Exhibit 10.3


    
      
        

      

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      Exhibit
        10.3

      
 

      PROVIDER
        AGREEMENT

      


      BETWEEN
        STATE OF OHIO

      DEPARTMENT
        OF JOB AND FAMILY SERVICES

      AND

      WELLCARE
        OF OHIO, INC. 

      Amendment
        No. 2

      


      


      Pursuant
        to Article IX.A. the Provider Agreement between the State of Ohio, Department
        of
        Job and Family Services, (hereinafter referred to as "ODJFS") and WELLCARE
        OF
        OHIO, INC. (hereinafter referred to as "MCP") for the Covered Families and
        Children (hereinafter referred to as "CFC") population dated November 1,
        2006,
        is hereby amended as follows:

       

      1.
        Baseline and Appendix J are modified as attached.

       

      2.
        All
        other terms of the provider agreement are hereby affirmed.

       

      The
        amendment contained herein shall be effective January 5, 2007.

       

      


       

      


      
        	
                WELLCARE
                  OF OHIO, INC.:

                 

              	 
	
                BY:
                  /s/
                  Todd S. Farha 

                TODD
                  S. FARHA, PRESIDENT & CEO

                 

              	
                DATE:
                  1/3/2007

              
	
                OHIO
                  DEPARTMENT OF JOB AND FAMILY SERVICES:

              	 
	
                BY:
                  /s/
                  Barbara Riley 

                BARBARA
                  E. RILEY, DIRECTOR

              	
                DATE:
                  1/5/2007

              


      

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      Covered
        Families and Children (CFC) population

      OHIO
        DEPARTMENT OF JOB AND FAMILY SERVICES

      OHIO
        MEDICAL ASSITANCE PROVIDER AGREEMENT

      FOR
        MANAGED CARE PLAN

      CFC
        ELIGIBLE POPULATION

      


      This
        provider agreement is entered into this first day of November, 2006, at
        Columbus, Franklin County, between the State of Ohio, Department of Job and
        Family Services, (herein referred to as ODJFS) whose principal offices are
        located in the City of Columbus County of Franklin, State of Ohio, and WellCare
        of Ohio, Inc, Managed Care Plan (hereinafter referred to as MCP), an Ohio
        for-profit corporation, whose principal office is located in the city of
        Beechwood, County of Cuyahoga, State of Ohio.

      


      MCP
        is
        licensed as a Health Insuring Corporation by the State of Ohio, Department
        of
        Insurance (hereinafter referred to as ODI), pursuant to Chapter 1751. of
        the
        Ohio Revised Code and is organized and agrees to operate as prescribed by
        the
        Chapter 5101:3-26 of the Ohio Administrative Code (hereinafter referred to
        as
        OAC), and other applicable portions of the OAC as amended from time to
        time.

      


      MCP
        is an
        entity eligible to enter into a provider agreement in accordance with 42
        CFR
        438.6 and is engaged in the business of providing prepaid comprehensive health
        care services as defined in 42 CFR 438.2 through the managed care program
        for
        the Covered Families and Children (CFC) eligible population described in
        OAC
        rule 5101:326-02 (B).

      


      ODJFS,
        as
        the single state agency designated to administer the Medicaid program under
        Section 5111.02 of the Ohio Revised Code and Title XIX of the Social Security
        Act, desires to obtain MCP services for the benefit of certain Medicaid
        recipients. In so doing, MCP has provided and will continue to provide proof
        of
        MCP’s capability to provide quality services, efficiently, effectively and
        economically during the term of this agreement.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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      This
        provider agreement is a contract between the ODJFS and the undersigned Managed
        Care Plan (MCP), provider of medical assistance, pursuant to the federal
        contracting provisions of 42 CFR 434.6 and 438.6 in which the MCP agrees
        to
        provide comprehensive medical services through the managed care program as
        provided in Chapter 5101:3-26 of the Ohio Administrative Code, assuming the
        risk
        of loss, and complying with applicable state statutes, Ohio Administrative
        Code,
        and Federal statutes, rules, regulations and other requirements, including
        but
        not limited to 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.

       

      ARTICLE
        I
        - GENERAL

       

      A.
        MCP
        agrees to report to the Chief of Bureau of Managed Health Care (hereinafter
        referred to as BMHC) or their designee as necessary to assure understanding
        of
        the responsibilities and satisfactory compliance with this provider
        agreement.

       

      B.
        MCP
        agrees to furnish its support staff and services as necessary for the
        satisfactory performance of the services as enumerated in this provider
        agreement.

       

      C.
        ODJFS
        may, from time to time as it deems appropriate, communicate specific
        instructions and requests to MCP concerning the performance of the services
        described in this provider agreement. Upon such notice and within the designated
        time frame after receipt of instructions, MCP shall comply with such
        instructions and fulfill such requests to the satisfaction of the department.
        It
        is expressly understood by the parties that these instructions and requests
        are
        for the sole purpose of performing the specific tasks requested to ensure
        satisfactory completion of the services described in this provider agreement,
        and are not intended to amend or alter this provider agreement or any part
        thereof.

       

      If
        the
        MCP previously had a provider agreement with the ODJFS and the provider
        agreement terminated more than two years prior to the effective date of any
        new
        provider agreement, such MCP will be considered a new plan in its first year
        of
        operation with the Ohio Medicaid managed care program.

