exhibit103.htm
Exhibit 10.3
 
HHSC Contract No. 529-12-0002-00006
 
   
Part 1: Parties to the Contract:

This Contract is between the Texas Health and Human Services Commission (HHSC), an administrative agency within the executive department of the State of Texas, having its principal office at 4900 North Lamar Boulevard, Austin, Texas 78751, and Bankers Reserve Life Insurance Company of Wisconsin d.b.a Superior Health Plan Network (MCO) a corporation organized under the laws of the State of Wisconsin, having its principal place of business at: 2100 South IH-35, Suite 202, Austin, Texas 78704.  HHSC and MCO may be referred to in this Amendment individually as a “Party” and collectively as the “Parties.”   
 
Part 2: Effective Date of Amendment:
Part 3: Contract Expiration Date
Part 4: Operational Start Date:
September 1, 2011
August 31, 2015
March 1, 2012
 
 
 Part 5: MCO Brand Names
 
The MCO will use following brand name(s).  The MCO acknowledges that if it requests a change to the brand name(s), it will be responsible for all costs associated with the change(s), including but not limited to HHSC's costs for modifying its business rules, system identifiers, communications materials, web page, etc.
 
STAR: Superior Health Plan
STAR+PLUS: __________
CHIP: ________________
MRSA: Superior Health Plan
 
Part 6: Project Managers:
 
HHSC:
Scott Schalchlin
Director, Health Plan Operations
11209 Metric Boulevard, Building H
Austin, Texas 78758
Phone: 512-491-1866
Fax: 512-491-1969
 
MCO:
Stacey Hull
Vice President 
2100 South IH-35, Suite 202
Austin, Texas 78704
Phone: 512-692-1465 Ext 22032
Fax: 866-702-4830
E-mail: shull@centene.com
 
Part 7: Deliver Legal Notices to:
 
HHSC:
General Counsel
4900 North Lamar Boulevard, 4th Floor
Austin, Texas 78751
Fax: 512-424-6586
 
MCO:
Superior HealthPlan
2100 South IH-35, Suite 202
Austin, Texas 78704
Fax: 866-702-4830
 
 
Part 8: HMO Programs and Service Areas:
 
This Contract applies to the following HHSC MCOO Programs and Service Areas (check all that apply). All references in the Contract Attachments to MCO Programs or Service Areas that are not checked are superfluous and do not apply to the MCO.
 
 
þ Medicaid STAR MCO Program   
 
Service Areas:
 
o Bexar
 
þ Medicaid RSA - Central
   
o Dallas
 
þ Medicaid RSA - Northeast
   
o El Paso
 
þ Medicaid RSA - West
   
o Harris
  o Nueces
   
þ Hidalgo
  o Tarrant
    o Jefferson   o Travis
   
o Lubbock
   
 
See Attachment B-4, “Map of Counties with MCO Program Service Areas,” for listing of counties included within the STAR Service Areas.

þ Medicaid STAR+PLUS MCO Program
 
Service Areas:
 
o Bexar
 
o Jefferson
   
o El Paso
 
o Lubbock
    o Harris  
o Nueces
   
þ Hidalgo
 
o Travis
 
See Attachment B-4.2, “Map of Counties with STAR+PLUS MCO Program Service Areas,” for listing of counties included within the STAR+PLUS Service Areas.

o CHIP MCO Program
 
Service Areas:
 
o Bexar
 
o Lubbock
   
o Dallas
 
o Nueces
   
o El Paso
 
o Tarrant
   
o Harris
 
o Travis
   
o Jefferson
   
 
 
See Attachment B-4.1, “Map of Counties with MCO Program Service Areas,” for listing of counties included within the CHIP Core Service Areas and CHIP Optional Service Areas.

 
Part 9: Payment
 
þ Medicaid STAR MCO Program
 
Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the STAR Program. The following Rate Cells and Capitation Rates will apply to Rate Period 1. The Parties will amend the Contract to include Capitation Rates for Rate Period 1 prior to the Operational Start Date:
 
Service Area: Hidalgo
     
   
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1  
TANF Child > 12 months
 
TBD
 
  2  
TANF child ≤ 12 months
 
TBD
 
  3  
TANF Adult
 
TBD
 
  4  
Pregnant Woman
 
TBD
 
  5  
Newborn 12 months
 
TBD
 
  6  
Expansion Child > 12 months
 
TBD
 
  7  
Expansion child 12 months
 
TBD
 
  8  
Federal Mandate child
 
TBD
 
 
Service Area: Medicaid Rural Service Area - Central Texas
     
   
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1  
TANF Child > 12 months
 
TBD
 
  2  
TANF child 12 months
 
TBD
 
  3  
TANF Adult
 
TBD
 
  4  
Pregnant Woman
 
TBD
 
  5  
Newborn 12 months
 
TBD
 
  6  
Expansion Child > 12 months
 
TBD
 
  7  
Expansion child 12 months
 
TBD
 
  8  
Federal Mandate child
 
TBD
 
  9  
Medicaid Only - Aged, Blind, & Disabled
 
TBD
 
  10   Dual Eligible - Aged, Blind, & Disabled  
TBD
 
 
Service Area: Medicaid Rural Service Area - Northeast Texas
     
   
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1  
TANF Child > 12 months
 
TBD
 
  2  
TANF child 12 months
 
TBD
 
  3  
TANF Adult
 
TBD
 
  4  
Pregnant Woman
 
TBD
 
  5  
Newborn 12 months
 
TBD
 
  6  
Expansion Child > 12 months
 
TBD
 
  7  
Expansion child 12 months
 
TBD
 
  8  
Federal Mandate child
 
TBD
 
  9  
Medicaid Only - Aged, Blind, & Disabled
 
TBD
 
  10   Dual Eligible - Aged, Blind, & Disabled  
TBD
 
 
Service Area: Medicaid Rural Service Area - West Texas
     
   
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1  
TANF Child > 12 months
 
TBD
 
  2  
TANF child 12 months
 
TBD
 
  3  
TANF Adult
 
TBD
 
  4  
Pregnant Woman
 
TBD
 
  5  
Newborn 12 months
 
TBD
 
  6  
Expansion Child > 12 months
 
TBD
 
  7  
Expansion child 12 months
 
TBD
 
  8  
Federal Mandate child
 
TBD
 
  9  
Medicaid Only - Aged, Blind, & Disabled
 
TBD
 
  10   Dual Eligible - Aged, Blind, & Disabled  
TBD
 
 
Delivery Supplemental Payment:  See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Delivery Supplemental Payment for the STAR Program.  The contract will be amended to include the DSP prior to the Operational Date.

þ Medicaid STAR+PLUS MCO Program
 
Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the STAR+PLUS Program.  The following Rate Cells and Capitation Rates will apply to Rate Period 1.  The Parties will amend the Contract to include Capitation Rates for Rate Period 1 prior to the Operational Date.
 
STAR+PLUS Service Area: Hidalgo
     
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1.  
Medicaid Only Standard Rate
 
TBD
 
  2.  
Medicaid Only 1915(C) Nursing Facility Waiver Rate - Above Floor
 
TBD
 
  3.   Medicaid Only 1915(C) Nursing Facility Waiver Rate - Below Floor   TBD  
  4.  
Dual Eligible Standard Rate
 
TBD
 
  5.  
Dual Eligible 1915(C) Nursing Facility Waiver Rate - Above Floor
 
TBD
 
  6.   Dual Eligible 1915(C) Nursing Facility Waiver Rate - Below Floor   TBD  
  7.  
Nursing Facility – Medicaid Only
 
TBD
 
  8.  
Nursing Facility – Dual Eligible
 
TBD
 

 
CHIP MCO PROGRAM
 
Capitation: See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the Capitation Rate-setting methodology and the Capitation Payment requirements for the CHIP Program. The following Rate Cells and Capitation Rates will apply to Rate Period 1.  The Parties will amend the Contract to include Capitation Rates for Rate Period 1 prior to the Operational Date.
 
Service Area:
     
Rate Cell
 
Rate Period 1 Capitation Rates
 
  1.  
< Age 1
 
 
 
  2.  
Ages 1 through 5
 
 
 
  3.  
Ages 6 through 14
 
 
 
  4.  
Ages 15 through 18
 
 
 
  5.   Perinate Newborn 0% to 185%      
  6.   Perinate Newborn Above 185% to 200%      
  7.   Perinate 0% to 185%      
  8.   Perinate Above 185% to 200%      
 
Delivery Supplemental Payment:  See Attachment A, “HHSC Uniform Managed Care Contract Terms and Conditions,” Article 10, for a description of the methodology for establishing the Delivery Supplemental Payment for the CHIP Program and CHIP Perinatal subprogram.  The Contract will be amended to include the DSP prior to the Operational Start Date.

 
Part 10: Contract Attachments:
 
A: HHSC Uniform Managed Care Contract Terms & Conditions
 
B: Scope of Work/Performance Measures
 
    B-1: HHSC RFP ###-##-####, Sections 1-9*
    B-2: STAR Covered Services
       B-2.1 CHIP Covered Services
       B-2.2 STAR+PLUS Covered Services
    B-3: Deliverables/Liquidated Damages Matrix
    B-4: Map of Counties with STAR MCO Program Service Areas
       B-4.1 CHIP Service Area
   B-4.1 STAR+PLUS Service Area
   B-4.1 MRSA Service Areas
    B-5: Wrap Services
    B-6: Texas MA Dual SNP Agreement
      
C: MCO’s Proposal
 
D. Corporate Guarantee
 
*The following RFP addenda and attachments are incorporated herein by reference: Addenda 1-6 and the HHSC HUB Subcontracting Plan.  All references in the Agreement to RFP addenda and attachments not incorporated herein by reference are superfluous.  HHSC expressly rejects all assumptions, exceptions and reservations included in the MCO's Proposal.
 
Part 11:  Signatures:
 
The Parties have executed this Contract Amendment in their capacities as stated below with authority to bind their organizations on the dates set forth by their signatures.  
 
Texas Health and Human Services Commission
/s/ Katie Olse
Katie Olse
Deputy Chief of Staff
Date: 9/9/11
 
Bankers Reserve Life Insurance Company of Wisconsin d.b.a Superior HealthPlan Network
/s/ Holly Munin
By:  Holly Munin
Title: CEO
Date:
 
 

 
 
 
 
 
 
Responsible Office: HHSC Office of General Counsel (OGC)  
Subject: Attachment A -- HHSC Uniform Managed Care Contract Terms & Conditions Version 2.0
 
Texas Health & Human Services Commission

Uniform Managed Care Contract Terms & Conditions
Version 2.0


DOCUMENT HISTORY LOG
STATUS1
DOCUMENT REVISION2
EFFECTIVE DATE
DESCRIPTION3
Baseline
n/a
September 1, 2011
Initial version of the Attachment A, “Medicaid and CHIP Uniform Managed Care Contract Terms & Conditions.”
 
 
 
 
 
 
 
 
 
1  Status should be represented as “Baseline” for initial issuances, “Revision” for changes to the Baseline version, and “Cancellation” for withdrawn versions
2 Revisions should be numbered in accordance according to the version of the issuance and sequential numbering of the revision—e.g., “1.2” refers to the first version of the document and the second revision.
3  Brief description of the changes to the document made in the revision.




 
TABLE OF CONTENTS
 
 

Article 1. Introduction...................................................................................................................................1
Section 1.01 Purpose......................................................................................................................................1
Section 1.02 Risk-based contract...................................................................................................................1
Section 1.03 Inducements...............................................................................................................................1
Section 1.04 Construction of the Contract......................................................................................................1
Section 1.05 No implied authority...................................................................................................................2
Section 1.06 Legal Authority...........................................................................................................................2
Article 2. Definitions.....................................................................................................................................2
Article 3. General Terms & Conditions.......................................................................................................15
Section 3.01 Contract elements.....................................................................................................................15
Section 3.02 Term of the Contract.................................................................................................................15
Section 3.03 Funding.....................................................................................................................................15
Section 3.04 Delegation of authority..............................................................................................................16
Section 3.05 No waiver of sovereign immunity..............................................................................................16
Section 3.06 Force Majeure...........................................................................................................................16
Section 3.07 Publicity.....................................................................................................................................16
Section 3.08 Assignment...............................................................................................................................16
Section 3.09 Cooperation with other vendors and prospective vendors........................................................16
Section 3.10 Renegotiation and reprocurement rights...................................................................................16
Section 3.11 RFP errors and omissions.........................................................................................................17
Section 3.12 Enforcement Costs....................................................................................................................17
Section 3.13 Preferences under service contracts.........................................................................................17
Section 3.14 Time of the essence..................................................................................................................17
Section 3.15 Notice........................................................................................................................................17
Article 4. Contract Administration & Management...................................................................................17
Section 4.01 Qualifications, retention and replacement of MCO employees.................................................17
Section 4.02 MCO’s Key Personnel...............................................................................................................17
Section 4.03 Executive Director.....................................................................................................................18
Section 4.04 Medical Director........................................................................................................................18
Section 4.05 Responsibility for MCO personnel and Subcontractors.............................................................19
Section 4.06 Cooperation with HHSC and state administrative agencies......................................................19
Section 4.07 Conduct of MCO personnel and Subcontractors.......................................................................20
Section 4.08 Subcontractors..........................................................................................................................20
Section 4.09 HHSC’s ability to contract with Subcontractors.........................................................................21
Section 4.10 MCO Agreements with Third Parties.........................................................................................21
Article 5. Member Eligibility & Enrollment.................................................................................................22
Section 5.01 Eligibility Determination.............................................................................................................22
Section 5.02 Member Enrollment & Disenrollment.........................................................................................22
Section 5.03 STAR enrollment for pregnant women and infants....................................................................23
Section 5.04 CHIP eligibility and enrollment..................................................................................................23
Section 5.05 CHIP Perinatal eligibility, enrollment, and disenrollment...........................................................23
Section 5.06 Span of Coverage.....................................................................................................................24
Section 5.07 Verification of Member Eligibility...............................................................................................25
Section 5.08 Special Temporary STAR Default Process...............................................................................25
Section 5.09 Special Temporary STAR+PLUS Default Process....................................................................26
Section 5.10 Special Temporary CHIP Default Process................................................................................26
Section 5.11 Default Methodology for Frew Incentives..................................................................................26
Article 6. Service Levels & Performance Measurement...........................................................................26
Section 6.01 Performance measurement.......................................................................................................26
Article 7. Governing Law & Regulations....................................................................................................26
Section 7.01 Governing law and venue.........................................................................................................26
Section 7.02 MCO responsibility for compliance with laws and regulations...................................................26
Section 7.03 TDI licensure/ANHC certification and solvency.........................................................................27
Section 7.04 Immigration Reform and Control Act of 1986............................................................................27
Section 7.05 Compliance with state and federal anti-discrimination laws......................................................28
Section 7.06 Environmental protection laws..................................................................................................28
Section 7.07 HIPAA.......................................................................................................................................29
Section 7.08 Historically Underutilized Business Participation Requirements................................................29
Article 8. Amendments & Modifications.....................................................................................................29
Section 8.01 Mutual agreement.....................................................................................................................29
Section 8.02 Changes in law or contract........................................................................................................29
Section 8.03 Modifications as a remedy........................................................................................................29
Section 8.04 Modification Process.................................................................................................................29
Section 8.05 Modification of the Uniform Managed Care Manual..................................................................30
Section 8.06 CMS approval of amendments..................................................................................................30
Section 8.07 Required compliance with amendment and modification procedures.......................................30
Article 9. Audit & Financial Compliance....................................................................................................30
Section 9.01 Record retention and audit........................................................................................................30
Section 9.02 Access to records, books, and documents................................................................................30
Section 9.03 Audits of Services, Deliverables and inspections......................................................................31
Section 9.04 SAO Audit.................................................................................................................................31
Section 9.05 Response/compliance with audit or inspection findings............................................................31
Section 9.06 Notification of Legal and Other Proceedings, and Related Events............................................32
Article 10. Terms & Conditions of Payment...............................................................................................32
Section 10.01 Calculation of monthly Capitation Payment.............................................................................32
Section 10.02 Time and Manner of Payment.................................................................................................32
Section 10.03 Certification of Capitation Rates..............................................................................................32
Section 10.04 Modification of Capitation Rates..............................................................................................32
Section 10.05 STAR and STAR+PLUS Capitation Structure.........................................................................33
Section 10.06 CHIP Capitation Rates Structure.............................................................................................34
Section 10.07 MCO input during rate setting process....................................................................................34
Section 10.08 Adjustments to Capitation Payments......................................................................................35
Section 10.09 Delivery Supplemental Payment for CHIP, CHIP Perinatal and STAR MCOs........................35
Section 10.10 Experience Rebate..................................................................................................................35
Section 10.11 Restriction on assignment of fees...........................................................................................41
Section 10.12 Liability for taxes.....................................................................................................................41
Section 10.13 Liability for employment-related charges and benefits............................................................41
Section 10.14 No additional consideration.....................................................................................................41
Section 10.15 Federal Disallowance..............................................................................................................41
Article 11. Disclosure & Confidentiality  of Information...........................................................................41
Section 11.01 Confidentiality..........................................................................................................................41
Section 11.02 Disclosure of HHSC’s Confidential Information.......................................................................42
Section 11.03 Member Records.....................................................................................................................42
Section 11.04 Requests for public information...............................................................................................42
Section 11.05 Privileged Work Product..........................................................................................................42
Section 11.06 Unauthorized acts...................................................................................................................43
Section 11.07 Legal action.............................................................................................................................43
Section 11.08 Information Security................................................................................................................43
Article 12. Remedies & Disputes................................................................................................................43
Section 12.01 Understanding and expectations.............................................................................................43
Section 12.02 Tailored remedies...................................................................................................................43
Section 12.03 Termination by HHSC.............................................................................................................46
Section 12.04 Termination by MCO...............................................................................................................47
Section 12.05 Termination by mutual agreement...........................................................................................48
Section 12.06 Effective date of termination....................................................................................................48
Section 12.07 Extension of termination effective date...................................................................................48
Section 12.08 Payment and other provisions at Contract termination............................................................48
Section 12.09 Modification of Contract in the event of remedies...................................................................48
Section 12.10 Turnover assistance................................................................................................................48
Section 12.11 Rights upon termination or expiration of Contract...................................................................48
Section 12.12 MCO responsibility for associated costs.................................................................................48
Section 12.13 Dispute resolution...................................................................................................................49
Section 12.14 Liability of MCO.......................................................................................................................49
Section 12.15 Pre-termination Process..........................................................................................................50
Article 13. Assurances & Certifications.....................................................................................................50
Section 13.01 Proposal certifications.............................................................................................................50
Section 13.02 Conflicts of interest..................................................................................................................50
Section 13.03 Organizational conflicts of interest..........................................................................................50
Section 13.04 HHSC personnel recruitment prohibition.................................................................................51
Section 13.05 Anti-kickback provision............................................................................................................51
Section 13.06 Debt or back taxes owed to State of Texas.............................................................................51
Section 13.07 Outstanding debts and judgments...........................................................................................51
Article 14. Representations & Warranties..................................................................................................51
Section 14.01 Authorization...........................................................................................................................51
Section 14.02 Ability to perform.....................................................................................................................51
Section 14.03 Minimum Net Worth................................................................................................................51
Section 14.04 Insurer solvency......................................................................................................................51
Section 14.05 Workmanship and performance..............................................................................................52
Section 14.06 Warranty of deliverables.........................................................................................................52
Section 14.07 Compliance with Contract.......................................................................................................52
Section 14.08 Technology Access.................................................................................................................52
Section 14.09 Electronic & Information Resources Accessibility Standards..................................................52
Article 15. Intellectual Property..................................................................................................................54
Section 15.01 Infringement and misappropriation..........................................................................................54
Section 15.02 Exceptions...............................................................................................................................54
Section 15.03 Ownership and Licenses.........................................................................................................54
Article 16. Liability.......................................................................................................................................55
Section 16.01 Property damage.....................................................................................................................55
Section 16.02 Risk of Loss.............................................................................................................................55
Section 16.03 Limitation of HHSC’s Liability..................................................................................................55
Article 17. Insurance & Bonding.................................................................................................................55
Section 17.01 Insurance Coverage................................................................................................................55
Section 17.02 Performance Bond..................................................................................................................57
Section 17.03 TDI Fidelity Bond.....................................................................................................................57

Article 1. Introduction
 
Section 1.01 Purpose.
The purpose of this Contract is to set forth the terms and conditions for the MCO’s participation as a managed care organization in one (1) or more of the MCO Programs administered by HHSC.  Under the terms of this Contract, MCO will provide comprehensive health care services to qualified Program recipients through a managed care delivery system.

Section 1.02 Risk-based contract.

This is a Risk-based contract.

Section 1.03 Inducements.

In making the award of this Contract, HHSC relied on MCO’s assurances of the following:
(1)  MCO is a health maintenance organization,  Approved Non-Profit Health Corporation (ANHC), or Exclusive Provider Organization that arranges for the delivery of Health Care Services, and is either (1) has received Texas Department of Insurance (TDI) licensure or approval as such an entity and is fully authorized to conduct business in the Service Areas, or (2) will receive TDI licensure or approval as such an entity and be fully authorized to conduct business in all Service Areas no later than 60 calendar days after HHSC executes this Contract;
(2)  MCO and the MCO Administrative Service Subcontractors have the skills, qualifications, expertise, financial resources and experience necessary to provide the Services and Deliverables described in the RFP, MCO’s Proposal, and this Contract in an efficient, cost-effective manner, with a high degree of quality and responsiveness, and has performed similar services for other public or private entities;
(3)  MCO has thoroughly reviewed, analyzed, and understood the RFP, has timely raised all questions or objections to the RFP, and has had the opportunity to review and fully understand HHSC’s current program and operating environment for the activities that are the subject of the Contract and the needs and requirements of the State during the Contract term;
(4)  MCO has had the opportunity to review and understand the State’s stated objectives in entering into this Contract and, based on such review and understanding, MCO currently has the capability to perform in accordance with the terms and conditions of this Contract;
(5)  MCO also has reviewed and understands the risks associated with the MCO Programs as described in the RFP, including the risk of non-appropriation of funds.
Accordingly, on the basis of the terms and conditions of this Contract, HHSC desires to engage MCO to perform the Services and provide the Deliverables described in this Contract under the terms and conditions set forth in this Contract.

