Document:

EXHIBIT 10.17

Arizona Health Care Cost Containment System
Acute Care Request for Proposal
October 1, 2003-September 30, 2006
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AHCCCS MISSION
Reaching across Arizona to provide
comprehensive, quality health care for
those in need.

AHCCCS VISION
Shaping tomorrow's managed health care...from
todays experience, quality and innovation.

AHCCCS CUSTOMER
Depending on the changing role of AHCCCS we
recognize different internal and external
customers, but we have only one fundamental
focus that inspires our efforts:
Our primary customers
are AHCCCS members.
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ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
SOLICITATION, OFFER AND AWARD
Request for Proposal Number YH04-0001
Date Issued: February 3, 2003 Issued by: AHCCCSA
					 Contracts and Purchasing
Subject of Solicitation: 		 701 E. Jefferson Ave.
ACUTE CARE SERVICES 			 Phoenix, AZ 85034
Term of Contract: 10/1/03-9/30/06

Questions concerning this solicitation shall be submitted to Michael Veit,
(602) 417-4762 or E-mail of MJVeit@ahcccs.state.az.us

I. SOLICITATION
In accordance with A.R.S. Sec. 36-2901, which is incorporated herein by
reference,competitive sealed proposals will be received at the address above,
until 3:00 p.m. local time, March 31, 2003. Proposals must be in the actual
possession of AHCCCSA on or prior to the time and date and at the location
indicated above. Late proposals will not be considered. Proposals must be
submitted in a sealed envelope or package (original and 7 copies) with the
Solicitation Number and the offeror's name and address clearly indicated on
the envelope or package. All proposals must be completed in ink or
typewritten. Additional instructions for preparing a proposal are included in
this solicitation document.

TABLE OF CONTENTS
A. SOLICITATION, OFFER AND AWARD..........................................  1
B. RATES .................................................................  6
C. DEFINITIONS ...........................................................  7
D. PROGRAM REQUIREMENTS .................................................. 15
E. CONTRACT CLAUSES ...................................................... 73
F. INDEX ................................................................. 81
G. REPRESENTATIONS & CERTIFICATIONS....................................... 84
H. EVALUATION FACTORS .................................................... 93
I. INSTRUCTIONS TO OFFERORS .............................................. 96
J. ATTACHMENTS .......................................................... 110

II. OFFER (Must be fully completed by Offeror)

The undersigned Offeror hereby agrees, if this offer is accepted within 120 days
of receipt of proposals, to provide all services in accordance with the terms
and requirements stated herein, including all attachments, amendments, and
Best-and-Final Offers (if any).

Name of Offeror: VHS Phoenix Health Plan, Inc.	Phone: (602) 824-3810
Address:	 1209 S. 7th Avenue		Fax: (602) 824-3857
City/State/Zip:	 Phoenix, AZ  85007		Email: nnovick@phxmem.com
Printed Name of Person Authorized to Sign Offer:Nancy Novick
Offeror's Signature: /s/ Nancy Novick		Date: 3/28/03

III. AWARD (To be completed by AHCCCSA)

The offer, including all attachments, amendments and Best-and-Final Offers
(if any), contained herein, is accepted.
Awarded this 1st day of May, 2003.

/s/ Michael J. Viet
Michael Veit, as AHCCCS Contracting Officer

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TABLE OF CONTENTS
SOLICITATION, OFFER AND AWARD ............................................. 1
SECTION B: CAPITATION RATES ............................................... 6
SECTION C: DEFINITIONS .................................................... 7
SECTION D: PROGRAM REQUIREMENTS ...........................................15
1. TERM OF CONTRACT AND OPTION TO RENEW....................................15
2. ELIGIBILITY CATEGORIES .................................................16
3. ENROLLMENT AND DISENROLLMENT............................................17
4. ANNUAL ENROLLMENT CHOICE ...............................................19
5. OPEN ENROLLMENT ........................................................20
6. AUTO-ASSIGNMENT ALGORITHM...............................................20
7. AHCCCS MEMBER IDENTIFICATION CARDS .....................................20
8. MAINSTREAMING OF AHCCCS MEMBERS.........................................20
9. TRANSITION OF MEMBERS...................................................21
10. SCOPE OF SERVICES .................................................... 21
11. SPECIAL HEALTH CARE NEEDS............................................. 29
12. BEHAVIORAL HEALTH SERVICES............................................ 29
13. AHCCCS MEDICAL POLICY MANUAL ......................................... 31
14. MEDICAID IN THE PUBLIC SCHOOLS (MIPS) ................................ 31
15. PEDIATRIC IMMUNIZATIONS AND THE VACCINE FOR CHILDREN PROGRAM.......... 31
16. STAFF REQUIREMENTS AND SUPPORT SERVICES............................... 32
17. WRITTEN POLICIES, PROCEDURES AND JOB DESCRIPTIONS..................... 33
18. MEMBER INFORMATION ................................................... 33
19. MEMBER SURVEYS ....................................................... 34
20. CULTURAL COMPETENCY................................................... 34
21. MEDICAL RECORDS....................................................... 35
22. ADVANCE DIRECTIVES.................................................... 35
23. QUALITY MANAGEMENT AND UTILIZATION MANAGEMENT (QM/UM) ................ 36
24. PERFORMANCE STANDARDS................................................. 37
25. GRIEVANCE AND REQUEST FOR HEARING PROCESS AND STANDARDS............... 39
26. QUARTERLY GRIEVANCE REPORT............................................ 39
27. NETWORK DEVELOPMENT................................................... 39
28. PROVIDER AFFILIATION TRANSMISSION..................................... 41
29. NETWORK MANAGEMENT.................................................... 41
30. PRIMARY CARE PROVIDER STANDARDS....................................... 41
31. MATERNITY CARE PROVIDER STANDARDS .................................... 42
32. REFERRAL PROCEDURES AND STANDARDS .................................... 43
33. APPOINTMENT STANDARDS ................................................ 44
34. FEDERALLY QUALIFIED HEALTH CENTERS (FQHC) ............................ 45
35. PROVIDER MANUAL....................................................... 45
36. PROVIDER REGISTRATION................................................. 46
37. SUBCONTRACTS ..........................................................46
38. CLAIMS PAYMENT SYSTEM ................................................ 48
39. SPECIALTY CONTRACTS .................................................. 48
40. HOSPITAL SUBCONTRACTING AND REIMBURSEMENT............................. 49
41. NURSING FACILITY REIMBURSEMENT........................................ 49
42. PHYSICIAN INCENTIVES.................................................. 50

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43. MANAGEMENT SERVICES SUBCONTRACTORS.................................... 50
44. MANAGEMENT SERVICES SUBCONTRACTOR AUDITS.............................. 51
45. MINIMUM CAPITALIZATION REQUIREMENTS................................... 51
46. PERFORMANCE BOND OR BOND SUBSTITUTE................................... 52
47. AMOUNT OF PERFORMANCE BOND............................................ 52
48. ACCUMULATED FUND DEFICIT.............................................. 53
49. ADVANCES, DISTRIBUTIONS, LOANS AND INVESTMENTS........................ 53
50. FINANCIAL VIABILITY STANDARDS / PERFORMANCE GUIDELINES................ 53
51. SEPARATE INCORPORATION................................................ 54
52. MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP ....................... 54
53. COMPENSATION ......................................................... 54
54. PAYMENTS TO CONTRACTORS .............................................. 56
55. CAPITATION ADJUSTMENTS ............................................... 57
56. INCENTIVES ........................................................... 57
57. REINSURANCE........................................................... 58
58. COORDINATION OF BENEFITS / THIRD PARTY LIABILITY...................... 61
59. COPAYMENTS ........................................................... 63
60. MEDICARE SERVICES AND COST SHARING.................................... 64
61. MARKETING............................................................. 64
62. CORPORATE COMPLIANCE.................................................. 64
63. RECORDS RETENTION..................................................... 65
64. DATA EXCHANGE REQUIREMENTS............................................ 65
65. ENCOUNTER DATA REPORTING.............................................. 66
66. ENROLLMENT AND CAPITATION TRANSACTION UPDATES......................... 67
67. PERIODIC REPORT REQUIREMENTS.......................................... 67
68. REQUESTS FOR INFORMATION.............................................. 68
69. DISSEMINATION OF INFORMATION ......................................... 68
70. OPERATIONAL AND FINANCIAL READINESS REVIEWS........................... 68
71. OPERATIONAL AND FINANCIAL REVIEWS..................................... 68
72. SANCTIONS ............................................................ 69
73. BUSINESS CONTINUITY PLAN.............................................. 70
74. TECHNOLOGICAL ADVANCEMENT............................................. 70
75. PENDING LEGISLATIVE / OTHER ISSUES.................................... 71
76. BALANCED BUDGET ACT OF 1997 (BBA)..................................... 71
77. HEALTHCARE GROUP OF ARIZONA........................................... 72
SECTION E: CONTRACT CLAUSES............................................... 73
1) APPLICABLE LAW......................................................... 73
2) AUTHORITY ............................................................. 73
3) ORDER OF PRECEDENCE.................................................... 73
4) CONTRACT INTERPRETATION AND AMENDMENT.................................. 73
5) SEVERABILITY........................................................... 73
6) RELATIONSHIP OF PARTIES................................................ 73
7) ASSIGNMENT AND DELEGATION.............................................. 73
8) GENERAL INDEMNIFICATION................................................ 73
9) INDEMNIFICATION -- PATENT AND COPYRIGHT................................ 74
10) COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS ............... 74
11) ADVERTISING AND PROMOTION OF CONTRACT ................................ 74
12) PROPERTY OF THE STATE................................................. 74
13) THIRD PARTY ANTITRUST VIOLATIONS...................................... 74
14) RIGHT TO ASSURANCE ................................................... 74

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15) TERMINATION FOR CONFLICT OF INTEREST.................................. 74
16) GRATUITIES ........................................................... 75
17) SUSPENSION OR DEBARMENT............................................... 75
18) TERMINATION FOR CONVENIENCE........................................... 75
19) TERMINATION FOR DEFAULT............................................... 75
20) TERMINATION - AVAILABILITY OF FUNDS .................................. 76
21) RIGHT OF OFFSET....................................................... 76
22) NON-EXCLUSIVE REMEDIES ............................................... 76
23) NON-DISCRIMINATION ................................................... 76
24) EFFECTIVE DATE........................................................ 76
25) INSURANCE............................................................. 76
26) DISPUTES.............................................................. 77
27) RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS........................... 77
28) INCORPORATION BY REFERENCE ........................................... 77
29) COVENANT AGAINST CONTINGENT FEES...................................... 77
30) CHANGES............................................................... 77
31) TYPE OF CONTRACT...................................................... 77
32) AMERICANS WITH DISABILITIES ACT ...................................... 77
33) WARRANTY OF SERVICES ................................................. 78
34) NO GUARANTEED QUANTITIES.............................................. 78
35) CONFLICT OF INTEREST ................................................. 78
36) DISCLOSURE OF CONFIDENTIAL INFORMATION................................ 78
37) COOPERATION WITH OTHER CONTRACTORS.................................... 78
38) ASSIGNMENT OF CONTRACT AND BANKRUPTCY................................. 78
39) OWNERSHIP OF INFORMATION AND DATA .................................... 78
40) AHCCCSA RIGHT TO OPERATE CONTRACTOR................................... 79
41) AUDITS AND INSPECTIONS................................................ 79
42) LOBBYING.............................................................. 79
43) CHOICE OF FORUM....................................................... 80
SECTION F: INDEX - PROGRAM REQUIREMENTS AND CONTRACT CLAUSES ............. 81
SECTION G: REPRESENTATIONS AND CERTIFICATIONS OF OFFEROR ................. 84
SECTION H: EVALUATION FACTORS AND SELECTION PROCESS....................... 93
SECTION I: INSTRUCTIONS TO OFFERORS....................................... 96
SECTION J: LIST OF ATTACHMENTS........................................... 110
ATTACHMENT A: MINIMUM SUBCONTRACT PROVISIONS ............................ 111
1) ASSIGNMENT AND DELEGATION OF RIGHTS AND RESPONSIBILITIES.............. 111
2) AWARDS OF OTHER SUBCONTRACTS.......................................... 111
3) CERTIFICATION OF COMPLIANCE - ANTI-KICKBACK AND LABORATORY TESTING.... 111
4) CERTIFICATION OF TRUTHFULNESS OF REPRESENTATION....................... 111
5) CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988.................... 111
6) COMPLIANCE WITH AHCCCSA RULES RELATING TO AUDIT AND INSPECTION........ 111
7) COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS........................... 112
8) CONFIDENTIALITY REQUIREMENT .......................................... 112
9) CONFLICT IN INTERPRETATION OF PROVISIONS ............................. 112
10) CONTRACT CLAIMS AND DISPUTES......................................... 112
11) ENCOUNTER DATA REQUIREMENT........................................... 112

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12) EVALUATION OF QUALITY, APPROPRIATENESS, OR TIMELINESS OF SERVICES ... 112
13) FRAUD AND ABUSE ..................................................... 112
14) GENERAL INFORMATION.................................................. 112
15) INSURANCE............................................................ 112
16) LIMITATIONS ON BILLING AND COLLECTION PRACTICES...................... 113
17) MAINTENANCE OF REQUIREMENTS TO DO BUSINESS AND PROVIDE SERVICES...... 113
18) NON-DISCRIMINATION REQUIREMENTS ..................................... 113
19) PRIOR AUTHORIZATION AND UTILIZATION REVIEW........................... 113
20) RECORDS RETENTION.................................................... 113
21) SEVERABILITY......................................................... 113
22) SUBJECTION OF SUBCONTRACT............................................ 114
23) TERMINATION OF SUBCONTRACT .......................................... 114
24) VOIDABILITY OF SUBCONTRACT .......................................... 114
25) WARRANTY OF SERVICES ................................................ 114
ATTACHMENT B: MINIMUM NETWORK STANDARDS.................................. 115
ATTACHMENT C: MANAGEMENT SERVICES SUBCONTRACTOR STATEMENT................ 126
ATTACHMENT D (1): SAMPLE LETTER OF INTENT ............................... 132
ATTACHMENT D (2): NETWORK SUBMISSION REQUIREMENTS........................ 136
ATTACHMENT E: INSTRUCTIONS FOR PREPARING CAPITATION PROPOSAL ............ 150
ATTACHMENT F: PERIODIC REPORT REQUIREMENTS .............................. 152
ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM.................................. 154
ATTACHMENT H (1): ENROLLEE GRIEVANCE SYSTEM STANDARDS AND POLICY......... 157
ATTACHMENT H (2): PROVIDER GRIEVANCE SYSTEM STANDARDS AND POLICY......... 161
ATTACHMENT I: ENCOUNTER SUBMISSION REQUIREMENTS.......................... 163
ATTACHMENT J: EPSDT PERIODICITY SCHEDULE................................. 166
ATTACHMENT K: OFFEROR'S CHECKLIST ....................................... 169

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SECTION B: CAPITATION RATES

Pre-Contract Award

1. The Contractor shall assume in the capitation rate calculation that
   services will be provided as described in this solicitation.
2. The first page following this page must be a certification that the
   capitation rates submitted by the Offeror are actuarially sound by an actuary
   who is a member of the American Academy of Actuaries.
3. The Capitation Rate Calculation Sheets (CRCS) will be generated by the Web
   application, described in Attachment E. The Offeror must complete two such
   CRCS for each risk group and Geographical Service Area (GSA) it is bidding.
   One CRCS is to be bid with Prescription Drug expenditures included
   and one CRCS is to be bid without Prescription Drug expenditures. The Offeror
   should insert a print out Of the CRCS bid sheets after the actuarial
   certification.
4. In the event that the Web application bid submission differs from the bid
   submission included with this
   section, the bid submitted via the Web application will prevail.

Post-Contract Award

The Contractor shall provide services as described in this contract. In
consideration for these services, the Contractor will be paid the attached
Contractor specific rates for the term October 1, 2003 through
September 30, 2004.

See attached.

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SECTION C: DEFINITIONS

1931
Eligible individuals and families under the 1931 provision of the Social
Security Act, with household income levels at or below 100% of the FPL.

ADHS
Arizona Department of Health Services, the state agency mandated to serve the
public health needs of all Arizona citizens.

ADHS BEHAVIORAL HEALTH RECIPIENT
A Title XIX or Title XXI acute care member who is eligible for, and is
receiving, behavioral health services through ADHS and its subcontractors.

AGENT
Any person who has been delegated the authority to obligate or act on behalf of
another person or entity.

AHCCCS
Arizona Health Care Cost Containment System, which is composed of the
Administration, Contractors, and other arrangements through which health care
services are provided to an eligible person, as defined by A.R.S. Sec. 36-2902,
et seq.

AHCCCS BENEFITS
See "COVERED SERVICES".

AHCCCS MEMBER
See "MEMBER".

AHCCCSA
Arizona Health Care Cost Containment System Administration.

ALTCS
The Arizona Long Term Care System, a program under AHCCCSA that delivers
long term, acute, behavioral health and case management services to members, as
authorized by A.R.S. Sec. 36-2932.

AMBULATORY CARE
Preventive, diagnostic and treatment services provided on an outpatient basis by
physicians, nurse practitioners, physician assistants and other health care
providers.

AMPM
AHCCCS Medical Policy Manual.

ANNUAL ENROLLMENT CHOICE (AEC)
The opportunity, given each member annually, to change to another Contractor in
their GSA.

ARIZONA ADMINISTRATIVE CODE (A.A.C.)
State regulations established pursuant to relevant statutes. For purposes of
this solicitation, the relevant sections of the AAC are referred to throughout
this document as "AHCCCS Rules".

A.R.S.
Arizona Revised Statutes.

BBA
The Balanced Budget Act of 1997.

BCCTP
Breast and Cervical Cancer Treatment Program, a Title XIX eligibility expansion
program for women who are not otherwise Title XIX eligible and are diagnosed
as needing treatment for breast and/or cervical cancer or lesions.

BIDDER'S LIBRARY
A repository of manuals, statutes, rules and other reference material located at
the AHCCCS Central office in Phoenix. A limited, virtual library is located on
the AHCCCS website at www.ahcccs.state.az.us.

BOARD CERTIFIED
An individual who has successfully completed all prerequisites of the respective
specialty board and successfully passed the required examination for
certification.

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CAPITATION
Payment to Contractor by AHCCCSA of a fixed monthly payment per person in
advance for which the Contractor provides a full range of covered services as
authorized under A.R.S. Sec. 36-2904 and Sec. 36-2907.

CATEGORICALLY LINKED TITLE XIX MEMBER
Member eligible for Medicaid under Title XIX of the Social Security Act
including those eligible under 1931 provisions of the Social Security Act, Sixth
Omnibus Budget Reconciliation Act (SOBRA), Supplemental Security Income
(SSI), SSI-related groups. To be categorically linked, the member must be aged
65 or over, blind, disabled, a child under age 19, a parent of a dependent
child, or pregnant.

CLEAN CLAIM
A claim that may be processed without obtaining additional information from the
provider of service or from a third party; but does not include claims under
investigation for fraud or abuse or claims under review for medical necessity.

CMS (formerly HCFA)
Centers for Medicare and Medicaid Services, an organization
within the U.S. Department of Health and Human Services, which administers the
Medicare and Medicaid programs and the State Children's Health Insurance
Program.

COMPETITIVE BID PROCESS
A state procurement system used to select Contractors to provide covered
services on a geographic basis.

CONTINUING OFFEROR (INCUMBENT)
An AHCCCS Contractor during CYE 03 that submits a proposal pursuant to this
solicitation.

CONTRACT SERVICES
See "COVERED SERVICES".

CONTRACT YEAR (CY)
Corresponds to Federal fiscal year (Oct. 1 through Sept. 30). For example,
Contract Year 04 is 10/01/03 - 9/30/04.

CONTRACTOR
An organization or entity agreeing through a direct contracting relationship
with AHCCCSA to provide the goods and services specified by this contract in
conformance with the stated contract requirements, AHCCCS statute and rules
and Federal law and regulations.

CONVICTED
A judgment of conviction has been entered by a Federal, State or local court,
regardless of whether an appeal from that judgment is pending.

COPAYMENT
A monetary amount specified by the Director that the member pays directly to a
Contractor or provider at the time covered services are rendered, as defined in
R9-22-107.

COVERED SERVICES
Health care services to be delivered by a Contractor which are designated in
Section D of this contract, AHCCCS Rules R9-22, Article 2 and R9-31, Article 2
and the AMPM.

CRS
The Children's Rehabilitative Services administered by ADHS, as defined in R9-
22-114.

CY
See "CONTRACT YEAR".

CYE
Contract Year Ending; same as "CONTRACT YEAR".

DAYS
Calendar days unless otherwise specified as defined in the text, as defined in
R9-22-101.

DIRECTOR
The Director of AHCCCSA.

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DISCLOSING ENTITY
An AHCCCS provider or a fiscal agent.

DISENROLLMENT
The discontinuance of a member's ability to receive covered services through a
Contractor.

DME
Durable Medical Equipment, which is an item, or appliance that can withstand
repeated use, is designated to serve a medical purpose, and is not generally
useful to a person in the absence of a medical condition, illness or injury as
defined in R9-22-102.

DUAL ELIGIBLE
A member who is eligible for both Medicare and Medicaid.

ELIGIBILITY DETERMINATION
A process of determining, through a written application and required
documentation, whether an applicant meets the qualifications for Title XIX or
Title XXI.

EMERGENCY MEDICAL CONDITION
A medical condition manifesting itself by acute symptoms of sufficient severity
(including severe pain) such that a prudent layperson, who possesses an average
knowledge of health and medicine, could reasonably expect the absence of
immediate medical attention to result in: a) placing the patient's health (or,
with respect to a pregnant woman, the health of the woman or her unborn child)
in serious jeopardy; b) serious impairment to bodily functions; or c) serious
dysfunction of any bodily organ or part.

EMERGENCY MEDICAL SERVICE
Covered inpatient and outpatient services provided after the sudden onset of an
emergency medical condition as defined above. These services must be furnished
by a qualified provider, and must be necessary to evaluate or stabilize the
emergency medical condition.

ENCOUNTER
A record of a health care related service rendered by a provider or providers
registered with AHCCCSA to a member who is enrolled with a Contractor on the
date of service.

ENROLLEE
A Medicaid recipient who is currently enrolled with a contractor.

ENROLLMENT
The process by which an eligible person becomes a member of a Contractor's
health plan.

EPSDT
Early and Periodic Screening, Diagnosis and Treatment; services for persons
under 21 years of age as described in AHCCCS rules R9-22, Article 2.

FAMILY PLANNING SERVICES EXTENSION PROGRAM
A program that provides only family planning services for a maximum of 24
months to SOBRA women whose pregnancy has ended and who are not
otherwise eligible for full Title XIX services.

FEDERALLY QUALIFIED HEALTH CENTER (FQHC)
An entity which meets the requirements and receives a grant and funding
pursuant to Section 330 of the Public Health Service Act. An FQHC includes an
outpatient health program or facility operated by a tribe or tribal organization
under the Indian Self-Determination Act (PL 93-638) or an urban Indian
organization receiving funds under Title V of the Indian Health Care
Improvement Act.

FEE-FOR-SERVICE (FFS)
A method of payment to registered providers on an amount per service basis.

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FES
Federal emergency services program covered under R9-22-217, to treat an
emergency medical condition for a member who is determined eligible under
A.R.S. Sec.36-2903.03 (D).

FFP
Federal financial participation (FFP) refers to the contribution that the
Federal government makes to the Title XIX and Title XXI program portions of
AHCCCS as defined in 42 CFR 400.203.

FISCAL YEAR (FY)
The budget year - Federal Fiscal Year: October 1 through September 30; State
fiscal year: July 1 through June 30.

FREEDOM TO WORK (TICKET TO WORK)
A Federal program that expands Title XIX eligibility to individuals, 16 through
64 years old, who are disabled and whose earned income, after allowable
deductions, is at or below 250% of the Federal Poverty Level.

GATEKEEPER
Primary care provider who is primarily responsible for all medical treatment
rendered, who makes referrals as necessary, and who coordinates and monitors
the member's treatment.

GEOGRAPHIC SERVICE AREA (GSA)
A specific county or defined grouping of counties designated by AHCCCSA
within which a Contractor provides, directly or through subcontract, covered
health care to members enrolled with that Contractor.

HEALTHCARE GROUP OF ARIZONA (HCG)
A prepaid medical coverage plan marketed to small, uninsured businesses and
political subdivisions within the state.

HEALTH MAINTENANCE ORGANIZATION (HMO)
Various forms of plan organization, including staff and group models that meet
the HMO licensing requirements of the Federal and/or State government and
offer a full array of health care services to members on a capitated basis.

HEALTH PLAN
See "CONTRACTOR".

HIFA
Health Insurance Flexibility and Accountability Act, a demonstration initiative
by CMS, which targets State Children's Health Insurance Program (Title
XXI) funding for populations with incomes below 200 percent of the Federal
Poverty Level, seeking to maximize private health insurance coverage
options.

HIFA PARENTS
Parents of Medicaid and KidsCare eligible children who are eligible for
AHCCCS benefits under the HIFA Waiver. All eligible parents must pay a
monthly premium based on household income.

IBNR
Incurred But Not Reported liability for services rendered for which claims have
not been received.

IHS
Indian Health Service authorized as a Federal agency pursuant to 25 U.S.C.
1661.

KIDSCARE
Individuals under the age of 19, eligible under the SCHIP program, in
households with income at or below 200% FPL. Children, in households with
incomes between 150% and 200% of the FPL, may participate in the program,
but are required to pay a premium amount based on the number of children in the
family and the gross family income.

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LIEN
A legal claim, filed with the County Recorder's office in which a member resides
and in the county an injury was sustained, for the purpose of ensuring that
AHCCCS receives reimbursement for medical services paid. The lien is attached
to any settlement the member may receive as a result of an injury.

MANAGED CARE
Systems that integrate the financing and delivery of health care services to
covered individuals by means of arrangements with selected providers to furnish
comprehensive services to members; establish explicit criteria for the
selection of health care providers; have financial incentives for members to
use providers and procedures associated with the plan; and have formal
programs for quality, utilization management and the coordination of care.

MANAGEMENT SERVICES SUBCONTRACTOR
A person or organization that agrees to perform any administrative function or
service for the Contractor, specifically related to securing or fulfilling the
Contractor's obligations to AHCCCSA, under the terms of this contract.

MANAGING EMPLOYEE
A general manager, business manager, administrator, director, or other
individual who exercises operational or managerial control over, or who directly
or indirectly conducts the day-to-day operation of an institution, organization
or agency.

MATERIAL OMISSION
Facts, data or other information excluded from a report, contract, etc., the
absence of which could lead to erroneous conclusions following reasonable
review of such report, contract, etc.

MEDICAID
A Federal/State program authorized by Title XIX of the Social Security Act, as
amended.

MEDICAL EXPENSE DEDUCTION (MED)
Title XIX Waiver member whose family income is more than 100% of the
Federal Poverty Level and has family medical expenses that reduce income to or
below 40% of the Federal Poverty Level. MED's may have a categorical link to
a Title XIX program; however, their income exceeds the limits of the Title XIX
program.

MEDICARE
A Federal program authorized by Title XVIII of the Social Security Act, as
amended.

MEDICARE HMO
A Health Maintenance Organization or Comprehensive Medical Plan, which
provides Medicare services to Medicare beneficiaries pursuant to a Medicare risk
contract with CMS under Sec.1876 of the Social Security Act.

MEMBER
An eligible person who is enrolled in the system, as defined in A.R.S.
Sec. 36-2901, A.R.S. Sec. 36-2981 and A.R.S. Sec. 36-2981.01.

NEW OFFEROR
An organization or entity that submits a proposal in response to this
solicitation and which has not been an AHCCCS Contractor during CYE 03.

NON-CONTRACTING PROVIDER
A person who provides services as prescribed in A.R.S. Sec. 36-2939 and who does
not have a subcontract with an AHCCCS Contractor.

OFFEROR
An organization or other entity that submits a proposal to the Administration in
response to this RFP, as defined in R9-22-106.

PERFORMANCE STANDARDS
A set of standardized indicators designed to assist AHCCCSA in evaluating,
comparing and improving the performance of its Contractors. Specific
descriptions of health services measurement goals are found in Section D,
Paragraph 24, Performance Standards.

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PMMIS
AHCCCSA's Prepaid Medical Management Information System.

POTENTIAL ENROLLEE
A Medicaid eligible recipient who is not enrolled with a contractor.

POST STABILIZATION SERVICES
Medically necessary services, related to an emergency medical condition,
provided after the member's condition is sufficiently stabilized so that the
member could alternatively be safely discharged or transferred to another
location. The services must be provided at the site where the member was treated
for the emergency medical condition.

PRIMARY CARE PROVIDER (PCP)
An individual who meets the requirements of A.R.S. Sec. 36-2901, and who is
responsible for the management of a member's health care. A PCP may be a
physician defined as a person licensed as an allopathic or osteopathic physician
according to A.R.S. Title 32, Chapter 13 or Chapter 17 or a practitioner defined
as a physician assistant licensed under A.R.S. Title 32, Chapter 25, or a
certified nurse practitioner licensed under A.R.S. Title 32, Chapter 15.

PRIOR PERIOD
The period of time, prior to the member's enrollment, during which a member is
eligible for covered services. The time frame is from the effective date of
eligibility to the day a member is enrolled with a Contractor.

PROVIDER
Any person or entity who contracts with AHCCCSA or a Contractor for the
provision of covered services to members according to the provisions A.R.S. Sec.
36-2901 or any subcontractor of a provider delivering services pursuant to
A.R.S. Sec. 36-2901.

QUALIFIED MEDICARE BENEFICIARY (QMB)
A person, eligible under A.R.S. Sec. 36-2971(6), who is entitled to Medicare
Part A insurance and meets certain income and residency requirements of the
Qualified Medicare Beneficiary program. A QMB, who is also eligible for
Medicaid, is commonly referred to as a QMB dual eligible.

RATE CODE
Eligibility classification for capitation payment purposes.

REGIONAL BEHAVIORAL HEALTH AUTHORITY (RBHA)
An organization under contract with ADHS, who administers covered behavioral
health services in a geographically specific area of the state. Tribal
governments, through an agreement with ADHS, may operate a tribal regional
behavioral health authority (TRBHA) for the provision of behavioral health
services to Native American members living on-reservation.

REINSURANCE
A risk-sharing program provided by AHCCCSA to Contractors for the
reimbursement of certain contract service costs incurred for a member beyond a
certain monetary threshold.

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

RISK GROUP
Grouping of rate codes that are paid at the same capitation rate.

RFP
Request For Proposal is a document prepared by AHCCCSA, which describes
the services required and instructs prospective offerors about how to prepare a
response (proposal), as defined in R9-22-106.

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SCHIP
State Children's Health Insurance Program under Title XXI of the Social
Security Act.

SCOPE OF SERVICES
See "COVERED SERVICES".

SES
State emergency services program covered under R9-22-217 to treat an
emergency medical condition for a qualified alien or non-citizen who is
determined eligible under A.R.S. Sec. 36-2901.06.

SOBRA
Section 9401 of the Sixth Omnibus Budget and Reconciliation Act, 1986,
amended by the Medicare Catastrophic Coverage Act of 1988, U.S.C.
1396a(a)(10)(A)(ii)(IX), November 5, 1990.

SPECIAL HEALTH CARE NEEDS
Members with special health care needs are those members who have serious and
chronic physical, developmental or behavioral conditions, and who also require
medically necessary health and related services of a type or amount beyond that
required by members generally.

STATE
The State of Arizona.

STATE PLAN
The written agreements between the State and CMS which describe how the
AHCCCS program meets CMS requirements for participation in the Medicaid
program and the State Children's Health Insurance Program.

SUBCONTRACT
An agreement entered into by the Contractor with a provider of health care
services, who agrees to furnish covered services to members or with any other
organization or person who agrees to perform any administrative function or
service for the Contractor specifically related to fulfilling the Contractor's
obligations to AHCCCSA under the terms of this contract, as defined in R9-22-
101.

SUBCONTRACTOR
(1) A person, agency or organization with which the Contractor has contracted
or delegated some of its management functions or responsibilities to provide
covered services to its members; or (2) A person, agency or organization with
which a fiscal agent has entered into a contract, agreement, purchase order or
lease (or leases of real property) to obtain space, supplies, equipment or
services provided under the AHCCCS agreement.

SUPPLEMENTAL SECURITY INCOME (SSI)
Federal cash assistance program under Title XVI of the Social Security Act.

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)
A Federal cash assistance program under Title IV of the Social Security Act
established by the Personal Responsibility and Work Opportunity Act of 1996. It
replaced Aid To Families With Dependent Children (AFDC).

THIRD PARTY
An individual, entity or program that is or may be liable to pay all or part
of the medical cost of injury, disease or disability of an AHCCCS applicant or
member, as defined in R9-22-1001.

THIRD PARTY LIABILITY
The resources available from a person or entity that is, or may be, by
agreement, circumstance or otherwise, liable to pay all or part of the medical
expenses incurred by an AHCCCS applicant or member, as defined in R9-22-1001.

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TITLE XIX MEMBER
Member eligible for Federally funded Medicaid programs under Title XIX of the
Social Security Act including those eligible under 1931 provisions of the Social
Security Act, Sixth Omnibus Budget Reconciliation Act (SOBRA),
Supplemental Security Income (SSI), SSI-related groups, Title XIX Waiver
groups, Medicare Cost Sharing groups, Breast and Cervical Cancer Treatment
program and Freedom to Work.

TITLE XIX WAIVER MEMBER
All MED (Medical Expense Deduction) members, and adults or childless couples
at or below 100% of the Federal Poverty Level who are not categorically linked
to another Title XIX program. This would also include Title XIX linked
individuals whose income exceeds the limits of the categorical program.

TITLE XXI MEMBER
Member eligible for acute care services under Title XXI of the Social Security
Act, referred to in Federal legislation as the "State Children's Health
Insurance Program" (SCHIP and HIFA). The Arizona version of SCHIP is referred
to as "KidsCare."

TRIBAL FACILITY (638 TRIBAL FACILITY)
A facility that is operated by an Indian tribe and that is authorized to provide
services pursuant to Public Law 93-638, as amended.

WWHP
Well Woman Healthcheck Program, administered by the Arizona Department of
Health Services and funded by the Centers for Disease Control and Prevention.
YEAR See "Contract Year".

[END OF DEFINITIONS]

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SECTION D: PROGRAM REQUIREMENTS

1. TERM OF CONTRACT AND OPTION TO RENEW
The initial term of this contract shall be 10/1/03 through 9/30/06, with
two one-year options to renew. All contract renewals shall be through
contract amendment. AHCCCSA shall issue amendments prior to the end date
of the contract when there is an adjustment to capitation rates and/or changes
to the scope of service contained herein. Changes to scope of service include
but are not limited to changes in the enrolled population, changes in
covered services, changes in GSA's

If the Contractor has been awarded a contract in more than one GSA, each such
contract will be considered separately renewable. AHCCCSA may renew the
Contractor's contract in one GSA, but not in another. In addition, if the
Contractor has had significant problems of non-compliance in one GSA, it may
result in the capping of the Contractor's enrollment in all GSAs. Further,
AHCCCSA may require the Contractor to renew all currently awarded GSA's, or
may terminate the contract if the Contractor does not agree to renew all
currently awarded GSA's.

When AHCCCSA issues an amendment to the contract, the provisions of such renewal
will be deemed to have been accepted 60 days after the date of mailing by
AHCCCSA, even if the amendment has not been signed by the Contractor, unless
within that time the Contractor notifies AHCCCSA in writing that it refuses to
sign the renewal amendment. If the Contractor provides such notification,
AHCCCSA will initiate contract termination proceedings.

Contractor's Notice of Intent Not To Renew: If the Contractor chooses not to
renew this contract, the Contractor may be liable for certain costs associated
with the transition of its members to a different health plan. If the
Contractor provides AHCCCSA written notice of its intent not to renew this
contract at least 180 days before its expiration, this liability for
transition costs may be waived by AHCCCSA.

Contract Termination: In the event the contract, or any portion thereof,
is terminated for any reason, or expires, the Contractor shall assist
AHCCCSA in the transition of its members to other contractors, and shall
abide by standards and protocols set forth in Paragraph 9, Transition of
Members. In addition, AHCCCSA reserves the right to extend the term of the
contract on a month-to-month basis to assist in any transition of
members. The Contractor shall make provision for continuing all management
and administrative services until the transition of all members is completed
and all other requirements of this contract are satisfied. The
Contractor shall be responsible for providing all reports set forth in this
contract and necessary for the transition process and shall be responsible
for the following:

a. Notification of subcontractors and members.
b. Payment of all outstanding obligations for medical care rendered to members.
c. Until AHCCCSA is satisfied that the Contractor has paid all such obligations,
   the Contractor shall provide the following reports to AHCCCSA:

(1) A monthly claims aging report by provider/creditor including IBNR amounts;
(2) A monthly summary of cash disbursements;
(3) Copies of all bank statements received by the Contractor.

d. Such reports shall be due on the fifth day of each succeeding month for the
   prior month.
e. In the event of termination or suspension of the contract by AHCCCSA, such
   termination or suspension shall not affect the obligation of the Contractor
   to indemnify AHCCCSA for any claim by any third party against the State or
   AHCCCSA arising from the Contractor's performance of this contract and for
   which the Contractor would otherwise be liable under this contract.
f. Any dispute by the Contractor, with respect to termination or suspension of
   this contract by AHCCCSA, shall be exclusively governed by the provisions
   of Section E, Paragraph 26, Disputes.

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g. Any funds, advanced to the Contractor for coverage of members for periods
   after the date of termination, shall be returned to AHCCCSA within 30 days
   of termination of the contract.

2. ELIGIBILITY CATEGORIES
AHCCCS is Arizona's Title XIX Medicaid program operating under an 1115 Waiver
and Title XXI program operating under Title XXI State Plan authority. Arizona
has the authority to require mandatory enrollment in managed care. All members
eligible for AHCCCS benefits, with few exceptions, are enrolled in acute care
health plans and paid for on a capitated basis. AHCCCSA pays for health care
expenses on a fee for service (FFS) basis for Title XIX and Title XXI eligible
members who receive services through the Indian Health Service; for Title XIX
eligible members who are entitled to emergency services under the Federal
Emergency Services (FES) program; for Medicare cost sharing beneficiaries under
QMB programs; and for the State Emergency Services (SES) Program.

The following describes the eligibility groups enrolled in the managed care
program and covered under this contract.

Title XIX
1931 (Also referred to as TANF): Eligible individuals and families under the
1931 provision of the Social Security Act, with household income levels at
or below 100% of the FPL.

SSI and SSI Related Groups: Eligible individuals receiving Supplemental Security
Income (SSI) or who are aged, blind or disabled with household income levels at
or below 100% of the FPL.

Freedom to Work (Ticket to Work): Eligible individuals under the Title XIX
expansion program that extends eligibility to individuals, 16 through 64 years
old who meet SSI disability criteria, whose earned income, after allowable
deduction, is at or below 250% of the FPL and who are not eligible for any other
Medicaid program. These members must pay a premium to AHCCCSA ranging from
$10 to $35, depending on income.

SOBRA: Under the Sixth Omnibus Budget and Reconciliation Act of 1986, eligible
pregnant women, with household income levels at or below 133% of the FPL,
and children in families with household incomes ranging from below 100% to
133% of the FPL, depending on the age of the child.

SOBRA Family Planning: Family planning extension program that covers the costs
for family planning services only, for a maximum of 24 months following the
loss of SOBRA eligibility.

Breast and Cervical Cancer Treatment Program (BCCTP): Eligible individuals under
the Title XIX expansion program for women with income up to 250% of the FPL,
who are diagnosed with and need treatment for breast and/or cervical cancer
or cervical lesions and are not eligible for other Title XIX programs providing
full Title XIX services. Eligible members cannot have other creditable health
insurance coverage, including Medicare.

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Title XIX Waiver Group

Non-MED: Eligible individuals and couples whose income is at or below 100% of
the FPL, and who are not categorically linked to another Title XIX program.

MED: Eligible individuals and families whose income is above 100% of the FPL
with medical expenses that reduce income to or below 40% of the FPL.

Title XXI
KidsCare: Individuals under the age of 19, whose income does not exceed 200%
FPL. Children, in households with incomes between 150% and 200% of the FPL, may
participate in the KidsCare program, but are required to pay a premium amount
to AHCCCSA based on the number of children in the family and the gross family
income.

HIFA Parents: Non-Title XIX-eligible parents of KidsCare children or parents of
Title XIX children who are eligible under the HIFA demonstration initiative
waiver. HIFA parents are required to pay a premium to AHCCCSA ranging from $15
to $25 per parent (except Native American members). Due to funding
considerations, this program has an enrollment cap.

3. ENROLLMENT AND DISENROLLMENT
AHCCCSA has the exclusive authority to enroll and disenroll members. The
Contractor shall not disenroll any member for any reason unless directed to
do so by AHCCCSA. The Contractor may request AHCCCSA to change the member's
enrollment in accordance with the AHCCCS Health Plan Change Policy.
AHCCCSA will disenroll the member when the member becomes ineligible for the
AHCCCS program, moves out of the health plan's service areas, changes
contractors during the member's open enrollment/annual enrollment choice period
or when approved for a health plan change through the AHCCCS Health Plan
Change Policy. Eligibility for the various AHCCCS coverage groups is determined
by one of the following agencies:

Social Security Administration (SSA)
SSA determines eligibility for the Supplemental Security Income
(SSI) cash program. SSI cash recipients are automatically
eligible for AHCCCS coverage.

Department of Economic Security (DES)
DES determines eligibility for the families with children under
section 1931 of the Social Security Act, pregnant women and
children under SOBRA, the Adoption Subsidy Program, Title IV-E
foster care children, Young Adult Transitional Insurance
Program, the Federal Emergency Services program (FES), HIFA
parents of SOBRA eligible children, the Title XIX Waiver
Members, and the State Emergency Services (SES) program.

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AHCCCSA
AHCCCSA determines eligibility for the SSI/Medical Assistance
Only groups, including the FES program for this population
(aged, disabled, blind), the Arizona Long-Term Care System
(ALTCS), the Qualified Medicare Beneficiary program and other
Medicare cost sharing programs, BCCTP, the Freedom to Work
program, the Title XXI KidsCare program, and HIFA parents of
KidsCare children.

AHCCCS acute care members are enrolled with Contractors in accordance with the
rules set forth in R9-22, Article 17, R9-31-306, 307, 309 and 1719.

Health Plan Choice

All AHCCCS members eligible for services covered under this contract have a
choice of available health plans. Information about these health plans will be
given to each applicant during the application process for AHCCCS benefits.
If there is only one health plan available for the applicant's Geographic
Service Area, no choice is offered as long as the health plan offers the member
a choice of PCPs. Members who do not choose prior to AHCCCSA being notified
of their eligibility, are automatically assigned to a health plan based on
family continuity or the auto-assignment algorithm. See Section D, Paragraph 6,
Auto-Assignment Algorithm, for further explanation.

Exceptions to the above enrollment policies for Title XIX members include
previously enrolled members who have been disenrolled for less than 90 days.
These members will be automatically enrolled with the same
Contractor, if still available. Members who have less than 30 days of continued
eligibility will not be enrolled with a Contractor, but will be placed on Fee
for Service. FES and SES members are not enrolled with a health
plan. Women, who become eligible for the Family Planning Services Extension
Program, will remain assigned to their current health plan.

The effective date of enrollment for a new Title XIX member with the Contractor
is the day AHCCCSA takes the enrollment action, generally the day prior to
the date the Contractor receives notification from AHCCCSA
via the daily roster. However, the Contractor is responsible for payment of
medically necessary covered services retroactive to the member's beginning
date of eligibility.

KidsCare members must select a health plan prior to being determined eligible
and therefore, will not be auto-assigned.
If the HIFA parent does not choose, they will be enrolled with their child's
health plan following the enrollment rules set forth in R9-31-1719. When a
member is transferred from Title XIX to Title XXI and has
not made a health plan choice for Title XXI, the member will remain with
their current health plan and a choice notice will be sent to the member.
The member may then change plans no later than 16 days from the
date the choice notice is sent.

The effective date of enrollment for a Title XXI member, including HIFA parents,
will be the first day of the month following notification to the health plan,
with few exceptions.

Prior Period Coverage: AHCCCS provides prior period coverage for the period of
time, prior to the Title XIX member's enrollment, during which a member is
eligible for covered services. The time frame is from the effective date of
eligibility to the day a member is enrolled with the Contractor. The Contractor
receives notification from the Administration of the member's enrollment. The
Contractor is responsible for payment of all claims for medically necessary
covered services provided to members during prior period coverage. This
may include services provided prior to the contract year (See Section D,
Paragraph 53, Compensation, for a description of the Contractor's reimbursement
from AHCCCSA for this eligibility time period.)

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Newborns:
Newborns, born to AHCCCS eligible mothers enrolled at the time of the child's
birth, will be enrolled with the mother's contractor, when newborn notification
is received by AHCCCSA. The Contractor is responsible for notifying AHCCCSA of
a child's birth to an enrolled member. Capitation for the newborn will begin
on the date notification is received by AHCCCSA (except for cases of births
during prior period coverage). The effective date of AHCCCS eligibility will be
the newborn's date of birth, and the Contractor is responsible for all covered
services to the newborn whether or not AHCCCSA has received notification of the
child's birth. AHCCCSA is currently available to receive notification calls 24
hours a day, 7 days a week.  Eligible mothers of newborns are sent a letter
advising them of their right to choose a different contractor for
their child; the date of the change will be the date of processing the
request from the mother. If the mother does not request a change, the child
will remain with the mother's contractor.

Newborns of FES mothers are auto-assigned to a contractor and mothers of these
newborns are sent a letter advising them of their right to choose a different
contractor for their child. In the event the FES mother chooses a different
contractor, AHCCCS will recoup all capitation paid to the originally assigned
contractor and the baby will be enrolled retroactive to the date of birth in
the second contractor. The second contractor will receive prior period
capitation from the date of birth to the day before assignment and prospective
capitation from the date of assignment forward. The second contractor will be
responsible for all covered services to the newborn from date of birth.

Enrollment Guarantees:
Upon initial capitated enrollment as a Title XIX-eligible member, the member is
guaranteed a minimum of five full months of continuous enrollment. Upon initial
capitated enrollment as a Title XXI-eligible member, the member is guaranteed
a minimum of 12 full months of continuous enrollment. Enrollment guarantees do
not apply to HIFA parents. The enrollment guarantee is a one-time benefit. If a
member changes from one contractor to another within the enrollment guarantee
period, the remainder of the guarantee period applies to the new contractor.
The enrollment guarantee may not be granted or may be terminated if the member
is incarcerated or, if a minor child is adopted. AHCCCS Rule R9-22, Article 17
and R9-31, Article 3 describes other reasons for which the enrollment guarantee
may not apply.

Native Americans:
Native Americans, on or off-reservation, may choose to receive services from
Indian Health Service (IHS), a PL 93-638 tribal facility or any available
contractor. If a choice is not made within the specified time limit, Native
American Title XIX members living on-reservation will be assigned to IHS.
Native American Title XIX members living off-reservation will be assigned to an
available contractor using AHCCCS' Family Continuity Policy and auto-assignment
algorithm. Native American Title XXI members must make a choice prior to being
determined eligible. Title XXI HIFA parent members' enrollment will
follow the Title XIX enrollment rules. Native Americans may change from IHS to
a contractor or from a contractor to IHS at any time.

4. ANNUAL ENROLLMENT CHOICE
AHCCCSA conducts an Annual Enrollment Choice (AEC) for members on their annual
anniversary date. AHCCCSA may hold an open enrollment as deemed necessary.
During AEC, members may change contractors subject to the availability of
other contractors within their Geographic Service Area. Members are
mailed a printed enrollment form and other information required by the Balanced
Budget Act of 1997 (BBA) 60 days prior to their AEC date and may choose a new
contractor by contacting AHCCCSA to complete the enrollment process. If the
member does not participate in the AEC, no change of contractor will be made
(except for approved changes under the Change of Plan Policy) during the new
anniversary year. This holds true if a contractor's contract is renewed and
the member continues to live in a contractor's service area. The
Contractor shall comply with the AHCCCS, Office of Managed Care Member
Transition for Annual Enrollment Choice, Open Enrollment and Other Plan
Changes Policy and the AMPM.

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5. OPEN ENROLLMENT
In the event that AHCCCSA does not award a CYE '04 contract to an incumbent
contractor, AHCCCSA will hold an open enrollment for those members enrolled
with the exiting contractor. If those members do not elect
to choose a contractor, they will be auto assigned. In addition to open
enrollment, AHCCCSA will make changes to both annual enrollment choice
materials and new enrollee materials prior to October 1, 2003 to
reflect the change in available health plans. The auto assignment algorithm
will be adjusted to exclude auto assignment of new enrollees to exiting
contractors(s). The exact dates for the open enrollment and other changes
described above have not yet been determined, but will be communicated when
they are finalized.

6. AUTO-ASSIGNMENT ALGORITHM
Members who do not exercise their right to choose and do not have family
continuity, are assigned to a contractor through an auto-assignment algorithm.
The algorithm is a mathematical formula used to distribute members to the
various contractors in a manner that is predictable and consistent with
AHCCCSA goals. The algorithm favors those contractors with lower capitation
rates and higher program scores in the latest contract award. For further
details on the AHCCCS Auto-Assignment Algorithm, refer to Attachment G. AHCCCSA
may change the algorithm at any time during the term of the contract in
response to contractor-specific issues (e.g. imposition of an enrollment cap).
The Contractor should consider this in preparing its response to this RFP.
Capitation rates may be adjusted to reflect changes to a contractor's risk due
to changes in the algorithm.

7. AHCCCS MEMBER IDENTIFICATION CARDS
Contractors are responsible for paying the costs of producing AHCCCS member
identification cards. The Contractor will receive an invoice the month
following the issue date of the identification card.

8. MAINSTREAMING OF AHCCCS MEMBERS
To ensure mainstreaming of AHCCCS members, the Contractor shall take affirmative
action so that members are provided covered services without regard to payer
source, race, color, creed, sex, religion, age, national origin, ancestry,
marital status, sexual preference, genetic information, or physical or mental
handicap, except where medically indicated. Contractors must take into account
a member's culture, when addressing members and their concerns, and must take
reasonable steps to encourage subcontractors to do the same. The
Contractor must make interpreters of any language available free of charge for
all members to ensure appropriate delivery of covered services. The Contractor
must provide members with information instructing them about how to access these
services.

Examples of prohibited practices include, but are not limited to, the following:

a. Denying or not providing a member any covered service or access to an
   available facility.
b. Providing to a member any covered service which is different, or is provided
   in a different manner or at a different time from that provided to other
   members, other public or private patients or the public at large, except
   where medically necessary.
c. Subjecting a member to segregation or separate treatment in any manner
   related to the receipt of any covered service; restricting a member in any
   way in his or her enjoyment of any advantage or privilege enjoyed by others
   receiving any covered service.
d. The assignment of times or places for the provision of services on the basis
   of the race, color, creed, religion, age, sex, national origin, ancestry,
   marital status, sexual preference, income status, AHCCCS membership, or
   physical or mental handicap of the participants to be served.

				-20-
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9. TRANSITION OF MEMBERS
The Contractor shall comply with the AMPM, and the AHCCCS, Office of Managed
Care Member Transition  for Annual Enrollment Choice, Open Enrollment and Other
Plan Changes Policy standards for member transitions between health plans or
GSAs, enrollment in or discharge from CRS, to or from an ALTCS
Program Contractor, IHS, a PL 93-638 tribal entity, and upon termination or
expiration of a contract. The Contractor shall develop and implement policies
and procedures, which comply with these policies to address transition of:

a. Members with significant medical conditions such as a high-risk pregnancy or
   pregnancy within the last 30 days, the need for organ or tissue
   transplantation, chronic illness resulting in hospitalization or nursing
   facility placement, etc.;
b. Members who are receiving ongoing services such as dialysis, home health,
   chemotherapy and/ or radiation therapy or who are hospitalized at the time of
   transition;
c. Members who have received prior authorization for services such as scheduled
   surgeries, out-of-area specialty services, nursing home admission;
d. Prescriptions, DME and medically necessary transportation ordered for the
   transitioning member by the relinquishing contractor; and
e. Medical records of the transitioning member (the cost, if any, of reproducing
   and forwarding medical records shall be the responsibility of the
   relinquishing AHCCCS contractor).

When relinquishing members, the Contractor is responsible for timely
notification to the receiving contractor regarding pertinent information related
to any special needs of transitioning members. The Contractor, when receiving a
transitioning member with special needs, is responsible for coordinating care
with the relinquishing contractor in order that services not be interrupted, and
for providing the new member with health plan and service information, emergency
numbers and instructions about how to obtain services.

10. SCOPE OF SERVICES
The Contractor shall provide covered services to AHCCCS members in accordance
with all applicable Federal, State and local laws, rules, regulations and
policies, including services listed in this document, listed by
reference in attachments, and AHCCCS policies referenced in this document.
The services are described in detail in AHCCCS Rules R9-22, Article 2 and the
AHCCCS Medical Policy Manual (AMPM), all of which are incorporated herein by
reference, except for provisions specific to the Fee-for-Service program, and
may be found in the Bidder's Library. The covered services must be medically
necessary and are briefly described below. Except for behavioral health and
children's preventive dental services, covered services must be provided by, or
coordinated with, a primary care provider. Services must be rendered by
providers that are appropriately licensed or certified, operating within their
scope of practice, and registered as an AHCCCS provider. The Contractor shall
provide the same standard of care for all members regardless of the member's
eligibility category. The Contractor may not arbitrarily deny or reduce the
amount, duration, or scope of a required service solely because of the
diagnosis, type of illness, or condition. The Contractor may place

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appropriate limits on a service on the basis of criteria such as medical
necessity; or for utilization control, provided the services furnished can
reasonably be expected to achieve their purpose.

The Contractor shall ensure that its providers are not restricted or inhibited
in any way from communicating freely with members regarding the members' health
care, medical needs and treatment options, even if needed services are not
covered by the Contractor.

Ambulatory Surgery and Anesthesiology: The Contractor shall provide surgical
services for either emergency or scheduled surgeries when provided in an
ambulatory or outpatient setting such as a freestanding surgical center or a
hospital based outpatient surgical setting.

Audiology: The Contractor shall provide audiology services to members under the
age of 21 including the identification and evaluation of hearing loss and
rehabilitation of the hearing loss through medical or surgical means (i. e.
hearing aids). Only the identification and evaluation of hearing loss are
covered for members 21 years of age and older unless the hearing loss is due
to an accident or injury-related emergent condition.

Behavioral Health: The Contractor shall provide behavioral health services as
described in Section D, Paragraph 12, Behavioral Health Services.

Children's Rehabilitative Services (CRS): The program for children with
CRS-covered conditions is administered by the Arizona Department of Health
Services (ADHS) for children who meet CRS eligibility criteria. The Contractor
shall refer children to the CRS program who are potentially eligible for
services related to CRS covered conditions, as specified in R9-22, Article 2
and A.R.S. Title 36, Chapter 2, Article 3. Eligibility criteria and the
referral process are described in the CRS Policy and Procedures Manual
available in  the Bidder's Library.

The Contractor shall monitor referrals to CRS to ensure covered services are
provided in a timely manner to eligible members. Referral to CRS does not
relieve the Contractor of the responsibility for providing medically necessary
services not covered by CRS to CRS enrolled members. The Contractor is also
responsible for initial care of newborn members, until those members become
enrolled in CRS. The Contractor must require the member's Primary Care Provider
(PCP) to coordinate their care with the CRS program.

A member with private insurance is not required to utilize CRS. If the member
uses their private insurance network for a CRS covered condition, and the
member is not enrolled with CRS, the Contractor is responsible for all
applicable deductibles and copays.

The Contractor remains ultimately responsible for the provision of all covered
services to its members, except for instances in which the CRS eligible
member refuses to receive CRS covered services through the CRS program. If the
Contractor becomes aware that CRS has failed to provide medically necessary CRS
covered services, the Contractor shall proceed as outlined in the CRS Medically
Necessary Appointment Policy located in the AMPM.

Chiropractic Services: The Contractor shall provide chiropractic services to
members under age 21 when prescribed by the member's PCP and approved by the
Contractor in order to ameliorate the member's medical condition. Medicare
approved chiropractic services shall also be covered, subject to limitations
specified in CFR 410.22, for Qualified Medicare Beneficiaries if prescribed by
the member's PCP and approved by the Contractor.

Dental: The Contractor shall provide all members under the age of 21 with all
medically necessary dental services including emergency dental services, dental
screening and preventive services in accordance with the

				-22-
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AHCCCS periodicity schedule, as well as therapeutic dental services, dentures,
and pre-transplantation dental services. The Contractor shall monitor compliance
with the EPSDT periodicity schedule for dental screening services. The
Contractor is required to meet specific utilization rates for members as
described in Section D, Paragraph 24, Performance Standards. The Contractor
shall ensure that members are notified when dental screenings are due if the
member has not been scheduled for a visit. If a dental screening is not
received by the member, a second notice must be sent. Members under the age of
21 may request dental services without referral and may choose a dental provider
from the Contractor's provider network. For members who are 21 years of age and
older, the Contractor shall provide emergency dental care, medically necessary
dentures and dental services for transplantation services as specified in the
AMPM.

Dialysis: The Contractor shall provide medically necessary dialysis, supplies,
diagnostic testing and medication for all members when provided by
Medicare-certified hospitals or Medicare-certified end stage renal disease
(ESRD) providers. Services may be provided on an outpatient basis, or on an
inpatient basis if the hospital admission is not solely to provide chronic
dialysis services.

Early and Periodic Screening, Diagnosis and Treatment (EPSDT): The Contractor
shall provide comprehensive health care services through primary prevention,
early intervention, diagnosis and medically necessary treatment to correct or
ameliorate defects and physical or mental illness discovered by the screenings
for members under age 21. The Contractor shall ensure that these members
receive required health screenings, including those for developmental/
behavioral health, in compliance with the AHCCCS periodicity schedule.
The Contractor shall submit all EPSDT reports to the AHCCCS Office of Medical
Management, as required by the AMPM. The Contractor is required to meet specific
participation/ utilization rates for members as described in Section D,
Paragraph 24, Performance Standards.

The Contractor shall ensure the initiation and coordination of a referral to the
ADHS/ RBHA system for members in need of behavior health services. The
Contractor shall follow up with the RBHA to monitor whether members have
received these health services.

Emergency Services: The Contractor shall have and/ or provide the following
as a minimum:

a. Emergency services facilities adequately staffed by qualified medical
   professionals to provide pre-hospital, emergency care on a 24-hour-a-day,
   7-day-a-week basis, for the sudden onset of a medically emergent condition.
   Emergency medical services are covered without prior authorization. The
   Contractor is encouraged to contract with emergency service facilities for
   the provision of emergency services. The Contractor is also encouraged to
   contract with or employ the services of non-emergency facilities (e. g.
   urgent care centers) to address member non-emergency care issues occurring
   after regular office hours or on weekends. The Contractor shall be
   responsible for educating members and providers regarding appropriate
   utilization of emergency room services including behavioral health
   emergencies. The Contractor shall monitor emergency service utilization
   (by both provider and member) and shall have guidelines for implementing
   corrective action for inappropriate utilization;
b. All medical services necessary to rule out an emergency condition;
c. Emergency transportation; and
d. Member access by telephone to a physician, registered nurse, physician
   assistant or nurse practitioner for advice in emergent or urgent situations,
   24 hours per day, 7 days per week.

Per the Balanced Budget Act of 1997, CFR 438.114, the following conditions apply
with respect to coverage and payment of emergency services:

The Contractor must cover and pay for emergency services regardless of whether
the provider that furnishes the service has a contract with the Contractor.

				-23-
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The Contractor may not deny payment for treatment obtained under either of the
following circumstances:

1. A member had an emergency medical condition, including cases in which the
   absence of medical attention would not have resulted in the outcomes
   identified in the definition of emergency medical condition CFR 438.114.
2. A representative of the Contractor (an employee or subcontracting provider)
   instructs the member to seek emergency medical services.

Additionally, the Contractor may not:

1. Limit what constitutes an emergency medical condition as defined in CFR
   438.114, on the basis of lists of diagnoses or symptoms.
2. Refuse to cover emergency services based on the failure of the provider,
   hospital, or fiscal agent to notify the Contractor of the member's screening
   and treatment within 10 calendar days of presentation for emergency services.
   This notification stipulation is only related to the provision of emergency
   services.

A member who has an emergency medical condition may not be held liable for
payment of subsequent screening and treatment needed to diagnose the specific
condition or stabilize the patient.

The attending emergency physician, or the provider actually treating the member,
is responsible for determining when the member is sufficiently stabilized for
transfer or discharge, and such determination is binding on the Contractor
responsible for coverage and payment. The Contractor shall comply with BBA
guidelines regarding the coordination of post-stabilization care.

Eye Examinations/ Optometry: The Contractor shall provide all medically
necessary emergency eye care, vision examinations, prescriptive lenses, and
treatments for conditions of the eye for all members under the age of 21. For
members who are 21 years of age and older, the Contractor shall provide
emergency care for eye conditions which meet the definition of an emergency
medical condition. Also covered for this population is cataract removal, and
medically necessary vision examinations and prescriptive lenses, if required,
following cataract removal and other eye conditions as specified in the AMPM.

Family Planning: The Contractor shall provide family planning services in
accordance with the AMPM, for all members who choose to delay or prevent
pregnancy. These include medical, surgical, pharmacological and laboratory
services, as well as contraceptive devices. Information and counseling, which
allow members to make informed decisions regarding family planning methods,
shall also be included. If the Contractor does not provide family planning
services, it must contract for these services through another health care
delivery system, which allows members freedom of choice in selecting a provider.

The Contractor shall provide services to members enrolled in the Family Planning
Services Extension Program, a program that provides family planning services
only, for a maximum of 24 months, to women whose SOBRA eligibility has
terminated. The Contractor is also responsible for notifying AHCCCSA when a
SOBRA woman is sterilized to prevent inappropriate enrollment in the SOBRA
Family Planning Services Extension Program. Notification should be made at the
time the newborn is reported or after the sterilization procedure is completed.

Health Risk Assessment and Screening: The Contractor shall provide these
services for non-hospitalized members, 21 years of age and older. These services
include, but are not limited to, screening for hypertension, elevated
cholesterol, colon cancer, sexually transmitted diseases, tuberculosis and HIV/
AIDS; nutritional assessment in cases when the member has a chronic debilitating
disease affected by nutritional needs; mammograms and prostate screenings;
physical examinations and diagnostic work-ups; and immunizations.

				-24-
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Required assessment and screening services for members under age 21 are
included in the AHCCCS EPSDT periodicity schedule.

Home Health: This service shall be provided under the direction of a physician
to prevent hospitalization or institutionalization and may include nursing,
therapies, supplies and home health aide services. It shall be provided on a
part-time or intermittent basis.

Hospice: These services are covered for members under 21 years of age who are
certified by a physician as being terminally ill and having six months or less
to live. See the AMPM for details on covered hospice services.

Hospital: Inpatient services include semi-private accommodations for routine
care, intensive and coronary care, surgical care, obstetrics and newborn
nurseries, and behavioral health emergency/ crisis services. If the
member's medical condition requires isolation, private inpatient accommodations
are covered. Nursing services, dietary services and ancillary services such as
laboratory, radiology, pharmaceuticals, medical supplies, blood and blood
derivatives, etc. are also covered. Outpatient hospital services include any of
the above, which may be appropriately provided on an outpatient or ambulatory
basis (i. e. laboratory, radiology, therapies, ambulatory surgery, etc.).
Observation services may be provided on an outpatient basis, if determined
reasonable and necessary, when deciding whether the member should be admitted
for inpatient care. Observation services include the use of a bed and periodic
monitoring by hospital nursing staff and/or other staff to evaluate, stabilize
or treat medical conditions of a significant degree of instability and/or
disability.

Immunizations: The Contractor shall provide immunizations for adults (21 years
of age and older) to include diphtheria-tetanus, influenza, pneumococcus,
rubella, measles and hepatitis-B. For all members under the age of 21,
immunization requirements include diphtheria, tetanus, pertussis vaccine (DPT),
inactivated polio vaccine (IPV), measles, mumps, rubella (MMR) vaccine, H.
influenza, type B (HIB) vaccine, hepatitis B (Hep B) vaccine, varicella
zoster virus (VZV) vaccine and pneumococcal conjugate vaccine (PCV). The
Contractor is required to meet specific immunization rates for members under
the age of 21, which are described in Paragraph 24, Performance Standards.

Indian Health Service (IHS): AHCCCSA will reimburse claims on a FFS basis for
acute care services that are medically necessary, eligible for 100% Federal
reimbursement, and are provided to Title XIX members enrolled with the
Contractor, in an IHS or a 638 tribal facility. The Contractor is responsible
for reimbursement to IHS or tribal facilities for emergency services provided to
Title XXI Native American members enrolled with the Contractor.
The Contractor may choose to subcontract with an IHS or 638 tribal facility as
part of their provider network for the delivery of covered services, however,
the Contractor will be liable for the cost of the care in the event they choose
to do so.

Laboratory: Laboratory services for diagnostic, screening and monitoring
purposes are covered when provided by a CLIA (Clinical Laboratory Improvement
Act) approved free standing, hospital, clinic, physician office or other health
care facility laboratory.

Upon written request, the Contractor may obtain laboratory test data on members
from a freestanding laboratory or hospital-based laboratory subject to the
requirements specified in A.R.S. Sec. 36-2903( R) and (S).
The data shall be used exclusively for quality improvement activities and health
care outcome studies required and/or approved by the Administration.

Maternity: The Contractor shall provide pre-conception counseling, pregnancy
identification, prenatal care, treatment of pregnancy related conditions, labor
and delivery services, and postpartum care for members.
Services may be provided by physicians, physician assistants, nurse
practitioners, or certified nurse midwives.

				-25-
<page>

Members may select or be assigned to a PCP specializing in obstetrics. All
members, anticipated to have a low-risk delivery, may elect to receive labor
and delivery services in their home, if this setting is included in
the allowable settings of the Contractor and the Contractor has providers in
its network that offer home labor and delivery services. All members,
anticipated to have a low-risk prenatal course and delivery, may elect to
receive prenatal care, labor and delivery and postpartum care provided by
licensed midwives, if these providers are in the Contractor's network. All
licensed midwife labor and delivery services must be provided in the member's
home, as licensed midwives do not have admitting privileges in hospitals or
AHCCCS registered freestanding birthing centers. Members receiving maternity
services from a licensed midwife must also be assigned to a PCP for other
health care and medical services. The Contractor shall allow women and their
newborns to receive up to 48 hours of inpatient hospital care after a routine
vaginal delivery and up to 96 hours of inpatient care after a cesarean
delivery. The attending health care provider, in consultation with the mother,
may discharge the mother or newborn prior to the 48-hour minimum length of stay.
A normal newborn may be granted an extended stay in the hospital of birth
when the mother's continued stay in the hospital is beyond the 48 or 96 hour
stay.

The Contractor shall inform all assigned AHCCCS pregnant women of voluntary
prenatal HIV testing and the availability of medical counseling if the test
is positive. The Contractor shall provide information in the member handbook
and annually in the member newsletter, which encourages pregnant women to be
tested and provides instructions about where testing is available.
Semi-annually, the Contractor shall report to AHCCCS the number of pregnant
women who have been identified as HIV/ AIDS positive. This report is due no
later than 30 days after the end of the second and fourth quarters of the
contract year.

Medical Foods: Medical foods are covered within limitations defined in the AMPM
for members diagnosed with a metabolic condition included under the ADHS Newborn
Screening Program and specified in the AMPM. The medical foods, including
metabolic formula and modified low protein foods, must be prescribed or
ordered under the supervision of a physician.

Medical Supplies, Durable Medical Equipment (DME), Orthotic and Prosthetic
Devices: These services are covered when prescribed by the member's PCP,
attending physician, practitioner, or by a dentist. Medical equipment may be
rented or purchased only if other sources, which provide the items at no cost,
are not available. The total cost of the rental must not exceed the purchase
price of the item. Reasonable repairs or adjustments of purchased equipment are
covered to make the equipment serviceable and/ or when the repair cost is less
than renting or purchasing another unit.

Nursing Facility: The Contractor shall provide services in nursing facilities,
including religious non-medical health care institutions, for members who
require short-term convalescent care not to exceed 90 days per contract year.
In lieu of a nursing facility, the member may be placed in an assisted living
facility, an alternative residential setting, or receive home and community
based services (HCBS) as defined in R9-22, Article 2 and R9-28, Article 2 that
meet the provider standards described in R9-28, Article 5, and subject to the
limitations set forth in the AMPM.

Nursing facility services must be provided in a dually-certified Medicare/
Medicaid nursing facility, which includes in the per-diem rate: nursing
services; basic patient care equipment and sickroom supplies; dietary
services; administrative physician visits; non-customized DME; necessary
maintenance and rehabilitation therapies; over-the-counter medications; social,
recreational and spiritual activities; and administrative, operational medical
direction services. See Paragraph 41, Nursing Facility Reimbursement, for
further details.

The Contractor shall notify the Assistant Director of the Division of Member
Services, in writing, when a member has been residing in a nursing facility for
75 days. This will allow AHCCCSA time to follow-up on the status of the ALTCS
application and to prepare for potential fee-for-service coverage, if the stay
goes beyond the 90-day maximum.

				-26-
<page>

Nutrition: Nutritional assessments may be conducted as a part of the EPSDT
screenings for members under age 21, and to assist members 21 years of age
and older whose health status may improve with nutritional intervention.
Assessment of nutritional status on a periodic basis may be provided as
determined necessary, and as a part of the health risk assessment and
screening services provided by the member's PCP. AHCCCS covers nutritional
therapy on an enteral, parenteral or oral basis, when determined medically
necessary to provide either complete daily dietary requirements or to
supplement a member's daily nutritional and caloric intake and when AHCCCS
criteria specified in the AMPM are met.

Physician: The Contractor shall provide physician services to include medical
assessment, treatments and surgical services provided by licensed allopathic
or osteopathic physicians.

Podiatry: The Contractor shall provide podiatry services to include
bunionectomies, casting for the purpose of constructing or accommodating
orthotics, medically necessary orthopedic shoes that are an integral part of a
brace, and medically necessary routine foot care for patients with a severe
systemic disease which prohibits care by a nonprofessional person.

Post-stabilization Care Services Coverage and Payment: Pursuant to 42
CFR 438.114, and 42 CFR 422.113( c), the following conditions apply with respect
to coverage and payment of post-stabilization care services:

The Contractor must cover and pay for post-stabilization care services without
authorization, regardless of whether the provider that furnishes the service
has a contract with the Contractor, for the following situations:

1. Post-stabilization care services that were pre-approved by the Contractor;
   or,
2. Post-stabilization care services were not pre-approved by the Contractor
   because the Contractor did not respond to the treating provider's request for
   pre-approval within one hour after being requested to approve such care or
   could not be contacted for pre-approval.
3. The Contractor representative and the treating physician cannot reach
   agreement concerning the enrollee's care and a contractor physician is not
   available for consultation. In this situation, the Contractor must give the
   treating physician the opportunity to consult with a contractor physician
   and the treating physician may continue with care of the patient until a
   contractor physician is reached or one of the criteria in CFR 422.113(c)(3)
   is met.

Pursuant to CFR 422.113(c)(3), the Contractor's financial responsibility for
post-stabilization care services that have not been pre-approved ends when:

1. A contractor physician with privileges at the treating hospital assumes
   responsibility for the member's care;
2. A contractor physician assumes responsibility for the member's care through
   transfer;
3. A contractor representative and the treating physician reach an agreement
   concerning the member's care; or
4. The member is discharged.

Pregnancy Terminations: AHCCCS covers pregnancy termination when it is the
result of rape or incest, or in circumstances where the member suffers from a
physical disorder, physical injury, or physical illness, including a life
endangering physical condition caused by or arising from the pregnancy itself,
that would, as certified by a physician, place the member in danger of death
unless the pregnancy is terminated. In addition, providers must submit to the
Contractor a Certificate of Medical Necessity for Pregnancy Termination. Prior
authorization is required. If the procedure is performed on an emergency basis,
 documentation, outlined in the AMPM, is required for a member under eighteen
years of age or a member who is considered an incapacitated adult who seeks a
medically necessary pregnancy termination, as defined above. The scope of
medically

				-27-
<page>

necessary pregnancy termination coverage is currently in litigation and is
expected to be broadened. A copy of the Court's final judgment will be placed
in the Bidder's Library.

Prescription Drugs: Medications ordered by a PCP, attending physician or dentist
and dispensed under the direction of a licensed pharmacist are covered subject
to limitations related to prescription supply amounts, contractor formularies
and prior authorization requirements, as well as restrictions for
immunosuppressant drugs addressed in AHCCCS medical policies for
transplantations. Contractors may include over-the-counter medications in their
formulary. An appropriate over-the-counter medication may be prescribed, when it
determined to be a lower-cost alternative to prescription drugs. See Paragraph
75, Pending Legislative/Other Issues for more information regarding the
potential carve out of prescription drug benefits from capitation.

Primary Care Provider (PCP): PCP services are covered when provided by a
physician, physician assistant or nurse practitioner selected by, or assigned
to, the member. The PCP provides primary health care and serves as a gatekeeper
and coordinator in referring the member for specialty medical services. The PCP
is responsible for maintaining the member's primary medical record, which
contains documentation of all health risk assessments and health care services
of which they are aware whether or not they were provided by the PCP.

Radiology and Medical Imaging: These services are covered when ordered by the
member's PCP, attending physician or dentist and are provided for diagnosis,
prevention, treatment or assessment of a medical condition.
Services are generally provided in hospitals, clinics, physician offices and
other health care facilities.

Rehabilitation Therapy: The Contractor shall provide occupational, physical and
speech therapies. Therapies must be prescribed by the member's PCP or attending
physician for an acute condition and the member must have the potential for
improvement due to the rehabilitation. Physical therapy for all members, and
occupational and speech therapies for members under the age of 21, are covered
in both inpatient and outpatient settings. For those members who are 21 and
over, occupational and speech therapies are covered in inpatient settings only.

Respiratory Therapy: This therapy is covered in inpatient and outpatient
settings when prescribed by the member's PCP or attending physician, and is
necessary to restore, maintain or improve respiratory functioning.

Transplantation of Organs and Tissue, and Related Immunosuppressant Drugs: These
services are covered within limitations defined in the AMPM for members
diagnosed with specified medical conditions. Such limitations include: whether
the stage of the disease is such that the transplant can affect the outcome; the
member has no other conditions that substantially reduce the potential for
successful transplantation; and whether the member will be able to comply with
necessary and required regimens of treatment. Bone grafts are also covered under
this service. Services include pre-transplant inpatient or outpatient
evaluation; donor search; organ/ tissue harvesting or procurement; preparation
and transplantation services; and convalescent care. In addition, if a member
receives, or has received, a transplant covered by a source other than AHCCCS,
medically necessary non-experimental services are provided, within limitations,
after the discharge from the acute care hospitalization for the transplantation.
AHCCCS has contracted with transplantation providers for the Contractor's use or
the Contractor may select its own transplantation provider.

Transportation: These services include emergency and non-emergency medically
necessary transportation. Emergency transportation, including transportation
initiated by an emergency response system such as 911, may be provided by
ground, air or water ambulance to manage an AHCCCS member's emergency medical
condition at an emergency scene and transport the member to the nearest
appropriate medical facility. Non-emergency transportation shall be provided for
members who are unable to provide their own transportation for medically
necessary services.

				-28-
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Triage/Screening and Evaluation: These are covered services when provided by
acute care hospitals, IHS facilities and urgent care centers to determine
whether or not an emergency exists, assess the severity of the
member's medical condition and determine what services are necessary to
alleviate or stabilize the emergent condition. Triage/screening services must
be reasonable, cost effective and meet the criteria for severity of
illness and intensity of service.

11. SPECIAL HEALTH CARE NEEDS
The Contractor must implement mechanisms to identify persons with special health
care needs in accordance with the guidelines provided in the AMPM.

The Contractor must implement mechanisms to assess each member identified as
having special health care needs, in order to identify any ongoing special
conditions of the member which require a course of treatment or
regular care monitoring in accordance with the guidelines provided in the AMPM.

For members with special health care needs determined to need a specialized
course of treatment or regular care monitoring, the Contractor must have
procedures in place to allow members to directly access a specialist
(for example through a standing referral or an approved number of visits) as
appropriate for the member's condition and identified needs.

12. BEHAVIORAL HEALTH SERVICES
AHCCCS members are eligible for comprehensive behavioral health services. The
behavioral health benefit for these members is provided through the ADHS
-Regional Behavioral Health Authority (RBHA) system.
The Contractor shall be responsible for member education regarding these
benefits; provision of limited emergency inpatient services; and screening and
referral to the RBHA system of members identified as requiring behavioral
health services.

Member Education: The Contractor shall be responsible for educating members in
the member handbook and other printed documents about covered behavioral health
services and where and how to access services.
Covered services include:

a. Behavior Management (behavioral health personal assistance, family support,
   peer support)
b. Case Management Services
c. Emergency/ Crisis Behavioral Health Services
d. Emergency Transportation
e. Evaluation and Screening
f. Group Therapy and Counseling
g. Individual Therapy and Counseling
h. Family Therapy and Counseling
i. Inpatient Hospital
j. Inpatient Psychiatric Facilities (residential treatment centers and
   sub-acute facilities)
k. Institutions for Mental Diseases (with limitations)
l. Laboratory and Radiology Services for Psychotropic Medication Regulation and
   Diagnosis
m. Non-Emergency Transportation
n. Partial Care (Supervised day program, therapeutic day program, and medical
   day program)
o. Psychosocial Rehabilitation (living skills training; health promotion;
   pre-job training, education and development; job coaching and employment
   support)
p. Psychotropic Medication
q. Psychotropic Medication Adjustment and Monitoring

				-29-
<page>

r. Respite Care (with limitations)
s. Therapeutic foster care services

Referrals: As specified in Section D, Paragraph 10, Scope of Services, EPSDT,
the Contractor must provide developmental/ behavioral health screenings for
members up to 21 years of age in compliance with the
AHCCCS periodicity schedule. The Contractor shall ensure the initiation and
coordination of behavioral health referrals of these members to the RBHA when
determined necessary through the screening process.
The Contractor is responsible for RBHA referral and follow-up collaboration,
as necessary, for other members identified as needing behavioral health
evaluation and treatment. Members may also access the RBHA system for evaluation
by self-referral or be referred by schools, State agencies or other service
providers. The Contractor is responsible for providing transportation to a
member's first RBHA evaluation appointment if a member is unable to provide
his/her own transportation.

Emergency Services: For those members who are not ADHS behavioral health
recipients, the Contractor is responsible for up to three days of inpatient
behavioral health services per emergency episode, not to exceed 12 days per
contract year. A referral to the RBHA for evaluation and identification as an
ADHS behavioral health recipient should be initiated as soon as possible after
admission.

When members present in an emergency room setting, the Contractor is responsible
for all emergency medical services including triage, physician assessment and
diagnostic tests. For members who are not ADHS behavioral health recipients,
the Contractor is responsible to provide medically necessary psychiatric
consultations or psychological consultations in emergency room settings to help
stabilize the member or determine the need for inpatient behavioral health
services. ADHS is responsible for medically necessary psychiatric consultations
provided to ADHS behavioral health recipients in emergency room settings.

Coordination of Care: The Contractor is responsible for ensuring that a medical
record is established by the PCP when behavioral health information is received
from the RBHA or provider about an assigned member even if the PCP has not yet
seen the assigned member. In lieu of actually establishing a medical record,
such information may be kept in an appropriately labeled file but must be
associated with the member's medical record as soon as one is established.
The Contractor shall require the PCP to respond to RBHA/ provider information
requests pertaining to ADHS behavioral health recipient members including, but
not limited to, current diagnosis, medication, pertinent laboratory results,
last PCP visit, and last hospitalization. For prior period coverage, the
Contractor is responsible for payment of all claims for medically necessary
covered behavioral health services to members who are not ADHS behavioral health
recipients.

Medication Management Services: The Contractor shall allow PCPs to provide
medication management services (prescriptions, medication monitoring visits,
laboratory and other diagnostic tests necessary for diagnosis and treatment of
behavioral disorders) to members with diagnoses of depression, anxiety and
attention deficit hyperactivity disorder. The Contractor shall make available,
on the Contractor's formulary, medications for the treatment of these disorders.

The Contractor shall ensure that training and education are available to PCPs
regarding behavioral health referral and consultation procedures. The Contractor
shall establish policies and procedures for referral and consultation and shall
describe them in its provider manual.

The Contractor shall ensure that its quality management program incorporates
monitoring of the PCP's management of behavioral health disorders.

				-30-
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13. AHCCCS MEDICAL POLICY MANUAL
The AHCCCS Medical Policy Manual (AMPM) is hereby incorporated by reference into
this contract. The Contractor is responsible for complying with the requirements
set forth within. The AMPM, with search capability and linkages to AHCCCS rules,
statutes and other resources, is available to all interested parties
through the AHCCCS Home Page on the Internet (www. ahcccs. state. az. us). Upon
adoption by AHCCCSA, AMPM updates will be available through the Internet at the
beginning of each month. The Contractor shall be responsible for maintaining a
copy current with these updates.

14. MEDICAID IN THE PUBLIC SCHOOLS (MIPS)
Pursuant to an Intergovernmental Agreement with the Department of Education, and
a contract with a Third Party Administrator, AHCCCSA reimburses participating
school districts for specifically identified Medicaid services when provided to
Medicaid eligible children who are included under the Individuals with
Disabilities Education Act (IDEA). The Medicaid services must be identified in
the member's Individual Education Plan (IEP) as medically necessary for the
child to obtain a public school education.

MIPS services are provided in a school setting or other approved setting
specifically to allow children to receive a public school education. They do not
replace medically necessary services provided outside the school setting or
other MIPS approved alternative setting. Currently, services include therapies
(OT, PT and speech/ language); behavioral health evaluation and counseling;
nursing and attendant care; and specialized transportation. The Contractor's
evaluations and determinations, about whether services are medically necessary,
should be made independent of the fact that the child is receiving MIPS
services.

Contractors and their providers must coordinate with schools and school
districts that provide MIPS services to the Contractor's enrolled members.
Services should not be duplicative. Contractor case managers, working
with special needs children, should coordinate with school or school
district case managers/ special education teachers, working with these members.
Transfer of member medical information and progress toward
treatment goals between the Contractor and the member's school or school
district is required and should be used to enhance the services provided to
members.

15. PEDIATRIC IMMUNIZATIONS AND THE VACCINE FOR CHILDREN PROGRAM
Through the Vaccine for Children Program, the Federal and State governments
purchase, and make available to providers free of charge, vaccines for AHCCCS
children under age 19. The Contractor shall not utilize AHCCCS funding to
purchase vaccines for members under the age of 19. If vaccines are not available
through the VFC Program, the Contractor shall contact the AHCCCSA Office of
Medical Management, Clinical Quality Management Unit. Any provider, licensed by
the State to administer immunizations, may register with ADHS as a
"VFC provider" and receive free vaccines. The Contractor shall comply with all
VFC requirements and monitor its providers to ensure that, if providing
immunizations to AHCCCS members under the age of 19, the providers are
registered with ADHS/ VFC.

Arizona State law requires the reporting of all immunizations given to children
under the age of 19. Immunizations must be reported at least monthly to the
ADHS. Reported immunizations are held in a central database known as ASIIS
(Arizona State Immunization Information System), which can be accessed by
providers to obtain complete, accurate immunization records. Software is
available from ADHS to assist providers in meeting this reporting requirement.
Contractors are encouraged to educate their provider network about these
reporting requirements and the use of this resource.

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16. STAFF REQUIREMENTS AND SUPPORT SERVICES
The Contractor shall have in place the organization, management and
administrative systems capable of fulfilling all contract requirements. For
the purposes of this contract, the Contractor shall not employ or
contract with any individual that has been debarred, suspended or otherwise
lawfully prohibited from participating in any public procurement activity. At a
minimum, the following staff is required:

a. A full-time Administrator/ CEO/ COO who is available at all times to fulfill
   the responsibilities of the position and to oversee the entire operation of
   the health plan. The Administrator shall devote sufficient time to the
   Contractor's operations to ensure adherence to program requirements and
   timely responses to AHCCCS Administration.
b. A Medical Director who shall be an Arizona-licensed physician. The Medical
   Director shall be actively involved in all-major clinical programs and QM/UM
   components of the Contractor. The Medical Director shall devote sufficient
   time to the Contractor to ensure timely medical decisions, including after-
   hours consultation as needed.
c. A Chief Financial Officer/ CFO who is available at all times to fulfill the
   responsibilities of the position and to oversee the budget and accounting
   systems implemented by the Contractor.
d. A Quality Management/ Utilization Management Coordinator who is an
   Arizona-licensed registered nurse, physician or physician's assistant.
e. A Maternal Health/ EPSDT Coordinator who shall be an Arizona-licensed
   registered nurse, physician or physician's assistant; or have a Master's
   degree in health services, public health or health care administration or
   other related field.
f. A Behavioral Health Coordinator who shall be a behavioral health professional
   as described in Health Services Rule R9-20. The Behavioral Health Coordinator
   shall devote sufficient time to ensure that the Contractor's behavioral
   health referral and coordination activities are implemented per AHCCCSA
   requirements.
g. Prior Authorization staff to authorize health care 24 hours per day, 7 days
   per week. This staff shall include an Arizona-licensed registered nurse,
   physician or physician's assistant.
h. Concurrent Review staff to conduct inpatient concurrent review. This staff
   shall consist of an Arizona-licensed registered nurse, physician, physician's
   assistant or an Arizona-licensed practical nurse experienced in concurrent
   review and under the direct supervision of a registered nurse, physician or
   physician's assistant.
i. Member Services Manager and staff to coordinate communications with members
   and act as member advocates. There shall be sufficient Member Service staff
   to enable members to receive prompt resolution to their inquiries/problems,
   and to meet the Contractor's standards for resolution, telephone abandonment
   rates and telephone hold times.
j. Provider Services Manager and staff to coordinate communications between the
   Contractor and its subcontractors. There shall be sufficient Provider
   Services staff to enable providers to receive prompt resolution to their
   problems or inquiries and appropriate education about participation in the
   AHCCCS program.
k. A Claims Administrator and Claims Processors to ensure the timely and
   accurate processing of original claims, re-submissions and overall
   adjudication of claims.
l. Encounter Processors to ensure the timely and accurate processing and
   submission to AHCCCSA of encounter data and reports.
m. A Grievance Manager who is responsible for oversight of the Contractor's
   grievance system for members and providers.
n. A Compliance Officer who will implement and oversee the Contractor's
   compliance program. The compliance officer shall be a senior, on-site
   official, available to all employees, with designated and recognized
   authority to access records and make independent referrals to the AHCCCSA,
   Office of Program Integrity.

				-32-
<page>

o. Health Plan Staff sufficient to implement and oversee compliance with both
   the Contractor's Cultural Competency Plan and the AHCCCS Cultural Competency
   Policy, and to oversee compliance with all AHCCCS requirements pertaining to
   limited English proficiency (LEP).
p. Clerical and Support staff to ensure appropriate functioning of the
   Contractor's operation.

The Contractor shall inform AHCCCS, Office of Managed Care, in writing within
seven days, when an employee leaves one of the key positions listed below. The
name of the interim contact person should be included with the notification.
The name and resume of the permanent employee should be submitted as soon
as the new hire has taken place.

Administrator
Medical Director
Chief Financial Officer
Maternal Health/ EPSDT Coordinator
Grievance Manager
Compliance Officer
Member Services Manager
Provider Services Manager
Claims Administrator
Quality Management/ Utilization Management
Coordinator
Behavioral Health Coordinator

The Contractor shall ensure that all staff have appropriate training, education,
experience and orientation to fulfill the requirements of the position.