       

      ARTICLE
        II - TIME OF PERFORMANCE

       

      A.
        Upon
        approval by the Director of ODJFS this provider agreement shall be in effect
        from the date entered through June 30, 2007, unless this provider agreement
        is
        suspended or terminated pursuant to Article VIII prior to the termination
        date,
        or otherwise amended pursuant to Article IX.

       

      ARTICLE
        III - REIMBURSEMENT

       

      A.
        ODJFS
        will reimburse MCP in accordance with rule 5101:3-26-09 of the Ohio
        Administrative Code and the appropriate appendices of this provider
        agreement.

       

      



      Covered
        Families and Children (CFC) population

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      ARTICLE
        IV - MCP INDEPENDENCE

       

      A.
        MCP
        agrees that no agency, employment, joint venture or partnership has been
        or will
        be created between the parties hereto pursuant to the terms and conditions
        of
        this agreement. MCP also agrees that, as an independent contractor, MCP assumes
        all responsibility for any federal, state, municipal or other tax liabilities,
        along with workers compensation and unemployment compensation, and insurance
        premiums which may accrue as a result of compensation received for services
        or
        deliverables rendered hereunder. MCP certifies that all approvals, licenses
        or
        other qualifications necessary to conduct business in Ohio have been obtained
        and are operative. If at any time during the period of this provider agreement
        MCP becomes disqualified from conducting business in Ohio, for whatever reason,
        MCP shall immediately notify ODJFS of the disqualification and MCP shall
        immediately cease performance of its obligation hereunder in accordance with
        OAC
        Chapter 5101:3-26.

       

      ARTICLE
        V
        - CONFLICT OF INTEREST; ETHICS LAWS

       

      A.
        In
        accordance with the safeguards specified in section 27 of the Office of Federal
        Procurement Policy Act (41 U.S.C. 423) and other applicable federal
        requirements, no officer, member or employee of MCP, the Chief of BMHC, or
        other
        ODJFS employee who exercises any functions or responsibilities in connection
        with the review or approval of this provider agreement or provision of services
        under this provider agreement shall, prior to the completion of such services
        or
        reimbursement, acquire any interest, personal or otherwise, direct or indirect,
        which is incompatible or in conflict with, or would compromise in any manner
        or
        degree the discharge and fulfillment of his or her functions and
        responsibilities with respect to the carrying out of such services. For purposes
        of this article, "members" does not include individuals whose sole connection
        with MCP is the receipt of services through a health care program offered
        by
        MCP.

       

      B.
        MCP
        hereby covenants that MCP, its officers, members and employees of the MCP
        have
        no interest, personal or otherwise, direct or indirect, which is incompatible
        or
        in conflict with or would compromise in any manner of degree the discharge
        and
        fulfillment of his or her functions and responsibilities under this provider
        agreement. MCP shall periodically inquire of its officers, members and employees
        concerning such interests.

       

      C.
        Any
        person who acquires an incompatible, compromising or conflicting personal
        or
        business interest shall immediately disclose his or her interest to ODJFS
        in
        writing. Thereafter, he or she shall not participate in any action affecting
        the
        services under this provider agreement, unless ODJFS shall determine that,
        in
        the light of the personal interest disclosed, his or her participation in
        any
        such action would not be contrary to the public interest. The written disclosure
        of such interest shall be made to: Chief, Bureau of Managed Health Care,
        ODJFS.

       

      



      Covered
        Families and Children (CFC) population

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      D.
        No
        officer, member or employee of MCP shall promise or give to any ODJFS employee
        anything of value that is of such a character as to manifest a substantial
        and
        improper influence upon the employee with respect to his or her duties. No
        officer, member or employee of MCP shall solicit an ODJFS employee to violate
        any ODJFS rule or policy relating to the conduct of the parties to this
        agreement or to violate sections 102.03, 102.04, 2921.42 or 2921.43 of the
        Ohio
        Revised Code.

       

      E.
        MCP
        hereby covenants that MCP, its officers, members and employees are in compliance
        with section 102.04 of the Revised Code and that if MCP is required to file
        a
        statement pursuant to 102.04(D)(2) of the Revised Code, such statement has
        been
        filed with the ODJFS in addition to any other required filings.

       

      ARTICLE
        VI - EQUAL EMPLOYMENT OPPORTUNITY

       

      A.
        MCP
        agrees that in the performance of this provider agreement or in the hiring
        of
        any employees for the performance of services under this provider agreement,
        MCP
        shall not by reason of race, color, religion, sex, sexual orientation, age,
        disability, national origin, veteran's status, health status, or ancestry,
        discriminate against any citizen of this state in the employment of a person
        qualified and available to perform the services to which the provider agreement
        relates.

       

      B.
        MCP
        agrees that it shall not, in any manner, discriminate against, intimidate,
        or
        retaliate against any employee hired for the performance or services under
        the
        provider agreement on account of race, color, religion, sex, sexual orientation,
        age, disability, national origin, veteran's status, health status, or
        ancestry.

       

      C.
        In
        addition to requirements imposed upon subcontractors in accordance with OAC
        Chapter 5101:3-26, MCP agrees to hold all subcontractors and persons acting
        on
        behalf of MCP in the performance of services under this provider agreement
        responsible for adhering to the requirements of paragraphs (A) and (B) above
        and
        shall include the requirements of paragraphs (A) and (B) above in all
        subcontracts for services performed under this provider agreement, in accordance
        with rule 5101:3-26-05 of the Ohio Administrative Code.

