after this Agreement has been terminated.
22.6	The State shall notify the CONTRACTOR of any claim, loss, damage, suit or action as soon as the State reasonably believes that such claim, loss, damage, suit or action may give rise to a right to indemnification under this Article. The failure of the State, however, to deliver such notice shall not relieve the CONTRACTOR of its obligation to indemnify the State under this Article. Prior to entering into any settlement for which it may seek indemnification under this Article, the State shall consult with the CONTRACTOR, but the CONTRACTOR need not approve the settlement. Nothing in this provision shall be interpreted as a waiver of the State’s right to indemnification. The State shall permit the CONTRACTOR, at the CONTRACTOR’s option and expense, to assume the defense of such asserted claim(s) using counsel acceptable to the State and to settle or otherwise dispose of the same, by and with the consent of the State. Failure to give prompt notice as provided herein shall not relieve the CONTRACTOR of its obligations hereunder, except to the extent that the defense of any claim for loss is prejudiced by such failure to give notice.

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ARTICLE 23 — LIABILITY

23.1	The CONTRACTOR shall be wholly at risk for all covered services. No additional payment shall be made by the State, nor shall any payment be collected from a Member, except for co-payments authorized by the State or State laws or regulations.
23.2	The CONTRACTOR is solely responsible for ensuring that it issues no payments for services for which it is not liable under this Agreement. The State shall accept no responsibility for refunding to the CONTRACTOR any such excess payments unless the State of New Mexico, or any of its officers, employees or agents directed such services to be rendered or payment made.
23.3	The CONTRACTOR, its successors and assignees shall procure and maintain such insurance and other forms of financial protections as are identified in this Agreement.

ARTICLE 24 — EQUAL OPPORTUNITY COMPLIANCE

24.1 The CONTRACTOR agrees to abide by all Federal and State laws, rules, regulations and executive orders of the Governor of the State of New Mexico and the President of the United States pertaining to equal opportunity including title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972 (regarding education programs and activities), the Age Discrimination Act of 1975, the Rehabilitation Act of 1973 and the Americans with Disabilities Act. In accordance with all such laws, rules, and regulations, and executive orders, the CONTRACTOR agrees to ensure that no person in the United States shall, on the grounds of race, color, national origin, sex, sexual preference, age, trans-gender, handicap or religion be excluded from employment with, or participation in, be denied the benefit of, or otherwise be subjected to discrimination under any program or activity performed under this Agreement. If the State finds that the CONTRACTOR is not in compliance with this requirement at any time during the term of this Agreement, the State reserves the right to terminate this Agreement pursuant to Article 9 or take such other steps it deems appropriate to correct said problem.

ARTICLE 25 — RIGHTS TO PROPERTY

25.1 All equipment and other property provided or reimbursed to the CONTRACTOR by the State is the property of the State and shall be turned over to the State at the time of termination or expiration of this Agreement, unless otherwise agreed to in writing. In addition, in regard to the performance of experimental, developmental or research done by the CONTRACTOR, the State shall determine the rights of the Federal Government and the parties to this Agreement in any resulting invention.

ARTICLE 26 — ERRONEOUS ISSUANCE OF PAYMENT OR BENEFITS

26.1 In the event of an error which causes payment(s) to the CONTRACTOR to be issued by the State, the CONTRACTOR shall reimburse the State within thirty (30) calendar days of written notice of such error for the full amount of the payment, subject to the provisions of Section 6.6(D) of this Agreement. Interest shall accrue at the statutory rate on any amounts not paid and determined to be due after the thirtieth (30^th) day following the notice.

ARTICLE 27 — EXCUSABLE DELAYS

27.1 The CONTRACTOR shall be excused from performance hereunder for any period that it is prevented from performing any services hereunder in whole or in part as a result of an act of nature, war, civil

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disturbance, epidemic, court order, or other cause beyond its reasonable control, and such nonperformance shall not be a default hereunder or ground for termination of the Agreement.

27.2	Suspensions under Force Majeure shall require the Party seeking suspension to give notification to the other Party at least five (5) business days before the imposition of the suspension. The receiving Party will be deemed to have agreed to such suspension unless having posted to mail such objection or non-consent within five (5) business days of receipt of request for suspension. The performance of either Party’s obligations under the Agreement shall be suspended during the period that any circumstances of Force Majeure persists, or for a consecutive period of ninety (90) calendar days, whichever is shorter, and such Party shall be granted an extension of time for performance equal to the period of suspension. For the purposes of this section, “Force Majeure” means any event or occurrence which is outside of the reasonable control of the Party concerned and which is not attributable to any act or failure to take preventive action by the Party concerned.
27.3	The CONTRACTOR shall be excused from performance hereunder during any period for which the State of New Mexico has failed to enact a budget or appropriate monies to fund the managed care program, provided that the CONTRACTOR notifies the State, in writing, of its intent to suspend performance and the State is unable to resolve the budget or appropriation deficiencies within forty-five (45) calendar days.
27.4	In addition, the CONTRACTOR shall be excused from performance hereunder for insufficient payment by the State, provided that the CONTRACTOR notifies the State in writing of its intent to suspend performance and the State is unable to remedy the monetary shortfall within forty-five (45) calendar days.

ARTICLE 28 — MARKETING

28.1 The CONTRACTOR shall maintain written policies and procedures governing the development and distribution of marketing materials for Members.

28.2 The State shall review and approve the content, comprehension level, and language(s) of all marketing materials directed at members before use.

(A) The CONTRACTOR shall distribute its marketing materials to its entire service area.

(B) The CONTRACTOR shall not seek to influence enrollment in conjunction with the sale or offering of any private insurance, not including public/private partnerships.

(C) The CONTRACTOR shall specify the methods by which it assures the State that marketing materials are accurate and do not mislead, confuse, or defraud the Members, or the State. Marketing materials will be considered inaccurate, false, or misleading if they contain statements or assertions, written or oral, including but not limited to:

(1) statements that the Member must enroll with the CONTRACTOR in order to obtain benefits or in order not to lose benefits; or

(2) statements that the CONTRACTOR is endorsed by CMS, the Federal or State Government, or similar entity.

28.3 Minimum Marketing and Outreach Requirements

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The marketing and outreach material shall meet the following minimum requirements:

(A) marketing and/or outreach materials shall meet requirements for all communication with Members, as set forth in the Medicaid Program Manual; and

(B) all marketing and/or outreach materials produced by the CONTRACTOR under the Agreement shall state that such services are funded pursuant to an Agreement with the State of New Mexico.

28.4	Marketing and outreach activities not permitted under this Agreement
	The following marketing and outreach activities are prohibited, regardless of the method of communication (oral, written) or whether the activity is performed by the CONTRACTOR directly, or by its participating providers, its subcontractors, or any other party affiliated with the CONTRACTOR:

(A) asserting or implying that a member shall lose Medicaid benefits if he/she does not enroll with the CONTRACTOR or inaccurately depicting the consequences of choosing a different CONTRACTOR;

(B)	designing a marketing or outreach plan which discourages or encourages CONTRACTOR selection based on health status or risk;
(C)	initiating an enrollment request on behalf of a CLTS recipient;
(D)	making inaccurate, false, materially misleading or exaggerated statements;

(E)	asserting or implying that the CONTRACTOR offers unique covered services when another MCO provides the same or similar service;
(F)	using gifts or other incentives to entice people to join a specific health plan;

(G) directly or indirectly conducting door-to-door, telephonic or other “Cold Call” marketing. “Cold Call” marketing is defined as any unsolicited personal contact by the CONTRACTOR with a potential member for the purpose of marketing. Marketing means any communication from a CONTRACTOR to a Member who is not enrolled in that entity that can reasonably be interpreted as intended to influence the Member to enroll in that particular CONTRACTOR’s CLTS product and not to enroll in or to disenroll from, another MCO’S CLTS product. The CONTRACTOR may send informational material regarding its benefit package to potential members; and

(H) conducting any other marketing activity prohibited by the State during the course of this Agreement.

28.5 The CONTRACTOR shall take reasonable steps to prevent subcontractors and participating providers from committing the acts described herein. The CONTRACTOR shall be held liable only if it knew or should have known that its subcontractors or participating providers were committing the acts described herein and did not take timely corrective actions. The State reserves the right to prohibit additional marketing activities at its discretion.

28.6 Marketing Time Frames

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	The CONTRACTOR may initiate marketing and outreach activities at any time.
28.7	The CLTS Marketing Guidelines are incorporated into this Agreement by reference. This Agreement shall incorporate all revisions to the Guidelines produced during the course of the Agreement.
28.8	Health Education and Outreach Materials may be distributed to the CONTRACTOR’s Members by mail or in connection with exhibits or other organized events, including but not limited to, health fair booths at community events and health plan hosted health improvement events. Health Education means programs, services or promotions that are designed or intended to inform the CONTRACTOR’s actual or potential Members upon request about the issues related to health lifestyles, situations that affect or influence health status or methods or modes of medical treatment. Outreach is the means of educating or informing the CONTRACTOR’s actual or potential Members about health issues. The State shall not approve health education materials.

ARTICLE 29 — PROHIBITION OF BRIBES, GRATUITIES & KICKBACKS

29.1	Pursuant to Sections NMSA 1978, § 13-1-191, 30-24-1 et seq., 30-41-1, and 30-41-3, the receipt or solicitation of bribes, gratuities and kickbacks is strictly prohibited.
29.2	No elected or appointed officer or other employee of the State of New Mexico shall benefit financially or materially from this Agreement. No individual employed by the State of New Mexico shall be admitted to any share or part of the Agreement or to any benefit that may arise therefrom.
29.3	The State may, by written notice to the CONTRACTOR, immediately terminate the right of the CONTRACTOR to proceed under the Agreement if it is found, after notice and hearing by the Secretary of HSD or his/her duly authorized representative, that gratuities in the form of entertainment, gifts or otherwise were offered or given by the CONTRACTOR or any agent or representative of the CONTRACTOR to any officer or employee of the State of New Mexico with a view toward securing the Agreement or securing favorable treatment with respect to the award or amending or making of any determinations with respect to the performing of such Agreement. In the event the Agreement is terminated as provided in this section, the State of New Mexico shall be entitled to pursue the same remedies against the CONTRACTOR as it would pursue in the event of a breach of contract by the CONTRACTOR and as a penalty in addition to any other damages to which it may be entitled by law.

ARTICLE 30 — LOBBYING

30.1 The CONTRACTOR certifies, in accordance with the Bryd Anti-Lobying Amendment to the best of its knowledge and belief, that:

(A) No Federally appropriated funds have been paid or shall be paid, by or on behalf of the CONTRACTOR, to any person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, or an employee of a member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.

(B) If any funds other than Federally appropriated funds have been paid or shall be paid to any person for influencing or attempting to influence an officer or employee of any agency, member

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of Congress, an officer or employee of Congress or an employee of a member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the CONTRACTOR shall complete and submit Standard Form-LLL “Disclosure Form to Report Lobbying,” in accordance with its instructions.

30.2

The CONTRACTOR shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all sub-recipients shall certify and disclose accordingly.

30.3

This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed under 31 USC §1352. Any person who fails to file the required certification shall be subject to a civil penalty of not less than ten thousand dollars ($10,000) and not more than one hundred thousand dollars ($100,000) for such failure.

ARTICLE 31 — CONFLICT OF INTEREST

31.1

The CONTRACTOR warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement, and further warrants that signing of this Agreement shall not be creating a violation of the Governmental Conduct Act, NMSA 1978, § 10-16-1 et seq. or be at least equal to Federal safeguards 41 USC 423, section 27.

31.2

If during the term of this Agreement and any extension thereof, the CONTRACTOR becomes aware of an actual or potential relationship, which may be considered a conflict of interest, the CONTRACTOR shall immediately notify the Contract Administrator in writing. Such notification includes when the CONTRACTOR employs or contracts with a person, on a matter related to this Agreement, and that person: (1) is a former State employee who has an obligation to comply with NMSA 1978, § 10-16-1 et. seq., or (2) is a former employee of the Department of Health or the Children, Youth and Families Department who was substantially and directly involved in the development or enforcement of this Agreement.

ARTICLE 32 — CONFIDENTIALITY

32.1	Any confidential information, as defined in State or Federal law, code, rules or regulations or otherwise applicable by the Code of Ethics, regarding Medicaid eligible recipients or providers given to or developed by the CONTRACTOR and its subcontractors shall not be made available to any individual or organization by the CONTRACTOR and its subcontractors other than the CONTRACTOR’s employees, agents, subcontractors, consultants or advisors without the prior written approval of the State.
32.2	The CONTRACTOR shall (1) notify the State promptly of any unauthorized possession, use, knowledge, or attempt thereof, of the State’s data files or other confidential information; and (2) promptly furnish the State full details of the unauthorized possession, use of knowledge or attempt thereof, and assist investigating or preventing the recurrence thereof.
32.3	In order to protect the confidentiality of Member information and records:

(A) The CONTRACTOR shall adopt and implement written confidentiality policies and procedures which conform to Federal and State laws and regulations.

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(B) The CONTRACTOR’s contracts with practitioners and other providers shall explicitly state expectations about the confidentiality of member information and records.

(C) The CONTRACTOR shall afford Members and/or legal guardians the opportunity to approve or deny the release of identifiable personal information by the CONTRACTOR to a person or agency outside of the CONTRACTOR, except to duly authorized subcontractors, providers or review organizations, or when such release is required by law, State regulation, or quality standards.

(1) When release of information is made in response to a court order, the CONTRACTOR shall notify the Member and/or legal guardian of such action in a timely manner.

(2) The CONTRACTOR shall have specific written policies and procedures that direct how confidential information gathered or learned during the investigation or resolution of a grievance is maintained, including the confidentiality of the Member’s status as a grievant.

32.4 The CONTRACTOR shall comply with the State’s requests for records and documents as necessary to verify the CONTRACTOR is meeting its duties and obligations under this Agreement, or for data reporting legally required of the State. Except as otherwise required by law, the State may not request from the CONTRACTOR records and documents that go beyond ensuring that the CONTRACTOR is meeting its duties under this Agreement, including, where appropriate, records and documents that are protected by any law, including, but not limited to, laws protecting proprietary information as a trade secret, confidentiality laws, and any and all applicable legal privileges (including, but not limited to, attorney/client, physician/patient, and quality assurance and peer review).

ARTICLE 33 — COOPERATION WITH THE MEDICAID FRAUD
CONTROL UNIT

33.1 The CONTRACTOR shall make an initial report to the State within five (5) business days when, in the CONTRACTOR’s professional judgment, suspicious activities may have occurred. The CONTRACTOR shall then take steps to establish whether or not, in its professional judgment, potential fraud has occurred. The CONTRACTOR will then make a report to the State and submit any applicable evidence in support of its findings. If the State decides to refer the matter to the New Mexico State Medicaid Fraud Control Unit of the Attorney General’s Office (MFCU), the State will notify the CONTRACTOR within five (5) business days of making the referral. The CONTRACTOR shall cooperate fully with any and all requests from MFCU for additional documentation or other types of collaboration in accordance with applicable law.

33.2 The CONTRACTOR shall cooperate fully in any investigation by the MFCU or subsequent legal action that may result from such investigation. The CONTRACTOR and its subcontractors and participating network providers shall, upon request, make available to the MFCU any and all administrative, financial and medical records relating to the delivery of items or services for which State monies are expended, unless otherwise provided by law. In addition, the MFCU shall be allowed to have access during normal business hours to the place of business and all records of the CONTRACTOR and its subcontractors and participating network providers, except under special circumstances when after hours access shall be allowed. Special circumstances shall be determined by the MFCU.

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33.3	The CONTRACTOR shall disclose to the State, the MFCU, and any other State or Federal agency charged with overseeing the Medicaid program, full and complete information regarding ownership, significant financial transactions or financial transactions relating to or affecting the Medicaid program between CONTRACTOR and persons related to the CONTRACTOR convicted of criminal activity related to Medicaid, Medicare, or the federal Title XX programs.
33.4	Any actual or potential conflict of interest within the CONTRACTOR’s program shall be referred by the CONTRACTOR to the MFCU. The CONTRACTOR also shall refer to the MFCU any instance where a financial or material benefit is given by any representative, agent or employee of the CONTRACTOR to the State, or any other party with direct responsibility for this Agreement. In addition, the CONTRACTOR shall notify the MFCU if it hires or enters into any business relationship with any person who, within two (2) years previous to that hiring or contract, was employed by the State in a capacity relating to the Medicaid program or any other party with direct responsibility for this Agreement.
33.5	Any recoupment received from the CONTRACTOR by the State pursuant to the provisions of Article 8 (Enforcement) of this Agreement herein shall not preclude the MFCU from exercising its right to criminal prosecution, civil prosecution, or any applicable civil penalties, administrative fines or other remedies.
33.6	Upon request to the CONTRACTOR, the MFCU shall be provided with copies of all grievances and resolutions affecting Members.
33.7	Should the CONTRACTOR know about or become aware of any investigation being conducted by the MFCU, or the State, the CONTRACTOR, and its representatives, agents and employees, shall maintain the confidentiality of this information.
33.8	The CONTRACTOR shall have in place and enforce policies and procedures to educate Members of the existence of, and role of, the MFCU.
33.9	The CONTRACTOR shall have in place and enforce policies and procedures for the detection and deterrence of fraud. These policies and procedures shall include specific requirements governing who within the CONTRACTOR’s organization is responsible for these activities, how these activities shall be conducted, and how the CONTRACTOR shall address cases of suspected fraud and abuse.
33.10	All documents submitted by the CONTRACTOR to the State, if developed or generated by the CONTRACTOR, or its agents, shall be deemed to be certified by the CONTRACTOR as submitted under penalty of perjury.

ARTICLE 34 — WAIVERS

34.1	No term or provision of this Agreement shall be deemed waived and no breach excused, unless such waiver or consent shall be in writing by the party claimed to have waived or consented.
34.2	A waiver by any party hereto of a breach of any of the covenants, conditions, or agreements to be performed by the other shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant, condition, or Agreement herein contained.

ARTICLE 35 — PROVIDER AVAILABILITY

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35.1 All providers owned (wholly or partially) or controlled by the CONTRACTOR, or any of the CONTRACTOR’S related or affiliated entities, and any and all providers that own (wholly or partially) or control the CONTRACTOR, to the extent of its legal authority, shall be willing to become a network provider for any Contractor that contracts with the State for Covered Services, to be reimbursed by such Contractor at the then-current and applicable Medicaid reimbursement rate for that provider type. The applicable Medicaid reimbursement rate is defined to exclude disproportionate share and medical education payments.

ARTICLE 36 — NOTICE

36.1 A notice shall be deemed duly given upon delivery, if delivered by hand, or three (3) calendar days after posting if sent by first-class mail, with proper postage affixed. Notice may also be tendered by facsimile transmission, with original to follow by first class mail.

36.2 All notices required to be given to HSD/MAD under this Agreement shall be sent to the HSD/MAD Contract Administrator or his/her designee:

Sarah Barth, Bureau Chief
Human Services Department
P.O. Box 2348
Santa Fe, NM 87504-2348

36.3 All notices required to be given to ALTSD under this Agreement shall be sent to:

Crystal Mata
Elderly & Disability Services Division
Aging & Long-Term Services Department
2550 Cerrillos Rd
Santa Fe, NM 87505

36.4 All notices required to be given to the CONTRACTOR under this Agreement shall be sent to:

Laura Hopkins, COO
AMERIGROUP Community Care of New Mexico, Inc.
6565 Americas Parkway, Suite 200
Albuquerque, NM 87110

ARTICLE 37 — AMENDMENTS

37.1 This Agreement shall not be altered, changed or amended other than by an instrument in writing executed by the parties to this Agreement. Amendments shall become effective and binding when signed by the parties, approved by the Department of Finance and Administration, and written approvals have been obtained from any necessary State and Federal agencies. All necessary approvals shall be attached as exhibits to the Agreement.

ARTICLE 38 — SUSPENSION, DEBARMENT AND OTHER
RESPONSIBILITY MATTERS

38.1 Pursuant to 45 C.F.R. Part 76 and other applicable federal regulations, the CONTRACTOR certifies by signing this Agreement, that it and its principals, to the best of its knowledge and belief and except as

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otherwise disclosed in writing by CONTRACTOR to the State prior to the execution of this Agreement: (1) are not debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any Federal department or agency; (2) have not, within a three-year period preceding the effective date of this Agreement, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State, or local) contract or subcontract; violation of Federal or State antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, or receiving stolen property; (3) have not been indicted for, or otherwise criminally or civilly charged by a governmental entity (Federal, State or local) with, commission of any of the offenses enumerated above in this Article 38.1; (4) have not, within a three-year period preceding the effective date of this Agreement, had one or more public agreements or transactions (Federal, State or local) terminated for cause or default; and (5) have not been excluded from participation from Medicare, Medicaid, Federal health care programs or Federal behavioral health care programs pursuant to Title XI of the Social Security Act, 42 U.S.C. § 1320a-7 and other applicable federal statutes. The CONTRACTOR may not knowingly have a relationship with the following:

(A) an individual who is an affiliate, as defined in the Federal Acquisition Regulations, that is disbarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in non-procurement activities under regulations issued under Executive Order No. 12549 or under guidelines implementing Executive Order No. 12549; or

(B) For purposes of this sction, an individual who is an affiliate, as defined in the Federal Acquisition Regulation, has a “relationship” if such individual is:

(1) a director, officer or partner of the CONTRACTOR;

(2) a person with beneficial ownership of five percent (5%) or more of the CONTRACTOR’s equity; or

(3) a person with an employment, consulting or other arrangement with the CONTRACTOR’s obligations under this Agreement.

38.2

The CONTRACTOR’s certification in Article 38.1 is a material representation of fact upon which the State relied when this Agreement was entered into by the parties. The CONTRACTOR shall provide immediate written notice to the State, if, at any time during the term of this Agreement, the CONTRACTOR learns that its certification in Article 38.1 was erroneous on the effective date of this Agreement or has become erroneous by reason of new or changed circumstances. If it is later determined that the CONTRACTOR’s certification in Article 38.1 was erroneous on the effective date of this Agreement or has become erroneous by reason of new or changed circumstances, in addition to other remedies available to the State, the State may terminate the Agreement.

38.3

As required by 45 C.F.R. Part 76 or other applicable federal regulations, the CONTRACTOR shall require each proposed first-tier subcontractor whose subcontract will equal or exceed twenty-five thousand dollars ($25,000), to disclose to the CONTRACTOR, in writing, whether as of the time of award of the subcontract, the subcontractor, or its principals, is or is not debarred, suspended, or proposed for debarment by any Federal department or agency. The CONTRACTOR shall make such disclosures available to the State when it requests subcontractor approval from the State pursuant to

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Article 19.4. If the subcontractor, or its principals, is debarred, suspended, or proposed for debarment by any Federal department or agency, the State may refuse to approve the use of the subcontractor.

ARTICLE 39 — NEW MEXICO EMPLOYEES HEALTH COVERAGE

39.1 If CONTRACTOR has, had, or anticipates having, six (6) or more employees who work, or who worked, are working, or are expected to work, an average of at least twenty (20) hours per week over a six (6) month period with said six-month period being at any time during the year prior to seeking the contract with the State of at anytime during the term of this Agreement, CONTRACTOR certifies, by signing this Agreement, to:

(A) have in place, and agree to maintain for the term of this Agreement, health insurance for those New Mexico employees and offer that health insurance to those employees no later than July 1, 2008, if the expected annual value in the aggregate of any and all contracts between the CONTRACTOR and the State exceeds one million dollars ($1,000,000.00); or

(B) have in place, and agree to maintain for the term of this Agreement, health insurance for those New Mexico employees and offer that health insurance to those employees no later than July 1, 2009, if the expected annual value in the aggregate of any and all contracts between the CONTRACTOR and the State exceeds Five hundred thousand dollars $500,000.00; or

(C) have in place, and agree to maintain for the term of this Agreement, health insurance for those New Mexico employees and offer that health insurance to those employees no later than July 1, 2010, if the expected annual value in the aggregate of any and all contracts between the CONTRACTOR and the State exceeds Two hundred fifty thousand dollars $250,000.00.

39.2 CONTRACTOR must agree to maintain a record of the number of employees who have:

(A) accepted health insurance;

(B)	declined health insurance due to other health insurance coverage already in place; or
(C)	declined health insurance for other reasons.

These records are subject to review and audit by the State or its representative.

39.3	The CONTRACTOR must agree to advise all New Mexico employees in writing of the availability of State publicly financed health coverage programs by providing each employee with, at a minimum, the following web site link for additional information http://insurenewmexico.state.nm.us/.
39.4	For Indefinite Quantity, Indefinite Delivery contracts (price agreements without specific limitations on quantity and providing for an indeterminate number of orders to be placed against it) these requirements shall apply the first day of the second month after the CONTRACTOR reports combined sales (from state and, if applicable, from local public bodies if from a state price agreement) of Two hundred and fifty thousand ($250,000); Five hundred thousand dollars ($500,000), or One million dollars ($1,000,000), depending on the dollar value threshold in effect at that time.
39.5	The CONTRACTOR agrees to include the provisions of this Article in all subcontracts, involving entities whose employees reside within that State of New Mexico, including Network Provider

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agreements, and all other sub-agreements used to fulfill the CONTRACTOR’s obligations under this Agreement.

39.6

The CONTRACTOR agrees to obtain verification of its subcontractors and Network Providers for compliance with this Article. Failure of any subcontractor or Network Provider to comply with this Article is to be reported to the State immediately upon CONTRACTOR’s knowledge of such failure and the CONTRACTOR shall advise the non-complying subcontractor or Network Provider that failure to cure the deficiency can result in immediate termination of the subcontract or Network Provider agreement, or as may be mandated by the State.

ARTICLE 40 — ENTIRE AGREEMENT

40.1 This Agreement incorporates all the agreements, covenants, and understandings between the parties hereto concerning the subject matter hereof, and all such covenants, agreements and understandings have been merged into this written Agreement. No prior agreement or understanding, verbal or otherwise, of the parties or their agents shall be valid or enforceable unless embodied in this Agreement. Except for those revisions required by CMS, state or federal requirements, revisions to the original Agreement shall require an amendment agreed to by both parties.

ARTICLE 41 — AUTHORIZATION FOR CARE

41.1 The CONTRACTOR shall, to the extent possible, ensure that administrative burdens placed on providers are minimized. In furtherance of this objective, the CONTRACTOR shall provide to the State, on a quarterly basis, a report of all benefits and procedures for which the CONTRACTOR or any of its subcontractors require a prior authorization. This report shall identify, for each such benefit and procedure, the number of such authorization requests that were made by providers, and the percentage that were approved and denied.

ARTICLE 42 — DUTY TO COOPERATE

42.1 The parties agree that they will cooperate in carrying out the intent and purpose of this Agreement. This duty includes specifically, an obligation by the parties to continue performance of the Agreement in the spirit it was written, in the event they identify any possible errors or problems associated with the performance of their respective obligations under this Agreement.

ARTICLE 43 — MERGER

43.1 This Agreement incorporates all the agreements, covenants, and understandings between the parties hereto concerning the subject matter hereof, and all such agreements, covenants, and understandings have been merged in this written Agreement. No prior agreement or understanding, verbal or otherwise, of the parties or their agents shall be valid or enforceable unless embodied in this Agreement. Except for those revisions required by CMS, state or federal requirements, revisions to the original Agreement shall require an amendment agreed to by the parties.

ARTICLE 44 — PENALTIES FOR VIOLATION OF LAW

44.1 The Procurement Code, Sections 13-1-28 through 13-1-19, NMSA 1978, imposes civil and criminal penalties for its violation. In addition, the New Mexico criminal statutes impose felony penalties for illegal bribes, gratuities and kickbacks.

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ARTICLE 45 — WORKERS COMPENSATION

45.1 The CONTRACTOR agrees to comply with state laws and regulations applicable to workers compensation benefits for its employees. If the CONTRACTOR fails to comply with the Workers Compensation Act and applicable regulations when required to do so, this Agreement may be terminated by the State.

ARTICLE 46 — INVALID TERM OR CONDITION

46.1 If any term or condition of this Agreement shall be held invalid or unenforceable, the remainder of this Agreement shall not be affected and shall be valid and enforceable.

ARTICLE 47 — ENFORCEMENT OF AGREEMENT

47.1 A party’s failure to require strict performance of any provision of this Agreement shall not waive or diminish that party’s right thereafter to demand strict compliance with that or any other provision. No waiver by a party of any of its rights under this Agreement shall be effective to waive any other rights.

ARTICLE 48 — AUTHORITY

48.1 If CONTRACTOR is other than a natural person, the individual(s) signing this Agreement on behalf of CONTRACTOR represents and warrants that he or she has the power and authority to bind CONTRACTOR, and that no further action, resolution, or approval from CONTRACTOR is necessary to enter into a binding contract.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date of execution by the State Contracts Officer, below.

CONTRACTOR
By:	/S/ Aileen McCormick	Date:	5/5/08
Title:	SW REGIONAL CEO
STATE OF NEW MEXICO
By:	/S/ Pamela S. Hyde	Date:	6/30/08
Pamela S. Hyde, J.D. Secretary      Human Services Department
Approved as to Form and Legal sufficiency:
By:	/S/ Paul R. Ritzma	Date:	6/27/08
	Paul R. Ritzma, General Counsel Human Services Department

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By:	/S/ Cindy Padilla	Date:	6/26/08
	Cindy Padilla, Secretary Aging & Long-Term Services Department
Approved as to Form and Legal sufficiency:
By:	/S/ Ana Marie Ortiz	Date:	6/26/08
	General Counsel Aging & Long-Term Services Department
DEPARTMENT OF FINANCE AND ADMINISTRATION
By:	/s/ Brad Mathews	Date:	8/12/08
	State Contracts Officer

The records of the Taxation and Revenue Department reflect that the CONTRACTOR is registered with the Taxation and Revenue Department of the State of New Mexico to pay gross Receipts and compensating taxes.

TAXATION AND REVENUE DEPARTMENT
ID Number: 03044223000
By:	Julie Rico	Date:	7/1/08

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CLTS Cohort Rate Table
AMERIGROUP
August 1, 2008 thru June 30, 2009

Cohort	Description	Member Months	Rates
300	NF LOC — Phase I, III, IV — Dual Eligible	*****REDACTED****
310	NF LOC — Phase II — Dual Eligible
320	NF LOC — Phase V — Dual Eligible
302	NF LOC — Phase I, III, IV — Medicaid Only
312	NF LOC — Phase II — Medicaid Only
322	NF LOC — Phase V — Medicaid Only
301	MI VIA — Dual Eligible
303	MI VIA — Medicaid Only
304	Healthy Duals
TOTAL
Phase I	Effective August 1, 2008 thru June 30, 2009
Phase II	Effective November 1, 2008 thru June 30, 2009
Phase III	Effective January 1, 2009 thru June 30, 2009
Phase IV	Effective April 1, 2009 thru June 30, 2009
Phase V	Effective April 1, 2009 thru June 30, 2009

CONTRACTOR		State of NM HSD Representative
BY:	/S/ Aileen McCormick	BY:	Carolyn Ingram
TITLE:	SW Regional CEO	TITLE:	Director, Medical Assistance Division/HSD
DATE:	7/7/2008	DATE:	8/1/08

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APPENDIX A

BENEFITS/SERVICES
EXCLUDED BENEFITS
AND
VALUE ADDED BENEFITS/SERVICES

BENEFITS/SERVICES

The CONTRACTOR shall be required to provide a comprehensive coordinated and fully integrated system of health care, long-term and social and community services to Members. The CONTRACTOR does not have the option of deleting benefits from the defined CLTS benefit package.

Behavioral health services provided by the CONTRACTOR’s Network Providers will be covered by the CONTRACTOR even when the primary diagnosis is a behavioral health diagnosis. All prescriptions for drugs written by the CONTRACTOR’s providers shall be paid for by the CONTRACTOR including drugs used to treat behavioral health conditions. Facility costs, including emergency room costs, will be covered by the CONTRACTOR when billed on an acute care/general hospital facility claim form, including behavioral health services provided by hospital staff.

Laboratory and Radiology Service costs shall be the responsibility of the CONTRACTOR when a Behavioral Health provider orders lab or radiology work that is performed by an outside, independent laboratory or radiology facility, including those lab and radiology services provided for persons within a psychiatric unit, a freestanding psychiatric hospital or the UNM Psychiatric emergency room.

Lab and radiology services shall be the responsibility of the SE when they are provided within and billed by a free standing psychiatric hospital, a PPS exempt unit of a general acute care hospital or UNM Psychiatric Emergency Room. In the event that a psychiatrist orders lab work but completes that lab work in their office/facility and bills for it, the SE is responsible for payment.

To facilitate proper adjudication of these claims, HSD/MAD will provide, or will require the SE to provide, an SE provider file to the CONTRACTOR to identify SE providers.

The following services are included in the covered benefit package of the Agreement, as currently defined and referenced herein, with reference made to those services provided for in the State’s 1915(c) waiver:

“Adult Day Health Services” are generally provided for two or more hours per day on a regularly scheduled basis, for one or more days per week, by a licensed adult day-care, community-based facility that offers health and social services to assist Members to achieve optimal functioning. Private Duty Nursing Services and Skilled Maintenance Therapies (physical, occupational and speech) may be provided in conjunction with Adult Day Health Services, by the Adult Day Health provider or by another provider. The Private Duty Nursing and Skilled Maintenance Therapies must be provided in a private setting at the facility. This is a 1915(c) waiver service.

“Ambulatory Surgical Services” includes surgical services rendered in an ambulatory surgical center setting as set forth in HSD/MAD regulations, 8.324.10 NMAC, AMBULATORY SURGICAL CENTER SERVICES.

“Anesthesia Services” includes anesthesia and monitoring services necessary for the performance of surgical or diagnostic procedures set forth in HSD/MAD regulations, 8.310.5, NMAC, ANESTHESIA SERVICES.

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“Assisted Living Services” are residential services that include personal support services, companion services, assistance with medication administration as set forth in Department of Health regulations, 7.8.2 RESIDENTIAL HEALTH FACILITIES. This is a 1915(c) waiver service.

“Audiology Services” includes audiology services as set forth in HSD/MAD regulations, 8.324.6 NMAC, HEARING AIDS AND RELATED EVALUATION.

“Case Management Services” includes the following:

(1) Case Management Services for Pregnant Women and their Infants, as set forth in HSD/MAD regulations, 8.326.3;

(2) Case Management Services for Traumatically Brain Injured Adults, as set forth in HSD/MAD regulations, 8.326.5;

(3) Case Management Services for Children up to age (3) years, as set forth in HSD/MAD regulations, 8.326.6;

(4) Case Management Services for Medically at Risk, as set forth in HSD/MAD regulations, 8.320.5;

Case Management Services does not include the Case Management Services provided to Developmentally Disabled Children age zero to three years of age who are receiving early intervention services, or Case Management provided by CYFD, defined as Child Protective Services Management.

“Community Transition Goods and Services” and “Community Relocation Specialist Services” are set forth in detail in Appendix C. This is a 1915(c) waiver service.

“Dental Services” includes dental services as set forth in HSD/MAD regulations, 8.310.7 NMAC, DENTAL SERVICES.

“Diagnostic Imaging and Therapeutic Radiology Services” includes medically necessary diagnostic imaging and radiology services set forth in HSD/MAD regulations, 8.324.3 NMAC, DIAGNOSTIC IMAGING AND THERAPEUTIC RADIOLOGY SERVICES.

“Dialysis Services” includes medically necessary dialysis services as set forth in HSD/MAD regulations, 8.325.2 NMAC, DIAYLSIS SERVICES. Dialysis providers shall assist Members in applying for and pursuing final Medicare eligibility determination.

“Durable Medical Equipment and Medical Supplies” includes the purchase, delivery, maintenance and repair of equipment, oxygen and oxygen administration equipment, nutritional products, disposable diapers, and disposable supplies essential for the use of the equipment as set forth in HSD/MAD regulations, 8.324.5 NMAC, DURABLE MEDICAL EQUIPMENT AND MEDICAL SUPPLIES.

“Emergency Response Services” provide an electronic device that enables Members to secure help in an emergency. The Member may also wear a portable “help” button to allow for mobility. The system is connected to the Member’s phone and programmed to signal a response center when the “help” button is activated. The response center is staffed by trained professionals. Emergency Response Services include installing, testing and maintaining equipment; training Members, caregivers, and first responders on the use of the equipment; twenty-four (24) hour monitoring for alarms; checking systems monthly or more frequently, if

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warranted by electrical outages, severe weather, etc.; and reporting Member emergencies and changes in the Member’s condition that may affect service delivery. Emergency categories consist of emergency response, emergency response high need, and emergency response installation/disconnect. This is a 1915(c) waiver service.

“Emergency Services” includes emergency and post-stabilization care services. Emergency Services are inpatient and outpatient services that are furnished by a provider that is qualified to furnish these services and which are needed to evaluate or stabilize an emergency condition. An emergency condition shall meet the definition of emergency as set forth in HSD/MAD regulations, 8.305.1.7 NMAC. The CONTRACTOR shall not limit what constitutes an emergency medical condition on the basis of lists of diagnosis or symptoms. Emergency Services shall be provided in accordance with HSD/MAD regulations, 8.305.7.11(F) NMAC. Post-stabilization care services are Covered Services related to an emergency condition that are provided after a Member is stabilized in order to maintain the stabilized condition or to improve or resolve the Member’s condition, such that within reasonable medical probability, no material deterioration of the Member’s condition is likely to result from or occur during discharge of the Member or transfer of the Member to another facility.

“Environmental Modifications” include the purchase and/or installation of equipment and/or making physical adaptations to an Member’s residence that are necessary to ensure the health, welfare, and safety of the Member or enhance the level of the Member’s independence. Adaptations include the installation of ramps and grab-bars; widening of doorways/hallways; installation of specialized electric and plumbing systems to accommodate medical equipment and supplies; lifts/elevators; modification of bathroom facilities (roll-in showers, sink, bathtub, and toilet modifications, water faucet controls, floor urinals and bidet adaptations and plumbing); turnaround space adaptations; specialized accessibility/safety adaptations; additions; trapeze and mobility tracks for home ceilings; automatic door openers/doorbells; voice-activated, light-activated, motion-activated, and electronic devices; fire safety adaptations; air-filtering devices; heating/cooling adaptations; glass substitute for windows and doors; modified switches, outlets, or environmental controls for home devices; and alarm and alert systems and/or signaling devices. All Environmental Modifications shall be provided in accordance with applicable federal, state laws and regulations, and local building codes.

The CONTRACTOR must ensure proper design criteria is addressed in planning and design of the adaptation, provide or secure licensed contractor(s) or approved vendor(s) to provide construction/remodeling services, provide administrative and technical oversight of construction projects, provide consultants to family members, waiver providers, and contractors concerning environmental modification projects to the Member’s residence, and inspect the final environmental modification project to ensure that the adaptations meet the approved plan submitted for environmental adaptation. This is a 1915(c) waiver service.

“EPSDT Services” includes the delivery of the Federally mandated EPSDT services as set forth in HSD/MAD regulations, 8.320.2 NMAC, EPSDT Services, and the following:

(1) “EPSDT Private Duty Nursing” includes private duty nursing for the EPSDT population as set forth in HSD/MAD regulations, 8.323.4 NMAC, EPSDT PRIVATE DUTY NURSING SERVICE. The services shall either be delivered in the Member’s home or the school setting.

(2) “EPSDT Personal Care” includes medically necessary personal care services furnished to Members under twenty-one (21) years of age as part of EPSDT as set forth in HSD/MAD regulations, 8.323.2 NMAC.

(3) “Tot-to-Teen Health Checks” requires the CONTRACTOR to adhere to the periodicity schedule to ensure that eligible Members receive EPSDT screens (Tot-to-Teen Health Checks), including:

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(A) education of and outreach to Members regarding the importance of health checks;

(B) development of a proactive approach to ensure that the services are received by Members;

(C) facilitation of appropriate coordination with school-based providers;

(D) development of a systematic communication process with CONTRACTOR’s Network Providers regarding screens and treatment coordination for Members;

(E) process to document, measure, and ensure compliance with the periodicity schedule; and

(F) development of a proactive process to ensure the appropriate follow-up evaluation, referral, and/or treatment, especially early intervention for mental health conditions, vision and hearing screening and current immunizations.

“Experimental Technology” The CONTRACTOR shall not deem a technology or its application experimental, investigational, or unproven and deny coverage unless that technology or its application is within the definition of “experimental, investigational, or unproven” as set forth in HSD/MAD regulations, 8.325.6 NMAC, EXPERIMENTAL OR INVESTIGATIONAL PROCEDURES TECHNOLOGIES OR NON-DRUG THERAPIES.

“Health Education and Preventive Care” The CONTRACTOR shall:

(1) provide a continuous program of health education without cost to Member. Such a program includes publications (e.g., brochures, newsletters, email updates), media (e.g., films, videotapes, DVDs), presentations (e.g., seminars, lunch-and-learn sessions), and class room instruction;

(2) provide programs of wellness education. Additional programs may be provided which address the social and physical consequences of high-risk behaviors;

(3) make preventive services available to Members. The CONTRACTOR shall periodically remind and encourage Members to use benefits, including physical examinations, which are available and designed to prevent illness (e.g., HIV counseling and testing for pregnant women);

(4) initiate targeted prevention initiatives for Members with acute and chronic disease, such as influenza and pneumococcal vaccinations, fecal occult blood testing, and eye and hearing examinations; and

(5) develop policies and procedures which encourage Home Safety Evaluations be performed proactively on all at-risk Members transitioning from institutions to community settings.

“Home Health Services” includes home health services set forth in HSD/MAD regulations, 8.325.9 NMAC, HOME HEALTH SERVICES.

“Hospice Services” includes hospice services set forth in HSD/MAD regulations, 8.325.4 NMAC, HOME HEALTH SERVICES.

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“Hospital Outpatient Services” includes hospital outpatient services for preventive, diagnostic, therapeutic, rehabilitative, or palliative medical services as set forth in HSD/MAD regulations, 8.311.2, NMAC, OUTPATIENT COVERED SERVICES.

“Inpatient Hospital Services” includes hospital inpatient acute care, procedures, and services as set forth in HSD/MAD regulations, 8.311.2 NMAC, HOSPITAL SERVICES. The CONTRACTOR shall comply with the maternity length of stay defined in HIPAA. Coverage for a hospital stay following a normal vaginal delivery may generally not be limited to less than forty-eight (48) hours for both the mother and newborn child. Health coverage for a hospital stay in connection with childbirth following a cesarean section may generally not be limited to less than ninety-six (96) hours for both the mother and newborn child.

“Laboratory Services” includes all laboratory services provided according to the applicable provisions of CLIA as set forth in HSD/MAD regulations, 8.324.2 NMAC, LABORATORY SERVICES.

“Nursing Facilities” includes services provided in nursing facilities or hospital swing beds to Members expected to reside in those facilities as set forth in HSD/MAD Program Manual MAD-731, NURSING FACILITIES and MAD-723, SWING BED HOSPITALS.

“Nutritional Services” includes nutritional services furnished to pregnant women and children set forth in HSD/MAD regulations, 8.324.9 NMAC, NUTRITIONAL SERVICES.

“Occupational Therapy Services” promote fine motor skills, coordination, sensory integration, and/or facilitate the use of adaptive equipment or other assistive technology. Specific services include: teaching of daily living skills; development of perceptual motor skills and sensory integrative functioning; design, fabrication, or modification of assistive technology or adaptive devices; provision of assistive technology services; design, fabrication, or applying selective orthotic or prosthetic devices or selecting adaptive equipment; use of specifically designed crafts and exercise to enhance function; training regarding OT activities; and consulting or collaborating with other service providers or family members, as direct by the Member.

“Personal Care Option Services” including the Personal Care Option Services as defined in HSD/MAD regulations, 8.315.4 NMAC, PERSONAL CARE OPTION SERVICES.

“Pharmacy Services” includes all pharmacy and related services as set forth in 8.324.4 NMAC, PHARMACY SERVICIES. The CONTRACTOR’s Preferred Drug List (PDL) shall use the following guidelines:

(1)	there is at least one (1) representing drug for each of the categories in the First Data Bank Blue Book;
(2)	generic substitution shall be based on AB Rating and/or clinical need;

(3) for a multiple source, brand name product within a therapeutic class, the CONTRACTOR may select a representative drug;

(4) the PDL shall follow the CMS special guidelines relating to drugs used to treat HIV infection;

(5) the PDL shall include coverage of certain over the counter (OTC) drugs by a licensed practitioner; and

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(6) the CONTRACTOR shall implement an appeals process for practitioners who think that an exception to the PDL shall be made for an individual Member.

In addition:

(1) the CONTRACTOR shall use a PDL developed with consideration of the clinical efficiency, safety and cost effectiveness of drug items and shall provide medically appropriate drug therapies for Members. Drug items not on the PDL must be considered for coverage on a prior authorization basis. Atypical antipsychotic medications must be available in the same manner as conventional antipsychotic medications for the treatment of severe mental illness, including schizophrenia, clinical depression, bipolar disorder, anxiety-panic disorder and obsessive-compulsive disorder. In compliance with State law, HSD/MAD will be creating a single Medicaid PDL to be used by all HSD/MAD Medicaid contractors for all Medicaid programs. HSD/MAD will require the CONTRACTOR to deliver a pharmacy benefit package using a single Medicaid PDL;

(2) the CONTRACTOR shall coordinate as necessary with the SE when administering the pharmacy services, to ensure that Member and provider questions are appropriated directed. The CONTRACTOR shall edit pharmacy claims to ensure that any authorizations given and claims paid are within the scope of the responsibility of the CONTRACTOR or the CONTRACTOR’s pharmacy subcontractor, and appropriately inform Members or providers when the claims within the scope of the responsibility of the SE for behavioral health services. Such determinations will be primarily based on the prescriber and other criteria as may be provided by the State;

(3) the CONTRACTOR shall maintain written policies and procedures governing its drug utilization review (DUR) program, in compliance with Federal and State law and regulations;

(4) the CONTRACTOR shall coordinate the delivery of the pharmacy benefit when Medicare Part D is the primary coverage; and

(5) the CONTACTOR shall ensure that any Member who takes nine (9) or more different prescription medications has their medications reviewed by a medical clinician for appropriateness and the identification and correction of potentially harmful practices and shall document this review in the Member’s chart at least every six (6) months.

“Physical Health Services” includes primary (including those provided in school-based settings) and specialty physical health services provided by a licensed practitioner performed within the scope of practice as defined by State law and as set forth in HSD/MAD regulations, 8.310.2.9, NMAC, MEDICAL SERVICES PROVIDERS; 8.310.9, NMAC, MIDWIFE SERVICES, including attending out of hospital births and other related birthing services performed by certified nurse midwives or direct-entry midwives licensed by the State of New Mexico which are either: (1) validly contracted with, and fully credentialed by, CONTRACTOR; or (2) are validly contracted with HSD/MAD. A licensed midwife shall only be considered validly contracted with HSD/MAD if all agreements and documents required by HSD/MAD, or the CONTRACTOR have been executed and approved. See also, HSD/MAD regulations, 8.310.11, NMAC, PODIATRY SERVICES; 8.310.3 NMAC, RURAL HEALTH CLINIC SERVICES; AND 8.310.4 NMAC, FEDERALLY QUALIFIED HEALTH CENTER SERVICES.

“Physical Therapy Services” promote gross/fine motor skills, facilitate independent functioning and/or prevent progressive disabilities. Specific services include: professional assessment(s), evaluation(s), and monitoring for therapeutic purposes; physical therapy treatments and interventions; training regarding PT activities, use of

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equipment and technologies or any other aspect of the Member’s physical therapy services; designing, modifying, or monitoring use of related environmental modifications; designing, modifying, and monitoring use of related activities supportive to the ISP goals and objectives; and consulting and collaborating with other service providers of family members, as directed by the Member.

“Pregnancy Termination Services” includes coverage of pregnancy terminations for rape, incest and endangerment to the life of the mother as allowed per 42 C.F.R. §441.202. A certification from the Network Provider must be provided prior to payment.

“Preventive Health Services” Unless a Member refuses offered services, and such refusal is documented, the CONTRACTOR shall provide, to the extent necessary, the services described herein. Member refusal is defined to include both failure to consent and refusal to access care. Preventive Health Services include:

(1) Immunizations. The CONTRACTOR shall ensure that, within six (6) months of enrollment, Members are immunized and current according to the type and schedule provided by the most current version of the Recommendations of the Advisory Committee on Immunization Practices, Centers for Disease Control and Prevention, Public Health Service, United States Department of Health and Human Services. This may be done by providing the necessary immunizations or by verifying the immunization history by a method deemed acceptable by the ACIP. “Current” is defined as no more than four (4) months overdue.

(2) Screens. The CONTRACTOR shall ensure that, to the extent possible, within six (6) months of enrollment or within six (6) months of a change in the standard, asymptomatic Members receive and are current for at least the following Screening Services. The CONTRACTOR shall require its Network Providers to perform the appropriate interventions based on the results of the screens. “Current” is defined as no more than four (4) months overdue.

(A) Screening for Breast Cancer. Female Members age forty (40) through sixty-nine (69) years of age who are not at high risk for breast cancer shall be screened every one to two years by mammography alone or by mammography and annual clinical breast examination. Female Members at high risk for developing breast cancer shall be screened as often as clinically indicated.

(B) Screening for Cervical Cancer. Female Members with a cervix shall receive cytopathology testing starting at the onset of sexual activity, but at least by twenty-one (21) years of age, and every three (3) years thereafter until reaching sixty-five (65) years of age, if prior testing has been consistently normal and the Member has been confirmed to be not at high risk. If the Member is at high risk, the testing frequency shall be at least annual.

(C) Screening for Colorectal Cancer. Members aged fifty (50) years and older at normal risk for colorectal cancer shall be screened with annual fecal occult blood testing or sigmoidoscopy colonoscopy or double contrast barium at a periodicity determined by the CONTRACTOR.

(D) Blood Pressure Measurement. Members of all ages shall receive a blood pressure measurement as medically indicated.

(E) Serum Cholesterol Measurement. Male Members aged thirty-five (35) and older and Female Members aged forty-five (45) and older who are at normal risk for coronary heart

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disease shall receive serum cholesterol and HDL cholesterol measurement every five (5) years. Adults aged twenty (20) and older with risk factors for coronary artery disease shall have serum cholesterol and HDL cholesterol measurements as clinically indicated.

(F) Screening for Obesity. All Members shall receive annual body weight and height measurements to be used in conjunction with a calculation of the Body Mass Index or referenced to a table of recommended weights.

(G) Screening for Elevated Lead Levels. Members aged nine (9) to fifteen (15) months old (ideally twelve (12) months old) shall receive a blood lead measurement at least once.

(H) Screening for Type 2 Diabetes. Members with one or more of the following risk factors shall be screened. Risk factors include a family history of diabetes (parent or sibling with diabetes); obesity (more than 20% over desired weight or BMI greater than 27 kg/m2); race/ethnicity (e.g., Hispanic, Native American, African American, Asian-Pacific Islander); previously identified impaired fasting glucose or impaired glucose tolerance; hypertension (greater than 140/90 mmHg); HDL cholesterol level lower than 35 mg/dl and triglyceride level greater than 250 mg/dl; history of gestational diabetes mellitus (GDM) or delivery of babies over nine pounds.

(I) Screening for Tuberculosis. Routine tuberculin skin testing shall not be required for all Members. The following high risk persons shall be screened or previous screening noted: persons who immigrated from countries in Asia, Africa, Latin America or the Middle East in the preceding five (5) years; persons who have substantial contact with immigrants from those areas; migrant farm workers; and person who are alcoholic, homeless or injecting drug users; HIV-infected persons shall be screened annually. Members whose screening tuberculin test is positive (greater than 10 mm. of induration) must be referred to the local public health office in their community of residence for contact investigation.

(J) Screening for Rubella. Female Members of childbearing ages shall be screened for rubella susceptibility by history of vaccination or by serology at their first clinical encounter in an office setting.

(K) Screening for Visual Impairment. Members three (3) to four (4) years of age shall be screened at least once for amblyopia and strabismus by physical examination and a stereo acuity test.

(L) Screening for Hearing Impairment. Members fifty (50) years and older shall be routinely screened for hearing impairment by questioning them about their hearing.

(M) Screening for Problem Drinking and Substance Abuse. Adolescent and adult Members shall be screened at least once by a careful history of alcohol use and/or the use of a standardized screening questionnaire such as the Alcohol Use Disorders Identification Test (AUDIT) or the four-question CAGE Instrument and the Substance Abuse Screening and Severity Inventory (SASSI). The frequency of screening shall be determined by the results of the first screen and other clinical indications. Members shall be referred to the SE as warranted.

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(N) Prenatal Screening. Pregnant Members shall be screened for preeclampsia, D (Rh) Incompatibility Down syndrome, neural tube defects, and hemogloginopathies, vaginal and rectal Group B Streptococcal infection, and counseled and offered testing for HIV.

(O) Screening for Chlamydia. All sexually active female Members age twenty-five (25) or younger shall be screened for Chlamydia. All female Members over age twenty-five (25) shall be screened for Chlamydia if they inconsistently use carrier contraception have more than one sexual partner or have had a sexually transmitted disease in the past.

(P) Behavioral Health Screening. During an encounter with a PCP, a behavioral health screen shall occur.

The CONTRACTOR shall ensure that clinically appropriate follow-up and/or intervention is performed when indicated by the screening results and that this is done using the guidance provided in the Guide Preventive Services, Report of the U.S. Preventive Services Task Force, Second Edition, Shalliams and Wilkins, 1996.

(3) Tot-to-Teen Health Checks. The CONTRACTOR shall operate a Tot-to-Teen Health check program for Members up to twenty-one (21) years of age to ensure the delivery of the Federally mandated EPSDT services. Within six (6) months of enrollment, the CONTRACTOR shall endeavor to ensure the eligible Members (up to age twenty-one) are current according to the screening schedule in EPSDT services, set forth in HSD/MAD regulations, 8.320.3 NMAC.

(4) Counseling Services. The CONTRACTOR shall provide to applicable asymptomatic Members counseling on the following unless Member refusal is documented: to prevent tobacco use, to promote physical activity, to promote a health diet, to prevent osteoporosis and heart disease in menopausal female Members, citing the advantages and disadvantages of calcium and hormonal supplementation, to prevent motor vehicle injuries, to prevent household and recreational injuries, to prevent dental and periodontal disease, to prevent HIV infection and other sexually transmitted diseases, and to prevent unintended pregnancies.

(5) Health Advisor Telephone Hotline. The CONTRACTOR shall provide a toll-free health advisor hotline, which shall provide at least the following:

(A) general health information on topics appropriate to the various Medicaid populations, including those with severe and chronic conditions;

(B) clinical assessment and triage to evaluate the acuity and severity of the Member’s symptoms and make the clinically appropriate referral; and

(C) pre-diagnostic and post-treatment care decision assistance based on symptoms.

The CONTRACTOR must participate in and provide appropriate financing for the statewide twenty-four (24) hour nurse hotline, unless significantly less costly options exist and are approved by the State.

(6) Family Planning Policy. The CONTRACTOR shall have a written family planning policy. This policy shall ensure that Members of the appropriate age of both sexes who seek family planning services shall be provided with counseling pertaining to the following: methods of contraception; evaluation and treatment of infertility; HIV and other sexually transmitted

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diseases and risk reduction practices; options for pregnant Members who do not wish to keep a child; and options for pregnant Members who may wish to terminate the pregnancy.

(7) Prenatal Care Program. The CONTRACTOR shall operate a proactive prenatal care program to promote early initiation and appropriate frequency of prenatal care consistent with the standards of the American College of Obstetrics and Gynecology. The program shall include at least the following:

(A) educational outreach to all Members of child-bearing ages;

(B) prompt and easy access to obstetrical care, including providing an office visit with a practitioner within three (3) weeks of having a positive pregnancy test (laboratory or home) unless earlier care is clinically indicated;

(C)	risk assessment of all pregnant Members to identify high risk cases for special management;
(D)	counseling which strongly advises voluntary testing for HIV;

(E) case management services to address the special needs of Members who have a high risk pregnancy, especially if risk is due to psychosocial factors such as substance abuse or teen pregnancy;

(F) screening for determination of need of a post-partum home visit; and

(G) coordination with other services in support of good prenatal care, including transportation and other community services and referral to an agency that dispenses free or reduced price baby car seats.

“Private Duty Nursing Services” include activities, procedures, and treatment for a physical condition, physical illness, or chronic disability. Services include medication management, administration and teaching; aspiration precautions; feeding tube management; gastrostomy and jejunostomy; skin care; weight management; urinary catheter management; bowel and bladder care; wound care; health education; health screening; infection control; environment management for safety; nutrition management; oxygen management; seizure management and precautions; anxiety reduction; staff supervision; and behavior and self-care assistance. This is a 1915(c) waiver service.

“Prosthetics and Orthotics” includes prosthetic and orthotic services as set forth in HSD/MAD regulations, 8.324.8 NMAC, PROSTHETICS AND ORTHOTICS.

“Rehabilitation Services” includes inpatient and outpatient hospital and outpatient physical, occupational, and speech therapy services as set forth in HSD/MAD regulations, 8.325.8 NMAC, REHABILITATION SERVICES and licensed speech and language pathology services furnished under EPSDT program as set forth in HSD/MAD regulations, 8.323.5 NMAC, LICENSED SPEECH AND LANGUAGE PATHOLOGISTS.

“Reproductive Health Services” includes reproductive health services as set forth in HSD/MAD regulations, 8.325.3 NMAC, REPRODUCTIVE HEALTH SERVICES. The CONTRACTOR shall provide Members with sufficient information to allow them to make informed choices including the types of family planning services available; the Member’s right to access these services in a timely and confidential manner; and the freedom to choose a qualified family planning. A female Member shall have the right to self-refer to a women’s health

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specialist within the Network Providers for covered care necessary to provide women’s routine and preventive health care services. This right to self-refer is in addition to the Member’s designated source of primary care if that source is not a women’s health specialist.

“Respite Services” is provided to Members unable to care for themselves and are furnished on a short-term basis because of the absence or need for relief of those persons normally providing the care. Respite Services may be provided in a Member’s home or in the community. Services include assistance with routine activities of daily living (e.g., bathing, toileting, preparing or assisting with meal preparation and eating), enhancing self-help skills, and providing opportunities for leisure, play, and other recreational activities and to allow community integration. This is a 1915(c) waiver service.

“School-Based Services” includes evaluation and physical, speech and occupational therapy furnished in a school-based setting, but not when specified in the Individualized Education Plan (IEP) or the Individualized Family Service Plan (IFSP), as set forth in HSD/MAD regulations, 8.320.6 NMAC, SCHOOL-BASED SERVICES FOR RECIPIENTS UNDER 21 YEARS OF AGE.

“Service Coordination” is person-centered and intended to support Members in pursing their desired life outcomes by assisting them in accessing support and services necessary to achieve the quality of life that they desire, in a safe and healthy environment. Service Coordination assists Members in gaining access to needed CLTS waiver services, Medicaid State Plan services, and medical, social, educational, and other services, regardless of the funding source for the services to which access is needed. This is both a 1915(b) and 1915(c) waiver service.

“Skilled Maintenance Therapy Services” include occupational services, physical therapy services and speech language therapy services. This is a 1915(c) waiver service.

“Special Rehabilitation Services” as set forth in HSD/MAD regulations 8.320.4 NMAC, SPECIAL REHABILITATION SERVICES.

“Speech Language Therapy Services” preserve abilities for independent function in communication; facilitate oral motor and swallowing function; facilitate use of assistive technology, and/or prevent progressive disabilities. Specific services include: identification of communicative or oropharyngeal disorders and delays in the development of communication skills; prevention of communicative or oropharyngeal disorders and delays in the development of communication skills; development of eating of swallowing plans and monitoring their effectiveness; use of specifically designed equipment, tools, and exercises to enhance function; design, fabrication, or modification of assistive technology or adaptive devices; provision of assistive technology services; adaptation of the Member’s environment to meet his/her needs; training regarding SLT activities; and consulting or collaborating with other service providers or family members, as directed by the Member.

“Transplant Services” include the following: heart transplants, lung transplants, heart-lung transplants, liver transplants, kidney transplants, autologous bone marrow transplants, allegoric bone marrow transplants and corneal transplants as set forth in HSD/MAD regulations, 8.325.5 NMAC, TRANSPLANT SERVICES, and 8.325.6 NMAC, EXPERIMENTAL OR INVESTIGATIONAL PROCEDURES, TECHNOLOGIES, OR NON-DRUG THERAPIES.

“Transportation Services” includes transportation services such as ground ambulance, air ambulance, taxicab and/or handivan, commercial bus, commercial air, meal, and lodging services, as indicated for medically necessary physical and behavioral health services as set forth in HSD/MAD regulations, 8.324.7 NMAC, TRANSPORTATION SERVICES. In addition, CONTRACTOR must abide by New Mexico law and regulations, specifically NMSA 1978, §65-2-97(F), stating that rates paid by the CONTRACTOR to

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transportation providers are not subject to and are exempt from New Mexico Public Regulation Commission approved tariffs. The CONTRACTOR is also required to coordinate, manage and be financially responsible for the delivery of the transportation benefit to Members receiving physical health services and/or behavioral health services. The CONTRACTOR shall coordinate with the SE as necessary to perform this function. Such coordination shall include:

(1) receiving information from and providing information to the SE regarding Members and providers;

(2)	meeting with the SE to resolve provider and Member issues to improve services, communication and coordination;
(3)	contacting the SE, as necessary, to provide quality transportation services; and
(4)	maintaining and distributing statistical information and data as may be required.

“Vision Services” includes vision services as set forth in HSD/MAD regulations, 8.310.6, NMAC, VISION CARE SERVICES.

SERVICES EXCLUDED FROM THE BENEFIT PACKAGE

The following Services are not included in the benefit package. Reimbursement for these services shall be made by the State on a fee-for-service basis:

(1)	Services provided to intermediate care facilities for the mentally retarded as set forth in HSD/MAD regulations, 8.313.2 NMAC, INTERMEDIATE CARE FACILITY FOR THE MENTALLY RETARDED.
(2)	Emergency services to undocumented aliens as set forth in HSD/MAD regulations, 8.325.10 NMAC, EMERGENCY SERVICES FOR UNDOCUMENTED ALIENS.
(3)	Experimental and investigational procedures, technologies or non-drug therapies, as set forth in HSD/MAD regulations, 8.325.6 NMAC, EXPERIMENTAL OR INVESTIGATIONAL PROCEDURES, TECHNOLOGIES OR NON-DRUG THERAPIES.
(4)	Case management provided by CYFD, defined as Child Protective Services Case Management, as set forth in HSD/MAD regulations, 8.320.5, NMAC, EPSDT CASE MANAGEMENT.
(5)	Case management provided by ALTSD, as set forth in HSD/MAD regulations, 8.326.7 NMAC, ADULT PROTECTIVE SERVICES CASE MANAGEMENT.
(6)	Case management provided by CYFD, as set forth in HSD/MAD regulations, 8.326.8, CASE MANAGEMENT SERVICES FOR CHILDREN PROVIDED BY JUVENILE PROBATION AND PAROLE OFFICERS.
(7)	Services provided in the schools and specified in the Individualized Education Program (IEP) or Individualized Family Service Plan (IFSP), as set forth in HSD/MAD regulations, 8.320.6 NMAC, SCHOOL-BASED SERVICES FOR RECIPIENTS UNDER TWENTY-ONE YEARS OF AGE; and

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(8) Services provided to the Home and Community Based Waiver Services programs as set forth in HSD/MAD Program Manual, MAD 733 NMAC, HOME AND COMMUNITY BASED SERVICES WAIVERS for the Mentally Fragile waiver, the HIV/AIDS waiver, and the Developmentally Disabled waiver.

VALUE ADDED BENEFITS/SERVICES

The CONTRACTOR shall provide a schedule for implementing value added benefits/services pursuant to the CONTRACTOR’s proposal, such as a transitional benefit, and approved by the State. All enhancements shall be identifiable and measurable through the use of unique payment and/or processing codes, approved by the State. All enhanced benefits/services shall be:

(1)	three or more direct services and not be administrative in nature;
(2)	reasonably expected to be provided to three percent (3%) of the CLTS’ population in the aggregate; and
(3)	reported to the State in a format and frequency determined by the State.