17. WRITTEN POLICIES, PROCEDURES AND JOB DESCRIPTIONS
The Contractor shall develop and maintain written policies, procedures and job
descriptions for each functional area of its health plan, consistent in format
and style. The Contractor shall maintain written guidelines for
developing, reviewing and approving all policies, procedures and job
descriptions. All policies and procedures shall be reviewed at least annually
to ensure that the Contractor's written policies reflect current practices.
Reviewed policies shall be dated and signed by the Contractor's appropriate
manager, coordinator, director or administrator. All medical and quality
management policies must be approved and signed by the Contractor's
Medical Director. Job descriptions shall be reviewed at least annually to
ensure that current duties performed by the employee reflect written
requirements.

18. MEMBER INFORMATION
The Contractor shall be accessible by phone for general member information
during normal business hours. All enrolled members will have access to a toll
free phone number. All informational materials, prepared by the Contractor,
shall be approved by AHCCCSA prior to distribution to members. The reading level
and name of the evaluation methodology used should be included.

All materials shall be translated when the Contractor is aware that a language
is spoken by 3,000 or 10%, whichever is less, of the Contractor's members, who
also have limited English proficiency (LEP).

All vital materials shall be translated when the Contractor is aware that a
language is spoken by 1,000 or 5%, whichever is less, of the Contractor's
members, who also have LEP. Vital materials must include, at a minimum, notices
for denials, reductions, suspensions or terminations of services, vital
information from the member handbooks and consent forms.

All written notices informing members of their right to interpretation and
translation services in a language shall be translated when the Contractor is
aware that 1,000 or 5% (whichever is less) of the Contractor's
members speak that language and have LEP.

				-33-
<page>

Oral interpretation services must be available and free of charge to all members
regardless of the prevalence of the language. The Contractor must notify all
member of their right to access oral interpretation services and
how to access them. Refer to the AHCCCS, Office of Managed Care Member
Information Policy.

The Contractor shall make every effort to ensure that all information prepared
for distribution to members is written at a 4th grade level. Regardless of the
format chosen by the Contractor, the member information must
be printed in a type, style and size, which can easily be read by members with
varying degrees of visual impairment. The Contractor must notify its members
that alternative formats are available and how to access them.

When there are program changes, notification shall be provided to the affected
members at least 30 days before implementation.

The Contractor shall produce and provide the following printed information to
each member or family within 10 days of receipt of notification of the
enrollment date:

I.  A member handbook which, at a minimum, shall include the items listed in the
    AHCCCS, Office of Managed Care Member Information Policy.

    The Contractor shall review and update the Member Handbook at least once a
    year. The handbook must be submitted to AHCCCS, Office of Managed Care for
    approval by September 1 st of each contract year, or within four weeks of
    receiving the annual renewal amendment, whichever is later.

II. A description of the Contractor's provider network, which at a minimum,
    includes those items listed in the AHCCCS, Office of Managed Care Member
    Information Policy.

The Contractor must give written notice about termination of a contracted
provider, within 15 days after receipt or issuance of the termination notice, to
each member who received their primary care from, or is seen on a regular basis
by, the terminated provider. Affected members must be informed of any other
changes in the network 30 days prior to the implementation date of the change.
The Contractor shall have information available for potential enrollees as
described in the AHCCCS, Office of Managed Care Member Information
Policy.

19. MEMBER SURVEYS
Unless waived by AHCCCSA, the Contractor shall perform its own annual general
or focused member survey. All such contractor surveys, along with a timeline for
the project, shall be approved in advance by AHCCCS Office of Managed Care.
The results and the analysis of the results shall be submitted to the Operations
Unit within 45 days of the completion of the project. AHCCCSA may require
inclusion of certain questions.

AHCCCSA may periodically conduct a survey of a representative sample of the
Contractor's membership. AHCCCSA will consider suggestions from the Contractor
for questions to be included in each survey. The results of these surveys,
conducted by AHCCCSA, will become public information and available to all
interested parties upon request.

20. CULTURAL COMPETENCY
The Contractor shall have a Cultural Competency Plan that meets the requirements
of the AHCCCS Cultural Competency Policy. An annual assessment of the
effectiveness of the plan, along with any modifications to

				-34-
<page>

the plan, must be submitted to the Office of Managed Care, no later than 45 days
after the start of each contract year.

21. MEDICAL RECORDS
The member's medical record is the property of the provider who generates the
record. Each member is entitled to one copy of his or her medical record free
of charge. The Contractor shall have written policies and procedures to
maintain the confidentiality of all medical records.

The Contractor is responsible for ensuring that a medical record is established
when information is received about a member. If the PCP has not yet seen the
member, such information may be kept temporarily in an appropriately
labeled file, in lieu of establishing a medical record, but must be associated
with the member's medical record as soon as one is established.

The Contractor shall have written policies and procedures for the maintenance of
medical records so that those records are documented accurately and in a timely
manner, are readily accessible, and permit prompt and systematic retrieval of
information.

The Contractor shall have written standards for documentation on the medical
record for legibility, accuracy and plan of care, which comply with the AMPM.

The Contractor shall have written plans for providing training and evaluating
providers' compliance with the Contractor's medical records standards. Medical
records shall be maintained in a detailed and comprehensive manner, which
conforms to good professional medical practice, permits effective professional
medical review and medical audit processes, and which facilitates an adequate
system for follow-up treatment. Medical records must be legible, signed and
dated.

When a member changes PCPs, his or her medical records or copies of medical
records must be forwarded to the new PCP within 10 working days from receipt of
the request for transfer of the medical records.

AHCCCSA is not required to obtain written approval from a member, before
requesting the member's medical record from the PCP or any other agency. The
Contractor may obtain a copy of a member's medical records without written
approval of the member, if the reason for such request is directly related to
the administration of the AHCCCS program. AHCCCSA shall be afforded access to
all members' medical records whether electronic or paper within 20 working days
of receipt of request.

Information related to fraud and abuse may be released so long as protected
HIV-related information is not disclosed (A.R.S. Sec.36-664( I)).

22. ADVANCE DIRECTIVES
The Contractor shall maintain policies and procedures addressing advanced
directives for adult members that specify:

a. Each contract or agreement with a hospital, nursing facility, home health
   agency, hospice or organization responsible for providing personal care, must
   comply with Federal and State law regarding advance directives for adult
   members. Requirements include:

  (1) Maintaining written policies that address the rights of adult members to
      make decisions about medical care, including the right to accept or refuse
      medical care, and the right to execute an

				-35-
<page>

      advance directive. If the agency/organization has a conscientious
      objection to carrying out an advance directive, it must be explained in
      policies. (A health care provider is not prohibited from making such
      objection when made pursuant to A.R.S. Sec. 36-3205.C.1.)
  (2) Provide written information to adult members regarding each individual's
      rights under State law to make decisions regarding medical care, and the
      health care provider's written policies concerning advance directives
      (including any conscientious objections).
  (3) Documenting in the member's medical record whether or not the adult member
      has been provided the information and whether an advance directive has
      been executed.
  (4) Not discriminating against a member because of his or her decision to
      execute or not execute an advance directive, and not making it a condition
      for the provision of care.
  (5) Providing education to staff on issues concerning advance directives
      including notification of direct care providers of services, such as home
      health care and personal care, of any advanced directives executed by
      members to whom they are assigned to provide services.

b. Contractors shall require subcontracted PCPs, which have agreements with the
   entities described in paragraph a. above, to comply with the requirements of
   subparagraphs a. (2) through (5) above. Contractors shall also encourage
   health care providers specified in subparagraph a. to provide a copy of the
   member's executed advanced directive, or documentation of refusal, to the
   member's PCP for inclusion in the member's medical record.

c. The Contractor shall provide written information to adult enrollees that
   describe the following:

  (1) A member's rights under State law, including a description of the
      applicable State law
  (2) The organization's policies respecting the implementation of those rights,
      including a statement of any limitation regarding the implementation of
      advance directives as a matter of conscience.
  (3) The member's right to file complaints directly with the state
  (4) Changes to State as soon as possible, but no later than 90 days after the
      effective date of the change

23. QUALITY MANAGEMENT AND UTILIZATION MANAGEMENT (QM/UM)
Quality Management (QM): The Contractor shall provide quality medical care to
members, regardless of payer source or eligibility category. The Contractor
shall execute processes to assess, plan, implement and evaluate quality
management and improvement activities, as specified in the AMPM, that include
at least the following:

  Conducting Quality Improvement Projects (QIPs);
  QM monitoring and evaluation activities;
  Credentialing and recredentialing processes;
  Investigation, analysis, tracking and trending of quality of care issues,
  abuse and/ or complaints; and
  AHCCCS mandated performance indicators.

The Contractor shall submit, within timelines specified in Attachment F, a
written QM plan that addresses its strategies for quality improvement and
conducting the quality management activities described in this section.
The Contractor shall conduct quality improvement projects as required by the
AMPM.

The Contractor may combine its plan for quality improvement and quality
management activities with the plan that addresses utilization management as
described below.

				-36-
<page>

Utilization Management (UM): The Contractor shall execute processes to assess,
plan, implement and evaluate utilization management activities, as specified in
the AMPM, that include at least the following:

  Pharmacy Management;
  Prior authorization;
  Concurrent review;
  Continuity and coordination of care;
  Monitoring and evaluation of over and/or under utilization of services;
  Evaluation of new medical technologies, and new uses of existing technologies;
  Development and/ or adoption of practice guidelines; and
  Consistent application of review criteria.

The Contractor shall maintain a written UM plan that addresses its plan for
monitoring UM activities described in this section. The plan must be submitted
for review by AHCCCS Office of Medical Management (OMM) within timelines
specified in Attachment F.

24. PERFORMANCE STANDARDS
All Performance Standards described below apply to all member populations.

Contractors must meet AHCCCS stated Minimum Performance Standards. However, it
is equally important that Contractors continually improve their performance
indicator outcomes from year to year. Contractors shall strive to meet the
ultimate standard, or benchmark, established by AHCCCS.

Any statistically significant drop in the Contractor's performance level for any
indicator must be explained by the Contractor in its annual quality management
program evaluation. If a Contractor has a significant drop in any indicator
without a justifiable explanation, it will be required to submit a corrective
action plan and may be subject to sanctions.

AHCCCS has established three levels of performance:

Minimum Performance Standard - A Minimum Performance Standard is the minimal
expected level of performance by the Contractor. If a Contractor does not
achieve this standard, or any indicator declines to a level below the AHCCCS
Minimum Performance, the Contractor will be required to submit a corrective
action plan and may be subject to sanctions.

Goal - A Goal is a reachable standard for a given performance indicator for the
Contract Year. If the Contractor has already met or exceeded the AHCCCS
Minimum Performance Standard for any indicator, the Contractor must strive to
meet the established Goal for the indicator( s).

Benchmark - A Benchmark is the ultimate standard to be achieved. Contractors
that have already achieved or exceeded the Goal for any performance indicator
must strive to meet the Benchmark for the indicator( s). Contractors that have
achieved the Benchmark are expected to maintain this level of performance for
future years.

A Contractor that has not shown demonstrable and sustained improvement toward
meeting AHCCCS Performance Standards shall develop a corrective action plan.
The corrective action plan must be received by AHCCCS, Office of Medical
Management within 30 days of receipt of notification from AHCCCS. This plan
must be approved by AHCCCS prior to implementation. AHCCCS may conduct one or
more follow-up onsite

				-37-
<page>

reviews to verify compliance with a corrective action plan. Failure to achieve
adequate improvement may result in sanction imposed by AHCCCS.

Performance Indicators: The Contractor shall comply with AHCCCS quality
management requirements to improve performance for all AHCCCS established
performance indicators. Complete descriptions of these indicators can be found
in the Technical Specifications section of the most recently published Health
Plan Performance Standards Results and Analysis documents for perinatal,
pediatric and adult/ adolescent services. The indicators for postpartum visits
and low birth weight have been eliminated as contractual performance
standards. The Contractor shall continue to monitor rates for postpartum visits
and low birth weights and implement interventions as necessary to improve or
sustain these rates. These activities will be monitored by AHCCCSA during the
Operational and Financial Review.

CMS has been working in partnership with states in developing core performance
measures for Medicaid and SCHIP programs. The current AHCCCS established
performance indicators may be subject to change when these core measures are
finalized and implemented.

In addition, AHCCCS has established standards for the following indicators:

EPSDT Participation: The Contractor shall take affirmative steps to increase
member participation in the EPSDT program. The participation rate is the number
of children younger than 21 years receiving at least one medical screen during
the contract year, compared to the number of children expected to receive at
least one medical screen. The number of children expected to receive at least
one medical screen is based on the AHCCCS EPSDT periodicity schedule and the
average period of eligibility.

Pediatric immunizations: The Contractor shall ensure members under age 21
receive age-appropriate immunizations as specified in the AMPM.

The Contractor shall participate in immunization audits, at intervals specified
by AHCCCSA, based on random sampling to assess and verify the immunization
status of two-year-old members. AHCCCS will provide the Contractor the selected
sample, specifications for conducting the audit, the AHCCCSA reporting
requirements, and technical assistance. The Contractor shall identify each
child's PCP, conduct the assessment, and report to AHCCCSA, in the required
format, all immunization data for the two-year-old children sampled. If medical
records are missing for more than 5 percent of the sample group, the Contractor
is subject to sanctions by AHCCCSA. An External Quality Review Organization
(EQRO) may conduct a study to validate the Contractor's reported rates.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                                     Benchmark *
                                                     CYE 04 Minimum       CYE 04      (Healthy
Performance Indicator                             Performance Standard     Goal     People Goals)
------------------------------------------------------------------------------------------------
<S>                                               <C>                     <C>       <C>
Immunization of two-year-olds 3 antigen series             78%              82%           90%
(4:3:1)
------------------------------------------------------------------------------------------------
Immunization of two-year-olds 5 antigen series             67%              73%           90%
(4:3:1:2:3)
------------------------------------------------------------------------------------------------
Immunizations of two-year-olds
     DtaP         4 doses                                  82%              85%           90%
------------------------------------------------------------------------------------------------
     Polio        3 doses                                  88%              90%           90%
------------------------------------------------------------------------------------------------
     MMR -        1 dose                                   88%              90%           90%
------------------------------------------------------------------------------------------------
     Hib          2 doses                                  85%              90%           90%
------------------------------------------------------------------------------------------------
     HBV          3 doses                                  81%              87%           90%
------------------------------------------------------------------------------------------------
</TABLE>

				-38-
<page>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                                     Benchmark *
                                                     CYE 04 Minimum       CYE 04      (Healthy
Performance Indicator                             Performance Standard     Goal     People Goals)
------------------------------------------------------------------------------------------------
<S>                                               <C>                     <C>       <C>
Varicella  1 dose                                          73%              80%          90%
------------------------------------------------------------------------------------------------
Dental visits                                              45%              55%          56%
------------------------------------------------------------------------------------------------
Well-child Visits 15 Months                                58%              64%          90%
------------------------------------------------------------------------------------------------
Well-child Visits 3-6 Years                                48%              64%          80%
------------------------------------------------------------------------------------------------
EPSDT Participation                                        58%              80%          80%
------------------------------------------------------------------------------------------------
Children's Access to PCP's                                 77%              80%          97%
------------------------------------------------------------------------------------------------
Cervical Cancer Screening (3-yr period)                    57%              60%          90%
------------------------------------------------------------------------------------------------
Breast Cancer Screening                                    55%              60%          70%
------------------------------------------------------------------------------------------------
Adolescent Well-care Visits                                48%              49%          50%
------------------------------------------------------------------------------------------------
Adult Ambulatory/Preventive Care                           78%              80%          96%
------------------------------------------------------------------------------------------------
Prenatal Care in the First Trimester                       59%              65%          90%
------------------------------------------------------------------------------------------------
</TABLE>

*Benchmarks for each performance indicator are based on Healthy People 2000 or
2010 goals for health promotion and disease prevention, as determined by the
U. S. Department of Health and Human Services.

25. GRIEVANCE AND REQUEST FOR HEARING PROCESS AND STANDARDS
The Contractor shall have in place a written grievance process for enrollees and
providers, which defines their rights regarding disputed matters with the
Contractor. The Contractor shall provide the appropriate personnel
to establish, implement and maintain the necessary functions related to the
grievance systems process. Refer to Attachment H( 1) and H( 2) for Enrollee
Grievance System Standards and Policy and Provider Grievance System Standards
and Policy, respectively.

The grievance process shall be in accordance with applicable Federal and State
laws, regulations and policies, including, but not limited to 42 CFR Part 438
Subpart F. The Contractor shall ensure compliance with
Attachment H. Contractor shall also ensure that it timely provides written
information to both enrollees and providers, which clearly explains the
grievance system requirements. Information to enrollees must meet
cultural competency and limited English proficiency requirements as specified in
the AHCCCS Cultural Competency Policy and Section D, Paragraph 18, Member
Information.

The Contractor shall be responsible to provide the necessary professional,
paraprofessional and clerical services for the representation of the Contractor
in all issues relating to the grievance system and any other matters arising
under this contract which rise to the level of administrative hearing or a
judicial proceeding.

26. QUARTERLY GRIEVANCE REPORT
The Contractor shall submit a Quarterly Grievance Report to AHCCCSA, Office of
Legal Assistance, using the Quarterly Grievance System Report Format. The
Quarterly Grievance System Report must be received by the AHCCCSA, Office of
Legal Assistance, no later than 45 days from the end of the quarter.

27. NETWORK DEVELOPMENT
The Contractor shall develop and maintain a provider network that is sufficient
to provide all covered services to AHCCCS members. It shall ensure covered
services are provided promptly and are reasonably accessible in
terms of location and hours of operation. There shall be sufficient personnel
for the provision of covered services, including emergency medical care on
a 24-hour-a-day, 7-days-a-week basis. The proposed network shall be

				-39-
<page>

sufficient to provide covered services within designated time and distance
limits. For Maricopa and Pima Counties only, this includes a network such that
95% of its members residing within the boundary area of metropolitan Phoenix
and Tucson do not have to travel more than 5 miles to see a PCP, dentist or
pharmacy. Ninety-five percent of its members residing outside the boundary area
must not have to travel more than 10 miles to see such providers. PCPs and
specialists who provide inpatient services to the Contractor's members shall
have admitting and treatment privileges in a minimum of one general acute care
hospital within the Contractor's service area. Hospitalists may satisfy this
requirement. Contractors in Maricopa and/ or Pima counties must have at least
one hospital contract in each of the service districts specified in Attachment
B.

Contractors must provide a comprehensive provider network that ensures its
membership has access at least equal to, or better than, community norms.
Services shall be as accessible to AHCCCS members in terms of timeliness,
amount, duration and scope as those services are to non-AHCCCS persons within
the same service area. The Contractor is expected to consider the full spectrum
of care when developing its network. The Contractor must also consider
communities whose residents typically receive care in neighboring states. If
the Contractor is unable to provide those services locally, it must so
demonstrate to AHCCCSA and shall provide reasonable alternatives for members
to access care. These alternatives must be approved by AHCCCSA. If the
Contractor's network is unable to provide medically necessary services required
under contract, the Contractor must adequately and timely cover these
services through an out of network provider until a network provider is
contracted. The Contractor and out of network provider must coordinate with
respect to authorization and payment issues in these circumstances.

The Contractor is also encouraged to develop non-financial incentive programs
to increase participation in its provider network.

The Contractor shall not discriminate with respect to participation in the
AHCCCS program, reimbursement or indemnification against any provider based
solely on the provider's type of licensure or certification. In addition,
the Contractor must not discriminate against particular providers that service
high-risk populations or specialize in conditions that require costly treatment.
provision, however, does not prohibit the Contractor from limiting provider
participation to the extent necessary to meet the needs of the Contractor's
members. This provision also does not interfere with measures established by the
Contractor to control costs consistent with its responsibilities under this
contract. If a Contractor declines to include individual or groups of providers
in its network, it must give the affected providers written notice of the reason
for its decision. The Contractor may not include providers excluded from
participation in Federal health care programs, under either section 1128 or
section 1128A of the Social Security Act.

See Attachment B, Minimum Network Requirements, for details on network
requirements by Geographic Service Area.

Provider Network Development and Management Plan: The Contractor shall develop
and maintain a provider network development and management plan, which ensures
that the provision of covered services will occur as stated above. This plan
shall be updated annually and submitted to AHCCCSA, Office of Managed Care,
45 days from the start of each contract year. The plan shall identify the
current status of the Contractor's network, and project future needs based
upon, at a minimum, membership growth; the number and types (in terms of
training, experience and specialization) of providers that exist in the
Contractor's service area; the expected utilization of services, given the
characteristics of its population and its health care needs; the numbers of
providers not accepting new Medicaid patients; and access of its membership
to specialty services as compared to the general population of the community.
The plan, at a minimum, shall also include the following:

a. current network gaps;
b. immediate short-term interventions when a gap occurs, including expedited
or temporary credentialing;
c. interventions to fill network gaps and barriers to those interventions;

				-40-
<page>

d. outcome measures/ evaluation of interventions;
e. ongoing activities for network development;
f. coordination between internal departments;
g. coordination with outside organizations and
h. specialty populations.

28. PROVIDER AFFILIATION TRANSMISSION
The Contractor shall submit information quarterly regarding its provider
network. This information shall be submitted in the format described in the
Provider Affiliation Transmission User Manual on October 15, January 15, April
15, and July 15 of each contract year. The manual may be found in the Bidder's
Library. If the provider affiliation transmission is not timely, accurate and
complete, the Contractor may be required to submit a corrective action plan and
may be subject to sanction.

29. NETWORK MANAGEMENT
The Contractor shall have policies and procedures in place that pertain to all
service specifications described in the AMPM. In addition, the Contractor shall
have policies on how the Contractor will:

a. Communicate with the network regarding contractual and/ or program changes
   and requirements;
b. Monitor network compliance with policies and rules of AHCCCSA and the
   Contractor, including compliance with all policies and procedures related to
   the grievance process and ensuring the member's care is not compromised
   during the grievance process;
c. Evaluate the quality of services delivered by the network;
d. Provide or arrange for medically necessary covered services should the
   network become temporarily insufficient within the contracted service area;
e. Monitor the adequacy, accessibility and availability of its provider network
   to meet the needs of its members, including the provision of care to members
   with limited proficiency in English; and
f. Process expedited and temporary credentials.

Contractor policies shall be subject to approval by AHCCCSA, Office of Managed
Care, and shall be monitored through operational audits.

All material changes in the Contractor's provider network must be approved in
advance by AHCCCSA, Office of Managed Care. A material change is defined as one
which affects, or can reasonably be foreseen to affect, the Contractor's ability
to meet the performance and network standards as described in this contract.
AHCCCSA will assess proposed changes in the Contractor's provider network for
potential impact on members' health care and provide a written response to the
Contractor. For emergency situations, AHCCCSA will expedite the approval
process.

The Contractor shall notify AHCCCSA, Office of Managed Care, within one working
day of any unexpected changes that would impair its provider network. This
notification shall include (1) information about how the change will affect the
delivery of covered services, and (2) the Contractor's plans for maintaining
the quality of member care, if the provider network change is likely to affect
the delivery of covered services.

30. PRIMARY CARE PROVIDER STANDARDS
The Contractor shall include in its provider network a sufficient number of PCPs
to meet the requirements of this contract. Health care providers designated by
the Contractor as PCPs shall be licensed in Arizona as

				-41-
<page>

allopathic or osteopathic physicians who generally specialize in family
practice, internal medicine, obstetrics, gynecology, or pediatrics; certified
nurse practitioners or certified nurse midwifes; or physician's assistants.

The Contractor shall assess the PCP's ability to meet AHCCCS appointment
availability and other standards when determining the appropriate number of its
members to be assigned to a PCP. The Contractor should also consider the PCP's
total panel size (i. e. AHCCCS and non-AHCCCS patients) when making this
determination. AHCCCS members shall not comprise the majority of a PCP's panel
of patients. AHCCCSA shall inform the Contractor when a PCP has a panel of more
than 1,800 AHCCCS members (assigned by a single Contractor or multiple
Contractors), to assist in the assessment of the size of their panel. This
information will be provided on a quarterly basis. The Contractor will adjust
the size of a PCP's panel, as needed, for the PCP to meet AHCCCS standards.

The Contractor shall have a system in place to monitor and ensure that each
member is assigned to an individual PCP and that the Contractor's data
regarding PCP assignments is current. The Contractor is encouraged to assign
members with complex medical conditions, who are age 12 and younger, to board
certified pediatricians. PCP's, with assigned members diagnosed with AIDS or
as HIV positive, shall meet criteria and standards set forth in the AMPM.

To the extent required by this contract, the Contractor shall offer members
freedom of choice within its network in selecting a PCP. The Contractor may
restrict this choice when a member has shown an inability to
form a relationship with a PCP, as evidenced by frequent changes, or when there
is a medically necessary reason. When a new member has been assigned to the
Contractor, the Contractor shall inform the member in writing of his enrollment
and of his PCP assignment within 10 days of the Contractor's receipt of
notification of assignment by AHCCCSA. The Contractor shall include with the
enrollment notification a list of all the Contractor's available PCPs, the
process for changing the PCP assignment, should the member desire to do so,
as well as the information required in the AHCCCS Office of Managed Care Member
Information Policy. The Contractor shall confirm any PCP change in writing to
the member. Members may make both their initial PCP selection and any
subsequent PCP changes either verbally or in writing.

At a minimum, the Contractor shall hold the PCP responsible for the following
gatekeeping activities:

a. Supervision, coordination and provision of care to each assigned member;
b. Initiation of referrals for medically necessary specialty care;
c. Maintaining continuity of care for each assigned member; and
d. Maintaining the member's medical record, including documentation of all
   services provided to the member by the PCP, as well as any specialty or
   referral services.

The Contractor shall establish and implement policies and procedures to monitor
PCP gatekeeping activities and to ensure that PCPs are adequately notified of,
and receive documentation regarding, specialty and referral services provided
to assigned members by specialty physicians, and other health care
professionals. Contractor policies and procedures shall be subject to approval
by AHCCCSA, Office of Managed Care, and shall be monitored through operational
audits.

31. MATERNITY CARE PROVIDER STANDARDS
The Contractor shall ensure that a maternity care provider is designated for
each pregnant member for the duration of her pregnancy and postpartum care and
that maternity services are provided in accordance with the AMPM. The
Contractor may include in its provider network the following maternity care
providers:

a. Arizona licensed allopathic and/ or osteopathic physicians who are general
practitioners or specialize in family practice or obstetrics

				-42-
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b. Physician Assistants
c. Nurse Practitioners
d. Certified Nurse Midwives

Pregnant members may choose, or be assigned, a PCP who provides obstetrical
care. Such assignment shall be consistent with the freedom of choice
requirements for selecting health care professionals while ensuring that
the continuity of care is not compromised. Members who choose to receive
maternity services from a licensed midwife shall also be assigned to a PCP for
medical care, as primary care is not within the scope of practice for
licensed midwives.

All physicians and certified nurse midwives who perform deliveries shall have OB
hospital privileges or a documented hospital coverage agreement for those
practitioners performing deliveries in alternate settings. Licensed midwives
perform deliveries only in the member's home. Labor and delivery services may
also be provided in the member's home by physicians, certified nurse
practitioners and certified nurse midwives who include such services within
their practice.

32. REFERRAL PROCEDURES AND STANDARDS
The Contractor shall have adequate written procedures regarding referrals to
specialists, to include, at a minimum, the following:

a. Use of referral forms clearly identifying the Contractor
b. A system for resolving disputes regarding the referrals
c. PCP referral shall be required for specialty physician services, except that
   women shall have direct access to in-network GYN providers, including
   physicians, physician assistants and nurse practitioners within the scope of
   their practice, without a referral for preventive and routine services. In
   addition, for members with special health care needs determined to need a
   specialized course of treatment or regular care monitoring, the Contractor
   must have a mechanism in place to allow such members to directly access a
   specialist (for example through a standing referral or an approved number of
   visits) as appropriate for the member's condition and identified needs. Any
   waiver of this requirement by the Contractor must be approved in advance by
   AHCCCSA.
d. Specialty physicians shall not begin a course of treatment for a medical
   condition other than that for which the member was referred, unless approved
   by the member's PCP.
e. A process in place that ensures the member's PCP receives all specialist and
   consulting reports and a process to ensure PCP follow-up of all referrals
   including EPSDT referrals for behavioral health services
f. A referral plan for any member who is about to lose eligibility and who
   requests information on low-cost or no-cost health care services
g. Referral to Medicare HMO including payment of copayments
h. Allow for a second opinion from a qualified health care professional within
   the network, or if one is not available in network, arrange for the member
   to obtain one outside the network, at no cost to the member.

The Contractor shall comply with all applicable physician referral requirements
and conditions defined in Sections 1903( s) and 1877 of the Social Security Act.
Upon finalization of the regulations, the Contractor shall comply with all
applicable physician referral requirements and conditions defined in 42 CFR
Part 411,  Part 424, Part 435 and Part 455. Sections 1903( s) and 1877 of the
Act prohibits physicians from making referrals for designated health services
to health care entities with which the physician or a member of the
physician's family has a financial relationship. Designated health services
include:

a. Clinical laboratory services
b. Physical therapy services
c. Occupational therapy services

				-43-
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d. Radiology services
e. Radiation therapy services and supplies
f. Durable medical equipment and supplies
g. Parenteral and enteral nutrients, equipment and supplies
h. Prosthetics, orthotics and prosthetic devices and supplies
i. Home health services
j. Outpatient prescription drugs
k. Inpatient and outpatient hospital services

33. APPOINTMENT STANDARDS
For purposes of this section, "urgent" is defined as an acute, but not
necessarily life-threatening disorder,
which, if not attended to, could endanger the patient's health. The
Contractor shall have procedures in place that ensure the following standards
are met:

a. Emergency PCP appointments-same day of request
b. Urgent care PCP appointments-within 2 days of request
c. Routine care PCP appointments-within 21 days of request

For specialty referrals, the Contractor shall be able to provide:

a. Emergency appointments -within 24 hours of referral
b. Urgent care appointments -within 3 days of referral
c. Routine care appointments -within 45 days of referral

For dental appointments, the Contractor shall be able to provide:

a. Emergency appointments -within 24 hours of request
b. Urgent care appointments -within 3 days of request
c. Routine care appointments -within 45 days of request

For maternity care, the Contractor shall be able to provide initial prenatal
care appointments for enrolled pregnant members as follows:

a. First trimester -within 14 days of request
b. Second trimester -within 7 days of request
c. Third trimester -within 3 days of request
d. High risk pregnancies -within 3 days of identification of high risk by the
Contractor or maternity care provider, or immediately if an emergency exists

If a member needs non-emergent medically necessary transportation, the
Contractor shall require its transportation provider to schedule the
transportation so that the member arrives on time for the appointment,
but no sooner than one hour before the appointment; does not have to wait more
than one hour after making the call to be picked up; nor have to wait for
more than one hour after conclusion of the appointment for transportation home.

The Contractor shall actively monitor the adequacy of its appointment processes
and reduce the unnecessary use of alternative methods such as emergency room
visits. The Contractor shall actively monitor and ensure that a member's
waiting time for a scheduled appointment at the PCP's or specialist's office
is no more than 45 minutes, except when the provider is unavailable due to an
emergency.

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The Contractor shall have written policies and procedures about educating its
provider network regarding appointment time requirements. The Contractor must
assign a specific staff member or unit within its organization to monitor
compliance with appointment standards. The Contractor must develop a corrective
action plan when appointment standards are not met; if appropriate, the
corrective action plan should be developed in conjunction with the provider.
Appointment standards shall be included in the Provider Manual.
The Contractor is encouraged to include the standards in the provider
subcontract.

34. FEDERALLY QUALIFIED HEALTH CENTERS (FQHC)
The Contractor is encouraged to use FQHCs in Arizona to provide covered services
and must comply with the Federal mandates. Section 4712( b)( 2) of the
Balanced Budget Act requires that "rates of payment between FQHCs/ RHCs and
MCOs shall not be less than the amount of payment for a similar set of services
with a non-FQHC/RHC." The intention of this provision is to ensure that
contractors negotiate rates of payment with FQHCs that are comparable to the
rates paid to providers that provide similar services.

Contractors are required to submit member information for Title XIX members for
each FQHC on a quarterly basis to the AHCCCSA Office of Managed Care. AHCCCSA
will perform periodic audits of the member information submitted. Contractors
should refer to the AHCCCS Office of Managed Care's policy on FQHC reimbursement
for further guidance. The following FQHCs are currently recognized by CMS:

	Canyonlands Community Health Care
	Chiricahua Community Health Centers, Inc.
	Clinica Adelante, Inc.
	Community Health Center of West Yavapai
	Desert Senita Community Health Center
	El Rio Health Center
	Inter-Tribal Health Care Center
	Marana Health Center
	Mariposa Community Health Center, Inc.
	Mountain Park Health Center
	Native American Community Health Center, Inc.
	Native Americans for Community Action Family Health Center
	North Country Community Health Center
	Sun Life Family Health Center
	Sunset Community Health Center (formerly Valley Health Center, Inc.)
	United Community Health Center, Inc.

35. PROVIDER MANUAL
The Contractor shall develop, distribute and maintain a provider manual. The
Contractor shall ensure that each contracted provider is issued a copy of the
provider manual and is encouraged to distribute a provider manual to any
individual or group that submits claim and encounter data. The Contractor
remains liable for ensuring that all providers, whether contracted or not,
meet the applicable AHCCCS requirements such as covered services, billing,
etc. At a minimum, the Contractor's provider manual must contain information on
the following:

a. Introduction to the Contractor which explains the Contractor's organization
   and administrative structure
b. Provider responsibility and the Contractor's expectation of the provider
c. Overview of the Contractor's Provider Service department and function

				-45-
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d. Listing and description of covered and non-covered services, requirements and
   limitations including behavioral health services
e. Emergency room utilization (appropriate and non-appropriate use of the
   emergency room)
f. EPSDT Services -screenings include a comprehensive history, developmental/
   behavioral health screening, comprehensive unclothed physical examination,
   appropriate vision testing, hearing testing, laboratory tests, dental
   screenings and immunizations
g. Dental services
h. Maternity/Family Planning services
i. The Contractor's policy regarding PCP assignments
j. Referrals to specialists and other providers, including access to behavioral
   health services provided by the ADHS/RBHA system
k. Grievance and request for hearing rights of providers and enrollees
l. Billing and encounter submission information
m. Information about policies and procedures relevant to the providers
   including, but not limited to, utilization management and claims submission
n. Reimbursement, including reimbursement for dual eligibles (i. e. Medicare
   and Medicaid) or members with other insurance
o. Cost sharing responsibility
p. Explanation of remittance advice
q. Prior authorization and notification requirements
r. Claims medical review
s. Concurrent review
t. Fraud and Abuse
u. Formularies (with updates and changes provided in advance to providers,
   including pharmacies)
v. AHCCCS appointment standards
w. Americans with Disabilities Act (ADA) requirements and Title VI, as
   applicable
x. Eligibility verification
y. Cultural competency information, including notification about Title VI of the
   Civil Rights Act of 1964. Providers should also be informed of how to access
   interpretation services to assist members who speak a language other the
   English or who use sign language.
z. Peer review and appeal process.

36. PROVIDER REGISTRATION
The Contractor shall ensure that all of its subcontractors register with AHCCCSA
as an approved service provider and receive an AHCCCS Provider ID Number.
A Provider Participation Agreement must be signed by each provider who does not
already have a current AHCCCS ID number. The original shall be forwarded to
AHCCCSA. This provider registration process must be completed in order for the
Contractor to report services a subcontractor renders to enrolled members and
for the Contractor to be paid reinsurance.

37. SUBCONTRACTS
The Contractor shall be legally responsible for contract performance whether or
not subcontracts are used. No subcontract shall operate to terminate the legal
responsibility of the Contractor to assure that all activities carried out by
the subcontractor conform to the provisions of this contract. Subject to such
conditions, any function required to be provided by the Contractor pursuant to
this contract may be subcontracted to a qualified person or organization. All
such subcontracts must be in writing. See the AHCCCS Claims Processing by
Subcontracted Providers Policy in the Bidder's Library.

				-46-
<page>

All subcontracts entered into by the Contractor are subject to prior review and
approval by AHCCCS, Office of Managed Care, and shall incorporate by reference
the terms and conditions of this contract. The following subcontracts shall be
submitted to AHCCCS, Office of Managed Care for prior approval at least 30 days
prior to the beginning date of the subcontract:

a. Automated data processing
b. Third-party administrators
c. Management Services (See also Section D, Paragraphs 43 & 44)
d. Model subcontracts
e. Capitated or other risk subcontracts requiring claims processing by the
   subcontractor
f. Hospitals
g. Requests for Proposal issued by the Contractor for the procurement of
   medical services.

The Contractor shall maintain a fully executed original of all subcontracts,
which shall be accessible to AHCCCSA within two working days of request by
AHCCCSA. A subcontract is voidable and subject to immediate cancellation by
AHCCCSA in the event any subcontract pertinent to "a" through "g" above is
implemented without the prior written approval of AHCCCSA. All subcontracts
shall comply with the applicable provisions of Federal and State laws,
regulations and policies.

The Contractor shall not include covenant-not-to-compete requirements in its
provider agreements. Specifically, the Contractor shall not contract with a
provider and require that the provider not provide services for any other
AHCCCS Contractor.

The Contractor must enter into a written agreement with any provider
(including out-of-state providers) the Contractor reasonably anticipates will be
providing services on its behalf more than 25 times during the contract year.
Exceptions to this requirement include the following:

a. If a provider who provides services more than 25 times during the contract
   year refuses to enter into a written agreement with the Contractor, the
   Contractor shall submit documentation of such refusal to AHCCCS, Office of
   Managed Care within seven days of its final attempt to gain such agreement.
b. If a provider performs emergency services such as an emergency room physician
   or an ambulance company, a written agreement is not required.
c. Individual providers as detailed in the AMPM.
d. Hospitals, as discussed in Section D, Paragraph 40, Hospital Subcontracting
   and Reimbursement.

These and any other exceptions to this requirement must be approved by AHCCCS,
Office of Managed Care. Each subcontract must contain verbatim all the
provisions of Attachment A, Minimum Subcontract Provisions. In
addition, each subcontract must contain the following:

a. Full disclosure of the method and amount of compensation or other
   consideration to be received by the subcontractor.
b. Identification of the name and address of the subcontractor.
c. Identification of the population, to include patient capacity, to be
   covered by the subcontractor.
d. The amount, duration and scope of medical services to be provided, and for
   which compensation will be paid.
e. The term of the subcontract including beginning and ending dates, methods
   of extension, termination and re-negotiation.
f. The specific duties of the subcontractor relating to coordination of benefits
   and determination of third-party liability.
g. A provision that the subcontractor agrees to identify Medicare and other
   third-party liability coverage and to seek such Medicare or third party
   liability payment before submitting claims to the Contractor.
h. A description of the subcontractor's patient, medical and cost record
   keeping system.

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i. Specification that the subcontractor shall cooperate with quality
   management/ quality improvement programs, and comply with the utilization
   management and review procedures specified in the AMPM.
j. A provision stating that a merger, reorganization or change in ownership of
   a subcontractor that is related to or affiliated with the Contractor shall
   require a contract amendment and prior approval of AHCCCSA.
k. Procedures for enrollment or re-enrollment of the covered population
   (may also refer to the Provider Manual).
l. A provision that the subcontractor shall be fully responsible for all tax
   obligations, Worker's Compensation Insurance, and all other applicable
   insurance coverage obligations which arise under this subcontract, for itself
   and its employees, and that AHCCCSA shall have no responsibility or
   liability for any such taxes or insurance coverage.
m. A provision that the subcontractor must obtain any necessary authorization
   from the Contractor or AHCCCSA for services provided to eligible and/or
   enrolled members.
n. A provision that the subcontractor must comply with encounter reporting and
   claims submission requirements as described in the subcontract.

38. CLAIMS PAYMENT SYSTEM
The Contractor shall develop and maintain a claims payment system capable of
processing, cost avoiding and paying claims in accordance with ARS 36-2904( H)
and (J), AHCCCS Rules R9-22-705, and R9-22-709, a copy of which may be found in
the Bidder's Library. In the absence of a subcontract provision to the contrary,
claims submission deadlines shall be calculated from the date of service or the
effective date of eligibility posting, whichever is later. Remittance advices
accompanying the Contractor's payments to providers must contain, at a
minimum, adequate descriptions of all denials and adjustments, the reasons for
such denials and adjustments, the amount billed, the amount paid, and grievance
and request for hearing rights. The Contractor's claims payment system, as well
as its prior authorization and concurrent review process, must minimize the
likelihood of having to recoup already-paid claims. Any recoupment in excess of
$50,000 per provider within a contract year must be approved in advance by
AHCCCSA, Office of Managed Care.

In accordance with the Balanced Budget Act of 1997, unless a subcontract
specifies otherwise, the Contractor shall ensure that 90% of all clean claims
are paid within 30 days of receipt of the clean claim and 99% are paid
within 90 days of receipt of the clean claim. Additionally, unless a
subcontract specifies otherwise, the Contractor shall not require providers
to initially submit claims earlier than 6 months after date of service or to
submit clean claims earlier than 12 months after date of service for which
payment is claimed. The receipt date of the claim is the date stamp on the
claim. The paid date of the claim is the date on the check or other form of
payment.

39. SPECIALTY CONTRACTS
AHCCCSA may at any time negotiate or contract on behalf of the Contractor and
AHCCCSA for specialized hospital and medical services. AHCCCSA will consider
existing Contractor resources in the development and execution of specialty
contracts. AHCCCSA may require the Contractor to modify its delivery network to
accommodate the provisions of specialty contracts. Specialty contracts shall
take precedence over, and supersede, existing and future subcontracts for
services that are subject to specialty contracts. AHCCCSA may consider
waiving this requirement in particular situations if such action is determined
to be in the best interest of the State; however, in no case shall reimbursement
exceed that payable under the relevant AHCCCSA specialty contract.

During the term of specialty contracts, AHCCCSA may act as an intermediary
between the Contractor and specialty contractors to enhance the cost
effectiveness of service delivery. AHCCCSA reserves the right to make
direct payments to specialty contractors on behalf of the Contractor.
Adjudication of claims related to such payments provided under specialty
contracts shall remain the responsibility of the Contractor. AHCCCSA may
provide technical assistance prior to the implementation of any specialty
contracts.

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Currently, AHCCCSA only has specialty contracts for transplant services. AHCCCSA
shall provide at least 60 days advance written notice to the Contractor prior to
the implementation of any specialty contract.

40. HOSPITAL SUBCONTRACTING AND REIMBURSEMENT
Maricopa and Pima counties only: Legislation authorizes the Hospital
Reimbursement Pilot Program (Pilot), which is effective from October 1, 2001,
through September 30, 2003. Legislation to extend the Pilot may be introduced
for CYE '04. The Pilot, as defined by AHCCCS Rule R9-22-718, requires hospital
subcontracts to be negotiated between health plans in Maricopa and Pima counties
and hospitals to establish reimbursement levels, terms and conditions.
Subcontracts shall be negotiated by the Contractor and hospitals to cover
operational concerns, such as timeliness of claims submission and payment,
payment of discounts or penalties and legal resolution which may, as an option,
include establishing arbitration procedures. These negotiated subcontracts
shall remain under close scrutiny by AHCCCSA to ensure availability of quality
services within specific service districts, equity of related party interests
and reasonableness of rates. The general provisions of this program
encompass acute care hospital services and outpatient hospital services that
result in an admission. The Contractor shall submit all hospital subcontracts
and any amendments to AHCCCSA, Office of Managed Care. For non-emergency
patient-days, the Contractor shall ensure that at least 65% of its members use
contracted hospitals. AHCCCSA reserves the right to subsequently adjust the 65%
standard. Further, if in AHCCCSA's judgment the number of emergency days at a
particular non-contracted hospital becomes significant, AHCCCSA may require a
subcontract at that hospital.

All counties EXCEPT Maricopa and Pima: The Contractor shall reimburse hospitals
for member care in accordance with AHCCCS Rule R9-22-705. The Contractor is
encouraged to obtain subcontracts with hospitals in all GSA's and must submit
copies of these subcontracts, including amendments, to AHCCCSA, Office of
Managed Care, at least seven days prior to the effective dates thereof.

Out-of-State Hospitals: The Contractor shall reimburse out-of-state hospitals in
accordance with AHCCCS Rule R9-22-705. Contractors serving border communities
(excluding Mexico) are strongly encouraged to establish contractual agreements
with those out-of-state hospitals that are identified by GSA in Attachment B.

Hospital Recoupments: The Contractor may conduct prepayment and post-payment
medical reviews of all hospital claims including outlier claims. Erroneously
paid claims are subject to recoupment. If the Contractor fails to identify lack
of medical necessity through concurrent review and/ or prepayment medical
review, lack of medical necessity identified during post-payment medical review
shall not constitute a basis for recoupment by the Contractor. This prohibition
does not apply to recoupments that are a result of an AHCCCS reinsurance audit.
See also Section D, Paragraph 38, Claims Payment System. For a more complete
description of the guidelines for hospital reimbursement, please consult the
Bidder's Library for applicable statutes and rules.

41. NURSING FACILITY REIMBURSEMENT
The Contractor shall not deny nursing facility services if the nursing facility
is unable to obtain prior authorization in situations where acute care
eligibility and ALTCS eligibility overlap and the member is enrolled with an
AHCCCS acute care contractor. In such situations, the Contractor shall impose
reasonable authorization requirements. The Contractor's payment responsibility,
described above, applies only in situations where the nursing facility has not
been notified in advance of the member's enrollment with an AHCCCS acute care
contractor. When ALTCS eligibility overlaps AHCCCS acute care enrollment, the
acute care enrollment takes precedence. Although the member could be ALTCS
eligible for this time period, there is no ALTCS enrollment that occurs on the
same days as AHCCCS acute enrollment.

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The Contractor shall provide medically necessary nursing facility services for
any member who has a pending ALTCS application, who is currently residing in
a nursing facility and is eligible for services provided under
this contract. If the member becomes ALTCS eligible and is enrolled with an
ALTCS Program Contractor before the end of the maximum 90 days per contract
year of nursing facility coverage, the Contractor is only
responsible for nursing facility coverage during the time the member is enrolled
with the Contractor. Nursing facility services, covered by a third party insurer
(including Medicare) while the member is enrolled with the Contractor, shall be
applied to the 90 day per contract year limitation.

The Contractor shall notify the Assistant Director of the Division of Member
Services in writing, when a member has been residing in a nursing facility for
75 days. This will allow AHCCCSA time to follow-up on the status of the ALTCS
application process and to prepare for potential fee-for-service coverage if the
stay goes beyond the 90-day per contract year maximum.

42. PHYSICIAN INCENTIVES
The Contractor must comply with all applicable physician incentive requirements
and conditions defined in 42 CFR 417.479. These regulations prohibit physician
incentive plans that directly or indirectly make payments to a doctor or a
group as an inducement to limit or refuse medically necessary services to a
member. The Contractor is required to disclose all physician incentive
agreements to AHCCCSA and to AHCCCS members who request them.

The Contractor shall not enter into contractual arrangements that place
providers at significant financial risk as defined in CFR 417.479 unless
specifically approved in advance by the AHCCCSA Office of Managed Care.
In order to obtain approval, the following must be submitted to the AHCCCSA
Office of Managed Care 45 days prior to the implementation of the contract:

1. A complete copy of the contract
2. A plan for the member satisfaction survey
3. Details of the stop-loss protection provided
4. A summary of the compensation arrangement that meets the substantial
   financial risk definition.

The Contractor shall disclose to AHCCCSA the information on physician incentive
plans listed in 42 CFR 417.479( h)( 1) through 417.479( I) upon contract
renewal, prior to initiation of a new contract, or upon request from AHCCCSA
or CMS. Please refer to the Physician Incentive Plan Disclosure by Contractors
Policy in the Bidder's Library for details on providing required disclosures.

The Contractor shall also provide for compliance with physician incentive plan
requirements as set forth in 42 CFR 422. These regulations apply to contract
arrangements with subcontracted entities that provide utilization management
services.

43. MANAGEMENT SERVICES SUBCONTRACTORS
All proposed management services subcontracts and/ or corporate cost allocation
plans must be approved in advance by AHCCCSA, Office of Managed Care, as
described in Section D, Paragraph 37, Subcontracts. Cost allocation plans must
be submitted with the proposed management fee agreement. AHCCCSA reserves the
right to perform a thorough review of actual management fees charged and/or
corporate allocations made. If the fees or allocations actually paid out are
determined to be unjustified or excessive, amounts may be subject to repayment
to the Contractor. The Contractor may be placed on monthly financial reporting,
and/ or financial sanctions may be imposed.

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44. MANAGEMENT SERVICES SUBCONTRACTOR AUDITS
All management services subcontractors that have oversight responsibilities for
the Contractor's program operations (such as third-party administrators) are
required to have an annual financial audit. A copy of this audit shall be
submitted to AHCCCSA, Office of Managed Care, within 120 days of the
subcontractor's fiscal year end. If services billed by a consultant or
actuary are less than $50,000 annually, AHCCCSA will waive the requirement
for an audit of that consultant or actuary.

45. MINIMUM CAPITALIZATION REQUIREMENTS
In order to be considered for a contract award, the Offeror must meet a minimum
capitalization requirement for each GSA bid. The capitalization requirement
for both new and continuing offerors must be met within 30 days after contract
award.

Minimum capitalization requirements by GSA are as follows:

<TABLE>
<CAPTION>
                                                CAPITALIZATION                   CAPITALIZATION
GEOGRAPHIC SERVICE AREA (GSA)                    REQUIREMENT--                    REQUIREMENT--
                                                NEW CONTRACTORS                EXISTING CONTRACTORS
<S>                                             <C>                            <C>
Mohave/Coconino/Apache/Navajo                     $4,400,000                        $3,000,000
La Paz/Yuma                                       $3,000,000                        $2,000,000
Maricopa                                          $5,000,000                        $4,000,000
Pima/Santa Cruz                                   $4,500,000                        $3,000,000
Cochise/Graham/Greenlee                           $2,150,000                        $2,000,000
Pinal/Gila                                        $2,400,000                        $2,000,000
Yavapai*                                          $1,600,000                        $1,600,000
</TABLE>

*Yavapai's minimum capitalization requirement for both new and existing offerors
is limited to $150 times the estimated number of members.

New Offerors: To be considered for a contract award in a given GSA or group of
GSA's, a new offeror must meet the minimum capitalization requirements listed
above. The capitalization requirement is subject to a $10,000,000 ceiling
regardless of the number of GSA's awarded. This requirement is in addition to
the Performance Bond requirements defined in Paragraphs 46 and 47 below and must
be met with cash with no encumbrances, such as a loan subject to repayment. The
capitalization requirement may be applied toward meeting the equity per member
requirement (see Section D, Paragraph 50, Financial Viability Standards/
Performance Guidelines) and is intended for use in operations of the Contractor.

Continuing Offerors: Continuing offerors that are bidding a county or GSA in
which they currently have a contract must meet the equity per member standard
(see Section D, Paragraph 50, Financial Viability Standards/Performance
Guidelines) for their current membership. Continuing offerors that do not meet
the equity standard must fund, through capital contribution, the necessary
amount to meet the minimum capitalization requirement. Continuing offerors
that are bidding a new GSA must provide the additional capitalization for the
new GSA they are bidding. The amount of the required capitalization for
continuing offers may differ from that for new offerors due to size of the
existing offerors current enrollment. (See the table of requirements by
GSA above).

Continuing offerors will not be required to provide additional capitalization
if they currently meet the equity per member standard with their existing
membership and their excess equity is sufficient to cover the proposed
additional members, or they have at least $10,000,000 in equity.

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46. PERFORMANCE BOND OR BOND SUBSTITUTE
The Contractor shall be required to provide a performance bond of standard
commercial scope issued by a surety company doing business in this State, an
irrevocable letter of credit, or a cash deposit (" Performance Bond") to
AHCCCSA for as long as the Contractor has AHCCCS-related liabilities of $50,000
or more outstanding, or 15 months following the effective date of this contract,
whichever is later, to guarantee: (1) payment of the Contractor's obligations
to providers, non-contracting providers, and non-providers; and (2) performance
by the Contractor of its obligations under this contract. The Performance Bond
shall be in a form acceptable to AHCCCSA as described in the AHCCCS Performance
Bond Policy available in the Bidder's Library.

In the event of a default by the Contractor, AHCCCSA shall, in addition to any
other remedies it may have under this contract, obtain payment under the
Performance Bond or substitute security for the purposes of the following:

a. Paying any damages sustained by providers, non-contracting providers and
   non-providers by reason of a breach of the Contractor's obligations under
   this contract,
b. Reimbursing AHCCCSA for any payments made by AHCCCSA on behalf of the
   Contractor, and
c. Reimbursing AHCCCSA for any extraordinary administrative expenses incurred
   by reason of a breach of the Contractor's obligations under this contract,
   including, but not limited to, expenses incurred after termination of this
   contract for reasons other than the convenience of the State by AHCCCSA.

In the event AHCCCSA agrees to accept substitute security in lieu of the
Performance Bond, irrevocable letter of credit or cash deposit, the Contractor
agrees to execute any and all documents and perform any and all acts necessary
to secure and enforce AHCCCSA's security interest in such substitute security
including, but not limited to, security agreements and necessary UCC filings
pursuant to the Arizona Uniform Commercial Code. In the event such substitute
security is agreed to and accepted by AHCCCSA, the Contractor acknowledges that
it has granted AHCCCSA a security interest in such substitute security to
secure performance of its obligations under this contract. The Contractor is
solely responsible for establishing the credit-worthiness of all forms of
substitute security. AHCCCSA may, after written notice to the Contractor,
withdraw its permission for substitute security, in which case the Contractor
shall provide AHCCCSA with a form of security described above. The Contractor
may not change the amount, duration or scope of the performance bond without
prior written approval from AHCCCSA, Office of Managed Care.

The Contractor shall not leverage the bond for another loan or create other
creditors using the bond as security.

47. AMOUNT OF PERFORMANCE BOND
The initial amount of the Performance Bond shall be equal to 80% of the total
capitation payment expected to be paid to the Contractor in the month of October
2003, or as determined by AHCCCSA. The total capitation amount shall include
delivery and hospital supplemental payments. This requirement must be satisfied
by the Contractor no later than 30 days after notification by AHCCCSA of the
amount required. Thereafter, AHCCCSA shall evaluate the enrollment statistics
of the Contractor on a monthly basis to determine if the Performance Bond must
be increased. The Contractor shall have 30 days following notification by
AHCCCSA to increase the amount of the Performance Bond. The Performance Bond
amount that must be maintained after the contract term shall be sufficient to
cover all outstanding liabilities and will be determined by AHCCCSA. The
Contractor may not change the amount of the performance bond without prior
written approval from AHCCCS, Office of Managed Care. Refer to the Performance
Bond/ Equity Per Member Policy for more details.

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48. ACCUMULATED FUND DEFICIT
The Contractor and its owners shall fund any accumulated fund deficit through
capital contributions in a form acceptable to AHCCCSA within 30 days after
receipt by AHCCCSA of the final audited financial statements, or as otherwise
requested by AHCCCSA. AHCCCSA may, at its option, impose enrollment caps in any
or all GSA's as a result of an accumulated deficit, even if unaudited.

49. ADVANCES, DISTRIBUTIONS, LOANS AND INVESTMENTS
The Contractor shall not, without the prior approval of AHCCCSA, make any
advances to a related party or subcontractor. The Contractor shall not,
without similar prior approval, make any distribution, loan or loan guarantee
to any entity, including another fund or line of business within its
organization. All investments, other than investments in U. S. Government
securities or Certificates of Deposit, also require AHCCCSA prior approval.
(See the Reporting Guide for Acute Care Contractors for alternatives to the
prior approval of individual investments.) All requests for prior approval are
to be submitted to the AHCCCSA Office of Managed Care.

50. FINANCIAL VIABILITY STANDARDS/PERFORMANCE GUIDELINES
AHCCCSA has established financial viability standards/ performance guidelines.
On a quarterly basis, AHCCCSA will review the following ratios with the purpose
of monitoring the financial health of the Contractor.
The two financial viability standards, the Current Ratio and Equity per
Member, are the standards that best represent the financial solvency of the
Contractor. Therefore, the Contractor must comply with these two financial
viability standards.

AHCCCSA will also monitor the Medical Expense Ratio, the Administrative Cost
Percentage, and the RBUC's Days Outstanding. These guidelines are analyzed as
part of AHCCCSA's due diligence in financial statement monitoring. Sanctions
may not be imposed if the Contractor does not meet these performance guidelines.
AHCCCSA takes into account Contractors' unique programs for managing care and
improving the heath status of members when analyzing medical expense and
administrative ratio results. However, if a critical combination of the
Financial Viability Standards and Performance Guidelines are not met, or if a
Contractor's experience differs significantly from other Contractors',
additional monitoring, such as monthly reporting, may be required.

FINANCIAL VIABILITY STANDARDS

Current Ratio
Current assets divided by current liabilities. "Current assets" includes any
long-term investments that can be converted to cash within 24 hours
without significant penalty (i. e., greater than 20%).

Standard: At least 1.00

If current assets include a receivable from a parent company, the parent
company must have liquid assets that support the amount of the inter-company
loan.

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Equity per Member
Equity, less on-balance sheet performance bond, divided by the number of
non-SOBRA Family Planning Extension Services members enrolled at
the end of the period.

Standard: At least $150 for Contractors with enrollment < 100,000
$100 for Contractors with enrollment of 100,000+

For purposes of this measurement, the equity to be measured must be
supported by unencumbered current assets.

(Failure to meet this standard may result in an enrollment cap being
imposed in any or all contracted GSAs.)

PERFORMANCE GUIDELINES

Medical Expense Ratio
Total medical expenses divided by total capitation + Delivery Supplement
+ Hospital Supplemental Payment +TPL+ Reinsurance + HIV/ AIDS
Supplement

Standard: At least 80%

Administrative Cost Percentage
Total administrative expenses (excluding income taxes), divided by total
capitation + Delivery Supplement + Hospital Supplemental Payment +
TPL + Reinsurance + HIV/ AIDS Supplement.

Standard: No more than 10%

Received But Unpaid Claims (Days Outstanding)
Received but unpaid claims divided by the average daily medical
expenses for the period, net of sub-capitation expense.
Standard: No more than 30 days

51. SEPARATE INCORPORATION
Within 60 days of contract award, a non-governmental contractor shall have
established a separate corporation for the purposes of this contract,
whose sole activity is the performance of contract function with AHCCCS.

52. MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP
A proposed merger, reorganization or change in ownership of the Contractor
shall require prior approval of AHCCCSA and a subsequent contract amendment.
The Contractor must submit a detailed merger, reorganization
and/or transition plan to AHCCCSA, Office of Managed Care, for review. The
purpose of the plan review is to
ensure uninterrupted services to members, evaluate the new entity's ability to
support the provider network, ensure that services to members are not
diminished and that major components of the organization and AHCCCS
programs are not adversely affected by such merger, reorganization or change
in ownership.

53. COMPENSATION
The method of compensation under this contract will be Prior Period Coverage
(PPC) capitation, prospective capitation, delivery supplement, hospitalized
supplement for Medical Expense Deduction (MED) members, HIV-AIDS
supplement, reinsurance and third party liability, as described and defined
within this contract and appropriate laws, regulations or policies.

				-54-
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Capitation rates awarded with the RFP will be effective for the period
October 1, 2003 through September 30, 2004. Actuaries establish the capitation
rates using practices established by the Actuarial Standards Board.
AHCCCS provides the following data to its actuaries to establish rates for
the purposes of rebasing the capitation rates.

a. Utilization and unit cost data derived from reported encounters
b. Audited financial statements reported by Contractors
c. Local market basket inflation trends
d. AHCCCS fee for service schedule pricing adjustments
e. Programmatic changes that affect reimbursement
f. Additional administrative requirements for Contractors
g. Other changes to medical practices that affect reimbursement

AHCCCS adjusts its rates to best match payment to risk. This further ensures the
actuarial basis for the capitation rates. The following risk factors will be
included for CYE '04:

a. Reinsurance (as described in Paragraph 57)
b. HIV/ AIDS supplemental payment
c. Age/ Gender for the 1931( b), SOBRA, KidsCare and BCCTP eligibility groups
d. Medicare enrollment for SSI members
e. Delivery supplemental payment
f. Hospitalized supplemental payments for MED members
g. Geographic Service Area adjustments
h. Risk sharing for Title XIX Waiver Group reimbursement
i. Risk sharing for PPC reimbursement
j. Member choice statistic for Title XIX Waiver Group

The above information is reviewed by AHCCCS' actuaries in renewal years to
determine if adjustments are necessary to maintain actuarially sound rates.
A Contractor may cover services for members that are not covered
under the State Plan; however those services are not included in the data
provided to actuaries for setting capitation rates. In addition to the above
data used to review the appropriateness of capitation rates, during
renewal years, AHCCCS may look at other factors that potentially impact
appropriate reimbursement including the medical cost experience of members
who exercise their right to choose a health plan upon initial enrollment
versus those who are auto assigned to a health plan.

Prospective Capitation: The Contractor will be paid capitation for all
prospective member months, including partial member months. This capitation
includes the cost of providing medically necessary covered services to
members during the prospective period coverage.

Prior Period Coverage (PPC) Capitation: Except for KidsCare members and HIFA
Parents, the Contractor will be paid capitation for all PPC member months,
including partial member months. This capitation includes the
cost of providing medically necessary covered services to members during prior
period coverage. The PPC capitation rates will be set by AHCCCSA and will be
paid to the Contractor along with the prospective capitation described below.
Contractors will not receive PPC capitation for newborns of members who were
enrolled at the time of delivery.

Reconciliation of PPC Costs to Reimbursement: For CYE '04, AHCCCSA will
reconcile the Contractor's PPC medical cost expenses to PPC capitation paid to
the Contractor during the year. This reconciliation will limit the Contractor's
profits and losses to 2%. Any losses in excess of 2% will be reimbursed to the
Contractor, and likewise, profits in excess of 2% will be recouped. Encounter
data will be used to determine medical expenses. Refer to the AHCCCS Office
of Managed Care's PPC Reconciliation Policy for further details.

				-55-
<page>

Risk Sharing for Title XIX Waiver Members: For CYE '04, AHCCCSA will reconcile
the Contractor's PPC and prospective medical cost expenses to PPC capitation,
prospective capitation, hospitalized supplemental payments, delivery
supplemental payments and HIV/ AIDS supplemental payments paid to the Contractor
during the year. This reconciliation will limit the Contractor's profits and
losses to 2%. Any losses in excess of 2% will be reimbursed to the Contractor,
and likewise, profits in excess of 2% will be recouped. Encounter data will be
used to determine medical expenses. Refer to the AHCCCS Office of Managed
Care's Title XIX Waiver Reconciliation Policy for further details.

Delivery Supplement: When the Contractor has an enrolled woman who delivers
during a prospective enrollment period, the Contractor will be entitled to a
supplemental payment. Supplemental payments will not apply to women who deliver
in a prior period coverage time period. AHCCCSA reserves the right at any time
during the term of this contract to adjust the amount of this payment for women
who deliver at home. The delivery supplemental payment is not made if the
hospitalized supplemental payment has already been paid.

Hospitalized Supplemental Payment: If an MED member is an inpatient on the date
of application for AHCCCS eligibility, and the date of application falls within
the member's eligibility period, the Contractor is entitled to a
supplemental payment to help defray costs related to the inpatient stay. The
payment is a one-time supplement that is paid when the member is enrolled with
the Contractor and is subject to review during the term of the contract.

HIV-AIDS Supplement: On a quarterly basis, the Contractor shall submit to
AHCCCSA, Office of Managed Care, an unduplicated monthly count of members,
by rate code, who are using approved HIV/ AIDS drugs along with the
supporting pharmacy log. The report shall be submitted, along with the quarterly
financial reporting package, within 60 days after the end of each quarter.
AHCCCSA reserves the right to recoup any amounts paid for ineligible members
as well as an associated penalty for incorrect encounter reporting.

Refer to the AHCCCS, Office of Managed Care HIV/ AIDS Supplemental Payment and
Review Policy for further details and requirements.

54. PAYMENTS TO CONTRACTORS
Subject to the availability of funds, AHCCCSA shall make payments to the
Contractor in accordance with the terms of this contract provided that the
Contractor's performance is in compliance with the terms and conditions
of this contract. Payment must comply with requirements of A.R.S. Title 36.
AHCCCSA reserves the option to make payments to the Contractor by wire or
National Automated Clearing House Association (NACHA) transfer and will provide
the Contractor at least 30 days notice prior to the effective date of any such
change.

Where payments are made by electronic funds transfer, AHCCCSA shall not be
liable for any error or delay in transfer or indirect or consequential damages
arising from the use of the electronic funds transfer process. Any charges or
expenses imposed by the bank for transfers or related actions shall be borne by
the Contractor. Except for adjustments made to correct errors in payment, and
as otherwise specified in this section, any savings remaining to the Contractor
as a result of favorable claims experience and efficiencies in service delivery
at the end of the contract term may be kept by the Contractor.

All funds received by the Contractor pursuant to this contract shall be
separately accounted for in accordance with generally accepted accounting
principles.

Except for funds received from the collection of permitted copayments and
third-party liabilities, the only source of payment to the Contractor for the
services provided hereunder is the Arizona Health Care Cost Containment
System Fund. An error discovered by the State with or without an audit in the
amount of fees paid to the

				-56-
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Contractor will be subject to adjustment or repayment by the Contractor making
a corresponding decrease in a current Contractor's payment or by making an
additional payment by AHCCCSA to the Contractor.

No payment due the Contractor by AHCCCSA may be assigned or pledged by the
Contractor. This section shall not prohibit AHCCCSA at its sole option from
making payment to a fiscal agent hired by Contractor.

55. CAPITATION ADJUSTMENTS
Except for changes made specifically in accordance with this contract, the rates
set forth in Section B shall not be subject to re-negotiation or modification
during the contract period. AHCCCSA may, at its option, review
the effect of a program change and determine if a capitation adjustment is
needed. In these instances the adjustment will be prospective with assumptions
discussed with the Contractor prior to modifying capitation rates. The
Contractor may request a review of a program change if it believes the program
change was not equitable; AHCCCSA will not unreasonably withhold such a review.

If the Contractor is in any manner in default in the performance of any
obligation under this contract, AHCCCSA may, at its option and in addition to
other available remedies, adjust the amount of payment until there is
satisfactory resolution of the default. The Contractor shall reimburse AHCCCSA
and/or AHCCCSA may deduct from future monthly capitation for any portion of a
month during which the Contractor was not at risk due to, for example:

a. death of a member
b. member's incarceration (not eligible for AHCCCS benefits from the date of
   incarceration)
c. duplicate capitation to the same Contractor
d. adjustment based on change in member's contract type
e. voluntary withdrawal

If a member is enrolled twice with the same Contractor, recoupment will be made
as soon as the double capitation is identified. AHCCCSA reserves the right to
modify its policy on capitation recoupments at any time during the term of
this contract.

56. INCENTIVES
AHCCCSA will be implementing an incentive program that utilizes financial
and/or non-financial incentives to promote program quality. AHCCCSA will use
contractor clinical performance indicators in the development of an
incentive program. Examples of incentive programs are listed below.

Auto assignment algorithm: Effective CYE '06, AHCCCSA will adjust the auto
assignment algorithm methodology to incorporate contractor's clinical
performance indicator results in the calculation of target percentages.
AHCCCSA will use the following performance indicators:

	Prenatal Care in the First Trimester
	Well-Child Visits 3-6 Years

Administrative requirements: Effective CYE '06, AHCCCSA may elect to reduce
Operational Financial Review (OFR) requirements for high performing contractors.

Use of Website: Contractors will be required to post their clinical performance
indicators compared to AHCCCS standard and statewide averages on their website.
In addition, AHCCCSA will post contractor performance indicators on its website.

				-57-
<page>

Incentive Fund: AHCCCSA may retain a specified percentage of capitation
reimbursement in order to distribute to Contractors based on their performance
measure outcomes. The incentive fund will not be implemented in CYE '04 and
contractors will be notified at least 60 days prior to implementation in a
future contract year.

57. REINSURANCE
Reinsurance is a stop-loss program provided by AHCCCSA to the Contractor for
the partial reimbursement of covered services, as described below, for a member
with an acute medical condition beyond an annual deductible level. AHCCCSA
"self-insures" the reinsurance program through a deduction to capitation rates
that is intended to be budget neutral. Refer to the AHCCCSA Reinsurance Claims
Processing Manual for further details on the Reinsurance Program.

Inpatient Reinsurance
Inpatient reinsurance covers partial reimbursement of covered inpatient
facility medical services. See the table below for applicable deductible levels
and coinsurance percentages. The coinsurance percent is the rate at which
AHCCCSA will reimburse the Contractor for covered inpatient services incurred
above the deductible. The deductible is the responsibility of the Contractor.
Per diem rates paid for nursing facility services provided within 30 days of
an acute hospital stay, including room and board, provided in lieu of
hospitalization for up to 90 days in any contract year shall be eligible for
reinsurance coverage.

The following table represents anticipated deductible and coinsurance levels
for CYE '04. These deductibles and coinsurance percentages are under review by
actuaries and are subject to change, at the discretion of AHCCCSA, prior to
contract awards. Any change will have a corresponding impact on capitation
rates.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                   Title XIX Waiver Group
                           Annual Deductible*         Annual Deductible
                           -----------------------------------------------------------------
                                                         Combined
Statewide Plan               Prospective            PPC and Prospective
  Enrollment                 Reinsurance                Reinsurance              Coinsurance
--------------------------------------------------------------------------------------------
<S>                        <C>                     <C>                           <C>
0-49,999                       $35,000                     $35,000                   75%
50,000-99,999                  $50,000                     $35,000                   75%
100,000 and over               $75,000                     $35,000                   75%
--------------------------------------------------------------------------------------------
</TABLE>
*applies to all members except for Title XIX Waiver Group members

a) Prospective Reinsurance: This coverage applies to prospective enrollment
periods. The deductible level is based on the Contractor's statewide AHCCCS
acute care enrollment (not including SOBRA Family Planning Extension services)
as of October 1st each contract year for all rate codes and counties, as shown
in the table above. AHCCCSA will adjust the Contractor's deductible level at
the beginning of a contract year if the Contractor's enrollment changes to
the next enrollment level. A Contractor may not elect a lower deductible.
These deductible levels are subject to change by AHCCCSA during the term of
this contract. Any change will have a corresponding impact on capitation rates.

b) Prior Period Coverage Reinsurance: Effective October 1, 2003, AHCCCSA will
no longer cover PPC inpatient expenses under the reinsurance program for any
members except Title XIX Waiver Group members. See section c) below for
additional information.

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c) Title XIX Waiver Members: A separate reinsurance deductible for the Title
XIX Waiver Group applies for both the prospective and prior period coverage
time periods. There can only be one reinsurance case for prior period and
prospective enrollment.

Catastrophic Reinsurance
The reinsurance program includes a special Catastrophic Reinsurance program.
This program encompasses members diagnosed with hemophilia, von Willebrand's
Disease, and Gaucher's Disease. For additional detail and restrictions refer
to the AHCCCS Reinsurance Claims Processing Manual and the AMPM. There
are no deductibles for catastrophic reinsurance cases. All medically necessary
covered services provided during the contract year shall be eligible for
reimbursement at 85% of the Contractor's paid amount. All catastrophic claims
are subject to medical review by AHCCCSA.

The Contractor shall notify AHCCCSA, Office of Managed Care, Reinsurance Unit,
of cases identified for catastrophic reinsurance coverage within 30 days of
(a) initial diagnosis, (b) enrollment with the Contractor, and (c) the
beginning of each contract year. Catastrophic reinsurance will be paid for a
maximum 30-day retroactive period from the date of notification to AHCCCSA.
The determination of whether a case or type of case is catastrophic shall be
made by the Director or designee based on the following criteria; 1) severity of
medical condition, including prognosis; and 2) the average cost or average
length of hospitalization and medical care, or both, in Arizona, for the
type of case under consideration.

HEMOPHILIA: Catastrophic reinsurance coverage is available for all members
diagnosed with Hemophilia (ICD9 codes 286.0, 286.1, 286.2).

VON WILLEBRAND'S DISEASE: Catastrophic reinsurance coverage is available for
all members diagnosed with von Willebrand's Disease who are non-DDAVP responders
and dependent on Plasma Factor VIII.

GAUCHER'S DISEASE: Catastrophic reinsurance is available for members diagnosed
with Gaucher's Disease classified as Type I and are dependent on enzyme
replacement therapy.

Transplants
This program covers members who are eligible to receive covered major organ and
tissue transplantation including bone marrow, heart, heart/ lung, lung, liver,
kidney, and other organ transplantation. Bone grafts and cornea transplantation
services are not eligible for transplant reinsurance coverage but are eligible
under the regular inpatient reinsurance program. Refer to the AMPM for covered
services for organ and tissue transplants. Reinsurance coverage for transplants
is limited to 85% of the AHCCCS contract amount for the
transplantation services rendered, or 85% of the Contractor's paid amount,
whichever is lower. The AHCCCS contracted transplantation rates may be found in
the Bidder's Library. When a member is referred to a transplant facility for an
AHCCCS-covered organ transplant, the Contractor shall notify AHCCCSA, Office of
Medical Management.

Other
For all reinsurance case types other than transplants, Contractors will be
reimbursed 100% for all medically necessary covered expenses provided in a
contract year, after the reinsurance case reaches $650,000.
Transplant case types have another risk limitation methodology described in the
AHCCCSA Reinsurance Claims Processing Manual.

				-59-
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Encounter Submission and Payments for Reinsurance

a) Encounter Submission: A Contractor shall prepare, review, verify, certify,
and submit, encounters for consideration to AHCCCSA. Upon submission, the
Contractor certifies that the services listed were actually rendered. The
encounters must be submitted in the format prescribed by AHCCCSA. The
Contractor must initiate and evaluate an encounter for probable 1st and 3rd
party liability before submitting the encounter for reinsurance consideration,
unless the encounter involves underinsured or uninsured motorist liability
insurance, 1st and 3rd party liability insurance or a tort feasor.

The Contractor must maintain evidence that costs incurred have been paid by the
Contractor before submitting reinsurance encounters. This information is
subject to AHCCCSA review. Collections from 1st and 3rd parties should be
reflected by the Contractor as reductions in the encounters submitted on a
dollar-for-dollar basis. For purposes of AHCCCSA reinsurance, payments made
by Contractor-purchased reinsurance are not considered 1st and 3rd party
collections.

All reinsurance claims must reach a clean claim status within fifteen months
from the end date of service, or date of eligibility posting, whichever is
later.

b) Encounter Processing: AHCCCSA will accept for processing only those
encounters that are submitted directly by an AHCCCS Contractor and that comply
with the AHCCCSA Encounter Reporting User Manual.

c) Payment of Inpatient and Catastrophic Reinsurance Cases: AHCCCSA will
reimburse a Contractor for costs incurred in excess of the applicable
deductible level, subject to coinsurance percentages. Amounts in excess of the
deductible level shall be paid based upon costs paid by the Contractor, minus
the coinsurance unless the costs are paid under a subcapitated arrangement.
In subcapitated arrangements, the Administration shall base reimbursement of
reinsurance encounters on the lower of the AHCCCS allowed amount or the
reported health plan paid amount, minus the coinsurance and Medicare/TPL
payment and applicable quick pay discounts.

Reimbursement for these reinsurance benefits will be made to the Contractor
each month. AHCCCSA will also provide a reconciliation of reinsurance payments
in the case where encounters used in the calculation of reinsurance benefits
are subsequently adjusted or voided.

When a member with an annual enrollment choice changes Contractors within a
contract year, for reinsurance purposes, all eligible inpatient costs, nursing
facility costs and inpatient psychiatric costs incurred for that member will
follow the member to the receiving health plan. Therefore, all submitted
encounters from the health plan the member is leaving (for dates of service
within the current contract year) will be applied toward, but not exceed,
the receiving health plan's deductible level. For further details regarding
this policy and other reinsurance policies refer to the AHCCCS Reinsurance
Claims Processing Manual.

d) Payment of Transplant Reinsurance Cases: Reinsurance benefits are based upon
the lower of the AHCCCS contract amount or the Contractor's paid amount, subject
to coinsurance percentages. While encounter data is not currently used to
determine reinsurance payments for transplant services, in the future,
encounters may be required in order for Contractors to receive reinsurance
payments for transplants. Contractors are required to encounter all medical
services provided for which a financial liability is incurred.
Please refer to the AHCCCS Reinsurance Claims Processing Manual for the
appropriate billing of transplant services. Reimbursement for these reinsurance
benefits will be made to the Contractor each month.

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Reinsurance Audits

Pre-audit: Medical audits on prospective and prior period coverage reinsurance
cases will be determined based on statistically valid retrospective random
sampling. For closed contracts, a 100% audit will be conducted. AHCCCSA, Office
of Managed Care, Reinsurance Unit, will generate the sampling and will
notify the Contractor of documentation needed for the retrospective medical
audit process to occur at the Contractor's offices.

On-site Audit: AHCCCSA will give the Contractor at least 45 days advance notice
of any on-site audit. The Contractor shall have all requested medical records
and financial documentation on-site and available to the nurse auditors. Any
documents not requested in advance by AHCCCSA shall be made available upon
request of the Audit Team during the course of the audit. The Contractor
representative shall be available to the Audit Team at all times during AHCCCSA
on-site audit activities. While on-site, the Contractor shall provide the Audit
Team with workspace, access to a telephone, electrical outlets and privacy for
conferences.

Audit Considerations: Reinsurance consideration will be given to inpatient
facility contracts and hearing decisions rendered by the Office of Legal
Assistance. Pre-hearing and/ or hearing penalties discoverable during the
review process will not be reimbursed under reinsurance.

Per diem rates may be paid for nursing facility and rehabilitation services
provided the services are rendered within 30 days of an acute hospital stay,
including room and board, provided in lieu of hospitalization for up to
90 days in any contract year. The services rendered in these sub-acute settings
must be of an acute nature and, in the case of rehabilitative or restorative
services, steady progress must be documented in the medical record.

Audit Determinations: The Contractor will be furnished a copy of the Reinsurance
Post-Audit Results letter approximately 60 days after the onsite audit and given
an opportunity to comment and provide additional medical or financial
documentation on any audit findings. AHCCCSA may limit reinsurance reimbursement
to a lower or alternative level of care if the Director or designee determines
that the less costly alternative could and should have been used by the
Contractor.

A recoupment of reinsurance reimbursements made to the Contractor may occur
based on the results of the medical audit sampling. The results of the medical
audit sampling may be separately extrapolated to the entire prospective and
prior period coverage reinsurance reimbursement populations in the audit
timeframe for the Contractor.

A Contractor whose reinsurance case is reduced or denied shall be notified in
writing by AHCCCSA and will be informed of rationale for reduction or denial
determination and the applicable grievance and appeal process available.

58. COORDINATION OF BENEFITS/THIRD PARTY LIABILITY
By law, AHCCCSA is the payer of last resort. This means AHCCCSA shall be used
as a source of payment for covered services only after all other sources of
payment have been exhausted. The two methods used in the coordination of
benefits are cost avoidance and post payment recovery. The Contractor shall use
these methods as described in A. A. C. R9-22-1001. (See also Section D,
Paragraph 60, Medicare Services and Cost Sharing).

Cost Avoidance: The Contractor shall cost-avoid all claims or services that are
subject to third-party payment and may deny a service to a member if it knows
that a third party (i. e. other insurer) will provide the service.
However, if a third-party insurer (other than Medicare) requires the member to
pay any copayment, coinsurance or deductible, the Contractor is responsible for
making these payments, even if the services are provided outside of the
Contractor's network. The Contractor's liability for copayments, coinsurance and
deductibles is limited to what the Contractor would have paid for the entire
service pursuant to a written contract with the provider or the AHCCCS
fee-for-service rate, less any amount paid by the third party. (The

				-61-
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Contractor must decide whether it is more cost-effective to provide the service
within its network or pay coinsurance and deductibles for a service outside its
network. For continuity of care, the Contractor may also choose to provide the
service within its network.) If the Contractor refers the member for services to
 a third-party insurer (other than Medicare), and the insurer requires payment
in advance of all copayments, coinsurance and deductibles, the Contractor must
make such payments in advance.

If the Contractor knows that the third party insurer will neither pay for nor
provide the covered service, and the service is medically necessary, the
Contractor shall not deny the service nor require a written denial letter. If
the Contractor does not know whether a particular service is covered by the
third party, and the service is medically necessary, the Contractor shall
contact the third party and determine whether or not such service is covered
rather than requiring the member to do so.

The requirement to cost-avoid applies to all AHCCCS covered services. For
prenatal care and preventive pediatric services, AHCCCS may require the
Contractor to provide such service and then coordinate payment with the
potentially liable third party (" pay and chase"). In emergencies, the
Contractor shall provide the necessary services and then coordinate payment
with the third-party payer. The Contractor shall also provide medically
necessary transportation so the member can receive third-party benefits.
Further, if a service is medically necessary, the Contractor shall ensure that
its cost avoidance efforts do not prevent a member from receiving such service
and that the member shall not be required to pay any coinsurance or deductibles
for use of the other insurer's providers.

Postpayment Recoveries: Postpayment recovery is necessary in cases where the
Contractor was not aware of third-party coverage at the time services were
rendered or paid for, or was unable to cost-avoid. The Contractor shall
identify all potentially liable third parties and pursue reimbursement from
them except in the circumstances below. The Contractor shall not pursue
reimbursement in the following circumstances unless the case has been referred
to the Contractor by AHCCCSA or AHCCCSA's authorized representative:

Uninsured/underinsured motorist insurance 	Restitution Recovery
First-and third-party liability insurance 	Worker's Compensation
Tortfeasors, including casualty 	  	Estate recovery
Special Treatment Trusts recovery

The Contractor shall report any cases involving the above circumstances to
AHCCCSA's authorized representative should the Contractor identify such a
situation. See AHCCCS Rule R9-22-1002 and R9-31-1002. The Contractor shall
cooperate with AHCCCSA's authorized representative in all collection efforts.
In joint cases involving both AHCCCS fee-for-service or reinsurance and the
Contractor, AHCCCSA's authorized representative is responsible for performing
all research, investigation and payment of lien-related costs, subsequent to
the referral of any and all relevant case information to AHCCCSA's authorized
representative by the Contractor. AHCCCSA's authorized representative is also
responsible for negotiating and acting in the best interest of all parties to
obtain a reasonable settlement in joint cases and may compromise a settlement
in order to maximize overall reimbursement, net of legal and other costs. The
Contractor will be responsible for their prorated share of the contingency fee.
 The Contractor's share of the contingency fee will be deducted from the
settlement proceeds prior to AHCCCSA remitting the settlement to the Contractor.
For total plan cases involving only payments from the Contractor, the
Contractor is responsible for performing all research, investigation, the
filing of liens and payment of lien filing fees and other related costs. The
Contractor shall use the cover sheet as prescribed by AHCCCS when filing liens.

The Contractor may retain up to 100% of its third-party collections if all of
the following conditions exist:

a. Total collections received do not exceed the total amount of the
   Contractor's financial liability for the member

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b. There are no payments made by AHCCCS related to fee-for-service, reinsurance
   or administrative costs (i. e. lien filing and contingency fees, etc.)
c. Such recovery is not prohibited by State or Federal law

Reporting: The Contractor may be required to report case level detail of
third-party collections and cost avoidance, including number of referrals on
total plan cases. In addition, upon AHCCCSA's request, the Contractor shall
provide an electronic extract of the Casualty cases, including open and closed
cases. Data elements include, but are not limited to: the member's first and
last name; AHCCCS ID; date of incident; claimed amount; paid/ recovered amount;
and case status. The AHCCCSA TPL Section shall provide the
format and reporting schedule for this information to the Contractor. The
Contractor shall notify AHCCCSA's authorized representative within five working
days of the identification of a third-party liability case with reinsurance.
Failure to report reinsurance cases may result in one of the remedies specified
in Section D, Paragraph 72, Sanctions. The Contractor shall communicate any
known change in health insurance information, including Medicare, to AHCCCS
Administration, Division of Member Services, not later than 10 days from the
date of discovery using the AHCCCS Third-Party Coverage Form found in the
Bidder's Library.

AHCCCSA will provide the Contractor, on an agreed upon schedule, with a
complete file of all third-party coverage information (other than Medicare) for
the purpose of updating the Contractor's files. The Contractor shall notify
AHCCCSA of any known changes in coverage within deadlines and in a format
prescribed by AHCCCSA.

Title XXI (KidsCare), HIFA Parents and BCCTP: Eligibility for KidsCare, HIFA
Parents and BCCTP benefits require that the applicant/ member not be enrolled
with any other creditable health insurance plan. If the Contractor becomes
aware of any such coverage, the Contractor shall notify AHCCCSA immediately.
AHCCCSA will determine if the other insurance meets the creditable definition
in A.R.S. 36-2982( G).

Contract Termination: Upon termination of this contract, the Contractor will
complete the existing third party liability cases or make any necessary
arrangements to transfer the cases to AHCCCSA's authorized TPL representative.

59. COPAYMENTS
The Contractor is responsible for the collection of copayments from members in
accordance with AHCCCS Rules R9-22-711 and R9-31-711, and 42 CFR 447. Services
may not be denied for inability to pay the copayment. Any required copayments
collected shall belong to the Contractor or its subcontractors.

The Contractor may not collect copayments for the following services:

a. Prenatal care including all obstetrical visits;
b. Well-baby and EPSDT care;
c. Care in nursing facilities and intermediate care facilities for the mentally
   retarded;
d. Visits scheduled by a primary care physician or practitioner, and not at the
   request of a member;
e. Drugs and medications;
f. Family planning services;
g. Translation and interpreter services.

A provider shall not bill a member for more than the statutory copayment amount.
Refer to Section D, Paragraphs 58, Coordination of Benefits/Third Party
Liability, Paragraph 60, Medicare Services and Cost Sharing, and R9-22-702
for exceptions.

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60. MEDICARE SERVICES AND COST SHARING
AHCCCS has members enrolled who are eligible for both Medicaid and Medicare.
These members are referred to as "dual eligibles". Generally, Contractors are
responsible for payment of Medicare coinsurance and/or deductibles for covered
services provided to dual eligible members. However, there are different cost
sharing responsibilities that apply to dual eligible members based on a variety
of factors. Unless prior approval is obtained from AHCCCSA, the Contractor must
limit their cost sharing responsibility according to the AHCCCS Medicare Cost
Sharing Policy. The Contractor shall have no cost sharing obligation if the
Medicare payment exceeds what the Contractor would have paid for the same
service of a non-Medicare member.

61. MARKETING
The Contractor shall submit all proposed marketing and outreach materials and
events that will involve the general public to the AHCCCS Marketing Committee
for prior approval in accordance with the AHCCCS Health Plan Marketing Policy.
The Contractor must have signed contracts with PCPs, specialists, dentists,
and pharmacies in order for them to be included in marketing materials.

62. CORPORATE COMPLIANCE
In accordance with A.R.S. Section 36-2918.01, all contractors are required to
notify the AHCCCS, Office of Program Integrity immediately of all suspected
fraud or abuse. The Contractor agrees to promptly (within ten working days of
discovery) inform the Office of Program Integrity in writing of instances of
suspected fraud or abuse. This shall include acts of suspected fraud or abuse
that were resolved internally but involved AHCCCS funds, contractors or
sub-contractors.

As stated in A.R.S. Section 13-2310, incorporated herein by reference, any
person who knowingly obtains any benefit by means of false or fraudulent
pretenses, representations, promises, or material omissions is guilty of a
Class 2 felony.

The Contractor agrees to permit and cooperate with any onsite review. A review
by the AHCCCS, Office of Program Integrity may be conducted without notice and
for the purpose of ensuring program compliance.