       

      ARTICLE
        VII - RECORDS, DOCUMENTS AND INFORMATION

       

      A.
        MCP
        agrees that all records, documents, writings or other information produced
        by
        MCP under this provider agreement and all records, documents, writings or
        other
        information used by MCP in the performance of this provider agreement shall
        be
        treated in accordance with rule 5101:3-26-06 of the Ohio Administrative Code.
        MCP must maintain an appropriate record system for services provided to members.
        MCP must retain all records in accordance with 45 CFR 74.

       

      B.
        All
        information provided by MCP to ODJFS that is proprietary shall be held to
        be
        strictly

       

      



      Covered
        Families and Children (CFC) population 

      Page
        5 of
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      confidential
        by ODJFS. Proprietary information is information which, if made public, would
        put MCP at a disadvantage in the market place and trade of which MCP is a
        part
        [see Ohio Revised Code Section 1333.61(D)]. MCP is responsible for notifying
        ODJFS of the nature of the information prior to its release to ODJFS. ODJFS
        reserves the right to require reasonable evidence of MCP's assertion of the
        proprietary nature of any information to be provided and ODJFS will make
        the
        final determination of whether this assertion is supported. The provisions
        of
        this Article are not self-executing.

       

      C.
        MCP
        shall not use any information, systems, or records made available to it for
        any
        purpose other than to fulfill the duties specified in this provider agreement.
        MCP agrees to be bound by the same standards of confidentiality that apply
        to
        the employees of the ODJFS and the State of Ohio. The terms of this section
        shall be included in any subcontracts executed by MCP for services under
        this
        provider agreement. MCP must implement procedures to ensure that in the process
        of coordinating care, each enrollee's privacy is protected consistent with
        the
        confidentiality requirements in 45 CFR parts 160 and 164.

       

      ARTICLE
        VIII - SUSPENSION AND TERMINATION

       

      A.
        This
        provider agreement may be canceled by the department or MCP upon written
        notice
        in accordance with the applicable rule(s) of the Ohio Administrative Code,
        with
        termination to occur at the end of the last day of a month.

       

      B.
        MCP,
        upon receipt of notice of suspension or termination, shall cease provision
        of
        services on the suspended or terminated activities under this provider
        agreement; suspend, or terminate all subcontracts relating to such suspended
        or
        terminated activities, take all necessary or appropriate steps to limit
        disbursements and minimize costs, and furnish a report, as of the date of
        receipt of notice of suspension or termination describing the status of all
        services under this provider agreement.

       

      C.
        In the
        event of suspension or termination under this Article, MCP shall be entitled
        to
        reconciliation of reimbursements through the end of the month for which services
        were provided under this provider agreement, in accordance with the
        reimbursement provisions of this provider agreement.

       

      D.
        ODJFS
        may, in its judgment, suspend, terminate or fail to renew this provider
        agreement if the MCP or MCP's subcontractors violate or fail to comply with
        the
        provisions of this agreement or other provisions of law or regulation governing
        the Medicaid program. Where ODJFS proposes to suspend, terminate or refuse
        to
        enter into a provider agreement, the provisions of applicable sections of
        the
        Ohio Administrative Code with respect to ODJFS' suspension, termination or
        refusal to enter into a provider agreement shall apply, including the MCP's
        right to request a public hearing under Chapter 119. of the Revised
        Code.

       

      



      Covered
        Families and Children (CFC) population

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      E.
        When
        initiated by MCP, termination of or failure to renew the provider agreement
        requires written notice to be received by ODJFS at least 75 days in advance
        of
        the termination or renewal date, provided, however, that termination or
        non-renewal must be effective at the end of the last day of a calendar month.
        In
        the event of non-renewal of the provider agreement with ODJFS, if MCP is
        unable
        to provide notice to ODJFS 75 days prior to the date when the provider agreement
        expires, and if, as a result of said lack of notice, ODJFS is unable to
        disenroll Medicaid enrollees prior to the expiration date, then the provider
        agreement shall be deemed extended for up to two calendar months beyond the
        expiration date and both parties shall, for that time, continue to fulfill
        their
        duties and obligations as set forth herein. If an MCP wishes to terminate
        or not
        renew their provider agreement for a specific region(s), ODJFS reserves the
        right to initiate a procurement process to select additional MCPs to serve
        Medicaid consumers in that region(s).

       

      ARTICLE
        IX - AMENDMENT AND RENEWAL

       

      A.
        This
        writing constitutes the entire agreement between the parties with respect
        to all
        matters herein. This provider agreement may be amended only by a writing
        signed
        by both parties. Any written amendments to this provider agreement shall
        be
        prospective in nature.

       

      B.
        This
        provider agreement may be renewed one or more times by a writing signed by
        both
        parties for a period of not more than twelve months for each
        renewal.

       

      C.
        In the
        event that changes in State or Federal law, regulations, an applicable waiver,
        or the terms and conditions of any applicable federal waiver, require ODJFS
        to
        modify this agreement, ODJFS shall notify MCP regarding such changes and
        this
        agreement shall be automatically amended to conform to such changes without
        the
        necessity for executing written amendments pursuant to this Article of this
        provider agreement.

