Exhibit 10.3
This Third Amendment to the Amended Medicaid Managed Care Contract, State-Wide
and Region 3, as appropriate, for SFY 2014-2015 (the “Contract”) by and between
the Commonwealth of Kentucky, through the Cabinet for Finance and
Administration, on behalf of the Cabinet for Heath and Family Services,
Department for Medicaid Services (collectively herein “Cabinet”) and WellCare of
Kentucky, Inc. (herein after “Contractor”) is to address certain rate and
regulatory issues.
WHEREAS, the Cabinet and Contractor have agreed to certain amendments to the
Managed Care Contract in place for the SFY 2014-2015;
NOW THEREFORE, the Contract is hereby amended as follows:
Section 1. Appendix A. “Capitation Payment Rates” shall be amended to
incorporate the Revised Rates attached hereto, subject to the approval of the
Centers for Medicare and Medicaid Services (CMS).
Section 2.    The following new Section “Risk Corridor Payment Adjustment,”
concerning a risk corridor, shall be added and shall read in its entirety as
follows:
The total annual capitation payment made to the Contractor for ACA Expansion
members and their associated healthcare costs shall be evaluated against a
designated Risk Corridor to determine whether a Risk Corridor Payment Adjustment
is warranted. A symmetrical Risk Corridor shall be established around a target
Medical Loss Ratio (see definition in Appendix T attached hereto and
incorporated into the Appendices of the Contract) of eighty-seven (87) percent
of total capitation paid by DMS on behalf of ACA Expansion members for each
Calendar Year. A range of plus or minus five (5) percent, for which no premium
adjustment shall be made, will be established around the Medical Loss Ratio
target. If the Contractor has a Medical Loss Ratio outside of the target range
it shall be subject to an adjustment to total ACA Expansion capitation payments
for the Calendar Year. The adjustment

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will be computed as eighty (80) percent of the difference between the actual
countable ACA Expansion Medical Expenses of the Contractor and the dollar amount
corresponding to the upper or lower risk corridor boundary. Total Medical
expenses below the lower Risk Corridor boundary of eighty-two (82) percent will
result in a premium refund from the Contractor to the Commonwealth. Total
Medical expenses above the upper risk corridor boundary of ninety-two (92)
percent will result in an additional premium payment from the Commonwealth to
the Contractor.

The first period of operation subject to this adjustment shall be Calendar Year
2014 and adjustments will continue annually through the contract coverage
period. The preliminary Risk Corridor adjustment process will begin eighteen
(18) months after the start of the Calendar year. The Final adjustment process
will begin 24 months after the start of the Calendar Year. If the contract with
the Contractor is not renewed at any time on the July 1st annual contract
renewal date or as a result of a subsequent contract award, the risk corridor
process will be unchanged except that the Medical Loss Ratio and Annual
Statement will reflect an appropriately reduced number of months of experience
instead of the full 12 months.

As part of the preliminary and final financial reconciliation process described
above, the Contractor will be required to prepare supplemental financial
schedules to reconcile Medical Expenses reported on the Annual Statement
required by the Kentucky Department of Insurance to medical expenses reported to
the Department for Medicaid Services and additional financial schedules
describing how reported expenses were directly attributed or allocated to the
ACA Expansion population. These schedules, and any other information the
Contractor wants to submit for consideration, will be due to the commonwealth 30
calendar days after the end of the 18 month and 24 month periods described
above. The Commonwealth will then determine, within 30 days, if any adjustment
is to be paid out or collected. The Contractor will then have 30 days to review
the Commonwealth’s findings and remit, if applicable, payment to the
Commonwealth or receive, if applicable payment from the Commonwealth. Items for
reconciliation, including non-claim specific items, are further described in
Appendix T of the amended contract. The Annual Statement and supplemental
schedules will by audited by an independent accounting firm contracted by the

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Commonwealth. The Contractor shall cooperate with the accounting firm by
supplying all clarifications and answers to inquiries requested in an expedient
manner.

Section 3.    Section 12.2 “Risk Adjustment Method for ACA Members” shall be
amended to read in its entirety as follows:
The capitation rates for Expansion Members will be risk-adjusted on a
prospective basis in the same manner as for Current Members. The Initial
Adjustment shall use the Encounter Data for 2014 with a three month run-out and
an effective date of July 1, 2015.
    
Section 4.    The following new Section “Health Insurers’ Premium Fee under the
ACA” concerning the payment method for the health insurers’ premium fee under
the ACA shall be added and shall read in its entirety as follows:
The health insurers’ premium fee under the ACA for calendar year 2013 and 2014
premiums were due in September 2014 and September 2015 respectfully. If the
Contractor is subject to the health insurer’s premium fee for the Capitation
Payments being made under the existing Managed Care Contract(s) with the
Commonwealth, as amended, the Commonwealth shall compensate the Contractor for
that fee and for any federal taxes resulting from such compensation. To
facilitate this payment, the Contractor shall provide the Department with the
Insurer’s Premium Fee assessment received from the Federal Government and the
pro rata portion attributed to the Contractor’s Capitation Payments under its
Contract(s) for the preceding calendar year. In addition the Contractor shall
provide a certified statement from its Chief Financial Officer as to the
effective Federal Tax Rate paid for the past five tax periods. These shall be
submitted to the Department no later than September 1 of each year that the
Insurer’s premium fee is imposed. For the calendar 2013 and 2014 fees, the
Department will make an adjustment to the Contractor’s 2013 and 2014 Capitation
Rates retroactively to compensate the Contractor for the Commonwealth’s share of
the Insurers’ Premium Fee and the Contractor’s Federal Tax payment attributed to
these adjustments using the average of the