Effective October 1, 2003, the Contractor shall be in compliance with 42 CFR
438.608. The Contractor must have a mandatory compliance program, supported by
other administrative procedures, that is designed to guard against fraud and
abuse.

The compliance program, which shall both prevent and detect suspected fraud or
abuse, must include:

1. Written policies, procedures, and standards of conduct that articulate the
   organization's commitment to and processes for complying with all applicable
   federal and state standards.
2. The designation of a compliance officer and a compliance committee.
3. Effective training and education.
4. Effective lines of communication between the compliance officer and the
   organization's employees.
5. Enforcement of standards through well-publicized disciplinary guidelines.
6. Provision for internal monitoring and auditing.
7. Provision for prompt response to problems detected.

The Contractor is required to research potential overpayments identified by the
AHCCCS, Office of Program Integrity. After conducting a cost benefit analysis
to determine if such action is warranted, the Contractor

				-64-
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should attempt to recover any overpayments identified. The AHCCCS Office of
Program Integrity shall be advised of the final disposition of the research and
advised of actions, if any, taken by the Contractor.

63. RECORDS RETENTION
The Contractor shall maintain books and records relating to covered services
and expenditures including reports to AHCCCSA and working papers used in the
preparation of reports to AHCCCSA. The Contractor shall comply with all
specifications for record keeping established by AHCCCSA. All books and records
shall be maintained to the extent and in such detail as required by AHCCCS
Rules and policies. Records shall include but not be limited to financial
statements, records relating to the quality of care, medical records,
prescription files and other records specified by AHCCCSA.

The Contractor agrees to make available, at all reasonable times during the
term of this contract, any of its records for inspection, audit or reproduction
by any authorized representative of AHCCCSA, State or Federal government.
The Contractor shall be responsible for any costs associated with the
reproduction of requested information.

The Contractor shall preserve and make available all records for a period of
five years from the date of final payment under this contract.

If this contract is completely or partially terminated, the records relating to
the work terminated shall be preserved and made available for a period of
five years from the date of any such termination. Records which relate to
grievances, disputes, litigation or the settlement of claims arising out of the
performance of this contract, or costs and expenses of this contract to which
exception has been taken by AHCCCSA, shall be retained by the Contractor for
a period of five years after the date of final disposition or resolution
thereof.

64. DATA EXCHANGE REQUIREMENTS
The Contractor is authorized to exchange data with AHCCCSA relating to the
information requirements of this contract and as required to support the data
elements to be provided AHCCCSA in the formats prescribed by AHCCCSA and in
formats prescribed by the Health Insurance Portability and Accountability Act
(HIPAA). Details for the formats may be found in the draft HIPAA Transaction
Companion Documents & Trading Partner Agreements, and in the AHCCCS Technical
Interface Guidelines, available in the Bidder's Library.

The information so recorded and submitted to AHCCCSA shall be in accordance
with all procedures, policies, rules, or statutes in effect during the term of
this contract. If any of these procedures, policies, rules, regulations or
statutes are hereinafter changed both parties agree to conform to these changes
following appropriate notification to both parties by AHCCCSA.

The Contractor is responsible for any incorrect data, delayed submission or
payment (to the Contractor or its subcontractors), and/or penalty applied due
to any error, omission, deletion, or erroneous insert caused by
Contractor-submitted data. Any data that does not meet the standards required
by AHCCCSA shall not be accepted by AHCCCSA.

The Contractor is responsible for identifying any inconsistencies immediately
upon receipt of data from AHCCCSA. If any unreported inconsistencies are
subsequently discovered, the Contractor shall be responsible for the necessary
adjustments to correct its records at its own expense.

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The Contractor shall accept from AHCCCSA original evidence of eligibility and
enrollment in a form appropriate for electronic data exchange. Upon request
by AHCCCSA, the Contractor shall provide to AHCCCSA updated date-sensitive PCP
assignments in a form appropriate for electronic data exchange.

The Contractor shall be provided with a Contractor-specific security code for
use in all data transmissions made in accordance with contract requirements.
Each data transmission by the Contractor shall include the Contractor's
security code. The Contractor agrees that by use of its security code, it
certifies that any data transmitted is accurate and truthful, to the best of
the Contractor's Chief Executive Officer, Chief Financial Officer or designee's
knowledge. The Contractor further agrees to indemnify and hold harmless the
State of Arizona and AHCCCSA from any and all claims or liabilities, including
but not limited to consequential damages, reimbursements or erroneous billings
and reimbursements of attorney fees incurred as a consequence of any error,
omission, deletion or erroneous insert caused by the Contractor in the
submitted input data. Neither the State of Arizona nor AHCCCSA shall be
responsible for any incorrect or delayed payment to the Contractor's AHCCCS
services providers (subcontractors) resulting from such error, omission,
deletion, or erroneous input data caused by the Contractor in the submission of
AHCCCS claims.

The costs of software changes are included in administrative costs paid to the
Contractor. There is no separate payment for software changes. A PMMIS systems
contact will be assigned after contract award. AHCCCSA will work with the
health plans as they evaluate Electronic Data Interchange options.

Health Insurance Portability and Accountability Act (HIPAA): The Contractor
shall comply with the Administrative Simplification requirements of Subpart F
of the HIPAA of 1996 (Public Law 107-191, 110 Statutes 1936) and all Federal
regulations implementing that Subpart that are applicable to the operations of
the Contractor by the dates required by the implementing Federal regulations.

65. ENCOUNTER DATA REPORTING
The accurate and timely reporting of encounter data is crucial to the success
of the AHCCCS program. AHCCCSA uses encounter data to pay reinsurance benefits,
set fee-for-service and capitation rates, determine disproportionate share
payments to hospitals, and to determine compliance with performance standards.
The Contractor shall submit encounter data to AHCCCSA for all services rendered,
including services provided during prior period coverage. This requirement is
a condition of the CMS grant award.

A Contractor shall prepare, review, verify, certify, and submit, encounters for
consideration to AHCCCSA. Upon submission, the Contractor certifies that the
services listed were actually rendered. The encounters must be submitted in the
format prescribed by AHCCCSA.

Encounter data must be provided to AHCCCSA by electronic media and must be
submitted in the PMMIS AHCCCSA supplied formats. Specific requirements for
encounter data are described in the AHCCCSA Encounter Reporting User Manual,
a copy of which may be found in the Bidder's Library. The Encounter Submission
Requirements are included herein as Attachment I. Refer to Paragraph 64, Data
Exchange Requirements, for further information.

An Encounter Submission Tracking Report must be maintained and made available
to AHCCCSA upon request. The Tracking Report's purpose is to link each claim
to an adjudicated or pended encounter returned to the Contractor. Further
information regarding the Encounter Submission Tracking Report may be found
in The AHCCCSA Encounter Reporting User's Manual.

Each month AHCCCSA provides the Contractor with full replacement files
containing provider and medical procedure coding information. These files
should be used to assist the Contractor in accurate Encounter Reporting.
Refer to Paragraph 64, Data Exchange Requirements, for further information.

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66. ENROLLMENT AND CAPITATION TRANSACTION UPDATES
AHCCCSA produces daily enrollment transaction updates identifying new members
and changes to members' demographic, eligibility and enrollment data, which the
Contractor shall use to update its member records. The daily enrollment
transaction update, which is run prior to the monthly enrollment and capitation
transaction update, is referred to as the "last daily" and will contain all
rate code changes made for the prospective month, as well as any new
enrollments and disenrollments.

AHCCCSA also produces a daily Manual Payment Transaction, which identifies
enrollment or disenrollment activity that was not included on the daily
enrollment transaction update due to internal edits. The Contractor
shall use the Manual Payment Transaction in addition to the daily enrollment
transaction update to update its member records.

A weekly capitation transaction will be produced to provide contractors with
member-level capitation payment information. This file will show changes to the
prospective capitation payments, as sent in the monthly file, resulting from
enrollment changes that occur after the monthly file is produced. This file will
also identify mass adjustments to and/ or manual capitation payments that
occurred at AHCCCS after the monthly file is produced.

The monthly enrollment and monthly capitation transaction updates are generally
produced two days before the end of every month. The update will identify the
total active population for the Contractor as of the first day of
the next month. These updates contain the information used by AHCCCSA to
produce the monthly capitation payment for the next month. The Contractor
will reconcile their member files with the AHCCCS monthly update.
After reconciling the monthly update information, the Contractor resumes
posting daily updates beginning with the last two days of the month. The last
two daily updates are different from the regular daily updates in that they
pay and/ or recoup capitation into the next month. If the Contractor detects an
error through the monthly update process, the Contractor shall notify AHCCCSA,
Office of Managed Care.

Refer to Paragraph 64, Data Exchange Requirements, for further information.

67. PERIODIC REPORT REQUIREMENTS
AHCCCSA, under the terms and conditions of its CMS grant award, requires
periodic reports, encounter data, and other information from the Contractor.
The submission of late, inaccurate, or otherwise incomplete reports
shall constitute failure to report subject to the penalty provisions described
in this contract.

Standards applied for determining adequacy of required reports are as follows:

a. Timeliness: Reports or other required data shall be received on or before
   scheduled due dates.
b. Accuracy: Reports or other required data shall be prepared in strict
   conformity with appropriate authoritative sources and/ or AHCCCS defined
   standards.
c. Completeness: All required information shall be fully disclosed in a manner
   that is both responsive and pertinent to report intent with no material
   omissions.

AHCCCS requirements regarding reports, report content and frequency of
submission of reports are subject to change at any time during the term of the
contract. The Contractor shall comply with all changes specified by AHCCCSA.

The Contractor shall be responsible for continued reporting beyond the term of
the contract. For example, processing claims and reporting encounter data will
likely continue beyond the term of the contract because of lag
time in filing source documents by subcontractors.

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The Contractor shall comply with all financial reporting requirements contained
in the Reporting Guide for Acute Health Care Contractors with the Arizona
Health Care Cost Containment System, a copy of which may be found
in the Bidder's Library. The required reports, which are subject to change
during the contract term, are summarized in Attachment F, Periodic Report
Requirements.

68. REQUESTS FOR INFORMATION
AHCCCSA may, at any time during the term of this contract, request financial or
other information from the Contractor. Upon receipt of such requests for
information, the Contractor shall provide complete information as
requested no later than 30 days after the receipt of the request unless
otherwise specified in the request itself.

69. DISSEMINATION OF INFORMATION
Upon request, the Contractor shall assist AHCCCSA in the dissemination of
information prepared by AHCCCSA or the Federal government to its members.
The cost of such dissemination shall be borne by the Contractor. All
advertisements, publications and printed materials that are produced by the
Contractor and refer to covered services shall state that such services are
funded under contract with AHCCCSA.

70. OPERATIONAL AND FINANCIAL READINESS REVIEWS
AHCCCSA may conduct Operational and Financial Readiness Reviews on all
successful offerors and will, subject to the availability of resources, provide
technical assistance as appropriate. The Readiness Reviews will be conducted
prior to the start of business. The purpose of Readiness Reviews is to assess
new Contractors' readiness and ability to provide covered services to members
at the start of the contract year and current Contractors' readiness to expand
to new geographic service areas. A new Contractor will be permitted to
commence operations only if the Readiness Review factors are met to AHCCCSA's
satisfaction.

71. OPERATIONAL AND FINANCIAL REVIEWS
In accordance with CMS requirements, AHCCCSA, or an independent external agent,
will conduct annual Operational and Financial Reviews for the purpose of (but
not limited to) ensuring operational and financial program compliance.
The reviews will identify areas where improvements can be made and make
recommendations accordingly, monitor the Contractor's progress towards
implementing mandated programs and provide the Contractor with technical
assistance if necessary. The Contractor shall comply with all other medical
audit provisions as required by AHCCCS Rule R9-22-521 and R9-31-521.

The type and duration of the Operational and Financial Review will be solely at
the discretion of AHCCCSA. Except in cases where advance notice is not possible
or advance notice may render the review less useful, AHCCCSA will give the
Contractor at least three weeks advance notice of the date of the on-site
review. In preparation for the on-site Operational and Financial Reviews, the
Contractor shall cooperate fully with AHCCCSA and the AHCCCSA Review Team by
forwarding in advance such policies, procedures, job descriptions, contracts,
logs and other information that AHCCCSA may request. The Contractor shall have
all requested medical records on-site. Any documents, not requested in advance
by AHCCCSA, shall be made available upon request of the Review Team during the
course of the review. The Contractor personnel, as identified in advance,
shall be available to the Review Team at all times during AHCCCSA on-site
review activities. While on-site, the Contractor shall provide the Review Team
with workspace, access to a telephone, electrical outlets and privacy for
conferences. Certain documentation submission requirements may be waived at
the discretion of AHCCCSA, if the Contractor has obtained accreditation from
NCQA, JCAHO or any other

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nationally recognized accrediting body. The Contractor must submit the entire
accreditation report to AHCCCSA for such waiver consideration.

The Contractor will be furnished a draft copy of the Operational and Financial
Review Report and given an opportunity to comment on any review findings prior
to AHCCCSA publishing the final report. Operational and Financial Review
findings may be used in the scoring of subsequent bid proposals by that
Contractor.

Recommendations, made by the Review Team to bring the Contractor into compliance
with Federal, State, AHCCCS, and/ or RFP requirements, must be implemented by
the Contractor. AHCCCSA may conduct a follow-up Operational and Financial
Review to determine the Contractor's progress in implementing recommendations
and achieving program compliance. Follow-up reviews may be conducted at any
time after the initial Operational and Financial Review.

AHCCCSA may conduct an Operational and Financial Review in the event the
Contractor undergoes a merger, reorganization, change in ownership or makes
changes in three or more key staff positions within a 12-month period.

72. SANCTIONS
AHCCCSA may impose monetary sanctions, suspend, deny, refuse to renew, or
terminate this contract or any related subcontracts in accordance with AHCCCS
Rules R9-22-606 and the terms of this contract and applicable Federal or
State law and regulations. Written notice will be provided to the Contractor
specifying the sanction to be imposed, the grounds for such sanction and either
the length of suspension or the amount of capitation prepayment to be withheld.
The Contractor may appeal the decision to impose a sanction in accordance with
A. A. C. 22, Article 8. Intermediate sanctions may be imposed, but are not
limited to the following actions:

a. Substantial failure to provide medically necessary services that the
   Contractor is required to provide under the terms of this contract to its
   enrolled members.
b. Imposition of premiums or charges in excess of the amount allowed under the
   AHCCCS 1115 Waiver.
c. Discrimination among enrollees on the basis of their health status of need
   for health care services.
d. Misrepresentation or falsification of information furnished to CMS or
   AHCCCSA.
e. Misrepresentation or falsification of information furnished to an enrollee,
   potential enrollee, or provider.
f. Failure to comply with the requirement for physician incentive plan as
   delineated in Paragraph 42.
g. Distribution directly, or indirectly through any agent or independent
   contractor, of marketing materials that have not been approved by AHCCCSA or
   that contain false or materially misleading information.
h. Failure to meet AHCCCS Financial Viability Standards.
i. Material deficiencies in the Contractor's provider network.
j. Failure to meet quality of care and quality management requirements.
k. Failure to meet AHCCCS encounter standards.
l. Violation of other applicable State or Federal laws or regulations.
m. Failure to fund accumulated deficit in a timely manner.
n. Failure to increase the Performance Bond in a timely manner.
o. Failure to comply with any provisions contained in this RFP.

AHCCCSA may impose the following types of intermediate sanctions:

a. Civil monetary penalties
b. Appointment of temporary management for a Contractor as provided in 42
   CFR 438.706 and A.R.S. Sec.36-2903 (M).
c. Granting enrollees the right to terminate enrollment without cause and
   notifying the affected enrollees of their right to disenroll.
d. Suspension of all new enrollment, including auto assignments after the
   effective date of the sanction.

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e. Suspension of payment for recipients enrolled after the effective date of
   the sanction until CMS or AHCCCSA is satisfied that the reason for
   imposition of the sanction no longer exists and is not likely to recur.
f. Additional sanctions allowed under statue or regulation that address areas
   of noncompliance, such as termination of the contract.

Cure Notice Process: Prior to the imposition of a sanction for non-compliance,
AHCCCSA may provide a written cure notice to the Contractor regarding the
details of the non-compliance. The cure notice will specify the period of time
during which the Contractor must bring its performance back into compliance
with contract requirements. If, at the end of the specified time period, the
Contractor has complied with the cure notice requirements, AHCCCSA will take no
further action. If, however, the Contractor has not complied with the cure
notice requirements, AHCCCSA will proceed with the imposition of sanctions.

The Sanctions policy is currently being drafted and will be in the Bidders
Library when finalized.

73. BUSINESS CONTINUITY PLAN
The Contractor shall adhere to all elements of the AHCCCS, Office of Managed
Care Business Continuity Plan Policy. This plan is currently under review and
will be placed in the Bidder's Library upon completion. The Contractor shall
develop a Business Continuity Plan to deal with unexpected events that may
affect its ability to adequately serve members. This plan shall, at a minimum,
include planning and training for:

	*Healthcare facility closure/loss of a major provider
	*Electronic/telephonic failure at the Contractor's main place of
	 business
	*Complete loss of use of the main site
	*Loss of primary computer system/records
	*Communication between the Contractor and AHCCCSA in the event of
	a business disruption

The Business Continuity Plan shall be updated annually.
All key staff shall be trained and familiar with the Plan.

74. TECHNOLOGICAL ADVANCEMENT
The Contractor shall implement the following technological measures according
to the applicable time frame:

April 1, 2004:

	*  Contractors must have a website with links to the following
	   information:

	1. Formulary
	2. Provider manual
	3. Policies
	4. Member handbook
	5. Provider listing

	*Contractors must have enrollment verification via website fully
	 operational
	*Contractors must have claims inquiry via website fully operational

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75. PENDING LEGISLATIVE / OTHER ISSUES
The following constitute pending items that will be resolved after the initial
issuance of the RFP document. Any program changes due to the resolution of the
issues will be reflected in future amendments to the RFP. Final
awarded capitation rates may also be adjusted to reflect the financial impact
of program changes.

Prescription Drugs: The Governor of Arizona issued an Executive Order,
available on the AHCCCS website, requiring AHCCCSA to explore carving out the
prescription drug benefit from capitation in order to participate in
the Federal Drug Rebate Program. As a result, the Contractor is required to
submit two capitation rate proposals, one with and one without prescription
drug costs and utilization. Refer to the Section C, Definitions and Section
I, Instructions to Offerors, for more detail.

Hospital Reimbursement Pilot Program: Legislation to extend the Pilot program
may be introduced effective for contract years beginning CYE '04. See Paragraph
40, Hospital Subcontracting and Reimbursement, for additional information on
the Hospital Reimbursement Pilot Program. The Pilot program is scheduled to
terminate September 30, 2003.

Hospice services for members age 21 and older: AHCCCSA is considering adding
hospice services as a benefit for members age 21 and older and is undergoing
the approval process, which includes an amendment to AHCCCS' state plan with
CMS.

Transplant Contracts: AHCCCSA is currently negotiating new contracts for organ
and tissue transplants, to be effective October 1, 2003. Contracted rates will
be published as soon as they are finalized.

Transplants: AHCCCSA may evaluate carving out transplant services from the
compendium of services for which AHCCCS Contractors are responsible. If AHCCCSA
determines that carving out the responsibility for transplant services is
appropriate, an RFP will be issued for the program. AHCCCSA does not anticipate
a carve out in CYE '04.

Transportation: AHCCCSA is evaluating its methodology, under capitation, for
providing transportation services to its members. Options may include
contracting with a centralized transportation broker to provide services to all
AHCCCS members. AHCCCSA does not anticipate a carve out in CYE '04.

Member Cost Sharing: AHCCCSA submitted a report to the Arizona Legislature on
possibilities for increasing AHCCCS' member cost sharing responsibilities. This
report may be found on the AHCCCS website. Changes include increases to
copayment amounts and collection of premiums. AHCCCSA is seeking CMS approval
to expand member cost sharing responsibility. Refer to the AHCCCS website for a
copy of the Cost Sharing Report.

76. BALANCED BUDGET ACT OF 1997 (BBA)
In August of 2002, CMS issued final regulations for the implementation of the
BBA. AHCCCS is currently reviewing all areas of the regulations to ensure full
compliance with the BBA; however, there are some issues that require further
clarification from CMS. The following items related to the BBA regulations are
pending. Any program changes due to the resolution of the issues will be
reflected in amendments to the RFP. Final awarded capitation rates may be also
be adjusted to reflect the financial impact of the program changes.

Grievances: AHCCCSA has not reached a final decision on whether it will
implement the option for a member to request an expedited hearing directly from
AHCCCSA. The final decision will be communicated through a future amendment
to this RFP.

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Special Healthcare Needs: AHCCCSA is in the process of determining the impact
of the BBA regulations regarding individuals with special healthcare needs.
The AMPM will be expanded to address policies related to this population.

PPC Time Period for MED Population: AHCCCSA is determining how to handle
reimbursement to the Contractor for the day a member meets spend down
requirements.

Policies: AHCCCSA is currently revising policies, as needed, to reflect the BBA
regulations. As the policies are updated, they will be issued to all offerors
via the AHCCCS web under "Bidder's Library". If a policy is finalized
after the contracts bids are awarded, they will be issued to all Contractors,
both via the website and in hard copy. Examples of AHCCCS policies currently
under revision include the AMPM, Sanctions Policy, Member Information Policy
and the Health Plan Marketing Policy.

77. HEALTHCARE GROUP OF ARIZONA
AHCCCSA encourages all Contractors to participate in the Healthcare Group (HCG)
program. Legislation was passed in 2002 that shifted administrative
responsibilities from HCG contractors to AHCCCSA. Additionally, effective
February 1, 2003, HCG's service package and premium structure has been
redesigned to better reflect the small group product in the Arizona
marketplace. HCG has created a niche market, as insurance companies are
moving away from the Health Maintenance Organization market. HCG hopes to
expand its enrollment significantly during the next two years, which will
result in a solid membership base to spread risk, thereby
increasing the attractiveness of the HCG product. For additional information,
contact AHCCCSA, Office of the Director.

[END OF SECTION D]

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SECTION E: CONTRACT CLAUSES

1) APPLICABLE LAW
Arizona Law -The law of Arizona applies to this contract including, where
applicable, the Uniform Commercial Code, as adopted in the State of Arizona.

Implied Contract Terms -Each provision of law and any terms required by law to
be in this contract are a part of this contract as if fully stated in it.

2) AUTHORITY
This contract is issued under the authority of the Contracting Officer who
signed this contract. Changes to the contract, including the addition of work
or materials, the revision of payment terms, or the substitution of work
or materials, directed by an unauthorized state employee or made unilaterally
by the Contractor are violations of the contract and of applicable law. Such
changes, including unauthorized written contract amendments, shall be void
and without effect, and the Contractor shall not be entitled to any claim under
this contract based on those changes.

3) ORDER OF PRECEDENCE
The parties to this contract shall be bound by all terms and conditions
contained herein. For interpreting such terms and conditions the following
sources shall have precedence in descending order: The Constitution and
laws of the United States and applicable Federal regulations; the terms of
the CMS 1115 waiver for the State of Arizona; the Constitution and laws of
Arizona, and applicable State rules; the terms of this contract,
including all attachments and executed amendments and modifications;
AHCCCSA policies and procedures.

4) CONTRACT INTERPRETATION AND AMENDMENT
No Parol Evidence -This contract is intended by the parties as a final and
complete expression of their agreement. No course of prior dealings between the
parties and no usage of the trade shall supplement or explain any term used in
this contract.

No Waiver -Either party's failure to insist on strict performance of any term
or condition of the contract shall not be deemed a waiver of that term or
condition even if the party accepting or acquiescing in the non-conforming
performance knows of the nature of the performance and fails to object to it.

Written Contract Amendments -The contract shall be modified only through a
written contract amendment within the scope of the contract signed by the
procurement officer on behalf of the State.

5) SEVERABILITY
The provisions of this contract are severable to the extent that any provision
or application held to be invalid shall not affect any other provision or
application of the contract, which may remain in effect without the
invalid provision, or application.

6) RELATIONSHIP OF PARTIES
The Contractor under this contract is an independent contractor. Neither party
to this contract shall be deemed to be the employee or agent of the other
party to the contract.

7) ASSIGNMENT AND DELEGATION
The Contractor shall not assign any right nor delegate any duty under this
contract without prior written approval of the Contracting Officer, who will
not unreasonably withhold such approval.

8) GENERAL INDEMNIFICATION
The Contractor shall defend, indemnify and hold harmless the State from any
claim, demand, suit, liability, judgment and expense (including attorney's fees
and other costs of litigation) arising out of or relating to injury, disease,
or death of persons or damage to or loss of property resulting from or in
connection with the

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negligent performance of this contract by the Contractor, its agents, employees,
and subcontractors or anyone for whom the Contractor may be responsible.
The obligations, indemnities and liabilities assumed by the Contractor under
this paragraph shall not extend to any liability caused by the negligence of
the State or its employees. The Contractor's liability shall not be limited by
any provisions or limits of insurance set forth in this contract. The State
shall reasonably notify the Contractor of any claim for which it may be liable
under this paragraph. The Administration shall bear no liability for
subcontracts that a Contractor executes with other parties for the provision
of administrative or management services, medical services or covered health
care services, or for any other purposes.

9) INDEMNIFICATION --PATENT AND COPYRIGHT
The Contractor shall defend, indemnify and hold harmless the State against any
liability including costs and expenses for infringement of any patent,
trademark or copyright arising out of contract performance or use by
the State of materials furnished or work performed under this contract. The
State shall reasonably notify the Contractor of any claim for which it may be
liable under this paragraph.

10) COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS
The Contractor shall comply with all applicable Federal and State laws and
regulations including Title VI of the Civil Rights Act of 1964; Title IX of the
Education Amendments of 1972 (regarding education programs and activities);
the Age Discrimination Act of 1975; and the Americans with Disabilities Act;
EEO provisions; Copeland Anti-Kickback Act; Davis-Bacon Act; Contract Work
Hours and Safety Standards; Rights to Inventions Made Under a Contract or
Agreement; Clean Air Act and Federal Water Pollution Control Act;
Byrd Anti-Lobbying Amendment. The Contractor shall maintain all applicable
licenses and permits.

11) ADVERTISING AND PROMOTION OF CONTRACT
The Contractor shall not advertise or publish information for commercial
benefit concerning this contract without the prior written approval of the
Contracting Officer.

12) PROPERTY OF THE STATE
Any materials, including reports, computer programs and other deliverables,
created under this contract are the sole property of AHCCCSA. The Contractor
is not entitled to a patent or copyright on those materials and may not
transfer the patent or copyright to anyone else. The Contractor shall not use
or release these materials without the prior written consent of AHCCCSA.

13) THIRD PARTY ANTITRUST VIOLATIONS
The Contractor assigns to the State any claim for overcharges resulting from
antitrust violations to the extent that those violations concern materials or
services supplied by third parties to the Contractor toward fulfillment
of this contract.

14) RIGHT TO ASSURANCE
If AHCCCSA, in good faith, has reason to believe that the Contractor does not
intend to perform or continue performing this contract, the procurement officer
may demand in writing that the Contractor give a written assurance of intent
to perform. The demand shall be sent to the Contractor by certified mail,
return receipt required. Failure by the Contractor to provide written assurance
within the number of days specified in the demand may, at the State's option,
be the basis for terminating the contract.

15) TERMINATION FOR CONFLICT OF INTEREST
AHCCCSA may cancel this contract without penalty or further obligation if any
person significantly involved in initiating, negotiating, securing, drafting or
creating the contract on behalf of AHCCCSA is, or becomes at any time while the
contract or any extension of the contract is in effect, an employee of, or a
consultant to, any other party to this contract with respect to the subject
matter of the contract. The cancellation shall be effective
when the Contractor receives written notice of the cancellation unless the
notice specifies a later time.

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16) GRATUITIES
AHCCCSA may, by written notice to the Contractor, immediately terminate this
contract if it determines that employment or a gratuity was offered or made
by the Contractor or a representative of the Contractor to any officer or
employee of the State for the purpose of influencing the outcome of the
procurement or securing the contract, an amendment to the contract, or
favorable treatment concerning the contract, including the making of any
determination or decision about contract performance. AHCCCSA, in addition to
any other rights or remedies, shall be entitled to recover exemplary damages
in the amount of three times the value of the gratuity offered by the
Contractor.

17) SUSPENSION OR DEBARMENT
The Contractor shall not employ, consult, subcontract or enter into any
agreement for Title XIX services with any person or entity who is debarred,
suspended or otherwise excluded from Federal procurement activity.
This prohibition extends to any entity which employs, consults, subcontracts
with or otherwise reimburses for services any person substantially involved
in the management of another entity which is debarred, suspended or otherwise
excluded from Federal procurement activity.

The Contractor shall not retain as a director, officer, partner or owner of 5%
or more of the Contractor entity, any person, or affiliate of such a person,
who is debarred, suspended or otherwise excluded from Federal procurement
activity.

AHCCCSA may, by written notice to the Contractor, immediately terminate this
contract if it determines that the Contractor has been debarred, suspended or
otherwise lawfully prohibited from participating in any public procurement
activity.

18) TERMINATION FOR CONVENIENCE
AHCCCSA reserves the right to terminate the contract in whole or in part at any
time for the convenience of the State without penalty or recourse. The
Contracting Officer shall give written notice by certified mail, return receipt
requested, to the Contractor of the termination at least 90 days before the
effective date of the termination. In the event of termination under this
paragraph, all documents, data and reports prepared by the Contractor under
the contract shall become the property of and be delivered to AHCCCSA. The
Contractor shall be entitled to receive just and equitable compensation for
work in progress, work completed and materials accepted before the effective
date of the termination.

19) TERMINATION FOR DEFAULT
AHCCCSA reserves the right to terminate this contract in whole or in part due
to the failure of the Contractor to comply with any term or condition of the
contract or failure to take corrective action as required by
AHCCCSA to comply with the terms of the contract. If the Contractor is
providing services under more than one contract with AHCCCSA, AHCCCSA may deem
unsatisfactory performance under one contract to be cause to require the
Contractor to provide assurance of performance under any and all other
contracts. In such situations, AHCCCSA reserves the right to seek remedies under
both actual and anticipatory breaches of contract if adequate assurance of
performance is not received. The Contracting Officer shall mail written notice
of the termination and the reason( s) for it to the Contractor by certified mail
return receipt requested.

In the event the Contractor requests a hearing prior to termination, AHCCCSA is
required by the Balanced Budget Act of 1997 to oversee the operation of the
Contractor entity through appointment of temporary management prior to the
hearing.

Upon termination under this paragraph, all documents, data, and reports
prepared by the Contractor under the contract shall become the property of
and be delivered to AHCCCSA on demand.

				-75-
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AHCCCSA may, upon termination of this contract, procure, on terms and in the
manner that it deems appropriate, materials or services to replace those under
this contract. The Contractor shall be liable for any excess costs incurred
by AHCCCSA in re-procuring the materials or services.

20) TERMINATION -AVAILABILITY OF FUNDS
Funds are not presently available for performance under this contract beyond
the current fiscal year. No legal liability on the part of AHCCCSA for any
payment may arise under this contract until funds are made available for
performance of this contract.

21) RIGHT OF OFFSET
AHCCCSA shall be entitled to offset against any amounts due the Contractor
any expenses or costs incurred by AHCCCSA concerning the Contractor's
non-conforming performance or failure to perform the contract.

22) NON-EXCLUSIVE REMEDIES
The rights and the remedies of AHCCCSA under this contract are not exclusive.

23) NON-DISCRIMINATION
The Contractor shall comply with State Executive Order No. 99-4, which mandates
that all persons, regardless of race, color, religion, sex, national origin or
political affiliation, shall have equal access to employment opportunities,
and all other applicable Federal and state laws, rules and regulations,
including the Americans with Disabilities Act and Title VI. The Contractor
shall take positive action to ensure that applicants for employment, employees,
and persons to whom it provides service are not discriminated against due to
race, creed, color, religion, sex, national origin or disability.

24) EFFECTIVE DATE
The effective date of this contract shall be the date that the Contracting
Officer signs the award page (page 1) of this contract.

25) INSURANCE
A certificate of insurance naming the State of Arizona and AHCCCSA as the
"additional insured" must be submitted to AHCCCSA within 10 days of
notification of contract award and prior to commencement of any services under
this contract. This insurance shall be provided by carriers rated as
"A+" or higher by the A. M. Best Rating Service. The following types and
levels of insurance coverage are required for this contract:

a. Commercial General Liability: Provides coverage of at least $1,000,000 for
   each occurrence for bodily injury and property damage to others as a result
   of accidents on the premises of or as the result of operations of the
   Contractor.
b. Commercial Automobile Liability: Provides coverage of at least $1,000,000
   for each occurrence for bodily injury and property damage to others
   resulting from accidents caused by vehicles operated by the Contractor.
c. Workers Compensation: Provides coverage to employees of the Contractor for
   injuries sustained in the course of their employment. Coverage must meet the
   obligations imposed by Federal and State statutes and must also include
   Employer's Liability minimum coverage of $100,000. Evidence of qualified
   self-insured status will also be considered.
d. Professional Liability (if applicable): Provides coverage for alleged
   professional misconduct or lack of ordinary skills in the performance of a
   professional act of service.

The above coverages may be evidenced by either one of the following:

a. The State of Arizona Certificate of Insurance: This is a form with the
   special conditions required by the contract already pre-printed on the form.
   The Contractor's agent or broker must fill in the pertinent policy
   information and ensure the required special conditions are included in the
   Contractor's policy.

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b. The Accord form: This standard insurance industry certificate of insurance
   does not contain the pre-printed special conditions required by this
   contract. These conditions must be entered on the certificate by the agent or
   broker and read as follows:

   The State of Arizona and Arizona Health Care Cost Containment System are
   hereby added as additional insureds. Coverage afforded under this Certificate
   shall be primary and any insurance carried by the State or any of its
   agencies, boards, departments or commissions shall be in excess of that
   provided by the insured Contractor. No policy shall expire, be canceled or
   materially changed without 30 days written notice to the State. This
   Certificate is not valid unless countersigned by an authorized representative
   of the insurance company.

26) DISPUTES
The exclusive manner for the Contractor to assert any claim, grievance, dispute
or demand against AHCCCSA shall be in accordance with A. A. C. 22, Article 8.
Pending the final resolution of any disputes involving this contract, the
Contractor shall proceed with performance of this contract in accordance with
AHCCCSA's instructions, unless AHCCCSA specifically, in writing, requests
termination or a temporary suspension of performance.

27) RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS
AHCCCSA may, at reasonable times, inspect the part of the plant or place of
business of the Contractor or subcontractor that is related to the performance
of this contract, in accordance with A.R.S. Sec.41-2547.

28) INCORPORATION BY REFERENCE
This solicitation and all attachments and amendments, the Contractor's proposal,
best and final offer accepted by AHCCCSA, and any approved subcontracts are
hereby incorporated by reference into the contract.

29) COVENANT AGAINST CONTINGENT FEES
The Contractor warrants that no person or agency has been employed or retained
to solicit or secure this contract upon an agreement or understanding for a
commission, percentage, brokerage or contingent fee. For violation of this
warranty, AHCCCSA shall have the right to annul this contract without liability.

30) CHANGES
AHCCCSA may at any time, by written notice to the Contractor, make changes
within the general scope of this contract. If any such change causes an
increase or decrease in the cost of, or the time required for, performance of
any part of the work under this contract, the Contractor may assert its right
to an adjustment in compensation paid under this contract. The Contractor must
assert its right to such adjustment within 30 days from the date of receipt of
the change notice. Any dispute or disagreement caused by such notice shall
constitute a dispute within the meaning of Section E, Paragraph 26, Disputes,
and be administered accordingly.

When AHCCCSA issues an amendment to modify the contract, the provisions of such
amendment will be deemed to have been accepted 60 days after the date of
mailing by AHCCCSA, even if the amendment has not been signed by the Contractor,
unless within that time the Contractor notifies AHCCCSA in writing that it
refuses to sign the amendment. If the Contractor provides such notification,
AHCCCSA will initiate termination proceedings.

31) TYPE OF CONTRACT
Firm Fixed-Price

32) AMERICANS WITH DISABILITIES ACT
People with disabilities may request special accommodations such as
interpreters, alternative formats or assistance with physical accessibility.
Requests for special accommodations must be made with at least three
days prior notice by calling Michael Veit at (602) 417-4762.

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33) WARRANTY OF SERVICES
The Contractor warrants that all services provided under this contract will
conform to the requirements stated herein. AHCCCSA's acceptance of services
provided by the Contractor shall not relieve the Contractor from
its obligations under this warranty. In addition to its other remedies,
AHCCCSA may, at the Contractor's expense, require prompt correction of any
services failing to meet the Contractor's warranty herein. Services
corrected by the Contractor shall be subject to all of the provisions of this
contract in the manner and to the same extent as the services originally
furnished.

34) NO GUARANTEED QUANTITIES
AHCCCSA does not guarantee the Contractor any minimum or maximum quantity of
services or goods to be provided under this contract.

35) CONFLICT OF INTEREST
The Contractor shall not undertake any work that represents a potential
conflict of interest, or which is not in the best interest of AHCCCSA or the
State without prior written approval by AHCCCSA. The Contractor
shall fully and completely disclose any situation that may present a conflict
of interest. If the Contractor is now performing or elects to perform during
the term of this contract any services for any AHCCCS health
plan, provider or Contractor or an entity owning or controlling same, the
Contractor shall disclose this relationship prior to accepting any
assignment involving such party.

36) DISCLOSURE OF CONFIDENTIAL INFORMATION
The Contractor shall not, without prior written approval from AHCCCSA, either
during or after the performance of the services required by this contract, use,
other than for such performance, or disclose to any person other than AHCCCSA
personnel with a need to know, any information, data, material, or exhibits
created, developed, produced, or otherwise obtained during the course of the
work required by this contract. This nondisclosure requirement shall also
pertain to any information contained in reports, documents, or other
records furnished to the Contractor by AHCCCSA.

37) COOPERATION WITH OTHER CONTRACTORS
AHCCCSA may award other contracts for additional work related to this contract
and Contractor shall fully cooperate with such other contractors and AHCCCSA
employees or designated agents, and carefully fit its own work to such other
contractors' work. The Contractor shall not commit or permit any act which will
interfere with the performance of work by any other contractor or by AHCCCSA
employees.

38) ASSIGNMENT OF CONTRACT AND BANKRUPTCY
This contract is voidable and subject to immediate cancellation by AHCCCSA
upon the Contractor becoming insolvent or filing proceedings in bankruptcy or
reorganization under the United States Code, or assigning rights or obligations
under this contract without the prior written consent of AHCCCSA.

39) OWNERSHIP OF INFORMATION AND DATA
Any data or information system, including all software, documentation and
manuals, developed by the Contractor pursuant to this contract, shall be deemed
to be owned by AHCCCSA. The Federal government reserves a royalty-free,
nonexclusive, and irrevocable license to reproduce, publish, or otherwise use
and to authorize others to use for Federal government purposes, such data or
information system, software, documentation and manuals. Proprietary software
which is provided at established catalog or market prices and sold or leased to
the general public shall not be subject to the ownership or licensing
provisions of this section.

Data, information and reports collected or prepared by the Contractor in the
course of performing its duties and obligations under this contract shall be
deemed to be owned by AHCCCSA. The ownership provision is in consideration of
the Contractor's use of public funds in collecting or preparing such data,
information and reports. These items shall not be used by the Contractor for
any independent project of the Contractor or publicized by the Contractor
without the prior written permission of AHCCCSA. Subject to applicable state

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and Federal laws and regulations, AHCCCSA shall have full and complete rights
to reproduce, duplicate, disclose and otherwise use all such information. At
the termination of the contract, the Contractor shall make available all such
data to AHCCCSA within 30 days following termination of the contract or such
longer period as approved by AHCCCSA, Office of the Director. For purposes of
this subsection, the term "data" shall not include member medical records.

Except as otherwise provided in this section, if any copyrightable or
patentable material is developed by the Contractor in the course of performance
of this contract, the Federal government, AHCCCSA and the State of Arizona
shall have a royalty-free, nonexclusive, and irrevocable right to reproduce,
publish, or otherwise use, and to authorize others to use, the work for state
or Federal government purposes. The Contractor shall additionally be subject
to the applicable provisions of 45 CFR Part 74 and 45 CFR Parts 6 and 8.

40) AHCCCSA RIGHT TO OPERATE CONTRACTOR
If, in the judgment of AHCCCSA, the Contractor's performance is in material
breach of the contract or the Contractor is insolvent, AHCCCSA may directly
operate the Contractor to assure delivery of care to members enrolled with
the Contractor until cure by the Contractor of its breach, by demonstrated
financial solvency or until the successful transition of those members to other
contractors.

If AHCCCS undertakes direct operation of the Contractor, AHCCCS, through
designees appointed by the Director, shall be vested with full and exclusive
power of management and control of the Contractor as
necessary to ensure the uninterrupted care to persons and accomplish the
orderly transition of persons to a new or existing Contractor, or until the
Contractor corrects the Contract Performance failure to the satisfaction of
AHCCCS. AHCCCS shall have the power to employ any necessary assistants, to
execute any instrument in the name of the Contractor, to commence, defend and
conduct in its name any action or proceeding in which the Contractor may be
a party.

All reasonable expenses of AHCCCS related to the direct operation of the
Contractor, including attorney fees, cost of preliminary or other audits of the
Contractor and expenses related to the management of any office or
other assets of the Contractor, shall be paid by the Contractor or withheld
from payment due from AHCCCS to the Contractor.

41) AUDITS AND INSPECTIONS
The Contractor shall comply with all provisions specified in applicable AHCCCS
Rule R9-22-519, -520 and -521 and AHCCCS policies and procedures relating to
the audit of the Contractor's records and the inspection of the Contractor's
facilities. The Contractor shall fully cooperate with AHCCCSA staff and allow
them reasonable access to the Contractor's staff, subcontractors, members, and
records.

At any time during the term of this contract, the Contractor's or any
subcontractor's books and records shall be subject to audit by AHCCCSA and,
where applicable, the Federal government, to the extent that the books and
records relate to the performance of the contract or subcontracts.

AHCCCSA, or its duly authorized agents, and the Federal government may evaluate
through on-site inspection or other means, the quality, appropriateness and
timeliness of services performed under this contract.

42) LOBBYING
No funds paid to the Contractor by AHCCCSA, or interest earned thereon, shall
be used for the purpose of influencing or attempting to influence an officer or
employee of any Federal or State agency, a member of the United States Congress
or State Legislature, an officer or employee of a member of the United States
Congress or State Legislature in connection with awarding of any Federal or
State contract, the making of any Federal or State grant, the making of any
Federal or State loan, the entering into of any cooperative agreement, and the
extension, continuation, renewal, amendment or modification of any Federal or
State contract, grant, loan, or cooperative agreement. The Contractor shall
disclose if any funds, other than those paid to the Contractor by

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AHCCCSA, have been used or will be used to influence the persons and entities
indicated above and will assist AHCCCSA in making such disclosures to CMS.

43) CHOICE OF FORUM
The parties agree that jurisdiction over any action arising out of or relating
to this contract shall be brought or filed in a court of competent jurisdiction
located in the State of Arizona.

[END OF SECTION E]

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SECTION F: INDEX -PROGRAM REQUIREMENTS AND CONTRACT CLAUSES

A
Accumulated Fund Deficit, 53
Advance Directives, 35
Advances, 53
Ambulatory, 7, 22, 25, 39
Annual Enrollment, 19
Appointment Standards, 44
Auto-Assignment, 18, 19, 20
Auto-Assignment Algorithm, 18, 19, 20

B
BBA, 7, 19, 23, 24, 45, 48, 71, 72, 75
Behavioral Health, 7, 12, 21, 22, 23, 25, 29, 30,
31, 32, 33, 43, 46
Breast and Cervical Cancer, 7, 14, 16, 18, 55, 63
Business Continuity Plan, 70

C
Capitalization, 51
Capitation, 6, 8, 12, 15, 19, 20, 31, 52, 54, 55,
56, 57, 58, 66, 67, 69, 70
Chiropractic, 22
Claims
Clean, 48, 60
Payment, 48, 49
Compensation, 54
Contraceptive, 24
Convalescent Care, 26, 28
Coordination of Care, 30
Copayment, 8, 43, 56, 61, 63, 71
Copayment, 8
Copayments, 63
Cost Avoidance, 61
Cost Sharing, 14, 16, 18, 33, 46, 61, 62, 63, 64, 71
Covered Services, 7, 8, 13, 21, 30
Credentialing, 36, 40
CRS, 8, 21, 22
Cultural Competency, 34
Cure Notice, 70

D
Data Exchange, 65
Dialysis, 21, 23
Disenrollment, 67
Distributions, 53
DME, 9, 21, 26
Dual Eligibles, 46, 64

E
Eligibility
CRS, 22
Determination, 9
Dual, 9, 33
Emergency, 9, 10, 13, 16, 23, 24, 25, 29, 44, 47
Encounter, 9, 32, 45, 46, 48, 55, 56, 60, 66, 67, 69, 70
Enrollment, 7, 9, 17, 19, 20, 67
Annual, 7, 17, 19, 20, 21, 60
Guarantees, 19
Open, 17, 19, 20
EPSDT, 9, 23, 25, 27, 30, 32, 33, 38, 39, 43, 46, 63

F
Family Planning, 9, 16, 18, 24, 33, 46, 54, 63
Fee-for-Service, 9, 19, 21, 26, 50, 61, 62, 63, 66
FFP, 10
Financial Viability Standards, 53
Formulary, 28, 30, 70
FQHC, 9, 45
Freedom to Work, 10, 14, 16, 18, 72

G
Geographic Service Area, 6, 7, 10, 15, 18, 19,
40, 49, 51, 53, 55, 68
Grievance, 39

H
HIFA, 10, 14, 17, 18, 19, 31, 55, 63
HIFA Parents, 10, 17, 18, 19, 55, 63

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HIFA PARENTS, 10, 17, 18, 19, 31, 63
HIPAA, 65, 66
HIV/AIDS, 24, 26, 33, 35, 42, 54, 55, 56
Home Health, 21, 25, 35, 36, 44
Hospice, 25, 35, 71
Hospital Subcontracting, 49

I
IBNR, 10, 15, 21
Identification Cards, 20
Immunizations, 24, 25, 31, 33, 38, 46
Indian Health Service, 10, 16, 17, 19, 21, 25, 29, 31
Inpatient, 9, 23, 25, 26, 28, 29, 30, 32, 40, 42, 44, 56, 58, 59, 60, 61
Investments, 53

K
KidsCare, 10, 14, 17, 18, 22, 31, 55, 63

L
Laboratory, 24, 25, 29, 30, 33, 43, 46
Limited English Proficiency (LEP), 33, 39
Loans, 53

M
Management Services, 7, 11, 29, 30, 47, 50, 51, 74
Maternity, 25, 33, 42, 43, 44, 46
Medicaid in the Public Schools (MIPS), 31
Medical Expense Deduction, 11, 14, 54
Medical Foods, 26
Member Education, 29
Mainstreaming, 20
Surveys, 34
Transition, 21
Midwives, 25, 43

N
Network Management, 41
Non-Contracting Provider, 11, 52
Nurse Practitioners, 7, 25, 42, 43
Nursing Facility, 21, 26, 35, 49, 50, 58, 60, 61
Nutrition, 27

O
Observation, 25
Omission, 11, 65, 66
Optometry, 24
Outpatient, 7, 9, 22, 23, 25, 28, 44, 49

P
Performance Standards, 11, 23, 25, 37, 38, 66
Periodicity Schedule, 23, 25, 30, 38
Pharmacy, 37, 40, 56
Physician Assistants, 7, 25, 42, 43
Physician Incentives, 50
Podiatry, 27
Postpartum Care, 25, 38, 42
Post-stabilization, 24, 27
Pregnancy, 9, 21, 24, 25, 26, 27, 42
Prenatal Care, 25, 26, 33, 39, 44, 57, 62, 63
Prescription Drugs, 6, 28, 44, 65, 71
Prescription Medication, 23, 28, 29, 30, 44, 65
Primary Care Physician, 10, 12, 22, 23, 25, 26,
27, 28, 30, 33, 35, 36, 38, 39, 40, 42, 43, 44, 46, 63, 66
Prior Authorization, 21, 23, 27, 28, 37, 46, 48, 49
Prior Period Coverage, 12, 18, 19, 30, 54, 55, 56, 58, 59, 61, 66
Provider, 11, 12, 41, 42, 45, 46
Provider Manual, 45, 48
Provider Registration, 46

Q
QMB, 12, 18
Quality Management, 31, 32, 33, 36

R
Radiology, 25, 28, 29, 44
Rate Code, 12, 56, 58, 67
RBHA, 12, 23, 29, 30, 33, 46
Referral, 10, 22, 23, 29, 30, 32, 33, 42, 43, 44, 46, 62, 63

				-82-
<page>

Rehabilitation, 22, 26, 28, 29, 61
Reinsurance, 12, 46, 49, 54, 55, 56, 58, 59, 60, 61, 62, 63, 66
Related Party, 12, 49, 53
Reporting Requirements, 66, 67
Respiratory, 28
Reviews, 68
RFP, 11, 12, 20, 24, 55, 69, 71
Risk Sharing, 24, 56
Roster, 18, 67

S
Sanctions, 37, 38, 50, 53, 63, 69, 70, 72
SOBRA, 8, 9, 10, 13, 14, 16, 17, 24, 31, 52, 54, 55, 58
SOBRA Family Planning, 16, 24, 54, 58
SSI, 8, 13, 14, 16, 17, 18, 55, 72
Staff Requirements, 32
Sterilization, 24
Subcontract, 10, 11, 13, 21, 25, 45, 46, 47, 48, 49, 75
Subcontractor, 11, 12, 13, 21, 46, 47, 48, 51, 53, 77, 79
Supplies, 13, 23, 25, 26, 44

T
TANF, 13, 16, 31
Technological Advancement, 70
Third Party, 8, 13, 15, 21, 26, 31, 47, 50, 54, 61, 62, 63, 74
Third Party Liability, 13, 61, 63
Ticket to Work, 10, 16, 18, 72
Title XIX, 7, 8, 9, 10, 11, 14, 16, 17, 18, 19, 22,
23, 25, 29, 30, 31, 45, 54, 55, 56, 58, 59, 63, 72, 75
Title XIX Waiver, 11, 14, 17, 54, 55, 56, 58, 59
Title XXI, 7, 9, 10, 13, 14, 16, 17, 18, 19, 23, 25, 29, 30, 31, 63
Transplants, 21, 23, 28, 59, 60, 71
Transportation, 21, 23, 28, 29, 30, 31, 33, 44, 62, 71
Triage, 29, 30

U
Utilization Management, 32, 33, 37 Vaccine for Children, 31
Vision, 24, 33, 46

[END OF SECTION F]

				-83-
<page>

SECTION G: REPRESENTATIONS and CERTIFICATIONS of OFFEROR

The Offeror must complete all information requested below.

1. CERTIFICATION OF ACCURACY OF INFORMATION PROVIDED
By signing this offer, the Offeror certifies, under penalty of law, that the
information provided herein is true, correct and complete to the best of the
Offeror's knowledge and belief. The Offeror also acknowledges that,
should investigation at any time disclose any misrepresentation or
falsification, any subsequent contract may be terminated by AHCCCSA without
penalty to or further obligation by AHCCCSA.

2. CERTIFICATION OF NON-COERCION
By signing this offer, the Offeror certifies, under penalty of law, that it has
not made any requests or inducements to any provider not to contract with
another potential program contractor in relation to this solicitation.

3. CERTIFICATION OF COMPLIANCE -ANTI-KICKBACK / LABORATORY TESTING
By signing this offer, the Offeror certifies that it has not engaged and will
not engage in any violation of the Medicare Anti-Kickback or the "Stark I"
and "Stark II" laws governing related-entity and compensation there
from. If the Offeror provides laboratory testing, it certifies that it has
complied with, and has sent to AHCCCSA, simultaneous copies of the information
required to be sent to the Centers for Medicare and Medicaid Services.
(See 42 USC Sec.1320a-7b, PL 101-239, PL 101-432, and 42 CFR Sec.411.361.)

4. AUTHORIZED SIGNATORY
Authorized Signatory for ______________________________________________________
					[OFFEROR'S Name]

_____________________________________ _________________________________________
[INDIVIDUAL'S Name] 		      [Title]

is the person authorized to sign this contract on behalf of the Offeror.

5. OFFEROR'S MAILING ADDRESS

AHCCCSA should address all notices relative to this offer to the attention of:

________________________________________________________________________
Name 					Title

________________________________________________________________________
Address 				Telephone Number

________________________________________________________________________
Fax Number 				Email Address

________________________________________________________________________
City 					State 		ZIP

				-84-
<page>

OFFEROR GENERAL INFORMATION (Page 1 of 2)

1. Organization Chart: Attach a copy of the Offeror's staff organization chart,
down to the supervisor level, setting forth lines of authority, responsibility
and communication which will pertain to this proposal. Provide an
overall organizational chart and separate organizational charts for each
functional area, which includes the number of current or proposed full-time
employees in each area.

2. If other than a governmental agency, when was your organization
formed?_______________________

3. License/ Certification: Attach a list of all licenses and certifications
(e. g. federal HMO status or State certifications) your organization maintains.
Use a separate sheet of paper listing the license requirement and the renewal
dates.

Have any licenses been denied, revoked or suspended within the past 10 years?
Yes _____ No _____
If yes, please explain.
________________________________________________________________________________
________________________________________________________________________________

4. Civil Rights Compliance Data: Has any federal or state agency ever made a
finding of noncompliance with any civil rights requirements with respect to
your program? Yes _____ No_____ If yes, please explain.
________________________________________________________________________________
________________________________________________________________________________

5. Accessibility Assurance: Does your organization provide assurance that no
qualified person with a disability will be denied benefits of, or excluded from,
participation in a program or activity because the Offeror's facilities
(including subcontractors) are inaccessible to, or unusable by, persons with
disabilities? (Note: Check local zoning ordinances for accessibility
requirements). Yes____ No____ If yes, describe how such assurance
is provided or how your organization is taking affirmative steps to provide
assurance.
________________________________________________________________________________
________________________________________________________________________________

6. Prior Convictions: List all felony convictions within the past 15 years of
any key personnel (i. e., Administrator, Medical Director, financial officers,
major stockholders or those with controlling interest, etc.).
Failure to make full and complete disclosure shall result in the rejection of
your proposal.
________________________________________________________________________________
________________________________________________________________________________

7. Federal Government Suspension/ Exclusion: Has the Offeror been suspended or
excluded from any federal government programs for any reason? Yes_____ No_____
If yes, please explain.
________________________________________________________________________________
________________________________________________________________________________

8. Was an actuarial firm used to assist in developing capitation rates?
Yes_____ No_____
If yes, what is name of the actuarial firm?_____________________________________

				-85-
<page>

OFFEROR GENERAL INFORMATION (Page 2 of 2)

9. Did a firm or organization provide the Offeror with any assistance in making
this offer (to include developing capitation rates or providing any other
technical assistance)? Yes_____ No_____ If yes, what is the name of this firm
or organization?
________________________________________________________________________________
Name
________________________________________________________________________________
Address City State

10. Has the Offeror contracted or arranged for Management Information Systems,
software or hardware, for the term of the contract? Yes_____ No_____
If yes, is the Management Information System being obtained from a vendor?
Yes _____ No_____ If yes, please provide the vendor's name, the vendor's
background with AHCCCSA, the vendor's background with other HMOs, and the
vendor's background with other Medicaid programs.
________________________________________________________________________________
________________________________________________________________________________

				-86-
<page>

FINANCIAL DISCLOSURE STATEMENT (Page 1 of 2)

The Offeror must provide the following information as required by
42 CFR 455.103. This Financial Disclosure Statement shall be prepared as of
12/31/02 or as specified below. However, continuing offerors who have filed
the required Financial Disclosure Statement within the last 12 months need not
complete this section if no significant changes have occurred since the last
filing.

1. Ownership: List the name and address of each person with an ownership or
controlling interest, as defined by 42 CFR 455.101, in the entity submitting
this offer:

					Percent of
Name 		Address 		Ownership or Control
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

2. Subcontractor Ownership: List the name and address of each person with an
ownership or control interest in any subcontractor in which the disclosing
entity has direct or indirect ownership of 5% or more:

					Percent of
Name 		Address 		Ownership or Control
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Names of above persons who are related to one another as spouse, parent, child
or sibling:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

3. Ownership in Other Entities: List the name of any other entity in which a
person with an ownership or control interest in the Offeror entity also has an
ownership or control interest:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

				-87-
<page>

FINANCIAL DISCLOSURE STATEMENT (Page 2 of 2)

4. Long-Term Business Transactions: List any significant business transactions,
as defined in 42 CFR 455.101, between the Offeror and any wholly-owned supplier
or between the Offeror and any subcontractor during the five-year period
ending on the Contractor's most recent fiscal year end:

Describe Ownership 	Type of Business 		Dollar Amount
of Subcontractors 	Transaction with Provider 	of Transaction
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

5. Criminal Offenses: List the name of any person who has ownership or control
interest in the Offeror, or is an agent or managing employee of the Offeror
and has been convicted of a criminal offense related to that person's
involvement in any program under Medicare, Medicaid or the Title XIX or Title
XXI services program since the inception of those programs:

Name 		Address 			Title
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

6. Creditors: List name and address of each creditor whose loans or mortgages
exceed 5% of total Offeror equity and are secured by assets of the Offeror's
company.

				Description 	Amount
Name 		Address 	of Debt 	of Security
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

				-88-
<page>

RELATED PARTY TRANSACTIONS (Page 1 of 2)

1. Board of Directors: List the names and addresses of the Board of Directors
of the Offeror.
Name/Title 			Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

2. Highest-Compensated Management: List names and titles of the 10 highest
compensated management personnel including but not limited to the
Chief Executive Officer, the Chief Financial Officer, Board Chairman,
Board Secretary, and Board Treasurer:

Name 				Title
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

3. Related Party Transactions: Describe transactions between the Offeror and
any related party in which a transaction or series of transactions during any
one fiscal year exceeds the lesser of $10,000 or 2% of the total
operating expenses of the disclosing entity. List property, goods, services and
facilities in detail noting the dollar amounts or other consideration for
each transaction and the date thereof. Include a justification as to (1) the
reasonableness of the transaction, (2) its potential adverse impact on the
fiscal soundness of the disclosing entity, and (3) that the transaction is
without conflict of interest:

a) The sale, exchange or leasing of any property:

Description of 		Name of Related Party 		Dollar Amount for
Transaction 		and Relationship 		Reporting Period
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Justification:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

				-89-
<page>

RELATED PARTY TRANSACTIONS (Page 2 of 2)

b) The furnishing of goods, services or facilities for consideration:

Description of 		Name of Related Party 		Dollar Amount for
Transaction 		and Relationship 		Reporting Period
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Justification:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

c) Describe all transactions between Offeror and any related party which
includes the lending of money, extensions of credit or any investment in a
related party. This type of transaction requires review and approval in
advance by the Office of the Director:

Description of 		Name of Related Party 		Dollar Amount for
Transaction 		and Relationship 		Reporting Period
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Justification:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

d) List the name and address of any individual who owns or controls more than
10% of stock or that has a controlling interest (i. e., formulates, determines
or vetoes business policy decisions):

							Has Controlling
				Owner Or 		Interest?
Name 		Address 	Controller 		Yes/No
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

				-90-
<page>

OFFEROR'S ADMINISTRATIVE FUNCTIONS SUBCONTRACTORS (Page 1 of 1)

The Offeror must identify any organizational or administrative functions
(e.g. claims processing, marketing, automated data processing, accounting)
or key personnel (e. g. administrator, medical director, chief financial
officer, etc.) which are subcontracted.

Subcontractor's Name:___________________________________________________________
Address:________________________________________________________________________
Method Of Payment:______________________________________________________________
Function Performed:_____________________________________________________________

Estimated Value Of Contract:
10/1/03-9/30/04 $______________________
10/1/04-9/30/05 $______________________
10/1/05-9/30/06 $______________________

Subcontractor's Name:___________________________________________________________
Address:________________________________________________________________________
Method Of Payment:______________________________________________________________
Function Performed:_____________________________________________________________

Estimated Value Of Contract:
10/1/03-9/30/04 $______________________
10/1/04-9/30/05 $______________________
10/1/05-9/30/06 $______________________

Subcontractor's Name:___________________________________________________________
Address:________________________________________________________________________
Method Of Payment:______________________________________________________________
Function Performed:_____________________________________________________________

Estimated Value Of Contract:
10/1/03-9/30/04 $______________________
10/1/04-9/30/05 $______________________
10/1/05-9/30/06 $______________________

Subcontractor's Name:___________________________________________________________
Address:________________________________________________________________________
Method Of Payment:______________________________________________________________
Function Performed:_____________________________________________________________

Estimated Value Of Contract:
10/1/03-9/30/04 $______________________
10/1/04-9/30/05 $______________________
10/1/05-9/30/06 $______________________

				-91-
<page>

OFFEROR'S KEY PERSONNEL (Page 1 of 1)

Indicate the names of the persons filling the following positions and the date
(month/year) they began, or will begin, their staff assignment. In addition,
the Offeror must attach detailed professional resumes (two pages maximum) and
job descriptions for all key personnel to include, at a minimum, the following
positions. If any of the following positions are filled by employees who do
not spend their full time on the AHCCCS program, please describe their other
duties. If personnel are not in place, submit minimum qualifications in place
of resumes.

<TABLE>
<CAPTION>
POSITION:                          NAME:            STARTING DATE:         # OF HOURS PER
                                                                          WEEK DEDICATED TO
                                                                           AHCCCS PROGRAM
<S>                                <C>              <C>                   <C>
Administrator
-------------------------------------------------------------------------------------------
Medical Director
-------------------------------------------------------------------------------------------
Chief Financial Officer
-------------------------------------------------------------------------------------------
Claims Administrator
-------------------------------------------------------------------------------------------
QM/UM Coordinator
-------------------------------------------------------------------------------------------
Provider Services Manager
-------------------------------------------------------------------------------------------
Member Services Manager
-------------------------------------------------------------------------------------------
Behavioral Health Coordinator
-------------------------------------------------------------------------------------------
Maternal Health/ EPSDT
Coordinator
-------------------------------------------------------------------------------------------
Grievance Coordinator
-------------------------------------------------------------------------------------------
Compliance Officer
-------------------------------------------------------------------------------------------
</TABLE>

[END OF SECTION G]

				-92-
<page>

SECTION H: EVALUATION FACTORS AND SELECTION PROCESS

AHCCCSA has established a scoring methodology which is designed to evaluate
fairly an offeror's ability to provide cost-effective, high-quality contract
services in a managed care setting in accordance with the AHCCCS
overall mission and goals. The following factors will be evaluated and
weighted in the order listed:

1. Provider Network
2. Capitation
3. Program
4. Organization
5. Extra Credit (optional)

It is anticipated that Capitation and the network development portion of
Provider Network will be scored by Geographic Service Area. The remaining
submission areas: the network management portion of Provider Network, Program,
Organization and Extra Credit, are anticipated to be scored statewide, not
specific to any Geographic Service Area (GSA). The scores received for each of
the four required components will be weighted separately and combined to
derive a final score for the Offeror, by GSA, prior to adding any extra credit
earned. Contracts will be awarded to qualified offerors whose proposals are
deemed to be most advantageous to the State in accordance with Section I,
Paragraph 9, Award of Contract.

In the case of negligible differences between two or more competing proposals
for a particular GSA, in the best interest of the state, AHCCCSA may consider
the following factors in awarding the contract:

  *an Offeror who is an incumbent health plan and has performed in an adequate
   manner (in the interest of continuity of care); and/or
  *an Offeror who participates satisfactorily in other lines of AHCCCS business;
   and/or
  *an Offeror's past performance with AHCCCS.

Offerors are encouraged to submit a bid for more than one GSA and/ or for more
than just urban GSAs.

AHCCCSA reserves the right to waive immaterial defects or omissions in this
solicitation or submitted proposals. The Offeror should note that, if
successful, it must meet all AHCCCS requirements, irrespective of what is
requested and evaluated through this solicitation. The proposal provided by
the Offeror will become part of the contract with AHCCCS.
________________________________________________________________________________
All of the components listed below will be evaluated against relevant statutes,
AHCCCSA rules and policies and the requirements contained in this RFP.
The Offeror's Checklist (Attachment K) contains RFP references for each of
these items:

1. PROVIDER NETWORK
The provider network will be evaluated and scored with reference to the
Offeror's network development and network management. Network development is
defined as the process of developing contractual arrangements with a sufficient
number of providers capable of delivering all covered services to AHCCCS members
in accordance with AHCCCSA standards (e. g., appointment times). AHCCCSA will
use contracts and/ or completed Letters of Intent with other required materials
to evaluate and score network development. A signed Letter of Intent will
receive the same weight and consideration as a signed contract. The Offeror's
network will be evaluated by service and by site in each GSA bid by the Offeror.
The Offeror should note that Attachment B of this solicitation identifies
minimum geographic standards for a provider network.

				-93-
<page>

Network management is defined as the process by which the Offeror certifies,
monitors, evaluates and communicates with its network. AHCCCSA anticipates
evaluating and scoring the Offeror's submitted materials relative to the
following areas:

a. Monitoring and management of network
b. Network communication
c. Capacity analysis, planning and development

2. CAPITATION
The Offeror shall submit initial capitation bids by risk group within a GSA.
These initial bids will be evaluated and scored. The lowest bid within each
GSA and risk group will receive the maximum allowable points. If a bid
is below the actuarial rate range, the bid will be evaluated as if it were at
the bottom of the actuarial rate range. No additional points will be given for
bids below the actuarial rate range. Conversely, the highest bid (within or
above the actuarial rate range) will receive the least number of points.

If AHCCCSA requests best and final offers, these offers will be scored using
the same methodology as was used to score the initial bids. The initial bid
will be weighted 60% and the final bid 40%.

Offerors should note that AHCCCSA may not offer the opportunity to submit best
and final offers.

3. PROGRAM
AHCCCSA will evaluate the Offeror's responsiveness to the requirements of this
solicitation and AHCCCSA policies. In particular, it is anticipated that the
Offeror's proposal regarding the following will be evaluated:

a. Quality Management
b. Utilization Management
c. Disease Prevention/ Health Maintenance
d. Focused Health Needs
e. Member Services

4. ORGANIZATION
Organization refers to the Offeror's prospective ability to perform the
administrative tasks necessary to support the requirements identified in this
solicitation. It is anticipated that the following areas will be evaluated:

a. Organization and Staffing
b. Corporate Compliance
c. Grievance and Appeals
d. Claims (includes TPL)
e. Encounters
f. Financial Standards (includes Performance Bond)
g. Liability Management (IBNR and RBUCs)

5. EXTRA CREDIT
The Offeror will have the option of submitting, in its proposal, descriptions
of programs/ initiatives it has implemented or will implement within the first
year of the contract. These programs/ initiatives should be ones that go
beyond the requirements of this RFP. AHCCCSA's purpose in allowing these
submissions is to introduce innovations to improve the AHCCCS program. The
programs/ initiatives should fit into one of the following three
categories:

				-94-
<page>

a. Use of Technology
b. Reduction of Hassle Factors for Providers
c. Community Involvement

The Offeror may submit up to three programs/initiatives, but should be aware
that the total of extra credit points is limited, regardless of the number
submitted. Offeror's should be aware that the points earned through extra
credit responses may be significant enough to determine the outcome of contract
awards.

Responses for extra credit will be scored by a group experienced in Medicaid
managed care at the national level. Submission of these programs/initiatives
is optional. If extra credit is awarded, the proposed programs/ initiatives
will be included in the successful Offeror's special terms and conditions to
the contract.

[END OF SECTION H]

				-95-
<page>

SECTION I: INSTRUCTIONS TO OFFERORS

TABLE OF CONTENTS

1.  CONTENTS OF OFFEROR'S PROPOSAL.........................................97
2.  PROSPECTIVE OFFERORS' INQUIRIES.......................................104
3.  PROSPECTIVE OFFERORS' CONFERENCE AND TECHNICAL INTERFACE MEETING......105
4.  LATE PROPOSALS........................................................105
5.  WITHDRAWAL OF PROPOSAL ...............................................105
6.  AMENDMENTS TO RFP.....................................................105
7.  ON-SITE REVIEW........................................................105
8.  BEST AND FINAL OFFERS ................................................105
9.  AWARD OF CONTRACT ....................................................107
10. FEDERAL DEADLINE FOR SIGNING CONTRACT.................................108
11. RFP MILESTONE DATES...................................................108
12. AHCCCS BIDDER'S LIBRARY...............................................109
13. OFFEROR'S INABILITY TO MEET REQUIREMENTS..............................109

				-96-
<page>

1. CONTENTS OF OFFEROR'S PROPOSAL
All proposals (original and seven copies) shall be organized with strict
adherence to the Offeror's Checklist (Attachment K), as described in this
section and submitted using the forms and specifications provided in this
RFP. All pages of the Offeror's proposal must be numbered sequentially with
documents placed in sturdy 3-inch, 3-ring binders. All responses shall be in
10 point font or larger with borders no less than 1/2". Unless otherwise
specified, responses to each submission requirement should be limited to three
81/2" x 11" one sided, single spaced, type written pages. Erasures,
interlineations or other modifications in the proposal must be initialed in
original ink by the authorized person signing the offer. A policy, brochure, or
reference to a policy or manual does not constitute an adequate response.
AHCCCSA will not reimburse the Offeror the cost of proposal preparation.

It is the responsibility of the Offeror to examine the entire RFP, seek
clarification of any requirement that may not be clear, and check all
responses for accuracy before submitting its proposal. The proposal becomes a
part of the contract; thus, what is stated in the proposal may be evaluated
either during the proposal evaluation process or during other reviews.
Proposals may not be withdrawn after the published due date and time.

All proposals will become the property of AHCCCSA. The Offeror may designate
certain information to be proprietary in nature by typing the word
"proprietary" on top of every page for which nondisclosure is requested.
Final determinations of nondisclosure, however, rest with the AHCCCSA Director.
Regardless of such determinations, all portions of the Offeror's proposal,
even pages that are proprietary, will be provided to CMS and its evaluation
contractor.

All proposals shall be organized according to the following major categories:

I.   General Matters
II.  Provider Network
III. Capitation
IV.  Program
V.   Organization
VI.  Extra Credit

Each section shall be separated by a divider and contain all information
requested in this solicitation. Numbering of pages should continue in sequence
through each separate section. For example, "Provider Network" would
begin with the page number following the last page number in "General
Matters". Each section shall begin with a table of contents.

Proposals that are not submitted in conformance with the guidelines described
herein will not be considered. References to various sections of the RFP
document in Section I and Section K are intended to be of assistance
and are not intended to represent all requirements. Other possible resources
may be found in the Bidder's Library.

All responses incorporating examples of past performance and/ or outcome data
must comply with the following requirements:

*  Incumbents must submit based on their AHCCCS acute care line of business
*  New Offerors currently operating as Managed Care Organizations (MCO), must
   submit all historical information from the same MCO/ line of business
*  New Offerors without current managed care operations are not expected to
   respond to historical submission requirements.

				-97-
<page>

I.   General Matters

See the Offeror's Checklist (Attachment K) for information to be submitted
under this section.

II.  Provider Network

The Offeror shall have in place an adequate network of providers capable of
meeting contract requirements. Attachment B lists minimum geographic network
requirements by GSA. The following specifies the submission
requirements.

Required Submissions: Provider Network Development

1. The provider network must be submitted on a 3.5" floppy disk according to
the specifications found in Attachment D (2). Supporting signed letters of
intent or contracts must be available for review by AHCCCSA, when requested,
as evidence of an understanding between the Offerer and provider (See
Attachment D (1)). Letters of intent and/ or contracts should NOT be included
with the Offerors proposal. AHCCCSA may verify any or all referenced letters
of intent or contracts. Do not send letters of intent or contracts to AHCCCSA
until instructed to do so.
Reference: Attachment D (1)

2. For each network hospital, provide a list of contracted physicians who have
admitting privileges to that facility.
References: Section D, Paragraph 27, Network Development; Attachment B:
Geographic Service Area/Minimum Network Standards

3. Provide a list of network deficiencies in each GSA.
References: Section D, Paragraph 27, Network Development; Attachment B:
Geographic Service Area/Minimum Network Standards

Required Submissions: Provider Network Management

Monitoring and Managing the Network

4. Describe the process of monitoring and managing the provider network for
compliance with AHCCCS network standards. Identify the staff involved in the
process. (Limit 5 pages)
References: Section D, Paragraph 16, Staff Requirements and Support Services,
Paragraph 27, Network Development, Paragraph 29, Network Management, Paragraph
30, Primary Care Provider Standards, Paragraph 31, Maternity Care Provider
Standards and Paragraph 33, Appointment Standards

5. Describe how the results obtained through monitoring are used to manage the
network and identify how provider issues are communicated within the
organization.
Reference: Section D, Paragraph 29, Network Management

Network Communication
6. Explain the provider communication process. Address health plan
accessibility to providers (including internal benchmarks), and provider
orientation, education and training.
References: Paragraph 27, Network Development and Paragraph 29, Network
Management

7. Describe how provider satisfaction is/ will be assessed. What results were
obtained and what changes were implemented after the last assessment?

				-98-
<page>

Capacity Analysis/ Planning and Development
8. Provide a copy of the Offeror's Network Development and Management Plan.
(No page limit)
Reference: Section D, Paragraph 27, Network Development (Provider Network
Development and Management Plan)

9. Provide a synopsis of the Offerer's Disaster Recovery Plan as it relates to
the provider network. (No page limit)
Reference: Section D, Paragraph 73, Business Continuity Plan

III. Capitation
Capitation is a fixed (per member) monthly payment to contractors for the
provision of covered services to members. It is an actuarially sound amount to
cover expected utilization and costs for the individual risk groups
in a risk-sharing managed care environment. The Offeror must demonstrate that
the capitation rates proposed are actuarially sound. In general terms, this
means that the Offeror who is awarded a contract should be able to keep
utilization at or near its proposed levels and that it will be able to contract
for unit costs that average at or near the amounts shown on the Capitation
Rates Calculation Sheet (CRCS). This requirement also applies to bids
submitted in best and final offer rounds.

Prior Period Coverage (PPC) and HIV/ AIDS Supplement rates will be set by
AHCCCS' actuaries and not bid by the Contractor. Due to the lack of complete
historical data, the Title XIX Waiver Group and HIFA Parents' rates
will also be set by AHCCCS' actuaries, rather than bid by the Contractor. See
Section D, Paragraph 53, Compensation, for information regarding risk sharing
for the Title XIX Waiver Group and PPC time period. All other rate codes,
including the Delivery Supplemental Payment, will be subject to competitive
bidding.

To facilitate the preparation of its capitation proposals, AHCCCSA will provide
each Offeror with a Data Supplement. This data source should not be used as the
sole source of information in making decisions concerning the capitation
proposal. Each Offeror is solely responsible for research, preparation and
documentation of its capitation proposal.

Required Submission: Capitation

10. The Offeror must submit its capitation proposal using the AHCCCSA bid web
site. Instructions for accessing and using the web site will be issued by
March 1, 2003. The Offeror must have an actuary who is a member of the
American Academy of Actuaries certify that the bid submission is actuarially
sound. This certification must be done with subsequent submissions in Best and
Final Offer rounds (if applicable). The Offeror must also submit hard copy
print outs of the web site CRCS. Refer to Section B and Attachment E for
more details.

The Offeror must prepare and submit its capitation proposal assuming a $35,000
deductible level for regular reinsurance, for all rate codes, in all counties.
AHCCCSA will provide a table of per member per month reinsurance adjustments
to be made to capitation rates for those Contractors whose actual
deductible level exceeds $35,000.

Capitation rates shall be submitted two ways: first, assuming all medical
services are included in the capitation rates, and second, assuming that
prescription drugs will be carved out of the capitation rates.
Prescription drugs are defined as "FDA approved legend or over the counter (OTC)
products provided upon receipt of a valid prescription order and dispensed by
a pharmacist in an outpatient setting."
When bidding with prescription drugs carved out, please factor the impact to
the other medical service and administrative categories. AHCCCSA anticipates
that in the event that prescription drugs are carved

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out, the entity with which AHCCCSA contracts will provide real time
prescription drug data to the health plans in a standard National Council for
Prescription Drug Programs (NCPDP) format The Offeror is
expected to continue an integrated approach, including the use of prescriptive
data, in the management of the member's care.

The Offeror's rate proposal will be deemed by AHCCCSA to include the costs of
administrative adjustments required during the term of this contract.
References: Section D, Paragraph 53, Compensation, Paragraph 57, Reinsurance
and Paragraph 75, Pending Legislative/Other Issues (Prescription Drugs)

IV. Program

Required Submissions: Program

Quality Management

11. Describe the process the Offeror uses to identify opportunities for quality
improvements. In addition, include a description of a recent quality improvement
project including initial identification, interventions and results of
improvement efforts. (Limit 5 pages)
References: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM) and
Paragraph 24, Performance Standards

12. Describe how peer review is utilized in your organization and incorporated
into your quality management process.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

13. Describe how quality of care complaints are handled including how they are
identified, researched and resolved.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

Utilization Management

14. Describe the Offeror's process for monitoring utilization, development of
intervention strategies for identified utilization issues and how the
effectiveness of these interventions is monitored. Include examples of data
and reports used to identify utilization trends. (Limit 5 pages text and no
more than 5 sample report attachments)
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

15. Describe the strategies used for pharmacy management, including the
identification and management of members with unusual utilization patterns.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

16. Discuss the process for provider profiling including methods, criteria and
actions taken based on profiling activities.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

17. Describe the process for ensuring consistent application of clinical
criteria used in the authorization process for both outpatient and inpatient
care.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

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18. Describe the Medical Director's role in utilization management activities,
including availability to internal and external customers.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

Disease Prevention/ Health Maintenance
19. Describe planned health promotion, outreach, monitoring and evaluation of
adult preventive services including well woman, well man and adult
immunizations.
References: Section D, Paragraph 10, Scope of Services, Paragraph 23, Quality
Management and Utilization Management (QM/ UM) and Paragraph 24, Performance
Standards

20. Describe planned outreach, monitoring and evaluation strategies for Early
and Periodic Screening, Diagnosis and Treatment (EPSDT) and explain how the
EPSDT program is integrated within the organization. In addition to overall
strategies, address activities aimed at healthy children aged 3 through
6 and adolescents. (Limit 5 pages)
References: Section D, Paragraph 10, Scope of Services, Paragraph 15, Pediatric
Immunizations and the Vaccine for Children's Program, Paragraph 23, Quality
Management and Utilization Management (QM/UM) and Paragraph 24, Performance
Standards

21. Describe strategies, both implemented and those planned for implementation,
to improve utilization of dental services to ensure increased member
participation and increased provider participation. Include the process used
to develop the strategies.
References: Section D, Paragraph 10, Scope of Services and Paragraph 24,
Performance Standards

22. Describe how utilization of family planning services for all members is
monitored and benchmarked.
References: Section D, Paragraph 10, Scope of Services and Paragraph 23,
Quality Management and Utilization Management (QM/UM)

Focused Health Needs

23. Describe how members with special health needs are identified and how the
information is used to provide comprehensive case or disease management.
References: Section D, Paragraph 11, Special Health Care Needs and Paragraph 23,
Quality Management and Utilization Management (QM/UM)

24. Describe the Offeror's disease management programs, including how outcomes
are assessed.
Reference: Section D, Paragraph 23, Quality Management and Utilization
Management (QM/UM)

25. Describe how the Offeror ensures culturally competent care and specify how
translation services are made available and provided to members with limited
English proficiency.
References: Section D, Paragraph 18, Member Information and Paragraph 20,
Cultural Competency

26. Describe planned outreach strategies for children with special health care
needs and other hard to reach populations. Include the process used to develop
the strategies.
References: Section D, Paragraph 10, Scope of Services, Paragraph 11, Special
Health Care Needs and Paragraph 23, Quality Management and Utilization
Management (QM/UM)

27. Discuss the maternity program and how processes are directed at achieving
good birth outcomes.
Response should include, but is not limited to prenatal care entry process,
identification and assessment of high-risk maternity patients, case management,
outreach and monitoring activities.

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References: Section D, Paragraph 10, Scope of Services, Paragraph 23, Quality
Management and Utilization Management (QM/ UM), Paragraph 24, Performance
Standards, Paragraph 31, Maternity Care Provider Standards and Paragraph 33,
Appointment Standards

Member Services

28. Describe the member complaint and resolution process, including
communications with other departments, benchmarks used and the average speed
for resolution of complaints.
References: Section D, Paragraph 18, Member Information, Paragraph 23, Quality
Management and Utilization Management (QM/UM), Paragraph 25, Grievance and
Request for Hearing Process and Standards and Attachment H (1), Enrollee
Grievance System Standards and Process

29. Explain the member communication process, addressing Offeror accessibility
to members (including internal benchmarks), the development and distribution
of written materials and member orientation and education.
References: Section D, Paragraph 8, Mainstreaming of AHCCCS Members, Paragraph
16, Staffing Requirements and Support Services, Paragraph 18, Member
Information and Paragraph 20, Cultural Competency

30. Describe how the Offeror assesses member satisfaction. What changes were
implemented after the last assessment?
References: Section D, Paragraph 4, Annual Enrollment Choice, Paragraph 19,
Member Surveys, Paragraph 23, Quality Management and Utilization Management
(QM/UM), Paragraph 25, Grievance and Request for Hearing Process and Standards
and Attachment H (1), Enrollee Grievance System Standards and Process

V. Organization

Organization refers to the Offeror's ability to perform the administrative
tasks necessary to support the requirements identified throughout this RFP.
The following identifies the submission requirements.

Required Submissions: Organization

Organization and Staffing

31. Describe the Offeror's experience providing similar services to similar
populations. Include any experience working with federally funded programs
such as Medicare and Medicaid, and with managed care organizations.

32. Describe the organization's various committees. Include the purpose and
composition (by title and functional area) of each committee. Describe how
committee information flows within the organization.

33. Submit a copy of the organization's Disaster Recovery Plan. (No page limit)
Reference: Section D, Paragraph 73, Business Continuity Plan

Corporate Compliance

34. Describe the role of the Compliance Officer (CO). Identify the CO's major
responsibilities, other than those related to corporate compliance, if any.
What percentage of time will the CO spend on the AHCCCS program corporate
compliance activities?
References: Section D, Paragraph 62, Corporate Compliance

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35. Describe how fraud is detected and reported including, but not limited to,
how employees, members and providers will learn about fraud, and the
process for reporting (both internally and externally) suspected fraud.
References: Section D, Paragraph 62, Corporate Compliance

Grievance and Appeals

36. Provide a flowchart and written description of the grievance and appeals
processes; include both the informal and formal processes and general
timeframes. Identify the staff that will be involved at each phase and provide
their qualifications.
References: Section D, Paragraph 25, Grievance and Request for Hearing Process
and Standards, Attachment H (1), Enrollee Grievance System Standards and
Policy and Attachment H (2), Provider Grievance System Standards and Policy

37. Describe the process that will be used to ensure corrective action is taken
with respect to deficiencies identified through the grievance system.
References: Section D, Paragraph 25, Grievance and Request for Hearing Process
and Standards, Attachment H (1), Enrollee Grievance System Standards and Policy
and Attachment H (2), Provider Grievance System Standards and Policy

Claims

38. Describe your claims process including, but not limited to, how timely and
accurate claims payments are ensured, the remediation process when the
Offeror's standards are not met, how coordination of benefits/TPL is done
and how provider claims inquiries are handled.
References: Section D, Paragraph 38, ClaimsPayment System and Paragraph 58,
Coordination of Benefits/Third Party Liability

39. What system is used to process claims? Are claims adjudication and payment
outsourced from the Offeror's organization?

40. Submit October, November, and December 2002 month end claims aging.

Encounters

41. Describe your encounter submissions process including, but not limited to,
how accuracy, timeliness and completeness are ensured and the remediation
process when the Offeror's standards are not met.
References: Section D, Paragraph 64, Data Exchange Requirement, Paragraph 65,
Encounter Data Reporting and Attachment I, Encounter Submission Requirements

Financial Standards

42. Submit the Offeror's plan for meeting the Performance Bond or Bond
Substitute requirement including the type of bond to be posted, source of
funding and timeline for meeting the requirement.
References: Section D, Paragraph 46, Performance Bond or Bond Substitute and
Paragraph 47, Amount of Performance Bond

43. Submit a plan for meeting the minimum capitalization requirement.
Reference: Section D, Paragraph 45, Minimum Capitalization Requirements

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44. Provide the organization's two most recent audited financial statements.
Include the parent company's most recent statements as well, if applicable.
(No page limit)

45. Submit verification of any contributions provided to the Offeror to improve
its financial position after the audit (copies of bank statements and deposit
slips), if applicable. (No page limit)

46. Provide enrollment figures for the two most recent audited financial
statements.

47. Provide the organization's last four unaudited internally prepared
quarterly financial statements with preparation dates indicated. (No page
limit)

48. Submit financial forecasts for the first three years of the contract
starting with October 1, 2003, including a balance sheet and a statement of
revenues, expenses and changes in equity in at least the level of detail
specified for annual audited financial statements as outlined in the Reporting
Guide for Acute Care Contractors with the Arizona Health Care Cost Containment
System. Include all assumptions used for the forecasts. (No page limit)

49. Submit financial viability calculations and results for the three-year
financial projections.
Reference: Section D, Paragraph 50, Financial Viability Standards/Performance
Guidelines

50. Describe the cost allocation plan, if applicable.
Reference: Section D, Paragraph 43, Management Services Subcontractors

Liability Management
51. Describe the Offeror's RBUC/ IBNR calculation methodology.
Reference: Section D, Paragraph 50, Financial Viability Standards/Performance
Guidelines

VI. Extra Credit

Optional Submissions: Extra Credit

52. Submit a description of a program/ initiative( s), which goes beyond the
requirements of this RFP and fits into one or more of the following categories;
Use of Technology, Reduction of Hassle Factors for Providers or Community
Involvement. With the description please include actual or anticipated
results, how the program/ initiative will be evaluated, and a high level
timeline. (Limit of three pages, plus the timeline for each program/initiative
submitted. There is a limit of three program/ initiatives that may be
submitted.)

2. PROSPECTIVE OFFERORS' INQUIRIES
Any questions related to this solicitation must be directed to Michael Veit,
AHCCCSA Contracts and Purchasing. Offerors shall not contact or ask questions
of other AHCCCSA staff unless authorized by the Contracting Officer.
Questions shall be submitted on disk, saved as a text file (. txt), along with
a hard copy printout, prior to the Prospective Offerors' Conference
(submit by 5: 00 p. m. on February 14, 2003). Offerors must submit inquiries
using Microsoft Word. Questions submitted by the deadline above may be
addressed at the Prospective Offerors' Conference. The envelope must be
marked "RFP Questions-Acute Care". Questions arising during the
Conference, or those that cannot be answered at the Prospective Offerors'
Conference, will be answered within a reasonable period in writing. Any
correspondence pertaining to this RFP must refer to the appropriate page,
section and paragraph number.

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3. PROSPECTIVE OFFERORS' CONFERENCE AND TECHNICAL INTERFACE MEETING
A New Offerors' Conference will be held on February 21, 2003, from 8: 30 a. m.
until 9: 30, at AHCCCS' 701 E. Jefferson building in the Gold Room on the
3rd Floor. The purpose of this conference will be to orient new
offerors to AHCCCS. Continuing offerors are welcome to attend, but the agenda
will assume no prior familiarity with the AHCCCS program. From 10: 00 a. m.
to 12: 30 p. m., there will be a Prospective Offerors' conference for all
new and continuing offerors. The purpose of this conference is to clarify the
contents of this solicitation and to avoid any misunderstandings regarding
AHCCCSA requirements. Any doubt as to the contents and requirements
of this solicitation or any apparent omission or discrepancy should be
presented at this conference. AHCCCSA will then determine the action necessary
and issue a written amendment to the solicitation, if appropriate.