       

      ARTICLE
        X
        - LIMITATION OF LIABILITY

       

      A.
        MCP
        agrees to indemnity the State of Ohio for any liability resulting from the
        actions or omissions of MCP or its subcontractors in the fulfillment of this
        provider agreement.

       

      B.
        MCP
        hereby agrees to be liable for any loss of federal funds suffered by ODJFS
        for
        enrollees resulting from specific, negligent acts or omissions of the MCP
        or its
        subcontractors during the term of this agreement, including but not limited
        to
        the nonperformance of the duties and obligations to which MCP has agreed
        under
        this agreement.

       

      C.
        In the
        event that, due to circumstances not reasonably within the control of MCP
        or
        ODJFS, a major disaster, epidemic, complete or substantial destruction of
        facilities, war, riot or civil insurrection occurs, neither ODJFS nor MCP
        will
        have any liability or obligation on account of reasonable delay in the provision
        or the arrangement of covered

       

      



      Covered
        Families and Children (CFC) population 

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      services;
        provided that so long as MCP's certificate of authority remains in full force
        and effect, MCP shall be liable for the covered services required to be provided
        or arranged for in accordance with this agreement.

       

      ARTICLE
        XI - ASSIGNMENT

       

      A.
        ODJFS
        will not allow the transfer of Medicaid members by one MCP to another MCP
        unless
        this membership has been obtained as a result of an MCP selling their entire
        Ohio corporation to another health plan. MCP shall not assign any interest
        in
        this provider agreement and shall not transfer any interest in the same (whether
        by assignment or novation) without the prior written approval of ODJFS and
        subject to such conditions and provisions as ODJFS may deem necessary. Any
        such
        assignments shall be submitted for ODJFS' review 120 days prior to the desired
        effective date. No such approval by ODJFS of any assignment shall be deemed
        in
        any event or in any manner to provide for the incurrence of any obligation
        by
        ODJFS in addition to the total agreed-upon reimbursement in accordance with
        this
        agreement.

       

      B.
        MCP
        shall not assign any interest in subcontracts of this provider agreement
        and
        shall not transfer any interest in the same (whether by assignment or novation)
        without the prior written approval of ODJFS and subject to such conditions
        and
        provisions as ODJFS may deem necessary. Any such assignments of subcontracts
        shall be submitted for ODJFS' review 30 days prior to the desired effective
        date. No such approval by ODJFS of any assignment shall be deemed in any
        event
        or in any manner to provide for the incurrence of any obligation by ODJFS
        in
        addition to the total agreed-upon reimbursement in accordance with this
        agreement.

       

      ARTICLE
        XII - CERTIFICATION MADE BY MCP

       

      A.
        This
        agreement is conditioned upon the full disclosure by MCP to ODJFS of all
        information required for compliance with federal regulations as requested
        by
        ODJFS.

       

      B.
        By
        executing this agreement, MCP certifies that no federal funds paid to MCP
        through this or any other agreement with ODJFS shall be or have been used
        to
        lobby Congress or any federal agency in connection with a particular contract,
        grant, cooperative agreement or loan. MCP further certifies compliance with
        the
        lobbying restrictions contained in Section 1352, Title 31 of the U.S. Code,
        Section 319 of Public Law 101-121 and federal regulations issued pursuant
        thereto and contained in 45 CFR Part 93, Federal Register, Vol. 55, No. 38,
        February 26, 1990, pages 6735-6756. If this provider agreement exceeds $100,000,
        MCP has executed the Disclosure of Lobbying Activities, Standard Form LLL,
        if
        required by federal regulations. This certification is material representation
        of fact upon which reliance was placed when this provider agreement was entered
        into.

       

      C.
        By
        executing this agreement, MCP certifies that neither MCP nor any principals
        of
        MCP (i.e., a director, officer, partner, or person with beneficial ownership
        of
        more than 5% of the MCP's equity) is presently debarred, suspended, proposed
        for
        debarment, declared ineligible, or otherwise excluded from participation
        in
        transactions by any Federal

       

      



      Covered
        Families and Children (CFC) population 

      Page
        8 of
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      agency.
        The MCP also certifies that the MCP has no employment, consulting or any
        other
        arrangement with any such debarred or suspended person for the provision
        of
        items or services or services that are significant and material to the MCP's
        contractual obligation with ODJFS. This certification is a material
        representation of fact upon which reliance was placed when this provider
        agreement was entered into. If it is ever determined that MCP knowingly executed
        this certification erroneously, then in addition to any other remedies, this
        provider agreement shall be terminated pursuant to Article VII, and ODJFS
        must
        advise the Secretary of the appropriate Federal agency of the knowingly
        erroneous certification.

       

      D.
        By
        executing this agreement, MCP certifies compliance with Article V as well
        as
        agreeing to future compliance with Article V. This certification is a material
        representation of fact upon which reliance was placed when this contract
        was
        entered into.

       

      E.
        By
        executing this agreement, MCP certifies compliance with the executive agency
        lobbying requirements of sections 121.60 to 121.69 of the Ohio Revised Code.
        This certification is a material representation of fact upon which reliance
        was
        placed when this provider agreement was entered into.