Section 1.04 Construction of the Contract.

(a) Scope of Introductory Article.
The provisions of any introductory article to the Contract are intended to be a general introduction and are not intended to expand the scope of the Parties’ obligations under the Contract or to alter the plain meaning of the terms and conditions of the Contract.
(b) References to the “State.”
References in the Contract to the “State” must mean the State of Texas unless otherwise specifically indicated and must be interpreted, as appropriate, to mean or include HHSC and other agencies of the State of Texas that may participate in the administration of the MCO Programs, provided, however, that no provision will be interpreted to include any entity other than HHSC as the contracting agency.
(c)  Severability.
If any provision of this Contract is construed to be illegal or invalid, such interpretation will not affect the legality or validity of any of its other provisions. The illegal or invalid provision will be deemed stricken and deleted to the same extent and effect as if never incorporated in this Contract, but all other provisions will remain in full force and effect.
(d)  Survival of terms.
Termination or expiration of this Contract for any reason will not release either Party from any liabilities or obligations set forth in this Contract that:
(1)  The Parties have expressly agreed must survive any such termination or expiration; or
(2)  Arose prior to the effective date of termination and remain to be performed or by their nature would be intended to be applicable following any such termination or expiration.
(e)  Headings.
The article, section and paragraph headings in this Contract are for reference and convenience only and may not be considered in the interpretation of this Contract.
(f) Global drafting conventions.
(1)  The terms “include,” “includes,” and “including” are terms of inclusion, and where used in this Contract, are deemed to be followed by the words “without limitation.”
(2)  Any references to “sections,” “appendices,” “exhibits” or “attachments” are deemed to be references to sections, appendices, exhibits or attachments to this Contract.
(3)  Any references to laws, rules, regulations, and manuals in this Contract are deemed references to these documents as amended, modified, or supplemented from time to time during the term of this Contract.

Section 1.05 No implied authority.

The authority delegated to MCO by HHSC is limited to the terms of this Contract.  HHSC is the state agency designated by the Texas Legislature to administer the MCO Programs, and no other agency of the State grants MCO any authority related to this program unless directed through HHSC.  MCO may not rely upon implied authority, and specifically is not delegated authority under this Contract to:
(1)   make public policy;
(2)  promulgate, amend or disregard administrative regulations or program policy decisions made by State and federal agencies responsible for administration of HHSC Programs; or
(3)  unilaterally communicate or negotiate with any federal or state agency or the Texas Legislature on behalf of HHSC regarding the HHSC Programs.
MCO is required to cooperate to the fullest extent possible to assist HHSC in communications and negotiations with state and federal governments and agencies concerning matters relating to the scope of the Contract and the MCO Program(s), as directed by HHSC.

Section 1.06 Legal Authority.

(a)  HHSC is authorized to enter into this Contract under Chapters 531 and 533, Texas Government Code; Section 2155.144, Texas Government Code; and/or Chapter 62, Texas Health & Safety Code. MCO is authorized to enter into this Contract pursuant to the authorization of its governing board or controlling owner or officer.
(b)  The person or persons signing and executing this Contract on behalf of the Parties, or representing themselves as signing and executing this Contract on behalf of the Parties, warrant and guarantee that he, she, or they have been duly authorized to execute this Contract and to validly and legally bind the Parties to all of its terms, performances, and provisions.

Article 2. Definitions

As used in this Contract, the following terms and conditions must have the meanings assigned below:
1915(c) Nursing Facility Waiver or 1915(c) STAR+PLUS Waiver (SPW) means the HHSC waiver program that provides home and community based services to aged and disabled adults as cost-effective alternatives to institutional care in nursing homes.  Should HHSC begin operating this waiver program under a 1115 Waiver structure, then references to the 1915(c) Nursing Facility Waiver or SPW will mean the home and community based services component of the 1115 Waiver for Members who qualify for the additional services described in Attachment B, Section 8.1.3.2, “1915(c) STAR+PLUS Waiver Services Available to Qualified Members.”
AAP means the American Academy of Pediatrics.
Abuse means provider practices that are inconsistent with sound fiscal, business, or medical practices and result in an unnecessary cost to the Medicaid or CHIP Program, or in reimbursement for services that are not Medically Necessary or that fail to meet professionally recognized standards for health care. It also includes Member practices that result in unnecessary cost to the Medicaid or CHIP Program.
Account Name means the name of the individual who lives with the child(ren) and who applies for the Children’s Health Insurance Program coverage on behalf of the child(ren).
Action (Medicaid only) means:
(1)  the denial or limited authorization of a requested Medicaid service, including the type or level of service;
(2)  the reduction, suspension, or termination of a previously authorized service;
(3)  the denial in whole or in part of payment for service;
(4)  the failure to provide services in a timely manner;
(5)  the failure of an MCO to act within the timeframes set forth in the Contract and 42 C.F.R. §438.408(b); or
(6)  for a resident of a rural area with only one (1) MCO, the denial of a Medicaid Members’ request to obtain services outside of the Network.
An Adverse Determination is one (1) type of Action.
Acute Care means preventive care, primary care, and other medical care provided under the direction of a physician for a condition having a relatively short duration.
Acute Care Hospital means a Hospital that provides Acute Care Services.
Adjudicate means to deny or pay a Clean Claim.
Administrative Services see MCO Administrative Services.
Administrative Services Contractor see HHSC Administrative Services Contractor.

 
 

 

Adverse Determination means a determination by an MCO or Utilization Review agent that the Health Care Services furnished, or proposed to be furnished to a patient, are not Medically Necessary or not appropriate.
Affiliate means any individual or entity that meets any of the following criteria:
(1)  owns or holds more than a five percent (5%) interest in the MCO (either directly, or through one (1) or more intermediaries);
(2)  in which the MCO owns or holds more than a five percent (5%) interest (either directly, or through one (1) or more intermediaries);
(3)  any parent entity or subsidiary entity of the MCO, regardless of the organizational structure of the entity;
(4)  any entity that has a common parent with the MCO (either directly, or through one (1) or more intermediaries);
(5)  any entity that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the MCO;  or
(6)  any entity that would be considered to be an affiliate by any Securities and Exchange Commission (SEC) or Internal Revenue Service (IRS) regulation, Federal Acquisition Regulations (FAR), or by another applicable regulatory body.
Agreement or Contract means this formal, written, and legally enforceable contract and amendments thereto between the Parties.
Allowable Expenses means all expenses related to the Contract between HHSC and the MCO that are incurred during the Contract Period, are not reimbursable or recovered from another source, and that conform with the Uniform Managed Care Manual’s “Cost Principles for Expenses.”
Appeal (CHIP and CHIP Perinatal Program only) means the formal process by which a Utilization Review agent addresses Adverse Determinations.
Appeal (Medicaid only) means the formal process by which a Member or his or her representative request a review of the MCO’s Action, as defined above.
Approved Non-Profit Health Corporation (ANHC) means an organization formed in compliance with Chapter 844 of the Texas Insurance Code and licensed by TDI. See also MCO.
Auxiliary Aids and Services includes:
(1)  qualified interpreters or other effective methods of making aurally delivered materials understood by persons with hearing impairments;
(2)  taped texts, large print, Braille, or other effective methods to ensure visually delivered materials are available to individuals with visual impairments; and
(3)  other effective methods to ensure that materials (delivered both aurally and visually) are available to those with cognitive or other Disabilities affecting communication.
Batch Processing is a billing technique that uses a single program loading to process many individual jobs, tasks, or requests for service. In managed care, batch billing is a technique that allows providers to send billing information all at once in a “batch” rather than in separate individual transactions.
Behavioral Health Services means Covered Services for the treatment of mental, emotional, or chemical dependency disorders.
Benchmark means a target or standard based on historical data or an objective/goal.
Business Continuity Plan or BCP means a plan that provides for a quick and smooth restoration of MIS operations after a disruptive event.  BCP includes business impact analysis, BCP development, testing, awareness, training, and maintenance.  This is a day-to-day plan.
Business Day means any day other than a Saturday, Sunday, or a state or federal holiday on which HHSC’s offices are closed, unless the context clearly indicates otherwise.
CAHPS means the Consumer Assessment of Health Plans Survey. This survey is conducted annually by the EQRO.
Call Coverage means arrangements made by a facility or an attending physician with an appropriate level of health care provider who agrees to be available on an as-needed basis to provide medically appropriate services for routine, high risk, or Emergency Medical Conditions or Emergency Behavioral Health Conditions that present without being scheduled at the facility or when the attending physician is unavailable.
Capitation Payment means the aggregate amount paid by HHSC to the MCO on a monthly basis for the provision of Covered Services to enrolled Members in accordance with the Capitation Rates in the Contract.
Capitation Rate means a fixed predetermined fee paid by HHSC to the MCO each month in accordance with the Contract, for each enrolled Member in a defined Rate Cell, in exchange for the MCO arranging for or providing a defined set of Covered Services to such a Member, regardless of the amount of Covered Services used by the enrolled Member.
Case Head means the head of the household that is applying for Medicaid.
C.F.R. means the Code of Federal Regulations.
Chemical Dependency Treatment means treatment provided for a chemical dependency condition by a Chemical Dependency Treatment facility, chemical dependency counselor or Hospital.
Child (or Children) with Special Health Care Needs (CSHCN) means a child (or children) who:
(1)  ranges in age from birth up to age 19 years;
(2)  has a serious ongoing illness, a complex chronic condition, or a disability that has lasted or is anticipated to last at least 12 continuous months or more;
(3)  has an illness, condition or disability that results (or without treatment would be expected to result) in limitation of function, activities, or social roles in comparison with accepted pediatric age-related milestones in the general areas of physical, cognitive, emotional, and/or social growth and/or development;
(4)  requires regular, ongoing therapeutic intervention and evaluation by appropriately trained health care personnel; and
(5)  has a need for health and/or health-related services at a level significantly above the usual for the child’s age.
Children’s Health Insurance Program or CHIP means the health insurance program authorized and funded pursuant to Title XXI, Social Security Act (42 U.S.C. §§ 1397aa-1397jj) and administered by HHSC.  The CHIP Perinatal Program is a subprogram of CHIP.
CHIP MCO Program, or CHIP Program, means the State of Texas program in which HHSC contracts with MCOs to provide, arrange for, and coordinate Covered Services for enrolled CHIP Members.
CHIP MCOs means MCOs participating in the CHIP MCO Program.
CHIP Perinatal MCOs means MCOs participating in the CHIP Perinatal Program, a subprogram of CHIP.
CHIP Perinatal Program means the State of Texas program in which HHSC contracts with MCOs to provide, arrange for, and coordinate Covered Services for enrolled CHIP Perinate and CHIP Perinate Newborn Members.  Although the CHIP Perinatal Program is part of the CHIP Program, for Contract administration purposes it is sometimes identified independently in this Contract.
CHIP Perinate means a CHIP Perinatal Program Member identified prior to birth (an unborn child).  
CHIP Perinate Newborn means a CHIP Perinate who has been born alive and whose family income meets the criteria for continued participation in the CHIP Perinatal Program (refer to Section 5.04.1 for information concerning eligibility).
Chronic or Complex Condition means a physical, behavioral, or developmental condition which may have no known cure and/or is progressive and/or can be debilitating or fatal if left untreated or under-treated.
Clean Claim means a claim submitted by a physician or provider for medical care or health care services rendered to a Member, with the data necessary for the MCO or subcontracted claims processor to adjudicate and accurately report the claim. A Clean Claim must meet all requirements for accurate and complete data as defined in the appropriate 837-(claim type) encounter guides as follows:
(1)  837 Professional Combined Implementation Guide;
(2)  837 Institutional Combined Implementation Guide;
(3)  837 Professional Companion Guide; and
(4)  837 Institutional Companion Guide.
(5)  National Council for Prescription Drug Programs (NCPDP) Companion Guide.
The MCO may not require a physician or provider to submit documentation that conflicts with the requirements of Texas Administrative Code, Title 28, Part 1, Chapter 21, Subchapters C and T.
Clinical Edit means a process for verifying that a Member’s medical condition matches the clinical criteria for dispensing a requested drug. Clinical Edits must be based on evidence-based clinical criteria and nationally recognized peer-reviewed information. If the information about a Member’s medical condition meets the Clinical Edit criteria, the claim can be approved.  If a Member's medical condition does not meet the Clinical Edit criteria, then prior authorization is required.
CMS means the Centers for Medicare and Medicaid Services, which is the federal agency responsible for administering Medicare and overseeing state administration of Medicaid and CHIP.
COLA means the Cost of Living Adjustment.
Community-based Long Term Services and Supports means services provided to STAR+PLUS Members in their home or other community based settings necessary to provide assistance with activities of daily living to allow the Member to remain in the most integrated setting possible. Community-based Long-term Services and Supports includes services available to all STAR+PLUS Members as well as those services available only to STAR+PLUS Members who qualify for 1915(c) Nursing Facility Waiver services.
Community Resource Coordination Groups
(CRCGs)
 means a statewide system of local interagency groups, including both public and private providers, which coordinate services for ”multi-need” children and youth. CRCGs develop individual service
plans for children and adolescents whose needs can be met only through interagency cooperation. CRCGs address Complex Needs in a model that promotes local decision-making and ensures that children receive the integrated combination of social, medical and other services needed to address their individual problems.
Complainant means a Member or a treating provider or other individual designated to act on behalf of the Member who filed the Complaint.
Complaint (CHIP Program only) means any dissatisfaction, expressed by a Complainant, orally or in writing to the MCO, with any aspect of the MCO’s operation, including, but not limited to, dissatisfaction with plan administration, procedures related to review or Appeal of an Adverse Determination, as defined in Texas Insurance Code, Chapter 843, Subchapter G; the denial, reduction, or termination of a service for reasons not related to Medical Necessity; the way a service is provided; or disenrollment decisions.  The term does not include misinformation that is resolved promptly by supplying the appropriate information or clearing up the misunderstanding to the satisfaction of the CHIP Member.
Complaint (Medicaid only) means an expression of dissatisfaction expressed by a Complainant, orally or in writing to the MCO, about any matter related to the MCO other than an Action. As provided by 42 C.F.R. §438.400, possible subjects for Complaints include, but are not limited to, the quality of care of services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the Medicaid Member’s rights.
Complex Need means a condition or situation resulting in a need for coordination or access to services beyond what a PCP would normally provide, triggering the MCO's determination that Care Coordination is required.
Comprehensive Care Program: see definition for Texas Health Steps.
Confidential Information means any communication or record (whether oral, written, electronically stored or transmitted, or in any other form) consisting of:
(1)  Confidential Client information, including HIPAA-defined protected health information;
(2)  All non-public budget, expense, payment and other financial information;
(3)  All Privileged Work Product;
(4)  All information designated by HHSC or any other State agency as confidential, and all information designated as confidential under the Texas Public Information Act;
(5)  Information utilized, developed, received, or maintained by HHSC, the MCO, or participating State agencies for the purpose of fulfilling a duty or obligation under this Contract and that has not been disclosed publicly.
Consumer-Directed Services means the Member or his legal guardian is the employer of and retains control over the hiring, management, and termination of an individual providing personal assistance or respite.
Continuity of Care means care provided to a Member by the same PCP or specialty provider to ensure that the delivery of care to the Member remains stable, and services are consistent and unduplicated.
Contract or Agreement means this formal, written, and legally enforceable contract and amendments thereto between the Parties.
Contract Period or Contract Term means the Initial Contract Period plus any and all Contract extensions.
Contractor or MCO means the MCO that is a party to this Contract and is an insurer licensed or approved by TDI as an HMO, ANHC formed in compliance with Chapter 844 of the Texas Insurance Code, or an EPO with an Exclusive Provider Benefit Plan approved by TDI in accordance with 28 T.A.C. §3.9201-3.9212.
Copayment (CHIP only) means the amount that a Member is required to pay when utilizing certain CHIP Covered Services.  Once the copayment is made, further payment is not required by the Member.
Corrective Action Plan means the detailed written plan that may be required by HHSC to correct or resolve a deficiency or event causing the assessment of a remedy or damage against MCO.
Court-Ordered Commitment means a commitment of a Member to a psychiatric facility for treatment ordered by a court of law pursuant to the Texas Health and Safety Code, Title VII Subtitle C.
Covered Services means Health Care Services the MCO must arrange to provide to Members, including all services required by the Contract and state and federal law, and all Value-added Services negotiated by the Parties (see Attachments B-2, B-2.1, B-2.2 and B-3 of the HHSC Managed Care Contract relating to “Covered Services” and “Value-added Services”).
CPW means Case Management for Children and Pregnant Women; a Medicaid program for children with a health condition/health risk, birth through 20 years of age and to women with high-risk pregnancies of all ages, in order to help them gain access to medical, social, educational and other health-related services.
Credentialing means the process of collecting, assessing, and validating qualifications and other relevant information pertaining to a health care provider to determine eligibility and to deliver Covered Services.
Cultural Competency means the ability of individuals and systems to provide services effectively to people of various cultures, races, ethnic backgrounds, and religions in a manner that recognizes, values, affirms, and respects the worth of the individuals and protects and preserves their dignity.
DADS means the Texas Department of Aging and Disability Services or its successor agency (formerly Department of Human Services).
Date of Disenrollment means the last day of the last month for which MCO receives payment for a Member.
Day means a calendar day unless specified otherwise.
Default Enrollment means the process established by HHSC to assign a mandatory STAR, STAR+PLUS, or CHIP Perinate enrollee who has not selected an MCO to an MCO.
Deliverable means a written or recorded work product or data prepared, developed, or procured by MCO as part of the Services under the Contract for the use or benefit of HHSC or the State of Texas.
Delivery Supplemental Payment means a one-time per pregnancy supplemental payment for STAR, CHIP and CHIP Perinatal MCOs.
Designated Provider means a physician, clinical practice or clinical group practice, rural clinic, community heath center, community mental health center, home health agency, or any other entity or provider (including pediatricians, gynecologists, and obstetricians) that are determined by the State and approved by the U.S. Secretary of Health and Human Services to be qualified to be a Health Home for Members with chronic conditions on the basis of documentation that the physician practice or clinic (A) has the systems and infrastructure in place to provide Health Home services and (B) satisfies the qualification standards established by the U.S. Secretary of Health and Human Services.
Diagnostic means assessment that may include gathering of information through interview, observation, examination, and use of specific tests that allows a provider to diagnose existing conditions.
Disabled Person or Person with Disability means a person under 65 years of age, including a child, who qualifies for Medicaid services because of a disability.
Disability means a physical or mental impairment that substantially limits one (1) or more of an individual’s major life activities, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and/or  working.
Disability-related Access means that facilities are readily accessible to and usable by individuals with disabilities, and that auxiliary aids and services are provided to ensure effective communication, in compliance with Title III of the Americans with Disabilities Act.
Disaster Recovery Plan means the document developed by the MCO that outlines details for the restoration of the MIS in the event of an emergency or disaster.
Discharge means a formal release of a Member from an Inpatient Hospital stay when the need for continued care at an inpatient level has concluded.  Movement or Transfer from one (1) Acute Care Hospital or Long Term Care Hospital /facility and readmission to another within 24 hours for continued treatment is not a discharge under this Contract.
Disease Management means a system of coordinated healthcare interventions and communications for populations with conditions in which patient self-care efforts are significant.
Disproportionate Share Hospital (DSH) means a Hospital that serves a higher than average number of Medicaid and other low-income patients and receives additional reimbursement from the State.
DSHS means the Texas Department of State Health Services or its successor agency (formerly Texas Department of Health and Texas Department of Mental Health and Mental Retardation).
DSM-IV means the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, which is the American Psychiatric Association’s official classification of behavioral health disorders.
Dual Eligibles means Medicaid recipients who are also eligible for Medicare.
ECI means Early Childhood Intervention, a federally mandated program for infants and children under the age of three (3) with or at risk for developmental delays and/or disabilities. The federal ECI regulations are found at 34 §C.F.R. 303.1 et seq. The State ECI rules are found at 25 TAC §621.21 et seq.
EDI means electronic data interchange.
Effective Date means the effective date of this Contract, as specified in the HHSC Managed Care Contract document.
Effective Date of Coverage means the first day of the month for which the MCO has received payment for a Member.
Eligibles means individuals residing in one (1) of the Service Areas and eligible to enroll in a STAR, STAR+PLUS, CHIP, or CHIP Perinatal MCO, as applicable.
Emergency Behavioral Health Condition means any condition, without regard to the nature or cause of the condition, which in the opinion of a prudent layperson possessing an average knowledge of health and medicine:
(1)  requires immediate intervention and/or medical attention without which Members would present an immediate danger to themselves or others, or
(2)  renders Members incapable of controlling, knowing or understanding the consequences of their actions.
Emergency Medical Condition means a medical condition manifesting itself by acute symptoms of recent onset and sufficient severity (including severe pain), such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical care could result in:
(1)  placing the patient’s health in serious jeopardy;
(2)  serious impairment to bodily functions;
(3)  serious dysfunction of any bodily organ or part;
(4)  serious disfigurement; or
(5)  in the case of a pregnant women, serious jeopardy to the health of a  woman or her unborn child.
Emergency Services means covered inpatient and outpatient services furnished by a provider that is qualified to furnish such services under the Contract and that are needed to evaluate or stabilize an Emergency Medical Condition and/or an Emergency Behavioral Health Condition, including Post-stabilization Care Services.
Encounter means a Covered Service or group of Covered Services delivered by a Provider to a Member during a visit between the Member and Provider. This also includes Value-added Services.
Encounter Data means data elements from Fee-for-Service claims or capitated services proxy claims that are submitted to HHSC by the MCO in accordance with HHSC’s required format for Medicaid and CHIP MCOs.
Enrollment Report/Enrollment File means the daily or monthly list of Eligibles that are enrolled with an MCO as Members on the day or for the month the report is issued.
EPSDT means the federally mandated Early and Periodic Screening, Diagnosis and Treatment program contained at 42 U.S.C. 1396d(r). The name has been changed to Texas Health Steps in the State of Texas.
Exclusive Provider Organization (EPO) means an insurer with an Exclusive Provider Benefit Plan approved by TDI in accordance with 28 T.A.C. §3.9201-3.9212
Expansion Area means a county or Service Area that has not previously provided healthcare to HHSC’s MCO Program Members utilizing a managed care model.
Expansion Children means children who are generally at least age one (1), but under age six (6), and live in a family whose income is at or below 133 percent of the federal poverty level (FPL).  Children in this coverage group have either elected to bypass TANF or are not eligible for TANF in Texas.
Expansion Service Areas are the Hidalgo and Medicaid Rural Service Areas for the STAR Program; and the El Paso, Hidalgo, and Lubbock Service Areas for the STAR+PLUS Program.
Expedited Appeal means an appeal to the MCO in which the decision is required quickly based on the Member's health status, and the amount of time necessary to participate in a standard appeal could jeopardize the Member's life or health or ability to attain, maintain, or regain maximum function.  
Experience Rebate means the portion of the MCO’s Net Income Before Taxes that is returned to the State in accordance with Section 10.10 for the STAR, CHIP and CHIP Perinatal Programs and 10.10.1 for the STAR+PLUS Program (“Experience Rebate”).
Expiration Date means the expiration date of this Contract, as specified in HHSC’s Managed Care Contract document.
External Quality Review Organization (EQRO) means the entity that contracts with HHSC to provide external review of access to and quality of healthcare provided to Members of HHSC’s MCO Programs.
Fair Hearing means the process adopted and implemented by HHSC in 1 T.A.C. Chapter 357, in compliance with federal regulations and state rules relating to Medicaid Fair Hearings.
Farm Worker Child (FWC) means a child birth through age 20 of a Migrant Farm Worker.
Fee-for-Service means the traditional Medicaid Health Care Services payment system under which providers receive a payment for each unit of service according to rules adopted pursuant to Chapter 32, Texas Human Resources Code.
Force Majeure Event means any failure or delay in performance of a duty by a Party under this Contract that is caused by fire, flood, hurricane, tornadoes, earthquake, an act of God, an act of war, riot, civil disorder, or any similar event beyond the reasonable control of such Party and without the fault or negligence of such Party.
FPL means the Federal Poverty Level.
FQHC means a Federally Qualified Health Center, certified by CMS to meet the requirements of §1861(aa)(3) of the Social Security Act as a federally qualified health center,  that is enrolled as a provider in the Texas Medicaid program.
Fraud means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable federal or state law.
FSR means Financial Statistical Report.  The FSR is a report designed by HHSC, and submitted to HHSC by the MCO in accordance with Contract requirements.  The FSR is a form of modified income statement, subject to audit, and contains revenue, cost, and other data, as defined by the Contract. Not all incurred expenses may be included in the FSR.
Functionally Necessary Covered Services means Community-based Long Term Services and Supports services provided to assist STAR+PLUS Members with activities of daily living based on a functional assessment of the Member’s activities of daily living and a determination of the amount of supplemental supports necessary for the STAR+PLUS Member to remain independent or in the most integrated setting possible.
Habilitative and Rehabilitative Services means Health Care Services described in Attachment B-2 that may be required by children who fail to reach (habilitative) or have lost (rehabilitative) age appropriate developmental milestones.
Health and Human Services Commission or HHSC means the administrative agency within the executive department of Texas state government established under Chapter 531, Texas Government Code, or its designee, including, but not limited to, the HHS Agencies.
Health Care Services means the Acute Care, Behavioral Health Care, and health-related services that an enrolled population might reasonably require in order to be maintained in good health.
Health Home means a Designated Provider (including a provider that operates in coordination with a team of health care professionals) or a Heath Team selected by a Member with chronic conditions to provide Health Home Services.
Health Home Services means comprehensive and timely high-quality services that are provided by a Designated Provider, a Team of Health Care Professionals operating with such a provider, or a Health Team.  Health Home Services include:
(1) Comprehensive care management;
(2) Care coordination and health promotion;
(3) Comprehensive transitional care, including appropriate follow-up, from inpatient to other settings;
(4) Patient and family support (including authorized representatives);
(5) Referral to community and social support services, if relevant; and
(6) Use of health information technology to link services, as feasible and appropriate.
Health-related Materials are materials developed by the MCO or obtained from a third party relating to the prevention, diagnosis or treatment of a medical condition.
Health Team means such term as described in Section 3502 of the Patient Protection and Affordable Care Act, P.L. 111-148 (March 23, 2010), as amended or modified.
HEDIS, the Health Plan Employer Data and Information Set, is a registered trademark of NCQA. HEDIS is a set of standardized performance measures designed to reliably compare the performance of managed health care plans. HEDIS is sponsored, supported and maintained by NCQA.
HHS Agency means the Texas health and human service agencies subject to HHSC’s oversight under Chapter 531, Texas Government Code, and their successor agencies.
HHSC Administrative Services Contractor (ASC) means an entity performing MCO administrative services functions, including member enrollment functions, for the STAR, STAR+PLUS, CHIP, or CHIP Perinatal MCO Programs under contract with HHSC.
HHSC MCO Programs or MCO Programs mean the STAR, STAR+PLUS, CHIP, and CHIP Perinatal MCO Programs.
HIPAA means the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 (August 21, 1996), as amended or modified.
Home and Community Support Services Agency or HCSSA means an entity licensed to provide home health, hospice, or personal assistance services provided to individuals in their own home or independent living environment as prescribed by a physician or individualized service plan. Each HCSS must provide clients with a plan of care that includes specific services the agency agrees to perform. The agencies are licensed and monitored by DADS or its successor.
Hospital means a licensed public or private institution as defined by Chapter 241, Texas Health and Safety Code, or in Subtitle C, Title 7, Texas Health and Safety Code.
ICF-MR means an intermediate care facility for the mentally retarded.
Individual Family Service Plan (IFSP) means the plan for services required by the Early Childhood Intervention (ECI) Program and developed by an interdisciplinary team.
Initial Contract Period means the Effective Date of the Contract through August 31, 2015.
Inpatient Stay means at least a 24-hour stay in a facility licensed to provide Hospital care.
JCAHO means Joint Commission on Accreditation of Health Care Organizations.
Joint Interface Plan (JIP) means a document used to communicate basic system interface information. This information includes: file structure, data elements, frequency, media, type of file, receiver and sender of the file, and file I.D. The JIP must include each of the MCO’s interfaces required to conduct business under this Contract. The JIP must address the coordination with each of the MCO’s interface partners to ensure the development and maintenance of the interface; and the timely transfer of required data elements between contractors and partners.
Key MCO Personnel means the critical management and technical positions identified by the MCO in accordance with Article 4.
Linguistic Access means translation and interpreter services, for written and spoken language to ensure effective communication. Linguistic access includes sign language interpretation, and the provision of other auxiliary aids and services to persons with disabilities.
Local Health Department means a local health department established pursuant to Health and Safety Code, Title 2, Local Public Health Reorganization Act §121.031.
Local Mental Health Authority (LMHA) means an entity within a specified region responsible for planning, policy development, coordination, and resource development and allocation and for supervising and ensuring the provision of mental health care services to persons with mental illness in one (1) or more local service areas.
Major Population Group means any population that represents at least 10% of the Medicaid, CHIP, and/or CHIP Perinatal Program population in the Service Area served by the MCO.
Mandated or Required Services means services that a state is required to offer to categorically needy clients under a state Medicaid plan.
Marketing means any communication from the MCO to a Medicaid or CHIP Eligible who is not enrolled with the MCO that can reasonably be interpreted as intended to influence the Eligible to:
(1) enroll with the MCO; or
(2) not enroll in, or to disenroll from, another MCO.
Marketing Materials means materials that are produced in any medium by or on behalf of the MCO and can reasonably be interpreted as intending to market to potential Members.  Health-related Materials are not Marketing Materials.
Material Subcontract means any contract, Subcontract, or agreement between the MCO and another entity that meets any of the following criteria:

 
 the other entity is an Affiliate of the MCO;

 
 the Subcontract is considered by HHSC to be for a key type of service or function, including

 
o Administrative Services (including but not limited to third party administrator, Network administration, and claims processing);

 
o delegated Networks (including but not limited to behavioral health, dental, pharmacy, and vision);

 
o management services (including management agreements with parent)

 
o reinsurance;

 
o Disease Management;

 
o pharmacy benefit management (PBM); or

 
o call lines (including nurse and medical consultation); or

 
 any other Subcontract that is, or is reasonably expected to be, more $200,000 per year.  Any Subcontracts between the MCO and a single entity that are split into separate agreements by time period, Program, or SDA, etc., will be consolidated for the purpose of this definition.

For the purposes of this Agreement, Material Subcontracts do not include contracts with any non-Affiliates for any of the following, regardless of the value of the contract:: utilities (e.g., water, electricity, telephone, Internet), mail/shipping, office space, or computer hardware.
Material Subcontractor or Major Subcontractor means any entity with a Material Subcontract with the MCO. For the purposes of this Agreement, Material Subcontractors do not include providers in the MCO’s Provider Network.  Material Subcontractors may include, without limitation, Affiliates, subsidiaries, and affiliated and unaffiliated third parties.
MCO means managed care organization.
MCO or Contractor means the MCO that is a party to this Contract and is an insurer licensed or approved by TDI as an HMO, ANHC formed in compliance with Chapter 844 of the Texas Insurance Code, or an EPO with an Exclusive Provider Benefit Plan approved by TDI in accordance with 28 T.A.C. §3.9201-3.9212.
MCO Administrative Services means the performance of services or functions, other than the direct delivery of Covered Services, necessary for the management of the delivery of and payment for Covered Services, including but not limited to Network, utilization, clinical and/or quality management, service authorization, claims processing, management information systems operation, and reporting.
MCO’s Service Area means all the counties included in any HHSC-defined Service Area, as applicable to each MCO Program and within which the MCO has been selected to provide MCO services.
Medicaid means the medical assistance entitlement program authorized and funded pursuant to Title XIX, Social Security Act (42 U.S.C. §1396 et seq.) and administered by HHSC.
Medicaid MCOs means contracted MCOs participating in STAR, STAR+PLUS, and/or STAR Health. 
Medical Assistance Only  (MAO) means a person that does not receive SSI benefits but qualifies financially and functionally for limited Medicaid assistance.
Medical Home means a PCP or specialty care Provider who has accepted the responsibility for providing accessible, continuous, comprehensive and coordinated care to Members participating in a HHSC MCO Program.
Medically Necessary means:
(1) For Medicaid Members birth through age 20, the following Texas Health Steps services:
(a)  screening, vision, and hearing services; and
(b)  other Health Care Services, including Behavioral Health Services, that are necessary to correct or ameliorate a defect or physical or mental illness or condition.  A determination of whether a service is necessary to correct or ameliorate a defect or physical or mental illness or condition:
(i) must comply with the requirements of the Alberto N., et al. v. Suehs, et al. partial settlement agreements; and
(ii) may include consideration of other relevant factors, such as the criteria described in parts (2)(b-g) and (3)(b-g) of this definition.
(2) For Medicaid and CHIP Members, non-behavioral health related Health Care Services (that for Medicaid Members birth through age 20 are not available through Texas Health Steps) that are:
(a)  reasonable and necessary to prevent illnesses or medical conditions, or provide early screening, interventions, and/or treatments for conditions that cause suffering or pain, cause physical deformity or limitations in function, threaten to cause or worsen a handicap, cause illness or infirmity of a Member, or endanger life;
(b)  provided at appropriate facilities and at the appropriate levels of care for the treatment of a Member’s health conditions;
(c)  consistent with health care practice guidelines and standards that are endorsed by professionally recognized health care organizations or governmental agencies;
(d)  consistent with the Member’s diagnoses;
(e)  no more intrusive or restrictive than necessary to provide a proper balance of safety, effectiveness, and efficiency;
(f)  are not experimental or investigative; and
(g)  are not primarily for the convenience of the Member or Provider; and
(3)  For Medicaid and CHIP Members, Behavioral Health Services (that for Medicaid Members birth through age 20 are not available through Texas Health Steps) that are:
(a)  are reasonable and necessary for the diagnosis or treatment of a mental health or chemical dependency disorder, or to improve, maintain, or prevent deterioration of functioning resulting from such a disorder;
(b)  are in accordance with professionally accepted clinical guidelines and standards of practice in behavioral health care;
(c)  are furnished in the most appropriate and least restrictive setting in which services can be safely provided;
(d)  are the most appropriate level or supply of service that can safely be provided;
(e)  could not be omitted without adversely affecting the Member’s mental and/or physical health or the quality of care rendered;
(f)  are not experimental or investigative; and
(g)  are not primarily for the convenience of the Member or Provider.
Member means a person who:
(1)  is entitled to benefits under Title XIX of the Social Security Act and Medicaid, is in a Medicaid eligibility category included in the STAR or STAR+PLUS Program, and is enrolled in the STAR or STAR+PLUS Program and the MCO’s STAR or STAR+PLUS MCO;
(2)  is entitled to benefits under Title XIX of the Social Security Act and Medicaid, is in a Medicaid eligibility category included as a voluntary participant in the STAR or STAR+PLUS Program, and is enrolled in the STAR or STAR+PLUS Program and the MCO’s STAR or STAR+PLUS MCO;
(3)  has met CHIP eligibility criteria and is enrolled in the MCO’s CHIP MCO; or
(4)  has met CHIP Perinatal Program eligibility criteria and is enrolled in the MCO’s CHIP Perinatal Program.
Member Materials means all written materials produced or authorized by the MCO and distributed to Members or potential members containing information concerning the MCO Program(s).  Member Materials include, but are not limited to, Member ID cards, Member handbooks, Provider directories, and Marketing Materials.
Member Month means one (1) Member enrolled with the MCO during any given month. The total Member Months for each month of a year comprise the annual Member Months.
Member(s) with Special Health Care Needs (MSHCN) includes a Child or Children with a Special Health Care Need (CSHCN) and any adult Member who:
(1)  has a serious ongoing illness, a Chronic or Complex Condition, or a Disability that has lasted or is anticipated to last for a significant period of time, and
(2)  requires regular, ongoing therapeutic intervention and evaluation by appropriately trained health care personnel.
Migrant Farm Worker means a migratory agricultural worker, generally defined as an individual:
(1) whose principal employment is in agriculture on a seasonal basis;
(2) who has been so employed within the last twenty-four months;
(3) who performs any activity directly related to the production or processing of crops, dairy products, poultry, or livestock for initial commercial sale or as a principal means of personal subsistence; and
(4) who establishes for the purposes of such employment a temporary abode.
MIS means Management Information System.
National Committee for Quality Assurance (NCQA) means the independent organization that accredits MCOs, managed behavioral health organizations, and accredits and certifies disease management programs. HEDIS and the Quality Compass are registered trademarks of NCQA.
Net Income before Taxes or Pre-tax Income means an aggregate excess of Revenues over Allowable Expenses.  
Network or Provider Network means all Providers that have entered into Network Provider agreements with the MCO or its Subcontractor for the delivery of Medicaid or CHIP Covered Services to the MCO’s Members.
Network Provider or Provider means an appropriately credentialed and licensed individual, facility, agency, institution, organization or other entity, and its employees and subcontractors, that has a contract with the MCO for the delivery of Covered Services to the MCO’s Members.
Network Provider Agreement or Provider Agreement means a contract between and MCO and a Network Provider for the delivery of Covered Services to members.
Non-capitated Services means those Medicaid services identified in Attachment B-1, Section 8.2.2.8.
Non-provider Subcontracts means contracts between the MCO and a third party that performs a function, excluding delivery of Health Care Services, that the MCO is required to perform under its Contract with HHSC.
Non-Urban County or Rural County means any county with fewer than 50,000 residents as reported by the Texas Association of Counties at:  http://www.county.org/.
Nursing Facility Cost Ceiling means the annualized cost of serving a client in a nursing facility.  A per diem cost is established for each Medicaid nursing facility resident based on the level of care needed.  This level of care is referred to as the Texas Index for Level of Effort or the TILE level.   The per diem cost is annualized to achieve the nursing facility ceiling.
Nursing Facility Level of Care means the determination that the level of care required to adequately serve a STAR+PLUS Member is at or above the level of care provided by a nursing facility.
OB/GYN means obstetrician-gynecologist.
Open Panel means PCPs who are accepting new patients for the MCO Program(s) served.
Operational Start Date means the first day on which an MCO is responsible for providing Covered Services to MCO Program Members and all related Contract functions in a Service Area.  The Operational Start Date may vary per MCO Program and Service Area.  The Operational Start Date(s) applicable to this Contract are set forth in the HHSC Managed Care Contract document.
Operations Phase means the period of time when MCO is responsible for providing the Covered Services and all related Contract functions for a Service Area.  The Operations Phase begins on the Operational Start Date, and may vary by MCO Program and Service Area.
Out-of-Network (OON) means an appropriately licensed individual, facility, agency, institution, organization or other entity that has not entered into a contract with the MCO for the delivery of Covered Services to the MCO’s Members.
Outpatient Hospital Services means diagnostic, therapeutic, and rehabilitative services that are provided to Members in an organized medical facility, for less than a 24-hour period, by or under the direction of a physician.
Parties means HHSC and MCO, collectively.
Party means either HHSC or MCO, individually.
Pended Claim means a claim for payment that requires additional information before the claim can be Adjudicated as a Clean Claim.
Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs.
Population Risk Group means a distinct group of members identified by age, age range, gender, type of program, or eligibility category.
Post-stabilization Care Services means Covered Services, related to an Emergency Medical Condition that are provided after a Member is stabilized in order to maintain the stabilized condition, or, for a Medicaid Member, under the circumstances described in 42 §§C.F.R. 438.114(b)&(e) and 42 C.F.R. §422.113(c)(iii) to improve or resolve the Medicaid Member’s condition.
PPACA – means the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), together known as the Affordable Care Act (ACA).
Pre-tax Income or Net Income before Taxes means an aggregate excess of Revenues over Allowable Expenses.
Primary Care Physician or Primary Care Provider (PCP) means a physician or provider who has agreed with the MCO to provide a Medical Home to Members and who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care.
Provider types that can be PCPs are from any of the following practice areas: General Practice, Family Practice, Internal Medicine, Pediatrics, Obstetrics/Gynecology (OB/GYN), Advanced Practice Nurses (APNs) and Physician Assistants (when APNs and PAs are practicing under the supervision of a physician specializing in Family Practice, Internal Medicine, Pediatrics or Obstetrics/Gynecology who also qualifies as a PCP under this contract), Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs) and similar community clinics; and specialist physicians who are willing to provide a Medical Home to selected Members with special needs and conditions.
Proposal means the proposal submitted by the MCO in response to the RFP.
Provider or Network Provider means an appropriately credentialed and licensed individual, facility, agency, institution, organization or other entity, and its employees and subcontractors, that has a contract with the MCO for the delivery of Covered Services to the MCO’s Members.
Provider Agreement or Network Provider Agreement means a contract between and MCO and a Network Provider for the delivery of Covered Services to members.
Provider Network or Network means all Providers that have contracted with the MCO for the applicable MCO Program.
Proxy Claim Form means a form submitted by Providers to document services delivered to Members under a capitated arrangement. It is not a claim for payment.
Public Health Entity means a HHSC Public Health Region, a Local Health Department, or a Hospital District.
Public Information means information that:
(1)  Is collected, assembled, or maintained under a law or ordinance or in connection with the transaction of official business by a governmental body or for a governmental body; and
(2)  The governmental body owns or has a right of access to.
Qualified and Disabled Working Individual (QDWI) means an individual whose only Medicaid benefit is payment of the Medicare Part A premium.
Qualified Medicare Beneficiary (QMB) means a Medicare beneficiary whose only Medicaid benefits are payment of Medicare premiums, deductibles, and coinsurance for individuals who are entitled to Medicare Part A, whose income does not exceed 100% of the federal poverty level, and whose resources do not exceed twice the resource limit of the SSI program.
Quality Improvement means a system to continuously examine, monitor and revise processes and systems that support and improve administrative and clinical functions.
Rate Cell means a Population Risk Group for which a Capitation Rate has been determined.
Rate Period 1 means the period of time beginning on the Operational Start Date and ending on August 31, 2013.
Rate Period 2 means the period of time beginning on September 1, 2013 and ending on August 31, 2014.
Readiness Review means the assurances made by a selected MCO and the examination conducted by HHSC, or its agents, of MCO’s ability, preparedness, and availability to fulfill its obligations under the Contract.
Real-Time Captioning (also known as CART, Communication Access Real-Time Translation) means a process by which a trained individual uses a shorthand machine, a computer, and real-time translation software to type and simultaneously translate spoken language into text on a computer screen. Real Time Captioning is provided for individuals who are deaf, have hearing impairments, or have unintelligible speech. It is usually used to interpret spoken English into text English but may be used to translate other spoken languages into text.
Request for Proposals or RFP means the procurement solicitation instrument issued by HHSC under which this Contract was awarded and all RFP addenda, corrections or modifications, if any.
Revenue means all revenue received by the MCO pursuant to this Contract, including retroactive adjustments made by HHSC. Revenue includes any funds earned on Medicaid or CHIP managed care funds such as investment income and earned interest.  Revenue excludes any reinsurance recoveries, which shall be shown as a contra-cost, or reported offset to reinsurance expense.  Revenues are reported at gross, and are not netted for any reinsurance premiums paid. See also the Uniform Managed Care Manual’s “Cost Principles for Expenses.”
Risk means the potential for loss as a result of expenses and costs of the MCO exceeding payments made by HHSC under the Contract.
Routine Care means health care for covered preventive and medically necessary Health Care Services that are non-emergent or non-urgent.
Rural County or Non-Urban County means any county with fewer than 50,000 residents as reported by the Texas Association of Counties at:  http://www.county.org/.
Rural Health Clinic (RHC) means an entity that meets all of the requirements for designation as a rural health clinic under 1861(aa)(1) of the Social Security Act and approved for participation in the Texas Medicaid Program.
Scope of Work means the description of Services and Deliverables specified in this Contract, the RFP, the MCO’s Proposal, and any attachments and modifications to these documents.
SDX means State Data Exchange.
Security Plan means a document that contains detailed management, operational, and technical information about a system, its security requirements, and the controls implemented to provide protection against risks and vulnerabilities.
SED means severe emotional disturbance as determined by a Local Mental Health Authority.
Service Area means the counties included in any HHSC-defined areas as applicable to each MCO Program.
Service Coordination means a specialized care management service that is performed by a Service Coordinator and that includes but is not limited to:
(1)  identification of needs, including physical health, mental health services and for STAR+PLUS Members, long term support services,
(2)  development of a Service Plan to address those identified needs;
(3)  assistance to ensure timely and a coordinated access to an array of providers and Covered Services;
(4)  attention to addressing unique needs of Members; and
(5)  coordination of Covered Services with Non-capitated Services, as necessary and appropriate.
Service Coordinator means the person with primary responsibility for providing service coordination and care management to STAR+PLUS Members.
Service Management is an administrative service in the STAR, and CHIP Programs performed by the MCO to facilitate development of a Service Plan and coordination of services among a Member’s PCP, specialty providers and non-medical providers to ensure Members with Special Health Care Needs and/or Members needing high-cost treatment have access to, and appropriately utilize, Medically Necessary Covered Services, Non-capitated Services, and other services and supports.
Service Plan (SP) means an individualized plan developed with and for Members with Special Health Care Needs, including persons with disabilities or chronic or complex conditions.
Services means the tasks, functions, and responsibilities assigned and delegated to the MCO under this Contract.
Significant Traditional Provider or STP means primary care providers, long term services and supports providers, and pharmacy providers identified by HHSC as having provided a significant level of care to Medicaid or CHIP clients. Disproportionate Share Hospitals (DSH) are also Medicaid STPs.
Skilled Nursing Facility Services (CHIP only)  Services provided in a facility that provides nursing or rehabilitation services and Medical supplies and use of appliances and equipment furnished by the facility.
Software means all operating system and applications software used by the MCO to provide the Services under this Contract.
Specialty Hospital means any inpatient Hospital that is not a general Acute Care Hospital.
Specified Low-Income Medicare Beneficiary(SLMB) means a Medicare beneficiary whose only Medicaid benefit is payment of the Medicare Part B premium.
SPMI means severe and persistent mental illness as determined by the Local Mental Health Authority.
SSA means the Social Security Administration.
Stabilize means to provide such medical care as to assure within reasonable medical probability that no deterioration of the condition is likely to result from, or occur from, or occur during discharge, transfer, or admission of the Member.
STAR+PLUS or STAR+PLUS Program means the State of Texas Medicaid managed care program in which HHSC contracts with MCOs to provide, arrange, and coordinate preventive, primary, acute and Long-term Services and Supports Covered Services to adult persons with disabilities and elderly persons age 65 and over who qualify for Medicaid through the SSI program and/or the MAO program. Children birth through age 20 who qualify for Medicaid through the SSI program, may voluntarily participate in the STAR+PLUS program.
STAR+PLUS MCOs means contracted MCOs participating in the STAR+PLUS Program.
State Fiscal Year (SFY) means a 12-month period beginning on September 1 and ending on August 31 the following year.
Subcontract means any agreement between the MCO and another party to fulfill the requirements of the Contract.
Subcontractor means any individual or entity, including an Affiliate, that has entered into a Subcontract with MCO.
Subsidiary means an Affiliate controlled by such person or entity directly or indirectly through one (1) or more intermediaries.
Supplemental Security Income (SSI) means a Federal income supplement program funded by general tax revenues (not Social Security taxes) designed to help aged, blind and disabled people with little or no income by providing cash to meet basic needs for food, clothing and shelter.
T.A.C. means Texas Administrative Code.
TDD means telecommunication device for the deaf. It is interchangeable with the term Teletype machine or TTY.
TDI means the Texas Department of Insurance.
Team of Health Care Professionals means physicians and other professionals, such a a nurse care coordinator, nutritionist, social worker, behavioral health professional, or any professionals deemed appropriate by HHSC and approved by CMS.  The team may be free-standing, virtual, or based at a Hospital, community health center, community mental health center, rural clinic, clinical practice or clinical group practice, academic health center, or any entity deemed appropriate by HHSC and approved by CMS.
Temporary Assistance to Needy Families (TANF) means the federally funded program that provides assistance to single parent families with children who meet the categorical requirements for aid. This program was formerly known as the Aid to Families with Dependent Children (AFDC) program.
Texas Health Steps is the name adopted by the State of Texas for the federally mandated Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program. It includes the State’s Comprehensive Care Program extension to EPSDT, which adds benefits to the federal EPSDT requirements contained in 42 U.S.C. §1396d(r), and defined and codified at 42 C.F.R. §§440.40 and 441.56-62. HHSC’s rules are contained in 25 T.A.C., Chapter 33 (relating to Early and Periodic Screening, Diagnosis and Treatment).
Texas Medicaid Bulletin means the bi-monthly update to the Texas Medicaid Provider Procedures Manual.
Texas Medicaid Provider Procedures Manual means the policy and procedures manual published by or on behalf of HHSC that contains policies and procedures required of all health care providers who participate in the Texas Medicaid program. The manual is published annually and is updated bi-monthly by the Texas Medicaid Bulletin.
Texas Public Information Act refers to the provisions of Chapter 552 of the Texas Government Code.
Third Party Liability (TPL) means the legal responsibility of another individual or entity to pay for all or part of the services provided to Members under the Contract (see 1 TAC §354.2301 et seq., relating to Third Party Resources).
Third Party Recovery (TPR) means the recovery of payments on behalf of a Member by HHSC or the MCO from an individual or entity with the legal responsibility to pay for the Covered Services.
Transfer means the movement of the Member from one (1) Acute Care Hospital or Long Term Care Hospital/facility and readmission to another Acute Care Hospital or Long Term Care Hospital/facility within 24 hours for continued treatment.
Transition Phase includes all activities the MCO is required to perform between the Contract Effective Date and the Operational Start Date for an MCO Program and all or part of a Service Area.
Turnover Phase includes all activities the MCO is required to perform in order to close out the Contract and/or transition Contract activities and operations to HHSC or a subsequent contractor.
Turnover Plan means the written plan developed by MCO, approved by HHSC, to be employed during the Turnover Phase.
Uniform Managed Care Manual (UMCM) means the manual published by or on behalf of HHSC that contains policies and procedures required of all MCOs participating in the HHSC Programs.  The UMCM, as amended or modified, is incorporated by reference into the Contract.
URAC /American Accreditation Health Care Commission means the independent organization that accredits Utilization Review functions and offers a variety of other accreditation and certification programs for health care organizations.
Urban County means any county with 50,000 or more residents as reported by the Texas Association of Counties at:  http://www.county.org/.
Urgent Behavioral Health Situation means a behavioral health condition that requires attention and assessment within 24 hours but which does not place the Member in immediate danger to himself or herself or others and the Member is able to cooperate with treatment.
Urgent Condition means a health condition including an Urgent Behavioral Health Situation that is not an emergency but is severe or painful enough to cause a prudent layperson, possessing the average knowledge of medicine, to believe that his or her condition requires medical treatment evaluation or treatment within 24 hours by the Member’s PCP or PCP designee to prevent serious deterioration of the Member’s condition or health.
Utilization Review means the system for retrospective, concurrent, or prospective review of the Medical Necessity and appropriateness of Health Care Services provided, being provided, or proposed to be provided to a Member.  The term does not include elective requests for clarification of coverage.
Value-added Services means additional services for coverage beyond those specified in Attachments B-2, B-2.1, and B-2.2.  Value-added Services may be actual Health Care Services, benefits, or positive incentives that HHSC determines will promote healthy lifestyles and improve health outcomes among Members.  Value-added Services that promote healthy lifestyles should target specific weight loss, smoking cessation, or other programs approved by HHSC. Temporary phones, cell phones, additional transportation benefits, and extra home health services may be Value-added Services, if approved by HHSC.  Best practice approaches to delivering Covered Services are not considered Value-added Services.
Waste means practices that are not cost-efficient.
Wrap-Around Services means services for Dual Eligible Members that are covered by Medicaid:
(1)  when the Dual Eligible Member has exceeded  the Medicare coverage limit; or
(2)  that are not covered by Medicare.