Also on February 21, 2003, from 2: 00 p. m. until 5: 00 p. m., a Technical
Interface meeting will be held. The purpose of this meeting is to orient
prospective offerors to the AHCCCS PMMIS system requirements and to
answer any technical questions.

4. LATE PROPOSALS
Late proposals will not be considered.

5. WITHDRAWAL OF PROPOSAL
At any time prior to the proposal due date and time, the Offeror (or
designated representative) may withdraw its proposal. Withdrawals must
be provided in writing and submitted to Michael Veit, AHCCCSA, Contracts and
Purchasing.

6. AMENDMENTS TO RFP
Amendments may be issued subsequent to the issue date of this solicitation.
Receipt of solicitation amendments must be acknowledged by signing and
returning the signature page of the amendment to Michael Veit, AHCCCS,
Contracts and Purchasing.

7. ON-SITE REVIEW
Prior to contract award, all Offerors may be subject to on-site review(s)
to determine that an infrastructure is in place that will support the
provision of services to the acute population within the GSAs bid.

8. BEST AND FINAL OFFERS
AHCCCSA reserves the right to accept any or all initial offers without further
negotiation and may choose not to request a best and final offer (BFO).
Offerors are therefore advised to submit their most competitive offers at the
outset. However, if it is considered in the best interest of the State, AHCCCSA
may issue a written request to all offerors for a best and final offer in a
particular geographic service area or areas. The purpose of a BFO request is
to allow offerors an opportunity to resubmit bids for rate codes not previously
accepted by AHCCCSA. This request will notify them of the date, time and
place for the submission of their offers. In addition, AHCCCSA will disclose
to each offeror which of its bid rates are acceptable (within or below
actuarial rate range), and which are not acceptable (above the actuarial
rate range). All offerors whose final bid rates fall below the bottom of the
actuarial rate range will have their rates increased to the bottom of that
rate range after the final BFO. If an offeror does not submit a notice of
withdrawal or a best and final offer, its immediate previous offer will be
considered its best and final offer.

All BFOs must be submitted via the AHCCCS website, as well as in accordance
with Section B of the RFP.
AHCCCSA will limit the number of BFO rounds if it is in the best interest of
the State. Offerors will be

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permitted, within the restrictions and limitations defined below, to adjust
upward, a capitation rate for a rate code that was previously accepted to
offset the reduction of a capitation rate in another rate code in the first BFO
round only. These restrictions and limitations include, but are not limited to:

a. An offeror will be allowed to adjust upward a previously accepted rate code
   bid only during the first BFO round;

b. The weighted amount of BFO increase cannot exceed the weighted amount of
   BFO reduction. AHCCCSA will furnish the Offeror, in the Data Supplement, the
   enrollment percentages, by rate code, by GSA, to be used in determining the
   weighted amount. Should the weighted amount of the adjustment exceed the
   weighted amount of the BFO reduction, AHCCCSA shall reject the first BFO and
   the adjustment (costing the Offeror the loss of the first BFO round in that
   GSA). Since a rate code can only be adjusted during the first BFO round, the
   Offeror will lose the opportunity to make an upward capitation adjustment to
   previously accepted rate code bids in that GSA. For example, assume that SSI
   w/o Medicare was the rate code where a BFO was needed and the offeror reduced
   this rate by $10 PMPM. Also assume the SSI w/o Medicare rate code accounted
   for 9% of the members in the GSA.

   Weighted Average Capitation Reduction -9% X $10.00 = $. 90

   Assume the rate code adjusted upward was TANF and this rate code was
   increased by $2.00 PMPM.    Also assume this rate code accounted for 50% of
   the members in the GSA.

   Weighted Average Capitation Increase -50% X $2.00 = $1.00

   Therefore, the BFO would be rejected because the weighted amount of the BFO
   adjustment exceeded the weighted amount of the BFO reduction.

c. Offerors will not be allowed to decrease a bid in a BFO round if the initial
   bid was below the bottom of the rate range. If such a BFO is submitted it
   will be rejected.

d. If an adjustment during the initial BFO round causes the Offeror to exceed
   the upper range of any rate code, AHCCCSA will reject the adjustment and
   return the (adjusted) rate code to the initial capitation rate bid by the
   Offeror. Since a previously accepted rate code bid can only be adjusted
   during the first BFO round, the Offeror will lose the opportunity to make an
   upward capitation adjustment for this rate code.

e. AHCCCSA reserves the sole right to accept or reject any adjustment. The
   Offeror by submitting an adjustment to a rate code is requesting approval by
   AHCCCSA; such approval shall not be automatic. If an initial bid is below the
   bottom of a rate range, it cannot be adjusted downward by the Offeror in a
   BFO round.

Capitation Rates Offered after the BFOs: As stated above, AHCCCSA may limit the
number of BFO rounds. After the final BFO round is complete, provided it is
in the best interest of the State, AHCCCSA will cease issuing BFO requests. At
this point, should the Offeror have a rate code( s) without an accepted
capitation rate, AHCCCSA shall offer a capitation rate to the Offeror. The
capitation rate offered should be somewhere in the bottom half of the rate
range (specific placement to be determined by AHCCCSA and its actuaries). Note
that all rates offered in this manner shall be identical for all offerors in
the same GSA and rate code.

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9. AWARD OF CONTRACT
AHCCCSA has determined that the provision of covered services to eligible
populations in the Geographic Service Areas as described below will stabilize
risk sharing. The Offeror must therefore bid on at least one entire
GSA in order to be considered for a contract award. Although AHCCCSA encourages
Offerors to bid on multiple GSAs, AHCCCSA may limit the number of GSA's awarded
to any one offeror, if deemed in the best interest of the State.
Notwithstanding any other provision of this solicitation, AHCCCSA expressly
reserves the right to:

a. Waive any immaterial mistake or informality;
b. Reject any or all proposals, or portions thereof; and/or
c. Reissue a Request for Proposal

If two plans or their parents merge after obtaining contract awards, AHCCCSA
retains the right to address each merger issue on an individual basis according
to what is deemed in the best interest of the State.

If there are significant compliance issues with a current plan or a plan's
contract in a particular county has been previously terminated, AHCCCSA
retains the right to address each compliance or termination issue on an
individual basis according to what is deemed in the best interest of the State.
A new bid proposal may not be accepted until it has been determined that the
reason for the significant compliance or termination issue has been
resolved and there is a reasonable assurance that it will not recur.

A response to this Request for Proposals is an offer to contract with AHCCCSA
based upon the terms, conditions, scope of work and specifications of the RFP.
All of the terms and conditions of the contract are contained in this
solicitation, solicitation amendments and subsequent contract amendments,
if any, signed by the Contracting Officer. Proposals do not become contracts
unless and until they are accepted by the Contracting Officer. A
contract is formed when the AHCCCSA Contracting Officer signs the award page
and provides written notice of the award( s) to the successful offeror( s),
and the Offeror accepts any special provisions to the contract and the
final rates awarded. AHCCCSA may also, at its sole option, modify any
requirements described herein. All offerors will be promptly notified of award.

AHCCCSA reserves the right to specify and/ or modify the number of contracts to
be awarded in any GSA. AHCCCSA anticipates awarding contracts as follows:

GSA #: 		County or Counties 			Number of Awards:
================================================================================
2 		Yuma, La Paz 				Maximum of 2
4 		Apache, Coconino, Mohave, and Navajo 	Maximum of 2
6 		Yavapai 				Maximum of 2
8 		Gila, Pinal 				Maximum of 2
10 		Pima, Santa Cruz* 			Maximum of 5
12 		Maricopa 				Maximum of 6
14 		Graham, Greenlee, Cochise 		Maximum of 2

Note: *AHCCCS anticipates awarding up to five contracts in the Pima County
portion of the Pima/ Santa Cruz GSA. Contracts will be awarded to two of
the five Pima contract awardees in Santa Cruz.

An existing contractor in Maricopa or Pima County who is not awarded a new
contract may request to have its enrollment capped and to continue providing
services under the terms and condition of this new RFP.
AHCCCSA may, at its sole option, grant or deny such a request. If AHCCCSA
approves such an enrollment cap,

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the Contractor would continue to serve its existing members but would not
receive any new members. The enrollment cap will not be lifted during the
term of this or any subsequent contract period unless one of the
following conditions exist:

a. Another contractor is terminated and increased member capacity is needed, or
b. Legislative action creates a sudden and substantial increase in the overall
   AHCCCS population, or
c. Extraordinary and unforeseen circumstances make such an action necessary and
   in the best interest of the State.

If an existing contractor is not awarded a new or capped (as mentioned above)
contract, an open enrollment will be held, as described in Section D,
Paragraph 5 of this document. The costs of this open enrollment shall be
shared by each of the Contractors within the pertinent GSA and AHCCCSA.

Subsequent to the award of contracts, in the event of significant non-compliance
issues with a Contractor in a particular GSA, AHCCCSA may refer back to the
results of the evaluation of this solicitation and select another
Contractor for a particular GSA that is considered to be in the best interest
of the State.

Finally, successful bidders should be prepared to submit sample subcontracts
for approval as soon as possible after the contract award. AHCCCSA will
expedite the approval process.

10. FEDERAL DEADLINE FOR SIGNING CONTRACT
The Center for Medicare and Medicaid Services (CMS) has imposed strict
deadlines for finalization of contracts in order to qualify for federal
financial participation. This contract, and all subsequent amendments, must be
completed and signed by both parties, and must be available for submission to
CMS prior to the beginning date for the contract term (October 1, 2003). All
public entity Offerors must ensure that the approval of this contract is
placed on appropriate agendas well in advance to ensure compliance with this
deadline. Any withholding of federal funds caused by the Offeror's failure
to comply with this requirement shall be borne in full by the Offeror.

11. RFP MILESTONE DATES
The following is the schedule of events regarding the solicitation process:

Activity 						Date
================================================================================
RFP Issued 						February 3, 2003
Technical Assistance and RFP Questions Due 		February 14, 2003
New Offerors Orientation 				February 21, 2003
Prospective Offerors Conference and Technical
Assistance Session 					February 21, 2003
PMMIS Technical Interface Meeting 			February 21, 2003
RFP Amendment Issued, if necessary 			February 28, 2003
Access to Web-Based Capitation Bid Submission Available March 3, 2003
Second Set of Technical Assistance Questions Due 	March 7, 2003
Second RFP Amendment Issued, if necessary 		March 14, 2003
Proposals Due by 3:00 P. M. 				March 31, 2003
Contracts Awarded 					May 1, 2003
Readiness Reviews Begin 				July 1, 2003
New Contracts Effective 				October 1, 2003

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12. AHCCCS BIDDER'S LIBRARY
The Bidders Library contains critical reference material on AHCCCS policies
and performance requirements. References are made throughout this solicitation
to material in the Bidder's Library and offerors are responsible
for the contents of such referenced material as if they were printed in full
herein. All such material is incorporated into the contract by reference.
The Bidder's Library is located at 701 E. Jefferson, Phoenix, AZ. Please
contact Michael Veit at (602) 417-4762 for further information or appointment
times. Portions of the material contained in the Library are also available
on the AHCCCS website at www. ahcccs. state. az. us.

13. OFFEROR'S INABILITY TO MEET REQUIREMENTS
If a potential offeror cannot meet the minimum capitalization requirements,
the performance bond requirements, or the minimum network standards described
herein, AHCCCSA requests that the potential offeror not submit a bid.

[END OF SECTION I]

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SECTION J: LIST OF ATTACHMENTS

Attachment A: Minimum Subcontract Provisions
Attachment B: Geographic Service Area; Minimum Network Requirements
Attachment C: Management Services Subcontractor Statement
Attachment D: Sample Letter of Intent: Network Submission Requirements
Attachment E: Instructions for Preparing Capitation Proposal
Attachment F: Periodic Reporting Requirements
Attachment G: Auto-Assignment Algorithm
Attachment H: Grievance System Standards and Policy
Attachment I: Encounter Submission Requirements
Attachment J: EPSDT Schedules
Attachment K: Offeror's Checklist

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ATTACHMENT A: MINIMUM SUBCONTRACT PROVISIONS

[The following provisions must be included verbatim in every subcontract.]

1) ASSIGNMENT AND DELEGATION OF RIGHTS AND RESPONSIBILITIES
No payment due the Subcontractor under this subcontract may be assigned without
the prior approval of AHCCCSA. No assignment or delegation of the duties of this
subcontract shall be valid unless prior written approval is received from
AHCCCSA. (AAC R2-7-305)

2) AWARDS OF OTHER SUBCONTRACTS
AHCCCSA and/ or the Contractor may undertake or award other contracts for
additional or related work to the work performed by the Subcontractor and the
Subcontractor shall fully cooperate with such other Contractors,
subcontractors or state employees. The Subcontractor shall not commit or permit
any act which will interfere with the performance of work by any other
contractor, subcontractor or state employee. (AAC R2-7-308)

3) CERTIFICATION OF COMPLIANCE-ANTI-KICKBACK AND LABORATORY TESTING
By signing this subcontract, the Subcontractor certifies that it has not
engaged in any violation of the Medicare Anti-Kickback statute (42 USC Sec.
1320a-7b) or the "Stark I" and "Stark II" laws governing related-entity
referrals (PL 101-239 and PL 101-432) and compensation there from. If the
Subcontractor provides laboratory testing, it certifies that it has complied
with 42 CFR Sec. 411.361 and has sent to AHCCCSA simultaneous copies of the
information required by that rule to be sent to the Health Care Financing
Administration. (42 USC Sec. 1320a-7b; PL 101-239 and PL 101-432;
42 CFR Sec. 411.361)

4) CERTIFICATION OF TRUTHFULNESS OF REPRESENTATION
By signing this subcontract, the Subcontractor certifies that all
representations set forth herein are true to the best of its knowledge. No
payment due the Contractor under this subcontract may be assigned without the
prior approval of AHCCCSA. No assignment or delegation of the duties of this
subcontract shall be valid unless prior written approval is received from
AHCCCSA.

5) CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988
The Clinical Laboratory Improvement Amendment (CLIA) of 1988 requires
laboratories and other facilities that test human specimens to obtain either
a CLIA Waiver or CLIA Certificate in order to obtain reimbursement from
the Medicare and Medicaid (AHCCCS) programs. In addition, they must meet all
the requirements of 42 CFR 493, Subpart A.

To comply with these requirements, AHCCCSA requires all clinical laboratories
to provide verification of CLIA Licensure or Certificate of Waiver during the
provider registration process. Failure to do so shall result in either a
termination of an active provider ID number or denial of initial registration.
These requirements apply to all clinical laboratories.

Pass-through billing or other similar activities with the intent of avoiding
the above requirements are prohibited. The Contractor may not reimburse
providers who do not comply with the above requirements. (CLIA of 1988;
42 CFR 493, Subpart A)

6) COMPLIANCE WITH AHCCCSA RULES RELATING TO AUDIT AND INSPECTION
The Subcontractor shall comply with all applicable AHCCCS Rules and Audit Guide
relating to the audit of the Subcontractor's records and the inspection of
the Subcontractor's facilities. If the Subcontractor is an inpatient
facility, the Subcontractor shall file uniform reports and Title XVIII and
Title XIX cost reports with AHCCCSA. (ARS 41-2548; 45 CFR 74.48 (d))

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7) COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS
The Subcontractor shall comply with all federal, State and local laws, rules,
regulations, standards and executive orders governing performance of duties
under this subcontract, without limitation to those designated within this
subcontract. (Requirement for FFP, 42 CFR 434.70)

8) CONFIDENTIALITY REQUIREMENT
Confidential information shall be safeguarded pursuant to 42 CFR Part 431,
Subpart F, ARS Sec. 36-107, 36-2903, 41-1959 and 46-135, AHCCCS Rules and
Health Insurance Portability and Accountability Act (Public Law 107-
191, 110 Statutes 1936).

9) CONFLICT IN INTERPRETATION OF PROVISIONS
In the event of any conflict in interpretation between provisions of this
subcontract and the AHCCCS Minimum Subcontract Provisions, the latter shall
take precedence.

10) CONTRACT CLAIMS AND DISPUTES
Contract claims and disputes arising under A.R.S. Sec. Title 36, Chapter 29
shall be adjudicated in accordance with AHCCCS Rules. (A.R.S. Sec. Title 36,
Chapter 29; AAC R2-7-916; AAC R9-22-802)

11) ENCOUNTER DATA REQUIREMENT
If the Subcontractor does not bill the Contractor (e. g., Subcontractor is
capitated), the Subcontractor shall submit encounter data to the Contractor
in a form acceptable to AHCCCSA.

12) EVALUATION OF QUALITY, APPROPRIATENESS, OR TIMELINESS OF SERVICES
The Arizona Health Care Cost Containment System Administration (AHCCCSA) or
the U. S. Department of Health and Human Services may evaluate, through
inspection or other means, the quality, appropriateness or timeliness of
services performed under this subcontract. (ARS 36-2903. C., (8.);
ARS 36-2903.02; AAC 9-22-522)

13) FRAUD AND ABUSE
If the Subcontractor discovers, or is made aware, that an incident of potential
fraud or abuse has occurred, the Subcontractor shall report the incident
to the prime Contractor as well as to AHCCCSA, Office of Program
Integrity. Incidents involving potential member eligibility fraud should be
reported to AHCCCSA, Office of Managed Care, Member Fraud Unit. All other
incidents of potential fraud should be reported to AHCCCSA,
Office of the Director, Office of Program Integrity. (ARS 36-2918.01;
AAC R9-22-511.)

14) GENERAL INFORMATION
The parties to this contract agree that AHCCCS shall be indemnified and held
harmless by the Contractor and Subcontractor for the vicarious liability
of AHCCCS as a result of entering into this contract. However, the
parties further agree that AHCCCS shall be responsible for its own negligence.
Each party to this contract is responsible for its own negligence.

15) INSURANCE
[This provision applies only if the Subcontractor provides services directly
to AHCCCS members]

The Subcontractor shall maintain for the duration of this subcontract a policy
or policies of professional liability insurance, comprehensive general
liability insurance and automobile liability insurance in amounts that meet
AHCCCS requirements. The Subcontractor agrees that any insurance protection
required by this subcontract, or otherwise obtained by the Subcontractor,
shall not limit the responsibility of Subcontractor to indemnify, keep and
save harmless and defend the State and AHCCCSA, their agents, officers and
employees as provided herein. Furthermore, the Subcontractor shall be fully
responsible for all tax obligations, Worker's Compensation Insurance, and
all other applicable insurance coverage, for itself and its employees, and
AHCCCSA shall have no responsibility or liability for any such taxes or
insurance coverage. (45 CFR Part 74)

				-112-
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16) LIMITATIONS ON BILLING AND COLLECTION PRACTICES
The Subcontractor shall not bill, nor attempt to collect payment directly or
through a collection agency from a person claiming to be AHCCCS eligible
without first receiving verification from AHCCCSA that the person was
ineligible for AHCCCS on the date of service, or that services provided were
not AHCCCS covered services. (AAC R9-22-702 and R9-22-201( J))

17) MAINTENANCE OF REQUIREMENTS TO DO BUSINESS AND PROVIDE SERVICES
The Subcontractor shall be registered with AHCCCSA and shall obtain and
maintain all licenses, permits and authority necessary to do business
and render service under this subcontract and, where applicable, shall comply
with all laws regarding safety, unemployment insurance, disability insurance
and worker's compensation.

18) NON-DISCRIMINATION REQUIREMENTS
The Contractor shall comply with State Executive Order No. 99-4, which
mandates that all persons, regardless of race, color, religion, sex,
national origin or political affiliation, shall have equal access to employment
opportunities, and all other applicable Federal and state laws, rules and
regulations, including the Americans with Disabilities Act and Title VI.
The Contractor shall take positive action to ensure that applicants for
employment, employees, and persons to whom it provides service are not
discriminated against due to race, creed, color, religion, sex, national
origin or disability. (Federal regulations, State Executive order # 99-4 &
AAC R9-22-513)

19) PRIOR AUTHORIZATION AND UTILIZATION REVIEW
The Contractor and Subcontractor shall develop, maintain and use a system for
Prior Authorization and Utilization Review that is consistent with AHCCCS
Rules and the Contractor's policies. (AAC R9-22-522)

20) RECORDS RETENTION

a. The Contractor shall maintain books and records relating to covered
   services and expenditures including reports to AHCCCSA and working papers
   used in the preparation of reports to AHCCCSA. The Contractor shall comply
   with all specifications for record keeping established by AHCCCSA. All books
   and records shall be maintained to the extent and in such detail as
   required by AHCCCS Rules and policies. Records shall include but not be
   limited to financial statements, records relating to the quality of care,
   medical records, prescription files and other records specified by AHCCCSA.

b. The Contractor agrees to make available at its office at all reasonable
   times during the term of this contract and the period set forth in the
   following paragraphs, any of its records for inspection, audit or
   reproduction by any authorized representative of AHCCCSA, State or Federal
   government.

c. The Contractor shall preserve and make available all records for a period
   of five years from the date of final payment under this contract.

d. If this contract is completely or partially terminated, the records
   relating to the work terminated shall be preserved and made available for
   a period of five years from the date of any such termination. Records which
   relate to grievances, disputes, litigation or the settlement of claims
   arising out of the performance of this contract, or costs and expenses of
   this contract to which exception has been taken by AHCCCSA, shall be
   retained by the Contractor for a period of five years after the date of
   final disposition or resolution thereof. (45 CFR 74.53; ARS 41-2548)

21) SEVERABILITY
If any provision of these standard subcontract terms and conditions is held
invalid or unenforceable, the remaining provisions shall continue valid and
enforceable to the full extent permitted by law.

				-113-
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22) SUBJECTION OF SUBCONTRACT
The terms of this subcontract shall be subject to the applicable material
terms and conditions of the contract existing between the Contractor and
AHCCCSA for the provision of covered services.

23) TERMINATION OF SUBCONTRACT
AHCCCSA may, by written notice to the Subcontractor, terminate this subcontract
if it is found, after notice and hearing by the State, that gratuities in the
form of entertainment, gifts, or otherwise were offered or given by the
Subcontractor, or any agent or representative of the Subcontractor, to any
officer or employee of the State with a view towards securing a contract
or securing favorable treatment with respect to the awarding, amending or the
making of any determinations with respect to the performance of the
Subcontractor; provided, that the existence of the facts upon which the
state makes such findings shall be in issue and may be reviewed in any
competent court. If the subcontract is terminated under this section, unless
the Contractor is a governmental agency, instrumentality or subdivision
thereof, AHCCCSA shall be entitled to a penalty, in addition to any other
damages to which it may be entitled by law, and to exemplary damages in the
amount of three times the cost incurred by the Subcontractor in providing
any such gratuities to any such officer or employee. (AAC R2-5-501; ARS 41-
2616 C.; 42 CFR 434.6, a. (6))

24) VOIDABILITY OF SUBCONTRACT
This subcontract is voidable and subject to immediate termination by
AHCCCSA upon the Subcontractor becoming insolvent or filing proceedings
in bankruptcy or reorganization under the United States Code, or upon
assignment or delegation of the subcontract without AHCCCSA's prior written
approval.

25) WARRANTY OF SERVICES
The Subcontractor, by execution of this subcontract, warrants that it has the
ability, authority, skill, expertise and capacity to perform the services
specified in this contract.

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ATTACHMENT B: MINIMUM NETWORK STANDARDS
Minimum Network Standards
(By Geographic Service Area)

INSTRUCTIONS:
Contractors shall have in place an adequate network of providers capable of
meeting contract requirements. The information that follows describes the
minimum network requirements by Geographic Service Area (GSA).
In some GSAs there are required service sites located outside of the
geographical boundary of a GSA. The reason for this relates to practical
access to care. In certain instances, a member must travel a much greater
distance to receive services within their assigned GSA, if the member were
not allowed to receive services in an adjoining GSA or state.

Split zip codes occur in some counties. Split zip codes are those which
straddle two different counties. Enrollment for members residing in these
zip codes is based upon the county and GSA to which the entire zip
code has been assigned by AHCCCS. The Contractor shall be responsible for
providing services to members residing in the entire zip code that is
assigned to the GSA for which the Contractor has agreed to provide services.
The split zip codes GSA assignments are as follows:

<TABLE>
<CAPTION>
                 SPLIT BETWEEN         COUNTY ASSIGNED
ZIP CODE         THESE COUNTIES              TO              ASSIGNED GSA
--------      --------------------     ---------------       ------------
<S>           <C>                       <C>                  <C>
 85220         Pinal and Maricopa          Maricopa               12
 85242         Pinal and Maricopa          Maricopa               12
 85292           Gila and Pinal              Gila                  8
 85342        Yavapai and Maricopa         Maricopa               12
 85358        Yavapai and Maricopa         Maricopa               12
 85390        Yavapai and Maricopa         Maricopa               12
 85643         Graham and Cochise          Cochise                14
 85645         Pima and Santa Cruz        Santa Cruz              10
 85943          Apache and Navajo          Navajo                  4
 86336        Coconino and Yavapai         Yavapai                 6
 86351        Coconino and Yavapai         Coconino                4
 86434          Mohave and Yavapai         Yavapai                 6
 86340        Coconino and Yavapai         Yavapai                 6
</TABLE>

If outpatient specialty services (OB, family planning, internal medicine and
pediatrics) are not included in the primary care provider contract, at least
one subcontract is required for each of these specialties in the service sites
specified.

In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must
demonstrate its ability to provide PCP, dental and pharmacy services so that
members do not have to travel more than 5 miles from their residence.
Metropolitan Phoenix is defined on the Minimum Network Standard page specific
to GSA # 12.

				-115-
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At a minimum, the Contractor shall have a physician with admitting and treatment
privileges with each hospital in its network. Contractors in GSA 10 and/or
GSA 12 must contract with physicians with admitting privileges in at least
one hospital in each service district (see specific GSA requirements). Should
the Hospital Reimbursement Pilot Program be renewed as discussed in Section D,
Paragraph 40, Hospital Subcontracting and Reimbursement, the Contractor shall
contract with at least one hospital in each service district.

Provider categories required at various service delivery sites included in the
Service Area Minimum Network Standards are indicated as follows:

H  Hospitals
P  Primary Care Providers (physicians, certified nurse practitioners and
   physician assistants)
D  Dentists
Ph Pharmacies

				-116-
<page>

HOSPITALS IN PHOENIX METROPOLITAIN AREA (By service district, by zip code)

DISTRICT 1
85006 	Good Samaritan Regional Medical Center
	St. Luke's Medical Center
85008 	Maricopa Medical Center
85013 	St. Joseph's Hospital & Medical Center
85020 	John C. Lincoln Hospital-North Mountain

DISTRICT 2
85015 	Phoenix Baptist Hospital & Medical Center
85027 	John C. Lincoln Hospital-Deer Valley
85306 	Thunderbird Samaritan Medical Center
85308 	Arrowhead Community Hospital & Medical Center
85351 	Walter O. Boswell Memorial Hospital
85375 	Del E. Webb Memorial Hospital
85031 	Maryvale Hospital Medical Center

DISTRICT 3
85032 	Paradise Valley Hospital
85054 	Mayo Clinic Hospital
85251 	Scottsdale Healthcare-Osborn
85261 	Scottsdale Healthcare-Shea

DISTRICT 4
85201 	Mesa General Hospital Medical Center
	Mesa Lutheran Hospital
85202 	Desert Samaritan Medical Center
85206 	Valley Lutheran Hospital
85224 	Chandler Regional Hospital
85281 	Tempe St. Luke's Hospital

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HOSPITALS IN TUCSON METROPOLITAN AREA (By service district, by zip code)

DISTRICT 1
85719 	University Medical Center
85741 	Northwest Hospital
85745 	Carondelet St. Mary's Hospital

DISTRICT 2
85711 	Carondelet St. Joseph's Hospital
85712 	El Dorado Hospital
	Tucson Medical Center
85713 	Kino Community Hospital

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<page>

Geographic Service Area 2 COUNTIES: LA PAZ AND YUMA
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy

Hospitals
Blythe, CA
Lake Havasu City
Parker
Yuma

Primary Care Providers Blythe, CA
Lake Havasu City
Parker
San Luis
Somerton
Wellton
Yuma

Dentists Blythe, CA
Lake Havasu City
Parker
San Luis
Yuma

Pharmacies Blythe, CA
Lake Havasu City
Parker
Somerton
San Luis
Yuma
[GRAPH]

				-119-
<page>

Geographic Service Area 4
COUNTIES: APACHE, COCONINO, MOHAVE, AND NAVAJO
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy

Hospitals
Bullhead City
Flagstaff
Gallup, NM
Kanab, UT
Kingman
Lake Havasu City
Needles, CA
Page
Payson
Show Low Springerville
St. George, UT
Winslow

Primary Care Providers
Ash Fork/Seligman
Bullhead City Colorado City/Hilldale/ Kanab, UT
Flagstaff
Fort Mohave
Gallup, NM
Holbrook
Kingman
Lake Havasu City
Page
Payson
Sedona
Show Low/Pinetop/Lakeside
Snowflake/Taylor
Springerville/Eager
St. George, UT/Mesquite, NV
St. Johns
Williams
Winslow
[GRAPH]

				-120-
<page>

Geographic Service Area 6
COUNTY: YAVAPI
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy

Hospitals
Cottonwood
Flagstaff
Phoenix
Prescott

Primary Care Providers
Ash Fork/Seligman
Camp Verde
Cottonwood
Phoenix/Wickenburg
Prescott
Prescott Valley
Sedona

Dentists
SAME AS PRIMARY CARE PROVIDERS

Pharmacies
SAME AS PRIMARY CARE PROVIDERS
(except for Ash Fork/Seligman, no pharmacy required)
[GRAPH]

				-121-
<page>

Geographic Service Area 8
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy
COUNTIES: PINAL AND GILA

Hospital
Casa Grande
Globe
Mesa
Payson

Primary Care Providers
Apache Junction
Casa Grande
Coolidge/Florence
Eloy
Globe/Miami/Claypool
Kearney
Mammoth/San Manuel/Oracle
Mesa
Payson

Dentists
Apache Junction
Casa Grande
Coolidge/Florence
Eloy
Globe/Miami/Claypool
Kearney
Mammoth/San Manuel/Oracle
Mesa
Payson

Pharmacies
Apache Junction
Casa Grande
Coolidge/Florence
Globe/Miami/Claypool
Kearney
Mammoth/San Manuel/Oracle
Mesa
Payson
[GRAPH]

				-122-
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Geographic Service Area 10
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy
COUNTY: PIMA AND SANTA CRUZ

Hospital
Tucson
District 1
Contract Required
District 2
Contract Required
Nogales
Physician(s) w/admit and
treatment privileges required

Primary Care Providers
Ajo
Green Valley
Marana
Nogales
Oro Valley
Tucson
Dentists
SAME AS PRIMARY CARE
PROVIDERS

Pharmacies
SAME AS PRIMARY CARE
PROVIDERS

[GRAPH]

				-123-
<page>

Geographic Service Area 12
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy
COUNTY: MARICOPA

Hospital
Metropolitan Phoenix*
District 1
Contract Required
District 2
Contract Required
District 3
Contract Required
District 4
Contract Required

Primary Care Providers
Buckeye
Cave Creek/Carefree
Gila Bend
Goodyear/Litchfield Park
Metropolitan Phoenix*
Queen Creek
Wickenburg

Dentists
Buckeye/Goodyear/Litchfield Park
Metropolitan Phoenix*
Wickenburg

Pharmacies
Buckeye
Cave Creek/Carefree
Goodyear/Litchfield Park
Metropolitan Phoenix*
Wickenburg

*For Purposes of this RFP, Metropolitan Phoenix encompasses the following:
Apache Junction, Avondale, Chandler, El Mirage, Fountain Hills, Gilbert,
Glendale, Mesa, Paradise Valley, Peoria, Phoenix, Scottsdale, Sun City/Sun
City West, Surprise, Tempe, Tolleson, and Youngtown. Within this area,
distance standards must be met as specified in Attachment B.

[GRAPH]

				-124-
<page>

Geographic Service Area 14
H=Hospital P=Primary Care Physician D=Dentist Ph=Pharmacy
COUNTIES: COCHISE, GRAHAM AND GREENLEE

Hospital
Benson
Bisbee
Douglas
Safford
Sierra Vista
Tucson
Willcox

Primary Care Providers
Benson
Bisbee
Douglas
Morenci/Clifton
Safford
Sierra Vista
Willcox

Dentists
Benson/Willcox
Bisbee
Douglas
Morenci/Clifton
Safford
Sierra Vista

Pharmacies
Benson
Bisbee
Douglas
Morenci/Clifton
Safford/Thatcher
Sierra Vista
Willcox
[GRAPH]

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ATTACHMENT C: MANAGEMENT SERVICES SUBCONTRACTOR STATEMENT

INSTRUCTIONS: A Management Services Subcontractor is defined as a marketing
organization or any other organization or person agreeing to perform any
administrative function or service for the Contractor specifically related to
securing or fulfilling the Contractor's obligations to AHCCCSA. This includes,
but is not limited to, third-party administrators, firms or persons who manage
operations of the Contractor such as marketing, automatic data processing,
claims processing, quality management, utilization management, prior
authorization and other management functions.

All Management Services Subcontractors are required to have an annual financial
audit. A copy of this audit must be filed with AHCCCSA within 120 days of the
Subcontractor's fiscal year end. Failure to file a copy may result in
withdrawal of AHCCCSA approval.

Attach to this proposal a signed copy of the Management Subcontract for
Contract Year 04 (10/1/03-9/30/04) in addition to all information requested
below. If the existing subcontract is for multiple terms, attach the original
management subcontract and all amendments. When making attachments to this
section, please refer to the question number and the item heading.

				*******

MANAGEMENT SERVICES SUBCONTRACTOR STATEMENT
NAME OF BUSINESS _______________________________________________________________

ADDRESS ______________________ CITY ______________ STATE ____ ZIP_____

PHONE NO. ____________________________________

1. Type of Business (check appropriate box)
[ ] Individual [ ] Partnership [ ] Corporation [ ] Joint Venture [ ] Government
[ ] Other (Describe)

If a corporation, indicate type:________________________________________________

2. Incorporated in the State of:________________________

If incorporated in a state other than Arizona, do you have a certificate to do
business in the State of Arizona? Yes_____ No_____.
If yes, type of certificate and with what agency or administration is it
filed: _________________________ .

3. Who is your Statutory Agent for the State of Arizona:
Name__________________________________________________Phone_____________________

Address________________________________________Stata:_______________ Zip:_______

4. Parent Company and Employer Identification Number

				-126-
<page>

For the purpose of this RFP, a parent company is defined as one which either
owns or controls the activities and basic business policies of the Management
Services Subcontractor. To own another company means the parent company must
own at least a majority (more than 50%) of the voting rights in the company.
To control another company, such ownership is not required; if such company is
able to formulate, determine, or veto business policy decisions of the
Management Services Subcontractor, such other company is considered the
parent company of the Management Services Subcontractor.

Is the Management Services Subcontractor owned or controlled by a parent
company as described above? Yes_____ No_____.
If yes, insert in the space below the name and main office address of the
parent company.

Name____________________________________________________________________________

Address_______________________________________________ State _________ Zip______

5. Organization Chart
Attach a copy of your staff functional organizational chart, setting forth
lines of authority, responsibility and communication which will pertain to
this proposal.

6. If other than a government agency, when was your organization formed?________
If your organization is a corporation, attach a list of the names and addresses
of the Board of Directors.

7. License/Certification
Attach a list of all licenses and certifications your organization is required
to maintain. Use a separate sheet of paper using the following format:

SERVICE COMPONENT 	LICENSE/REQUIREMENT 	RENEWAL DATE

If any licenses have been denied, revoked or suspended within the past 10
years, please explain.

8. Administrative Agents
Is your agency acting as the administrative agent for any other agency
organization? Yes____ No____

If yes, describe the relationship in both legal and functional aspects.

9. Civil Rights Compliance Data
Has any federal or state agency ever made a finding of noncompliance with any
relevant civil rights requirement with respect to your company?
Yes_____ No_____. If yes, please explain.

				-127-
<page>

10. Prior Convictions
Are there any felony convictions of any key personnel (i.e., Chief Executive
Officer, Plan Managers, Financial Officers, major stockholders or those with
controlling interest, etc.) within the past 15 years?
Yes_____ No_____. If yes, please explain.

11. Does your company have any ownership or control interest of 5% or more
(i.e., able to formulate, determine, vote or influence business policy
decisions, etc.) in another organization?
Yes______ No______. If yes, list each organization's name, address and the
percentage of ownership and/or control.
						PERCENT OF
NAME 			ADDRESS 		OWNERSHIP OR CONTROL
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
12. Do those who own or control your company have any ownership or control
interest of 5% or more (i.e., able to formulate, determine, veto or influence
business policy decisions, etc.) in another organization? Yes_____ No_____.
If yes, list each organization's name and address, the percentage of ownership
or control, and the names of those with the common ownership or control
interest:

						PERCENT OF
NAME 			ADDRESS 		OWNERSHIP OR CONTROL
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

13. Has your company ever been suspended or excluded from any federal program
for any reason?
Yes_____ No_____. If yes, please attach explanation.

14. Subcontractor's Customer Description: For each of your principal customers
(i.e. one that generates 5% or more of Subcontractor's gross annual revenue),
please provide the following information:

a. Customer's name and address
b. Customer's percentage of Subcontractor revenue
c. Percent of Subcontractor's time managing customer
d. Customer's principal business

15. Subcontractor's Personnel Experience Statement
Please provide resumes for all key personnel describing professional experience
and education including continuing educational courses taken during the last
three years.

16. Subcontractor Controlling Interest Statement

				-128-
<page>

Please provide the name and address of any individuals or organizations with an
ownership or controlling interest in the Subcontractor company (i.e., able to
formulate, determine or veto business policy decisions, etc.). You may include
those whose ownership or control interest is less than 5%.

							PERCENT OF
NAME 			ADDRESS 			OWNERSHIP OR CONTROL
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

17. Subcontractor Financial Statement
a. Is your accounting system based on a cash or accrual method?
   Cash [ ]
   Accrual [ ]
   Other [ ] (Give a brief explanation.)

b. Does your organization prepare an annual financial statement?
   Yes_____ No _____ . If yes, provide a copy of the latest report.

c. Are interim financial statements prepared? Yes_____ No_____.
   If yes, how often are they prepared? ____________________________

Are footnotes and supplementary schedules an integral part of the statements?
   Yes _____ No_____ .

   Provide a copy of the latest statements including all necessary data to
   support your answers above.

d. Is your organization audited by an independent accounting firm or accountant?
   Yes_____ No_____. If yes, how often are audits conducted?________________.

   By whom are they conducted? Provide name, address and telephone number and
   attach a copy of the latest audited financial statements.

e. Do you have any uncorrected audit exceptions? Yes_____ No_____.

   If yes, please explain the action being taken to correct the exceptions.

f. Does your organization have an accounting manual? Yes_____ No_____.
   If no, please explain if you have proper accounting policies and procedures,
   and how you provide for the dissemination of such accounting policies and
   procedures within your organization and what controls exist to ensure the
   integrity of your financial information. The Subcontractor agrees to furnish
   copies of such written accounting policies and procedures for inspection upon
   request from AHCCCSA.

g. Are management letters on internal controls issued by the accounting firm?
   Yes_____ No_____.

				-129-
<page>

   If yes, attach a copy of the management letter from the latest audit. This
   must be on the auditor's letterhead and theSubcontractor, by its submission,
   certifies the letter is unaltered.

   If no, please provide a comprehensive description of internal control
   systems. (You are responsible for instituting adequate procedures against
   irregularities and improprieties and enforcing adherence to generally
   accepted accounting principles.)

h. Does your organization have a formal basis to distribute or allocate costs
   reflected in your financial statement? Yes_____ No_____.
   Please explain principal allocation techniques used or proposed to be used.
   Indicate the allocation base used for each type of cost allotment.

i. Indicate the types of liability insurance your organization maintains.
   State the amount of coverage and the name and address of the carrier.

j. Please attach a complete analysis of revenues and expenses by business
   segment (lines of business) and by geographic area (within Arizona and
   outside Arizona) for your company or your company's owners.

k. Are there any suits, judgments, tax deficiencies, or claims pending against
   your organization? Yes_____ No_____.
   If yes, briefly describe each item and indicate the dollar amount, either
   actual or estimated.

l. In the last 12 months has your firm or organization paid any bonuses,
   provided any gifts over a dollar value of $500, or in any other way provided
   a financial reward, over and above salary, to any staff member, board member
   or other personnel associated with the firm or organization?
   Yes_____ No_____. If yes, describe to whom it was given, the type of reward,
   its value and source(s) of revenue.

18. Subcontractor's Background Check Information

All Management Services Subcontractors must provide sufficient information
concerning key personnel to enable AHCCCSA to conduct background checks.
Please provide a list of all key personnel giving the following information
for each:

a. Name
b. All other names ever used
c. Social Security Account Number
d. Date of Birth
e. Place of Birth
f. All addresses for the last 10 years
g. Ever suspended from any federal program for any reason? If yes, please
   explain.

				-130-
<page>

19. Subcontractor Restriction of Competition Statement

In connection with the Management Services Subcontractor's participation in
this procurement, the Management Services Subcontractor (to include its
employees) to the best of its knowledge and belief:

a. has not disclosed and will not knowingly disclose the prices, or any matter
   relating to such prices, to any other offeror, subcontractor or competitor;

b. has not attempted and will not make any attempt to induce any other person
   or firm to submit or not to submit a proposal for the purpose of restricting
   competition.

_________________________________________________________________________
Management Services Subcontractor Signature

_________________________________________________________________________
Print Name and Title

The Management Services Subcontractor shall insert in the applicable space
below, if the Management Services Offeror has no parent company, its own
employer's identification number (Federal social security number used on
employer's quarterly federal tax return, U.S. Treasury Department Form 941),
or, if the Subcontractor has a parent company, the employer's identification
number of the parent company.

Management Services Subcontractor
Employer Identification No. ____________________________________________

Parent Company's
Employer Identification No. ____________________________________________

				-131-
<page>

ATTACHMENT D (1): SAMPLE LETTER OF INTENT

The following information is provided as early notification for Offerors'
benefit. However, complete instructions regarding this Letter of Intent
will be provided when the RFP is released. Do not send completed Letter of
Intent to AHCCCSA at this time. Only instructions included in the RFP are
considered official.

Letter of Intent Instructions

The following is the mandated format for the Arizona Health Care Cost
Containment System, Contract Year Ending 2004, Letter of Intent (LOI).
It is to be used to show a provider's intention to enter into a contract with
an Offeror. No alterations or changes are permitted, except for shaded areas,
which identify the Offeror. The completed LOI or an executed contract will be
acceptable evidence of an Offeror's proposed network. For purposes of the
RFP, no scoring distinction will be made between an LOI and executed contracts.
If a provider has multiple sites that offer identical services, only one LOI
should be signed, with additional service site information (items 1 to 6)
attached to the LOI. If services differ between sites, a separate LOI must be
obtained for each service site.

If a representative signs an LOI on behalf of a provider, evidence of authority
for the representative must be available upon request.

				-132-
<page>

[OFFEROR'S LOGO]
Please do not sign this Letter of Intent unless you seriously intend to enter
into negotiations with the health plan mentioned below.

No alterations or changes are permitted, except for shaded areas which
identify the Offeror. This letter is subject to verification by the Arizona
Health Care Cost Containment System Administration (AHCCCSA).

The provider signing below is willing to enter into contract negotiations with
(Offeror's name), for provision of covered services to AHCCCS members enrolled
with (Offeror's name). This provider intends to sign a contract with
(Offeror's name) if (Offeror's name) is awarded an AHCCCS contract beginning
October 1, 2003 in the provider's service area and an acceptable agreement
can be reached between the provider and (Offeror's name). Signing this Letter
of Intent does not obligate the provider to sign a contract with (Offeror's
name) however, please do not sign this Letter of Intent unless you
seriously intend to enter into negotiations with the above mentioned
health plan.

The following information is furnished by the provider:

1. AHCCCS PROVIDER IDENTIFICATION NUMBER_______________________________________

2. PROVIDER'S PRINTED NAME_____________________________________________________

3. ADDRESS (where services will be provided)___________________________________
_____________________________________________________ZIP CODE__________________

4. COUNTY____________________ 5. TELEPHONE__________________ 6. FAX ___________
___ Please check here if additional service site information is attached to the
Letter of Intent

7. CHECK ALL THAT APPLY
___ A. Primary Care Physician
___ Family Practice 				Services ___ EPSDT
___ General Practice 			 		 ___ OB
___ Pediatrics
___ Internal Medicine

___ B. Primary Care Nurse Practitioner
___ Family Practice 				Services: ___ EPSDT
___ Adult 				  		  ___ OB
___ Pediatrics
___ Midwife

___ C. Primary Care Physician's Assistant 	Services: ___ EPSDT
							  ___ OB
___ D. Physician - Specialist - (Specify)_______________________________________
___ E. Hospital

				-133-
<page>

___ F. Urgent Care Facility
___ G. Pharmacy
___ H. Laboratory
___ I. Medical Imaging
___ J. Medically Necessary Transportation
___ K. Nursing Facility
___ L. Dentist
___ M. Therapy (Specify Physical Therapy, Occupational Therapy, Speech,
       Respiratory)____________
___ N. Behavioral Health Provider (Specify)_____________________________________
___ O. Durable Medical Equipment
___ P. Home Health Agency
___ Q. Other (Please Specify)___________________________________________________

8. LANGUAGES SPOKEN BY THE PROVIDER (OTHER THAN ENGLISH)________________________

________________________________________________________________________________

9. NAME OF HOSPITAL(S) WHERE PHYSICIAN HAS ADMITTING PRIVILEGES ________________

________________________________________________________________________________

________________________________________________________________________________

NOTICE TO PROVIDERS: This Letter of Intent will be used by AHCCCSA in its bid
evaluation and contract award process. You should only sign this Letter of
Intent if you intend to enter into contract negotiations with (Offeror's name)
should they receive a contract award. If you are signing on behalf
of a physician, please provide evidence of your authority to do so.
Do not return completed Letter of Intent to AHCCCSA. Completed Letter of Intent
needs to be returned to (Offeror's name).

10. PROVIDER'S SIGNATURE______________________________________ DATE ____________

11. PRINTED NAME OF SIGNER_____________________________________TITLE____________

				-134-
<page>

[OFFEROR'S LOGO]

ADDITIONAL SERVICE SITES

1. AHCCCS PROVIDER IDENTIFICATION NUMBER________________________________________

2. PROVIDER'S PRINTED NAME______________________________________________________

3. ADDRESS (where services will be provided)____________________________________

_____________________________________________________ZIP CODE___________________

4. COUNTY____________________ 5. TELEPHONE__________________ 6. FAX ____________

3. ADDRESS (where services will be provided)____________________________________

_____________________________________________________ZIP CODE___________________

4. COUNTY____________________ 5. TELEPHONE__________________ 6. FAX ____________

3. ADDRESS (where services will be provided)____________________________________

_____________________________________________________ZIP CODE___________________

4. COUNTY____________________ 5. TELEPHONE__________________ 6. FAX ____________

3. ADDRESS (where services will be provided)____________________________________

_____________________________________________________ZIP CODE___________________

4. COUNTY____________________ 5. TELEPHONE__________________ 6. FAX ____________

				-135-
<page>

ATTACHMENT D (2): NETWORK SUBMISSION REQUIREMENTS

The entire provider network must be submitted on a 3.5" floppy disk in a .dbf
format. The disk must be clearly labeled with the Offeror's name and the
number of records contained on the disk. The disk must be accompanied by
the Provider Network Submission Form found on the last page of this attachment.

The Offeror should note that while the layout and fields for this submission
are similar to those of the quarterly Provider Affiliation Transmission,
there are differences in the information and fields which are required.

The Offeror's provider network must be submitted to AHCCCSA using the layout
and specifications found in this attachment.

				-136-
<page>

DEFINITION OF TERMS
*City
The city where the provider performs services.

*County Code
An AHCCCSA assigned code that identifies a particular county within
Arizona or identifies a location as out-of-state.

*EPSDT Indicator
Indicates whether or not the provider performs early and
periodic screening, diagnosis and treatment services.

*Language Spoken Code
A code associated with a specific language, other than
English, used by the provider.

*OB Indicator
Indicates whether or not the provider delivers obstetric services.

*PCP Indicator
Indicates whether or not the provider is available as a primary
care provider to the general membership.

*Provider Type Code
An AHCCCSA assigned code that identifies services that may
be rendered by the provider. For example, 07 (Dentist), 08 (Allopathic
Physician - MD), 10 (Podiatrist), 19 (Registered Nurse Practitioner), and 31
(Osteopathic Physician - DO).

*Service Provider ID
An AHCCCSA assigned number identifying the provider.

*Service Provider Name
The name of the service provider.

*Specialty Code
AHCCCSA assigned codes that are subsets of the Provider Type Codes.

*Service Street
Address The physical street address where the provider performs services.
PO Boxes must not be used. If a street address does not exist, you may use a
physical description/location as long as it would serve to direct members to
where care is provided. Providers who are Hospitalists should use the hospital
address as their service street address.

*Service City
The city that coincides with the Service Street Address.

*Service ZIP Code
The ZIP code that coincides with the Service Street Address and Service City.

*Provider Contract Status
An AHCCCSA assigned number identifying the provider's contract status.

*Total Record Count
The total number of records submitted by the Offeror.

				-137-
<page>

RULES AND ASSUMPTIONS

*Service Provider ID is required and must be a valid registered AHCCCSA
 provider. Submit ID numbers for individuals, as opposed to group provider IDs.

*All text should be in upper case.

*A Service Provider with multiple service sites requires a separate record for
 each service site.

*Service Provider Name is required. Providers which are entities should be
 identified by the entity name followed by any individual identifier
 (i.e. AAA Pharmacy #111). Providers which are persons should be identified by
 last name, a forward slash, first name, a space, middle initial followed by
 a period if applicable (i.e. Smith/John A.).

*Service Street Address is required. To provide a uniform method to abbreviate
 an address, use the street abbreviations found in the Service Street Address
 table. Secondary unit abbreviations used in the Service Street
 Address must be taken from the Secondary Unit Abbreviation Table.

*Service City is required.

*Service ZIP Code is required and should be submitted as a 5 digit code.
 All of the following yes/ no indicators must contain a valid 'Y' or 'N' value.

	*PCP Indicator
	*EPSDT Indicator
	*OB Indicator

*Language Spoken Codes must be valid as defined by the Language Spoken Code
 table (maximum of two language codes are permitted). If no other languages
 than English are spoken the field should be left blank.

*Specialty Codes must be valid as defined by the Specialty Code table (a
 maximum of five Specialty Codes are permitted). Specialty Codes are required
 for the following provider types:

	*07 Dentist
	*08 Allopathic Physician (MD)
	*19 Registered Nurse Practitioner
	*31 Osteopathic Physician (DO)

Specialty Codes are not required for provider types other than those listed
above. In cases where Specialty Codes are not required, the field may be
left blank. In cases where more fields exist than are necessary for a
particular provider, the remaining, unnecessary fields should be left blank.

*Provider Contract Status must be valid as defined by the Provider Contract
 Status Codes table.

				-138-
<page>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
FIELD                                           LENGTH
NAME           FIELD DESCRIPTION               OF FIELD         DEMAND                   REQUIRED INFORMATION
---------------------------------------------------------------------------------------------------------------------------
<S>          <C>                            <C>              <C>          <C>
A            SERVICE PROVIDER ID            6 Characters     Required     An active provider
---------------------------------------------------------------------------------------------------------------------------
B            SERVICE PROVIDER NAME          25 Characters    Required     Name of active provider
---------------------------------------------------------------------------------------------------------------------------
C            SERVICE STREET ADDRESS         25 Characters    Required     See lists of valid abbreviations in this document
---------------------------------------------------------------------------------------------------------------------------
D            SERVICE CITY                   25 Characters    Required     Name of city where services are performed
---------------------------------------------------------------------------------------------------------------------------
E            SERVICE ZIP CODE               5 Characters     Required     5 digit number
---------------------------------------------------------------------------------------------------------------------------
F            COUNTY CODE                    2 Characters     Required     See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
G            PCP INDICATOR                  1 Character      Required     'Y' or 'N'
---------------------------------------------------------------------------------------------------------------------------
H            OB INDICATOR                   1 Character      Required     'Y' or 'N'
---------------------------------------------------------------------------------------------------------------------------
I            EPSDT INDICATOR                1 Character      Required     'Y' or 'N'
---------------------------------------------------------------------------------------------------------------------------
J            LANGUAGE CODE 1                2 Characters     Optional     See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
K            LANGUAGE CODE 2                2 Characters     Optional     See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
L            PROVIDER TYPE CODE             2 Characters     Required     See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
M            SPECIALTY CODE 1               3 Characters     Conditional  See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
N            SPECIALTY CODE 2               3 Characters     Conditional  See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
O            SPECIALTY CODE 3               3 Characters     Conditional  See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
P            SPECIALTY CODE 4               3 Characters     Conditional  See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
Q            SPECIALTY CODE 5               3 Characters     Conditional  See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
R            PROVIDER CONTRACT STATUS       2 Characters     Required     See list of valid codes in this document
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

				-139-
<page>

FILE SAMPLE

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
A        B                 C            D          E       F    G     H    I    J     K     L    M    N    O    P    Q   R
---------------------------------------------------------------------------------------------------------------------------
<S>     <C>                <C>         <C>         <C>     <C>  <C>   <C>  <C>  <C>   <C>   <C>  <C>  <C>  <C>  <C>  <C> <C>
010101  AAA PHARMACY #111  222 WEST    PHOENIX     85000   13   N     N    N                03                           01
			   MAIN ST
---------------------------------------------------------------------------------------------------------------------------
020202  SMITH/JOHN A.      111 EAST    TUCSON      85000   19   Y     N    Y    01          08   150  156                02
		           CENTER
---------------------------------------------------------------------------------------------------------------------------
121212  DOE/JANE           333 NORTH   FLAGSTAFF   85000   05   Y     Y    Y    01    15    31   089                    01
			   OAK
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

Some field lengths in file sample are not representational of requirements.

				-140-
<page>

SERVICE STREET ABBREVIATIONS
Primary Name	Approved Abbreviation
Avenue 		AVE
Boulevard 	BLVD
Center 		CTR
Circle 		CIR
Court 		CT
Drive 		DR
Expressway 	EXPY
Freeway 	FWY
Highway 	HWY
Junction 	JCT
Lane 		LN
Parkway 	PKWY
Place 		PL
Road 		RD
Roadway 	RDWY
Route 		RT
Square 		SQ
Station 	STA
Street 		ST
Terrace 	TER
Trail 		TRL

SECONDARY UNIT ABBREVIATIONS
Description	Approved Abbreviation
Administration 	ADMN
Annex 		ANX
Apartment 	APT
Branch 		BR
Building 	BLDG
Company 	CO
Convalescent 	CONVAL
Department 	DEPT
Division 	DIV
Floor 		FL
Hospice 	HSPC
Hospital 	HOSP
Laboratory 	LAB
Lobby 		LBBY
Office 		OFC
Room 		RM
Space 		SPC
Suite 		STE
Trailer 	TRLR

				-141-
<page>

COUNTY CODES
CODE	DESCRIPTION
01 	APACHE
03 	COCHISE
05 	COCONINO
07 	GILA
09 	GRAHAM
11 	GREENLEE
13 	MARICOPA
15 	MOHAVE
17 	NAVAJO
19 	PIMA
21 	PINAL
23 	SANTA CRUZ
25 	YAVAPAI
27 	YUMA
29 	LA PAZ
99 	OUT-OF-STATE

LANGUAGE SPOKEN CODES
CODE	DESCRIPTION	AREA OF ORIGIN
01 	SPANISH
02 	ALBANIAN
03 	AMERICAN SIGN LANGUAGE
04 	APACHE
05 	ARABIC
06 	ARMENIAN
07 	BOSNIAN
08 	CHINESE
09 	CROATIAN
10 	CZECH
11 	DANISH
12 	DUTCH
13 	EDO 		NIGERIA
14 	FINNISH
15 	FRENCH
16 	GERMAN
17 	GREEK
18 	GUJARATI 	INDIA
19 	HEBREW
20 	HINDI,INDIAN, EAST INDIAN
21 	HOPI
22 	IRANIAN, PERSIAN, FARSI

				-142-
<page>

LANGUAGE SPOKEN CODES (cont'd)
CODE	DESCRIPTION	AREA OF ORIGIN
23 	ITALIAN
24 	JAPANESE
25 	KANNADA INDIA
26 	KOREAN
27 	MARATHI 	AFGHANISTAN, BANGLADESH, INDIA, IRAN,
			NEPAL, PAKISTAN, AND SRI LANKA
28 	NAVAJO
29 	NIGERIAN
30 	NORWEGIAN
31 	IGBO 		NIGERIA
32 	POLISH
33 	PORTUGUESE
34 	PUNJABI 	PAKISTAN
35 	ROMANIAN
36 	RUSSIAN
37 	SERBIAN
38 	SINGHALESE 	SRI LANKA
39 	SWEDISH
40 	TAGALOG (FILIPINO)
41 	TAIWANESE
42 	TAMIL 		INDIA
43 	THAI, SIAMESE
44 	TOHONO O'ODHAM
45 	UKRANIAN
46 	URDU, PAKISTANI
47 	VIETNAMESE
48 	YAQUI
49 	YORUBA 		WESTERN AFRICA
99 	OTHER

				-143-
<page>

PROVIDER TYPE CODES
CODE	DESCRIPTION
02 	HOSPITAL
03 	PHARMACY
04 	LABORATORY
05 	URGENT CARE CENTER
07 	DENTIST
08 	MD-PHYSICIAN ALLOPATH
09 	CERTIFIED NURSE-MIDWIFE
12 	CERTIFIED REGISTERED NURSE ANESTHETIST
16 	CHIROPRACTOR
18 	PHYSICIAN'S ASSISTANT
19 	REGISTERED NURSE PRACTITIONER
22 	NURSING HOME
23 	HOME HEALTH AGENCY
28 	NON-EMERGENCY TRANSPORTATION PROVIDERS
30 	DME SUPPLIER
31 	DO-PHYSICIAN OSTEOPATH
35 	HOSPICE
41 	DIALYSIS CLINIC
48 	NUTRITIONIST
62 	AUDIOLOGIST
65 	HOSPITAL OUTPATIENT SURGERY CENTER
69 	OPTOMETRIST
84 	LICENSED MIDWIFE
99 	OTHER

				-144-
<page>

SPECIALTY CODES
CODE DESCRIPTION
010 ALLERGIST/IMMUNOLOGIST
011 ALLERGIST
012 IMMUNOLOGIST
020 ANESTHESIOLOGIST
030 SURGERY-COLON/RECTAL
040 DERMATOLOGIST
050 FAMILY PRACTICE
055 GENERAL PRACTICE
060 INTERNAL MEDICINE
062 CARDIOVASCULAR MEDICINE
063 ENDOCRINOLOGIST
064 GASTROENTEROLOGIST
065 HEMATOLOGIST
066 INFECTIOUS DISEASES
067 NEPHROLOGIST
068 PULMONARY DISEASES
069 RHEUMATOLOGIST
070 SURGERY-NEUROLOGY
075 NEUROLOGIST
076 PEDIATRIC NEUROLOGIST
080 NUCLEAR MEDICINE
082 GERONTOLOGIST
083 PSYCHOLOGIST
084 RN FAMILY NURSE PRACTITIONER
085 RN SCHOOL NURSE PRACTITIONER
086 RN PEDIATRIC NURSE ASSOCIATE
087 RN PEDIATRIC NURSE PRACTITIONER
088 RN GERIATRIC NURSE PRACTITIONER
089 OBSTETRICIAN AND GYNECOLOGIST
090 GYNECOLOGIST
091 OBSTETRICIAN
092 MATERNAL AND FETAL MEDICINE
093 REPRODUCTIVE ENDOCRINOLOGIST
094 RN MIDWIFE
095 WOMEN'S HC/OB-GYN NP
096 NEONATAL NURSE PRACTITIONER
097 RN ADULT NURSE PRACTITIONER
100 OPHTHALMOLOGIST
110 SURGERY-ORTHOPEDIC
120 OTOLARYNGOLOGIST
122 LARYNGOLOGIST
124 OTOLOGIST
125 RHINOLOGIST
150 PEDIATRICIAN
151 PEDIATRIC CARDIOLOGIST
152 PEDIATRIC HEMATOLOGIST

				-145-
<page>

SPECIALTY CODES (cont'd)
CODE DESCRIPTION
153 SURGERY-PEDIATRIC
154 PEDIATRIC NEPHROLOGIST
155 PEDIATRIC NEONATAL/PERINATAL
156 PEDIATRIC ENDOCRINOLOGIST
157 PEDIATRIC ALLERGIST
158 RADIOLOGY PEDIATRIC
159 PEDIATRIC PULMONARY
160 PHYSICAL MEDICINE/REHABILITATION
161 OSTEOPATHIC MANIPULATIVE THERAPY
165 THERAPIST-SPEECH
166 THERAPIST-OCCUPATIONAL
167 THERAPIST-PHYSICAL
170 SURGERY-PLASTIC
171 SURGERY-PLASTIC, OTOLARYNGOLOGICAL FACIAL
175 ACUPUNCTURIST
176 ADOLESCENT MEDICINE
181 SURGERY-OBSTETRICAL
182 PREVENTIVE MEDICINE
183 OCCUPATIONAL MEDICINE
187 NUTRITIONIST
188 PHARMACOLOGIST
191 PEDIATRIC-PSYCHIATRIST
192 PSYCHIATRIST
195 PSYCHIATRIST AND NEUROLOGIST
200 RADIOLOGY
201 RADIOLOGY-DIAGNOSTIC
205 RADIOLOGY-THERAPEUTIC
210 SURGERY
211 SURGERY-ABDOMINAL
212 SURGERY-CARDIOVASCULAR
213 SURGERY-HAND
214 SURGERY-HEAD AND NECK
215 SURGERY-MAXILLOFACIAL
216 SURGERY-TRAUMA
217 SURGERY-UROLOGICAL
218 SURGERY-VASCULAR
219 SURGERY-GYNECOLOGICAL
220 SURGERY-THORACIC
230 UROLOGIST
241 ONCOLOGIST
250 EMERGENCY MEDICINE
251 CRITICAL CARE MEDICINE
441 SURGERY-OPHTHALMOLOGICAL
484 SURGERY-PODIATRIST
490 IMMUNOHEMATOLOGY
503 PHYSIOLOGICAL TESTING

				-146-
<page>

SPECIALTY CODES (cont'd)
CODE DESCRIPTION
600 OPTOMETRIST
650 PODIATRIST
714 EYE (LOW VISION SPECIALIST)
798 PHYSICIAN ASSISTANT
800 DENTIST-GENERAL
801 DENTIST-ORTHODONTURE
802 DENTIST-ENDODONTIST
803 DENTIST-ORAL PATHOLOGIST
804 DENTIST-PEDODONTIST
805 DENTIST-PROSTHODONTIST
806 DENTIST-PERIODONTIST
808 DENTIST-ORAL SURGEON
809 DENTIST-ANESTHESIOLOGIST
900 PROCEDURES-ANY CERTIFIED LAB
901 EMERGENCY ROOM PHYSICIANS
925 AUDIOLOGIST
927 CARDIOLOGIST
935 OTORHINOLARYNGOLOGIST (ENT)
943 PEDIATRIC ORTHOPEDIST
950 ORTHOPEDIST
958 GYNECOLOGICAL ONCOLOGY
963 PEDIATRIC HEMATOLOGY-ONCOLOGY
999 OTHER

				-147-
<page>

PROVIDER CONTRACT STATUS CODES
CODE 	PROVIDER CONTRACT STATUS
01 	PROVIDER CURRENTLY CONTRACTED WITH OFFEROR
02 	PROVIDER HAS SIGNED LETTER OF INTENT WITH OFFEROR

				-148-
<page>

PROVIDER NETWORK SUBMISSION FORM

Offeror Name _________________________________________

Total Record Count ___________________________________

This submission includes a network for the following GSA(s)

<TABLE>
<CAPTION>
---------------------------
              Yes      No
---------------------------
<S>           <C>      <C>
GSA 2
---------------------------
GSA 4
---------------------------
GSA 6
---------------------------
GSA 8
---------------------------
GSA 10
---------------------------
GSA 12
---------------------------
GSA 14
---------------------------
</TABLE>
				-149-
<page>

ATTACHMENT E: INSTRUCTIONS FOR PREPARING CAPITATION PROPOSAL

All capitation rate bid proposals (including and best and final offers, if
applicable) must be submitted to AHCCCSA via the AHCCCS Web Based Capitation
Rate Proposal application. A Capitation Rate Calculation Sheet (CRCS) must
be completed for every risk group in each Geographic Service Area (GSA) in
which the Offeror bids.

The Offeror must also use the Web application to print and submit Section B,
Capitation Rates, of the Request for Proposal (RFP). In the event that the
Web application bid submission differs from the bid submission included
with Section B of the RFP, the bid submitted via the Web application will
prevail. The first page of Section B should be the certification that the
capitation rates are actuarially sound by an actuary who is a member of the
American Academy of Actuaries.

The Web application will present the CRCS bid screens by:

a. Pharmacy expenditures included and without pharmacy expenditures
b. Geographic Service Area (GSA), and
c. Risk Group

The following is a list of the seven GSAs and the fifteen counties associated
to each GSA that will be effective 10/1/03.

GSA 	County or Counties
===============================================================================
2 	Yuma, La Paz
4 	Apache, Coconino, Mohave, and Navajo
6 	Yavapai
8 	Gila, Pinal
10 	Pima, Santa Cruz
12 	Maricopa
14 	Graham, Greenlee, Cochise

The following is a listing of the nine risk groups for which capitation rates
need to be bid. All nine risk groups apply to each GSA.

1. TANF <1
2. TANF 1-13
3. TANF 14-44 Female
4. TANF 14-44 Male
5. TANF 45+
6. SSI with Medicare
7. SSI without Medicare
8. SOBRA Family Planning
9. Delivery Supplemental Payment

Note: 1931s, KidsCare, SOBRA Children, SOBRA Mothers, and Breast and Cervical
Cancer Treatment Program populations are included in TANF risk groups. See the
Data Supplement for the roll up of rate codes in the nine risk groups.

				-150-
<page>

Detailed instructions for the Web application will be included within the Web
application at the time it becomes available. Instructions will also be made
available via a solicitation amendment. These instructions will include
general guidelines for the usage of the Web application as well as the
following items:

*Process to receive a unique ID and password for the Web application
*Application software requirements
*Customer technical support desk phone number

				-151-
<page>

ATTACHMENT F: PERIODIC REPORT REQUIREMENTS

The following table is a summary of the periodic reporting requirements for
AHCCCS acute care contractors and is subject to change at any time during the
term of the contract. The table is presented for convenience
only and should not be construed to limit the Contractor's responsibilities
in any manner. "Reporting Guide" refers to the Reporting Guide for Acute
Health Care Contractors with the Arizona Health Care Cost Containment System.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                                                         AHCCCS
           REPORT                               WHEN DUE                SOURCE/REFERENCE                 CONTACT:
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                         <C>                               <C>
Monthly Financial                      30 days after the end of    Reporting Guide                   Financial
Reporting Package                      the month, as applicable                                      Manager
--------------------------------------------------------------------------------------------------------------------
Quarterly Financial                    60 days after the end of    Reporting Guide                   Financial
Reporting Package                      each quarter                                                  Manager
--------------------------------------------------------------------------------------------------------------------
Draft Annual Financial                 90 days after the end of    Reporting Guide                   Financial
Reporting Package                      each fiscal year                                              Manager
--------------------------------------------------------------------------------------------------------------------
Final Annual Financial                 120 days after the end of   Reporting Guide                   Financial
Reporting Package                      each fiscal year                                              Manager
--------------------------------------------------------------------------------------------------------------------
Management Services                    120 days after the end of   Reporting Guide                   Financial
Subcontractor Audit Report             the subcontractor's fiscal                                    Manager
(if services >$50,000)                 year
--------------------------------------------------------------------------------------------------------------------
Physician Incentive Plan               To be determined            RFP Section D, Paragraph 42       Financial
(PIP) reporting                                                                                      Manager
--------------------------------------------------------------------------------------------------------------------
Provider Affiliation                   15 days after the end of    PMMIS Provider-to-Health          OMC, Health
Transmission                           each quarter                Plan FTP submission and           Plan Operations
                                                                   processing
--------------------------------------------------------------------------------------------------------------------
Corrected Pended                       Monthly, according to       Encounter Manual                  Encounter
Encounter Data                         established schedule                                          Administrator
--------------------------------------------------------------------------------------------------------------------
New Day Encounter                      Monthly, according to       Encounter Manual                  Encounter
                                       established schedule                                          Administrator
--------------------------------------------------------------------------------------------------------------------
Medical Records for Data               90 days after the request   RFP Attachment I, Encounter       Encounter
Validation                             received from               Submission Requirements           Administrator
                                       AHCCCSA
--------------------------------------------------------------------------------------------------------------------
Quarterly Grievance and                45 days after the end of    RFP Section D, Paragraph 26       Office of Legal
Appeals Report                         each quarter                                                  Assistance
--------------------------------------------------------------------------------------------------------------------
Comprehensive EPSDT                    Annually on December        RFP Section D, Paragraph 24       OMM/CQM
Plan including Dental                  15th
--------------------------------------------------------------------------------------------------------------------
EPSDT Progress Report                  15 days after the end of    AMPM, Chapter 400                 OMM/CQM
including Dental - Quarterly           each quarter
Update
--------------------------------------------------------------------------------------------------------------------
Quarterly Inpatient Hospital           15 days after the end of    State Medicaid Manual and         OMM CSM
Showing                                each quarter                the AMPM, Chapter 1000
--------------------------------------------------------------------------------------------------------------------
Quality Management                     Annually on December        AMPM, Chapter 900                 OMM/CQM
Utilization Management                 15th
Plan and Evaluation
--------------------------------------------------------------------------------------------------------------------
Monthly Pregnancy                      End of the month            AMPM, Chapter 400                 OMM/CQM
Termination Report                     following the pregnancy
                                       termination
--------------------------------------------------------------------------------------------------------------------
</TABLE>

				-152-
<page>

<TABLE>
-------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                          <C>                               <C>
Maternity Care Plan                      Annually on December         AMPM, Chapter 400                 OMM/CQM
                                         15th
-------------------------------------------------------------------------------------------------------------------------
Semi-annual report of                    30 days after the end of     AMPM, Chapter 400                 OMM/CQM
number of pregnant women                 the 2nd and 4th quarter
who are HIV/AIDS positive                of each contract year
-------------------------------------------------------------------------------------------------------------------------
Provider Network                         45 days after the first day  RFP Section D, Paragraph 27       OMC, Health
Development and                          of a new contract year                                         Plan Operations
Management Plan
-------------------------------------------------------------------------------------------------------------------------
Cultural Competency Plan                 45 days after the first day  AHCCCS Cultural                   OMC, Health
                                         of a new contract year       Competency Policy                 Plan Operations
-------------------------------------------------------------------------------------------------------------------------
Quality Improvement                      Annually on December         AMPM, Chapter 900                 OMM/CQM
Project Proposal                         15th
(initial/baseline year of the
project)
-------------------------------------------------------------------------------------------------------------------------
Quality Improvement                      Annually on December         AMPM, Chapter 900                 OMM/CQM
Project Interim Report                   15th
(intervention/measurement
year(s) of the project)
-------------------------------------------------------------------------------------------------------------------------
Quality Improvement                      Within 180 days of the       AMPM Chapter 900                  OMM/CQM
Project Final Report                     end of the project, as
                                         defined in the project
                                         proposal approved by
                                         AHCCCS OMM
-------------------------------------------------------------------------------------------------------------------------
Provider Fraud/Abuse                     Immediately following        RFP Section D, Paragraph 62       Office of
Report                                   discovery                                                      Program Integrity
                                                                                                        Manager
-------------------------------------------------------------------------------------------------------------------------
Eligible Person                          Immediately following        RFP Section D, Paragraph 62       Office of
Fraud/Abuse Report                       discovery                                                      Program Integrity
                                                                                                        Manager
-------------------------------------------------------------------------------------------------------------------------
Non-Transplant                           Annually, within 30 days     RFP Section D, Paragraph 57       OMC
Catastrophic Reinsurance                 of the beginning of the                                        Reinsurance
covered Diseases                         contract year, enrollment                                      Manager
                                         to the plan, and when
                                         newly diagnosed.
-------------------------------------------------------------------------------------------------------------------------
Prescription Drug                        Monthly, within 45 days      AMPM                              Pharmacy
Utilization Report*                      of month end                                                   Program
                                                                                                        Administrator
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

				-153-
<page>

ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM

Members who do not have the right to choose a Contractor or members who have
the right to choose but do not exercise this right, are assigned to a
Contractor through an auto-assignment algorithm. The algorithm is a
mathematical formula used to distribute members to the various Contractors in
a manner that is predictable and consistent with AHCCCSA goals.

The algorithm employs a data table and a formula to assign cases (a case may
be a member or a household of members) to Contractors using the target
percentages developed. The algorithm data table consists of all the
geographic service areas (GSA) in the state, all Contractors serving each GSA,
and the target percentages by risk group within each GSA.

The Contractor farthest away from its target percentage within a GSA and risk
group, the largest negative difference, is assigned the next case for that GSA.
The equation used is:

				(t/T) - P = d

t = The total members assigned to the GSA, per risk group category, for the
    Contractor
T = The total members assigned to the GSA, per risk group category, all
    Contractors combined
P = The target percentage of members per risk group for the Contractor
d = The difference

The algorithm is calculated after each assignment to give a new difference for
each Contractor. When more than one Contractor has the same difference, and
their differences are greater than all other Contractors, the Contractor
with the lowest Health Plan I.D. Number will be assigned the case.

Assignment by the algorithm applies to:

1. Members that are newly eligible to the AHCCCS program that did not choose a
   Contractor within the prescribed time limits.

2. Members whose assigned health plan is no longer available after the member
   moves to a new GSA and did not choose a new Contractor within the prescribed
   time limits.

3. Members whose assigned plan is no longer available at the beginning of a
   contract cycle that did not choose a Contractor within the prescribed time
   limits.

All Contractors, within a given geographic service area (GSA) and for each risk
group, will have a placement in the algorithm and will receive members
accordingly. A Contractor with a more favorable target percentage in the
algorithm will receive proportionally more members. Conversely, a Contractor
with a lower target percentage in the algorithm will receive proportionally
fewer members. The algorithm favors Contractors with both lower final
bids and awarded rates. The algorithm also favors those Contractors with
programs that score higher based on AHCCCSA's evaluation criteria.

For Contractors in the Maricopa and Pima/Santa Cruz GSAs with fewer than
25,000 members statewide, a temporary adjustment will be made to the algorithm
formula in order to ensure a minimum membership (see the discussion entitled
"Adjustment Methodology for Contractors with Fewer than 25,000 Members" for
more information).

				-154-
<page>

Development of the Target Percentages

For the first year of the contract, the algorithm target percentages will be
developed using the methodology described below. However, for subsequent
years, AHCCCS reserves the right to change the algorithm methodology to
assure assignments are made in the best interest of the AHCCCS program and
the State.

A Contractor's placement in the algorithm is based upon the following three
factors, which are weighted as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
#                                           FACTOR                                          WEIGHTING
-----------------------------------------------------------------------------------------------------
<S>        <C>                                                                              <C>
1          The final capitation rate bid submitted by the Contractor. Final bids               30%
           that are below the bottom of the rate range will be assigned to the bottom
           of the rate range for development of the target percentages.
-----------------------------------------------------------------------------------------------------
2          The Contractor's final awarded rate from AHCCCSA.                                   30%
-----------------------------------------------------------------------------------------------------
3          The Contractor's score on the Program component of the proposal.                    40%
-----------------------------------------------------------------------------------------------------
</TABLE>

Points will be assigned to each Contractor by risk group by GSA. Based on the
rankings of the final bid rates and the final awarded rates, each Contractor
will be assigned a number of points for each of these two components
separately as follows:

TABLE FOR FACTORS #1 AND #2
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                2nd        3rd       4th       5th       6th       7th
NUMBER OF AWARDS    LOWEST     LOWEST     LOWEST    LOWEST    LOWEST    LOWEST    LOWEST
     IN GSA          RATE       RATE       RATE      RATE      RATE      RATE      RATE
----------------------------------------------------------------------------------------
<S>                 <C>        <C>        <C>       <C>       <C>       <C>       <C>
      2               60         40
----------------------------------------------------------------------------------------
      3               44         32         24
----------------------------------------------------------------------------------------
      4               35         28         22        15
----------------------------------------------------------------------------------------
      5               30         25         20        15        10
----------------------------------------------------------------------------------------
      6               26         23         19        15        11         6
----------------------------------------------------------------------------------------
      7               25         20         17        14        11         8        5
----------------------------------------------------------------------------------------
</TABLE>

Contractors that have equal bids in a GSA for the same risk group will be given
an equal percentage of the points for all of the positions combined.

The third component of the calculation, program scores, will be assigned a
number of points based on the Contractor's ranking among the scores. The
higher the score, the more points assigned. For this component, points will
be assigned as follows:

TABLE FOR FACTOR #3
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                             2nd        3rd         4th        5th        6th       7th
NUMBER OF     HIGHEST      HIGHEST    HIGHEST     HIGHEST    HIGHEST    HIGHEST   HIGHEST
AWARDS IN     PROGRAM      PROGRAM    PROGRAM     PROGRAM    PROGRAM    PROGRAM   PROGRAM
  GSA          SCORE        SCORE      SCORE       SCORE      SCORE      SCORE     SCORE
-----------------------------------------------------------------------------------------
<S>           <C>          <C>        <C>         <C>        <C>        <C>       <C>
   2            60            40
-----------------------------------------------------------------------------------------
   3            44            32         24
-----------------------------------------------------------------------------------------
   4            35            28         22         15
-----------------------------------------------------------------------------------------
   5            30            25         20         15         10
-----------------------------------------------------------------------------------------
   6            26            23         19         15         11          6
-----------------------------------------------------------------------------------------
   7            25            20         17         14         11          8         5
-----------------------------------------------------------------------------------------
</TABLE>

				-155-
<page>

Contractors that have equal program scores will be given an equal percentage
of the points for all of the positions combined.

The points awarded for the three components will be combined as follows to
give the target percentage for each Contractor by GSA by risk group:

Final Bid Points (.30) + Awarded Bid Points (.30) + Program Score Points (.40)
= TARGET PERCENTAGE
100

Adjustment Methodology for Contractors with Fewer than 25,000 Members

At the beginning of the new contract cycle, the auto-assignment algorithm for
the Maricopa and Pima/Santa Cruz GSAs will be adjusted to favor Contractors
with fewer than 25,000 members statewide. The adjusted algorithm
will be utilized until a target membership of 25,000 members statewide, per
Contractor, is reached.

The adjustment will be made to the final percentages developed using the
methodology above. A pre-determined percentage, based on the table below,
will be added to the affected Contractor(s) and subtracted evenly from the
other Contractors.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                       PERCENTAGE ADDED
                                              TO             PERCENTAGE TO BE EVENLY
NUMBER OF CONTRACTORS BELOW 25,000         TARGETED         SUBTRACTED FROM REMAINING
   STATEWIDE MINIMUM ENROLLMENT           CONTRACTORS                BIDDERS
--------------------------------------------------------------------------------------
<S>                                    <C>                  <C>
               1                             20%                        20%
--------------------------------------------------------------------------------------
               2                             15%                        30%
--------------------------------------------------------------------------------------
               3                             10%                        30%
--------------------------------------------------------------------------------------
</TABLE>

*In the event that there are more than three affected Contractors, AHCCCS
will disclose adjustment methodology by July 1, 2003.

In the event that a Contractor only receives an award in rural GSAs, AHCCCS
reserves the right to make a temporary adjustment to the auto-assignment target
to favor the new Contractor until a minimum enrollment is reached.

AHCCCSA reserves the right to adjust capitation rates for potential changes to
the populations risk due to the adjusted algorithm.

				-156-
<page>

ATTACHMENT H (1): ENROLLEE GRIEVANCE SYSTEM STANDARDS AND POLICY

The Contractor shall have a written policy delineating its Grievance System
which shall be in accordance with applicable Federal and State laws,
regulations and policies, including, but not limited to 42 CFR Part 438 Subpart
F. The Contractor shall provide the Enrollee Grievance System Policy to all
providers and subcontractors at the time of contract. The Contractor shall
also furnish this information to its enrollees within a reasonable time after
the Contractor receives notice of the recipient's enrollment. Additionally,
the Contractor shall provide written notification of any significant change
in this policy at least 30 days before the intended effective date of the
change.

The written information provided to enrollees describing the Grievance System
including the grievance process, enrollee rights, grievance system
requirements and timeframes, shall be in each prevalent non-English language
occurring within the Contractor's service area and in an easily understood
language and format. The Contractor shall inform enrollees that oral
interpretation services are available in any language, that additional
information is available in prevalent non-English languages upon request
and how enrollees may obtain this information.

Written documents, including but not limited to the Contractor's Notice of
Action, the Notice of Contractor's Appeal/Grievance Resolution, Notice of
Contractor Extension for Resolution, and Notice of Contractor Extension
of Notice of Action shall be translated in the enrollee's language if
information is received by the Contractor, orally or in writing, indicating
that the enrollee has a limited English proficiency. Otherwise, these documents
shall be translated in the prevalent non-English language(s) or shall contain
information in the prevalent non-English language(s) advising the enrollee
that the information is available in the prevalent non-English language(s)
and in alternative formats along with an explanation of how enrollees may
obtain this information. This information must be in large, bold print
appearing in a prominent location on the first page of the document.

At a minimum, the Contractor's Grievance System Standards and Policy shall
specify:

*That the Contractor shall maintain records of all grievances and appeals.

*Information describing the grievance, appeal, and fair hearing procedures
 and timeframes describing the right to hearing, the method for obtaining a
 hearing, the rules which govern representation at the hearing, definitions
 of "action," "grievance," and "appeal," the right to file grievances and
 appeals and the requirements and timeframes for filing a grievance or
 appeal.

*Information explaining that a provider acting on behalf of an enrollee and
 with the enrollee's written consent, may file an appeal or grievance.

*The availability of assistance in the filing process and the Contractor's
 toll-free numbers that an enrollee can use to file a grievance or appeal by
 phone if requested by the enrollee.

*That an enrollee shall be given no less than 20 days (and no more than 90
 days) from the date of the Contractor's Notice of Action to file an appeal.

*That the Contractor shall mail a Notice of Action: 1) at least 10 days before
 the date of a termination, suspension or reduction of previously authorized
 AHCCCS services (include exception situations, fraud, move out of state);
 2) at the time of any action affecting the claim when there has been a
 denial of payments; 3) within 14 calendar days from receipt of a request for
 a standard service authorization which has been denied or reduced unless an
 extension is in effect; 4) within three working days from receipt of an
 expedited service authorization request unless an extension is in effect.

				-157-
<page>

*That the Notice of Action must explain: 1) the action the Contractor has taken
 or intends to take, 2) the reasons for the action, 3) the enrollee's right to
 file an appeal with the Contractor, 4) the enrollee's right to request a State
 fair hearing if no exhaustion of the Contractor's appeal process is required,
 5) the procedures for exercising these rights, 6) circumstances
 when expedited resolution is available and how to request it and 7) the
 enrollee's right to request continued benefits pending resolution of the
 appeal, how to request continued benefits and the circumstances under which
 the enrollee may be required to pay for the cost of these services.

*That the Contractor shall permit both oral and written appeals and grievances
 and that oral inquiries appealing an action are treated as appeals and are
 confirmed in writing unless expedited resolution is requested.

*That the Contractor shall acknowledge receipt of each grievance and appeal.

*The definition of a standard appeal and that the Contractor shall resolve
 standard appeals no  later than 45 days from the date of receipt of the appeal.

*The definition of an expedited appeal and that the Contractor shall resolve
 all expedited appeals not later than three working days from the date the
 Contractor receives the appeal where the Contractor determines, or the provider
 in making the request on the enrollee's behalf indicates, that standard
 resolution timeframe could seriously jeopardize the enrollee's
 life or health or ability to attain, maintain or regain maximum function.
 The Contractor shall make reasonable efforts to provide oral notice to an
 enrollee regarding an expedited resolution appeal.

*The standard and expedited resolution timeframes may be extended up to 14
 calendar days if the enrollee requests the extension or if the Contractor
 establishes a need for additional information and that the delay is in the
 enrollee's interest.

*That if the Contractor extends the timeframe for resolution of a grievance or
 appeal when not requested by the enrollee, the Contractor shall provide the
 enrollee with written notice of the reason for the delay.

*That an enrollee may file an appeal of: 1) the denial or limited authorization
 of a requested service including the type or level of service, 2) the
 reduction, suspension or termination of a previously authorized service,
 3) the denial in whole or in part of payment for service, 4) the
 failure to provide services in a timely manner, 5) the failure of the
 Contractor to comply with the timeframes for dispositions of grievances and
 appeals and 6) the denial of a rural enrollee's request to obtain services
 outside the Contractor's network when the Contractor is the only Contractor
 in the rural area.

*That benefits shall continue only if: 1) the enrollee files an appeal before
 the later of a) 10 days from the mailing of the Notice of Action or b) the
 intended date of the Contractor's action, 2) the appeal involves the
 termination, suspension, or reduction of a previously authorized course of
 treatment, 3) the services were ordered by an authorized provider, 4) the
 original period covered by the original authorization has not expired, and 5)
 the enrollee requests a continuation of benefits.

				-158-
<page>

*That the Contractor continues extended benefits originally provided to the
 enrollee until any of the following occurs: 1) enrollee withdraws appeal,
 2) enrollee has not specifically requested continued benefits pending a
 hearing decision within 10 days of MCO/PIHP mailing appeal resolution notice,
 3) State hearing office issues decision adverse to enrollee or 4) time period
 or service limits of a previously authorized service has been met.

*That for appeals, the Contractor provides the enrollee a reasonable
 opportunity to present evidence and allegations of fact or law in person
 and in writing and that the Contractor informs the enrollee of the limited
 time available in cases involving expedited resolution.

*That for appeals, the Contractor provides the enrollee and his representative
 the opportunity before and during the appeals process to examine the
 enrollee's case file including medical records and other documents
 considered during the appeals process.

*That if the Contractor denies a request for expedited resolution, it must
 make reasonable efforts to give the enrollee prompt oral notice and follow-up
 within two calendar days with a written notice of the denial of expedited
 resolution.

*That the Contractor shall ensure that individuals who make decisions
 regarding grievance and appeals are individuals not involved in any previous
 level of review or decision making and that individuals who make decisions
 regarding: 1) appeals of denials based on lack of medical necessity, 2) a
 grievance regarding denial of expedited resolution of an appeal or 3)
 grievances or appeals involving clinical issues are health care professionals
 as defined in 42 CFR 438.2 with the appropriate clinical expertise in treating
 the enrollee's condition or disease.

*That the Contractor shall provide written notice of the disposition of each
 appeal which must contain: 1) the results of the resolution process and the
 date it was completed, 2) for appeals not resolved wholly in favor of
 enrollees: a) the enrollee's right to request a State fair hearing
 and how to do so, b) the right to receive benefits pending the hearing and how
 to request continuation of benefits and c) information explaining that the
 enrollee may be held liable for the cost of benefits if the hearing decision
 upholds the Contractor.