       

      F.
        By
        executing this agreement, MCP certifies that MCP is not on the most recent
        list
        established by the Secretary of State, pursuant to section 121.23 of the
        Ohio
        Revised Code, which identifies MCP as having more than one unfair labor practice
        contempt of court finding. This certification is a material representation
        of
        fact upon which reliance was placed when this provider agreement was entered
        into.

       

      G.
        By
        executing this agreement MCP agrees not to discriminate against individuals
        who
        have or are participating in any work program administered by a county
        Department of Job and Family Services under Chapters 5101 or 5107 of the
        Revised
        Code.

       

      H.
        By
        executing this agreement, MCP certifies and affirms that, as applicable to
        MCP,
        no party listed in Division (I) or (J) of Section 3517.13 of the Ohio Revised
        Code or spouse of such party has made, as an individual, within the two previous
        calendar years, one or more contributions in excess of $1,000.00 to the Governor
        or to his campaign committees. This certification is a material representation
        of fact upon which reliance was placed when this provider agreement was entered
        into. If it is ever determined that MCP's certification of this requirement
        is
        false or misleading, and not withstanding any criminal or civil liabilities
        imposed by law, MCP shall return to ODJFS all monies paid to MCP under this
        provider agreement. The provisions of this section shall survive the expiration
        or termination of this provider agreement.

       

      I.
        By
        executing this agreement, MCP certifies and affirms that HHS, US Comptroller
        General or representatives will have access to books, documents, etc. of
        MCP.

       

      J.
        By
        executing this agreement, MCP agrees to comply with the false claims recovery
        requirements of Section 6032 of The Deficit Reduction Act of 2005 (also see
        Section 5111.101
        of the Revised Code). ARTICLE XIII - CNSTRUCTION

       

      



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        Families and Children (CFC) population 

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      A.
        This
        provider agreement shall be governed, construed and enforced in accordance
        with
        the laws and regulations of the State of Ohio and appropriate federal statutes
        and regulations. If any portion of this provider agreement is found
        unenforceable by operation of statute or by administrative or judicial decision,
        the operation of the balance of this provider agreement shall not be affected
        thereby; provided, however, the absence of the illegal provision does not
        render
        the performance of the remainder of the provider agreement
        impossible.

       

      ARTICLE
        XIV - INCORPORATION BY REFERENCE

       

      A.
        Ohio
        Administrative Code Chapter 5101:3-26 (Appendix A) is hereby incorporated
        by
        reference as part of this provider agreement having the full force and effect
        as
        if specifically restated herein.

       

      B.
        Appendices B through P and any additional appendices are hereby incorporated
        by
        reference as part of this provider agreement having the full force and effect
        as
        if specifically restated herein.

       

      C.
        In the
        event of inconsistence or ambiguity between the provisions of OAC 5101:3-26
        and
        this provider agreement, the provision of OAC 5101:3-26 shall be determinative
        of the obligations of the parties unless such inconsistency or ambiguity
        is the
        result of changes in federal or state law, as provided in Article IX of this
        provider agreement, in which case such federal or state law shall be
        determinative of the obligations of the parties. In the event OAC 5101:3-26
        is
        silent with respect to any ambiguity or inconsistency, the provider agreement
        (including Appendices B through P and any additional appendices), shall be
        determinative of the obligations of the parties. In the event that a dispute
        arises which is not addressed in any of the aforementioned documents, the
        parties agree to make every reasonable effort to resolve the dispute, in
        keeping
        with the objectives of the provider agreement and the budgetary and statutory
        constraints of ODJFS.

       

      



      Covered
        Families and Children (CFC) population

       

      The
        parties have executed this agreement the date first written above. The agreement
        is hereby accepted and considered binding in accordance with the terms and
        conditions set forth in the preceding statements.

      


      


      
        	
                WELLCARE
                  OF OHIO, INC.:

              	
                DATE:

              
	
                By:
                  _________________

                TODD
                  FARHA, CEO

              	 
	
                 

                 

                OHIO
                  DEPARTMENT OF JOB AND FAMILY SERVICES:

              	 
	
                BY:
                  _________________

                   BARBARA
                  E.
                  RILEY, DIRECTOR

              	
                DATE:
                  

              


      

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      



      APPENDIX
        J

       

      FINANCIAL
        PERFORMANCE

       

      CFC
        ELIGIBLE POPULATION

       

      1.
        SUBMISSION OF FINANCIAL STATEMENTS AND REPORTS

       

      MCPs
        must
        submit the following financial reports to ODJFS:

       

      a.
        The
        National Association of Insurance Commissioners (NAIC) quarterly and annual
        Health Statements (hereafter referred to as the "Financial Statements"),
        as
        outlined in Ohio Administrative Code (OAC) rule 5101:3-26-09(B). The Financial
        Statements must include all required Health Statement filings, schedules
        and
        exhibits as stated in the NAIC Annual Health Statement Instructions including,
        but not limited to, the following sections: Assets, Liabilities, Capital
        and
        Surplus Account, Cash Flow, Analysis of Operations by Lines of Business,
        Five-Year Historical Data, and the Exhibit of Premiums, Enrollment and
        Utilization. The Financial Statements must be submitted to BMHC even if the
        Ohio
        Department of Insurance (ODI) does not require the MCP to submit these
        statements to ODI. A signed hard copy and an electronic copy of the reports
        in
        the NAIC-approved format must both be provided to ODJFS;

