Electronic Code of Federal Regulations

Amendment

42 CFR--PART 438

Amendment(s) published November 13, 2020, in 85 FR 72837

Effective Dates: July 1, 2021

4. Section 438.4 is further amended, effective July 1, 2021, by adding paragraph (c) to read as follows:

§438.4   Actuarial soundness.

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(c) Option to develop and certify a rate range. (1) Notwithstanding the provision at paragraph (b)(4) of this section, the State may develop and certify a range of capitation rates per rate cell as actuarially sound, when all of the following conditions are met:

(i) The rate certification identifies and justifies the assumptions, data, and methodologies specific to both the upper and lower bounds of the rate range.

(ii) Both the upper and lower bounds of the rate range must be certified as actuarially sound consistent with the requirements of this part.

(iii) The upper bound of the rate range does not exceed the lower bound of the rate range multiplied by 1.05.

(iv) The rate certification documents the State's criteria for paying MCOs, PIHPs, and PAHPs at different points within the rate range.

(v) The State does not use as a criterion for paying MCOs, PIHPs, and PAHPs at different points within the rate range any of the following:

(A) The willingness or agreement of the MCOs, PIHPs, or PAHPs or their network providers to enter into, or adhere to, intergovernmental transfer (IGT) agreements; or

(B) The amount of funding the MCOs, PIHPs, or PAHPs or their network providers provide through IGT agreements.

(2) When a State develops and certifies a range of capitation rates per rate cell as actuarially sound consistent with the requirements of this paragraph (c), the State must:

(i) Document the capitation rates, prior to the start of the rating period, for the MCOs, PIHPs, and PAHPs at points within the rate range, consistent with the criteria in paragraph (c)(1)(iv) of this section.

(ii) Not modify the capitation rates under §438.7(c)(3).

(iii) Not modify the capitation rates within the rate range, unless the State is increasing or decreasing the capitation rate per rate cell within the rate range up to 1 percent during the rating period. However, any changes of the capitation rate within the permissible 1 percent range must be consistent with a modification of the contract as required in §438.3(c) and are subject to the requirements at paragraph (b)(1) of this section. Any modification to the capitation rates within the rate range greater than the permissible 1 percent range will require the State to provide a revised rate certification for CMS approval, which demonstrates that—

(A) The criteria in paragraph (c)(1)(iv) of this section, as described in the initial rate certification, were not applied accurately;

(B) There was a material error in the data, assumptions, or methodologies used to develop the initial rate certification and that the modifications are necessary to correct the error; or

(C) Other adjustments are appropriate and reasonable to account for programmatic changes.

(iv) Post on the website required in §438.10(c)(3) the following information prior to executing a managed care contract or contract amendment that includes or modifies a rate range:

(A) The upper and lower bounds of each rate cell;

(B) A description of all assumptions that vary between the upper and lower bounds of each rate cell, including for the assumptions that vary, the specific assumptions used for the upper and lower bounds of each rate cell; and

(C) A description of the data and methodologies that vary between the upper and lower bounds of each rate cell, including for the data and methodologies that vary, the specific data and methodologies used for the upper and lower bounds of each rate cell.

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