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Federal Tax Rate the Contractor paid for the past five tax periods.
Effective July 1, 2015, using the prior years’ assessment as an estimate, the
Capitation Payment shall be adjusted to compensate Contractor for the 2015
assessment. This rate shall be adjusted each month based upon the Contractor’s
Membership changes and shall be reconciled at the end of the period. This
payment method is contingent upon receipt of federal financial participation for
the payment and CMS approval.

Section 5.    The following language corrections/additions to the Contract have
been requested by CMS in order to confirm that the Contractor has been in
compliance with the requirements of 42 CFR 438 and other applicable federal laws
or regulations. The Cabinet acknowledges that these requirements have heretofore
been incorporated by reference under the Contract and that the Contractor has
been in compliance with all such requirements.
a)    In Section 1. “Definitions,” the following definitions shall be added or
amended:

Emergency Services or Emergency Care means covered inpatient and outpatient
services that are as follows: (1) furnished by a provider that is qualified to
furnish these services; and (2) needed to evaluate or stabilize an emergency
medical condition.

I/T/U means (“I”) Indian Health Service, (“T”) Tribally operated
facility/program, and (“U”) Urban Indian clinic.
Service Authorization Request means a Member’s request for the provision of a
service.
b)
The following new Section “Compliance with Federal Law” shall be added and shall
read in its entirety as follows:

A.
The Contractor shall be prohibited from paying for an item or service (other
than an emergency item or

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service, not including items or services furnished in an emergency room of a
hospital):

(1)
Furnished by any individual or entity during any period when the individual or
entity is excluded from participation under Title V, XVIII, or XX of the Social
Security Act or sections 1128, 1128A, 1156, or 1842(j)(2),[203] of the Social
Security Act;

(2)
Furnished at the medical direction or on the prescription of a physician, during
the period when such physician is excluded from participation under title V,
XVIII, or XX or pursuant to section 1128, 1128A, 1156, or 1842(j)(2) of the
Social Security Act and when the person furnishing such item or service knew, or
had reason to know, of the exclusion (after a reasonable time period after
reasonable notice has been furnished to the person);

(3)
Furnished by an individual or entity to whom the Department has failed to
suspend payments during any period when there is a pending investigation of a
credible allegation of fraud against the individual or entity, unless the
Department determines there is good cause not to suspend such payments;

(4)
With respect to any amount expended for which funds may not be used under the
Assisted Suicide Funding Restriction Act of 1997;

(5)
With respect to any amount expended for roads, bridges, stadiums, or any other
item or service not covered under the Medicaid State Plan;

(6)
For home health care services provided by an agency or organization, unless the
agency provides the state with a surety bond as specified in Section 1861(o)(7)
of the Social Security Act.

B.
The Capitation Payment provided by this Contract shall not be paid to the
Contractor if it could be excluded from participation in Medicare or Medicaid
for any of the following reasons:

(1)
The Contractor is controlled by a sanctioned individual;

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(2)
The Contractor has a contractual relationship that provides for the
administration, management or provision of medical services, or the
establishment of policies, or the provision of operational support for the
administration, management or provision of medical services, either directly or
indirectly, with an individual convicted of certain crimes as described in
section 1128(b)(8)(B) of the Social Security Act;

(3)
The Contractor employs or contracts, directly or indirectly, for the furnishing
of health care, utilization review, medical social work, or administrative
services, with one of the following:

a. Any individual or entity excluded from participation in Federal health care
programs.

b. Any entity that would provide those services through an excluded individual
or entity.

C.
The Contractor shall not:

(1)
Knowingly have a director, officer, or partner who is (or is affiliated with a
person/entity that is) debarred, suspended, or excluded from participation in
federal healthcare programs.

(2)
Knowingly have a person with ownership of more than 5% of the MCE’s equity who
is (or is affiliated with a person/entity that is) debarred, suspended, or
excluded from participation in federal healthcare programs.

(3)
Knowingly have an employment, consulting, or other agreement with an individual
or entity for the provision of MCE contract items or services who is (or is
affiliated with a person/entity that is) debarred, suspended, or excluded from
participation in federal healthcare programs.

(4)
If the Department learns that the Contractor has a prohibited relationship with
a person or entity who is debarred, suspended, or excluded from participation in
federal healthcare programs, the Department shall notify CMS of the

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noncompliance;. may continue this Contract unless CMS directs otherwise; shall
not renew or extend this Contract unless CMS provides to the Department a
written statement describing compelling reasons that exist for renewing or
extending the agreement.