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APPENDIX B

REPORTING REQUIREMENTS

The CONTRACTOR shall provide to the State managerial, financial, utilization and quality reports. The content, format, and schedule for submission shall be determined by the State in advance for the financial reporting period and shall conform to reasonable industry and/or to CMS standards. The State may also require the CONTRACTOR to submit non-routine ad hoc reports, provided that the State shall pay the CONTRACTOR to produce any non-routine ad hoc reports that require a significant amount of time, resources or effort on the part of the CONTRACTOR. The State shall notify CONTRACTOR, in writing, of changes to required reports at least thirty (30) business days prior to implementing and reporting changes. The CONTRACTOR shall be held harmless if the State fails to meet this requirement.

Reporting Standards

Reports submitted by the CONTRACTOR to the State shall meet the following standards:

(1)	reports or other required data shall be received on or before the scheduled due dates;
(2)	reports or other required data shall be prepared in strict conformity with appropriate authoritative sources and/or State defined standards;
(3)	all required information shall be fully disclosed in a manner that is both responsive and pertinent to report intent with no material omission;
(4)	the submission of late, inaccurate, or otherwise incomplete reports constitutes failure to report. In such cases, a penalty may be assessed by the State; and
(5)	the State requirements regarding reports, report content, and frequency of submission are subject to change at any time during the term of the Agreement. The CONTRACTOR shall comply with all changes specified in writing by the State, after the State has discussed such changes with the CONTRACTOR.

Automated Reporting Standards

(1)	The CONTRACTOR is required to submit data to the State. The State shall define the format and data elements after having consulted with the CONTRACTOR on the definition of these elements.
(2)	The CONTRACTOR is responsible for identifying and reporting to the State immediately upon discovery of any inconsistencies in its automated reporting. The CONTRACTOR shall make necessary adjustments to its reports at its own expense.
(3)	The State, in conjunction with its fiscal agent(s), intends to implement electronic data interchange standards for transactions related to health care. The CONTRACTOR shall work with the State to develop the technical components of such an interface.

Disease Reports

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The CONTRACTOR shall ensure that its Network Providers comply with the disease reporting required by a New Mexico Regulation Governing the Control of Disease and Conditions of Public Health Significance, 1980.

Disease Management Reports

The CONTRACTOR shall effectively improve outcomes of Members with chronic diseases through Disease Management Programs and Performance Measures. The CONTRACTOR shall provide ongoing Disease Management (DM) for a minimum of two (2) chronic diseases. The CONTRACTOR shall select the chronic diseases based on the analysis of their Member enrollment demographics and cost-benefit. The CONTRACTOR must submit a comprehensive DM Plan description for each DM program for review and approval by the State. The CONTRACTOR shall develop methodology to track interventions and outcomes for the selected managed disease protocols. A report based on the periodic and/or quarterly review of the internal tracking for program efficacy shall be submitted to the State thirty (30) days after the quarter end. In addition, an annual qualitative and quantitative evaluation should be focused on program successes and areas of improvement.

Encounters

CMS requires that encounter data be used for rate-setting purposes. Encounter data will also be used to determine compliance with performance measures, cost neutrality calculations for waiver services and other contractual requirements as appropriate. Therefore, submission of accurate and complete encounter data is a mandatory requirement.

The State maintains oversight responsibility for evaluating and monitoring the volume, timeliness, and quality of encounter data submitted by the CONTRACTOR. If the CONTRACTOR elects to contract with a third party to process and submit encounter data, the CONTRACTOR remains responsible for the quality, accuracy, and timeliness of the encounter data submitted to the State. The State shall communicate directly with the CONTRACTOR any requirements and/or deficiencies regarding quality, accuracy and timeliness of encounter data, and not with the third party contractor. The CONTRACTOR shall submit encounter data to the State in accordance with the following:

(1)	Encounter Submission Media
	The CONTRACTOR shall provider encounter data to the State by electronic media, such as magnetic tape or direct file transmission. Paper transmission is not permitted.
(2)	Encounter Submission Timeframes
	The CONTRACTOR shall submit encounters to the State within one hundred twenty (120) calendar days of the date of service or discharge, regardless of whether the encounter is from a subcontractor or subcapitated arrangement. Exceptions may be allowed for encounters from out-of-state, non-contracted providers. Encounters for claims involving other insurance or third parties must be submitted within three hundred sixty five (365) calendar days from date of service. Encounters that do not clear edit checks shall be returned to the CONTRACTOR for correction and re-submission. The CONTRACTOR shall correct and resubmit the encounter data to the State.
(3)	Encounter Data Elements
	Encounter data elements are a combination of those elements required by HIPAA-compliant transaction formats, which comprise a minimum core data set for states and managed care organizations, and those

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required by CMS or the State for use in managed care. The State may increase or reduce or make mandatory or optional, data elements, as it deems necessary. The CONTRACTOR will be held harmless in conversion to HIPAA coded encounter data when delays are the result of HIPAA implementation issues. The transition to HIPAA codes and requirements does not relieve the CONTRACTOR of timely submission of encounter data. The State will approve necessary default values for paper claim encounters that must pass the State’s required HIPAA format edits.

The CONTRACTOR shall submit encounter data to the State using the 837 and NCPDP formats. The State will work with the CONTRACTOR and HSD/MAD’s claims processing contractor to provide the CONTRACTOR with an electronic disposition of each submitted encounter.

Financial Reporting

(1)	The CONTRACTOR shall submit annual audited financial statements including, but not limited to, its Income Statement; Statement of Changes in Financial Condition or cash flow; and Balance Sheet. The CONTRACTOR shall include an audited scheduled of CLTS revenues and expenses according to generally accepted accounting principles. The result of the CONTRACTOR’s annual audit and related management letters shall be submitted no later than one hundred fifty (150) calendar days following the close of the CONTRACTOR’s fiscal year. The audit shall be performed by an independent Certified Public Accountant. The CONTRACTOR shall submit for examination any other financial reports requested by the State and related to the CONTRACTOR’s solvency or performance of this Agreement.
(2)	The CONTRACTOR and its subcontractors shall maintain their accounting systems in accordance with statutory accounting principles, generally accepted accounting principles, or other generally accepted systems of accounting. The accounting system shall clearly document all financial transactions between the CONTRACTOR and its subcontractors, and the CONTRACTOR and the State. These transactions shall include, but are not limited to, claim payments, refunds, and adjustments of payments.
(3)	The CONTRACTOR and its subcontractors shall make available to the State and any other authorized State or Federal agency, any and all financial records required to examine the compliance by the CONTRACTOR insofar as those records are related to the CONTRACTOR’s performance under this Agreement. For the purpose of examination, review, and inspection of its records, the CONTRACTOR and its subcontractors shall provide the State access to its facilities.
(4)	The CONTRACTOR and its subcontractors shall retain all records and reports relating to agreements with the State for a minimum of ten (10) years from the date of final payment. In cases involving incomplete audits and/or unresolved audit findings, administrative sanctions, or litigation, the minimum ten (10) year retention period shall begin when such actions are resolved.
(5)	The CONTRACTOR is mandated to notify the State immediately when any change in ownership can legally be disclosed. The CONTRACTOR shall submit a detailed work plan during the transaction period or no later than the date of the approval of sale by the DOI that identifies areas of the Agreement that will be impacted by the change in ownership, including management and staff.
(6)	The CONTRACTOR shall submit records involving any business restructuring when changes in ownership interest of five percent (5%) or more have occurred. These records shall include, but are not limited to, an updated list of names and addresses of all person or entities having ownership interest of five percent (5%) or more. These records shall be provided no later than the date that they are required to report the information to the Securities and Exchange Commission or other regulatory authority.

149

(7)

Reports post-marked with the due date will be considered as a timely submission. If report due date falls on a weekend or recognized State holiday, receipt of the report the next business day is acceptable.

(8)

Table No. 1, gives an overview of the reporting requirements the State has established to monitor and examine the CONTRACTOR for solvency and compliance with Federal requirements for financial stability. These requirements shall enable the State, or its designee, to determine if changes have occurred which affect a CONTRACTOR and/or its subcontractors’ financial condition. The CONTRACTOR’s required level of reinsurance, fidelity bond, or insurance and solvency cash reserves may change with changes to the CONTRACTOR’s net worth or other financial condition.

Grievance, Appeals and Hearings Reporting

The CONTRACTOR shall submit a Monthly Report to the State using a description, methodology, and report template developed and mutually agreed upon by all parties. The Grievance, Appeals, and Hearings Report is due no later than thirty (30) days after the month end.

HEDIS

The CONTRACTOR shall utilize the most current HEDIS data submission and reporting tool, submit a copy of the HEDIS data in accordance with the State requirement, and submit a final audited report to the State. The HEDIS compliance audit will be at the CONTRACTOR’s expense. HEDIS measures required by Medicare Managed Care shall be included in the State’s defined HEDIS measures.

TABLE NO. 1

Performance Measures

DOMAIN	MEASURE	DUE
Prevention	•    Flu Shots for Older Adults
	•    Pneumonia Vaccination for Older Adults
	•    Fecal Occult Blood Testing(*)
Utilization	•    Inpatient Hospital Care — General Hospital
	•    Inpatient Hospital Care — Non-acute Care
	•    Nursing Home Admissions & Length of Stays
	•    Emergent Care visits
Effectiveness of Care	•    Comprehensive Diabetes Care
	•    Cholesterol Management for Cardiovascular Conditions
	•    Medication Management
Patient Satisfaction	•    CAHPS
Access to Care	•    Access to health care providers/services and MCO services
	•    Call answer timeliness
	•    Call abandonment

150

DOMAIN	MEASURE	DUE
Safety	•    Number of home safety evaluations conducted
	•    Falls and mobility
Self Direction	•    Signed Care Plans (Consumer)
	•    Number of consumers who transition from NF placement that are served & maintained w/community based services for six months
Other	•    Claims timeliness

Provider Network Reports

The CONTRACTOR shall notify the State within five (5) business days of any unexpected changes to the composition of its provider network that negatively affect Member access or the CONTRACTOR’s ability to deliver all Covered Services included in the benefit package in a timely manner. Any anticipated material changes in the CONTRACTOR’s provider network shall be reported to the State when the CONTRACTOR knows of the anticipated change or within thirty (30) calendar days, whichever comes first. The notice submitted to the State shall include the following information: nature of the change; information about how the change affects the delivery of Covered Services or access to the services; and the CONTRACTOR’s plan for maintaining the access and quality of Member care.

TABLE NO. 2

Definition	Frequency	Objective	Due Date
Analysis of Stop-loss protection with Detail of Panel Composition	Quarterly	Examine to determine Solvency, Rate Payment.	30 days from end of Qtr
CAHPS (Member Satisfaction Survey)	Annual	Determine member satisfaction with access/outcomes/quality	August 30
Calendar-Year Independently Audited Financial Statements	Annual	Examine for Solvency and CMS Compliance	June 1
Calendar-Year Medicaid- Specific Audited Schedule of Revenue and Expenses	Annual	Examine and determine for Solvency and CMS Compliance	June 1
Cash Reserve Statement	Quarterly	Examine and confirm Solvency and CMS Compliance	30 days from end of Qtr

151

Definition	Frequency	Objective	Due Date
Claims Payment Timeliness	Monthly	Compliance with the BBA payment timeliness requirements for 30-days and 90-days.	15 days from end of the month
Critical Incident Report	Monthly		30 days from end of month
Cultural Competency Plan	Annual		August 1
Delegation Report	Upon Change		30 Days from Revision, addition or deletion
Department of Insurance Reports	Quarterly Quarters 1,2 & 3 (45 days from end of quarter) annually on 3/1	Examine and confirm Solvency and CMS Compliance	45 days from the end of quarter or the 15th of the month, March 1 for Annual Statement
Detailed Denial Report	Quarterly		30 Days from end of Quarter
Disease Management Comprehensive Plan	Annual		September 1
Disease Management Program Performance Review	Quarterly		30 Days from end of Quarter
Disease Management Program Evaluation	Annual		September 1
Expenditures by Category of Services for hospital, pharmacy, physician, dental, transportation and other	Quarterly	Determine Cost Efficiency	45 days from end of Qtr or the 15th day of the second month following the end of the quarter
Expenditures of services to FQHCs and RHCs	Quarterly	Enable HSD/MAD to make wraparound payments to FQHCs and RHCs	30 days from end of Qtr

152

Definition	Frequency	Objective	Due Date
Geo-Access	Quarterly	Maintain current provider availability and access	30 Days from end of Quarter
Grievance, Appeals & Hearings	Monthly		30 Days from end of Month
HEDIS Data Submission (With Analysis)	Annual		August 15 or as Designated by NCQA
Identify the Fidelity Bond or Insurance Protection by Amount of Coverage in relation to Annual Payments. Identify MCO Directors, Officers Employees or Partners.	Annual	Examine and confirm Solvency and CMS Compliance	Initially and upon renewal
Member Satisfaction Survey & Dissemination (CAHPS)	Annual		August 30
Prior Authorization Listing	Quarterly		30 Days from end of Quarter
Prior Authorization Report	Monthly		30 Days from end of Month
Program Integrity/Suspicious Activity/Fraud	Quarterly		30 Days from end of Quarter
Provider Satisfaction Survey	Annual		August 30
Provider Training Plan	Annual		July 1
Quality Management/Quality Improvement Comprehensive Plan	Annual		September 1
Quality Management/Quality Improvement Program Evaluation	Annual		September 1

153

Definition	Frequency	Objective	Due Date
Quarterly Medicaid specific unaudited Schedule of Revenue and Expenses	Quarterly	Examine and compare Administrative Expenditures by Line of Business	45 days from the end of quarter or the 15th day of the second month following the end of a quarter
Reinsurance Policy	Annual	Assess Solvency and CMS Compliance	Initially and upon renewal
Utilization Management Program	Annual		September 1

154

APPENDIX C

C.1 MONEY FOLLOWS THE PERSON (MFP) INITIATIVES

The State, pursuant to State law, is mandated to move individuals, where appropriate, from an institutional setting to community-based living. The CONTRACTOR shall:

1.	identify eligible Medicaid-funded nursing facility and, as requested by HSD or ALTSD, residents that wish to move from the institutional setting to home and community based programs and may be eligible for participation in the Money Follows the Person Project initiatives;
2.	screen all individuals identified in paragraph 1 to determine if the individual is a probable MFP consumer/participant; and, if so, complete a comprehensive assessment utilizing the State’s assessment tool or another appropriate assessment/screening tool chosen by the CONTRACTOR and approved by HSD/MAD and ALTSD;
3.	identify any and all appropriate home and community based programs for each identified eligible institutional recipient;
4.	if, and when an eligible institutional resident is discharged from the institution (and before such date, if appropriate), assist the individual with the following:

(A) relocation specialist services, which are specialized services provided while the individual is a resident in an institutional setting and during the individual’s transition to and residence in the community. These services may include but are not limited to:

(1) assessing the individual’s needs and assisting the individual to arrange for and procure needed resources for the move from the institution to the community, such as establishing Medicaid medical and financial eligibility for home and community-based services and eligibility for other HSD programs; identifying needed State plan or other services; coordinating the array of services and providers needed on or after the move, and arranging the time-sensitive transition services;

(2) developing a comprehensive person-centered, community-based services and transition plan;

(3) carefully monitoring the first sixty (60) days the individual resides in the community to make certain that services are delivered according to the plan and are sufficient to meet the individual’s needs, and that the individual is comfortable and safe in their environment;

(4) ensuring that individuals have an opportunity to educate/train their respective caregivers; and

(5) ensuring that the individual’s service plan is implemented as written; and

(6) linking the individual to appropriate home and community-based services.

(B) transitional services incurred by individuals who are transitioning from an institutional setting to the community to establish a basic household. These services may include such things as

155

security deposits, essential household furnishings and moving expenses required to occupy a community domicile, set-up fees or deposits for utility or service access, and services necessary for the individual’s health and safety;

(C) non-medical transportation services which would enable the individual to gain access to community services, events, activities and resources, or other activities or events that support independence and cannot be obtained from other sources;

(D) assistive technology which includes devices and services, which may include training or technical assistance for the individual or, where appropriate, family members or others;

(E) specialized medical equipment and supplies, including devices, controls or appliances which enable an individual to increase his/her ability to perform activities of daily living and perceive, control or communicate with his/her living environment;

(F) nutrition services including an assessment of the individual’s nutritional needs, development and/or revision of the individual’s nutritional plan, counseling and nutritional intervention, and observation and technical assistance related to implementation of the nutritional plan;

(G) substance abuse services which may include short-term education and counseling, and linkage to education and support groups for prevention or treatment of potential or acute substance abuse;

(H)	family support services which may include education on the crucial informal support network in areas such as service availability, expectations, and health and safety issues; and
(I)	purchase of service animals.

5.	developing a brochure, under the direction of HSD/MAD or ALTSD, to provide information to institutional recipients, their families, advocates, State employees and other interested parties regarding the Money Follows the Person program;
6.	provide HSD/MAD and ALTSD with a list of individuals that have been identified as eligible for the Money Follows the Person program on a monthly basis;
7.	provide HSD/MAD and ALTSD with a list of individuals that have transitioned back to home and community based programs on a monthly basis;
8.	provide HSD and ALTSD with a report detailing the pre-transition and post-transition services rendered for each eligible individual on a monthly basis, to include all fields and format agreed to by the parties;
9.	collect data, implement strategies and provide reports regarding quality management initiatives, as identified by ALTSD and HSD/MAD; and
10.	provide ad-hoc reports relating to the Money Follows the Person initiative as requested by HSD or ALTSD.

C.2  IDENTICATION OF BARRIERS FOR HOME AND COMMUNITY BASED PROGRAM SUPPORTS

156

	The CONTRACTOR shall identify any current and potential barriers to providing home and community based programs throughout the State. This identification may include workforce shortages in current and future programs; facility shortages for current and future programs; statutory and regulatory barriers to address future long-term care service needs; and other information that the CONTRACTOR deems appropriate. The CONTRACTOR shall collaborate with MFP stakeholder groups, or other groups identified by ALTSD or HSD/MAD in the identification of these issues and potential resolutions. The CONTRACTOR shall provide HSD/MAD and ALTSD with a report identifying these barriers and potential solutions every six (6) months or more often as needed.
C.3	IDENTIFICATION OF COMPLEX CASES
	The CONTRACTOR shall receive uniform person-level individual data, based upon the initial assessment and the ongoing assessment process. Based on this data, the CONTRACTOR shall identify complex cases, such complex cases being identified on criteria developed by the CONTRACTOR and approved by HSD/MAD and ALTSD. The CONTRACTOR shall monitor the health and safety of the identified person, coordinate his/her care and take steps to ensure his/her health and safety is maintained in a reasonable manner. The CONTRACTOR shall report identified complex cases on a quarterly basis or more often as needed, including all information set forth in a Letter of Direction (LOD) to be completed by ALTSD and HSD/MAD, in consultation with the CONTRACTOR.
C.4	PERFORMANCE MEASURE, DEFAULT BY CONTRACTOR
	The CONTRACTOR shall substantially perform all Performance Measures as agreed to by the Parties.

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APPENDIX SECTION D

(THESE ARE THE CURRENT MEGS)
(COHORTS WILL BE SUBSETS OF THESE MEGS)

The State will pay a
monthly PMPM
Capitation Rate to the
Contractor for Members by Cohort:	Name of Cohort	Description of Cohort
Cohort 1	Dual NF LOC	Enrollee is dually eligible for Medicaid and Medicare and meets NF LOC. NF LOC is required for NF Resident, PCO, and D & E Waiver.
Cohort 2	Dual Mi Via	Enrollee is dually eligible for Medicaid and Medicare and has been approved for Mi Via Waiver services. The Mi Via Waiver services will be delivered outside of the CLTS Waiver.
Cohort 3	Non Dual NF LOC	Enrollee is Medicaid only and meets NF LOC. NF LOC is required for NF Resident, PCO, and D & E Waiver.
Cohort 4	Non Dual Mi Via	Enrollee is Medicaid only and has been approved for Mi Via Waiver services. The Mi Via Waiver services will be delivered outside of CLTS Waiver.
Cohort 5	Healthy Duals	Enrollee is dually eligible for Medicaid and Medicare and does not receive any long-term care services.

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EX-10.4

Exhibit 10.4

AMENDED AND RESTATED
CONTRACT BETWEEN

THE GEORGIA DEPARTMENT OF COMMUNITY
HEALTH

and

AMERIGROUP GEORGIA MANAGED CARE
COMPANY, INC.

for

PROVISION OF SERVICES TO

GEORGIA FAMILIES

Contract No.: 0652

Amendment 3

May 1, 2008

TABLE OF CONTENTS

1.0 SCOPE OF SERVICE	1
1.1 BACKGROUND	1
1.2.1 Medicaid	2
1.2.2 PeachCare for Kids	3
1.2.3 Exclusions	3
1.3 SERVICE REGIONS	4
1.4 DEFINITIONS	4
1.5 ACRONYMS	19
2.0 DCH RESPONSIBILITIES	22
2.1 GENERAL PROVISIONS	22
2.2 LEGAL COMPLIANCE	22
2.3 ELIGIBILITY AND ENROLLMENT	22
2.4 DISENROLLMENT	24
2.5 MEMBER SERVICES AND MARKETING	25
2.6 COVERED SERVICES & SPECIAL COVERAGE PROVISIONS	25
2.7 NETWORK	25
2.8 QUALITY MONITORING	26
2.9 COORDINATION WITH CONTRACTOR’S KEY STAFF	27
2.10 FORMAT STANDARDS	27
2.11 FINANCIAL MANAGEMENT	27
2.12 INFORMATION SYSTEMS	27
2.13 READINESS OR ANNUAL REVIEW	28
3.0 GENERAL CONTRACTOR RESPONSIBILITIES	29
4.0 SPECIFIC CONTRACTOR RESPONSIBILITIES	30

ii

4.1 ENROLLMENT	30
4.1.1 Enrollment Procedures	30
4.1.2 Selection of a Primary Care Provider (PCP)	30
4.1.3 Newborn Enrollment	31
4.1.4 Reporting Requirements	32
4.2 DISENROLLMENT	32
4.2.1 Disenrollment Initiated by the Member	32
4.2.2 Disenrollment Initiated by the Contractor	33
4.2.3 Acceptable Reasons for Disenrollment Investigation Requests by Contractor	33
4.2.4 Unacceptable Reasons for Disenrollment Requests by Contractor	34
4.3 MEMBER SERVICES	35
4.3.1 General Provisions	35
4.3.2 Requirements for Written Materials	35
4.3.3 Member Handbook Requirements	36
4.3.4 Member Rights	39
4.3.5 Provider Directory	40
4.3.6 Member Identification (ID) Card	40
4.3.7 Toll-free Member Services Line	41
4.3.8 Internet Presence/Web Site	42
4.3.9 Cultural Competency	43
4.3.10 Translation Services	44
4.3.11 Reporting Requirements	44
4.4 MARKETING	44
4.4.1 Prohibited Activities	44
4.4.2 Allowable Activities	44
4.4.3 State Approval of Materials	45
4.4.4 Provider Marketing Materials	45
4.5 COVERED BENEFITS AND SERVICES	46

iii

4.5.1 Included Services	46
4.5.2 Individuals with Disabilities Education Act (IDEA) Services	48
4.5.3 Enhanced Services	49
4.5.4 Medical Necessity	49
4.5.5 Experimental, Investigational or Cosmetic Procedures	50
4.5.6 Moral or Religious Objections	50
4.6 SPECIAL COVERAGE PROVISIONS	50
4.6.1 Emergency Services	50
4.6.2 Post-Stabilization Services	52
4.6.3 Urgent Care Services	54
4.6.4 Family Planning Services	54
4.6.5 Sterilizations, Hysterectomies and Abortions	55
4.6.6 Pharmacy	56
4.6.7 Immunizations	57
4.6.8 Transportation	57
4.6.9 Perinatal Services	57
4.6.10 Parenting Education	58
4.6.11 Mental Health and Substance Abuse	59
4.6.12 Advance Directives	59
4.6.13 Foster Care Forensic Exam	60
4.6.14 Laboratory Services	60
4.6.15 Member Cost-Sharing	60
4.7 EARLY AND PERIODIC SCREENING, DIAGNOSTIC AND TREATMENT (EPSDT) PROGRAM: HEALTH CHECK	60
4.7.1 General Provisions	60
4.7.2 Outreach and Informing	61
4.7.3 Screening	62
4.7.4 Tracking	63

iv

4.7.5 Diagnostic and Treatment Services	64
4.7.6 Reporting Requirements	64
4.8 PROVIDER NETWORK	64
4.8.1 General Provisions	64
4.8.2 Primary Care Providers (PCPs)	66
4.8.3 Direct Access	69
4.8.4 Pharmacies	69
4.8.5 Hospitals	69
4.8.6 Laboratories	70
4.8.7 Mental Health/Substance Abuse	70
4.8.8 Federally Qualified Health Centers (FQHCs)	70
4.8.10 Family Planning Clinics	71
4.8.11 Nurse Practitioners Certified (NP-Cs) and Certified Nurse Midwives (CNMs)	71
4.8.13 Geographic Access Requirements	72
4.8.14 Waiting Maximums and Appointment Requirements	73
4.8.15 Credentialing	74
4.8.16 Mainstreaming	75
4.8.17 Coordination Requirements	75
4.8.18 Network Changes	75
4.8.19 Out-of-Network Providers	76
4.8.21 Reporting Requirements	77
4.9 PROVIDER SERVICES	78
4.9.1 General Provisions	78
4.9.2 Provider Handbooks	78
4.9.3 Education and Training	79
4.9.4 Provider Relations	80
4.9.5 Toll-free Provider Services Telephone Line	80
4.9.6 Internet Presence/Web Site	81

v

4.9.7 Provider Complaint System	82
4.9.8 Reporting Requirements	84
4.10 PROVIDER CONTRACTS AND PAYMENTS	85
4.10.1 Provider Contracts	85
4.10.2 Provider Termination	89
4.10.3 Provider Insurance	89
4.10.4 Provider Payment	90
4.10.5 Reporting Requirements	92
4.11 UTILIZATION MANAGEMENT AND CARE COORDINATION RESPONSIBILITIES	93
4.11.1 Utilization Management	93
4.11.2 Prior Authorization and Pre-Certification	94
4.11.3 Referral Requirements	95
4.11.4 Transition of Members	96
4.11.5 Court-Ordered Evaluations and Services	98
4.11.6 Second Opinions	98
4.11.7 Care Coordination and Case Management	98
4.11.8 Disease Management	100
4.11.9 Discharge Planning	100
4.11.10 Reporting Requirements	101
4.12 QUALITY IMPROVEMENT	101
4.12.1 General Provisions	101
4.12.2 QUALITY STRATEGIC PLAN REQUIREMENTS	101
4.12.3 REPORTING REQUIREMENTS	102
4.12.4 Quality Assessment Performance Improvement (QAPI) Program	103
4.12.5 Performance Improvement Projects	104
4.12.6 Practice Guidelines	106

vi

4.12.7 Focused Studies	107
4.12.7.1 Focus Studies:	107
4.12.8 Patient Safety Plan	107
4.12.9 Performance Incentives	108
4.12.9.1 Incentive Arrangement	108
4.12.10 External Quality Review	108
4.12.11 Reporting Requirements	108
4.13 FRAUD AND ABUSE	108
4.13.1 Program Integrity	108
4.13.2 Compliance Plan	109
4.13.3 Coordination with DCH and Other Agencies	110
4.13.4 Reporting Requirements	111
4.14 INTERNAL GRIEVANCE SYSTEM	111
4.14.1 General Requirements	111
4.14.2 Grievance Process	113
4.14.3 Proposed Action	114
4.14.4 Administrative Review Process	116
4.14.5 Notice of Adverse Action	117
4.14.7 Continuation of Benefits while the Contractor Appeal and Administrative Law Hearing are Pending	119
4.14.8 Reporting Requirements	120
4.15 ADMINISTRATION AND MANAGEMENT	121
4.15.1 General Provisions	121
4.15.2 Place of Business and Hours of Operation	121
4.15.3 Training	121
4.15.4 Data Certification	122
4.15.5 Implementation Plan	122
4.16 CLAIMS MANAGEMENT	122

vii

4.16.1 General Provisions	123
4.16.2 Other Considerations	125
4.16.4 Reporting Requirements	126
4.17 INFORMATION MANAGEMENT AND SYSTEMS	127
4.17.1 General Provisions	127
4.17.2 Global System Architecture and Design Requirements	128
4.17.3 Data and Document Management Requirements by Major Information Type	131
4.17.4 System and Data Integration Requirements	131
4.17.5 System Access Management and Information Accessibility Requirements	131
4.17.6 Systems Availability and Performance Requirements	132
4.17.7 System User and Technical Support Requirements	135
4.17.8 System Change Management Requirements	137
4.17.9 System Security and Information Confidentiality and Privacy Requirements	137
4.17.10 Information Management Process and Information Systems Documentation Requirements	138
4.17.11 Reporting Requirements	139
4.18 REPORTING REQUIREMENTS	139
4.18.1 General Procedures	139
4.18.2 Weekly Reporting	140
4.18.3 Monthly Reporting	140
4.18.4 Quarterly Reporting	143
4.18.5 Annual Reports	147
4.18.6 Ad Hoc Reports	149
4.18.6.5 Contractor Notifications	152
5.0 DELIVERABLES	152
5.1 CONFIDENTIALITY	152
5.2 NOTICE OF DISAPPROVAL	152
5.3 RESUBMISSION WITH CORRECTIONS	152

viii

5.4 NOTICE OF APPROVAL/DISAPPROVAL OF RESUBMISSION	153
5.5 DCH FAILS TO RESPOND	153
5.6 REPRESENTATIONS	153
5.7 CONTRACT DELIVERABLES	153
5.8 CONTRACT REPORTS	156
6.0 TERM OF CONTRACT	158
7.0 PAYMENT FOR SERVICES	158
8.0 FINANCIAL MANAGEMENT	161
8.1 GENERAL PROVISIONS	161
8.2 SOLVENCY AND RESERVES STANDARDS	161
8.3 REINSURANCE	161
8.4 THIRD PARTY LIABILITY AND COORDINATION OF BENEFITS	162
8.4.2 Cost Avoidance	162
8.4.3 Compliance	163
8.5 PHYSICIAN INCENTIVE PLAN	163
8.6 REPORTING REQUIREMENTS	164
9.0 PAYMENT OF TAXES	167
10.0 RELATIONSHIP OF PARTIES	167
11.0 INSPECTION OF WORK	168
12.0 STATE PROPERTY	168
13.0 OWNERSHIP AND USE OF DATA/ UPGRADES	168
13.1 OWNERSHIP AND USE OF DATA	168
13.2 SOFTWARE AND OTHER UPGRADES	169
14.0 CONTRACTOR STAFFING	169

ix

14.1 STAFFING ASSIGNMENTS AND CREDENTIALS	169
14.2 STAFFING CHANGES	171
14.3 CONTRACTOR’S FAILURE TO COMPLY	171
15.0 CRIMINAL BACKGROUND CHECKS	172
16.0 SUBCONTRACTS	172
16.1 USE OF SUBCONTRACTORS	172
16.2 COST OR PRICING BY SUBCONTRACTORS	173
17.0 LICENSE, CERTIFICATE, PERMIT REQUIREMENT	173
18.0 RISK OR LOSS AND REPRESENTATIONS	174
19.0 PROHIBITION OF GRATUITIES AND LOBBYIST DISCLOSURES	174
20.0 RECORDS REQUIREMENTS	174
20.1 GENERAL PROVISIONS	174
20.2 RECORDS RETENTION REQUIREMENTS	175
20.3 ACCESS TO RECORDS	175
20.4 MEDICAL RECORD REQUESTS	175
21.0 CONFIDENTIALITY REQUIREMENTS	176
21.1 GENERAL CONFIDENTIALITY REQUIREMENTS	176
21.2 HIPAA COMPLIANCE	176
22.0 TERMINATION OF CONTRACT	176
22.1 GENERAL PROCEDURES	176
22.2 TERMINATION BY DEFAULT	177
22.3 TERMINATION FOR CONVENIENCE	177
22.4 TERMINATION FOR INSOLVENCY OR BANKRUPTCY	177
22.5 TERMINATION FOR INSUFFICIENT FUNDING	178
22.6 TERMINATION PROCEDURES	178

x

22.7 TERMINATION CLAIMS	180
23.0 LIQUIDATED DAMAGES	181
23.1 GENERAL PROVISIONS	181
23.2 CATEGORY 1	181
23.3 CATEGORY 2	181
23.4 CATEGORY 3	182
23.5 CATEGORY 4	184
23.6 OTHER REMEDIES	186
23.7 NOTICE OF REMEDIES	187
24.0 INDEMNIFICATION	187
25.0 INSURANCE	188
25.1 INSURANCE OF CONTRACTOR	188
27.0 COMPLIANCE WITH ALL LAWS	190
27.1 NON-DISCRIMINATION	190
27.2 DELIVERY OF SERVICE AND OTHER FEDERAL LAWS	190
27.3 COST OF COMPLIANCE WITH APPLICABLE LAWS	191
27.4 GENERAL COMPLIANCE	191
28.0 CONFLICT RESOLUTION	192
29.0 CONFLICT OF INTEREST AND CONTRACTOR INDEPENDENCE	192
30.0 NOTICE	193
31.0 MISCELLANEOUS	193
31.1 CHOICE OF LAW OR VENUE	193
31.2 ATTORNEY’S FEES	193
31.3 SURVIVABILITY	194
31.4 DRUG-FREE WORKPLACE	194

xi

31.5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT AND OTHER MATTERS	194
31.6 WAIVER	194
31.7 FORCE MAJEURE	194
31.8 BINDING	194
31.9 TIME IS OF THE ESSENCE	195
31.10 AUTHORITY	195
31.11 ETHICS IN PUBLIC CONTRACTING	195
31.12 CONTRACT LANGUAGE INTERPRETATION	195
31.13 ASSESSMENT OF FEES	195
31.14 COOPERATION WITH OTHER CONTRACTORS	195
31.15 SECTION TITLES NOT CONTROLLING	196
31.16 LIMITATION OF LIABILITY/EXCEPTIONS	196
31.17 COOPERATION WITH AUDITS	196
31.18 HOMELAND SECURITY CONSIDERATIONS	196
31.19 PROHIBITED AFFILIATIONS WITH INDIVIDUALS DEBARRED AND SUSPENDED	197
31.20 OWNERSHIP AND FINANCIAL DISCLOSURE	197
32.0 AMENDMENT IN WRITING	198
33.0 CONTRACT ASSIGNMENT	198
34.0 SEVERABILITY	198
35.0 COMPLIANCE WITH AUDITING AND REPORTING REQUIREMENTS FOR NONPROFIT ORGANIZATIONS (O.C.G.A. § 50-20-1 ET SEQ.)	198
36.0 ENTIRE AGREEMENT	199
ATTACHMENT A	201
DRUG FREE WORKPLACE CERTIFICATE	201
ATTACHMENT B	203

xii

CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT, AND OTHER RESPONSIBILITY MATTERS	203
ATTACHMENT C	205
NONPROFIT ORGANIZATION DISCLOSURE FORM	205
ATTACHMENT D	206
CONFIDENTIALITY STATEMENT	206
ATTACHMENT E	207
BUSINESS ASSOCIATE AGREEMENT	207
ATTACHMENT F	212
VENDOR LOBBYLIST DISCLOSURE AND REGISTRATION CERTIFICATION FORM	212
ATTACHMENT G	214
PAYMENT BOND AND	214
IRREVOCABLE LETTER OF CREDIT	214
ATTACHMENT H	216
CAPITATION PAYMENT	216
NOTICE OF YOUR RIGHT TO A HEARING	218
ATTACHMENT J	219
MAP OF SERVICE REGIONS/LIST OF COUNTIES BY SERVICE REGIONS	219
ATTACHMENT K	220
APPLICABLE CO-PAYMENTS	220
ATTACHMENT L	221
INFORMATION MANAGEMENT AND SYSTEMS	221

xii

     THIS AMENDED AND RESTATED CONTRACT, with an effective date of July 1, 2008 (hereinafter referred to as the “Effective Date”), is made and entered into by and between the Georgia Department of Community Health (hereinafter referred to as “DCH” or the “Department”) and Amerigroup Georgia Managed Care Company, Inc. (hereinafter referred to as the “Contractor”).

     WHEREAS, DCH is responsible for Health Care policy, purchasing, planning and regulation pursuant to the Official Code of Georgia Annotated (O.C.G.A.) § 31-5A-4 et. seq.;

     WHEREAS, DCH is the single State agency designated to administer medical assistance in Georgia under Title XIX of the Social Security Act of 1935, as amended, and O.C.G.A. §§ 49-4-140 et seq.(the “Medicaid Program”), and is charged with ensuring the appropriate delivery of Health Care services to Medicaid recipients and PeachCare for Kids Members;

     WHEREAS, DCH caused Request for Proposals Number 41900-001-0000000027 (hereinafter the “RFP”) to be issued through Department of Administrative Service(s) (DOAS), which is expressly incorporated as if completely restated herein;

     WHEREAS, DCH received from Contractor a proposal in response to the RFP, “Contractor’s Proposal,” which is expressly incorporated as if completely restated herein;

     WHEREAS, DCH accepted Contractor’s Proposal and entered into a contract with Contractor on July 18, 2005, for the provision of various services for the Department; and

     WHEREAS, DCH and Contractor now wish to amend and restate the Contract in its entirety

     NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Department and the Contractor (each individually a “Party” and collectively the “Parties”) hereby agree as follows:

1.0	SCOPE OF SERVICE
1.0.1	The State of Georgia is implementing reforms to the Medicaid and PeachCare for Kids programs. These reforms will focus on system-wide improvements in performance and quality, will consolidate fragmented systems of care, and will prevent currently unsustainable trend rates in Medicaid and PeachCare for Kids expenditures. The reforms will be implemented through a management of care approach to achieve the greatest value for the most efficient use of resources.
1.0.2	The Contractor shall assist the State of Georgia in this endeavor through the following tasks, obligations, and responsibilities.
1.1	BACKGROUND
1.1.1	In 2003, the Georgia Department of Community Health (DCH) identified unsustainable Medicaid growth and projected that without a change to the system, Medicaid would require

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50 percent of all new State revenue by 2008. In addition, Medicaid utilization was driving more than 35 percent of total growth each year. For that reason, DCH decided to employ a management of care approach to organize its fragmented system of care, enhance access, achieve budget predictability, explore possible cost containment opportunities and focus on system-wide performance improvements. Furthermore, DCH believed that managed care could continuously and incrementally improve the quality of healthcare and services provided to patients and improve efficiency by utilizing both human and material resources more effectively and more efficiently. The DCH Division of Managed Care and Quality submitted a State Plan Amendment in 2004 to implement a full-risk mandatory Medicaid Managed Care program called Georgia Families.

1.1.2

Effective June 1, 2006 the state of Georgia implemented Georgia Families (GF), a managed care program through which health care services are delivered to members of Medicaid and PeachCare for Kids™. The intent of this program is to:

1.	Offer care coordination to members
2.	Enhance access to health care services
3.	Achieve budget predictability as well as cost containment
4.	Create system-wide performance improvements
5.	Continually and incrementally improve the quality of health care and services provided to members
6.	Improve efficiency at all levels

1.1.3 The GF program is designed to:

1.1.3.1	Improve the Health Care status of the Member population;
1.1.3.2	Establish a “Provider Home” for Members through its use of assigned Primary Care Providers (PCPs);
1.1.3.3	Establish a climate of contractual accountability among the state, the care management organizations and the health care providers;
1.1.3.4	Slow the rate of expenditure growth in the Medicaid program; and
1.1.3.5	Expand and strengthen a sense of Member responsibility that leads to more appropriate utilization of health care services.

1.2 ELIGIBILITY FOR GEORGIA FAMILIES

1.2.1 Medicaid

1.2.1.1 The following Medicaid eligibility categories are required to enroll in GF.

1.2.1.1.1 Low Income Families — Adults and children who meet the standards of the old AFDC (Aid to Families with Dependent Children) program.

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1.2.1.1.2	Transitional Medicaid — Former Low-Income Medicaid (LIM) families who are no longer eligible for LIM because their earned income exceeds the income limit.
1.2.1.1.3	Pregnant Women (Right from the Start Medicaid — RSM) — Pregnant women with family income at or below two hundred percent (200%) of the federal poverty level who receive Medicaid through the RSM program.
1.2.1.1.4	Children (Right from the Start Medicaid — RSM) — Children less than nineteen (19) years of age whose family income is at or below the appropriate percentage of the federal poverty level for their age and family.
1.2.1.1.5	Children (newborn) — A child born to a woman who is eligible for Medicaid on the day the child is born.
1.2.1.1.6	Women Eligible Due to Breast and Cervical Cancer — Women less than sixty-five (65) years of age who have been screened through Title XV Center for Disease Control (CDC) screening and have been diagnosed with breast or cervical cancer.
1.2.1.1.7	Refugees — Those individuals who have the required INS documentation showing they meet a status in one of these groups: refugees, asylees, Cuban parolees/Haitian entrants, Amerasians or human trafficking victims.

1.2.2 PeachCare for Kids

1.2.2.1 PeachCare for Kids — The State Children’s Health Insurance Program (SCHIP) in Georgia. Children less than nineteen (19) years of age who have family income that is less than two hundred thirty-five percent (235%) of the federal poverty level, who are not eligible for Medicaid or any other health insurance program, and who cannot be covered by the State Health Benefit Plan.

1.2.3 Exclusions

1.2.3.1 The following recipients are excluded from Enrollment in GF, even if the recipient is otherwise eligible for GF per section 1.2.1 and section 1.2.2.

1.2.3.1.1	Recipients eligible for Medicare;
1.2.3.1.2	Recipients that are Members of a Federally Recognized Indian Tribe;

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1.2.3.1.3	Recipients that are enrolled in fee-for-service Medicaid through Supplemental Security Income prior to enrollment in GF. Members that are already enrolled in a CMO through GF will remain in that CMO until the disenrollment is completed through the normal monthly process.
1.2.3.1.4	Children less than twenty-one (21) years of age who are in foster care or other out-of-home placement;
1.2.3.1.5	Medicaid children enrolled in the Children’s Medical Services program administered by the Georgia Division of Public Health;
1.2.3.1.6	Children less than twenty-one (21) years of age who are receiving foster care or other adoption assistance under Title IV-E of the Social Security Act (NOTE: Foster Children in “Relative” placement remain within the Georgia Families program);
1.2.3.1.7	Children enrolled in the Georgia Pediatric Program (GAPP);
1.2.3.1.8	Recipients enrolled under group health plans for which DCH provides payment for premiums, deductibles, coinsurance and other cost sharing, pursuant to Section 1906 of the Social Security Act.
1.2.3.1.9	Individuals enrolled in a Hospice category of aid.

1.3	SERVICE REGIONS
1.3.1	For the purposes of coordination and planning, DCH has divided the State, by county, into six (6) Service Regions. See Attachment J for a listing of the counties in each Service Region.
1.3.2	Members will choose or will be assigned to a Care Management Organization (CMO) plan that is operating in the Service Region in which they reside.
1.4	DEFINITIONS

Whenever capitalized in this Contract, the following terms have the respective meaning set forth below, unless the context clearly requires otherwise.

Abandoned Call: A call in which the caller elects a valid option and is either not permitted access to that option or disconnects from the system.

Abuse: Provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for Health Care. It also includes Member practices that result in unnecessary cost to the Medicaid program.

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Administrative Law Hearing: The appeal process administered by the State in accordance with O.C.G.A. § 49-4-153 and as required by federal law, available to Members and Providers after they exhaust the Contractor’s Grievance System and Complaint Process.

Administrative Review: means the formal reconsideration, as a result of the proper and timely submission of a provider or member’s request, by an Office or Unit of the Division, which has proposed an adverse action.

Administrative Service(s): The contractual obligations of the Contractor that include but may not be limited to utilization management, credentialing providers, network management, quality improvement, marketing, enrollment, member services, claims payment, management information systems, financial management, and reporting.

Action: The denial or limited authorization of a requested service, including the type or level of service; the reduction, suspension, or termination of a previously authorized service; the denial, in whole or part of payment for a service; the failure to provide services in a timely manner; or the failure of the CMO to act within the time frames provided in 42 CFR 438.408(b).

Advance Directives: A written instruction, such as a living will or durable power of attorney for Health Care, recognized under State law (whether statutory or as recognized by the courts of the State), relating to the provision of Health Care when the individual is incapacitated.

After-Hours: Provider office/visitation hours that extends beyond the normal business hours of a provider, which are Monday-Friday 9-5:30 and may extend to Saturday hours.

Agent: An entity that contracts with the State of Georgia to perform administrative functions, including but not limited to: fiscal agent activities; outreach, eligibility, and Enrollment activities; Systems and technical support; etc.

Appeal: A request for review of an action, as “action” is defined in 438.400.

Assess: Means the process used to examine and determine the level of quality or the progress toward improvement of quality and/or performance related to Contractor service delivery systems.

At Risk: Any service for which the Provider agrees to accept responsibility to provide, or arrange for, in exchange for the Capitation payment and Obstetrical: Delivery Payments.

Authoritative Host: A system that contains the master or “authoritative” data for a particular data type, e.g. Member, Provider, CMO, etc. The Authoritative Host may feed data from its master data files to other systems in real time or in batch mode. Data in an Authoritative Host is expected to be up-to-date and reliable.

Authorized Representative: A person authorized by the Member in writing to make health-related decisions on behalf of a Member, including, but not limited to Enrollment and Disenrollment decisions, filing Appeals and Grievances with the Contractor, and choice of a Primary Care

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Physician (PCP). The authorized representative is either the Parent or Legal Guardian for a child. For an adult this person is either the legal guardian (guardianship action), health care or other person that has power of attorney, or another signed HIPAA compliant document indicating who can make decisions on behalf of the member.

Automatic Assignment (or Auto-Assignment): The Enrollment of an eligible person, for whom Enrollment is mandatory, in a CMO plan chosen by DCH or its Agent. Also the assignment of a new Member to a PCP chosen by the CMO Plan, pursuant to the provisions of this Contract.

Benefits: The Health Care services set forth in this Contract, for which the Contractor has agreed to provide, arrange, and be held fiscally responsible.

Blocked Call: A call that cannot be connected immediately because no circuit is available at the time the call arrives or the telephone system is programmed to block calls from entering the queue when the queue backs up beyond a defined threshold.

Calendar Days: All seven days of the week.

Capitation: A Contractual agreement through which a Contractor agrees to provide specified Health Care services to Members for a fixed amount per month.

Capitation Payment: A payment, fixed in advance, that DCH makes to a Contractor for each Member covered under a Contract for the provision of medical services and assigned to the Contractor. This payment is made regardless of whether the Member receives Covered Services or Benefits during the period covered by the payment.

Capitation Rate: The fixed monthly amount that the Contractor is prepaid by DCH for each Member assigned to the Contractor to ensure that Covered Services and Benefits under this Contract are provided.

Capitated Service: Any Covered Service for which the Contractor receives an actuarially sound Capitation Payment.

Care Coordination: A set of Member-centered, goal-oriented, culturally relevant, and logical steps to assure that a Member receives needed services in a supportive, effective, efficient, timely, and cost-effective manner. Care Coordination is also referred to as Care Management.

Care Management Organization (CMO): an entity organized for the purpose of providing Health Care, has a Health Maintenance Organization Certificate of Authority granted by the State of Georgia, which contracts with Providers, and furnishes Health Care services on a prepaid, capitated basis to Members in a designated Service Region.

Centers for Medicare & Medicaid Services (CMS): The Agency within the U.S. Department of Health and Human Services with responsibility for the Medicare, Medicaid and the State Children’s Health Insurance Program.

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Certified Nurse Midwife (CNM): A registered professional nurse who is legally authorized under State law to practice as a nurse-midwife, and has completed a program of study and clinical experience for nurse-midwives or equivalent.

Chronic Condition: Any ongoing physical, behavioral, or cognitive disorder, including chronic illnesses, impairments and disabilities. There is an expected duration of at least twelve (12) months with resulting functional limitations, reliance on compensatory mechanisms (medications, special diet, assistive device, etc) and service use or need beyond that which is normally considered routine.

Claim: A bill for services, a line item of services, or all services for one recipient within a bill.

Claims Administrator: The entity engaged by DCH to provide Administrative Service(s) to the CMO Plans in connection with processing and adjudicating risk-based payment, and recording health benefit encounter Claims for Members.

Clean Claim: A claim received by the CMO for adjudication, in a nationally accepted format in compliance with standard coding guidelines, which requires no further information, adjustment, or alteration by the Provider of the services in order to be processed and paid by the CMO. The following exceptions apply to this definition: i. A Claim for payment of expenses incurred during a period of time for which premiums are delinquent; ii. A Claim for which Fraud is suspected; and iii. A Claim for which a Third Party Resource should be responsible.

Cold-Call Marketing: Any unsolicited personal contact by the CMO Plan, with a potential Member, for the purposes of marketing.

Completion/Implementation Timeframe: The date or time period projected for a project goal or objective to be met, for progress to be demonstrated or for a proven intervention to be established as the standard of care for the Contractor.

Condition: A disease, illness, injury, disorder, of biological, cognitive, or psychological basis for which evaluation, monitoring and/or treatment are indicated.

Consecutive Enrollment Period: The consecutive twelve (12) month period beginning on the first day of Enrollment or the date the notice is sent, whichever is later. For Members that use their option to change CMO plans without cause during the first ninety (90) Calendar Days of Enrollment, the twelve-month consecutive Enrollment period will commence when the Member enrolls in the new CMO plan. This is not to be construed as a guarantee of eligibility during the consecutive Enrollment period.

Contested Claim: A Claim that is denied because the Claim is an ineligible Claim, the Claim submission is incomplete, the coding or other required information to be submitted is incorrect, the amount Claimed is in dispute, or the Claim requires special treatment.

Contract: The written agreement between the State and the Contractor; comprised of the Contract, any addenda, appendices, attachments, or amendments thereto.

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Contract Award: The date upon which DCH issues the Apparent Successful Offeror Letters.

Contract Execution: The date upon which all parties have signed the Contract.

Contractor: The Care Management Organization with a valid Certificate of Authority in Georgia that contracts hereunder with the State for the provision of comprehensive Health Care services to Members on a prepaid, capitated basis.

Contractor’s Representative: The individual legally empowered to bind the Contractor, using his/her signature block, including his/her title. This individual will be considered the Contractor’s Representative during the life of any Contract entered into with the State unless amended in writing.

Co-payment: The part of the cost-sharing requirement for Members in which a fixed monetary amount is paid for certain services/items received from the Contractor’s Providers.

Core Services: Covered services for both the Rural Health Centers (RHC) and Federally Qualified Health Centers (FQHC) programs defined as follows: Physician services, including required physician supervision of Physician Assistants (Pas), Nurse Practitioners (NPs), and Certified Nurse Midwives (CNMs); Services and supplies furnished as incident to physician professional services; Services of PAs, NPs and CNMs; Services of clinical psychologists and clinical social workers (when providing diagnosis and treatment of mental illness); Services and supplies furnished as incident to professional services provided by PAs, NPs, CNMs, clinical psychologists, and clinical social workers; Visiting nurse services on a part time or intermittent basis to homebound patients (limited to areas in which there is a designated shortage of home health agencies).

Corrective Action Plan: The detailed written plan required by DCH to correct or resolve a deficiency or event causing the assessment of a liquidated damage or sanction against the CMO.

Corrective Action Preventive Action (CAPA): CAPA focuses on the systematic investigation of discrepancies (failures and/or deviations) in an attempt to prevent their reoccurrence. To ensure that corrective and preventive actions are effective, the systematic investigation of the failure incidence is pivotal in identifying the corrective and preventive actions undertaken.

Cost Avoidance: A method of paying Claims in which the Provider is not reimbursed until the Provider has demonstrated that all available health insurance has been exhausted.

Covered Services: Those Medically Necessary Health Care services provided to Members, the payment or indemnification of which is covered under this Contract.

Credentialing: The Contractor’s determination as to the qualifications and ascribed privileges of a specific Provider to render specific Health Care services.

Critical Access Hospital (CAH): Critical access hospital’ means a hospital that meets the requirements of the federal Centers for Medicare and Medicaid Services to be designated as a critical access hospital and that is recognized by the Department of Community Health as a critical access hospital for purposes of Medicaid.

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Cultural Competency: A set of interpersonal skills that allow individuals to increase their understanding, appreciation, acceptance, and respect for cultural differences and similarities within, among and between groups and the sensitivity to know how these differences influence relationships with Members. This requires a willingness and ability to draw on community-based values, traditions and customs, to devise strategies to better meet culturally diverse Member needs, and to work with knowledgeable persons of and from the community in developing focused interactions, communications, and other supports.

Deliverable: A document, manual or report submitted to DCH by the Contractor to fulfill requirements of this Contract.

Department of Community Health (DCH): The Agency in the State of Georgia responsible for oversight and administration of the Medicaid program, the PeachCare for Kids program, and the State Health Benefits Plan (SHBP).

Department of Insurance (DOI): The Agency in the State of Georgia responsible for licensing, overseeing, regulating, and certifying insuring entities.

Diagnostic Related Group (DRG): Any of the payment categories that are used to classify patients and especially Medicare patients for the purpose of reimbursing hospitals for each case in a given category with a fixed fee regardless of the actual costs incurred and that are based especially on the principal diagnosis, surgical procedure used, age of patient, and expected length of stay in the hospital.

Diagnostic Services: Any medical procedures or supplies recommended by a physician or other licensed medical practitioner, within the scope of his or her practice under State law, to enable him or her to identify the existence, nature or extent of illness, injury, or other health deviation in a Member.

Discharge: Point at which Member is formally released from hospital, by treating physician, an authorized member of physician’s staff or by the Member after they have indicated, in writing, their decision to leave the hospital contrary to the advice of their treating physician.

Disenrollment: The removal of a Member from participation in the Contractor’s plan, but not necessarily from the Medicaid or PeachCare for Kids program.

Documented Attempt: A bona fide, or good faith, attempt to contract with a Provider. Such attempts may include written correspondence that outlines contracted negotiations between the parties, including rate and contract terms disclosure, as well as documented verbal conversations, to include date and time and parties involved.

Durable Medical Equipment (DME): Equipment, including assistive technology, which: a) can withstand repeated use; b) is used to service a health or functional purpose; c) is ordered by a qualified practitioner to address an illness, injury or disability; and d) is appropriate for use in the home, work place, or school.

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Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) Program: A Title XIX mandated program that covers screening and Diagnostic Services to determine physical and mental deficiencies in Members less than 21 years of age, and Health Care, treatment, and other measures to correct or ameliorate any deficiencies and Chronic Conditions discovered.

Emergency Medical Condition: A medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, serious impairments of bodily functions, or serious dysfunction of any bodily organ or part. An Emergency Medical Condition shall not be defined on the basis of lists of diagnoses or symptoms.

Emergency Services: Covered inpatient and outpatient services furnished by a qualified Provider that are needed to evaluate or stabilize an Emergency Medical Condition that is found to exist using the prudent layperson standard.

Encounter: A distinct set of health care services provided to a Medicaid or PeachCare for Kids Member enrolled with a Contractor on the dates that the services were delivered.

Encounter Data: Health Care Encounter Data include: (i) All data captured during the course of a single Health Care encounter that specify the diagnoses, comorbidities, procedures (therapeutic, rehabilitative, maintenance, or palliative), pharmaceuticals, medical devices and equipment associated with the Member receiving services during the Encounter; (ii) The identification of the Member receiving and the Provider(s) delivering the Health Care services during the single Encounter; and, (iii) A unique, i.e. unduplicated, identifier for the single Encounter.

Enrollee: See Member.

Enrollment: The process by which an individual eligible for Medicaid or PeachCare for Kids applies (whether voluntary or mandatory) to utilize the Contractor’s plan in lieu of fee for service and such application is approved by DCH or its Agent.

Enrollment Broker: The entity engaged by DCH to assist in outreach, education and Enrollment activities associated with the GF program.

Enrollment Period: The twelve (12) month period commencing on the effective date of Enrollment.

Evaluate: The process used to examine and determine the level of quality or the progress toward improvement of quality and/or performance related to Contractor service delivery systems.

External Quality Review (EQR): The analysis and evaluation by an external quality review organization of aggregated information on quality, timeliness, and access to the Health Care services that a CMO or its Subcontractors furnish to Members and to DCH.

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External Quality Review Organization (EQRO): An organization that meets the competence and independence requirements set forth in 42 CFR 438.354 and performs external quality review, and other related activities.

Federal Financial Participation (FFP): The funding contribution that the federal government makes to the Georgia Medicaid and PeachCare for Kids programs.

Federally Qualified Health Center (FQHC): An entity that provides outpatient health programs pursuant to Section 1905(l) (2) (B) of the Social Security Act.

Fee-for-Service (FFS): A method of reimbursement based on payment for specific services rendered to a Member.

Financial Relationship: A direct or indirect ownership or investment interest (including and option or non vested interest) in any entity. This direct or indirect interest may be in the form of equity, debt, or other means and includes any indirect ownership or investment interest no matter how many levels removed from a direct interest, or a compensation arrangement with an entity.

Fraud: An intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit or financial gain to him/herself or some other person. It includes any act that constitutes Fraud under applicable federal or State law.

Grievance: An expression of dissatisfaction about any matter other than an action. Possible subjects for grievances include, but are not limited to, the quality of care or services provided or aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the enrollee’s rights.

Grievance System: The overall system that includes Grievances and Appeals at the Contractor level and access to the State Fair Hearing process (the State’s Administrative Law Review).

Georgia Technology Authority (GTA): The state agency that manages the state’s information technology (IT) infrastructure i.e. data center, network and telecommunications services and security, establishes policies, standards and guidelines for state IT, promotes an enterprise approach to state IT, and develops and manages the state portal.

Health Care: Health Care means care, services, or supplies related to the health of an individual. Health Care includes, but is not limited to, the following: (i) Preventive, diagnostic, therapeutic, rehabilitative, maintenance, or palliative care, and counseling, service, assessment, or procedure with respect to the physical or mental Condition, or functional status, of an individual or that affects the structure or function of the body; and (ii) Sale or dispensing of a drug, device, equipment, or other item in accordance with a prescription.

Health Care Professional: A physician or other Health Care Professional, including but not limited to podiatrists, optometrists, chiropractors, psychologists, dentists, physician’s assistants, physical or occupational therapists and therapists assistants, speech-language pathologists, audiologists, registered or licensed practical nurses (including nurse practitioners, clinical nurse specialist,

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certified registered nurse anesthetists, and certified nurse midwives), licensed certified social workers, registered respiratory therapists, and certified respiratory therapy technicians licensed in the State of Georgia.

Health Check: The State of Georgia’s Early and Periodic Screening, Diagnostic, and Treatment program pursuant to Title XIX of the Social Security Act.

Health Insurance Portability and Accountability Act (HIPAA): A law enacted in 1996 by the Congress of the United States. When referenced in this Contract it includes all related rules, regulations and procedures.

Health Maintenance Organization: As used in Section 8.6 a Health Maintenance Organization is an entity, that is organized for the purpose of providing Health Care and has a Health Maintenance Organization Certificate of Authority granted by the State of Georgia, which contracts with Providers and furnishes Health Care services on a prepaid, capitated basis to Members in a designated Service Region.

Historical Provider Relationship: A Provider who has been the main source of Medicaid or PeachCare for Kids services for the Member during the previous year (decided on by the most recent provider on the member’s claim history).

Immediately: Within twenty-four (24) hours.

In-Network Provider: A Provider that has entered into a Provider Contract with the Contractor to provide services.

Incentive Arrangement: Any mechanism under which a Contractor may receive additional funds over and above the Capitation rates, for exceeding targets specified in the Contract.

Incurred-But-Not-Reported (IBNR): Estimate of unpaid Claims liability, includes received but unpaid Claims.

Information: i. Structured Data: Data that adhere to specific properties and Validation criteria that is stored as fields in database records. Structured queries can be created and run against structured data, where specific data can be used as criteria for querying a larger data set; ii. Document: Information that does not meet the definition of structured data includes text, files, spreadsheets, electronic messages and images of forms and pictures.

Information System/Systems: A combination of computing hardware and software that is used in: (a) the capture, storage, manipulation, movement, control, display, interchange and/or transmission of information, i.e. structured data (which may include digitized audio and video) and documents; and/or (b) the processing of such information for the purposes of enabling and/or facilitating a business process or related transaction.

Insolvent: Unable to meet or discharge financial liabilities.

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Limited-English-Proficient Population: Individuals with a primary language other than English who must communicate in that language if the individual is to have an equal opportunity to participate effectively in, and benefit from, any aid, service or benefit provided by the health Provider.

Mandatory Enrollment: The process whereby an individual eligible for Medicaid or PeachCare for Kids is required to enroll in a Contractor’s plan, unless otherwise exempted or excluded, to receive covered Medicaid or PeachCare for Kids services.

Marketing: Any communication from a CMO plan to any Medicaid or PeachCare for Kids eligible individual that can reasonably be interpreted as intended to influence the individual to enroll in that particular CMO plan, or not enroll in or disenroll from another CMO plan.

Marketing Materials: Materials that are produced in any medium, by or on behalf of a CMO, and can reasonably be interpreted as intended to market to any Medicaid or PeachCare for Kids eligible individual.

Measurable: applies to a Contractor objective and means the ability to determine definitively whether, or not the objective has been met, or whether progress has been made toward a positive outcome.

Medicaid: The joint federal/state program of medical assistance established by Title XIX of the Social Security Act, which in Georgia is administered by DCH.

Medicaid Eligible: An individual eligible to receive services under the Medicaid Program but not necessarily enrolled in the Medicaid Program.

Medicaid Management Information System (MMIS): Computerized system used for the processing, collecting, analysis and reporting of Information needed to support Medicaid and SCHIP functions. The MMIS consists of all required subsystems as specified in the State Medicaid Manual.

Medical Director: The licensed physician designated by the Contractor to exercise general supervision over the provision of health service Benefits by the Contractor.

Medical Records: The complete, comprehensive records of a Member including, but not limited to, x-rays, laboratory tests, results, examinations and notes, accessible at the site of the Member’s participating Primary Care physician or Provider, that document all medical services received by the Member, including inpatient, ambulatory, ancillary, and emergency care, prepared in accordance with all applicable DCH rules and regulations, and signed by the medical professional rendering the services.

Medical Screening: An examination: i. provided on hospital property, and provided for that patient for whom it is requested or required, ii. performed within the capabilities of the hospital’s

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emergency room (ER) (including ancillary services routinely available to its ER) iii. the purpose of which is to determine if the patient has an Emergency Medical Condition, and iv. performed by a physician (M.D. or D.O.) and/or by a nurse practitioner, or physician assistant as permitted by State statutes and regulations and hospital bylaws.

Medically Necessary Services: Those services that meet the definition found in Section 4.5.

Member: A Medicaid or PeachCare for Kids recipient who is currently enrolled in a CMO plan.

Methodology: Means the planned process, steps, activities or actions taken by a Contractor to achieve a goal or objective, or to progress toward a positive outcome.

Monitoring: Means the process of observing, evaluating, analyzing and conducting follow-up activities.

National Committee for Quality Assurance (NCQA): An organization that sets standards, and evaluates and accredits health plans and other managed care organizations.

Net Capitation Payment: The Capitation Payment made by DCH to Contractor less any quality assessment fee made by Contractor to DCH. This payment amount also excludes a payment to a Contractor for obstetrical or other medical services that are on a per occurrence basis rather than a per member basis.

Non-Emergency Transportation (NET): A ride, or reimbursement for a ride, provided so that a Member with no other transportation resources can receive services from a medical provider. NET does not include transportation provided on an emergency basis, such as trips to the emergency room in life threatening situations.

