2011-12 Managed Care Capitation Rates
The Department of Health Care Services (DHCS) released the preliminary capitation rates for the 2011-12 rate year for the Two-plan (TPM), Geographic Managed Care, and County Organized Health System Managed care models to the contracting health plans on November 3, 2011. The aforementioned rates are preliminary as they have not yet been approved by the Centers for Medicare and Medicaid Services (CMS); CMS approval is expected in 2012.
Prior to incorporating the AB 97 ( Committee on Budget, Chapter 3, Statutes of 2011) rate reductions, the rate increases for the three major managed care models in the aggregate were projected at 3.61 percent. One of the primary drivers of the rate increase was the restoration of a non-contract hospital rate reduction for managed care plans which increased rates overall by 0.90 percent, as well as other inflationary trends related inpatient and outpatient services.
After incorporating the AB 97 reductions the overall rate increase is estimated at 1.40 percent, as the rate reductions are estimated to be 2.2 percent. Significant areas of reduction are Primary Care Physician Services for adults, lab and radiology services, specialist services for adults, clinics, other professional, transportation, as well as all other managed care services. These specific reductions are referred to as the actuarial equivalent of the Fee for Service reductions.
It is important to note that inpatient, and outpatient Services were not impacted by the AB 97 reductions as they were statutorily excluded. Additionally, DHCS did not reduce the pharmacy category of service by the actuarial equivalent because the actuaries could not certify the rates with pharmacy reductions because current managed care pricing is well below Fee for Service. Additionally, managed care pharmacy had already been reduced by approximately 10 percent during the base rate development due to an actuarial efficiency reduction. The impact of this efficiency adjustment is an overall 1 percent downward adjustment to the rates.
Individual preliminary plan capitation rates for 2011-12 will be posted to the DHCS website on Tuesday, November 8, 2012, as well as the actuarial factors used for the County Organized Health System rate development. The actuarial factors related to the Two-plan and Geographic Managed Care Models for 2011-12 can currently be viewed on the DHCS website at the following links:
Geographic Managed Care model