D.
The Contractor shall report to the Department and, upon request, to the
Secretary of HHS, the Inspector General of the HHS, and the U. S. Comptroller
General a description of transactions between the Contractor and a party in
interest (as defined in section 1318(b) of such Social Security Act), including
the following transactions: (i) Any sale or exchange, or leasing of any property
between the Contractor and such a party(ii) Any furnishing for consideration of
goods, services (including management services), or facilities between the
Contractor and such a party, but not including salaries paid to employees for
services provided in the normal course of their employment.(iii) Any lending of
money or other extension of credit between the Contractor and such a party. The
Contractor shall make any reports of transactions between the Contractor and
parties in interest that are provided to the Department, or other agencies
available to Members upon reasonable request.

E.
The Contractor shall disclose to the Department any persons or corporations with
an ownership or control interest in the Contractor that has direct, indirect, or
combined direct/indirect ownership interest of 5% or more of the Contractor’s
equity; owns 5% or more of any mortgage, deed of trust, note, or other
obligation secured by the Contractor if that interest equals at least 5% of the
value of the Contractor’s assets; is an officer or director of the Contractor
organized as a corporation, or is a partner of the Contractor organized as a
partnership.

The disclosure shall contain: the name and address (The address for corporate
entities must include as applicable primary business address, every business
location, and P.O. Box address; date of birth and Social Security Number (in the
case of an individual); other tax identification number (in the case of a
corporation);

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whether the control interest in the Contractor or the Contractor’s subcontractor
is related to another person with ownership or control interest in the
Contractor as a spouse, parent, child, or sibling; the name of any other
Medicaid provider or fiscal agent in which the person or corporation has an
ownership or control interest and the name, address, date of birth, and Social
Security Number of any managing employee of the Contractor.

c)
Section 4.1 “Performance Standards,” shall be amended to read in its entirety as
follows:

The Contractor shall perform or cause to be performed all of the Covered
Services and shall develop, produce and deliver to the Department all of the
statements, reports, data, accounting, Claims and documentation described and
required by the provisions of this Contract, and the Department shall make
payments to the Contractor on a capitated basis as described in this Contract.
The Contractor acknowledges that failure to comply with the provisions of this
Contract may result in Finance taking action pursuant to Sections 40.0 through
40.13, “Remedies for Violation, Breach, or Non-Performance of Contract”. The
Contractor shall meet the applicable terms and conditions imposed upon Medicaid
managed care organizations as set forth in 42 United States Code Section
1396b(m), 42 CFR 438 et seq., 907 KAR Title 17, other related managed care
regulations and the 1915 Waiver, as applicable.
d)
Section 5.4 “Employment Practices,” shall be amended to add the following at the
end of the Section:

D.
Title IX of the Education Amendments of 1972 (regarding education, programs and
activities);

E.
The Age Discrimination Act of 1975;

e)
Sections 20.7 “Adverse Actions Related to Medical Necessity or Coverage
Denials,” shall be amended to read in its entirety as follows:

20.7 Adverse Actions Related to Requests for Services and Coverage Denials

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The Contractor shall provide the Member written notice that meets the language
and formatting requirements for Member materials, of any adverse Action (not
just service authorization actions) within the timeframes for each type of
Action pursuant to 42 CFR 438.210(c). The notice must explain:
A.
The action the Contractor has taken or intends to take;

B.
The reasons for the action in clear, non–technical language that is
understandable by a layperson;

C.
The federal or state regulation supporting the action, if applicable;

D.
The Member’s right to appeal;

E.
The Member’s right to request a State hearing;

F.
Procedures for exercising Member’s rights to Appeal or file a Grievance;

G.
Circumstances under which expedited resolution is available and how to request
it;

H.
The Member’s rights to have benefits continue pending the resolution of the
Appeal, how to request that benefits be continued, and the circumstances under
which the Member may be required to pay the costs of these services;

I.
Be available in the state-established prevalent non-English languages in its
service area;

J.
Be available in alternative formats for persons with special needs; and

K.
Be easily understood in language and format.

The Contractor must give notice at least:
A.
Ten (10) Days before the date of an adverse Action when the Action is a
termination, suspension or reduction of a covered service authorized by the
Department, its agent or Contractor, except the period of advanced notice is
shortened to five (5) Days if Member Fraud or Abuse has been determined.

B.
The Contractor must give notice by the date of the adverse Action for the
following:

(1)
In the death of a Member;

(2)
A signed written Member statement requesting service termination or giving
information requiring termination or reduction of services (where he understands
that this must be the result of supplying that information);

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(3)
The Member’s admission to an institution where he is ineligible for further
services;

(4)
The Member’s address is unknown and mail directed to him has no forwarding
address;

(5)
The Member has been accepted for Medicaid services by another local
jurisdiction;

(6)
The Member’s physician prescribes the change in the level of medical care;

(7)
An adverse determination made with regard to the preadmission screening
requirements for nursing facility admissions on or after January 1, 1989;

(8)
The safety or health of individuals in the facility would be endangered, the
Member’s health improves sufficiently 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) days.