Article 3. General Terms & Conditions

Section 3.01 Contract elements.

(a)  Contract documentation.
The Contract between the Parties will consist of the HHSC Managed Care Contract document and all attachments and amendments.
(b)  Order of documents.
In the event of any conflict or contradiction between or among the contract documents, the documents must control in the following order of precedence:
(1) The final executed HHSC Managed Care Contract document, and all amendments thereto;
(2) HHSC Managed Care Contract Attachment A – “Uniform Managed Care Contract Terms and Conditions,” and all amendments thereto;
(3) HHSC Managed Care Contract Attachment B – “Scope of Work/Performance Measures,” and all attachments and amendments thereto;
(4) The Uniform Managed Care Manual, and all attachments and amendments thereto; and
(5) HHSC Managed Care Contract Attachment C-1 – “MCO’s Proposal.”

Section 3.02 Term of the Contract.

The term of the Contract will begin on the Effective Date and will conclude on the Expiration Date.  The Parties may renew the Contract for an additional period or periods, but the Contract Term may not exceed a total of eight (8) operational years.  All reserved contract extensions beyond the Expiration Date will be subject to good faith negotiations between the Parties and mutual agreement to the extension(s).

Section 3.03 Funding.

This Contract is expressly conditioned on the availability of state and federal appropriated funds. MCO will have no right of action against HHSC in the event that HHSC is unable to perform its obligations under this Contract as a result of the suspension, termination, withdrawal, or failure of funding to HHSC or lack of sufficient funding of HHSC for any activities or functions contained within the scope of this Contract. If funds become unavailable, the provisions of
Article 12
, “Remedies and Disputes” will apply. HHSC will use all reasonable efforts to ensure that such funds are available, and will negotiate in good faith with MCO to resolve any MCO claims for payment that represent accepted Services or Deliverables that are pending at the time funds become unavailable.  HHSC must make best efforts to provide reasonable written advance notice to MCO upon learning that funding for this Contract may be unavailable.

Section 3.04 Delegation of authority.

Whenever, by any provision of this Contract, any right, power, or duty is imposed or conferred on HHSC, the right, power, or duty so imposed or conferred is possessed and exercised by the Executive Commissioner unless any such right, power, or duty is specifically delegated to the duly appointed agents or employees of HHSC. The Commissioner will reduce any such delegation of authority to writing and provide a copy to MCO on request.

Section 3.05 No waiver of sovereign immunity.

The Parties expressly agree that no provision of this Contract is in any way intended to constitute a waiver by HHSC or the State of Texas of any immunities from suit or from liability that HHSC or the State of Texas may have by operation of law.

Section 3.06 Force Majeure.

Neither Party will be liable for any failure or delay in performing its obligations under the Contract if such failure or delay is due to a Force Majeure Event.  The existence of such causes of delay or failure will extend the period of performance in the exercise of reasonable diligence until after the causes of delay or failure have been removed.  Each Party must inform the other in writing with proof of receipt within five (5) Business Days of the existence of a Force Majeure Event.

Section 3.07 Publicity.

(a) MCO may use the name of HHSC, the State of Texas, any HHS Agency, and the name of the HHSC MCO Program in any media release, public announcement, or public disclosure relating to the Contract or its subject matter only if, at least seven (7) calendar days prior to distributing the material, the MCO submits the information to HHSC for review and comment.  If HHSC has not responded within seven (7) calendar days, the MCO may use the submitted information.  HHSC reserves the right to object to and require changes to the publication if, at HHSC’s sole discretion, it determines that the publication does not accurately reflect the terms of the Contract or the MCO’s performance under the Contract. .
(b)  MCO will provide HHSC with one (1) electronic copy of any information described in Subsection 3.07(a) prior to public release.  MCO will provide additional copies, including hard copies, at the request of HHSC.
(c)  The requirements of Subsection 3.07(a) do not apply to:
(1)  proposals or reports submitted to HHSC, an administrative agency of the State of Texas, or a governmental agency or unit of another state or the federal government;
(2)  information concerning the Contract’s terms, subject matter, and estimated value:
(a)  in any report to a governmental body to which the MCO is required by law to report such information, or
(b)  that the MCO is otherwise required by law to disclose; and
(3)  Member Materials (the MCO must comply with the Uniform Managed Care Manual’s provisions regarding the review and approval of Member Materials).

Section 3.08 Assignment.

(a)  Assignment by MCO.
MCO must not assign all or any portion of its rights under or interests in the Contract or delegate any of its duties without prior written consent of HHSC.  Any written request for assignment or delegation must be accompanied by written acceptance of the assignment or delegation by the assignee or delegation by the delegate.  Except where otherwise agreed in writing by HHSC, assignment or delegation will not release MCO from its obligations pursuant to the Contract. An HHSC-approved Material Subcontract will not be considered to be an assignment or delegation for purposes of this section.
(b)  Assignment by HHSC.
MCO understands and agrees HHSC may in one (1) or more transactions assign, pledge, transfer, or hypothecate the Contract.  This assignment will only be made to another State agency or a non-State agency that is contracted to perform agency support.
(c)  Assumption.
Each party to whom a transfer is made (an "Assignee") must assume all or any part of MCO’S or HHSC's interests in the Contract, the product, and any documents executed with respect to the Contract.

Section 3.09 Cooperation with other vendors and prospective vendors.

HHSC may award supplemental contracts for work related to the Contract, or any portion thereof.  MCO will reasonably cooperate with such other vendors, and will not commit or permit any act that may interfere with the performance of work by any other vendor.

Section 3.10 Renegotiation and reprocurement rights.

(a)  Renegotiation of Contract terms.
Notwithstanding anything in the Contract to the contrary, HHSC may at any time during the term of the Contract exercise the option to notify MCO that HHSC has elected to renegotiate certain terms of the Contract.  Upon MCO’s receipt of any notice pursuant to this Section, MCO and HHSC will undertake good faith negotiations of the subject terms of the Contract, and may execute an amendment to the Contract in accordance with
Article 8
.
(b)  Reprocurement of the services or procurement of additional services.
Notwithstanding anything in the Contract to the contrary, whether or not HHSC has accepted or rejected MCO’s Services and/or Deliverables provided during any period of the Contract, HHSC may at any time issue requests for proposals or offers to other potential contractors for performance of any portion of the Scope of Work covered by the Contract or Scope of Work similar or comparable to the Scope of Work performed by MCO under the Contract.
(c)  Termination rights upon reprocurement.
If HHSC elects to procure the Services or Deliverables or any portion of the Services or Deliverables from another vendor in accordance with this Section, HHSC will have the termination rights set forth in Article 12, “Remedies and Disputes.”

Section 3.11 RFP errors and omissions.

MCO will not take advantage of any errors and/or omissions in the RFP or the resulting Contract.  MCO must promptly notify HHSC of any such errors and/or omissions that are discovered.

Section 3.12 Enforcement Costs.

In the event of any litigation, appeal, or other legal action to enforce any provision of the Contract, MCO agrees to pay all reasonable expenses of such action, if HHSC is the prevailing Party.

Section 3.13 Preferences under service contracts.

MCO is required in performing the Contract to purchase products and materials produced in the State of Texas when they are available at a price and time comparable to products and materials produced outside the State.

Section 3.14 Time of the essence.

In consideration of the need to ensure uninterrupted and continuous MCO Program performance, time is of the essence in the performance of the Scope of Work under the Contract.

Section 3.15 Notice

(a)  Any notice or other legal communication required or permitted to be made or given by either Party pursuant to the Contract will be in writing and in English, and will be deemed to have been given:
(1)  Three (3) Business Days after the date of mailing if sent by registered or certified U.S. mail, postage prepaid, with return receipt requested;
(2)  When transmitted if sent by facsimile, provided a confirmation of transmission is produced by the sending machine; or
(3)  When delivered if delivered personally or sent by express courier service.
(b)  The notices described in this Section may not be sent by electronic mail.
(c)  All notices must be sent to the Project Manager identified in the HHSC Managed Care Contract document.  In addition, legal notices must be sent to the Legal Contact identified in the HHSC Managed Care Contract document.
(d)  Routine communications that are administrative in nature will be provided in a manner agreed to by the Parties.

Article 4. Contract Administration & Management

Section 4.01 Qualifications, retention and replacement of MCO employees.

MCO agrees to maintain the organizational and administrative capacity and capabilities to carry out all duties and responsibilities under this Contract.  The personnel MCO assigns to perform the duties and responsibilities under this Contract will be properly trained and qualified for the functions they are to perform.  Notwithstanding transfer or turnover of personnel, MCO remains obligated to perform all duties and responsibilities under this Contract without degradation and in accordance with the terms of this Contract.

Section 4.02 MCO’s Key Personnel.

(a)  Designation of Key Personnel.
MCO must designate key management and technical personnel who will be assigned to the Contract. For the purposes of this requirement, Key Personnel are those with management responsibility or principal technical responsibility for the following functional areas for each MCO Program included within the scope of the Contract:
(1)  Member Services;
(2)  Management Information Systems;
(3)  Claims Processing,
(4)  Provider Network Development and Management;
(5)  Benefit Administration and Utilization and Care Management;
(6)  Quality Improvement;
(7)  Behavioral Health Services;
(8)  Financial Functions;
(9)  Reporting;
(10)  Executive Director(s) for applicable HHSC MCO Program(s) as defined in Section 4.03, “Executive Director”;
(11)  Medical Director(s) for applicable HHSC MCO Program(s) as defined in Section 4.04, “Medical Director”; and
(12)  Management positions for STAR+PLUS Service Coordinators for STAR+PLUS MCOs as defined in Section 4.04.1, “STAR+PLUS Service Coordinator.”
(b) Support and Replacement of Key Personnel.
The MCO must maintain, throughout the Contract Term, the ability to supply its Key Personnel with the required resources necessary to meet Contract requirements and comply with applicable law. The MCO must ensure project continuity by timely replacement of Key Personnel, if necessary, with a sufficient number of persons having the requisite skills, experience and other qualifications.  Regardless of specific personnel changes, the MCO must maintain the overall level of expertise, experience, and skill reflected in the Key MCO Personnel job descriptions and qualifications included in the MCO’s proposal.
(c) Notification of replacement of Key Personnel.
MCO must notify HHSC within 15 Business Days of any change in Key Personnel. Hiring or replacement of Key Personnel must conform to all Contract requirements. If HHSC determines that a satisfactory working relationship cannot be established between certain Key Personnel and HHSC, it will notify the MCO in writing.  Upon receipt of HHSC’s notice, HHSC and MCO will attempt to resolve HHSC’s concerns on a mutually agreeable basis.

Section 4.03 Executive Director.

(a)  The MCO must employ a qualified individual to serve as the Executive Director for its HHSC MCO Program(s).  Such Executive Director must be employed full-time by the MCO, be primarily dedicated to HHSC MCO Program(s), and must hold a Senior Executive or Management position in the MCO’s organization, except that the MCO may propose an alternate structure for the Executive Director position, subject to HHSC’s prior written approval.
(b)  The Executive Director must be authorized and empowered to represent the MCO regarding all matters pertaining to the Contract prior to such representation. The Executive Director must act as liaison between the MCO and the HHSC and must have responsibilities that include, but are not limited to, the following:
(1)  ensuring the MCO’s compliance with the terms of the Contract, including securing and coordinating resources necessary for such compliance;
(2)  receiving and responding to all inquiries and requests made by HHSC related to the Contract, in the timeframes and formats specified by HHSC. Where practicable, HHSC must consult with the MCO to establish timeframes and formats reasonably acceptable to the Parties;
(3)  attending and participating in regular HHSC MCO Executive Director meetings or conference calls;
(4)  attending and participating in regular HHSC Regional Advisory Committees (RACs) for managed care (the Executive Director may designate key personnel to attend a RAC if the Executive Director is unable to attend);
(5)  making best efforts to promptly resolve any issues identified either by the MCO or HHSC that may arise and are related to the Contract;
(6)  meeting with HHSC representative(s) on a periodic or as needed basis to review the MCO’s performance and resolve issues, and
(7)  meeting with HHSC at the time and place requested by HHSC, if HHSC determines that the MCO is not in compliance with the requirements of the Contract.

Section 4.04 Medical Director.

(a)  The MCO must have a qualified individual to serve as the Medical Director for its HHSC MCO Program(s). The Medical Director must be currently licensed in Texas under the Texas Medical Board as an M.D. or D.O. with no restrictions or other licensure limitations. The Medical Director must comply with the requirements of 28 T.A.C. §11.1606 and all applicable federal and state statutes and regulations.
(b)  The Medical Director, or his or her physician designee meeting the same Contract qualifications that apply to the Medical Director, must be available by telephone 24 hours a day, seven (7) days a week, for Utilization Review decisions. The Medical Director, and his/her designee, must either possess expertise with Behavioral Health Services, or ready access to such expertise to ensure timely and appropriate medical decisions for Members, including after regular business hours.
(c)  The Medical Director, or his or her physician designee meeting the same Contract qualifications that apply to the Medical Director, must be authorized and empowered to represent the MCO regarding clinical issues, Utilization Review and quality of care inquiries. The Medical Director, or his or her physician designee, must exercise independent medical judgment in all decisions relating to Medical Necessity. The MCO must ensure that its decisions relating to m Medical Necessity are not adversely influenced by fiscal management decisions. HHSC may conduct reviews of decisions relating to Medical Necessity upon reasonable notice.


