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Rate Setting Information Available
November 21, 2007

The Pennsylvania Community Providers Association organized a Rate Setting Work Group comprised of over 15 members representing a cross section of the mental health/drug and alcohol provider membership that has been working for over a year to assist in advocacy efforts for a fair rate setting process for community providers. PCPA members believe that the commonwealth’s commitment to clients, quality service, and access to care is threatened by the lack of a meaningful, fair rate setting process.

No provision for a formalized rate negotiation process between provider and county/managed care organization (MCO) has been made in the HealthChoices program. While it appears that there may be some provision for provider rate increases when the Department of Public Welfare (DPW) sets and re-sets rates with the MCO, it has become apparent that rate increases are often not passed on to providers. Despite the provision of documentation on the significant rise in the cost of providing care, many providers have experienced a complete refusal by certain MCOs to consider rate increases and have gone multiple (three or more) years without rate increases.

In addition, the mental retardation system is in the midst of major changes regarding how service provider rates are established and negotiated. A major concern is that providers in this system have recently been instructed to use a "budget neutral" approach to determining individual service rates. However, these budgets are often based on historically under-funded budgets and are therefore an inaccurate picture of true costs.

Attached are several important documents:

1. A final copy of the PCPA Rate Setting Position Paper.

2. The HealthChoices Behavioral Health Agreement Periods which details the timeline for MCO contract renewals.

3. The HealthChoices Behavioral Health Rate Adjustment and Negotiation Timeline which details the actions that the MCO should take to prepare for contract renewal.

PCPA will send the position paper to state and county officials and MCOs and request meetings to discuss the issues. PCPA members are encouraged to share the position paper with local officials for their consideration and feedback. Mental health and drug and alcohol members are also encouraged to carefully review the timelines provided by the Office of Mental Health and Substance Abuse Services and establish a target date to meet with MCOs serving your community. Providers who wish to apply to an MCO for a rate increase may find they have a better chance for success if they follow the MCO rate adjustment timeline and submit rate increase requests at least eight months prior to the commencement date of the agreement period.

The work group continues to organize a rate setting "guide" for members. Expectations are that it will be complete in early 2008. For further information, please contact Lynn Cooper.

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