2023 Colorado Revised Statutes › Title 25.5 - HEALTH CARE POLICY AND FINANCING (§§ 25.5-1-101 — 25.5-11-101) › COLORADO MEDICAL ASSISTANCE ACT (§§ 25.5-4-101 — 25.5-6-2001) › Article 5 - COLORADO MEDICAL ASSISTANCE ACT - SERVICES AND PROGRAMS (§§ 25.5-5-101 — 25.5-5-804) › Part 4 - STATEWIDE MANAGED CARE SYSTEM (§§ 25.5-5-401 — 25.5-5-427) › Section 25.5-5-408 - [Effective 8/7/2024] Capitation payments - availability of base data - adjustments - rate calculation - capitation payment proposal - preference - assignment of medicaid members - definition

(1)
(a)
The state department shall make capitation payments to MCEs based upon a defined scope of services under a risk contract.
(b)
A certification by a qualified actuary retained by the state department is conclusive evidence that the state department has correctly calculated the direct health-care cost of providing these same services on an actuarially equivalent Colorado medicaid population group.
(c)
Except as otherwise provided in subsection (1)(d) of this section and where the state department has instituted a program of competitive bidding provided in section
25.5-5-402 (9)
, the state department may utilize a market rate set through the competitive bid process for a set of defined services. The state department shall only use market rate bids that do not discriminate and are adequate to assure quality and network sufficiency. A certification of a qualified actuary, retained by the state department, to the appropriate lower limit is conclusive evidence of the state department's compliance with the requirements of this subsection (1)(c). For the purposes of this subsection (1), a "qualified actuary" means a person deemed as such under rules promulgated by the commissioner of insurance.
(d)
The state department shall reimburse a federally qualified health center, as defined in the federal "Social Security Act",
42 U.S.C. sec. 1395x (aa)(4)
, for the total reasonable costs incurred by the center in providing health-care services to all members of medical assistance.
(e)
An MCE shall certify, as a condition of entering into a contract with the state department, that the capitation payments set forth in the contract between the MCE and the state department are sufficient to ensure the financial stability of the MCE with respect to delivery of services to the medicaid members covered in the contract.
(f)
(I)
Except as provided in subsection (1)(f)(II) of this section, for capitation payments effective on and after July 1, 2003, an MCE that is contracting for a defined scope of services under a risk contract shall certify, through a qualified actuary retained by the MCE, that the capitation payments set forth in the contract between the MCE and the state department comply with all applicable federal and state requirements that govern the capitation payments. For purposes of this subsection (1)(f)(I), a "qualified actuary" means a person deemed as such by rule promulgated by the commissioner of insurance.
(II)
An MCO providing services under the PACE program as described in section
25.5-5-412
shall certify that the capitation payments are in compliance with applicable federal and state requirements that govern said capitation payments and that the capitation payments are sufficient to ensure the financial viability of the MCO with respect to the delivery of services to the PACE program participants covered in the contract.
(2)
The state department shall develop capitation rates for MCEs contracting for a defined scope of services under a risk contract that include risk adjustments, reinsurance, or stop-loss funding methods. Payments to plans may vary when it is shown through diagnoses or other relevant data that certain populations are expected to cost more or less than the capitated population as a whole.
(3)
The state board, in consultation with recognized medical authorities, shall develop a definition of special needs populations that includes evidence of diagnosed or medically confirmed health conditions. The state department shall develop a method for adjusting payments to plans for such special needs populations when diagnoses or other relevant data indicates these special needs populations would cost significantly more than similarly capitated populations.
(4)
Under no circumstances shall the risk adjustments, reinsurance, or stop-loss methods developed by the state department pursuant to subsection (2) of this section cause the average per capita medicaid payment to a plan to be greater than the projected medicaid expenditures for treating medicaid enrollees of that plan under fee-for-service medicaid.
(5)
The state department may develop quality incentive payments to recognize superior quality of care or service provided by a managed care plan.
(6)
Within two hundred ten days from the beginning of each fiscal year, the state department, in cooperation with the MCEs, shall set a timeline for the rate-setting process for the following fiscal year's rates and for the provision of base data to the MCEs that is used in the calculation of the rates, which must include but not be limited to the information included in subsection (7) of this section.
(7)
The state department shall identify and make available to the MCEs the base data used in the calculation of the direct health-care cost of providing these same services on an actuarially equivalent Colorado medicaid population group. The state department shall consult with the MCEs regarding any and all adjustments in the base data made to arrive at the capitation payments.