       

      b.
        Hard
        copies of annual financial statements for those entities who have an ownership
        interest totaling five percent or more in the MCP or an indirect interest
        of
        five percent or more, or a combination of direct and indirect interest equal
        to
        five percent or more in the MCP;

       

      c.
        Annual
        audited Financial Statements prepared by a licensed independent external
        auditor
        as submitted to the ODI, as outlined in OAC rule 5101:3-26-09(B);

       

      d.
        Medicaid Managed Care Plan Annual Ohio Department of Job and Family Services
        (ODJFS) Cost Report and the auditor's certification of the cost report, as
        outlined in OAC rule 5101 ;3-26-09(B);

       

      e.
        Annual
        physician incentive plan disclosure statements and disclosure of and changes
        to
        the MCP's physician incentive plans, as outlined in OAC rule
        5101:3-26-09(B);

       

      f.
        Reinsurance agreements, as outlined in OAC rule 5101:3-26-09(C);

       

      g.
        Prompt
        Pay Reports, in accordance with OAC rule 5101:3-26-09(B). A hard copy and
        an
        electronic copy of the reports in the ODJFS-specified format must be provided
        to
        ODJFS;

       

      



      Appendix
        J 

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        2

       

      h.
        Notification of requests for information and copies of information released
        pursuant to a tort action (i.e., third party recovery), as outlined in OAC
        rule
        5101:3-26-09.1;

       

      i.
        Financial, utilization, and statistical reports, when ODJFS requests such
        reports, based on a concern regarding the MCP's quality of care, delivery
        of
        services, fiscal operations or solvency, in accordance with OAC rule
        5101:3-26-06(D);

       

      j.
        In
        accordance with ORC Section 5111.76 and Appendix C, MCP Responsibilities,
        MCPs
        must submit ODJFS-specified franchise fee reports in hard copy and electronic
        formats pursuant to ODJFS specifications.

       

      2.
        FINANCIAL PERFORMANCE MEASURES AND STANDARDS

       

      This
        Appendix establishes specific expectations concerning the financial performance
        of MCPs. In the interest of administrative simplicity and nonduplication
        of
        areas of the ODI authority, ODJFS' emphasis is on the assurance of access
        to and
        quality of care. ODJFS will focus only on a limited number of indicators
        and
        related standards to monitor plan performance. The three indicators and
        standards for this contract period are identified below, along with the
        calculation methodologies. The source for each indicator will be the NAIC
        Quarterly and Annual Financial Statements.

       

      Report
        Period:
        Compliance will be determined based on the annual Financial
        Statement.

       

      a.
        Indicator: Net Worth as measured by Net Worth Per Member

       

      Definition:
        Net
        Worth = Total Admitted Assets minus Total Liabilities divided by Total Members
        across all lines of business

       

      Standard:
        For the
        financial report that covers calendar year 2006, a minimum net worth per
        member
        of $156.00, as determined from the annual Financial Statement submitted to
        ODI
        and the ODJFS.

       

      The
        Net
        Worth Per Member (NWPM) standard is the Medicaid Managed Care Capitation
        amount
        paid to the MCP during the preceding calendar year, including delivery payments,
        but excluding the at-risk amount, expressed as a per-member per-month figure,
        multiplied by the applicable proportion below:

       

      0.75
        if
        the MCP had a total membership of 100,000 or more during that calendar
        year

       

      0.90
        if
        the MCP had a total membership of less than 100,000 for that calendar
        year

       

      



      Appendix
        J

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        3

       

      If
        the
        MCP did not receive Medicaid Managed Care Capitation payments during the
        preceding calendar year, then the NWPM standard for the MCP is the average
        Medicaid Managed Care

      


      capitation
        amount paid to Medicaid-contracting MCPs during the preceding calendar year,
        including delivery payments, but excluding the at-risk amount, multiplied
        by the
        applicable proportion above.

       

      b.
        Indicator: Administrative Expense Ratio

       

      Definition:
        Administrative Expense Ratio = Administrative Expenses minus Franchise Fees
        divided by Total Revenue minus Franchise Fees.

       

      Standard:
        Administrative Expense Ratio not to exceed 15%, as determined from the annual
        Financial Statement submitted to ODI and ODJFS.

       

      c.
        Indicator: Overall Expense Ratio

       

      Definition:
        Overall
        Expense Ratio = The sum of the Administrative Expense Ratio and the Medical
        Expense Ratio.

       

      Administrative
        Expense Ratio = Administrative Expenses minus Franchise Fees divided by Total
        Revenue minus Franchise Fees.

       

      Medical
        Expense Ratio = Medical Expenses divided by Total Revenue.

       

      Standard:
        Overall
        Expense Ratio not to exceed 100% as determined from the annual Financial
        Statement submitted to ODI and ODJFS.

       

      Penalty/or
        noncompliance:
        Failure
        to meet any standard on 2.a., 2.b., or 2.c. above will result in ODJFS requiring
        the MCP to complete a corrective action plan (CAP) and

      specifying
        the date by which compliance must be demonstrated. Failure to meet the standard
        or otherwise comply with the CAP by the specified date will result in a new
        membership freeze unless ODJFS determines that the deficiency does not
        potentially jeopardize access to or quality of care or affect the MCP's ability
        to meet administrative requirements (e.g., prompt pay requirements). Justifiable
        reasons for noncompliance may include one-time events (e.g., MCP investment
        in
        information system products).