Non-Institutional Claims: Claims submitted by a medical Provider other than a hospital, nursing facility, or intermediate care facility/mentally retarded (ICF/MR).

Nurse Practitioner Certified (NP-C): A registered professional nurse who is licensed by the State of Georgia and meets the advanced educational and clinical practice requirements beyond the two or four years of basic nursing education required of all registered nurses.

Objective: Means a measurable step, generally in a series of progressive steps, to achieve a goal.

Obstetrical Delivery Payment: A payment, fixed in advance, that DCH makes to a Contractor for each birth of a child to a Member. The Contractor is responsible for all medical services related to the delivery of the Member’s child.

Out-of-Network Provider: A Provider of services that does not have a Provider contract with the Contractor.

PeachCare for Kids: The State of Georgia’s State Children’s Health Insurance Program established pursuant to Title XXI of the Social Security Act.

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Performance Improvement Project (PIP): Means a planned process of data gathering, evaluation and analysis to determine interventions or activities that are projected to have a positive outcome. A PIP includes measuring the impact of the interventions or activities toward improving the quality of care and service delivery.

Pharmacy Benefit Manager (PBM): An entity responsible for the provision and administration of pharmacy benefit management services including but not limited to claims processing and maintenance of associated systems and related processes.

Physician Assistant (PA) — A trained, licensed individual who performs tasks that might otherwise be performed by physicians or under the direction of a supervising physician.

Physician Incentive Plan: Any compensation arrangement between a Contractor and a physician or physician group that may directly have the effect of reducing or limiting services furnished to Members.

Post-Stabilization Services: Covered Services, related to an Emergency Medical Condition that are provided after a member is stabilized in order to maintain the stabilized condition or to improve or resolve the member’s condition.

Potential Enrollee: See Potential Member.

Potential Member: A Medicaid or SCHIP recipient who is subject to mandatory Enrollment in a care management program but is not yet the Member of a specific CMO plan.

Pre-Certification: Review conducted prior to a Member’s admission, stay or other service or course of treatment in a hospital or other facility.

Prevalent Non-English Language: A language other than English, spoken by a significant number or percentage of potential Members and Members in the State.

Preventive Services: Services provided by a physician or other licensed health practitioner within the scope of his or her practice under State law to: prevent disease, disability, and other health Conditions or their progression; treat potential secondary Conditions before they happen or at an early remediable stage; prolong life; and promote physical and mental health and efficiency.

Primary Care: All Health Care services and laboratory services, including periodic examinations, preventive Health Care and counseling, immunizations, diagnosis and treatment of illness or injury, coordination of overall medical care, record maintenance, and initiation of Referrals to specialty Providers described in this Contract, and for maintaining continuity of patient care. These services are customarily furnished by or through a general practitioner, family physician, internal medicine physician, obstetrician/gynecologist, or pediatrician, and may be furnished by a nurse practitioner to the extent the furnishing of those services is legally authorized in the State in which the practitioner furnishes them.

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Primary Care Provider (PCP): A licensed medical doctor (MD) or doctor of osteopathy (DO) or certain other licensed medical practitioner who, within the scope of practice and in accordance with State certification/licensure requirements, standards, and practices, is responsible for providing all required Primary Care services to Members. A PCP shall include general/family practitioners, pediatricians, internists, physician’s assistants, CNMs or NP-Cs, provided that the practitioner is able and willing to carry out all PCP responsibilities in accordance with these Contract provisions and licensure requirements.

Prior Authorization: (also known as “pre-authorization” or “prior approval”). Authorization granted in advance of the rendering of a service after appropriate medical review.

Proposed Action: The proposal of an action for the denial or limited authorization of a requested service, including the type or level of service; the reduction, suspension, or termination of a previously authorized service; the denial, in whole or part of payment for a service; the failure to provide services in a timely manner; or the failure of the CMO to act within the time frames provided in 42 CFR 438.408(b).

Prospective Payment System (PPS): A method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, DRGs for inpatient hospital services). CMS uses separate PPSs for reimbursement to acute inpatient hospitals, home health agencies, hospice, hospital outpatient, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities.

Provider: Any physician, hospital, facility, or other Health Care Professional who is licensed or otherwise authorized to provide Health Care services in the State or jurisdiction in which they are furnished.

Provider Complaint: A written expression by a Provider, which indicates dissatisfaction or dispute with the Contractor’s policies, procedures, or any aspect of a Contractor’s administrative functions, including a Proposed Action.

Provider Contract: Any written contract between the Contractor and a Provider that requires the Provider to perform specific parts of the Contractor’s obligations for the provision of Health Care services under this Contract.

Quality: The degree to which a CMO increases the likelihood of desired health outcomes of its Members through its structural and operational characteristics, and through the provision of health services that are consistent with current professional knowledge.

Referral: A request by a PCP for a Member to be evaluated and/or treated by a different physician, usually a specialist.

Referral Services: Those Health Care services provided by a health professional other than the Primary Care Provider and which are ordered and approved by the Primary Care Provider or the Contractor.

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Reinsurance: An agreement whereby the Contractor transfers risk or liability for losses, in whole or in part, sustained under this Contract. A reinsurance agreement may also exist at the Provider level.

(Claims) Reprocessing: Upon determination of the need to correct the outcome of one or more claims processing transactions, the subsequent attempt to process a single claim or batch of claims.

Remedy: The State’s means to enforce the terms of the Contract through performance guarantees and other actions.

Risk Contract: A Contract under which the Contractor assumes financial risk for the cost of the services covered under the Contract, and may incur a loss if the cost of providing services exceeds the payments made by DCH to the Contractor for services covered under the Contract.

Routine Care: Treatment of a Condition that would have no adverse effects if not treated within twenty-four (24) hours or could be treated in a less acute setting (e.g., physicians office) or by the patient.

Rural Health Clinic (RHC): A clinic certified to receive special Medicare and Medicaid reimbursement. The purpose of the RHC program is improving access to primary care in underserved rural areas. RHCs are required to use a team approach of physicians and midlevel practitioners (nurse practitioners, physician assistants, and certified nurse midwives) to provide services. The clinic must be staffed at least 50% of the time with a midlevel practitioner. RHCs may also provide other health care services, such as mental health or vision services, but reimbursement for those services may not be based on their allowable costs.

Rural Health Services: Medical services provided to rural sparsely populated areas isolated from large metropolitan counties.

Scope of Services: Those specific Health Care services for which a Provider has been credentialed, by the plan, to provide to Members.

Service Authorization: A Member’s request for the provision of a service.

Service Region: A geographic area comprised of those counties where the Contractor is responsible for providing adequate access to services and Providers.

Short Term: A period of thirty (30) Calendar Days or less.

Significant Traditional Providers: Those Providers that provided the top eighty percent (80%) of Medicaid encounters for the GMC-eligible population in the base year of 2004.

Span of Control: Information systems and telecommunications capabilities that the CMO itself operates or for which it is otherwise legally responsible according to the terms and Conditions of this Contract. The CMO span of control also includes Systems and telecommunications capabilities outsourced by the CMO.

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Stabilized: With respect to an emergency medical condition; that no material deterioration of the condition is likely, within reasonable medical probability, to result from or occur during the transfer of the individual from a facility, or , with respect to a woman in labor, the woman has delivered (including the placenta).

State: The State of Georgia.

State Children’s Health Insurance Program (SCHIP): A joint federal-state Health Care program for targeted, low-income children, established pursuant to Title XXI of the Social Security Act. Georgia’s SCHIP program is called PeachCare for Kids.

State Fair Hearing: See Administrative Law Hearing

Subcontract: Any written contract between the Contractor and a third party, including a Provider, to perform a specified part of the Contractor’s obligations under this Contract.

Subcontractor: Any third party who has a written Contract with the Contractor to perform a specified part of the Contractor’s obligations under this Contract.

Subcontractor Payments: Any amounts the Contractor pays a Provider or Subcontractor for services they furnish directly, plus amounts paid for administration and amounts paid (in whole or in part) based on use and costs of Referral Services (such as Withhold amounts, bonuses based on Referral levels, and any other compensation to the physician or physician group to influence the use for Referral Services). Bonuses and other compensation that are not based on Referral levels (such as bonuses based solely on quality of care furnished, patient satisfaction, and participation on committees) are not considered payments for purposes of Physician Incentive Plans.

System Access Device: A device used to access System functions; can be any one of the following devices if it and the System are so configured: i. Workstation (stationary or mobile computing device) ii. Network computer/“winterm” device, iii. “Point of Sale” device, iv. Phone, v. Multi-function communication and computing device, e.g. PDA.

System Unavailability: Failure of the system to provide a designated user access based on service level agreements or software/hardware problems within the contractors span of control.

System Function Response Time: Based on the specific sub function being performed,

Record Search Time-the time elapsed after the search command is entered until the list of matching records begins to appear on the monitor.

Record Retrieval Time-the time elapsed after the retrieve command is entered until the record data begin to appear on the monitor.

Print Initiation Time- the elapsed time from the command to print a screen or report until it appears in the appropriate queue.

On-line Claims Adjudication Response Time- the elapsed time from the receipt of the transaction by the Contractor from the Provider and/or switch vendor until the Contractor hands-off a response to the Provider and/or switch vendor.

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Systems: See Information Systems.

Telecommunication Device for the Deaf (TDD): Special telephony devices with keyboard attachments for use by individuals with hearing impairments who are unable to use conventional phones.

Third Party Resource: Any person, institution, corporation, insurance company, public, private or governmental entity who is or may be liable in Contract, tort, or otherwise by law or equity to pay all or part of the medical cost of injury, disease or disability of an applicant for or recipient of medical assistance.

Urgent Care: Medically Necessary treatment for an injury, illness, or another type of Condition (usually not life threatening) which should be treated within twenty-four (24) hours.

Utilization: The rate patterns of service usage or types of service occurring within a specified time.

Utilization Management (UM): A service performed by the Contractor which seeks to assure that Covered Services provided to Members are in accordance with, and appropriate under, the standards and requirements established by the Contractor, or a similar program developed, established or administered by DCH.

Utilization Review (UR): Evaluation of the clinical necessity, appropriateness, efficacy, or efficiency of Health Care services, procedures or settings, and ambulatory review, prospective review, concurrent review, second opinions, care management, discharge planning, or retrospective review.

Validation: The review of information, data, and procedures to determine the extent to which they are accurate, reliable, free from bias and in accord with standards for data collection and analysis.

Week: The traditional seven-day week, Sunday through Saturday.

Withhold: A percentage of payments or set dollar amounts that a Contractor deducts from a practitioner’s service fee, Capitation, or salary payment, and that may or may not be returned to the physician, depending on specific predetermined factors.

Working Days: Monday through Friday but shall not include Saturdays, Sundays, or State and Federal Holidays.

Work Week: The traditional work week, Monday through Friday.

1.5 ACRONYMS

AFDC — Aid to Families with Dependent Children

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AICPA — American Institute of Certified Public Accountants

CAH — Critical Access Hospital

CAP — Corrective Action Plan

CAPA — Corrective Action Preventive Action

CDC — Centers for Disease Control

CFR — Code of Federal Regulations

CMO — Care Management Organization

CMS — Centers for Medicare & Medicaid Services

CNM — Certified Nurse Midwives

CSB — Community Service Boards

DCH — Department of Community Health

DME — Durable Medical Equipment

DOI — Department of Insurance

EB — Enrollment Broker

EPSDT — Early and Periodic Screening, Diagnostic, and Treatment

EQR — External Quality Review

EQRO — External Quality Review Organization

EVS — Eligibility Verification System

FFS — Fee-for-Service

FQHC — Federally Qualified Health Center

GF — Georgia Families

GTA — Georgia Technology Authority

HHS — US Department of Health and Human Services

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HIPAA — Health Insurance Portability and Accountability Act

HMO — Health Management Organization

IBNR — Incurred-But-Not-Reported

INS — U.S. Immigration and Naturalization Services

LIM — Low-Income Medicaid

MMIS — Medicaid Management Information System

NAIC — National Association of Insurance Commissioners

NCQA — National Committee for Quality Assurance

NET — Non-Emergency Transportation

NP-C — Certified Nurse Practitioners

NPI — National Provider Identifier

PA — Physician Assistant

PBM — Pharmacy Benefit Manager

PCP — Primary Care Provider

PPS — Prospective Payment System

QAPI — Quality Assessment Performance Improvement

RHC — Rural Health Clinic

RSM — Right from the Start Medicaid

SCHIP — State Children’s Health Insurance Program

SSA — Social Security Act

TANF — Temporary Assistance for Needy Families

TDD — Telecommunication Device for the Deaf

UM — Utilization Management

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UPIN — Unique Physician Identifier Number

UR — Utilization Review

2.0	DCH RESPONSIBILITIES
2.1	GENERAL PROVISIONS
2.1.1	DCH is responsible for administering the GF program. The agency will administer Contracts, monitor Contractor performance, and provide oversight in all aspects of the Contractor operations.
2.2	LEGAL COMPLIANCE
2.2.1	DCH will comply with, and will monitor the Contractor’s compliance with, all applicable State and federal laws and regulations.
2.3	ELIGIBILITY AND ENROLLMENT

2.3.1	The State of Georgia has the sole authority for determining eligibility for the Medicaid program and whether Medicaid beneficiaries are eligible for Enrollment in GF. DCH or its Agent will determine eligibility for PeachCare for Kids and will collect applicable premiums. DCH or its agent will continue responsibility for the electronic eligibility verification system (EVS).
2.3.2	DCH or its Agent will review the Medicaid Management Information System (MMIS) file daily and send written notification and information within two (2) Business Days to all Members who are determined eligible for GF. A Member shall have thirty (30) Calendar Days to select a CMO plan and a PCP. Each Family Head of Household shall have thirty (30) Calendar Days to select one (1) CMO plan for the entire Family and PCP for each member. DCH or its Agent will issue a monthly notice of all Enrollments to the CMO plan.
2.3.3	If the Member does not choose a CMO plan within thirty (30) Calendar Days of being deemed eligible for GF, DCH or its Agent will Auto-Assign the individual to a CMO plan using the following algorithm:

2.3.3.1	If an immediate family member(s) of the Member is already enrolled in one CMO plan, the Member will be Auto-Assigned to that plan;
2.3.3.2	If there are no immediate family members already enrolled and the Member has a Historical Provider Relationship with a Provider, the Member will be Auto-Assigned to the CMO plan where the Provider is contracted;

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2.3.3.3 If the Member does not have a Historical Provider Relationship with a Provider in any CMO plan, or the Provider contracts with all plans, the Member will be Auto-Assigned to the CMO plan that has the lowest capitated rates in the Service Region.

2.3.4	Enrollment, whether chosen or Auto-Assigned, will be effective at 12:01 a.m. on the first (1st) Calendar Day of the month following the Member selection or Auto-Assignment, for those Members assigned on or between the first (1st) and twenty-fourth (24th) Calendar Day of the month. For those Members assigned on or between the twenty-fifth (25th) and thirty-first (31st) Calendar Day of the month, Enrollment will be effective at 12:01 a.m. on the first (1st) Calendar Day of the second (2nd) month after assignment.
2.3.5	In the future, at a date to be determined by DCH, DCH or its Agent may include quality measures in the Auto-Assignment algorithm. Members will be Auto-Assigned to those plans that have higher scores on quality measures to be defined by DCH. This factor will be applied after determining that there are no Historical Provider Relationships, but prior to utilizing the lowest Capitation rates criteria.
2.3.6	In the Atlanta Service Region, DCH will limit enrollment in a single plan to no more than forty percent (40%) of total GF eligible lives in the Service Region. Members will not be Auto-Assigned to a CMO plan unless a family member is enrolled in the CMO plan or a Historical Provider Relationship exists with a Provider that does not participate in any other CMO plan in the Atlanta Service Region. DCH may, at its sole discretion, elect to modify this threshold for reasons it deems necessary and proper.
2.3.7	In the five (5) Service Regions other than Atlanta DCH will limit Enrollment in a single plan to no more than sixty-five percent (65%) of total GF eligible lives in the Service Region. Members will not be Auto-Assigned to a CMO plan unless a family member is enrolled in the CMO plan or a Historical Provider Relationship exists with a Provider that does not participate in any other CMO plan in the Service Region. Enrollment limits will be figured once per quarter at the beginning of each quarter.
2.3.8	DCH or its Agent will have five (5) Business Days to notify Members and the CMO plan of the Auto-Assignment. Notice to the Member will be made in writing and sent via surface mail. Notice to the CMO plan will be made via file transfer.
2.3.9	DCH or its Agent will be responsible for the consecutive Enrollment period and re-Enrollment functions.
2.3.10	Conditioned on continued eligibility, all Members will be enrolled in a CMO plan for a period of twelve (12) consecutive months. This consecutive Enrollment period will commence on the first (1st) day of Enrollment or upon the date the notice is sent, whichever is later. If a Member disenrolls from one CMO plan and enrolls in a

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	different CMO plan, consecutive Enrollment period will begin on the effective date of Enrollment in the second (2nd) CMO plan.
2.3.11	DCH or its Agent will automatically enroll a Member into the CMO plan in which he or she was most recently enrolled if the Member has a temporary loss of eligibility, defined as less than sixty (60) Calendar Days. In this circumstance, the consecutive Enrollment period will continue as though there has been no break in eligibility, keeping the original twelve (12) month period.
2.3.12	DCH or its Agent will notify Members at least once every twelve (12) months, and at least sixty (60) Calendar Days prior to the date upon which the consecutive Enrollment period ends (the annual Enrollment opportunity), that they have the opportunity to switch CMO plans. Members who do not make a choice will be deemed to have chosen to remain with their current CMO plan.
2.3.13	In the event a temporary loss of eligibility has caused the Member to miss the annual Enrollment opportunity, DCH or its Agent will enroll the Member in the CMO plan in which he or she was enrolled prior to the loss of eligibility. The member will receive a new 60-calendar day notification period beginning the first day of the next month.
2.3.14	In accordance with current operations, the State will issue a Medicaid number to a newborn upon notification from the hospital, or other authorized Medicaid provider.
2.3.15	Upon notification from a CMO plan that a Member is an expectant mother, DCH or its Agent shall mail a newborn enrollment packet to the expectant mother. This packet shall include information that the newborn will be Auto-Assigned to the mother’s CMO plan and that she may, if she wants, select a PCP for her newborn prior to the birth by contacting her CMO plan. The mother shall have ninety (90) Calendar Days from the day a Medicaid number was assigned to her newborn to choose a different CMO plan.
2.4	DISENROLLMENT
2.4.1	DCH or its Agent will process all CMO plan Disenrollments. This includes Disenrollments due to non-payment of the PeachCare for Kids premiums, loss of eligibility for GF due to other reasons, and all Disenrollment requests Members or CMO plans submit via telephone, surface mail, internet, facsimile, and in person.
2.4.2	DCH or its Agent will make final determinations about granting Disenrollment requests and will notify the CMO plan via file transfer and the Member via surface mail of any Disenrollment decision within five (5) Calendar Days of making the final determination
2.4.3	Whether requested by the Member or the Contractor the following are the Disenrollment timeframes:

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2.4.3.1	If the Disenrollment request is received by DCH or its agent on or before the managed care monthly process on the twenty-fourth (24th) Calendar Day of the month, the Disenrollment will be effective at midnight the first (1st) day of the month following the month in which the request was filed; and
2.4.3.2	If the Disenrollment request is received by DCH or its agent after the managed care monthly process on the twenty-fourth (24th) Calendar Day of the month, the Disenrollment will be effective at midnight the first (1st) day of the second (2nd) month following the month in which the request was filed.
2.4.3.3	If a Member is hospitalized in an inpatient facility on the first day of the month their Disenrollment is to be effective, the Member will remain enrolled until the month following their discharge from the inpatient facility.

2.4.4	When Disenrollment is necessary due to a change in eligibility category, or eligibility for GF, the Member will be disenrolled according to the timeframes identified in Section 2.4.3.
2.4.5	When disenrollment is necessary because a Member loses Medicaid or PeachCare for Kids eligibility (for example, he or she has died, been incarcerated, or moved out-of-state) disenrollment shall be immediate.
2.5	MEMBER SERVICES AND MARKETING
2.5.1	DCH will provide to the Contractor its methodology for identifying the prevalent non-English languages spoken. For the purposes of this Section, prevalent means a non-English language spoken by a significant number or percentage of Medicaid and PeachCare for Kids eligible individuals in the State.
2.5.2	DCH will review and prior approve all marketing materials.
2.6	COVERED SERVICES & SPECIAL COVERAGE PROVISIONS
2.6.1	DCH will use submitted Encounter Data, and other data sources, to determine Contractor compliance with federal requirements that eligible Members under the age of twenty-one (21) receive periodic screens and preventive/well child visits in accordance with the specified periodicity schedule. DCH will use the participant ratio as calculated using the CMS 416 methodology for measuring the Contractor’s performance.
2.7	NETWORK

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2.7.1	DCH will provide to the Contractor up-to-date changes to the State’s list of excluded Providers, as well as any additional information that will affect the Contractor’s Provider network.
2.7.2	DCH will consider all Contractors’ requests to waive network geographic access requirements in rural areas. All such requests shall be submitted in writing.
2.7.3	DCH will provide the State’s Provider Credentialing policies to the Contractor upon execution of this Contract.
2.8	QUALITY MONITORING
2.8.1	DCH will have a written strategy that the contractor fully cooperates with DCH’s Quality Monitoring reviews by providing at a minimum information for review that supports it’s compliance with the items being monitored. In accordance with 42 CFR 438.204, this strategy will, at a minimum, monitor:

2.8.1.1	The availability of services;
2.8.1.2	The adequacy of the Contractor’s capacity and services;
2.8.1.3	The Contractor’s coordination and continuity of care for Members;
2.8.1.4	The coverage and authorization of services;
2.8.1.5	The Contractor’s policies and procedures for selection and retention of Providers;
2.8.1.6	The Contractor’s compliance with Member information requirements in accordance with 42 CFR 438.10;
2.8.1.7	The Contractor’s compliance with State and federal privacy laws and regulations relative to Member’s confidentiality;
2.8.1.8	The Contractor’s compliance with Member Enrollment and Disenrollment requirements and limitations;
2.8.1.9	The Contractor’s Grievance System;
2.8.1.10	The Contractor’s oversight of all Subcontractor relationships and delegations;
2.8.1.11	The Contractor’s adoption of practice guidelines, including the dissemination of the guidelines to Providers and Providers’ application of them;
2.8.1.12	The Contractor’s quality assessment and performance improvement program; and

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2.8.1.13	The Contractor’s health information systems.
2.8.1.14	The Contractor shall respond to requests for information within stipulated time frame.

2.9	COORDINATION WITH CONTRACTOR’S KEY STAFF
2.9.1	DCH will make diligent good faith efforts to facilitate effective and continuous communication and coordination with the Contractor in all areas of GF operations.
2.9.2	Specifically, DCH will designate individuals within the department who will serve as a liaison to the corresponding individual on the Contractor’s staff, including:

2.9.2.1	A program integrity staff Member;
2.9.2.2	A quality oversight staff Member;
2.9.2.3	A Grievance System staff Member who will also ensure that the State Administrative Law Hearing process is consistent with the Rules of the Office of the State Administrative Hearings Chapter 616-1-2 and with any other applicable rule, regulation, or procedure whether State or federal;
2.9.2.4	An information systems coordinator; and
2.9.2.5	A vendor management staff Member.

2.10	FORMAT STANDARDS
2.10.1	DCH will provide to the Contractor its standards for formatting all Reports requested of the Contractor. DCH will require that all Reports be submitted electronically.
2.11	FINANCIAL MANAGEMENT
2.11.1	In order to facilitate the Contractor’s efforts in using Cost Avoidance processes to ensure that primary payments from the liable third party are identified and collected to offset medical expenses; DCH will include information about known Third Party Resources on the electronic Enrollment data given to the Contractor.
2.11.2	DCH will monitor Contractor compliance with federal and State physician incentive plan rules and regulations.
2.12	INFORMATION SYSTEMS
2.12.1	DCH will supply the following information to the Contractor:

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2.12.1.1	Application and database design and development requirements (standards) that are specific to the State of Georgia.
2.12.1.2	Networking and data communications requirements (standards) that are specific to the State of Georgia.
2.12.1.3	Specific information for integrity controls and audit trail requirements.
2.12.1.4	State web portal (Georgia.gov) integration standards and design guidelines.
2.12.1.5	Specifications for data files to be transmitted by the Contractor to DCH and/or its agents.
2.12.1.6	Specifications for point-to-point, uni-directional or bi-directional interfaces between Contractor and DCH systems.

2.13	READINESS OR ANNUAL REVIEW
2.13.1	DCH will conduct a readiness review of each new CMO at least 30 days prior to Enrollment of Medicaid and/or PeachCare for Kids™ recipients in the CMO plan and an annual review of each existing CMO plan. The readiness and financial review will include, one (1) or more as needed as determined by DCH on-site review. DCH will conduct the reviews to provide assurances that the Contractor is able and prepared to perform all administrative functions and is providing for high quality of services to Members.
2.13.2	Specifically, DCH’s review will document the status of the Contractor with respect to meeting program standards set forth in this Contract, as well as any goals established by the Contractor. A multidisciplinary team appointed by DCH will conduct the readiness and annual review. The scope of the reviews will include, but not be limited to, review and/or verification of:

2.13.2.1	Network Provider composition and access;
2.13.2.2	Staff;
2.13.2.3	Marketing materials;
2.13.2.4	Content of Provider agreements;
2.13.2.5	EPSDT plan;
2.13.2.6	Member services capability;

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2.13.2.7	Comprehensiveness of quality and Utilization Management strategies;
2.13.2.8	Policies and procedures for the Grievance System and Complaint System;
2.13.2.9	Financial solvency;
2.13.2.10	Contractor litigation history, current litigation, audits and other government investigations both in Georgia and in other states; and
2.13.2.11	Information systems’ Claims payment system performance and interfacing capabilities.

2.13.3	The readiness review may assess the Contractor’s ability to meet any requirements set forth in this Contract and the documents referenced herein.
2.13.4	Members may not be enrolled in a CMO plan until DCH has determined that the Contractor is capable of meeting these standards. A Contractor’s failure to pass the readiness review 30 days prior to the beginning of service delivery may result in immediate Contract termination. Contractor’s failure to pass the annual review may result in corrective action and pending contract termination.
2.13.5	DCH will provide the Contractor with a summary of the findings as well as areas requiring remedial action.
3.0	GENERAL CONTRACTOR RESPONSIBILITIES
3.1	The Contractor shall immediately notify DCH of any of the following:
3.1.1	Change in business address, telephone number, facsimile number, and e-mail address;
3.1.2	Change in corporate status or nature;
3.1.3	Change in business location;
3.1.4	Change in solvency;
3.1.5	Change in corporate officers, executive employees, or corporate structure;
3.1.6	Change in ownership, including but not limited to the new owner’s legal name, business address, telephone number, facsimile number, and e-mail address;
3.1.7	Change in incorporation status; or
3.1.8	Change in federal employee identification number or federal tax identification number.

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3.1.9	Change in CMO litigation history, current litigation, audits and other government investigations both in Georgia and in other states.
3.2	The Contractor shall not make any changes to any of the requirements herein, without explicit written approval from Commissioner of DCH, or his or her designee.
4.0	SPECIFIC CONTRACTOR RESPONSIBILITIES
	The Contractor shall complete the following actions, tasks, obligations, and responsibilities:
4.1	ENROLLMENT
4.1.1	Enrollment Procedures

4.1.1.1	DCH or its Agent is responsible for Enrollment, including auto-assignment of a CMO plan; Disenrollment; education; and outreach activities. The Contractor shall coordinate with DCH and its Agent as necessary for all Enrollment and Disenrollment functions.
4.1.1.2	DCH or its Agent will make every effort to ensure that recipients ineligible for Enrollment in GF are not enrolled in GF. However, to ensure that such recipients are not enrolled in GF, the Contractor shall assist DCH or its Agent in the identification of recipients that are ineligible for Enrollment in GF, as discussed in Section 1.2.3, should such recipients inadvertently become enrolled in GF.
4.1.1.3	The Contractor shall assist DCH or its Agent in the identification of recipients that become ineligible for Medicaid (for example, those who have died, been incarcerated, or moved out-of-state).
4.1.1.4	The Contractor shall accept all individuals for enrollment without restrictions. The Contractor shall not discriminate against individuals on the basis of religion, gender, race, color, or national origin, and will not use any policy or practice that has the effect of discriminating on the basis of religion, gender, race, color, or national origin or on the basis of health, health status, pre-existing Condition, or need for Health Care services.

4.1.2 Selection of a Primary Care Provider (PCP)

4.1.2.1 At the time of plan selection, Members, with counseling and assistance from DCH or its Agent, will choose an In-Network PCP. If a Member fails to select a PCP, or if the Member has been Auto-Assigned to the CMO plan, the Contractor shall Auto-Assign Members to a PCP based on the following algorithm:

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4.1.2.1.1	Assignment shall be made to a Provider with whom, based on FFS Claims history, the Member has a Historical Provider Relationship, provided that the geographic access requirements in 4.8.13 are met;
4.1.2.1.2	If there is no Historical Provider Relationship the Member shall be Auto-Assigned to a Provider who is the assigned PCP for an immediate family member enrolled in the CMO plan, if the Provider is an appropriate Provider based on the age and gender of the Member;
4.1.2.1.3	If other immediate family members do not have an assigned PCP, Auto-Assignment shall be made to a Provider with whom a family member has a Historical Provider Relationship; if the Provider is an appropriate Provider based on the age and gender of the Member;
4.1.2.1.4	If there is no Member or immediate family member historical usage Members shall be Auto-Assigned to a PCP, using an algorithm developed by the Contractor, based on the age and sex of the Member, and geographic proximity.

4.1.2.2	PCP assignment shall be effective immediately. The Contractor shall notify the Member via surface mail of their Auto-Assigned PCP within ten (10) Calendar Days of Auto-Assignment.
4.1.2.3	The Contractor shall submit its PCP Auto-Assignment Policies and Procedures to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.1.3 Newborn Enrollment

4.1.3.1	All newborns shall be Auto-Assigned by DCH or its Agent to the mother’s CMO plan.
4.1.3.2	The Contractor shall be responsible for notifying DCH or its Agent of any Members who are expectant mothers at least sixty (60) Calendar Days prior to the expected date of delivery. The Contractor shall be responsible for notifying DCH or its Agent of newborns born to enrolled members that do not appear on a monthly roster within 60 days of birth.
4.1.3.3	The Contractor shall provide assistance to any expectant mother who contacts them wishing to make a PCP selection for her newborn and record that selection.
4.1.3.4	Within twenty-four (24) hours of the birth, the Contractor shall ensure the submission of a newborn notification form to DCH or its agent. If the mother has made a PCP selection, this information shall be included in the newborn

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notification form. If the mother has not made a PCP selection, the Contractor shall Auto-Assign the newborn to a PCP within thirty (30) days of the birth. Auto-Assignment shall be made using the algorithm described in Section 4.1.2.1. Notice of the PCP Auto-Assignment shall be mailed to the mother within twenty-four (24) hours.

4.1.4 Reporting Requirements

4.1.4.1	The Contractor shall submit to DCH weekly Member Information Reports as described in Section 4.18.2.1.
4.1.4.2	The Contractor shall submit to DCH monthly Eligibility and Enrollment Reconciliation Reports as described in Section 4.18.3.2.

4.2	DISENROLLMENT
4.2.1	Disenrollment Initiated by the Member

4.2.1.1	A Member may request Disenrollment from a CMO plan without cause during the ninety (90) Calendar Days following the date of the Member’s initial Enrollment with the CMO plan or the date DCH or its Agent sends the Member notice of the Enrollment, whichever is later. A Member may request Disenrollment without cause every twelve (12) months thereafter.
4.2.1.2	A Member may request Disenrollment from a CMO plan for cause at any time. The following constitutes cause for Disenrollment by the Member:
4.2.1.2.1	The Member moves out of the CMO plan’s Service Region;
4.2.1.2.2	The CMO plan does not, because of moral or religious objections, provide the Covered Service the Member seeks;
4.2.1.2.3	The Member needs related services to be performed at the same time and not all related services are available within the network. The Member’s Provider or another Provider have determined that receiving service separately would subject the Member to unnecessary risk;
4.2.1.2.4	The Member requests to be assigned to the same CMO plan as family members; and
4.2.1.2.5	The Member’s Medicaid eligibility category changes to a category ineligible for GF, and/or the Member otherwise becomes ineligible to participate in GF.
4.2.1.2.6	Other reasons, per 42 CFR 438.56(d)(2), include, but are not limited to, poor quality of care, lack of access to services covered under the

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Contract, or lack of Providers experienced in dealing with the Member’s Health Care needs. (DCH or its Agent shall make determination of these reasons.)

4.2.1.3 The Contractor shall provide assistance to Members seeking to disenroll. This assistance shall consist of providing the forms to the Member and referring the Member to DCH or its Agent who will make Disenrollment determinations.

4.2.2 Disenrollment Initiated by the Contractor

4.2.2.1	The Contractor shall complete all Disenrollment paperwork for Members it is seeking to disenroll.
4.2.2.2	The Contractor shall notify DCH or its Agent upon identification of a Member who it knows or believes meets the criteria for Disenrollment, as defined in Section 4.2.3.1.
4.2.2.3	Prior to requesting Disenrollment of a Member for reasons described in Sections 4.2.3.1.1, 4.2.3.1.2, and 4.2.3.1.3 the Contractor shall document at least three (3) interventions over a period of ninety (90) Calendar Days that occurred through treatment, case management, and Care Coordination to resolve any difficulty leading to the request. The Contractor shall provide at least one (1) written warning to the Member, certified return receipt requested, regarding implications of his or her actions. DCH recommends that this notice be delivered within ten (10) Business Days of the Member’s action.
4.2.2.4	If the Member has demonstrated abusive or threatening behavior as defined by DCH, only one (1) written attempt to resolve the difficulty is required.
4.2.2.5	The Contractor shall cite to DCH or its Agent at least one (1) acceptable reason for Disenrollment outlined in Section 4.2.3 before requesting Disenrollment of the Member.
4.2.2.6	The Contractor shall submit Disenrollment requests to DCH or its Agent and the Contractor shall honor all Disenrollment determinations made by DCH or its Agent. DCH’s decision on the matter shall be final, conclusive and not subject to appeal.

4.2.3 Acceptable Reasons for Disenrollment Investigation Requests by Contractor

4.2.3.1 The Contractor may request Disenrollment if:

4.2.3.1.1 The Member demonstrates a pattern of disruptive or abusive behavior that could be construed as non-compliant and is not caused by a presenting illness;

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4.2.3.1.2	The Member’s Utilization of services is Fraudulent or abusive;
4.2.3.1.3	The Member has moved out of the Service Region;
4.2.3.1.4	The Member is placed in a long-term care nursing facility, State institution, or intermediate care facility for the mentally retarded;
4.2.3.1.5	The Member’s Medicaid eligibility category changes to a category ineligible for GF, and/or the Member otherwise becomes ineligible to participate in GF. Disenrollments due to Member eligibility will follow the normal monthly process as described in Section 2.4.3. Disenrollments will be processed as of the date that the member eligibility category actually changes and will not be made retroactive, regardless of the effective date of the new eligibility category. Note exception when SSI members are hospitalized.
4.2.3.1.6	The Member has any other condition as so defined by DCH; or
4.2.3.1.7	The Member has died, been incarcerated, or moved out of State, thereby making them ineligible for Medicaid.

4.2.4 Unacceptable Reasons for Disenrollment Requests by Contractor

4.2.4.1 The Contractor shall not request Disenrollment of a Member for discriminating reasons, including:

4.2.4.1.1	Adverse changes in a Member’s health status;
4.2.4.1.2	Missed appointments;
4.2.4.1.3	Utilization of medical services;
4.2.4.1.4	Diminished mental capacity;
4.2.4.1.5	Pre-existing medical condition;
4.2.4.1.6	Uncooperative or disruptive behavior resulting from his or her special needs; or
4.2.4.1.7	Lack of compliance with the treating physician’s plan of care.

4.2.4.2 The Contractor shall not request Disenrollment because of the Member’s attempt to exercise his or her rights under the Grievance System.

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4.2.4.3 The request of one PCP to have a Member assigned to a different Provider shall not be sufficient cause for the Contractor to request that the Member be disenrolled from the plan. Rather, the Contractor shall utilize its PCP assignment process to assign the Member to a different and available PCP.

4.3	MEMBER SERVICES
4.3.1	General Provisions

4.3.1.1 The Contractor shall ensure that Members are aware of their rights and responsibilities, the role of PCPs, how to obtain care, what to do in an emergency or urgent medical situation, how to request a Grievance, Appeal, or Administrative Law Hearings, and how to report suspected Fraud and Abuse. The Contractor shall convey this information via written materials and via telephone, internet, and face-to-face communications that allow the Members to submit questions and receive responses from the Contractor.

4.3.2 Requirements for Written Materials

4.3.2.1	The Contractor shall make all written materials available in alternative formats and in a manner that takes into consideration the Member’s special needs, including those who are visually impaired or have limited reading proficiency. The Contractor shall notify all Members and Potential Members that information is available in alternative formats and how to access those formats.
4.3.2.2	The Contractor shall make all written information available in English, Spanish and all other prevalent non-English languages, as defined by DCH. For the purposes of this Contract, prevalent means a non-English language spoken by a significant number or percentage of Medicaid and PeachCare for Kids eligible individuals in the State.
4.3.2.3	All written materials distributed to Members shall include a language block, printed in Spanish and all other prevalent non-English languages, that informs the Member that the document contains important information and directs the Member to call the Contractor to request the document in an alternative language or to have it orally translated.
4.3.2.4	All written materials shall be worded such that they are understandable to a person who reads at the fifth (5th) grade level. Suggested reference materials to determine whether this requirement is being met are:

4.3.2.4.1 Fry Readability Index;

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4.3.2.4.2	PROSE The Readability Analyst (software developed by Education Activities, Inc.);
4.3.2.4.3	Gunning FOG Index;
4.3.2.4.4	McLaughlin SMOG Index;
4.3.2.4.5	The Flesch-Kincaid Index; or
4.3.2.4.6	Other word processing software approved by DCH.

4.3.2.5	The Contractor shall provide written notice to DCH of any changes to any written materials provided to the Members. Written notice shall be provided at least thirty (30) Calendar Days before the effective date of the change.
4.3.2.6	All written materials, including information for the Web site, must be submitted to DCH for approval before being distributed.

4.3.3 Member Handbook Requirements

4.3.3.1	The Contractor shall mail to all newly enrolled Members a Member Handbook within ten (10) Calendar Days of receiving the notice of enrollment from DCH or its Agent. The Contractor shall mail to all enrolled Members a Member Handbook at least annually thereafter.
4.3.3.2	Pursuant to the requirements set forth in 42 CFR 438.10, the Member Handbook shall include, but not be limited to:

4.3.3.2.1	A table of contents;
4.3.3.2.2	Information about the roles and responsibilities of the Member (this information to be supplied by DCH);
4.3.3.2.3	Information about the role of the PCP;
4.3.3.2.4	Information about choosing a PCP;
4.3.3.2.5	Information about what to do when family size changes;
4.3.3.2.6	Appointment procedures;
4.3.3.2.7	Information on Benefits and services, including a description of all available GF Benefits and services;

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4.3.3.2.8	Information on how to access services, including Health Check services, non-emergency transportation (NET) services, and maternity and family planning services;
4.3.3.2.9	An explanation of any service limitations or exclusions from coverage;
4.3.3.2.10	A notice stating that the Contractor shall be liable only for those services authorized by the Contractor;
4.3.3.2.11	Information on where and how Members may access Benefits not available from or not covered by the Contractor;
4.3.3.2.12	The Medical Necessity definition used in determining whether services will be covered;
4.3.3.2.13	A description of all pre-certification, prior authorization or other requirements for treatments and services;
4.3.3.2.14	The policy on Referrals for specialty care and for other Covered Services not furnished by the Member’s PCP;
4.3.3.2.15	Information on how to obtain services when the Member is out of the Service Region and for after-hours coverage;
4.3.3.2.16	Cost-sharing;
4.3.3.2.17	The geographic boundaries of the Service Regions;
4.3.3.2.18	Notice of all appropriate mailing addresses and telephone numbers to be utilized by Members seeking information or authorization, including an inclusion of the Contractor’s toll-free telephone line and Web site;
4.3.3.2.19	A description of Utilization Review policies and procedures used by the Contractor;
4.3.3.2.20	A description of Member rights and responsibilities as described in Section 4.3.4;
4.3.3.2.21	The policies and procedures for Disenrollment;
4.3.3.2.22	Information on Advance Directives;
4.3.3.2.23	A statement that additional information, including information on the structure and operation of the CMO plan and physician incentive plans, shall be made available upon request;

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4.3.3.2.24 Information on the extent to which, and how, after-hours and emergency coverage are provided, including the following:

i.	What constitutes an Urgent and Emergency Medical Condition, Emergency Services, and Post-Stabilization Services;
ii.	The fact that Prior Authorization is not required for Emergency Services;
iii.	The process and procedures for obtaining Emergency Services, including the use of the 911 telephone systems or its local equivalent;
iv.	The locations of any emergency settings and other locations at which Providers and hospitals furnish Emergency Services and Post-Stabilization Services covered herein; and
v.	The fact that a Member has a right to use any hospital or other setting for Emergency Services;

4.3.3.2.25 Information on the Grievance Systems policies and procedures, as described in Section 4.14 of this Contract. This description must include the following:

i.	The right to file a Grievance and Appeal with the Contractor;
ii.	The requirements and timeframes for filing a Grievance or Appeal with the Contractor;
iii.	The availability of assistance in filing a Grievance or Appeal with the Contractor;
iv.	The toll-free numbers that the Member can use to file a Grievance or an Appeal with the Contractor by phone;
v.	The right to a State Administrative Law Hearing, the method for obtaining a hearing, and the rules that govern representation at the hearing;
vi.	Notice that if the Member files an Appeal or a request for a State Administrative Law Hearing within the timeframes specified for filing, the Member may be required to pay the cost of services furnished while the Appeal is pending, if the final decision is adverse to the Member; and

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vii. Any Appeal rights that the State chooses to make available to Providers to challenge the failure of the Contractor to cover a service.

4.3.3.3 The Contractor shall submit to DCH for review and approval any changes and edits to the Member Handbook at least thirty (30) Calendar Days before the effective date of change.

4.3.4 Member Rights

4.3.4.1 The Contractor shall have written policies and procedures regarding the rights of Members and shall comply with any applicable federal and State laws and regulations that pertain to Member rights. These rights shall be included in the Member Handbook. At a minimum, said policies and procedures shall specify the Member’s right to:

4.3.4.1.1	Receive information pursuant to 42 CFR 438.10;
4.3.4.1.2	Be treated with respect and with due consideration for the Member’s dignity and privacy;
4.3.4.1.3	Have all records and medical and personal information remain confidential;
4.3.4.1.4	Receive information on available treatment options and alternatives, presented in a manner appropriate to the Member’s Condition and ability to understand;
4.3.4.1.5	Participate in decisions regarding his or her Health Care, including the right to refuse treatment;
4.3.4.1.6	Be free from any form of restraint or seclusion as a means of coercion, discipline, convenience or retaliation, as specified in other federal regulations on the use of restraints and seclusion;
4.3.4.1.7	Request and receive a copy of his or her Medical Records pursuant to 45 CFR 160 and 164, subparts A and E, and request to amend or correct the record as specified in 45 CFR 164.524 and 164.526;
4.3.4.1.8	Be furnished Health Care services in accordance with 42 CFR 438.206 through 438.210;
4.3.4.1.9	Freely exercise his or her rights, including those related to filing a Grievance or Appeal, and that the exercise of these rights will not adversely affect the way the Member is treated;

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4.3.4.1.10

Not be held liable for the Contractor’s debts in the event of insolvency; not be held liable for the Covered Services provided to the Member for which DCH does not pay the Contractor; not be held liable for Covered Services provided to the Member for which DCH or the CMO plan does not pay the Health Care Provider that furnishes the services; and not be held liable for payments of Covered Services furnished under a contract, Referral, or other arrangement to the extent that those payments are in excess of amount the Member would owe if the Contractor provided the services directly; and

4.3.4.1.11

Only be responsible for cost sharing in accordance with 42 CFR 447.50 through 42 CFR 447.60 and Attachment K of this Contract.

4.3.5 Provider Directory

4.3.5.1	The Contractor shall mail via surface mail a Provider Directory to all new Members within ten (10) Calendar Days of receiving the notice of Enrollment from DCH or the State’s Agent.
4.3.5.2	The Provider Directory shall include names, locations, office hours, telephone numbers of, and non-English languages spoken by, current Contracted Providers. This includes, at a minimum, information on PCPs, specialists, dentists, pharmacists, FQHCs and RHCs, mental health and substance abuse Providers, and hospitals. The Provider Directory shall also identify Providers that are not accepting new patients.
4.3.5.3	The Contractor shall submit the Provider Directory to DCH for review and prior approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.3.5.4	The Contractor shall up-date and amend the Provider Directory on its Web site within five (5) Business Days of any changes, produce and distribute quarterly up-dates to all Members, and re-print the Provider Directory and distribute to all Members at least once per year.
4.3.5.5	At least once per month, the Contractor shall submit to DCH and its Agent any changes and edits to the Provider Directory. Such changes shall be submitted electronically in a format to be determined by DCH.
4.3.5.6	The Contractor shall post on its website a searchable list of all providers with which the care management organization has contracted. At a minimum, this list shall be searchable by provider name, specialty, and location.

4.3.6 Member Identification (ID) Card

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4.3.6.1 The Contractor shall mail via surface mail a Member ID Card to all new Members according to the following timeframes:

4.3.6.1.1	Within ten (10) Calendar Days of receiving the notice of Enrollment from DCH or the Agent for Members who have selected a CMO plan and a PCP;
4.3.6.1.2	Within ten (10) Calendar Days of PCP assignment or selection for Members that are Auto-Assigned to the CMO plan.

4.3.6.2 The Member ID Card must, at a minimum, include the following information:

4.3.6.2.1	The Member’s name;
4.3.6.2.2	The Member’s Medicaid or PeachCare for Kids identification number;
4.3.6.2.3	The PCP’s name, address, and telephone numbers (including after-hours number if different from business hours number);
4.3.6.2.4	The name and telephone number(s) of the Contractor;
4.3.6.2.5	The Contractor’s twenty-four (24) hour, seven (7) day a week toll-free Member services telephone number;
4.3.6.2.6	Instructions for emergencies; and
4.3.6.2.7	Includes minimum or instructions to facilitate the submission of a claim by a provider.

4.3.6.3	The Contractor shall reissue the Member ID Card within ten (10) Calendar Days of notice if a Member reports a lost card, there is a Member name change, the PCP changes, or for any other reason that results in a change to the information disclosed on the Member ID Card.
4.3.6.4	The Contractor shall submit a front and back sample Member ID Card to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.3.7 Toll-free Member Services Line

4.3.7.1	The Contractor shall operate a toll-free telephone line to respond to Member questions, comments and inquiries.
4.3.7.2	The Contractor shall develop Telephone Line Policies and Procedures that address staffing, personnel, hours of operation, access and response standards,

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	monitoring of calls via recording or other means, and compliance with standards.
4.3.7.3	The Contractor shall submit these Telephone Line Policies and Procedures, including performance standards pursuant to Section 4.3.7.7, to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.3.7.4	The telephone line shall handle calls from non-English speaking callers, as well as calls from Members who are hearing impaired.
4.3.7.5	The Contractor’s call center systems shall have the capability to track call management metrics identified in Attachment L.
4.3.7.6	The telephone line shall be fully staffed between the hours of 7:00 a.m. and 7:00 p.m. EST, Monday through Friday, excluding State holidays. The telephone line staff shall be trained to accurately respond to Member questions in all areas, including, but not limited to, Covered Services, the provider network, and non-emergency transportation (NET).
4.3.7.7	The Contractor shall develop performance standards and monitor Telephone Line performance by recording calls and employing other monitoring activities. At a minimum, the standards shall require that, on a monthly basis, eighty percent (80%) of calls are answered by a person within thirty (30) seconds, the Blocked Call rate does not exceed one percent (1%), and the rate of Abandoned Calls does not exceed five percent (5%).
4.3.7.8	The Contractor shall have an automated system available between the hours of 7:00 p.m. and 7:00 a.m. EST Monday through Friday and at all hours on weekends and holidays. This automated system must provide callers with operating instructions on what to do in case of an emergency and shall include, at a minimum, a voice mailbox for callers to leave messages. The Contractor shall ensure that the voice mailbox has adequate capacity to receive all messages. A Contractor’s Representative shall return messages on the next Business Day.
4.3.7.9	The Contractor shall develop Call Center Quality Criteria and Protocols to measure and monitor the accuracy of responses and phone etiquette as it relates to the Toll-free Telephone Line. The Contractor shall submit the Call Center Quality Criteria and Protocols to DCH for review and approval within sixty (60) Calendar Days of Contract Award and annually with updates thereafter.

4.3.8 Internet Presence/Web Site

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4.3.8.1	The Contractor shall provide general and up-to-date information about the CMO plan’s program, its Provider network, its customer services, and its Grievance and Appeals Systems on its Web site.
4.3.8.2	The Contractor shall maintain a Member portal that allows Members to access a searchable Provider Directory that shall be updated within five (5) Business Days upon changes to the Provider network.
4.3.8.3	The Web site must have the capability for Members to submit questions and comments to the Contractor and for members to receive responses.
4.3.8.4	The Web site must comply with the marketing policies and procedures and with requirements for written materials described in this Contract and must be consistent with applicable State and federal laws.
4.3.8.5	In addition to the specific requirements outlined above, the Contractor’s Web site shall be functionally equivalent, with respect to functions described in this Contract, to the Web site maintained by the State’s Medicaid fiscal agent (www.ghp.georgia.gov).
4.3.8.6	The Contractor shall submit Web site screenshots to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.3.9 Cultural Competency

4.3.9.1	In accordance with 42 CFR 438.206, the Contractor shall have a comprehensive written Cultural Competency Plan describing how the Contractor will ensure that services are provided in a culturally competent manner to all Members, including those with limited English proficiency. The Cultural Competency Plan must describe how the Providers, individuals and systems within the CMO plan will effectively provide services to people of all cultures, races, ethnic backgrounds and religions in a manner that recognizes values, affirms and respects the worth of the individual Members and protects and preserves the dignity of each.
4.3.9.2	The Contractor shall submit the Cultural Competency Plan to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.3.9.3	The Contractor may distribute a summary of the Cultural Competency Plan to the In-Network Providers if the summary includes information on how the Provider may access the full Cultural Competency Plan on the Web site. This summary shall also detail how the Provider can request a hard copy from the CMO at no charge to the Provider.

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4.3.10 Translation Services

4.3.10.1 The Contractor is required to provide oral translation services of information to any Member who speaks any non-English language regardless of whether a Member speaks a language that meets the threshold of a Prevalent Non-English Language. The Contractor is required to notify its Members of the availability of oral interpretation services and to inform them of how to access oral interpretation services. There shall be no charge to the Member for translation services.

4.3.11 Reporting Requirements

4.3.11.1 The Contractor shall submit monthly Telephone and Internet Activity Reports to DCH as described in Section 4.18.3.1.

4.4 MARKETING

4.4.1 Prohibited Activities

4.4.1.1 The Contractor is prohibited from engaging in the following activities:

4.4.1.1.1	Directly or indirectly engaging in door-to-door, telephone, or other Cold-Call Marketing activities to Potential Members;
4.4.1.1.2	Offering any favors, inducements or gifts, promotions, and/or other insurance products that are designed to induce Enrollment in the Contractor’s plan, and that are not health related and/or worth more than $10.00 cash;
4.4.1.1.3	Distributing information, plans and materials that contain statements that DCH determines are inaccurate, false, or misleading. Statements considered false or misleading include, but are not limited to, any assertion or statement (whether written or oral) that the recipient must enroll in the Contractor’s plan in order to obtain Benefits or in order to not lose Benefits or that the Contractor’s plan is endorsed by the federal or State government, or similar entity; and
4.4.1.1.4	Distributing information or materials that, according to DCH, mislead or falsely describe the Contractor’s Provider network, the participation or availability of network Providers, the qualifications and skills of network Providers (including their bilingual skills); or the hours and location of network services.

4.4.2 Allowable Activities

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4.4.2.1 The Contractor shall be permitted to perform the following marketing activities:

4.4.2.1.1	Distribute general information through mass media (i.e. newspapers, magazines and other periodicals, radio, television, the Internet, public transportation advertising, and other media outlets);
4.4.2.1.2	Make telephone calls, mailings and home visits only to Members currently enrolled in the Contractor’s plan, for the sole purpose of educating them about services offered by or available through the Contractor;
4.4.2.1.3	Distribute brochures and display posters at Provider offices and clinics that inform patients that the clinic or Provider is part of the CMO plan’s Provider network, provided that all CMO plans in which the Provider participates have an equal opportunity to be represented; and
4.4.2.1.4	Attend activities that benefit the entire community such as health fairs or other health education and promotion activities.

4.4.2.2	If the Contractor performs an allowable activity, the Contractor shall conduct these activities in the entire Service Region as defined by this Contract.
4.4.2.3	All materials shall comply with the information requirements in 42 CFR 438.10 and detailed in Section 4.3.2 of this Contract.

4.4.3 State Approval of Materials

	The Contractor shall submit a detailed description of its Marketing Plan and copies of all Marketing Materials (written and oral) it or its Subcontractors plan to distribute to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.4.3.1	This requirement includes, but is not limited to posters, brochures, Web sites, and any materials that contain statements regarding the benefit package and Provider network-related materials. Neither the Contractor nor its Subcontractors shall distribute any marketing materials without prior, written approval from DCH.
4.4.3.2	The Contractor shall submit any changes to previously approved marketing materials and receive approval from DCH of the changes before distribution.

4.4.4 Provider Marketing Materials

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4.4.4.1 The Contractor shall collect from its Providers any Marketing Materials they intend to distribute and submit these to DCH for review and approval prior to distribution.

4.5	COVERED BENEFITS AND SERVICES
4.5.1	Included Services

4.5.1.1

The Contractor shall at a minimum provide Medically Necessary services and Benefits as outlined below, and pursuant to the Georgia State Medicaid Plan, and the Georgia Medicaid Policies and Procedures Manual. Such Medically Necessary services shall be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope for the same services furnished to recipients under Fee-for-Service Medicaid. The Contractor may not arbitrarily deny or reduce the amount, duration or scope of a required service solely because of the diagnosis, type of illness or Condition.

4.5.1.2

SERVICE	COVERAGE LIMITATIONS
Ambulatory Surgical Services
Audiology Services	Not covered for Members age 21 and older. Available under EPSDT as part of a written service plan.
Childbirth Education Services
Dental Services	Preventive, diagnostic and treatment services provided to Members under age 21. Emergency Services only for Members age 21 and older.
Durable Medical Equipment
Early and Periodic Screening, Diagnostic, and Treatment Services
Emergency Transportation Services
Emergency Services
Family Planning Services and Supplies
Federally Qualified Health Center Services	Ambulatory services such as dental services are subject to any limitations applicable to the specific ambulatory service.
Home Health Services	Not covered: social services, chore services, meals on wheels, audiology services.
Hospice Services	Available to Members certified as

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SERVICE	COVERAGE LIMITATIONS
	being terminally ill and having a medical prognosis of life expectancy of six (6) months or less.
Inpatient Hospital Services	Psychiatric hospitalizations are covered for a maximum of 30 days per treatment episode
Laboratory and Radiological Services	Not covered: portable X-ray services; services provided in facilities not meeting the definition of an independent laboratory or X-ray facility; services or procedures referred to another testing facility; services furnished by a State or public laboratory; services or procedures performed by a facility not certified to perform them.
Mental Health Services	Community Mental Health Rehabilitation services are only available as part of a written service plan.
Nurse Midwife Services
Nurse Practitioner Services
Nursing Facility Services	Not covered: Long-term nursing facility (over 30 Consecutive Days)
Obstetrical Services
Occupational Therapy Services	These services are covered for children under age 21 as medically necessary. Services for adults 21 and older are covered when medically necessary for short term rehabilitation.
Optometric Services	Not covered for Members age 21 and older: routine refractive services and optical devices.
Orthotic and Prosthetic Services	Not covered for Members age 21 and older: orthopedic shoes and supportive devices for the feet which are not an integral part of a leg brace; hearing aids and accessories.
Oral Surgery
Outpatient Hospital Services

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SERVICE	COVERAGE LIMITATIONS
Pharmacy Services	Not covered: certain outpatient drugs pursuant to Section 1927(d) of the Social Security Act. Additionally, certain over the counter (OTC) drugs must be included, pursuant to the Georgia State Policies and Procedures Manual.
Physical Therapy Services	These services are covered for children under age 21 as medically necessary. Services for adults 21 and older are covered when medically necessary for short term rehabilitation.
Physician Services
Podiatric Services	Not covered: services for flatfoot; subluxation; routine foot care, supportive devices; vitamin B-12 injections.
Pregnancy-Related Services
Private Duty Nursing Services
Rural Health Clinic Services
Speech Therapy Services	These services are covered for children under age 21 as medically necessary. Services for adults 21 and older are covered when medically necessary for short term rehabilitation.
Substance Abuse Treatment Services (Inpatient)	Substance abuse treatment, inpatient and rehabilitative, are covered as part of a written service plan.
Swing Bed Services
Targeted Case Management	Covered for pregnant women under age 21 and other pregnant women at risk for adverse outcomes; infants and toddlers with established risk for developmental delay.
Transplants	Not covered for Members age 21 and older: heart, lung and heart/lung transplants.

4.5.2 Individuals with Disabilities Education Act (IDEA) Services

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4.5.2.1	For Members up to and including age three (3), the Contractor shall be responsible for Medically Necessary IDEA services provided pursuant to an Individualized Family Service Plan (IFSP) or Individualized Service Plan (IEP).
4.5.2.2	For Members age four (4) and older, the Contractor shall not be responsible for Medically Necessary IDEA services provided pursuant to an IEP or IFSP. Such services shall remain in FFS Medicaid.

4.5.2.2.1 The Contractor shall be responsible for all other Medically Necessary covered services.

4.5.3 Enhanced Services

4.5.3.1 In addition to the Covered Services provided above, the Contractor shall do the following:

4.5.3.1.1	Place strong emphasis on programs to enhance the general health and well-being of Members;
4.5.3.1.2	Make health promotion materials available to Members;
4.5.3.1.3	Participate in community-sponsored health fairs; and
4.5.3.1.4	Provide education to Members, families and other Health Care Providers about early intervention and management strategies for various illnesses.

4.5.3.2 The Contractor shall not charge a Member for participating in health education services that are defined as either enhanced or Covered Services.

4.5.4 Medical Necessity

4.5.4.1 Based upon generally accepted medical practices in light of Conditions at the time of treatment, Medically Necessary services are those that are:

4.5.4.1.1	Appropriate and consistent with the diagnosis of the treating Provider and the omission of which could adversely affect the eligible Member’s medical Condition;
4.5.4.1.2	Compatible with the standards of acceptable medical practice in the community;
4.5.4.1.3	Provided in a safe, appropriate, and cost-effective setting given the nature of the diagnosis and the severity of the symptoms;

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4.5.4.1.4	Not provided solely for the convenience of the Member or the convenience of the Health Care Provider or hospital; and
4.5.4.1.5	Not primarily custodial care unless custodial care is a covered service or benefit under the Members evidence of coverage.

4.5.4.2

There must be no other effective and more conservative or substantially less costly treatment, service and setting available.

4.5.4.3

For children under 21, the Contractor is required to provide medically necessary services to correct or ameliorate physical and behavioral health disorders, a defect, or a condition identified in as EPSDT (Health Check) screening, regardless whether those services are included in the State Plan, but are otherwise allowed pursuant to 1905 (a) of the Social Security Act. See Diagnostic and Treatment, Section 4.7.5.2.

4.5.5 Experimental, Investigational or Cosmetic Procedures

4.5.5.1 Pursuant to the Georgia State Medicaid Plan and the Georgia Medicaid Policies and Procedures Manual, in no instance shall the Contractor cover experimental, investigational or cosmetic procedures.

4.5.6 Moral or Religious Objections

4.5.6.1 The Contractor is required to provide and reimburse for all Covered Services. If, during the course of the Contract period, pursuant to 42 CFR 438.102, the Contractor elects not to provide, reimburse for, or provide coverage of a counseling or Referral service because of an objection on moral or religious grounds, the Contractor shall notify:

4.5.6.1.1	DCH within one hundred and twenty (120) Calendar Days prior to adopting the policy with respect to any service;
4.5.6.1.2	Members within ninety (90) Calendar Days after adopting the policy with respect to any service; and
4.5.6.1.3	Members and Potential Members before and during Enrollment.

4.5.6.2. The Contractor acknowledges that such objection will be grounds for recalculation of rates paid to the Contractor.

4.6 SPECIAL COVERAGE PROVISIONS

4.6.1 Emergency Services

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4.6.1.1

Emergency Services shall be available twenty-four (24) hours a day, seven (7) Days a week to treat an Emergency Medical Condition.

4.6.1.2

An Emergency Medical Condition shall not be defined or limited based on a list of diagnoses or symptoms. An Emergency Medical Condition is a medical or mental health Condition manifesting itself by acute symptoms of sufficient severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in the following:

4.6.1.2.1	Placing the physical or mental health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy;
4.6.1.2.2	Serious impairment to bodily functions;
4.6.1.2.3	Serious dysfunction of any bodily organ or part;
4.6.1.2.4	Serious harm to self or others due to an alcohol or drug abuse emergency;
4.6.1.2.5	Injury to self or bodily harm to others; or
4.6.1.2.6	With respect to a pregnant woman having contractions: (i) that there is adequate time to effect a safe transfer to another hospital before delivery, or (ii) that transfer may pose a threat to the health or safety of the woman or the unborn child.

4.6.1.3	The Contractor shall provide payment for Emergency Services when furnished by a qualified Provider, regardless of whether that Provider is in the Contractor’s network. These services shall not be subject to prior authorization requirements. The Contractor shall be required to pay for all Emergency Services that are Medically Necessary until the Member is stabilized. The Contractor shall also pay for any screening examination services conducted to determine whether an Emergency Medical Condition exists.
4.6.1.4	The Contractor shall base coverage decisions for Emergency Services on the severity of the symptoms at the time of presentation and shall cover Emergency Services when the presenting symptoms are of sufficient severity to constitute an Emergency Medical Condition in the judgment of a prudent layperson.
4.6.1.5	The attending emergency room physician, or the Provider actually treating the Member, is responsible for determining when the Member is sufficiently stabilized for transfer or discharge, and that determination is binding on the

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	Contractor, who shall be responsible for coverage and payment. The Contractor, however, may establish arrangements with a hospital whereby the Contractor may send one of its own physicians with appropriate emergency room privileges to assume the attending physician’s responsibilities to stabilize, treat, and transfer the Member, provided that such arrangement does not delay the provision of Emergency Services.
4.6.1.6	The Contractor shall not retroactively deny a Claim for an emergency screening examination because the Condition, which appeared to be an Emergency Medical Condition under the prudent layperson standard, turned out to be non-emergency in nature. If an emergency screening examination leads to a clinical determination by the examining physician that an actual Emergency Medical Condition does not exist, then the determining factor for payment liability shall be whether the Member had acute symptoms of sufficient severity at the time of presentation. In this case, the Contractor shall pay for all screening and care services provided. Payment shall be at either the rate negotiated under the Provider Contract, or the rate paid by DCH under the Fee for Service Medicaid program.
4.6.1.7	The Contractor may establish guidelines and timelines for submittal of notification regarding provision of emergency services, but, the Contractor shall not refuse to cover an Emergency Service based on the emergency room Provider, hospital, or fiscal agent’s failure to notify the Member’s PCP, CMO plan representative, or DCH of the Member’s screening and treatment within said timeframes.
4.6.1.8	When a representative of the Contractor instructs the Member to seek Emergency Services the Contractor shall be responsible for payment for the Medical Screening examination and for other Medically Necessary Emergency Services, without regard to whether the Condition meets the prudent layperson standard.
4.6.1.9	The Member who has an Emergency Medical Condition shall not be held liable for payment of subsequent screening and treatment needed to diagnose the specific Condition or stabilize the patient.
4.6.1.10	Once the Member’s Condition is stabilized, the Contractor may require Pre-Certification for hospital admission or Prior Authorization for follow-up care.