C.
The Contractor must give notice on the date of the adverse Action when the
Action is a denial of payment.

D.
The Contractor must give notice as expeditiously as the Member’s health
condition requires and within State-established timeframes that may not exceed
two (2) business days following receipt of the request for service, with a
possible extension of up to fourteen (14) additional days, if the Member, or the
Provider, requests an extension, or the Contractor justifies a need for
additional information and how the extension is in the Member’s interest. If the
Contractor extends the time frame, the Contractor must give the Member written
notice of the reason for the decision to extend the timeframe and inform the
Member of the right to file a Grievance if he or she disagrees with that
decision; and issue and carry out the determination as expeditiously as the
Member’s health condition requires and no later than the date the extension
expires.

E.
For cases in which a Provider indicates, or the Contractor determines, that
following the standard timeframe could seriously jeopardize the Member’s life or
health or ability to attain, maintain or regain maximum function, the Contractor
shall make an expedited authorization decision and provide notice as
expeditiously as the Member’s health condition requires

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and no later than two (2) business days after receipt of the request for
service.
F.
The Contractor shall give notice on the date that the timeframes expire when
service authorization decisions not reached within the timeframes for either
standard or expedited service authorizations. An untimely service authorization
constitutes a denial and is thus an adverse action.

f)
Section 22.1 “Required Functions,” shall be amended to add the following at the
end of the Section:

  
W.
Ensure each Member is free to exercise his or her rights without the Contractor
or its Providers treating the Member adversely.

X.
Guaranteeing each Member’s right to receive information on available treatment
options and alternatives, presented in a manner appropriate to the Member’s
condition and ability to understand.

g)
Section 22.2 “Member Handbook,” shall be amended to add the following phrase in
subsection “O” after the words “second opinions”

in or out of the Contractor’s Provider network
h)
The following new Section “Information Materials Requirements” shall be added
and shall read in its entirety as follows:

The Contractor shall notify all Members of their right to request and obtain the
information listed herein at least once a year and within a reasonable time
after the Contractor receives from the Department notice of the Member's
enrollment. Any change in the information listed herein shall be communicated at
least 30 days before the intended effective date of the change.
A.
Names, locations, telephone numbers of, and non-English languages spoken by,
Providers in the Contractor’s network, including identification of Providers
that are not accepting new patients. This includes, at a minimum, information on
primary care physicians, specialists, and hospitals.

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B.
Any restrictions on the Member's freedom of choice among network Providers.

C.
Member rights and protections, as specified in 42 CFR §438.100.

D.
Information on the right to file grievances and appeals and procedures as
provided in 42 CFR §§438.400 through 438.424 and 907 KAR 17:010, including:
requirements and timeframes for filing a grievance or appeal; availability of
assistance in the filing process; toll-free numbers that the Member can use to
file a grievance or an appeal by phone; that when requested benefits can
continue during the grievance or appeal; and that 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.

E.
Information on a State fair hearing including the right to hearing; method for
obtaining a hearing; and rules that govern representation at the hearing.

F.
The amount, duration, and scope of benefits available under the Contract in
sufficient detail to ensure that Members understand the benefits to which they
are entitled.

G.
Procedures for obtaining benefits, including authorization requirements.

H.
The extent to which, and how, Members may obtain benefits, including family
planning services, from out-of-network providers.

I.
The extent to which, and how, after-hours and emergency coverage are provided,
including:

a.
What constitutes emergency medical condition, emergency services, and
post-stabilization services, with reference to the definitions in 42 CFR
§438.114(a) and 907 KAR 3:130.

b.
The fact that prior authorization is not required for emergency services.

c.
The process and procedures for obtaining emergency services, including use of
the 911-telephone system.

d.
The locations of any emergency settings and other locations at which providers
and hospitals furnish emergency services and post-

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stabilization services covered under the Contract.
e.
The fact that, subject to the provisions of this section, the Member has a right
to use any hospital or other setting for emergency care.

J.
The post-stabilization care services rules set forth at 42 CFR §422.113(c).

K.
The Contractor’s policy on referrals for specialty care and for other benefits
not furnished by the Member's primary care provider.

L.
Cost sharing, if any.

M.
How and where to access any benefits that are available under the State plan but
are not covered under the Contract.

N.
Any appeal rights made available to Providers to challenge the failure of the
Contractor to cover a service.

O.
Advance directives, as set forth in 42 CFR §438.6(i)(2).

P.
Upon request, information on the structure and operation of the Contractor and
physician incentive plans.

A Member’s right to request and receive a copy of his or her medical records and
request that the records be amended or corrected.

i)
Section 22.6 “Member’s Rights and Responsibilities” shall be amended to add the
following subsection:

K. Any Indian enrolled with the Contractor eligible to receive services from a
participating I/T/U provider or a I/T/U primary care provider shall be allowed
to receive services from that provider if part of Contractor’s network,

j)
Section 23.4 “Primary Care Provider (PCP) Changes,” shall be amended to add the
following sentence at the end of the first paragraph of that section:

Pursuant to 42 CFR 438.56, for Members in a designated rural area in which only
the Contractor provides services, the restrictions on changing PCPs cannot be
more restrictive than

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for Member Disenrollment as outlined in Section 27.3 “Member Request for
Disenrollment.”

k)
Section 24.1 “Grievance and Appeal Policies and Procedures,” shall be amended to
read in its entirety as follows:

The Contractor shall have a timely and organized Grievance and Appeal Process
with written policies and procedures for resolving Grievances filed by Members.
The Grievance and Appeal Process shall address Members’ oral and written
grievances. The Grievance and Appeal Process shall be approved in writing by the
Department prior to implementation and shall be conducted in compliance with the
notice, timelines, rights and procedures in 42 CFR 438 subpart F, 907 KAR 17:010
and other applicable CMS and Department requirements. These policies and
procedures shall include, but not be limited to:

A.
Provide the Member the opportunity to present evidence and allegations of fact
or law, in person as well as in writing;

B.
Allow the Member or the Member’s representative prior to and after the appeal to
review the Member’s case file;

C.
Consider the Member, the Member’s representative, or the legal representative of
the Member’s estate as parties to the appeal;

D.
A process for evaluating patterns of grievances for impact on the formulation of
policy and procedures, access and utilization;

E.
Procedures for maintenance of records of grievances separate from medical case
records and in a manner which protects the confidentiality of Members who file a
grievance or appeal;

F.
Ensure that a grievance or an appeal is disposed of and notice given as
expeditiously as the Member’s health condition requires but not to exceed 30
days from its initiation;

G.
Ensure individuals who make decisions on grievances and appeals were not
involved in any prior level of review;

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H.
If the grievance involves a Medical Necessity determination, ensure that the
grievance and appeal is heard by health care professionals who have the
appropriate clinical expertise;

I.
Process for informing Members, orally and/or in writing, about the Contractor’s
Grievance and Appeal Process by making information readily available at the
Contractor’s office, by distributing copies to Members upon enrollment; and by
providing it to all subcontractors at the time of contract or whenever changes
are made to the Grievance and Appeal Process;

J.
Provide assistance to Members in filing a grievance if requested or needed;

K.
Include assurance that there will be no discrimination against a Member solely
on the basis of the Member filing a grievance or appeal;

L.
Include notification to Members in the Member Handbook regarding how to access
the Cabinet’s ombudsmen’s office regarding grievances, appeals and hearings;

M.
Provide oral or written notice of the resolution of the grievance in a manner to
ensure ease of understanding;

N.
Provide for an appeal of a grievance decision if the Member is not satisfied
with that decision.

O.
Provide for continuation of services, if appropriate, while the appeal is
pending;

P.
Provide expedited appeals relating to matters which could place the Member at
risk or seriously compromise the Member’s health or well-being;

Q.
Not require a Member or a Member’s representative to follow an oral request for
an expedited appeal with a written request;

R.
Inform the Member of the limited time to present evidence and allegations of
fact or law in the case of an expedited appeal;

S.
Provide written notice of the appeal decision;

T.
Provide for the right to request a hearing under KRS Chapter 13B; -

U.
Provide for continuation of services, if appropriate, while the hearing is
pending;

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V.
Allows a Provider to file a grievance or appeal on the Member’s behalf as
provided in 907 KAR 17.010; and.

W.
Notifies the Member that if a Service Authorization Request is denied and the
Member proceeds to receive the service and appeal the denial, if the appeal is
in the Contractor’s favor, that the Member may be liable for the cost.

If the Contractor continues or reinstates the Member's benefits while the appeal
is pending, the benefits must be continued until one of the following occurs:

A.
The Member withdraws the appeal,

B.
The Member does not request a State Fair Hearing with continuation of benefits
within 10 days from the date the Contractor mails an adverse appeal decision,

C.
A State Fair Hearing decision adverse to the Member is made, or

D.
The service authorization expires or authorization limits are met.

All grievance or appeal files shall be maintained in a secure and designated
area and be accessible to the Department or its designee, upon request, for
review. Grievance or appeal files shall be retained for ten (10) years following
the final decision by the Contractor, HSD, an administrative law judge, judicial
appeal, or closure of a file, whichever occurs later.

The Contractor shall have procedures for assuring that files contain sufficient
information to identify the grievance or appeal, the date it was received, the
nature of the grievance or appeal, notice to the Member of receipt of the
grievance or appeal, all correspondence between the Contractor and the Member,
the date the grievance or appeal is resolved, the resolution, the notices of
final decision to the Member, and all other pertinent information. Documentation
regarding the grievance shall be made available to the Member, if requested.

l)
Section 24.2 “State Hearings for Members,” shall be amended to read in its
entirety as follows:

A Member may not file a grievance with the state. A Member shall exhaust the
internal Appeal process with the Contractor

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prior to requesting a State Fair Hearing. The Contractor, the Member, or the
Member’s representative or legal representative of the Member’s estate shall be
parties to the hearing as provided in 907 KAR 17:010(5). A Member may request a
State Fair Hearing if he or she is dissatisfied with an Action that has been
taken by the Contractor within forty-five (45) days of the final appeal decision
by the Contractor as provided for in 907 KAR 17:010. A Member may request a
State Fair Hearing for an Action taken by the Contractor that denies or limits
an authorization of a requested service or reduces, suspends, or terminates a
previously authorized service. The standard timeframe for reaching a decision in
a State Fair Hearing is found in KRS Chapter 13B.
Failure of the Contractor to comply with the State Fair Hearing requirements of
the state and federal Medicaid law in regard to an Action taken by the
Contractor or to appear and present evidence will result in an automatic ruling
in favor of the Member.
The contractor shall authorize or provide the disputed services promptly and as
expeditiously as the Member's health condition requires if the services were not
furnished while the appeal was pending and the State Fair Hearing results in a
decision to reverse the Contractor’s decision to deny, limit, or delay services.
The Contractor shall pay for disputed services received by the Member while the
appeal was pending and the State Fair Hearing reverses a decision to deny
authorization of the services.