Section 4.04.1 STAR+PLUS Service Coordinator
(a)  STAR+PLUS MCOs must employ as Service Coordinators persons experienced in meeting the needs of people with disabilities, old and young, and vulnerable populations who have Chronic or Complex Conditions. A Service Coordinator must have an undergraduate and/or graduate degree in social work or a related field, or be a Registered Nurse, Licensed Vocational Nurse, Advanced Nurse Practitioner, or a Physician Assistant.
(b)  The STAR+PLUS MCO must monitor the Service Coordinator’s workload and performance to ensure that he or she is able to perform all necessary Service Coordination functions for the STAR+PLUS Members in a timely manner.
(c)  The Service Coordinator must be responsible for working with the Member or his or her representative, the PCP and other Providers to develop a seamless package of care in which primary, Acute Care, and Long-term Services and Supports service needs are met through a single, understandable, rational plan. Each Member’s Service Plan must also be well coordinated with the Member’s family and community support systems, including Independent Living Centers, Area Agencies on Aging and Mental Retardation Authorities. The Service Plan should be agreed to and signed by the Member or the Member’s representative to indicate agreement with the plan. The plan should promote consumer direction and self-determination and may include information for services outside the scope of Covered Services such as how to access affordable, integrated housing. For Dual Eligible Members, the STAR+PLUS MCO is responsible for meeting the Member’s Community Long- term Services and Supports needs.
(d)  The STAR+PLUS MCO must empower its Service Coordinators to authorize the provision and delivery of Covered Services, including Community Long-term Services and Supports Covered Services.

Section 4.05 Responsibility for MCO personnel and Subcontractors.

(a) MCO’s employees and Subcontractors will not in any sense be considered employees of HHSC or the State of Texas, but will be considered for all purposes as the MCO’s employees or its Subcontractor’s employees, as applicable.
(b) Except as expressly provided in this Contract, neither MCO nor any of MCO’s employees or Subcontractors may act in any sense as agents or representatives of HHSC or the State of Texas.
(c) MCO agrees that anyone employed by MCO to fulfill the terms of the Contract is an employee of MCO and remains under MCO’s sole direction and control.  MCO assumes sole and full responsibility for its acts and the acts of its employees and Subcontractors.
(d) MCO agrees that any claim on behalf of any person arising out of employment or alleged employment by the MCO  (including, but not limited to, claims of discrimination against MCO, its officers, or its agents) is the sole responsibility of MCO and not the responsibility of HHSC.  MCO will indemnify and hold harmless the State from any and all claims asserted against the State arising out of such employment or alleged employment by the MCO.  MCO understands that any person who alleges a claim arising out of employment or alleged employment by MCO will not be entitled to any compensation, rights, or benefits from HHSC (including, but not limited to, tenure rights, medical and hospital care, sick and annual/vacation leave, severance pay, or retirement benefits).
(e) MCO agrees to be responsible for the following in respect to its employees:
(1) Damages incurred by MCO’s employees within the scope of their duties under the Contract; and
(2) Determination of the hours to be worked and the duties to be performed by MCO’s employees.
(f) MCO agrees and will inform its employees and Subcontractor(s) that there is no right of subrogation, contribution, or indemnification against HHSC for any duty owed to them by MCO pursuant to this Contract or any judgment rendered against the MCO. HHSC’s liability to the MCO’s employees, agents and Subcontractors, if any, will be governed by the Texas Tort Claims Act, as amended or modified (TEX. CIV. PRACT. & REM. CODE §101.001et seq.).
(g) MCO understands that HHSC does not assume liability for the actions of, or judgments rendered against, the MCO, its employees, agents or Subcontractors.  MCO agrees that it has no right to indemnification or contribution from HHSC for any such judgments rendered against MCO or its Subcontractors.

Section 4.06 Cooperation with HHSC and state administrative agencies.

(a)  Cooperation with Other MCOs.
MCO agrees to reasonably cooperate with and work with the other MCOs in the MCO Programs, Subcontractors, and third-party representatives as requested by HHSC. To the extent permitted by HHSC’s financial and personnel resources, HHSC agrees to reasonably cooperate with MCO and to use its best efforts to ensure that other HHSC contractors reasonably cooperate with the MCO.
(b)  Cooperation with state and federal administrative agencies.
MCO must ensure that MCO personnel will cooperate with HHSC or other state or federal administrative agency personnel at no charge to HHSC for purposes relating to the administration of MCO Programs including, but not limited to the following purposes:
(1)  The investigation and prosecution of Fraud, Abuse, and Waste in the HHSC programs;
(2)  Audit, inspection, or other investigative purposes; and
(3)  Testimony in judicial or quasi-judicial proceedings relating to the Services and/or Deliverables under this Contract or other delivery of information to HHSC or other agencies’ investigators or legal staff.

Section 4.07 Conduct of MCO personnel and Subcontractors.

(a)  While performing the Scope of Work, MCO’s personnel and Subcontractors must:
(1)  Comply with applicable state rules and regulations and HHSC’s requests regarding personal and professional conduct generally applicable to the service locations; and
(2)  Otherwise conduct themselves in a businesslike and professional manner.
(b)  If HHSC determines in good faith that a particular employee or Subcontractor is not conducting himself or herself in accordance with this Contract, HHSC may provide MCO with notice and documentation concerning such conduct.  Upon receipt of such notice, MCO must promptly investigate the matter and take appropriate action that may include:
(1)  Removing the employee or Subcontractor from the project;
(2)  Providing HHSC with written notice of such removal; and
(3)  Replacing the employee or Subcontractor with a similarly qualified individual acceptable to HHSC.
(c)  Nothing in the Contract will prevent MCO, at the request of HHSC, from replacing any personnel who are not adequately performing their assigned responsibilities or who, in the reasonable opinion of HHSC’s Project Manager, after consultation with MCO, are unable to work effectively with the members of the HHSC’s staff.  In such event, MCO will provide replacement personnel with equal or greater skills and qualifications as soon as reasonably practicable.  Replacement of Key Personnel will be subject to HHSC review. The Parties will work together in the event of any such replacement so as not to disrupt the overall project schedule.
(d)  MCO agrees that anyone employed or retained by MCO to fulfill the terms of the Contract remains under MCO’s sole direction and control.
(e)  MCO must have policies regarding disciplinary action for all employees who have failed to comply with federal and/or state laws and the MCO’s standards of conduct, policies and procedures, and Contract requirements.  MCO must have policies regarding disciplinary action for all employees who have engaged in illegal or unethical conduct.

Section 4.08 Subcontractors.

(a)  MCO remains fully responsible for the obligations, services, and functions performed by its Subcontractors to the same extent as if such obligations, services, and functions were performed by MCO’s employees, and for purposes of this Contract such work will be deemed work performed by MCO.  HHSC reserves the right to require the replacement of any Subcontractor found by HHSC to be unacceptable and unable to meet the requirements of the Contract, and to object to the selection of a Subcontractor.
(b)  MCO must:
(1)  actively monitor the quality of care and services, as well as the quality of reporting data, provided under a Subcontract;
(2)  provide HHSC with a copy of TDI filings of delegation agreements;
(3)  unless otherwise provided in this Contract, provide HHSC with written notice no later than:
(i)  three (3) Business Days after receiving notice from a Material Subcontractor of its intent to terminate a Subcontract;
(ii)  180 calendar days prior to the termination date of a Material Subcontract for MIS systems operation or reporting;
(iii)  90 calendar days prior to the termination date of a Material Subcontract for non-MIS MCO Administrative Services; and
(iv)  30 calendar days prior to the termination date of any other Material Subcontract.
HHSC may grant a written exception to these notice requirements if, in HHSC’s reasonable determination, the MCO has shown good cause for a shorter notice period.
(c)  During the Contract Period, Readiness Reviews by HHSC or its designated agent may occur if:
(1)  a new Material Subcontractor is employed by MCO;
(2)  an existing Material Subcontractor provides services in a new Service Area;
(3)  an existing Material Subcontractor provides services for a new MCO Program;
(4)  an existing Material Subcontractor changes locations or changes its MIS and or operational functions;
(5)  an existing Material Subcontractor changes one (1) or more of its MIS subsystems, claims processing or operational functions; or
(6)  a Readiness Review is requested by HHSC.
The MCO must submit information required by HHSC for each proposed Material Subcontractor as indicated in Section 7, “Transition Phase Requirements.”  Refer to Sections 8.1.1.2, “Additional Readiness Reviews and Monitoring Efforts,” and 8.1.18, “Management Information System Requirements” for additional information regarding MCO Readiness Reviews during the Contract Period.
(d)  MCO must not disclose Confidential Information of HHSC or the State of Texas to a Subcontractor unless and until such Subcontractor has agreed in writing to protect the confidentiality of such Confidential Information in the manner required of MCO under this Contract.
(e)  MCO must identify any Subcontractor that is a subsidiary or entity formed after the Effective Date of the Contract, whether or not an Affiliate of MCO.  The MCO must substantiate the proposed Subcontractor’s ability to perform the subcontracted Services, and certify to HHSC that no loss of service will occur as a result of the performance of such Subcontractor.  The MCO will be the sole point of contact with regard to contractual matters..
(f)  Except as provided herein, all Subcontracts must be in writing and must provide HHSC the right to examine the Subcontract and all Subcontractor records relating to the Contract and the Subcontract.  This requirement does not apply to agreements with utility or mail service providers.
(g) A Subcontract whereby MCO receives rebates, recoupments, discounts, payments, or other consideration from a Subcontractor (including without limitation Affiliates) pursuant to or related to the execution of this Contract must be in writing and must provide HHSC the right to examine the Subcontract and all records relating to such consideration.
(h)  All Subcontracts described in subsections (f) and (g) must show the dollar amount or the value of any consideration that MCO pays to or receives from the Subcontractor.
(i)  HMO must submit a copy of each Material Subcontract executed prior to the Effective Date of the Contract to HHSC no later than thirty (30) days after the Effective Date of the Contract.  For Material Subcontracts executed or amended after the Effective Date of the Contract, MCO must submit a copy to HHSC no later than five (5) Business Days after execution or amendment.
(j)  Network Provider Contracts must include the mandatory provisions included in Uniform Managed Care Manual Chapter 8.1, “Provider Contract Checklist.”
(k)  HHSC reserves the right to reject any Subcontract or require changes to any provisions that do not comply with the requirements or duties and responsibilities of this Contract or create significant barriers for HHSC in monitoring compliance with this Contract.
(l)  MCO must comply with the requirements of Section 6505 of the PPACA, entitled “Prohibition on Payments to Institutions or Entities Located Outside of the United States.”
(m)  Provider payment must comply with the requirements of Section 2702 of PPACA, entitled “Payment Adjustment for Health Acquired Conditions.”

Section 4.09 HHSC’s ability to contract with Subcontractors.

The MCO may not limit or restrict, through a covenant not to compete, employment contract or other contractual arrangement, HHSC’s ability to contract with Subcontractors or former employees of the MCO.

Section 4.10 MCO Agreements with Third Parties

(a)  If the MCO intends to report compensation paid to a third party (including without limitation an Affiliate) as an Allowable Expense under this Contract, the compensation paid to the third party exceeds $200,000, or is reasonably anticipated to exceed $200,000, in a State Fiscal Year, then the MCO’s agreement with the third party must be in writing.  The agreement must provide HHSC the right to examine the agreement and all records relating to the agreement.
(b)  All agreements whereby the MCO or its Subcontractors receive discounts, incentives, rebates, fees, free goods, bundling arrangements, recoupments, retrocession, payments, or other consideration from a third party (including without limitation Affiliates) pursuant to or related to the execution of this Contract, must be in writing and must provide HHSC and the Office of Attorney General the right to examine the agreement and all records relating to such consideration.
(c)  All agreements described in subsections (a) and (b) must show the dollar amount, the percentage of money, or the value of any consideration that MCO pays to or receives from the third party.
(d)  MCO must submit a copy of each third party agreement described in subsections (a) and (b) to HHSC.  If the third party agreement is entered into prior to the Effective Date of the Contract, MCO must submit a copy no later than thirty (30) days after the Effective Date of the Contract.  If the third party agreement is executed after the Effective Date of the Contract, MCO must submit a copy no later than five (5) Business Days after execution.
(e)  For third party agreements valued under $200,000 per State Fiscal Year that are reported as Allowable Expenses, the MCO must maintain financial records and data sufficient to verify the accuracy of such expenses in accordance with the requirements of Article 9,  “Audit and Financial Compliance.”
(f)  HHSC reserves the right to reject any third party agreement or require changes to any provisions that do not comply with the requirements or duties and responsibilities of this Contract or create significant barriers for HHSC in monitoring compliance with this Contract.
(g)  Upon request, the MCO and its Subcontractors must provide all information described in Section 4.10 to HHSC and the Office of Attorney General at no cost.
(h)  This section must not apply to Provider Contracts, or agreements with utility or mail service providers.
(i)  MCO must comply with the requirements of Section 6505 of the PPACA, entitled “Prohibition on Payments to Institutions or Entities Located Outside of the United States.”
(j)  Provider payment must comply with the requirements of Section 2702 of PPACA, entitled “Payment Adjustment for Health Acquired Conditions.”

Article 5. Member Eligibility & Enrollment

Section 5.01 Eligibility Determination

The State or its designee will make eligibility determinations for each of the HHSC MCO Programs.

Section 5.02 Member Enrollment & Disenrollment.

(a)  The HHSC Administrative Services Contractor will enroll and disenroll eligible individuals in the MCO Program.  To enroll in an MCO, the Member’s permanent residence must be located within the MCO’s Service Area. The MCO is not allowed to induce or accept disenrollment from a Member.  The MCO must refer the Member to the HHSC Administrative Services Contractor.
(b)  HHSC makes no guarantees or representations to the MCO regarding the number of eligible Members who will ultimately be enrolled into the MCO or the length of time any such enrolling Members remain enrolled with the MCO.
(c) The HHSC Administrative Services Contractor will electronically transmit to the MCO new Member information and change information applicable to active Members.
(d)  As described in the following Sections, depending on the MCO Program, special conditions may also apply to enrollment and span of coverage for the MCO.
(e)  A Medicaid MCO has a limited right to request a Member be disenrolled from MCO without the Member’s consent. HHSC must approve any MCO request for disenrollment of a Member for cause. HHSC may permit disenrollment of a Member under the following circumstances:
(1)  Member misuses or loans Member’s MCO membership card to another person to obtain services.
(2)  Member is disruptive, unruly, threatening or uncooperative to the extent that Member’s membership seriously impairs MCO’s or Provider’s ability to provide services to Member or to obtain new Members, and Member’s behavior is not caused by a physical or behavioral health condition.
(3)  Member steadfastly refuses to comply with managed care restrictions (e.g., repeatedly using emergency room in combination with refusing to allow MCO to treat the underlying medical condition).
(4)  MCO must take reasonable measures to correct Member behavior prior to requesting disenrollment. Reasonable measures may include providing education and counseling regarding the offensive acts or behaviors.
(5)  For STAR+PLUS MCOs, under limited conditions, the MCO may request disenrollment of members who are totally dependent on a ventilator or who have been diagnosed with End Stage Renal Disease.
(f)  HHSC must notify the Member of HHSC’s decision to disenroll the Member if all reasonable measures have failed to remedy the problem.
(g)  If the Member disagrees with the decision to disenroll the Member from MCO, HHSC must notify the Member of the availability of the Complaint procedure and, for Medicaid Members, HHSC’s Fair Hearing process.
(h)  MCO cannot request a disenrollment based on adverse change in the member’s health status or utilization of services that are Medically Necessary for treatment of a member’s condition.
(i)  Members taken into conservatorship by the Department of Family and Protective Services (DFPS) will be disenrolled from the MCO effective the date of conservatorship, and enrolled in the STAR Health Program unless otherwise determined by DFPS.


Section 5.03 STAR enrollment for pregnant women and infants.

(a)  The HHSC Administrative Services Contractor will retroactively enroll some pregnant Members in a Medicaid MCO based on their date of eligibility.
(b)  The HHSC Administrative Services Contractor will enroll newborns born to Medicaid eligible mothers who are enrolled in a STAR MCO in the same MCO for at least 90 days following the date of birth, unless the mother requests a plan change as a special exception.  The HHSC Administrative Service Contractor will consider such requests on a case-by-case basis. The HHSC Administrative Services Contractor will retroactively, to date of birth, enroll newborns in the applicable STAR MCO.
Section 5.03.1 Enrollment for infants born to pregnant women in STAR+PLUS.
If a newborn is born to a Medicaid-eligible mother enrolled in a STAR+PLUS MCO, the HHSC Administrative Service Contractor will enroll the newborn into that MCO’s STAR MCO product, if one (1) exists.  All rules related to STAR newborn enrollment will apply to the newborn. If the STAR+PLUS MCO does not have a STAR product but the newborn is eligible for STAR, the newborn will be enrolled in traditional Fee-for-Service Medicaid, and given the opportunity to select a STAR MCO.

Section 5.04 CHIP eligibility and enrollment.

(a)  Term of coverage.
The HHSC Administrative Services Contractor determines CHIP eligibility on HHSC’s behalf. The HHSC Administrative Services Contractor will enroll and disenroll eligible individuals into and out of CHIP.
(b)  Pregnant Members and Infants.
(1)  The HHSC Administrative Contractor will refer pregnant CHIP Members, with the exception of Legal Permanent Residents and other legally qualified aliens barred from Medicaid due to federal eligibility restrictions, to Medicaid for eligibility determinations. Those CHIP Members who are determined to be Medicaid Eligible will be disenrolled from MCO’s CHIP plan. Medicaid coverage will be coordinated to begin after CHIP eligibility ends to avoid gaps in health care coverage.
(2)  In the event the MCO remains unaware of a CHIP Member’s pregnancy until delivery, the facility and professional costs associated with the delivery will be covered by CHIP in accordance with Attachment B-1.1, “CHIP Covered Services.” This includes the post-delivery costs for the newborn’s care while in the facility, as described in Attachment B-1.1, “CHIP Covered Services.,” The HHSC Administrative Services Contractor will set a pregnant CHIP mother’s eligibility expiration date at the later of (1) the end of the second month following the month of the pregnancy delivery or the pregnancy termination or (2) the Member’s original eligibility expiration date.
The Administrative Services Contractor will screen the newborn’s eligibility for Medicaid, and then CHIP (if the newborn is not eligible for Medicaid).  If the newborn is eligible for CHIP, the Administrative Services Contractor will enroll the newborn in the mother’s CHIP plan prospectively, following standard cut-off rules.  The newborn’s CHIP eligibility ends when the mother’s CHIP eligibility expires, as described above.

Section 5.05 CHIP Perinatal eligibility, enrollment, and disenrollment

(a)  The HHSC Administrative Contractor will electronically transmit to the MCO new CHIP Perinate Member information based on the appropriate CHIP Perinate or CHIP Perinate Newborn Rate Cell.  There is no waiting period for CHIP Perinatal Program Members.
(b)  Once born, a CHIP Perinate who lives in a family with an income at or below 185% of the FPL will be deemed eligible for 12 months of continuous Medicaid coverage (beginning on the date of birth).  A CHIP Perinate will continue to receive coverage through the CHIP Perinatal Program as a “CHIP Perinate Newborn” after birth if the child’s family income is above 185% to 200% FPL.  A CHIP Perinate Newborn is eligible for 12 months continuous enrollment, beginning with the month of enrollment as a CHIP Perinate (month of enrollment as an unborn child plus 11 months).  A CHIP Perinate Newborn will maintain coverage in his or her CHIP Perinatal MCO.
(c)  HHSC’s Administrative Services Contractor will send an enrollment packet to the prospective CHIP Perinate Members’ households.  If the household does not make a selection within 15 calendar days, the HHSC Administrative Services Contractor will notify the household that the prospective member has been assigned to a CHIP Perinatal MCO (“Default Enrollment”).  When this occurs the household has 90 calendar days to select another CHIP Perinatal MCO for the Member.
(d)  HHSC’s Administrative Services Contractor will assign prospective members to CHIP Perinatal MCOs in a Service Area in a rotational basis.  Should HHSC implement one (1) or more administrative rules governing the Default Enrollment processes, such administrative rules will take precedence over the Default Enrollment process set forth herein.
(e)  When a member of a household enrolls in the CHIP Perinatal Program, all traditional CHIP members in the household will be disenrolled from their current health plans and prospectively enrolled in the CHIP Perinatal Program Member’s health plan.  All members of the household must remain in the same health plan until the later of: (1) the end of the CHIP Perinatal Program Member’s enrollment period, or (2) the end of the traditional CHIP members’ enrollment period.
(f)  In the 10th month of the CHIP Perinate Newborn’s coverage, the family will receive a CHIP renewal form.  The family must complete and submit the renewal form, which will be pre-populated to include the CHIP Perinate Newborn’s and the CHIP Program Members’ information.  Once the Member’s CHIP Perinatal Program coverage expires, the Member will be added to his or her siblings’ existing CHIP program case.