4.6.2 Post-Stabilization Services

4.6.2.1 The Contractor shall be responsible for providing Post-Stabilization care services twenty-four (24) hours a day, seven (7) days a week, both inpatient and outpatient, related to an Emergency Medical Condition, that are provided after a Member is stabilized in order to maintain the stabilized Condition, or,

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	pursuant to 42 CFR 438.114(e), to improve or resolve the Member’s Condition.
4.6.2.2	The Contractor shall be responsible for payment for Post-Stabilization Services that are Prior Authorized or Pre-Certified by an In-Network Provider or organization representative, regardless of whether they are provided within or outside the Contractor’s network of Providers.
4.6.2.3	The Contractor is financially responsible for Post-Stabilization Services obtained from any Provider, regardless of whether they are within or outside the Contractor’s Provider network that are administered to maintain the Member’s stabilized Condition for one (1) hour while awaiting response on a Pre-Certification or Prior Authorization request.
4.6.2.4	The Contractor is financially responsible for Post-Stabilization Services obtained from any Provider, regardless of whether they are within or outside the Contractor’s Provider network, that are not prior authorized by a CMO plan Provider or organization representative but are administered to maintain, improve or resolve the Member’s stabilized Condition if:

4.6.2.4.1	The Contractor does not respond to the Provider’s request for pre-certification or prior authorization within one (1) hour;
4.6.2.4.2	The Contractor cannot be contacted; or
4.6.2.4.3	The Contractor’s Representative and the attending physician cannot reach an agreement concerning the Member’s care and a CMO plan physician is not available for consultation. In this situation the Contractor shall give the treating physician the opportunity to consult with an In-Network physician and the treating physician may continue with care of the Member until a CMO plan physician is reached or one of the criteria in Section 4.6.2.5 are met.

4.6.2.5 The Contractor’s financial responsibility for Post-Stabilization Services it has not approved will end when:

4.6.2.5.1	An In-Network Provider with privileges at the treating hospital assumes responsibility for the Member’s care;
4.6.2.5.2	An In-Network Provider assumes responsibility for the Member’s care through transfer;
4.6.2.5.3	The Contractor’s Representative and the treating physician reach an agreement concerning the Member’s care; or
4.6.2.5.4	The Member is discharged.

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4.6.2.6 In the event the Member receives Post-Stabilization Services from a Provider outside the Contractor’s network, the Contractor is prohibited from charging the Member more than he or she would be charged if he or she had obtained the services through an In-Network Provider.

4.6.3 Urgent Care Services

4.6.3.1 The Contractor shall provide Urgent Care services as necessary. Such services shall not be subject to Prior Authorization or Pre-Certification.

4.6.4 Family Planning Services

4.6.4.1	The Contractor shall provide access to family planning services within the network. In meeting this obligation, the Contractor shall make a reasonable effort to contract with all family planning clinics, including those funded by Title X of the Public Health Services Act, for the provision of family planning services. The Contractor shall verify its efforts to contract with Title X Clinics by maintaining records of communication. The Contractor shall not limit Members’ freedom of choice for family planning services to In-Network Providers and the Contractor shall cover services provided by any qualified Provider regardless of whether the Provider is In-Network. The Contractor shall not require a Referral if a Member chooses to receive family planning services and supplies from outside of the network.
4.6.4.2	The Contractor shall inform Members of the availability of family planning services and must provide services to Members wishing to prevent pregnancies, plan the number of pregnancies, plan the spacing between pregnancies, or obtain confirmation of pregnancy.
4.6.4.3	Family planning services and supplies include at a minimum:

4.6.4.3.1	Education and counseling necessary to make informed choices and understand contraceptive methods;
4.6.4.3.2	Initial and annual complete physical examinations;
4.6.4.3.3	Follow-up, brief and comprehensive visits;
4.6.4.3.4	Pregnancy testing;
4.6.4.3.5	Contraceptive supplies and follow-up care;
4.6.4.3.6	Diagnosis and treatment of sexually transmitted diseases; and
4.6.4.3.7	Infertility assessment.

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4.6.4.4 The Contractor shall furnish all services on a voluntary and confidential basis, even if the Member is less than eighteen (18) years of age.

4.6.5 Sterilizations, Hysterectomies and Abortions

4.6.5.1 In compliance with federal regulations, the Contractor shall cover sterilizations and hysterectomies, only if all of the following requirements are met:

4.6.5.1.1	The Member is at least twenty-one (21) years of age at the time consent is obtained;
4.6.5.1.2	The Member is mentally competent;
4.6.5.1.3	The Member voluntarily gives informed consent in accordance with the State Policies and Procedures for Family Planning Clinic Services. This includes the completion of all applicable documentation;
4.6.5.1.4	At least thirty (30) Calendar Days, but not more than one hundred and eighty (180) Calendar Days, have passed between the date of informed consent and the date of sterilization, except in the case of premature delivery or emergency abdominal surgery. A Member may consent to be sterilized at the time of premature delivery or emergency abdominal surgery, if at least seventy-two (72) hours have passed since informed consent for sterilization was signed. In the case of premature delivery, the informed consent must have been given at least thirty (30) Calendar Days before the expected date of delivery (the expected date of delivery must be provided on the consent form);
4.6.5.1.5	An interpreter is provided when language barriers exist. Arrangements are to be made to effectively communicate the required information to a Member who is visually impaired, hearing impaired or otherwise disabled; and
4.6.5.1.6	The Member is not institutionalized in a correctional facility, mental hospital or other rehabilitative facility.

4.6.5.2 A hysterectomy shall be considered a Covered Service only if the following additional requirements are met:

4.6.5.2.1 The Member must be informed orally and in writing that the hysterectomy will render the individual permanently incapable of reproducing (this is not applicable if the individual was sterile prior to the hysterectomy or in the case of an emergency hysterectomy); and

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4.6.5.2.2 The Member must sign and date a “Patient’s Acknowledgement of Prior Receipt of Hysterectomy Information” form prior to the Hysterectomy. Informed consent must be obtained regardless of diagnosis or age.

4.6.5.3 Regardless of whether the requirements listed above are met, a hysterectomy shall not be covered under the following circumstances:

4.6.5.3.1	If it is performed solely for the purpose of rendering a Member permanently incapable of reproducing;
4.6.5.3.2	If there is more than one (1) purpose for performing the hysterectomy, but the primary purpose was to render the Member permanently incapable of reproducing; or
4.6.5.3.3	If it is performed for the purpose of cancer prophylaxis.

4.6.5.4

Abortions or abortion-related services performed for family planning purposes are not Covered Services. Abortions are Covered Services if a Provider certifies that the abortion is medically necessary to save the life of the mother or if pregnancy is the result of rape or incest. The Contractor shall cover treatment of medical complications occurring as a result of an elective abortion and treatments for spontaneous, incomplete, or threatened abortions and for ectopic pregnancies.

4.6.5.5

The Contractor shall maintain documentation of all sterilizations, hysterectomies and abortions and provide documentation to DCH upon the request of DCH.

4.6.6 Pharmacy

4.6.6.1 The Contractor shall provide pharmacy services either directly or through a Pharmacy Benefits Manager (PBM). The Contractor or its PBM may establish a drug formulary if the following minimum requirements are met:

4.6.6.1.1	Drugs from each specific therapeutic drug class are included and are sufficient in amount, duration, and scope to meet Members’ medical needs;
4.6.6.1.2	The only excluded drug categories are those permitted under section 1927(d) of the Social Security Act;
4.6.6.1.3	A Pharmacy & Therapeutics Committee that advises and/or recommends formulary decisions; and

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4.6.6.1.4 Over-the-counter medications specified in the Georgia State Medicaid Plan are included in the formulary.

4.6.6.2	The Contractor shall provide the formulary to DCH upon the request of DCH.
4.6.6.3	If the Contractor chooses to implement a mail-order pharmacy program, any such program must be accordance with State and federal law.

4.6.7 Immunizations

4.6.7.1	The Contractor shall provide all Members under twenty-one (21) years of age with all vaccines and immunizations in accordance with the Advisory Committee on Immunization Practices (ACIP) guidelines.
4.6.7.2	The Contractor shall ensure that all Providers use vaccines which have been made available, free of cost, under the Vaccine for Children (VFC) program for Medicaid children eighteen (18) years old and younger. Immunizations shall be given in conjunction with Well-Child/Health Check care.
4.6.7.3	The Contractor shall provide all adult immunizations specified in the Georgia Medicaid Policies and Procedures Manual.
4.6.7.4	The Contractor shall report all immunizations to the Georgia Registry of Immunization Transactions and Services (GRITS) in a format to be determined by DCH.

4.6.8 Transportation

4.6.8.1	The Contractor shall provide emergency transportation and shall not retroactively deny a Claim for emergency transportation to an emergency Provider because the Condition, which appeared to be an Emergency Medical Condition under the prudent layperson standard, turned out to be non-emergency in nature.
4.6.8.2	The Contractor is not responsible for providing non-emergency transportation (NET) but the Contractor shall coordinate with the NET vendors for services required by Members.

4.6.9 Perinatal Services

4.6.9.1 The Contractor shall ensure that appropriate perinatal care is provided to women and newborn Members. The Contractor shall have adequate capacity such that any new Member who is pregnant is able to have an initial visit with her Provider within fourteen (14) Calendar Days of Enrollment. The Contractor shall have in place a system that provides, at a minimum, the following services:

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4.6.9.1.1	Pregnancy planning and perinatal health promotion and education for reproductive-age women;
4.6.9.1.2	Perinatal risk assessment of non-pregnant women, pregnant and post-partum women, and newborns and children up to five (5) months of age;
4.6.9.1.3	Childbirth education classes to all pregnant Members and their chosen partner. Through these classes, expectant parents shall be encouraged to prepare themselves physically, emotionally, and intellectually for the childbirth experience. The classes shall be offered at times convenient to the population served, in locations that are accessible, convenient and comfortable. Classes shall be offered in languages spoken by the Members.
4.6.9.1.4	Access to appropriate levels of care based on risk assessment, including emergency care;
4.6.9.1.5	Transfer and care of pregnant women, newborns, and infants to tertiary care facilities when necessary;
4.6.9.1.6	Availability and accessibility of OB/GYNs, anesthesiologists, and neonatologists capable of dealing with complicated perinatal problems; and
4.6.9.1.7	Availability and accessibility of appropriate outpatient and inpatient facilities capable of dealing with complicated perinatal problems.

4.6.9.2 The Contractor shall provide inpatient care and professional services relating to labor and delivery for its pregnant/delivering Members, and neonatal care for its newborn Members at the time of delivery and for up to forty-eight (48) hours following an uncomplicated vaginal delivery and ninety-six (96) hours following an uncomplicated Caesarean delivery.

4.6.10 Parenting Education

4.6.10.1	In addition to individual parent education and anticipatory guidance to parents and guardians at preventive pediatric visits and Health Check screens, the Contractor shall offer or arrange for parenting skills education to expectant and new parents, at no cost to the Member.
4.6.10.2	The Contractor agrees to create effective ways to deliver this education, whether through classes, as a component of post-partum home visiting, or other such means. The educational efforts shall include topics such as bathing, feeding (including breast feeding), injury prevention, sleeping,

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illness, when to call the doctor, when to use the emergency room, etc. The classes shall be offered at times convenient to the population served, and in locations that are accessible, convenient and comfortable. Convenience will be determined by DCH. Classes shall be offered in languages spoken by the Members.

4.6.11 Mental Health and Substance Abuse

4.6.11.1	The Contractor shall have written Mental Health and Substance Abuse Policies and Procedures that explain how they will arrange or provide for covered mental health and substance abuse services. Such policies and procedures shall include Advance Directives. The Contractor shall assure timely delivery of mental health and substance abuse services and coordination with other acute care services.
4.6.11.2	Mental Health and Substance Abuse Policies and Procedures shall be submitted to DCH for approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.6.11.3	The Contractor shall permit Members to self-refer to an In-Network Provider for an initial mental health or substance abuse visit but prior authorization may be required for subsequent visits.

4.6.12 Advance Directives

4.6.12.1 In compliance with 42 CFR 438.6 (i) (1)-(2) and 42 CFR 422.128, the Contractor shall maintain written policies and procedures for Advance Directives, including mental health advance directives. Such Advance Directives shall be included in each Member’s medical record. The Contractor shall provide these policies to all Members eighteen (18) years of age and older and shall advise Members of:

4.6.12.1.1	Their rights under the law of the State of Georgia, including the right to accept or refuse medical or surgical treatment and the right to formulate Advance Directives; and
4.6.12.1.2	The Contractor’s written policies respecting the implementation of those rights, including a statement of any limitation regarding the implementation of Advance Directives as a matter of conscience.

4.6.12.2 The information must include a description of State law and must reflect changes in State laws as soon as possible, but no later than ninety (90) Calendar Days after the effective change.

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4.6.12.3	The Contractor’s information must inform Members that complaints may be filed with the State’s Survey and Certification Agency.
4.6.12.4	The Contractor shall educate its staff about its policies and procedures on Advance Directives, situations in which Advance Directives may be of benefit to Members, and their responsibility to educate Members about this tool and assist them to make use of it.
4.6.12.5	The Contractor shall educate Members about their ability to direct their care using this mechanism and shall specifically designate which staff Members and/or network Providers are responsible for providing this education.

4.6.13 Foster Care Forensic Exam

4.6.13.1 The Contractor shall provide a forensic examination to a Member that is less than eighteen (18) years of age that is placed outside the home in State custody. Such exam shall be in accordance with State law and regulations.

4.6.14 Laboratory Services

4.6.14.1 The Contractor shall require all network laboratories to automatically report the Glomerular Filtration Rate (GFR) on any serum creatinine tests ordered by In-Network Providers.

4.6.15 Member Cost-Sharing

4.6.15.1 The Contractor shall ensure that Providers collect Member co-payments as specified in Attachment K.

4.7 EARLY AND PERIODIC SCREENING, DIAGNOSTIC AND TREATMENT (EPSDT) PROGRAM: HEALTH CHECK

4.7.1 General Provisions

4.7.1.1	The Contractor shall provide EPSDT services (called Health Check services) to Medicaid children less than twenty-one (21) years of age and PeachCare for Kids children less than age nineteen (19) years of age (hereafter referred to as Health Check eligible children), in compliance with all requirements found below.
4.7.1.2	The Contractor shall comply with sections 1902(a)(43) and 1905(a)(4)(B) and 1905(r) of the Social Security Act and federal regulations at 42 CFR 441.50 that require EPSDT services to include outreach and informing, screening, tracking, and, diagnostic and treatment services. The Contractor shall comply

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with all Health Check requirements pursuant to the Georgia Medicaid Policies and Procedures Manual.

4.7.1.3 The Contractor shall develop an EPSDT Plan that includes written policies and procedures for conducting outreach, informing, tracking, and follow-up to ensure compliance with the Health Check periodicity schedules. The EPSDT Plan shall emphasize outreach and compliance monitoring for children and adolescents (young adults), taking into account the multi-lingual, multi-cultural nature of the GF population, as well as other unique characteristics of this population. The plan shall include procedures for follow-up of missed appointments, including missed Referral appointments for problems identified through Health Check screens and exams. The plan shall also include procedures for referral, tracking and follow up for annual dental examinations and visits. The Contractor shall submit its EPSDT Plan to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.7.2 Outreach and Informing

4.7.2.1 The Contractor’s Health Check outreach and informing process shall include:

4.7.2.1.1	The importance of preventive care;
4.7.2.1.2	The periodicity schedule and the depth and breadth of services;
4.7.2.1.3	How and where to access services, including necessary transportation and scheduling services; and
4.7.2.1.4	A statement that services are provided without cost.

4.7.2.2	The Contractor shall inform its newly enrolled families with Health Check eligible children about the Health Check program within sixty (60) Calendar Days of Enrollment with the plan. This requirement includes informing pregnant women and new mothers, either before or within seven (7) days after the birth of their children, that Health Check services are available.
4.7.2.3	The Contractor shall provide written notification to its families with Health Check eligible children when appropriate periodic assessments or needed services are due. The Contractor shall coordinate appointments for care. The Contractor shall follow up with families with Health Check eligible children that have failed to access Health Check screens and services after one hundred and twenty (120) Calendar Days of Enrollment in the CMO plan.
4.7.2.4	The Contractor shall provide to each PCP, on a monthly basis, a list of the PCP’s Health Check eligible children that have not had an encounter during the initial one hundred and twenty (120) Calendar Days of CMO plan

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Enrollment, and/or are not in compliance with the Health Check periodicity schedule. The Contractor and/or the PCP shall contact the Members’ parents or guardians to schedule an appointment.

4.7.2.5

Informing may be oral (on the telephone, face-to-face, or films/tapes) or written and may be done by Contractor personnel or Health Care Providers. All outreach and informing shall be documented and shall be conducted in non-technical language at or below a fifth (5th) grade reading level. The Contractor shall use accepted methods for informing persons who are blind or deaf, or cannot read or understand the English language, in accordance with Section 4.3.2 of this Contract.

4.7.2.6

The Contractor may provide nominal, non-cash incentives (valued $10 or less) to Members to motivate compliance with periodicity schedules.

4.7.3 Screening

4.7.3.1 The Contractor is responsible for periodic screens in accordance with the State’s periodicity schedule. Such screens must include all of the following:

4.7.3.1.1	A comprehensive health and developmental history;
4.7.3.1.2	Developmental assessment, including mental, emotional, and behavioral health development;
4.7.3.1.3	Measurements (including head circumference for infants);
4.7.3.1.4	An assessment of nutritional status;
4.7.3.1.5	A comprehensive unclothed physical exam;
4.7.3.1.6	Immunizations according to the Advisory Committee of Immunization Practices (ACIP);
4.7.3.1.7	Certain laboratory tests (including the federally required blood lead screening);
4.7.3.1.8	Anticipatory guidance and health education;
4.7.3.1.9	Vision screening;
4.7.3.1.10	Tuberculosis and lead risk screening;
4.7.3.1.11	Hearing screening; and
4.7.3.1.12	Dental and oral health assessment.

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4.7.3.2	Lead screening is a required component of a Health Check screen and the Contractor shall implement a screening program for the presence of lead toxicity. The screening program shall consist of two (2) parts: verbal risk assessment (from thirty-six (36) to seventy-two (72) months of age), and blood lead screening. Regardless of risk, the Contractor shall provide for a blood lead screening test for all Health Check eligible children at twelve (12) and twenty-four (24) months of age. Children between twenty-four (24) months of age and seventy-two (72) months of age should receive a blood lead screening test if there is no record of a previous test.
4.7.3.3	The Contractor shall have a lead case management program for Health Check eligibles and their households when there is a positive blood lead test equal to or greater than ten (10) micrograms per deciliter. The lead case management program shall include education, a written case management plan that includes all necessary referrals, coordination with other specific agencies, and aggressive pursuit of non-compliance with follow-up tests and appointments.
4.7.3.4	The Contractor shall have procedures for Referral to and follow up with oral health professionals, including annual dental examinations and services by an oral health professional.
4.7.3.5	The Contractor shall provide inter-periodic screens, which are screens that occur between the complete periodic screens and are Medically Necessary to determine the existence of suspected physical or mental illnesses or Conditions. This includes at a minimum vision, hearing and dental services.
4.7.3.6	The Contractor shall provide Referrals for further diagnostic and/or treatment services to correct or ameliorate defects, and physical and mental illnesses and Conditions discovered by the Health Check screens. Referral and follow up may be made to the Provider conducting the screening or to another Provider, as appropriate.
4.7.3.7	The Contractor shall provide an initial health and screening visit to all newly enrolled GF Health Check eligible children within ninety (90) Calendar Days and within twenty-four (24) hours of birth to all newborns.
4.7.3.8	Minimum Contractor compliance with the Health Check screening requirements, including blood lead screening and annual dental examinations and services, is an eighty percent (80%) screening rate, using the methodology prescribed by CMS to determine the screening rate.

4.7.4 Tracking

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4.7.4.1 The Contractor shall establish a tracking system that provides information on compliance with Health Check requirements. This system shall track, at a minimum, the following areas:

4.7.4.1.1	Initial newborn Health Check visit occurring in the hospital;
4.7.4.1.2	Periodic and preventive/well child screens and visits as prescribed by the periodicity schedule;
4.7.4.1.3	Diagnostic and treatment services, including Referrals;
4.7.4.1.4	Immunizations, lead, tuberculosis and dental services; and
4.7.4.1.5	A reminder/notification system.

4.7.4.2 All information generated and maintained in the tracking system shall be consistent with Encounter Data requirements as specified elsewhere herein.

4.7.5 Diagnostic and Treatment Services

4.7.5.1

If a suspected problem is detected by a screening examination as described above, the child shall be evaluated as necessary for further diagnosis. This diagnosis is used to determine treatment needs.

4.7.5.2

Health Check requires coverage for all follow-up diagnostic and treatment services deemed Medically Necessary to ameliorate or correct a problem discovered during a Health Check screen. Such Medically Necessary diagnostic and treatment services must be provided regardless of whether such services are covered by the State Medicaid Plan, as long as they are Medicaid-Covered Services as defined in Title XIX of the Social Security Act. The Contractor shall provide Medically Necessary, Medicaid-covered diagnostic and treatment services, either directly or by Referral.

4.7.6 Reporting Requirements

4.7.6.1 The Contractor shall submit to DCH quarterly Health Check Reports as described in Section 4.18.4.1. The Contractor shall report Health Check visits in accordance with the appropriate codes specified in the appropriate Provider Handbooks.

4.8 PROVIDER NETWORK

4.8.1 General Provisions

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4.8.1.1	The Contractor is solely responsible for providing a network of physicians, pharmacies, hospitals, and other health care Providers through whom it provides the items and services included in Covered Services.
4.8.1.2	The Contractor shall ensure that its network of Providers is adequate to assure access to all Covered Services, and that all Providers are appropriately credentialed, maintain current licenses, and have appropriate locations to provide the Covered Services.
4.8.1.3	The Contractor shall notify DCH sixty (60) days in advance when a decision is made to close network enrollment for new provider contracts and also notify DCH when network enrollment is reopened. The Contractor must notify DCH sixty (60) days prior to closing a provider panel.
4.8.1.4	The Contractor shall not include any Providers who have been excluded from participation by the Department of Health and Human Services, Office of Inspector General, or who are on the State’s list of excluded Providers. The Contractor is responsible for routinely checking the exclusions list and shall immediately terminate any Provider found to be excluded and notify the Member per the requirements outlined in this Contract.
4.8.1.5	The Contractor shall require that each Provider have a unique physician identifier number (UPIN). Effective May 23, 2007, in accordance with 45 CFR 160.103, the Contractor shall require that each Provider have a national Provider identifier (NPI).
4.8.1.6	The Contractor shall have written Selection and Retention Policies and Procedures. These policies shall be submitted to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter. In selecting and retaining Providers in its network the Contractor shall consider the following:

4.8.1.6.1	The anticipated GF Enrollment;
4.8.1.6.2	The expected Utilization of services, taking into consideration the characteristics and Health Care needs of its Members;
4.8.1.6.3	The numbers and types (in terms of training, experience and specialization) of Providers required to furnish the Covered Services;
4.8.1.6.4	The numbers of network Providers who are not accepting new GF patients; and
4.8.1.6.5	The geographic location of Providers and Members, considering distance, travel time, the means of transportation ordinarily used by

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Members, and whether the location provides physical access for Members with disabilities.

4.8.1.7 If the Contractor declines to include individual Providers or groups of Providers in its network, the Contractor shall give the affected Providers written notice of the reason(s) for the decision. These provisions shall not be construed to:

4.8.1.7.1	Require the Contractor to contract with Providers beyond the number necessary to meet the needs of its Members;
4.8.1.7.2	Preclude the Contractor from establishing measures that are designed to maintain quality of services and control costs and are consistent with its responsibilities to Members.

4.8.1.8	The Contractor shall ensure that all network Providers have knowingly and willfully agreed to participate in the Contractor’s network. The Contractor shall be prohibited from acquiring established networks without contacting each individual Provider to ensure knowledge of the requirements of this Contract and the Provider’s complete understanding and agreement to fulfill all terms of the Provider Contract, as outlined in section 4.10. DCH reserves the right to confirm and validate, through both the collection of information and documentation from the Contractor and on-site visits to network Providers, the existence of a direct relationship between the Contractor and the network Providers.
4.8.1.9	The Contractor shall submit an up-dated version of the Provider Network Listing spreadsheet for all requested Provider types (as outlined under Required Attachments in 5.1.2.8 in the RFP), and include any Provider Letters of Intent or executed Signature Pages of Provider Contracts not previously submitted (as part of the RFP response) to DCH within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.8.1.10	The Contractor shall submit a final copy of the Provider Network Listing spreadsheet for all requested Provider types (as outlined under Required Attachments in 5.1.2.8 in the RFP), Signature Pages for all Provider Contracts, and written acknowledgements from all Providers part of a PHO, IPA, or other network stating that they know they are in the CMO’s network, know they are accepting Medicaid patients, and that they are accepting the terms and conditions. These shall all be submitted to DCH ninety (90) Calendar Days prior to establishment of the Contractor in that Service Region.

4.8.2 Primary Care Providers (PCPs)

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4.8.2.1	The Contractor shall offer its Members freedom of choice in selecting a PCP. The Contractor shall have written PCP Selection Policies and Procedures describing how Members select their PCP.
4.8.2.2	The Contractor shall submit these PCP Selection Policies and Procedures policies to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.8.2.3	PCP assignment policies shall be in accordance with Section 4.1.2 of this Contract.
4.8.2.4	The Contractor may require that Members are assigned to the same PCP for a period of up to six (6) months. In the event the Contractor requires that Members are assigned to the same PCP for a period of six (6) months or less, the following exceptions shall be made:

4.8.2.4.1	Members shall be allowed to change PCPs without cause during the first ninety (90) Calendar Days following PCP selection;
4.8.2.4.2	Members shall be allowed to change PCPs with cause at anytime. The following constitute cause for change:

4.8.2.4.2.1	The PCP no longer meets the geographic access standards as defined in Section 4.8.14;
4.8.2.4.2.2	The PCP does not, because of moral or religious objections, provide the Covered Service(s) the Member seeks; and
4.8.2.4.2.3	The Member requests to be assigned to the same PCP as other family members.

4.8.2.4.3 Members shall be allowed to change PCPs every six (6) months.

4.8.2.5

The PCP is responsible for supervising, coordinating, and providing all Primary Care to each assigned Member. In addition, the PCP is responsible for coordinating and/or initiating Referrals for specialty care (both in and out of network), maintaining continuity of each Member’s Health Care and maintaining the Member’s Medical Record, which includes documentation of all services provided by the PCP as well as any specialty services. The Contractor shall require that PCPs fulfill these responsibilities for all Members.

4.8.2.6

The Contractor shall include in its network as PCPs the following:

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4.8.2.6.1 Physicians who routinely provide Primary Care services in the areas of:

4.8.2.6.1.1	Family Practice;
4.8.2.6.1.2	General Practice;
4.8.2.6.1.3	Pediatrics; or
4.8.2.6.1.4	Internal Medicine.

4.8.2.6.2 Nurse Practitioners Certified (NP-C) specializing in:

4.8.2.6.2.1	Family Practice; or
4.8.2.6.2.2	Pediatrics.

4.8.2.7	NP-Cs in independent practice must also have a current collaborative agreement with a licensed physician who has hospital admitting privileges.
4.8.2.8	FQHCs and RHCs may be included as PCPs. The Contractor shall maintain an accurate list of all Providers rendering care at these facilities.
4.8.2.9	Primary Care Public Health Department Clinics and Primary Care Hospital Outpatient Clinics may be included as PCPs if they agree to the requirements of the PCP role, including the following conditions:

4.8.2.9.1	The practice must routinely deliver Primary Care as defined by the majority of the practice devoted to providing continuing comprehensive and coordinated medical care to a population undifferentiated by disease or organ system. If deemed necessary, a Medical Record audit of the practice will be performed. Any exceptions to this requirement will be considered on a case-by-case basis.
4.8.2.9.2	Any Referrals for specialty care to other Providers of the same practice may be reviewed for appropriateness.

4.8.2.10	Physician’s assistants (PAs) may participate as a PCP as a Member of a physician’s practice.
4.8.2.11	The Contractor may allow female Members to select a gynecologist or obstetrician-gynecologist (OB-GYN) as their Primary Care Provider.
4.8.2.12	The Contractor may allow Members with Chronic Conditions to select a specialist with whom he or she has an on-going relationship to serve as a PCP.

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4.8.3 Direct Access

4.8.3.1	The Contractor shall provide female Members with direct in-network access to a women’s health specialist for covered care necessary to provide her routine and preventive Health Care services. This is in addition to the Member’s designated source of Primary Care if that Provider is not a women’s health specialist.
4.8.3.2	The Contractor shall have a process in place that ensures that Members determined to need a course of treatment or regular care monitoring have direct access to a specialist as appropriate for the Member’s condition and identified needs. The Medical Director shall be responsible for over-seeing this process.
4.8.3.3	The Contractor shall ensure that Members who are determined to need a course of treatment or regular care monitoring have a treatment plan. This treatment plan shall be developed by the Member’s PCP with Member participation, and in consultation with any specialists caring for the Member. This treatment plan shall be approved in a timely manner by the Medical Director and in accord with any applicable State quality assurance and utilization review standards.

4.8.4 Pharmacies

4.8.4.1 The Contractor shall maintain a comprehensive Provider network of pharmacies that ensures pharmacies are available and accessible to all Members.

4.8.5 Hospitals

4.8.5.1	The Contractor shall have a comprehensive Provider network of hospitals such that they are available and accessible to all Members. This includes, but is not limited to tertiary care facilities and facilities with neo-natal, intensive care, burn, and trauma units.
4.8.5.2	The Contractor shall include in its network Critical Access Hospitals (CAHs) that are located in its Service Region.
4.8.5.3	The Contractor shall maintain copies of all letters and other correspondence related to its efforts to include CAHs in its network. This documentation shall be provided to DCH upon request.
4.8.5.4	A critical access hospital must provide notice to a care management organization and the Department of Community Health of any alleged

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breaches in its contract by such care management organization (Title 33 of the Official Code of Georgia Annotated as amended pursuant to HB 1234).

4.8.6 Laboratories

4.8.6.1 The Contractor shall maintain a comprehensive Provider network of laboratories that ensures laboratories are accessible to all Members. The Contractor shall ensure that all laboratory testing sites providing services under this contract have either a clinical laboratory (CLIA) certificate or a waiver of a certificate of registration, along with a CLIA number, pursuant to 42 CFR 493.3.

4.8.7 Mental Health/Substance Abuse

4.8.7.1	The Contractor shall include in its network Core Service Providers (CSP’s) that meet the requirements of the Department of Human Resources and are located in its Service Region, provided they agree to the Contractor’s terms and conditions as well as rates; and presuming they meet the credentialing requirements established by the Contractor for that provider type.
4.8.7.2	The Contractor shall maintain copies of all letters and other correspondence related to the inclusion of CSP’s in its network. This documentation shall be provided to DCH upon request.

4.8.8 Federally Qualified Health Centers (FQHCs)

4.8.8.1	The Contractor shall include in its Provider network all FQHCs in its Service Region based on PPS rates.
4.8.8.2	The Contractor shall maintain copies of all letters and other correspondence related to its efforts to include FQHCs in its network. This documentation shall be provided to DCH upon request.
4.8.8.3	The FQHC must agree to provide those primary care services typically included as part of a physician’s medical practice, as described in §901 of State Medicaid Manual Part II for FQHC (the Manual). Services and supplies deemed necessary for the provision of a Core services as described in §901.2 of the Manual are considered part of the FQHC service. In addition, an FQHC can provide other ambulatory services of the following state Medicaid Program, once enrolled in the programs:

4.8.8.1.1	Health Check (COS 600),
4.8.8.1.2	Mental Health (COS 440),
4.8.8.1.3	Dental Services (COS 450 and 460),
4.8.8.1.4	Refractive Vision Care services (COS 470),
4.8.8.1.5	Podiatry (COS 550),

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4.8.8.1.6 Pregnancy Related services (COS 730), and

4.8.9 Rural Health Clinics (RHCs)

4.8.9.1	The Contractor shall include in its Provider network all RHCs in its Service Region based on PPS rates.
4.8.9.2	The Contractor shall maintain copies of all letters and other correspondence related to its efforts to include FQHCs and RHCs in its network. This documentation shall be provided to DCH upon request.
4.8.9.3	The RHC must agree to provide those primary care services typically included as part of a physician’s medical practice, as described in §901 of State Medicaid Manual Part II for RHC (the Manual). Services and supplies deemed necessary for the provision of a Core services as described in §901.2 of the Manual are considered part of the RHC service. In addition, an RHC can provide other ambulatory services of the following state Medicaid Program, once enrolled in the programs:

4.8.9.3.1	Health Check (COS 600),
4.8.9.3.2	Mental Health (COS 440),
4.8.9.3.3	Dental Services (COS 450 and 460),
4.8.9.3.4	Refractive Vision Care services (COS 470),
4.8.9.3.5	Podiatry (COS 550),
4.8.9.3.6	Pregnancy Related services (COS 730), and
4.8.9.3.7	Perinatal Case Management (COS 761).

4.8.10 Family Planning Clinics

4.8.11.1	The Contractor shall make a reasonable effort to subcontract with all family planning clinics, including those funded by Title X of the Public Health Services Act.
4.8.11.2	The Contractor shall maintain copies of all letters and other correspondence related to its efforts to include Title X Clinics in its network. This documentation shall be provided to DCH upon request.

4.8.11 Nurse Practitioners Certified (NP-Cs) and Certified Nurse Midwives (CNMs)

4.8.11.1 The Contractor shall ensure that Members have appropriate access to NP-Cs and CNMs, through either Provider contracts or Referrals. This provision shall in no way be interpreted as requiring the Contractor to provide any services that are not Covered Services.

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4.8.12 Dental Practitioners

4.8.12.1 The Contractor shall not deny any dentist from participating in the Medicaid and PeachCare for Kids dental program administered by such care management organization if:

4.8.12.1.1	If such dentist has obtained a license to practice in this state and is an enrolled provider who has met all of the requirements of the Department of Community Health for participation in the Medicaid and PeachCare for Kids program; and
4.8.12.1.2	If licensed dentist will provide dental services to members pursuant to a state or federally funded educational loan forgiveness program that requires such services; provided, however, each care management organization shall be required to offer dentists wishing to participate through such loan forgiveness programs the same contract terms offered to other dentists in the service region who participate in the care management organization’s Medicaid and PeachCare for Kids dental programs;
4.8.12.1.3	If the geographic area in which the dentist intends to practice has been designated as having a dental professional shortage as determined by the Department of Community Health, which may be based on the designation of the Health Resources and Services Administration of the United States Department of Health and Human Services; 4.8.12.1.4 The Contractor much establish to the satisfaction of the Department of Community Health that a sufficient number of general dentists and specialists have contracted with the care management organization to provide covered dental services to members in the geographic region.
4.8.12.1.4	The Contractor may only decline to contract with a dentist who has had his or her license to practice dentistry sanctioned in any manner or fails to meet the credentialing criteria established by the care management organization. Any dentist denied on this basis shall be entitled to a hearing before an administrative law judge as set forth in subsection (e) of Code Section 49-4-153.

4.8.13 Geographic Access Requirements

4.8.13.1 In addition to maintaining in its network a sufficient number of Providers to provide all services to its Members, the Contractor shall meet the following geographic access standards for all Members:

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	Urban	Rural
PCPs	Two (2) within eight (8) miles	Two (2) within fifteen (15) miles
Specialists	One (1) within thirty (30) minutes or thirty (30) miles	One within forty-five (45) minutes or forty-five (45) miles
Dental Providers	One (1) within thirty (30) minutes or thirty (30) miles	One within forty-five (45) minutes or forty-five (45) miles
Hospitals	One (1) within thirty (30) minutes or thirty (30) miles	One within forty-five (45) minutes or forty-five (45) miles
Mental Health Providers	One (1) within thirty (30) minutes or thirty (30) miles	One within forty-five (45) minutes or forty-five (45) miles
Pharmacies	One (1) twenty-four (24) hours a day, seven (7) days a week within fifteen (15) minutes or fifteen (15) miles	One (1) twenty-four (24) hours a day (or has an after hours emergency phone number and pharmacist on call), seven (7) days a week within thirty (30) minutes or thirty (30) miles

4.8.13.2 All travel times are maximums for the amount of time it takes a Member, using usual travel means in a direct route to travel from their home to the Provider. DCH recognizes that transportation with NET vendors may not always follow direct routes due to multiple passengers.

4.8.14 Waiting Maximums and Appointment Requirements

4.8.14.1	The Contractor shall require that all network Providers offer hours of operation that are no less than the hours of operation offered to commercial and Fee-for-Service patients. The Contractor shall encourage its PCPs to offer After-Hours office care in the evenings and on weekends.
4.8.14.2	The Contractor shall have in its network the capacity to ensure that waiting times for appointments do not exceed the following:

PCPs (routine visits)	21 Calendar Days
PCP (adult sick visit)	72 hours
PCP (pediatric sick visit)	24 hours
Specialist	30 Calendar Days
Non-emergency hospital stays	30 Calendar Days
Mental health Providers	14 Calendar Days

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Urgent Care Providers	24 hours
Emergency Providers	Immediately (24 hours a day, 7 days a week) and without prior authorization

4.8.14.3	The Contractor shall provide adequate capacity for initial visits for pregnant women within fourteen (14) Calendar Days and visits for Health Check eligible children within ninety (90) Calendar Days of Enrollment into the CMO plan.
4.8.14.4	The Contractor shall take corrective action if there is a failure to comply with these waiting times.

4.8.15 Credentialing

4.8.15.1	The Contractor shall maintain written policies and procedures for the Credentialing and Re-Credentialing of network Providers, using standards established by National Committee Quality Assurance (NCQA), Joint Commission on Accreditation Healthcare Organization (JCAHO), or American Accreditation Healthcare Commission/URAC. At a minimum, the Contractor shall require that each Provider be credentialed in accordance with State law. The Contractor may impose more stringent Credentialing criteria than the State requires. The Contractor shall Credential all completed applications packets within 120 calendar days of receipt.
4.8.15.2	Credentialing policies and procedures shall include: the verification of the existence and maintenance of credentials, licenses, certificates, and insurance coverage of each Provider from a primary source; a methodology and process for Re-Credentialing Providers; a description of the initial quality assessment of private practitioner offices and other patient care settings; and procedures for disciplinary action, such as reducing, suspending, or terminating Provider privileges.
4.8.15.3	Upon the request of DCH, The Contractor shall make available all licenses, insurance certificates, and other documents of network Providers. The Contractor shall also make available to DCH each quarter the total number of provider applications by date that have been received, credentialed, and approved. These reports should be catalogued date in such a way to allow age tracking of each provider application submitted and the specific reason code for applications delayed beyond 120 days.
4.8.15.4	The newly awarded Contractor shall submit its Provider Credentialing and re-Credentialing Policies and Procedures to DCH within sixty (60) Calendar Days of Contract Award and as updated thereafter. Existing Contractors shall submit its Provider Credentialing and re-Credentialing Policies and Procedures to DCH quarterly.

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4.8.16 Mainstreaming

4.8.16.1	The Contractor shall encourage that all In-Network Providers accept Members for treatment, unless they have a full panel (2500 members) and are accepting no new GF or commercial patients. The Contractor shall ensure that In-Network Providers do not intentionally segregate Members in any way from other persons receiving services.
4.8.16.2	The Contractor shall ensure that Members are provided services without regard to race, color, creed, sex, religion, age, national origin, ancestry, marital status, sexual preference, health status, income status, or physical or mental disability.

4.8.17 Coordination Requirements

4.8.17.1	The Contractor shall coordinate with all divisions within DCH, as well as with other State agencies, and with other CMO plans operating within the same Service Region.
4.8.17.2	The Contractor shall also coordinate with local education agencies in the Referral and provision of children’s intervention services provided through the school to ensure Medical Necessity and prevent duplication of services.
4.8.17.3	The Contractor shall coordinate the services furnished to its Members with the service the Member receives outside the CMO plan, including services received through any other managed care entity.
4.8.17.4	The Contractor shall coordinate with all NET vendors.
4.8.17.5	DCH strongly encourages the Contractor to Contract with Providers of essential community services who would normally Contract with the State as well as other public agencies and with non-profit organizations that have maintained a historical base in the community.
4.8.17.6	The Contractor shall implement procedures to ensure that in the process of coordinating care each Member’s privacy is protected consistent with the confidentiality requirements in 45 CFR 160 and 45 CFR 164.

4.8.18 Network Changes

4.8.18.1 The Contractor shall notify DCH within seven (7) Business Days of any significant changes to the Provider network or, if applicable, to any Subcontractors’ Provider network. A significant change is defined as:

4.8.18.1.1 A decrease in the total number of PCPs by more than five percent (5%);

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4.8.18.1.2	A loss of all Providers in a specific specialty where another Provider in that specialty is not available within sixty (60) miles;
4.8.18.1.3	A loss of a hospital in an area where another contracted hospital of equal service ability is not available within thirty (30) miles; or
4.8.18.1.4	Other adverse changes to the composition of the network, which impair or deny the Members’ adequate access to In-Network Providers.

4.8.18.2	The Contractor shall have procedures to address changes in the health plan Provider network that negatively affect the ability of Members to access services, including access to a culturally diverse Provider network. Significant changes in network composition that negatively impact Member access to services may be grounds for Contract termination or State determined remedies.
4.8.18.3	If a PCP ceases participation in the Contractor’s Provider network the Contractor shall send written notice to the Members who have chosen the Provider as their PCP. This notice shall be issued no less than thirty (30) Calendar Days prior to the effective date of the termination and no more than ten (10) Calendar Days after receipt or issuance of the termination notice.
4.8.18.4	If a Member is in a prior authorized ongoing course of treatment with any other participating Provider who becomes unavailable to continue to provide services, the Contractor shall notify the Member in writing within ten (10) Calendar Days from the date the Contractor becomes aware of such unavailability.
4.8.18.5	These requirements to provide notice prior to the effective dates of termination shall be waived in instances where a Provider becomes physically unable to care for Members due to illness, a Provider dies, the Provider moves from the Service Region and fails to notify the Contractor, or when a Provider fails Credentialing. Under these circumstances, notice shall be issued immediately upon the Contractor becoming aware of the circumstances.

4.8.19 Out-of-Network Providers

4.8.19.1 If the Contractor’s network is unable to provide Medically Necessary Covered Services to a particular Member, the Contractor shall adequately and timely cover these services Out-of-Network for the Member. The Contractor must inform the Out-of Network Provider that the member cannot be balance billed.

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4.8.19.2 The Contractor shall coordinate with Out-of-Network Providers regarding payment. For payment to Out-of-Network, or non-participating Providers, the following guidelines apply:

4.8.19.2.1	If the Contractor offers the service through an In-Network Provider(s), and the Member chooses to access the service (i.e., it is not an emergency) from an Out-of-Network Provider, the Contractor is not responsible for payment.
4.8.19.2.2	If the service is not available from an In-Network Provider, but the Contractor has three (3) Documented Attempts to contract with the Provider, the Contractor is not required to pay more than Medicaid FFS rates for the applicable service, less ten percent (10%).
4.8.19.2.3	If the service is available from an In-Network Provider, but the service meets the Emergency Medical Condition standard, and the Contractor has three (3) Documented Attempts to contract with the Provider, the Contractor is not required to pay more than Medicaid FFS rates for the applicable service, less ten percent (10%).
4.8.19.2.4	If the service is not available from an In-Network Provider and the Member requires the service and is referred for treatment to an Out-of-Network Provider, the payment amount is a matter between the CMO and the Out-of-Network Provider.

4.8.19.3 In the event that needed services are not available from an In-Network Provider and the Member must receive services from an Out-of-Network Provider, the Contractor must ensure that the Member is not charged more than it would have if the services were furnished within the network.

4.8.20 Shriners Hospitals for Children

4.8.20.1	The Contractor shall comply with the responsibilities outlined in the “Memorandum of Understanding for the PeachCare Partnership Program” executed on February 18, 2008.
4.8.20.2	The Contractor shall cooperate with DCH in making any updates or revisions to the Memorandum, as necessary.

4.8.21 Reporting Requirements

4.8.21.1	The Contractor shall submit to DCH Provider Network Adequacy and Capacity Reports, as described in Section 4.18.6.2.
4.8.21.2	The Contractor shall submit to DCH quarterly Timely Access Reports as described in Section 4.18.4.2.

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4.9 PROVIDER SERVICES

4.9.1 General Provisions

4.9.1.1	The Contractor shall provide information to all Providers about GF in order to operate in full compliance with the GF Contract and all applicable federal and State regulations.
4.9.1.2	The Contractor shall monitor Provider knowledge and understanding of Provider requirements, and take corrective actions to ensure compliance with such requirements.
4.9.1.3	The Contractor shall submit to DCH for review and prior approval all materials and information to be distributed and/or made available.
4.9.1.4	All Provider Handbooks and bulletins must be in compliance with State and federal laws.

4.9.2 Provider Handbooks

4.9.2.1 The Contractor shall issue a Provider Handbook to all network Providers at the time the Provider Contract is signed. The Contractor may choose not to distribute the Provider Handbook via mail, provided it submits a written notification to all Providers that explains how to obtain the Provider Handbook from the CMO’s Web site. This notification shall also detail how the Provider can request a hard copy from the CMO at no charge to the Provider. All Provider Handbooks and bulletins shall be in compliance with State and federal laws. The Provider Handbook shall serve as a source of information regarding GF Covered Services, policies and procedures, statutes, regulations, telephone access and special requirements to ensure all Contract requirements are being met. At a minimum, the Provider Handbook shall include the following information:

4.9.2.1.1	Description of the GF;
4.9.2.1.2	Covered Services;
4.9.2.1.3	Emergency Service responsibilities;
4.9.2.1.4	Health Check/EPSDT program services and standards;
4.9.2.1.5	Policies and procedures of the Provider complaint system;

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4.9.2.1.6	Information on the Member Grievance System, including the Member’s right to a State Administrative Law Hearing, the timeframes and requirements, the availability of assistance in filing, the toll-free numbers and the Member’s right to request continuation of Benefits while utilizing the Grievance System;
4.9.2.1.7	Medical Necessity standards and practice guidelines;
4.9.2.1.8	Practice protocols, including guidelines pertaining to the treatment of chronic and complex Conditions;
4.9.2.1.9	PCP responsibilities;
4.9.2.1.10	Other Provider or Subcontractor responsibilities;
4.9.2.1.11	Prior Authorization, Pre-Certification, and Referral procedures;
4.9.2.1.12	Protocol for Encounter Data element reporting/records;
4.9.2.1.13	Medical Records standard;
4.9.2.1.14	Claims submission protocols and standards, including instructions and all information necessary for a clean or complete Claim;
4.9.2.1.15	Payment policies;
4.9.2.1.16	The Contractor’s Cultural Competency Plan; and
4.9.2.1.17	Member rights and responsibilities.

4.9.2.2	The Contractor shall disseminate bulletins as needed to incorporate any needed changes to the Provider Handbook.
4.9.2.3	The Contractor shall submit the Provider Handbook to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter. Any updates or revisions shall be submitted to DCH for review and approval at least 30 days prior to distribution.

4.9.3 Education and Training

4.9.3.1 The Contractor shall provide training to all Providers and their staff regarding the requirements of the Contract and special needs of Members. The Contractor shall conduct initial training within thirty (30) Calendar Days of placing a newly Contracted Provider on active status. The Contractor shall also conduct ongoing training as deemed necessary by the Contractor or DCH in order to ensure compliance with program standards and the GF Contract.

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4.9.3.2	The Contractor shall submit the Provider Training Manual and Training Schedule to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.9.3.3	The Contractor shall submit the Provider Rep Field Visit Report as described in Section 4.18.4.13.

4.9.4 Provider Relations

4.9.4.1

The Contractor shall establish and maintain a formal Provider relations function to timely and adequately respond to inquiries, questions and concerns from network Providers. The Contractor shall implement policies addressing the compliance of Providers with the requirements of GF, institute a mechanism for Provider dispute resolution and execute a formal system of terminating Providers from the network.

4.9.4.2

The Contractor shall provide for a Provider Relations Liaison to carry out the Provider relations functions. There shall be at least one (1) Provider Relations Liaison in each Service Region.

4.9.5 Toll-free Provider Services Telephone Line

4.9.5.1	The Contractor shall operate a toll-free telephone line to respond to Provider questions, comments and inquiries.
4.9.5.2	The Contractor shall develop Telephone line Policies and Procedures that address staffing, personnel, hours of operation, access and response standards, monitoring of calls via recording or other means, and compliance with standards.
4.9.5.3	The Contractor shall submit these Telephone line Policies and Procedures, including performance standards, to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.9.5.4	The Contractor’s call center systems shall have the capability to track call management metrics identified in Attachment L.
4.9.5.5	Pursuant to OCGA 30-20A-7.1, the telephone line shall be staffed twenty-four (24) hours a day, seven (7) days a week to respond to Prior Authorization and Pre-certification requests. This telephone line shall have staff to respond to Provider questions in all other areas, including the Provider complaint system, Provider responsibilities, etc. between the hours of 7:00am and 7:00pm EST Monday through Friday, excluding State holidays.

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4.9.5.6	The Contractor shall develop performance standards and monitor Telephone Line performance by recording calls and employing other monitoring activities. At a minimum, the standards shall require that, on a monthly basis, eighty percent (80%) of calls are answered by a person within thirty (30) seconds, the Blocked Call rate does not exceed one percent (1%), and the rate of Abandoned Calls does not exceed five percent (5%).
4.9.5.7	The Contractor shall insure that after regular business hours the non-Prior Authorization/Pre-certification line is answered by an automated system with the capability to provide callers with operating hour’s information and instructions on how to verify Enrollment for a Member with an Emergency or Urgent Medical Condition. The requirement that the Contractor shall provide information to Providers on how to verify Enrollment for a Member with an Emergency or Urgent Medical Condition shall not be construed to mean that the Provider must obtain verification before providing Emergency Services.
4.9.5.8	The Contractor shall develop Call Center Quality Criteria and Protocols to measure and monitor the accuracy of responses and phone etiquette as it relates to the Toll-free Telephone Line. The Contractor shall submit the Call Center Quality Criteria and Protocols to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.9.6 Internet Presence/Web Site

4.9.6.1	The Contractor shall dedicate a section of its Web Site to Provider services and provide at a minimum, the capability for Providers to make inquiries and receive responses through the Medicaid fiscal agent Web Site, (www.ghp.georgia.gov).
4.9.6.2	In addition to the specific requirements outlined above, the Contractor’s Web Site shall be functionally equivalent, with respect to functions described in this Contract, to the Web Site maintained by the State’s Medicaid fiscal agent (www.ghp.georgia.gov).
4.9.6.3	The Contractor shall submit Web site screenshots to DCH for review and approval sixty (60) Calendar Days prior to Contract Award and quarterly thereafter and as updated.
4.9.6.4	The Contractor shall maintain a website that allows providers to submit, process, edit (only if original submission is in an electronic format), rebill, and adjudicate claims electronically. To the extent a provider has the capability; each care management organization shall submit payments to providers electronically and submit remittance advices to providers electronically within one business day of when payment is made. To the extent that any of these functions involve covered transactions under 45 C.F.R. Section 162.900, et

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seq., then those transactions also shall be conducted in accordance with applicable federal requirements.

4.9.6.5 The Contractor shall post on its website a searchable list of all providers with which the care management organization has contracted. At a minimum, this list shall be searchable by provider name, specialty, and location. At a minimum, the list shall be updated once each month.

4.9.7 Provider Complaint System

4.9.7.1	The Contractor shall establish a Provider Complaint system that permits a Provider to dispute the Contractor’s policies, procedures, or any aspect of a Contractor’s administrative functions.
4.9.7.2	The Contractor shall submit its Provider Complaint System Policies and Procedures to DCH for review and approval quarterly and annually and as updated thereafter.
4.9.7.3	The Contractor shall include its Provider Complaint System Policies and Procedures in its Provider Handbook that is distributed to all network Providers. This information shall include, but not be limited to, specific instructions regarding how to contact the Contractor’s Provider services to file a Provider complaint and which individual(s) have the authority to review a Provider complaint.
4.9.7.4	The Contractor shall distribute the Provider Complaint System Policies and Procedures to Out-of-Network Providers with the remittance advice of the processed Claim. The Contractor may distribute a summary of these Policies and Procedures if the summary includes information on how the Provider may access the full Policies and Procedures on the Web site. This summary shall also detail how the Provider can request a hard copy from the CMO at no charge to the Provider.
4.9.7.5	As a part of the Provider Complaint System, the Contractor shall:

4.9.7.5.1	Allow Providers thirty (30) Calendar Days to file a written complaint;
4.9.7.5.2	Allow providers to consolidate complaints or appeals of multiple claims that involve the same or similar payment or coverage issues, regardless of the number of individual patients or payment claims included in the bundled complaint or appeal.

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4.9.7.5.3	Allow a provider that has exhausted the care management organization ´s internal appeals process related to a denied or underpaid claim or group of claims bundled for appeal the option either to pursue the administrative review process described in subsection (e) of Code Section 49-4-153(e) or to select binding arbitration by a private arbitrator who is certified by a nationally recognized association that provides training and certification in alternative dispute resolution. If the care management organization and the provider are unable to agree on an association, the rules of the American Arbitration Association shall apply. The arbitrator shall have experience and expertise in the health care field and shall be selected according to the rules of his or her certifying association. Arbitration conducted pursuant to this Code section shall be binding on the parties. The arbitrator shall conduct a hearing and issue a final ruling within 90 days of being selected, unless the care management organization and the provider mutually agree to extend this deadline. All costs of arbitration, not including attorney ´s fees, shall be shared equally by the parties.
4.9.7.5.4	For all claims that are initially denied or underpaid by a care management organization but eventually determined or agreed to have been owed by the care management organization to a provider of health care services, the care management organization shall pay, in addition to the amount determined to be owed, interest of 20 percent per annum, calculated from 15 days after the date the claim was submitted. A care management organization shall pay all interest required to be paid under this provision or Code Section 33-24-59.5 automatically and simultaneously whenever payment is made for the claim giving rise to the interest payment.
4.9.7.5.5	All interest payments shall be accurately identified on the associated remittance advice submitted by the care management organization to the provider.
4.9.7.5.6	Require that the reason for the complaint is clearly documented;
4.9.7.5.7	Require that Providers exhaust the Contractor’s internal Provider Complaint process prior to requesting an Administrative Law Hearing (State Fair Hearing);
4.9.7.5.8	Have dedicated staff for Providers to contact via telephone, electronic mail, or in person, to ask questions, file a Provider Complaint and resolve problems;
4.9.7.5.9	Identify a staff person specifically designated to receive and process Provider Complaints;

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4.9.7.5.10	Thoroughly investigate each GF Provider Complaint using applicable statutory, regulatory, and Contractual provisions, collecting all pertinent facts from all parties and applying the Contractor’s written policies and procedures; and
4.9.7.5.11	Ensure that CMO plan executives with the authority to require corrective action are involved in the Provider Complaint process.

4.9.7.6	In the event the outcome of the review of the Provider Complaint is adverse to the Provider, the Contractor shall provide a written Notice of Adverse Action to the Provider. The Notice of Adverse Action shall state that Providers may request an Administrative Law Hearing in accordance with OCGA § 49-4-153, OCGA § 50-13-13 and OCGA § 50-13-15.
4.9.7.7	The Contractor shall notify the Providers that a request for an Administrative Law Hearing must include the following information:

4.9.7.7.1	A clear expression by the Provider that he/she wishes to present his/her case to an Administrative Law Judge;
4.9.7.7.2	Identification of the Action being appealed and the issues that will be addressed at the hearing;
4.9.7.7.3	A specific statement of why the Provider believes the Contractor’s Action is wrong; and
4.9.7.7.4	A statement of the relief sought.

4.9.7.8 DCH has delegated its statutory authority to receive hearing requests to the Contractor. The Contractor shall include with the Notice of Adverse Action the Contractor’s address where a Provider’s request for an Administrative Law Hearing should be sent in accordance with OCGA § 49-4-153(e).

Amerigroup Georgia Managed Care Company, Inc.
303 Perimeter Center North
Suite 400
Atlanta, GA 30346

4.9.8 Reporting Requirements

4.9.8.1 The Contractor shall submit to DCH monthly Telephone and Internet Activity Reports as described in Section 4.18.3.1.

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4.9.8.2 The Contractor shall submit to DCH quarterly Provider Complaints Reports as described in 4.18.4.3.

4.10 PROVIDER CONTRACTS AND PAYMENTS

4.10.1 Provider Contracts

4.10.1.1	The Contractor shall comply with all DCH procedures for contract review and approval submission. Memoranda of Agreement (MOA) shall not be permitted. Letters of Intent shall only be permitted in accordance with Section 4.8.1.9.
4.10.1.2	The Contractor shall submit to DCH for review and approval a model for each type of Provider Contract within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.10.1.3	Any significant changes to the model Provider Contract shall be submitted to DCH for review and approval no later than thirty (30) Calendar Days prior to the Enrollment of Members into the CMO plan.
4.10.1.4	Upon request, the Contractor shall provide DCH with free copies of all executed Provider Contracts.
4.10.1.5	The Contractor shall not require providers to participate or accept other plans or products offered by the care management organization unrelated to providing care to members, nor reduce the funding available for members as a result of payment of such penalties.. Any care management organization which violates this prohibition shall be subject to a penalty of $1,000.00 per violation.
4.10.1.6	The Contractor shall not enter into any exclusive contract agreements with providers than exclude other health care providers from contract agreements for network participation.
4.10.1.7	Health care providers may not, as a condition of contracting with a CMO, require the CMO to contract with or not contract with another health care provider. A provider who violates this probation will be subject to a $1,000 per violation penalty.
4.10.1.8	If a provider has complied with all of DCH’s published procedures for verifying a patient’s eligibility for Medicaid benefits through the established common verification process, DCH must reimburse the provider for all covered services provided to the patient within the 72 hours following the verification, if such services are denied by a CMO or DCH because the patient is not enrolled as shown in the verification process. DCH would be able to

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pursue a case of action against a person who had contributed to the incorrect verification.

4.10.1.9 In addition to addressing the CMO plan licensure requirements, the Contractor’s Provider Contracts shall:

4.10.1.9.1	Prohibit the Provider from seeking payment from the Member for any Covered Services provided to the Member within the terms of the Contract and require the Provider to look solely to the Contractor for compensation for services rendered, with the exception of nominal cost sharing pursuant to the Georgia State Medicaid Plan, the Georgia State Medicaid Policies and Procedures Manual, and the GF Contract;
4.10.1.9.2	Require the Provider to cooperate with the Contractor’s quality improvement and Utilization Review and management activities;
4.10.1.9.3	Include provisions for the immediate transfer to another PCP or Contractor if the Member’s health or safety is in jeopardy;
4.10.1.9.4	Not prohibit a Provider from discussing treatment or non-treatment options with Members that may not reflect the Contractor’s position or may not be covered by the Contractor;
4.10.1.9.5	Not prohibit a Provider from acting within the lawful scope of practice, from advising or advocating on behalf of a Member for the Member’s health status, medical care, or treatment or non-treatment options, including any alternative treatments that might be self-administered;
4.10.1.9.6	Not prohibit a Provider from advocating on behalf of the Member in any Grievance System or Utilization Review process, or individual authorization process to obtain necessary Health Care services;
4.10.1.9.7	Require Providers to meet appointment waiting time standards pursuant to Section 4.8.15.2 of this Contract;
4.10.1.9.8	Provide for continuity of treatment in the event a Provider’s participation terminates during the course of a Member’s treatment by that Provider;
4.10.1.9.9	Prohibit discrimination with respect to participation, reimbursement, or indemnification of any Provider who is acting within the scope of his or her license or certification

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under applicable State law, solely based on such license or certification. This provision should not be construed as any willing provider law, as it does not prohibit Contractors from limiting Provider participation to the extent necessary to meet the needs of the Members. Additionally, this provision shall not preclude the Contractor from using different reimbursement amounts for different specialties or for different practitioners in the same specialty. This provision also does not interfere with measures established by the Contractor that are designed to maintain Quality and control costs;

4.10.1.9.10	Prohibit discrimination against Providers serving high-risk populations or those that specialize in Conditions requiring costly treatments;
4.10.1.9.11	Specify that CMS and DCH will have the right to inspect, evaluate, and audit any pertinent books, financial records, documents, papers, and records of any Provider involving financial transactions related to the GF Contract;
4.10.1.9.12	Specify Covered Services and populations;
4.10.1.9.13	Require Provider submission of complete and timely Encounter Data, pursuant to Section 4.17.4.2 of the GF Contract;
4.10.1.9.14	Include the definition and standards for Medical Necessity, pursuant to the definition in Section 4.5.4 of this Contract;
4.10.1.9.15	Specify rates of payment. The Contractor ensures that Providers will accept such payment as payment in full for Covered Services provided to Members, as deemed Medically Necessary and appropriate under the Contractor’s Quality Improvement and Utilization Management program, less any applicable Member cost sharing pursuant to the GF Contract;
4.10.1.9.16	Provide for timely payment to all Providers for Covered Services to Members.  Pursuant to O.C.G.A. 33-24-59.5(b) (1) once a clean claim has been received, the CMO(s) will have 15 Business Days within which to process and either transmit funds for payment electronically for the claim or mail a letter or notice denying it, in whole or in part giving the reasons for such denial.
4.10.1.9.17	Specify acceptable billing and coding requirements;

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4.10.1.9.18	Require that Providers comply with the Contractor’s Cultural Competency plan;
4.10.1.9.19	Require that any marketing materials developed and distributed by Providers be submitted to the Contractor to submit to DCH for approval;
4.10.1.9.20	Specify that in the case of newborns the Contractor shall be responsible for any payment owed to Providers for services rendered prior to the newborn’s Enrollment with the Contractor;
4.10.1.9.21	Specify that the Contractor shall not be responsible for any payments owed to Providers for services rendered prior to a Member’s Enrollment with the Contractor, even if the services fell within the established period of retroactive eligibility;
4.10.1.9.22	Comply with 42 CFR 434 and 42 CFR 438.6;
4.10.1.9.23	Require Providers to collect Member co-payments as specified in Attachment K;
4.10.1.9.24	Not employ or subcontract with individuals on the State or Federal Exclusions list;
4.10.1.9.25	Prohibit Providers from making Referrals for designated health services to Health Care entities with which the Provider or a Member of the Provider’s family has a Financial Relationship.
4.10.1.9.26	Require Providers of transitioning Members to cooperate in all respects with Providers of other CMO plans to assure maximum health outcomes for Members;
4.10.1.9.27	Not require that Providers sign exclusive Provider Contracts with the Contractor if the Provider is an STP, CAH, FQHC, or RHC;
4.10.1.9.28	Contain a provision stating that in the event DCH is due funds from a Provider; who has exhausted or waived the administrative review process, if applicable, the Contractor shall reduce payment by one hundred percent (100%) to that Provider until such time as the amount owed to DCH is recovered; and
4.10.1.9.29	Contain a provision giving notice that the Contractor’s negotiated rates with Providers shall be adjusted in the event

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the Commissioner of DCH directs the Contractor to make such adjustments in order to reflect budgetary changes to the Medical Assistance program.