       

      If
        the
        financial statement is not submitted to ODI by the due date, the MCP continues
        to be obligated to submit the report to ODJFS by ODI's originally specified
        due
        date unless the MCP requests and is granted an extension by ODJFS.

       

      Appendix
        J 

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        4

       

      Failure
        to submit complete quarterly and annual Financial Statements on a timely
        basis
        will be deemed a failure to meet the standards and will be subject to the
        noncompliance penalties listed for indicators 2.a., 2.b., and 2.c., including
        the imposition of a new membership freeze. The new membership freeze will
        take
        effect at the first of the month following the month in which the determination
        was made that the MCP was non-compliant for failing to submit financial reports
        timely.

       

      In
        addition, ODJFS will review two liquidity indicators if a plan demonstrates
        potential problems in meeting related administrative requirements or the
        standards listed above. The two standards, 2.d and 2.e, reflect ODJFS' expected
        level of performance. At this time, ODJFS has not established penalties for
        noncompliance with these standards;

      however,
        ODJFS will consider the MCP's performance regarding the liquidity measures,
        in
        addition to indicators 2.a., 2.b., and 2.c., in determining whether to impose
        a
        new membership freeze, as outlined above, or to not issue or renew a contract
        with an MCP. The source for each indicator will be the NAIC Quarterly and
        annual
        Financial Statements.

       

      Long-term
        investments that can be liquidated without significant penalty within 24
        hours,
        which a plan would like to include in Cash and Short-Term Investments in
        the
        next two measurements, must be disclosed in footnotes on the NAIC Reports.
        Descriptions and amounts should be disclosed. Please note that "significant
        penalty" for this purpose is any penalty greater than 20%. Also, enter the
        amortized cost of the investment, the market value of the investment, and
        the
        amount of the penalty.

       

      d.
        Indicator: Days Cash on Hand

       

      Definition:
        Days
        Cash on Hand = Cash and Short-Term Investments divided by (Total Hospital
        and
        Medical Expenses plus Total Administrative Expenses) divided by
        365.

       

      Standard:
        Greater
        than 25 days as determined from the annual Financial Statement submitted
        to ODI
        and ODJFS.

       

      e.
        Indicator: Ratio of Cash to Claims Payable

       

      Definition:
        Ratio of
        Cash to Claims Payable = Cash and Short-Term Investments divided by claims
        Payable (reported and unreported).

       

      Standard:
        Greater
        than 0.83 as determined from the annual Financial Statement submitted to
        ODI and
        ODJFS.

       

      3.
        REINSURANCE REQUIREMENTS

       

      Pursuant
        to the provisions of OAC rule 5101:3-26-09 (C), each MCP must carry reinsurance
        coverage from a licensed commercial carrier to protect against inpatient-related
        medical expenses incurred by Medicaid members.

       

      Appendix
        J 

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        5

       

      The
        annual deductible or retention amount for such insurance must be specified
        in
        the reinsurance agreement and must not exceed $75,000.00, except as provided
        below. Except for transplant services, and as provided below, this reinsurance
        must cover, at a minimum, 80% of inpatient costs incurred by one member in
        one
        year, in excess of $75,000.00.

       

      For
        transplant services, the reinsurance must cover, at a minimum, 50% of transplant
        related costs incurred by one member in one year, in excess of
        $75,000.00.

       

      An
        MCP
        may request a higher deductible amount and/or that the reinsurance cover
        less
        than 80% of inpatient costs in excess of the deductible amount. If the MCP
        does
        not have more than 75,000 members in Ohio, but does have more than 75,000
        members between Ohio and other states, ODJFS may consider alternate reinsurance
        arrangements. However, depending on the corporate structures of the Medicaid
        MCP, other forms of security may be required in addition to reinsurance.
        These
        other security tools may include parental guarantees, letters of credit,
        or
        performance bonds. In determining whether or not the request will be approved,
        the ODJFS may consider any or all of the following:

       

      a.
        whether the MCP has sufficient reserves available to pay unexpected
        claims;

       

      b.
        the
        MCP's history in complying with financial indicators 2.a., 2.b., and 2.c.,
        as
        specified in this Appendix.

       

      c.
        the
        number of members covered by the MCP;

       

      d.
        how
        long the MCP has been covering Medicaid or other members on a full risk
        basis.

       

      e.
        risk
        based capital ratio greater than 2.5 calculated from the last annual ODI
        financial statement.

       

      f.
        scatter diagram or bar graph from the last calendar year that shows the number
        of reinsurance claims that exceeded the current reinsurance
        deductible.

       

      The
        MCP
        has been approved to have a reinsurance policy with a deductible amount of
        $75,000 that covers 80% of inpatient costs in excess of the deductible amount
        for non-transplant services.