Section 5.06 Span of Coverage

(a)  Medicaid MCOs.
(1)  Open Enrollment.
HHSC will conduct continuous open enrollment for Medicaid Eligibles and the MCO must accept all persons who choose to enroll as Members in the MCO or who are assigned as Members in the MCO by HHSC, without regard to the Member’s health status or any other factor.
(2)  Enrollment of New Medicaid Eligibles.
Persons who become eligible for Medicaid during an Inpatient Stay in a Hospital will not be enrolled in a Medicaid MCO until discharged from the Hospital, with the following exceptions:  (1) Members retroactively enrolled in STAR in accordance with Section 5.03, “STAR Enrollment of Pregnant Women and Infants,” and (2) Members prospectively enrolled in STAR or STAR+PLUS who are at or below 12 months of age.  Except as provided in the following table, if a Member is enrolled in a Medicaid MCO during an Inpatient Stay, the Medicaid MCO will be responsible for all Covered Services beginning on the Effective Date of Coverage.  If a Member is enrolled during an Inpatient Stay under either of the above-referenced exceptions, responsibility for the Inpatient Stay services is assigned as follows:
 
 
 
 
Responsibility for Inpatient Stay Services Responsibility for Inpatient Stay Services
Exception Exception
Hospital Facility Charges Hospital Facility Charges
Professional Services Charges Professional Services Charges
Member Retroactively Enrolled in STAR per Section 5.03
STAR MCO
STAR MCO
Member ≤ 12 Months of Age Who Is Prospectively Enrolled in STAR
Medicaid FFS*
STAR MCO
Member ≤ 12 Months of Age Who Is Prospectively Enrolled in STAR+PLUS
STAR+PLUS MCO for Inpatient Mental Health Covered Services
Medicaid FFS for all Other Inpatient Facility Services*
STAR+PLUS MCO
 
 

*These services are Non-Capitated Services.
(3)  Movement between STAR or STAR+PLUS MCOs.
Except as provided in Section 5.06(a)(8), a Member cannot change from a STAR or STAR+PLUS MCO to a different STAR or STAR+PLUS MCO during an Inpatient Stay in a Hospital.
(4)  Movement from a Medicaid Fee-for-Service or PCCM Program to a STAR or STAR+PLUS MCO.
A Medicaid recipient can move from the Medicaid Fee-for-Service or PCCM program into a STAR or STAR+PLUS MCO during an Inpatient Stay in a Hospital.  Except as provided in subpart (a)(2), responsibility for claims incurred during the Inpatient Stay will be divided as follows: (1) the Medicaid Fee-for-Service program will continue to pay allowable Hospital facility charges until the earlier of the date of Discharge or loss of Medicaid eligibility; and (2) beginning on the Effective Date of Coverage, the STAR or STAR+PLUS MCO will pay for all other Covered Services.
(5)   Movement from a STAR MCO to the STAR Health MCO.
A Medicaid recipient can move from the STAR Program into the STAR Health Program during an Inpatient Stay.  In such cases, responsibility for claims incurred during the Inpatient stay will be divided as follows: (1) the STAR MCO will continue to pay Hospital facility charges for Covered Services until the earlier of the date of Discharge or loss of Medicaid eligibility, and (2) beginning on the Effective Date of Coverage, the STAR Health MCO will pay for all other Covered Services.
(6)  Movement from a STAR+PLUS MCO to the STAR Health MCO.
A Medicaid recipient can move from the STAR+PLUS Program into the STAR Health Program during an Inpatient Stay.  In such cases, responsibility for claims incurred during the Inpatient stay will be divided as follows: (1) the STAR+PLUS MCO will continue to pay Hospital facility charges for Behavioral Health Covered Services until the earlier of the date of Discharge or loss of Medicaid eligibility, (2) and the Medicaid FFS program will continue to pay Hospital facility charges for non-Behavioral Health Covered Services until the earlier of the date of Discharge or loss of Medicaid eligibility, and (3) beginning on the Effective Date of Coverage, the STAR Health MCO will pay for all other Covered Services.
(7)  Movement from STAR+PLUS to Medicaid Fee-for-Service.
A Medicaid recipient can move from the STAR+PLUS Program to FFS (if a child) during an Inpatient Stay.  In such cases, responsibility for claims incurred during the Inpatient Stay will be divided as follows: (1) the STAR+PLUS MCO will continue to pay Hospital facility charges for inpatient Behavioral Health Covered Services until the earlier of the date of Discharge or loss of Medicaid eligibility, and (2) beginning on the effective date of FFS coverage, FFS will pay for all other Medicaid services.
(8)  Movement from STAR to STAR+PLUS or Medicaid Fee-for-Service due to SSI Status.
When a STAR member becomes qualified for SSI, the STAR member will move, in accordance with the processes described in Section 5.06(c): (1) to FFS or STAR+PLUS (if a child), or (2) to STAR+PLUS (if an adult).  If a move occurs during an Inpatient Stay, responsibility for claims incurred during the Inpatient Stay will be divided as follows: (1) the STAR MCO will continue to pay Hospital facility charges for Covered Services until the earlier of the date of Discharge or loss of Medicaid eligibility, and (2) beginning on the Effective Date of Coverage for STAR+PLUS or the effective date of FFS coverage, the new entity will pay for all other Medicaid services.
(9)  Responsibility for Costs Incurred After Loss of Medicaid Eligibility.
Medicaid MCOs are not responsible for services incurred on or after the effective date of loss of Medicaid eligibility.
(10)  Reenrollment after Temporary Loss of Medicaid Eligibility.
Members who are disenrolled because they are temporarily ineligible for Medicaid will be automatically re-enrolled into the same MCO, if available.  Temporary loss of eligibility is defined as a period of six (6) months or less.
(b)  CHIP MCOs.
If a CHIP Program or CHIP Perinatal Program Member’s Effective Date of Coverage occurs while the Member is confined in a Hospital, MCO is responsible for the Member’s costs of Covered Services beginning on the Effective Date of Coverage.  If a Member is disenrolled while the Member is confined in a Hospital, MCO’s responsibility for the Member’s costs of Covered Services terminates on the Date of Disenrollment.
(c)  Effective Date of SSI Status.
In accordance with Section 8.2.13, SSI status is effective on the date the State’s eligibility system identifies a STAR, CHIP, or CHIP Perinatal Program Member as Type Program 13 (TP 13).  HHSC is responsible for updating the State’s eligibility system within 45 days of official notice of the Member’s Federal SSI status by the Social Security Administration (SSA).  Once HHSC has updated the State’s eligibility system to identify the STAR, CHIP, or CHIP Perinatal Program Member as TP13, following standard eligibility cut-off rules, HHSC will allow the Member to:
(1)  prospectively move to Medicaid FFS (if the Member is a child in any part of the State);
(2)   prospectively move to STAR+PLUS (if the Member is a child in a STAR+PLUS Service Area); or
(3)   remain in STAR (if the Member is a child who is already enrolled in STAR in a Service Area not served by STAR+PLUS).
HHSC will not retroactively disenroll a Member from the STAR, CHIP, or CHIP Perinatal Programs.

Section 5.07 Verification of Member Eligibility.

Medicaid MCOs are prohibited from entering into an agreement to share information regarding their Members with an external vendor that provides verification of Medicaid recipients’ eligibility to Medicaid providers.  All such external vendors must contract with the State and obtain eligibility information from the State.

 
Section 5.08 Special Temporary STAR Default Process

(a)  STAR MCOs that did not contract with HHSC to provide STAR services in a Service Area prior to the Effective Date of the Contract will be assigned a limited number of STAR eligibles who have not actively made an MCO choice, for a finite period. The number will vary by Service Area as set forth below.
(b)  For the Bexar, Dallas, El Paso, Harris, Jefferson, Lubbock, Nueces, Tarrant, and Travis Service Areas, the special default process will begin with the Operational Start Date and conclude when the MCO has achieved an enrollment of 15,000 mandatory STAR members, or at the end of six (6) months, whichever comes first.
(c)  Special default periods may be extended for one (1) or more Service Areas if consistent with HHSC administrative rules.

Section 5.09 Special Temporary STAR+PLUS Default Process

(a)  STAR+PLUS MCOs that did not contract with HHSC to provide STAR+PLUS services in a Service Area prior to the Effective Date of the Contract will be assigned a limited number of STAR+PLUS eligibles who have not actively made an MCO choice, for a finite period. To the extent possible, the special default assignment will be based on each eligible's prior history with a PCP and geographic proximity to a PCP.
(b)  The special default process will begin on the Operational Start Date.

Section 5.10 Special Temporary CHIP Default Process

(a)  CHIP MCOs that did not contract with HHSC to provide CHIP services in a Service Area prior to the Effective Date of the Contract will be assigned a limited number of CHIP eligibles who have not actively made an MCO choice, for a finite period.
(b)  In Service Areas where there is only one (1) new CHIP MCO, Members will be defaulted into the new CHIP MCO until it reaches 3,000 members or until six (6) months from the Operational Start Date, whichever comes first.
(c)  In Service Areas where there are two (2) or more new MCOs, Members are distributed evenly between the new MCOs until the MCOs reach 3,000 members or until six (6) months from the Operational Start Date, whichever comes first.
(d)  Once one (1) of these criteria is met, HHSC’s standard default process begins for all participating MCO.

Section 5.11 Default Methodology for Frew Incentives

As required by the “Frew vs. Suehs Corrective Action Order: Managed Care,” this Contract includes a system of incentives and disincentives associated with the Medicaid Managed Care Texas Health Steps Medical Checkups Reports. The default assignment methodology associated with these reports, and corresponding incentives and disincentives for Medicaid MCOs, will be included in the Uniform Managed Care Manual.

Article 6. Service Levels & Performance Measurement

Section 6.01 Performance measurement.

Satisfactory performance of this Contract will be measured by:
(a)  Adherence to this Contract, including all representations and warranties;
(b)  Delivery of the Services and Deliverables;
(c)  Results of audits performed by HHSC or its representatives in accordance with Article 9, “Audit and Financial Compliance”;
(d)  Timeliness, completeness, and accuracy of required reports; and
(e)  Achievement of performance measures developed by MCO and HHSC and as modified from time to time by written agreement during the term of this Contract.

Article 7. Governing Law & Regulations

Section 7.01 Governing law and venue.

This Contract is governed by the laws of the State of Texas and interpreted in accordance with Texas law.  Provided MCO first complies with the procedures set forth in Section 12.13, “Dispute Resolution,” proper venue for claims arising from this Contract will be in the State District Court of Travis County, Texas.

Section 7.02 MCO responsibility for compliance with laws and regulations.

(a)  MCO must comply, to the satisfaction of HHSC, with all provisions set forth in this Contract, all applicable provisions of state and federal laws, rules, regulations, federal waivers, policies and guidelines, and any court-ordered consent decrees, settlement agreements, or other court orders that govern the performance of the Scope of Work including, but not limited to:
(1)  Titles XIX and XXI of the Social Security Act;
(2)  Chapters 62 and 63, Texas Health and Safety Code;
(3)  Chapters 531 and 533, Texas Government Code;
(4)  42 C.F.R. Parts 417 and 457, as applicable;
(5)  45 C.F.R. Parts 74 and 92;
(6)  48 C.F.R. Part 31, or OMB Circular A-122, based on whether the entity is for-profit or nonprofit;
(7)  1 T.A.C. Part 15, Chapters 361, 370, 371, 391, and 392;
(8)  Consent Decree and Corrective Action Orders, Frew, et al. v. Suehs, et al., (applies to Medicaid MCOs only);
(9)   partial settlement agreements, Alberto N., et al. v. Suehs, et al., (applies to Medicaid MCOs only);
(10)  Texas Human Resources Code Chapters 32 and 36;
(11)  Texas Penal Code Chapter 35A (Medicaid Fraud);
(12)  1 T.A.C. Chapter 353;
(13)  1 T.A.C. Chapter 354, Subchapters B and J;
(14) 1. T.A.C. Chapter 354, Subchapters F, I, K, and I, as applicable;
(15)  The Patient Protection and Affordable Care Act (“PPACA”; Public Law 111-148);
(16)  The Health Care and Education Reconciliation Act of 2010 (“HCERA”; Public Law 111-152) 42 CFR Part 455; and
(17)  all State and Federal tax laws, State and Federal employment laws, State and Federal regulatory requirements, and licensing provisions.
(b)  The Parties acknowledge that the federal and/or state laws, rules, regulations, policies, or guidelines, and court-ordered consent decrees, settlement agreements, or other court orders that affect the performance of the Scope of Work may change from time to time or be added, judicially interpreted, or amended by competent authority.  MCO acknowledges that the MCO Programs will be subject to continuous change during the term of the Contract and, except as provided in Section 8.02, MCO has provided for or will provide for adequate resources, at no additional charge to HHSC, to reasonably accommodate such changes.  The Parties further acknowledge that MCO was selected, in part, because of its expertise, experience, and knowledge concerning applicable Federal and/or state laws, regulations, policies, or guidelines that affect the performance of the Scope of Work.  In keeping with HHSC’s reliance on this knowledge and expertise, MCO is responsible for identifying the impact of changes in applicable Federal or state legislative enactments and regulations that affect the performance of the Scope of Work or the State’s use of the Services and Deliverables. MCO must timely notify HHSC of such changes and must work with HHSC to identify the impact of such changes.
(c)  HHSC will notify MCO of any changes in applicable law, regulation, policy, or guidelines that HHSC becomes aware of in the ordinary course of its business.
(d)  MCO is responsible for any fines, penalties, or disallowances imposed on the State or MCO arising from any noncompliance with the laws and regulations relating to the delivery of the Services or Deliverables by the MCO, its Subcontractors or agents.
(e)  MCO is responsible for ensuring each of its employees, agents or Subcontractors who provide Services under the Contract are properly licensed, certified, and/or have proper permits to perform any activity related to the Services.
(f)  MCO warrants that the Services and Deliverables will comply with all applicable Federal, State, and County laws, regulations, codes, ordinances, guidelines, and policies.  MCO will indemnify HHSC from and against any losses, liability, claims, damages, penalties, costs, fees, or expenses arising from or in connection with MCO’s failure to comply with or violation of any such law, regulation, code, ordinance, or policy.

Section 7.03 TDI licensure/ANHC certification and solvency.

(a)  Licensure
MCO must receive TDI approval to operate in all counties of the Service Areas included within the scope of the Contract.
(b)  Solvency
MCO must maintain compliance with the Texas Insurance Code and rules promulgated and administered by the TDI requiring a fiscally sound operation.  MCO must have a plan and take appropriate measures to ensure adequate provision against the risk of insolvency as required by TDI.  Such provision must be adequate to provide for the following in the event of insolvency:
(1)  continuation of benefits, until the time of discharge, to Members who are confined on the date of insolvency in a Hospital or other inpatient facility;
(2)  payment to unaffiliated health care providers and affiliated health care providers whose agreements do not contain member “hold harmless” clauses acceptable to TDI for required services rendered to Members for the duration of the Contract period for which HHSC has paid a Capitation Payment, and
(3)  continuation of benefits for the duration of the Contract period for which HHSC has paid a Capitation Payment.
Provision against the risk of insolvency must be made by establishing adequate reserves, insurance or other guarantees in full compliance with all financial requirements of TDI.

Section 7.04 Immigration Reform and Control Act of 1986.

MCO must comply with the requirements of the Immigration Reform and Control Act of 1986 and the Immigration Act of 1990 (8 U.S.C. §1101,
et seq.) regarding employment verification and retention of verification forms for any individual(s) hired on or after November 6, 1986, who will perform any labor or services under this Contract.

Section 7.05 Compliance with state and federal anti-discrimination laws.

(a)  MCO agrees to comply with state and federal anti-discrimination laws, including without limitation:
(1)  Title VI of the Civil Rights Act of 1964 (42 U.S.C. §2000d et seq.);
(2)  Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. §794);
(3)  Americans with Disabilities Act of 1990 (42 U.S.C. §12101 et seq.);
(4)  Age Discrimination Act of 1975 (42 U.S.C. §§6101-6107);
(5) Title IX of the Education Amendments of 1972 (20 U.S.C. §§1681-1688);
(6)  Food Stamp Act of 1977 (7 U.S.C. §200 et seq.); and
(7)  The HHS agency’s administrative rules, as set forth in the Texas Administrative Code, to the extent applicable to this Agreement.
MCO agrees to comply with all amendments to the above-referenced laws, and all requirements imposed by the regulations issued pursuant to these laws. These laws provide in part that no persons in the United States may, on the grounds of race, color, national origin, sex, age, disability, political beliefs, or religion, be excluded from participation in or denied any aid, care, service or other benefits provided by Federal or State funding, or otherwise be subjected to discrimination.
(b)  MCO agrees to comply with Title VI of the Civil Rights Act of 1964, and its implementing regulations at 45 C.F.R. Part 80 or 7 C.F.R. Part 15, prohibiting a contractor from adopting and implementing policies and procedures that exclude or have the effect of excluding or limiting the participation of clients in its programs, benefits, or activities on the basis of national origin. Applicable state and federal civil rights laws require contractors to provide alternative methods for ensuring access to services for applicants and recipients who cannot express themselves fluently in English. MCO agrees to ensure that its policies do not have the effect of excluding or limiting the participation of persons in its programs, benefits, and activities on the basis of national origin. MCO also agrees to take reasonable steps to provide services and information, both orally and in writing, in appropriate languages other than English, in order to ensure that persons with limited English proficiency are effectively informed and can have meaningful access to programs, benefits, and activities.
(c)  MCO agrees to comply with Executive Order 13279, and its implementing regulations at 45 C.F.R. Part 87 or 7 C.F.R. Part 16. These provide in part that any organization that participates in programs funded by direct financial assistance from the United States Department of Agriculture or the United States Department of Health and Human Services must not, in providing services, discriminate against a program beneficiary or prospective program beneficiary on the basis of religion or religious belief.
(d)  Upon request, MCO will provide HHSC Civil Rights Office with copies of all of the MCO’s civil rights policies and procedures.
(e)  MCO must notify HHSC’s Civil Rights Office of any civil rights complaints received relating to its performance under this Agreement. This notice must be delivered no more than ten (10) calendar days after receipt of a complaint. Notice provided pursuant to this section must be directed to:
HHSC Civil Rights Office
701 W. 51st Street, Mail Code W206
Austin, Texas 78751
Phone Toll Free: (888) 388-6332
Phone: (512) 438-4313
TTY Toll Free: (877) 432-7232
Fax: (512) 438-5885.

Section 7.06 Environmental protection laws.

MCO must comply with the applicable provisions of federal environmental protection laws as described in this Section:
(a)  Pro-Children Act of 1994.
MCO must comply with the Pro-Children Act of 1994 (20 U.S.C. §6081 et seq.), as applicable, regarding the provision of a smoke-free workplace and promoting the non-use of all tobacco products.
(b)  National Environmental Policy Act of 1969.
MCO must comply with any applicable provisions relating to the institution of environmental quality control measures contained in the National Environmental Policy Act of 1969 (42 U.S.C. §4321 et seq.) and Executive Order 11514 (“Protection and Enhancement of Environmental Quality”).
(c)  Clean Air Act and Water Pollution Control Act regulations.
MCO must comply with any applicable provisions relating to required notification of facilities violating the requirements of Executive Order 11738 (“Providing for Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans”).
(d)  State Clean Air Implementation Plan.
MCO must comply with any applicable provisions requiring conformity of federal actions to State (Clean Air) Implementation Plans under §176(c) of the Clean Air Act of 1955, as amended (42 U.S.C. §740 et seq.).
(e)  Safe Drinking Water Act of 1974.
MCO must comply with applicable provisions relating to the protection of underground sources of drinking water under the Safe Drinking Water Act of 1974, as amended (21 U.S.C. § 349; 42 U.S.C. §§ 300f to 300j-9).

Section 7.07 HIPAA.

(a)  MCO must comply with applicable provisions of HIPAA.  This includes, but is not limited to, the requirement that the MCO’s MIS system comply with applicable certificate of coverage and data specification and reporting requirements promulgated pursuant to HIPAA.  MCO must comply with HIPAA EDI requirements.
(b)  Additionally, MCO must comply with HIPAA notification requirements, including those set forth in the Health Information Technology for Economic and Clinical Health Act (HITECH Act) at 42 U.S.C. 17931 et.seq.  MCO must notify HHSC of all breaches or potential breaches of unsecured protected health information, as defined by the HITECH Act, without unreasonable delay and in no event later than 60 calendar days after discovery of the breach or potential breach.  If, in HHSC’s determination, MCO has not provided notice in the manner or format prescribed by the HITECH Act, then HHSC may require the MCO to provide such notice.

Section 7.08 Historically Underutilized Business Participation Requirements

(a)  Definitions.
For purposes of this Section:
(1)  “Historically Underutilized Business” or “HUB” means a minority or women-owned business as defined by Texas Government Code, Chapter 2161.
(2)  “HSP” means a HUB Subcontracting Plan.
(b)  HUB Requirements.
(1)  In accordance with Attachment B-1, Section 8.1.17.2, the MCO must submit an HSP for HHSC’s approval during the Transition Phase, and maintain the HSP thereafter.
(2)  MCO must report to HHSC’s contract manager and HUB Office monthly, in the format required by Chapter 5.4.4.3 of the Uniform Managed Care Manual, its use of HUB subcontractors to fulfill the subcontracting opportunities identified in the HSP.
(3)  MCO must obtain prior written approval from the HHSC HUB Office before making any changes to the HSP. The proposed changes must comply with HHSC’s good faith effort requirements relating to the development and submission of HSPs.
(i)   The MCO must submit a revised HSP to the HHSC HUB Office when it: changes the dollar amount of, terminates, or modifies an existing Subcontract for MCO Administrative Services; or enters into a new Subcontract for MCO Administrative Services. All proposed changes to the HSP must comply with the requirements of this Agreement.
(4)  HHSC will determine if the value of Subcontracts to HUBs meet or exceed the HUB subcontracting provisions specified in the MCO's HSP. If HHSC determines that the MCO's subcontracting activity does not demonstrate a good faith effort, the MCO may be subject to provisions in the Vendor Performance and Debarment Program (Title 34, Part 1, Chapter 20, Subchapter C, Rule §20.105), and subject to remedies for Breach.

Article 8. Amendments & Modifications

Section 8.01 Mutual agreement.

This Contract may be amended at any time by mutual agreement of the Parties.  The amendment must be in writing and signed by individuals with authority to bind the Parties.

Section 8.02 Changes in law or contract.

If Federal or State laws, rules, regulations, policies or guidelines are adopted, promulgated, judicially interpreted or changed, or if contracts are entered or changed, the effect of which is to alter the ability of either Party to fulfill its obligations under this Contract, the Parties will promptly negotiate in good faith appropriate modifications or alterations to the Contract. Such modifications or alterations must be in writing and signed by individuals with authority to bind the parties, equitably adjust the terms and conditions of this Contract, and must be limited to those provisions of this Contract affected by the change.

Section 8.03 Modifications as a remedy.

This Contract may be modified under the terms of Article 12, “Remedies and Disputes.”

Section 8.04 Modification Process.

(a)  If HHSC seeks modifications to the Contract, HHSC’s notice to MCO will specify those modifications to the Scope of Work, the Contract pricing terms, or other Contract terms and conditions.
(b)  MCO must respond to HHSC’s proposed modification within the timeframe specified by HHSC, generally within ten (10) Business Days of receipt.  Upon receipt of MCO’s response to the proposed modifications, HHSC may enter into negotiations with MCO to arrive at mutually agreeable Contract amendments. In the event that HHSC determines that the Parties will be unable to reach agreement on mutually satisfactory contract modifications, then HHSC will provide written notice to MCO of its intent terminate the Contract, or not to extend the Contract beyond the current Contract Term.