4.10.2 Provider Termination

4.10.2.1 The Contractor shall comply with all State and federal laws regarding Provider termination. In its Provider Contracts the Contractor shall:

4.10.2.1.1

Specify that in addition to any other right to terminate the Provider Contract, and notwithstanding any other provision of this Contract, DCH may request Provider termination immediately, or the Contractor may immediately terminate on its own, a Provider’s participation under the Provider Contract if a Provider fails to abide by the terms and conditions of the Provider Contract, as determined by DCH, or, in the sole discretion of DCH, fails to come into compliance within fifteen (15) Calendar Days after a receipt of notice from the Contractor specifying such failure and requesting such Provider to abide by the terms and conditions hereof;

4.10.2.1.2

Specify that any Provider whose participation is terminated under the Provider Contract for any reason shall utilize the applicable appeals procedures outlined in the Provider Contract. No additional or separate right of appeal to DCH or the Contractor is created as a result of the Contractor’s act of terminating, or decision to terminate any Provider under this Contract. Notwithstanding the termination of the Provider Contract with respect to any particular Provider, this Contract shall remain in full force and effect with respect to all other Providers;

4.10.2.2	The Contractor shall notify DCH at least forty-five (45) Calendar Days prior to the effective date of the suspension, termination, or withdrawal of a Provider from participation in the Contractor’s network. If the termination was “for cause” the Contractor shall provide to DCH the reasons for termination; and
4.10.2.3	The Contractor shall notify the Members pursuant to Section 4.8.19 of this Contract.

4.10.3 Provider Insurance

4.10.3.1 The Contractor shall require each Provider (with the exception of 4.10.3.2 below, and FQHCs that are section 330 grantees) to maintain, throughout the terms of the Contract, at its own expense, professional and comprehensive general liability, and medical malpractice, insurance. Such comprehensive general liability policy of insurance shall provide coverage in an amount established by the Contractor pursuant to its written Contract with the

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	Provider. Such professional liability policy of insurance shall provide a minimum coverage in the amount of one million dollars ($1,000,000) per occurrence, and three million dollars ($3,000,000) annual aggregate. Providers may be allowed to self-insure if the Provider establishes an appropriate actuarially determined reserve. DCH reserves the right to waive this requirement if necessary for business need.
4.10.3.2	The Contractor shall require allied mental health professionals to maintain, throughout the terms of the Contract, professional and comprehensive general liability, and medical malpractice, insurance. Such comprehensive general liability policy of insurance shall provide coverage in an amount established by the Contractor pursuant to its written Contract with Provider. Such professional liability policy of insurance shall provide a minimum coverage in the amount of one million dollars ($1,000,000) per occurrence, and one million dollars ($1,000,000) annual aggregate. These providers may also be allowed to self insure if the Provider establishes an appropriate actuarially determined reserve.
4.10.3.3	In the event any such insurance is proposed to be reduced, terminated or canceled for any reason, the Contractor shall provide to DCH and Department of Insurance (DOI) at least thirty (30) Calendar Days prior written notice of such reduction, termination or cancellation. Prior to the reduction, expiration and/or cancellation of any insurance policy required hereunder, the Contractor shall require the Provider to secure replacement coverage upon the same terms and provisions so as to ensure no lapse in coverage, and shall furnish DCH and DOI with a Certificate of Insurance indicating the receipt of the required coverage at the request of DCH or DOI.
4.10.3.4	The Contractor shall require Providers to maintain insurance coverage (including, if necessary, extended coverage or tail insurance) sufficient to insure against claims arising at any time during the term of the GF Contract, even though asserted after the termination of the GF Contract. DCH or DOI, at its discretion, may request that the Contractor immediately terminate the Provider from participation in the program upon the Provider’s failure to abide by these provisions. The provisions of this Section shall survive the expiration or termination of the GF Contract for any reason.

4.10.4 Provider Payment

4.10.4.1 With the exceptions noted below, the Contractor shall negotiate rates with Providers and such rates shall be specified in the Provider Contract. DCH prefers that Contractors pay Providers on a Fee for Service basis, however if the Contractor does enter into a capitated arrangement with Providers, the Contractor shall continue to require all Providers to submit detailed Encounter Data, including those Providers that may be paid a Capitation Payment.

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4.10.4.2	The Contractor shall be responsible for issuing an IRS Form (1099) in accordance with all federal laws, regulations and guidelines.
4.10.4.3	When the Contractor negotiates a contract with a Critical Access Hospital (CAH), pursuant to Section 4.8.6 of the GF Contract, the Contractor shall pay the CAH a payment rate based on 101% allowable costs incurred by the CAH. DCH may require the Contractor to adjust the rate paid to CAHs if so directed by the State of Georgia’s Appropriations Act.

4.10.4.3.1

A critical access hospital must provide notice to a care management organization and the Department of Community Health of any alleged breaches in its contract by such care management organization.

4.10.4.3.2

If a critical access hospital satisfies the requirement of Title 33 of the Official Code of Georgia Annotated (HB1234), and if the Department of Community Health concludes, after notice and hearing, that a care management organization has substantively and repeatedly breached a term of its contract with a critical access hospital, the department is authorized to require the care management organization to pay damages to the critical access hospital in an amount not to exceed three times the amount owed. Notwithstanding the foregoing, nothing in Title 33 of the Official Code of Georgia Annotated (HB1234) shall be interpreted to limit the authority of the Department of Community Health to establish additional penalties or fines against a care management organization for failure to comply with the contract between a care management organization and the Department of Community Health.

4.10.4.4 When the Contractor negotiates a contract with a FQHC and/or a RHC, as defined in Section 1905(a)(2)(B) and 1905(a)(2)(C) of the Social Security Act, the Contractor shall, at minimum, pay the PPS rates for Core Services and other ambulatory services per encounter. The rates are established as described in §1001.1 of the Manual. At Contractor’s discretion, it may pay more than the PPS rate for these services.

4.10.4.4.1 Payment Reports must consist of all covered service claim types each month, inclusive of all of the below claims data:

• Early and Periodic Screening, Diagnosis and Treatment

• Physician Services

• Office Visits

• Laboratory Diagnostics

• Radiology Diagnostics

• Obstetrical Services

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• Family Planning Services

• Injectable Drugs and Immunizations

• Visiting Nurse Services

• Newborn Hearing Screening

• Hospitals

• Nursing Homes

• Other Clinics

• Residential

• Dental Services

• Mental Health Clinic Services

• Refractive Services

• Pharmaceutical Services

• Psychology Services

• Podiatry Services

• Pediatric Preventive Health Screening/Newborn Metabolic

• Supplies incident to core services

(SEE DCH MEDICIAD MANUAL FOR ADDITIONAL INFORMATION ON FQHCs AND RHCs REQUIREMENTS:

https://www.ghp.georgia.gov/wps/output/en_US/public/Provider/MedicaidManuals/01_2008_RHC_v2.pdf

https://www.ghp.georgia.gov/wps/output/en_US/public/Provider/MedicaidManuals/01_2008_FQHC_manual_v2.pdf

4.10.4.5

Upon receipt of notice from DCH that it is due funds from a Provider, who has exhausted or waived the administrative review process, if applicable, the Contractor shall reduce payment to the Provider for all claims submitted by that Provider by one hundred percent (100%), or such other amount as DCH may elect, until such time as the amount owed to DCH is recovered. The Contractor shall promptly remit any such funds recovered to DCH in the manner specified by DCH. To that end, the Contractor’s Provider Contracts shall contain a provision giving notice of this obligation to the Provider, such that the Provider’s execution of the Contract shall constitute agreement with the Contractor’s obligation to DCH.

4.10.4.6

The Contractor shall adjust its negotiated rates with Providers to reflect budgetary changes to the Medical Assistance program, as directed by the Commissioner of DCH; to the extent, such adjustments can be made within funds appropriated to DCH and available for payment to the Contractor. The Contractor’s Provider Contracts shall contain a provision giving notice of this obligation to the Provider, such that the Provider’s execution of the Contract shall constitute agreement with the Contractor’s obligation to DCH.

4.10.5 Reporting Requirements

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4.10.5.1 The Contractor shall submit a monthly FQHC and RHC Reports as described in Section 4.18.4.4.

4.11 UTILIZATION MANAGEMENT AND CARE COORDINATION RESPONSIBILITIES

4.11.1 Utilization Management

4.11.1.1 The Contractor shall provide assistance to Members and Providers to ensure the appropriate Utilization of resources, using the following program components: Prior Authorization and Pre-Certification, prospective review, concurrent review, retrospective review, ambulatory review, second opinion, discharge planning and case management. Specifically, the Contractor shall have written Utilization Management Policies and Procedures that:

4.11.1.1.1	Include protocols and criteria for evaluating Medical Necessity, authorizing services, and detecting and addressing over-Utilization and under-Utilization. Such protocols and criteria shall comply with federal and State laws and regulations.
4.11.1.1.2	Address which services require PCP Referral; which services require Prior-Authorization and how requests for initial and continuing services are processed, and which services will be subject to concurrent, retrospective or prospective review.
4.11.1.1.3	Describe mechanisms in place that ensure consistent application of review criteria for authorization decisions.
4.11.1.1.4	Require that all Medical Necessity determinations be made in accordance with DCH’s Medical Necessity definition as stated in Section 4.5.4.

4.11.1.2	The Contractor shall submit the Utilization Management Policies and Procedures to DCH for review and prior approval within quarterly and as changed.
4.11.1.3	Network Providers may participate in Utilization Review activities in their own Service Region to the extent that there is not a conflict of interest. The Utilization Management Policies and Procedures shall define when such a conflict may exist and shall describe the remedy.
4.11.1.4	The Contractor shall have a Utilization Management Committee comprised of network Providers within each Service Region. The Contractor may have one (1) independent Utilization Management Committee for all of the Service

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Regions in which it is operating, if there is representation from each Service Region on the Committee. The Utilization Management committee is accountable to the Medical Director and governing body of the Contractor. The Utilization Management Committee shall meet on a regular basis and maintain records of activities, findings, recommendations, and actions. Reports of these activities shall be made available to DCH upon request.

4.11.1.5 The Contractor, and any delegated Utilization Review agent, shall not permit or provide compensation or anything of value to its employees, agents, or contractors based on:

4.11.1.5.1	Either a percentage of the amount by which a Claim is reduced for payment or the number of Claims or the cost of services for which the person has denied authorization or payment; or
4.11.1.5.2	Any other method that encourages the rendering of a Proposed Action.

4.11.2 Prior Authorization and Pre-Certification

4.11.2.1	The Contractor shall not require Prior Authorization or Pre-Certification for Emergency Services, Post-Stabilization Services, or Urgent Care services, as described in Section 4.6.1, 4.6.2, and 4.6.3.
4.11.2.2	The Contractor shall require Prior Authorization and/or Pre-Certification for all non-emergent and non-urgent inpatient admissions except for normal newborn deliveries.
4.11.2.3	The Contractor may require Prior Authorization and/or Pre-Certification for all non-emergent, Out-of-Network services.
4.11.2.4	Prior Authorization and Pre-Certification shall be conducted by a currently licensed, registered or certified Health Care Professional who is appropriately trained in the principles, procedures and standards of Utilization Review.
4.11.2.5	The Contractor shall notify the Provider of Prior Authorization determinations in accordance with the following timeframes:

4.11.2.5.1 Standard Service Authorizations. Prior Authorization decisions for non-urgent services shall be made within fourteen (14) Calendar Days of receipt of the request for services. An extension may be granted for an additional fourteen (14) Calendar Days if the Member or the Provider requests an extension, or if the Contractor justifies to DCH a need for additional information and the extension is in the Member’s interest.

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4.11.2.5.2

Expedited Service Authorizations. In the event a Provider indicates, or the Contractor determines, that following the standard timeframe could seriously jeopardize the Member’s life or health the Contractor shall make an expedited authorization determination and provide notice within twenty-four (24) hours. The Contractor may extend the twenty-four (24) hour period for up to five (5) Business Days if the Member or the Provider requests an extension, or if the Contractor justifies to DCH a need for additional information and the extension is in the Member’s interest.

4.11.2.5.3

Authorization for services that have been delivered. Determinations for authorization involving health care services that have been delivered shall be made within thirty (30) Calendar Days of receipt of the necessary information.

4.11.2.6 The Contractor’s policies and procedures for authorization shall include consulting with the requesting Provider when appropriate.

4.11.3 Referral Requirements

4.11.3.1	The Contractor may require that Members obtain a Referral from their PCP prior to accessing non-emergency specialized services.
4.11.3.2	In the Utilization Management Policies and Procedures discussed in Section 4.11.1.1, the Contractor shall address:

4.11.3.2.1	When a Referral from the Member’s PCP is required;
4.11.3.2.2	How a Member obtains a Referral to an In-Network Provider or an Out-of-Network Provider when there is no Provider within the Contractor’s network that has the appropriate training or expertise to meet the particular health needs of the Member;
4.11.3.2.3	How a Member with a Condition which requires on-going care from a specialist may request a standing Referral; and
4.11.3.2.4	How a Member with a life-threatening Condition or disease, which requires specialized medical care over a prolonged period of time, may request and obtain access to a specialty care center.

4.11.3.3	The Contractor shall prohibit Providers from making Referrals for designated health services to Health Care entities with which the Provider or a Member of the Provider’s family has a Financial Relationship.
4.11.3.4	DCH strongly encourages the Contractor to develop electronic, web-based Referral processes and systems. In the event a Referral is made via the

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telephone, the Contractor shall ensure that the Contractor, the Provider and DCH maintain Referral data, including the final decision, in a data file that can be accessed electronically.

4.11.3.5 In conjunction with the other Utilization Management policies, the Contractor shall submit the Referral processes to DCH for review and approval.

4.11.4 Transition of Members

4.11.4.1 Procedures that are scheduled to occur after their new CMO effective date, but that have been authorized by either DCH or the patients original CMO prior to their new CMO effective date will be covered by the patients new CMO for 30 days, this will include:

4.11.4.1.1

Members that are in ongoing treatment or that are receiving medication that has been covered by DCH or another CMO prior to their new CMO effective date will be covered by the new CMO for at least 30 days to allow time for clinical review, and if necessary transition of care. The CMO will not be obligated to cover services beyond 30 days, even if the DCH authorization was for a period greater than 30 days.

4.11.4.1.2

Members who are otherwise engaged with programs operated by the State Department of Human Resources; child protective agency; mental health program; or children’s medical services.

4.11.4.2 Inpatient Care

4.11.4.2.1	Members enrolled in a CMO that are hospitalized in an inpatient facility will remain the responsibility of that CMO until they are discharged from the facility, even if they change to a different CMO, or they become eligible for coverage under FFS Medicaid during their inpatient stay.
4.11.4.2.2	Inpatient care for newborns born on or after their mother’s effective date will be the responsibility of the mother’s assigned CMO.
4.11.4.2.3	Members that become eligible and enrolled in SSI after the date of an inpatient hospitalization shall remain the responsibility of the CMO until they are discharged from inpatient hospital care. These members will remain the responsibility of the CMO for all covered services, even if the start date for SSI eligibility is made retroactive to a date prior to the hospitalization.

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4.11.4.2.4	The CMO will continue to receive capitation payment for every month that the member continues to be hospitalized and will be responsible for all medical claims during the period that they are receiving capitation. At discharge, and upon notice of such discharge, DCH will reassign the member to FFS or the new CMO following the normal monthly process.
4.11.4.2.5	Upon notification that a hospitalized member will be transitioning to a new CMO, or to FFS Medicaid, the current CMO will work with the new CMO or FFS Medicaid to ensure that coordination of care and appropriate discharge planning occurs.

4.11.4.3

When relinquishing Members, the Contractor shall cooperate with the receiving CMO plan regarding the course of on-going care with a specialist or other Provider.

4.11.4.4

Contractors must identify and facilitate coordination of care for all Georgia Families members during changes or transitions between Contractors, as well as transitions to FFS Medicaid. Members with special circumstances (such as those listed below) may require additional or distinctive assistance during a period of transition. Policies or protocols must be developed to address these situations. Special circumstances include members designated as having “special health care needs”, as well as members who have:

4.11.4.4.1 Medical conditions or circumstances such as:

4.11.4.4.1.1	Pregnancy (especially women who are high risk and in third trimester, or are within 30 days of their anticipated delivery date)
4.11.4.4.1.2	Major organ or tissue transplantation services which are in process, or have been authorized
4.11.4.4.1.3	Chronic illness, which has placed the member in a high-risk category and/or resulted in hospitalization or placement in nursing, or other, facilities, and/or
4.11.4.4.1.4	Significant medical conditions, (e.g., diabetes, hypertension, pain control or orthopedics) that require ongoing care of specialist appointments.

4.11.4.4.2 Members who are in treatment such as:

4.11.4.4.2.1	Chemotherapy and/or radiation therapy, or
4.11.4.4.2.2	Dialysis.

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4.11.4.4.3 Members with ongoing needs such as:

4.11.4.4.3.1	Durable medical equipment including ventilators and other respiratory assistance equipment
4.11.4.4.3.2	Home health services
4.11.4.4.3.3	Medically necessary transportation on a scheduled basis
4.11.4.4.3.4	Prescription medications, and/or
4.11.4.4.3.5	Other services not indicated in the State Plan, but covered by Title XIX for Early and Periodic Screening, Diagnosis and Treatment eligible members.

4.11.4.4.4 Members who are currently hospitalized.

4.11.5 Court-Ordered Evaluations and Services

4.11.5.1 In the event a Member requires Medicaid-covered services ordered by a State or federal court, the Contractor shall fully comply with all court orders while maintaining appropriate Utilization Management practices.

4.11.6 Second Opinions

4.11.6.1	The Contractor shall provide for a second opinion in any situation when there is a question concerning a diagnosis or the options for surgery or other treatment of a health Condition when requested by any Member of the Health Care team, a Member, parent(s) and/or guardian (s), or a social worker exercising a custodial responsibility.
4.11.6.2	The second opinion must be provided by a qualified Health Care Professional within the network, or the Contractor shall arrange for the Member to obtain one outside the Provider network.
4.11.6.3	The second opinion shall be provided at no cost to the Member.

4.11.7 Care Coordination and Case Management

4.11.7.1 The Contractor shall be responsible for the Care Coordination/Case Management of all Members and shall make special effort to identify Members who have the greatest need for Care Coordination, including those who have catastrophic, or other high-cost or high-risk Conditions.

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4.11.7.2 The Contractor’s Care Coordination system shall emphasize prevention, continuity of care, and coordination of care. The system will advocate for, and link Members to, services as necessary across Providers and settings. Care Coordination functions include:

4.11.7.2.1	Early identification of Members who have or may have special needs;
4.11.7.2.2	Assessment of a Member’s risk factors;
4.11.7.2.3	Development of a plan of care;
4.11.7.2.4	Referrals and assistance to ensure timely access to Providers;
4.11.7.2.5	Coordination of care actively linking the Member to Providers, medical services, residential, social and other support services where needed;
4.11.7.2.6	Monitoring;
4.11.7.2.7	Continuity of care; and
4.11.7.2.8	Follow-up and documentation.

4.11.7.3 The Contractor shall develop and implement a Care Coordination and case management system to ensure:

4.11.7.3.1 Timely access and delivery of Health Care and services required by Members;

4.11.7.3.2	Continuity of Members’ care; and
4.11.7.3.3	Coordination and integration of Members’ care.

4.11.7.4 These policies shall include, at a minimum, the following elements:

4.11.7.4.1 The provision of an individual needs assessment and diagnostic assessment; the development of an individual treatment plan, as necessary, based on the needs assessment; the establishment of treatment objectives; the monitoring of outcomes; and a process to ensure that treatment plans are revised as necessary. These procedures must be designed to accommodate the specific cultural and linguistic needs of the Contractor’s Members;

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4.11.7.4.2	A strategy to ensure that all Members and/or authorized family members or guardians are involved in treatment planning
4.11.7.4.3	Procedures and criteria for making Referrals to specialists and subspecialists;
4.11.7.4.4	Procedures and criteria for maintaining care plans and Referral Services when the Member changes PCPs; and
4.11.7.4.5	Capacity to implement, when indicated, case management functions such as individual needs assessment, including establishing treatment objectives, treatment follow-up, monitoring of outcomes, or revision of treatment plan.

4.11.7.5 The Contractor shall submit the Care Coordination and Case Management Policies and Procedures to DCH for review and approval within ninety (90) Calendar Days of Contract Award and as updated thereafter.

4.11.8 Disease Management

4.11.8.1	The Contractor shall develop disease management programs for individuals with Chronic Conditions.
4.11.8.2	The Contractor shall have disease management programs for Members with diabetes and asthma.
4.11.8.3	In addition, the Contractor shall develop programs for at least two (2) additional Conditions to be chosen from the following list:

4.11.8.3.1	Perinatal case management;
4.11.8.3.2	Obesity;
4.11.8.3.3	Hypertension;
4.11.8.3.4	Sickle cell disease; or
4.11.8.3.5	HIV/AIDS.

4.11.9 Discharge Planning

4.11.9.1 The Contractor shall maintain and operate a formalized discharge-planning program that includes a comprehensive evaluation of the Member’s health needs and identification of the services and supplies required to facilitate appropriate care following discharge from an institutional clinical setting.

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4.11.10 Reporting Requirements

4.11.10.1	The Contractor shall submit Utilization Management Reports to DCH as described in Sections 4.18.3.6 and 4.18.4.5.
4.11.10.2	The Contractor shall submit monthly Prior Authorization and Pre-Certification Reports to DCH as described in Section 4.18.3.3.

4.12 QUALITY IMPROVEMENT

4.12.1 General Provisions

4.12.1.1	The Contractor shall provide for the delivery of Quality care with the primary goal of improving the health status of Members and, where the Member’s Condition is not amenable to improvement, maintain the Member’s current health status by implementing measures to prevent any further decline in Condition or deterioration of health status. This shall include the identification of Members at risk of developing Conditions, the implementation of appropriate interventions and designation of adequate resources to support the intervention(s).
4.12.1.2	The Contractor shall seek input from, and work with, Members, Providers and community resources and agencies to actively improve the Quality of care provided to Members.
4.12.1.3	The Contractor shall establish a multi-disciplinary Quality Oversight Committee to oversee all Quality functions and activities. This committee shall meet at least quarterly, but more often if warranted.

4.12.2 Quality Strategic Plan Requirements

4.12.2.1

The Contractor shall support and comply with Georgia Families Quality Strategic Plan. The Quality Strategic Plan is designed to improve the Quality of Care and Service rendered to GF members (as defined in Title 42 of the Code of Federal Regulations (42 CFR) 431.300 et seq. (Safeguarding Information on Applicants and Recipients); 42 CFR 438.200 et seq. (Quality Assessment and Performance Improvement Including Health Information Systems), and 45 CFR Part 164 (HIPAA Privacy Requirements).

4.12.2.2

The GF Quality Strategic Plan promotes improvement in the quality of care provided to enrolled members through established processes. DCH Managed Care & Quality staff’ oversight of the Contractor includes:

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4.12.2.2.1	Monitoring and evaluating the Contractor’s service delivery system and provider network, as well as its own processes for quality management and performance improvement;
4.12.2.2.2	Implementing action plans and activities to correct deficiencies and/or increase the quality of care provided to enrolled members,
4.12.2.2.3	Initiating performance improvement projects to address trends identified through monitoring activities, reviews of complaints and allegations of abuse, provider credentialing and profiling, utilization management reviews, etc.;
4.12.2.2.4	Monitoring compliance with Federal, State and Georgia Families requirements;
4.12.2.2.5	Ensuring the Contractor’s coordination with State registries;
4.12.2.2.6	Ensuring Contractor executive and management staff participation in the quality management and performance improvement processes;
4.12.2.2.7	Ensure that the development and implementation of quality management and performance improvement activities include contracted provider participation and information provided by members, their families and guardians, and
4.12.2.2.8	Identifying the Contractor’s best practices for performance and quality improvement.

4.12.3 Reporting Requirements

Contractors must submit the following data reports as indicated.

REPORT	DUE DATE	REPORTS DIRECTED TO:
Performance Improvement Project Proposal(s)	Annually by March 31	Georgia Families/Quality Management Unit
Quality Assurance Performance Improvement Plan	Annually by March 31	Georgia Families/Quality Management Unit
Quality Assurance Performance Improvement Program Evaluation	Annually by March 31	Georgia Families/Quality Management Unit
Performance Improvement Project Baseline Report	By March 31 following initial year of study	Georgia Families/Quality Management Unit

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REPORT	DUE DATE	REPORTS DIRECTED TO:
Performance Improvement Project Final Evaluation Report (including any new QM/PI activities implemented as a result of the project)	Annually by March 31	Georgia Families/Quality Management Unit
Corrective Action Preventive Action Plan for deficiencies noted in: 1. An Operations Field Review 2. A Focused Review 3. QM/PI Plan 4. Performance related to Quality Measures	30 days after receipt of notice to submit a Corrective Action Preventive Action Plan (CAP) unless otherwise stated.	Georgia Families/Quality Management Unit
Quarterly QM Reports	45 days after end of quarter	Georgia Families/Quality Management Unit
Performance Measures Report	Annually by March 31	Georgia Families/Quality Management Unit

If an extension of time is needed to complete a report, the Contractor may submit a request in writing to the Georgia Families/ Quality Management

4.12.4 Quality Assessment Performance Improvement (QAPI) Program

4.12.4.1	The Contractor shall have in place an ongoing QAPI program consistent with 42 CFR 438.240.
4.12.4.2	The Contractor’s QAPI program shall be based on the latest available research in the area of Quality assurance and at a minimum must include:

4.12.4.2.1	A method of monitoring, analysis, evaluation and improvement of the delivery, Quality and appropriateness of Health Care furnished to all Members (including under and over Utilization of services), including those with special Health Care needs;
4.12.4.2.2	Written policies and procedures for Quality assessment, Utilization Management and continuous Quality improvement that are periodically assessed for efficacy;
4.12.4.2.3	A health information system sufficient to support the collection, integration, tracking, analysis and reporting of data;
4.12.4.2.4	Designated staff with expertise in Quality assessment, Utilization Management and continuous Quality improvement;
4.12.4.2.5	Reports that are evaluated, indicated recommendations that are implemented, and feedback provided to Providers and Members;

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4.12.4.2.6	A methodology and process for conducting and maintaining Provider profiling;
4.12.4.2.7	Quarterly Reports to the Contractor’s multi-disciplinary Quality oversight committee and DCH on results, conclusions, recommendations and implemented system changes;
4.12.4.2.8	Annual performance improvement projects (PIPs) that focus on clinical and non-clinical areas; and
4.12.4.2.9	Annual Reports on performance improvement projects and a process for evaluation of the impact and assessment of the Contractor’s QAPI program.

4.12.4.3	The Contractor’s QAPI Program Plan must be submitted to DCH for review and approval within ninety (90) Calendar Days of Contract Award and as updated thereafter.
4.12.4.4	The Contractor shall submit any changes to its QAPI Program Plan to DCH for review and prior approval sixty (60) Calendar Days prior to implementation of the change.
4.12.4.5	Upon the request of DCH, the Contractor shall provide any information and documents related to the implementation of the QAPI program.

4.12.5 Performance Improvement Projects

4.12.5.1 As part of its QAPI program the Contractor shall conduct clinical and non-clinical performance improvement projects in accordance with DCH and federal protocols. In designing its performance improvement projects, the Contractor shall:

4.12.5.1.1	Show that the selected area of study is based on a demonstration of need and is expected to achieve measurable benefit to the Member (rationale);
4.12.5.1.2	Establish clear, defined and measurable goals and objectives that the Contractor shall achieve in each year of the project;
4.12.5.1.3	Measure performance using Quality indicators that are objective, measurable, clearly defined and that allow tracking of performance and improvement over time;
4.12.5.1.4	Implement interventions designed to achieve Quality improvements;

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4.12.5.1.5	Evaluate the effectiveness of the interventions;
4.12.5.1.6	Establish standardized performance measures (such as HEDIS or another similarly standardized product);
4.12.5.1.7	Plan and initiate activities for increasing or sustaining improvement; and
4.12.5.1.8	Document the data collection methodology used (including sources) and steps taken to assure data is valid and reliable.

4.12.5.2	Each performance improvement project must be completed in a period determined by DCH, to allow information on the success of the project in the aggregate to produce new information on Quality of care each year.
4.12.5.3	The Contractor shall perform the following required clinical performance improvement projects, ongoing for the duration of the GF Contract period:

4.12.5.3.1	One (1) in the area of Health Check screens;
4.12.5.3.2	One (1) in the area of immunizations; and
4.12.5.3.3	One (1) in the area of blood lead screens.
4.12.5.3.4	One (1) in the area of detection of chronic kidney disease.

4.12.5.4 The Contractor shall perform one (1) optional clinical performance improvement project from the following areas:

4.12.5.4.1	Coordination/continuity of care;
4.12.5.4.2	Chronic care management;
4.12.5.4.3	High volume Conditions; or
4.12.5.4.4	High risk Conditions.

4.12.5.5 The Contractor shall perform the following required non-clinical performance improvement projects:

4.12.5.5.1	One (1) in the area of Member satisfaction; and
4.12.5.5.2	One (1) in the area of Provider satisfaction.

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4.12.5.6 The Contractor shall perform one (1) optional non-clinical performance improvement project from the following areas:

4.12.5.6.1	Cultural competence;
4.12.5.6.2	Appeals/Grievance/Provider Complaints;
4.12.5.6.3	Access/service capacity; or
4.12.5.6.4	Appointment availability.

4.12.5.7	The Contractor shall submit its Proposed Performance Improvement Projects to DCH for review and prior approval within ninety (90) Calendar Days of Contract Award and as updated thereafter.
4.12.5.8	The Contractor shall meet the established goals and objectives, as determined by DCH, for its performance improvement projects. The Contractor shall submit to DCH any and all data necessary to enable DCH to measure the Contractor’s performance under this Section.

4.12.6 Practice Guidelines

4.12.6.1 The Contractor shall adopt a minimum of three (3) evidence-based clinical practice guidelines, one of which shall be for chronic kidney disease. Such guidelines shall:

4.12.6.1.1	Be based on the health needs and opportunities for improvement identified as part of the QAPI program;
4.12.6.1.2	Be based on valid and reliable clinical evidence or a consensus of Health Care Professionals in the particular field;
4.12.6.1.3	Consider the needs of the Members;
4.12.6.1.4	Be adopted in consultation with network Providers; and
4.12.6.1.5	Be reviewed and updated periodically as appropriate.

4.12.6.2	The Contractor shall submit the Practice Guidelines, which shall include a methodology for measuring and assessing compliance, to DCH for review and prior approval as part of the QAPI program plan within ninety (90) Calendar Days of Contract Award and as updated thereafter.
4.12.6.3	The Contractor shall disseminate the guidelines to all affected Providers and, upon request, to Members.

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4.12.6.4	The Contractor shall ensure that decisions for Utilization Management, Member education, coverage of services, and other areas to which the guidelines apply are consistent with the guidelines.
4.12.6.5	In order to ensure consistent application of the guidelines the Contractor shall encourage Providers to utilize the guidelines, and shall measure compliance with the guidelines, until ninety percent (90%) or more of the Providers are consistently in compliance. The Contractor may use Provider incentive strategies to improve Provider compliance with guidelines.

4.12.7 Focused Studies

4.12.7.1 Focus Studies are State required studies that examine a specific aspect of health care (such as prenatal care) for a defined point in time. These projects are usually based on information extracted from medical records or Contractor administrative data such as enrollment files and encounter/claims data. Steps to be taken by Contractor when conducting focus studies are:

• Selecting the Study Topic(s)

• Defining the Study Question(s)

• Selecting the Study Indicator(s)

• Identifying a representative and generalizable study population

• Documenting sound sampling techniques utilized (if applicable)

• Collecting reliable data

• Analyzing data and interpreting study results

4.12.7.2	The Contractor shall also perform a minimum of two (2) focused studies each year, commencing with the second (2nd) year of operations. One (1) study shall focus on preventive care services.
4.12.7.3	The Contractor shall submit to DCH for approval the areas in which it will conduct focused studies on the first (1st) day of the third (3rd) quarter annually. Due to federal reporting requirements (e.g., Quality Strategic Plan and EQRO), the year for Focus Studies is defined as October 1 – September 30 therefore the 1st day of the 3rd quarter is April 1.

4.12.8 Patient Safety Plan

4.12.8.1 The Contractor shall have a structured Patient Safety Plan to address concerns or complaints regarding clinical care. This plan must include written policies and procedures for processing of Member complaints regarding the care they received. Such policies and procedures shall include:

4.12.8.1.1 A system of classifying complaints according to severity;

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4.12.8.1.2 A review by the Medical Director and a mechanism for determining which incidents will be forwarded to Peer Review and Credentials Committees; and

4.12.8.1.3 A summary of incident(s), including the final disposition, included in the Provider profile.

4.12.8.2 The Contractor shall submit the Patient Safety Plan to DCH for review and approval within ninety (90) Calendar Days of the Contract Award and as updated thereafter.

4.12.9 Performance Incentives

4.12.9.1 The Contractor may be eligible for Performance Incentives as described in Section 7.0. All Incentives must comply with the federal managed care Incentive Arrangement requirements pursuant to 42 CFR 438.6 and the State Medicaid Manual 2089.3.

4.12.10 External Quality Review

4.12.10.1 DCH will contract with an External Quality Review Organization (EQRO) to conduct annual, external, independent reviews of the Quality outcomes, timeliness of, and access to, the services covered in this Contract. The Contractor shall collaborate with DCH’s EQRO to develop studies, surveys and other analytic activities to assess the Quality of care and services provided to Members and to identify opportunities for CMO plan improvement. To facilitate this process the Contractor shall supply data, including but not limited to Claims data and Medical Records, to the EQRO.

4.12.11 Reporting Requirements

4.12.11.1	The Contractor’s Quality Oversight Committee shall submit Quality Oversight Committee Reports to DCH as described in Section 4.18.4.6.
4.12.11.2	The Contractor shall submit Performance Improvement Project Reports as described in Section 4.18.5.1
4.12.11.3	The Contractor shall submit annual Focused Studies Reports to DCH as described in Section 4.18.5.2.
4.12.11.4	The Contractor shall submit annual Patient Safety Plan Reports to DCH as described in Section 4.18.5.3.

4.13	FRAUD AND ABUSE
4.13.1	Program Integrity

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4.13.1.1	The Contractor shall have a Program Integrity Program, including a mandatory compliance plan, designed to guard against Fraud and Abuse. This Program Integrity Program shall include policies, procedures, and standards of conduct for the prevention, detection, reporting, and corrective action for suspected cases of Fraud and Abuse in the administration and delivery of services under this Contract.
4.13.1.2	The Contractor shall submit its Program Integrity Policies and Procedures, which include the compliance plan and pharmacy lock-in program described below, to DCH for approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.

4.13.2 Compliance Plan

4.13.2.1 The Contractor’s compliance plan shall include, at a minimum, the following:

4.13.2.1.1	The designation of a Compliance Officer who is accountable to the Contractor’s senior management and is responsible for ensuring that policies to establish effective lines of communication between the Compliance Officer and the Contractor’s staff, and between the Compliance Officer and DCH staff, are followed;
4.13.2.1.2	Provision for internal monitoring and auditing of reported Fraud and Abuse violations, including specific methodologies for such monitoring and auditing;
4.13.2.1.3	Policies to ensure that all officers, directors, managers and employees know and understand the provisions of the Contractor’s Fraud and Abuse compliance plan;
4.13.2.1.4	Policies to establish a compliance committee that periodically meets and reviews Fraud and Abuse compliance issues;
4.13.2.1.5	Policies to ensure that any individual who reports CMO plan violations or suspected Fraud and Abuse will not be retaliated against;
4.13.2.1.6	Polices of enforcement of standards through well-publicized disciplinary standards;
4.13.2.1.7	Provision of a data system, resources and staff to perform the Fraud and Abuse and other compliance responsibilities;
4.13.2.1.8	Procedures for the detection of Fraud and Abuse that includes, at a minimum, the following:

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4.13.2.1.8.1	Claims edits
4.13.2.1.8.2	Post-processing review of Claims;
4.13.2.1.8.3	Provider profiling and Credentialing;
4.13.2.1.8.4	Quality Control; and
4.13.2.1.8.5	Utilization Management.

4.13.2.1.9 Written standards for organizational conduct;

4.13.2.1.10	Effective training and education for the Compliance Officer and the organization’s employees, management, board Members, and Subcontractors;
4.13.2.1.11	Inclusion of information about Fraud and Abuse identification and reporting in Provider and Member materials;
4.13.2.1.12	Provisions for the investigation, corrective action and follow-up of any suspected Fraud and Abuse reports; and
4.13.2.1.13	Procedures for reporting suspected Fraud and Abuse cases to the State Program Integrity Unit, including timelines and use of State approved forms.

4.13.2.2 As part of the Program Integrity Program, the Contractor shall implement a pharmacy lock-in program. The policies, procedures and criteria for establishing a lock-in program shall be submitted to DCH for review and approval as part of the Program Integrity Policies and Procedures discussed in Section 4.13.1.2. The pharmacy lock-in program shall:

4.13.2.2.1	Allow Members to change pharmacies for good cause, as determined by the Contractor after discussion with the Provider(s) and the pharmacist. Valid reasons for change should include recipient relocation or the pharmacy does not provide the prescribed drug;
4.13.2.2.2	Provide Case management and education reinforcement of appropriate medication use;
4.13.2.2.3	Annually assess the need for lock-in for each Member; and
4.13.2.2.4	Require that the Contractor’s Compliance Officer report on the program on a quarterly basis to DCH.
4.13.2.2.5	A member will not be allowed to transfer to another pharmacy, PCP, or CMO while enrolled in their existing CMO’s pharmacy lock-in program.

4.13.3 Coordination with DCH and Other Agencies

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4.13.3.1	The Contractor shall cooperate and assist any State or federal agency charged with the duty of identifying, investigating, or prosecuting suspected Fraud and Abuse cases, including permitting access to the Contractor’s place of business during normal business hours, providing requested information, permitting access to personnel, financial and Medical Records, and providing internal reports of investigative, corrective and legal actions taken relative to the suspected case of Fraud and Abuse.
4.13.3.2	The Contractor’s Compliance Officer shall work closely, including attending quarterly meetings, with DCH’s program integrity staff to ensure that the activities of one entity do not interfere with an ongoing investigation being conducted by the other entity.
4.13.3.3	The Contractor shall inform DCH immediately about known or suspected cases and it shall not investigate or resolve the suspicion without making DCH aware of, and if appropriate involved in, the investigation, as determined by DCH.

4.13.4 Reporting Requirements

4.13.4.1 The Contractor shall submit a Fraud and Abuse Report, as described in Section 4.18.4.7 to DCH on a monthly basis. This Report shall include information on the pharmacy lock-in program described in Section 4.13.2.2.

4.14	INTERNAL GRIEVANCE SYSTEM
4.14.1	General Requirements

4.14.1.1	The Contractor’s Grievance System shall include a Grievance process, an Administrative Review process and access to the State’s Administrative Law Hearing (State Fair Hearing) system. The Contractor’s Grievance System is an internal process that shall be exhausted by the Member prior to accessing an Administrative Law Hearing.
4.14.1.2	The Contractor shall develop written Grievance System Policies and Procedures that detail the operation of the Grievance System. The Contractor’s policies and procedures shall be available in the Member’s primary language. The Grievance System Policies and Procedures shall be submitted to DCH for review and approval within sixty (60) Calendar Days of Contract Award and as updated thereafter.
4.14.1.3	The Contractor shall process each Grievance and Administrative Review using applicable State and federal statutory, regulatory, and GF Contractual

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provisions, and the Contractor’s written policies and procedures. Pertinent facts from all parties must be collected during the investigation.

4.14.1.4	The Contractor shall give Members any reasonable assistance in completing forms and taking other procedural steps for both Grievances and Administrative Reviews. This includes, but is not limited to, providing interpreter services and toll-free numbers that have adequate TTD and interpreter capability.
4.14.1.5	The Contractor shall acknowledge receipt of each filed Grievance and Administrative Review in writing within ten (10) Business Days of receipt. The Contractor shall have procedures in place to notify all Members in their primary language of Grievance and Appeal resolutions.
4.14.1.6	The Contractor shall ensure that the individuals who make decisions on Grievances and Administrative Reviews were not involved in any previous level of review or decision-making; and are Health Care Professionals who have the appropriate clinical expertise, as determined by DCH, in treating the Member’s Condition or disease if deciding any of the following:

4.14.1.6.1	An Appeal of a denial that is based on lack of Medical Necessity;
4.14.1.6.2	A Grievance regarding denial of expedited resolutions of an Administrative Review; and
4.14.1.6.3	Any Grievance or Administrative Review that involves clinical issues.

4.14.1.7	DCH also allows a state review on behalf of PeachCare for Kids members.  If the member or parent believes that a denied service should be covered, the parent must send a written request for review to the Care Management Organization (CMO) in which the affected child is enrolled. The CMO will conduct its review process in accordance with Section 4.14.4 of the contract.
4.14.1.8	If the decision of the CMO review maintains the denial of service, a letter will be sent to the parent detailing the reason for denial. If the parent elects to dispute the decision, the parent will have the option of having the decision reviewed by the Formal Appeals Committee. The request should be sent to:

Department of Community Health
PeachCare for Kids
Administrative Review Request
2 Peachtree Street, NW, 39^th floor
Atlanta, GA 30303-3159

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4.14.1.9 The decision of the Formal Grievance Committee will be the final recourse available to the member. In reference to the Formal Grievance level, the State assures:

4.14.1.9.1	Enrollees receive timely written notice of any documentation that includes the reasons for the determination, an explanation of applicable rights to review, the standard and expedited time frames for review, the manner in which a review can be requested, and the circumstances under which enrollment may continue, pending review.
4.14.1.9.2	Enrollees have the opportunity for an independent, external review of a delay, denial, reduction, suspension, termination of health services, failure to approve, or provide payment for health services in a timely manner. The independent review is available at the Formal Grievance level.
4.14.1.9.3	Decisions are written when reviewed by DCH and the Formal Grievance Committee.
4.14.1.9.4	Enrollees have the opportunity to represent themselves or have representatives in the process at the Formal Grievance level.
4.14.1.9.5	Enrollees have the opportunity to timely review their files and other applicable information relevant to the review of the decision. While this is assured at each level of review, members will be notified of the timeframes for the appeals process once an appeal is file with the Formal Grievance Committee.
4.14.1.9.6	Enrollees have the opportunity to fully participate in the review process, whether the review is conducted in person or in writing.
4.14.1.9.7	Reviews that are not expedited due to an enrollee’s medical condition will be completed within 90 calendar days of the date of a request is made.
4.14.1.9.8	Reviews that are expedited due to an enrollee’s medical condition shall be completed within 72 hours of the receipt of the request.

4.14.2 Grievance Process

4.14.2.1	A Member or Member’s Authorized Representative may file a Grievance to the Contractor either orally or in writing. A Grievance may be filed about any matter other than a Proposed Action. A Provider cannot file a Grievance on behalf of a Member.
4.14.2.2	The Contractor shall ensure that the individuals who make decisions on Grievances that involve clinical issues or denial of an expedited review of an Administrative Review are Health Care Professionals who have the appropriate clinical expertise, as determined by DCH, in treating the

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Member’s Condition or disease and who were not involved in any previous level of review or decision-making.

4.14.2.3 The Contractor shall provide written notice of the disposition of the Grievance as expeditiously as the Member’s health Condition requires but must be completed within ninety (90) days but shall not exceed ninety (90) Calendar Days of the filing date.

4.14.3 Proposed Action

4.14.3.1	All Proposed Actions shall be made by a physician, or other peer review consultant, who has appropriate clinical expertise in treating the Member’s Condition or disease.
4.14.3.2	In the event of a Proposed Action, the Contractor shall notify the Member in writing. The Contractor shall also provide written notice of a Proposed Action to the Provider. This notice must meet the language and format requirements in accordance with Section 4.3.2 of this Contract and be sent in accordance with the timeframes described in Section 4.14.3.4.
4.14.3.3	The notice of Proposed Action must contain the following:

4.14.3.3.1	The Action the Contractor has taken or intends to take, including the service or procedure that is subject to the Action.
4.14.3.3.2	Additional information, if any, that could alter the decision.
4.14.3.3.3	The specific reason used as the basis of the action.
4.14.3.3.4	The reasons for the Action must have a factual basis and legal/policy basis.
4.14.3.3.5	The Member’s right to file an Administrative Review through the Contractor’s internal Grievance System as described in Section 4.14.
4.14.3.3.6	The Provider’s right to file a Provider Complaint as described in Section 4.9.7;
4.14.3.3.7	The requirement that a Member exhaust the contractor’s internal Administrative Review Process;
4.14.3.3.8	The circumstances under which expedited review is available and how to request it; and
4.14.3.3.9	The Member’s right to have Benefits continue pending resolution of the Administrative Review with the Contractor, Member instructions

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on how to request that Benefits be continued, and the circumstances under which the Member may be required to pay the costs of these services.

4.14.3.4 The Contractor shall mail the Notice of Proposed Action within the following timeframes:

4.14.3.4.1 For termination, suspension, or reduction of previously authorized Covered Services at least ten (10) Calendar Days before the date of Proposed Action or not later than the date of Proposed Action in the event of one of the following exceptions:

4.14.3.4.1.1	The Contractor has factual information confirming the death of a Member.
4.14.3.4.1.2	The Contractor receives a clear written statement signed by the Member that he or she no longer wishes services or gives information that requires termination or reduction of services and indicates that he or she understands that this must be the result of supplying that information.
4.14.3.4.1.3	The Member’s whereabouts are unknown and the post office returns Contractor mail directed to the Member indicating no forwarding address (refer to 42 CFR 431.231(d) for procedures if the Member’s whereabouts become known).
4.14.3.4.1.4	The Member’s Provider prescribes a change in the level of medical care.
4.14.3.4.1.5	The date of action will occur in less than ten (days), in accordance with § 483.12(a) (5) (ii), which provides exceptions to the 30 days notice requirements of § 483.12(a) (5) (i).
4.14.3.4.1.6	The Contractor may shorten the period of advance notice to five (5) Calendar Days before date of action if the Contractor has facts indicating that action should be taken because of probable Member Fraud and the facts have been verified, if possible, through secondary sources.

4.14.3.4.2	For denial of payment, at the time of any Proposed Action affecting the Claim.
4.14.3.4.3	For standard Service Authorization decisions that deny or limit services, within the timeframes required in Section 4.11.2.5.

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4.14.3.4.4

If the Contractor extends the timeframe for the decision and issuance of notice of Proposed Action according to Section 4.11.2.5, the Contractor shall give the Member written notice of the reasons for the decision to extend Grievance if he or she disagrees with that decision. The Contractor shall issue and carry out its determination as expeditiously as the Member’s health requires and no later than the date the extension expires.

4.14.3.4.5

For authorization decisions not reached within the timeframes required in Section 4.11.2.5 for either standard or expedited Service Authorizations, Notice of Proposed Action shall be mailed on the date the timeframe expires, as this constitutes a denial and is thus a Proposed Action.

4.14.4 Administrative Review Process

4.14.4.1	An Administrative Review is the request for review of a “Proposed Action”. The Member, the Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, may file an Administrative Review either orally or in writing. Unless the Member or Provider requests expedited review, the Member, the Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, must follow an oral filing with a written, signed, request for Administrative Review.
4.14.4.2	The Member, the Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, may file an Administrative Review with the Contractor within thirty (30) Calendar Days from the date of the notice of Proposed Action.
4.14.4.3	Administrative Reviews shall be filed directly with the Contractor, or its delegated representatives. The Contractor may delegate this authority to an Administrative Review committee, but the delegation must be in writing.
4.14.4.4	The Contractor shall ensure that the individuals who make decisions on Administrative Reviews are individuals who were not involved in any previous level of review or decision-making; and who are Health Care Professionals who have the appropriate clinical expertise in treating the Member’s Condition or disease if deciding any of the following:

4.14.4.4.1	An Administrative Review of a denial that is based on lack of Medical Necessity.
4.14.4.4.2	An Administrative Review that involves clinical issues.

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4.14.4.5	The Administrative Review process shall provide the Member, the Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, a reasonable opportunity to present evidence and allegations of fact or law, in person, as well as in writing. The Contractor shall inform the Member of the limited time available to provide this in case of expedited review.
4.14.4.6	The Administrative Review process must provide the Member, the Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, opportunity, before and during the Administrative Review process, to examine the Member’s case file, including Medical Records, and any other documents and records considered during the Administrative Review process.
4.14.4.7	The Administrative Review process must include as parties to the Administrative Review the Member, the Member’s Authorized Representative, the Provider acting on behalf of the Member with the Member’s written consent, or the legal representative of a deceased Member’s estate.
4.14.4.8	The Contractor shall resolve each Administrative Review and provide written notice of the resolution, as expeditiously as the Member’s health Condition requires but shall not exceed forty-five (45) Calendar Days from the date the Contractor receives the Administrative Review. For expedited reviews and notice to affected parties, the Contractor has no longer than three (3) working days or as expeditiously as the Member’s physical or mental health condition requires, whichever is sooner. If the Contractor denies a Member’s request for expedited review, it must transfer the Administrative Review to the timeframe for standard resolution specified herein and must make reasonable efforts to give the Member prompt oral notice of the denial, and follow up within two (2) Calendar Days with a written notice. The Contractor shall also make reasonable efforts to provide oral notice for resolution of an expedited review of an Administrative Review.
4.14.4.9	The Contractor may extend the timeframe for standard or expedited resolution of the Administrative Review by up to fourteen (14) Calendar Days if the Member, Member’s Authorized Representative, or the Provider acting on behalf of the Member with the Member’s written consent, requests the extension or the Contractor demonstrates (to the satisfaction of DCH, upon its request) that there is need for additional information and how the delay is in the Member’s interest. If the Contractor extends the timeframe, it must, for any extension not requested by the Member, give the Member written notice of the reason for the delay.

4.14.5 Notice of Adverse Action

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4.14.5.1	If the Contractor upholds the Proposed Action in response to a Grievance or Administrative Review filed by the Member, the Contractor shall issue a Notice of Adverse Action within the timeframes described in Section 4.14.4.8 and 4.14.4.9.
4.14.5.2	The Notice of Adverse Action shall meet the language and format requirements as specified in 4.3 and include the following:

4.14.5.2.1	The results and date of the adverse Action including the service or procedure that is subject to the Action.
4.14.5.2.2	Additional information, if any, that could alter the decision.
4.14.5.2.3	The specific reason used as the basis of the action.;
4.14.5.2.4	The right to request a State Administrative Law Hearing within thirty (30) Calendar Days. The time for filing will begin when the filing is date stamped;
4.14.5.2.5	The right to continue to receive Benefits pending a State Administrative Law Hearing;
4.14.5.2.6	How to request the continuation of Benefits;
4.14.5.2.7	Information explaining that the Member may be liable for the cost of any continued Benefits if the Contractor’s action is upheld in a State Administrative Law Hearing.
4.14.5.2.8	Circumstances under which expedited resolution is available and how to request it; and

4.14.6 Administrative Law Hearing

4.14.6.1

The State will maintain an independent Administrative Law Hearing process as defined in the Georgia Administrative Procedure Act O.C.G.A. §49-4-153) and as required by federal law, 42 CFR 431.200. The Administrative Law Hearing process shall provide Members an opportunity for a hearing before an impartial Administrative Law Judge. The Contractor shall comply with decisions reached as a result of the Administrative Law Hearing process.

4.14.6.2

The Contractor is responsible for providing counsel to represent its interests. DCH is not a party to case and will only provide counsel to represent its own interests.

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4.14.6.3	A Member or Member’s Authorized Representative may request in writing an Administrative Law Hearing within thirty (30) Calendar Days of the date the Notice of Adverse Action is mailed by the Contractor. The parties to the Administrative Law Hearing shall include the Contractor as well as the Member, Member’s Authorized Representative, or representative of a deceased Member’s estate. A Provider cannot request an Administrative Law Hearing on behalf of a Member. DCH reserves the right to intervene on behalf of the interest of either party.
4.14.6.4	The hearing request and a copy of the adverse action letter must be received by the Department within 30 days or less from the date that the notice of action was mailed.
4.14.6.5	A Member may request a Continuation of Benefits as described in Section 4.14.7 while an Administrative Law Hearing is pending.
4.14.6.6	The Contractor shall make available any records and any witnesses at its own expense in conjunction with a request pursuant to an Administrative Law Hearing.

4.14.7 Continuation of Benefits while the Contractor Appeal and Administrative Law Hearing are Pending

4.14.7.1 As used in this Section, “timely” filing means filing on or before the later of the following:

4.14.7.1.1	Within ten (10) Calendar Days of the Contractor mailing the Notice of Adverse Action.
4.14.7.1.2	The intended effective date of the Contractor’s Proposed Action.

4.14.7.2

The Contractor shall continue the Member’s Benefits if the Member or the Member’s Authorized Representative files the Appeal timely; the Appeal involves the termination, suspension, or reduction of a previously authorized course of treatment; the services were ordered by an authorized Provider; the original period covered by the original authorization has not expired; and the Member requests extension of the Benefits.

4.14.7.3

If, at the Member’s request, the Contractor continues or reinstates the Member’s benefit while the Appeal or Administrative Law Hearing is pending, the Benefits must be continued until one of the following occurs:

4.14.7.3.1 The Member withdraws the Appeal or request for the Administrative Law Hearing.

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4.14.7.3.2	Ten (10) Calendar Day pass after the Contractor mails the Notice of Adverse Action, unless the Member, within the ten (10) Calendar Day timeframe, has requested an Administrative Law Hearing with continuation of Benefits until an Administrative Law Hearing decision is reached.
4.14.7.3.3	An Administrative Law Judge issues a hearing decision adverse to the Member.
4.14.7.3.4	The time period or service limits of a previously authorized service has been met.

4.14.7.4	If the final resolution of Appeal is adverse to the Member, that is, upholds the Contractor action, the Contractor may recover from the Member the cost of the services furnished to the Member while the Appeal is pending, to the extent that they were furnished solely because of the requirements of this Section.
4.14.7.5	If the Contractor or the Administrative Law Judge reverses a decision to deny, limit, or delay services that were not furnished while the Appeal was pending, the Contractor shall authorize or provide this disputed services promptly, and as expeditiously as the Member’s health condition requires.
4.14.7.6	If the Contractor or the Administrative Law Judge reverses a decision to deny authorization of services, and the Member received the disputed services while the Appeal was pending, the Contractor shall pay for those services.

4.14.8 Reporting Requirements

4.14.8.1	The Contractor shall log and track all Grievances, Proposed Actions, Appeals and Administrative Law Hearing requests, as described in Section 4.18.4.8.
4.14.8.2	The Contractor shall maintain records of Grievances, whether received verbally or in writing, that include a short, dated summary of the problems, name of the grievant, date of the Grievance, date of the decision, and the disposition.
4.14.8.3	The Contractor shall maintain records of Appeals, whether received verbally or in writing, that include a short, date summary of the issues, name of the appellant, date of Appeal, date of decision, and the resolution.
4.14.8.4	DCH may publicly disclose summary information regarding the nature of Grievances and Appeals and related dispositions or resolutions in consumer information materials.

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4.14.8.5 The Contractor shall submit quarterly Grievance System Reports to DCH as described in Section 4.18.4.8.1.

4.15	ADMINISTRATION AND MANAGEMENT
4.15.1	General Provisions

4.15.1.1 The Contractor shall be responsible for the administration and management of all requirements of this Contract. All costs related to the administration and management of this Contract shall be the responsibility of the Contractor.

4.15.2 Place of Business and Hours of Operation

4.15.2.1	The Contractor shall maintain a central business office within the Service Region in which it is operating. If the Contractor is operating in more than one (1) Service Region, there must be one (1) central business office and an additional office in each Service Region. If a Contractor is operating in two (2) or more contiguous Service Regions, the Contractor may establish one (1) central business office for all Service Regions. This business office must be centrally located within the contiguous Service Regions and in a location accessible for foot and vehicle traffic. The Contractor may establish more than one (1) business office within a Service Region, but must designate one (1) of the offices as the central business office.
4.15.2.2	All documentation must reflect the address of the location identified as the legal, duly licensed, central business office. This business office must be open at least between the hours of 8:30 a.m. and 5:30 p.m. EST, Monday through Friday. The Contractor shall ensure that the office(s) are adequately staffed to ensure that Members and Providers receive prompt and accurate responses to inquiries.
4.15.2.3	The Contractor shall ensure that all business offices and all staff that perform functions and duties, related to this Contract are located within the United States.
4.15.2.4	The Contractor shall provide live access, through its telephone hot line as described in Section 4.3.7 and Section 4.9.5. The Contractor shall provide access twenty-four (24) hours a day, seven (7) days per week to its Web site.

4.15.3 Training

4.15.3.1 The Contractor shall conduct on-going training for its entire staff, in all departments, to ensure appropriate functioning in all areas and to ensure that staff is aware of all programmatic changes.

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4.15.3.2	The Contractor shall submit a staff-training plan to DCH for review and approval within ninety (90) days of Contract Award and as updated thereafter.
4.15.3.3	The Contractor designated staff are required to attend DCH in-service training quarterly and annually. DCH will determine the type and scope of the training.

4.15.4 Data Certification

4.15.4.1 The Contractor shall certify all data pursuant to 42 CFR 438.606. The data that must be certified include, but are not limited to, Enrollment information, Encounter Data, and other information required by the State and contained in Contracts, proposals and related documents. The data must be certified by one of the following: the Contractor’s Chief Executive Officer, the Contractor’s Chief Financial Officer, or an individual who has delegated authority to sign for, and who Reports directly to the Contractor’s Chief Executive Officer or Chief Financial Officer. The certification must attest, based on best knowledge, information, and belief, as follows:

4.15.4.1.1	To the accuracy, completeness and truthfulness of the data.
4.15.4.1.2	To the accuracy, completeness and truthfulness of the documents specified by the State.

4.15.4.2 The Contractor shall submit the certification concurrently with the certified data.

4.15.5 Implementation Plan

4.15.5.1	The Contractor shall develop an Implementation Plan that details the procedures and activities that will be accomplished during the period between the awarding of this Contract and the start date of GF. This Implementation Plan shall have established deadlines and timeframes for the implementation activities and shall include coordination and cooperation with DCH and its representatives during all phases.
4.15.5.2	The Contractor shall submit its Implementation Plan to DCH for DCH’s review and approval within thirty (30) Calendar Days of Contract Award. Implementation of the Contract shall not commence prior to DCH approval.
4.15.5.3	The Contractor will not receive any additional payment to cover start up or implementation costs.

4.16 CLAIMS MANAGEMENT

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4.16.1 General Provisions

4.16.1.1	The Contractor shall utilize the same time frames and deadlines for submission, processing, payment, denial, adjudication, and appeal of Medicaid claims as the time frames and deadlines that the Department of Community Health uses on claims its pays directly. The Contractor shall administer an effective, accurate and efficient Claims processing function that adjudicates and settles Provider Claims for Covered Services that are filed within the time frames specified by the Depatment of Community Health (see Part I. Policy and Procedures for Medicaid/PeachCare for Kids Manual) and in compliance with all applicable State and federal laws, rules and regulations.
4.16.1.2	The Contractor shall maintain a Claims management system that can identify date of receipt (the date the Contractor receives the Claim as indicated by the date-stamp), real-time-accurate history of actions taken on each Provider Claim (i.e. paid, denied, suspended, Appealed, etc.), and date of payment (the date of the check or other form of payment).
4.16.1.3	At a minimum, the Contractor shall run one (1) Provider payment cycle per week, on the same day each week, as determined by the Department of Community Health.
4.16.1.4	The Contractor shall support an Automated Clearinghouse (ACH) mechanism that allows Providers to request and receive electronic funds transfer (EFT) of Claims payments.
4.16.1.5	The Contractor shall encourage that its Providers, as an alternative to the filing of paper-based Claims, submit and receive Claims information through electronic data interchange (EDI), i.e. electronic Claims. Electronic Claims must be processed in adherence to information exchange and data management requirements specified in Section 4.17. As part of this Electronic Claims Management (ECM) function, the Contractor shall also provide on-line and phone-based capabilities to obtain Claims processing status information.
4.16.1.6	The Contractor shall generate Explanation of Benefits and Remittance Advices in accordance with State standards for formatting, content and timeliness.
4.16.1.7	The Contractor shall not pay any Claim submitted by a Provider who is excluded or suspended from the Medicare, Medicaid or SCHIP programs for Fraud, abuse or waste or otherwise included on the Department of Health and Human Services Office of Inspector General exclusions list, or employs someone on this list. The Contractor shall not pay any Claim submitted by a Provider that is on payment hold under the authority of DCH or its Agent(s).

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4.16.1.8	Not later than the fifteenth (15th) business day after the receipt of a Provider Claim that does not meet Clean Claim requirements, the Contractor shall suspend the Claim and request in writing (notification via e-mail, the CMO plan Web Site/Provider Portal or an interim Explanation of Benefits satisfies this requirement) all outstanding information such that the Claim can be deemed clean. Upon receipt of all the requested information from the Provider, the CMO plan shall complete processing of the Claim within fifteen (15) Business Days.
4.16.1.9	If a provider submits a claim to a responsible health organization for services rendered within 72 hours after the provider verifies the eligibility of the patient with that responsible health organization, the responsible health organization shall reimburse the provider in an amount equal to the amount to which the provider would have been entitled if the patient had been enrolled as shown in the eligibility verification process. After resolving the provider’s claim, if the responsible health organization made payment for a patient for whom it was not responsible, then the responsible health organization may pursue a cause of action against any person who was responsible for payment of the services at the time they were provided but may not recover any payment made to the provider.
4.16.1.10	The Contract shall not apply any penalty for failure to file claims in a timely manner, for failure to obtain prior authorization, or for the provider not being a participating provider in the person’s network, and the amount of reimbursement shall be that person’s applicable rate for the service if the provider is under contract with that person or the rate paid by the Department of Community Health for the same type of claim that it pays directly if the provider is not under contract with that person.
4.16.1.11	The Contractor shall inform all network Providers about the information required to submit a Clean Claim as a provision within the Contractor/Provider Contract. The Contractor shall make available to network Providers Claims coding and processing guidelines for the applicable Provider type. The Contractor shall notify Providers ninety (90) Calendar Days before implementing changes to Claims coding and processing guidelines.
4.16.1.12	The Contractor shall assume all costs associated with Claim processing, including the cost of reprocessing/resubmission, due to processing errors caused by the Contractor or to the design of systems within the Contractor’s span of control.
4.16.1.13	In addition to the specific Web site requirements outlined above, the Contractor’s Web site shall be functionally equivalent to the Web site maintained by the State’s Medicaid fiscal agent.

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4.16.2 Other Considerations

4.16.2.1	An adjustment to a paid Claim shall not be counted as a Claim for the purposes of reporting.
4.16.2.2	Electronic Claims shall be treated as identical to paper-based Claims for the purposes of reporting.

4.16.3 Encounter Data Submission Requirements

4.16.3.1	The Georgia Families program utilizes encounter data to determine the adequacy of medical services and to evaluate the quality of care rendered to members. DCH will use the following requirements to establish the standards for the submission of data and to measure the compliance of the Contractor to provide timely and accurate information. Encounter data from the Contractor also allows DCH to budget available resources, set contractor capitation rates, monitor utilization, follow public health trends and detect potential fraud. Most importantly, it allows the Division of Managed Care and Quality to make recommendations that can lead to the improvement of healthcare outcomes.
4.16.3.1	The Contractor shall work with all contracted providers to implement standardized billing requirements to enhance the quality and accuracy of the billing data submitted to the health plan.
4.16.3.2	The Contractor shall instruct contracted providers that the Georgia State Medicaid ID number is mandatory, and must be documented in record. The Contractor will emphasize to providers the need for a unique GA Medicaid number for each practice location.
4.16.3.3	The Contractor shall submit to Fiscal Agent weekly cycles of data files. All identified errors shall be submitted to the Contractor from the Fiscal Agent each week. The Contractor shall clean up and resubmit the corrected file to the Fiscal Agent within seven (7) Business Days of receipt.
4.16.3.4	The Contractor is required to submit 100% of Critical Data Elements such as state Medicaid ID numbers, NPI numbers, SSN numbers, Member Name, and DOB. These items must match the states eligibility and provider file.
4.16.3.5	The Contractor submitted claims must consistently include:

4.16.3.5.1 1- patient name

4.16.3.5.2 2- date of birth

4.16.3.5.3 3- place of service

4.16.3.5.4 4- date of service

4.16.3.5.5 5- type of service

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4.16.3.5.6 6- units of service

4.16.3.5.7 7- diagnosis-primary & secondary

4.16.3.5.8 8- treating provider

4.16.3.5.9 9- NPI number

4.16.3.5.10	10- Medicaid Number
4.16.3.5.11	11- facility code
4.16.3.5.12	12- a unique TCN
4.16.3.5.13	13- all additionally required CMS 1500 or UB 04 codes.
4.16.3.5.14	14 – CMO Paid Amount

4.16.3.6 For each submission of claims per 4.16.3.5, Contractor must provide the following Cash Disbursements data elements:

1.	Provider/Payee Number
2.	Name
3.	address
4.	city
5.	state
6.	zip
7.	check date
8.	check number
9.	check amount
10.	check code( ie. eft, paper check, etc)

Contractor will assist DCH in reconciliation of Cash Disbursement check amounts totals to CMO Paid Amount totals for submitted claims.