*That if the Contractor's decision is appealed and a request for hearing is
 filed, the Contractor must ensure that all supporting documentation is received
 by the AHCCCSA, Office of Legal Assistance, no later than five working days
 from the date the Contractor receives the verbal or written request from
 AHCCCSA, Office of Legal Assistance. The file sent by the Contractor
 must contain a cover letter that includes:

1. Complainant's name
2. Complainant's AHCCCS I.D. number
3. Complainant's address
4. Complainant's phone number (if applicable)
5. date of receipt of grievance or appeal
6. summary of the Contractor's actions undertaken to resolve the grievance and
   basis of the determination

				-159-
<page>

*The following material shall be included in the file sent by the Contractor:

1. written request of the Complainant asking for the request for hearing
2. copies of the entire file which includes the investigations and/or medical
   records; and the Contractor's resolution
3. other information relevant to the resolution of the grievance or appeal

*That if the Contractor or the State fair hearing decision reverses a decision
 to deny, limit or delay services not furnished while the appeal was pending,
 the Contractor shall authorize or provide the services promptly and as
 expeditiously as the enrollee's health condition requires.

*That if the Contractor or State fair hearing decision reverses a decision to
 deny authorization of services and the disputed services were received
 pending appeal, the Contractor shall pay for those services.

				-160-
<page>

ATTACHMENT H (2): PROVIDER GRIEVANCE SYSTEM STANDARDS AND POLICY

The Contractor shall have in place a written grievance system policy for
providers regarding adverse actions taken by the Contractor. The policy shall
be in accordance with applicable Federal and State laws, regulations
and policies. The grievance policy shall include the following provisions:

a. The grievance policy shall be provided to all subcontractors at the time
   of contract. For providers without a contract, the grievance policy may be
   mailed with a remittance advice, provided the remittance is sent within
   45 days of receipt of a claim.

b. The grievance policy must specify that all grievances, with the
   exception of those challenging claim denials, must be filed with the
   Contractor no later than 60 days from the date of the adverse action.
   Grievances challenging claim denials must be filed in writing with the
   Contractor no later that 12 months from the date of service, 12 months
   after the date of eligibility posting or within 60 days after
   the date of a timely claim submission, whichever is later.

c. Specific individuals are appointed with authority to require corrective
   action and with requisite experience to administer the grievance process.

d. A log is maintained for all grievances containing sufficient information
   to identify the Complainant, date of receipt, nature of the grievance and
   the date the grievance is resolved. Separate logs must be maintained for
   provider and member grievances

e. Within five working days of receipt, the Complainant is informed by letter
   that the grievance has been received.

f. Each grievance is thoroughly investigated using the applicable statutory,
   regulatory, contractual and policy provisions, ensuring that facts are
   obtained from all parties.

g. All documentation received and mailed by the Contractor during the grievance
   process is dated upon receipt.

h. All grievances are filed in a secure designated area and are retained for
   five years following the Contractor's decision, the Administration's
   decision, judicial appeal or close of the grievance, whichever is later.

i. A copy of the Contractor's decision will be either hand-delivered or
   delivered by certified mail to all parties whose interest has been
   adversely affected by the decision. The decision shall be mailed to all
   other individuals by regular mail. The date of the decision shall be the
   date of personal delivery or, if mailed, the postmark date of the mailing.
   The decision must include and describe in detail, the following:

1. the nature of the grievance
2. the issues involved
3. the reasons supporting the Contractor's decision, explained in easy to
   understand terms for members, including references to applicable statute,
   rule, applicable contractual provisions, policy and procedure
4. the Complainant's right to request a hearing by filing the request for
   hearing to the Contractor no later than 30 days after the date of the
   Contractor's decision.

j. If the Contractor's decision is appealed and a request for hearing is filed,
   the Contractor must ensure that all supporting documentation is received by
   the AHCCCSA, Office of Legal Assistance, no later than five working days
   from the date the Contractor receives the verbal or written request from
   AHCCCSA, Office of Legal Assistance. The file sent by the Contractor must
   contain a cover letter that includes:

1. Complainant's name
2. Complainant's AHCCCS ID number
3. Complainant's address

				-161-
<page>

4. Complainant's phone number (if applicable)
5. the date of receipt of grievance
6. a summary of the Contractor's actions undertaken to resolve the grievance
   and basis of the determination

k. The following material shall be included in the file sent by the Contractor:

1. written request of the Complainant asking for the request for hearing
2. copies of the entire file which includes the investigations and/or medical
   records; and the Contractor's decision
3. other information relevant to the resolution of the grievance

				-162-
<page>

ATTACHMENT I: ENCOUNTER SUBMISSION REQUIREMENTS

The Contractor will be assessed sanctions for noncompliance with encounter
submission requirements. AHCCCSA may also perform special reviews of encounter
data, such as comparing encounter reports to the Contractor's claims files.
Any findings of incomplete or inaccurate encounter data may result in the
imposition of sanctions or requirement of a corrective action plan.

Pended Encounter Corrections

The Contractor must resolve all pended encounters within 120 days of the
original processing date. Sanctions will be imposed according to the
following schedule for each encounter pended for more than 120 days unless
the pend is due to AHCCCSA error:

0-120 days   121-180 days  181-240 days   241-360 days   361 + days
No sanction  $ 5 per month $ 10 per month $ 15 per month $ 20 per month

"AHCCCSA error" is defined as a pended encounter, which (1) AHCCCSA
acknowledges to be the result of its own error, and (2) requires a change
to the system programming, an update to the database reference table,
or further research by AHCCCSA. AHCCCSA reserves the right to adjust the
sanction amount if circumstances warrant.

When the Contractor notifies AHCCCSA, in writing, that the resolution of a
pended encounter depends on AHCCCSA rather than the Contractor, AHCCCSA will
respond in writing within 30 days of receipt of such notification. The
AHCCCSA response will report the status of each pending encounter problem or
issue in question.

Pended encounters will not qualify as AHCCCSA errors if AHCCCSA reviews the
Contractor's notification and asks the Contractor to research the issue and
provide additional substantiating documentation, or if AHCCCSA disagrees with
the Contractor's claim of AHCCCSA error. If a pended encounter being
researched by AHCCCSA is later determined not to be caused by AHCCCSA error,
the Contractor may be sanctioned retroactively.

Before imposing sanctions, AHCCCSA will notify the Contractor, in writing, of
the total number of sanctionable encounters pended more than 120 days. Pended
encounters shall not be deleted by the Contractor as a means of avoiding
sanctions for failure to correct encounters within 120 days. The Contractor
shall document deleted encounters and shall maintain a record of the deleted
CRNs with appropriate reasons indicated. The Contractor shall, upon
request, make this documentation available to AHCCCSA for review.

Encounter Validation Studies

Per CMS requirement, AHCCCSA will conduct encounter validation studies of
the Contractor's encounter submissions, and sanction the Contractor for
noncompliance with encounter submission requirements. The purpose of encounter
validation studies is to compare recorded utilization information from a
medical record or other source with the Contractor's submitted encounter data.
Any and all covered services may be validated as part of these studies.
Encounter validation studies will be conducted at least yearly.

AHCCCSA may revise study methodology, timelines, and sanction amounts based on
agency review or as a result of consultations with CMS. The Contractor will
be notified in writing of any significant change in study methodology.

				-163-
<page>

AHCCCSA will conduct two encounter validation studies. Study "A" examines
non-institutional services (form HCFA 1500 encounters), and Study "B"
examines institutional services (form UB-92 encounters).

AHCCCSA will notify the Contractor in writing of the sanction amounts and of
the selected data needed for encounter validation studies. The Contractor will
have 90 days to submit the requested data to AHCCCSA. In the case of medical
records requests, the Contractor's failure to provide AHCCCSA with the records
requested within 90 days may result in a sanction of $1,000 per missing
medical record. If AHCCCSA does not receive a sufficient number of medical
records from the Contractor to select a statistically valid sample for a
study, the Contractor may be sanctioned up to 5% of its annual capitation
payment.

The criteria used in encounter validation studies may include timeliness,
correctness, and omission of encounters. These criteria are defined as follows:

Timeliness: The time elapsed between the date of service and the date that the
encounter is received at AHCCCS. All encounters must be received by AHCCCSA
no later than 240 days after the end of the month in which the service was
rendered, or the effective date of enrollment with the Contractor, whichever
is later. For all encounters for which timeliness is evaluated, a sanction
per encounter error extrapolated to the population of encounters may be
assessed if the encounter record is received by AHCCCSA more than 240
days after the date determined above. It is anticipated that the sanction
amount will be $1.00 per error extrapolated to the population of encounters;
however, sanction amounts may be adjusted if AHCCCSA determines that
encounter quality has changed, or if CMS changes sanction requirements. The
Contractor will be notified of the sanction amount in effect for the studies
at the time the studies begin.

Correctness: A correct encounter contains a complete and accurate description
of AHCCCS covered services provided to a member. A sanction per encounter
error extrapolated to the population of encounters may be assessed if the
encounter is incomplete or incorrectly coded. It is anticipated that the
sanction amount will be $1.00 per error extrapolated to the population of
encounters; however, sanction amounts may be adjusted if AHCCCSA determines
that encounter quality has changed, or if CMS changes sanction requirements.
The Contractor will be notified of the sanction amount in effect for the
studies at the time the studies begin.

Omission of data: An encounter not submitted to AHCCCSA or an encounter
inappropriately deleted from AHCCCSA's pending encounter file or historical
files in lieu of correction of such record. For Study "A" and for Study "B",
a sanction per encounter error extrapolated to the population of encounters
may be assessed for an omission. It is anticipated that the sanction amount
will be $5.00 per error extrapolated to the population of encounters for
Study "A" and $10.00 per error extrapolated to the population of encounters
for Study "B"; however, sanction amounts may be adjusted if AHCCCSA
determines that encounter quality has changed, or if CMS changes sanction
requirements. The Contractor will be notified of the sanction amount in effect
for the studies at the time the studies begin.

For encounter validation studies, AHCCCSA will select all approved and pended
encounters to be studied no earlier than 240 days after the end of the
month in which the service was rendered. Once AHCCCSA has selected the
Contractor's encounters for encounter validation studies, subsequent
encounter submissions for the period being studied will not be considered.

AHCCCSA may review all of the Contractor's submitted encounters, or may select
a sample. The sample size, or number of encounters to be reviewed, will be
determined using statistical methods in order to accurately
estimate the Contractor's error rates. Error rates will be calculated by
dividing the number of errors found by the number of encounters reviewed.
A 95% confidence interval will be used to account for limitations caused
by sampling. The confidence interval shows the range within which the true
error rate is estimated to be. If error rates are based on a sample, the
error rate used for sanction purposes will be the lower limit of the
confidence interval.

				-164-
<page>

Encounter validation methodology and statistical formulas are provided in the
AHCCCS Encounter Data Validation Technical Document, which is available in the
Bidders Library. This document also provides examples, which illustrate how
AHCCCSA determines study sample sizes, error rates, confidence intervals,
and sanction amounts.

Written preliminary results of all encounter validation studies will be sent
to the Contractor for review and comment. The Contractor will have a maximum
of 30 days to review results and provide AHCCCSA with additional documentation
that would affect the final calculation of error rates and sanctions. AHCCCSA
will examine the Contractor's documentation and may revise study results if
warranted. Written final results of the study will then be sent to the
Contractor and communicated to CMS, and any sanctions will be assessed.

The Contractor may file a written challenge to sanctions assessed by AHCCCSA
not more than 35 days after the Contractor receives final study results from
AHCCCSA. Challenges will be reviewed by AHCCCSA and a written decision will
be rendered no later than 60 days from the date of receipt of a timely
challenge. Sanctions shall not apply to encounter errors successfully
challenged. A challenge must be filed on a timely basis and a decision must
be rendered by AHCCCSA prior to filing a grievance and request for hearing
pursuant to Article 8 of AHCCCS Rules. Sanction amounts will be deducted
from the Contractor's capitation payment.

Encounter Corrections

Contractors are required to submit replacement or voided encounters in the
event that claims are subsequently corrected following the initial encounter
submission. This includes corrections as a result of inaccuracies
identified by fraud and abuse audits or investigations conducted by AHCCCSA
or the Contractor. Contractors shall refer to the Encounter Reporting User
Manual for instructions regarding submission of corrected encounters.

				-165-
<page>

ATTACHMENT J: EPSDT PERIODICITY SCHEDULE

AHCCCS EPSDT PERIODICITY SCHEDULE

<TABLE>
<CAPTION>
======================================================================================================================
                                             INFANCY                          EARLY CHILDHOOD         MIDDLE CHILDHOOD
                          -------------------------------------------    --------------------------   ----------------
                           new  2-4  by 1   2    4     6     9     12    15    18    24    3     4     5     6     8
     PROCEDURES           born  day   mo   mo    mo    mo    mo    mo    mo    mo    mo    yr    yr    yr    yr    yr
----------------------------------------------------------------------------------------------------------------------
<S>                       <C>   <C>  <C>   <C>    <C>  <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
History Initial/Interval   x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Height & Weight            x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Head Circumference         x     x    x     x    x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Blood Pressure                                                                             x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Nutritional Assessment     x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Vision**
----------------------------------------------------------------------------------------------------------------------
Hearing**/Speech
----------------------------------------------------------------------------------------------------------------------
Dev./Behavioral Assess.    x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Physical Examination       x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Immunization             <-x----------->    x    x     x           <-----x------>                <-----x----->
----------------------------------------------------------------------------------------------------------------------
Tuberculin Test                                                    +     +     +     +     +     +     +     +     +
----------------------------------------------------------------------------------------------------------------------
Hematocrit/Hemoglobin                 <----------------------x->
----------------------------------------------------------------------------------------------------------------------
Urinalysis                                                                                             x
----------------------------------------------------------------------------------------------------------------------
Lead Screen
----------------------------------------------------------------------------------------------------------------------
    Verbal                                             x     x           x     x           x     x     x     x
----------------------------------------------------------------------------------------------------------------------
    Blood                                                          x                 x     x*    x*    x*    x*
----------------------------------------------------------------------------------------------------------------------
Anticipatory Guidance      x     x    x     x    x     x     x     x     x     x     x     x     x     x     x     x
----------------------------------------------------------------------------------------------------------------------
Dental Referral**
======================================================================================================================

<CAPTION>
========================================================================
                                             ADOLESCENCE
                             -------------------------------------------
                             10    12    14    16    18
     PROCEDURES              yr    yr    yr    yr    yr   20+up to 21 yr
------------------------------------------------------------------------
<S>                          <C>   <C>   <C>   <C>   <C>  <C>
History Initial/Interval     x     x     x     x     x          x
------------------------------------------------------------------------
Height & Weight              x     x     x     x     x          x
------------------------------------------------------------------------
Head Circumference
------------------------------------------------------------------------
Blood Pressure               x     x     x     x     x          x
------------------------------------------------------------------------
Nutritional Assessment       x     x     x     x     x          x
------------------------------------------------------------------------
Vision**
------------------------------------------------------------------------
Hearing**/Speech
------------------------------------------------------------------------
Dev./Behavioral Assess.      x     x     x     x     x          x
------------------------------------------------------------------------
Physical Examination         x     x     x     x     x          x
------------------------------------------------------------------------
Immunization                   <---x------>
------------------------------------------------------------------------
Tuberculin Test              +     +     +     +     +          +
------------------------------------------------------------------------
Hematocrit/Hemoglobin              <-----x--------------------------->
------------------------------------------------------------------------
Urinalysis                         <-----x--------------------------->
------------------------------------------------------------------------
Lead Screen
------------------------------------------------------------------------
    Verbal
------------------------------------------------------------------------
    Blood
------------------------------------------------------------------------
Anticipatory Guidance        x     x     x     x     x          x
------------------------------------------------------------------------
Dental Referral**
========================================================================
</TABLE>

These are minimum requirements. If at any time other procedures, tests, etc. are
medically indicated, the physician is obligated to perform them. If a child
comes under care for the first time at any point on the schedule, or if any
items are not accomplished at the suggested age, the schedule should be brought
up to date at the earliest possible time.

Key: x = to be completed   + = to be performed for members at risk when
                               indicated.

<----x----> = the range during which a service may be provided, with the x
    indicating the preferred age.

*   Members not previously screened who fall within this range (36 to 72 months
    of age) must have a blood lead screen performed.

**  See separate schedule for detail.

*** If American Academy of Pediatrics guidelines are used for the screening
    schedule and/or more screenings are medically necessary, those additional
    interperiodic screenings will be covered

				-166-
<page>

                   ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
                           DENTAL PERIODICITY SCHEDULE

<TABLE>
<CAPTION>
=============================================================================================================================
             MONTHS                                                     YEARS
-----------------------------------------------------------------------------------------------------------------------------
           Birth thru 36
              months											               20+ up
Procedure               3    4    5    6    7    8    9    10    11    12    13    14    15    16    17    18    19    to 21
----------------------------------------------------------------------------------------------------------------------------
<S>        <C>         <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>  <C>
Dental          +       x    x    x    x    x    x    x    x     x     x     x     x     x     x     x     x     x       x
Referral
=============================================================================================================================
</TABLE>

REFERRALS FOR ROUTINE DENTAL VISITS SHOULD BEGIN AT AGE THREE (3). EARLIER
INITIAL DENTAL EVALUATIONS MAY BE APPROPRIATE FOR SOME CHILDREN. SUBSEQUENT
EXAMINATIONS AS PRESCRIBED BY DENTIST.

KEY:  + = BIRTH TO 36 MONTHS IF INDICATED

      x = TO BE COMPLETED

				-167-
<page>

		ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
			VISION PERIODICITY SCHEDULE

<TABLE>
<CAPTION>
=============================================================================================================================
                                      MONTHS                                                     YEARS
-----------------------------------------------------------------------------------------------------------------------------
            New   2 - 4  by 1
Procedure   born   Days   mo   2    4    6   9    12    15    18    24    3*  4    5   6    8    10    12   14    16    18
-----------------------------------------------------------------------------------------------------------------------------
<S>         <C>   <C>    <C>   <C>  <C>  <C> <C>  <C>   <C>   <C>   <C>   <C> <C>  <C> <C>  <C>  <C>   <C>  <C>   <C>   <C>
Vision +++   S      S     S    S    S    S   S    S     S     S     S     O   O    O   S    S    O     O    S     S     O
=============================================================================================================================

<CAPTION>
============================
            YEARS
----------------------------
	    20+ up
	    to 21 yr
----------------------------
<S>	    <C>
Vision +++  S
============================
</TABLE>

THESE ARE MINIMUM REQUIREMENTS: IF AT ANY TIME OTHER PROCEDURES, TESTS, ETC. ARE
MEDICALLY INDICATED, THE PHYSICIAN IS
OBLIGATED TO PERFORM THEM.

KEY:  S  =SUBJECTIVE, BY HISTORY

      O  =OBJECTIVE, BY A STANDARD TESTING METHOD

      *  =IF THE PATIENT IS UNCOOPERATIVE, RESCREEN IN 6 MONTHS.

    +++  =MAY BE DONE MORE FREQUENTLY IF INDICATED OR AT INCREASED RISK.

                   ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
                     HEARING AND SPEECH PERIODICITY SCHEDULE

<TABLE>
<CAPTION>
=============================================================================================================================
                                      MONTHS                                                     YEARS
-----------------------------------------------------------------------------------------------------------------------------
            New   2 - 4  by 1
Procedure   born   Days   mo   2    4    6   9    12    15    18    24   3    4    5   6    8    10    12   14    16    18
-----------------------------------------------------------------------------------------------------------------------------
<S>         <C>   <C>    <C>   <C>  <C>  <C> <C>  <C>   <C>   <C>   <C>  <C>  <C>  <C> <C>  <C>  <C>   <C>  <C>   <C>   <C>
Hearing/    S/0     S     S    S    S    S   S    S     S     S     S    O    O    O   S    S    O     O    S     S     O
Speech +++
=============================================================================================================================

<CAPTION>
============================
            YEARS
----------------------------
	    20+ up
	    to 21 yr
----------------------------
<S>	    <C>
Hearing/
Speech +++  S
============================
</TABLE>

THESE ARE MINIMUM REQUIREMENTS: IF AT ANY TIME OTHER PROCEDURES, TESTS, ETC. ARE
MEDICALLY INDICATED, THE PHYSICIAN IS
OBLIGATED TO PERFORM THEM.

KEY:  S  =SUBJECTIVE, BY HISTORY

      O  =OBJECTIVE, BY A STANDARD TESTING METHOD

      *  =ALL CHILDREN, INCLUDING NEWBORNS, MEETING RISK CRITERIA FOR HEARING
          LOSS SHOULD BE OBJECTIVELY SCREENED.

    +++  =MAY BE DONE MORE FREQUENTLY IF INDICATED OR AT INCREASED RISK

				-168-
<page>

ATTACHMENT K: OFFEROR'S CHECKLIST

Offerors must submit all items below, unless otherwise noted. In the column
titled "Offeror's Page #", the Offeror must enter the appropriate page numbers
from its proposal where the AHCCCS Evaluation Panel may find the Offeror's
response to that requirement.

I.       GENERAL MATTERS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                 SUBJECT:                         REFERENCE    OFFEROR'S PAGE #
-------------------------------------------------------------------------------
<S>                                              <C>           <C>
Offeror's signature page                         (Front page)        N/A
-------------------------------------------------------------------------------
Offeror's Checklist (this attachment)                N/A
-------------------------------------------------------------------------------
Completion of all items in Section G of the RFP   Section G
-------------------------------------------------------------------------------
</TABLE>

NOTE: The "Reqmt. #" shown below in Parts II, III, IV and V refers to the
numbered submission requirements outlined in Section I, Paragraph 1 of this RFP.

II.      PROVIDER NETWORK

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>       <C>                        <C>
Provider Network Development       1.     Attachment D (1)
------------------------------------------------------------------------------
                                   2.     Paragraph 27, Attachment
                                          B
------------------------------------------------------------------------------
                                   3.     Paragraph 27, Attachment
                                          B
------------------------------------------------------------------------------
Provider Network Management:
------------------------------------------------------------------------------
Monitoring and Managing            4.     Paragraph 16, 27, 29, 30,
                                          31, 33
------------------------------------------------------------------------------
                                   5.     Paragraph 29
------------------------------------------------------------------------------
Network Communication              6.     Paragraph 27, 29
------------------------------------------------------------------------------
                                   7.     N/A
------------------------------------------------------------------------------
Capacity Analysis/Planning and     8.     Paragraph 27
Development
------------------------------------------------------------------------------
                                   9.     Paragraph 73
------------------------------------------------------------------------------
</TABLE>

III.     CAPITATION

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>       <C>                        <C>
Capitation                         10.    Paragraph 53, 57, 75,
                                          Section B, Attachment E
------------------------------------------------------------------------------
</TABLE>

				-169-
<page>

IV.      PROGRAM

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>       <C>                        <C>
Quality Management                 11.    Paragraph 23, 24
------------------------------------------------------------------------------
                                   12.    Paragraph 23
------------------------------------------------------------------------------
                                   13.    Paragraph 23
------------------------------------------------------------------------------
Utilization Management             14.    Paragraph 23
------------------------------------------------------------------------------
                                   15.    Paragraph 23
------------------------------------------------------------------------------
                                   16.    Paragraph 23
------------------------------------------------------------------------------
                                   17.    Paragraph 23
------------------------------------------------------------------------------
                                   18.    Paragraph 23
------------------------------------------------------------------------------
Disease Prevention/Health          19.    Paragraph 10, 23, 24
Maintenance
------------------------------------------------------------------------------
                                   20.    Paragraph 10, 15, 23, 24
------------------------------------------------------------------------------
                                   21.    Paragraph 10, 24
------------------------------------------------------------------------------
                                   22.    Paragraph 10, 23
------------------------------------------------------------------------------
Focused Health Needs               23.    Paragraph 11, 23
------------------------------------------------------------------------------
                                   24.    Paragraph 23
------------------------------------------------------------------------------
                                   25.    Paragraph 18, 20
------------------------------------------------------------------------------
                                   26.    Paragraph 10, 11, 23
------------------------------------------------------------------------------
                                   27.    Paragraph 10, 23, 24, 31,
                                          33
------------------------------------------------------------------------------
Member Services                    28.    Paragraph 18, 23, 25,
                                          Attachment H (1)
------------------------------------------------------------------------------
                                   29.    Paragraph 8, 16, 18, 20
------------------------------------------------------------------------------
                                   30.    Paragraph 4, 19, 23, 25,
                                          Attachment H (1)
------------------------------------------------------------------------------
</TABLE>

V.       ORGANIZATION

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>       <C>                        <C>
Organization and Staffing          31.    N/A
------------------------------------------------------------------------------
                                   32.    N/A
------------------------------------------------------------------------------
                                   33.    Paragraph 73
------------------------------------------------------------------------------
Corporate Compliance               34.    Paragraph 62
------------------------------------------------------------------------------
                                   35.    Paragraph 62
------------------------------------------------------------------------------
Grievance and Appeals              36.    Paragraph 25, Attachment
                                          H (1), Attachment H (2)
------------------------------------------------------------------------------
                                   37.    Paragraph 25, Attachment
                                          H (1), Attachment H (2)
------------------------------------------------------------------------------
</TABLE>

				-170-
<page>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>       <C>                        <C>
Claims                             38.    Paragraph 38, 58
------------------------------------------------------------------------------
                                   39.    N/A
------------------------------------------------------------------------------
                                   40.    N/A
------------------------------------------------------------------------------
Encounters                         41.    Paragraph 64, 65,
                                          Attachment I
------------------------------------------------------------------------------
Financial Standards                42.    Paragraph 46, 47
------------------------------------------------------------------------------
                                   43.    Paragraph 45
------------------------------------------------------------------------------
                                   44.    N/A
------------------------------------------------------------------------------
                                   45.    N/A
------------------------------------------------------------------------------
                                   46.    N/A
------------------------------------------------------------------------------
                                   47.    N/A
------------------------------------------------------------------------------
                                   48.    N/A
------------------------------------------------------------------------------
                                   49.    Paragraph 50
------------------------------------------------------------------------------
                                   50.    Paragraph 43
------------------------------------------------------------------------------
Liability Management               51.    Paragraph 50
------------------------------------------------------------------------------
</TABLE>

VI.      EXTRA CREDIT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                SECTION D
                                              PARAGRAPH #S AND       OFFEROR'S
          SUBJECT:              REQMT. #        ATTACHMENTS            PAGE #
------------------------------------------------------------------------------
<S>                             <C>           <C>                    <C>
Optional Submissions:
------------------------------------------------------------------------------
Extra Credit                       52.              N/A
------------------------------------------------------------------------------
</TABLE>

[END OF CHECKLIST]

				-171-
<page>VANGUARD HEALTH SYSTEMS, INC.

EXHIBIT 10.18

Page 1 of 8

	

AHCCCS

 LOGO

     

	
SOLICITATION AMENDMENT

Solicitation Number:       RFP YH04-0001

 Amendment Number One

 Solicitation Due Date:   March 31, 2003, 3:00 PM (MST)

	
Arizona Health Care Cost

 Containment System Administration

 (AHCCCSA)

 701 East Jefferson, MD 5700

 Phoenix, Arizona 85034

 Michael Veit, (602) 417-4762

A signed copy of this amendment must be included with the proposal, which must be received by AHCCCSA no later than the Solicitation due date and time.  This solicitation is amended as follows:

1.         REMOVE AND REPLACE:   REMOVE page 58 and REPLACE with the attached Revised Page 58, dated February 10, 2003.

2.         REMOVE AND REPLACE:   REMOVE page 99 and REPLACE with the attached Revised Page 99, dated February 10, 2003.

3.         REMOVE AND REPLACE:   REMOVE all pages under Tab "B, "Program Changes", and REPLACE

            with the attached four (4) revised pages of the DATA SUPPLEMENT, dated February10, 2003.

4.         REMOVE AND REPLACE:   REMOVE the first sheet under Tab "T, "Reinsurance Payments CYE 19 (2001)" and REPLACE with the attached

            revised page of the DATA SUPPLEMENT, dated February 10, 2003.

5.         All other terms and conditions remains the same, including the proposal due date and time.

	
Offeror hereby acknowledges receipt and

 understanding of this Solicitation Amendment.

	
This Solicitation Amendment is hereby executed this 10th

 day of February, 2003, in Phoenix, Arizona.

	

 /s/ Nancy Novick                                    3/28/03

	

 /s/ Michael J. Veit

	
Signature                                             
   Date

	
 

	

 Nancy Novick, CEO

	
Signed Copy in File

	
Typed Name and Title

	
Michael Veit

	

 VHS Phoenix Health Plan, Inc.

	
Contracts and Purchasing Administrator

	
Name of Company

	
 

Incentive Fund:  AHCCCSA may retain a specified percentage of capitation reimbursement in order to distribute
to Contractors based on their performance measure outcomes.  The incentive fund will not be implemented in CYE ’04 and contractors will be notified at least 60 days prior to implementation in a future contract year.

58.          REINSURANCE

Reinsurance is a stop-loss program provided by AHCCCSA to the Contractor for the partial reimbursement of covered services, as described below, for a member with an acute medical condition beyond an annual deductible
level.  AHCCCSA “self-insures” the reinsurance program through a deduction to capitation rates that is intended to be budget neutral.  Refer to the AHCCCSA Reinsurance Claims Processing Manual for further details on the Reinsurance
Program.

Inpatient Reinsurance

Inpatient reinsurance covers partial reimbursement of covered inpatient facility medical services.  See the table below for applicable deductible levels and coinsurance percentages.  The coinsurance percent is the
rate at which AHCCCSA will reimburse the Contractor for covered inpatient services incurred above the deductible.  The deductible is the responsibility of the Contractor.  Per diem rates paid for nursing facility services provided within 30 days of an acute
hospital stay, including room and board, provided in lieu of hospitalization for up to 90 days in any contract year shall be eligible for reinsurance coverage.

The following table represents deductible and coinsurance levels for CYE ’04:

		

Annual Deductible*

	
Title XIX Waiver Group

 Annual Deductible

	
	
Statewide Plan

 Enrollment

	

Prospective

 Reinsurance

	
Combined

 PPC and Prospective

 Reinsurance

	

Coinsurance

	
0-34,999

	
$20,000

	
$15,000

	
75%

	
35,000-49,999

	
$35,000

	
$15,000

	
75%

	
50,000 and over

	
$50,000

	
$15,000

	
75%

*applies to all members except for Title XIX Waiver Group members

a)  Prospective Reinsurance: This coverage applies to prospective enrollment periods.  The deductible level is based on the Contractor’s statewide
AHCCCS acute care enrollment (not including SOBRA Family Planning Extension services) as of October 1st each contract year for all rate codes and counties, as shown in the table above.  AHCCCSA will adjust the Contractor’s deductible level at the beginning
of a contract year if the Contractor’s enrollment changes to the next enrollment level.  A Contractor at the $35,000 or $50,000 deductible level may elect a lower deductible prior to the beginning of a new contract year.  These deductible levels are
subject to change by AHCCCSA during the term of this contract.  Any change will have a corresponding impact on capitation rates.

b)  Prior Period Coverage Reinsurance:  Effective October 1, 2003, AHCCCSA will no longer cover PPC inpatient expenses under the reinsurance program for any
members except Title XIX Waiver Group members.  See section c) below for additional information.

-58-

Capacity Analysis/Planning and Development

                8.             Provide a copy of the Offeror’s Network Development
and Management Plan.  (No page limit)

                                Reference: Section D, Paragraph 27, Network Development (Provider Network
Development and

                                Management Plan)

                9.             Provide a synopsis of the Offerer’s Disaster Recovery
Plan as it relates to the provider network.

                                (No  page limit) Reference:  Section D, Paragraph 73, Business
Continuity Plan

III.  Capitation

Capitation is a fixed (per member) monthly payment to contractors for the provision of covered services to members.  It is an actuarially sound amount to cover expected utilization and costs for the individual risk groups
in a risk-sharing managed care environment.  The Offeror must demonstrate that the capitation rates proposed are actuarially sound.  In general terms, this means that the Offeror who is awarded a contract should be able to keep utilization at or near its
proposed levels and that it will be able to contract for unit costs that average at or near the amounts shown on the Capitation Rates Calculation Sheet (CRCS).  This requirement also applies to bids submitted in best and final offer rounds.

Prior Period Coverage (PPC) and HIV/AIDS Supplement rates will be set by AHCCCS’ actuaries and not bid by the Contractor.  Due to the lack of complete historical data, the Title XIX Waiver Group and HIFA Parents'
rates will also be set by AHCCCS’ actuaries, rather than bid by the Contractor.  See Section D, Paragraph 53, Compensation, for information regarding risk sharing for the Title XIX Waiver Group and PPC time period.  All other rate codes, including the
Delivery Supplemental Payment, will be subject to competitive bidding.

To facilitate the preparation of its capitation proposals, AHCCCSA will provide each Offeror with a Data Supplement.  This data source should not be used as the sole source of information in making decisions concerning
the capitation proposal.  Each Offeror is solely responsible for research, preparation and documentation of its capitation proposal.

Required Submission:   Capitation

                10.           The Offeror must submit its capitation proposal using the AHCCCSA bid
web site.  Instructions for

                                accessing and using the web site will be issued by March 1, 2003.  The
Offeror must have an actuary

                                 who is a member of the American Academy of Actuaries certify that the bid
submission is actuarially

                                 sound.  This certification must be done with subsequent submissions in
Best and Final Offer rounds

                                 (if applicable).  The Offeror must also submit hard copy print outs of the
web site CRCS.  Refer to

                                 Section B and Attachment E for more details.

                                The Offeror must prepare and submit its
capitation proposal assuming a $20,000 deductible level for

                                regular reinsurance, for all rate codes, in all counties.  AHCCCSA will
provide a table of per member

                                 per month reinsurance adjustments to be made to capitation rates for those
Contractors whose actual

                                 deductible level exceeds $20,000.

                                Capitation rates shall be submitted two
ways:  first, assuming all medical services are included in the

                                 capitation rates, and second, assuming that prescription drugs will be carved
out of the capitation

                                 rates.  Prescription drugs are defined as “FDA approved legend or
over the counter (OTC) products

                                 provided upon receipt of a valid prescription order and dispensed by a
pharmacist in an outpatient

                                 setting.”  When bidding with prescription drugs carved out, please
factor the impact to the other

                                 medical service and administrative categories.  AHCCCSA anticipates that
in the event that

                                 prescription drugs are carved

-99-

PROGRAM CHANGES

The following program changes should be considered when reviewing the Encounter Utilization Reports and financial information provided in the data supplement for preparation of the capitation rate bid submissions.  There
are also program changes that are not included in this data supplement.  These changes are either effective after the time period for which encounters and claims have been gathered, or will be effective on or after October 1, 2003.  Below is a brief
description of the AHCCCS acute program changes and their effective dates:

Geographic Service Areas

AHCCCSA has regrouped Arizona counties into the following GSA’s:

	
Geographic Service Area (GSA)

	
Maximum Number of Contracts

	
  2.     Yuma, La Paz

	
2

	
  4.     Mohave, Coconino, Apache,

           Navajo

	
2

	
  6.     Yavapai

	
2

	
  8.     Pinal, Gila

	
2

	
10.     Pima, Santa Cruz

	
5/2

	
12.     Maricopa

	
6

	
14.     Graham, Greenlee, Cochise

	
2

Contracts will be awarded by GSA.  For GSA #10, up to five contracts will be awarded for Pima County, and up to two of those five contracts will include an award for Santa Cruz County.

The data supplement information has been revised to regroup counties into the GSA’s proposed for October 1, 2003.

2nd Newborn Screen (PKU) Testing

Effective February 1, 2002, the Arizona Department of Health Services ADHS) requires that a 2nd Newborn Screen test be done on all Arizona Newborns.  The code for the testing is S3620.  The cost of the
test is $20.  In addition to the cost of the test, there are associated handling fees that Contractors are required to pay to the providers collecting the test.  The AHCCCS fee for service schedule for handling fees is $4.25 for tests performed in
physicians’ offices, and $10.00 for tests performed in contracted laboratory facilities.  These services are not included in the data supplement due to lag in capturing encounter data.

Circumcisions

Effective October 1, 2002 elective circumcisions are no longer a covered service.   Circumcision services have been removed from the Encounter Utilization Reports.

Hospital Pilot Program

The hospital pilot program in Maricopa and Pima counties was terminated for CYE ’01 and reinstated for CYE ’02 and CYE ’03.  The pilot program states that if a health plan in Maricopa and Pima counties
is unable to contract with a hospital for inpatient services, then the health plan reimbursement rate is 95% of the AHCCCS Tier Per Diems.  Health plan cost information for inpatient stays in Maricopa and Pima counties will reflect the termination of the pilot
program for CYE ’01.  Even though the program is scheduled to terminated CYE ’04, bidders should assume that the pilot program will be reinstated through legislation.

Title XIX Waiver Group

Effective April 1, 2001, AHCCCS received a waiver from CMS that converted the Medically Needy/Medically Indigent (MNMI) population from a state funded only population to a Title XIX funded population.  This group was
renamed the Title XIX Waiver Group (TWG). 

This population has two components.  First, effective October 1, 2001, the eligibility criteria changed to increase the Federal Poverty Level (FPL) for determining Title XIX eligibility to incomes at or below 100% of the
FPL (non-MED’s) from 40% of the FPL.  The second group of members is the Medical Expense Deduction (MED).  These members have incomes above 100% of the FPL, but incur sufficient medical costs that cause them to “spend down” to below 40% of
the FPL.

Due to the historical high percentage of MNMI members becoming eligible while hospitalized, AHCCCSA created a hospitalized supplemental payment as a method of risk adjustment for this population.  After monitoring the
actual percentages of members who become eligible while hospitalized, effective October 1, 2003, AHCCCSA will no longer pay a hospitalized supplement for the non-MED portion of the Title XIX Waiver Group.

Due to uncertainly of the risk of this population, AHCCCSA will continue to set the capitation rates and reconcile the medical expenditures for CYE ’04.  The reconciliation will include a 2% risk band.  Refer
to the Title XIX Waiver Group Reconciliation Policy in the Bidder’s Library for more details.  

Prior Period Coverage

For CYE ’03, AHCCCS placed health plans at full risk for medical service expenditures incurred during the Prior Period Coverage (PPC) time period.  There will not be a reconciliation for CYE ’03 PPC
expenditures.

Effective CYE ’04, AHCCCS will set the capitation rates for the PPC time period and reconcile PPC medical expenses to service revenues per the PPC Reconciliation Policy found in the bidder’s
library.   The reconciliation will include a 2% risk band. 

Breast and Cervical Cancer Treatment Program

Effective January 1, 2002, AHCCCS implemented the Breast and Cervical Cancer Treatment Program.  For CYE ’02, all medical costs associated with this population were paid through the AHCCCS reinsurance program. 
In addition, health plans were paid the TANF 14-44F capitation rate on a monthly basis.  For years beginning with CYE ’04, the plans will be at full risk for this population.  AHCCCSA will no longer pay for medical services through reinsurance. 
The encounter utilization reports for CYE ’02 include the rate codes and medical experience for the BCCTP population in the TANF 14-44F and TANF 45+ risk groups.

HIFA Parents

Effective January 1, 2003, AHCCCSA implemented its HIFA waiver with CMS that permits using excess Title XXI funds to the cover the parents of KidsCare and SOBRA Children eligible members who are not otherwise eligible. 
This program has a limit on the enrollment due to the availability of excess funding.  Because there are currently no encounters for this population, AHCCCSA will set the rates for CYE ’04.

KidsCare/TANF (1931) Combining

Effective October 1, 2002, AHCCCSA blended the cost and utilization experience of the health plans for the purpose of establishing one capitation rate for TANF (1931)/ SOBRA/ and KidsCare members.  The Encounter
Utilization Reports have been restated to include the KidsCare rate codes in the TANF/SOBRA risk groups.

Population Growth

With the passage of Proposition 204 in October 2001 that increased the Medicaid eligibility level to 100% of the FPL, AHCCCS population has grown dramatically.  In addition to Proposition 204, AHCCCS’ membership has
grown due to the downturn in the economy as well as new efficiencies in the eligibility process.  This growth is represented in member month and enrollment information presented in this supplement.

Reinsurance Payments for CYE ‘01

This section presents the statewide reinsurance paid per member per month to health plans for the period October 1, 2000 through September 30, 2001.  When estimating reinsurance, the bidder should consider all changes to
the reinsurance program effective October 1, 2003.  The bidder should also consider changes in rates and utilization from year to year.

See Section B, Program Changes, for reinsurance deductible level changes effective October 1, 2003.  The bidder should note that all bids should be prepared assuming the deductible levels for statewide enrollment of
0-35,000 members ($20,000).  If the health plan’s statewide enrollment exceeds 35,000 members, their capitation rates will be adjusted upwards where applicable, to offset the higher deductible levels.

	
Page 1 of 2

	

AHCCCS

 LOGO

     

	
SOLICITATION AMENDMENT

Solicitation Number:       RFP YH04-0001

 Amendment Number Two

 Solicitation Due Date:   March 31, 2003, 3:00 PM (MST)

	
Arizona Health Care Cost

 Containment System Administration

 (AHCCCSA)

 701 East Jefferson, MD 5700

 Phoenix, Arizona 85034

 Michael Veit, (602) 417-4762

A signed copy of this amendment shall be included with the proposal, which must be received by AHCCCSA no later than the Solicitation due date and time.  This solicitation is amended as follows:

1.         Finalized version of the Question and Answers distributed at the Bidder’s Conference on February 21,

             2003.  The following questions had amended answers:  8, 12, 18, 63, 142-163, 179, 218b, 230b

2.         Guidance for bidding capitation rates with the prescription drug benefit excluded in the rates.

3.         Revised Attachment H(1) and H(2)

4.         Section H, Page 103, Required Submission Claims, #38.  Please add “Limit 5 pages” after the submission

             requirement text.

5.         Section H, Page 101, Submission #22.  This should be changed to read, “Describe how utilization of family

             planning services for all members is monitored.

6.         Attachment B, Page 115.  Last paragraph should read, “In Tucson (GSA 10) and Metropolitan Phoenix

             (GSA 12), the Contractor must demonstrate its ability to provide PCP, dental and pharmacy services so that

             95% of members do not have to travel more than 5 miles from their residence.”

7.         Section D, Paragraph 32, Page 43. subpart c:  Add:  “PCP referral is not required for dental service for

             members under the age of 21.”  Add prior to the last sentence in c.

8.         Medicaid Eligibility Verification System (MEVS).  Names and Addresses of vendors.

9.         Attachment E.  Add Instructions for Web Based Capitation Rate Proposal Application.

10.       Data Supplement Section H – Enrollment and Demographic Information

            o         REPLACEMENT - Enrollment and Demographic
Information – Replace previous summary sheet

            o         ADDITION - Member Growth Projections – Add this chart to the back of the
information in this section.

            o         ADDITION – Acute Enrollment Activity – Add this report to the back of
the information in this section.

            o         ADDITION – Acute Member ID Cards – Add this report to the back of the
information in this section.

11.       Data Supplement Section N – SOBRA Family Planning Services Member Months

            o         REPLACEMENT – Replace entire section
with this new information.

12.       Data Supplement Section O – Utilization for SOBRA Family Planning Services

            o         REPLACEMENT – Replace entire section
with this new information.

13.       Data Supplement Section P – SOBRA Family Planning Services Costs – PMPM

            o         REPLACEMENT – Replace entire section
with this new information.

14.       Data Supplement Section S – Deliveries – C-Section vs. Vaginal

            o         REPLACEMENT – Replace entire section
with this new information.

*.         All other terms and conditions remains the same, including the proposal due date and time.

	
Offeror hereby acknowledges receipt and

 understanding of this Solicitation Amendment.

	
This Solicitation Amendment is hereby executed this 28th

 day of February, 2003, in Phoenix, Arizona.

	

 /s/ Nancy Novick                                    3/28/03

	

 /s/ Michael J. Veit

	
Signature                                             
   Date

	
 

	

 Nancy Novick, CEO

	
Signed Copy in File

	
Typed Name and Title

	
Michael Veit

	

 VHS Phoenix Health Plan, Inc.

	
Contracts and Purchasing Administrator

	
Name of Company

	
 

	
Quest #r

	
Page

	
Sect

	
Paragraph

	
Question

	
Answer

	
1

	
6

	
Sect B

	
N/A

	
What format is required for the actuarially sound certification?

	
A basic actuarial certification letter with a signature. A member of the American Academy of Actuaries must attest that the rates they bid are actuarially sound for that plan.

	
2

	
6

	
Sect B

	
N/A

	
What is the definition of “actuarially sound” for the purposes of the actuarial certification?  Is it the general definition as described on page 99 of the RFP or is it the CMS definition of
“actuarially sound” or should the certifying actuary refer to the applicable actuarial standards as issued by the Actuarial Standards Board?

	
The definition on page 99 of the RFP is adequate at this time.

	
3

	
6

	
Sect B

	
N/A

	
How will the Offeror know that the bid submission in the AHCCCSA Web application is correct?  Not that we don’t trust the AHCCCSA systems, but wouldn’t it be better if the rate submitted via
print out (that the actuary is certifying and can see) is the prevailing bid rather than the bid submitted via Web application?  The actuary can’t certify to the accuracy of the AHCCCSA systems.

	
Yes AHCCCSA agrees that the hard copy print out will prevail if there is a difference in what is entered into the web site and what is on the hard copy print out.  This statement corrects the direction in
Attachment E of the RFP as issued on February 3, 2003.

If there is a difference, the web site will be adjusted to match the hard copy print out.  All reports that will be used in the scoring are generated from the web site bids; therefore, it is necessary that
the web site bids are correct.  Please note that because the bids will be scored using the web site, the Offeror must submit one set of bids only.  Barring AHCCCS system issues, the hard copy and the web bid submissions must be identical.

	
4

	
6

	
Sect B

	
 

	
Please define more specifically what the definition of "Actuarially Sound" means from the Offeror’s perspective.  If a health plan has a sicker than average population for a given rate cell, how
should an Offeror reconcile its "actuarially sound" bid when this rate will be above the rate range?

	
Please refer to the answer in question #2 above for a description of actuarial soundness. Because of concerns regarding adverse selection that an AHCCCCS Contractor had, AHCCCS engaged Mercer to run AHCCCS health
plan encounter data through the Chronic Disability Payment System (CDPS) in 2002. Each of the health plans was scored from a risk standpoint. Total reimbursement [capitation, regular reinsurance, catastrophic reinsurance, AIDS/HIV $, maternity payments, etc.] 
paid to health plans was also tabulated for comparison purposes. Because this analysis showed almost perfect alignment in the ranking of risk versus payment, AHCCCS felt the actuarial soundness of its current payment methodologies had been confirmed.

	
5

	
6

	
Sect B

	
 

	
Given the BBA's requirement for the rate ranges to be "Actuarially Sound" from the perspective of the State's actuaries, please define more specifically what this means.

	
CMS has issued an extensive rate-setting checklist that defines in great detail exactly what is meant by actuarially sound rates. Mercer was consulted extensively by CMS in the development of the tool, and
supplied much of the material that found its way into the checklist. We do not foresee significant changes in the way rate ranges are established in Arizona. There may be significant changes in the way they are documented and filed with CMS.

Mercer brought the issue of actuarial soundness to the attention of the American Academy of Actuaries. As a result, the Actuarial Standards Board has just begun its own analysis of what it means to make an
assertion that capitation rates are actuarially sound. Mercer is also represented on this task force and will take its recommendations into account as they become available.

	
6

	
9

	
Sect C

	
Definition, Emergency Medical Service

	
Is the word inpatient referring to admission to the emergency room?

Can we assume that if it refers to admission to the hospital that it would only be related to emergency surgery or ICU status and once the patient is stabilized in the ICU that notification applies?

	
The definition of emergency medical services includes services provided in both inpatient and outpatient settings.  This definition did not change with BBA.  The notification standards have
changed.  Emergency service providers have up to 10 days to notify the health plan. Notice requirements are still being analyzed, and further clarification will be forthcoming.

	
7

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
The RFP states that contractors are responsible for payments during prior period coverage and may include services provided prior to the contract year. Does AHCCCSA anticipate setting a limit as to  how far
back the prior period can go?

	
The prior period coverage (PPC) time period is already defined and limited depending upon the eligibility category.  Please refer to AHCCCS rule for those limitations.

	
8

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
Health Plan Choice– Members having fewer than 30 days continuous eligibility remaining will not be placed with a health plan but enrolled in
AHCCCS FFS.  Please explain when this may occur.

	
The eligibility source informs AHCCCS that the approved eligibility period will extend into the future less than 30 days (example: member is determined they will be ineligible the following month although they
are eligible this month).  However, it is possible to enroll a member with a health plan (member had been anticipated to remain eligible) and then have the member become ineligible before the end of the month (example: the member is incarcerated, dies, or moves
out of state).

	
9

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
Health Plan Choice– What are the “few exceptions” in which the effective date of enrollment for a Title XXI member will not be
the first day of the month?

	
There are unusual situations, usually administrative mistakes, when a TXXI member may be enrolled during the month.  These are rare, and will not affect reimbursement.

	
10

	
18-19

	
Sect D

	
#3-Enrollment and Disenrollment

	
Health Plan Choice– How long do newly eligible persons have to select a health plan?  How long does a mother have to select a health
plan for her newborn child?  For FES babies?

	
Members are encouraged to choose a health plan prior to the eligibility approval date.  If not, they are auto-assigned through the algorithm.  For newborns, the members have 16 days to choose a plan for
their baby.

	
11

	
19

	
Sect D

	
#5-Enrollment and Disenrollment

	
When will open enrollment dates be finalized and shared with contractors?

	
It is anticipated that Open Enrollment will take place in August, 2003 for enrollment October 1, 2003.  The finalized dates will be shared with the Contractors as soon as they are known.

	
12

	
19

	
Sect D

	
#3- Enrollment and Disenrollment

	
When does the capitation payment start:  When the hospital calls with notification or when the plan calls AHCCCS?

	
As stated in the RFP, “The Contractor is responsible for notifying AHCCCSA of a child’s birth....” However, a hospital may notify AHCCCSA in lieu of the contractor when the mother is
enrolled in AHCCCS FFS.  The plan is required to notify AHCCCS of a birth when the mother is enrolled with the health plan.  Capitation begins the day AHCCCSA is initially notified of the birth by either the Contractor or the hospital.  For babies born
to FES mothers, the eligibility is retro to the date of birth and PPC capitation is paid for the date of birth to the date of notification.  For babies of enrolled mothers, there is no PPC capitation and the plan is prospectively capitated from the date of
notification forward.

	
13

	
20

	
Sect D

	
#5—Open Enrollment

	
How will AHCCCSA handle enrollment in rural GSAs if a contract is awarded to an incumbent and a new Contractor?  If members have not selected a health plan through the open enrollment process, would AHCCCSA
weight the auto assignment process to ensure that the non-incumbent health plan has a sound membership base to allow a viable operating base?

	
Members of the exiting health plan will have an opportunity to choose a new health plan through an open enrollment process.  Per Attachment G, AHCCCSA reserves the right to adjust the algorithm for a
Contractor who is awarded contracts in only rural GSA’s.  This will be decided at a later date based on awards.  That adjustment per Attachment G is only applicable to contractors in Maricopa and Pima counties.

	
14

	
20

	
Sect D

	
# 5—Open Enrollment

	
Section notes that the algorithm will be adjusted to exclude auto assignments to an exiting contractor: 

On what date would the algorithm be adjusted?

When will new contractor names be added to AEC materials?

	
The exiting contractor’s enrollment is anticipated to be capped on July 1, 2003.

New contractor names will be added to AEC materials for mailing in mid-June.

	
15

	
20

	
Sect D

	
# 5—Open Enrollment

	
For successful Offerors, please describe the open enrollment process for incumbent contractors awarded a contract under this procurement.  Will members of a health plan that is being replaced in a given GSA
be the only members participating in open enrollment activities, or will all health plans’ members participate?  When an additional health plan is added to a GSA, will members of all existing health plans within that GSA participate in open enrollment
activities?

	
Open enrollment will only be offered to members of exiting Contractors.  Those members will be able to select from all contractors in the GSA for enrollment on October 1.

	
16

	
20

	
Sect D

	
# 5-- Open Enrollment

	
If a contractor is purchased by another organization, will AHCCCS hold an open enrollment for those members?

	
The answer will depend upon details and the timing of the sale and whether an award is received by the continuing plan.

	
17

	
20

	
Sect D

	
#6—Auto-Assignment Algorithm

	
Are there specific reasons why AHCCCSA made the statement in the RFP, “Capitation rates may be adjusted to reflect changes to a contractor’s risk due to changes in the algorithm”? Could AHCCCSA
describe the kinds of scenarios that would require a change to the algorithm?  How would and what type of notification timeline would future changes to the algorithm methodology be communicated to the health plans? 

	
It is believed that members who are auto assigned through the algorithm have a lower risk that those who choose a health plan.  Those who choose are believed to be already accessing services, or are in the
need of services, which is why they are more concerned about the health plan with whom they are enrolled.  Therefore, if a plan is receiving more members though the algorithm through an adjustment, then it is believed by AHCCCSA’s actuaries that the
plan’s risk is lower than the other plans.  Therefore, an adjustment is made to all Contractors’ rate to ensure actuarial soundness.

Another scenario is the adjustment that may be made if there is a Contractor in Pima or Maricopa County who has total statewide enrollment of less than 25,000 members.  Another scenario is when a
Contractor’s enrollment is capped due to financial performance or sanctions.

The health plans would have at least 30 days notice.  This notification would occur through a contract amendment.

	
18

	
20

	
Sect D

	
# 7-- AHCCCS Member Identification Cards

	
Membership cards:

How much will cards cost? 

What will the health plans be charged?

What is the frequency of card issuance (one time per member, when the member changes rate codes, when the member changes contractors, etc.)?

Will the invoice provided by AHCCCS be at the member detail level?

If AHCCCS is unsure about any of the above, please provide direction as to how the health plan should account for this new cost in its bid.

	
The Offerors should budget 75 cents per card.  New cards are issued for the following reasons:  new member, change in RBHA, change in Contractor, lost/stolen cards, significant name change, change in
program eligibility, and upon member request.  AHCCCSA issued approximately 40,000 cards per month in the recent months.

AHCCCSA has not yet determined how the invoicing will be handled.

The bidder should use the information provided here in their capitation rate bid submissions.

	
19

	
20

	
Sect D

	
# 7-- AHCCCS Member Identification Cards

	
What is the average cost per AHCCCS ID card?

	
See the answer to #18 above.

	
20

	
20

	
Sect D

	
 

	
a. What are the costs to the health plans on a per card basis?

b. For each GSA, how many ID cards (new and reissued) were issued last year?

c. How many replacement cards were issued last year?

d. For cost control purposes, will the health plans have input regarding the vendor and content of the card?

e. How will AHCCCSA monitor and ensure that health plans are not inadvertently billed for ID cards for other health plans or FFS members?

f. How will ID card costs be handled for members who are retroactively disenrolled (i.e. refunded)?

g. Will postage be charged to the health plan for the mailing of ID cards?

	
a-c, e, f. See the answer to #18 above.

AHCCCSA will contract with the vendor.   The content of the card is not the discretion of the Contractor.

g. The Contractor will be billed for postage included in the 75 cents.

	
21

	
20

	
Sect D

	
#8—Mainstreaming of AHCCCS members

	
Please define “available facility”

	
This is a facility that would normally be available for use by your members i.e., in-network or when medically necessary.  The intent of the statement is that use of such a facility cannot be denied based on one of the
criteria in the previous paragraph in the RFP, payor source, race, color etc.

	
22

	
20

	
Sect D

	
#8—Mainstreaming of AHCCCS members

	
What does AHCCCSA consider to be “reasonable steps” to be taken with subcontractors to encourage mainstreaming of members?

	
The phrase is used in the context that “Contractors must take into account a member’s culture when addressing members and their concerns, and must take reasonable steps to encourage subcontractors to
do the same.”  The overall paragraph discusses prohibited discriminatory practices with respect to a member’s rights to receive services in a manner that does not discriminate based on payor source, race, color, gender, etc.  The Offeror should
use its own judgment to identify reasonable steps.

	
23

	
21

	
Sect D

	
 #9—Transition of Members

	
Transition of Members-Acute Care-If we are notified from CRS that a patient is coming in or out, what is the plan's responsibility of transition and to whom?

	
When a member is enrolled in CRS, the health plan still has the responsibility of providing all covered services for the member that are not included as CRS covered services for the CRS enrolled diagnosis (refer
to CRS covered diagnosis list).  CRS and the health plan are expected to coordinate applicable services such as DME, prescriptions, etc as they pertain in the transition.

	
24

	
21

	
Sect D

	
 #9—Transition of Members

	
Are PCP's still required to have dental service reports in the medical record?

	
No, dental treatment records are not required in the PCP chart.  However, record of any verbal referrals/recommendations by the PCP for dental services should be documented in the patient record maintained
by the PCP.

	
25

	
21

	
Sect D

	
#10—Scope of Services (CRS-last paragraph

	
CRS is currently under procurement for a new contractor.  How will that new contract’s operations impact coordination of services with AHCCCSA health plans and what will be the financial impacts of any
contract changes to a health plan?

	
If an award is made to a new CRS contractor, the AHCCCS contractors would be responsible for coordinating care with and referring potentially eligible members to the new contractor.  It is not anticipated
that this will have any financial impact to AHCCCS contractors.

	
26

	
22

	
Sect D

	
#10—Scope of Services (CRS-last paragraph)

	
Who is financially responsible for services if the CRS eligible and enrolled member does not utilize CRS services?   The AMPM Section 400 references medical care paid by the plan to an eligible,
enrolled member when CRS fails to provide timely services. It does not address which entity pays for the medical expenses if the member is an eligible, enrolled CRS patient, but refuses to use their services. Under these circumstances, does the health plan continue
to pay for medical services or are we not obligated to pay for the CRS covered services because of CRS eligibility and enrollment?

	
In this instance the member (family or guardian) is responsible for payment. The member is choosing to go out of network for services.  However, it is AHCCCSA’s expectation that Health Plans assist
members in understanding the services delivery system and that plans facilitate the members use of CRS.

	
27

	
23

	
Sect D

	
#10-- Scope of Services (Emergency Services, last sentence)

	
Please clarify:  how does this apply to out of state providers who are not contracted with the plan or AHCCCS?  What if a provider refuses to register with AHCCCS?  Can they bill the member? 
Is there a statute to protect the member from billing/collections/by out of state providers?  Is there a quick registration process for out-of state providers?

	
Providers must register with AHCCCS to be eligible for payment. A contract with the health plan is not required.  Registered providers may not bill members for medically necessary covered services. 
AHCCCS is not aware of a statute that protects members from billing/collections by unregistered, out of state providers.  State rule prohibits billing of Medicaid members for medically necessary covered services.  AHCCCS does have a simplified registration
form for single use providers.

	
28

	
23

	
Sect D

	
#10-- Scope of Services

	
EPSDT– What are the health plans’ specific responsibilities in terms of “follow-up” with a RBHA to monitor whether members
have received behavioral health services?

	
When this information has not already been received from the member or the RBHA, the Contractor is expected to contact  the RBHA to ensure that the member has either been scheduled or seen for an appointment
or that the member has refused behavioral health services from the RBHA.

	
29

	
23-24

	
Sect D

	
#10-- Scope of Services (Emergency Services, last sentence)

	
Emergency Services– Please confirm that the 10 calendar day requirement applies only to the notification of emergency services and not to any inpatient stay
admission resulting from an emergency department visit.  Please confirm that the 10 calendar day requirement is unrelated to the 1 hour response time required.

	
Analysis re BBA Emergency notification requirements is ongoing and further clarification will be forthcoming.

	
30

	
24

	
Sect D

	
#10, Scope of Services (Emergency Services, paragraph 2, #2)

	
In bullet point #2, clarification is needed regarding notification.  Does this mean the emergency room services must have notification to the health plan within 10 days?

By screening and treatment are you including admissions to the hospital and work up and treatment?  If so does the facility have 10 days to notify the health plan of admission?

Does this mean there will be no concurrent review process for any member admitted through the Emergency Room?

	
Analysis re BBA Emergency notification requirements is ongoing and further clarification will be forthcoming.

The Offerors should assume that there will be no changes to program costs for this provision when developing capitation rate bids.

	
31

	
24

	
Sect D

	
#10, Scope of Services (Emergency Services, paragraph 3)

	
“A member who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the patient”. 
Does this statement mean that authorization would not be needed for follow up visits resulting from the ER visits?

	
The issue of authorization is different from that of patient financial responsibility.  Authorization may still be required for follow-up done after the patient is stabilized. Prior Authorization is not a
guarantee of payment.

	
32

	
24

	
Sect D

	
#10-- Scope of Services (Emergency Services)

	
Emergency services-- How long does a provider of emergency services now have to notify the plan to ensure payment, or is there no time limit?

	
The new notification requirements per BBA are within 10 calendar days for emergency services.  Analysis regarding BBA Emergency notification requirements is ongoing and further clarification will be
forthcoming.

	
33

	
25

	
Sect D

	
#10—Scope of Services (Hospital)

	
Observation services may be provided on outpatient basis if determined reasonable...when deciding if member should be admitted for inpatient care. There is no specification of the time frame (prior contracts
have indicated up to 24 hours).

Is the absence of a time designation meant that AHCCCS will be following the 48-hour Medicare standard?

If the time frame is expanded from 24 to 48 hours, what criteria are going to be used to determine that the extended stay to 48 hours was appropriate as observation versus inpatient?

	
Please see the AMPM Policy 310, Observation Services for clarification.

	
34

	
25

	
Sect D

	
# 10—Scope of Services  (Hospital)

	
What is meaning/financial impact of removing 24-hour limit from observation services?

	
Please see the AMPM Policy 310, Observation Services for clarification.  The financial impact is unknown at this time.

	
35

	
25

	
Sect D

	
# 10—Scope of Services  (Immunizations)

	
What are the adult immunization performance standards?

	
AHCCCS has not established adult immunization performance indicators for the acute care population. 

	
36

	
26

	
Sect D

	
#10—Scope of Services (Nursing Facility)

	
What would occur when a member no longer requires the skilled services of a convalescent care stay, but a discharge from the facility is deemed inappropriate for a specific reason?  For example, Mr. Smith is
admitted to a skilled nursing facility for Rehab Services (OT and PT), after a hip replacement.  A week into his stay, he is discharged from therapies because he is unable or unwilling to participate.  Mr. Smith no longer meets the criteria for a
convalescent care stay, but he is still not able to care for himself in his previous living arrangement, and a discharge from the skilled nursing facility is not appropriate because of safely issues.

	
The Health Plan is responsible for providing medically necessary covered services. Facility coverage is not limited to the skilled level of care.

	
37

	
26

	
Sect D

	
#10—Scope of Services (Nursing Facility)

	
Can this member (see above question) be kept in the facility at a lower level (e.g. a custodial care level) until the discharge is appropriate?  If this is possible, how would AHCCCSA like to be notified,
and would the custodial care days still need to be counted toward the 90 day contract year maximum benefit?

	
There is no prohibition against health plans negotiating rates at a lower level of care. AHCCCS does not require notification. Days at a lower level of care do count toward the 90-day contract year maximum
benefit.

	
38

	
27

	
Sect D

	
#10, Scope of Services  (Post-stabilization Care Services Coverage and Payment, paragraph 2, #2.)

	
In bullet #2, is 1 hour the correct time for approval of post-stabilization care services at non-contracted facilities?

Who will determine the 1-hour time frame? Will telephone logs be used to verify?

	
One hour is the correct time for approval of post-stabilization care services approval requests for all providers both contracted and non-contracted.

Both hospitals and plans will likely document the one-hour timeframe and telephone logs may be one method to accomplish this.

Further clarification regarding BBA requirements will be forthcoming.

	
39

	
27

	
Sect D

	
#10, Scope of Services (Post-stabilization Care Services Coverage and Payment, paragraph 3, #3.)

	
In bullet #3 A Contractor’s physician with privileges at the treating hospital assumes responsibility for the member’s care.  What happens when the Contractor’s physician with
privileges at the treating hospital is ready and willing to assume the care but the non-contracted Attending physician will not relinquish care?

	
AHCCCS expects treating physicians to act in the best interests of the member. Issues such as this should be brought to the plan Medical Director for resolution.

	
40

	
27

	
Sect D

	
# 10, Scope of Services, (Pregnancy Terminations)

	
Is there any information on expected financial impact of policy change?

	
Based upon 18 months of experience with this policy, AHCCCSA believes that the financial impact is not material, and capitation rates will not be adjusted for this policy change.

	
41

	
27

	
Sect D

	
#10, Scope of Services  (Post-stabilization Care Services Coverage and Payment, paragraph 2, #2.)

	
Post Stabilization– The RFP implies a contractor must respond to authorization requests within one hour.  If not, are services deemed
approved?  How will AHCCCSA evaluate health plans’ performance of this requirement?

	
If authorization is not provided within one hour, services are deemed authorized. Methods to monitor this performance requirement will be developed. Further analysis of BBA will be completed and additional
information will be forthcoming.

	
42

	
28

	
Sect D

	
# 10-- Scope of Services

	
Omitted...not used as a maintenance regimen...Is this changing or does the phrase "potential for improvement" cover this?

	
Please clarify and resubmit the question.

	
43

	
28

	
Sect D

	
# 10—Scope of Services (Prescription Drugs)

	
Will pharmacy carve-out include OTC items currently being provided by health plans, for example, condoms and nutritional supplements?

	
The pharmacy carve out will include those OTC items that require a prescription.

	
44

	
28

	
Sect D

	
#10--Scope of Services (Transportation, first sentence)

	
Give examples of medically necessary transportation.

	
Includes but is not limited to transportation for well child care, prenatal appointments, urgent medical appointments, prescription pick-up at pharmacy, ambulance transportation and other services that are
medically necessary.

	
45

	
29

	
Sect D

	
 #10—Scope of Services

	
What is the timeline for new or revised policies in AMPM regarding Special Health Care Needs?

	
The deadline is October 1, 2003. As clarification is available it will be published.

	
46

	
29

	
Sect D

	
#12-- Behavioral Health Services, paragraph 1

	
“AHCCCS members are eligible for comprehensive behavioral health services” – This indicates that Family Planning members would also have this benefit, is this correct?

	
No, SFP members are not eligible for behavioral health services.  This will be clarified in the RFP document at a future date.

	
47

	
30

	
Sect D

	
#12-- Behavioral Health Services, Medication Management Services, paragraph 1

	
In previous publications the PCP was allowed to provide medication management for members with diagnoses of mild to moderate depression, mild to moderate anxiety and attention deficit hyperactivity
disorder.  Were the words mild to moderate intentionally left out?

	
Since the inception of the psychiatric medication initiative in October of 1999, which allows health plan PCPs to prescribe for certain behavioral health disorders within the scope of their practice, the contract
language has remained the same.  The words “mild”, “minor”, or “moderate” have not been in contract and there is no change in the expectation.  AHCCCS policy (AMPM 310) and the guiding principles published in September
1999 refer to ADD/ADHD, mild depression, and anxiety disorders as those which may be managed by the health plan PCP.

	
48

	
30

	
Sect D

	
#12—Behavioral Health Services

	
“The Contractor shall allow PCPs to provide medication management services (prescription, medication monitoring visits, laboratory, and other diagnostic test necessary for diagnosis and treatment of
behavioral disorders) to members with diagnoses of depression, anxiety and attention deficit hyperactivity disorder.”

As this statement does not specify that the PCP may treat “mild” or “minor” depression, please clarify whether the expectation has changed from the original guiding principles published
Sept 1999.

	
Please refer to the answer for question 47.

	
49

	
30

	
Sect D

	
#12—Behavioral Health Services

	
Does AHCCCSA have any guidelines for the monitoring of PCP management of behavioral health disorders?

	
No, AHCCCS does not have guidelines specific to the monitoring of PCPs’ management of behavioral health disorders.

	
50

	
31

	
Sect D

	
#14-- Medicaid in the Public Schools, last paragraph

	
Regarding transfer of medical information between the Contractor and the member’s school or school district. ...Isn’t that a violation of the HIPAA privacy standard?  Would the Health Plan
have to have a Business Associate Contract with the schools or school districts?

 

	
The MIPS program provides reimbursement for school districts that are registered providers.  The relationship between a health plan and a provider does not constitute a business associate relationship. 
See 65 Fed. Reg. 82476 (Dec. 28, 2000).  Disclosure for purposes of treatment, payment and certain health care operations are permitted by the rules and do not necessarily require a business associate agreement.  45 CFR 164.506.  “Payment”
activities include coordination of benefits.  “Treatment” includes activities by a provider to coordinate care with a third party.  45 CFR 164.501

	
51

	
31

	
Sect D

	
#14-(MIPS)-last paragraph

	
The RFP states, "Contractors and their providers must coordinate with schools and school districts that provide MIPS services to the Contractor's enrolled members." Is the intent of this new requirement simply to
ensure that services are not duplicative? How are contractors notified when a school or school district is working with a special needs child?  Is AHCCCSA going to provide this information on the monthly FYI file?  Are we coordinating with the school or
school district or the providers that actually provide the services? Has consideration been given to the HIPAA implications? Have the schools/school districts indicated that they are willing to work with the health plans?

	
The intent of the policy is to prevent duplication of service. Contractors can be notified via a DDD support coordinator, a parent, a school provider or the school. AHCCCS will not be providing this information
on the FYI file. Plans are required to coordinate care with the most appropriate entity to best meet the needs of the members. Please see HIPAA response given previously. Yes, the school districts have expressed a desire to coordinate with the health
plans.

	
52

	
31

	
Sect D

	
#14-(MIPS)-last paragraph

	
Please clarify responsibilities of both the health plan and a school in sharing/generating appropriate medical record requirements?  (i.e. transfers of member medical information)

	
Please refer to the answers for questions #50 and #51.

	
53

	
32

	
Section D

	
#16 - Staff Requirements and Support Services, item n.

	
Define difference between Compliance Officer, contract YH04 vs. Fraud and Abuse Coordinator, and contract YH03?

	
The staffing requirement for a Compliance Officer is in the current contract.  The difference between the two positions is the Compliance Officer is considered a key position and must be a senior on-site
employee.  The function is similar to that of the Fraud and Abuse Coordinator, with the additional responsibility to oversee the implementation of a compliance program as outlined in Paragraph 62 of the RFP.  The Compliance Officer should continue to attend
the AHCCCS Fraud and Abuse Workgroup.

	
54

	
32

	
Sect D

	
#16 - Staff Requirements and Support Services, item m.

	
This section states that a Grievance Manager is a required position, this is also restated on page 33, however, on page 92, Section G, Offeror’s Key Personnel, and the position is listed as Grievance
Coordinator.   Is it the intent of AHCCCSA to require a Grievance Manager or Coordinator?  Are these two titles interchangeable?

	
The 2 position titles are not interchangeable. As part of the staff requirements in paragraph 16, AHCCCS requires a Grievance Manager who is responsible for the oversight of the contractor’s Grievance
System.  The reference to Grievance Coordinator on p. 92 is incorrect and should be changed to Grievance Manager.

	
55

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
The RFP states affected members must be informed of any other changes in the network 30 days prior to the implementation date of the change.  Please define “other” changes in the network and
provide examples.

	
Other changes include, but are not limited to turnover in DME providers and provider address changes.

	
56

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
Termination of a contracted provider:

Does this include specialty providers?

	
Yes, for members who were seeing the specialist on a regular basis.

	
57

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
  What does AHCCCSA consider to be “program changes” that require notification be provided to “affected members”?

	
Changes in cost sharing or covered services would be examples of program changes.

	
58

	
36

	
Sect D

	
#22.  Advance Directives, last paragraph

	
In referring to written information to adult enrollees, what is meant by (4): “Changes to State as soon as possible, but no later than 90 days after the effective date of the change?”  Does this
requirement conflict with other disseminated information to member approval requirements?

	
The sentence should read, “(4) Changes to State law as soon as possible...”

	
59

	
37

	
Sect D

	
# 24-- Performance Standards, last paragraph

	
What is the responsibility of the Health Plan when a response is not received from AHCCCS in a timely manner as it states that a corrective action plan “must be approved by AHCCCS prior to
implementation”?

Will the health plan be given sufficient time i.e. (6-9 months) after the date of AHCCCS approval to demonstrate improvement?

	
The Health Plans are responsible for continuing to improve Performance Indicator rates, and it is expected that health plans will develop and implement interventions that will assist them in achieving, at a
minimum, the AHCCCS Minimum Performance Standard.   The amount of time a health plan will be given to implement a corrective action plans depends upon the severity of the issue needing correction and the proposed plan.

	
60

	
37

	
Sect D

	
# 24-- Performance Standards

	
On what are the minimum performance standards based?

	
The AHCCCS Minimum Performance Standards are derived from a formula that includes, but is not limited to previous Performance Indicator rates and statewide averages.

	
61

	
37

	
Sect D

	
# 24-- Performance Standards

	
  As it relates to levels of performance, please define “demonstrable and sustained improvement.”

	
Demonstrable is statistically significant and sustained is for more than 1 year.

	
62

	
39

	
Sect D

	
# 24-- Performance Standards

	
In the current contract, health plans are required to report the results of Provider Turnovers and Interpreter Services.  Will this still be required under the new contract?

	
The current contract states “AHCCCSA will continue to measure and report results for the Performance Measures...”  This measurement and reporting will continue, but because these are not
considered Performance Standards, the information was removed from the RFP.

	
63

	
40

	
Sect D

	
#27—Network Development

	
“For Maricopa and Pima Counties only, this includes a network such that 95% of its members residing within the boundary area of metropolitan Phoenix and Tucson do not have to travel more than 5 miles to see
a PCP, dentist or pharmacy.”

Attachment B, page 115—“In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must demonstrate its ability to provide PCP dental and Pharmacy services so that the member so not have to
travel more than 5 miles from their residence.

There seems to be an apparent conflict between the wording in the Network Development in paragraph 27, and Attachment B, page 115.  Can you please clarify which applies and define metropolitan
Tucson?

	
To clarify, the adjective “metropolitan” is describing Phoenix only.  Metropolitan Phoenix includes other cities as shown on the GSA map for Maricopa County.  In Pima County, this standard
applies only to the city of Tucson.

Attachment B, Page 115.  Last paragraph should read, “In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must demonstrate its ability to provide PCP, dental and pharmacy services to that 95% of
members do not have to travel more than 5 miles from their residence.”

	
64

	
40

	
Sect D

	
# 27 Network Development

	
“Contractors must provide a comprehensive provider network that ensures its membership has access at least equal to, or better than, community norms.”  How will AHCCCS determine community
norms?

	
The Contractor is asked to identify network gaps in its own annual Provider Network Development and Management plan.  In addition, AHCCCSA will utilize information from licensing boards, commercial insurers
and other publicly available materials to determine provider availability.

	
65

	
40

	
Sect D

	
# 27 Network Development

	
“Access is supposed to be equal or better than community norm.”  How will a potential Offeror best demonstrate such access measures/benchmarks in a successful proposal?

	
The Agency will not advise Offerors about improving their submission.

	
66

	
40

	
Sect D

	
# 27 Network Development

	
Provider Network Development and Management Plan– The plan is to consider access of members to specialty care compared to the general
population in the community.  How will a potential Offeror best demonstrate such access in a successful proposal?  How will this criterion be measured (i.e. what is the benchmark(s) that will be used?)?

	
The Agency will not advise Offerors about improving their submission.

	
67

	
40

	
Sect D

	
# 27 Network Development

	
Provider Network Development and Management Plan–

What is the time period the health plans should use for “projecting future needs”, e.g., one year?

	
The Bidder should use its best judgment in deciding how far in the future projected needs should be assessed in order to maintain an accessible network, capable of delivering covered services for the contract
period.

	
68

	
40

	
Sect D

	
# 27 Network Development

	
How does the requirement to consider providers in neighboring states in terms of network development reconcile with the requirement that health plan providers must be licensed in Arizona?  Also, how does
this apply to out-of-state hospitals?

	
Providers whose service address is outside of Arizona must be licensed in the state in which they provide services.

	
69

	
41

	
Sect D

	
# 27 Network Development

	
Provider Network Development and Management Plan–

How is AHCCCSA defining “specialty populations” for the purpose of this plan, and what type of information does AHCCCSA want addressed regarding specialty populations as it relates to the
plan?

	
The Offeror should use its expertise and judgment to identify those populations with network needs different than the majority of members in the GSA, who would need special consideration in the design of the
network.

	
70

	
41

	
Sect D

	
# 29—Network

Management

	
Re: notifications of significant network changes.  In the past, AHCCCSA stated that it would respond within 14 days.  What will be AHCCCSA’s turnaround time(s) for approvals of corrective actions
arising from such notifications?

	
The turnaround time will be dependent upon the circumstances, such as complexity of the corrective action plan.  As stated in the paragraph, AHCCCSA will expedite the process in an emergency.

	
71

	
41

	
Sect D

	
# 29—Network

Management

	
For contractor policies, what does “subject to approval” by AHCCCSA mean?  Is AHCCCSA approval limited only to network management policies or all contractor policies?  Will existing plans
have to submit their policies for approval?

	
“Subject to approval” means the Agency has approval authority over the policies during an operational audit.  It is not limited to network policies only.  Contractors will be notified of
pending operational audits. 

	
72

	
42

	
Sect D

	
#30—Primary Care Provider Standards

	
Once the contractor had determined that appointment availability has not been compromised will action still be required should the panel size exceed 1800?

	
No.  The Contractor, however, is expected to ensure that quality of care standards continue to be met by such providers.  The information may also suggest that the Contractor should recruit additional
providers to serve members in that area.

	
73

	
43

	
Sect D

	
#32-- Referral Procedures and Standards, paragraph 1, item g.

	
“Referral to Medicare HMO including payment of co-payments”.  Please explain this requirement.

	
The Contractor must have written policies on their Medicare Cost Sharing responsibilities that should include copayment responsibilities when a member is referred to a Medicare HMO. 

	
74

	
45

	
Sect D

	
#35—Provider Manual

	
The RFP states, "The contractor remains liable for ensuring that all providers, whether contracted or not, meet the applicable AHCCCSA requirements."  What are a health plan’s obligations to
non-contracted providers?  Please define or further clarify “applicable requirements.”

	
There are a number of “applicable” requirements that the health plan is responsible for, regardless of the providers’ contract status.  Examples include, but are not limited to, ensure
non-contracted providers do not bill members for covered services, that claims/encounter data is submitted if a financial liability is incurred by the Contractor, and that the health plan coordinates benefits.

	
75

	
47

	
Sect D

	
# 37—Subcontracts, paragraph 5

	
Would the “use of provider more than 25 times” include hospitals where members are admitted through the Emergency Department?

	
Yes, the Contractor would be responsible for contracting with physicians who have admitting privileges.  The Contractor would be encouraged to contract with the hospital.

	
76

	
47

	
Sect D

	
# 37—Subcontracts

	
"The Contractor must enter into a written agreement with any provider (including out-of-state providers) the Contractor reasonably anticipates will be providing services on its behalf more than 25 times during
the contract year."    Can this be applied to one individual receiving 25 services form one provider, or is it for 25 unique members?

	
AHCCCSA is requiring a contract for providers used more than 25 times a year, regardless of the number of services provided or members seen.

	
77

	
48

	
Sect D

	
#39—Specialty Contracts

	
With the high potential for AHCCCSA to develop specialty contracts going forward, (i.e. pharmacy) can AHCCCSA provide additional details on how the process might work (i.e. health plan involvement, adjustments to
capitation rates, reporting requirements (both to and form AHCCCSA), claims payment, recovery/reinsurance, TPL related issues)?

	
This section refers to contracts that AHCCCSA negotiates on behalf of its Contractors.  Currently, the only specialty contract AHCCCS is negotiating is for transplant services.  These specialty
contracts are for services provided through the health plans and should not be confused with a carve out of services. 

In the event AHCCCSA carves out the responsibility for certain medical services from its Contractors, AHCCCSA will solicit feedback from its Contractors, capitation rates will be adjusted and other operating
issues will be addressed.  Because AHCCCSA is not currently in the process of developing a carve out, it is unknown what impact a carve out would have on health plan reporting and involvement.  That would need to be addressed on a case by case basis
depending upon the type of service that is carved out.

	
78

	
49

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
For Maricopa and Pima counties, the RFP states that, "The Contractor shall submit all hospital subcontracts and any amendments to AHCCCSA, Office of Managed Care". For all counties EXCEPT Maricopa and Pima it
states, "The Contractor is encouraged to obtain subcontracts with hospitals in all GSA's and must submit copies of these subcontracts, including amendments, to AHCCCSA, Office of Managed Care, at least seven days prior to the effective dates thereof". What
requirements exist (for incumbents bidding on new GSA’s and new contractors) to have the Maricopa and Pima hospital contracts (or any other contract as required by the RFP) reviewed by AHCCCSA prior to implementation? 

	
The Office of Managed Care will accept hospital subcontracts and amendments for review and approval after contract awards are made.  It is suggested that they be submitted as soon after the award that the
contracts and amendments are complete to allow time for the process, prior to implementation.

	
79

	
49

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
Hospital Recoupments– Does AHCCCSA have a policy regarding recoupment of capitation from one health plan and paid to another when
retroactive enrollment occurs, and the initial health plan has paid claims to a provider who was not aware of the enrollment change until notified of recoupment (which often occurs after claims submission timeframes)?

	
AHCCCSA is developing an informal policy related to this issue.  Essentially, medical expenditures incurred in these situations should be treated like expenditures incurred during the PPC time period. 
That means, claims should not be denied for lack of prior authorization, but may be denied if reviewed for medical necessity, and the second health plan determines that the services were not medically necessary.

	
80

	
49

71

116

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
In the Data Supplement, Offerors are instructed to consider the Maricopa/Pima counties contracting pilot project to be extended beyond September 30, 2003.  This is also reiterated in Amendment #1 dated
February 10, 2003.  Is the Data Supplement to be considered a part of the contract and RFP, and a valid RFP instruction?

	
Instructions given in the data supplement should be considered a valid RFP instruction.

	
81

	
49

119

120

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
Out of State Hospitals– Given that Attachment B represents AHCCCSA’s minimum network requirements, how would a potential Offeror
successfully address any potential network deficiencies if Offeror is only “strongly encouraged” but not required to contract with these out of state providers? (e.g. regarding out of state providers listed for GSAs 2 and 4)

	
Although, Contractors are encouraged to contract with hospitals, they are required to have contracts with physicians with admitting privileges to hospitals considered to be a part of the network.  This is
true whether the hospital is in-state or out of state.

	
82

	
50

	
Sect D

	
#42—Physician Incentives

	
"The Contractor shall disclose to AHCCCSA the information on physician incentive plans listed in 42 CFR 417.479(h)(I) through 417.479(i) upon contract renewal, prior to initiation of a new contract, or upon
request from AHCCCSA or CMS."

Question: Is CMS providing the state oversight in respect to physician incentives?

	
This question needs to be clarified.  Refer to the Physician Incentive Plan regulations for AHCCCSA’s responsibility in monitoring compliance with those regulations.  The annual disclosure
reporting requirement is on hold until CMS develops a new disclosure form.  All other provisions will continue to be enforced.

AHCCCS is required to report to CMS on its Contractor’s compliance with those regulations.

	
83

	
51

	
Sect D

	
#45—Minimum Capitalization Requirements

	
"Continuing Offerors that are bidding a new GSA must provide the additional capitalization for the new GSA they are bidding."

Question: Is the capitalization requirement for UFC going into Cochise/Graham/Greenlee, the amount for New Contractors or for Existing Contractors?

	
A current Contractor is considered an existing offeror in all counties to be bid.

	
84

	
51

	
Sect D

	
#45-- Minimum Capitalization Requirements

	
Please clarify what the minimum capitalization requirements are for continuing offerors bidding a new GSA.  Is it the equity per member standard or the capitalization requirements for new contractors
presented in the table?

	
The minimum capitalization requirement for bidders is what is listed in the table.  However, a Contractor must also meet it’s equity per member standard after the contract is awarded.  If the
bidder meets its minimum capitalization, but doesn’t meet its equity per member standard, then the bidder must develop a plan to meet that standard should they be awarded a contract.

	
85

	
51

	
Sect D

	
#45—Minimum Capitalization Requirements

	
Since the current RFP realigns some counties in new GSA’s, is a contractor that is currently an incumbent in one of the county (s) in the GSA but not the other county (s) considered to be an existing
contractor for purposes of the minimum capitalization requirements?  If a contractor uses an irrevocable letter of credit (LOC) to meet its performance bond requirement as described in the RFP, is it correct to say that AHCCCSA will not consider the LOC an
encumbrance or a loan subject to repayment (since the LOC is truly an off balance sheet item and has no outstanding balance owed) as described in the minimum capitalization requirements?  Regardless of the number of GSA’s a contractor is awarded, is it
correct to say that the maximum amount of capitalization or equity a contractor is required to meet is $10,000,000?

	
A current Contract is always considered an existing contractor for capitalization purposes.  Refer to the Performance Bond/Equity Per Member Policy for questions regarding encumbrances on equity.  The
maximum capitalization that a bidder must have to secure an award is $10,000,000.  However, the Contractor must also meet the equity per member requirement.  If the $10,000,000 does not meet the requirement, then additional capital must be
provided.

	
 

	
51

	
Sect D

	
#45—Minimum Capitalization Requirements

	
Please explain the rationale for the Yavapai County minimum capitalization requirements being the same for both new and incumbent contractors.

	
The methodology that was used to determine the amount of the “existing offerors” minimum capitalization requirement resulted in an amount in excess of what the equity per member amount would be. 
Therefore, the existing offeror’s minimum was limited to the equity per member amount.

	
86

	
51

	
SD

	
#45—Minimum Capitalization Requirements

	
If an Offeror is currently an incumbent health plan in a county that is included in a “new” GSA (e.g. for GSA 4, in one county and not all), then will that incumbent health plan be considered an
incumbent health plan or a “new” Offeror in that “new” GSA for proposal submission requirement purposes?

	
Incumbent.

	
87

	
52

	
Sect D

	
#47—Amount of Performance Bond

	
For the Performance Bond specifications it indicates that it must be effective for 15 months following the effective date of the contract...should this be 15 months from the termination date of the
contract?

	
This does mean termination date, and that clarification will be made in the document at a future date.

	
88

	
52

	
Sect D

	
#47 Amount of Performance Bond

	
Will you allow one performance bond from Yavapai County listing both Yavapai County Long Term Care and the acute care program?

	
Yes.

	
89

	
53

	
Sect D

	
#49—Advances, Distribution, Loans and Investments

	
When does AHCCCSA anticipate making changes to the “AHCCCSA Reporting Guide for Acute Care Contractors”?

	
OMC anticipates that the revised guide will be available by May 2003.  Please note that reporting requirements will not change. 

	
90

	
53

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
What is the AHCCCSA definition of “liquid assets”?

	
Cash or investments that can be converted to cash within 3 business days.

	
91

	
53-54

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
How can AHCCCSA be assured that the positive financial performance of a health plan is not the result of not providing all necessary covered services, or limiting access to sub-specialists, thereby causing
the more expensive members to select another health plan?

	
AHCCCSA monitors several areas of health plan operations to ensure that members are receiving appropriate services including, types of member grievances for denied services. 

	
92

	
54

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
How many incumbent health plans in each of the past three (3) years have had Medical Expense Ratios of less than 85%?

	
Because this ratio varies from quarter to quarter, several plans have had Medical Expense Ratios of less than 85% at various times.

	
93

	
54

	
Section D

	
#50—Financial Viability Standards/Performance

	
Provide clarification on what is meant by “on balance sheet” performance bond.

	
Assets that are set aside on the balance sheet for the stated purpose of a performance bond,

	
94

	
54

	
Sect D

	
#51—Separate Incorporation

	
Is it the intent of the separate incorporation requirement that a separate corporation be established for various lines of AHCCCSA business (i.e. Acute Care, ALTCS and Health Care Group) or may these lines of
AHCCCSA business be part of one corporate entity as long as separate mandated reporting can be done for each line of AHCCCSA business?

	
All lines of AHCCCS business must be included in one separate corporation—not separately incorporated.  Separate reporting to AHCCCS for these lines of business will continue to be required.

	
95

	
54

 150

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
What is AHCCCSA’s intent in lowering the Medical Expense Ratio requirement to 80%?  Please explain the potential impacts on capitation rates.

