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County Requirements for HealthChoices Expansion
January 31, 2006

On January 27 a PCPA Info described changes to the expansion plan for HealthChoices behavioral health. PCPA has received more information about the expansion plan. The Office of Mental Health and Substance Abuse Services (OMHSAS) sent a letter to affected county commissioners providing more detailed information about options and county responsibilities in the expansion process. A copy of the letter is available from the link.

Counties must respond to OMHSAS by February 22 using the response format attached to the letter, informing OMHSAS whether they will choose Option 1 – inclusion in the contract that is managed directly by the commonwealth – or Option 2 – acceptance of the county right of first opportunity to manage the contract themselves. Counties must specify which of several models available under Option 2 that they will select. Counties can manage the program directly using county employees, use a subcontractor for program management services (either an administrative service organization or a behavioral health managed care organization [BH-MCO[), or develop a multi-county joinder with one contract as described above. Counties that subcontract with a BH-MCO must select a vendor through a competitive selection process by July. OMHSAS will issue a request for proposals to counties choosing the first right of opportunity in July with responses due in September. Counties that had previously selected a BH-MCO may proceed with that selection. However, they must establish that the selection remains valid and was done in accordance with established procurement procedures.

Counties must address a number of requirements if they elect to operate HealthChoices under Option 2. Counties must describe the procurement process and timeframes. They must have a minimum of 10,000 covered lives in the county or subcontract with a BH-MCO that covers, or will cover, at least 10,000 lives. For the multi-county joinder model, counties must establish a multi-county entity or a quasi-governmental entity to enter into a single contract with the Department of Public Welfare (DPW). The counties do not have to be contiguous. The county must agree to accept a two-month delay in capitation payment and describe how operational costs will be funded during the time period. They must explain how development and start-up costs will be funded. The county or BH-MCO must reserve minimum equity equal to the greater of five percent of annual capitation or $250,000, that can be phased in over the first four quarters of the program. They must also establish an insolvency protection arrangement of at least two-months of paid claims or capitation revenue approved by DPW. A risk corridor will be established for the first two years of operation, allowing for payment or recoupment of funds for treatment costs that are outside of the established treatment expense estimates. DPW may provide an interim payment after six months, at its discretion.

Please contact Betty Simmonds at PCPA with questions.

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