4.16.3.7	The Contractor shall maintain an Encounter Error Rate of <5% weekly as monitored by the Fiscal Agent and DCH.  The Encounter Error Rate is the occurrence of a single error in any Transaction Control Number (TCN) or encounter claim counts as an error for that encounter (this is regardless of how many other errors are detected in the TCN.)
4.16.3.8	The Contractors failure to comply with defined standard(s) will be subject to a corrective action plan (CAP) and may be liable for liquidated damages (LD’s).

4.16.4 Reporting Requirements

4.16.4.1 The Contractor shall submit Claims Processing Reports to DCH as described in section 4.18.3.5.1.

4.16.5 Emergency Health Care Services

4.16.5.1 The Contractor shall not deny or inappropriately reduce payment to a provider of emergency health care services for any evaluation, diagnostic testing, or

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treatment provided to a recipient of medical assistance for an emergency condition; or

4.16.5.2	Make payment for emergency health care services contingent on the recipient or provider of emergency health care services providing any notification, either before or after receiving emergency health care services.
4.16.5.3	In processing claims for emergency health care services, a care management organization shall consider, at the time that a claim is submitted, at least the following criteria:

4.16.5.3.1	The age of the patient;
4.16.5.3.2	The time and day of the week the patient presented for services;
4.16.5.3.3	The severity and nature of the presenting symptoms;
4.16.5.3.4	The patient’s initial and final diagnosis; and
4.16.5.3.5	Any other criteria prescribed by the Department of Community Health, including criteria specific to patients under 18 years of age.

4.16.5.4

The Contractor shall configure or program its automated claims processing system to consider at least the conditions and criteria described in this subsection for claims presented for emergency health care services.

4.16.5.5

If a provider that has not entered into a contract with a care management organization provides emergency health care services or post-stabilization services to that care management organization’s member, the care management organization shall reimburse the non contracted provider for such emergency health care services and post-stabilization services at a rate equal to the rate paid by the Department of Community Health for Medicaid claims that it reimburses directly.

4.17	INFORMATION MANAGEMENT AND SYSTEMS
4.17.1	General Provisions

4.17.1.1	The Contractor shall have Information management processes and Information Systems (hereafter referred to as Systems) that enable it to meet GF requirements, State and federal reporting requirements, all other Contract requirements and any other applicable State and federal laws, rules and regulations including HIPAA.
4.17.1.2	The Contractor is responsible for maintaining a system that shall possess capacity sufficient to handle the workload projected for the start of the program and will be scaleable and flexible enough to adapt as needed, within negotiated timeframes, in response to program or Enrollment changes.

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4.17.1.3	The Contractor shall provide a Web-accessible system hereafter referred to as the DCH Portal that designated DCH and other state agency resources can use to access Quality and performance management information as well as other system functions and information as described throughout this Contract. Access to the DCH Portal shall be managed as described in section 4.17.5.
4.17.1.4	The Contractor shall attend DCH’s Systems Work Group meetings as scheduled by DCH. The Systems Work Group will meet on a designated schedule as agreed to by DCH, its agents and every Contractor.
4.17.1.5	The Contractor shall provide a continuously available electronic mail communication link (E-mail system) with the State. This system shall be:

4.17.1.5.1	Available from the workstations of the designated Contractor contacts; and
4.17.1.5.2	Capable of attaching and sending documents created using software products other than Contractor systems, including the State’s currently installed version of Microsoft Office and any subsequent upgrades as adopted.

4.17.1.6

By no later than the 30th of April of each year, the Contractor will provide DCH with an annual progress/status report of the Contractor’s system refresh plan for the upcoming State fiscal year. The plan will outline how Systems within the Contractor’s Span of Control will be systematically assessed to determine the need to modify, upgrade and/or replace application software, operating hardware and software, telecommunications capabilities, information management policies and procedures, and/or systems management policies and procedures in response to changes in business requirements, technology obsolescence, staff turnover and other relevant factors. The systems refresh plan will also indicate how the Contractor will insure that the version and/or release level of all of its System components (application software, operating hardware, operating software) are always formally supported by the original equipment manufacturer (OEM), software development firm (SDF) or a third party authorized by the OEM and/or SDF to support the System component.

4.17.1.7

The Contractor is responsible for all costs associated with the Contractors system refresh plan.

4.17.2 Global System Architecture and Design Requirements

4.17.2.1 The Contractor shall comply with federal and State policies, standards and regulations in the design, development and/or modification of the Systems it will employ to meet the aforementioned requirements and in the management of Information contained in those Systems. Additionally, the Contractor shall

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adhere to DCH and State-specific system and data architecture preferences as indicated in this Contract.

4.17.2.2 The Contractor’s Systems shall:

4.17.2.2.1	Employ a relational data model in the architecture of its databases and relational database management system (RDBMS) to operate and maintain them;
4.17.2.2.2	Be SQL and ODBC compliant;
4.17.2.2.3	Adhere to Internet Engineering Task Force/Internet Engineering Standards Group standards for data communications, including TCP and IP for data transport;
4.17.2.2.4	Conform to standard code sets detailed in Attachment L;
4.17.2.2.5	Contain controls to maintain information integrity. These controls shall be in place at all appropriate points of processing. The controls shall be tested in periodic and spot audits following a methodology to be developed jointly and mutually agreed upon by the Contractor and DCH; and
4.17.2.2.7	Partner with the State in the development of future standard code sets, not specific to HIPAA or other federal effort and will conform to such standards as stipulated by DCH.

4.17.2.3	Where Web services are used in the engineering of applications, the Contractor’s Systems shall conform to World Wide Web Consortium (W3C) standards such as XML, UDDI, WSDL and SOAP so as to facilitate integration of these Systems with DCH and other State systems that adhere to a service-oriented architecture.
4.17.2.4	Audit trails shall be incorporated into all Systems to allow information on source data files and documents to be traced through the processing stages to the point where the Information is finally recorded. The audit trails shall:

4.17.2.4.1	Contain a unique log-on or terminal ID, the date, and time of any create/modify/delete action and, if applicable, the ID of the system job that effected the action;
4.17.2.4.2	Have the date and identification “stamp” displayed on any on-line inquiry;

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4.17.2.4.3	Have the ability to trace data from the final place of recording back to its source data file and/or document shall also exist;
4.17.2.4.4	Be supported by listings, transaction Reports, update Reports, transaction logs, or error logs;
4.17.2.4.5	Facilitate auditing of individual Claim records as well as batch audits; and
4.17.2.4.6	Be maintained for seven (7) years in either live and/or archival systems. The duration of the retention period may be extended at the discretion of and as indicated to the Contractor by the State as needed for ongoing audits or other purposes.

4.17.2.5	The Contractor shall house indexed images of documents used by Members and Providers to transact with the Contractor in the appropriate database(s) and document management systems to maintain the logical relationships between certain documents and certain data.
4.17.2.6	The Contractor shall institute processes to insure the validity and completeness of the data it submits to DCH. At its discretion, DCH will conduct general data validity and completeness audits using industry-accepted statistical sampling methods. Data elements that will be audited include but are not limited to: Member ID, date of service, Provider ID, category and sub category (if applicable) of service, diagnosis codes, procedure codes, revenue codes, date of Claim processing, and date of Claim payment.
4.17.2.7	Where a System is herein required to, or otherwise supports, the applicable batch or on-line transaction type, the system shall comply with HIPAA-standard transaction code sets as specified in Attachment L.
4.17.2.8	The Contractor System(s) shall conform to HIPAA standards for information exchange.
4.17.2.9	The layout and other applicable characteristics of the pages of Contractor Web sites shall be compliant with Federal “section 508 standards” and Web Content Accessibility Guidelines developed and published by the Web Accessibility Initiative.
4.17.2.10	Contractor Systems shall conform to any applicable Application, Information and Data, Middleware and Integration, Computing Environment and Platform, Network and Transport, and Security and Privacy policy and standard issued by GTA as stipulated in the appropriate policy/standard. These policies and standards can be accessed at: http://gta.georgia.gov/00/channel_modifieddate/0,2096,1070969_6947051,00.html

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4.17.3 Data and Document Management Requirements by Major Information Type

4.17.3.1 In order to meet programmatic, reporting and management requirements, the Contractor’s systems shall serve as either the Authoritative Host of key data and documents or the host of valid, replicated data and documents from other systems. Attachment L lays out the requirements for managing (capturing, storing and maintaining) data and documents for the major information types and subtypes associated with the aforementioned programmatic, reporting and management requirements.

4.17.4 System and Data Integration Requirements

4.17.4.1 All of the Contractor’s applications, operating software, middleware, and networking hardware and software shall be able to interface with the State’s systems and will conform to standards and specifications set by the Georgia Technology Authority and the agency that owns the system. These standards and specifications are detailed in Attachment L.

4.17.4.2	The Contractor’s System(s) shall be able to transmit and receive transaction data to and from the MMIS as required for the appropriate processing of Claims and any other transaction that may be performed by either System.
	The Contractor shall generate encounter data files no less than weekly (or at a frequency defined by DCH) from its claims management system(s) and/or other sources. The files will contain settled Claims and Claim adjustments and encounters from Providers with whom the Contractor has a capitation arrangement for the most recent month for which all such transactions were completed. The Contractor will provide these files electronically to DCH and/or its designated agent in adherence to the procedure and format indicated in Attachment L.
	The Contractor’s System(s) shall be capable of generating all required files in the prescribed formats (as referenced in Attachment L) for upload into state Systems used specifically for program integrity and compliance purposes.

4.17.4.3 The Contractor’s System(s) shall possess mailing address standardization functionality in accordance with US Postal Service conventions.

4.17.5 System Access Management and Information Accessibility Requirements

4.17.5.1 The Contractor’s System shall employ an access management function that restricts access to varying hierarchical levels of system functionality and Information. The access management function shall:

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4.17.5.1.1	Restrict access to Information on a “need to know” basis, e.g. users permitted inquiry privileges only will not be permitted to modify information;
4.17.5.1.2	Restrict access to specific system functions and information based on an individual user profile, including inquiry only capabilities; global access to all functions will be restricted to specified staff jointly agreed to by DCH and the Contractor; and
4.17.5.1.3	Restrict attempts to access system functions to three (3), with a system function that automatically prevents further access attempts and records these occurrences.
4.17.5.1.4	At a minimum, follow the GTA Security Standard and Access Management protocols.

4.17.5.2	The Contractor shall make System Information available to duly Authorized Representatives of DCH and other State and federal agencies to evaluate, through inspections or other means, the quality, appropriateness and timeliness of services performed.
4.17.5.3	The Contractor shall have procedures to provide for prompt electronic transfer of System Information upon request to In-Network or Out-of-Network Providers for the medical management of the Member in adherence to HIPAA and other applicable requirements.
4.17.5.4	All Information, whether data or documents, and reports that contain or make references to said Information, involving or arising out of this Contract are owned by DCH. The Contractor is expressly prohibited from sharing or publishing DCH information and reports without the prior written consent of DCH. In the event of a dispute regarding the sharing or publishing of information and reports, DCH’s decision on this matter shall be final and not subject to change.

4.17.6 Systems Availability and Performance Requirements

4.17.6.1 The Contractor will ensure that Member and Provider portal and/or phone-based functions and information, such as confirmation of CMO Enrollment (CCE) and electronic claims management (ECM), Member services and Provider services, are available to the applicable System users twenty-four (24) hours a day, seven (7) Days a week, except during periods of scheduled System Unavailability agreed upon by DCH and the Contractor. Unavailability caused by events outside of a Contractor’s span of control is outside of the scope of this requirement.

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4.17.6.2 The Contractor shall ensure that at a minimum, all other System functions and Information are available to the applicable system users between the hours of 7:00 a.m. and 7:00 p.m. Monday through Friday.

4.17.6.3 The Contractor shall ensure that the average response time that is controllable by the Contractor is no greater than the requirements set forth below, between 7:00 am and 7:00 pm, Monday through Friday for all applicable system functions except a) during periods of scheduled downtime, b) during periods of unscheduled unavailability caused by systems and telecommunications technology outside of the Contractor’s span of control or c) for Member and Provider portal and phone-based functions such as CCE and ECM that are expected to be available twenty-four (24) hours a day, seven (7) days a week:

4.17.6.3.1	Record Search Time – The response time shall be within three (3) seconds for ninety-eight percent (98%) of the record searches as measured from a representative sample of DCH System Access Devices, as monitored by the Contractor;
4.17.6.3.2	Record Retrieval Time – The response time will be within three (3) seconds for ninety-eight percent (98%) of the records retrieved as measured from a representative sample of DCH System Access Devices;
4.17.6.3.3	On-line Adjudication Response Time – The response time will be within five (5) seconds ninety-nine percent (99%) of the time as measured from a representative sample of user System Access Devices.

4.17.6.4 The Contractor shall develop an automated method of monitoring the CCE and ECM functions on at least a thirty (30) minute basis twenty-four (24) hours a day, seven (7) Days per week. The monitoring method shall separately monitor for availability and performance/response time each component of the CCE and ECM systems, such as the voice response system, the PC software response, direct line use, the swipe box method and ECM on-line pharmacy system.

4.17.6.5	Upon discovery of any problem within its Span of Control that may jeopardize System availability and performance as defined in this Section of the Contract, the Contractor shall notify the DCH, Managed Care & Quality, Director of Contract Management in person, via phone, electronic mail and/or surface mail.
4.17.6.6	The Contractor shall deliver notification as soon as possible but no later than 7:00 pm if the problem occurs during the business day and no later than 9:00 am the following business day if the problem occurs after 7:00 pm.

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4.17.6.7	Where the operational problem results in delays in report distribution or problems in on-line access during the business day, the Contractor shall notify the DCH, Managed Care & Quality, Director of Contract Management within fifteen (15) minutes of discovery of the problem, in order for the applicable work activities to be rescheduled or be handled based on System Unavailability protocols.
4.17.6.8	The Contractor shall provide to the DCH, Managed Care & Quality, Director of Contract Management information on System Unavailability events, as well as status updates on problem resolution. These up-dates shall be provided on an hourly basis and made available via electronic mail, telephone and the Contractor’s Web Site/DCH Portal.
4.17.6.9	Unscheduled System Unavailability of CCE and ECM functions, caused by the failure of systems and telecommunications technologies within the Contractor’s Span of Control will be resolved, and the restoration of services implemented, within thirty (30) minutes of the official declaration of System Unavailability. Unscheduled System Unavailability to all other Contractor System functions caused by systems and telecommunications technologies within the Contractor’s Span of Control shall be resolved, and the restoration of services implemented, within four (4) hours of the official declaration of System Unavailability.
4.17.6.10	Cumulative System Unavailability caused by systems and telecommunications technologies within the Contractor’s span of control shall not exceed one (1) hour during any continuous five (5) Day period.
4.17.6.11	The Contractor shall not be responsible for the availability and performance of systems and telecommunications technologies outside of the Contractor’s Span of Control. Contractor is obligated to work with identified vendors to resolve and report system availability and performance issues. Reference Section 23.5.1.5 - Liquidated Damages)
4.17.6.12	Full written documentation that includes a Corrective Action Plan with a set time frame for resolution must be submitted to DCH by close of business the same day, that describes what caused the problem, how the problem will be prevented from occurring again, shall be delivered within five (5) Business Days of the problem’s occurrence.
4.17.6.13	Regardless of the architecture of its Systems, the Contractor shall develop and be continually ready to invoke a business continuity and disaster recovery (BC-DR) plan that at a minimum addresses the following scenarios: (a) the central computer installation and resident software are destroyed or damaged, (b) System interruption or failure resulting from network, operating hardware,

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	software, or operational errors that compromises the integrity of transactions that are active in a live system at the time of the outage, (c) System interruption or failure resulting from network, operating hardware, software or operational errors that compromises the integrity of data maintained in a live or archival system, (d) System interruption or failure resulting from network, operating hardware, software or operational errors that does not compromise the integrity of transactions or data maintained in a live or archival system but does prevent access to the System, i.e. causes unscheduled System Unavailability.
4.17.6.14	The Contractor shall periodically, but no less than annually, test its BC-DR plan through simulated disasters and lower level failures in order to demonstrate to the State that it can restore System functions per the standards outlined elsewhere in this Contract. The Contractor will prepare a report of the results of these tests and present to DCH staff within five (5) business days of test completion.
4.17.6.15	In the event that the Contractor fails to demonstrate in the tests of its BC-DR plan that it can restore system functions per the standards outlined in this Contract, the Contractor shall be required to submit to the State a Corrective Action Plan that describes how the failure will be resolved. The Corrective Action Plan will be delivered within five (5) Business Days of the conclusion of the test.
4.17.6.16	The Contractor shall submit System Availability and Performance Report to DCH as described in section 4.18.3.4.1

4.17.7 System User and Technical Support Requirements

4.17.7.1	Beginning sixty (60) Calendar Days prior to the scheduled start of operations, the Contractor shall provide Systems Help Desk (SHD) services to all DCH staff and the other agencies that may have direct access to Contractor systems.
4.17.7.2	The SHD shall be available via local and toll free telephone service and via e-mail from 7 a.m. to 7 p.m. EST Monday through Friday, with the exception of State holidays. Upon State request, the Contractor shall staff the SHD on a State holiday, Saturday, or Sunday at the Contractor’s expense.
4.17.7.3	SHD staff shall answer user questions regarding Contractor System functions and capabilities; report recurring programmatic and operational problems to appropriate Contractor or DCH staff for follow-up; redirect problems or queries that are not supported by the SHD, as appropriate, via a telephone transfer or other agreed upon methodology; and redirect problems or queries specific to data access authorization to the appropriate State login account administrator.

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4.17.7.4	The Contractor shall submit to DCH for review and approval its SHD Standards. At a minimum, these standards shall require that between the hours of 7 a.m. and 7 p.m. EST ninety percent (90%) of calls are answered by the fourth (4th) ring, the call abandonment rate is five percent (5%) or less, the average hold time is two (2) minutes or less, and the blocked call rate does not exceed one percent (1%).
4.17.7.5	Individuals who place calls to the SHD between the hours of 7 p.m. and 7 a.m. EST shall be able to leave a message. The Contractor’s SHD shall respond to messages by noon the following Business Day.
4.17.7.6	Recurring problems not specific to System Unavailability identified by the SHD shall be documented and reported to Contractor management within one (1) Business Day of recognition so that deficiencies are promptly corrected.
4.17.7.7	Additionally, the Contractor shall have an IT service management system that provides an automated method to record, track, and report on all questions and/or problems reported to the SHD. The service management system shall:

4.17.7.7.1	Assign a unique number to each recorded incident;
4.17.7.7.2	Create State defined extract files that contain summary information on all problems/issues received during a specified time frame;
4.17.7.7.3	Escalate problems based on their priority and the length of time they have been outstanding;
4.17.7.7.4	Perform key word searches that are not limited to certain fields and allow for searches on all fields in the database;
4.17.7.7.5	Notify support personnel when a problem is assigned to them and re-notify support personnel when an assigned problem has escalated to a higher priority;
4.17.7.7.6	List all problems assigned to a support person or group;
4.17.7.7.7	Perform searches for duplicate problems when a new problem is entered;
4.17.7.7.8	Allow for entry of at least five hundred (500) characters of free form text to describe problems and resolutions; and
4.17.7.7.9	Generate Reports that identify categories of problems encountered, length of time for resolution, and any other State-defined criteria.

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4.17.7.8 The Contractor’s call center systems shall have the capability to track call management metrics identified in Attachment L.

4.17.8 System Change Management Requirements

4.17.8.1	The Contractor shall absorb the cost of routine maintenance, inclusive of defect correction, System changes required to effect changes in State and federal statute and regulations, and production control activities, of all Systems within its Span of control.
4.17.8.2	The Contractor shall provide DCH, prior written notice of non-routine System changes excluding changes prompted by events described in Section 4.17.6 and including proposed corrections to known system defects, within ten (10) Calendar Days of the projected date of the change. As directed by the state, the Contractor shall discuss the proposed change in the Systems Work Group.
4.17.8.3	The Contractor shall respond to State reports of System problems not resulting in System Unavailability according to the following timeframes:

4.17.8.3.1	Within five (5) Calendar Days of receipt, the Contractor shall respond in writing to notices of system problems.
4.17.8.3.2	Within fifteen (15) Calendar Days, the correction will be made or a Requirements Analysis and Specifications document will be due.
4.17.8.3.3	The Contractor will correct the deficiency by an effective date to be determined by DCH.
4.17.8.3.4	Contractor systems will have a system-inherent mechanism for recording any change to a software module or subsystem.

4.17.8.4	The Contractor shall put in place procedures and measures for safeguarding the State from unauthorized modifications to Contractor Systems.
4.17.8.5	Unless otherwise agreed to in advance by DCH as part of the activities described in Section 4.17.8.3, scheduled System Unavailability to perform System maintenance, repair and/or upgrade activities shall take place between 11 p.m. on a Saturday and 6 a.m. on the following Sunday.

4.17.9 System Security and Information Confidentiality and Privacy Requirements

4.17.9.1 The Contractor shall provide for the physical safeguarding of its data processing facilities and the systems and information housed therein. The Contractor shall provide DCH with access to data facilities upon DCH

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request. The physical security provisions shall be in effect for the life of this Contract.

4.17.9.2	The Contractor shall restrict perimeter access to equipment sites, processing areas, and storage areas through a card key or other comparable system, as well as provide accountability control to record access attempts, including attempts of unauthorized access.
4.17.9.3	The Contractor shall include physical security features designed to safeguard processor site(s) through required provision of fire retardant capabilities, as well as smoke and electrical alarms, monitored by security personnel.
4.17.9.4	The Contractor shall ensure that the operation of all of its systems is performed in accordance with State and federal regulations and guidelines related to security and confidentiality and meet all privacy and security requirements of HIPAA regulations. Relevant publications are included in Attachment L.
4.17.9.5	The Contractor will put in place procedures, measures and technical security to prohibit unauthorized access to the regions of the data communications network inside of a Contractor’s Span of Control.
4.17.9.6	The Contractor shall ensure compliance with:

4.17.9.6.1	42 CFR Part 431 Subpart F (confidentiality of information concerning applicants and Members of public medical assistance programs);
4.17.9.6.2	42 CFR Part 2 (confidentiality of alcohol and drug abuse records); and
4.17.9.6.3	Special confidentiality provisions related to people with HIV/AIDS and mental illness.

4.17.9.7 The Contractor shall provide its Members with a privacy notice as required by HIPAA. The Contractor shall provide the State with a copy of its Privacy Notice for its filing.

4.17.10 Information Management Process and Information Systems Documentation Requirements

4.17.10.1 The Contractor shall ensure that written System Process and Procedure Manuals document and describe all manual and automated system procedures for its information management processes and information systems.

4.17.10.2 The Contractor shall develop, prepare, print, maintain, produce, and distribute distinct System Design and Management Manuals, User Manuals and

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Quick/Reference Guides, and any updates thereafter, for DCH and other agency staff that use the DCH Portal.

4.17.10.3	The System User Manuals shall contain information about, and instructions for, using applicable System functions and accessing applicable system data.
4.17.10.4	When a System change is subject to State sign off, the Contractor shall draft revisions to the appropriate manuals prior to State sign off the change.
4.17.10.5	All of the aforementioned manuals and reference guides shall be available in printed form and on-line via the DCH Portal. The manuals will be published in accordance to the applicable DCH and/or Georgia Technology Authority (GTA) standard.
4.17.10.6	Updates to the electronic version of these manuals shall occur in real time; updates to the printed version of these manuals shall occur within ten (10) Business Days of the update taking effect.

4.17.11 Reporting Requirements

4.17.11.1 The Contractor shall submit a monthly Systems Availability and Performance Report to DCH as described in Section 4.18.3.4.

4.18	REPORTING REQUIREMENTS
4.18.1	General Procedures

4.18.1.1 The Contractor shall comply with all the reporting requirements established by this Contract. The Contractor shall create Reports using the formats, including electronic formats, instructions, and timetables as specified by DCH, at no cost to DCH. Changes to the format must be approved by DCH prior to implementation. The Contractor shall transmit and receive all transactions and code sets required by the HIPAA regulations in accordance with Section 21.2. The Contractor’s failure to submit the Reports as specified may result in the assessment of liquidated damages as described in Section 23.0.

4.18.1.1.1 The Contractor shall submit the Deliverables and Reports for DCH review and approval according to the following timelines, unless otherwise indicated.

4.18.1.1.1.1 Annual Reports shall be submitted within thirty (30) Calendar Days following the twelfth (12^th) month Members are enrolled in the CMO plan;

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4.18.1.1.1.2	Quarterly Reports shall be submitted by April 30, July 30, October 30, and January 30, for the quarter immediately preceding the due date;
4.18.1.1.1.3	Monthly Reports shall be submitted within fifteen (15) Calendar Days of the end of each month; and
4.18.1.1.1.4	Weekly Reports shall be submitted on the same day of each week, as determined by DCH.

4.18.1.2	For reports required by DOI and DCH, the Contractor shall submit such reports according to the DOI schedule of due dates, unless otherwise indicated. While such schedule may be duplicated in this Contract, should the DOI schedule of due dates be amended at a future date, the due dates in this Contract shall automatically change to the new DOI due dates.
4.18.1.3	The Contractor shall, upon request of DCH, generate any additional data or reports at no additional cost to DCH within a time period prescribed by DCH. The Contractor’s responsibility shall be limited to data in its possession.

4.18.2 Weekly Reporting

4.18.2.1 Member Information Report

4.18.2.1.1 Pursuant to Section 4.1.4.1 the Contractor shall submit a Member Information Report. The report shall include information on the Members that change addresses or move outside the Service Region. The Contractor shall also report any information that may affect the Member’s eligibility for GF including, but not limited to, changes in income or employment, family size, or incarceration. The minimum data elements that will be required for this report are described in Attachment L.

4.18.2.2 Member Data Conflict Report

4.18.2.2.1 Pursuant to Section 5.8, the Contractor shall submit a Member Data Conflict Report. The report shall include data conflicts that may affect the Member’s eligibility for Georgia Families including, but not limited to, name changes, date of birth, duplicate records, social security number or gender.

4.18.3 Monthly Reporting

4.18.3.1 Telephone and Internet Activity Report

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4.18.3.1.1 This information may be submitted as a summary report, in a format to be determined by DCH. The Contractor shall maintain, and make available at the request of DCH, any and all supporting documentation. Each Telephone and Internet Activity Report shall include the following information:

i.	Call volume;
ii.	E-mail volume;
iii.	Average call length;
iv.	Average hold time;
v.	Abandoned Call rate;
vi.	Accuracy rate based on CMO’s Call Center Quality Criteria and Protocols;
vii.	Content of call or email and resolution; and
viii.	Blocked Call rate.

4.18.3.2 Eligibility and Enrollment Reconciliation Report

4.18.3.2.1 Pursuant to Section 4.1.4.2 the Contractor shall submit an Eligibility and Enrollment Reconciliation Report that reconciles eligibility data to the Contractor’s Enrollment records. The written report shall verify that the Contractor has an Enrollment record for all Members that are eligible for Enrollment in the CMO plan.

4.18.3.3 Prior Authorization and Pre-Certification Report

4.18.3.3.1 Pursuant to Section 4.11.10.2 the Contractor shall submit Prior Authorization and Pre-Certification Reports that summarize all requests in the preceding month for Prior Authorization and Pre-Certification. The Report shall include, at a minimum, the following information:

i.	Total number of completed requests for Standard Service Authorizations;
ii.	Total number of completed requests for Expedited Service Authorizations;
iii.	Percent of completed requests within timeliness standards by type of service;
iv.	Total number of completed requests authorized by type of service;
v.	Total number or completed requests denied by type of service; and
vi.	Percent of completed requests denied by type of service;

4.18.3.4 System Availability and Performance Report

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4.18.3.4.1 Pursuant to Section 4.17.6.16 the Contractor shall submit a System Availability and Performance Report that shall report the following information:

i.	Record Search Time
ii.	Record Retrieval Time
iii.	Screen Edit Time
iv.	New Screen/Page Time
v.	Print Initiation Time
vi.	Confirmation of CMO Enrollment Response Time
vii.	Online Claims Adjudication Response Time

4.18.3.5 Claims Processing Report

4.18.3.5.1 Pursuant to Section 4.16.4 the Contractor shall submit a Claims Processing Report that documents the claims processing activities for the following claim types:

i            Physicians

ii            Institutional

iii            Professional

iiii            Pharmacy

iiv            Dental

iv            Vision

ivi            Behavioral

4.18.3.5.2.1	Number and dollar value of Claims processed by Provider type and processing status (adjudicated and paid, adjudicated and not paid, suspended, appealed, denied);
4.18.3.5.2.2	Aging of Claims: number, dollar value and status of Claims filed in most recent and prior months (defined as six (6) months previous) by Provider type and processing status; and
4.18.3.5.2.3	Cumulative percentage for the current fiscal year of Clean Claims processed and paid within thirty (30) calendar and ninety (90) Calendar Days of receipt.

4.18.3.6 Utilization Management Report

4.18.3.6.1 Pursuant to Section 4.11.10.1, the Contractor shall submit a Utilization Management Report on Utilization patterns and aggregate trend analysis. The monthly Utilization Management Report shall be based on authorization data and will contain specific elements specified by DCH such that all CMOs are reporting a common data set.

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4.18.4 Quarterly Reporting

4.18.4.1 EPSDT Report

4.18.4.1.1 Pursuant to Section 4.7.6.1 the Contractor shall submit an EPSDT Report for Medicaid Members and PeachCare for Kids Members that identifies at a minimum the following:

i.	Number of Health Check eligible Members;
ii.	Number of live births;
iii.	Number of initial newborn visits within twenty-four (24) hours of birth;
iv.	Number of Members who received all scheduled EPSDT screenings in accordance with the periodicity schedule;
v.	Number of Members who received dental examinations services by an oral health professional;
vi.	Number of Members that received an initial health visit and screening within ninety (90) Calendar Days of Enrollment;
vii.	Number of diagnostic and treatment services, including Referrals; and
viii.	Number and rate of blood lead screening.

4.18.4.1.2	Reports shall capture Medicaid Members and PeachCare for Kids Members separately.
4.18.4.1.3	DCH, at its sole discretion, may add additional data to the EPSDT Report if DCH determines that it is necessary for monitoring purposes.

4.18.4.2 Timely Access Report

4.18.4.2.1 Pursuant to Section 4.8.19.2 the Contractor shall submit Timely Access Reports that monitor the time lapsed between a Member’s initial request for an office appointment and the date of the appointment. These data for the Timely Access Reports may be collected using statistical sampling methods (including periodic Member and/or Provider surveys). The report shall include:

i.	Total number of appointment requests;
ii.	Total number of requests that meet the waiting time standards;
iii.	Total number of requests that exceed the waiting time standards; and
iv.	Average waiting time for those requests that exceed the waiting time standards. Information for items iii and iv shall be provided for each provider type/class.

4.18.4.3 Provider Complaints Report

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4.18.4.3.1 Pursuant to Section 4.9.8.2 the Contractor shall submit a Provider Complaints Report that includes, at a minimum, the following:

i.	Number of complaints by type;
ii.	Type of assistance provided; and
iii.	Administrative disposition of the case.

4.18.4.4 FQHC and RHC Report

4.18.4.4.1 Pursuant to 4.10.5.1 the Contractor shall submit monthly FQHC and RHC Payment Reports that identify Contractor payments made to each FQHC and RHC for each Covered Service provided to Members.

4.18.4.5 Utilization Management Report

4.18.4.5.1 Utilization Management Reports must include an analysis of data and identification of opportunities for improvement and follow up of the effectiveness of the intervention. Utilization data is to be reported separately based on both authorization (report based on authorization data shall be submitted monthly pursuant to Section 4.18.3.6.1) and claim data. The reports shall include, at a minimum, the following data: Specific data elements are defined with DCH such that all CMOs are reporting a common data set.

4.18.4.5.1.1	Number of UM cases handled, by type;
4.18.4.5.1.2	Number of denials (medical/dental/behavioral health/pharmaceutical);
4.18.4.5.1.3	Number of appeals;
4.18.4.5.1.4	Monitoring of at least four (4) types of utilization data for over-utilization and under-utilization. This should be measured against an established threshold (length of stay, unplanned readmissions, procedure rates, member complaints, etc.)

4.18.4.5.2 Pursuant to Section 4.11.10.1, the Contractor shall submit a Utilization Management Report on Utilization patterns and aggregate trend analysis. The Contractor shall also submit individual physician profiles to DCH, as requested. These Reports should provide to DCH analysis and interpretation of Utilization patterns, including but not limited to, high volume services, high risk services, services driving cost increases, including prescription drug utilization; Fraud and Abuse trends; and Quality and disease management. The Contractor shall provide ad hoc Reports pursuant to the requests of DCH. The

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	Contractor shall submit its proposed reporting mechanism, including but not limited to focus of study, data sources to DCH for approval.
4.18.4.5.3	The Contractor shall select three (3) of the following elements to monitor in its physician profiles. Each element should be measured against an established threshold.

4.18.4.5.3.1	Member access (encounters per member per year, new patient visit within 6 months, ER use per member per year, etc.)
4.18.4.5.3.2	Preventive care (EPSDT rates, breast cancer screening rates, immunizations, etc.)
4.18.4.5.3.3	Disease management (asthma ER/IP encounters, HBA1C rates, etc.)
4.18.4.5.3.4	Pharmacy utilization (generics, asthma medications, etc.)

4.18.4.6 Quality Oversight Committee Report

4.18.4.6.1 Pursuant to Section 4.12.11.1 the Contractor shall submit a Quality Oversight Committee Report that shall include a summary of results, conclusions, recommendations and implemented system changes for the QAPI program.

4.18.4.7 Fraud and Abuse Report

4.18.4.7.1 Pursuant to Section 4.13.4.1 the Contractor shall submit a Fraud and Abuse Report, which shall include, at a minimum, the following:

i.	Source of complaint;
ii.	Alleged persons or entities involved;
iii.	Nature of complaint;
iv.	Approximate dollars involved;
v.	Date of the complaint;
vi.	Disciplinary action imposed;
vii.	Administrative disposition of the case;
viii.	Investigative activities, corrective actions, prevention efforts, and results; and

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ix. Trending and analysis as it applies to: Utilization Management; Claims management; post-processing review of Claims; and Provider profiling.

4.18.4.8 Grievance System Report

4.18.4.8.1 Pursuant to Section 4.14.8.5 the Contractor shall submit a summary of Grievance, Appeals and Administrative Law Hearing requests. The report shall, at a minimum, include the following:

i.	Number of complaints by type;
ii.	Type of assistance provided; and
iii.	Administrative disposition of the case.

4.18.4.9 Cost Avoidance Report

4.18.4.9.1 Pursuant to Section 8.6.1 the Contractor shall submit a Cost Avoidance Report that identifies all cost-avoided claims for Members with third party coverage from private insurance carriers and other responsible third parties.

4.18.4.10 Medical Loss Ratio Report

4.18.4.10.1 Pursuant to Section 8.6.2, the Contractor shall submit monthly, a Medical Loss Ratio report that captures medical expenses relative to capitation payments received on a cumulative year to date basis. In addition, the Medical Loss Ratio report shall be submitted by May 15, August 15, November 15 and February 15 for the quarter immediately preceding the due date. The Medical Loss Ratio report shall include:

4.18.4.10.1.1	Capitation payments received;
4.18.4.10.1.2	Medical expenses by provider grouping including, but not limited to:

4.18.4.10.1.2.1	Direct payments to Providers for covered medical services;
4.18.4.10.1.2.2	Capitated payments to providers; and
4.18.4.10.1.2.3	Payments to subcontractors for covered benefits and services.

4.18.4.10.1.3 An Estimate of incurred but not reported IBNR expenses;

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4.18.4.10.1.4	Actuarial certification that the report, including the estimate of IBNR, has been reviewed for accuracy; and
4.18.4.10.1.5	Supporting claims lag tables by claim type.

4.18.4.11 Independent Audit and Income Statement

4.18.4.11.1 The Contractor shall submit to DOI:

4.18.4.11.1.1	A quarterly report on the form prescribed by the National Association of Insurance Commissioners (NAIC) for Health Maintenance Organizations (HMOs)pursuant to Section 8.6.6; and
4.18.4.11.1.2	A quarterly income statement on the form prescribed by the NAIC for HMOs pursuant to Section 8.6.6.

4.18.4.12 Subcontractor Agreement Report

4.18.4.12.1 Pursuant to Section 16.0, the Contractor shall submit a Subcontractor Agreement Report. The Subcontractor Agreement Report shall include:

i. All signed agreements for services provided (direct or indirect) to or on behalf of the Contractor’s assigned membership or contracted providers that includes:

• Name of Subcontractor

• Services provided by Subcontractor

• Terms of the subcontracted agreement

• Subcontractor contact information

ii.	Monitoring schedule (at lest twice per year)
iii.	Monitoring results

4.18.4.13 Provider Rep Field Visit Report

4.18.4.13.1 The Contractor shall submit the Provider Rep Field Visit Report (4.9.3) quarterly, and on an as-needed-basis, according to the guidelines outlined in section 4.9.3.1 and 4.9.3.2. The purpose of this report is to show that the CMOs conduct training within thirty (30) Calendar Days of placing a newly Contracted Provider on active status. The contractor shall also conduct ongoing training as deemed necessary by the Contractor or DCH in order to ensure compliance with program standard and the GHF Contract.

4.18.5 Annual Reports

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4.18.5.1 Performance Improvement Projects Reports

4.18.5.1.1 Pursuant to Section 4.12.5 the Contractor shall submit a Performance Improvement Projects Report that includes the study design, analysis, status and results on performance improvement projects. Status Reports on Performance Improvement Projects may be requested more frequently by DCH.

4.18.5.2 Focused Studies Report

4.18.5.2.1 Pursuant to Section 4.12.7.3 the Contractor shall, by April 1, submit the Focus Studies proposal that includes study topics, study questions, study indicators, and the study population for each of the two required focused studies to DCH for approval. The Contractor shall submit annual Reports on the focused studies, which includes analysis and results, no later than the March 31.

4.18.5.3 Patient Safety Reports

4.18.5.3.1 Pursuant to Section 4.12.8 the Contractor shall submit a Patient Safety Report that includes, at a minimum, the following:

i.	A system of classifying complaints according to severity;
ii.	Review by Medical Director and mechanism for determining which incidents will be forwarded to Peer Review and Credentials Committees; and
iii.	Summary of incident(s) included in Provider Profile.

4.18.5.4 Systems Refresh Plan

4.18.5.4.1 Pursuant to Section 4.17.1.6 the Contractor shall submit to DCH a Systems Refresh Plan no later than April 30 of each contract year.

4.18.5.5 Independent Audit and Income Statement

4.18.5.5.1 The Contractor shall submit to DOI:

ii.	An annual report on the form prescribed by the National Association of Insurance Commissioners (NAIC) for Health Maintenance Organizations (HMO) pursuant to Section 8.6.6;
iii.	An annual income statement pursuant to Section 8.6.6; and

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iv. An annual audit of its business transactions pursuant to Section 8.6.6.

4.18.5.6 “SAS 70” Report

4.18.5.6.1	Pursuant to Section 8.6.4, the Contractor shall submit to DCH an annual SAS 70 Report conducted by an independent auditing firm.
4.18.5.6.2	SAS 70 reports shall be due May 15 of each year and apply to the preceding twelve (12) month period April through March.

4.18.5.7 Disclosure of Information on Annual Business Transactions

4.18.5.7.1 Pursuant to Section 8.6.5, the Contractor shall submit to DCH, in a format specified by DCH, an annual Disclosure of Information on Annual Business Transactions.

4.18.6 Ad Hoc Reports

4.18.6.1 State Quality Monitoring Reports

4.18.6.1.1 Pursuant to section 2.8.1 the Contractor shall report, upon request by DCH, information to support the State’s Quality Monitoring Functions in accordance with 42 CFR 438.204. These Reports shall include information on:

4.18.6.1.1.1	The availability of services;
4.18.6.1.1.2	The adequacy of the Contractor’s capacity and services;
4.18.6.1.1.3	The Contractor’s coordination and continuity of care for Members;
4.18.6.1.1.4	The coverage and authorization of services;
4.18.6.1.1.5	The Contractor’s policies and procedures for selection and retention of Providers;
4.18.6.1.1.6	The Contractor’s compliance with Member information requirements in accordance with 42CFR 438.10;
4.18.6.1.1.7	The Contractor’s compliance with 45 CFR relative to Member’s confidentiality;
4.18.6.1.1.8	The Contractor’s compliance with Member Enrollment and Disenrollment requirements and limitations;
4.18.6.1.1.9	The Contractor’s Grievance System;
4.18.6.1.1.10	The Contractor’s oversight of all subcontractual relationships and delegations therein;
4.18.6.1.1.11	The Contractor’s adoption of practice guidelines, including the dissemination of the guidelines to Providers and Provider’s application of them;

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4.18.6.1.1.12	The Contractor’s quality assessment and performance improvement program; and
4.18.6.1.1.13	The Contractor’s health information systems.

4.18.6.2 Monthly Provider Network Adequacy and Capacity Report

4.18.6.2.1

Pursuant to Section 4.8.15.2 the Contractor shall submit a Provider Network Adequacy and Capacity Report monthly that demonstrates that the Contractor offers an appropriate range of preventive, Primary Care and specialty services that is adequate for the anticipated number of Members for the service area and that its network of Providers is sufficient in number, mix and geographic distribution to meet the needs of the anticipated number of Members in the service area.

4.18.6.2.2

This Provider Network Adequacy and Capacity Report shall list all Providers enrolled in the Contractor’s Provider network, including but not limited to, physicians, hospitals, FQHC/RHCs, home health agencies, pharmacies, Durable Medical Equipment vendors, behavioral health specialists, ambulance vendors, and dentists. Each Provider shall be identified by a unique identifying Provider number as specified in Section 4.8.1.5. This unique identifier shall appear on all Encounter Data transmittals. In addition to the listing, the Provider Network Adequacy and Capacity Report shall identify:

i.	Provider additions and deletions from the preceding month;
ii.	All OB/GYN Providers participating in the Contractor’s network, and those with open panels; and
iii.	List of Primary Care Providers with open panels.

4.18.6.2.3 The Reports shall be submitted to DCH at the following times:

i.	Sixty (60) Calendar Days after Contract Award and monthly thereafter;
ii.	Upon DCH request;
iii.	Upon Enrollment of a new population in the Contractor’s plan; and
iv.	Any time there has been a significant change in the Contractor’s operations that would affect adequate capacity

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and services. A significant change is defined as any of the following:

– A decrease in the total number of PCPs by more than five percent (5%);

– A loss of Providers in a specific specialty where another Provider in that specialty is not available within sixty (60) miles; or

– A loss of a hospital in an area where another CMO plan hospital of equal service ability is not available within thirty (30) miles; or

– Other adverse changes to the composition of the network, which impair or deny the Members’ adequate access to CMO plan Providers.

4.18.6.3 Third Party Liability and Coordination of Benefits Report

4.18.6.3.1 Pursuant to Section 8.6.3, the Contractor shall submit a Third Party Liability and Coordination of Benefits Report that includes any Third Party Resources available to a Member discovered by the Contractor, in addition to those provided to the Contractor by DCH pursuant to Section 2.11.1, within ten (10) Business Days of verification of such information. The Contractor shall report any known changes to such resources in the same manner.

4.18.6.4 Hospital Statistical and Reimbursement Report

4.18.6.4.1	The Contractor shall provide a Hospital Statistical and Reimbursement Report (HS&R) to a hospital provider upon request by the hospital or DCH using the same format that is used by DCH in completing HS&R reports within 30 days or receipt of such request.
4.18.6.4.2	Contractor will provide DCH with a quarterly report due fifteen (15) days after the end of the quarter, indicating all HS&R reports requested, the requesting hospital, date requested by hospital and date provided to hospital.
4.18.6.4.3	Contractor must provide the HS&R report to the requesting hospital within thirty (30) days of request. If delinquent in providing the HS&R Report, Contractor is subject to a $1,000 per day starting on the thirty-first day after the request and continuing until the report is provided. Payment of the penalty will be to DCH to be deposited in the Indigent Care Trust Fund. Contractor shall not reduce the funding available for health care services for Members as a result of payment of such penalties.

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4.18.6.5 Contractor Notifications

4.18.6.5.1 Pursuant to Section 5.8 the Contractor shall submit a Contractor Notifications Report that includes all DCH requested updated information within 10 days of verification; subsequently a quarterly summary must be provided that includes but is not limited to:

i.	Relationship of Parties
ii.	Criminal Background
iii.	Confidentiality Requirements
iv.	Insurance Coverage
v.	Payment Bond & Letter of Credit
vi.	Compliance with Federal Laws
vii.	Conflict of Interest and Contractor Independence
viii.	Drug Free Workplace
ix.	Business Associate Agreement
x.	System Status
xi.	Key staff or Senior Level Management
xii.	Current Corporate and Local Organization Chart

5.0	DELIVERABLES
5.1	CONFIDENTIALITY
5.1.1	The Contractor shall ensure that any Deliverables that contain information about individuals that is protected by confidentiality and privacy laws shall be prominently marked as “CONFIDENTIAL” and submitted to DCH in a manner that ensures that unauthorized individuals do not have access to the information. The Contractor shall not make public such reports. Failure to ensure confidentiality may result in sanctions and liquidated damages as described in Section 23.
5.2	NOTICE OF DISAPPROVAL
5.2.1	DCH will provide written notice of disapproval of a Deliverable to the Contractor within fourteen (14) Calendar Days of submission if it is disapproved. DCH may, at its sole discretion, elect to review a deliverable longer than 14 calendar days.
5.2.2	The notice of disapproval shall state the reasons for disapproval as specifically as is reasonably necessary and the nature and extent of the corrections required for meeting the Contract requirements.
5.3	RESUBMISSION WITH CORRECTIONS

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5.3.1	Within fourteen (14) Calendar Days of receipt of a notice of disapproval, the Contractor shall make the corrections and resubmit the Deliverable.
5.4	NOTICE OF APPROVAL/DISAPPROVAL OF RESUBMISSION
5.4.1	Within thirty (30) Calendar Days following resubmission of any disapproved Deliverable, DCH will give written notice to the Contractor of approval, Conditional approval or disapproval.
5.5	DCH FAILS TO RESPOND
5.5.1	In the event that DCH fails to respond to a Contractor’s resubmission within the applicable time period, the Contractor may either:

5.5.1.1	Notify DCH in writing that it intends to proceed with subsequent work unless DCH provides written notice of disapproval within fourteen (14) Calendar Days from the date DCH receives the Contractor’s notice.
5.5.1.2	Notify DCH that it intends to delay subsequent work until DCH responds in writing to the resubmission.

5.6	REPRESENTATIONS
5.6.1	By submitting a Deliverable or report, the Contractor represents that to the best of its knowledge, it has performed the associated tasks in a manner that will, in concert with other tasks, meet the objectives stated or referred to in the Contract.
5.6.2	By approving a Deliverable or report, DCH represents only that it has reviewed the Deliverable or report and detected no errors or omissions of sufficient gravity to defeat or substantially threaten the attainment of those objectives and to warrant the Withholding or denial of payment for the work completed. DCH’S acceptance of a Deliverable or report does not discharge any of the Contractor’s Contractual obligations with respect to that Deliverable or report.
5.7	CONTRACT DELIVERABLES

	Contract
Deliverable	Section		Due Date
PCP Auto-assignment Policies		4.1.2.3	Within 60 Calendar Days of Contract Award and as updated thereafter.
Member Handbook		4.3.3.5	Within 60 Calendar Days of Contract Award and as updated thereafter.

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	Contract
Deliverable	Section		Due Date
Provider Directory		4.3.5.3	Within 60 Calendar Days of Contract Award and as updated thereafter.
Sample Member ID card		4.3.6.4	Within 60 Calendar Days of Contract Award and as updated thereafter.
Telephone Hotline Policies and		4.3.7.3	Within 60 Calendar
Procedures (Member and Provider)		4.9.6	Days of Contract Award and as updated thereafter.
Call Center Quality Criteria and Protocols		4.3.7.9 4.9.5.8	Within 60 Calendar Days of Contract Award and as updated thereafter.
Web site Screenshots		4.3.8.5 4.9.6	Within 60 Calendar Days of Contract Award and as updated thereafter.
Cultural Competency Plan		4.3.9.3	Within 60 Calendar Days of Contract Award and as updated thereafter.
Marketing Plan and Materials		4.4.3.1	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Marketing Materials		4.4.4.1	Within 60 Calendar Days of Contract Award and as updated thereafter.
MH/SA Policies and Procedures		4.6.10	Within 60 Calendar Days of Contract Award and as updated thereafter.
EPSDT policies and procedures		4.7.1.3	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Selection and Retention Policies and Procedures		4.8.1.5	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Network Listing spreadsheet for all requested Provider types and Provider Letters of Intent or executed Signature Pages of Provider Contracts not previously submitted as part of the RFP response		4.8.1.7	Within 60 Calendar Days of Contract Award and as updated thereafter.

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	Contract
Deliverable	Section		Due Date
Final Provider Network Listing spreadsheet for all requested Provider types, Signature Pages for all Providers, and written acknowledgements from all Providers part of a PPO, IPO, or other network stating they know they are in the Contractor’s network, know they are accepting Medicaid patients, and are accepting the terms and conditions of the Provider Contract.		4.8.1.8	Within 90 Calendar Days of Contract Award and as updated thereafter.
PCP Selection Policies and Procedures		4.8.2.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Credentialing and Re-Credentialing Policies and Procedures		4.8.13.4	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Handbook		4.9.2.4	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Training Manuals		4.9.3.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Provider Complaint System Policies and Procedures		4.9.7.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Utilization Management Policies and Procedures		4.11.1.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Care Coordination and Case Management Policies and Procedures		4.11.8.3	Within 60 Calendar Days of Contract Award and as updated thereafter.
Quality Assessment and Performance Improvement Plan		4.12.2.3	Within 90 Calendar Days of Contract Award and as updated thereafter.
Proposed Performance Improvement Projects		4.12.3.7	Within 90 Calendar Days of Contract Award and as updated thereafter.
Practice Guidelines		4.12.4.2	Within 90 Calendar Days of Contract Award and as updated thereafter.
Focused Studies		4.12.5.2	1st day of the 4th Quarter of the 1st year

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	Contract
Deliverable	Section		Due Date
Patient Safety Plan		4.12.6.2	Within 90 Calendar Days of Contract Award and as updated thereafter.
Program Integrity Policies and Procedures		4.13.1.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Grievance System Policies and Procedures		4.14.1.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Staff Training Plan		4.15.3.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Implementation Plan		4.15.5.2	Within 60 Calendar Days of Contract Award and as updated thereafter.
Payment Schedule		4.16.1.4	Within 60 Calendar Days of Contract Award and as updated thereafter.
Business Continuity Plan		4.17	Within 60 Calendar Days of Contract Award and as updated thereafter.
System Users Manuals and Guides		4.17	Within 60 Calendar Days of Contract Award and as updated thereafter.
Information Management Policies and Procedures		4.17	Within 60 Calendar Days of Contract Award and as updated thereafter.
Subcontractor Agreements		16.1	Within 60 Calendar Days of Contract Award and as updated thereafter.

5.8 CONTRACT REPORTS

	Contract
Report	Section		Due Date
Member Information Report		4.18.2.1	Weekly
Member Data Conflict Report		4.18.2.2	Weekly
Telephone and Internet Activity Report		4.18.3.1	Monthly
Eligibility and Enrollment Reconciliation Report		4.18.3.2	Monthly

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	Contract
Report	Section		Due Date
Prior Authorization and Pre-Certification Report		4.18.3.3	Monthly
Claims Processing Report		4.18.3.4	Monthly
System Availability and Performance Report		4.18.3.5	Monthly
Utilization Management Report		4.18.3.6	Monthly
Medical Loss Ratio Report		4.18.4.10	Quarterly
Inpatient Expense Report		8.0	Monthly
Physicians Expense Report		8.0	Monthly
Pharmacy Expense Report		8.0	Monthly
Outpatient Expense Report		8.0	Monthly
Specialty Physician Expense Report		8.0	Monthly
Utilization by Age Report		8.0	Monthly
Enrollment Report		8.0	Monthly
Large Claims Report		8.0	Monthly
Claims Expense by Size Report		8.0	Monthly
GME Payments Report		8.0	Monthly
EPSDT Report		4.18.4.1	Quarterly
Timely Access Report		4.18.4.2	Quarterly
Provider Complaints Report		4.18.4.3	Quarterly
FQHC & RHC Report		4.18.4.4	Quarterly
Utilization Management Report		4.18.4.5	Quarterly
Quality Oversight Committee Report		4.18.4.6	Quarterly
Contractor Information Report		14.0	Quarterly
Subcontractor Information Report		16.0	Quarterly
Fraud and Abuse Report		4.18.4.7	Monthly
Grievance System Report		4.18.4.8	Quarterly
Cost Avoidance and Post Payment Recovery Report		4.18.4.9	Quarterly
Independent Audit and Income Statement		4.18.4.11	Quarterly
Hospital Statistical and Reimbursement Report		4.18.6.4	Quarterly
Subcontractor Agreement Report		4.18.4.12	Quarterly
Performance Improvement Projects Report		4.18.5.1	Annually
Focused Studies Report		4.18.5.2	Annually
Patient Safety Report		4.18.5.3	Annually
System Refresh Plan		4.48.5.4	Annually
Independent Audit and Income Statement		4.18.5.5	Annually
“SAS 70” Report		4.18.5.6	Annually

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	Contract
Report	Section		Due Date
Disclosure of Information on Annual Business Transactions		4.18.5.7	Annually
State Quality Monitoring Report		4.18.6.1	Upon request by DCH
Provider Network Adequacy and Capacity Report		4.18.6.2	Sixty Days after Contract Award; Quarterly; and Any time there is a significant change. Monthly or any time there is a significant change.
Third Party Liability and Coordination of Benefits Report		4.18.6.1.3	Within 10 Days of verification
Contractor Notifications		4.18.6.5	Within 10 Days of verifications Quarterly summary report
Hospital Statistical and Reimbursement Report		4.18.6.4	Upon request by Hospital Provider or DCH within 30 days of receipt of the request

6.0	TERM OF CONTRACT
6.1	This Contract shall begin on July 15, 2005 and shall continue until the close of the then current State fiscal year unless renewed as hereinafter provided. DCH is hereby granted six (6) options to renew this Contract for an additional term of up to one (1) State fiscal year, which shall begin on July 1, and end at midnight on June 30, of the following year, each upon the same terms, Conditions and Contractor’s price in effect at the time of the renewal. The option shall be exercisable solely and exclusively by DCH. As to each term, the Contract shall be terminated absolutely at the close of the then current State fiscal year without further obligation by DCH.
7.0	PAYMENT FOR SERVICES
7.1	GENERAL PROVISIONS

7.1.1 DCH will compensate the Contractor a prepaid, per member per month capitation rate for each GF Member enrolled in the Contractor’s plan (See Attachment H).The number of enrolled Members in each rate cell category will be determined by the records maintained in the Medicaid Member Information System (MMIS) maintained by DCH’s fiscal agent. The monthly compensation will be the final negotiated rate for each rate cell multiplied by the number of enrolled Members in each rate cell category. The Contractor must provide to DCH, and keep current, its tax identification number, billing address, and other contact information. Pursuant to the terms of this Contract, should DCH assess liquidated damages or other remedies or actions for noncompliance or deficiency with the terms of this Contract, such amount

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	shall be withheld from the prepaid, monthly compensation for the following month, and for continuous consecutive months thereafter until such noncompliance or deficiency is corrected.
7.1.2	The relevant Deliverables shall be mailed to the Project Leader named in the Notice provision of this Contract.
7.1.3	The total of all payments made by DCH to Contractor under this Contract shall not exceed the per Member per month Capitation payments agreed to under Attachment H, which has been provided for through the use of State or federal grants or other funds. With the exception of payments provided to the Contractor in accordance with Section 7.2 on Performance Incentives, DCH will have no responsibility for payment beyond that amount. Also as specified in Section 7.2.2 the total of all payments to the Contract will not exceed one hundred and five percent (105%) of the Capitation payment pursuant to 42 CFR 438.6 (hereinafter the “maximum funds”). It is expressly understood that the total amount of payment to the Contractor will not exceed the maximum funds provided above, unless Contractor has obtained prior written approval, in the form of a Contract amendment, authorizing an increase in the total payment. Additionally, the Contractor agrees that DCH will not pay or otherwise compensate the Contractor for any work that it performs in excess of the Maximum Funds.

7.2	Performance Incentives
7.2.1	The Contractor may be eligible for financial performance incentives subject to availability of funding. In order to be eligible for the financial performance incentives described below the Contractor must be fully compliant in all areas of the Contract. All incentives must comply with the federal managed care Incentive Arrangement requirements pursuant to 42 CFR 438.6 and the State Medicaid Manual 2089.3.
7.2.2	The total of all payments paid to the Contractor under this Contract shall not exceed one hundred and five percent (105%) of the Capitation payment pursuant to 42 CFR 438.6.
7.2.3	The amount of financial performance incentive and allocation methodology is developed solely by DCH.

7.2.3.1 Health Check Screening Initiative

7.2.3.1.1 The Contractor could become eligible for a performance incentive payment if the Contractor’s performance exceeds the minimum compliance standard for Health Check visits.

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7.2.3.1.2 The payment to the Contractor, if any, shall depend upon the percentage of Health Check well-child visits and screens achieved by the Contractor in excess of the minimum required compliance standard of eighty percent (80%). Payment shall be based on information obtained from Encounter Data.

7.2.3.2 Blood Lead Screening Test Incentive

7.2.3.2.1	Pursuant to the requirements outlined in Section 4.7.3.2, the Contractor may be eligible for a performance incentive payment if the Contractor’s performance exceeds the minimum compliance standard for blood lead screening tests provided to children age nine (9) months to thirty (30) months of age.
7.2.3.2.2	The payment to the Contractor, if any, shall depend upon the percentage of lead screening blood tests performed per unduplicated child during the Contract period, in excess of the minimum required compliance standard of eighty percent (80%) blood lead screening for children age nine (9) months to thirty (30) months of age. Payment shall be based on information obtained from Encounter Data.

7.2.3.3 Dental Visits Incentive

7.2.3.3.1	The Contractor may be eligible for financial performance incentives if the Contractor’s performance exceeds the minimum compliance standard for the provision of children’s dental services, as specified in Section 4.7.3.8, and as reported in Encounter Data. Dental services mean any dental service that is reported using a dental HCPC code or an ADA dental Claim form.
7.2.3.3.2	The payment to the Contractor, if any, shall be based on the percentage or number of visits achieved by the Contractor in excess of the minimum compliance standard of an eighty percent (80%) rate of Health Check eligible children receiving visits.

7.2.3.4 Newborn Enrollment Notification Incentive

7.2.3.4.1 Pursuant to the requirements outlined in Section 4.1.3, the Contractor may be eligible for financial incentive payments based on the Contractor’s compliance with newborn Enrollment notification to DCH. Minimum Contractor compliance with newborn Enrollment notification is

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	notification to DCH within twenty-four (24) hours of the birth of each newborn.
7.2.3.4.2	The payment to the Contractor, if any, shall depend upon the number of newborn Enrollment notifications received by DCH within the first twelve (12) hours of the birth of the newborn.

7.2.3.5 EPSDT Tracking and Notices for Missed Appointments and Referrals

7.2.3.5.1 Pursuant to the requirements outlined in Section 4.7 the Contractor may be eligible for incentive payments based on the Contractor’s follow-up, in the form of a telephone call or second (2^nd) notice, to Health Check eligible Members who have received an initial notice of missed screens.

8.0	FINANCIAL MANAGEMENT
8.1	GENERAL PROVISIONS
8.1.1	The Contractor shall be responsible for the sound financial management of the CMO plan.
8.2	SOLVENCY AND RESERVES STANDARDS
8.2.1	The Contractor shall establish and maintain such net worth, working capital and financial reserves as required pursuant to O.C.G.A. § 33-21.
8.2.2	The Contractor shall provide assurances to the State that its provision against the risk of insolvency is adequate such that its Members shall not be liable for its debts in the event of insolvency.
8.2.3	As part of its accounting and budgeting function, the Contractor shall establish an actuarially sound process for estimating and tracking incurred but not reported costs. As part of its reserving process, the Contractor shall conduct annual reviews to assess its reserving methodology and make adjustments as necessary.
8.3	REINSURANCE
8.3.1	DCH will not administer a Reinsurance program funded from capitation payment Withholding.
8.3.2	In addition to basic financial measures required by State law and discussed in section 8.2.1 and section 26, the Contractor shall meet financial viability standards. The Contractor shall maintain net equity (assets minus liability) equal to at least one (1) month’s capitation payments under this Contract. In addition, the Contractor shall

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maintain a current ratio (current assets/current liabilities) of greater than or equal to 1.0.

8.3.3	In the event the Contractor does not meet the minimum financial viability standards outlined in 8.3.2, the Contractor shall obtain Reinsurance that meets all DOI requirements. While commercial Reinsurance is not required, DCH recommends that Contractors obtain commercial Reinsurance rather than self-insuring. The Contractor may not obtain a reinsurance policy from an offshore company; the insurance carrier, the insurance carrier’s agents and the insurance carrier’s subsidiaries must be domestic.
8.4	THIRD PARTY LIABILITY AND COORDINATION OF BENEFITS
8.4.1	Third party liability refers to any other health insurance plan or carrier (e.g., individual, group, employer-related, self-insured or self-funded, or commercial carrier, automobile insurance and worker’s compensation) or program, that is, or may be, liable to pay all or part of the Health Care expenses of the Member.

8.4.1.1	Pursuant to Section 1902(a)(25) of the Social Security Act and 42 CFR 433 Subpart D, DCH hereby authorizes the Contractor as its agent to identify and cost avoid Claims for all CMO plan Members, including PeachCare for Kids Members.
8.4.1.2	The Contractor shall make reasonable efforts to determine the legal liability of third parties to pay for services furnished to CMO plan Members. To the extent permitted by State and federal law, the Contractor shall use Cost Avoidance processes to ensure that primary payments from the liable third party are identified, as specified below.
8.4.1.3	If the Contractor is unsuccessful in obtaining necessary cooperation from a Member to identify potential Third Party Resources after sixty (60) Calendar Days of such efforts, the Contractor may inform DCH, in a format to be determined by DCH, that efforts have been unsuccessful.

8.4.2 Cost Avoidance

8.4.2.1 The Contractor shall cost avoid all Claims or services that are subject to payment from a third party health insurance carrier, and may deny a service to a Member if the Contractor is assured that the third party health insurance carrier will provide the service, with the exception of those situations described below section 8.4.2.2. However, if a third party health insurance carrier requires the Member to pay any cost-sharing amounts (e.g., co-payment, coinsurance, deductible), the Contractor shall pay the cost sharing amounts. The Contractor’s liability for such cost sharing amounts shall not exceed the amount the Contractor would have paid under the Contractor’s payment schedule for the service.