	
Because successful medical management and the implementation of disease management programs can contribute to lower Medical Expense Ratios, AHCCCSA felt that its Contractors should not be discouraged from
pursuing these managed care avenues by potential failure to be in compliance with a financial standard.  This does not impact capitation rate development.

	
96

	
55

	
Sect D

	
#53—Compensation

	
Related to the reconciliation process for PPC costs, what administration percentage does AHCCCSA intend to use in the reconciliation calculation?  In the PPC Reconciliation Policy, the calculation includes a
reduction for reinsurance. Should this not be deleted from the policy as explained in paragraph 58 on page 58 of the RFP  “Effective October 1, 2003, AHCCCSA will no longer cover PPC inpatient expenses under the reinsurance program...” Or are
there medical expenditures related to PPC members that still qualify for the reinsurance program?

	
AHCCCSA will use the administrative percentage that is built into the capitation rates.  The policy will be updated to reflect the elimination of PPC reinsurance in the future. 

	
97

	
55

	
Sect D

	
#53—Compensation

	
Would “programmatic changes that affect reimbursement” include the anticipated increase in in-patient stays or other associated medical expenditures associated with carve out of pharmacy
benefit?

Will AHCCCS be making adjustments in cap for increase in malpractice insurance that is being passed on through increases in contract rates with providers?

	
Yes, programmatic changes include all service categories impacted due a prescription drug In the event that prescription drugs are carved out,

AHCCCS will factor in the increases to provider payments due to malpractice insurance premium increases.

	
98

	
55

	
Sect D

	
#53—Compensation

	
  In determining the various components of health plan reimbursement, how will AHCCCSA take into account the significant trends that have occurred since January 1, 2002?  For example, population changes
have increased medical costs.

	
The encounter utilization reports have six months of CYE ’02 data and financial data as reported by health plans have the full CYE ’02 data.  This data is used in the development of capitation
rates.  The information contained in this data plus adjustments for trend and program changes should account for increased utilization. 

	
99

	
55

	
Sect D

	
#53—Compensation

	
Given that C-section rates have increased to almost 30% in the past 6 months, and are expected to continue increasing due to malpractice concerns and changing provider practices (caused, among other things, by
VBACs being limited), how will AHCCCSA take into account these factors in health plan capitation rate range development?

	
The rate development will be based upon recent actual delivery experience. Information provided by current Contractors will also be utilized in developing future c-section / vaginal delivery percentages. It is
anticipated that there will be an increase to the assumed percentage of babies delivered by C-section.

	
101

	
55

	
Sect D

	
#53—Compensation

	
Given that AHCCCSA’s historical rate increases have been well below actual health plan and market trends, how will future capitation rate increases be developed?  Will AHCCCSA adjust its capitation
rate increases to a targeted Medical Expense Ratio?  For example, if the average of all health plans’ profitability is 5%, and expense trends are increasing at 8% annually, then will AHCCCSA pass along to the health plans 8% or 3%?

	
The first statement is subjective, and conflicts with the audited financial information OMC collects from its contractors. [We also note with interest that the example chosen seems to conflict with the first part
of the question.] While health plan profitability is an important input to rate-setting development, other factors must also be considered before reaching the conclusion rates are actuarially sound.

	
102

	
55

	
Sect D

	
#53—Compensation

	
When will all reimbursement rates that Offerors are not bidding on (by RFP instruction) be made available to potential Offerors? (e.g. prior period coverage, hospital supplemental payments, HIV/AIDS supplemental
payments, Title XIX Waiver Group capitation, Title XIX Waiver Group hospital supplemental payment etc.)

	
AHCCCSA anticipates that the “set rates” will be available by April 1, 2003. 

	
103

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– Please explain AHCCCSA’s rationale for discontinuing reinsurance for the PPC population.  Will AHCCCSA be
taking this circumstance into account when developing the PPC capitation rates being developed (that the Health plans are not bidding on)?

	
With the transition of the MNMI population to the Title XIX Waiver Group, very little reinsurance is paid through PPC.  Therefore, it did not seem cost effective to maintain the large administrative burden
that it puts on the agency.  The small amount of reinsurance paid for PPC claims will be factored into the capitation rates.

	
104

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– What is the rationale for putting a retrospective period at risk, and on what basis are AHCCCSA’s actuaries
developing rates for this program? 

	
AHCCCSA believes that putting the PPC time period at risk will encourage health plans to review claims for medical necessity.

AHCCCSA’s actuaries will use actual claims paid data from the reconciliations to develop the capitation rates.  Furthermore, the rates are reconciled.

	
105a

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– What assumptions regarding length of enrollment, enrollee choice, and utilization and cost trends have been made
regarding this population?

	
The assumptions will be released with the capitation rates.

	
105b

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage Reconciliation– Why is AHCCCSA putting the health plans at 2% risk when the health plans have no ability to manage
this utilization and related costs?  Please explain how this will be accomplished when current PPC capitation rates may not be adequate.

	
AHCCCSA believes that putting the PPC time period at risk will encourage health plans to review claims for medical necessity.

AHCCCSA has no evidence that the current PPC rate is not adequate.

	
107

	
56

	
Sect D

	
#53—Compensation

	
“Risk sharing for PPC reimbursement” – is the elimination of reinsurance also factored into the rates?

	
Yes.

	
108

	
55

	
Sect D

	
#53—Compensation

	
Since PPC rates are done by AHCCCS actuaries and not by the plans, what profit/loss did AHCCCS build in to the rate structure?

	
Profit/loss is not build into capitation rates.  Mercer builds a 2.0% risk contingency into the PPC rates.

	
109

	

56

	
Sect D

	
#53—Compensation

	
Please provide a detail definition of the services included in the delivery supplemental payment.  Please provide detailed information on the DRGs, revenue codes, and CPT/HCPCS codes included in the
definition

	
Additional data will be distributed at the Offeror’s Conference.  Please refer to the service matrix for coding and service category.

	
110

	
56

	
Sect D

	
#53—Compensation

	
Please provide details on how the hospitalized supplemental payment is calculated.

	
The hospital supplemental payment will be calculated based on the costs of the first hospitalization for members who were hospitalized on the date of application.  Encounter data will be used to determine
these costs.

	
111

	
56

	
Sect D

	
#53—Compensation

	
Title XIX Waiver Group Rates– Will the existing member choice selection adjustment percentages remain in effect for Title XIX Waiver Group
members, and will those ranges apply to both the AHCCCSA Care and MED groups?  What assumptions underlie the ranges assigned for capitation rate adjustments under this methodology?

	
AHCCCSA anticipates that it will continue with the choice adjustment.

The TWG rates, including the hospitalized supplemental payment, will be set by Mercer. Rate ranges will not be developed for this group. A risk corridor will be built around these rates.

	
112

	
56

	
Sect D

	
#53—Compensation

	
Title XIX Waiver Group Rates– Will AHCCCSA share its assumptions regarding development of the hospital supplemental payment?  Will
AHCCCSA provide application dates to the health plans in order to allow them to track the receivables for these payments?

	
AHCCCS will provide the assumptions regarding the development of the hospital supplemental payment at the time they are released.

No, AHCCCSA does not have the application dates to provide.

	
113

	
56

	
Sect D

	
#53—Compensation

	
The RFP indicates that AHCCCSA may evaluate the cost experience of choice members versus those who are auto-assigned.  Has AHCCCSA completed any such analysis, and will that analysis be shared with Offerors
prior to the proposal due date?

	
The analysis has not been completed.  AHCCCS will continue to pursue this analysis.

	
114

	
56

	
Sect D

	
#53—Compensation

	
Delivery Supplement – What specific cost components comprise the delivery supplement payment?  What period of time preceding and
subsequent to the birth event should be included?

	
An ad-hoc delivery report will be distributed to all potential contractors at the bidders’ conference to be held on Friday February 21, 2003. The delivery supplemental payment covers costs from six months
prior to the delivery date, the actual delivery, and two months post delivery.  The offset in the CRCS should be eight months of capitation for the member.

	
115

	
57

	
Sect D

	
#55-- Capitation Adjustments, paragraph 2, item b.

	
If a member is hospitalized with a police guard, are they considered incarcerated?  If not, please provide the definition that is used by AHCCCS to qualify a member as “incarcerated.”

	
If the member meets any of the following criteria, they will be considered incarcerated.

The following are considered inmates:

1.     an inmate in a DOC prisoner

2.     an inmate of a county, city or tribal jail

3.     an inmate of a prison or jail prior to conviction

4.     an inmate of a prison or jail prior to sentencing

5.     an inmate of a prison or jail who can leave prison or jail on

         work release or work furlough and must return at specific

         intervals

6.     an inmate of a prison or jail who can leave prison or jail on

         work release or work furlough and must return at specific

         intervals

7.     an inmate who receives outpatient medical services outside of

         the prison or jail setting.

	
116

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
As contractors will be required to post clinical performance indicators on the Health Plan web site, are these indicators AHCCCS generated numbers or health plan internal data?

	
Contractors must post AHCCCS generated performance indicators.  These will not be posted prior to receiving Contractor feedback.   

	
117

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
Use of Web Site– Please confirm when this data must be posted to a health plan’s web site.

	
AHCCCS will inform the plans when this information is required to be posted.  Available information will be posted in CYE ’04.

	
118

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
On what contract year will the clinical performance indicator results be based to adjust the auto-assignment algorithm?  When will these clinical performance indicator results be made available to the health
plans?

	
As soon as reported by AHCCCS in 2005, for Contract Year 10/1/03 through 9/30/04.

	
119

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
49. For prenatal care in the first trimester, what definition of “trimester” will be used in calculating the performance measures that will impact the auto-assignment algorithm, and how will it be
benchmarked?  Examples to consider for clarification include: first time seen for this pregnancy, whether or not on AHCCCS; first time seen on AHCCCS, whether or not by current health plan or provider, and first time seen by current health plan or
provider.

	
AHCCCS uses the HEDIS specifications for definition of trimester. Healthy People 2010 is the benchmark. Further clarification will be forthcoming.

	
120

	
58

	
Sect D

	
#56—Incentives

	
Related to the incentive fund (it is understood that the incentives would not take place until after the CYE 9/30/04), however, what type and or amount of capitation is AHCCCSA considering retaining? 
AHCCCSA has previously discussed incorporating incentives and performance outcomes into the reimbursement to contractors but has not previously implemented a process. How much input will AHCCCSA solicit from the contractors in developing incentives and/or the
performance measured outcomes?  If contractors are required to develop/submit actuarially sound capitation rates how can AHCCCSA retain a portion of the capitation for an incentive fund? Would this action cause the capitation rates to not be actuarially
sound?

	
AHCCCSA is not considering a financial incentive program at this time—but may in the future.  Contractor input into the process will be solicited.

Any amounts withheld from capitation would be small enough so as to not impact the actuarial soundness of the capitation rates.

	
121

	
58

	
Sect D

	
#57—Reinsurance

	
Related to inpatient reinsurance and nursing facility service expenditures in lieu of hospitalization, can AHCCCSA be more specific on what expenditures would qualify for reinsurance reimbursement as described in
the RFP?  The definition of what qualifies as “...provided in lieu of hospitalization...” has been an issue in the past.

	
Please refer to the Reinsurance Claims Processing Manual, Chapter 2, Section 2, Chapter 3, Section 2, and Chapter  6, Section 4.

	
122

	
58

	
Sect D

	
#57--Reinsurance

	
What are the reinsurance premiums in regards to the reinsurance table on page 58?

	
This will be published by the end of February. 

	
123

	
58

	
Sect D

	
#65 Incentives

	
Incentive Fund – What performance measures does AHCCCSA intend to use in administering the Incentive Fund?  Will such incentive fund
measurements be linked to the accessibility and quality of covered services coordinated by the health plan, or to the Medical Expense Ratio?

	
AHCCCSA has not developed a methodology for the incentive fund at this time.

	
124

	
60

	
Sect D

	
#57--Reinsurance

	
What does "certify" mean as it references "verify and certify" encounters?

	
Per the BBA all encounter submissions must be certified as accurate by the submitter.  OMC EPARS unit has issued a format for that certification.

	
125

	
61

	
Sect D

	
# 57--Reinsurance, Reinsurance Audits, Audit Considerations, first paragraph

	
Please give a clearer explanation of “Pre-hearing and/or hearing penalties discoverable during the review process will not be reimbursed under reinsurance.”

	
AHCCCS will not reimburse for penalties assessed to Contractors through reinsurance.  Contractors have sole financial responsibility for penalties that are awarded through the grievance process.

	
126

	
61

	
Sect D

	
# 58-- Coordination of Benefits, paragraph 2, Cost Avoidance

	
Is CRS considered a third party?

	
CRS meets the definition as a third party.  However, this does not mean that this entire section applies appropriately to CRS coverage.  Contractors are required to coordinate service with CRS per
Paragraph 10, page 22. 

	
127

	
61

	
Sect D

	
# 58-- Coordination of Benefits, paragraph 2, Cost Avoidance

	
AHCCCSA is currently under procurement for a new TPL contractor.  How will that new contract’s operations impact coordination of services with AHCCCS health plans and what will be the financial impacts
of any contract changes to a health plan?

	
The new contractor will perform the same functions as the current contractor.  Therefore, there are no financial impacts anticipated.

	
128

	
64

	
Sect D

	
# 62-- Corporate Compliance

	
This health plan is a part of a larger corporation; this larger corporation has a defined Corporate Compliance Program and Officer.  This Officer is located in Washington D.C.; This health plan additionally
has a Fraud and Abuse Officer on site.  This section appears to mingle the two together.  Are we meeting the guideline if we have an Off-site Compliance Officer and Committee, if we have a local on site Fraud and Abuse officer?

	
Please refer to the answers for questions #53 and #54.

	
129

	
65

	
Sect D

	
#63—Records Retention

	
“The Contractor shall preserve and make available all records for a period of five years from the date of final payment under this contract.”

As the statement does not differentiate for age, does the same limit apply to pediatric patient (<21) records?

	
All member records, regardless of the age of the member must be maintained and available as delineated in this paragraph.

	
130

	
66

	
Sect D

	
Page 66, Section 64, Data Exchange Requirements, first paragraph

	
Upon request, the Contractor shall provide updated, date-sensitive PCP assignments: Does AHCCCS anticipate requiring this during the upcoming contract year?  If so, when will the file layout be
provided?

	
We do not anticipate that this information will be required in the upcoming contract year.

	
131

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Are security code/data transmissions already in effect with the AHCCCS VPN and PMMIS systems or is this something new?

	
The security code/data transmissions have been in effect with the AHCCCS VPN and PMMIS systems since October of 2002.

	
132

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Does the Health Plan have to obtain a business associate contract with AHCCCS for the release of member information to AHCCCS under the HIPAA privacy standards?

	
The AHCCCS Administration is not aware of any covered functions that it performs on behalf of Health Plans under this RFP that would require the Health Plans to consider the Administration to be a business
associate of the Health Plan.  Furthermore, it is the AHCCCS Administration’s position that neither will Health Plans, under this RFP, be required to perform covered functions on behalf of the AHCCCS Administration that would require the AHCCCS
Administration to consider the Health Plans to be business associates of the AHCCCS Administration.  Neither does the AHCCCS Administration consider a business associate agreement to be a prerequisite for the exchange of protected health information between
health plans and the AHCCCS Administration.  For example, covered entities may disclose protected health information to another covered entity for purposes of treatment, payment or certain health care operations.  See 45 CFR 164.506.  There are also a
number of disclosures permitted by 45 CFR 164.512 that pertain to the relationship between the health plans and the AHCCCS Administration.  Neither of these rules mandates that a business associate agreement be executed as a precondition for disclosures pursuant
to these rules.

	
133

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Do we need to state specifically in our notice of privacy practices that information can and will be released to AHCCCS for the purposes of oversight?

 

	
It is the position of the AHCCCS Administration that it falls within the regulatory definition of a health oversight agency as set forth at 45 CFR 164.501.  The Privacy Rule, at 45 CFR 164.520(b)(ii)(B),
requires that the notice of privacy practices include a description of the purposes for which a covered entity is permitted to disclose protected health information.  Disclosures for health oversight activities are permitted by the rule.  See 45 CFR
164.512(d).  Determining the precise contents of the contractor’s notice of privacy practices is the contractor’s responsibility.  Any advice or direction provided by the Administration is not binding on the federal agency responsible for
enforcement of the HIPAA Privacy requirements.

	
134

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Will AHCCCS have a notice of privacy practices that addresses sending information to the Health Plans?

	
Yes.

	
135

	
70

	
Sect D

	
# 72—Sanctions

	
When will the Sanctions policy be available?

	
The policy will be available prior to October 1, 2003 in order to be in compliance with the BBA.  OMC will make every effort to finalize it well in advance of that date.

	
136

	
70

	
Sect D

	
# 73-- Business Continuity Plan

	
When will the Business Continuity Plan policy be available?

	
A draft of the Business Continuity Plan Policy is in the bidder’s library and on the AHCCCS web site.

	
137

	
70

70

72-73

	
Sect D

	
# 73-- Business Continuity Plan

	
When will draft AHCCCSA policies or AHCCCSA policies in revision as referenced in RFP be ready and how will they be distributed?  If not by website, how will potential Offerors be notified?  (e.g.
Sanctions policy; Current Health plan Change policy; Member Transition for Annual Enrollment Choice policy, Open Enrollment and Other Plan Changes, and Business Continuity Plan policy.)

	
These policies will all be posted on the web site when completed.  Most of these are currently posted there.  It is the bidder’s responsibility to regularly review the web site or physical
bidder’s library for updates.

	
138

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Relating to the inpatient pilot program, if legislation is not enacted to extend the pilot program in Maricopa and Pima counties beyond 9/30/03, will AHCCCSA adjust the capitation rates it pays to
contractors? 

	
Yes.

	
139

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
When will all of the pending issues listed on page 71 of the RFP (e.g., transplants) be resolved and will those issues be resolved before the bid due date?

	
AHCCCSA is unable to determine the exact date the pending issues will be resolved.  It is unlikely that they will be resolved prior to the bid submission due date. 

	
140

	
71

	
Sect D

	
#76—Balanced Budget Act of 1997 (BBA)

	
What is the timeline for new or revised policies in AMPM regarding Balanced budget Act of 1997 (BBA)?

	
October 1, 2003

	
141

	
71

	
Sect D

	
#76—Balanced Budget Act of 1997 (BBA)

	
When will policies be completed regarding Special Health care needs and Emergency Services according to BBA?

	
October 1, 2003

	
142

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Has AHCCCSA or the Governor’s Office prepared a position or policy paper that outlines the pros and cons of
carving out pharmacy services from the AHCCCS program?  If yes, when will this be made available to potential Offerors?

	
AHCCCSA is in the process of hiring a consultant to determine if cost savings can be achieved with carving out prescription drugs from the Contractors.  The result of that study is anticipated to be
finalized in the Summer of 2003.  The report should include both pros and cons of a prescription drug carve out.

	
143

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given the complexity of a pharmacy services carve out, is the October 1, 2003 implementation date feasible?

	
If implemented, AHCCCSA anticipates that the prescription drug carve out would be effective October 1, 2004.

	
144

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– How much in PMPM dollar savings does AHCCCSA anticipate to realize if pharmacy services are carved out from the health plans?

	
AHCCCSA is in the process of hiring a consultant to determine the potential cost savings of carving out prescription drug costs from the Contractors.  The result of that study is anticipated to be finalized
in the Summer of 2003.  The report should include both pros and cons of a prescription drug carve out.

	
145

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
  Prescription Drugs – Will AHCCCSA implement quantity limits per month and per prescription, prescriptions per period of time and dosage limits to manage utilization problems that could affect
medical costs?  (Over-utilization of antibiotics causing resistance – a CDC effort is underway to address this problem as well as under-utilization of statins in diabetics and CAD, and asthma as mentioned above. Higher than recommended or safe doses result
in adverse effects).

	
AHCCCSA  does not anticipate implementing any additional  type of quantity limit at this time.  Please refer to the AMPM, Chapter 300 for current limits.

	
146

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA identify and work with health plan case management to restrict members to prevent drug-seeking behavior and
help them get proper treatment of their condition?

	
PBM’s have these types of edits and AHCCCSA expects that this information will be made available to the Contractors.

	
147

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA provide the health plans concurrent access to the pharmacy database for their respective membership to
allow them to do reviews that impact care plans, disease management, and health outcomes?

	
Yes, AHCCCSA anticipates that real time data will be made available to its Contractors.

	
148

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA assign responsibility to the PBM to perform all of the management of these pharmacy issues?  Will
AHCCCSA or the PBM hire staff to address health plan interests and data integration requirements?

	
The responsibility will be shared by the PBM and the Contractors, not unlike the current system.  Yes there will be staff to coordinate the administration of the program.

	
149

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– In the event that pharmacy services are carved out of the AHCCCSA program, please delineate which drugs will be carved
out.  Examples include:

Injectables

 Enterals

 Infusion drugs / Hemo factor

 Chemotherapy

 Family Planning drugs

 Pharmacy dispensed in a physician or hospital

 setting

 Psychotropic drugs currently being provided by

 RBHAs

	
The bidder should assume that all outpatient pharmacy services will be carved out.  Any of the listed drugs when administered in an outpatient setting will be carved out. If any of the listed drugs are
administered in an inpatient setting, then they are covered under the AHCCCS tier per diem reimbursement. 

Prescriptions administered in a Skilled Nursing Facility will be carved out.

	
150

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If injectables are not carved out, will there be compensation to the plans for the increased costs associated with
obtaining them on the medical side?  The discount obtained running them through the retail pharmacy benefit will be lost if they are not. (MC)

	
Injectables will be carved out.

	
151

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA carve out all transplant related therapy and manage the coordination of benefits with Medicare?

	
Yes, prescription drugs associated with transplants will be carved out, and the PBM will be responsible for coordinating benefits with Medicare.

	
152

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given certain members’ complex pharmacy regimens designed to control or improve chronic and costly medical
conditions, how will AHCCCSA adjust capitation rates for such identified members’ increased non-pharmacy utilization costs if pharmacy services are carved out of the AHCCCS program?  For example, what may be the pharmacy prior authorization requirements
that will need to be coordinated among the “statewide” pharmacy benefits manager and the health plans to achieve cost savings and consistency in application of clinical criteria?

	
One prior authorization policy will be developed by AHCCCSA with input from its Contractors. 

The plans should factor the impact of the prescription drug carve out to other service categories.

	
153

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management is carved out, what does AHCCCSA intend to do with over-prescribing physicians?  How will
such issues be coordinated with health plans?  Will this data be made available by health plan?

	
The Contractors will continue to receive real time information that will permit provider profiling.  This will be the responsibility of the Contractor to monitor.

	
154

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management services are carved out, how will AHCCCSA deal with prescriptions for health plan members that
are written by physicians who are not contracted with the member’s health plan?

	
All prescriptions will most likely be filled unless the pharmacy is not in the PBM’s network.

	
155

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Who will be responsible for reporting and monitoring pharmacy fraud and abuse issues?

	
Both the Contractor and the PBM will be responsible for monitoring fraud and abuse issues.

	
156

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given federal Medicaid drug rebate requirements and recent lawsuits limiting the use of a formulary, how will AHCCCSA
restrict the usage of high cost and inappropriate pharmaceuticals?

	
CMS has recently interpreted the Medicaid Drug Rebate Prgram as permitting the use of a formulary that encourages management of the pharmacy benefit.  States with formularies have recently prevailed in the
courts.

	
157

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Rebates are based on increased utilization of brand name medications, not cost-effective management, thus resulting in
higher cost of the pharmacy benefit.  The logic of doing this, to get back a greater percentage of rebate dollars, is flawed.  If one is spending $100 to get back $4 (4%), and keeping generic utilization in the 60%-plus range, how would it benefit to treat
the same condition for $200 to get back $36 (18%) and drive up the average cost per prescription, since the use of generics would most likely decline 15-25 percentage points?

	
Noted.  The study will address this question.

	
158

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If AHCCCSA decides to carve out the pharmacy benefit, any gain from increased rebates will be offset by increased health
plan costs (PMPM and $/Rx).  The current requirements to obtain Federal Rebates are contradictory to the ability to manage over-, under- and mis-utilization of the pharmacy benefit and ultimately affect patient care in a positive manner.  The carve out of
pharmacy services from the health plans could result in misinformed decisions, increased hospitalizations, emergency room visits and physician visits.  What are the assumptions of AHCCCSA’s actuaries regarding the impact on other health care costs if
pharmacy management is carved out of the program?

	
The study will address the question.  Additionally, the Contractors will continue to receive data as the currently do from the PBM to perform the “back end” utilization management.  Each
plan must make its own determination of the impact that the prescription drug carve out will have to other service categories.  AHCCCS’ actuaries have not made final determinations of the impact to other service categories.

	
159

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management is carved out, how will AHCCCSA handle requests for non-formulary drugs?

	
AHCCCS will work with its Contractors to develop a prior authorization process for non-formulary drugs.

	
160

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Managing the pharmacy benefit at the health plan level with closed formularies allows for more effective case
management, concurrent review and disease management, to name a few activities that positively impact member health outcomes and reduce overall program costs.  An open formulary focused on obtaining rebates will ultimately result in increased medical service and
pharmacy costs, and hinder health plans’ abilities to implement effective medical management programs that readily influence member behaviors and health outcomes.  Will AHCCCSA be establishing an open or closed formulary?  Will it be a uniform
statewide formulary?  What will be AHCCCSA’s assumptions in developing health plan capitation rates for open and closed formularies?

	
There will not be an open formulary.  CMS is flexible with the states in establishing formularies that have effective management procedures.

There will be no impact to the capitation rates for open or closed formularies.

	
161

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– One of the most effective ways to control pharmacy costs is to conduct academic detailing and profiling of
physicians’ prescribing behaviors.  Who from AHCCCSA will be responsible for these initiatives?  How will this information be conveyed to providers?  How often?

	
As mentioned previously, the Contractors will receive data that will permit them to continue their provider profiling.

	
162

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– With pharmacy services carved out of the AHCCCSA program, how does AHCCCSA intend to address the issuance and payment of
prescriptions written in an inpatient setting that are reimbursed on a per diem basis?  Will AHCCCS adjust facility tiered per diem rates?

	
These will continue to be included in the tier per diems.  The rates will be adjusted as provided for in Arizona statute.

	
163

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– With pharmacy services carved out of the AHCCCS program, how does AHCCCSA intend to handle prescriptions written in an
emergency room?  Will only short-term prescriptions be issued, with written instructions for the member to follow up with his/her PCP?  How will the information about such prescriptions written in the emergency room be communicated/transmitted to the
member’s PCP?  Which provider will be responsible for effecting such information transfers?

	
This detail has not been worked out yet.

	
164

	
71

	
Sec D

	
#75—Pending Legislative/Other Issues

	
Hospital Pilot Program– Even though AHCCCSA instructs Offerors to bid as if this program is extended beyond September 30, 2003, does AHCCCSA
anticipate that such extension will actually occur?  And what will be the impacts if the pilot program is not extended?

	
Yes, AHCCCSA anticipates that the pilot will be extended.

	
165

	
71

	
Sect D

	
#76-- BBA

	
When is it anticipated that AHCCCSA’s final decision regarding the BBA requirement to have an expedited hearing process through the State Medicaid agency be made available to potential Offerors?

	
AHCCCSA will have that decision as soon as possible.  When a final decision is made.  Offerors will be informed immediately through the web site and in written form.

	
166

	
72

	
Sect D

	
#77-- Healthcare Group of Arizona

	
Does agreement to participate in the HCG program provide any weight in award decisions for the acute care program?

	
In the case of negligible differences between two or more competing proposals for a particular GSA, in the best interest of the State, AHCCCSA may consider an Offeror, who participates satisfactorily in other
lines of AHCCCS business, as a factor in awarding the contract..

	
167

	
89

	
Sect G

	
Related Party Transactions

	
Are questions 1 & 2 specific to the health plans board and staff or do these questions relate to the health plan’s parent company?

	
These questions are specific to the Offeror’s board and staff.

	
168

	
90

	
Sect G

	
Related Party Transactions

	
Furnishing of goods or services – does this include payments made to brother/sister organizations made in the normal course of business, i.e., payment to a hospital for inpatient services when the plan and
hospital are owned by the same organization?

	
Yes, this applies to payments made to related party organizations in the normal course of business.

	
169

	
92

	
Sect G

	
 

	
Please define “AHCCCSA program” as to be used in the final column of this table?  Is this meant to include responsibilities pertaining to other AHCCCSA programs as well, such as the ALTCS and
Premium Sharing programs?

	
The AHCCCS acute care line of business.

	
170

	
93

	
Sect H

	
 

	
What percentages/values will be assigned to each of the five scoring categories?

	
This information is not being shared with Offerors.

	
171

	
93

	
Sect H

	
 

	
Can AHCCCSA define “negligible differences” in the contents of the sentence, “In the case of negligible differences between two or more competing proposals for a particular
GSA...”

	
The definition is not being shared with Offerors.

	
172

	
93

	
Sect H

	
 

	
If a Letter of Intent (AHCCCSA mandated LOI format for CYE 9/30/04 approved version) does not include language to address the amount of reimbursement to be paid a provider for services rendered, how can the
determination of a capitation rate based on such LOI’s be considered to be actuarially sound? If CMS has mandated that all capitation rates be actuarially sound, how can AHCCCSA consider an LOI with no negotiated fee schedule to have the same weight as fully
executed contract?

	
Capitation rates will not be based on LOI’s, but rather on historical cost and utilization data provided by health plans.

Historical experience with appropriate trends that are applied to the historical data are sufficient to develop actuarially sound capitation rates. 

	
173

	
94

	
Sect H

	
 

	
The RFP addresses the situation when an offeror submits a capitation bid below the actuarial rate range, what will AHCCCSA do if the offeror’s capitation bid is above the actuarial rate range?  Will
AHCCCSA place the offeror within the range and if so, at point within the range?

	
If the Offeror’s bid is above the top of the rate range,   AHCCCSA may elect to initiate a BFO process to guide the bidder into the rate range, or may set the rate at some point below the mid
point of the rate range.  The exact placement is confidential.

	
174

	
94

	
Sect H

	
 

	
What are the maximum and minimum number of points possible for the capitation bids by GSA and risk group? If a bid is between the minimum and maximum rate within the actuarial rate range, will points be awarded
on a linear basis or some other method?

	
The scoring methodology for capitation bids is proprietary and confidential.

	
175

	
97

	
Sect H

	
 

	
Is AHCCCSA anticipating that Offerors will submit policies with their proposals?  If yes, what policies are to be submitted in Offerors’ proposals?

	
No.

	
176a

	
97

	
Sect H

	
 

	
In responding to questions presented in this section of the RFP, may potential Offerors provide attachments that further illustrate their narrative responses?  Will such attachments be counted toward (i.e.
included as part of) the three (3) or five (5) page limit instructions?

	
It is anticipated that the narrative will fully address the submission requirement.  Only specified attachments may be included per the submission instructions.  The narrative may include a description
of policies, handbooks, manuals, newsletters or other documents, but the documents should not be included in the submission unless specifically requested.

	
176b

	
 

	
Sect H

	
 

	
Please clarify the award of points for the extra credit submissions.

	
The first full paragraph on page 95 of the RFP which begins, "The Offeror may submit up to three programs/initiatives, ..."  should be changed to read, "There are a specific number of points available for each
category.  In order to receive the full number of points available, an initiative/program must be submitted for each category.  If multiple submissions in a single category are received, they will be considered one initiative/program.  Offerors should
be aware that the points earned through extra credit responses may be significant enough to determine the outcome of contract awards."

	
177

	
98

	
Sect I

	
 

	
May the bidders submit the provider network on a CD as opposed to a 3.5" floppy disk?

	
Yes.

	
178

	
98

	
Sect I

	
 

	
What is the intent of “network hospital?”  Does this include the hospitals that are listed in Attachment B, or the hospitals for whom the contractor has obtained a LOI?

	
Each hospital the bidder considers to be a part of the network, whether there is a contract, LOI or not.  Please note that in Maricopa and Pima Counties where the Pilot Program exists, Offerors are required
to have contracts or LOI’s with hospitals.

	
179

	
98

	
Sect I

	
 

	
If the provider is currently contracted with our long term care program, is he considered a provider currently contracted for purposes of this database? If we have both a contract for LTC and a LOI for acute
care, how do we indicate it?

	
A contract covering the participation of a provider in the LTC program solely does not constitute a contract for the Acute Care program.  The LOI should be reflected in the submission.

	
180

	
98

	
Sect I

	
 

	
How would you like multiple addresses of providers entered in the database?  If a provider has multiple service addresses how do you wish us to list them by line item - the Access 2000 database will not
accept multiple entries of the same ID number, and we would need to modify the number somehow.

	
AHCCCS has successfully entered multiple entries with the same ID number and had them accepted by Access 2000.  Perhaps the Offeror is using the primary key on the ID number.  If this is
the problem, removal should allow acceptance.  Or they may be indexing and set their index to not accept duplicates.

	
181

	
98

	
Sect I

	
Question 1

	
Should a printed copy of the Provider Network File be submitted with the 3.5’ disk?  Due to size of the file can the Provider network File be submitted on CD?  How many copies of the disk (or CD)
should be submitted with the response?  Should the Provider Network File be sorted by GSA and Provider Type?  Please Clarify.

	
It is not necessary to submit a printed copy.  The file may be submitted on a CD.  Three copies of the disk (CD) should be submitted.  Sorting of the data will be done after receipt of the file by
AHCCCS.

	
182

	
98

	
Sect I

	
Question 2

	
What format is required for the contracted physicians who have admitting privileges to the network hospitals?  Is the response limited to three pages?  Are there preferred column formats and/or length
limit on data fields?

	
This information should be submitted on hard copy.  There is no page limit.  Please sort by hospital with provider ID and name.

	
183

	
98

	
Sect I

	
Question 3

	
Is the response limited to three pages?

	
No.

	
184

	
98

	
Sect I

	
 

	
If the Plan does a group contract, do you need to have a letter of Intent for each provider/location for a group practice?

	
No.  Proof of authority of signatory must be available if requested.

	
185

	
98

	
Sect I

	
 

	
If the Plan has evergreen contracts with an existing provider in a GSA they already occupy, do you have to have a Letter of Intent for those providers?

	
No.

	
186

	
98

	
Sect I

	
  

	
If the Plan currently contracts with a provider in a specific county in which the Plan currently has membership and that provider also services other counties, does the Plan need a LOI for counties in which the
Plan is bidding but does not currently have membership?  Or is the current contract for the county sufficient?

	
There must be a contract or LOI that covers the pertinent GSA and time period.

	
187

	
98

	
Sect I

	
 

	
Can potential Offerors submit their responses to this question on a CD-ROM instead of floppy disks?

	
Yes.

	
188

	
99

	
Sect I

	
 

	
When will the rates being calculated by AHCCCS for PPC, HIV, T19, and HIFA be available?     Are the bidders to include these rates in the projections they prepare or should they be carved
out?

	
AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
189

	
100

	
Sect I

	
 

	
How can AHCCCSA deem that the rate proposal includes the cost of administrative adjustments required during the term of the contract when of the financial impact of several major issues is unknown and contingent
on pending legislation?  Is AHCCCSA prepared to adjust capitation rates and or the administrative component due the resolution of pending legislation?

	
AHCCCSA will adjust the capitation rates after the pending items are resolved, if necessary.  Contractor feedback will be solicited.

	
190

	
100

	
Sect I

	
Capitation

 Last paragraph on page 100

	
“The offeror’s rate proposal will be deemed by AHCCCSA to include the costs of administrative adjustments required during the term of this contract.

Please define what is meant by “administrative adjustments.”

	
Examples of administrative adjustments include BBA costs, HIPAA costs, member ID card costs, and the impact to administrative costs due to the carve out of pharmacy (pharmacy bid only).

	
191

	
101

	
Sect I

	
 

	
What does benchmarking Family Planning Services mean?

	
The submission requirement regarding Family Planning has been modified.  Benchmarking is deleted as a submission requirement.

	
192

	
101

	
Sect I

	
 

	
Will AHCCCS have goals and benchmarks set as in the performance standards as relates to Family Planning services?

	
None are planned at this time.

	
193

	
101

	
Sect I

	
 

	
Please define “other hard to reach populations.”

	
The health plan should define this based upon the geographic areas served.

	
194

	
102

	
Sect I

	
 

	
How far back should I go to indicate an average speed for resolution? (the last quarter, last contract year, calendar year)

	
Please use the last complete contract year.

	
195

	
103

	
Sect I

	
Grievance and Appeals

	
This item asks for both a flowchart and a written description of the grievance and appeals process.  Due to the many contingencies of the grievance and appeal process, may responses include the requested
flowchart as an attachment to the three-page response?  Or is the flowchart to be included within the three-page response?

	
The narrative should be three pages; the flow chart should not be included in the 3 page limit.

	
196

	
103

	
Sect I

	
Question 36

	
Requests a description of the grievance and appeal process, including “both the informal and formal processes.”—is there a mandated informal process and if so what are the parameters given the
administrative code and the process set forth in Attachment H?

	
No.  With the new Balanced Budget Act regulations, there is no mandated informal process.  We are amending the submission requirement to:  Provide a flow chart and written description of the
grievance and appeals processes; include general timeframes.  Identify the staff that will be involved at each phase and provide their qualifications.  (Limit 3 pages plus a flowchart)

	
197

	
103

	
Sect I

	
 

	
Is this “informal” process the expedited appeal process in response to the Notice of Action described in Attachment H, or some part of that process?

	
Please refer to the answer in question # 196.

	
198

	
103

	
Sect I

	
Question 40.

	
How must this requirement be met for a new offeror? As a current LTC PC, must we submit claims aging data from our LTC program?

	
A new Offeror, currently acting as an MCO, must submit their claims aging for the current line of business used throughout the submission.

	
199

	
103

	
Sect I

	
Question 40

	
What format is required for the claims aging report – detail or summary?

	
This bid submission requirement is eliminated. 

	
 

	
104

	
 

	
 

	
The health plan compiles quarterly financial information for AHCCCS.  Will a copy of the quarterly financial statements submitted to AHCCCS meet this requirement?  If yes, which schedules should be
submitted?  If no, please provide more details as to what specific financial schedules are required.

	
Yes.  Please provide the Balance Sheet and Income Statement, and notes to financial statements.

	
200

	
104

	
Sect I

	
 

	
In answering the questions in Section I of the bid, specifically financial forecasts (items #48) and financial viability calculations (item #49), how should the offeror incorporate the fact that; capitation rates
have to be submitted with and without (carved out) the pharmacy component, and capitation rates for several risk groups are unknown and will be set by AHCCCSA?  These items will have a direct impact on an offeror’s forecasted financial results.

	
Only submit financial statements assuming the prescription drug benefit remains the responsibility of the Contractor. 

AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
201

	
104

	
Sect I

	
Question 52

	
Can programs initiated prior to 10/1/2003 be used for extra credit?  Is the total page limit for the response 9 pages (limit of three programs/initiatives/limit of three pages each) plus the timeline for
each program/initiative?  Please clarify.

	
Yes, programs initiated and expected to continue in the new contract period may be submitted for extra credit.  The total page limit is 9 pages, a limit of 3 per program/initiative.  The timelines are
in addition to the 9 pages.

	
202

	
104

	
Sect I

	
 

	
The RFP calls for financial forecasts in "at least the level of detail specified for annual audited financial statements". Does this mean that we need to submit the income statement at the risk code category
level as well as a combined income statement for the entire county?

	
No—just the Balance Sheet and Income Statement and notes to the financial statements.  This information should be statewide rather than by county or GSA. 

	
203

	
104

	
Sect I

	
 

	
We are preparing two sets of capitation rates, one with and one without prescriptions. Do we need to prepare two sets of financial projections also? 

	
No—just one assuming that the prescription drug benefit remains the responsibility of the Contractors.

	
205

	
104

	
Sect I

	
 

	
Will AHCCCS determine which set of capitation rates we should use in our projections?

	
The Offeror should use the capitation rates that assume prescription drug will continue to be the responsibility of the health plans in their projections.

	
206

	
104

	
Sect I

	
 

	
Who is considered to be within "community involvement"? Members, Agencies, Community Providers, Hospitals, etc.

	
The entities mentioned could be considered a part of the community, but community is not limited to these entities.

	
207

	
104

	
Sect I

	
 

	
Please clarify whether the entire response to this section is three (3) pages maximum or three (3) pages maximum per each initiative selected?

	
Please refer to the answer to question #104.

	
208

	
105

	
Sect I

	
 

	
What would cause AHCCCSA to not have a Best and Final Offer (BFO) process?

	
BFOs can be time consuming and resource intensive for both the state, as well as the bidders. If the initial bids for a given GSA fall generally within the established rate ranges, the state has reserved the
right to finish scoring the proposals and to make tentative awards. Rate offers to the successful bidders would then be made to the extent necessary to ensure all rates fall within the established rate ranges.

	
209

	
106

	
Sect I

	
 

	
Capitation Rates Offered after BFOs– Please further clarify the following, “At this point, should the Offeror have a rate code(s)
without an accepted capitation rate, AHCCCSA shall offer a capitation rate to the Offeror.  Note that all rates offered in this manner shall be identical for all Offerors in the same GSA and rate code.”  Please further clarify the meaning of
“all Offerors” in this context.  Is this only to be applied to those Offerors not having acceptable rates?

	
Yes.

	
210

	
107

	
Sect I

	
 

	
In the RFP amendments about Pima/Santa Cruz, 5 contracts will be awarded in Pima but only 2 will get Santa Cruz County.  When bidding in Santa Cruz Co., should we bid as blended rates or separate per
county?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
211

	
109

	
Sect I

	
 

	
Will all Bidders Library items be posted on AHCCCSA’s web site?  If not, how will potential Offerors be notified that new materials are available in the Bidders Library?

	
It is AHCCCSA’s intention to have virtually all bidders’ items posted on the web site.  Potential Offerors should review the web site on a regular basis to receive updates.

	
212

	
115

	
Attach B

	
 

	
In terms of assessing and evaluating a health plan’s network of providers, are PCPs, dentists, pharmacies, hospitals and specialty care providers all assessed equally?  If not, how are they assessed or
evaluated in the scoring process?  How are ancillary providers assessed or evaluated in the scoring process?

	
This information is not being shared with bidders.

	
213

	
 

	
Attach B

	
 

	
Please clarify this statement - “if outpatient specialty services (OB, family planning, internal medicine and pediatrics) are not included in the primary care provider contract, at least one subcontract is
required for each of these specialties in the service sites specified.”

	
Contracted providers able to deliver these specialty services, should be available in the service sites specified.  If the services are not available, this information should be included in the Network
Development and Management plan, along with the steps to be taken to provide the services to members.

	
214

	
115

	
Attach B

	
Instructions

	
May a prospective bidder include in their floppy disk containing their provider network, an existing network developed for a line of business other than AHCCCS? Would the prospective bidder be required to notify
the providers that make up that network of the intent to include them in their proposal to meet the minimum network standards for that GSA? If so, if they’re current contracts do not contain the AHCCCSA minimum subcontract provisions can they be considered
"contracted" for the AHCCCS line of business?

	
We do not believe that a provider is a member of an Offeror’s network, when they are unaware of this fact.  In order for a contract to be considered for a submitted provider it must contain all
required components.

	
215

	
119

 120

 124

	
Attach B

	
 

	
Will AHCCCSA waive pharmacy minimum network standard requirements for the following communities that currently do not have a pharmacy: Ash Fork (GSA 4), Carefree (GSA 12), Seligman (GSA 4) and San Luis
(GSA 2)?

	
Please be aware that a slash mark (/) between two geographic service sites, indicates that the service must be available in at least one of the sites.  The GSA 2 service site list for pharmacies should read
San Luis/Somerton.  With this correction there are pharmacies in these sites.

	
216

	
125

	
Attach B

	
Map

	
For GSA 14, the map indicates that PCP, Dentists and Pharmacies are a minimum requirement for both Morenci and Clifton.  However, the list on the left side of the page indicates that Morenci and Clifton are
together.  Are Clifton and Morenci considered one in the same for this requirement, or do you need these services in both cities?

	
Please refer to the answer to question #215.

	
217

	
 

	
Attach B

	
 

	
Page 49 states, “all counties except Maricopa and Pima contractor is encouraged to obtain subcontracts with hospital” and Attachment B lists hospitals a minimum network requirement in all
counties.  Is it required or encourages to obtain and LOI in counties other than Maricopa and Pima in order to meet minimum network requirements?

	
It is required that the Offeror have either contracts or LOIs with physicians with admitting privileges to hospitals in the Offerors network.  Offerors are encouraged to contract with hospitals.

	
218a

	
126

	
Attach C

	
Instructions

	
Could AHCCCSA further define or add additional clarity to what it considers “any administrative function or service for the Contractor” as it relates to the term “Management Services
Subcontractor”? For example, would our PBM and GACCP (Credentialing Primary Source Verification) be considered Management Services Subcontractors?

	
A Management Services Subcontractor is defined in the opening paragraph of Attachment C.  For purposes of responding to the RFP, the subcontractor is an individual or firm who is responsible for day today
operations of the health plan.

	
218b

	
126

	
Attach C

	
Instructions

	
Page 126, Attachment C, Management Services Subcontractor Statements.  Based  upon the answers to the Bidders' questions released at the Bidders' Conference and the feedback from the past two years' Operational
and    Financial Reviews, there seems to be conflicting definitions and  interpretations around management services subcontractors.  Based on OFR feedback, we believe that subcontractors for services such as data   information
systems, pharmacy benefit managers (PBM), management services and any other organization to which day-to-day operations are delegated (such as recoveries and clinical evaluations) are required to complete a management services subcontractor statement.  Please
clarify.

	
For purposes of Attachment C, the opening definition is applicable.  Therefore, data information systems, PBM, etc. are not included.  However,  clarification for which sub contractors require and
audit submission will be clarified in the revised acute care reporting guide.

	
219

	
126

	
Attach C

	
 

	
Attachment C is not included on the Offeror’s Checklist.  For submission purposes, should Attachment C be submitted following completion of Section G in General Matters?

	
Yes.

	
220

	
126

	
Attach C

	
 

	
Please provide additional examples of what Constitutes a “Management Services Subcontractor”.

	
See answer to #218 above.

	
221

	
126

	
Attach C

	
 

	
Please identify whether the following meets the requirement for a management services subcontract:

Organization which coordinates purchasing of health insurance for health plan employees

Organization which coordinates purchasing of other insurance (such as liability) for the health plan

organization which manages the health plan’s data center operations but does not have decision making authority in areas such as methodology for claims processing, authorization processing, etc.; it would,
however, be involved in implementing changes to the health plan’s information systems based on direction by health plan employees

provides legal services to the health plan

acts as the Human Resources/Payroll department for the health plan to assist with hiring, addressing employee questions regarding benefits, processing payroll, etc.

Would any of the answers to the above be different if the services were provided by a related party?  If yes, which ones and why?

	
None of these listed meet the requirement.

	
222

	
126

	
Attach C

	
 

	
Most of the current AHCCCS plans are owned by larger organizations which provide some administrative services to the health plans, but are not actively involved in the normal operations of the plan.  In this
case, would a management services subcontract be required between the health plan and its parent company?

	
These would not qualify.

	
223

	
126

	
Attach C

	
 

	
Does AHCCCS consider a Pharmacy Benefit Manager contract, which has as one of the contractual responsibilities, the processing of retail pharmacy claims, a Management Service Subcontractor?

	
No.

	
224

	
126

	
Attach C

	
 

	
Does a specialty provider delegated for limited prior auth, i.e. approvals only, qualify as a management services contract?

	
More information is needed.

	
225

	
126

	
Attach C

	
 

	
Is Medifax EDI considered a Management Services Subcontractor?  They provide electronic claims clearinghouse and member eligibility verification services.

	
No.

	
226

	
126

	
Attach C

	
 

	
Management Services Subcontractor Statement – Please clarify which subcontractors AHCCCSA anticipates to be included with an Offeror’s proposal?

	
Any organization that is hired by a parent company to run the operations of the health plan.  A subcontractor that provides all of the operations of a medical service, i.e. family planning
services.

	
227

	
127

	
Attach C

	
 

	
Management Services Subcontractor Statement—Is this required on an LOI provider?

	
No.

	
228

	
129

	
Attach C

	
 

	
Will a copy of the organization’s most recent Form 10-K be acceptable in lieu of a copy of the audited financial statements?

	
The two most recent audited financial statements must be included.  If the 2002 has not been completed, then please submit the most recent 10-K for 2002.

	
229

	
132

	
Attach D(1)

	
 

	
In a group practice - does each physician need a separate LOI or can a group administrator sign for all physicians within group?

	
Please refer to the answer to question # 184.

	
230a

	
138

	
Attach D(2)

	
 

	
If a provider is in the process of obtaining an AHCCCS ID number, how should they be reported on the LOI file?

	
The provider ID field should be filled with zeros.

	
230b

	
138

	
Attach D(2)

	
 

	
Page 138, Attachment D(2), Service Provider Name - If an individual provider  has a last name which is hyphenated, how should the name be listed?  Example:  Smith-Jones/John A. (hyphen without spaces); Smith -
Jones/John A. (hyphen with spaces); Smith Jones/John A. (without hyphen or spaces).  Please clarify.

Page 138, Attachment D(2), Service Provider Name - Should the Plan try to  match first names to the AHCCCS Provider File registered name even though the provider may utilize a different name?  Example:  AHCCCS
Provider File list the provider's name as Charles G. Jones; the physician actually goes by his middle name and APIPA has him registered as C. George Jones, or should the name be listed as Charles George Jones?  Please clarify.

	
Q1.  The plan should give AHCCCS the hyphenated name without spaces (Smith-Jones).

Q2.  For this submission, it is not necessary to match the name with the AHCCCS Provider File.  However, the health plan may do so if they wish.

	
231

	
150

	
Attach E

	
 

	
For Pima and Santa Cruz – in that not all contractors who receive an award for the GSA will be active in Santa Cruz County, should the rates be bid as a blended rate or as stand-alone rates for each
county?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
232

	
150

	
Attach E

	
 

	
Is AHCCCS providing any alternatives to the Web Based Capitation Rate Proposal should the web site being down?  What assurances is AHCCCS providing that its web site will be up and accessible and that the
response time will not be compromised when a significant number of Contractors might be attempting to access it at the same time?

	
OMC has received many assurances from ISD that the web traffic will not prevent bidders from completing their bids via the web application.  Offerer’s are required to submit a hard copy of their bids
that will be used as back up should the web application fail.

	
233

	
150

	
Attach E

	
 

	
What will be the recourse for material errors and omissions in the development of rate ranges by AHCCCSA?  Errors or omissions may be identified by the health plans, AHCCCSA or AHCCCSA’s actuary. 
Furthermore, what is the recourse if the development of the rate ranges does not meet with CMS' approval subsequent or concurrently to the bid process?

	
Material errors and omissions would be disclosed and corrected. To the extent rate ranges were modified, awarded rates would be adjusted by the same percentage(s). Beyond that, it would depend on the nature of
CMS’ concerns. As long as the covered services and populations in the contracts have not changed, the rates would probably stand. The bidder’s actuary would have already certified that the rates were actuarially sound for the bidder, and AHCCCS’
actuaries will have done the same for the rate ranges. Issues related to federal match or CMS requirements for documentation should not affect the acute care contracts.

	
234

	
150

	
Attach E

	
 

	
Please explain AHCCCSA’s decision to not use a diagnostic-based risk adjuster, given that CMS lists it as a requirement to actuarially sound rates, and explain why it is not applicable if
omitted.   

	
Refer to question 1. The rate setting methodology is in compliance with CMS regulations.

	
235

	
150

	
Attach E

	
 

	
Please explain the methodology that will be used to develop the upper and lower bounds of the capitation rate ranges. 

- a. What fee schedule assumptions will be used to price encounter data for the upper and lower bounds of the rate range? 

- b. What percentage of the Medicaid Fee schedule will be used for inpatient given that AHCCCSA states that the average reimbursement is 97% in their most recently submitted budget to the JLBC? 

- c. What are the assumptions related to the average dispensing fees, AWP, and rebate assumptions for retail pharmacy?

- d. What percentage of the fee schedule will be assumed in rural counties where contracting requires payments that exceed the AHCCCSA fee schedules?

- e. How will outpatient encounters be priced given that plans must contract at a percentage of billed charges at multiple facilities?

- f. What assumptions were made for pricing encounters for typically sub-capitated costs such as PCP, laboratory and DME, regarding under-submission of encounter data by the providers?

- g. What administrative component will be priced into the upper and lower bound of the rate range?

- h. What time periods are the State’s actuary using as their base rate assumptions?  What time period(s) will AHCCCSA use as its base for developing the rate ranges?  If this varies by GSA or
rate cell, please provide to potential Offerors.

	
a.  The state’s reimbursement schedules, and the health plan paid amounts.

b. The inpatient component of the capitation rate is based upon cost and utilization information from health plan reported encounters and financials.  AHCCCS will inflate the component by the inflation used
for the tier per diems for 10/1/03.

c. The PMPM assumptions will closely match the blended experience of the current contractors, adjusted for trends and changes in approved drugs.

d.  Rate ranges will be established for 3 different zones, or groupings of counties, based on the encounters priced out by the health plan paid amounts. This should reflect health plans’ contracting
issues as closely as possible. This pricing of encounters by health plan paid amounts has been cross-walked against their audited financial experience for 3 years.

e. For clarification, health plans are not required to contract at a percentage of billed charges.  Health plan paid amount is used for pricing.

f. As discussed in the data supplement, subcapitated encounters, if no value is assigned by the health plan, will be priced at the AHCCCS FFS schedule.

g. The Offerors should bid what they expect their administration component to be.

h.  !0/1/99-3/31/02

	
236

	
150

	
Attach E

	
 

	
Will AHCCCSA share its trend assumptions with Offerors?  How do the 5% trend assumptions in the State Legislative budget for the AHCCCS program relate to this process?

	
Trends assumptions used to develop the State Legislative budget were their own best estimates. AHCCCSA’s actuaries will make their own trend estimates.

	
237

	
150

	
Attach E

	
 

	
  When will AHCCCSA make available information regarding program changes?

	
Information is provided in Section B of the data supplement. Potential contractors will be made aware of any additional program changes, as they become available.

	
238

	
150

	
Attach E

	
 

	
How will financial data be used given changes in reserves for other prior period adjustments that skew actual results?  For instance, if a health plan releases reserves or recognizes revenue from older
periods, the health plan’s experience will look more favorable than their “run rate” for that period.

	
Financial statements are revised and restated for adjustments, and are audited on a periodic basis. Financials represent one supplemental data source used in the development of actuarially sound rates. 
These revised financial statements are not provided in the data supplement.

	
239

	
150

	
Attach E

	
 

	
If the Legislature eliminates eligibility groups (e.g., KidsCare, HIFA parents), will AHCCCSA adjust the capitation rates, given that the prospective bidders are bidding rates assuming continued coverage of all
groups?  And if so, how will the adjustment be made?  If adjustments are made in the rates, how will this impact the algorithm?

	
Any material change within a rate cell, such as the elimination of one subset of a category of aid will be adjusted for in the capitation rates.

The Offeror should assume that all current eligibility groups will continue to exist in CYE ’04.

	
240

	
151

	
Attach E

	
 

	
Since the Web application for submitting capitation rates has not been issued yet, will offerors have the opportunity to formally ask questions and receive responses after the February 14, 2003 deadline to submit
questions?

	
Yes.  A presentation of the web site will be forthcoming at the bidder’s conference.

A second set of technical questions will be issued by AHCCCSA by due March 7, 2003.

	
241

	
153

	
Attach F

	
 

	
Please describe what the health plans will be required to report on the newly required “Prescription Drug Utilization Report”?

	
Contractor submitted pharmacy encounters are still the "official" documentation for AHCCCS.  However, contractors will be asked to provide standard monthly production reports of aggregate pharmacy cost and
utilization data in a mutually agreeable format .

	
242

	
157

	
Attach H

	
 

	
Is the “Notice of Action” considered the same as an initial organization determination?  Also, normally, a member has 60 days following an adverse action to file an appeal.  The timeframe
listed in this section of the RFP is different.  Has this timeframe changed and, if so, when? 

	
42 CFR 438.404 delineates Notice of Action requirements.  State statute ARS §36-2903.01 specifies a 60-day timeframe for filing non claim related grievances. However,  the BBA provisions have will
have a major impact on the existing AHCCCS/Contractor  grievance process.  These changes shall be communicated through regulation and/or formal policy.

	
243

	
157

	
Attach H

	
 

	
It refers to the Notice of Action and the situations in which that must be generated, including notice to members when a claim is denied—does this mandate and EOB to be sent to a member?  If it does,
can the member ask for an expedited appeal in that situation?

	
The BBA regulations require that notice be given enrollees for denial of payment, in whole or in part.  Expedited resolution of an appeal applies to situations when taking the time for standard resolution
could seriously jeopardize the enrollee’s life or health or ability to attain, maintain, or regain maximum function.  It does not appear that appeals of this nature would satisfy the criteria for expedited resolution.  Moreover, it is anticipated that
most of these appeals will be withdrawn once the MCO explains to the enrollee, as part of its resolution process,  that the enrollee will not be not financially responsible for payment.

	
244

	
157

	
Attach H

	
 

	
It refers to a “standard appeal”—what is this?  A non-expedited appeal as described in previous paragraphs?  A grievance as set forth in the current administrative code?  If it is
the latter, are the timeframes for response changed from 30 days to 45 days with extension of 2 weeks without member agreement, but only notice?

	
42 CFR 438.408 delineates requirements for standard and expedited resolution of appeals.  The existing AHCCCS/Contractor grievance process will be amended to ensure compliance with the BBA provisions. 
These changes will be communicated through regulation, contract, and/or formal policy.

	
245

	
157

	
Attach H

	
 

	
Are there member grievances as previously provided for in the administrative code?  If so, under what circumstances, and what rules, etc applies?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
246

	
157

	
Attach H

	
 

	
Is the process of requesting a “fair hearing” the same as the current process of appealing a decision from a member grievance?  Does this still exist in its current form, and if so, under what
circumstances?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
247

	
157

	
Attach H

	
 

	
Can a member appeal from the process set forth in Attachment H (either standard or expedited), beyond the fair hearing process or is that the full and final process?

	
As in the current scheme, a member may file a Petition for Judicial Review in Superior Court.

	
248

	
157

	
Attach H

	
 

	
Attachment H provides that the enrollee is to be given no less than 20 days and no more than 90 days from date of Notice of Action to file an appeal—does this apply to expedited grievances (appeals) under
Article 13 or to “standard” grievance which currently have 60 days limit?

	
The 20/90 day requirement for appealing a Contractor  Notice of Action is delineated in 42 CFR 438.402 and applies to both expedited and standard appeals.

	
249

	
157

	
Attach H (1)

	
Entire Attachment H (1)

	
This section uses the terms grievance, appeal, expedited appeal, State fair hearing and expedited hearing. Contractors currently utilize the AHCCCSA definitions of the terms grievance and expedited hearing. 
May Contractors assume that the definitions and requirements will stay the same for these two terms?  Please provide more information, definitions and processes for appeal, expedited appeal and State fair hearing.

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.  The BBA has defined specific
terms which pertain to the Grievance System; any current terms which do not conform to the BBA must be amended to ensure compliance.  As an example, refer to the definition of “action,” “appeal”, and “grievance” as defined in
438.400.

	
250

	
157

	
Attach H (1)

	
Paragraph 3

	
Currently, we rely on the language in the Member Information section of the contract.  Therefore, vital materials, including Notices for Denials, Reductions, Suspensions or Terminations of Services are
translated when we are aware that a language is spoken by 1,000 or,  5% of our members. We also inform our members of their right to interpretation and translation services when we are aware that 1,000 or 5% of the members speak a specific language and have
LEP.  Attachment H of the RFP states, "Written documents, including but not limited to the Contractor's Notice of Action, the Notice of Contractor's Appeal/Grievance Resolution, ... shall be translated in the enrollee's language if information is received by the
Contractor, orally or in writing, indicating that the enrollee has Limited English Proficiency." We are interpreting this to say that we must print the stated documents in a member's chosen language if the member tells us that he/she has LEP.  Is this
correct?

	
If the Contractor is aware that the enrollee has a limited English proficiency in a prevalent non English language,  the Contractor  must translate the written material , e.g. the Contractor resolution
notice, in the prevalent non English language-rather than simply including language in the document advising the enrollee that the information is available in the prevalent non English language.

	
251

	
157

	
Attach H (1)

	
Bullet 2

	
This bullet requires a contractor to define appeal.  Please provide a definition and the context that AHCCCSA is using the term appeal.

	
”Appeal” is defined in 42 CFR 438.400.

	
252

	
157

	
Attach H (1)

	
Bullet 4

	
This bullet allows for an enrollee to file both a grievance and an appeal orally.  Currently, enrollees that dispute a grievance decision must submit a request for hearing in writing.  Does this oral
request include the appeal of a grievance decision?

	
42 CFR 438.402 delineates requirements for oral and written appeals. The BBA  does not mandate a hearing process for grievances as defined in 438.400.

	
253

	
157

	
Attach H (1)

	
Bullet 5

	
The RFP states that an enrollee shall be given no less than 20 days (and no more than 90 days) to file an appeal.  Is it the intent of AHCCCSA to allow individual health plans choose the time frame for
filing grievances and appeals, or is AHCCCSA going to define the timeline?

	
AHCCCS anticipates establishing a specific timeframe for appealing through regulation and/or formal policy.

	
254

	
157

	
Attach H (1)

	
Bullet 6 Item 2

	
This bullet indicates that a contractor shall notify enrollees at the time of any action affecting the claim when there has been a denial of payments.  Is it the intent of AHCCCSA to require Contractors to
notify enrollees when provider claims have been denied?  Is it the intent of AHCCCSA to allow enrollees to appeal provider claim denials?  If so what level of appeal is meant by this section?

	
Please refer to the answer to question # 243.

	
255

	
157

	
Attach H (1)

	
Bullet 6

	
As this statement does not specify working or calendar days, can we assume it is calendar days?  This statement would imply that the Notice of Action is sent out 10 days before the date of the action. 
Is this to mean the “effective” date of the action?

	
Please refer to Subpart F.  Notice of  Action mailing requirements are found in 438.404.  The timeframes generally refer to calendar days although he expedited timeframe is stated in terms of
working days.

	
256

	
157

	
Attach H (1)

	
 

	
Are there set definitions of the terms

Appeal, grievance and complaint?

	
Yes, please refer to 438.400.

	
257

	
157

	
Attach H (1)

	
 

	
Are the terms appeals and grievances being used interchangeably or Are you allowing the Health Plan to define these terms or Do we use CFR 438 subpart F to define the terms? Note – CFR 438
does not recognize the term “complaint”.

	
Please refer to the definitions found in Subpart F.  These terms are not used interchangeably and must conform to the BBA definitions.

	
258

	
157

	
Attach H (1)

	
 

	
Where it states “inquiries appealing an action are treated as appeals and are confirmed in writing....” Please clarify who is “confirming in writing” -the Health Plan or the
enrollee?

	
Please refer to 42 CFR 438.406(b).

	
259

	
158

	
Attach H (1)

	
Bullet 7     Item 3

	
This item refers to the enrollee’s right to file an appeal with the contractor.  Does this mean the enrollee's right to file a grievance?

	
No, the terms “grievances” and “appeals” have distinct meanings as defined in Subpart F.

	
260

	
158

	
Attach H (1)

	
Bullet 7     Item 4

	
This bullet refers to the enrollee’s right to file a request for State fair hearing.  May we take this to mean the enrollees right to file a request for expedited hearing?  If not, from whom does
the enrollee request a State fair hearing?

	
The BBA permits enrollees to file requests for hearing with the State concerning  “actions” which are not resolved solely in favor of the enrollee by the Contractor.  Some of these actions
may qualify as “expedited” matters.

	
261

	
158

	
Attach H (1)

	
Bullet 7     Item 6

	
In this item it refers to the enrollee’s right to file an expedited resolution.  Please provide a definition of expedited resolution in this context and the circumstances in which an enrollee can
utilize or request the expedited resolution.  With whom does the enrollee request an expedited resolution?

	
Expedited resolution is discussed in 438.408 and 438.410.

	
262

	
158

	
Attach H (1)

	
Bullet 10

	
This bullet uses the term standard appeal.  Does this terminology refer to what is currently called a grievance?  Or is this a new appeal process?  This bullet allows the contractor to respond to
standard appeals within 45 days, if this is referring to the current grievance process, is the AHCCCSA eliminating the 30 day time frame currently used for processing grievances?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
263

	
158

	
Attach H (1)

	
Bullet 14 Item 3

	
This bullet indicates that an enrollee can appeal the denial in whole or in part of payment for service.  Is this to mean the enrollees can appeal provider claim denials?  If so, what level of appeal is
meant by this section?

	
Subpart F delineates MCO requirements for appeals of “actions” which include the denial of payment for a service, in whole or in part.  Also refer to response number 243.

	
264

	
158

	
Attach H (1)

	
Bullet 21 Item 2 b

	
This bullet indicates that a health plan has to provide written notice of the enrollee's right to receive benefits pending the hearing and how to request continuation of benefits.  Bullet 15, on page 158,
indicates that benefits shall continue if the enrollee meets all five criteria.  Should the health plan include this information only if all of the criteria in Bullet 15 had been previously met?  Or is it the intent of AHCCCSA to have the health plans
include this language in every letter?

	
42 CFR438.408 delineates the content requirements which must be included in the Contractor’s written notice of resolution.  The right to receive continued benefits must be included.

	
265

	
158

	
Attach H

	
 

	
Attachment H provides that the Contractor shall permit both oral and written appeals and grievances and those oral inquiries appealing an action are treated as appeals and are confirmed in writing unless
expedited resolution is requested.  Please clarify what an “expedited resolution” is?  Is this is referring to an Article 13 request for expedited appeal?

	
Please refer to the answer to question #261.

	
266

	
158

	
Attach H

	
 

	
Attachment H refers to the Contractor resolving all expedited appeal within 3 working days and making reasonable efforts to provide oral notice to an enrollee regarding an expedited appeal resolution—is
this effort to provide notice regarding an appeal of the expedited appeal?  Is that same as Article 13?  Does this mean after the Contractor makes decision on expedited that the member then can access the expedited, or non-expedited, appeal process in
either Article 13 or 8?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
267

	
158

	
Attach H

	
 

	
Attachment H1 refers to right of enrollee to file appeal of “failure to provide services in timely manner”—is this a grievance filed with Contractor about provider’s car, e.g., quality of
care complaint, that is a “standard appeal” (with 45? Days to resolve and right of appeal?) or a “traditional” grievance under Article 8?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
268

	
161

	
Attach H(2)

	
Item J

	
“If the contractor’s decision is appealed and a request for hearing is filed..........” .  Is that 1 step or 2 steps?  Can the provider appeal the Health Plan grievance
decision to be relooked at and if not satisfied, request a hearing or is “appeal and request for hearing” saying the same thing which would be an appeal to AHCCCS?

	
The terms “appeal and request for hearing” in this context represent one action and refers to appealing the Contractor decision to the State.

	
269

	
 

	
Data Supp

	
General Question

	
Upon reviewing the data supplement, it appears that in general the medical expenses for the TANF/KidsCare under 1 age category show a decrease in medical expenses from 2001 to 2002.  Please explain any
pertinent issues that may cause a decrease in medical expenses during these time periods.

	
AHCCCSA is unaware of any pertinent issues that contributed to a decrease in medical expenses.  This information is based upon health plan self-reported data.

	
270

	
 

	
Data Supp

	
Section A Overview

	
Please provide additional details on how Mercer will develop the mid-point and rate ranges for the  contract period?

	
This information will be presented at the Bidder’s Conference

	
271

	
 

	
Data Supp

	
Section A Overview

	
Please provide information on any medical trend analysis that was completed using the data in the data supplement.

	
The information in the data supplement is not directly used in the development of medical trends. The encounter utilization reports are used to aid in the development of utilization trends.

	
272

	
 

	
Data Supp

	
Section A Overview

	
Please provide additional details on capitation offset on the CRCS form for Delivery Supplement.

	
  Health plans receive monthly capitation for the pregnant women enrolled in their plan. Currently, the assumed duration of a pregnant woman in the program is 8 months including the post partum time period.
Therefore, in order to avoid double paying the plans, the maternity payment is reduced for the eight months of capitation dollars that the plans will received.

	
273

	
 

	
Data Supp

	
Section D and F

	
How do the Provider Type and Category of Service drive the rate setting?  Please clarify the relationship of the service matrix which includes Provider Type and Category of Service to the Capitation Rate
Setting worksheets. 

	
The Provider type and Category of Service make up the criteria for developing general service categories that are the basis of the capitation rates.  The crosswalk between the service matrix to the CRCS is
provided so you can use the encounter utilization reports for developing your capitation bids by those service categories.

	
274

	
 

	
Data Supp

	
 

	
When evaluating utilization for rate setting, how do codes with global rates billed with TC, 26 modifier get handled? Are the professional (26) component in physician services and the technical (TC) portion in
lab, radiology, etc.?    If they are split, what are the percentages of splits that will apply?

	
Both the professional component and technical component for lab and radiology services are included in the lab and radiology services category.  See the service matrix in Section D of the Data Supplement for
further information.

	
275

	
 

	
Data Supp

	
 

	
What is the 4/1/03 AHCCCS fee schedule status? How will adjustments to that fee schedule be factored into the rate setting?

	
AHCCCS will increase the hospital tier per diems based on the 3rd quarter DRI.  An estimate of this will be used in developing the capitation rates.  AHCCCS will continue to freeze its fee
schedule for all other rates.  This will be factored into the capitation rate development.

	
276

	
 

	
Data Supp

	
Capitation Rate Calculation Sheet (CRCS)

	
Can you give an example of a “Miscellaneous” service?  There are no AHCCCSA Service Matrix Categories that crosswalk to this line in the CRCS.

	
This is a service that does not fit any of the categories that are contained in the service matrix.

	
277

	
 

	
Data Supp

	
Service Matrix

	
In the Service Matrix of the data set, non-emergency transportation is counted as number of encounters.  Should this not be number of units?

	
It should be the number of units that is defined as a trip for transportation services.

	
278

	
 

	
Gen quest

	
 

	
How many disease management programs need to be in place and are there specific diseases that are mandated?

	
AHCCCS has not established a standard for the number of disease management programs a plan must offer. The development and implementation of disease management programs should be based on the needs of the health
plan's members.

	
279

	
 

	
Gen quest

	
 

	
What is meant by “disease management programs”?  Do they include management of diseases within the realm of case management, or are they looking for “disease-specific”
programs?

	
Disease Management Programs are disease specific programs designed to assist persons with chronic illnesses improve their self-management skills.  Case management can be one tool of disease management.

	
280

	
 

	
Gen quest

	
 

	
Will they accept referrals to current HIHS programs as disease management, i.e. MMC’s/CHC CHF Program, Diabetes Education & Coagulation Clinic, informal asthma education, etc?

	
Disease management programs can be provided in many different methods.  It is up to the Contractor to determine what is effective for their population. 

	
281

	
 

	
Gen quest

	
 

	
If they truly mean specific “disease management programs”, with tracking of CLINICAL Indicator, (in addition to Utilization Monitoring which can be easily done by the HP), is there a date by which
these programs must be in place?

	
AHCCCS will monitor the implementation of Disease Management programs at the first round of Operational and Financial Reviews conducted under the new contract.

	
282

	
 

	
Gen quest

	
 

	
Does AHCCCSA intend to now, or at any time during the contract term, install geographic access standards for specialists?

	
In lieu of specific standards by geographic area, AHCCCS is utilizing the community access standard as the guideline for network development.  Essentially, this means that services that are generally
available to the population of a given community, should be equally available to the AHCCCS members residing in that same community.  Additional specific requirements are not currently anticipated.

	
283

	
 

	
Gen quest

	
 

	
Will the performance bond and capitalization levels remain consistent during the period of the financial statement forecast?

	
The Offeror should assume that they will remain constant.

	
284

	
 

	
Gen quest

	
 

	
What years’ growth assumptions should be used of the overall AHCCCS population growth in the financial statement forecast?

	
AHCCCSA will provide the estimates used by the AHCCCS budget office at the bidder’s conference.

	
285

	
 

	
Gen quest

	
 

	
Should we assume our same mixture of membership by rate group as of now as our mixture in the financial statement forecast?

	
This is a decision that the Offeror will need to make based upon its estimates.

	
 

	
 

	
Gen quest

	
 

	
Should the margin on Financial Statement Forecast rates set by AHCCCS’ actuaries be included in the financial statement forecast?

	
The contractor should not factor the “margin” (risk/contingency) that is included in the capitation rate development.  They should report their actual expected margin.

	
286

	
 

	
Gen quest

	
 

	
When setting the rates without pharmacy, will all administrative costs related to the pharmacy benefit be borne by another entity?

	
Yes, some portion of the administrative costs will be borne by another entity.  It is unknown at this point the amount.

	
287

	
 

	
Gen quest

	
 

	
For the capitation rates set by AHCCCS’ actuaries (PPC, HIV/AIDS, Title XIX Waiver, HIFA Parents, etc.) when will that data be available?  What are the inflationary assumptions used for the contract
period?

	
AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
288

	
 

	
Gen quest

	
 

	
When will the reinsurance adjustment table for plans with a deductible greater than $20,000 be available?  Will this be consistent through out the contract period?

	
The reinsurance offsets will be available by the end of February.  Those offsets will be adjusted annually when additional date is analyzed including inpatient rate adjustments, program changes, and actual
reinsurance claims paid.

	
289

	
 

	
Gen quest

	
 

	
Will the bidder be able to modify the capitation rates after they are input into the web site?  If so, when will they no longer be available for modification?

	
The bidder can modify their capitation rate bids until 3:00 pm, March 31, 2003.

	
290

	
 

	
Gen quest

	
 

	
Does AHCCCSA have any enrollment projections for the acute care program over the next 1-5 years split by GSA and/or eligibility category?  If so, please provide copies of what is available.

	
AHCCCSA will provide the estimates used by the AHCCCS budget office at the bidder’s conference.

	
291

	
 

	
Gen quest

	
 

	
Upon bidding for GSA 10, will separate capitation rates be quoted for Pima County and Santa Cruz County?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
292

	
 

	
Gen quest

	
 

	
Will AHCCCSA make available experience information regarding Third Party Recoveries?

	
The TPL experience is included in the current health plan financial statements.

	
293

	
 

	
Gen quest

	
 

	
Will AHCCCSA make available experience information regarding member co pays?

	
The amount of the copayments will be hard coded into the CRCS.

	
294

	
 

	
Gen quest

	
 

	
Is there a preferred form for the actuarial certification?

	
  Please refer to the answer to question #1.

	
295

	
 

	
Gen quest

	
 

	
Can AHCCCSA provide guidance as to how CYE ’04 reimbursement rates will vary from CYE ’03, specifically identifying percentage changes to inpatient hospital tiered per diems, outpatient hospital
reimbursement, and other fee-for-service reimbursement?

	
AHCCCS will increase the hospital tier per diems based on the 3rd quarter DRI.  An estimate of this will be used in developing the capitation rates.  AHCCCS will continue to freeze its fee
schedule for all other rates.  This will be factored into the capitation rate development.

	
296

	
 

	
Gen quest

	
 

	
How many hospital supplement payments per 1,000 non-MED members occurred in historical contract years?

	
AHCCCS will provide total hospital supplemental payments for CYE ’02 when the rates are provided.

	
297

	
 

	
Gen quest

	
 

	
What aid code groups do the $15,000 and $20,000 deductibles correspond to in Exhibit U of the data supplement?

	
The $15,000 applies to Title XIX Waiver Group rates categories.  The $20,000 applies to all other rate categories.  See further definitions of risk groups in the data supplement and paragraph 2 of the
RFP.

	
298

	
 

	
Gen quest

	
 

	
Will elements of the Capitation Rate Calculation sheet be set by AHCCCS?  If so, please describe them.

	
AHCCCS will set the following items in the CRCS:

1.             reinsurance offsets

 2.             copayment amounts

	
299

	
 

	
Gen quest

	
 

	
Per instruction, all responses should be limited to three pages unless indicated otherwise.  Does this three page limitation include attachments, i.e. manual, sample reports, handbooks, etc?

	
Please refer to the answer to question #176.

	
300

	
 

	
Gen quest

	
 

	
Can attachments be marked as such in the 1/2 inch margin around the page?

	
Where attachments are permitted, yes.

	
302

	
 

	
Gen quest

	
 

	
Is the response page limit to narrative only?  Do you want response attachments to be included?

	
Page limits apply to the narrative.  Attachments which are specifically requested do not count toward the limit.

	
303

	
 

	
Gen quest

	
 

	
How do you want attachments that are not within the 8 1⁄2 x 11 requirements to be displayed? I.e. electronic file (if available), Xerox copy of material, in sleeves, in separate binder?

	
Attachments, which are specifically requested, may be submitted in hard copy form in a sleeve, following the applicable narrative.

	
304

	
 

	
Gen quest

	
 

	
May we have a BID Rating Tool?

	
No.

	
305

	
 

	
Gen quest

	
 

	
Does AHCCCS intend to adjust its FFS schedule to reflect the Medicare Fee schedule in 2003/2004

	
No.  AHCCCS will freeze its rate schedule.

	
306

	
 

	
Gen quest

	
 

	
When using the rate worksheets on the web, are bidder's able to change them up until 3/31/03, 3pm?

	
Yes.  After that, the bidder will be locked out.

	
307

	
 

	
Gen quest

	
 

	
When using the rate worksheets on the web, are these secured and confidential from other bidders?

	
Yes. More information will be provided at the bidder’s conference.

ATTACHMENT H (1): ENROLLEE GRIEVANCE SYSTEM STANDARDS AND POLICY

The Contractor shall have a written policy delineating its Grievance System which shall be in accordance with applicable Federal and State laws, regulations and policies, including, but not limited to 42 CFR Part 438 Subpart
F.  The Contractor shall provide the Enrollee Grievance System Policy to all providers and subcontractors at the time of contract.  The Contractor shall also furnish this information to its enrollees within a reasonable time after the Contractor
receives notice of the recipient’s enrollment.  Additionally, the Contractor shall provide written notification of any significant change in this policy at least 30 days before the intended effective date of the change.

The written information provided to enrollees describing the Grievance System including the grievance process, enrollee rights, grievance system requirements and timeframes, shall be in each prevalent non-English language
occurring within the Contractor’s service area and in an easily understood language and format.  The Contractor shall inform enrollees that oral interpretation services are available in any language, that additional information is available in prevalent
non-English languages upon request and how enrollees may obtain this information.

Written documents, including but not limited to the Contractor’s Notice of Action, the Notice of Contractor’s Appeal/Grievance Resolution, Notice of Contractor Extension for Resolution, and Notice of Contractor
Extension of Notice of Action shall be translated in the enrollee’s language if information is received by the Contractor, orally or in writing, indicating that the enrollee has a limited English proficiency.  Otherwise, these documents shall be translated
in the prevalent non-English language(s) or shall contain information in the prevalent non-English language(s) advising the enrollee that the information is available in the prevalent non-English language(s) and in alternative formats along with an explanation of how
enrollees may obtain this information.  This information must be in large, bold print appearing in a prominent location on the first page of the document.

At a minimum, the Contractor’s Grievance System Standards and Policy shall specify:

                °              That the Contractor shall maintain records of all
grievances and appeals.

                °             
Information describing the grievance, appeal, and fair hearing procedures and timeframes

                                 describing the right to hearing, the method for obtaining a hearing, the rules
which govern

                                 representation at the hearing, definitions of “action,”
“grievance,” and “appeal,” the right to file

                                 grievances and appeals and the requirements and timeframes for filing a
grievance or appeal.

                °              Information explaining that a provider acting on
behalf of an enrollee and with the enrollee’s

                                 written consent, may file an appeal or grievance.

                °              The availability of assistance in the filing
process and the Contractor’s toll-free numbers that an

                                 enrollee can use to file a grievance or appeal by phone if requested by the
enrollee.

                °              That an enrollee shall be given no less than 20
days (and no more than 90 days) from the date of

                                 the Contractor’s Notice of Action to file an appeal.

                °              That the Contractor shall mail a Notice of
Action:  1) at least 10 days before the date of a

                                 termination, suspension or reduction of previously authorized AHCCCS services
(include

                                 exception situations, fraud, move out of state); 2) at the time of any action
affecting the claim when

                                 there has been a denial of payments; 3) within 14 calendar days from receipt of
a request for a

                                 standard service authorization which has been denied or reduced unless an
extension is in effect; 4)

                                 within three working days from receipt of an expedited service authorization
request unless an

                                 extension is in effect.

                                                                                               
-157-

                °              That the Notice of Action must explain:  1)
the action the Contractor has taken or intends to take,

                                 2) the reasons for the action, 3) the enrollee’s right to file an appeal
with the Contractor, 4) the

                                 enrollee’s right to request a State fair hearing if no exhaustion of the
Contractor’s appeal process is

                                 required, 5) the procedures for exercising these rights, 6) circumstances when
expedited resolution

                                 is available and how to request it and 7) the enrollee’s right to request
continued benefits pending

                                 resolution of the appeal, how to request continued benefits and the
circumstances under which the

                                 enrollee may be required to pay for the cost of these services.

                °              That the Contractor shall permit both oral and
written appeals and grievances and that oral

                                 inquiries appealing an action are treated as appeals and are confirmed in
writing unless expedited

                                 resolution is requested.

                °              That the Contractor shall acknowledge receipt of
each grievance and appeal, in writing, within five

                                 working days of receipt, except for appeals which meet the criteria for
expedited resolution.  The

                                 Contractor shall acknowledge receipt of appeals, which meet the criteria
for expedited resolution,

                                 in writing, within one working day.

                °              The definition of a standard appeal and that the
Contractor shall resolve standard appeals no later

                                 than 45 days from the date of receipt of the appeal.

                °              The definition of an expedited appeal and that the
Contractor shall resolve all expedited appeals

                                 not later than three working days from the date the Contractor receives the
appeal where the

                                 Contractor determines, or the provider in making the request on the
enrollee’s behalf indicates, that

                                 standard resolution timeframe could seriously jeopardize the enrollee’s
life or health or ability to

                                 attain, maintain or regain maximum function.  The Contractor shall make
reasonable efforts to

                                 provide oral notice to an enrollee regarding an expedited resolution
appeal.

                °              The standard and expedited resolution timeframes
may be extended up to 14 calendar days if the

                                 enrollee requests the extension or if the Contractor establishes a need for
additional information

                                 and that the delay is in the enrollee’s interest.

                °              That if the Contractor extends the timeframe for
resolution of a grievance or appeal when not

                                 requested by the enrollee, the Contractor shall provide the enrollee with
written notice of the

                                 reason for the delay.

                °              That an enrollee may file an appeal of:  1)
the denial  or limited authorization of a

                                 requested service including the type or level of service, 2) the reduction,
suspension or termination

                                 of a previously authorized service, 3) the denial in whole or in part of
payment for service, 4) the

                                 failure to provide services in a timely manner, 5) the failure of the
Contractor to comply with the

                                 timeframes for dispositions of grievances and appeals and 6) the denial of a
rural enrollee’s request

                                 to obtain services outside the Contractor’s network when the Contractor
is the only Contractor in

                                 the rural area.

                °              That benefits shall continue only if:  1) the
enrollee files an appeal before the later of a) 10 days

                                 from the mailing of the Notice of Action or b) the intended date of the
Contractor’s action, 2) the

                                 appeal involves the termination, suspension, or reduction of a previously
authorized course of

                                 treatment, 3) the services were ordered by an authorized provider, 4) the
original period covered

                                 by the original authorization has not expired, and 5) the enrollee requests a
continuation of

                                 benefits.

                                                                                               
-158-

                °              That the Contractor continues extended benefits
originally provided to the enrollee until any of the

                                 following occurs:  1) enrollee withdraws appeal, 2) enrollee has not
specifically requested

                                 continued benefits pending a hearing decision within 10 days of MCO/PIHP
mailing appeal

                                 resolution notice, 3) State hearing office issues decision adverse to enrollee
or 4) time period or

                                 service limits of a previously authorized service has been met.

                °              That for appeals, the Contractor provides the
enrollee a reasonable opportunity to present evidence

                                 and allegations of fact or law in person and in writing and that the Contractor
informs the enrollee

                                 of the limited time available in cases involving expedited
resolution.

                °              That for appeals, the Contractor provides the
enrollee and his representative the opportunity before

                                 and during the appeals process to examine the enrollee’s case file
including medical records and

                                 other documents considered during the appeals process.

                °              That if the Contractor denies a request for
expedited resolution, it must make reasonable efforts to

                                 give the enrollee prompt oral notice and follow-up within two calendar days
with a written notice

                                 of the denial of expedited resolution.

                °              That the Contractor shall ensure that individuals
who make decisions regarding grievance and

                                 appeals are individuals not involved in any previous level of review or
decision making and that

                                 individuals who make decisions regarding:  1) appeals of
denials  based on lack of

                                 medical necessity, 2) a grievance regarding denial of expedited resolution of
an appeal or 3)

                                 grievances or appeals involving clinical issues are health care professionals
as defined in 42 CFR

                                 438.2 with the appropriate clinical expertise in treating the enrollee’s
condition or disease.

                °              That the Contractor shall provide written notice of
the disposition of each appeal which must

                                 contain:  1) the results of the resolution process and the date it was
completed, 2) for appeals not

                                 resolved wholly in favor of enrollees:  a) the enrollee’s right to
request a State fair hearing and how

                                 to do so, b) the right to receive benefits pending the hearing and how to
request continuation of

                                 benefits and c) information explaining that the enrollee may be held liable for
the cost of benefits if

                                 the hearing decision upholds the Contractor.

                °              That if the Contractor’s decision is appealed
and a request for hearing is filed, the Contractor must

                                 ensure that all supporting documentation is received by the AHCCCSA, Office of
Legal

                                 Assistance, no later than five working days from the date the Contractor
receives the verbal or

                                 written request from AHCCCSA, Office of Legal Assistance.  The file sent
by the Contractor must

                                 contain a cover letter that includes:

                                               
1.             Complainant’s name

                                               
2.             Complainant’s AHCCCS I.D. number

                                               
3.             Complainant’s address

                                               
4.             Complainant’s phone number (if applicable)

                                               
5.             date of receipt of grievance or appeal

                                               
6.             summary of the Contractor’s actions undertaken to resolve the grievance and

                                                                
basis of the determination

                                                                                               
-159-

                °              The following material shall be included in the
file sent by the Contractor:

                                               
1.             written request of the Complainant asking for the request for hearing

                                               
2.             copies of the entire file which includes the investigations and/or medical records;

                                                                
and the Contractor’s resolution other information relevant to the resolution of the

                                                
3.             grievance or appeal

                °              That if the Contractor or the State fair hearing
decision reverses a decision to deny, limit or delay

                                 services not furnished while the appeal was pending, the Contractor shall
authorize or provide the

                                 services promptly and as expeditiously as the enrollee’s health condition
requires.

                °              That if the Contractor or State fair hearing
decision reverses a decision to deny authorization of

                                 services and the disputed services were received pending appeal, the Contractor
shall pay for those

                                 services.

                                                                                               
-160-

ATTACHMENT H (2):   PROVIDER GRIEVANCE SYSTEM STANDARDS AND POLICY

The Contractor shall have in place a written grievance system policy for providers regarding adverse actions taken

 by the Contractor.  The policy shall be in accordance with applicable Federal and State laws, regulations and

 policies.  The grievance policy shall include the following provisions:

a.             The grievance policy shall be provided to all subcontractors at the time of contract.  For providers without a

                 contract, the grievance policy may be mailed with a remittance advice, provided the remittance is sent

                 within 45 days of receipt of a claim.

b.             The grievance policy must specify that all grievances, with the exception of those challenging claim

                 denials, must be filed with the Contractor no later than 60 days from the date of the adverse action.