Section 8.05 Modification of the Uniform Managed Care Manual.

(a)  HHSC will provide MCO with at least ten (10) Business Days advance written notice before implementing a substantive and material change in the Uniform Managed Care Manual (a change that materially and substantively alters the MCO’s ability to fulfill its obligations under the Contract).  The Uniform Managed Care Manual, and all modifications thereto made during the Contract Term, are incorporated by reference into this Contract.  HHSC will provide MCO with a reasonable amount of time to comment on such changes, generally at least five (5) Business Days.  HHSC is not required to provide advance written notice of changes that are not material and substantive in nature, such as corrections of clerical errors or policy clarifications.
(b)  The Parties agree to work in good faith to resolve disagreements concerning material and substantive changes to the Uniform Managed Care Manual.  If the Parties are unable to resolve issues relating to material and substantive changes, then either Party may terminate the agreement in accordance with Article 12, “Remedies and Disputes.”
(c)  Changes will be effective on the date specified in HHSC’s written notice, which will not be earlier than the MCO’s response deadline, and such changes will be incorporated into the Uniform Managed Care Manual.  If the MCO has raised an objection to a material and substantive change to the Uniform Managed Care Manual and submitted a notice of termination in accordance with Section 12.04(c), HHSC will not enforce the policy change for the objecting MCO during the period of time between the receipt of the notice and the date of Contract termination.

Section 8.06 CMS approval of amendments

Amendments, modifications, and changes to the Contract are subject to the approval of the Centers for Medicare and Medicaid Services (“CMS.”)

Section 8.07 Required compliance with amendment and modification procedures.

No different or additional services, work, or products will be authorized or performed except as authorized by this Article.  No waiver of any term, covenant, or condition of this Contract will be valid unless executed in compliance with this Article.  MCO will not be entitled to payment for any services, work or products that are not authorized by a properly executed Contract amendment or modification.

Article 9. Audit & Financial Compliance

Section 9.01 Record retention and audit.

MCO agrees to maintain, and require its Subcontractors to maintain, records, books, documents, and information (collectively “records”) that are adequate to ensure that services are provided and payments are made in accordance with the requirements of this Contract, including applicable Federal and State requirements (e.g., 45 CFR §74.53). Such records must be retained by MCO or its Subcontractors for a period of five (5) years after the Contract Expiration Date or until the resolution of all litigation, claim, financial management review or audit pertaining to this Contract, whichever is longer.

Section 9.02 Access to records, books, and documents.

(a)   Upon reasonable notice, MCO must provide, and cause its Subcontractors to provide, the officials and entities identified in this Section with prompt, reasonable, and adequate access to any records that are related to the scope of this Contract.
(b)   MCO and its Subcontractors must provide the access described in this Section upon HHSC’s request.  This request may be for, but is not limited to, the following purposes:
(1) Examination;
(2) Audit;
(3)  Investigation;
(4)  Contract administration; or
(5)  The making of copies, excerpts, or transcripts.
(c)   The access required must be provided to the following officials and/or entities:
(1) The United States Department of Health and Human Services or its designee;
(2) The Comptroller General of the United States or its designee;
(3)   MCO Program personnel from HHSC or its designee;
(4)   The Office of Inspector General;
(5)  The Medicaid Fraud Control Unit of the Texas Attorney General's Office or its designee;
(6)   Any independent verification and validation contractor, audit firm, or quality assurance contractor acting on behalf of HHSC;
(7)   The Office of the State Auditor of Texas or its designee;
(8)   A State or Federal law enforcement agency;
(9)   A special or general investigating committee of the Texas Legislature or its designee; and
(10)   Any other state or federal entity identified by HHSC, or any other entity engaged by HHSC.
(d) MCO agrees to provide the access described wherever MCO maintains such books, records, and supporting documentation.  MCO further agrees to provide such access in reasonable comfort and to provide any furnishings, equipment, and other conveniences deemed reasonably necessary to fulfill the purposes described in this Section.  MCO will require its Subcontractors to provide comparable access and accommodations.
(e) Upon request, the MCO must provide copies of the information described in this Section free of charge to HHSC and the entities described in subsection (c).
(f) In accordance with Texas Government Code §533.012(e), any information submitted to HHSC or the Texas Attorney General’s Office pursuant to Texas Government Code §533.012(a)(1) is confidential and is not subject to disclosure under the Texas Public Information Act.

Section 9.03 Audits of Services, Deliverables and inspections.

(a)  Upon reasonable notice from HHSC, MCO will provide, and will cause its Subcontractors to provide, such auditors and inspectors as HHSC may from time to time designate, with access to:
(1) service locations, facilities, or installations;
(2)   records; and
(3)   Software and Equipment.
(b)  The access described in this Section will be for the purpose of examining, auditing, or investigating:
(1)  MCO’s capacity to bear the risk of potential financial losses;
(2)  the Services and Deliverables provided;
(3)  a determination of the amounts payable under this Contract;
(4)  a determination of the allowability of costs reported under this Contract;
(5)  an examination of Subcontract terms and/or transactions;
(6)  an assessment of financial results under this Contract;
(7)  detection of Fraud, Waste and/or Abuse; or
(8)  other purposes HHSC deems necessary to perform its oversight function and/or enforce the provisions of this Contract.
(c)  MCO must provide, as part of the Scope of Work, any assistance that such auditors and inspectors reasonably may require to complete such audits or inspections.
(d)  If, as a result of an audit or review of payments made to the MCO, HHSC discovers a payment error or overcharge, HHSC will notify the MCO of such error or overcharge.  HHSC will be entitled to recover such funds as an offset to future payments to the MCO, or to collect such funds directly from the MCO.  MCO must return funds owed to HHSC within 30 days after receiving notice of the error or overcharge, or interest will accrue on the amount due.  HHSC will calculate interest at 12% per annum, compounded daily.  In the event that an audit reveals that errors in reporting by the MCO have resulted in errors in payments to the MCO or errors in the calculation of the Experience Rebate, the MCO will indemnify HHSC for any losses resulting from such errors, including the cost of audit.  If the interest rate stipulated hereunder is found by a court of competent jurisdiction to be outside the range deemed legal and enforceable, then the rate hereunder will be adjusted as little as possible so as to be deemed legal and enforceable.

Section 9.04 SAO Audit

The MCO understands that acceptance of funds under this Contract acts as acceptance of the authority of the State Auditor’s Office (“SAO”), or any successor agency, to conduct an investigation in connection with those funds.  The MCO further agrees to cooperate fully with the SAO or its successor in the conduct of the audit or investigation, including providing all records requested.  The MCO will ensure that this clause concerning the authority to audit funds and the requirement to cooperate is included in any Subcontract, and in any third party agreements described in Section 4.10, “MCO Agreements with Third Parties.”

Section 9.05 Response/compliance with audit or inspection findings.

(a)  MCO must take action to ensure its or a Subcontractor’s compliance with or correction of any finding of noncompliance with any law, regulation, audit requirement, or generally accepted accounting principle relating to the Services and Deliverables or any other deficiency contained in any audit, review, or inspection conducted under this Article.  This action will include MCO’s delivery to HHSC, for HHSC’S approval, a Corrective Action Plan that addresses deficiencies identified in any audit, review, or inspection within 30 calendar days of the close of the audit, review, or inspection.
(b)  MCO must bear the expense of compliance with any finding of noncompliance under this Section that is:
(1)  Required by Texas or Federal law, regulation, rule, court order, or other audit requirement relating to MCO's business;
(2)  Performed by MCO as part of the Scope of Work; or
(3)  Necessary due to MCO's noncompliance with any law, regulation, rule, court order, or audit requirement imposed on MCO.
(c)  As part of the Scope of Work, MCO must provide to HHSC upon request a copy of those portions of MCO's and its Subcontractors' internal audit reports relating to the Services and Deliverables provided to HHSC under the Contract.

Section 9.06 Notification of Legal and Other Proceedings, and Related Events.

The MCO must notify HHSC of all proceedings, reports, documents, actions, and events as specified in Uniform Managed Care Manual Chapter 5.8, “Report of Legal and Other Proceedings, and Related Events.”

Article 10. Terms & Conditions of Payment

Section 10.01 Calculation of monthly Capitation Payment.

(a)  This is a Risk-based contract.  For each applicable MCO Program, HHSC will pay the MCO fixed monthly Capitation Payments based on the number of eligible and enrolled Members. HHSC will calculate the monthly Capitation Payments by multiplying the number of Members by each applicable Member Rate Cell.  In consideration of the Monthly Capitation Payments, the MCO agrees to provide the Services and Deliverables described in this Contract.
(b)  MCO will be required to provide timely financial and statistical information necessary in the Capitation Rate determination process.  Encounter Data provided by MCO must conform to all HHSC requirements. Encounter Data containing non-compliant information, including, but not limited to, inaccurate Member identification numbers, inaccurate provider identification numbers, or diagnosis or procedures codes insufficient to adequately describe the diagnosis or medical procedure performed, will not be considered in the MCO’s experience for rate-setting purposes.
(c)  Information or data, including complete and accurate Encounter Data, as requested by HHSC for rate-setting purposes, must be provided to HHSC: (1) within 30 days of receipt of the letter from HHSC requesting the information or data; and (2) no later than March 31st of each year.
(d)  The fixed monthly Capitation Rate consists of the following components:
(1)  an amount for Health Care Services performed during the month;
(2)  an amount for administering the MCO Program, and
(3)  an amount for the MCO’s Risk margin.
Capitation Rates for each MCO Program may vary by Service Area and MCO.  HHSC will employ or retain qualified actuaries to perform data analysis and calculate the Capitation Rates for each Rate Period.
(e)  MCO understands and expressly assumes the risks associated with the performance of the duties and responsibilities under this Contract, including the failure, termination or suspension of funding to HHSC, delays or denials of required approvals, and cost overruns not reasonably attributable to HHSC.

Section 10.02 Time and Manner of Payment.

(a)  During the Contract Term and beginning after the Operational Start Date, HHSC will pay the monthly Capitation Payments by the 10th Business Day of each month.
(b)  The MCO must accept Capitation Payments by direct deposit into the MCO’s account.
(c)  HHSC may adjust the monthly Capitation Payment to the MCO in the case of an overpayment to the MCO; for Experience Rebate amounts due and unpaid, including any associated interest; and if monetary damages are assessed in accordance with Article 12, “Remedies and Disputes.”
(d)  HHSC’s payment of monthly Capitation Payments is subject to availability of federal and state appropriations. If appropriations are not available to pay the full monthly Capitation Payment, HHSC may:
(1)  equitably adjust Capitation Payments for all participating MCOs, and reduce scope of service requirements as appropriate in accordance with Article 8, “Amendments and Modifications,” or
(2)  terminate the Contract in accordance with Article 12, “Remedies and Disputes.”

Section 10.03 Certification of Capitation Rates.

HHSC will employ or retain a qualified actuary to certify the actuarial soundness of the Capitation Rates, and all revisions or modifications thereto.

Section 10.04 Modification of Capitation Rates.

The Parties expressly understand and agree that the agreed Capitation Rates are subject to modification in accordance with
Article 8
, “Amendments and Modifications,” if changes in state or federal laws, rules, regulations, guidelines, policies, or court orders affect the rates or the actuarial soundness of the rates.  HHSC will provide the MCO notice of a modification to the Capitation Rates at least 60 days
prior to the effective date of the change, unless HHSC determines that circumstances warrant a shorter notice period.  If the MCO does not accept the rate change, either Party may terminate the Contract in accordance with
Article 12, “Remedies and Disputes.”

Section 10.05 STAR and STAR+PLUS Capitation Structure.

(a)  STAR Rate Cells.
STAR Capitation Rates are defined on a per Member per month basis by Rate Cells and Service Areas.  STAR Rate Cells are:
(1)  TANF adults;
(2)  TANF children over 12 months of age;
(3)  Expansion children over 12 months of age;
(4)  Newborns less than or equal to 12 months of age;
(5)  TANF children less than or equal to 12 months of age;
(6)  Expansion children less than or equal to 12 months of age;
(7)  Federal mandate children;
(8)  Pregnant women; and
(9)  Dual Eligible Standard Rate (applies to the Medicaid Rural Service Area only).
These Rate Cells are subject to change.
(b)  STAR+PLUS Rate Cells.
STAR+PLUS Capitation Rates are defined on a per Member per month basis by Rate Cells. STAR+PLUS Rate Cells are based on client category as follows:
(1)  Medicaid Only Standard Rate
(2)  Medicaid Only 1915 (c) Nursing Facility Waiver Rate – Above Floor
(3)  Medicaid Only 1915 (c) Nursing Facility Waiver Rate – Below Floor
(4)  Dual Eligible Standard Rate
(5)  Dual Eligible 1915(c) Nursing Facility Waiver Rate – Above Floor
(6)  Dual Eligible 1915(c) Nursing Facility Waiver Rate – Below Floor
(7)  Nursing Facility – Medicaid only
(8)  Nursing Facility - Dual Eligible
These Rate Cells are subject to change.
(c) STAR and STAR+PLUS Capitation Rate development:
(1)  Capitation Rates for Service Areas with historical Medicaid MCO Program participation.
For Service Areas where HHSC operated a Medicaid MCO Program prior to the Effective Date of this Contract, HHSC will develop base Capitation Rates by analyzing the Medicaid MCO Program’s historical Encounter Data and financial data for the Service Area (e.g., Capitation Rates for the STAR Program will be based on STAR Program historical Encounter Data and financial data for the Service Area).  This analysis will apply to all MCOs in the Service Area, including MCOs that have no historical participation in the Medicaid MCO Program in Service Area.  The analysis will include a review of historical enrollment and claims experience information; any changes to Covered Services and covered populations; rate changes specified by the Texas Legislature; and any other relevant information.  If the MCO participated in the Medicaid MCO Program in the Service Area prior to the Effective Date of this Contract, HHSC may modify the Service Area base Capitation Rates using diagnosis-based risk adjusters to yield the final Capitation Rates.
(2)  Capitation Rates for Rate Periods 1 and 2 for Service Areas with no historical STAR Program participation.
For Service Areas where HHSC has not operated a Medicaid MCO Program prior to the Effective Date of this Contract, HHSC will establish base Capitation Rates for Rate Periods 1 and 2 by analyzing Fee-for-Service claims data for the Medicaid MCO Program and Service Area (e.g., Capitation Rates for the STAR Program will be based fee-for-service data in the Service Area).  This analysis will include a review of historical enrollment and claims experience information; any changes to Covered Services and covered populations; rate changes specified by the Texas Legislature; and any other relevant information.
(3)  Capitation Rates for subsequent Rate Periods for Service Areas with no historical STAR Program participation.
For Service Areas where HHSC has not operated a Medicaid MCO Program prior to the Effective Date of this Contract, HHSC will establish base Capitation Rates for the Rate Periods following Rate Period 2 by analyzing the Medicaid MCO Program’s historical Encounter Data and financial data for the Service Area.  This analysis will include a review of historical enrollment and claims experience information; any changes to Covered Services and covered populations; rate changes specified by the Texas Legislature; and any other relevant information.
(d)  Acuity adjustment.
HHSC may evaluate and implement an acuity adjustment methodology, or alternative reasonable methodology, that appropriately reimburses the MCO for acuity and cost differences that deviate from that of the community average, if HHSC in its sole discretion determines that such a methodology is reasonable and appropriate.  The community average is a uniform rate for all MCOs in a Service Area, and is determined by combining all the experience for all MCOs in a Service Area to get an average rate for the Service Area.
(e)  Value-added Services.
Value-added Services will not be included in the rate-setting process.
(f)  Delay in Increased STAR+PLUS Capitation Level for Certain Members Receiving Waiver Services
Once a current STAR+PLUS MCO Member has been certified to receive STAR+PLUS Waiver (SPW) services, there is a two (2) month delay before the MCO will begin receiving the higher capitation payment.
Non-Waiver Members who qualify for STAR+PLUS based on eligibility for SPW services and Waiver recipients who transfer from another region will not be subject to this two (2) month delay in the increased capitation payment.
All SPW recipients will be registered into Service Authorization System Online (SASO).  The Premium Payment System (PPS) will process data from the SASO system in establishing a Member’s correct capitation payment.

Section 10.06 CHIP Capitation Rates Structure.

(a)  CHIP Rate Cells.
CHIP Capitation Rates are defined on a per Member per month basis by the Rate Cells applicable to a Service Area.  CHIP Rate Cells are based on the Member’s age group as follows:
(1)  under age one (1);
(2)  ages one (1) through five (5);
(3)  ages six (6) through fourteen (14); and
(4)  ages fifteen (15) through eighteen (18).
(b)  CHIP Perinatal Program Rate Cells.
CHIP Perinatal Capitation Rates are defined on a per Member per month basis by the Rate Cells applicable to a Service Area.  CHIP Perinatal Rate Cells are based on the Member’s birth status and household income as follows:
(1)  CHIP Perinate 0% to 185% of FPL;
(2)  CHIP Perinate Above 185% to 200% of FPL;
(3)  CHIP Perinate Newborn 0% to 185% of FPL (born before September 1, 2010); and
(4)  CHIP Perinate Newborn Above 185% to 200% of FPL.
(c)  CHIP and CHIP Perinatal Program Capitation Rate development:
HHSC will establish base Capitation Rates by analyzing Encounter Data and financial data for each Service Area.  This analysis will include a review of historical enrollment and claims experience information; any changes to Covered Services and covered populations; rate changes specified by the Texas Legislature; and any other relevant information.  HHSC may modify the Service Area base Capitation Rate using diagnosis based risk adjusters to yield the final Capitation Rates.
(d)  Acuity adjustment.
HHSC may evaluate and implement an acuity adjustment methodology, or alternative reasonable methodology, that appropriately reimburses the MCO for acuity and cost differences that deviate from that of the community average, if HHSC in its sole discretion determines that such a methodology is reasonable and appropriate.  The community average is a uniform rate for all MCOs in a Service Area, and is determined by combining all the experience for all MCOs in a Service Area to get an average rate for the Service Area.
(e)   Value-added Services.
Value-added Services will not be included in the rate-setting process.

Section 10.07 MCO input during rate setting process.

(a)  In Service Areas with historical STAR or STAR+PLUS Program participation, MCO must provide certified Encounter Data and financial data as prescribed in Uniform Managed Care Manual Chapter 5.0, “Deliverable Matrix.”  Such information may include, without limitation: claims lag information by Rate Cell, capitation expenses, and stop loss reinsurance expenses.  HHSC may request clarification or for additional financial information from the MCO.  HHSC will notify the MCO of the deadline for submitting a response, which will include a reasonable amount of time for response.
(b)  HHSC will allow the MCO to review and comment on data used by HHSC to determine base Capitation Rates.   In Service Areas with no historical STAR or STAR+PLUS Program participation, this will include Fee-for-Service data for Rate Periods 1 and 2.   HHSC will notify the MCO of deadline for submitting comments, which will include a reasonable amount of time for response.  HHSC will not consider comments received after the deadline in its rate analysis.
(c)  During the rate setting process, HHSC will conduct at least two (2) meetings with the MCOs.  HHSC may conduct the meetings in person, via teleconference, or by another method deemed appropriate by HHSC.  Prior to the first meeting, HHSC will provide the MCO with proposed Capitation Rates.  During the first meeting, HHSC will describe the process used to generate the proposed Capitation Rates, discuss major changes in the rate setting process, and receive input from the MCO.  HHSC will notify the MCO of the deadline for submitting comments, which will include a reasonable amount of time to review and comment on the proposed Capitation Rates and rate setting process.  After reviewing such comments, HHSC will conduct a second meeting to discuss the final Capitation Rates and changes resulting from MCO comments, if any.

Section 10.08 Adjustments to Capitation Payments.

(a)  Recoupment.
HHSC may recoup a payment made to the MCO for a Member if:
(1)  the Member is enrolled into the MCO in error;
(2)  the Member moves outside the United States;
(3)  the Member dies before the first day of the month for which the payment was made; or
(4)  a Member’s eligibility status or program type is changed, corrected as a result of error, or is retroactively adjusted; or
(5)   payment has been denied by the CMS in accordance with the requirements in 42 C.F.R. §438.730.
(b)  Appeal of recoupment.
The MCO may appeal the recoupment or adjustment of capitations in the above circumstances using the HHSC dispute resolution process set forth in Section 12.13, “Dispute Resolution.”

Section 10.09 Delivery Supplemental Payment for CHIP, CHIP Perinatal and STAR MCOs.

(a)  The Delivery Supplemental Payment (DSP) is a function of the average delivery cost in each Service Area.  Delivery costs include facility and professional charges.
(b)  CHIP and STAR MCOs will receive a Delivery Supplemental Payment (DSP) from HHSC for each live or stillbirth by a Member. CHIP Perinatal MCOs will receive a DSP from HHSC for each live or stillbirth by a mother of a CHIP Perinatal Program Member in the above 185% to 200% FPL (measured at the time of enrollment in the CHIP Perinatal subprogram).   CHIP Perinatal MCOs will not receive a DSP from HHSC for a live or stillbirth by the mother of a CHIP Perinatal Program Member in the 0% to185% FPL.  For STAR and CHIP and CHIP Perinatal Program MCOs, the one-time DSP payment is made in the amount identified in the HHSC Managed Care Contract document regardless of whether there is a single birth or there are multiple births at time of delivery.  A delivery is the birth of a live born infant, regardless of the duration of the pregnancy, or a stillborn (fetal death) infant of twenty (20) weeks or more of gestation.  A delivery does not include a spontaneous or induced abortion, regardless of the duration of the pregnancy.
(c)  MCO must submit a monthly DSP Report as described in, Section 8.1.20.2, “Reports” to the RFP, in the format prescribed in Uniform Managed Care Manual Chapter 5.3.9, “Disproportionate Share Hospital Report.”
(d)  HHSC will pay the Delivery Supplemental Payment within twenty (20) Business Days after receipt of a complete and accurate report from the MCO.
(e)  The MCO will not be entitled to Delivery Supplemental Payments for deliveries that are not reported to HHSC within 210 days after the date of delivery, or within thirty (30) days from the date of discharge from the Hospital for the stay related to the delivery, whichever is later.
(f)  MCO must maintain complete claims and adjudication disposition documentation, including paid and denied amounts for each delivery. The MCO must submit the documentation to HHSC within five (5) Business Days after receiving a request for such information from HHSC.