The Department shall provide for an expedited hearing within three (3) days of a
request for an appeal that meets the requirements of an expedited appeal after a
denial by the Contractor.

m)
Section 26.15 “Member Request for Disenrollment,” shall be amended to read in
its entirety as follows:

A Member may request Disenrollment only with cause pursuant to 42 CFR 438.56.
The cause for disenrollment includes but is not limited to the following: the
Member needs related services to be performed at and not all related services
are available within the Contractor’s network and the Member’s provider
determines that receiving the services separately would subject the Member to
unnecessary risk; poor quality of care; lack of access to services covered under
the Contract; or lack

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of access to Providers experienced in dealing with the Member's health care
needs.
The Member shall submit a written or oral request to request Disenrollment to
either the Contractor or the Department giving the reason(s) for the request. If
submitted to the Contractor, the Contractor shall transmit the Member’s request
to the Contract Compliance Officer of the Department. If submitted to the
Department, the Department shall transmit a copy to Contractor. If the
Disenrollment request is not granted, the Member may request a state fair
hearing. The Department shall notify all Members of their disenrollment rights
at least annually no less than 60 days before the start of each enrollment
period.

n)
Section 27.1 “Required Functions,” shall be amended to add the following at the
end of subsection “O”:

; and
P.
Consult with a requesting Provider on authorization decisions, when appropriate.

Q.
Ensures no punitive action is taken against a Provider who either requests an
expedited resolution or supports a Member’s appeal.

o)
In Section 27.7 “Provider Maintenance of Medical Records,” (found in Section
27.6 in Region 3 Contracts) add the following at the end of the Section:

A Member’s medical record shall include at a minimum for hospitals and mental
hospitals:
A.
Identification of the beneficiary.

B.
Physician name.

C.
Date of admission and dates of application for and authorization of Medicaid
benefits if application is made after admission; the plan of care (as required
under 42 CFR 456.172 (mental hospitals) or 42 CFR 456.70 (hospitals).
Initial and subsequent continued stay review dates (described under 42 CFR
456.233 and 42 CFR 465.234 (for mental hospitals) and 42 CFR 456.128 and 42 CFR
456.133 (for hospitals)

D.
Reasons and plan for continued stay if applicable.

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E.
Other supporting material the committee believes appropriate to include.

F.
For non-mental hospitals only:
1. Date of operating room reservation.
2. Justification of emergency admission if applicable.

p)
The following new Section “Reenrollment” shall be added and shall read in its
entirety as follows:

A Member whose eligibility is terminated because the Member no longer qualifies
for medical assistance under one of the aid categories listed in Section 26.9
“Persons Eligible for Enrollment” or otherwise becomes ineligible may apply for
reenrollment in the same manner as an initial enrollment.
A Member previously enrolled with the Contractor shall be automatically
reenrolled with the Contractor if eligibility for medical assistance is
re-established within two (2) months of losing eligibility. The Contractor shall
be given a new enrollment date once a Member has been reinstated.
Reenrollment that is more than two (2) months after losing eligibility shall be
treated as a new enrollment for all purposes.
q)
Section 28.1 “Network Providers to Be Enrolled,” shall be amended to add the
following sentence at the end of the Section:

The Contractor shall maintain, by written agreements, a network of Providers
that consider the geographic location of Providers and its Members, the
distance, travel time, the means of transportation ordinarily used by its
Members, whether the location provides physical access for its Members with
disabilities, and considers the numbers of network Providers who are not
accepting new Medicaid patients.

r)
Section 29.1 “Claims Payment,” shall be amended to read in its entirety as
follows:

In accordance with the Balanced Budget Act (BBA) Section 4708, the Contractor
shall implement Claims payment procedures that ensure 90% of all Provider
Claims, including to I/T/Us, for which no further written information or

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substantiation is required in order to make payment are paid or denied within
thirty (30) days of the date of receipt of such Claims and that 99% of all
Claims are processed within ninety (90) days of the date of receipt of such
Claims. In addition, the Contractor shall comply with the Prompt-Pay statute,
codified within KRS 304.17A-700-730, as may be amended, and KRS 205.593, and KRS
304.14-135 and KRS 304.99-123, as may be amended. The date of receipt is the
date the MCE receives the claim, as indicated by its date stamp on the claim or
other notation as appropriate to the medium used to file a claim and the date of
payment is the date of the check or other form of payment.