                 Grievances challenging claim denials must be filed in writing with the Contractor no later that 12 months

                 from the date of service, 12 months after the date of eligibility posting or within 60 days after the date of a

                 timely claim submission, whichever is later.

c.             Specific individuals are appointed with authority to require corrective action and with requisite experience

                 to administer the grievance process.

d.             A log is maintained for all grievances containing sufficient information to identify the Complainant, date of

                 receipt, nature of the grievance and the date the grievance is resolved.  Separate logs must be maintained for

                 provider and member grievances

e.             Within five working days of receipt, the Complainant is informed by letter that the grievance has been

                 received.

f.              Each grievance is thoroughly investigated using the applicable statutory, regulatory, contractual and policy

                 provisions, ensuring that facts are obtained from all parties.

g.             All documentation received and mailed by the Contractor during the grievance process is dated upon

                 receipt.

h.             All grievances are filed in a secure designated area and are retained for five years following the

                 Contractor’s decision, the Administration’s decision, judicial appeal or close of the grievance, whichever is

                 later.

i.              A copy of the Contractor’s decision will be communicated in writing to all parties.  (struck text): either hand delivered 

                 or delivered by certified mail to all parties whose interest has been adversely affected by the decision.  The

                 decision shall be mailed to all other individuals by regular mail.  The date of the decision shall be the date

                 of personal delivery or, if mailed, the postmark date of the mailing.   The decision must include and describe

                 in detail, the following:

                1.             the nature of the grievance

                 2.             the issues involved

                3.             the reasons supporting the Contractor’s decision, (struck text): explained in easy to understand terms
for

                                members, including references to applicable statute, rule,
applicable contractual provisions, policy

                                 and procedure

                4.             the Complainant’s right to request a hearing by filing the request for hearing to the

                                 Contractor no later than 30 days after the date of the Contractor’s
decision.

j.              If the Contractor’s decision is appealed and a request for hearing is filed, the Contractor must ensure that all

                 supporting documentation is received by the AHCCCSA, Office of Legal Assistance, no later than five

                 working days from the date the Contractor receives the verbal or written request from AHCCCSA, Office of

                 Legal Assistance.  The file sent by the Contractor must contain a cover letter that includes:

                1.             Complainant’s name

                2.             Complainant’s AHCCCS ID number

                3.             Complainant’s address

                4.             Complainant’s phone number (if applicable)

                5.             the date of receipt of grievance

                 6.             a summary of the Contractor’s actions undertaken to resolve the grievance and basis of
the

                                 determination

                                                                               
-161-

k.             The following material shall be included in the file sent by the Contractor:

                1.             written request of the Complainant asking for the request
for hearing

                2.             copies of the entire file which includes the investigations and/or medical records; and the

                                 Contractor’s decision

                3.             other information relevant to the resolution of the grievance

                                                                               
-162-

GENERAL GUIDANCE ON BIDDING CAPITATION RATES

WITH THE PRESCRIPTION DRUG BENEFIT CARVED OUT

The following information is provided as guidance to bidders for submitting a capitation rate proposal with

 the prescription drug benefit carved out.  AHCCCS is currently in the process of hiring a consultant to

 perform an analysis of the potential carve out.  Part of that analysis will include a recommendation for the

 design that will be used in the event that the benefit is carved out.  AHCCCS anticipates that the analysis

 will be completed in the Summer of 2003.  Therefore, the following should be considered a guide for

 preparing the capitation rate bid submissions; however, it is subject to change.  In any event this information

 will help ensure that bidders are all using most of the same assumptions when developing their capitation

 rate proposals for the carve out option.

ü   Due to recent guidance from CMS, AHCCCS fully expects that there will be a closed formulary.

      AHCCCS will solicit Contractor input in developing the formulary as well as input from other

       required parties as defined in the federal Medicaid Drug Rebate Program.

ü   AHCCCS in conjunction with its Contractors will develop statewide prior authorization criteria for

       the Pharmacy Benefits Manager (PBM) that is awarded a contract.  It is anticipated that the prior

       authorization requirements will be as effective as those currently used at the health plans.

ü   In the Pharmacy RFP, AHCCCS will incorporate the requirement for the PBM to send real time

       data to the Contractors.  This process should be similar to AHCCCS’ current Contractor’s data

       exchange protocols and requirements with their PBM’s.

ü   The real time access to data should ensure that the Contractor’s will continue to receive real time

       data for use in utilization management, disease management programs, identification of drug-

      seeking members, care coordination, case management, and provider profiling, etc.

ü   AHCCCS believes that there is a potential for a prescription drug carve out to have an impact on the

       utilization of other services.  This impact will vary by plan and type of program (acute versus long

       term care).  Each bidder should factor its unique integration of pharmacy management into their

       operations when determining secondary impacts.  AHCCCS expects that each plan will have a

       different estimate. They should factor that into their capitation rate bidding.

ü   The bidder should also consider the impact the prescription drug carve out will have to their

       administrative costs.  For example, if the PBM does all prior authorizations, how would that

       impact the Contractor staffing?  Conversely, because the plans will continue to perform

       utilization management based upon PBM data, there may be no staffing impact.

Please refer to the Question and Answer document that will be issued in the 2nd RFP Amendment for further

 information on the potential prescription drug carve out.

Medicaid Eligibility Verification System (MEVS)

Contract Awards under

RFP YH03-0005

Contract # YH03-0005-01

Company:         WebMD-Envoy

Contact:            Wheeler Foster, Client Manager

Address:           26 Century Blvd., Suite 601

                           Nashville, TN  37214

Phone:              (805) 496-3155

Fax:                   (805) 496-3077

E-mail:              wfoster@webmd.net

Contract # YH03-0005-02

Company:         Health Data Exchange (HDX)

Contact:            Jonas Dahlen, Area Manager

Address:           467 Creamery Way

                           Exton, PA  19341

Phone:              (610) 219-9099

Fax:                   (619) 219-1384

E-mail:              JonasDahlen@siemens.com

Contract # YH03-0005-03

Company:         Medifax EDI

Contact:            Tommy Lewis, VP of Marketing

Address:           1283 Murfreesboro Road

                           Nashville, TN  37217

Phone:              (615) 565-2158

Fax:                   (615) 565-2858

E-mail:              tommy.lewis@medifax.com

	
Page 1 of 2

	

AHCCCS

 LOGO

     

	
SOLICITATION AMENDMENT

Solicitation Number:       RFP YH04-0001

 Acute Care Services - CYE 04

 Amendment Number Three

 Solicitation Due Date:   March 31, 2003, 3:00 PM (MST)

	
Arizona Health Care Cost

 Containment System Administration

 (AHCCCSA)

 701 East Jefferson, MD 5700

 Phoenix, Arizona 85034

 Michael Veit, (602) 417-4762

A signed copy of this amendment shall be included with the proposal, which must be received by AHCCCSA no later than the Solicitation due date and time.  This solicitation is amended as follows:

1.         As part of the Data Supplement that was previously issued, an Encounter Utilization Reports binder and

             CD was also issued.  The information in the Encounter Utilization Reports did not previously include

            Per Member Per Month (PMPM) cost information.  That information was being reviewed internally and

             also by Mercer and has now been authorized to be released.  As a result, the summary information

             included in the previous binder has been updated and the reports and a CD have been generated with this

             additional information.  This information is attached to this Amendment.

2.         Please refer to Section C of the Data Supplement for information about the contents and layout of the

             CD.

3.         The PMPM cost information will be used in addition to the health plan financial information in the

             development of the capitation rate ranges for CYE04.

4.         All other terms and conditions remains the same, including the proposal due date and time.

	
Offeror hereby acknowledges receipt and

 understanding of this Solicitation Amendment.

	
This Solicitation Amendment is hereby executed this 14th

 day of March, 2003, in Phoenix, Arizona.

	

 /s/ Nancy Novick                                    3/28/03

	

 /s/ Michael J. Veit

	
Signature                                             
   Date

	
 

	

 Nancy Novick, CEO

	
Signed Copy in File

	
Typed Name and Title

	
Michael Veit

	

 VHS Phoenix Health Plan, Inc.

	
Contracts and Purchasing Administrator

	
Name of Company

	
 

Historical Utilization Data for Capitated Members

Encounter Utilization Reports

The following reports present historical encounter utilization information for capitated enrollees for contract year 18 (10/99-9/00), contract year 19 (10/00-9/01) and the first six months of contract year 20 (10/01-3/02
annualized).  Utilization is shown for each risk group and age/sex category by county, GSA, and statewide.   All of the column totals, GSA information, and statewide information have been weighted.  These utilization reports are for prospective
enrollment only.

Before utilizing this information, the bidder should review Section D, Service Matrix/ Selection Criteria.  The Service Matrix defines and describes the selection criteria used for each of the service categories shown in
this section.  The bidder should also review Sections F and G providing the CRCS screen layouts for bidding and the Crosswalk from the Service Matrix to the CRCS screen layouts.

Units per 1000

The first set of reports in this section present utilization information by county and GSA.  These detailed reports are sorted by contract year and then service categories within each year.   The second set of
reports in this section present statewide utilization.  The statewide reports are sorted by service category first and then contract year under each service category.

The utilization information presented in this section represents historical annual utilization per 1,000 members.  With the exception of the average length of stay information, the utilization statistics have been
calculated by dividing the total number of the units/encounters counted, by the total number of member months in the rate code and age/sex categories, and multiplying the result by 12,000 (1,000 members for 12 months). The member months used in the denominator of the
calculation can be found in Section I, Acute Capitated Member Months Paid.

Unit Cost

The first set of reports in this section present unit cost information by county and GSA.  These detailed reports are sorted by contract year and then service categories within each year.   The second set of
reports in this section present statewide unit costs.  The statewide reports are sorted by service category first and then contract year under each service category.

The unit cost information presented in this section represents historical annual unit costs for medical services.  With the exception of the average length of stay information, the unit cost statistics have been
calculated by dividing the total price of encounters (health plan paid, or valued at the AHCCCS FFS schedule if the provider is subcapitated) , by the total number of encounters.

Cost PMPM

The first set of reports in this section present cost PMPM information by county and GSA.  These detailed reports are sorted by contract year and then service categories within each year.   The second set of
reports in this section present statewide costs PMPM.  The statewide reports are sorted by service category first and then contract year under each service category.

The cost PMPM information presented in this section represents historical annual costs PMPM for medical services. The cost PMPM statistics have been calculated by dividing the total cost of the encounters (health plan paid, or
valued at the AHCCCS FFS schedule if the provider is subcapitated) by the total number of member months in the rate code and age/sex categories.

	
Page 1 of *

	

AHCCCS

 LOGO

     

	
SOLICITATION AMENDMENT

Solicitation Number:       RFP YH04-0001

 Acute Care Services - CYE 04

 Amendment Number Four

 Solicitation Due Date:   March 31, 2003, 3:00 PM (MST)

	
Arizona Health Care Cost

 Containment System Administration

 (AHCCCSA)

 701 East Jefferson, MD 5700

 Phoenix, Arizona 85034

 Michael Veit, (602) 417-4762

A signed copy of this amendment shall be included with the proposal, which must be received by AHCCCSA no later than the Solicitation due date and time.  This solicitation is amended as follows:

The questions and answers document has been updated for the round two questions.  The new questions are shaded for easy identification.

*.         All other terms and conditions remains the same, including the proposal due date and time.

	
Offeror hereby acknowledges receipt and

 understanding of this Solicitation Amendment.

	
This Solicitation Amendment is hereby executed this 14th

 day of March, 2003, in Phoenix, Arizona.

	

 /s/ Nancy Novick                                    3/28/03

	

 /s/ Michael J. Veit

	
Signature                                             
   Date

	
 

	

 Nancy Novick, CEO

	
Signed Copy in File

	
Typed Name and Title

	
Michael Veit

	

 VHS Phoenix Health Plan, Inc.

	
Contracts and Purchasing Administrator

	
Name of Company

	
 

	
Quest #

	
Page

	
Sect

	
Paragraph

	
Question

	
Answer

	
1

	
6

	
Sect B

	
 

	
What format is required for the actuarially sound certification?

	
A basic actuarial certification letter with a signature. A member of the American Academy of Actuaries must attest that the rates they bid are actuarially sound for that plan.

	
2

	
6

	
Sect B

	
 

	
What is the definition of “actuarially sound” for the purposes of the actuarial certification?  Is it the general definition as described on page 99 of the RFP or is it the CMS definition of
“actuarially sound” or should the certifying actuary refer to the applicable actuarial standards as issued by the Actuarial Standards Board?

	
The definition on page 99 of the RFP is adequate at this time.

	
3

	
6

	
Sect B

	
 

	
How will the Offeror know that the bid submission in the AHCCCSA Web application is correct?  Not that we don’t trust the AHCCCSA systems, but wouldn’t it be better if the rate submitted via
print out (that the actuary is certifying and can see) is the prevailing bid rather than the bid submitted via Web application?  The actuary can’t certify to the accuracy of the AHCCCSA systems.

	
Yes AHCCCSA agrees that the hard copy print out will prevail if there is a difference in what is entered into the web site and what is on the hard copy print out.  This statement corrects the direction in
Attachment E of the RFP as issued on February 3, 2003.

If there is a difference, the web site will be adjusted to match the hard copy print out.  All reports that will be used in the scoring are generated from the web site bids; therefore, it is necessary that
the web site bids are correct.  Please note that because the bids will be scored using the web site, the Offeror must submit one set of bids only.  Barring AHCCCS system issues, the hard copy and the web bid submissions must be identical.

	
4

	
6

	
Sect B

	
 

	
Please define more specifically what the definition of "Actuarially Sound" means from the Offeror’s perspective.  If a health plan has a sicker than average population for a given rate cell, how
should an Offeror reconcile its "actuarially sound" bid when this rate will be above the rate range?

	
Please refer to the answer in question #2 above for a description of actuarial soundness. Because of concerns regarding adverse selection that an AHCCCCS Contractor had, AHCCCS engaged Mercer to run AHCCCS health
plan encounter data through the Chronic Disability Payment System (CDPS) in 2002. Each of the health plans was scored from a risk standpoint. Total reimbursement [capitation, regular reinsurance, catastrophic reinsurance, AIDS/HIV $, maternity payments, etc.] 
paid to health plans were also tabulated for comparison purposes. Because this analysis showed almost perfect alignment in the ranking of risk versus payment, AHCCCS felt the actuarial soundness of its current payment methodologies had been confirmed.

	
5

	
6

	
Sect B

	
 

	
In the response to this question in the last round, AHCCCSA indicated that a CDPS analysis had been performed on all current contractors.

Supplementary revenue sources such as reinsurance should be correlated to risk selection. However rank does not ensure rate adequacy. A plan may have 6% higher acuity but only 3% more from supplementary revenue sources. Will
AHCCCS use the CDPS risk factors developed last year to appropriately move the rate range up or down for each existing plan? New plans can be assumed to attract an average "1.00" population.

	
The results of running the CDPS model will not be used in developing capitation rate ranges.

The analysis showed that plans with higher acuity tended to collect proportionately more in supplementary revenue. The purpose of rebasing the capitation rates and the supplementary revenue sources is to ensure that
reimbursement and risk adjusters are adequate.

	
6

	
6

	
Sect B

	
 

	
Given the BBA's requirement for the rate ranges to be "Actuarially Sound" from the perspective of the State's actuaries, please define more specifically what this means.

	
CMS has issued an extensive rate-setting checklist that defines in great detail exactly what is meant by actuarially sound rates. Mercer was consulted extensively by CMS in the development of the tool, and
supplied much of the material that found its way into the checklist. We do not foresee significant changes in the way rate ranges are established in Arizona. There may be significant changes in the way they are documented and filed with CMS.

Mercer brought the issue of actuarial soundness to the attention of the American Academy of Actuaries. As a result, the Actuarial Standards Board has just begun its own analysis of what it means to make an
assertion that capitation rates are actuarially sound. Mercer is also represented on this task force and will take its recommendations into account as they become available.

	
7

	
6

	
Sect B

	
 

	
Will AHCCCSA accept a “qualified” certification of actuarial soundness? For example, if a current contractor is expanding into a new GSA and letters of intent are included for the network, the actuary will be
required to qualify the opinion with an assumption as to what the final reimbursement might be.  Is this acceptable to AHCCCSA? Also, will AHCCCSA require a certification of actuarial soundness after a BFO?  What happens if the actuary can’t certify
to actuarial soundness if the bidder is asked to accept lower rates during the BFO process?

	
Yes, we would accept a certification based on the best data and information available at the time that the certification is made. Presumably the actuary has satisfied himself or herself that the letters of intent will evolve
into signed contracts at the assumed reimbursement levels. The actuary for each offeror will need to certify that the rates submitted for initial bids are actuarially sound for that offeror. Subsequent certifications are required after the BFOs (if applicable). If at
any time an actuary does not feel the proposed rates are actuarially sound for his or her client, the bidder should not sign a contract with AHCCCSA

	
8

	
9

	
Sect C

	
Definition, Emergency Medical Service

	
Is the word inpatient referring to admission to the emergency room?

Can we assume that if it refers to admission to the hospital that it would only be related to emergency surgery or ICU status and once the patient is stabilized in the ICU that notification applies?

	
The definition of emergency medical services includes services provided in both inpatient and outpatient settings.  This definition did not change with BBA.  The notification standards have
changed.  Emergency service providers have up to 10 days to notify the health plan. Notice requirements are still being analyzed, and further clarification will be forthcoming.

	
9

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
The RFP states that contractors are responsible for payments during prior period coverage and may include services provided prior to the contract year. Does AHCCCSA anticipate setting a limit as to how far back
the prior period can go?

	
The prior period coverage (PPC) time period is already defined and limited depending upon the eligibility category.  Please refer to AHCCCS rule for those limitations.

	
10

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
  Health Plan Choice – Members having fewer than 30 days continuous eligibility remaining will not be placed with a health plan but enrolled in AHCCCS FFS.  Please explain when this may
occur.

	
The eligibility source informs AHCCCS that the approved eligibility period will extend into the future less than 30 days (example: member is determined they will be ineligible the following month although they
are eligible this month).  However, it is possible to enroll a member with a health plan (member had been anticipated to remain eligible) and then have the member become ineligible before the end of the month (example: the member is incarcerated, dies, or moves
out of state).

	
11

	
18

	
Sect D

	
#3-Enrollment and Disenrollment

	
  Health Plan Choice – What are the “few exceptions” in which the effective date of enrollment for a Title XXI member will not be the first day of the month?

	
There are unusual situations, usually administrative mistakes, when a TXXI member may be enrolled during the month.  These are rare, and will not affect reimbursement.

	
12

	
18-19

	
Sect D

	
#3-Enrollment and Disenrollment

	
  Health Plan Choice – How long do newly eligible persons have to select a health plan?  How long does a mother have to select a health plan for her newborn child?  For FES
babies?

	
Members are encouraged to choose a health plan prior to the eligibility approval date.  If not, they are auto-assigned through the algorithm.   For newborns, the members have 16 days to choose a plan
for their baby.

	
13

	
19

	
Sect D

	
#5-Enrollment and Disenrollment

	
When will open enrollment dates be finalized and shared with contractors?

	
It is anticipated that Open Enrollment will take place in August, 2003 for enrollment October 1, 2003.  The finalized dates will be shared with the Contractors as soon as they are known.

	
14

	
19

	
Sect D

	
#3- Enrollment and Disenrollment

	
When does the capitation payment start:  When the hospital calls with notification or when the plan calls AHCCCS?

	
As stated in the RFP, “The Contractor is responsible for notifying AHCCCSA of a child’s birth....” However, a hospital may notify AHCCCSA in lieu of the contractor when the mother is
enrolled in AHCCCS FFS.  The plan is required to notify AHCCCS of a birth when the mother is enrolled with the health plan.  Capitation begins the day AHCCCSA is initially notified of the birth by either the Contractor or the hospital.  For babies born
to FES mothers, the eligibility is retro to the date of birth and PPC capitation is paid for the date of birth to the date of notification.  For babies of enrolled mothers, there is no PPC capitation and the plan is prospectively capitated from the date of
notification forward.

	
15

	
20

	
Sect D

	
#5—Open Enrollment

	
How will AHCCCSA handle enrollment in rural GSAs if a contract is awarded to an incumbent and a new Contractor?  If members have not selected a health plan through the open enrollment process, would AHCCCSA
weight the auto assignment process to ensure that the non-incumbent health plan has a sound membership base to allow a viable operating base?

	
Members of the exiting health plan will have an opportunity to choose a new health plan through an open enrollment process.  Per Attachment G, AHCCCSA reserves the right to adjust the algorithm for a
Contractor who is awarded contracts in only rural GSA’s.  This will be decided at a later date based on awards.  That adjustment per Attachment G is only applicable to contractors in Maricopa and Pima counties.

	
16

	
20

	
Sect D

	
# 5—Open Enrollment

	
Section notes that the algorithm will be adjusted to exclude auto assignments to an exiting contractor: 

On what date would the algorithm be adjusted?

When will new contractor names be added to AEC materials?

	
The exiting contractor’s enrollment is anticipated to be capped on July 1, 2003.

New contractor names will be added to AEC materials for mailing in mid-June.

	
17

	
20

	
Sect D

	
# 5—Open Enrollment

	
For successful Offerors, please describe the open enrollment process for incumbent contractors awarded a contract under this procurement.  Will members of a health plan that is being replaced in a given GSA
be the only members participating in open enrollment activities, or will all health plans’ members participate?  When an additional health plan is added to a GSA, will members of all existing health plans within that GSA participate in open enrollment
activities?

	
Open enrollment will only be offered to members of exiting Contractors.  Those members will be able to select from all contractors in the GSA for enrollment on October 1.

	
18

	
20

	
Sect D

	
# 5-- Open Enrollment

	
If a contractor is purchased by another organization, will AHCCCS hold an open enrollment for those members?

	
The answer will depend upon details and the timing of the sale and whether an award is received by the continuing plan.

	
19

	
20

	
Sect D

	
#6—Auto-Assignment Algorithm

	
Are there specific reasons why AHCCCSA made the statement in the RFP, “Capitation rates may be adjusted to reflect changes to a contractor’s risk due to changes in the algorithm”? Could AHCCCSA
describe the kinds of scenarios that would require a change to the algorithm?  How would and what type of notification timeline would future changes to the algorithm methodology be communicated to the health plans?

	
It is believed that members who are auto assigned through the algorithm have a lower risk that those who choose a health plan.  Those who choose are believed to be already accessing services, or are in the
need of services, which is why they are more concerned about the health plan with whom they are enrolled.  Therefore, if a plan is receiving more members though the algorithm through an adjustment, then it is believed by AHCCCSA’s actuaries that the
plan’s risk is lower than the other plans.  Therefore, an adjustment is made to all Contractors’ rate to ensure actuarial soundness.

Another scenario is the adjustment that may be made if there is a Contractor in Pima or Maricopa County who has total statewide enrollment of less than 25,000 members.  Another scenario is when a
Contractor’s enrollment is capped due to financial performance or sanctions.

The health plans would have at least 30 days notice.  This notification would occur through a contract amendment.

	
20

	
20

	
Sect D

	
#6—Auto-Assignment Algorithm

	
In the first Q & A, AHCCCS indicated that members who are auto assigned through the algorithm have a lower risk than those who choose a health plan....if a plan is receiving more members through the algorithm through
an adjustment, then it is believed by AHCCCSA’s actuaries that the plan’s risk is lower than the other plans.  Can AHCCCS provide the data on why this is believed to be true?

	
This determination was based on comparing the financial experience of two AHCCCS contractors before and after one plan’s enrollment was capped.  AHCCCS also pulled a small sample of data that supports this
contention.  AHCCCS is working on pulling a larger more statistically sound data sample to continue to verify this belief.

It is also a widely held belief that those who choose a health plan are already receiving medical services, or have an investment in their health due to untreated health problems.  Those who do not choose are therefore
not believed to have the same level of health issues.

	
21

	
20

	
Sect D

	
# 7-- AHCCCS Member Identification Cards

	
Membership cards:

How much will cards cost? 

What will the health plans be charged?

What is the frequency of card issuance (one time per member, when the member changes rate codes, when the member changes contractors, etc.)?

Will the invoice provided by AHCCCS be at the member detail level?

If AHCCCS is unsure about any of the above, please provide direction as to how the health plan should account for this new cost in its bid.

	
The Offerors should budget 75 cents per card.  New cards are issued for the following reasons:  new member, change in RBHA, change in Contractor, lost/stolen cards, significant name change, change in
program eligibility, and upon member request.  AHCCCSA issued approximately 40,000 cards per month in the recent months.

AHCCCSA has not yet determined how the invoicing will be handled.

The bidder should use the information provided here in their capitation rate bid submissions.

	
22

	
20

	
Sect D

	
# 7-- AHCCCS Member Identification Cards

	
Request on question 18:

Please provide the number of ID cards distributed by GSA.

	
The information AHCCCS has regarding the number of ID cards distributed was included in an amendment to the data supplement.  The information was not available by GSA, but by health plan.

	
23

	
20

	
Sect D

	
# 7-- AHCCCS Member Identification Cards

	
What is the average cost per AHCCCS ID card?

	
See the answer to #21 above.

	
24

	
20

	
Sect D

	
 

	
a. What are the costs to the health plans on a per card basis?

b. For each GSA, how many ID cards (new and reissued) were issued last year?

c. How many replacement cards were issued last year?

d. For cost control purposes, will the health plans have input regarding the vendor and content of the card?

e. How will AHCCCSA monitor and ensure that health plans are not inadvertently billed for ID cards for other health plans or FFS members?

f. How will ID card costs be handled for members who are retroactively disenrolled (i.e. refunded)?

g. Will postage be charged to the health plan for the mailing of ID cards?

	
a-c, e, f. See the answer to #21 above.

AHCCCSA will contract with the vendor.   The content of the card is not the discretion of the Contractor.

g. The Contractor will be billed for postage included in the 75 cents.

	
25

	
20

	
Sect D

	
#8—Mainstreaming of AHCCCS members

	
Please define “available facility”

	
This is a facility that would normally be available for use by your members i.e., in-network or when medically necessary.  The intent of the statement is that use of such a facility cannot be denied based on
one of the criteria in the previous paragraph in the RFP, payor source, race, color etc.

	
26

	
20

	
Sect D

	
#8—Mainstreaming of AHCCCS members

	
What does AHCCCSA consider to be “reasonable steps” to be taken with subcontractors to encourage mainstreaming of members?

	
The phrase is used in the context that “Contractors must take into account a member’s culture when addressing members and their concerns, and must take reasonable steps to encourage subcontractors to
do the same.”  The overall paragraph discusses prohibited discriminatory practices with respect to a member’s rights to receive services in a manner that does not discriminate based on payor source, race, color, gender, etc.  The Offeror should
use its own judgment to identify reasonable steps.

	
27

	
21

	
Sect D

	
#9—Transition of Members

	
Transition of Members-Acute Care-If we are notified from CRS that a patient is coming in or out, what is the plan's responsibility of transition and to whom?

	
When a member is enrolled in CRS, the health plan still has the responsibility of providing all covered services for the member that are not included as CRS covered services for the CRS enrolled diagnosis (refer
to CRS covered diagnosis list).  CRS and the health plan are expected to coordinate applicable services such as DME, prescriptions, etc as they pertain in the transition.

	
28

	
21

	
Sect D

	
 #9—Transition of Members

	
Are PCP's still required to have dental service reports in the medical record?

	
No, dental treatment records are not required in the PCP chart.  However, record of any verbal referrals/recommendations by the PCP for dental services should be documented in the patient record maintained
by the PCP.

	
29

	
21

	
Sect D

	
#10—Scope of Services (CRS-last paragraph

	
CRS is currently under procurement for a new contractor.  How will that new contract’s operations impact coordination of services with AHCCCSA health plans and what will be the financial impacts of any
contract changes to a health plan?

	
If an award is made to a new CRS contractor, the AHCCCS contractors would be responsible for coordinating care with and referring potentially eligible members to the new contractor.  It is not anticipated
that this will have any financial impact to AHCCCS contractors.

	
30

	
22

	
Sect D

	
#10—Scope of Services (CRS-last paragraph

	
Transition of Members-If a member transitions "enrolls or discharges" from CRS, is CRS responsible for sending timely notice to the health plan?  CRS provides a monthly list of members accepted and discharged from
CRS.  This time frame of "Notification" to a plan doesn't coincide with transition policy 520 in the AMPM.

	
Yes, CRS must notify contractors of enrollments and disenrollments in accordance with the transition policy.  Your concern regarding transition time frames is noted.

	
31

	
22

	
Sect D

	
#10—Scope of Services (CRS-last paragraph)

	
Who is financially responsible for services if the CRS eligible and enrolled member does not utilize CRS services?   The AMPM Section 400 references medical care paid by the plan to an eligible,
enrolled member when CRS fails to provide timely services. It does not address which entity pays for the medical expenses if the member is an eligible, enrolled CRS patient, but refuses to use their services. Under these circumstances, does the health plan continue
to pay for medical services or are we not obligated to pay for the CRS covered services because of CRS eligibility and enrollment?

	
In this instance the member (family or guardian) is responsible for payment. The member is choosing to go out of network for services.  However, it is AHCCCSA’s expectation that Health Plans assist
members in understanding the services delivery system and that plans facilitate the members use of CRS.

	
32

	
23

	
Sect D

	
#10-- Scope of Services (Emergency Services, last sentence)

	
Please clarify:  how does this apply to out of state providers who are not contracted with the plan or AHCCCS?  What if a provider refuses to register with AHCCCS?  Can they bill the member? 
Is there a statute to protect the member from billing/collections/by out of state providers?  Is there a quick registration process for out-of state providers?

	
Providers must register with AHCCCS to be eligible for payment. A contract with the health plan is not required.  Registered providers may not bill members for medically necessary covered services. 
AHCCCS is not aware of a statute that protects members from billing/collections by unregistered, out of state providers.  State rule prohibits billing of Medicaid members for medically necessary covered services.  AHCCCS does have a simplified registration
form for single use providers.

	
33

	
23

	
Sect D

	
#10-- Scope of Services

	
EPSDT– What are the health plans’ specific responsibilities in terms of “follow-up” with a RBHA to monitor whether members
have received behavioral health services?

	
When this information has not already been received from the member or the RBHA, the Contractor is expected to contact the RBHA to ensure that the member has either been scheduled or seen for an appointment or
that the member has refused behavioral health services from the RBHA.

	
34

	
23-24

	
Sect D

	
#10-- Scope of Services (Emergency Services, last sentence)

	
  Emergency Services – Please confirm that the 10 calendar day requirement applies only to the notification of emergency services and not to any inpatient stay admission resulting from an
emergency department visit.  Please confirm that the 10 calendar day requirement is unrelated to the 1 hour response time required.

	
Analysis re BBA Emergency notification requirements is ongoing and further clarification will be forthcoming.

	
35

	
23-24

	
Sect D

	
#10-- Scope of Services (Emergency Services, last sentence)

	
When will further clarification be forthcoming on the BBA Emergency Notification requirements?

	
Further clarification for bidding purposes is not forthcoming; however, AHCCCS is pursuing a waiver with CMS from this provision.

BBA states that a health plan may not deny payment to a provider of an emergency service for failure to notify the health plan of the service within 10 calendar days. This does not preclude a contractor from conducting retro
review or working with hospitals to maintain current notification time frames.  AHCCCS does not expect contractors to experience an increase in utilization due to this change.

	
36

	
24

	
Sect D

	
#10, Scope of Services (Emergency Services, paragraph 2, #2)

	
In bullet point #2, clarification is needed regarding notification.  Does this mean the emergency room services must have notification to the health plan within 10 days?

By screening and treatment are you including admissions to the hospital and work up and treatment?  If so does the facility have 10 days to notify the health plan of admission?

Does this mean there will be no concurrent review process for any member admitted through the Emergency Room?

	
Analysis re BBA Emergency notification requirements is ongoing and further clarification will be forthcoming.

The Offerors should assume that there will be no changes to program costs for this provision when developing capitation rate bids.

	
37

	
24

	
Sect D

	
#10, Scope of Services (Emergency Services, paragraph 3)

	
“A member who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the patient”. 
Does this statement mean that authorization would not be needed for follow up visits resulting from the ER visits?

	
The issue of authorization is different from that of patient financial responsibility.  Authorization may still be required for follow-up done after the patient is stabilized. Prior Authorization is not a
guarantee of payment.

	
38

	
24

	
Sect D

	
#10-- Scope of Services (Emergency Services)

	
Emergency services-- How long does a provider of emergency services now have to notify the plan to ensure payment, or is there no time limit?

	
The new notification requirements per BBA are within 10 calendar days for emergency services.  Analysis regarding BBA Emergency notification requirements is ongoing and further clarification will be
forthcoming.

	
39

	
25

	
Sect D

	
#10—Scope of Services (Hospital)

	
Regarding observation - no specific time frame in RFP versus 24 hours in the contracts.  Are you changing the AMPM policy to something other than the 24 hour or do we presume it will stay as per policy?

	
 Observation services are defined in the AMPM Policy 310.  There is no anticipated change to this policy.

	
40

	
25

	
Sect D

	
#10—Scope of Services (Hospital)

	
Observation services may be provided on outpatient basis if determined reasonable...when deciding if member should be admitted for inpatient care. There is no specification of the time frame (prior contracts
have indicated up to 24 hours).

Is the absence of a time designation meant that AHCCCS will be following the 48-hour Medicare standard?

If the time frame is expanded from 24 to 48 hours, what criteria are going to be used to determine that the extended stay to 48 hours was appropriate as observation versus inpatient?

	
Please see the AMPM Policy 310, Observation Services for clarification.

	
41

	
25

	
Sect D

	
# 10—Scope of Services  (Hospital)

	
What is meaning/financial impact of removing 24-hour limit from observation services?

	
Please see the AMPM Policy 310, Observation Services for clarification.  The financial impact is unknown at this time.

	
42

	
25

	
Sect D

	
# 10—Scope of Services  (Immunizations)

	
What are the adult immunization performance standards?

	
AHCCCS has not established adult immunization performance indicators for the acute care population. 

	
43

	
26

	
Sect D

	
#10—Scope of Services (Nursing Facility)

	
What would occur when a member no longer requires the skilled services of a convalescent care stay, but a discharge from the facility is deemed inappropriate for a specific reason?  For example, Mr. Smith is
admitted to a skilled nursing facility for Rehab Services (OT and PT), after a hip replacement.  A week into his stay, he is discharged from therapies because he is unable or unwilling to participate.  Mr. Smith no longer meets the criteria for a
convalescent care stay, but he is still not able to care for himself in his previous living arrangement, and a discharge from the skilled nursing facility is not appropriate because of safely issues.

	
The Health Plan is responsible for providing medically necessary covered services. Facility coverage is not limited to the skilled level of care.

	
44

	
26

	
Sect D

	
#10—Scope of Services (Nursing Facility)

	
Can this member (see above question) be kept in the facility at a lower level (e.g. a custodial care level) until the discharge is appropriate?  If this is possible, how would AHCCCSA like to be notified,
and would the custodial care days still need to be counted toward the 90 day contract year maximum benefit?

	
There is no prohibition against health plans negotiating rates at a lower level of care. AHCCCS does not require notification. Days at a lower level of care do count toward the 90-day contract year maximum
benefit.

	
45

	
27

	
Sect D

	
#10, Scope of Services  (Post-stabilization Care Services Coverage and Payment, paragraph 2, #2.)

	
In bullet #2, is 1 hour the correct time for approval of post-stabilization care services at non-contracted facilities?

Who will determine the 1-hour time frame? Will telephone logs be used to verify?

	
One hour is the correct time for approval of post-stabilization care services approval requests for all providers both contracted and non-contracted.

Both hospitals and plans will likely document the one-hour timeframe and telephone logs may be one method to accomplish this.

Further clarification regarding BBA requirements will be forthcoming.

	
46

	
27

	
Sect D

	
#10, Scope of Services (Post-stabilization Care Services Coverage and Payment, paragraph 3, #3.)

	
In bullet #3 A Contractor’s physician with privileges at the treating hospital assumes responsibility for the member’s care.  What happens when the Contractor’s physician with
privileges at the treating hospital is ready and willing to assume the care but the non-contracted Attending physician will not relinquish care?

	
AHCCCS expects treating physicians to act in the best interests of the member. Issues such as this should be brought to the plan Medical Director for resolution.

	
47

	
27

	
Sect D

	
# 10, Scope of Services, (Pregnancy Terminations)

	
Is there any information on expected financial impact of policy change?

	
Based upon 18 months of experience with this policy, AHCCCSA believes that the financial impact is not material, and capitation rates will not be adjusted for this policy change.

	
48

	
27

	
Sect D

	
#10, Scope of Services  (Post-stabilization Care Services Coverage and Payment, paragraph 2, #2.)

	
Post Stabilization– The RFP implies a contractor must respond to authorization requests within one hour.  If not, are services deemed
approved?  How will AHCCCSA evaluate health plans’ performance of this requirement?

	
If authorization is not provided within one hour, services are deemed authorized. Methods to monitor this performance requirement will be developed. Further analysis of BBA will be completed and additional
information will be forthcoming.

	
49

	
28

	
Sect D

	
# 10-- Scope of Services

	
Omitted...not used as a maintenance regimen...Is this changing or does the phrase "potential for improvement" cover this?

	
Please clarify and resubmit the question.

	
50

	
28

	
Sect D

	
# 10—Scope of Services (Prescription Drugs)

	
Will pharmacy carve-out include OTC items currently being provided by health plans, for example, condoms and nutritional supplements?

	
The pharmacy carve out will include those OTC items that require a prescription.

	
51

	
28

	
Sect D

	
#10--Scope of Services (Transportation, first sentence)

	
Give examples of medically necessary transportation.

	
Includes but is not limited to transportation for well child care, prenatal appointments, urgent medical appointments, prescription pick-up at pharmacy, ambulance transportation and other services that are
medically necessary.

	
52

	
28

	
Sect D

	
# 10-- Scope of Services

	
In previous contracts, physical therapy for all members and occupational and speech therapies for members under the age of 21 are covered on both an inpatient and outpatient basis if not used as a maintenance
regimen.  The underlined words are omitted in the RFP.  Is there a change in coverage?

	
There is no change in the coverage due to the deletion of the phrase “if not used as a maintenance regimen”. Rehabilitation Therapies are covered when there is an expectation of improvement in the member’s
condition.

	
53

	
29

	
Sect D

	
 #10—Scope of Services

	
What is the timeline for new or revised policies in AMPM regarding Special Health Care Needs?

	
The deadline is October 1, 2003. As clarification is available it will be published.

	
54

	
29

	
Sect D

	
#12-- Behavioral Health Services, paragraph 1

	
“AHCCCS members are eligible for comprehensive behavioral health services” – This indicates that Family Planning members would also have this benefit, is this correct?

	
No, SFP members are not eligible for behavioral health services.  This will be clarified in the RFP document at a future date.

	
55

	
30

	
Sect D

	
#12-- Behavioral Health Services, Medication Management Services, paragraph 1

	
In previous publications the PCP was allowed to provide medication management for members with diagnoses of mild to moderate depression, mild to moderate anxiety and attention deficit hyperactivity
disorder.  Were the words mild to moderate intentionally left out?

	
Since the inception of the psychiatric medication initiative in October of 1999, which allows health plan PCPs to prescribe for certain behavioral health disorders within the scope of their practice, the contract
language has remained the same.  The words “mild”, “minor”, or “moderate” have not been in contract and there is no change in the expectation.  AHCCCS policy (AMPM 310) and the guiding principles published in September
1999 refer to ADD/ADHD, mild depression, and anxiety disorders as those which may be managed by the health plan PCP.

	
56

	
30

	
Sect D

	
#12—Behavioral Health Services

	
“The Contractor shall allow PCPs to provide medication management services (prescription, medication monitoring visits, laboratory, and other diagnostic test necessary for diagnosis and treatment of
behavioral disorders) to members with diagnoses of depression, anxiety and attention deficit hyperactivity disorder.”

As this statement does not specify that the PCP may treat “mild” or “minor” depression, please clarify whether the expectation has changed from the original guiding principles published
Sept 1999.

	
Please refer to the answer for question 55.

	
57

	
30

	
Sect D

	
#12—Behavioral Health Services

	
Does AHCCCSA have any guidelines for the monitoring of PCP management of behavioral health disorders?

	
No, AHCCCS does not have guidelines specific to the monitoring of PCPs’ management of behavioral health disorders.

	
58

	
30

	
Sect D

	
#12—Behavioral Health Services

	
The RFP states," For Prior Period Coverage, the Contractor is responsible for payment of all claims for medically necessary covered behavioral health services to members who are not ADHS behavioral health recipients." 
Does this mean that if someone is Non-TXIX RBHA enrolled, the RBHA is responsible for Behavior Health emergency services during prior period coverage?  Is the Contractor responsible for outpatient stabilization services during PPC until the member is RBHA
enrolled?

	
No, the contractor is not responsible the payment of behavioral health services during a PPC time period for non TXIX RBHA enrolled members. 

Yes, the contractor is responsible all behavioral health services if the member was not RBHA enrolled.

	
59

	
31

	
Sect D

	
#14-- Medicaid in the Public Schools, last paragraph

	
Regarding transfer of medical information between the Contractor and the member’s school or school district. ...Isn’t that a violation of the HIPAA privacy standard?  Would the Health Plan
have to have a Business Associate Contract with the schools or school districts?

 

	
The MIPS program provides reimbursement for school districts that are registered providers.  The relationship between a health plan and a provider does not constitute a business associate relationship. 
See 65 Fed. Reg. 82476 (Dec. 28, 2000).  Disclosure for purposes of treatment, payment and certain health care operations are permitted by the rules and do not necessarily require a business associate agreement.  45 CFR 164.506.  “Payment”
activities include coordination of benefits.  “Treatment” includes activities by a provider to coordinate care with a third party.  45 CFR 164.501

	
60

	
31

	
Sect D

	
#14-(MIPS)-last paragraph

	
The RFP states, "Contractors and their providers must coordinate with schools and school districts that provide MIPS services to the Contractor's enrolled members." Is the intent of this new requirement simply to
ensure that services are not duplicative? How are contractors notified when a school or school district is working with a special needs child?  Is AHCCCSA going to provide this information on the monthly FYI file?  Are we coordinating with the school or
school district or the providers that actually provide the services? Has consideration been given to the HIPAA implications? Have the schools/school districts indicated that they are willing to work with the health plans?

	
The intent of the policy is to prevent duplication of service. Contractors can be notified via a DDD support coordinator, a parent, a school provider or the school. AHCCCS will not be providing this information
on the FYI file. Plans are required to coordinate care with the most appropriate entity to best meet the needs of the members. Please see HIPAA response given previously. Yes, the school districts have expressed a desire to coordinate with the health
plans.

	
61

	
31

	
Sect D

	
#14-(MIPS)-last paragraph

	
Please clarify responsibilities of both the health plan and a school in sharing/generating appropriate medical record requirements?  (i.e. transfers of member medical information)

	
Please refer to the answers for questions #59 and #60.

	
62

	
32

	
Section D

	
#16-- Staff Requirements and Support Services, item n.

	
Define difference between Compliance Officer, contract YH04 vs. Fraud and Abuse Coordinator, and contract YH03?

	
The staffing requirement for a Compliance Officer is in the current contract.  The difference between the two positions is the Compliance Officer is considered a key position and must be a senior on-site
employee.  The function is similar to that of the Fraud and Abuse Coordinator, with the additional responsibility to oversee the implementation of a compliance program as outlined in Paragraph 62 of the RFP.  The Compliance Officer should continue to attend
the AHCCCS Fraud and Abuse Workgroup.

	
63

	
32

	
Section D

	
#16-- Staff Requirements and Support Services, item n.

	
From the first Q & A, it appears that AHCCCS sees the Compliance Officer and the Fraud and Abuse Coordinator to be two different individuals.  If a health plan has a Compliance Officer with its parent organization
that is off-site, can this person be a part of the health plan’s compliance program, in cooperation with the on-site compliance/fraud and abuse program?  AHCCCS used our compliance program as an example of what is expected from health plans during a recent
Fraud and Abuse meeting, but it appears that these two similar, but separate programs have become one under the RFP.  The purpose of an off-site Compliance Officer is to allow freedom for the employee to report any individual including fellow employees,
supervisors, or managers if they believe there is unethical behavior within the health plan.  The fraud and abuse program is more likely to look for and report suspected fraud outside the company, such as with members or providers.  This program with both
of its separate components works well.  However, if we are required to merge them, the employees may feel uncomfortable reporting internal issues.  Is it possible to maintain both programs without co-mingling? 

	
The requirement for a fraud and abuse coordinator does not appear in the RFP.  The corporate compliance officer must be a senior, on-site official. The Offeror is responsible for designing a system in which its employees
do feel comfortable reporting internal issues to the C.C. officer.  This, however, does not preclude cooperation and coordination with a compliance officer in the parent organization.

	
64

	
32

	
Sect D

	
#16-- Staff Requirements and Support Services, item m.

	
This section states that a Grievance Manager is a required position, this is also restated on page 33, however, on page 92, Section G, Offeror’s Key Personnel, and the position is listed as Grievance
Coordinator.   Is it the intent of AHCCCSA to require a Grievance Manager or Coordinator?  Are these two titles interchangeable?

	
The 2 position titles are not interchangeable. As part of the staff requirements in paragraph 16, AHCCCS requires a Grievance Manager who is responsible for the oversight of the contractor’s Grievance
System.  The reference to Grievance Coordinator on p. 92 is incorrect and should be changed to Grievance Manager.

	
65

	
33-34

	
Sect D

	
#18-- Member Information

	
According to the revised Member Information Policy, it appears that the content requirements for the informational brochure to prospective members has changed, i.e., adding specialists, telephone numbers and languages spoken.
Are there plans to change the format to allow for the required content changes?

	
No.  This information can be in summary form.  Space constraints may result in fewer pictures and other text being used in the brochures.

	
66

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
The RFP states affected members must be informed of any other changes in the network 30 days prior to the implementation date of the change.  Please define “other” changes in the network and
provide examples.

	
Other changes include, but are not limited to turnover in DME providers and provider address changes.

	
67

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
Termination of a contracted provider:

Does this include specialty providers?

	
Yes, for members who were seeing the specialist on a regular basis.

	
68

	
34

	
Sect D

	
#18-- Member Information, last paragraph

	
  What does AHCCCSA consider to be “program changes” that require notification be provided to “affected members”?

	
Changes in cost sharing or covered services would be examples of program changes.

	
69

	
36

	
Sect D

	
#22.  Advance Directives, last paragraph

	
In referring to written information to adult enrollees, what is meant by (4): “Changes to State as soon as possible, but no later than 90 days after the effective date of the change?”  Does this
requirement conflict with other disseminated information to member approval requirements?

	
The sentence should read, “(4) Changes to State law as soon as possible...”

	
70

	
37

	
Sect D

	
# 24-- Performance Standards, last paragraph

	
What is the responsibility of the Health Plan when a response is not received from AHCCCS in a timely manner as it states that a corrective action plan “must be approved by AHCCCS prior to
implementation”?

Will the health plan be given sufficient time i.e. (6-9 months) after the date of AHCCCS approval to demonstrate improvement?

	
The Health Plans are responsible for continuing to improve Performance Indicator rates, and it is expected that health plans will develop and implement interventions that will assist them in achieving, at a
minimum, the AHCCCS Minimum Performance Standard.   The amount of time a health plan will be given to implement a corrective action plans depends upon the severity of the issue needing correction and the proposed plan.

	
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# 24-- Performance Standards

	
On what are the minimum performance standards based?

	
The AHCCCS Minimum Performance Standards are derived from a formula that includes, but is not limited to previous Performance Indicator rates and statewide averages.

	
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# 24-- Performance Standards

	
As it relates to levels of performance, please define “demonstrable and sustained improvement.”

	
Demonstrable is statistically significant and sustained is for more than 1 year.

	
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# 24-- Performance Standards

	
In the current contract, health plans are required to report the results of Provider Turnovers and Interpreter Services.  Will this still be required under the new contract?

	
The current contract states “AHCCCSA will continue to measure and report results for the Performance Measures...”  This measurement and reporting will continue, but because these are not
considered Performance Standards, the information was removed from the RFP.

	
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#27—Network Development

	
“For Maricopa and Pima Counties only, this includes a network such that 95% of its members residing within the boundary area of metropolitan Phoenix and Tucson do not have to travel more than 5 miles to see
a PCP, dentist or pharmacy.”

Attachment B, page 115—“In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must demonstrate its ability to provide PCP dental and Pharmacy services so that the member so not have to
travel more than 5 miles from their residence.

There seems to be an apparent conflict between the wording in the Network Development in paragraph 27, and Attachment B, page 115.  Can you please clarify which applies and define metropolitan
Tucson?

	
To clarify, the adjective “metropolitan” is describing Phoenix only.  Metropolitan Phoenix includes other cities as shown on the GSA map for Maricopa County.  In Pima County, this standard
applies only to the city of Tucson.

Attachment B, Page 115.  Last paragraph should read, “In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must demonstrate its ability to provide PCP, dental and pharmacy services to that 95% of
members do not have to travel more than 5 miles from their residence.”

	
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# 27 Network Development

	
“Contractors must provide a comprehensive provider network that ensures its membership has access at least equal to, or better than, community norms.”  How will AHCCCS determine community
norms?

	
The Contractor is asked to identify network gaps in its own annual Provider Network Development and Management plan.  In addition, AHCCCSA will utilize information from licensing boards, commercial insurers
and other publicly available materials to determine provider availability.

	
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# 27 Network Development

	
“Access is supposed to be equal or better than community norm.”  How will a potential Offeror best demonstrate such access measures/benchmarks in a successful proposal?

	
The Agency will not advise Offerors about improving their submission.

	
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# 27 Network Development

	
Provider Network Development and Management Plan– The plan is to consider access of members to specialty care compared to the general
population in the community.  How will a potential Offeror best demonstrate such access in a successful proposal?  How will this criterion be measured (i.e. what is the benchmark(s) that will be used?)?

	
The Agency will not advise Offerors about improving their submission.

	
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# 27 Network Development

	
Provider Network Development and Management Plan–

What is the time period the health plans should use for “projecting future needs”, e.g., one year?

	
The Bidder should use its best judgment in deciding how far in the future projected needs should be assessed in order to maintain an accessible network, capable of delivering covered services for the contract
period.

	
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# 27 Network Development

	
How does the requirement to consider providers in neighboring states in terms of network development reconcile with the requirement that health plan providers must be licensed in Arizona?  Also, how does
this apply to out-of-state hospitals?

	
Providers whose service address is outside of Arizona must be licensed in the state in which they provide services.

	
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Sect D

	
# 27 Network Development

	
Provider Network Development and Management Plan–

How is AHCCCSA defining “specialty populations” for the purpose of this plan, and what type of information does AHCCCSA want addressed regarding specialty populations as it relates to the
plan?

	
The Offeror should use its expertise and judgment to identify those populations with network needs different than the majority of members in the GSA, who would need special consideration in the design of the
network.

	
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# 29—Network

Management

	
Re: notifications of significant network changes.  In the past, AHCCCSA stated that it would respond within 14 days.  What will be AHCCCSA’s turnaround time(s) for approvals of corrective actions
arising from such notifications?

	
The turnaround time will be dependent upon the circumstances, such as complexity of the corrective action plan.  As stated in the paragraph, AHCCCSA will expedite the process in an emergency.

	
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Sect D

	
# 29—Network

Management

	
For contractor policies, what does “subject to approval” by AHCCCSA mean?  Is AHCCCSA approval limited only to network management policies or all contractor policies?  Will existing plans
have to submit their policies for approval?

	
“Subject to approval” means the Agency has approval authority over the policies during an operational audit.  It is not limited to network policies only.  Contractors will be notified of
pending operational audits. 

	
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#30—Primary Care Provider Standards

	
Once the contractor had determined that appointment availability has not been compromised will action still be required should the panel size exceed 1800?

	
No.  The Contractor, however, is expected to ensure that quality of care standards continue to be met by such providers.  The information may also suggest that the Contractor should recruit additional
providers to serve members in that area.

	
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Sect D

	
#32-- Referral Procedures and Standards, paragraph 1, item g.

	
“Referral to Medicare HMO including payment of co-payments”.  Please explain this requirement.

 

	
The Contractor must have written policies on their Medicare Cost Sharing responsibilities that should include copayment responsibilities when a member is referred to a Medicare HMO. 

	
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Sect D

	
#35—Provider Manual

	
The RFP states, "The contractor remains liable for ensuring that all providers, whether contracted or not, meet the applicable AHCCCSA requirements."  What are a health plan’s obligations to
non-contracted providers?  Please define or further clarify “applicable requirements.”

	
There are a number of “applicable” requirements that the health plan is responsible for, regardless of the providers’ contract status.  Examples include, but are not limited to, ensure
non-contracted providers do not bill members for covered services, that claims/encounter data is submitted if a financial liability is incurred by the Contractor, and that the health plan coordinates benefits.

	
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Sect D

	
# 37—Subcontracts, paragraph 5

	
Would the “use of provider more than 25 times” include hospitals where members are admitted through the Emergency Department?

	
Yes, the Contractor would be responsible for contracting with physicians who have admitting privileges.  The Contractor would be encouraged to contract with the hospital.

	
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# 37—Subcontracts

	
"The Contractor must enter into a written agreement with any provider (including out-of-state providers) the Contractor reasonably anticipates will be providing services on its behalf more than 25 times during
the contract year."    Can this be applied to one individual receiving 25 services form one provider, or is it for 25 unique members?

	
AHCCCSA is requiring a contract for providers used more than 25 times a year, regardless of the number of services provided or members seen.

	
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Sect D

	
#39—Specialty Contracts

	
With the high potential for AHCCCSA to develop specialty contracts going forward, (i.e. pharmacy) can AHCCCSA provide additional details on how the process might work (i.e. health plan involvement, adjustments to
capitation rates, reporting requirements (both to and form AHCCCSA), claims payment, recovery/reinsurance, TPL related issues)?

	
This section refers to contracts that AHCCCSA negotiates on behalf of its Contractors.  Currently, the only specialty contract AHCCCS is negotiating is for transplant services.  These specialty
contracts are for services provided through the health plans and should not be confused with a carve out of services. 

In the event AHCCCSA carves out the responsibility for certain medical services from its Contractors, AHCCCSA will solicit feedback from its Contractors, capitation rates will be adjusted and other operating
issues will be addressed.  Because AHCCCSA is not currently in the process of developing a carve out, it is unknown what impact a carve out would have on health plan reporting and involvement.  That would need to be addressed on a case by case basis
depending upon the type of service that is carved out.

	
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Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
For Maricopa and Pima counties, the RFP states that, "The Contractor shall submit all hospital subcontracts and any amendments to AHCCCSA, Office of Managed Care". For all counties EXCEPT Maricopa and Pima it
states, "The Contractor is encouraged to obtain subcontracts with hospitals in all GSA's and must submit copies of these subcontracts, including amendments, to AHCCCSA, Office of Managed Care, at least seven days prior to the effective dates thereof". What
requirements exist (for incumbents bidding on new GSA’s and new contractors) to have the Maricopa and Pima hospital contracts (or any other contract as required by the RFP) reviewed by AHCCCSA prior to implementation? 

	
The Office of Managed Care will accept hospital subcontracts and amendments for review and approval after contract awards are made.  It is suggested that they be submitted as soon after the award that the
contracts and amendments are complete to allow time for the process, prior to implementation.

	
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Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
Hospital Recoupments– Does AHCCCSA have a policy regarding recoupment of capitation from one health plan and paid to another when
retroactive enrollment occurs, and the initial health plan has paid claims to a provider who was not aware of the enrollment change until notified of recoupment (which often occurs after claims submission timeframes)?

	
AHCCCSA is developing an informal policy related to this issue.  Essentially, medical expenditures incurred in these situations should be treated like expenditures incurred during the PPC time period. 
That means, claims should not be denied for lack of prior authorization, but may be denied if reviewed for medical necessity, and the second health plan determines that the services were not medically necessary.

	
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 71

 116

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
In the Data Supplement, Offerors are instructed to consider the Maricopa/Pima counties contracting pilot project to be extended beyond September 30, 2003.  This is also reiterated in Amendment #1 dated
February 10, 2003.  Is the Data Supplement to be considered a part of the contract and RFP, and a valid RFP instruction?

	
Instructions given in the data supplement should be considered a valid RFP instruction.

	
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 119

 120

	
Sect D

	
#40—Hospital Subcontracting and Reimbursement

	
Out of State Hospitals– Given that Attachment B represents AHCCCSA’s minimum network requirements, how would a potential Offeror
successfully address any potential network deficiencies if Offeror is only “strongly encouraged” but not required to contract with these out of state providers? (e.g. regarding out of state providers listed for GSAs 2 and 4)

	
Although, Contractors are encouraged to contract with hospitals, they are required to have contracts with physicians with admitting privileges to hospitals considered to be a part of the network.  This is
true whether the hospital is in-state or out of state.

	
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#42—Physician Incentives

	
"The Contractor shall disclose to AHCCCSA the information on physician incentive plans listed in 42 CFR 417.479(h)(I) through 417.479(i) upon contract renewal, prior to initiation of a new contract, or upon
request from AHCCCSA or
CMS."                                                          
Question: Is CMS providing the state oversight in respect to physician incentives?

	
This question needs to be clarified.  Refer to the Physician Incentive Plan regulations for AHCCCSA’s responsibility in monitoring compliance with those regulations.  The annual disclosure
reporting requirement is on hold until CMS develops a new disclosure form.  All other provisions will continue to be enforced.

AHCCCS is required to report to CMS on its Contractor’s compliance with those regulations.

	
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Sect D

	
#43—Management Service Subcontract

	
Is a provider that is capitated for ophthalmology services and performs the prior authorization function for ophthalmology services (when there is a denial, the health plan issues the denial) considered a Management Services
Subcontractor?

	
No.

	
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Sect D

	
#43—Management Service Subcontract

	
Is an organization, such as a Nurse Line that provides a 24 hour service to respond to member’s health care questions, considered a Management Services Subcontractor? Would the answer change if the same service also
receives and refers all operational issues which arise outside of normal business hours to the health plan’s staff member on call?

	
This is not considered a management services subcontractor.

The answer is still no.

	
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Sect D

	
#45—Minimum Capitalization Requirements

	
"Continuing Offerors that are bidding a new GSA must provide the additional capitalization for the new GSA they are
bidding."                                                                             
Question: Is the capitalization requirement for UFC going into Cochise/Graham/Greenlee, the amount for New Contractors or for Existing Contractors?

	
A current Contractor is considered an existing offeror in all counties to be bid.

	
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Sect D

	
#45-- Minimum Capitalization Requirements

	
Please clarify what the minimum capitalization requirements are for continuing offerors bidding a new GSA.  Is it the equity per member standard or the capitalization requirements for new contractors
presented in the table?

	
The minimum capitalization requirement for bidders is what is listed in the table.  However, a Contractor must also meet it’s equity per member standard after the contract is awarded.  If the
bidder meets its minimum capitalization, but doesn’t meet its equity per member standard, then the bidder must develop a plan to meet that standard should they be awarded a contract.

	
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Sect D

	
#45—Minimum Capitalization Requirements

	
Since the current RFP realigns some counties in new GSA’s, is a contractor that is currently an incumbent in one of the county (s) in the GSA but not the other county (s) considered to be an existing
contractor for purposes of the minimum capitalization requirements?  If a contractor uses an irrevocable letter of credit (LOC) to meet its performance bond requirement as described in the RFP, is it correct to say that AHCCCSA will not consider the LOC an
encumbrance or a loan subject to repayment (since the LOC is truly an off balance sheet item and has no outstanding balance owed) as described in the minimum capitalization requirements?  Regardless of the number of GSA’s a contractor is awarded, is it
correct to say that the maximum amount of capitalization or equity a contractor is required to meet is $10,000,000?

	
A current Contract is always considered an existing contractor for capitalization purposes.  Refer to the Performance Bond/Equity Per Member Policy for questions regarding encumbrances on equity.  The
maximum capitalization that a bidder must have to secure an award is $10,000,000.  However, the Contractor must also meet the equity per member requirement.  If the $10,000,000 does not meet the requirement, then additional capital must be
provided.

	
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Sect D

	
#45—Minimum Capitalization Requirements

	
Please explain the rationale for the Yavapai County minimum capitalization requirements being the same for both new and incumbent contractors.

	
The methodology that was used to determine the amount of the “existing offerors” minimum capitalization requirement resulted in an amount in excess of what the equity per member amount would be. 
Therefore, the existing offeror’s minimum was limited to the equity per member amount.

	
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51

	
SD

	
#45—Minimum Capitalization Requirements

	
If an Offeror is currently an incumbent health plan in a county that is included in a “new” GSA (e.g. for GSA 4, in one county and not all), then will that incumbent health plan be considered an
incumbent health plan or a “new” Offeror in that “new” GSA for proposal submission requirement purposes?

	
Incumbent.

	
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Sect D

	
#47—Amount of Performance Bond

	
For the Performance Bond specifications it indicates that it must be effective for 15 months following the effective date of the contract...should this be 15 months from the termination date of the
contract?

	
This does mean termination date, and that clarification will be made in the document at a future date.

	
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Sect D

	
#47 Amount of Performance Bond

	
Will you allow one performance bond from Yavapai County listing both Yavapai County Long Term Care and the acute care program?

	
Yes.

	
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Sect D

	
#49—Advances, Distribution, Loans and Investments

	
When does AHCCCSA anticipate making changes to the “AHCCCSA Reporting Guide for Acute Care Contractors”?

	
OMC anticipates that the revised guide will be available by May 2003.  Please note that reporting requirements will not change. 

	
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Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
The RFP indicates that AHCCCS will monitor RBUC's Days Outstanding.  The standard is set at no more than 30 days.  Plans may have contracts with providers allowing 45 days to pay a claim.  The Plan may also
decide to pay as close to the 45th day deadline as possible.  This may put a Plan out of the 30th day standard.  Although there are no sanctions if a Plan falls outside of the standard, is there some way to restructure the RBUC
standard to take this into account?  Otherwise a Plan may appear to be out of compliance while still paying providers according to contract.

	
  Yes, the language will be changed to address subcontracts that have provisions that are different than the BBA requirement prior to the contract effective
date.

	
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Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
What is the AHCCCSA definition of “liquid assets”?

	
Cash or investments that can be converted to cash within 3 business days.

	
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53-54

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
How can AHCCCSA be assured that the positive financial performance of a health plan is not the result of not providing all necessary covered services, or limiting access to sub-specialists, thereby causing
the more expensive members to select another health plan?

	
AHCCCSA monitors several areas of health plan operations to ensure that members are receiving appropriate services including, types of member grievances for denied services. 

	
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Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
How many incumbent health plans in each of the past three (3) years have had Medical Expense Ratios of less than 85%?

	
Because this ratio varies from quarter to quarter, several plans have had Medical Expense Ratios of less than 85% at various times.

	
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Section D

	
#50—Financial Viability Standards/Performance

	
Provide clarification on what is meant by “on balance sheet” performance bond.

	
Assets that are set aside on the balance sheet for the stated purpose of a performance bond,

	
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Sect D

	
#51—Separate Incorporation

	
Is it the intent of the separate incorporation requirement that a separate corporation be established for various lines of AHCCCSA business (i.e. Acute Care, ALTCS and Health Care Group) or may these lines of
AHCCCSA business be part of one corporate entity as long as separate mandated reporting can be done for each line of AHCCCSA business?

	
All lines of AHCCCS business must be included in one separate corporation—not separately incorporated.  Separate reporting to AHCCCS for these lines of business will continue to be required.

	
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150

	
Sect D

	
#50—Financial Viability Standards/Performance Guidelines

	
What is AHCCCSA’s intent in lowering the Medical Expense Ratio requirement to 80%?  Please explain the potential impacts on capitation rates.

	
Because successful medical management and the implementation of disease management programs can contribute to lower Medical Expense Ratios, AHCCCSA felt that its Contractors should not be discouraged from
pursuing these managed care avenues by potential failure to be in compliance with a financial standard.  This does not impact capitation rate development.

	
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54-55

	
Sect D

	
#53—Compensation

	
Given that the "set" rates for PPC and the Title XIX Waiver group have never yielded a result above the lower bound of the risk corridor, and given that these rates will not be released until April 1, 2003, how should the
"bid" rates be adjusted to subsidize these unknown rates?

	
There was different experience for each plan.  This statement is a broad generalization based on one plan’s experience. The “bid” rates should be based on expected costs and utilization for that
population.  Rate ranges will not assume any subsidy, therefore, the bidder should not build in “subsidy” into the “bid” rates. 

	
113

	
54-55

	
Sect D

	
#53—Compensation

	
Given the uncertainty in the Title XIX Waiver population historical data, will AHCCCSA implement another mid-year rate reduction (as they did in April 2002, by 42%) if it appears that most contractors will be profitable in
this program?

Offerors' Conference

	
The TWG rates were adjusted due to excessive profits that contractors were making prior to April 1, 2002.  It is not anticipated that the rates will be adjusted mid year unless AHCCCS see either excessive profits
or excessive losses.

	
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Sect D

	
#53—Compensation

	
Related to the reconciliation process for PPC costs, what administration percentage does AHCCCSA intend to use in the reconciliation calculation?  In the PPC Reconciliation Policy, the calculation includes a
reduction for reinsurance. Should this not be deleted from the policy as explained in paragraph 58 on page 58 of the RFP  “Effective October 1, 2003, AHCCCSA will no longer cover PPC inpatient expenses under the reinsurance program...” Or are
there medical expenditures related to PPC members that still qualify for the reinsurance program?

	
AHCCCSA will use the administrative percentage that is built into the capitation rates.  The policy will be updated to reflect the elimination of PPC reinsurance in the future. 

	
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Sect D

	
#53—Compensation

	
Would “programmatic changes that affect reimbursement” include the anticipated increase in in-patient stays or other associated medical expenditures associated with carve out of pharmacy
benefit?

Will AHCCCS be making adjustments in cap for increase in malpractice insurance that is being passed on through increases in contract rates with providers?

	
Yes, programmatic changes include all service categories impacted due a prescription drug In the event that prescription drugs are carved out,

AHCCCS will factor in the increases to provider payments due to malpractice insurance premium increases.

	
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55

	
Sect D

	
#53—Compensation

	
  In determining the various components of health plan reimbursement, how will AHCCCSA take into account the significant trends that have occurred since January 1, 2002?  For example, population changes
have increased medical costs.

	
The encounter utilization reports have six months of CYE ’02 data and financial data as reported by health plans have the full CYE ’02 data.  This data is used in the development of capitation
rates.  The information contained in this data plus adjustments for trend and program changes should account for increased utilization. 

	
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55

	
Sect D

	
#53—Compensation

	
Given that C-section rates have increased to almost 30% in the past 6 months, and are expected to continue increasing due to malpractice concerns and changing provider practices (caused, among other things, by
VBACs being limited), how will AHCCCSA take into account these factors in health plan capitation rate range development?

	
The rate development will be based upon recent actual delivery experience. Information provided by current Contractors will also be utilized in developing future c-section / vaginal delivery percentages. It is
anticipated that there will be an increase to the assumed percentage of babies delivered by C-section.

	
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55

	
Sect D

	
#53—Compensation

	
Given that AHCCCSA’s historical rate increases have been well below actual health plan and market trends, how will future capitation rate increases be developed?  Will AHCCCSA adjust its capitation
rate increases to a targeted Medical Expense Ratio?  For example, if the average of all health plans’ profitability is 5%, and expense trends are increasing at 8% annually, then will AHCCCSA pass along to the health plans 8% or 3%?

	
The first statement is subjective, and conflicts with the audited financial information OMC collects from its contractors. [We also note with interest that the example chosen seems to conflict with the first part
of the question.] While health plan profitability is an important input to rate-setting development, other factors must also be considered before reaching the conclusion rates are actuarially sound.

	
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55

	
Sect D

	
#53—Compensation

	
When will all reimbursement rates that Offerors are not bidding on (by RFP instruction) be made available to potential Offerors? (e.g. prior period coverage, hospital supplemental payments, HIV/AIDS supplemental
payments, Title XIX Waiver Group capitation, Title XIX Waiver Group hospital supplemental payment etc.)

	
AHCCCSA anticipates that the “set rates” will be available by April 1, 2003. 

	
120

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– Please explain AHCCCSA’s rationale for discontinuing reinsurance for the PPC population.  Will AHCCCSA be
taking this circumstance into account when developing the PPC capitation rates being developed (that the Health plans are not bidding on)?

	
With the transition of the MNMI population to the Title XIX Waiver Group, very little reinsurance is paid through PPC.  Therefore, it did not seem cost effective to maintain the large administrative burden
that it puts on the agency.  The small amount of reinsurance paid for PPC claims will be factored into the capitation rates.

	
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55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– What is the rationale for putting a retrospective period at risk, and on what basis are AHCCCSA’s actuaries
developing rates for this program? 

	
AHCCCSA believes that putting the PPC time period at risk will encourage health plans to review claims for medical necessity.

AHCCCSA’s actuaries will use actual claims paid data from the reconciliations to develop the capitation rates.  Furthermore, the rates are reconciled.

	
122

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage– What assumptions regarding length of enrollment, enrollee choice, and utilization and cost trends have been made
regarding this population?

	
The assumptions will be released with the capitation rates.

	
123

	
55

	
Sect D

	
#53—Compensation

	
Prior Period Coverage Reconciliation– Why is AHCCCSA putting the health plans at 2% risk when the health plans have no ability to manage
this utilization and related costs?  Please explain how this will be accomplished when current PPC capitation rates may not be adequate.

	
AHCCCSA believes that putting the PPC time period at risk will encourage health plans to review claims for medical necessity.

AHCCCSA has no evidence that the current PPC rate is not adequate.

	
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Sect D

	
#53—Compensation

	
“Risk sharing for PPC reimbursement” – is the elimination of reinsurance also factored into the rates?

	
Yes.

	
125

	
55

	
Sect D

	
#53—Compensation

	
Since PPC rates are done by AHCCCS actuaries and not by the plans, what profit/loss did AHCCCS build in to the rate structure?

	
Profit/loss is not build into capitation rates.  Mercer builds a 2.0% risk contingency into the PPC rates.

	
126

	

56

	
Sect D

	
#53—Compensation

	
Please provide a detail definition of the services included in the delivery supplemental payment.  Please provide detailed information on the DRGs, revenue codes, and CPT/HCPCS codes included in the
definition

	
Additional data will be distributed at the Offeror’s Conference.  Please refer to the service matrix for coding and service category.

	
127

	
56

	
Sect D

	
#53—Compensation

	
Please provide details on how the hospitalized supplemental payment is calculated.

	
The hospital supplemental payment will be calculated based on the costs of the first hospitalization for members who were hospitalized on the date of application.  Encounter data will be used to determine
these costs.

	
128

	
56

	
Sect D

	
#53—Compensation

	
Title XIX Waiver Group Rates– Will the existing member choice selection adjustment percentages remain in effect for Title XIX Waiver Group
members, and will those ranges apply to both the AHCCCSA Care and MED groups?  What assumptions underlie the ranges assigned for capitation rate adjustments under this methodology?

	
AHCCCSA anticipates that it will continue with the choice adjustment.

The TWG rates, including the hospitalized supplemental payment, will be set by Mercer. Rate ranges will not be developed for this group. A risk corridor will be built around these rates.

	
129

	
56

	
Sect D

	
#53—Compensation

	
Title XIX Waiver Group Rates– Will AHCCCSA share its assumptions regarding development of the hospital supplemental payment?  Will
AHCCCSA provide application dates to the health plans in order to allow them to track the receivables for these payments?

	
AHCCCS will provide the assumptions regarding the development of the hospital supplemental payment at the time they are released.

No, AHCCCSA does not have the application dates to provide.

	
130

	
56

	
Sect D

	
#53—Compensation

	
The RFP indicates that AHCCCSA may evaluate the cost experience of choice members versus those who are auto-assigned.  Has AHCCCSA completed any such analysis, and will that analysis be shared with Offerors
prior to the proposal due date?

	
The analysis has not been completed.  AHCCCS will continue to pursue this analysis.

	
131

	
56

	
Sect D

	
#53—Compensation

	
Delivery Supplement – What specific cost components comprise the delivery supplement payment?  What period of time preceding and
subsequent to the birth event should be included?

	
An ad-hoc delivery report will be distributed to all potential contractors at the bidders’ conference to be held on Friday February 21, 2003. The delivery supplemental payment covers costs from six months
prior to the delivery date, the actual delivery, and two months post delivery.  The offset in the CRCS should be eight months of capitation for the member.

	
132

	
57

	
Sect D

	
#55-- Capitation Adjustments, paragraph 2, item b.

	
If a member is hospitalized with a police guard, are they considered incarcerated?  If not, please provide the definition that is used by AHCCCS to qualify a member as “incarcerated.”

	
If the member meets any of the following criteria, they will be considered incarcerated.

The following are considered inmates:

1.    an inmate in a DOC prisoner

 2.    an inmate of a county, city or tribal jail

 3.    an inmate of a prison or jail prior to conviction

 4.    an inmate of a prison or jail prior to sentencing

 5.    an inmate of a prison or jail who can leave prison or jail on

        work release or work furlough and must return at specific

        intervals

 6.    an inmate of a prison or jail who can leave prison or jail on

        work release or work furlough and must return at specific

        intervals

 7.    an inmate who receives outpatient medical services outside of

        the prison or jail setting.

	
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57

	
Sect D

	
#56-- Incentives

	
As an incentive, "AHCCCSA will adjust the auto assignment algorithm methodology to incorporate contractor's clinical performance indicator results in the calculation of target percentages." AHCCCSA will use pre-natal care in
the first trimester as a performance indicator. Will AHCCCSA accept the Health Plan's audited HEDIS results when reporting this indicator?

	
No, AHCCCS will not accept a plans audited HEDIS results. AHCCCS will generate the performance indicators to ensure consistency in data collection and analysis methodology across contractors.  However, contractors will be
involved in this process and should agree with the indicator results based on data submitted to AHCCCS.

	
134

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
As contractors will be required to post clinical performance indicators on the Health Plan web site, are these indicators AHCCCS generated numbers or health plan internal data?

	
Contractors must post AHCCCS generated performance indicators.  These will not be posted prior to receiving Contractor feedback.   

	
135

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
Use of Web Site– Please confirm when this data must be posted to a health plan’s web site.

	
AHCCCS will inform the plans when this information is required to be posted.  Available information will be posted in CYE ’04.

	
136

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
On what contract year will the clinical performance indicator results be based to adjust the auto-assignment algorithm?  When will these clinical performance indicator results be made available to the health
plans?

	
As soon as reported by AHCCCS in 2005, for Contract Year 10/1/03 through 9/30/04.

	
137

	
57

	
Sect D

	
#56-- Incentives, Use of Website, last paragraph

	
49. For prenatal care in the first trimester, what definition of “trimester” will be used in calculating the performance measures that will impact the auto-assignment algorithm, and how will it be
benchmarked? Examples to consider for clarification include: first time seen for this pregnancy, whether or not on AHCCCS; first time seen on AHCCCS, whether or not by current health plan or provider, and first time seen by current health plan or provider.

	
AHCCCS uses the HEDIS specifications for definition of trimester. Healthy People 2010 is the benchmark. Further clarification will be forthcoming.

	
138

	
58

	
Sect D

	
#56—Incentives

	
Related to the incentive fund (it is understood that the incentives would not take place until after the CYE 9/30/04), however, what type and or amount of capitation is AHCCCSA considering retaining? 
AHCCCSA has previously discussed incorporating incentives and performance outcomes into the reimbursement to contractors but has not previously implemented a process. How much input will AHCCCSA solicit from the contractors in developing incentives and/or the
performance measured outcomes?  If contractors are required to develop/submit actuarially sound capitation rates how can AHCCCSA retain a portion of the capitation for an incentive fund? Would this action cause the capitation rates to not be actuarially
sound?

	
AHCCCSA is not considering a financial incentive program at this time—but may in the future.  Contractor input into the process will be solicited.

Any amounts withheld from capitation would be small enough so as to not impact the actuarial soundness of the capitation rates.

	
139

	
58

	
Sect D

	
#57—Reinsurance

	
Related to inpatient reinsurance and nursing facility service expenditures in lieu of hospitalization, can AHCCCSA be more specific on what expenditures would qualify for reinsurance reimbursement as described in
the RFP?  The definition of what qualifies as “...provided in lieu of hospitalization...” has been an issue in the past.

	
Please refer to the Reinsurance Claims Processing Manual, Chapter 2, Section 2, Chapter 3, Section 2, and Chapter  6, Section 4.

	
140

	
58

	
Sect D

	
#57--Reinsurance

	
What are the reinsurance premiums in regards to the reinsurance table on page 58?

	
This will be published by the end of February. 

	
141

	
58

	
Sect D

	
#65 Incentives

	
Incentive Fund – What performance measures does AHCCCSA intend to use in administering the Incentive Fund?  Will such incentive fund
measurements be linked to the accessibility and quality of covered services coordinated by the health plan, or to the Medical Expense Ratio?

	
AHCCCSA has not developed a methodology for the incentive fund at this time.

	
142

	
60

	
Sect D

	
#57--Reinsurance

	
What does "certify" mean as it references "verify and certify" encounters?

	
Per the BBA all encounter submissions must be certified as accurate by the submitter.  OMC EPARS unit has issued a format for that certification.

	
143

	
61

	
Sect D

	
# 57--Reinsurance, Reinsurance Audits, Audit Considerations, first paragraph

	
Please give a clearer explanation of “Pre-hearing and/or hearing penalties discoverable during the review process will not be reimbursed under reinsurance.”

	
AHCCCS will not reimburse for penalties assessed to Contractors through reinsurance.  Contractors have sole financial responsibility for penalties that are awarded through the grievance process.

	
144

	
61

	
Sect D

	
# 58-- Coordination of Benefits, paragraph 2, Cost Avoidance

	
Is CRS considered a third party?

	
CRS meets the definition as a third party.  However, this does not mean that this entire section applies appropriately to CRS coverage.  Contractors are required to coordinate service with CRS per
Paragraph 10, page 22. 

	
145

	
61

	
Sect D

	
# 58-- Coordination of Benefits, paragraph 2, Cost Avoidance

	
AHCCCSA is currently under procurement for a new TPL contractor.  How will that new contract’s operations impact coordination of services with AHCCCS health plans and what will be the financial impacts
of any contract changes to a health plan?

	
The new contractor will perform the same functions as the current contractor.  Therefore, there are no financial impacts anticipated.

	
146

	
61

	
Sect D

	
# 58-- Coordination of Benefits, paragraph 2, Cost Avoidance

	
Third Party Liability:

Where is historical information for TPL?  If the amounts reported with plans' financial PMPM's are net of TPL, what is the TPL offset?  Also, how would a new bidder know what is in the plans' financials?

	
The TPL amount reported by health plans is approximately $3.5M per year.  This is the amount recovered through pay and chase recoveries.  This amounts to less than .50 pmpm.  We do not have
additional detailed information.

	
147

	
64

	
Sect D

	
# 62-- Corporate Compliance

	
This health plan is a part of a larger corporation; this larger corporation has a defined Corporate Compliance Program and Officer.  This Officer is located in Washington D.C.; This health plan additionally
has a Fraud and Abuse Officer on site.  This section appears to mingle the two together.  Are we meeting the guideline if we have an Off-site Compliance Officer and Committee, if we have a local on site Fraud and Abuse officer?

	
Please refer to the answers for questions #62 and #64.

	
148

	
65

	
Sect D

	
#63—Records Retention

	
“The Contractor shall preserve and make available all records for a period of five years from the date of final payment under this contract.”

As the statement does not differentiate for age, does the same limit apply to pediatric patient (<21) records?

	
All member records, regardless of the age of the member must be maintained and available as delineated in this paragraph.

	
149

	
66

	
Sect D

	
Page 66, Section 64, Data Exchange Requirements, first paragraph

	
Upon request, the Contractor shall provide updated, date-sensitive PCP assignments: Does AHCCCS anticipate requiring this during the upcoming contract year?  If so, when will the file layout be
provided?

	
We do not anticipate that this information will be required in the upcoming contract year.

	
150

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Are security code/data transmissions already in effect with the AHCCCS VPN and PMMIS systems or is this something new?

	
The security code/data transmissions have been in effect with the AHCCCS VPN and PMMIS systems since October of 2002.

	
151

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Does the Health Plan have to obtain a business associate contract with AHCCCS for the release of member information to AHCCCS under the HIPAA privacy standards?

	
The AHCCCS Administration is not aware of any covered functions that it performs on behalf of Health Plans under this RFP that would require the Health Plans to consider the Administration to be a business
associate of the Health Plan.  Furthermore, it is the AHCCCS Administration’s position that neither will Health Plans, under this RFP, be required to perform covered functions on behalf of the AHCCCS Administration that would require the AHCCCS
Administration to consider the Health Plans to be business associates of the AHCCCS Administration.  Neither does the AHCCCS Administration consider a business associate agreement to be a prerequisite for the exchange of protected health information between
health plans and the AHCCCS Administration.  For example, covered entities may disclose protected health information to another covered entity for purposes of treatment, payment or certain health care operations.  See 45 CFR 164.506.  There are also a
number of disclosures permitted by 45 CFR 164.512 that pertain to the relationship between the health plans and the AHCCCS Administration.  Neither of these rules mandates that a business associate agreement be executed as a precondition for disclosures pursuant
to these rules.

	
152

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Do we need to state specifically in our notice of privacy practices that information can and will be released to AHCCCS for the purposes of oversight?

 

	
It is the position of the AHCCCS Administration that it falls within the regulatory definition of a health oversight agency as set forth at 45 CFR 164.501.  The Privacy Rule, at 45 CFR 164.520(b)(ii)(B),
requires that the notice of privacy practices include a description of the purposes for which a covered entity is permitted to disclose protected health information.  Disclosures for health oversight activities are permitted by the rule.  See 45 CFR
164.512(d).  Determining the precise contents of the contractor’s notice of privacy practices is the contractor’s responsibility.  Any advice or direction provided by the Administration is not binding on the federal agency responsible for
enforcement of the HIPAA Privacy requirements.

	
153

	
66

	
Sect D

	
# 64, Data Exchange Requirements

	
Will AHCCCS have a notice of privacy practices that addresses sending information to the Health Plans?

	
Yes.

	
154

	
70

	
Sect D

	
# 72—Sanctions

	
When will the Sanctions policy be available?

	
The policy will be available prior to October 1, 2003 in order to be in compliance with the BBA.  OMC will make every effort to finalize it well in advance of that date.

	
155

	
70

	
Sect D

	
# 73-- Business Continuity Plan

	
When will the Business Continuity Plan policy be available?

	
A draft of the Business Continuity Plan Policy is in the bidder’s library and on the AHCCCS web site.

	
156

	
70

70

72-73

	
Sect D

	
# 73-- Business Continuity Plan

	
When will draft AHCCCSA policies or AHCCCSA policies in revision as referenced in RFP be ready and how will they be distributed?  If not by website, how will potential Offerors be notified?  (e.g.
Sanctions policy; Current Health plan Change policy; Member Transition for Annual Enrollment Choice policy, Open Enrollment and Other Plan Changes, and Business Continuity Plan policy.)

	
These policies will all be posted on the web site when completed.  Most of these are currently posted there.  It is the bidder’s responsibility to regularly review the web site or physical
bidder’s library for updates.

	
157

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Relating to the inpatient pilot program, if legislation is not enacted to extend the pilot program in Maricopa and Pima counties beyond 9/30/03, will AHCCCSA adjust the capitation rates it pays to
contractors? 

	
Yes.

	
158

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
When will all of the pending issues listed on page 71 of the RFP (e.g., transplants) be resolved and will those issues be resolved before the bid due date?

	
AHCCCSA is unable to determine the exact date the pending issues will be resolved.  It is unlikely that they will be resolved prior to the bid submission due date. 

	
159

	
71

	
Sect D

	
#76—Balanced Budget Act of 1997 (BBA)

	
Please confirm that the increased costs associated with the BBA, particularly those related to the 10-day window for ER notification, post-stabilization changes, etc. are considered program changes and that the health plan
should bid as if those changes were not in effect.

	
These are program changes and should be considered when developing the capitation bid proposal.  Please note, the direction that was provided in answer #

	
160

	
71

	
Sect D

	
#76—Balanced Budget Act of 1997 (BBA)

	
What is the timeline for new or revised policies in AMPM regarding Balanced budget Act of 1997 (BBA)?

	
October 1, 2003

	
161

	
71

	
Sect D

	
#76—Balanced Budget Act of 1997 (BBA)

	
When will policies be completed regarding Special Health care needs and Emergency Services according to BBA?

	
October 1, 2003

	
162

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Has AHCCCSA or the Governor’s Office prepared a position or policy paper that outlines the pros and cons of
carving out pharmacy services from the AHCCCS program?  If yes, when will this be made available to potential Offerors?

	
AHCCCSA is in the process of hiring a consultant to determine if cost savings can be achieved with carving out prescription drugs from the Contractors.  The result of that study is anticipated to be
finalized in the Summer of 2003.  The report should include both pros and cons of a prescription drug carve out.

	
163

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given the complexity of a pharmacy services carve out, is the October 1, 2003 implementation date feasible?

	
If implemented, AHCCCSA anticipates that the prescription drug carve out would be effective October 1, 2004.

	
164

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– How much in PMPM dollar savings does AHCCCSA anticipate to realize if pharmacy services are carved out from the health plans?

	
AHCCCSA is in the process of hiring a consultant to determine the potential cost savings of carving out prescription drug costs from the Contractors.  The result of that study is anticipated to be finalized
in the Summer of 2003.  The report should include both pros and cons of a prescription drug carve out.

	
165

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
  Prescription Drugs – Will AHCCCSA implement quantity limits per month and per prescription, prescriptions per period of time and dosage limits to manage utilization problems that could affect
medical costs?  (Over-utilization of antibiotics causing resistance – a CDC effort is underway to address this problem as well as under-utilization of statins in diabetics and CAD, and asthma as mentioned above. Higher than recommended or safe doses result
in adverse effects).

	
AHCCCSA  does not anticipate implementing any additional  type of quantity limit at this time.  Please refer to the AMPM, Chapter 300 for current limits.

	
166

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA identify and work with health plan case management to restrict members to prevent drug-seeking behavior and
help them get proper treatment of their condition?

	
PBM’s have these types of edits and AHCCCSA expects that this information will be made available to the Contractors.

	
167

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA provide the health plans concurrent access to the pharmacy database for their respective membership to
allow them to do reviews that impact care plans, disease management, and health outcomes?

	
Yes, AHCCCSA anticipates that real time data will be made available to its Contractors.

	
168

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA assign responsibility to the PBM to perform all of the management of these pharmacy issues?  Will
AHCCCSA or the PBM hire staff to address health plan interests and data integration requirements?

	
The responsibility will be shared by the PBM and the Contractors, not unlike the current system.  Yes there will be staff to coordinate the administration of the program.

	
169

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– In the event that pharmacy services are carved out of the AHCCCSA program, please delineate which drugs will be carved
out.  Examples include:

Injectables

 Enterals

 Infusion drugs / Hemo factor

 Chemotherapy

 Family Planning drugs

 Pharmacy dispensed in a physician or hospital

 setting

 Psychotropic drugs currently being provided by

 RBHAs

	
The bidder should assume that all outpatient pharmacy services will be carved out.  Any of the listed drugs when administered in an outpatient setting will be carved out. If any of the listed drugs are
administered in an inpatient setting, then they are covered under the AHCCCS tier per diem reimbursement. 

Prescriptions administered in a Skilled Nursing Facility will be carved out.

	
170

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If injectables are not carved out, will there be compensation to the plans for the increased costs associated with
obtaining them on the medical side?  The discount obtained running them through the retail pharmacy benefit will be lost if they are not. (MC)

	
Injectables will be carved out.

	
171

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Will AHCCCSA carve out all transplant related therapy and manage the coordination of benefits with Medicare?

	
Yes, prescription drugs associated with transplants will be carved out, and the PBM will be responsible for coordinating benefits with Medicare.