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8.4.2.2 Further, the Contractor shall not withhold payment for services provided to a Member if third party liability, or the amount of third party liability, cannot be determined, or if payment will not be available within sixty (60) Calendar Days.

8.4.2.3 The requirement of Cost Avoidance applies to all Covered Services except Claims for labor and delivery, including inpatient hospital care and postpartum care, prenatal services, preventive pediatric services, and services provided to a dependent covered by health insurance pursuant to a court order. For these services, the Contractor shall ensure that services are provided without regard to insurance payment issues and must provide the service first. The Contractor shall then coordinate with DCH or it agent to enable DCH to recover payment from the potentially liable third party.

8.4.2.4 If the Contractor determines that third party liability exists for part or all of the services rendered, the Contractor shall:

8.4.2.4.1	Notify Providers and supply third party liability data to a Provider whose Claim is denied for payment due to third party liability; and
8.4.2.4.2	Pay the Provider only the amount, if any, by which the Provider’s allowable Claim exceeds the amount of third party liability.

8.4.3 Compliance

8.4.3.1 DCH may determine whether the Contractor complies with this Section by inspecting source documents for timeliness of billing and accounting for third party payments.

8.5	PHYSICIAN INCENTIVE PLAN
8.5.1	The Contractor may establish physician incentive plans pursuant to federal and State regulations, including 42 CFR 422.208 and 422.210, and 42 CFR 438.6.
8.5.2	The Contractor shall disclose any and all such arrangements to DCH, and upon request, to Members. Such disclosure shall include:

8.5.2.1	Whether services not furnished by the physician or group are covered by the incentive plan;
8.5.2.2	The type of Incentive Arrangement;
8.5.2.3	The percent of Withhold or bonus; and,
8.5.2.4	The panel size and if patients are pooled, the method used.

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8.5.3	Upon request, the Contractor shall report adequate information specified by the regulations to DCH in order that DCH will adequately monitor the CMO plan.
8.5.4	If the Contractor’s physician incentive plan includes services not furnished by the physician/group, the Contractor shall: (1) ensure adequate stop loss protection to individual physicians, and must provide to DCH proof of such stop loss coverage, including the amount and type of stop loss; and (2) conduct annual Member surveys, with results disclosed to DCH, and to Members, upon request.
8.5.5	Such physician incentive plans may not provide for payment, directly or indirectly, to either a physician or physician group as an inducement to reduce or limit medically necessary services furnished to an individual.
8.6	REPORTING REQUIREMENTS
8.6.1	The Contractor shall submit to DCH quarterly Cost Avoidance Reports as described in Section 4.18.4.9.
8.6.2	The Contractor shall submit to DCH quarterly Medical Loss Ratio Reports that detail direct medical expenditures for Members and premiums paid by the Contractor, as described in Section 4.18.4.10.
8.6.3	The Contractor shall submit to DCH Third Party Liability and Coordination of Benefits Reports within ten (10) Business Days of verification of available Third Party Resources to a Member, as described in Section 4.18.6.3. The Contractor shall report any known changes to such resources in the same manner.
8.6.4	The Contractor, at its sole expense, shall submit by May 15 (or a later date if approved by DCH) of each year a “Report on Controls Placed in Operation and Tests of Operating Effectiveness”, meeting all standards and requirements of the AICPA’s SAS 70, for the Contractor’s operations performed for DCH under the GF Contract.

8.6.4.1 Statement on Auditing Standards Number 70 (SAS 70), Reports on the Processing of Transactions by Service Organizations, is an auditing standard developed by the American Institute of Certified Public Accountants (AICPA). The completion of the SAS 70 process represents that a service organization has been through an in-depth audit of their control objectives and control activities, which include controls over information technology and related processes. A Type II report not only includes the service organization’s description of controls, but also includes detailed testing of the service organization’s controls over a period of time. The Type II SAS 70 should be for a period no less than nine months. The control objectives to be included in the scope of the SAS 70 must be approved by the Georgia Department of Community Health (DCH) before the SAS 70 process is commenced.

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8.6.4.2	The audit shall be conducted by an independent auditing firm, which has prior SAS 70 audit experience. The auditor must meet all AICPA standards for independence. The selection of, and contract with the independent auditor shall be subject to the approval of DCH and the State Auditor. Since such audits are not intended to fully satisfy all auditing requirements of DCH, the State Auditor reserves the right to fully and completely audit at their discretion the Contractor’s operation, including all aspects, which will have effect upon the DCH account, either on an interim audit basis or at the end of the State’s fiscal year. DCH also reserves the right to designate other auditors or reviewers to examine the Contractor’s operations and records for monitoring and/or stewardship purposes.
8.6.4.3	The independent auditing firm shall simultaneously deliver identical reports of its findings and recommendations to the Contractor and DCH within forty-five (45) Calendar Days after the close of each review period. The audit shall be conducted and the report shall be prepared in accordance with generally accepted auditing standards for such audits as defined in the publications of the AICPA, entitled “Statements on Auditing Standards” (SAS). In particular, both the “Statements on Auditing Standards Number 70-Reports on the Processing of Transactions by Service Organizations” and the AICPA Audit Guide, “Audit Guide of Service-Center-Produced Records” are to be used.
8.6.4.4	The Contractor shall respond to the audit findings and recommendations within thirty (30) Calendar Days of receipt of the audit and shall submit an acceptable proposed corrective action to DCH. The Contractor shall implement the corrective action plan within forty (40) Calendar Days of its approval by DCH.

8.6.5 The Contractor shall submit to DCH a “Disclosure of Information on Annual Business Transactions”. This report must include:

8.6.5.1 Definition of A Party in Interest – As defined in section 1318(b) of the Public Health Service Act, a party in interest is:

8.6.5.1.1 Any director, officer, partner, or employee responsible for management or administration of an HMO; any person who is directly or indirectly the beneficial owner of more than five percent (5%) of the equity of the HMO; any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than five percent (5%) of the HMO; or, in the case of an HMO organized as a nonprofit corporation, an incorporator or Member of such corporation under applicable State corporation law;

8.6.5.1.2 Any organization in which a person described in section 8.6.5.1.1 is director, officer or partner; has directly or indirectly a beneficial

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interest of more than five percent (5%) of the equity of the HMO; or has a mortgage, deed of trust, note, or other interest valuing more than five percent (5%) of the assets of the HMO;

8.6.5.1.3	Any person directly or indirectly controlling, controlled by, or under common control with a HMO; or
8.6.5.1.4	Any spouse, child, or parent of an individual described in sections 8.6.5.1.1, Section 8.6.5.1.2, or Section 8.6.5.1.3.

8.6.5.2 Types of Transactions Which Must Be Disclosed – Business transactions which must be disclosed include:

8.6.5.2.1	Any sale, exchange or lease of any property between the HMO and a party in interest;
8.6.5.2.2	Any lending of money or other extension of credit between the HMO and a party in interest; and
8.6.5.2.3	Any furnishing for consideration of goods, services (including management services) or facilities between the HMO and the party in interest. This does not include salaries paid to employees for services provided in the normal course of their employment;

8.6.5.3 The information which must be disclosed in the transactions listed in Section 8.6.5.2 between an HMO and a party of interest includes:

8.6.5.3.1	The name of the party in interest for each transaction;
8.6.5.3.2	A description of each transaction and the quantity or units involved;
8.6.5.3.3	The accrued dollar value of each transaction during the fiscal year; and
8.6.5.3.4	Justification of the reasonableness of each transaction.

8.6.6 The Contractor shall submit all necessary reports, documentation, to DOI as required by State law, which may include, but is not limited to the following:

8.6.6.1 Pursuant to State law and regulations, an annual report on the form prescribed by the National Association of Insurance Commissioners (NAIC) for HMOs, on or before March 1 of each calendar year.

8.6.6.2 An annual income statement detailing the Contractor’s fourth quarter and year to date earned revenue and incurred expenses as a result of this Contract on or before March 1 of each year. This annual income statement shall be accompanied by a Medical Loss Ratio report for the corresponding period and

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	a reconciliation of the Medical Loss Ratio report to the annual NAIC filing on an accrual basis.
8.6.6.3	Pursuant to state law and regulations, a quarterly report on the form prescribed by the NAIC for HMOs filed on or before May 15 for the first quarter of the year, August 15 for the second quarter of the year, and November 15, for the third quarter of the year.
8.6.6.4	A quarterly income statement detailing the Contractor’s quarterly and year to date earned revenue and incurred expenses because of this contract filed on or before May 15, for the first quarter of the year, August 15, for the second quarter of the year, and November 15, for the third quarter of the year. Each quarterly income statement shall be accompanied by a Medical Loss Ratio report for the corresponding period and reconciliation of the Medical Loss Ratio report to the quarterly NAIC filing on an accrual basis.
8.6.6.5	An annual independent audit of its business transactions to be performed by a licensed and certified public accountant, in accordance with National Association of Insurance Commissioners Annual Statement Instructions regarding the Annual Audited Financial Report, including but not limited to the financial transactions made under this contract.

9.0	PAYMENT OF TAXES
9.1	Contractor will forthwith pay all taxes lawfully imposed upon it with respect to this Contract or any product delivered in accordance herewith. DCH makes no representation whatsoever as to the liability or exemption from liability of Contractor to any tax imposed by any governmental entity.
9.2	The Contractor shall remit the Quality Assessment fee, as provided for in O.C.G.A. §31-8-170 et seq., in the manner prescribed by DCH.
10.0	RELATIONSHIP OF PARTIES
10.1	Neither Party is an agent, employee, or servant of the other. It is expressly agreed that the Contractor and any Subcontractors and agent, officers, and employees of the Contractor or any Subcontractor in the performance of this Contract shall act as independent contractors and not as officers or employees of DCH. The parties acknowledge, and agree, that the Contractor, its agent, employees, and servants shall in no way hold themselves out as agent, employees, or servants of DCH. It is further expressly agreed that this Contract shall not be construed as a partnership or joint venture between the Contractor or any Subcontractor and DCH.

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11.0	INSPECTION OF WORK
11.1	DCH, the State Contractor, the Department of Health and Human Services, the General Accounting Office, the Comptroller General of the United States, if applicable, or their Authorized Representatives, shall have the right to enter into the premises of the Contractor and/or all Subcontractors, or such other places where duties under this Contract are being performed for DCH, to inspect, monitor or otherwise evaluate the services or any work performed pursuant to this Contract. All inspections and evaluations of work being performed shall be conducted with prior notice and during normal business hours. All inspections and evaluations shall be performed in such a manner as will not unduly delay work.
12.0	STATE PROPERTY
12.1	The Contractor agrees that any papers, materials and other documents that are produced or that result, directly or indirectly, from or in connection with the Contractor’s provision of the services under this Contract shall be the property of DCH upon creation of such documents, for whatever use that DCH deems appropriate, and the Contractor further agrees to execute any and all documents, or to take any additional actions that may be necessary in the future to effectuate this provision fully. In particular, if the work product or services include the taking of photographs or videotapes of individuals, the Contractor shall obtain the consent from such individuals authorizing the use by DCH of such photographs, videotapes, and names in conjunction with such use. Contractor shall also obtain necessary releases from such individuals, releasing DCH from any and all Claims or demands arising from such use.
12.2	The Contractor shall be responsible for the proper custody and care of any State-owned property furnished for the Contractor’s use in connection with the performance of this Contract. The Contractor will also reimburse DCH for its loss or damage, normal wear and tear excepted, while such property is in the Contractor’s custody or use.
13.0	OWNERSHIP AND USE OF DATA/ UPGRADES
13.1	OWNERSHIP AND USE OF DATA
13.1.1	All data created from information, documents, messages (verbal or electronic), Reports, or meetings involving or arising out of this Contract is owned by DCH, hereafter referred to as DCH Data. The Contractor shall make all data available to DCH, who will also provide it to CMS upon request. The Contractor is expressly prohibited from sharing or publishing DCH Data or any information relating to Medicaid data without the prior written consent of DCH. In the event of a dispute

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	regarding what is or is not DCH Data, DCH’s decision on this matter shall be final and not subject to Appeal.
13.2	SOFTWARE AND OTHER UPGRADES
13.2.1	The Parties also understand and agree that any upgrades or enhancements to software programs, hardware, or other equipment, whether electronic or physical, shall be made at the Contractor’s expense only, unless the upgrade or enhancement is made at DCH’s request and solely for DCH’s use. Any upgrades or enhancements requested by and made for DCH’s sole use shall become DCH’s property without exception or limitation. The Contractor agrees that it will facilitate DCH’s use of such upgrade or enhancement and cooperate in the transfer of ownership, installation, and operation by DCH.
14.0	CONTRACTOR STAFFING
14.1	STAFFING ASSIGNMENTS AND CREDENTIALS
14.1.1	The Contractor warrants and represents that all persons, including independent Contractors and consultants assigned by it to perform this Contract, shall be employees or formal agents of the Contractor and shall have the credentials necessary (i.e., licensed, and bonded, as required) to perform the work required herein. The Contractor shall include a similar provision in any contract with any Subcontractor selected to perform work hereunder. The Contractor also agrees that DCH may approve or disapprove the Contractor’s Subcontractors or its staff assigned to this Contract prior to the proposed staff assignment. DCH’s decision on this matter shall not be subject to Appeal.
14.1.1.1	The contractor shall insure that all personnel involved in activities that involve clinical or medical decision making have a valid, active and unrestricted license to practice. On at staff have a decision making least an annual current license have a valid, basis the CMO and that is in good active and its subcontractors standing and will unrestricted will verify that provide a list to license to DCH of licensed staff and current licensure status.
14.1.2	In addition, the Contractor warrants that all persons assigned by it to perform work under this Contract shall be employees or authorized Subcontractors of the Contractor and shall be fully qualified, as required in the RFP and specified in the Contractor’s proposal and in this Contract, to perform the services required herein. Personnel commitments made in the Contractor’s proposal shall not be changed unless approved by DCH in writing. Staffing will include the named individuals at the levels of effort proposed.
14.1.3	The Contractor shall provide and maintain sufficient qualified personnel and staffing to enable the Deliverables to be provided in accordance with the RFP, the Contractor’s proposal and this Contract. The Contractor shall submit to DCH a

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	detailed staffing plan, including the employees and management for all CMO functions.
14.1.4	At a minimum, the Contractor shall provide the following staff:

14.1.4.1	An Executive Administrator who is a full-time administrator with clear authority over the general administration and implementation of the requirements detailed in this Contract.
14.1.4.2	A Medical Director who is a licensed physician in the State of Georgia. The Medical Director shall be actively involved in all major clinical program components of the CMO plan, shall be responsible for the sufficiency and supervision of the Provider network, and shall ensure compliance with federal, State and local reporting laws on communicable diseases, child abuse, neglect, etc.
14.1.4.3	A Quality Improvement/Utilization Director.
14.1.4.4	A Chief Financial Officer who oversees all budget and accounting systems.
14.1.4.5	An Information Management and Systems Director and a complement of technical analysts and business analysts as needed to maintain the operations of Contractor Systems and to address System issues in accordance with the terms of this contract.
14.1.4.6	A Pharmacist who is licensed in the State of Georgia;
14.1.4.7	A Dental Consultant who is a licensed dentist in the State of Georgia.
14.1.4.8	A Mental Health Coordinator who is a licensed mental health professional in the State of Georgia.
14.1.4.9	A Member Services Director.
14.1.4.10	A Provider Services Director.
14.1.4.11	A Provider Relations Liaison.
14.1.4.12	A Grievance/Complaint Coordinator.
14.1.4.13	Compliance Officer.
14.1.4.14	A Prior Authorization/Pre-Certification Coordinator who is a physician, registered nurse, or physician’s assistant licensed in the State of Georgia.

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14.1.4.15 Sufficient staff in all departments, including but not limited to, Member services, Provider services, and prior authorization and concurrent review services to ensure appropriate functioning in all areas.

14.1.5	The Contractor shall conduct on-going training of staff in all departments to ensure appropriate functioning in all areas.
14.1.6	The Contractor shall comply with all staffing/personnel obligations set out in the RFP and this Contract, including but not limited to those pertaining to security, health, and safety issues.
14.2	STAFFING CHANGES
14.2.1	The Contractor shall notify DCH in the event of any changes to key staff, including the Executive Administrator, Medical Director, Quality Improvement/Utilization Director, Management Information Systems Director, and Chief Financial Officer. The Contractor shall replace any of the key staff with a person of equivalent experience, knowledge and talent.
14.2.2	DCH also may require the removal or reassignment of any Contractor employee or Subcontractor employee that DCH deems to be unacceptable. DCH’s decision on this matter shall not be subject to Appeal. Notwithstanding the above provisions, the Parties acknowledge and agree that the Contractor may terminate any of its employees designated to perform work or services under this Contract, as permitted by applicable law. In the event of Contractor termination of any key staff identified in 14.1.4, the Contractor shall provide DCH with immediate notice of the termination, the reason(s) for the termination, and an action plan for replacing the discharged employee.
14.2.3	The Contractor must submit to DCH quarterly the Contractor Information Report that includes but is not limited to the Contractor’s local staff information as well as local and corporate organizational charts.
14.3	CONTRACTOR’S FAILURE TO COMPLY
14.3.1	Should the Contractor at any time: 1) refuse or neglect to supply adequate and competent supervision; 2) refuse or fail to provide sufficient and properly skilled personnel, equipment, or materials of the proper quality or quantity; 3) fail to provide the services in accordance with the timeframes, schedule or dates set forth in this Contract; or 4) fail in the performance of any term or condition contained in this Contract, DCH may (in addition to any other contractual, legal or equitable remedies) proceed to take any one or more of the following actions after five (5) Calendar Days written notice to the Contractor:

14.3.1.1 Withhold any monies then or next due to the Contractor;

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14.3.1.2	Obtain the services or their equivalent from a third party, pay the third party for same, and Withhold the amount so paid to third party from any money then or thereafter due to the Contractor; or
14.3.1.3	Withhold monies in the amount of any damage caused by any deficiency or delay in the services.

15.0	CRIMINAL BACKGROUND CHECKS
15.1	The Contractor shall, upon request, provide DCH with a resume or satisfactory criminal background check or both of any Members of its staff or a Subcontractor’s staff assigned to or proposed to be assigned to any aspect of the performance of this Contract.
16.0	SUBCONTRACTS
16.1	USE OF SUBCONTRACTORS
16.1.1	The Contractor will not subcontract or permit anyone other than Contractor personnel to perform any of the work, services, or other performances required of the Contractor under this Contract, or assign any of its rights or obligations hereunder, without the prior written consent of DCH. Prior to hiring or entering into an agreement with any Subcontractor, any and all Subcontractors shall be approved by DCH. DCH reserves the right to inspect all subcontract agreements at any time during the Contract period. Upon request from DCH, the Contractor shall provide in writing the names of all proposed or actual Subcontractors. The Contractor is solely accountable for all functions and responsibilities contemplated and required by this Contract, whether the Contractor performs the work directly or through a Subcontractor.
16.1.2	All contracts between the Contractor and Subcontractors must be in writing and must specify the activities and responsibilities delegated to the Subcontractor. The contracts must also include provisions for revoking delegation or imposing other sanctions if the Subcontractor’s performance is inadequate.
16.1.3	All contracts must ensure that the Contractor evaluates the prospective Subcontractor’s ability to perform the activities to be delegated; monitors the Subcontractor’s performance on an ongoing basis and subjects it to formal review according to a periodic schedule established by DCH and consistent with industry standards or State laws and regulations; and identifies deficiencies or areas for improvement and that corrective action is taken.
16.1.4	The Contractor shall give DCH immediate notice in writing by registered mail or certified mail of any action or suit filed by any Subcontractor and prompt notice of

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	any Claim made against the Contractor by any Subcontractor or vendor that, in the opinion of Contractor, may result in litigation related in any way to this Contract.
16.1.5	All Subcontractors must fulfill the requirements of 42 CFR 438.6 as appropriate.
16.1.6	All Provider contracts shall comply with the requirements and provisions as set forth in Section 4.10 of this Contract.
16.1.6	The Contractor shall submit a Subcontractor Information Report to include, but is not limited to: Subcontractor name, services provided, effective date of the subcontracted agreement.
16.2	COST OR PRICING BY SUBCONTRACTORS
16.2.1	The Contractor shall submit, or shall require any Subcontractors hereunder to submit, cost or pricing data for any subcontract to this Contract prior to award. The Contractor shall also certify that the information submitted by the Subcontractor is, to the best of their knowledge and belief, accurate, complete and current as of the date of agreement, or the date of the negotiated price of the subcontract to the Contract or amendment to the Contract. The Contractor shall insert the substance of this Section in each subcontract hereunder.
16.2.2	If DCH determines that any price, including profit or fee negotiated in connection with this Contract, or any cost reimbursable under this Contract was increased by any significant sum because of the inaccurate cost or pricing data, then such price and cost shall be reduced accordingly and this Contract and the subcontract shall be modified in writing to reflect such reduction.
17.0	LICENSE, CERTIFICATE, PERMIT REQUIREMENT
17.1	The Contractor warrants that it is qualified to do business in the State and is not prohibited by its articles of incorporation, bylaws or the law of the State under which it is incorporated from performing the services under this Contract. The Contractor shall have and maintain a Certificate of Authority pursuant to O.C.G.A. §33-21, and shall obtain and maintain in good standing any Georgia-licenses, certificates and permits, whether State or federal, that are required prior to and during the performance of work under this Contract. Loss of the licenses certificates and permits, and Certificate of Authority for health maintenance organizations shall be cause for termination of the Contract pursuant to Section 22 of this Contract. In the event the Certificate of Authority, or any other license or permit is canceled, revoked, suspended or expires during the term of this Contract, the Contractor shall inform the State immediately and cease all activities under this Contract, until further instruction from DCH. The Contractor agrees to provide DCH with certified copies of all licenses, certificates and permits necessary upon request.

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17.2	The Contractor shall be accredited by the National Committee for Quality Assurance (NCQA) for MCO, URAC (Health Plan accreditation), Accreditation Association for Ambulatory Health Care (AAAHC) for MCO, or Joint Commission on Accreditation of Healthcare Organizations (JCAHO) for MCO, or shall be actively seeking and working towards such accreditation. The Contractor shall provide to DCH upon request any and all documents related to achieving such accreditation and DCH shall monitor the Contractor’s progress towards accreditation. DCH may require that the Contractor achieve such accreditation by year three of this Contract.
18.0	RISK OR LOSS AND REPRESENTATIONS
18.1	DCH takes no title to any of the Contractor’s goods used in providing the services and/or Deliverables hereunder and the Contractor shall bear all risk of loss for any goods used in performing work pursuant to this Contract.
18.2	The Parties agree that DCH may reasonably rely upon the representations and certifications made by the Contractor, including those made by the Contractor in the Contractor’s response to the RFP and this Contract, without first making an independent investigation or verification.
18.3	The Parties also agree that DCH may reasonably rely upon any audit report, summary, analysis, certification, review, or work product that the Contractor produces in accordance with its duties under this Contract, without first making an independent investigation or verification.
19.0	PROHIBITION OF GRATUITIES AND LOBBYIST DISCLOSURES
19.1	The Contractor, in the performance of this Contract, shall not offer or give, directly or indirectly, to any employee or agent of the State, any gift, money or anything of value, or any promise, obligation, or contract for future reward or compensation at any time during the term of this Contract, and shall comply with the disclosure requirements set forth in O.C.G.A. § 45-1-6.
19.2	The Contractor also states and warrants that it has complied with all disclosure and registration requirements for vendor lobbyists as set forth in O.C.G.A. § 21-5-1, et. seq. and all other applicable law, including but not limited to registering with the State Ethics Commission. In addition, the Contractor states and warrants that no federal money has been used for any lobbying of State officials, as required under applicable federal law. For the purposes of this Contract, vendor lobbyists are those who lobby State officials on behalf of businesses that seek a contract to sell goods or services to the State or oppose such contract.
20.0	RECORDS REQUIREMENTS
20.1	GENERAL PROVISIONS

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20.1.1	The Contractor agrees to maintain books, records, documents, and other evidence pertaining to the costs and expenses of this Contract to the extent and in such detail as will properly reflect all costs for which payment is made under the provisions of this Contract and/or any document that is a part of this Contract by reference or inclusion. The Contractor’s accounting procedures and practices shall conform to generally accepted accounting principles, and the costs properly applicable to the Contract shall be readily ascertainable.
20.2	RECORDS RETENTION REQUIREMENTS
20.2.1	The Contractor shall preserve and make available all of its records pertaining to the performance under this Contract for a period of seven (7) years from the date of final payment under this Contract, and for such period, if any, as is required by applicable statute or by any other section of this Contract. If the Contract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for period of seven (7) years from the date of termination or of any resulting final settlement. Records that relate to Appeals, litigation, or the settlements of Claims arising out of the performance of this Contract, or costs and expenses of any such agreements as to which exception has been taken by the State Contractor or any of his duly Authorized Representatives, shall be retained by Contractor until such Appeals, litigation, Claims or exceptions have been disposed of.
20.3	ACCESS TO RECORDS
20.3.1	The State and federal standards for audits of DCH agents, contractors, and programs are applicable to this section and are incorporated by reference into this Contract as though fully set out herein.
20.3.2	Pursuant to the requirements of 42 CFR 434.6(a) (5) and 42 CFR 434.38, the Contractor shall make all of its books, documents, papers, Provider records, Medical Records, financial records, data, surveys and computer databases available for examination and audit by DCH, the State Attorney General, the State Health Care Fraud Control Unit, the State Department of Audits, or authorized State or federal personnel. Any records requested hereunder shall be produced immediately for on-site review or sent to the requesting authority by mail within fourteen (14) Calendar Days following a request. All records shall be provided at the sole cost and expense of the Contractor. DCH shall have unlimited rights to use, disclose, and duplicate all information and data in any way relating to this Contract in accordance with applicable State and federal laws and regulations.
20.4	MEDICAL RECORD REQUESTS
20.4.1	The Contractor shall ensure a copy of the Member’s Medical Record is made available, without charge, upon the written request of the Member or Authorized Representative within fourteen (14) Calendar Days of the receipt of the written request.

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20.4.2	The Contractor shall ensure that Medical Records are furnished at no cost to a new PCP, Out-of-Network Provider or other specialist, upon Member’s request, no later than fourteen (14) Calendar Days following the written request.
21.0	CONFIDENTIALITY REQUIREMENTS
21.1	GENERAL CONFIDENTIALITY REQUIREMENTS
21.1.1	The Contractor shall treat all information, including Medical Records and any other health and Enrollment information that identifies a particular Member or that is obtained or viewed by it or through its staff and Subcontractors performance under this Contract as confidential information, consistent with the confidentiality requirements of 45 CFR parts 160 and 164. The Contractor shall not use any information so obtained in any manner, except as may be necessary for the proper discharge of its obligations. Employees or authorized Subcontractors of the Contractor who have a reasonable need to know such information for purposes of performing their duties under this Contract shall use personal or patient information, provided such employees and/or Subcontractors have first signed an appropriate non-disclosure agreement that has been approved and maintained by DCH. The Contractor shall remove any person from performance of services hereunder upon notice that DCH reasonably believes that such person has failed to comply with the confidentiality obligations of this Contract. The Contractor shall replace such removed personnel in accordance with the staffing requirements of this Contract. DCH, the Georgia Attorney General, federal officials as authorized by federal law or regulations, or the Authorized Representatives of these parties shall have access to all confidential information in accordance with the requirements of State and federal laws and regulations.
21.2	HIPAA COMPLIANCE
21.2.1	The Contractor shall assist DCH in its efforts to comply with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its amendments, rules, procedures, and regulations. To that end, the Contractor shall cooperate and abide by any requirements mandated by HIPAA or any other applicable laws. The Contractor acknowledges that HIPAA may require the Contractor and DCH to sign a business associate agreement or other documents for compliance purposes, including but not limited to a business associate agreement. The Contractor shall cooperate with DCH on these matters, sign whatever documents may be required for HIPAA compliance, and bide by their terms and conditions.
22.0	TERMINATION OF CONTRACT
22.1	GENERAL PROCEDURES

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22.1.1 This Contract may terminate, or may be terminated, by DCH for any or all of the following reasons:

22.1.1.1	Default by the Contractor, upon thirty (30) Calendar Days notice;
22.1.1.2	Convenience of DCH, upon thirty (30) Calendar Days notice;
22.1.1.3	Immediately, in the event of insolvency, Contract breach, or declaration of bankruptcy by the Contractor; or
22.1.1.4	Immediately, when sufficient appropriated funds no longer exist for the payment of DCH’s obligation under this Contract.

22.2	TERMINATION BY DEFAULT
22.2.1	In the event DCH determines that the Contractor has defaulted by failing to carry out the substantive terms of this Contract or failing to meet the applicable requirements in 1932 and 1903(m) of the Social Security Act, DCH may terminate the Contract in addition to or in lieu of any other remedies set out in this Contract or available by law.
22.2.2	Prior to the termination of this Contract, DCH will:

22.2.2.1	Provide written notice of the intent to terminate at least thirty (30) Calendar Days prior to the termination date, the reason for the termination, and the time and place of a hearing to give the Contractor an opportunity to Appeal the determination and/or cure the default;
22.2.2.2	Provide written notice of the decision affirming or reversing the proposed termination of the Contract, and for an affirming decision, the effective date of the termination; and
22.2.2.3	For an affirming decision, give Members or the Contractor notice of the termination and information consistent with 42 CFR 438.10 on their options for receiving Medicaid services following the effective date of termination.

22.3	TERMINATION FOR CONVENIENCE
22.3.1	DCH may terminate this Contract for convenience and without cause upon thirty (30) Calendar Days written notice. Termination for convenience shall not be a breach of the Contract by DCH. The Contractor shall be entitled to receive, and shall be limited to, just and equitable compensation for any satisfactory authorized work performed as of the termination date Availability of funds shall be determined solely by DCH.
22.4	TERMINATION FOR INSOLVENCY OR BANKRUPTCY

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22.4.1	The Contractor’s insolvency, or the Contractor’s filing of a petition in bankruptcy, shall constitute grounds for termination for cause. In the event of the filing of a petition in bankruptcy, the Contractor shall immediately advise DCH. If DCH reasonably determines that the Contractor’s financial condition is not sufficient to allow the Contractor to provide the services as described herein in the manner required by DCH, DCH may terminate this Contract in whole or in part, immediately or in stages. The Contractor’s financial condition shall be presumed not sufficient to allow the Contractor to provide the services described herein, in the manner required by DCH if the Contractor cannot demonstrate to DCH’s satisfaction that the Contractor has risk reserves and a minimum net worth sufficient to meet the statutory standards for licensed health care plans. The Contractor shall cover continuation of services to Members for the duration of period for which payment has been made, as well as for inpatient admissions up to discharge.
22.5	TERMINATION FOR INSUFFICIENT FUNDING
22.5.1	In the event that federal and/or State funds to finance this Contract become unavailable, DCH may terminate the Contract in writing with thirty (30) Calendar Days notice to the Contractor. The Contractor shall be entitled to receive, and shall be limited to, just and equitable compensation for any satisfactory authorized work performed as of the termination date. Availability of funds shall be determined solely by DCH.
22.6	TERMINATION PROCEDURES
22.6.1	DCH will issue a written notice of termination to the Contractor by certified mail, return receipt requested, or in person with proof of delivery. The notice of termination shall cite the provision of this Contract giving the right to terminate, the circumstances giving rise to termination, and the date on which such termination shall become effective. Termination shall be effective at 11:59 p.m. EST on the termination date.
22.6.2	Upon receipt of notice of termination or on the date specified in the notice of termination and as directed by DCH, the Contractor shall:

22.6.2.1	Stop work under the Contract on the date and to the extent specified in the notice of termination;
22.6.2.2	Place no further orders or Subcontract for materials, services, or facilities, except as may be necessary for completion of such portion of the work under the Contract as is not terminated
22.6.2.3	Terminate all orders and Subcontracts to the extent that they relate to the performance of work terminated by the notice of termination;

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22.6.2.4	Assign to DCH, in the manner and to the extent directed by the Contract Administrator, all of the right, title, and interest of Contractor under the orders or subcontracts so terminated, in which case DCH will have the right, at its discretion, to settle or pay any or all Claims arising out of the termination of such orders and Subcontracts;
22.6.2.5	With the approval of the Contract Administrator, settle all outstanding liabilities and all Claims arising out of such termination or orders and subcontracts, the cost of which would be reimbursable in whole or in part, in accordance with the provisions of the Contract;
22.6.2.6	Complete the performance of such part of the work as shall not have been terminated by the notice of termination;
22.6.2.7	Take such action as may be necessary, or as the Contract Administrator may direct, for the protection and preservation of any and all property or information related to the Contract that is in the possession of Contractor and in which DCH has or may acquire an interest;
22.6.2.8	Promptly make available to DCH, or another CMO plan acting on behalf of DCH, any and all records, whether medical or financial, related to the Contractor’s activities undertaken pursuant to this Contractor. Such records shall be provided at no expense to DCH;
22.6.2.9	Promptly supply all information necessary to DCH, or another CMO plan acting on behalf of DCH, for reimbursement of any outstanding Claims at the time of termination; and
22.6.2.10	Submit a termination plan to DCH for review and approval that includes the following terms:

22.6.2.10.1	Maintain Claims processing functions as necessary for ten (10) consecutive months in order to complete adjudication of all Claims;
22.6.2.10.2	Comply with all duties and/or obligations incurred prior to the actual termination date of the Contract, including but not limited to, the Appeal process as described in Section 4.14;
22.6.2.10.3	File all Reports concerning the Contractor’s operations during the term of the Contract in the manner described in this Contract;
22.6.2.10.4	Ensure the efficient and orderly transition of Members from coverage under this Contract to coverage under any new arrangement developed by DCH in accordance with procedures set forth in Section 4.11.4;

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22.6.2.10.5	Maintain the financial requirements, and insurance set forth in this Contract until DCH provides the Contractor written notice that all continuing obligations of this Contract have been fulfilled; and
22.6.2.10.6	Submit Reports to DCH every thirty (30) Calendar Days detailing the Contractor’s progress in completing its continuing obligations under this Contract until completion.

22.6.3	Upon completion of these continuing obligations, the Contractor shall submit a final report to DCH describing how the Contractor has completed its continuing obligations. DCH will advise, within twenty (20) Calendar Days of receipt of this report, if all of the Contractor’s obligations are discharged. If DCH finds that the final report does not evidence that the Contractor has fulfilled its continuing obligations, then DCH will require the Contractor to submit a revised final report to DCH for approval.
22.7	TERMINATION CLAIMS
22.7.1	After receipt of a notice of termination, the Contractor shall submit to the Contract Administrator any termination claim in the form, and with the certification prescribed by, the Contract Administrator. Such claim shall be submitted promptly but in no event later than ten (10) months from the effective date of termination. Upon failure of the Contractor to submit its termination claim within the time allowed, the Contract Administrator may, subject to any review required by the State procedures in effect as of the date of execution of the Contract, determine, on the basis of information available, the amount, if any, due to the Contractor by reason of the termination and shall thereupon cause to be paid to the Contractor the amount so determined.
22.7.2	Upon receipt of notice of termination, the Contractor shall have no entitlement to receive any amount for lost revenues or anticipated profits or for expenditures associated with this Contract or any other contract. Upon termination, the Contractor shall be paid in accordance with the following:

22.7.2.1	At the Contract price(s) for completed Deliverables and/or services delivered to and accepted by DCH; and/or
22.7.2.2	At a price mutually agreed upon by the Contractor and DCH for partially completed Deliverables and/or services.

22.7.3 In the event the Contractor and DCH fail to agree in whole or in part as to the amounts with respect to costs to be paid to the Contractor in connection with the total or partial termination of work pursuant to this article, DCH will determine, on the basis of information available, the amount, if any, due to the Contractor by reason of termination and shall pay to the Contractor the amount so determined.

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23.0	LIQUIDATED DAMAGES
23.1	GENERAL PROVISIONS
23.1.1	In the event the Contractor fails to meet the terms, conditions, or requirements of this Contract and financial damages are difficult or impossible to ascertain exactly, the Contractor agrees that DCH may assess liquidated damages, not penalties, against the Contractor for the deficiencies. The Parties further acknowledge and agree that the specified liquidated damages are reasonable and the result of a good faith effort by the Parties to estimate the actual harm caused by the Contractor’s breach. The Contractor’s failure to meet the requirements in this Contract will be divided into four (4) categories of events.
23.1.2	Notwithstanding any sanction or liquidated damages imposed upon the Contractor other than Contract termination, the Contractor shall continue to provide all Covered Services and care management.
23.2	CATEGORY 1
23.2.1	Liquidated damages up to $100,000 per violation may be imposed for Category 1 events. For Category 1 events, the Contractor shall submit a written corrective action plan to DCH for review and approval prior to implementing the corrective action. Category 1 events are monitored by DCH to determine compliance and shall include and constitute the following:

23.2.1.1	Acts that discriminate among Members on the basis of their health status or need for health care services; and
23.2.1.2	Misrepresentation of actions or falsification of information furnished to CMS or the State.
23.2.1.3	Failure to implement requirements stated in the Contractor’s proposal, the RFP, this Contract, or other material failures in the Contractor’s duties.
23.2.1.4	Failure to participate in a readiness and/or annual review.
23.2.1.5	Failure to provide an adequate provider network of physicians, pharmacies, hospitals, and other specified health care Providers in order to assure member access to all Covered Services.

23.3	CATEGORY 2
23.3.1	Liquidated damages up to $25,000 per violation may be imposed for the Category 2 events. For Category 2 events, the Contractor shall submit a written corrective action plan to DCH for review and approval prior to implementing the corrective action.

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Category 2 events are monitored by DCH to determine compliance and include the following:

23.3.1.1	Substantial failure to provide medically necessary services that the Contractor is required to provide under law, or under this Contract, to a Member covered under this Contract;
23.3.1.2	Misrepresentation or falsification of information furnished to a Member, Potential Member, or health care Provider;
23.3.1.3	Failure to comply with the requirements for physician incentive plans, as set forth in 42 CFR 422.208 and 422.210;
23.3.1.4	Distribution directly, or indirectly, through any Agent or independent contractor, marketing materials that have not been approved by the State or that contain false or materially misleading information;
23.3.1.5	Violation of any other applicable requirements of section 1903(m) or 1932 of the Social Security Act and any implementing regulations;
23.3.1.6	Failure of the Contractor to assume full operation of its duties under this Contract in accordance with the transition timeframes specified herein;
23.3.1.7	Imposition of premiums or charges on Members that are in excess of the premiums or charges permitted under the Medicaid program (the State will deduct the amount of the overcharge and return it to the affected Member).
23.3.1.8	Failure to resolve Member Appeals and Grievances within the timeframes specified in this Contract;
23.3.1.9	Failure to ensure client confidentiality in accordance with 45 CFR 160 and 45 CFR 164; and an incident of noncompliance will be assessed as per member and/or per HIPAA regulatory violation.
23.3.1.10	Violation of a subcontracting requirement in the Contract.
23.3.1.11	Failure to enhance provider rates in accordance with the legislative mandates of Georgia House Bill 990.

23.4	CATEGORY 3
23.4.1	Liquidated damages up to $5,000.00 per day may be imposed for Category 3 events. For Category 3 events, a written corrective action plan may be required and corrective action must be taken. In the case of Category 3 events, if corrective action is taken within four (4) Business Days, then liquidated damages may be waived at the

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discretion of DCH. Category 3 events are monitored by DCH to determine compliance and shall include the following:

23.4.1.1	Failure to submit required Reports and Deliverables in the timeframes prescribed in Section 4.18 and Section 5.7;
23.4.1.2	Submission of incorrect or deficient Deliverables or Reports as determined by DCH;
23.4.1.3	Failure to comply with the Claims processing standards as follows:

23.4.1.3.1	Failure to process and finalize to a paid or denied status ninety-seven percent (97%) of all Clean Claims within fifteen (15) Business Days during a fiscal year;
23.4.1.3.2	Failure to pay Providers interest at an eighteen percent (18%) annual rate, calculated daily for the full period during which a clean, unduplicated Claim is not adjudicated within the claims processing deadlines. For all claims that are initially denied or underpaid by a Contractor but eventually determined or agreed to have been owed by the Contractor to a provider of health care services, the Contractor shall pay, in addition to the amount determined to be owed, interest of 20 percent per annum, calculated from 15 days after the date the claim was submitted. A Contractor shall pay all interest required to be paid under this provision or Code Section 33-24-59.5 automatically and simultaneously whenever payment is made for the claim giving rise to the interest payment. All interest payments shall be accurately identified on the associated remittance advice submitted by the Contractor to the provider. A Contractor shall not be responsible for the penalty described in this subsection if the health care provider submits a claim containing a material omission or inaccuracy in any of the data elements required for a complete standard health care claim form as prescribed under 45 C.F.R. Part 162 for electronic claims, a CMS Form 1500 for nonelectronic claims, or any claim prescribed by the Department of Community Health.
23.4.1.3.3

23.4.1.4	Failure to comply with the EPSDT initial health visit and screening requirements for Health Check eligibles within sixty (60) Calendar Days as described in Section 4.7.
23.4.1.5	Failure to comply with the EPSDT periodicity schedule for eighty percent (80%) of Health Check eligibles as described Section 4.7.

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23.4.1.6	Failure to provide an initial visit within fourteen (14) Calendar Days for all newly enrolled women who are pregnant in accordance with Sections 4.6.9.1 and 4.8.13.4.
23.4.1.7	Failure to comply with the Notice of Proposed Action and Notice of Adverse Action requirements as described in Sections 4.14.3 and 4.14.5.
23.4.1.8	Failure to comply with any corrective action plans as required by DCH.
23.4.1.9	Failure to seek, collect and/or report third party information as described in Section 8.4.
23.4.1.10	Failure to comply with the Contractor staffing requirements as described in Section 14.3.
23.4.1.11	Failure of Contractor to issue written notice to Members upon Provider’s notice of termination in the Contractor’s plan as described in Sections 4.8.17.3 and 4.8.17.4.
23.4.1.12	Failure to comply with federal law regarding sterilizations, hysterectomies, and abortions and as described in Section 4.6.5.
23.4.1.13	Failure to submit acceptable member and provider directed materials or documents in a timely manner, i.e., member and provider directories, handbooks, policies and procedures.

23.5	CATEGORY 4
23.5.1	Liquidated damages as specified below may be imposed for Category 4 events. Imposition of liquidated damages will not relieve the Contractor from submitting and implementing corrective action plans or corrective action as determined by DCH. Category 4 events are monitored by DCH to determine compliance and include the following:

23.5.1.1 Failure to implement the business continuity-disaster recovery (BC-DR) plan as follows:

23.5.1.1.1	Implementation of the (BC-DR) plan exceeds the proposed time by two (2) or less Calendar Days: five thousand dollars ($5,000) per day up to day 2;
23.5.1.1.2	Implementation of the (BC-DR) plan exceeds the proposed time by more than (2) and up to five (5) Calendar Days: ten thousand dollars ($10,000) per each day beginning with Day 3 and up to Day 5;

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23.5.1.1.3	Implementation of the (BC-DR) plan exceeds the proposed time by more than five (5) and up to ten (10) Calendar Days, twenty-five thousand dollars ($25,000) per day beginning with Day 6 and up to Day 10; and
23.5.1.1.4	Implementation of the (BC-DR) plan exceeds the proposed time by more than ten (10) Calendar Days: fifty thousand dollars ($50,000) per each day beginning with Day 11.

23.5.1.2 Unscheduled System Unavailability (other than CCE and ECM functions described below) occurring during a continuous five (5) Business Day period, may be assessed as follows:

23.5.1.2.1	Greater than or equal to two (2) and less than twelve (12) hours cumulative: up to one hundred twenty-five dollars ($125) for each thirty (30) minutes or portions thereof;
23.5.1.2.2	Greater than or equal to twelve (12) and less than twenty-four (24) hours cumulative: up to two hundred fifty dollars ($250) for each thirty (30) minutes or portions thereof; and
23.5.1.2.3	Greater than or equal to twenty-four (24) hours cumulative: up to five hundred dollars ($500) for each thirty (30) minutes or portions thereof up to a maximum of twenty-five thousand dollars ($25,000) per occurrence.

23.5.1.3 Confirmation of CMO Enrollment (CCE) or Electronic Claims Management (ECM) system downtime. In any calendar week, penalties may be assessed as follows for downtime outside the State’s control of any component of the CCE and ECM systems, such as the voice response system and PC software response system:

23.5.1.3.1	Less than twelve (12) hours cumulative: up to two hundred fifty dollars ($250) for each thirty (30) minutes or portions thereof;
23.5.1.3.2	Greater than or equal to twelve (12) and less than twenty-four (24) hours cumulative: up to five hundred ($500) for each thirty (30) minutes or portions thereof; and
23.5.1.3.3	Greater than or equal to twenty-four (24) hours cumulative: up to one thousand dollars ($1,000) for each thirty (30) minutes or portions thereof up to a maximum of fifty thousand dollars ($50,000) per occurrence.

23.5.1.4 Failure to make available to the state and/or its agent readable, valid extracts of Encounter Information for a specific month within fifteen (15) Calendar

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Days of the close of the month: five hundred dollars ($500) per day. After fifteen (15) Calendar Days of the close of the month: two thousand dollars ($2000) per day.

23.5.1.5 Failure to correct a system problem not resulting in System Unavailability within the allowed timeframe, where failure to complete was not due to the action or inaction on the part of DCH as documented in writing by the Contractor:

23.5.1.5.1	One (1) to fifteen (15) Calendar Days late: two hundred and fifty dollars ($250) per Calendar Day for Days 1 through 15;
23.5.1.5.2	Sixteen (16) to thirty (30) Calendar Days late: five hundred dollars ($500) per Calendar Day for Days 16 through 30; and
23.5.1.5.3	More than thirty (30) Calendar Days late: one thousand dollars ($1,000) per Calendar Day for Days 31 and beyond.

23.5.1.6 Failure to meet the Telephone Hotline performance standards:

23.5.1.6.1	$1,000.00 for each percentage point that is below the target answer rate of eighty percent (80%) in thirty (30) seconds;
23.5.1.6.2	$1,000.00 for each percentage point that is above the target of a one percent (1%) Blocked Call rate; and
23.5.1.6.3	$1,000.00 for each percentage point that is above the target of a five percent (5%) Abandoned Call rate.

23.6	OTHER REMEDIES
23.6.1	In addition other liquidated damages described above for Category 1-4 events, DCH may impose the following other remedies:

23.6.1.1	Appointment of temporary management of the Contractor as provided in 42 CFR 438.706, if DCH finds that the Contractor has repeatedly failed to meet substantive requirements in section 1903 (m) or section 1932 of the Social Security Act;
23.6.1.2	Granting Members the right to terminate Enrollment without cause and notifying the affected Members of their right to disenroll;
23.6.1.3	Suspension of all new Enrollment, including default Enrollment, after the effective date of remedies;

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23.6.1.4	Suspension of payment to the Contractor for Members enrolled after the effective date of the remedies and until CMS or DCH is satisfied that the reason for imposition of the remedies no longer exists and is not likely to occur;
23.6.1.5	Termination of the Contract if the Contractor fails to carry out the substantive terms of the Contract or fails to meet the applicable requirements in 1932 and 1903(m) of the Social Security Act;
23.6.1.6	Civil Monetary Fines in accordance with 42 CFR 438.704; and
23.6.1.7	Additional remedies allowed under State statute or State regulation that address areas of non-compliance specified in 42 CFR 438.700.

23.7	NOTICE OF REMEDIES
23.7.1	Prior to the imposition of either liquidated damages or other remedies, DCH will issue a written notice of remedies that will include the following:

23.7.1.1	A citation to the law, regulation or Contract provision that has been violated;
23.7.1.2	The remedies to be applied and the date the remedies will be imposed;
23.7.1.3	The basis for DCH’s determination that the remedies should be imposed;
23.7.1.4	Request for a corrective action plan, if applicable; and
23.7.1.5	The time frame and procedure for the Contractor to dispute DCH’s determination. A Contractor’s dispute of a liquidated damage or remedies shall not stay the effective date of the proposed liquidated damage or remedies.

24.0

INDEMNIFICATION

24.1

The Contractor hereby releases and agrees to indemnify and hold harmless DCH, the State of Georgia and its departments, agencies and instrumentalities (including the State Tort Claims Trust Fund, the State Authority Liability Trust Fund, The State Employee Broad Form Liability Funds, the State Insurance and Hazard Reserve Fund, and other self-insured funds, all such funds hereinafter collectively referred to as the “Funds”) from and against any and all claims, demands, liabilities, losses, costs or expenses, and attorneys’ fees, caused by, growing out of, or arising from this Contract, due to any act or omission on the part of the Contractor, its agents, employees, customers, invitees, licensees or others working at the direction of the Contractor or on its behalf, or due to any breach of this Contract by the Contractor, or due to the application or violation of any pertinent federal, State or local law, rule or regulation. This indemnification extends to the successors and assigns of the

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	Contractor, and this indemnification survives the termination of the Contract and the dissolution or, to the extent allowed by the law, the bankruptcy of the Contractor.
25.0	INSURANCE
25.1	INSURANCE OF CONTRACTOR
25.1.1	The Contractor shall, at a minimum, prior to the commencement of work, procure the insurance policies identified below at the Contractor’s own cost and expense and shall furnish DCH with proof of coverage at least in the amounts indicated. It shall be the responsibility of the Contractor to require any Subcontractor to secure the same insurance coverage as prescribed herein for the Contractor, and to obtain a certificate evidencing that such insurance is in effect. In the event that any such insurance is proposed to be reduced, terminated or cancelled for any reason, the Contractor shall Provider to DCH at least thirty (30) Calendar Days written notice. Prior to the reduction, expiration and/or cancellation of any insurance policy required hereunder, the Contractor shall secure replacement coverage upon the same terms and provisions to ensure no lapse in coverage, and shall furnish, at the request of DCH, a certificate of insurance indicating the required coverage’s. The Contractor shall maintain insurance coverage sufficient to insure against claims arising at any time during the term of the Contract. The provisions of this Section shall survive the expiration or termination of this Contract for any reason. In addition, the Contractor shall indemnify and hold harmless DCH and the State from any liability arising out of the Contractor’s or its Subcontractor’s untimely failure in securing adequate insurance coverage as prescribed herein:

25.1.1.1 Workers’ Compensation Insurance, the policy (ies) to insure the statutory limits established by the General Assembly of the State of Georgia. The Workers’ Compensation Policy must include Coverage B – Employer’s Liability Limits of:

25.1.1.1	Bodily injury by accident: five hundred thousand dollars ($500,000) each accident;
25.1.1.2	Bodily Injury by Disease: five hundred thousand dollars ($ 500,000) each employee; and
25.1.1.3	One million dollars ($ 1,000,000) policy limits.

25.1.1.2	The Contractor shall require all Subcontractors performing work under this Contract to obtain an insurance certificate showing proof of Worker’s Compensation Coverage.
25.1.1.3	The Contractor shall have commercial general liability policy (ies) as follows:

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25.1.1.3.1	Combined single limits of one million dollars ($1,000,000) per person and three million dollars ($3,000,000) per occurrence;
25.1.1.3.2	On an “occurrence” basis; and
25.1.1.3.3	Liability for property damage in the amount of three million dollars ($3,000,000) including contents coverage for all records maintained pursuant to this Contract.

26.0 PAYMENT BOND & IRREVOCABLE LETTER OF CREDIT

Section 26.1	Within five (5) Business Days of Contract Execution, Contractor shall obtain and maintain in force and effect an irrevocable letter of credit in the amount representing one half of one month’s Net Capitation Payment associated with the actual GCS lives in the Atlanta and Central Service Regions enrolled in Contractor’s plan. On or before July 2 each following year, Contractor shall modify the amount of the irrevocable letter of credit currently in force and effect to equal one-half of the average of the Net Capitation Payments paid to the Contractor for the months of January, February and March. If at any time during the year, the actual GCS lives enrolled in Contractor’s plan increases or decreases by more than twenty-five percent, DCH, at it sole discretion, may increase or decrease the amount required for the irrevocable letter of credit.
	DCH may, at its discretion, redeem Contractor’s irrevocable letter of credit in the amount(s) of actual damages suffered by DCH if DCH determines that the Contractor is (1) unable to perform any of the terms and conditions of the Contract or if (2) the Contractor is terminated by default or bankruptcy or material breach that is not cured within the time specified by DCH, or under both conditions described at one (1) and two (2).
	With regard to the irrevocable letter of credit, DCH may recoup payments from the Contractor for liabilities or obligations arising from any act, event, omission or condition which occurred or existed subsequent to the effective date of the Contract and which is identified in a survey, review, or audit conducted or assigned by DCH.
Section 26.2	DCH may also, at its discretion, redeem Contractor’s irrevocable letter of credit in the amount(s) of actual damages suffered by DCH if DCH determines that the Contractor is (1) unable to perform any of the terms and conditions of the Contract or if (2) the Contractor is terminated by default or bankruptcy or material breach that is not

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	cured within the time specified by DCH, or under both conditions described at one (1) and two (2).
Section 26.3	During the Contract period, Contractor shall obtain and maintain a payment bond from an entity licensed to do business in the State of Georgia and acceptable to DCH with sufficient financial strength and creditworthiness to assume the payment obligations of Contractor in the event of a default in payment arising from bankruptcy, insolvency, or other cause. Said bond shall be delivered to DCH within five (5) Business Days of Contract Execution and shall be in the amount of Five Million Dollars ($5,000,000.00). On or before July 2, of each following year, Contractor shall modify the amount of the bond to equal the average of the Net Capitation Payments paid to the Contractor for the months of January, February and March.
	If at any time during the year, the actual GCS lives enrolled in Contractor’s plan increases or decreases by more than twenty-five percent, DCH, at it sole discretion, may increase or decrease the amount required for the bond.

27.0 COMPLIANCE WITH ALL LAWS

27.1 NON-DISCRIMINATION

27.1.1 The Contractor agrees to comply with applicable federal and State laws, rules and regulations, and the State’s policy relative to nondiscrimination in employment practices because of political affiliation, religion, race, color, sex, physical handicap, age, or national origin including, but not limited to, Title VI of the Civil Rights Act of 1964, as amended; Title IX of the Education Amendments of 1972 as amended; the Age Discrimination Act of 1975, as amended; Equal Employment Opportunity (45 CFR 74 Appendix A (1), Executive Order 11246 and 11375) and the Americans with Disability Act of 1993 (including but not limited to 28 C.F.R. § 35.100 et seq.). Nondiscrimination in employment practices is applicable to employees for employment, promotions, dismissal and other elements affecting employment.

27.2

DELIVERY OF SERVICE AND OTHER FEDERAL LAWS

27.2.1

The Contractor agrees that all work done as part of this Contract will comply fully with applicable administrative and other requirements established by applicable federal and State laws and regulations and guidelines, including but not limited to section 1902(a)(7) of the Social Security Act and DCH Medicaid and PeachCare for Kids Policies and Procedures manuals, and assumes responsibility for full compliance with all such applicable laws, regulations, and guidelines, and agrees to fully reimburse DCH for any loss of funds or resources or overpayment resulting from non-compliance by Contractor, its staff, agents or Subcontractors, as revealed in

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	subsequent audits. The provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.) and the rules and regulations as promulgated by the United States Department of Labor in Title XXIX of the Code of Federal Regulations are applicable to this Contract. Contractor shall agree to conform with such federal laws as affect the delivery of services under this Contract including but not limited to the Titles VI, VII, XIX, XXI of the Social Security Act, the Federal Rehabilitation Act of 1973, the Davis Bacon Act (40 U.S.C. § 276a et seq.), the Copeland Anti-Kickback Act (40 U.S.C. § 276c), the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as Amended (33 U.S.C. 1251 et seq.); the Byrd Anti-Lobbying Amendment (31 U.S.C. 1352);and Debarment and Suspension (45 CFR 74 Appendix A (8) and Executive Order 12549 and 12689); the Contractor shall agree to conform to such requirements or regulations as the United States Department of Health and Human Services may issue from time to time. Authority to implement federal requirements or regulations will be given to the Contractor by DCH in the form of a Contract amendment.
27.2.2	The Contractor shall include notice of grantor agency requirements and regulations pertaining to reporting and patient rights under any contracts involving research, developmental, experimental or demonstration work with respect to any discovery or invention which arises or is developed in the course of or under such contract, and of grantor agency requirements and regulations pertaining to copyrights and rights in data.
27.2.3	The Contractor shall recognize mandatory standards and policies relating to energy efficiency, which are contained in the State energy conservation plan issues in compliance with the Energy Policy and Conservation Act (Pub. L. 94-165).
27.3	COST OF COMPLIANCE WITH APPLICABLE LAWS
27.3.1	The Contractor agrees that it will bear any and all costs (including but not limited to attorneys’ fees, accounting fees, research costs, or consultant costs) related to, arising from, or caused by compliance with any and all laws, such as but not limited to federal and State statutes, case law, precedent, regulations, policies, and procedures. In the event of a disagreement on this matter, DCH’s determination on this matter shall be conclusive and not subject to Appeal.
27.4	GENERAL COMPLIANCE
27.4.1	Additionally, the Contractor agrees to comply and abide by all laws, rules, regulations, statutes, policies, or procedures that may govern the Contract, the Deliverables in the Contract, or either party’s responsibilities. To the extent that applicable laws, rules, regulations, statutes, policies, or procedures require the Contractor to take action or inaction, any costs, expenses, or fees associated with that action or inaction shall be borne and paid by the Contractor solely.

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28.0	CONFLICT RESOLUTION
28.1	Any dispute concerning a question of fact or obligation related to or arising from this Contract that is not disposed of by mutual agreement shall be decided by the Contract Administrator who shall reduce his or her decision to writing and mail or otherwise furnish a copy to the Contractor. The written decision of the Contract Administrator shall be final and conclusive, unless the Contractor mails or otherwise furnishes a written Appeal to the Commissioner of DCH within ten (10) Calendar Days from the date of receipt of such decision. The decision of the Commissioner or a duly Authorized Representative for the determination of such Appeal shall be final and conclusive. In connection with any Appeal proceeding under this provision, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its Appeal. Pending a final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the Contract.
29.0	CONFLICT OF INTEREST AND CONTRACTOR INDEPENDENCE
29.1	No official or employee of the State of Georgia or the federal government who exercises any functions or responsibilities in the review or approval of the undertaking or carrying out of the GF program shall, prior to the completion of the project, voluntarily acquire any personal interest, direct or indirect, in this Contract or the proposed Contract.
29.2	The Contractor covenants that it presently has no interest and shall not acquire any interest, direct or indirect, that would conflict in any material manner or degree with, or have a material adverse effect on the performance of its services hereunder. The Contractor further covenants that in the performance of the Contract no person having any such interest shall be employed.
29.3	All of the parties hereby certify that the provisions of O.C.G.A. §45-10-20 through §45-10-28, which prohibit and regulate certain transactions between State officials and employees and the State of Georgia, have not been violated and will not be violated in any respect throughout the term.
29.4	In addition, it shall be the responsibility of the Contractor to maintain independence and to establish necessary policies and procedures to assist the Contractor in determining if the actual Contractors performing work under this Contract have any impairments to their independence. To that end, the Contractor shall submit a written plan to DCH within five (5) Business Days of Contract Award in which it outlines its Impartiality and Independence Policies and Procedures relating to how it monitors and enforces Contractor and Subcontractor impartiality and independence. The Contractor further agrees to take all necessary actions to eliminate threats to impartiality and independence, including but not limited to reassigning, removing, or terminating Contractors or Subcontractors.

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30.0	NOTICE
30.1	All notices under this Contract shall be deemed duly given upon delivery, if delivered by hand, or three (3) Calendar Days after posting, if sent by registered or certified mail, return receipt requested, to a party hereto at the addresses set forth below or to such other address as a party may designate by notice pursuant hereto.

For DCH:

Contract Administration:

CMO Name and Address
(404) XXX-XXXX – Phone
(404) XXX-XXXX – Fax
E-mail address: XXXX

Project Leader:

Name
Georgia Department of Community Health
2 Peachtree Street, NW – 36^th Floor
Atlanta, GA 30303-3159
(404) XXX-XXXX – Phone
(404) XXX-XXXX – Fax
E-mail address: XXXX

30.2	It shall be the responsibility of the Contractor to inform the Contract Administrator of any change in address in writing no later than five (5) Business Days after the change.
31.0	MISCELLANEOUS
31.1	CHOICE OF LAW OR VENUE
31.1.1	This Contract shall be governed in all respects by the laws of the State of Georgia. Any lawsuit or other action brought against DCH, the State based upon, or arising from this Contract shall be brought in a court or other forum of competent jurisdiction in Fulton County in the State of Georgia.
31.2	ATTORNEY’S FEES
31.2.1	In the event that either party deems it necessary to take legal action to enforce any provision of this Contract, and in the event DCH prevails, the Contractor agrees to

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	pay all expenses of such action including reasonable attorney’s fees and costs at all stages of litigation as awarded by the court, a lawful tribunal, hearing officer or administrative law judge. If the Contractor prevails in any such action, the court or hearing officer, at its discretion, may award costs and reasonable attorney’s fees to the Contractor. The term legal action shall be deemed to include administrative proceedings of all kinds, as well as all actions at law or equity.
31.3	SURVIVABILITY
31.3.1	The terms, provisions, representations and warranties contained in this Contract shall survive the delivery or provision of all services or Deliverables hereunder.
31.4	DRUG-FREE WORKPLACE
31.4.1	The Contractor shall certify to DCH that a drug-free workplace shall be provided for the Contractor’s employees during the performance of this Contract as required by the “Drug-Free Workplace Act”, O.C.G.A. § 50-24-1, et seq. and applicable federal law. The Contractor will secure from any Subcontractor hired to work in a drug-free workplace such similar certification. Any false certification by the Contractor or violation of such certification, or failure to carry out the requirements set forth in the code, may result in the Contractor being suspended, terminated or debarred from the performance of this Contract.
31.5	CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT AND OTHER MATTERS
31.5.1	The Contractor certifies that it is not presently debarred, suspended, proposed for debarment or declared ineligible for award of contracts by any federal or State agency.
31.6	WAIVER
31.6.1	The waiver by DCH of any breach of any provision contained in this Contract shall not be deemed to be a waiver of such provision on any subsequent breach of the same or any other provision contained in this Contract and shall not establish a course of performance between the parties contradictory to the terms hereof.
31.7	FORCE MAJEURE
31.7.1	Neither party to this Contract shall be responsible for delays or failures in performance resulting from acts beyond the control of such party. Such acts shall include, but not be limited to, acts of God, strikes, riots, lockouts, acts of war, epidemics, fire, earthquakes, or other disasters.
31.8	BINDING

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31.8.1	This Contract and all of its terms, conditions, requirements, and amendments shall be binding on DCH, the Contractor, and their respective successors and permitted assigns.
31.9	TIME IS OF THE ESSENCE
31.9.1	Time is of the essence in this Contract. Any reference to “Days” shall be deemed Calendar Days unless otherwise specifically stated.
31.10	AUTHORITY
31.10.1	DCH has full power and authority to enter into this Contract, and the person acting on behalf of and signing for the Contractor has full authority to enter into this Contract, and the person signing on behalf of the Contractor has been properly authorized and empowered to enter into this Contract on behalf of the Contractor and to bind the Contractor to the terms of this Contract. Each party further acknowledges that it has had the opportunity to consult with and/or retain legal counsel of its choice, read this Contract, understands this Contract, and agrees to be bound by it.
31.11	ETHICS IN PUBLIC CONTRACTING
31.11.1	The Contractor understands, states, and certifies that it made its proposal to the RFP without collusion or fraud and that it did not offer or receive any kickbacks or other inducements from any other Contractor, supplier, manufacturer, or Subcontractor in connection with its proposal to the RFP.
31.12	CONTRACT LANGUAGE INTERPRETATION
31.12.1	The Contractor and DCH agree that in the event of a disagreement regarding, arising out of, or related to, Contract language interpretation, DCH’s interpretation of the Contract language in dispute shall control and govern. DCH’s interpretation of the Contract language in dispute shall not be subject to Appeal under any circumstance.
31.13	ASSESSMENT OF FEES
31.13.1	The Contractor and DCH agree that DCH may elect to deduct any assessed fees from payments due or owing to the Contractor or direct the Contractor to make payment directly to DCH for any and all assessed fees. The choice is solely and strictly DCH’s choice.
31.14	COOPERATION WITH OTHER CONTRACTORS
31.14.1	In the event that DCH has entered into, or enters into, agreements with other contractors for additional work related to the services rendered hereunder, the Contractor agrees to cooperate fully with such other contractors. The Contractor shall

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	not commit any act that will interfere with the performance of work by any other contractor.
31.14.2	Additionally, if DCH eventually awards this Contract to another contractor, the Contractor agrees that it will not engage in any behavior or inaction that prevents or hinders the work related to the services contracted for in this Contract. In fact, the Contractor agrees to submit a written turnover plan and/or transition plan to DCH within thirty (30) Days of receiving the Department’s intent to terminate letter. The Parties agree that the Contractor has not successfully met this obligation until the Department accepts its turnover plan and/or transition plan.
31.14.3	The Contractor’s failure to cooperate and comply with this provision, shall be sufficient grounds for DCH to halt all payments due or owing to the Contractor until it becomes compliant with this or any other contract provision. DCH’s determination on the matter shall be conclusive and not subject to Appeal.
31.15	SECTION TITLES NOT CONTROLLING
31.15.1	The Section titles used in this Contract are for reference purposes only and shall not be deemed a part of this Contract.
31.16	LIMITATION OF LIABILITY/EXCEPTIONS
31.16.1	Nothing in this Contract shall limit the Contractor’s indemnification liability or civil liability arising from, based on, or related to claims brought by DCH or any third party or any claims brought against DCH or the State by a third party or the Contractor.
31.17	COOPERATION WITH AUDITS
31.17.1	The Contractor agrees to assist and cooperate with the Department in any and all matters and activities related to or arising out of any audit or review, whether federal, private, or internal in nature, at no cost to the Department.
31.17.2	The parties also agree that the Contractor shall be solely responsible for any costs it incurs for any audit related inquiries or matters. Moreover, the Contractor may not charge or collect any fees or compensation from DCH for any matter, activity, or inquiry related to, arising out of, or based on an audit or review.
31.18	HOMELAND SECURITY CONSIDERATIONS
31.18.1	The Contractor shall perform the services to be provided under this Contract entirely within the boundaries of the United States. In addition, the Contractor will not hire any individual to perform any services under this Contract if that individual is required to have a work visa approved by the U.S. Department of Homeland Security and such individual has not met this requirement.