       

      Penalty
        for noncompliance:
        If it is
        determined that an MCP failed to have reinsurance coverage, that an MCP's
        deductible exceeds $75,000,00 without approval from ODJFS, or that the MCP's
        reinsurance for non-transplant services covers less than 80% of inpatient
        costs
        in excess of the deductible incurred by one member for one year without approval
        from ODJFS, then the MCP will be required to pay a monetary penalty
        to

       

      Appendix
        J 

      Page
        6

       

      ODJFS.
        The amount of the penalty will be the difference between the estimated amount,
        as determined by ODJFS, of what the MCP would have paid in premiums for the
        reinsurance policy if it had been in compliance and what the MCP did actually
        pay while it was out of compliance plus 5%. For example, if the MCP paid
        $3,000,000.00 in premiums during the period of non-compliance and would have
        paid $5,000,000.00 if the requirements had been met, then the penalty would
        be
        $2,100,000.00.

       

      If
        it is
        determined that an MCP's reinsurance for transplant services covers less
        than
        50% of inpatient costs incurred by one member for one year, the MCP will
        be
        required to develop a corrective action plan (CAP).

       

      4.
        PROMPT PAY REQUIREMENTS

       

      In
        accordance with 42 CFR 447.46, MCPs must pay 90% of all submitted cleanclaims
        within 30 days of the date of receipt and 99% of such claims within 90 days
        of
        the date of receipt, unless the MCP and its contracted provider(s) have
        established an alternative payment schedule that is mutually agreed upon
        and
        described in their contract. The prompt pay requirement applies to the
        processing of both electronic and paper claims for contracting and
        non-contracting providers by the MCP and delegated claims processing
        entities.

       

      The
        date
        of receipt is the date the MCP receives the claim, as indicated by its date
        stamp on the claim. The date of payment is the date of the check or date
        of
        electronic payment transmission. A claim means a bill from a provider for
        health
        care services that is assigned a unique identifier. A claim does not include
        an
        encounter form.

       

      A
        "claim"
        can include any of the following: (1) a bill for services; (2) a line item
        of
        services; or (3) all services for one recipient within a bill. A "clean claim"
        is a claim that can be processed without obtaining additional information
        from
        the provider of a service or from a third party.

       

      Clean
        claims do not include payments made to a provider of service or a third party
        where the timing of the payment is not directly related to submission of
        a
        completed claim by the provider of service or third party (e.g., capitation).
        A
        clean claim also does not include a claim from a provider who is under
        investigation for fraud or abuse, or a claim under review for medical
        necessity.

       

      Penalty
        for noncompliance:
        Noncompliance with prompt pay requirements will result in progressive penalties
        to be assessed on a quarterly basis, as outlined in Appendix N of the Provider
        Agreement.

       

      5.
        PHYSICIAN INCENTIVE PLAN DISCLOSURE REQUIREMENTS

       

      MCPs
        must
        comply with the physician incentive plan requirements stipulated in 42 CFR
        438.6(h). If the MCP operates a physician incentive plan, no specific payment
        can be made directly or indirectly under this physician incentive plan to
        a
        physician or physician

       

      


      Appendix
        J

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        7

       

      group
        as
        an inducement to reduce or limit medically necessary services furnished to
        an
        individual.

       

      If
        the
        physician incentive plan places a physician or physician group at substantial
        financial risk [as determined under paragraph (d) of 42 CFR 422.208] for
        services that the physician or physician group does not famish itself, the
        MCP
        must assure that all physicians and physician groups at substantial financial
        risk have either aggregate or per-patient stop-loss protection in accordance
        with paragraph (f) of 42 CFR 422.208, and conduct periodic surveys in accordance
        with paragraph (h) of 42 CFR 422.208.

       

      In
        accordance with 42 CFR 417.479 and 42 CFR 422.210, MCPs must maintain copies
        of
        the following required documentation and submit to ODJFS annually, no later
        than
        30 days after the close of the state fiscal year and upon any modification
        of
        the MCP's physician incentive plan:

       

      a.
        A
        description of the types of physician incentive arrangements the MCP has
        in
        place which indicates whether they involve a withhold, bonus, capitation,
        or
        other arrangement. If a physician incentive arrangement involves a withhold
        or
        bonus, the percent of the withhold or bonus must be specified.

       

      b.
        A
        description of information/data feedback to a physician/group on their: 1)
        adherence to evidence-based practice guidelines; and 2) positive and/or negative
        care variances from standard clinical pathways that may impact outcomes or
        costs. The feedback information may be used by the MCP for activities such
        as
        physician performance improvement projects that include incentive programs
        or
        the development of quality improvement initiatives.

       

      c.
        A
        description of the panel size for each physician incentive plan. If patients
        are
        pooled, then the pooling method used to determine if substantial financial
        risk
        exists must also be specified.

       

      d.
        If
        more than 25% of the total potential payment of a physician/group is at risk
        for
        referral services, the MCP must maintain a copy of the results of the required
        patient satisfaction survey and documentation verifying that the physician
        or
        physician group has adequate stop-loss protection, including the type of
        coverage (e.g., per member per year, aggregate), the threshold amounts, and
        any
        coinsurance required for amounts over the threshold.

       


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        8

       

      6.
        NOTIFICATION OF REGULATORY ACTION

       

      Any
        MCP
        notified by the ODI of proposed or implemented regulatory action must report
        such notification and the nature of the action to ODJFS no later than one
        working day after receipt from ODI. The ODJFS may request, and the MCP must
        provide, any additional information as necessary to assure continued
        satisfaction of program requirements. MCPs may request that information related
        to such actions be considered proprietary in accordance with established
        ODJFS
        procedures. Failure to comply with this provision will result in an immediate
        membership freeze.