Regular Session 2019-2020 House Bill 2476 P.N. 3689

PRINTER'S NO. 3689

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2476

Session of

2020

INTRODUCED BY GROVE, RYAN, JONES, GAYDOS, DeLUCA, KEEFER AND

SAYLOR, APRIL 30, 2020

REFERRED TO COMMITTEE ON HEALTH, APRIL 30, 2020

AN ACT

Amending the act of June 13, 1967 (P.L.31, No.21), entitled "An

act to consolidate, editorially revise, and codify the public

welfare laws of the Commonwealth," in health care outcomes,

further providing for establishment, for value-based models

relating to the Hospital Outcomes Program, for value-based

models relating to the Managed Care Organization Outcomes

Program and for managed care organization Medicaid contracts.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Sections 511-A, 524-A, 534-A and 535-A of the act

of June 13, 1967 (P.L.31, No.21), known as the Human Services

Code, are amended to read:

Section 511-A. Establishment.

(a) Programs.--The department shall establish the following

linked Medicaid outcomes-based programs:

(1) A Hospital Outcomes Program designed to provide a

hospital with information to reduce potentially avoidable

events and further increase efficiency in Medicaid hospital

services.

(2) A Managed Care Organization Outcomes Program

designed to provide a Medicaid managed care organization with

information to reduce potentially avoidable events and

further increase efficiency in Medicaid managed care

programs.

(b) Targeted savings.--The department shall implement

through the Medicaid outcome-based programs established under

subsection (a) targeted savings to the Medicaid program.

Targeted savings under this subsection shall only include:

(1) Averted costs by actions taken by hospitals or

managed care organizations under the Medicaid outcome-based

programs.

(2) Reduced expenditures for the Medicaid program which

result from actions taken by hospitals or managed care

organizations under Medicaid outcome-based programs.

be:

(1) No less than $40,000,000 for the 2020-2021 fiscal

year. Savings achieved during the prior fiscal year shall not

count towards the targeted savings for the 2020-2021 fiscal

year.

(2) No less than $55,000,000 for the 2021-2022 fiscal

year. Savings achieved during prior fiscal years shall not

count towards the targeted savings amount for the 2021-2022

fiscal year.

(3) No less than $55,000,000 for the 2022-2023 fiscal

year. Savings achieved during prior fiscal years shall not

count towards the targeted savings amount for the 2022-2023

fiscal year.

Section 524-A. [Value-based models] Performance-based financial

incentives and penalties.

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(a) Establishment.--After the implementation of the

reporting system under section 522-A, the department shall

[evaluate value-based models that will support hospitals in

reducing rates of potentially avoidable complications and

readmissions.] establish performance-based financial incentives

and penalties for hospitals under the Hospital Outcomes Program.

(b) Financial incentives.--Financial incentives provided by

the department under this section shall include an adjustment to

the reimbursement a hospital receives under the Medicaid program

based on whether the hospital successfully improved outcomes

under the Hospital Outcomes Program concerning potentially

avoidable readmissions and complications.

adjustment under this section shall be communicated to the

hospitals under the Hospital Outcomes Program in a clear and

transparent manner.

(d) Rate adjustment.--The determination of a rate adjustment

under this section by the department shall include, but not be

limited to, the following:

(1) Review of each hospital discharge claims data.

(2) A retrospective analysis of performance under the

Hospital Outcomes Program. The department shall apply the

analysis under this paragraph to each hospital on a

prospective basis.

(3) Whether the hospital was able to achieve all savings

mandated for expenditures under the Medicaid program.

(e) Adjustment factor.--In order to make a rate adjustment

under this section, the department shall establish an adjustment

factor for hospitals concerning potentially avoidable events

based on the hospital's actual versus expected risk-adjusted

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performance compared to the State average.

Section 534-A. [Value-based models] Performance-based financial

incentives and penalties.

(a) Establishment.--After the implementation of the

reporting system under section 532-A, the department shall

[evaluate value-based models that will support managed care

organizations in reducing rates of potentially avoidable

admissions, readmissions and emergency visits.] establish

performance-based financial incentives and penalties for managed

care organizations based on whether the managed care

organization reduced avoidable admissions, readmissions,

emergency visits or complications. Financial incentives and

penalties under this subsection shall include:

(1) Positive or negative changes in the annual capitated

rates for managed care organization.

(2) Adjustment of the percentage of Medicaid program

enrollees automatically assigned a plan by the department to

a managed care organization based on the managed care

organization's performance and health outcomes under the

Managed Care Organization Outcomes Program.

(b) Adjustments to annual capitated rate.--The department

shall adjust a managed care organization's annual capitated rate

for providing service under the Medicaid program. A

determination of the adjustment of a managed care organization's

capitated rate shall include, but not be limited, to the

following factors:

(1) A retrospective review of the managed care

organization's performance in reducing avoidable admissions,

readmissions, emergency visits or complications. The review

under this paragraph shall be applied to the managed care

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organizations in a prospective manner.

(2) Risk corridors identified by the department.

(3) The incorporation of potentially avoidable events

into the capitation rates for managed care organizations

providing services under the Medicaid program.

adjustments to a managed care organization, the department shall

establish specific adjustment factors for potentially avoidable

events for each managed care organization plan based on the

plan's actual risk adjusted performance under the program

compared to the State average.

Section 535-A. Managed care organization Medicaid contracts.

(a) General rule.--The department shall amend contracts

entered into or renewed on or after the effective date of this

section with the department's participating managed care

organizations as necessary to incorporate the Managed Care

Organization Outcomes Program.

(b) Financial incentives.--Beginning on the effective date

of this subsection, the department shall amend any contracts

with a managed care organization as necessary to incorporate the

financial incentives established under section 534-A.

Section 2. The department shall promulgate rules and

regulations necessary to implement this act.

Section 3. This act shall take effect in 60 days.

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