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31.18.2	If the Contractor performs services, or uses services, in violation of the foregoing paragraph, the Contractor shall be in material breach of this Contract and shall be liable to the Department for any costs, fees, damages, claims, or expenses it may incur. Additionally, the Contractor shall be required to hold harmless and indemnify DCH pursuant to the indemnification provisions of this Contract.
31.18.3	The prohibitions in this Section shall also apply to any and all agents and Subcontractors used by the Contractor to perform any services under this Contract.
31.19	PROHIBITED AFFILIATIONS WITH INDIVIDUALS DEBARRED AND SUSPENDED
31.19.1	The Contractor shall not knowingly have a relationship with an individual, or an affiliate of an individual, who is debarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in non-procurement activities under regulations issued under Executive Order No. 12549 or under guidelines implementing Executive Order No. 12549. For the purposes of this Section, a “relationship” is described as follows:

31.19.1.1	A director, officer or partner of the Contractor;
31.19.1.2	A person with beneficial ownership of five percent (5%) or more of the Contractor entity; and
31.19.1.3	A person with an employment, consulting or other arrangement with the Contractor’s obligations under its Contract with the State.

31.20	OWNERSHIP AND FINANCIAL DISCLOSURE
31.20.1	The Contractor shall disclose financial statements for each person or corporation with an ownership or control interest of five percent (5%) or more in the Contractor’s entity for the prior twelve (12) month period. For the purposes of this Section, a person or corporation with an ownership or control interest shall mean a person or corporation:

31.20.1.1	That owns directly or indirectly five percent (5%) or more of the Contractor’s capital or stock or received five percent (5%) or more of its profits;
31.20.1.2	That has an interest in any mortgage, deed of trust, note, or other obligation secured in whole or in part by the Contractor or by its property or assets, and that interest is equal to or exceeds five percent (5%) of the total property and assets of the Contractor; and

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31.20.1.3 That is an officer or director of the Contractor (if it is organized as a corporation) or is a partner in the Contractor’s organization (if it is organized as a partnership).

32.0	AMENDMENT IN WRITING
32.1	No amendment, waiver, termination or discharge of this Contract, or any of the terms or provisions hereof, shall be binding upon either party unless confirmed in writing. None of the Solicitation Documents may be modified or amended, except by writing executed by both parties. Additionally, CMS approval may be required before any such amendment is effective. DCH will determine, in its sole discretion, when such CMS approval is required. Any agreement of the parties to amend, modify, eliminate or otherwise change any part of this Contract shall not affect any other part of this Contract, and the remainder of this Contract shall continue to be of full force and effect as set out herein.
33.0	CONTRACT ASSIGNMENT
33.1	Contractor shall not assign this Contract, in whole or in part, without the prior written consent of DCH, and any attempted assignment not in accordance herewith shall be null and void and of no force or effect.
34.0	SEVERABILITY
34.1	Any section, subsection, paragraph, term, condition, provision, or other part of this Contract that is judged, held, found or declared to be voidable, void, invalid, illegal or otherwise not fully enforceable shall not affect any other part of this Contract, and the remainder of this Contract shall continue to be of full force and effect as set out herein.
35.0	COMPLIANCE WITH AUDITING AND REPORTING REQUIREMENTS FOR NONPROFIT ORGANIZATIONS (O.C.G.A. § 50-20-1 ET SEQ.)
35.1	The Contractor agrees to comply at all times with the provisions of the Federal Single Audit Act (hereinafter called the Act) as amended from time to time, all applicable implementing regulations, including but not limited to any disclosure requirements imposed upon non-profit organizations by the Georgia Department of Audits as a result of the Act, and to make complete restitution to DCH of any payments found to be improper under the provisions of the Act by the Georgia Department of Audits, the Georgia Attorney General’s Office or any of their respective employees, agents, or assigns.

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36.0

ENTIRE AGREEMENT

36.1

This Contract constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations or contracts. No written or oral agreements, representatives, statements, negotiations, understandings, or discussions that are not set out, referenced, or specifically incorporated in this Contract shall in any way be binding or of effect between the parties.

(Signatures on following page)

SIGNATURE PAGE

     IN WITNESS WHEREOF, the parties state and affirm that, they are duly authorized to bind the respected entities designated below as of the day and year indicated.

GEORGIA DEPARTMENT OF COMMUNITY HEALTH

/S/ Rhonda Medows MD	8/20/08
XXX, Commissioner	Date
DOAS STATE PURCHASING REPRESENTATIVE
Anne Maize	Date
AMERIGROUP Georgia Care Management Company, Inc
CONTRACTOR NAME

BY: /S/ Melvin Lindsey   Signature 5/29/08   Date

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/S/ Melvin Lindsey
Print/Type Name
CEO
TITLE	AFFIX CORPORATE SEAL HERE
	(Corporations without a seal, attach a
	Certificate of Corporate Resolution)

ATTEST:	/S/ Stanley F. Baldwin **SIGNATURE
	Corporate Secretary TITLE

*	Must be President, Vice President, CEO or other authorized officer
**	Must be Corporate Secretary

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ATTACHMENT A

DRUG FREE WORKPLACE CERTIFICATE

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
CERTIFICATION REGARDING DRUG-FREE WORKPLACE REQUIREMENTS
GRANTEES OTHER THAN INDIVIDUALS

By signing and/or submitting this application or grant agreement, the grantee is providing the certification set out below.

This certification is required by regulations implementing the Drug-Free Workplace Act of 1988, 45 CFR Part 76, Subpart F. The regulations, published in the January 31, 1989 Federal Register, require certification by grantees that they will maintain a drug-free workplace. The certification set out below is a material representation of fact upon which reliance will be placed when HHS makes a determination regarding the award of the grant. False certification or violation of the certification shall be grounds for suspension of payments, suspension or termination of grants, or government-wide suspension or debarment.

The grantee certifies that it will provide a drug-free workplace by:

1.	Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the grantee’s workplace and specifying the actions that will be taken against employees for violation of such prohibition;
2.	Establishing a drug-free awareness program to inform employees about:

a)	The dangers of drug abuse in the workplace;
b)	The grantee’s policy of maintaining a drug-free workplace;
c)	Any available drug counseling, rehabilitation, and employee assistance programs; and
d)	The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace;

3.	Making it a requirement that each employee who will be engaged in the performance of the grant be given a copy of the statement required by paragraph 1;
4.	Notifying the employee in the statement required by paragraph 1 that, as a Condition of employment under the grant, the employee will:

a)	Abide by the terms of the statement; and
b)	Notify the employer of any criminal drug statute conviction for a violation occurring in the workplace no later than five Days after such conviction;

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5.	Notifying the agency within ten Days after receiving notice under subparagraph 4. b) from an employee or otherwise receiving actual notice of such conviction;
6.	Taking one of the following actions, within 30 Days of receiving notice under subparagraph 4. b), with respect to any employee who is so convicted;

a)	Taking appropriate personnel action against such an employee, up to and including termination; or
b)	Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a federal, State, or local health, law enforcement, or other appropriate agency;

7. Making a good faith effort to continue to maintain a drug-free workplace through implementation of paragraphs 1, 2, 3, 4, 5, and 6.

Contractor
Signature	Date

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ATTACHMENT B

CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED
DEBARMENT, AND OTHER RESPONSIBILITY MATTERS

     Federal Acquisition Regulation 52.209-5, Certification Regarding Debarment, Suspension, Proposed Debarment, and Other Responsibility Matters (March 1996)

(a) (1) The Contractor certifies, to the best of its knowledge and belief, that—

(i) The Contractor and/or any of its Principals—

A.	Are o are not o presently debarred, suspended, proposed for debarment, or declared ineligible for award of Contracts by any Federal agency;
B.	Have o have not o within a three-year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of Fraud or criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, State, or local) Contract or subcontract; violation of federal or State antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, evasion, or receiving stolen property; and
C.	Are o are not o presently indicted for, or otherwise criminally or civilly charged by a governmental entity with commission of any of the offenses enumerated in subdivision (a) (1) (i) (B) of this provision.

(ii)	The Contractor has o has not o within a three-year period preceding this offer, had one or more Contracts terminated for default by any federal agency.
(2)	“Principals,” for purposes of this certification, means officers, directors, owners, partners, and, persons having primary management or supervisory responsibilities within a business entity (e.g., general manager, plant manager, head of a subsidiary, division, or business segment; and similar positions).

This certification concerns a matter within the jurisdiction of an Agency of the United States and the making of a false, fictitious, or Fraudulent certification may render the maker subject to prosecution under 18 U.S.C. § 1001.

(b) The Contractor shall provide immediate written notice to the Contracting Officer if, at any time prior to Contract Award, the Contractor learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.

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(c)	A certification that if any of the items in paragraph (a) of this provision exist will not necessarily result in Withholding of an award under this solicitation. However, the certification will be considered in connection with a determination of the Contractor’s responsibility. Failure of the Contractor to furnish a certification or provide such additional information as requested by the Contracting Officer may render the Contractor non-responsible.
(d)	Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the certification required by paragraph (a) of this provision. The knowledge and information of a Contractor is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.
(e)	The certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making award. If it is later determined that the Contractor knowingly rendered an erroneous certification, in addition to other remedies available to the Government, the Contracting Officer may terminate the Contract resulting from this solicitation for default.

Contractor:
By:
	Signature	Date
	Name and Title

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ATTACHMENT C

GEORGIA DEPARTMENT OF COMMUNITY HEALTH
NONPROFIT ORGANIZATION DISCLOSURE FORM

Notice to all DCH Contractors: Pursuant to Georgia law, nonprofit organizations that receive funds from a State organization must comply with audit requirements as specified in O.C.G.A. § 50-20-1 et seq. (hereinafter “the Act”) to ensure appropriate use of public funds. “Nonprofit Organization” means any corporation, trust, association, cooperative, or other organization that is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest; is not organized primarily for profit; and uses its net proceeds to maintain, improve or expand its operations. The term nonprofit organization includes nonprofit institutions of higher education and hospitals. For financial reporting purposes, guidelines issued by the American Institute of Certified Public Accountants should be followed in determining nonprofit status.

The Department of Community Health (DCH) must report Contracts with nonprofit organizations to the Department of Audits and must ensure compliance with the other requirements of the Act. Prior to execution of any Contract, the potential Contractor shall complete this form disclosing its corporate status to DCH. This form must be returned, along with proof of corporate status, to: Name, Director, Contract and Procurement Administration, Georgia Department of Community Health, 35^th Floor, 2 Peachtree Street, N.W., Atlanta, Georgia 30303-3159.

Acceptable proof of corporate status includes, but is not limited to, the following documentation:

• Financial statements for the previous year;

• Employee list;

• Employee salaries;

• Employees’ reimbursable expenses; and

• Corrective action plans.

Entities that meet the definition of nonprofit organization provided above and are subject the requirements of the Act will be contacted by DCH for further information.

COMPANY NAME:

ADDRESS:

PHONE:	FAX:
CORPORATE STATUS: (check one)	For Profit	Non-Profit

I, the undersigned duly Authorized Representative of                                                                  do hereby attest that the above information is true and correct to the best of my knowledge.

  Signature   Date

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ATTACHMENT D

STATE OF GEORGIA
THE GEORGIA DEPARTMENT OF COMMUNITY HEALTH
2 PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30303-3159

CONFIDENTIALITY STATEMENT
FOR SAFEGUARDING INFORMATION

I, the undersigned, understand, and by my signature agree to comply with Federal and State requirements (References: 42 CFR 431.300 – 431.306. Chapter 350-5 of Rules of Georgia Department of Community Health) regarding the safeguarding of Medicaid information in my possession, including but not limited to information which is electronically obtained from the Medicaid Management Information System (MMIS) while performing Contractual services with the Department of Community Health, its Agents or Contractors.

Individual’s Name: (typed or printed):                                                                                   

Signature:                                                               Date:                                                              

Telephone No.:                                                              

Company or Agency Name and Address:

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ATTACHMENT E

BUSINESS ASSOCIATE AGREEMENT

     This Business Associate Agreement (hereinafter referred to as “Agreement”), effective this                      day of                     ,                     is made and entered into by and between the Georgia Department of Community Health (hereinafter referred to as “DCH”) and                                                               (hereinafter referred to as “Contractor”) as Amendment No.                                          to Contract No.                                          between DCH and Contractor dated                                          (“Contract”).

     WHEREAS, DCH is required by the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 (“HIPAA”), to enter into a Business Associate Agreement with certain entities that provide functions, activities, or services involving the use of Protected Health Information (“PHI”);

     WHEREAS, Contractor, under Contract No.                                           (hereinafter referred to as “Contract”), may provide functions, activities, or services involving the use of PHI;

     NOW, THEREFORE, for and in consideration of the mutual promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, DCH and Contractor (each individually a “Party” and collectively the “Parties”) hereby agree as follows:

1.	Terms used, but not otherwise defined, in this Agreement shall have the same meaning as those terms in the Privacy Rule, published as the Standards for Privacy of Individually Identifiable Health Information in 45 CFR Parts 160 and 164 (“Privacy Rule”):
2.	Except as limited in this Agreement, Contractor may use or disclose PHI only to extent necessary to meet its responsibilities as set forth in the Contract provided that such use or disclosure would not violate the Privacy Rule if done by DCH.
3.	Unless otherwise required by Law, Contractor agrees:

A.	That it will not request, create, receive, use or disclose PHI other than as permitted or required by this Agreement or as required by law.
B.	To establish, maintain and use appropriate safeguards to prevent use or disclosure of the PHI other than as provided for by this Agreement.

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C.	To mitigate, to the extent practicable, any harmful effect that is known to Contractor of a use or disclosure of PHI by Contractor in violation of the requirements of this Agreement.
D.	That its Agents or Subcontractors are subject to the same obligations that apply to Contractor under this Agreement and Contractor agrees to ensure that its Agents or Subcontractors comply with the Conditions, restrictions, prohibitions and other limitations regarding the request for, creation, receipt, use or disclosure of PHI, that are applicable to Contractor under this Agreement.
E.	To report to DCH any use or disclosure of PHI that is not provided for by this Agreement of which it becomes aware. Contractor agrees to make such report to DCH in writing in such form as DCH may require within twenty-four (24) hours after Contractor becomes aware.
F.	To make any amendment(s) to PHI in a Designated Record Set that DCH directs or agrees to pursuant to 45 CFR 164.526 at the request of DCH or an Individual, within five (5) Business Days after request of DCH or of the Individual. Contractor also agrees to provide DCH with written confirmation of the amendment in such format and within such time as DCH may require.
G.	To provide access to PHI in a Designated Record Set, to DCH upon request, within five (5) Business Days after such request, or, as directed by DCH, to an Individual. Contractor also agrees to provide DCH with written confirmation that access has been granted in such format and within such time as DCH may require.
H.	To give DCH, the Secretary of the U.S. Department of Health and Human Services (the “Secretary”) or their designees access to Contractor’s books and records and policies, practices or procedures relating to the use and disclosure of PHI for or on behalf of DCH within five (5) Business Days after DCH, the Secretary or their designees request such access or otherwise as DCH, the Secretary or their designees may require. Contractor also agrees to make such information available for review, inspection and copying by DCH, the Secretary or their designees during normal business hours at the location or locations where such information is maintained or to otherwise provide such information to DCH, the Secretary or their designees in such form, format or manner as DCH, the Secretary or their designees may require.
I.	To document all disclosures of PHI and information related to such disclosures as would be required for DCH to respond to a request by an Individual or by the Secretary for an accounting of disclosures of PHI in accordance with the requirements of the Privacy Rule.
J.	To provide to DCH or to an Individual, information collected in accordance with Section 3. I. of this Agreement, above, to permit DCH to respond to a request by an Individual for an accounting of disclosures of PHI as provided in the Privacy Rule.

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4.	Unless otherwise required by Law, DCH agrees:
	That it will notify Contractor of any new limitation in DCH’s Notice of Privacy Practices in accordance with the provisions of the Privacy Rule if, and to the extent that, DCH determines in the exercise of its sole discretion that such limitation will affect Contractor’s use or disclosure of PHI.
	That it will notify Contractor of any change in, or revocation of, permission by an Individual for DCH to use or disclose PHI to the extent that DCH determines in the exercise of its sole discretion that such change or revocation will affect Contractor’s use or disclosure of PHI.
	That it will notify Contractor of any restriction regarding its use or disclosure of PHI that DCH has agreed to in accordance with the Privacy Rule if, and to the extent that, DCH determines in the exercise of its sole discretion that such restriction will affect Contractor’s use or disclosure of PHI.
5.	The Term of this Agreement shall be effective as of                                          , and shall terminate when all of the PHI provided by DCH to Contractor, or created or received by Contractor on behalf of DCH, is destroyed or returned to DCH, or, if it is infeasible to return or destroy PHI, protections are extended to such information, in accordance with the termination provisions in this Section.

A. Termination for Cause. Upon DCH’s knowledge of a material breach by Contractor, DCH will either:

(1)	Provide an opportunity for Contractor to cure the breach or end the violation, and terminate this Agreement if Contractor does not cure the breach or end the violation within the time specified by DCH;
(2)	Immediately terminate this Agreement if Contractor has breached a material term of this Agreement and cure is not possible; or
(3)	If neither termination nor cure is feasible, DCH will report the violation to the Secretary.

B.

Effect of Termination.

Except as provided in paragraph (A.) (2) of this Section, upon termination of this Agreement, for any reason, Contractor shall return or destroy all PHI received from DCH, or created or received by Contractor on behalf of DCH. This provision shall apply to PHI that is in the possession of Subcontractors or Agents of Contractor. Neither Contractor nor its Agents nor Subcontractors shall retain copies of the PHI.

(1) In the event that Contractor determines that returning or destroying the PHI is not feasible, Contractor shall send DCH detailed written notice of the specific

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reasons why it believes such return or destruction not feasible and the factual basis for such determination, including the existence of any Conditions or circumstances, which make such return or disclosure infeasible. If DCH determines, in the exercise of its sole discretion, that the return or destruction of such PHI is not feasible, Contractor agrees that it will limit its further use or disclosure of PHI only to those purposes DCH may, in the exercise of its sole discretion, deem to be in the public interest or necessary for the protection of such PHI, and will take such additional action as DCH may require for the protection of patient privacy or the safeguarding, security and protection of such PHI.

(2)	If neither termination nor cure is feasible, DCH will report the violation to the Secretary.
(3)	Section 5. B. of this Agreement, regarding the effect of termination or expiration, shall survive the termination of this Agreement.

C.	Conflicting Termination Provisions.
	In the event of conflicting termination provisions or requirements, with respect to PHI, the termination provisions of Section 5 in this Business Associate Agreement shall control, supercede, and control those in the underlying Contract.

6.

Interpretation. Any ambiguity in this Agreement shall be resolved to permit DCH to comply with applicable Medicaid laws, rules and regulations, and the Privacy Rule, and any rules, regulations, requirements, rulings, interpretations, procedures or other actions related thereto that are promulgated, issued or taken by or on behalf of the Secretary; provided that applicable Medicaid laws, rules and regulations and the laws of the State of Georgia shall supercede the Privacy Rule if, and to the extent that, they impose additional requirements, have requirements that are more stringent than or have been interpreted to provide greater protection of patient privacy or the security or safeguarding of PHI than those of HIPAA and its Privacy Rule.

7.

All other terms and Conditions contained in the Contract and any amendment thereto, not amended by this Amendment, shall remain in full force and effect.

Signatures on following page

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SIGNATURE PAGE

Individual’s Name: (typed or printed):                                                              

*Signature:                                                               Date:                                                              

Title:                                             &n bsp;                                                         

Telephone No.:	Fax No.
Company or Agency Name and Address:

*	Must be President, Vice President, CEO or other authorized officer
**	Must be Corporate Secretary

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ATTACHMENT F

VENDOR LOBBYLIST DISCLOSURE AND REGISTRATION
CERTIFICATION FORM

Pursuant to Executive Order Number 10.01.03.01 (the “Order”), which was signed by Governor Sonny Perdue on October 1, 2003, Contractors with the State are required to complete this form. The Order requires “Vendor Lobbyists,” defined as those who lobby State officials on behalf of businesses that seek a Contract to sell goods or services to the State or those who oppose such a Contract, to certify that they have registered with the State Ethics Commission and filed the disclosures required by Article 4 of Chapter 5 of Title 21 of the Official Code of Georgia Annotated. Consequently, every vendor desiring to enter into a Contract with the State must complete this certification form. False, incomplete, or untimely registration, disclosure, or certification shall be grounds for termination of the award and Contract and may cause recoupment or refund actions against Contractor.

In order to be in compliance with Executive Order Number 10.01.03.01, please complete this Certification Form by designating only one of the following:

o	Contractor does not have any lobbyist employed, retained, or affiliated with the Contractor who is seeking or opposing Contracts for it or its clients. Consequently, Contractor has not registered anyone with the State Ethics Commission as required by Executive Order Number 10.01.03.01 and any of its related rules, regulations, policies, or laws.
o	Contractor does have lobbyist(s) employed, retained, or affiliated with the Contractor who are seeking or opposing Contracts for it or its clients. The lobbyists are:
	Contractor states, represents, warrants, and certifies that it has registered the above named lobbyists with the State Ethics Commission as required by Executive Order Number 10.01.03.01 and any of its related rules, regulations, policies, or laws.

Signatures on the following page

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SIGNATURE PAGE

Contractor Date
Signature	Title of Signatory

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ATTACHMENT G

PAYMENT BOND AND
IRREVOCABLE LETTER OF CREDIT

Signatures on the following page

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SIGNATURE PAGE

     Signed and sealed this      day of                                          in the presence of:

Seal
	Witness	Contractor
	Title
Seal
	Witness	Surety

          By:                                                              

          Title                                                              

          COUNTERSIGNED

           By:                                                                                    

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ATTACHMENT H

CAPITATION PAYMENT

On the Following Page

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ATTACHMENT I

NOTICE OF YOUR RIGHT TO A HEARING

You have the right to a hearing regarding this decision. To have a hearing, you must ask for one in writing. Your request for a hearing, along with a copy of the adverse action letter, must be received within thirty (30) days of the date of the letter. Please mail your request for a hearing to:

[NAME, ADDRESS, FAX NUMBER FOR MANAGED CARE ORGANIZATION:]

     The Office of State Administrative Hearings will notify you of the time, place and date of your hearing. An Administrative Law Judge will hold the hearing. In the hearing, you may speak for yourself or let a friend or family member to speak for you. You also may ask a lawyer to represent you. You may be able to obtain legal help at no cost. If you desire an attorney to help you, you may call one of the following telephone numbers:

Georgia Legal Services Program	Georgia Advocacy Office
1-800-498-9469	1-800-537-2329
(Statewide legal services, EXCEPT	(Statewide advocacy for persons
for the counties served by Atlanta	with disabilities or mental
illness)
Legal Aid)

Atlanta Legal Aid
404-377-0701 (Dekalb/Gwinnett Counties)
770-528-2565 (Cobb County)
404-524-5811 (Fulton County)
404-669-0233 (South. Fulton/Clayton County)
678-376-4545 (Gwinnett County)

You may also ask for free mediation services after you have filed a Request for Hearing by calling (404) 657-2800. Mediation is another way to solve problems before going to a hearing.

If the problem cannot be solved during mediation, you still have the right to a hearing.

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ATTACHMENT J

MAP OF SERVICE REGIONS/LIST OF COUNTIES BY SERVICE REGIONS

Atlanta	Central	East	North	SE	SW
Barrow	Baldwin	Burke	Banks	Appling	Atkinson
Bartow	Bibb	Columbia	Catoosa	Bacon	Baker
Butts	Bleckley	Emanuel	Chattooga	Brantley	Ben Hill
Carroll	Chattahoochee	Glascock	Clarke	Bryan	Berrien
Cherokee	Crawford	Greene	Dade	Bulloch	Brooks
Clayton	Crisp	Hancock	Dawson	Camden	Calhoun
Cobb	Dodge	Jefferson	Elbert	Candler	Clay
Coweta	Dooly	Jenkins	Fannin	Charlton	Clinch
DeKalb	Harris	Lincoln	Floyd	Chatham	Coffee
Douglas	Heard	McDuffie	Franklin	Effingham	Colquitt
Fayette	Houston	Putnam	Gilmer	Evans	Cook
Forsyth	Jones	Richmond	Gordon	Glynn	Decatur
Fulton	Lamar	Screven	Habersham	Jeff Davis	Dougherty
Gwinnett	Laurens	Taliaferro	Hall	Liberty	Early
Haralson	Macon	Warren	Hart	Long	Echols
Henry	Marion	Washington	Jackson	McIntosh	Grady
Jasper	Meriwether	Wilkes	Lumpkin	Montgomery	Irwin
Newton	Monroe		Madison	Pierce	Lanier
Paulding	Muscogee		Morgan	Tattnall	Lee
Pickens	Peach		Murray	Toombs	Lowndes
Rockdale	Pike		Oconee	Ware	Miller
Spalding	Pulaski		Oglethorpe	Wayne	Mitchell
Walton	Talbot		Polk		Quitman
	Taylor		Rabun		Randolph
	Telfair		Stephens		Seminole
	Treutlen		Towns		Schley
	Troup		Union		Stewart
	Twiggs		Walker		Sumter
	Upson		White		Terrell
	Wheeler		Whitfield		Thomas
	Wilcox				Tift
	Wilkinson				Turner
	Johnson				Webster
					Worth

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ATTACHMENT K

APPLICABLE CO-PAYMENTS

Children under age twenty-one (21), pregnant women, nursing facility residents and Hospice care Members are exempted from co-payments.

There are no co-payments for family planning services and for emergency services except as defined below.

Services can not be denied to anyone based on the inability to pay these co-payments.

Service	Additional Exceptions	Co-Pay Amount
Ambulatory Surgical Centers		A $3 co-payment to be deducted from the surgical procedure code billed. In the case of multiple surgical procedures, only one $3 amount will be deducted per date of service.
FQHC/RHCs		A $2 co-payment on all FQHC and RHC.
Outpatient		A $3 member co-payment is required on all non-emergency outpatient hospital visits
Inpatient	Members who are admitted from an emergency department or following the receipt of urgent care or are transferred from a different hospital, from a skilled nursing facility, or from another health facility are exempted from the inpatient co-payment.	A co-payment of $12.50 will be imposed on hospital inpatient services
Emergency Department		A $6 co-payment will be imposed if the Condition is not an Emergency Medical Condition
Oral Maxiofacial Surgery		A $2 Member co-payment will be imposed on all evaluation and management procedure codes (99201 – 99499) billed by oral surgeons.
Prescription Drugs		Drug Cost:	Co-pay Amount
		<$10.01	$ .50
		$10.01 — $25.00	$1.00
		$25.01 — $50.00	$2.00
		>$50.01	$3.00

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ATTACHMENT L

INFORMATION MANAGEMENT AND SYSTEMS

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EX-10.5

Exhibit 10.5

AMENDMENT #4 TO CONTRACT NO. 0652 BETWEEN
GEORGIA DEPARTMENT OF COMMUNITY HEALTH AND
AMERIGROUP GEORGIA MANAGED CARE COMPANY, INC.

     This Amendment is between the Georgia Department of Community Health (hereinafter referred to as “DCH” or the “Department”) and Amerigroup Georgia Managed Care Company, Inc. (hereinafter referred to as “Contractor”) and is made effective this 26^th day of August, 2008 (hereinafter referred to as the “Effective Date”). Other than the chands, modifications and additions specifically articulated in this Amendment #3 to Contract # 0652, RFP#41900-001-0000000027, the original Contract shall remain in effect and binding on and against DCH and Contractor. Unless expressly modified or added in this Amendment #4, the terms and conditions of the original Contract are expressly incorporated into this Amendment #4 as if completely restated herein.

     WHEREAS, DCH and Contractor executed a contract for the provision of services to Georgia Healthy Families; and,

     WHEREAS, pursuant to Section 32.0, Amendments in Writing, DCH and Contractor desire to amend the above-referenced Contract as set forth below.

     NOW THEREFORE, for and in consideration of the mutual promisesof the Parties, the terms, provisions and conditions of this Amendment and other good and valuable consideration, the sufficiency of which is hereby acknowledged, DCH and Contractor hereby agree as follows:

I. To delete the current Section 26.0 PAYMENT BOND & IRREVOCABLE LETTER OF CREDIT in its entirety and replace with the following:

26.0 PAYMENT BOND & IRREVOCABLE LETTER OF CREDIT

Section 26.1 Within five (5) Business Days of Contract Execution, Contractor shall obtain and maintain in force and effect an irrevocable letter of credit in the amount representing one half of one month’s total Net Capitation Payment associated with the actual GCS lives enrolled in Contractor’s plan. On or before July 2 each following year, Contractor shall modify the amount of the irrevocable letter of credit currently in force and effect to equal one-half of the average of the Net Capitation Payments paid to the Contractor for the months of January, February and March. If at any time during the year, the actual GCS lives enrolled in Contractor’s plan increases or decreases by more than twenty-five percent, DCH, at it sole discretion, may increase or decrease the amount required for the irrevocable letter of credit.

Notwithstanding the above, in the event that the amount of the irrevocable letter of credit required hereunder would exceed

Page 1 of 4

$17,365,640.00, Contractor shall have the option, in its discretion, to obtain a surety bond in lieu of the irrevocable letter of credit for any amounts in excess of $17,365,640.00, and such surety bond, together with an irrevocable letter of credit in the amount of $17,365,640.00, shall satisfy Contractor’s obligations under this Section 26.1.

With regard to the irrevocable letter of credit, DCH may recoup payments from the Contractor for liabilities or obligations arising from any act, event, omission or condition which occurred or existed subsequent to the effective date of the Contract and which is identified in a survey, review, or audit conducted or assigned by DCH.

Section 26.2 DCH may also, at its discretion, redeem Contractor’s irrevocable letter of credit in the amount(s) of actual damages suffered by DCH if DCH determines that the Contractor is (1) unable to perform any of the terms and conditions of the Contract or if (2) the Contractor is terminated by default or bankruptcy or material breach that is not cured within the time specified by DCH, or under both conditions described at one (1) and two (2).

Section 26.3 During the Contract period, Contractor shall obtain and maintain a payment bond from an entity licensed to do business in the State of Georgia and acceptable to DCH with sufficient financial strength and creditworthiness to assume the payment obligations of Contractor in the event of a default in payment arising from bankruptcy, insolvency, or other cause. Said bond shall be delivered to DCH within five (5) Business Days of Contract Execution and shall be in the amount of Five Million Dollars ($5,000,000.00). On or before July 2, of each following year, Contractor shall modify the amount of the bond to equal the average of the Net Capitation Payments paid to the Contractor for the months of January, February and March.

If at any time during the year, the actual GCS lives enrolled in Contractor’s plan increases or decreases by more than twenty-five percent, DCH, at its sole discretion, may increase or decrease the amount required for the bond.

II. DCH and Contractor agree that they have assumed an obligation to perform the covenants, agreements, duties and obligations of the Contract, as modified and amended herein, and agree to abide by all the provisions, terms and conditions contained in the Contract as modified and amended.

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III.	This Amendment shall be binding and inure to the benefit of the parties hereto, their heirs, representatives, successors and assigns. Whenever the provisions of this Amendment and the Contract are in conflict, the provisions of this Amendment shall take precedence and control.
VI.	It is understood by the Parties hereto that, if any part, term, or provision of this Amendment or this entire Amendment is held to be illegal or in conflict with any law of this State, then DCH, at its sole option, may enforce the remaining unaffected portions or provisions of this Amendment or of the Contract and the rights and obligations of the parties shall be construed and enforced as if the Contract or Amendment did not contain the particular part, term or provision held to be invalid.
VII.	This Amendment shall become effective as stated herein and shall remain effective for so long as the Contract is in effect. VIII. This Amendment shall be construed in accordance with the laws of the State of Georgia.
IX.	All other terms and conditions contained in the Contract and any amendment thereto, not amended by this Amendment, shall remain in full force and effect.

- SIGNATURES ON THE FOLLOWING PAGE -

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GEORGIA DEPARTMENT OF COMMUNITY HEALTH

/s/ Dr. Rhonda M. Medows
Dr. Rhonda M. Medows, M.D.	Date 8/26/08
Commissioner

AMERIGROUP GEORGIA MANAGED CARE COMPANY, INC.

BY:	/s/ Melvin Lindsey	Date 5/29/08
	*SIGNATURE
	Please Print/Type Name Here)
		AFFIX CORPORATE SEAL HERE (Corporations without a seal, attach a Certificate of Corporate Resolution)
ATTEST:	/s/ Stanley F. Baldwin
	**SIGNATURE
	Corporate Secretary
	TITLE

*	Must be President, Vice President, CEO or Other Authorized Officer
**	Must be Corporate Secretary

Page 4 of 4

EX-10.6

Exhibit 10.6

AMENDMENT #5 TO CONTRACT NO. 0652 BETWEEN
GEORGIA DEPARTMENT OF COMMUNITY HEALTH AND
AMERIGROUP GEORGIA MANAGED CARE COMPANY, INC.

     This Amendment is between the Georgia Department of Community Health (hereinafter referred to as “DCH” or the “Department”) and Amerigroup Georgia Managed Care Company, (hereinafter referred to as “Contractor”) and is made effective this 15th day of September, 2008 (hereinafter referred to as the “Effective Date”). Other than the changes, modifications and additions specifically articulated in this Amendment #5 to Contract # 0652, RFP#41900-001-0000000027, the original Contract shall remain in effect and binding on and against DCH and Contractor. Unless expressly modified or added in this Amendment #5, the terms and conditions of the original Contract are expressly incorporated into this Amendment #5 as if completely restated herein.

     WHEREAS, DCH and Contractor executed a contract for the provision of services to members of the Georgia Families Program;

     WHEREAS, DCH pays Contractor a per member per month capitation rate for each Georgia Families member enrolled in the Contractor’s plan;

     WHEREAS, DCH has sought permission from the Centers for Medicare and Medicaid Services (hereinafter referred to as “CMS”) to revise the capitation rates payable to Contractor for State Fiscal Year 2009; and

     WHEREAS, pursuant to Section 32.0, Amendments in Writing, DCH and Contractor desire to amend the above-referenced Contract by adding additional funding as set forth below.

     NOW THEREFORE, for and in consideration of the mutual promises of the Parties, the terms, provisions and conditions of this Amendment and other good and valuable consideration, the sufficiency of which is hereby acknowledged, DCH and Contractor hereby agree as follows:

I.	Upon receiving written notice from CMS indicating that agency’s approval of the revised capitation rates, the parties shall delete the current Attachment H, Capitation Payment, in its entirety and replace it with the new Attachment H, Capitation Payment, contained at Exhibit 1 to this Amendment.
II.	DCH and Contractor agree that they have assumed an obligation to perform the covenants, agreements, duties and obligations of the Contract, as modified and amended herein, and agree to abide by all the provisions, terms and conditions contained in the Contract as modified and amended.
III.	This Amendment shall be binding and inure to the benefit of the parties hereto, their heirs, representatives, successors and assigns. Whenever the provisions of this Amendment and the Contract are in conflict, the provisions of this Amendment shall take precedence and control.

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VI.	It is understood by the Parties hereto that, if any part, term, or provision of this Amendment or this entire Amendment is held to be illegal or in conflict with any law of this State, then DCH, at its sole option, may enforce the remaining unaffected portions or provisions of this Amendment or of the Contract and the rights and obligations of the parties shall be construed and enforced as if the Contract or Amendment did not contain the particular part, term or provision held to be invalid.
VII.	This Amendment shall become effective as stated herein and shall remain effective for so long as the Contract is in effect.
VIII.	This Amendment shall be construed in accordance with the laws of the State of Georgia.
IX.	All other terms and conditions contained in the Contract and any amendment thereto, not amended by this Amendment, shall remain in full force and effect.

- SIGNATURES ON THE FOLLOWING PAGE -

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SIGNATURE PAGE

IN WITNESS WHEREOF, DCH and Contractor, through their authorized officers and agents, have caused this Amendment to be executed on their behalf as of the date indicated.

GEORGIA DEPARTMENT OF COMMUNITY HEALTH

/S/ Dr. Rhonda M. Medows, M.D.	Date
Commssioner

AMERIGROUP GEORGIA MANAGED CARE COMPANY, INC.

BY:
	Date

/S/ Dr,Tunde Sotunde, CEO
Please Print/Type Name Here
	AFFIX CORPORATE SEAL HERE (Corporations without a seal, attach a Certificate of Corporate Resolution

ATTEST: /S/ Stanley F. Baldwin

TITLE: Secretary

*	Must be President, Vice President, CEO or Other Authorized Officer
**	Must be Corporate Secretary

Page 3 of 4

EXHIBIT 1

CONFIDENTIAL — NOT FOR CIRCULATION
ATTACHMENT H

Attachment H is a table displaying the contracted rates by rate cell for each contracted region. These rates will be the basis for calculating capitation payments in each contracted Region.

(The table is displayed on the following page.)

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FY 2009 CMO Rates

Region	Aid Category	Age/Gender Group	Amerigroup
Atlanta	Medicaid (LIM/Refugee/RSM)	0 - 2 Months, Male and Female	****REDACTED***
Atlanta		3 - 11 Months, Male and Female
Atlanta		1 - 5 Years, Male and Female
Atlanta		6 -13 Years, Male and Female
Atlanta		14 - 20 Years, Female
Atlanta		14 - 20 Years, Male
Atlanta		21 - 44 Years, Female
Atlanta		21 -44 Years, Male
Atlanta		45+ Years, Female
Atlanta		45+ Years, Male
Atlanta	PeachCare	0 - 2 Months, Male and Female
Atlanta	PeachCare	3 - 11 Months, Male and Female
Atlanta	PeachCare	1 - 5 Years, Male and Female
Atlanta	PeachCare	6 - 13 Years, Male and Female
Atlanta	PeachCare	14 - 20 Years, Female
Atlanta	PeachCare	14 - 20 Years, Male
Atlanta	Breast and Cervical Cancer	All Ages
Atlanta
East		0 - 2 Months, Male and Female
East		3 - 11 Months, Male and Female
East	Medicaid (LIM/Refugee/RSM)	1 - 5 Years, Male and Female
East	Medicaid (LIM/Refugee/RSM)	6 - 13 Years, Male and Female
East	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Female
East	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Male
East	Medicaid (LIM/Refugee/RSM)	21 -44 Years, Female
East	Medicaid (LIM/Refugee/RSM)	21 -44 Years, Male
East	Medicaid (LIM/Refugee/RSM)	45+ Years, Female
East	Medicaid (LIM/Refugee/RSM)	45+ Years, Male
East	PeachCare	0 - 2 Months, Male and Female
East	PeachCare	3 - 11 Months, Male and Female
East	PeachCare	1 - 5 Years, Male and Female
East	PeachCare	6 - 13 Years, Male and Female
East	PeachCare	14 - 20 Years, Female
East	PeachCare	14 - 20 Years, Male
East	Breast and Cervical Cancer	All Ages
East	Maternity Delivery/Kick Payment
North
North	Medicaid (LIM/Refugee/RSM)	3 - 11 Months, Male and Female
North	Medicaid (LIM/Refugee/RSM)	1 - 5 Years, Male and Female 6 - 13
North	Medicaid (LIM/Refugee/RSM)	Years, Male and Female
North	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Female
North	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Male
North	Medicaid (LIM/Refugee/RSM)	21 - 44 Years, Female
North	Medicaid (LIM/Refugee/RSM)	21 - 44 Years, Male
North	Medicaid (LIM/Refugee/RSM)	45+ Years, Female
North	Medicaid (LIM/Refugee/RSM)	45+ Years, Male
North	PeachCare	0 - 2 Months, Male and Female
North	PeachCare	3 - 11 Months, Male and Female
North	PeachCare	1 - 5 Years, Male and Female
North	PeachCare	6 -13 Years, Male and Female
North	PeachCare	14 - 20 Years, Female
North	PeachCare	14 - 20 Years, Male
North	Breast and Cervical Cancer	All Ages
North	Maternity Delivery/Kick Payment
Southeast	Medicaid (LIM/Refugee/RSM)	0 - 2 Months, Male and Female
Southeast	Medicaid (LIM/Refugee/RSM)	3 - 11 Months, Male and Female
Southeast	Medicaid (LIM/Refugee/RSM)	1 - 5 Years, Male and Female
Southeast	Medicaid (LIM/Refugee/RSM)	6 - 13 Years, Male and Female
Southeast	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Female
	Medicaid (LIM/Refugee/RSM)	14 - 20 Years, Male
Southeast	Medicaid (LIM/Refugee/RSM)	21 - 44 Years, Female
Southeast	Medicaid (LIM/Refugee/RSM)
Southeast	Medicaid (LIM/Refugee/RSM)	21 - 44 Years, Male 45+ Years, Female
Southeast	Medicaid (LIM/Refugee/RSM)	45+ Years, Male
Southeast	PeachCare	0 - 2 Months, Male and Female
Southeast	PeachCare	3 - 11 Months, Male and Female
Southeast	PeachCare	1 - 5 Years, Male and Female
Southeast	PeachCare	6 -13 Years, Male and Female
Southeast	PeachCare	14 - 20 Years, Female
Southeast	PeachCare	14 - 20 Years, Male
Southeast	Breast and Cervical Cancer	All Ages
Southeast	Maternity Delivery/Kick Payment

EX-10.7

Exhibit 10.7

AMERIGROUP CORPORATION
AMENDED AND RESTATED CHANGE IN CONTROL BENEFIT POLICY

     Section 1. Purpose of Policy.

          The name of this policy is the AMERIGROUP Corporation Amended and Restated Change in Control Benefit Policy (the “Policy”). The purposes of the Policy are as follows: (1) to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without the distraction arising from the possibility of a change in control of the Company; (2) to enable and encourage the Company’s management to focus their attention on obtaining the best possible transaction for the Company’s stockholders and to make an independent evaluation of all possible transactions, without being diverted by their personal concerns regarding the possible impact of various transactions on the security of their jobs and benefits; and (3) to provide severance benefits to certain Participants (as defined below) who incur a termination of employment under the circumstances described herein within a certain period following a Change in Control (as defined below).

     Section 2. Definitions.

          For purposes of the Policy, the following terms shall be defined as set forth below:

          (a) “Affiliate” means any corporation or other entity 50% or more of the voting power of the outstanding voting securities of which is owned by the Company or its Subsidiaries or by any other Affiliate.

          (b) “Award” means all payments to a Participant under the Policy, including to the extent applicable, the payment upon a Change in Control under Section 5(a), the Severance Payment under Section 5(b) and the Gross-Up Payment under Section 5(d).

          (c) “Board” means the Board of Directors of the Company.

          (d) “Cause” means, unless a Participant is a party to a written employment agreement with the Company, Subsidiary or Affiliate which contains a definition of “cause,” “termination for cause,” or any other similar term or phrase, in which case “Cause” shall have the meaning set forth in such agreement, conduct involving one or more of the following: (i) the substantial and continuing failure of the Participant to render services to the Company or any Subsidiary or Affiliate in accordance with the Participant’s obligations and position with the Company, Subsidiary or Affiliate, after 30 day’s notice from the President of the Company or any Subsidiary or Affiliate, such notice setting forth in reasonable detail the nature of such failure, and in the event the Participant fails to cure such breach or failure within 30 days of notice from the Company or any Subsidiary or Affiliate, if such breach or failure is capable of cure; (ii) dishonesty, gross negligence, breach of fiduciary duty; (iii) the commission by the Participant of an act of fraud or embezzlement, as found by a court of competent jurisdiction; (iv) the conviction of the Participant of a felony; or a (v) material breach of the terms of an agreement with the Company or any Subsidiary or Affiliate, provided that the Company or any Subsidiary or Affiliate provides the

Participant with adequate notice of such breach and the Participant fails to cure such breach, if the breach is reasonably curable, within thirty (30) days after receipt of such notice.

          (e) “Change in Control” means (1) in the case of any Award that is subject to Section 409A of the Code, any event that constitutes, within the meaning of Section 409A(a)(2)(A)(v) of the Code, (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the Company’s assets, or (2) in the case of any other Award, the first to occur of any one of the events set forth in the following paragraphs:

          (i) any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company) representing 25% or more of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii);

          (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date of the Policy, constitute the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date of the Policy or whose appointment, election or nomination for election was previously so approved or recommended;

          (iii) there is consummated a merger or consolidation of the Company with any other corporation other than (A) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation continuing to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

          (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least a majority of the board of directors of which comprises individuals who were directors of the Company immediately prior to such sale or disposition.

          (f) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

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          (g) “Committee” means the Compensation Committee of the Board or, to the extent so provided by the Board, any other person, committee or entity the Board may appoint to administer the Policy.

          (h) “Company” means AMERIGROUP Corporation, a Delaware corporation, and, except in determining under Section 2(e) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets.

          (i) “Date of Termination” with respect to any purported termination of a Participant’s employment (other than by reason of the Participant’s death or Disability), means the date specified in the Notice of Termination (which shall be within thirty (30) days from the date such Notice of Termination is given).

          (j) “Disability” means the condition of a Participant who is either (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.

          (k) “Eligible Recipient” means an employee, officer or director (including a non-employee director) of the Company or of any Subsidiary or Affiliate.

          (l) “Enhancement Amount” means an additional LTI Award amount that a Participant may have the opportunity to earn with respect to the first calendar year of a performance cycle under the LTI Plan.

          (m) “Equity Plan” means the AMERIGROUP Corporation 2005 Equity Incentive Plan, or any successor stock incentive plan, as amended from time to time.

          (n) “Excise Tax” means the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to that tax.

          (o) “Good Reason” means, without the consent of the Participant, (i) any changes in the duties and responsibilities of the Participant which are materially inconsistent with the duties and responsibilities of the Participant within the Company immediately prior to the Change in Control, (ii) any 10% or greater reduction of the Participant’s target annual compensation in effect immediately prior to the change of control, (iii) any required relocation of the Participant’s office beyond a 50 mile radius from the location of the Participant’s office immediately prior to the Change in Control, or (iv) any failure by the Company to obtain the assumption of the Policy by a successor of the Company.

          (p) “LTI Award” means a long-term incentive compensation award granted pursuant to the LTI Plan.

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          (q) “LTI Plan” means the Company’s Long Term Incentive Program, or any successor long-term cash incentive plan, as amended from time to time, which is a component of the Company’s 2007 Cash Incentive Plan, as amended.

          (r) “Multiple” means a number for each Participant, selected by the Committee, ranging from one (1) to three (3). Unless otherwise specified in writing by the Committee, the following multiples shall be used: (i) three (3) for the Chief Executive Officer; (ii) two (2) for the President, Chief Operating Officer, Chief Financial Officer, any Executive Vice President and any Regional Chief Executive Officer; and (iii) one (1) for the Company’s Health Plan Chief Executive Officers (which includes the Chief Executive Officer of the Company’s Senior & Special Services Organization) and any other Participant not specifically listed herein or assigned a different Multiple by the Committee. In the event a Participant holds more than one officer position listed in this definition and the Multiples differ between such officer positions, only the higher Multiple attributable to such positions shall apply.

          (s) “Notice of Termination” means a notice which shall indicate the specific termination provision in this Policy relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated.

          (t) “Participant” means any Eligible Recipient selected by the Committee pursuant to the Committee’s authority in Section 4(a) hereof. Notwithstanding the foregoing, for (i) Awards payable under Sections 5(a), 5(b) and 5(d), the Participants shall include the Company’s Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, any Executive Vice President, any Regional Chief Executive Officer and the Company’s Health Plan Chief Executive Officers (which includes the Chief Executive Officer of the Company’s Senior & Special Services Organization), and any other Participants designated by the Committee, and (ii) for Awards payable under Sections 5(a) and 5(d), the Participants shall include those Company employees who are eligible for an annual cash bonus and/or a long term incentive cash award, as applicable, as of the date of a Change in Control

          (u) “Payment” means any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2)(A) of the Code) to or for the benefit of a Participant, whether paid or payable pursuant to this Agreement or otherwise pursuant to any plan, agreement or understanding between the Participant and the Company, which within the meaning of Section 280G(b)(2)(A)(i) of the Code, is contingent on a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company.

          (v) “Protected Period” shall mean the period beginning on the date of a Change in Control and ending on the date which is two (2) years after the date of such Change in Control.

          (w) “Separation from Service” means a Participant’s “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code.

          (x) “Subsidiary” means any corporation or other entity (other than the Company) in an unbroken chain of entities beginning with the Company, if each of the entities (other than the last entity) in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of securities in one of the other entities in the chain.

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          (y) “Target Amount” means an amount determined under the LTI Plan that might be earned by a Participant in three annual installments during a performance cycle of the LTI Plan.

     Section 3. Effective Date.

          The effective date of the Policy shall be February 12, 2007, as amended and restated July 30, 2008 (the “Effective Date”). The Policy shall remain in effect until the earlier of (i) such time as the Company has discharged all of its obligations hereunder, or (ii) the date of the termination of the Policy pursuant to Section 10(e) hereof.

     Section 4. Administration.

          (a) Prior to the date of a Change in Control, the Policy shall be interpreted, administered and operated by the Committee; on and after the date of a Change in Control, the Policy shall be interpreted, administered and operated by a committee appointed by the Committee as such Committee is constituted immediately prior to the Change in Control. In each case, subject to the terms of the Policy, the Committee shall have complete authority, in its sole discretion subject to the express provisions of the Policy, to determine who shall be a Participant, to interpret the Policy, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Policy. Notwithstanding the foregoing, the Committee may delegate any of its duties hereunder to such person or persons from time to time as it may designate.

          (b) All expenses and liabilities which members of the Committee incur in connection with the administration of the Policy shall be borne by the Company. The Committee may employ attorneys, consultants, accountants, appraisers, brokers, or other persons, and the Committee, the Company and the Company’s officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Policy, and all members of the Committee shall be fully protected by the Company in respect of any such action, determination or interpretation.

     Section 5. Benefits Provided.

          (a) “Payments Upon a Change in Control” Subject to Section 5(d) hereof, the Company shall pay to each Participant within ten (10) business days after a Change in Control, a lump sum payment in an amount equal to the sum of (i) the Participant’s Target Amount for any LTI Award (including any Enhancement Amount) that has been established for such Participant under the LTI Plan, as amended, or any successor long-term incentive plan, for a performance year that has been completed as of the date of the Change in Control and (ii) any unpaid but earned annual cash bonus plus a pro-rated annual cash bonus for the fiscal year in which the Change in Control occurs. The amount of any such pro-rated annual cash bonus shall be equal to the product of the Participant’s target annual bonus for the applicable fiscal year, multiplied by a fraction, the numerator of which is the number of months in the fiscal year completed prior to the date of the Change in Control, and the denominator of which is twelve (12). Notwithstanding anything hereinabove to the contrary, in the case of any Enhancement Amount for the 2006 performance year and any portion of the Target Amount of an LTI Award that is attributable to the 2006 performance year, in no event shall any payment be made hereunder prior to January, 2008.

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          (b) “Termination After Change in Control” Subject to Section 5(d) hereof, if a Participant’s employment with the Company is terminated during the Protected Period (i) by the Company other than for Cause, or by reason of the Participant’s Disability or death, or (ii) by the Participant for Good Reason, the Company shall pay to each Participant within ten (10) business days after the Participant’s Date of Termination a lump sum severance payment (the “Severance Payment”) in an amount equal to the Participant’s Multiple times the sum of the Participant’s annual base salary and the Participant’s target annual cash bonus, in each case, for the fiscal year in which the Change in Control occurs. Notwithstanding anything hereinabove to the contrary, in the case of any Severance Payment to be made after the Separation from Service of a Participant that constitutes a distribution of deferred compensation to a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, the Severance Payment shall be paid to the Participant on the date that is six (6) months after the date of the Participant’s Separation from Service.

          (c) “General Release” The Severance Payment shall be conditioned upon the execution by the Participant of the Company’s standard form general release.

          (d) “Section 280G”

               (i) Notwithstanding anything in this Policy to the contrary, in the event that it shall be determined that any Payment would constitute an “excess parachute payment” within the meaning of Section 280G(b) of the Code, the Participant shall be paid an additional amount (a “Gross-Up Payment”) such that the net amount retained by the Participant after deduction of any Excise Tax, and any federal, state and local income and employment taxes and excise tax, including any interest and penalties with respect thereto, imposed upon the Gross-Up Payment, shall be equal to the Payment; provided, however, that if the total Payment(s) are less than or equal to 120% of the Capped Benefit (as defined below), the Payment(s) shall be reduced by an amount necessary to prevent any portion of the Payment(s) from being a “parachute payment” as defined in Section 280G(b)(2) of the Code. If the Payment(s) are to be reduced pursuant to this Section, the Company shall provide Participant with a reasonable opportunity to request which of the benefits payable to the Participant shall be reduced. For purposes of determining the amount of the Gross-Up Payment, the Participant shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Participant’s residence on the date the Payment is made, net of the reduction in federal income taxes that the Participant may obtain from the deduction of such state and local income taxes. The “Capped Benefit” shall equal the total Payment(s), reduced by the amount necessary to prevent any portion of the Payment(s) from being a “parachute payment” as defined in Section 280G(b)(2) of the Code.

               (ii) All determinations to be made under this Section 5(d) shall be made by the Company’s independent public accountant immediately prior to the Change in Control (the “Accounting Firm”); provided, that if the Accounting Firm is serving as accountant or auditor to the individual, entity or group effecting the Change of Control, the Committee shall appoint another independent accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide its determinations and any supporting calculations and work papers both to the Company and the Participant within fifteen (15) business days after receipt of written notification from the Company

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or the Participant that there has been a Payment or by such earlier time as is requested by the Company. Any such determination by the Accounting Firm shall include explanations of whether and when a Gross-Up Payment is required, the amount of any such Gross-Up Payment and the assumptions utilized in arriving at the determination. The Accounting Firm’s determination shall be binding upon the Company and the Participant. Within five (5) days after receipt of the Accounting Firm’s determination, the Company shall pay to the Participant any Gross-Up Payment determined by the Accounting Firm.

               (iii) In the event that upon any audit by the Internal Revenue Service, or by a state or local taxing authority, of a Payment or Gross-Up Payment, a change is finally determined to be required in the amount of taxes paid by the Participant, appropriate adjustments shall be made under this Section 5(d) in the manner determined by the Accounting Firm, such that the net amount which is payable to the Participant after taking into account the provisions of Section 4999 of the Code and any interest and penalties shall reflect the intent of the parties as expressed in paragraph (A) of this Section 5(d). The Participant shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Participant is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Participant shall not pay such claim prior to the expiration of the 30-day period following the date on which the Participant gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall: (A) give the Company any information reasonably requested by the Company relating to such claim; (B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (C) cooperate with the Company in good faith in order effectively to contest such claim; and (D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any excise tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(d), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine. The Company’s control of the contest shall be limited to issues the resolution of which could result in a Gross-Up Payment’s being payable hereunder, and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

               (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in paragraphs (ii) and (iii) of this Section 5(d) shall be borne solely by the Company.

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          (e) Other Existing Arrangements This Policy will be subordinated to any written severance benefit arrangement, change of control severance agreement or employment agreement that provides for severance benefits in existence between the Participant and the Company, notwithstanding the terms of any such arrangement or agreement, and any benefits under any such arrangement or agreement will be paid prior to any payments under this Policy, which shall be delayed for payment until all benefits under any such arrangement or agreement have been determined and paid, and payments under this Policy will be reduced by any amounts paid under any such arrangement or agreement.

     Section 6. Termination Procedures.

          Any purported termination of a Participant’s employment following a Change in Control (other than by reason of death) shall be communicated by written Notice of Termination from one party to the other party in accordance with Section 9 hereof.

     Section 7. No Mitigation.

          The Company agrees that, in order for a Participant to be eligible to receive the Severance Payment and other benefits described herein, the Participant is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Participant by the Company pursuant to Section 5 hereof. Further, the amount of any payment or benefit provided for in this Policy hereof shall not be reduced by any compensation or income earned by the Participant as the result of employment by another employer or self-employment, by retirement benefits, by offset against any amount claimed to be owed by the Participant to the Company, or otherwise.

     Section 8. Successors.

          (a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume this Policy and all obligations of the Company hereunder in the same manner and to the same extent that the Company would be so obligated if no such succession had taken place.

          (b) This Policy shall inure to the benefit of and shall be binding upon the Company, its successors and assigns, but without the prior written consent of the Participants this Policy may not be assigned other than in connection with the merger or sale of substantially all of the business and/or assets of the Company or similar transaction in which the successor or assignee assumes (whether by operation of law or express assumption) all obligations of the Company hereunder.

          (c) This Policy shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees or other beneficiaries. If a Participant shall die while any amount would still be payable to such Participant hereunder (other than amounts which, by their terms, terminate upon the death of the Participant) if such Participant had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Policy to the executors, personal representatives or administrators of such Participant’s estate.

8

     Section 9. Notices.

          For the purpose of this Policy, notices and all other communications provided for in the Policy shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to a Participant, to the address on file with the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

          To the Company:

AMERIGROUP Company
4425 Company Lane
Virginia Beach, VA 23462
Attention: Executive Vice President, Associate Services

     Section 10. Miscellaneous

          (a) No waiver by the Company or any Participant, as the case may be, at any time of any breach by the other party of, or of any lack of compliance with, any condition or provision of this Policy to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. All other plans, policies and arrangements of the Company in which the Participant participates during the term of this Policy shall be interpreted so as to avoid the duplication of benefits paid hereunder. It is expressly acknowledged that the terms of this policy shall not affect the terms of any equity incentive agreement between the Company and the Participant.

          (b) Employment with any present or future Affiliate or Subsidiary shall be considered employment with the Company for all purposes of this Policy.

          (c) Nothing contained in this Policy or any documents relating to the Policy shall (i) confer upon any Participant any right to continue in the employ of the Company or a subsidiary, (ii) constitute any contract or agreement of employment, or (iii) interfere in any way with the right of the Company to terminate the Participant’s employment at any time, with or without Cause.

          (d) A Participant shall be entitled to the benefits of any indemnity applicable to the Participant that is provided by the Company’s articles of incorporation, bylaws or otherwise immediately prior to a Change in Control, and any subsequent changes to the articles of incorporation, bylaws or otherwise reducing the indemnity granted to the Company’s officers and employees shall not affect the rights granted hereunder.

          (e) Prior to a Change in Control, the Committee shall have the right to amend or terminate the Policy and to add or remove Participants from time to time, in its sole and absolute discretion. From and after (i) the occurrence of a Change in Control; (ii) the public announcement of a proposal for a transaction that, if consummated, would constitute a Change in Control; or (iii)

9

the Board’s learning of a specific proposal containing the essential terms of a transaction that, if consummated, would constitute a Change in Control, the Committee shall not have the right to terminate the Policy or amend it any manner which adversely affects the rights of any Participant unless the Company has obtained the prior written consent of each affected Participant. Notwithstanding the preceding sentence, however, in the case of a proposal under clause (ii) or clause (iii) immediately above, if the proposal is finally withdrawn or terminated, the Policy may be terminated or amended after the withdrawal or termination. Notwithstanding the foregoing, the Policy shall automatically terminate on the date following the termination of the Protected Period, provided that all obligations accrued by Participants prior to such termination of the Policy must be satisfied in full in accordance with the terms hereof.

          (f) Except as otherwise provided herein or by law, no right or interest of any Participant under the Policy shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of any Participant under the Policy shall be liable for, or subject to, any obligation or liability of such Participant.

          (g) All amounts payable hereunder shall be subject to applicable federal, state and local tax withholding.

          (h) This Policy shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the Commonwealth of Virginia (without regard to the conflicts of laws principles thereof), to the extent not preempted by federal law, which shall otherwise control.

          (i) The invalidity or unenforceability of any provision of this Policy shall not affect the validity or enforceability of any other provision of this Policy, which shall remain in full force and effect. If this Policy shall for any reason be or become unenforceable by either party, this Policy shall thereupon terminate and become unenforceable by the other party.

          (j) This Policy shall have no effect on any equity incentive award granted by the Company to a Participant under the Equity Incentive Plan or any other equity incentive program or arrangement. The terms of the equity incentive award shall govern those awards with respect to a change of control.

          (k) If a Participant commences a legal action to enforce any of the obligations of the Company under this Policy and it is ultimately determined that the Participant is entitled to any payments or benefits under this Policy, the Company shall pay the Participant the amount necessary to reimburse the Participant in full for all reasonable expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Participant with respect to such action. The Company shall pay to a Participant interest on any unpaid portion of the Participant’s Award that is not paid when due, calculated at the prime rate of the Company’s primary lending institution as in effect from time to time from the date that payment should have been made under this Policy, until the Award is fully paid.

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EX-31.1

Exhibit 31.1

CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James G. Carlson, Chairman and Chief Executive Officer of AMERIGROUP Corporation, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2008 of AMERIGROUP Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal

quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2008	/s/ JAMES G. CARLSON
	James G. Carlson
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION
OF
CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James W. Truess, Executive Vice President and Chief Financial Officer of AMERIGROUP Corporation, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2008 of AMERIGROUP Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal

quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2008	/s/ JAMES W. TRUESS
	James W. Truess
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CEO AND CFO
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AMERIGROUP Corporation (the “Company”) on Form 10-Q for the three and nine month periods ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), James G. Carlson, as Chief Executive Officer of the Company, hereby certifies to the best of his knowledge, and James W. Truess, as Chief Financial Officer (principal financial officer) of the Company, hereby certifies to the best of his knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JAMES G. CARLSON James G. Carlson
Chairman and Chief Executive Officer
Date: October 28, 2008

/s/ JAMES W. TRUESS James W. Truess
Executive Vice President and Chief Financial Officer
Date: October 28, 2008

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.