June 29, 2006, Introduced by Reps. Kahn, Hune, Stewart, Newell, Gaffney, David Law and Jones and referred to the Committee on Health Policy.
A bill to amend 1939 PA 280, entitled
"The social welfare act,"
(MCL 400.1 to 400.119b) by adding section 105b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 105b. (1) The department of community health shall
develop, certify, and implement actuarially sound rates for all
payments to medicaid health plans under the medicaid managed care
program. The department of community health's certification process
shall incorporate the following definition: "Actuarially sound
rates" means medicaid health plan capitation rates that have been
developed in accordance with the federal requirements for actuarial
soundness, and include, for the period covering the rate
certification, an analysis of projected premiums, including
expected reinsurance and governmental stop-loss cash flows,
governmental risk adjustment cash flows, and investment income, and
provide for all reasonable, appropriate, and attainable costs,
including health benefits, health plan maternity case rate
utilization costs, proposed or planned benefit changes, health
benefit settlement expenses, marketing and administrative expenses,
subrogation recoveries, state-mandated assessments and taxes, and
the cost of capital including provisions for risk and contingency
charges. Projected health benefit costs shall include reasonable
assumptions relative to trends in the utilization and cost of
medical services established without regard to or in any other way
biased based on a consideration of state budgetary constraints.
(2) An actuary who meets the qualification standards of the
American academy of actuaries shall provide the certification.
(3) The department of community health's certification process
shall use a uniform and consistent capitation rate development
methodology by incorporating aggregate data that shall include, at
a minimum, all of the following:
(a) Financial filings made by all medicaid health plans for
the most recent 24 months preceding the date the rate was
established by the department of community health.
(b) Data available to develop rates for all covered
populations, including fee-for-service data for the overall
program.
(c) Fee-for-service data for the 12 months preceding
recipients' enrollment in a managed care organization.
(d) The aggregate encounter data from all medicaid health
plans for voluntary and mandatory enrollment populations.
(4) The proposed actuarial certification rates shall be
actuarially sound in rate cells specific to the enrolled
population, including, but not limited to, eligibility category,
age, gender, and region.
(5) The department of community health shall publish a report
for public disclosure that explicitly and clearly explains all
actuarial assumptions, methodologies, source of data, premises, and
calculations, used in developing statewide rates for medicaid
health plans. The report shall be published regardless of
proprietary rights and protections otherwise available to the
person or entity responsible for developing the statewide rates for
medicaid health plans.
(6) The department of community health shall also publish the
proposed actuarial certification under this act. The proposed
certification shall occur at least 90 days before the beginning of
the fiscal year for which the certified rates apply. Before
publication of the proposed actuarially sound certificate, the
department of community health shall establish a review period of
not less than 30 days or equal to the amount of time the department
of community health uses as a review period for promulgation of its
medicaid policy, whichever is greater, for the purpose of allowing
a person or an entity the opportunity to submit a written objection
to the department of community health regarding the basis,
methodology, or conclusions of the proposed actuarial
certification.