The Contractor shall, notify the requesting provider of any decision to deny a
Claim, or to authorize a service in an amount, duration, or scope that is less
than requested.
Any conflict between the BBA and Commonwealth law will default to the BBA unless
the Commonwealth requirements are stricter.
s)
Section 30.1 “Medicaid Covered Services,” shall be amended to add the following
two paragraphs in front of the first paragraph:

The Contractor shall provide Covered Services in an the amount, duration, and
scope that is no less than the amount, duration, and scope furnished Medicaid
recipients under fee-for-service program; that are reasonably be expected to
achieve the purpose for which the services are furnished; enables the Member to
achieve age-appropriate growth and development; and enables the Member to
attain, maintain, or regain functional capacity. The Contractor shall not
arbitrarily deny or reducing the amount, duration, or scope of a required
service solely because of the diagnosis, type of illness, or condition.
The Contractor may establishing measures that are designed to maintain quality
of services and control costs and are consistent with its responsibilities to
Members; may place appropriate limits on a service on the basis of criteria
applied under the Medicaid State Plan, and applicable regulations, such as
medical necessity; and place appropriate limits on a service for utilization
control, provided the services furnished can reasonably be expected to achieve
their purpose.

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t)
In Section 30.3 “Second Opinions,” add the following phrase after the word
“network” in the first sentence:

or arrange for the Member to obtain a second opinion outside the network without
cost to the Member.

u)
The following new Section “Provider-Preventable Diseases” shall be added and
shall read in its entirety as follows:

The Contractor shall not pay a Provider for provider-preventable conditions that
meet the following criteria:
A.
Is identified in the State Medicaid plan;

B.
Has been found by the Department, based upon a review of medical literature by
qualified professionals, to be reasonably preventable through the application of
procedures supported by evidence-based guidelines;

C.
Has a negative consequence for the Member;

D.
Is auditable; and

E.
Includes, at a minimum, wrong surgical or other invasive procedure performed on
a patient; surgical or other invasive procedure performed on the wrong body
part; surgical or other invasive procedure performed on the wrong patient.

The Contractor shall require all Providers to report provider-preventable
conditions associated with claims for payment or Member treatments for which
payment would otherwise be made. The Contractor shall report all identified
provider-preventable conditions in a form or frequency as specified by the
Department.

v)
Section 32.3 “Emergency Care, Urgent Care and Post Stabilization Care,” shall be
amended to add the following paragraph at the end of the Section:

The Contractor shall not limit what constitutes an emergency medical condition
on the basis of lists of diagnoses or symptoms. An Emergency Medical Services
Provider shall have a minimum of ten (10) calendar days to notify the Contractor
of the Member's screening and treatment before refusing to cover the emergency
services based on a failure to notify. A Member who has an emergency medical
condition shall not be liable for payment of subsequent screening and

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treatment needed to diagnose or stabilize the specific condition. The Contractor
is responsible for coverage and payment of services until the attending Provider
determines that the Member is sufficiently stabilized for transfer or discharge.

w)
Section 39.5 “Penalties for Failure to Correct” shall be amended to add the
following to the list of monitory penalties:

(6) Fails to comply with the requirements for physician incentive plans, as set
forth (for Medicare) in 42 CFR §§422.208 and 422.210 ($25,000).

x)
Section 39.6 “Notice of Contractor Breach” shall be amended to add the following
at the end of the Section:

E.
Appoint temporary management; and

F.
Grant Members the right to disenroll without cause

y) The new Section “Additional Sanctions Required by CMS” shall be added and
shall read in its entirety as follows:
Payments provided for under this Contract will be denied for new enrollees when,
and for so long as, payment for those enrollees is denied by CMS under 42 CFR
438.730(e).

z)
Appendix H “Covered Services,” in V. “Health Services Limited by Prior
Authorization,” clarify Organ Transplant Services as follows:

•Transplantation of Organs and Tissue (Must be in compliance with State Plan and
907 KAR 1:350)

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Approvals:

This Amendment to the Contract is subject to the terms and conditions as stated.
The parties certify that they are authorized to bind this agreement between
parties and that they accept the terms of this agreement.

CONTRACTOR:
WELLCARE OF KENTUCKY, INC.
 
 
 
/s/ Kelly A. Munson
 
Region President
SIGNATURE
 
TITLE
 
 
 
Kelly A. Munson
 
6.24.15
PRINTED NAME
 
DATE
 
 
 
COMMONWEALTH OF KENTUCKY
CABINET FOR FINANCE AND ADMINISTRATION

 
 
 
 
/s/ Donald R. Speer
 
Executive Director
SIGNATURE
 
TITLE
 
 
 
Donald R. Speer
 
6/25/15
PRINTED NAME
 
DATE
 
 
 

Approved As To Form And Legality:
 
 
 
 
/s/ Geri Grigsby
 
 
GENERAL COUNSEL
CABINET FOR FINANCE AND ADMINISTRATION
 
 
 
 

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APPENDIX A – REVISED RATES
WELLCARE
Region 3
July 1, 2014-June 30, 2015
 
 
 
 
Non-ACA Base Rate
 
Families & Children
 
 
 
 
 
Infant - Age Under 1
 
$
553.12

 
 
Child - Age 1 to 5
 
$
142.03

 
 