(8)
For capitation payments effective on and after July 1, 2003, the state department shall recalculate the base calculation every three years. The three-year cycle for the recalculation of the base calculation shall begin with capitation payments effective for fiscal year 2003-04. In the years in which the base calculation is not recalculated, the state department shall annually trend the base calculation after consulting with the MCEs. The state department shall take into consideration when trending the base calculation any public policy changes that affect reimbursement under the "Colorado Medical Assistance Act".
(9)
The rate-setting process referenced in subsection (6) of this section must include a time period after the MCEs have received the direct health-care cost of providing these same services on an actuarially equivalent Colorado medicaid population group for each MCE to submit to the state department the MCE's capitation payment proposal, which must not exceed one hundred percent of the direct health-care cost of providing these same services on an actuarially equivalent Colorado medicaid population group. The state department shall provide to the MCEs the MCE's specific adjustments to be included in the calculation of the MCE's proposal. Each MCE's capitation payment proposal must meet the requirements of subsections (1)(e) and (1)(f) of this section and section
25.5-5-402 (10)
.
(10)
For capitation payments effective on and after July 1, 2003, unless otherwise required by federal law, the state department shall certify, through a qualified actuary retained by the state department, that the capitation payments set forth in the contract between the state department and the MCEs comply with all applicable federal and state requirements that govern said capitation payments.
(11)
Effective on and after July 1, 2003, the capitation payments certified by the qualified actuary under subsection (10) of this section shall not be subject to any dispute resolution process, including any such process set forth in any settlement agreement entered into prior to July 1, 2002.
(12)
Nothing in this section shall prevent, to the extent possible, an MCE that is also a government-owned entity from using certified public expenditure or other federally recognized financing mechanisms to provide the state share for the federal match to enhance capitation payments up to or above the one hundred percent limit contained in subsection (9) of this section. The state shall not be obligated to increase any general fund expenditures because of the use of certified public expenditure or other federally recognized financing mechanism pursuant to this subsection (12).
(13)
A PIHP agreement may include a provision for a quality incentive payment that is distributed to the contractor within a reasonable period of time, as specified in the contract, following the end of each fiscal year if the contractor substantially exceeds predetermined quality indicators. The quality indicators must be based upon broadly accepted measures of performance adopted by rule of the state board and agreed upon at the outset of the contract period, and must include, but need not be limited to, the health plan employers data and information set measures. The quality incentive payment may be made proportional if the state board establishes multiple quality measurements. The quality incentive payments must not exceed the total cost savings created under the PIHP agreement, as determined by comparison of the PIHP members with an actuarially equivalent fee-for-service population, and the quality incentive payment must not exceed five percent of the total medicaid payments received by the contractor during the performance period of the PIHP agreement.
Amended by 2024 Ch. 152,§ 59, eff. 8/7/2024.
Amended by 2020 Ch. 70, § 28, eff. 9/14/2020.
Amended by 2018 Ch. 313, § 4, eff. 8/8/2018.
L. 2006: Entire article added with relocations, p. 1893, § 7, effective July 1. L. 2007: (1)(b) and (9) amended and (12) added, p. 1354, § 4, effective May 29. L. 2008: (1)(a), (2), (6), (7), (8), (9), (10), and (12) amended, p. 400, § 5, effective August 5. L. 2009: (1)(a) amended, (SB 09-265), ch. 936, p. 936, § 4, effective May 1. L. 2010: (1)(a)(II) repealed, (HB 10-1382), ch. 939, p. 939, § 3, effective May 6. L. 2018: (1) amended with relocations, (6), (7), and (9) amended, and (13) added with relocations, (HB 18-1431), ch. 1887, p. 1887, § 4, effective August 8. L. 2020: (1)(d) amended, (SB 20-136), ch. 70, p. 289, § 28, effective September 14.
(1) This section is similar to former § 26-4-119 as it existed prior to 2006.
(2) Provisions of subsection (1) are similar to provisions of former § 25.5-5-404, as it existed prior to 2018, and provisions of subsection (13) are similar to former § 25.5-5-407.5(2)(a), as it existed prior to 2018.
2024 Ch. 152, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
This section is set out more than once due to postponed, multiple, or conflicting amendments.
For the legislative declaration in SB 20-136, see section 1 of chapter 70, Session Laws of Colorado 2020.