	
172

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given certain members’ complex pharmacy regimens designed to control or improve chronic and costly medical
conditions, how will AHCCCSA adjust capitation rates for such identified members’ increased non-pharmacy utilization costs if pharmacy services are carved out of the AHCCCS program?  For example, what may be the pharmacy prior authorization requirements
that will need to be coordinated among the “statewide” pharmacy benefits manager and the health plans to achieve cost savings and consistency in application of clinical criteria?

	
One prior authorization policy will be developed by AHCCCSA with input from its Contractors. 

The plans should factor the impact of the prescription drug carve out to other service categories.

	
173

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management is carved out, what does AHCCCSA intend to do with over-prescribing physicians?  How will
such issues be coordinated with health plans?  Will this data be made available by health plan?

	
The Contractors will continue to receive real time information that will permit provider profiling.  This will be the responsibility of the Contractor to monitor.

	
174

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management services are carved out, how will AHCCCSA deal with prescriptions for health plan members that
are written by physicians who are not contracted with the member’s health plan?

	
All prescriptions will most likely be filled unless the pharmacy is not in the PBM’s network.

	
175

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Who will be responsible for reporting and monitoring pharmacy fraud and abuse issues?

	
Both the Contractor and the PBM will be responsible for monitoring fraud and abuse issues.

	
176

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Given federal Medicaid drug rebate requirements and recent lawsuits limiting the use of a formulary, how will AHCCCSA
restrict the usage of high cost and inappropriate pharmaceuticals?

	
CMS has recently interpreted the Medicaid Drug Rebate Program as permitting the use of a formulary that encourages management of the pharmacy benefit.  States with formularies have recently prevailed in the
courts.

	
177

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Rebates are based on increased utilization of brand name medications, not cost-effective management, thus resulting in
higher cost of the pharmacy benefit.  The logic of doing this, to get back a greater percentage of rebate dollars, is flawed.  If one is spending $100 to get back $4 (4%), and keeping generic utilization in the 60%-plus range, how would it benefit to treat
the same condition for $200 to get back $36 (18%) and drive up the average cost per prescription, since the use of generics would most likely decline 15-25 percentage points?

	
Noted.  The study will address this question.

	
178

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If AHCCCSA decides to carve out the pharmacy benefit, any gain from increased rebates will be offset by increased health
plan costs (PMPM and $/Rx).  The current requirements to obtain Federal Rebates are contradictory to the ability to manage over-, under- and mis-utilization of the pharmacy benefit and ultimately affect patient care in a positive manner.  The carve out of
pharmacy services from the health plans could result in misinformed decisions, increased hospitalizations, emergency room visits and physician visits.  What are the assumptions of AHCCCSA’s actuaries regarding the impact on other health care costs if
pharmacy management is carved out of the program?

	
The study will address the question.  Additionally, the Contractors will continue to receive data as the currently do from the PBM to perform the “back end” utilization management.  Each
plan must make its own determination of the impact that the prescription drug carve out will have to other service categories.  AHCCCS’ actuaries have not made final determinations of the impact to other service categories.

	
179

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– If pharmacy management is carved out, how will AHCCCSA handle requests for non-formulary drugs?

	
AHCCCS will work with its Contractors to develop a prior authorization process for non-formulary drugs.

	
180

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– Managing the pharmacy benefit at the health plan level with closed formularies allows for more effective case
management, concurrent review and disease management, to name a few activities that positively impact member health outcomes and reduce overall program costs.  An open formulary focused on obtaining rebates will ultimately result in increased medical service and
pharmacy costs, and hinder health plans’ abilities to implement effective medical management programs that readily influence member behaviors and health outcomes.  Will AHCCCSA be establishing an open or closed formulary?  Will it be a uniform
statewide formulary?  What will be AHCCCSA’s assumptions in developing health plan capitation rates for open and closed formularies?

	
There will not be an open formulary.  CMS is flexible with the states in establishing formularies that have effective management procedures.

There will be no impact to the capitation rates for open or closed formularies.

	
181

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– One of the most effective ways to control pharmacy costs is to conduct academic detailing and profiling of
physicians’ prescribing behaviors.  Who from AHCCCSA will be responsible for these initiatives?  How will this information be conveyed to providers?  How often?

	
As mentioned previously, the Contractors will receive data that will permit them to continue their provider profiling.

	
182

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– With pharmacy services carved out of the AHCCCSA program, how does AHCCCSA intend to address the issuance and payment of
prescriptions written in an inpatient setting that are reimbursed on a per diem basis?  Will AHCCCS adjust facility tiered per diem rates?

	
These will continue to be included in the tier per diems.  The rates will be adjusted as provided for in Arizona statute.

	
183

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Prescription Drugs– With pharmacy services carved out of the AHCCCS program, how does AHCCCSA intend to handle prescriptions written in an
emergency room?  Will only short-term prescriptions be issued, with written instructions for the member to follow up with his/her PCP?  How will the information about such prescriptions written in the emergency room be communicated/transmitted to the
member’s PCP?  Which provider will be responsible for effecting such information transfers?

	
This detail has not been worked out yet.

	
184

	
71

	
Sect D

	
#75—Pending Legislative/Other Issues

	
Hospital Pilot Program– Even though AHCCCSA instructs Offerors to bid as if this program is extended beyond September 30, 2003, does AHCCCSA
anticipate that such extension will actually occur?  And what will be the impacts if the pilot program is not extended?

	
Yes, AHCCCSA anticipates that the pilot will be extended.

	
185

	
71

	
Sect D

	
#76-- BBA

	
When is it anticipated that AHCCCSA’s final decision regarding the BBA requirement to have an expedited hearing process through the State Medicaid agency be made available to potential Offerors?

	
AHCCCSA will have that decision as soon as possible.  When a final decision is made.  Offerors will be informed immediately through the web site and in written form.

	
186

	
72

	
Sect D

	
#77-- Healthcare Group of Arizona

	
Does agreement to participate in the HCG program provide any weight in award decisions for the acute care program?

	
In the case of negligible differences between two or more competing proposals for a particular GSA, in the best interest of the State, AHCCCSA may consider an Offeror, who participates satisfactorily in other
lines of AHCCCS business, as a factor in awarding the contract..

	
187

	
89

	
Sect G

	
Related Party Transactions

	
Are questions 1 & 2 specific to the health plans board and staff or do these questions relate to the health plan’s parent company?

	
These questions are specific to the Offeror’s board and staff.

	
188

	
90

	
Sect G

	
Related Party Transactions

	
Furnishing of goods or services – does this include payments made to brother/sister organizations made in the normal course of business, i.e., payment to a hospital for inpatient services when the plan and
hospital are owned by the same organization?

	
Yes, this applies to payments made to related party organizations in the normal course of business.

	
189

	
92

	
Sect G

	
 

	
Please define “AHCCCSA program” as to be used in the final column of this table?  Is this meant to include responsibilities pertaining to other AHCCCSA programs as well, such as the ALTCS and
Premium Sharing programs?

	
The AHCCCS acute care line of business.

	
190

	
93

	
Sect H

	
 

	
What percentages/values will be assigned to each of the five scoring categories?

	
This information is not being shared with Offerors.

	
191

	
93

	
Sect H

	
 

	
Can AHCCCSA define “negligible differences” in the contents of the sentence, “In the case of negligible differences between two or more competing proposals for a particular
GSA...”

	
The definition is not being shared with Offerors.

	
192

	
93

	
Sect H

	
 

	
If a Letter of Intent (AHCCCSA mandated LOI format for CYE 9/30/04 approved version) does not include language to address the amount of reimbursement to be paid a provider for services rendered, how can the
determination of a capitation rate based on such LOI’s be considered to be actuarially sound? If CMS has mandated that all capitation rates be actuarially sound, how can AHCCCSA consider an LOI with no negotiated fee schedule to have the same weight as fully
executed contract?

	
Capitation rates will not be based on LOI’s, but rather on historical cost and utilization data provided by health plans.

Historical experiences with appropriate trends that are applied to the historical data are sufficient to develop actuarially sound capitation rates. 

	
193

	
94

	
Sect H

	
 

	
The RFP addresses the situation when an offeror submits a capitation bid below the actuarial rate range, what will AHCCCSA do if the offeror’s capitation bid is above the actuarial rate range?  Will
AHCCCSA place the offeror within the range and if so, at point within the range?

	
If the Offeror’s bid is above the top of the rate range,   AHCCCSA may elect to initiate a BFO process to guide the bidder into the rate range, or may set the rate at some point below the mid
point of the rate range.  The exact placement is confidential.

	
194

	
94

	
Sect H

	
 

	
What are the maximum and minimum number of points possible for the capitation bids by GSA and risk group? If a bid is between the minimum and maximum rate within the actuarial rate range, will points be awarded
on a linear basis or some other method?

	
The scoring methodology for capitation bids is proprietary and confidential.

	
195

	
97

	
Sect H

	
 

	
Is AHCCCSA anticipating that Offerors will submit policies with their proposals?  If yes, what policies are to be submitted in Offerors’ proposals?

	
No.

	
196a

	
97

	
Sect H

	
 

	
In responding to questions presented in this section of the RFP, may potential Offerors provide attachments that further illustrate their narrative responses?  Will such attachments be counted toward (i.e.
included as part of) the three (3) or five (5) page limit instructions?

	
It is anticipated that the narrative will fully address the submission requirement.  Only specified attachments may be included per the submission instructions.  The narrative may include a description
of policies, handbooks, manuals, newsletters or other documents, but the documents should not be included in the submission unless specifically requested.

	
196b

	
 

	
Sect H

	
 

	
Please clarify the award of points for the extra credit submissions.

	
The first full paragraph on page 95 of the RFP which begins, "The Offeror may submit up to three programs/initiatives, ..."  should be changed to read, "There are a specific number of points available for each
category.  In order to receive the full number of points available, an initiative/program must be submitted for each category.  If multiple submissions in a single category are received, they will be considered one initiative/program.  Offerors should
be aware that the points earned through extra credit responses may be significant enough to determine the outcome of contract awards."

	
197

	
98

	
Sect I

	
 

	
May the bidders submit the provider network on a CD as opposed to a 3.5" floppy disk?

	
Yes.

	
198

	
98

	
Sect I

	
 

	
What is the intent of “network hospital?”  Does this include the hospitals that are listed in Attachment B, or the hospitals for whom the contractor has obtained a LOI?

	
Each hospital the bidder considers to be a part of the network, whether there is a contract, LOI or not.  Please note that in Maricopa and Pima Counties where the Pilot Program exists, Offerors are required
to have contracts or LOI’s with hospitals.

	
199

	
 

	
Sect I

	
 

	
We have a group of physician’s that we have gotten an LOI from and a great number of them are not currently serving AHCCCS members, but we know it does not mean they don’t have an AHCCCS ID
number.  I know you mentioned that the file is extremely large, but is there a way we could either get access to this file or come to the bidder’s library and look these providers up?

	
The file to which you refer is not public and will not be shared with potential contractors.  If for some reason the providers do not know their own AHCCS ID numbers, the submission may be submitted with 0s
filling the field for the AHCCCS ID number.

	
200

	
98

	
Sect I

	
 

	
If the provider is currently contracted with our long term care program, is he considered a provider currently contracted for purposes of this database? If we have both a contract for LTC and a LOI for acute
care, how do we indicate it?

	
A contract covering the participation of a provider in the LTC program solely does not constitute a contract for the Acute Care program.  The LOI should be reflected in the submission.

	
201

	
98

	
Sect I

	
 

	
How would you like multiple addresses of providers entered in the database?  If a provider has multiple service addresses how do you wish us to list them by line item - the Access 2000 database
will not accept multiple entries of the same ID number, and we would need to modify the number somehow.

	
AHCCCS has successfully entered multiple entries with the same ID number and had them accepted by Access 2000.  Perhaps the Offeror is using the primary key on the ID number.  If this is
the problem, removal should allow acceptance.  Or they may be indexing and set their index to not accept duplicates.

	
202

	
98

	
Sect I

	
Question 1

	
Should a printed copy of the Provider Network File be submitted with the 3.5’ disk?  Due to size of the file can the Provider network File be submitted on CD?  How many copies of the disk (or CD)
should be submitted with the response?  Should the Provider Network File be sorted by GSA and Provider Type?  Please Clarify.

	
It is not necessary to submit a printed copy.  The file may be submitted on a CD.  Three copies of the disk (CD) should be submitted.  Sorting of the data will be done after receipt of the file by
AHCCCS.

	
203

	
98

	
Sect I

	
Question 2

	
What format is required for the contracted physicians who have admitting privileges to the network hospitals?  Is the response limited to three pages?  Are there preferred column formats and/or length
limit on data fields?

	
This information should be submitted on hard copy.  There is no page limit.  Please sort by hospital with provider ID and name.

	
204

	
98

	
Sect I

	
Question 3

	
Is the response limited to three pages?

	
No.

	
205

	
98

	
Sect I

	
 

	
If the Plan does a group contract, do you need to have a letter of Intent for each provider/location for a group practice?

	
No.  Proof of authority of signatory must be available if requested.

	
206

	
98

	
Sect I

	
 

	
If the Plan has evergreen contracts with an existing provider in a GSA they already occupy, do you have to have a Letter of Intent for those providers?

	
No.

	
207

	
98

	
Sect I

	
 

	
If the Plan currently contracts with a provider in a specific county in which the Plan currently has membership and that provider also services other counties, does the Plan need a LOI for counties in which the
Plan is bidding but does not currently have membership?  Or is the current contract for the county sufficient?

	
There must be a contract or LOI that covers the pertinent GSA and time period.

	
208

	
98

	
Sect I

	
 

	
Can potential Offerors submit their responses to this question on a CD-ROM instead of floppy disks?

	
Yes.

	
209

	
98I

	
Sect I

	
 

	
In the first Q & A, AHCCCS indicated that for each network hospital, we should provide a list of contracted physicians who have admitting privileges to that facility on hard copy, sorted by hospital with provider ID and
name. Does AHCCCS require any additional information such as the provider’s specialty or address, etc.?

	
No.

	
210

	
98-99I

	
Sect I

	
2,3,4,8,

	
For each of the four requirements, should the response only pertain to the current GSAs in which the health plan operates or should the response also include the potential GSAs on which the health plan will be
bidding?

	
The Agency is interested in a response that includes submissions describing the GSAs for which the Offeror is bidding, GSAs in which the Offeror is an incumbent and those in which they are a new bidder.

	
211

	
99

	
Sect I

	
 

	
When will the rates being calculated by AHCCCS for PPC, HIV, T19, and HIFA be available?     Are the bidders to include these rates in the projections they prepare or should they be carved
out?

	
AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
212

	
100

	
Sect I

	
 

	
How can AHCCCSA deem that the rate proposal includes the cost of administrative adjustments required during the term of the contract when of the financial impact of several major issues is unknown and contingent
on pending legislation?  Is AHCCCSA prepared to adjust capitation rates and or the administrative component due the resolution of pending legislation?

	
AHCCCSA will adjust the capitation rates after the pending items are resolved, if necessary.  Contractor feedback will be solicited.

	
213

	
100

	
Sect I

	
Capitation

Last paragraph on page 100

	
“The offeror’s rate proposal will be deemed by AHCCCSA to include the costs of administrative adjustments required during the term of this contract.

Please define what is meant by “administrative adjustments.”

	
Examples of administrative adjustments include BBA costs, HIPAA costs, member ID card costs, and the impact to administrative costs due to the carve out of pharmacy (pharmacy bid only).

	
214

	
101

	
Sect I

	
 

	
What does benchmarking Family Planning Services mean?

	
The submission requirement regarding Family Planning has been modified.  Benchmarking is deleted as a submission requirement.

	
215

	
101

	
Sect I

	
 

	
Will AHCCCS have goals and benchmarks set as in the performance standards as relates to Family Planning services?

	
None are planned at this time.

	
216

	
101

	
Sect I

	
 

	
Please define “other hard to reach populations.”

	
The health plan should define this based upon the geographic areas served.

	
217

	
101

	
Sect I 

	
 

	
What is meant by, "Comprehensive Case Management"?  What benchmarks are used for case manager to member ratios for the health plan?

	
Comprehensive Case Management is the process of identifying members who require special assistance in accessing health care services, evaluating their needs, and assisting the member in meeting those needs. Not all members
with Special Health Care Needs require case management, and not all members who would benefit from Case Management are members with Special Health Care Needs. There are no AHCCCS defined case manager to member ratios in the Acute Care Program.

	
218

	
102

	
Sect I

	
 

	
How far back should I go to indicate an average speed for resolution? (the last quarter, last contract year, calendar year)

	
Please use the last complete contract year.

	
219

	
103

	
Sect I

	
 

	
In the first Q&A, AHCCCS responded in question #199 that this bid submission requirement had been eliminated.  However, this was not listed as eliminated in solicitation Amendment 2 (unless AHCCCS considers inclusion
of the question and related answer).  Please clarify whether this has been eliminated or not, and if it has, whether the health plan can expect to see it specifically identified on a subsequent amendment.

	
Page 1 of the Solicitation Amendment states, “This solicitation is amended as follows:

1.  Finalized version of the Questions and Answers distributed at the Bidder’s Conference on February 21, 2003...”  As stated in the answer to Question 199, the requirement has been eliminated. 
This information will not be repeated in another amendment.

	
220

	
103

	
Sect I

	
Grievance and Appeals

	
This item asks for both a flowchart and a written description of the grievance and appeals process.  Due to the many contingencies of the grievance and appeal process, may responses include the requested
flowchart as an attachment to the three-page response?  Or is the flowchart to be included within the three-page response?

	
The narrative should be three pages; the flow chart should not be included in the 3 page limit.

	
221

	
103

	
Sect I

	
Question 36

	
Requests a description of the grievance and appeal process, including “both the informal and formal processes.”—is there a mandated informal process and if so what are the parameters given the
administrative code and the process set forth in Attachment H?

	
No.  With the new Balanced Budget Act regulations, there is no mandated informal process.  We are amending the submission requirement to:  Provide a flow chart and written description of the
grievance and appeals processes; include general timeframes.  Identify the staff that will be involved at each phase and provide their qualifications.  (Limit 3 pages plus a flowchart)

	
222

	
103

	
Sect I

	
 

	
Is this “informal” process the expedited appeal process in response to the Notice of Action described in Attachment H, or some part of that process?

	
Please refer to the answer in question # 221.

	
223

	
103

	
Sect I

	
Question 40.

	
How must this requirement be met for a new offeror? As a current LTC PC, must we submit claims aging data from our LTC program?

	
A new Offeror, currently acting as an MCO, must submit their claims aging for the current line of business used throughout the submission.

	
224

	
103

	
Sect I

	
Question 40

	
What format is required for the claims aging report – detail or summary?

	
This bid submission requirement is eliminated. 

	
225

	
103

	
Sect I

	
 

	
In response to first-round question 199, AHCCCS stated that the bid requirement to submit claims aging reports was eliminated (i.e., RFP Question 40). However, Solicitation Amendment #2 did not amend the RFP to reflect this
change. Please confirm that Question 40 has been eliminated and that the Bidder is not expected to respond to this question.

	
The answers to the questions in Amendment #2 were incorporated by reference into the RFP.  The submission requirement is eliminated.

	
226

	
103

	
Sect I

	
 

	
What format is required for the claims aging report-detail or summary? This bid submission requirement is eliminated.

Is this bid requirement eliminated for only New Offeror's or has it been eliminated for all Offeror's?

	
 This submission has been eliminated for all Offerors.

	
227

	
104

	
Sect I

	
 

	
The health plan compiles quarterly financial information for AHCCCS.  Will a copy of the quarterly financial statements submitted to AHCCCS meet this requirement?  If yes, which schedules should be
submitted?  If no, please provide more details as to what specific financial schedules are required.

	
Yes.  Please provide the Balance Sheet and Income Statement, and notes to financial statements.

	
228

	
104

	
Sect I

	
 

	
In answering the questions in Section I of the bid, specifically financial forecasts (items #48) and financial viability calculations (item #49), how should the offeror incorporate the fact that; capitation rates
have to be submitted with and without (carved out) the pharmacy component, and capitation rates for several risk groups are unknown and will be set by AHCCCSA?  These items will have a direct impact on an offeror’s forecasted financial results.

	
Only submit financial statements assuming the prescription drug benefit remains the responsibility of the Contractor. 

AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
229

	
104

	
Sect I

	
Question 52

	
Can programs initiated prior to 10/1/2003 be used for extra credit?  Is the total page limit for the response 9 pages (limit of three programs/initiatives/limit of three pages each) plus the timeline for
each program/initiative?  Please clarify.

	
Yes, programs initiated and expected to continue in the new contract period may be submitted for extra credit.  The total page limit is 9 pages, a limit of 3 per program/initiative.  The timelines are
in addition to the 9 pages.

	
230

	
104

	
Sect I

	
 

	
The RFP calls for financial forecasts in "at least the level of detail specified for annual audited financial statements". Does this mean that we need to submit the income statement at the risk code category
level as well as a combined income statement for the entire county?

	
No—just the Balance Sheet and Income Statement and notes to the financial statements.  This information should be statewide rather than by county or GSA. 

	
231

	
104

	
Sect I

	
 

	
We are preparing two sets of capitation rates, one with and one without prescriptions. Do we need to prepare two sets of financial projections also? 

	
No—just one assuming that the prescription drug benefit remains the responsibility of the Contractors.

	
232

	
104

	
Sect I

	
 

	
Will AHCCCS determine which set of capitation rates we should use in our projections?

	
The Offeror should use the capitation rates that assume prescription drug will continue to be the responsibility of the health plans in their projections.

	
233

	
104

	
Sect I

	
 

	
Who is considered to be within "community involvement"? Members, Agencies, Community Providers, Hospitals, etc.

	
The entities mentioned could be considered a part of the community, but community is not limited to these entities.

	
234

	
104

	
Sect I

	
 

	
Please clarify whether the entire response to this section is three (3) pages maximum or three (3) pages maximum per each initiative selected?

	
Please refer to the answer to question #229.

	
235

	
105

	
Sect I

	
 

	
What would cause AHCCCSA to not have a Best and Final Offer (BFO) process?

	
BFOs can be time consuming and resource intensive for both the state, as well as the bidders. If the initial bids for a given GSA fall generally within the established rate ranges, the state has reserved the
right to finish scoring the proposals and to make tentative awards. Rate offers to the successful bidders would then be made to the extent necessary to ensure all rates fall within the established rate ranges.

	
236

	
106

	
Sect I

	
 

	
Capitation Rates Offered after BFOs– Please further clarify the following, “At this point, should the Offeror have a rate code(s)
without an accepted capitation rate, AHCCCSA shall offer a capitation rate to the Offeror.  Note that all rates offered in this manner shall be identical for all Offerors in the same GSA and rate code.”  Please further clarify the meaning of
“all Offerors” in this context.  Is this only to be applied to those Offerors not having acceptable rates?

	
Yes.

	
237

	
107

	
Sect I

	
 

	
In the RFP amendments about Pima/Santa Cruz, 5 contracts will be awarded in Pima but only 2 will get Santa Cruz County.  When bidding in Santa Cruz Co., should we bid as blended rates or separate per
county?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
238

	
109

	
Sect I

	
 

	
Will all Bidders Library items be posted on AHCCCSA’s web site?  If not, how will potential Offerors be notified that new materials are available in the Bidders Library?

	
It is AHCCCSA’s intention to have virtually all bidders’ items posted on the web site.  Potential Offerors should review the web site on a regular basis to receive updates.

	
239

	
115 +

	
Attach B

	
Geographic Service Area-Minimum Network Requirements

	
As part of the Minimum Network Requirements for a particular GSA, a specialty OB provider is required in a specific municipality.  If the health plan has specific and direct knowledge that the only provider in this
municipality providing specialty OB services has serious quality issues, does AHCCCS expect the health plan to contract with this provider?  If no, will the health plan be considered out of compliance with the Minimum Network Requirements?

	
If a contractor can demonstrate to AHCCCS that there is only one provider who would meet the minimum standard, and that provider cannot be credentialed by the contractor due to quality issues, AHCCCS will not require the
contractor to contract with the provider.  A contractor in this situation would be considered in compliance with the minimum network standard.

	
240

	
115

	
Attachment B:

	
Minimum Network Standards

	
If an Offeror attempts to contract with a Provider (particularly a hospital in an urban GSA) and the provider is unwilling to contract with the Offeror even at the AHCCCS FFS rates (Pilot I/P rates in this case) and the
Offeror can demonstrate it tried to contract in good faith, would AHCCCS consider the Provider (facility) as a contracted facility for purposes of meeting the minimum network requirements?  Is there not, already a contract between the Health Plan (through
AHCCCS) and the Provider (I/P facility) that if an AHCCCCS member presents at the Providers facility, the Provider must treat the member and accept the AHCCCS FFS rate (Pilot I/P rates) as full reimbursement if no other arrangements exist between the Provider and the
Health Plan?

	
If the Contractor can show a good faith effort, the Agency will consider waiving the contracting requirement.  Yes per state statute, health plans default to the AHCCCS tier per diems if they do not have a contract with a
hospital for different reimbursement. 

	
241

	
115

	
Attach B

	
 

	
In terms of assessing and evaluating a health plan’s network of providers, are PCPs, dentists, pharmacies, hospitals and specialty care providers all assessed equally?  If not, how are they assessed or
evaluated in the scoring process?  How are ancillary providers assessed or evaluated in the scoring process?

	
This information is not being shared with bidders.

	
242

		
Attach B

	
 

	
Please clarify this statement - “if outpatient specialty services (OB, family planning, internal medicine and pediatrics) are not included in the primary care provider contract, at least one subcontract is
required for each of these specialties in the service sites specified.”

	
Contracted providers able to deliver these specialty services, should be available in the service sites specified.  If the services are not available, this information should be included in the Network
Development and Management plan, along with the steps to be taken to provide the services to members.

	
243

	
115

	
Attach B

	
Instructions

	
May a prospective bidder include in their floppy disk containing their provider network, an existing network developed for a line of business other than AHCCCS? Would the prospective bidder be required to notify
the providers that make up that network of the intent to include them in their proposal to meet the minimum network standards for that GSA? If so, if they’re current contracts do not contain the AHCCCSA minimum subcontract provisions can they be considered
"contracted" for the AHCCCS line of business?

	
We do not believe that a provider is a member of an Offeror’s network, when they are unaware of this fact.  In order for a contract to be considered for a submitted provider it must contain all
required components.

	
244

	
119

 120

 124

	
Attach B

	
 

	
Will AHCCCSA waive pharmacy minimum network standard requirements for the following communities that currently do not have a pharmacy: Ash Fork (GSA 4), Carefree (GSA 12), Seligman (GSA 4) and San Luis
(GSA 2)?

	
Please be aware that a slash mark (/) between two geographic service sites, indicates that the service must be available in at least one of the sites.  The GSA 2 service site list for pharmacies should read
San Luis/Somerton.  With this correction there are pharmacies in these sites.

	
245

	
125

	
Attach B

	
Map

	
For GSA 14, the map indicates that PCP, Dentists and Pharmacies are a minimum requirement for both Morenci and Clifton.  However, the list on the left side of the page indicates that Morenci and Clifton are
together.  Are Clifton and Morenci considered one in the same for this requirement, or do you need these services in both cities?

	
Please refer to the answer to question #244.

	
246

		
Attach B

	
 

	
Page 49 states, “all counties except Maricopa and Pima contractor is encouraged to obtain subcontracts with hospital” and Attachment B lists hospitals a minimum network requirement in all
counties.  Is it required or encourages to obtain and LOI in counties other than Maricopa and Pima in order to meet minimum network requirements?

	
It is required that the Offeror have either contracts or LOIs with physicians with admitting privileges to hospitals in the Offerors network.  Offerors are encouraged to contract with hospitals.

	
247

	
126

	
Attach C

	
Instructions

	
Could AHCCCSA further define or add additional clarity to what it considers “any administrative function or service for the Contractor” as it relates to the term “Management Services
Subcontractor”? For example, would our PBM and GACCP (Credentialing Primary Source Verification) be considered Management Services Subcontractors?

	
A Management Services Subcontractor is defined in the opening paragraph of Attachment C.  For purposes of responding to the RFP, the subcontractor is an individual or firm who is responsible for day today
operations of the health plan.

	
248

	
126

	
Attach C

	
Instructions

	
Page 126, Attachment C, Management Services Subcontractor Statements.  Based  upon the answers to the Bidders' questions released at the Bidders' Conference and the feedback from the past two years' Operational
and    Financial Reviews, there seems to be conflicting definitions and  interpretations around management services subcontractors.  Based on OFR feedback, we believe that subcontractors for services such as data   information
systems, pharmacy benefit managers (PBM), management services and any other organization to which day-to-day operations are delegated (such as recoveries and clinical evaluations) are required to complete a management services subcontractor statement.  Please
clarify.

	
For purposes of Attachment C, the opening definition is applicable.  Therefore, data information systems, PBM, etc. are not included.  However, clarification for which sub contractors require and audit
submission will be clarified in the revised acute care reporting guide.

	
249

	
126

	
Attach C

	
 

	
Attachment C is not included on the Offeror’s Checklist.  For submission purposes, should Attachment C be submitted following completion of Section G in General Matters?

	
Yes.

	
250

	
126

	
Attach C

	
 

	
Please provide additional examples of what Constitutes a “Management Services Subcontractor”.

	
See answer to #247 above.

	
251

	
126

	
Attach C

	
 

	
Please identify whether the following meets the requirement for a management services subcontract:

1.     Organization which coordinates purchasing of

         health insurance for health plan employees

2.     Organization which coordinates purchasing of

         other insurance (such as liability) for the health

         plan

3.     organization which manages the health plan’s data

         center operations but does not have decision

         making authority in areas such as methodology

         for claims processing, authorization processing,

         etc.; it would, however, be involved in

         implementing changes to the health plan’s

         information systems based on direction by health

         plan employees

4.     provides legal services to the health plan

5.     acts as the Human Resources/Payroll department

         for the health plan to assist with hiring, addressing

         employee questions regarding benefits,

         processing payroll, etc.

Would any of the answers to the above be different if the services were provided by a related party?  If yes, which ones and why?

	
None of these listed meet the requirement.

	
252

	
126

	
Attach C

	
 

	
Most of the current AHCCCS plans are owned by larger organizations which provide some administrative services to the health plans, but are not actively involved in the normal operations of the plan. In this case,
would a management services subcontract be required between the health plan and its parent company?

	
These would not qualify.

	
253

	
126

	
Attach C

	
 

	
Does AHCCCS consider a Pharmacy Benefit Manager contract, which has as one of the contractual responsibilities, the processing of retail pharmacy claims, a Management Service Subcontractor?

	
No.

	
254

	
126

	
Attach C

	
 

	
Does a specialty provider delegated for limited prior auth, i.e. approvals only, qualify as a management services contract?

	
More information is needed.

	
255

	
126

	
Attach C

	
 

	
Is Medifax EDI considered a Management Services Subcontractor?  They provide electronic claims clearinghouse and member eligibility verification services.

	
No.

	
256

	
126

	
Attach C

	
 

	
Please clarify that Data Information Systems are excluded from the Attachment C Statement requirements.

	
They are excluded.

	
257

	
126

	
Attach C

	
 

	
Management Services Subcontractor Statement – Please clarify which subcontractors AHCCCSA anticipates to be included with an Offeror’s proposal?

	
Any organization that is hired by a parent company to run the operations of the health plan.  A subcontractor that provides all of the operations of a medical service, i.e. family planning
services.

	
258

	
127

	
Attach C

	
 

	
Management Services Subcontractor Statement—Is this required on an LOI provider?

	
No.

	
259

	
129

	
Attach C

	
 

	
Will a copy of the organization’s most recent Form 10-K be acceptable in lieu of a copy of the audited financial statements?

	
The two most recent audited financial statements must be included.  If the 2002 has not been completed, then please submit the most recent 10-K for 2002.

	
260

	
132

	
Attach D(1)

	
 

	
In a group practice - does each physician need a separate LOI or can a group administrator sign for all physicians within group?

	
Please refer to the answer to question # 205.

	
261a

	
138

	
Attach D(2)

	
 

	
If a provider is in the process of obtaining an AHCCCS ID number, how should they be reported on the LOI file?

	
The provider ID field should be filled with zeros.

	
261b

	
138

	
Attach D(2)

	
 

	
Page 138, Attachment D(2), Service Provider Name - If an individual provider  has a last name which is hyphenated, how should the name be listed?  Example:  Smith-Jones/John A. (hyphen without spaces); Smith -
Jones/John A. (hyphen

with spaces); SmithJones/John A. (without hyphen or spaces).  Please clarify.

Page 138, Attachment D(2), Service Provider Name - Should the Plan try to  match first names to the AHCCCS Provider File registered name even though the provider may utilize a different name?  Example:  AHCCCS
Provider File list the provider's name as Charles G. Jones; the physician actually goes by his middle name and APIPA has him registered as C. George Jones, or should the name be listed as Charles George Jones?  Please clarify.

	
Q1.  The plan should give AHCCCS the hyphenated name without spaces (Smith-Jones).

Q2.  For this submission, it is not necessary to match the name with the AHCCCS Provider File.  However, the health plan may do so if they wish.

	
262

	
145 - 147

	
 

	
 

	
The Specialty Code Table seems to be missing  many of the Provider Specialty values that appear in the PMMIS Menu, Screen RF613.  If we use a code that does not appear in the Provider Specialty Table on pages 145
– 147, do we use the codes in the PMMIS Menu, Screen RF613?  Or, do we populate the Provider Specialty fields with 999?

	
The field should be populated with 99.

	
263

	
136 and

144

	
Attach E

	
N/A

	
Page 136 asks the offer to submit the entire provider network.  If the provider network contains provider type codes which are valid in the state PMMIS system, but are not included on the provider type codes listed on
page 144, should the providers be reported as 99 “Other” or should the table include all AHCCCS valid provider types?

	
Please refer to the answer to question 262.

	
264

	
136 and 145-147

	
Attach E

	
N/A

	
Page 136 asks the offer to submit the entire provider network.  If the provider network contains specialty codes which are valid in the state PMMIS system, but are not included on the specialty codes table  listed on
pages 145 - 147, should the specialists be reported as 999 “Other” or should the table include all AHCCCS valid specialty codes?

	
Please refer to the answer to question 262.

	
265

	
150

	
Attach E

	
 

	
For Pima and Santa Cruz – in that not all contractors who receive an award for the GSA will be active in Santa Cruz County, should the rates be bid as a blended rate or as stand-alone rates for each
county?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
266

	
150

	
Attach E

	
 

	
Is AHCCCS providing any alternatives to the Web Based Capitation Rate Proposal should the web site being down?  What assurances is AHCCCS providing that its web site will be up and accessible and that the
response time will not be compromised when a significant number of Contractors might be attempting to access it at the same time?

	
OMC has received many assurances from ISD that the web traffic will not prevent bidders from completing their bids via the web application.  Offerer’s are required to submit a hard copy of their bids
that will be used as back up should the web application fail.

	
267

	
150

	
Attach E

	
 

	
What will be the recourse for material errors and omissions in the development of rate ranges by AHCCCSA?  Errors or omissions may be identified by the health plans, AHCCCSA or AHCCCSA’s actuary. 
Furthermore, what is the recourse if the development of the rate ranges does not meet with CMS' approval subsequent or concurrently to the bid process?

	
Material errors and omissions would be disclosed and corrected. To the extent rate ranges were modified, awarded rates would be adjusted by the same percentage(s). Beyond that, it would depend on the nature of
CMS’ concerns. As long as the covered services and populations in the contracts have not changed, the rates would probably stand. The bidder’s actuary would have already certified that the rates were actuarially sound for the bidder, and AHCCCS’
actuaries will have done the same for the rate ranges. Issues related to federal match or CMS requirements for documentation should not affect the acute care contracts.

	
268

	
150

	
Attach E

	
 

	
Please explain AHCCCSA’s decision to not use a diagnostic-based risk adjuster, given that CMS lists it as a requirement to actuarially sound rates, and explain why it is not applicable if
omitted.   

	
Refer to question 1. The rate setting methodology is in compliance with CMS regulations.

	
269

	
150

	
Attach E

	
 

	
Please explain the methodology that will be used to develop the upper and lower bounds of the capitation rate ranges. 

- a. What fee schedule assumptions will be used to price encounter data for the upper and lower bounds of the rate range? 

- b. What percentage of the Medicaid Fee schedule will be used for inpatient given that AHCCCSA states that the average reimbursement is 97% in their most recently submitted budget to the JLBC? 

- c. What are the assumptions related to the average dispensing fees, AWP, and rebate assumptions for retail pharmacy?

- d. What percentage of the fee schedule will be assumed in rural counties where contracting requires payments that exceed the AHCCCSA fee schedules?

- e. How will outpatient encounters be priced given that plans must contract at a percentage of billed charges at multiple facilities?

- f. What assumptions were made for pricing encounters for typically sub-capitated costs such as PCP, laboratory and DME, regarding under-submission of encounter data by the providers?

- g. What administrative component will be priced into the upper and lower bound of the rate range?

- h. What time periods are the State’s actuary using as their base rate assumptions?  What time period(s) will AHCCCSA use as its base for developing the rate ranges?  If this varies by GSA or
rate cell, please provide to potential Offerors.

	
a.  The state’s reimbursement schedules, and the health plan paid amounts.

b. The inpatient component of the capitation rate is based upon cost and utilization information from health plan reported encounters and financials.  AHCCCS will inflate the component by the inflation used
for the tier per diems for 10/1/03.

c. The PMPM assumptions will closely match the blended experience of the current contractors, adjusted for trends and changes in approved drugs.

d.  Rate ranges will be established for 3 different zones, or groupings of counties, based on the encounters priced out by the health plan paid amounts. This should reflect health plans’ contracting
issues as closely as possible. This pricing of encounters by health plan paid amounts has been cross-walked against their audited financial experience for 3 years.

e. For clarification, health plans are not required to contract at a percentage of billed charges.  Health plan paid amount is used for pricing.

f. As discussed in the data supplement, subcapitated encounters, if no value is assigned by the health plan, will be priced at the AHCCCS FFS schedule.

g. The Offerors should bid what they expect their administration component to be.

h.  !0/1/99-3/31/02

	
270

	
150

	
Attach E

	
 

	
  Will AHCCCSA share its trend assumptions with Offerors?  How do the 5% trend assumptions in the State Legislative budget for the AHCCCS program relate to this process?

	
Trends assumptions used to develop the State Legislative budget were their own best estimates. AHCCCSA’s actuaries will make their own trend estimates.

	
271

	
150

	
Attach E

	
 

	
When will AHCCCSA make available information regarding program changes?

	
Information is provided in Section B of the data supplement. Potential contractors will be made aware of any additional program changes, as they become available.

	
272

	
150

	
Attach E

	
 

	
How will financial data be used given changes in reserves for other prior period adjustments that skew actual results?  For instance, if a health plan releases reserves or recognizes revenue from older
periods, the health plan’s experience will look more favorable than their “run rate” for that period.

	
Financial statements are revised and restated for adjustments, and are audited on a periodic basis. Financials represent one supplemental data source used in the development of actuarially sound rates. 
These revised financial statements are not provided in the data supplement.

	
273

	
150

	
Attach E

	
 

	
If the Legislature eliminates eligibility groups (e.g., KidsCare, HIFA parents), will AHCCCSA adjust the capitation rates, given that the prospective bidders are bidding rates assuming continued coverage of all
groups?  And if so, how will the adjustment be made?  If adjustments are made in the rates, how will this impact the algorithm?

	
Any material change within a rate cell, such as the elimination of one subset of a category of aid will be adjusted for in the capitation rates.

The Offeror should assume that all current eligibility groups will continue to exist in CYE ’04.

	
274

	
151

	
Attach E

	
 

	
Since the Web application for submitting capitation rates has not been issued yet, will offerors have the opportunity to formally ask questions and receive responses after the February 14, 2003 deadline to submit
questions?

	
Yes.  A presentation of the web site will be forthcoming at the bidder’s conference.

A second set of technical questions will be issued by AHCCCSA by due March 7, 2003.

	
275

	
153

	
Attach F

	
 

	
Please describe what the health plans will be required to report on the newly required “Prescription Drug Utilization Report”?

	
Contractor submitted pharmacy encounters are still the "official" documentation for AHCCCS.  However, contractors will be asked to provide standard monthly production reports of aggregate pharmacy cost and
utilization data in a mutually agreeable format .

	
276

	
84-92

	
Attach G

	
 

	
Are any of these forms available for electronic fill-in? Or are we to print out the PDF version and fill in by hand?

AHCCCS Website

	
Electronic version of section G has been placed on the web page.

	
277

	
157

	
Attach.

H (1)

	
 

	
In you previous response to question 250 regarding LEP, is your intent with the use of the word prevalent to mean 1,000 or 5% as per RFP?     

If the health plan becomes aware of 1 member LEP, is the health plan required to translate all member information to that non-prevalent LEP, i.e. Farsi?

	
Yes, prevalent refers to the 5%/ 1000 standard for purposes of vital documents, and there is no requirement to provide written translation to a member who speaks a language not meeting the 5%/1000.  However, the
BBA requires the MCO to provide oral translations of any language-regardless of whether prevalent or not when requested by a member.

	
278

	
Page 157, 100, 102

	
Attach.

H (1)

	
 

	
When asked for clarification of definitions, the offerors are told to refer to the CFR 438 subpart F for definitions.  However, AHCCCS continues to use the term complaint in requirements 13 and 28, yet refers to CFR
438.  CFR 438 does not recognize the term “complaint”.  Are we to assume that AHCCCS is talking about “grievances” and the term complaint will be eliminated?

	
See answer to question #305.

	
279

	
157

	
Attach H

	
 

	
Is the “Notice of Action” considered the same as an initial organization determination?  Also, normally, a member has 60 days following an adverse action to file an appeal.  The timeframe
listed in this section of the RFP is different.  Has this timeframe changed and, if so, when? 

	
42 CFR 438.404 delineates Notice of Action requirements.  State statute ARS §36-2903.01 specifies a 60-day timeframe for filing non claim related grievances. However,  the BBA provisions have will
have a major impact on the existing AHCCCS/Contractor  grievance process.  These changes shall be communicated through regulation and/or formal policy.

	
280

	
157

	
Attach H

	
 

	
It refers to the Notice of Action and the situations in which that must be generated, including notice to members when a claim is denied—does this mandate and EOB to be sent to a member?  If it does,
can the member ask for an expedited appeal in that situation?

	
The BBA regulations require that notice be given enrollees for denial of payment, in whole or in part.  Expedited resolution of an appeal applies to situations when taking the time for standard resolution
could seriously jeopardize the enrollee’s life or health or ability to attain, maintain, or regain maximum function.  It does not appear that appeals of this nature would satisfy the criteria for expedited resolution.  Moreover, it is anticipated that
most of these appeals will be withdrawn once the MCO explains to the enrollee, as part of its resolution process,  that the enrollee will not be not financially responsible for payment.

	
281

	
157

	
Attach H

	
 

	
It refers to a “standard appeal”—what is this?  A non-expedited appeal as described in previous paragraphs?  A grievance as set forth in the current administrative code?  If it is
the latter, are the timeframes for response changed from 30 days to 45 days with extension of 2 weeks without member agreement, but only notice?

	
42 CFR 438.408 delineates requirements for standard and expedited resolution of appeals.  The existing AHCCCS/Contractor grievance process will be amended to ensure compliance with the BBA provisions. 
These changes will be communicated through regulation, contract, and/or formal policy.

	
282

	
157

	
Attach H

	
 

	
Are there member grievances as previously provided for in the administrative code?  If so, under what circumstances, and what rules, etc applies?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
283

	
157

	
Attach H

	
 

	
Is the process of requesting a “fair hearing” the same as the current process of appealing a decision from a member grievance?  Does this still exist in its current form, and if so, under what
circumstances?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
284

	
157

	
Attach H

	
 

	
Can a member appeal from the process set forth in Attachment H (either standard or expedited), beyond the fair hearing process or is that the full and final process?

	
As in the current scheme, a member may file a Petition for Judicial Review in Superior Court.

	
285

	
157

	
Attach H

	
 

	
Attachment H provides that the enrollee is to be given no less than 20 days and no more than 90 days from date of Notice of Action to file an appeal—does this apply to expedited grievances (appeals) under
Article 13 or to “standard” grievance which currently have 60 days limit?

	
The 20/90 day requirement for appealing a Contractor  Notice of Action is delineated in 42 CFR 438.402 and applies to both expedited and standard appeals.

	
286

	
157

	
Attach H (1)

	
Entire Attachment H (1)

	
This section uses the terms grievance, appeal, expedited appeal, State fair hearing and expedited hearing. Contractors currently utilize the AHCCCSA definitions of the terms grievance and expedited hearing. 
May Contractors assume that the definitions and requirements will stay the same for these two terms?  Please provide more information, definitions and processes for appeal, expedited appeal and State fair hearing.

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.  The BBA has defined specific
terms which pertain to the Grievance System; any current terms which do not conform to the BBA must be amended to ensure compliance.  As an example, refer to the definition of “action,” “appeal”, and “grievance” as defined in
438.400.

	
287

	
157

	
Attach H (1)

	
Paragraph 3

	
Currently, we rely on the language in the Member Information section of the contract.  Therefore, vital materials, including Notices for Denials, Reductions, Suspensions or Terminations of Services are
translated when we are aware that a language is spoken by 1,000 or,  5% of our members. We also inform our members of their right to interpretation and translation services when we are aware that 1,000 or 5% of the members speak a specific language and have
LEP.  Attachment H of the RFP states, "Written documents, including but not limited to the Contractor's Notice of Action, the Notice of Contractor's Appeal/Grievance Resolution, ... shall be translated in the enrollee's language if information is received by the
Contractor, orally or in writing, indicating that the enrollee has Limited English Proficiency." We are interpreting this to say that we must print the stated documents in a member's chosen language if the member tells us that he/she has LEP.  Is this
correct?

	
If the Contractor is aware that the enrollee has a limited English proficiency in a prevalent non English language,  the Contractor  must translate the written material , e.g. the Contractor resolution
notice, in the prevalent non English language-rather than simply including language in the document advising the enrollee that the information is available in the prevalent non English language.

	
288

	
157

	
Attach H (1)

	
Bullet 2

	
This bullet requires a contractor to define appeal.  Please provide a definition and the context that AHCCCSA is using the term appeal.

	
”Appeal” is defined in 42 CFR 438.400.

	
289

	
157

	
Attach H (1)

	
Bullet 4

	
This bullet allows for an enrollee to file both a grievance and an appeal orally.  Currently, enrollees that dispute a grievance decision must submit a request for hearing in writing.  Does this oral
request include the appeal of a grievance decision?

	
42 CFR 438.402 delineates requirements for oral and written appeals. The BBA  does not mandate a hearing process for grievances as defined in 438.400.

	
290

	
157

	
Attach H (1)

	
Bullet 5

	
The RFP states that an enrollee shall be given no less than 20 days (and no more than 90 days) to file an appeal.  Is it the intent of AHCCCSA to allow individual health plans choose the time frame for
filing grievances and appeals, or is AHCCCSA going to define the timeline?

	
AHCCCS anticipates establishing a specific timeframe for appealing through regulation and/or formal policy.

	
291

	
157

	
Attach H (1)

	
Bullet 6 Item 2

	
This bullet indicates that a contractor shall notify enrollees at the time of any action affecting the claim when there has been a denial of payments.  Is it the intent of AHCCCSA to require Contractors to
notify enrollees when provider claims have been denied?  Is it the intent of AHCCCSA to allow enrollees to appeal provider claim denials?  If so what level of appeal is meant by this section?

	
Please refer to the answer to question # 280.

	
292

	
157

	
Attach H (1)

	
Bullet 6

	
As this statement does not specify working or calendar days, can we assume it is calendar days?  This statement would imply that the Notice of Action is sent out 10 days before the date of the action. 
Is this to mean the “effective” date of the action?

	
Please refer to Subpart F.  Notice of  Action mailing requirements are found in 438.404.  The timeframes generally refer to calendar days although he expedited timeframe is stated in terms of
working days.

	
293

	
157

	
Attach H (1)

	
 

	
Are there set definitions of the terms

Appeal, grievance and complaint?

	
Yes, please refer to 438.400.

	
294

	
157

	
Attach H (1)

	
 

	
Are the terms appeals and grievances being used interchangeably or Are you allowing the Health Plan to define these terms or Do we use CFR 438 subpart F to define the terms? Note – CFR 438
does not recognize the term “complaint”.

	
Please refer to the definitions found in Subpart F.  These terms are not used interchangeably and must conform to the BBA definitions.

	
295

	
157

	
Attach H (1)

	
 

	
Where it states “inquiries appealing an action are treated as appeals and are confirmed in writing....” Please clarify who is “confirming in writing” -the Health Plan or the
enrollee?

	
Please refer to 42 CFR 438.406(b).

	
296

	
158

	
Attach H (1)

	
Bullet 7     Item 3

	
This item refers to the enrollee’s right to file an appeal with the contractor.  Does this mean the enrollee's right to file a grievance?

	
No, the terms “grievances” and “appeals” have distinct meanings as defined in Subpart F.

	
297

	
158

	
Attach H (1)

	
Bullet 7      Item 4

	
This bullet refers to the enrollee’s right to file a request for State fair hearing.  May we take this to mean the enrollees right to file a request for expedited hearing?  If not, from whom does
the enrollee request a State fair hearing?

	
The BBA permits enrollees to file requests for hearing with the State concerning  “actions” which are not resolved solely in favor of the enrollee by the Contractor.  Some of these actions
may qualify as “expedited” matters.

	
298

	
158

	
Attach H (1)

	
Bullet 7     Item 6

	
In this item it refers to the enrollee’s right to file an expedited resolution.  Please provide a definition of expedited resolution in this context and the circumstances in which an enrollee can
utilize or request the expedited resolution.  With whom does the enrollee request an expedited resolution?

	
Expedited resolution is discussed in 438.408 and 438.410.

	
299

	
158

	
Attach H (1)

	
Bullet 10

	
This bullet uses the term standard appeal.  Does this terminology refer to what is currently called a grievance?   Or is this a new appeal process?  This bullet allows the contractor to respond to
standard appeals within 45 days, if this is referring to the current grievance process, is the AHCCCSA eliminating the 30 day time frame currently used for processing grievances?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
300

	
158

	
Attach H (1)

	
Bullet 14 Item 3

	
This bullet indicates that an enrollee can appeal the denial in whole or in part of payment for service.  Is this to mean the enrollees can appeal provider claim denials?  If so, what level of appeal is
meant by this section?

	
Subpart F delineates MCO requirements for appeals of “actions” which include the denial of payment for a service, in whole or in part.  Also refer to response number 280.

	
301

	
158

	
Attach H (1)

	
Bullet 21 Item 2 b

	
This bullet indicates that a health plan has to provide written notice of the enrollee's right to receive benefits pending the hearing and how to request continuation of benefits.  Bullet 15, on page 158,
indicates that benefits shall continue if the enrollee meets all five criteria.  Should the health plan include this information only if all of the criteria in Bullet 15 had been previously met?  Or is it the intent of AHCCCSA to have the health plans
include this language in every letter?

	
42 CFR438.408 delineates the content requirements which must be included in the Contractor’s written notice of resolution.  The right to receive continued benefits must be included.

	
302

	
158

	
Attach H

	
 

	
Attachment H provides that the Contractor shall permit both oral and written appeals and grievances and those oral inquiries appealing an action are treated as appeals and are confirmed in writing unless
expedited resolution is requested.  Please clarify what an “expedited resolution” is?  Is this is referring to an Article 13 request for expedited appeal?

	
Please refer to the answer to question #298.

	
303

	
158

	
Attach H

	
 

	
Attachment H refers to the Contractor resolving all expedited appeal within 3 working days and making reasonable efforts to provide oral notice to an enrollee regarding an expedited appeal resolution—is
this effort to provide notice regarding an appeal of the expedited appeal?  Is that same as Article 13?  Does this mean after the Contractor makes decision on expedited that the member then can access the expedited, or non-expedited, appeal process in
either Article 13 or 8?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
304

	
158

	
Attach H

	
 

	
Attachment H1 refers to right of enrollee to file appeal of “failure to provide services in timely manner”—is this a grievance filed with Contractor about provider’s car, e.g., quality of
care complaint, that is a “standard appeal” (with 45? Days to resolve and right of appeal?) or a “traditional” grievance under Article 8?

	
Attachments H(1) and H(2) have been written to incorporate all required changes due to the BBA.  This attachment prevails over rule and statute effective October 1, 2003.

	
305

	
 

	
Attach H

	
 

	
AHCCCS has changed most of the terminology in the member grievance system section to reflect new BBA language.  For example:

Previous Language              New Language

 Complaints                           Grievances

 Grievances                           Appeals

 Appeals                                State Fair Hearings

AHCCCS has not changed this terminology in the provider grievance section to reflect these changes.  Nor has AHCCCS updated the language in questions #13 and #28 of this RFP.  Should Offeror answer provider grievance
questions and other questions (13 and 28) based on previous language definitions or new language definitions?

	
The BBA does not address the provider dispute resolution process.  Therefore, AHCCCCS intends to retain the existing process, with some minor modifications.  AHCCCCS will communicate any changes through a formal
policy.

Submission #28, under Member Services, is amended to read, "Describe the member grievances and resolution process, including communications with other departments, benchmarks used and the average speed for resolution of
grievances (or complaints using previous terminology)".  #36 is amended to read, "Provide a flowchart and written description of the appeals and State fair hearing processes and general timelines.

438.400 defines "grievance" as an expression of dissatisfaction about a matter other than an "action."  This regulation states, "possible subjects for grievances include, but are not limited to, the quality of care or
services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the enrollee's rights."  Generally speaking, "grievances" under the BBA are similar to "complaints" under the previous
nomenclature.  The BBA does not provide hearing rights regarding grievance disposition.

Although quality of care complaints may be communicated to the Contractor in a variety of ways, those which are reported by members are to be treated as grievances.  Quality of care complaints not communicated to the
Contractor by members are not assumed to be grievances and are therefore treated independently of the grievance system.

In general, "appeals" (BBA terminology) refer to what previously were known as grievances, when filed by members regarding an action taken by the contractor. as defined in Attachment H1, page 158, eighth bullet of the
RFP. 

	
306

	
 

	
Attach H

	
 

	
We have interpreted an expedited appeal to be what was formerly known as an expedited grievance, which would be submitted directly to AHCCCS.  Please clarify the process as it relates to the Offeror.

	
The BBA defines “actions” and “grievances.”   For purposes of the Enrollee Grievance System delineated in Attachment H(1), an “action” confers hearing rights whereas a
“grievance” does not.  The BBA sets forth requirements for expedited resolution of “actions” which are found in 438.408 and 410.  “Grievances” are not subject to expedited resolution.  When the Contractor determines
or the provider indicates that taking the time for standard resolution could seriously jeopardize the enrollee’s life or health or ability to attain, maintain, or regain maximum function, then the appeal must be resolved no longer than 3 working days after the
MCO receives the appeal – unless the timeframe is extended in accordance with the requirements in 438.408©.  This applies to denials, reductions, and terminations.  Currently, AHCCCS Policy and Rule permit appeals of denials, reductions and
terminations of services to be scheduled directly to hearing, by passing the Contractor review process.  It is likely that AHCCCS will amend the current Member Rights and Responsibility Policy and Article 13 of AHCCCS Regulations, “Members’ Rights
and Responsibilities for Expedited Hearings” to require the Contractor to initially address all enrollee actions and grievances through the Contractor Grievance System.  These changes will be communicated to Contractors through formal policy and/or
rule.

	
307

	
 

	
Attach H

	
 

	
Does b) only apply if an expedited appeal was filed directly with AHCCCS, within 10 days of service and only to original services requested?  Please clarify the process as it relates to the Offeror.

	
See response to number 306 above.

	
308

	
 

	
Attach H

	
 

	
If a State fair hearing results in reversal of a decision, can Offerors limit only to medically necessary covered services in the scope of the original request?  Does this only apply if services were received under an
approved request for continuation of services?  Can we require out-of-state providers to comply with policies, such as obtaining an AHCCCS provider ID number and to accept the AHCCCS fee schedule?

	
Please refer to 438.420 and 424 for continuation of benefits and reversal of decisions.  In order for services to continue during an appeal, the requirements in 438.420 must be met.  Additionally, Contractors must
ensure the timely provision of services which were originally denied by the Contractor if the AHCCCS Hearing Decision subsequently reverses the Contractor’s denial.  All services must be medically necessary.  These requirements are discussed in
several areas in Attachment H(1).

Federal regulations require that all Medicaid providers sign a provider agreement.  In addition, State Law ARS §36-2904L, authorizes payment of non-hospital services at the AHCCCS capped fee for service schedule
– in the absence of an agreement to the contrary.

	
309

	
 

	
Attach H

	
 

	
It states that Offerors are to continue benefits under certain conditions, such as until “3) State hearing office issues decision adverse to enrollee.”  Currently, the Administrative Law Judge at the Office of
Administrative Hearings hears the case and issues a Recommended Order & Decision.  The Director of AHCCCS then reviews that decision and issues the Director’s Decision, accepting, rejecting or modifying the Administrative Law Judge’s
decision.  Please clarify decision is applicable for the timeframe of coverage.

	
The Director’s Decision, issued on behalf of the AHCCCS Director, shall be considered the Decision by the State Hearing Office for purposes of duration of continued benefits in 438.4200 or effectuation of reversed appeal
resolutions in 438.424.  Please note that the duration of continued benefits is determined by the occurrence of any of the four conditions in 438.420©-only one of which pertains to a hearing decision.  For example, if the time period or service limits
of a previously authorized service have been met, the continued benefits must cease even if a Hearing Decision has not yet been issued.

	
310

	
 

	
Attach H

	
 

	
Other bidders raised some questions regarding definition and processes were referred back to CFR.  How will this affect the current “expedited appeal” process in Arizona? We are uncertain how to coordinate the
“expedited appeal” and denial of an “expedited resolution.”

	
Please refer to responses to questions 306 and 307.

	
311

	
 

	
Attach H

	
 

	
The change in definitions would indicate that what is currently called the member complaint process (as reflected in questions 28 and 13) is now the member grievance process.  If this is true, should the current member
complaint process be included in the flowchart?  Please clarify.

	
Please refer to response to question 305.

	
 

	
Page 161

	
Attach H

	
 

	
Question 262 states that questions about Attachments H(1) and H (2) “have been written to incorporate all required changes due to the BBA”.  The BBA does not recognize the providers’ right to file a
grievance or an appeal except on behalf of the member, with the member’s permission.  See 438.402 section c (1) ii “A provider, acting on behalf of the enrollee and with the enrollee’s written consent, may file an appeal.  A provider may
not file a grievance or request a state fair hearing.” Are we to follow the CFR 438 subpart F, as we have been told in answer to the bidders question to “refer to 42 CFR 438”?  If so, will H2 be revised to comply with the BBA?

	
Attachment H(2) will be retained.  Subpart F of Part 438 does not address the provider dispute resolution process.  Therefore, AHCCCS intends to retain the existing provider grievance system process with some minor
modifications, and will advise contractors of changes to the provider process through a formal policy.

The statement means that providers may not file a grievance or request a state fair hearing for a member.

	
312

	
161

	
Attach H(2)

	
Item J

	
“If the contractor’s decision is appealed and a request for hearing is filed..........” .  Is that 1 step or 2 steps?  Can the provider appeal the Health Plan grievance
decision to be relooked at and if not satisfied, request a hearing or is “appeal and request for hearing” saying the same thing which would be an appeal to AHCCCS?

	
The terms “appeal and request for hearing” in this context represent one action and refers to appealing the Contractor decision to the State.

	
313

	
 

	
Data Supp

	
General Question

	
Upon reviewing the data supplement, it appears that in general the medical expenses for the TANF/KidsCare under 1 age category show a decrease in medical expenses from 2001 to 2002.  Please explain any
pertinent issues that may cause a decrease in medical expenses during these time periods.

	
AHCCCSA is unaware of any pertinent issues that contributed to a decrease in medical expenses.  This information is based upon health plan self-reported data.

	
314

	
 

	
Data Supp

	
Section A Overview

	
Please provide additional details on how Mercer will develop the mid-point and rate ranges for the  contract period?

	
This information will be presented at the Bidder’s Conference

	
315

	
 

	
Data Supp

	
Section A Overview

	
Please provide information on any medical trend analysis that was completed using the data in the data supplement.

	
The information in the data supplement is not directly used in the development of medical trends. The encounter utilization reports are used to aid in the development of utilization trends.

	
316

	
 

	
Data Supp

	
Section A Overview

	
Please provide additional details on capitation offset on the CRCS form for Delivery Supplement.

	
  Health plans receive monthly capitation for the pregnant women enrolled in their plan. Currently, the assumed duration of a pregnant woman in the program is 8 months including the post partum time period.
Therefore, in order to avoid double paying the plans, the maternity payment is reduced for the eight months of capitation dollars that the plans will received.

	
317

	
 

	
Data Supp

	
Section D and F

	
How do the Provider Type and Category of Service drive the rate setting?  Please clarify the relationship of the service matrix which includes Provider Type and Category of Service to the Capitation Rate
Setting worksheets. 

	
The Provider type and Category of Service make up the criteria for developing general service categories that are the basis of the capitation rates.  The crosswalk between the service matrix to the CRCS is
provided so you can use the encounter utilization reports for developing your capitation bids by those service categories.

	
318

	
 

	
Data Supp

	
 

	
When evaluating utilization for rate setting, how do codes with global rates billed with TC, 26 modifier get handled? Are the professional (26) component in physician services and the technical (TC) portion in
lab, radiology, etc.?    If they are split, what are the percentages of splits that will apply?

	
Both the professional component and technical component for lab and radiology services are included in the lab and radiology services category.  See the service matrix in Section D of the Data Supplement for
further information.

	
319

	
 

	
Data Supp

	
 

	
What is the 4/1/03 AHCCCS fee schedule status? How will adjustments to that fee schedule be factored into the rate setting?

	
AHCCCS will increase the hospital tier per diems based on the 3rd quarter DRI.  An estimate of this will be used in developing the capitation rates.  AHCCCS will continue to freeze its fee
schedule for all other rates.  This will be factored into the capitation rate development.

	
320

	
 

	
Data Supp

	
Capitation Rate Calculation Sheet (CRCS)

	
Can you give an example of a “Miscellaneous” service?  There are no AHCCCSA Service Matrix Categories that crosswalk to this line in the CRCS.

	
This is a service that does not fit any of the categories that are contained in the service matrix.

	
321

	
 

	
Data Supp

	
Service Matrix

	
In the Service Matrix of the data set, non-emergency transportation is counted as number of encounters.  Should this not be number of units?

	
It should be the number of units that is defined as a trip for transportation services.

	
322

	
 

	
Data Supp

	
Maternity Costs

	
Is the "Encounter Data" for the SOBRA Supplement available in electronic form?  This data includes utilization per 1,000 and costs per unit by type of service for the three contract years ending 2000, 2001, and 2002 (six
months) for each county and GSA.  It is comparable to what the AHCCCSA provided in electronic format on their CD earlier for acute care aid categories.  AHCCCSA handed out hard copy printouts of the SOBRA Supplement data at the bidder's
conference.

	
The data handed out was for all Maternity costs irrespective of their eligibility category.   This information is available electronically through the AHCCCS web site’s bidder’s
library.

	
323

	
 

	
Gen quest

	
 

	
How many disease management programs need to be in place and are there specific diseases that are mandated?

	
AHCCCS has not established a standard for the number of disease management programs a plan must offer. The development and implementation of disease management programs should be based on the needs of the health
plan's members.

	
324

	
 

	
Gen quest

	
 

	
What is meant by “disease management programs”?  Do they include management of diseases within the realm of case management, or are they looking for “disease-specific”
programs?

	
Disease Management Programs are disease specific programs designed to assist persons with chronic illnesses improve their self-management skills.  Case management can be one tool of disease
management.

	
325

	
 

	
Gen quest

	
 

	
Will they accept referrals to current HIHS programs as disease management, i.e. MMC’s/CHC CHF Program, Diabetes Education & Coagulation Clinic, informal asthma education, etc?

	
Disease management programs can be provided in many different methods.  It is up to the Contractor to determine what is effective for their population. 

	
326

	
 

	
Gen quest

	
 

	
If they truly mean specific “disease management programs”, with tracking of CLINICAL Indicator, (in addition to Utilization Monitoring which can be easily done by the HP), is there a date by which
these programs must be in place?

	
AHCCCS will monitor the implementation of Disease Management programs at the first round of Operational and Financial Reviews conducted under the new contract.

	
327

	
 

	
Gen quest

	
 

	
Does AHCCCSA intend to now, or at any time during the contract term, install geographic access standards for specialists?

	
In lieu of specific standards by geographic area, AHCCCS is utilizing the community access standard as the guideline for network development.  Essentially, this means that services that are generally
available to the population of a given community, should be equally available to the AHCCCS members residing in that same community.  Additional specific requirements are not currently anticipated.

	
328

	
 

	
Gen quest

	
 

	
Will the performance bond and capitalization levels remain consistent during the period of the financial statement forecast?

	
The Offeror should assume that they will remain constant.

	
329

	
 

	
Gen quest

	
 

	
What years’ growth assumptions should be used of the overall AHCCCS population growth in the financial statement forecast?

	
AHCCCSA will provide the estimates used by the AHCCCS budget office at the bidder’s conference.

	
330

	
 

	
Gen quest

	
 

	
Should we assume our same mixture of membership by rate group as of now as our mixture in the financial statement forecast?

	
This is a decision that the Offeror will need to make based upon its estimates.

	
331

	
 

	
Gen quest

	
 

	
Should the margin on Financial Statement Forecast rates set by AHCCCS’ actuaries be included in the financial statement forecast?

	
The contractor should not factor the “margin” (risk/contingency) that is included in the capitation rate development.  They should report their actual expected margin.

	
332

	
 

	
Gen quest

	
 

	
When setting the rates without pharmacy, will all administrative costs related to the pharmacy benefit be borne by another entity?

	
Yes, some portion of the administrative costs will be borne by another entity.  It is unknown at this point the amount.

	
333

	
 

	
Gen quest

	
 

	
For the capitation rates set by AHCCCS’ actuaries (PPC, HIV/AIDS, Title XIX Waiver, HIFA Parents, etc.) when will that data be available?  What are the inflationary assumptions used for the contract
period?

	
AHCCCSA anticipates that the capitation rates in question will be available April 1, 2003.  Because the PPC and TWG rates are reconciled, the Offeror should estimate what their profitability will be for the
TWG and PPC experience and build that into their financial projections.  For the HIFA parents, assume a rate that is 10% greater than the applicable TANF rates. 

	
334

	
 

	
Gen quest

	
 

	
When will the reinsurance adjustment table for plans with a deductible greater than $20,000 be available?  Will this be consistent through out the contract period?

	
The reinsurance offsets will be available by the end of February.  Those offsets will be adjusted annually when additional date is analyzed including inpatient rate adjustments, program changes, and actual
reinsurance claims paid.

	
335

	
 

	
Gen quest

	
 

	
Will the bidder be able to modify the capitation rates after they are input into the web site?  If so, when will they no longer be available for modification?

	
The bidder can modify their capitation rate bids until 3:00 pm, March 31, 2003.

	
336

	
 

	
Gen quest

	
 

	
Does AHCCCSA have any enrollment projections for the acute care program over the next 1-5 years split by GSA and/or eligibility category?  If so, please provide copies of what is available.

	
AHCCCSA will provide the estimates used by the AHCCCS budget office at the bidder’s conference.

	
337

	
 

	
Gen quest

	
 

	
Upon bidding for GSA 10, will separate capitation rates be quoted for Pima County and Santa Cruz County?

	
The Offeror must submit a bid for the entire GSA.  Capitation scoring will be based upon the blended capitation rate.  After all RFP scoring is completed, the two bidders with the highest overall scores will receive
an award for both Pima and Santa Cruz counties.  The next highest scorers will receive an award in Pima County only.  The Pima County only Contractors will be offered a rate that is their bidded rate for both counties as adjusted based upon a percentage
difference between the risk of the two counties combined and Pima County only as determined by Mercer.  If the Pima County awardee does not accept the offered rate, then the next highest scorer will be offered a rate until all available Contractor slots are
awarded.

	
338

	
 

	
Gen quest

	
 

	
Will AHCCCSA make available experience information regarding Third Party Recoveries?

	
The TPL experience is included in the current health plan financial statements.

	
339

	
 

	
Gen quest

	
 

	
Will AHCCCSA make available experience information regarding member co pays?

	
The amount of the copayments will be hard coded into the CRCS.

	
340

	
 

	
Gen quest

	
 

	
Is there a preferred form for the actuarial certification?

	
  Please refer to the answer to question #1.

	
341

	
 

	
Gen quest

	
 

	
Can AHCCCSA provide guidance as to how CYE ’04 reimbursement rates will vary from CYE ’03, specifically identifying percentage changes to inpatient hospital tiered per diems, outpatient hospital
reimbursement, and other fee-for-service reimbursement?

	
AHCCCS will increase the hospital tier per diems based on the 3rd quarter DRI.  An estimate of this will be used in developing the capitation rates.  AHCCCS will continue to freeze its fee
schedule for all other rates.  This will be factored into the capitation rate development.

	
342

	
 

	
Gen quest

	
 

	
How many hospital supplement payments per 1,000 non-MED members occurred in historical contract years?

	
AHCCCS will provide total hospital supplemental payments for CYE ’02 when the rates are provided.

	
343

	
 

	
Gen quest

	
 

	
What aid code groups do the $15,000 and $20,000 deductibles correspond to in Exhibit U of the data supplement?

	
The $15,000 applies to Title XIX Waiver Group rates categories.  The $20,000 applies to all other rate categories.  See further definitions of risk groups in the data supplement and paragraph 2 of the
RFP.

	
344

	
 

	
Gen quest

	
 

	
Will elements of the Capitation Rate Calculation sheet be set by AHCCCS?  If so, please describe them.

	
AHCCCS will set the following items in the CRCS:

1.        reinsurance offsets

 2.        copayment amounts

	
345

	
 

	
Gen quest

	
 

	
Per instruction, all responses should be limited to three pages unless indicated otherwise.  Does this three page limitation include attachments, i.e. manual, sample reports, handbooks, etc?

	
Please refer to the answer to question #196a.

	
346

	
 

	
Gen quest

	
 

	
Can attachments be marked as such in the 1/2 inch margin around the page?

	
Where attachments are permitted, yes.

	
347

	
 

	
Gen quest

	
 

	
Is the response page limit to narrative only?  Do you want response attachments to be included?

	
Page limits apply to the narrative.  Attachments which are specifically requested do not count toward the limit.

	
348

	
 

	
Gen quest

	
 

	
How do you want attachments that are not within the 8 1⁄2 x 11 requirements to be displayed? I.e. electronic file (if available), Xerox copy of material, in sleeves, in separate binder?

	
Attachments, which are specifically requested, may be submitted in hard copy form in a sleeve, following the applicable narrative.

	
349

	
 

	
Gen quest

	
 

	
May we have a BID Rating Tool?

	
No.

	
350

	
 

	
Gen quest

	
 

	
Does AHCCCS intend to adjust its FFS schedule to reflect the Medicare Fee schedule in 2003/2004

	
No.  AHCCCS will freeze its rate schedule.

	
351

	
 

	
Gen quest

	
 

	
When using the rate worksheets on the web, are bidder's able to change them up until 3/31/03,
3pm?                                                         

	
Yes.  After that, the bidder will be locked out.

	
352

	
 

	
Gen quest

	
 

	
When using the rate worksheets on the web, are these secured and confidential from other bidders?

	
Yes. More information will be provided at the bidder’s conference.

	
353

	
 

	
Gen quest

	
 

	
Freedom-To-Work

a) Can AHCCCSA provide enrollment in Freedom-to-Work aid codes by county?

b) What data can be made available to assess the cost of these members as compared to SSI members without Medicare?

	
a) Based on March 2003

COCHISE              4

 COCONINO          5

 GILA                      1

 MARICOPA         66

 MOHAVE             5

 NAVAJO               1

 PIMA                     23

 PINAL                   4

 YAVAPAI             6

 

b) AHCCCS has no data because this population became eligible January 1, 2003.  The capitation rates were not changed for the population as it is not expected that their risk will be greater than the general
SSI population, and because there are so few members potentially eligible.

	
354

	
 

	
 

	
Offeror’s Conference

	
Does AHCCCSA intend to truncate any encounter data when developing standard deviations for their rate range development?

	
Some of the rate cells will no doubt be too small to give them full statistical credibility. Mercer will be looking more closely at the statistical relationships between the rating regions (county groupings), rather than
taking a literal interpretation of the statistical analysis.

	
355

	
 

	
 

	
Offeror’s Conference

	
Given the large increases in hospital charge masters, has AHCCCS made a determination as to whether they will trend unit costs for outpatient services

	
AHCCCS is developing a methodology that will limit the outpatient facility trend.  AHCCCSA does not anticipate the trend to exceed 5%.

	
356

	
 

	
 

	
Offeror’s Conference

	
What additional data / information is the state making available to its actuaries that the plans have not been given?

Are the actuaries receiving encounter data by quarter?

What is the most recent time period they have received?

If additional data has been provided to the state's actuaries, what is the rationale for not providing the additional data to potential offerors, in particular, new offerors?

	
AHCCCS provided Mercer with encounter data to develop reinsurance offsets.  AHCCCSA also provides health plan specific data to Mercer.  All other data has been provided to bidders.

No.

The data that was provided in the data supplement—October 1, 2001 through March 31, 2002.

The additional data provided to Mercer will not aid the Offerors in their capitation rate bid development.  Also, AHCCCS does not release health plan specific data.

	
357

	
 

	
 

	
AHCCCS Website

	
http://www.ahcccs.state.az.us/Contracting/OpenRFPs/YH04-0001/YH04-0001.asp has three forms at the bottom of the page: Marketing Attestation Statement (PDF), AHCCCS Medicare Research Request Form (PDF), and Third Party
Liability (TPL) Change Form (PDF). Are we expected to do anything with these forms for this RFP?  Specifically, are they to be submitted with the bid? If so, where should they be placed in the response?

	
These are forms with specific purposes that are referenced in the RFP document in a similar manner as policies.  Therefore AHCCCS included them in their bidder’s library.  There is no submission requirement for
these forms.

	
358

	
 

	
Gen quest

	
 

	
If a continuing offeror currently holds a Bond Substitute, should the offeror assume that the substitute will continue to be acceptable in response to this question?

	
Yes, such as a county resolution.

	
359

	
 

	
Gen quest

	
 

	
If the offeror is part of a larger governmental organization (e.g. an enterprise fund), should it submit a copy of the CAFR for the entire governmental entity?

	
This is not required.

	
360

	
 

	
Gen quest

	
 

	
How does AHCCCS intend that bidders account for the HIV-AIDS supplemental payments in the bids and in the CRCS sheets?

	
  The HIV-AIDS supplemental payment will be set. The benefits covered by this supplemental payment should not be included in any of the CRCS sheets.

	
361

	
 

	
Gen quest

	
 

	
At the Bidders’ conference, the Mercer actuary shared some of their trend assumptions (0% for physician, 4% for hospital inpatient).  What trends will Mercer use for hospital outpatient?  For prescription
drugs? For other services?

	
The bidder should develop their own trends for pharmacy.  For outpatient, AHCCCS is developing a methodology for reimbursement for October 1, 2003 that should minimize trends.  As discussed, AHCCCS is freezing its
fee for service fee schedule for a second year.  That should be factored into trend assumptions.  Each bidder should consider their own expected trends based on historical experience expected future payments to providers.

	
362

	
 

	
Gen quest

	
 

	
Is the plan required to notice members on every denied claim?

	
AHCCCS is getting clarification from CMS on this issue.

	
363

	
 

	
Gen quest

	
 

	
For the Utilization Data provided by the State for Yrs 18, 19 and 20, do the numbers for the various TANF risk pools include KidsCare?  (KidsCare groups were streamlined to TANF effective 10/01/02; however,
health plans are still required to report them separately from TANF.)

	
Yes.  Refer to the data supplement section J.

	
364

	
 

	
Gen quest

	
 

	
Health plans are to bid for two sets of rates to be effective 10/01/03; one with a pharmacy benefit and one without pharmacy benefit.  For the three-year financial forecasts, do health plans need to consider
inflation/adjustments for the second and third year forecasts?

	
Yes.  Please note no financial forecasts are required for bids without the pharmacy benefit.

	
365

	
 

	
Gen quest

	
 

	
(paraphrased) Are all medical costs for pregnant women included in the development of the delivery supplemental payment, and is that why there is 8 months of capitation subtracted from the gross rate to get to a net delivery
supplement rate?

	
Yes.

	
366

	
 

	
Gen quest

	
 

	
The amounts for deliveries and births are different.  However, the difference is small and may be easily explained in accounting for twins and stillborns.

More perplexing, however, is that the member months for TANF 14-44 Females and SOBRA moms should theoretically be the same from one report to the next.  In the membership data file, "MemberMonths_Detail.txt" membership
is

different from that reported in section R of the Revised Data Supplement, "Birth to Member Month Analysis - Summary by County".

	
1.  Births and delivery numbers are different - ANSWER = the reason the numbers do not exactly match is due to two things: 1) mom may not have been AHCCCS eligible and therefore we do not have the delivery information; 2)
multiple births will have more than one birth but only one delivery.

2.  MM different from databook to "Birth to member month analysis" - the reason that the member months do not exactly match is because the databook groups member months based upon updated eligibility information that many
times comes after the payment of member months.  This allows the utilization in the databook to be classified into the most precise risk grouping.  The birth report gathered member months based upon "paid" member months.

	
367

	
 

	
Gen quest

	
 

	
The Mercer actuary said that the width of the rate ranges was calculated based on a 95% confidence interval.

a.     Are we correct to interpret this to mean that the range is set in such a way that the rates have a 95% chance of being correct for a given population over a given time period?

b.     For what time period is this calculated? A month, a year?  5 years?  The range would be wider for a short time period due to random statistical fluctuation.

c.     For what time period is this calculated?  Statewide?  By GSA? By plan?  A 95% confidence interval will be wider, the fewer the members it is based on.  A confidence interval based
on statewide data would be much narrower than the confidence interval which is appropriate for any given plan.

	

 a. The expectation is that plan experience will fall within the rate range for the specific rate being considered 95% of the time.

b. A 1 year period.

c. A 1 year period. By eligibility group, county groupings, or rating levels, as explained at the bidders’ conference. These are then used to develop rate ranges for the GSAs.

	
368

	
 

	
Gen quest

	
 

	
The AHCCCS encounter data supplied includes a SOBRA category.  Do these costs include Family Planning?  If so, how can we split out the SOBRA Family Planning costs from the rest of the medical costs for the SOBRA
Moms?  If they don’t include Family Planning costs, what data is used to calculate these numbers?  (Note that the health plan financial data included in the Data Supplement does not split out Family Planning costs by age and so cannot be used to
allocate the SFP costs between TANF Female 14-44 and TANF 45+).

	
SOBRA mom utilization does not include SOBRA Family Planning as it is not a covered service under that eligibility category.  Please refer to the data supplement which details what is included in the encounter data, and
the supplemental SOBRA Family Planning data.

Family planning services (such as pharmacy costs) are included in the encounter data for the TANF rate categories and not broken out separately as a service category. 

	
369

	
 

	
Gen quest

	
 

	
The TANF Rate Calculation Sheets have a line for “Family Planning Svc Offset” The rate categories allow the health plan data to completely split out the SOBRA Family Planning.  What is the purpose of the
offset?  Are the health plans to put the SOBRA Family Planning costs in the calculations for the Gross Capitation Rate and then offset it below, rather than just exclude it from the Gross Capitation Rate?

	
The offset is removed in the web site CRCS’.

	
370

	
 

	
Gen quest

	
 

	
The Delivery Supplement is described to cover the costs for 6 months prior to delivery, the actual delivery and 2 months past actual delivery.

a.     What is considered a delivery?  Does the delivery have to be a live birth?  If not, what are the criteria for distinguishing between a delivery and a miscarriage?

b.     The Capitation Rate Calculation Sheet for the Delivery Supplement does not include all types of service.  It is our understanding that the Supplemental payment is intended to only include the
maternity-related costs.  Is this correct?

c.     If the answer to b. is yes, then:  There is a capitation offset of 8 months for the Delivery Supplement.  If the Delivery Supplement is only meant to cover maternity related costs, then is
it correct to assume that this offset should be less than the full capitation rate?

	
a)  A delivery has to be a live birth.  In the event of a stillbirth, if the criteria outlined in the OMM policy manual is met, then a delivery supplemental payment can still be generated.

b)  The CRCS for the delivery supplement does include an "other" category for all non maternity related services.  The supplemental payment is intended to cover all costs associated with a member who delivers a
baby.  The use of the "capitation offset" will reduce the amount of this payment so that duplicate payments for this population are not made.

c) N/A

 

	
371

	
103

	
Sect H

	
 

	
The change in definitions would indicate that what is currently called the member complaint process (as reflected in questions 28 and 13) is now the member grievance process.  If this is true, should the current member
complaint process be included in the flowchart?  Please clarify.

	
See answer to question #305.

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM ADMINISTRATION

DIVISION OF BUSINESS AND FINANCE

CONTRACT AMENDMENT

Page 1 of 1 with Attachment

	
1.  Amendment No.:

                 01

	
 

	
2.  CONTRACT No.:

      YH04-0001-06

	
 

	
3.  EFFECTIVE DATE OF MODIFICATION:

                                May 1, 2003

	
 

	
4.  PROGRAM:

                 OMC

	
5.  CONTRACTOR/PROVIDER NAME AND ADDRESS:

Phoenix Health Plan/Community Connection

 1209 South 7th Avenue

 Phoenix, Arizona  85007

	
6.  PURPOSE:

To incorporate GSAs and Special Provisions

  7.  THE CONTRACT REFERENCED ABOVE IS AMENDED AS FOLLOWS:

                1.             The following GSAs are hereby incorporated into Contract
Number YH04-0001-06:

                                GSA #8 - Pinal/Gila Counties

                                GSA #12 - Maricopa County

                2.             The attached Special Provisions are also hereby incorporated
into Contract Number YH04-0001-06.

                Note:  Please sign, date and return one original to:    AHCCCS Contracts and Purchasing

                                                                                                               
701 E. Jefferson, MD5700

                                                                                                               
Phoenix, Arizona  85034

	
8.  EXCEPT AS PROVIDED FOR HEREIN, ALL TERMS AND CONDITIONS OF THE ORIGINAL CONTRACT NOT HERETOFORE CHANGED AND/OR

      AMENDED REMAIN UNCHANGED AND IN FULL EFFECT.

     IN WITNESS WHEREOF THE PARTIES HERETO SIGN THEIR NAMES IN AGREEMENT

	
9. NAME OF CONTRACTOR:

           Phoenix Health Plan/Community Connection

 

	
10.  ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM

	
SIGNATURE OF AUTHORIZED INDIVIDUAL:

/s/ Nancy Novick

	
SIGNATURE:

/s/ Michael J. Veit

	
TYPED NAME:

Nancy Novick

	
TYPED NAME:

Michael Veit

	
TITLE:

Chief Executive Officer

	
TITLE:

Contracts and Purchasing Administrator

	
DATE

5/1/03

	
DATE:

May 1, 2003

Special Provisions (Contract #YH04-0001)

Phoenix Health Plan

1.         Minimum Network Standards

Contractor must have made significant progress toward signed subcontracts with the entire provider network by June 15, 2003, in order to participate in “Open Enrollment”.  Contractors must have their entire
provider network contracted, with providers that meet or exceed the applicable Geographic Service Area (GSA) Minimum Network Standards, as outlined in Attachment B of this contract, by August 15, 2003.  Furthermore, the Contractor must have in place a sufficient
number of contracts with providers to ensure that all covered services, as described in Section D, Paragraph 10 (Scope of Services) of this contract, will be provided in accordance with Section D, Paragraph 33 (Appointment Standards) of this contract. 
Contractor must have a provider network that will be capable of serving the greater of your existing membership in a GSA or up to one half of the members in a rural area, one sixth of the members in Maricopa County and one fourth of the members in Pima County. 
Provider contracts must include verbatim, the minimum sub-contract provisions located in Attachment A of this contract.

Failure to meet this provision may result in contract termination or the selection of an alternative contractor, financial sanctions, an enrollment cap, or other penalties in accordance with R9-22-606 and R9 31-606.

2.         Compliance with Marketing Policy

Marketing materials can only list contracted providers.  If Contractor is found to be in violation of the AHCCCS Health Plan Marketing Policy, Contractor may be subject to an enrollment cap or other sanction, in the
applicable GSA(s) affected by the violation.  Further detail about Open Enrollment will be sent under separate cover within the next few days.

3.         Readiness Assessment

As discussed in Section D, Paragraph 70 of the contract, AHCCCS may conduct Operational and Financial Readiness Reviews on all successful offerors.  A contractor will be permitted to commence operations only if the
Readiness Review establishes the ability to comply with contractual requirements.  AHCCCS may enforce provisions of R9-22-606 and R9-31-606 if contractor does not satisfy Readiness Review requirements.

4.         Revised Financial Forecasts

The Contractor is required to supply AHCCCS with revised financial forecasts by 6/15/03 based on awarded rates and contract terms, excluding prior period coverage revenues and expenses.  On a statewide basis, provide
financial forecasts including income statement and balance sheet for each year of the next three years.  Any losses budgeted will require additional equity and performance bond coverage.

5.         Performance Bonds

Contractor must submit a detailed plan to meet the AHCCCS performance bond requirements to the Office of Managed Care by June 30, 2003.  All performance bond account activity requires the advanced approval of
AHCCCS.  The performance bond must be posted within 15 days following notification by AHCCCSA of the amount required.

6.         Minimum Capitalization Requirements and Equity per Member

The capitalization requirement must be met by June 30, 2003.  Please refer to Section D, Paragraph 45 of the CYE ’04 Contract for the minimum capitalization requirements by GSA.  Refer also to the Performance
Bond/Equity Per Member Policy for more details about the equity requirements.  Failure to meet this standard may result in an enrollment cap being imposed in any or all contracted GSAs.

7.         Management Services Subcontractors

All proposed management services subcontracts and/or corporate cost allocation plans must be submitted to the Office of Managed Care for prior approval.  Cost allocation plans must be submitted with the proposed
management fee agreement.  AHCCCSA reserves the right to perform a thorough review of actual management fees charged and/or corporate allocations made.  If the fees or allocations actually paid out are determined to be unjustified or excessive, amounts may
be subject to repayment to the Contractor, the Contractor may be placed on monthly financial reporting, and/or financial sanctions may be imposed.  Further no changes can be made to the management agreements without AHCCCS’ prior approval.  Finally,
all administrative costs, including management fees, allocated fees, cannot exceed 10% annually.

8.         Additional Financial Reporting

Contractor is a wholly owned subsidiary of Vanguard.  Consequently, contractor must submit quarterly unaudited financial information of the parent or sponsoring organization (balance sheet and income statement only)
within 60 days of quarter end, and audited financial statements of the parent or sponsoring organization no later than 120 days after fiscal year end.

9.         Title XIX Waiver Group Rates

AHCCCS acknowledges that the final offered Title XIX Waiver Group rates have not been provided and will provide the Contractor with these rates as soon as possible.

10.       Extra Credit Programs/Initiatives

Contractor shall implement/maintain the following programs/initiatives as described in Submission 52 of the Contractor’s RFP response:

            McNet Internet Application Initiative

            Claims Department Initiative

            Medical Home Program

Contractor shall submit to the Office of Managed Care a detailed description of the program, goals, work plan with timelines and the methodology for assessment of results within 45 days from the beginning of the contract
year.  An interim update report shall be submitted to the Office of Managed Care by April 1, 2004.  A report which covers progress made, an assessment of the success of the initiative/program, changes made as a result of the project and work plans covering
the future of the project shall be submitted within 45 days of the beginning of the Contract Year Ending 2005.

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