Child - Age 6 to 12
 
$
181.97

 
 
Child - Age 13 to 18 Female
$
361.99

 
 
Child - Age 13 to 18 Male
$
247.81

 
 
Adult - Age 19 to 24 Female
$
735.97

 
 
Adult - Age 19 to 24 Male
$
234.09

 
 
Adult - Age 25 to 39 Female
$
658.08

 
 
Adult - Age 25 to 39 Male
$
437.40

 
 
Adult - Age 40 or Older Female
$
703.33

 
 
Adult - Age 40 or Older Male
$
561.14

 
 
 
 
 
 
 
SSI Adults without Medicare
 
 
 
 
Age 19 to 24 Female
 
$
1,069.27

 
 
Age 19 to 24 Male
 
$
730.05

 
 
Age 25 to 44 Female
 
$
1,366.60

 
 
Age 25 to 44 Male
 
$
1,242.02

 
 
Age 45 or Older Female
$
1,840.04

 
 
Age 45 or Older Male
 
$
1,786.48

 
 
 
 
 
 
 
Dual Eligible
 
 
 
 
 
Female
 
 
$
161.56

 
 
Male
 
 
$
155.72

 
 
 
 
 
 
 
SSI Child
 
 
 
 
 
 
Age Under 1
 
$
10,207.52

 
 
Age 1 to 5
 
 
$
1,190.71

 
 
Age 6 to 18
 
$
947.85

 
 
 
 
 
 
 
Foster Care
 
 
 
 
 
Infant - Age Under 1
 
$
2,598.89

 
 
Age 1 to 5
 
 
$
427.83

 
 
Age 6 to 12
 
$
965.83

 
 
Age 13 or Older Female
$
1,383.70

 
 
Age 13 or Older Male
 
$
1,227.53

 
 
 
 
 
 
 

 

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Appendix T
Medical Loss Ratio Calculation

Unless specifically addressed below, the Medical Loss Ratio (MLR) calculation
shall follow guidelines described in the Affordable Care Act. The formula to be
used for the MLR Calculation is as follows:
Adjusted MLR = [(i + q + n - r)/{p + n - r) - t - f - n + r}] + c
Where,
i = incurred claims
q = expenditures on quality improving activities
p = earned premiums (excluding MCO tax)
t = Federal and State taxes (excluding MCO tax)
f = licensing and regulatory fees
n = reinsurance, and risk adjustment payments made by issuer
r = issuer’s reinsurance, and risk adjustment related receipts
c = credibility adjustment, if any.

Additional guidance regarding financial items to excluded or included in the
Numerator or Denominator of the Medical Loss Ratio calculation is as follows:
*Numerator
•Incurred Claims             
•Direct claims that the MCO pays to providers (including under capitation
contracts with health care professionals) for services or supplies covered under
the managed care contract with DMS, provided to enrollees;
•Incurred but not reported and unpaid claims reserves for the MLR Reporting
year, including claims reported in the process of adjustment;
•Percentage withholds from payments made to contracted providers;
•Claims that are recoverable for anticipated coordination of benefits;
•Claims payments recoveries received as a result of subrogation;
•Changes in other claims-related reserves;
•Claims payments recoveries as a result of fraud reductions efforts, not to
exceed the amount of fraud reduction expenses;
•Reserves for contingent benefits and the medical claim portion of lawsuits; and
•The amount of incentive and bonus payments made to providers.
•Deductions From Claims
•Overpayment recoveries received from providers;
•Prescription drug rebates received by the MCO or PIHP; and
•State subsidies based on a stop-loss payment methodology.
•Solvency Funds
•Payments made by an MCO to mandated solvency funds.
•Pass Through Payments

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•Increased payments for certain Medicaid primary care services provided by
certain qualified primary care providers;
•Supplemental payments included in MCO capitation rates intended for payment to
providers and other entities.
•Health Care Quality Activities May be included in numerator
•Any MCO expenditure that meets the requirements of 42 CFR 422.2430.
•Excluded from Claims
•Amounts paid to third party vendors for secondary network savings;
•Amounts paid to third party vendors for network development, administrative
fees, claims processing, and utilization management; and
•Amounts paid, including amounts paid to a provider, for professional or
administrative services that do not represent compensation or reimbursement for
State plan services, provided to an enrollee.
•Amounts paid to the State as remittance
 
*
Denominator

•Revenue
•State capitation payments to the MCO for all enrollees under a risk contract
less any unreturned withholds
•State-developed one time payments, for specific life events;
•Payments to the MCO for incentive arrangements or payments for the amount of a
withhold the MCO earns in accordance with conditions in the contract
•Unpaid cost sharing amounts that the MCO could have collected from enrollees
under the contract
•All changes to unearned premium reserves.
•Pass Through Payments
•Increased payments for certain Medicaid primary care services provided by
certain qualified primary care providers;
•Supplemental payments included in rates intended for payment to providers and
other entities.
•Exclusions
•Federal and State taxes and licensing and regulatory fees. Taxes, licensing and
regulatory fees
•e.g. Health Insurer Fee
•Statutory assessments to defray the operating expenses of any State or Federal
department.
•State taxes and assessments
                                        

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