Section 10.10 Experience Rebate

(a)  MCO’s duty to pay.
At the end of each Rate Period beginning with Rate Period 1, the MCO must pay an Experience Rebate for the STAR and CHIP Programs if the MCO’s Net Income before Taxes is greater than the percentage set forth below of the total Revenue for the period.  The Experience Rebate is calculated in accordance with the tiered rebate method set forth below based on the consolidated Net Income before Taxes for all of the MCO’s STAR and CHIP Service Areas included within the scope of the Contract, as measured by the Financial-Statistical Report (FSR) as reviewed and confirmed by HHSC.
(b)  Graduated Experience Rebate Sharing Method.
 
 
Pre-tax Income as a % of Revenues
MCO Share
HHSC Share
≤ 3%
100%
0%
> 3% and ≤ 5%
80%
20%
> 5% and ≤ 7%
60%
40%
> 7% and ≤ 9%
40%
60%
> 9% and ≤ 12%
20%
80%
> 12%
0%
100%
Pre-tax Income as a % of Revenues
MCO Share
HHSC Share
≤ 3%
100%
0%
> 3% and ≤ 5%
80%
20%
> 5% and ≤ 7%
60%
40%
> 7% and ≤ 9%
40%
60%
> 9% and ≤ 12%
20%
80%
> 12%
0%
100%

 
 
HHSC and the MCO will share the Net Income before Taxes for the STAR and CHIP Programs as follows, unless HHSC provides the MCO an Experience Rebate Reward in accordance with Section 6, “Premium Payment Incentives and Disincentives,” and Uniform Managed Care Manual Chapter 6.2, “Financial Incentive Methodology”:
(1)  The MCO will retain all the Net Income before Taxes that is equal to or less than 3% of the total STAR and CHIP Program Revenues received by the MCO;
(2)   HHSC and the MCO will share that portion of the Net Income before Taxes that is over 3% and less than or equal to 5% of the total STAR and CHIP Program Revenues received, with 80% to the MCO and 20% to HHSC.
(3)  HHSC and the MCO will share that portion of the Net Income before Taxes that is over 5% and less than or equal to 7% of the total STAR and CHIP Program Revenues received, with 60% to the MCO and 40% to HHSC.
(4)  HHSC and the MCO will share that portion of the Net Income before Taxes that is over 7% and less than or equal to 9% of the total STAR and CHIP Program Revenues received, with 40% to the MCO and 60% to HHSC.
(5)  HHSC and the MCO will share that portion of the Net Income before Taxes that is over 9% and less than or equal to 12% of the total STAR and CHIP Program Revenues received, with 20% to the MCO and 80% to HHSC.
(6)  HHSC will be paid the entire portion of the Net Income before Taxes that exceeds 12% of the total STAR and CHIP Program Revenues.
(c)  Net income before taxes.
(1)  The MCO must compute the Net Income before Taxes in accordance with Uniform Managed Care Manual Chapter 6.1 “Cost Principles for Expenses,” Chapter 5.3.1.2, “CHIP FSR Instructions for Completion,,” and Chapter 5.3.1.4, “STAR FSR Instructions for Completion,” and applicable federal regulations. The Net Income before Taxes will be confirmed by HHSC or its agent for the Rate Year relating to all revenues and expenses incurred pursuant to the Contract. HHSC reserves the right to modify the “Cost Principles for Expenses” and “FSR Instructions for Completion” found in the Uniform Managed Care Manual in accordance with Section 8.05, “Modification of the Uniform Managed Care Manual.”
(2)  For purposes of calculating Net Income before Taxes certain items are omitted from the calculation; these include, but are not limited to:
(i)  the payment of an Experience Rebate;
(ii)  any interest expense associated with late or underpayment of the Experience Rebate;
(iii)  financial incentives, including without limitation the Quality Challenge Award described in Attachment B-1, Section 6.3.2.3; and
(iv)  financial disincentives, including without limitation: the Performance-based Capitation Rate described in Attachment B-1, Section 6.3.2.2; and the liquidated damages described in Attachment B-5.
See  Uniform Managed Care Manual Chapter 6.1, “Cost Principles for Expenses.”
(3)  Financial incentives will not be reduced by potential increased Experience Rebate payments.  Financial disincentives will not be offset in whole or part by potential decreases in Experience Rebate payments.
(4)  For FSR reporting purposes, financial incentives incurred must not be reported as an increase in Revenues or as an offset to costs, and any award of such will not increase reported income.  Financial disincentives incurred must not be included as reported expenses, and must not reduce reported income.  The reporting or recording of any of these incurred items will be done on a memo basis, which is below the income line, and will be listed as separate items.
(d)  Carry forward of prior Rate Year losses.
Losses incurred by a STAR and/or CHIP Programl MCO for one (1) Rate Year may be carried forward to the next Rate Year, and applied as an offset against STAR and CHIP Program pre-tax net income. Prior losses may be carried forward for two (2) contiguous Rate Years for this purpose.  If the MCO offsets a loss against another STAR or CHIP Program Service Area, only that portion of the loss that was not used as an offset may be carried forward to the next Rate Year. Losses incurred by a STAR and/or CHIP Program MCO cannot be offset against the STAR+PLUS Program.
In the case of a loss in a given Rate Year being carried forward and applied against profits in both of the next two (2) Rate Years, the loss must first be applied against the first subsequent Rate Year such that the profit in the first subsequent Rate Year is reduced to a zero pre-tax income; any additional loss then remaining unapplied may be carried forward to any profit in the next subsequent Rate Year.  In such case, the revised income in the third Rate Year would be equal to the cumulative income of the three (3) contiguous periods.
Carry forward of losses may be impacted by the Admin Cap; see Section 10.10.2 (f) below.
Losses incurred in the last or next-to-last year of a prior contiguous contract with HHSC may be carried forward up to two (2) years into the first or potentially second year of this Contract if such losses meet all other requirements of both the prior and current contracts.
(e)  Settlements for payment.
(1)  There may be one (1) or more MCO payment(s) of the State share of the Experience Rebate on income generated for a given State Fiscal Year under the STAR and/or CHIP Programs. The first scheduled payment (the “Primary Settlement”) will equal 100% of the State share of the Experience Rebate as derived from the FSR, and will be paid on the same day the 90-day FSR Report is submitted to HHSC.
The “Primary Settlement,” as utilized herein, refers strictly to what should be paid with the 90-day FSR, and does not refer to the first instance in which an MCO may tender a payment.  For example, an MCO may submit a 90-day FSR indicating no Experience Rebate is due, but then submit a 334-day FSR with a higher income and a corresponding Experience Rebate payment.  In such case, this initial payment would be subsequent to the Primary Settlement.
(2)  The next scheduled payment will be an adjustment to the Primary Settlement, if required, and will be paid on the same day that the 334-day FSR Report is submitted to HHSC if the adjustment is a payment from the MCO to HHSC.  Section 10.10(f) describes the interest expenses associated with any payment after the Primary Settlement.
An MCO may make non-scheduled payments at any time to reduce the accumulation of interest under Section 10.10(f).    For any nonscheduled payments prior to the 334-day FSR, the MCO is not required to submit a revised FSR, but is required to submit an Experience Rebate calculation form and an adjusted summary page of the FSR.  The FSR summary page is labeled “Summary Income Statements (Dollars), All Coverage Groups Combined (FSR, Part I).”
(3)  HHSC or its agent may audit or review the FSRs. If HHSC determines that corrections to the FSRs are required, based on an HHSC audit/review or other documentation acceptable to HHSC, then HHSC will make final adjustments.  Any payment resulting from an audit or final adjustment will be due from the MCO within 30 days of the earlier of:
(i)  the date of the management representation letter resulting from the audit; or
(ii)  the date of any invoice issued by HHSC.
Payment within this 30-day timeframe will not relieve the MCO of any interest payment obligation that may exist under Section 10.10(f).
(4)  In the event that any Experience Rebates and/or corresponding interest payments owed to the State are not paid by the required due dates, then HHSC may offset such amounts from any future Capitation Payments, or collect such sums directly from the MCO. HHSC may adjust the Experience Rebate if HHSC determines the MCO has paid amounts for goods or services that are not reasonable, necessary, or allowable in accordance with Uniform Managed Care Manual Chapter 6.1, “Cost Principles for Expenses,” Chapter 5.3.1.2, “CHIP FSR Instructions for Completion,” Chapter 5.3.1.4, “STAR FSR Instructions for Completion,” and the Federal Acquisition Regulations (FAR), or other applicable federal or state regulations. HHSC has final authority in auditing and determining the amount of the Experience Rebate.
(f)  Interest on Experience Rebate.
(1)  Interest on any Experience Rebate owed to HHSC will be charged beginning 35 days after the due date of the Primary Settlement, as described in Section 10.10(e)(1).  Thus, any Experience Rebate due or paid on or after the Primary Settlement will accrue interest starting at 35 days after the due date for the 90-day FSR Report.  For example, any Experience Rebate payment (s) made in conjunction with the 334-day FSR, or as a result of audit findings, will accrue interest back to 35 days after the due-date for submission of the 90-day FSR.
The MCO has the option of preparing an additional FSR based on 120 days of claims run-out (a “120- day FSR”).  If a 120-day FSR, and an Experience Rebate payment based on it, are received by HHSC before the interest commencement date above, then such a payment would be counted as part of the Primary Settlement.
(2)  If an audit or adjustment determines a downward revision of income after an interest payment has previously been required for the same State Fiscal Year, then HHSC will recalculate the interest and, if necessary, issue a full or partial refund or credit to the MCO.
(3)  Any interest obligations that are incurred pursuant to Section 10.10 that are not timely paid will be subject to accumulation of interest as well, at the same rate as applicable to the underlying Experience Rebate.
(4)  All interest assessed pursuant to Section 10.10 will continue to accrue until such point as a payment is received by HHSC, at which point interest on the amount received will stop accruing.  If a balance remains at that point that is subject to interest, then the balance will continue to accrue interest.  If interim payments are made, then any interest that may be due will only be charged on amounts for the time period during which they remained unpaid.  By way of example only, if $100,000 is subject to interest commencing on a given day, and a payment is received for $75,000 45 days after the start of interest, then the $75,000 will be subject to 45 days of interest, and the $25,000 balance will continue to accrue interest until paid.  The accrual of interest as defined under Section 10.10(f) will not stop during any period of dispute.  If a dispute is resolved in the MCO’s favor, then interest will only be assessed on the revised unpaid amount.
(5)  If the MCO incurs an interest obligation pursuant to Section 10.10 for an Experience Rebate payment HHSC will assess such interest at 12% per annum, compounded daily.  If any interest rate stipulated hereunder is found by a court of competent jurisdiction to be outside the range deemed legal and enforceable, then the rate hereunder will be adjusted as little as possible so as to be deemed legal and enforceable.
(6)   Any such interest expense incurred pursuant to Section 10.10 is not an Allowable Expense for reporting purposes on the FSR.
 
Section 10.10.1 STAR+PLUS Experience Rebate
(a)  MCO’s duty to pay.
At the end of each Rate Period beginning with Rate Period 1, the STAR+PLUS MCO must pay an Experience Rebate to HHSC for the STAR+PLUS Program if the MCO’s STAR+PLUS Net Income before Taxes is greater than the percentage set forth below of the total STAR+PLUS Revenue for the period. The STAR+PLUS Experience Rebate is calculated in accordance with the tiered rebate method set forth below based on the consolidated Net Income before Taxes for all of the MCO’s STAR+PLUS Service Areas in the State, as measured by the Financial-Statistical Report (FSR) as reviewed and confirmed by HHSC.
(b)  Graduated STAR+PLUS Experience Rebate Sharing Method.
 
 
Pre-tax Income as a % of Revenues Pre-tax Income as a % of Revenues
MCO Share MCO Share
HHSC Share HHSC Share
≤ 3%
100%
0%
> 3% and ≤ 5%
80%
20%
> 5% and ≤ 7%
60%
40%
> 7% and ≤ 9%
40%
60%
> 9% and ≤ 12%
20%
80%
> 12%
0%
100%

 
 
HHSC and the MCO will share the Net Income before Taxes for the STAR+PLUS Program as follows, unless HHSC provides the MCO an Experience Rebate Reward in accordance with Section 6 of Attachment B-1 to the HHSC Managed Care Contract document and HHSC’s Uniform Managed Care Manual:
(1)  The STAR+PLUS MCO will retain all the Net Income before Taxes that is equal to or less than 3% of the total STAR+PLUS Revenues received by the MCO.
(2) HHSC and the STAR+PLUS MCO will share that portion of the Net Income before Taxes that is over 3% and less than or equal to 5% of the total STAR+PLUS Revenues received, with 80% to the MCO and 20% to HHSC.
(3)  HHSC and the STAR+PLUS MCO will share that portion of the Net Income before Taxes that is over 5% and less than or equal to 7% of the total STAR+PLUS Revenues received, with 60% to the MCO and 40% to HHSC.
(4)  HHSC and the STAR+PLUS MCO will share that portion of the Net Income before Taxes that is over 7% and less than or equal to 9% of the total STAR+PLUS Revenues received, with 40% to the MCO and 60% to HHSC.
(5)  HHSC and the STAR+PLUS MCO will share that portion of the Net Income before Taxes that is over 9% and less than or equal to 12% of the total STAR+PLUS Revenues received, with 20% to the MCO and 80% to HHSC.
(6)  HHSC will be paid the entire portion of the Net Income before Taxes that exceeds 12% of the total STAR+PLUS Revenues.
(c)  Net income before taxes.
The MCO must compute the Net Income before Taxes in accordance with Uniform Managed Care Manual Chapter 6.1, “Cost Principles for Expenses,” Chapter 5.3.1.6 “STAR+PLUS FSR Instructions for Completion,” and applicable federal regulations.
The language applied to STAR and CHIP Programs under Sections 10.10(c) above will also be applied to STAR+PLUS, with all applicable references to the STAR and CHIP Programs replaced with STAR+PLUS.
(d)  Carry forward of prior Rate Year losses.
Losses incurred by a STAR+PLUS MCO for one Rate Year may be carried forward to the next Rate Year, and applied as an offset against a STAR+PLUS pre-tax net income.  Prior losses may be carried forward for two contiguous Rate Years for this purpose.  Losses incurred by a STAR+PLUS MCO cannot be offset against the STAR or CHIP Programs.
The language applied to STAR and CHIP Programs under Sections 10.10(d) above will also be applied to STAR+PLUS, with all applicable references to the STAR and CHIP Programs replaced with STAR+PLUS.
(e)  Settlements for payment; interest.
The processes applied to STAR and CHIP Programs under Sections 10.10(e-f) will also be applied to STAR+PLUS, with all applicable references to the STAR and CHIP Programs replaced with STAR+PLUS.  Any interest accruing under Section 10.10(f) for the STAR and CHIP Programs will be separate and apart from interest accruing for the STAR+PLUS Program.
Section 10.10.2  Administrative Expense Cap.
(a)  General requirement.
The calculation methodology of Experience Rebates described in Sections 10.10 and 10.10.1 will be adjusted by an Administrative Expense Cap (“Admin Cap.”)  The Admin Cap is a calculated maximum amount of administrative expense dollars (corresponding to a given FSR) that can be deducted from Revenues for purposes of determining income subject to the Experience Rebate.  While Administrative Expenses may be limited by the Admin Cap to determine Experience Rebates, all valid Allowable Expenses will continue to be reported on the Financial Statistical Reports (FSRs).  Thus, the Admin Cap does not impact FSR reporting, but may impact any associated Experience Rebate calculation.
The calculation of any corresponding Experience Rebate due will be subject to limitations on total deductible administrative expenses.
Such limitations will be calculated as follows:
(b)  Calculation methodology.
HHSC will determine the administrative expense component of the applicable Capitation Rate structure for each Program and Service Area prior to each applicable Rate Period. At the conclusion of a Rate Period, HHSC will apply that predetermined administrative expense component against the MCO’s actually incurred number of Member Months and aggregate premiums received (monthly Capitation Payments plus Delivery Supplemental Payments and/or Bariatric Supplemental Payments if applicable to the Program), to determine the specific Admin Cap, in aggregate dollars, for a given MCO, Service Area, and Program.
(c)  Data sources.
In determining the amount of Experience Rebate payment to include in the Primary Settlement (or in conjunction with any subsequent payment or settlement), the MCO will need to make the appropriate calculation, in order to assess the impact, if any, of the Admin Cap.
(1) The total premiums paid by HHSC (received by the MCO), and corresponding Member Months, will be taken from the relevant FSR (or audit report) for the Rate Period.
(2) There are two (2) components of the administrative expense portion of the Capitation Rate structure:
(i) the percentage rate to apply against the total premiums paid (the “percentage of premium” within the administrative expenses), and,
(ii) the dollar rate per Member Month (the “fixed amount” within the administrative expenses).
These will be taken from the supporting details associated with the official notification of final Capitation Rates, as supplied by HHSC.   This notification is sent to the MCOs during the annual rate setting process via email, labeled as “the final rate exhibits for your health plan.”  The email has one (1) or more spreadsheet files attached, which are particular to the given MCO.  The spreadsheet(s) show the fixed amount and percentage of premium components for the administrative component of the Capitation Rate.
The components of the administrative expense portion of the Capitation Rate can also be found on HHSC’s Medicaid website, under “Rate Analysis for Managed Care Services.”  Under each Program, there is a separate Rate Setting document for each Rate Period that describes the development of the Capitation Rates.  Within each such document, there is a section entitled “Administrative Fees,” where it refers to “the amount allocated for administrative expenses.”
(3)   In cases where the administrative expense portion of the Capitation Rate refers to “the greater of (a) [one (1) set of factors], and (b) [another set of factors],”  then the Admin Cap will be calculated each way, and the larger of the two (2) results will be the Admin Cap utilized for the determination of any Experience Rebates due.
(d)  Separate calculations, by FSR.
Each MCO will have a separate Admin Cap for each Program and each Service Area in which it participates.  This will require calculating a separate Admin Cap corresponding to each FSR (for annual, or complete period, versions of FSRs only).  All administrative expenses reported on an FSR in excess of the calculated corresponding Admin Cap will be subtracted from the total Allowable Expense in the Experience Rebate calculation of income for that Program and Service Area, subject to any consolidation or offset that may apply, as described in Section 10.10.2(e).
By way of example only, HHSC will calculate the Admin Cap for a Rate Period as follows:
(1) Multiply the predetermined administrative expense rate structure “fixed amount,”  or dollar rate per Member Month (for example, $11.00), by the actual number of Member Months for the Program and Service Area during the Rate Period (for example, 70,000):

 
 $11.00 x 70,000 = $770,000.

(2) Multiply the predetermined percent of premiums in the administrative expense rate structure (for example, 5.75%), by the actual aggregate premiums earned for the Program and Service Area during the Rate Period (for example, $6,000,000).

 
 5.75% x $6,000,000 = $345,000.

(3) Add the totals of items 1 and 2, plus applicable premium taxes and maintenance taxes (for example, $112,000), to determine the Admin Cap for the Program and Service Area:

 
 ($770,000 + $345,000) + $112,000 = $1,227,000.

 In this example, $1,227,000 would be the Admin Cap for a single Program in a given Service Area for an MCO in a particular Rate Period.
(e)  Consolidation and offsets.
STAR, CHIP, and CHIP Perinatal Program results will be consolidated, but STAR+PLUS Program results will be calculated on a stand-alone basis.  For a given MCO, total incurred administrative expenses, as reported on the FSRs for the MCO’s Service Areas and/or Programs (excluding STAR+PLUS), will be summed, and compared to the total Admin Caps for the MCO’s various Service Areas and Programs (excluding STAR+PLUS).  Thus, a STAR and/or CHIP MCO that exceeds its Admin Cap limit in one (1) or more Service Areas or Programs, but does not exceed the Admin Cap in another Service area or Program, may have an offset.  Similarly, within STAR+PLUS, MCOs operating in multiple Service Areas will likewise consolidate STAR+PLUS Service Area FSR administrative expense results, and compare that to consolidated STAR+PLUS Admin Caps. The net impact of the Admin Cap across relevant FSRs will be applied to the Experience Rebate calculation.
(f)  Impact on Loss carry-forward.
For Experience Rebate calculation purposes, the calculation of any loss carry-forward, as described in Sections 10.10(d) and 10.10.1(d), will be based on the allowable pre-tax loss as determined under the Admin Cap. 
(g)  MCOs entering a Service Delivery Area or Program.
If an MCO enters a new Service Area or offers a Program that it did not offer under a previous contract, it will be exempt from the Admin Cap for those Service Areas and Programs for a period of time to be determined by HHSC, up through the first State Fiscal Year or portion thereof.
(h)  Service Delivery Areas with only one (1) MCO in a Program.
In Service Areas operating with only one (1) MCO for a Program, HHSC may, at its sole discretion, revise the Admin Cap if its application would create an undue hardship on the MCO.
(i)  Unforeseen events.
If, in HHSC’s sole discretion, it determines that unforeseen events have created significant hardships for one (1) or more MCOs, HHSC may revise or temporarily suspend the Admin Cap as it deems necessary.
Section 10.10.3  Reinsurance Cap
(a)  General requirement.
Reinsurance is reported on HHSC’s FSR report format as: 1) gross reinsurance premiums paid, and 2) reinsurance recoveries received.  The premiums paid are treated as a part of medical expenses, and the recoveries received are treated as an offset to those medical expenses (also known as a contra-cost).  The net of the gross premiums paid minus the recoveries received is called the net reinsurance cost.  The net reinsurance cost, as measured in aggregate dollars over the SFY, divided by the number of member-months for that same period, is referred to as the net reinsurance cost per-member-per-month (PMPM).
MCOs are limited to a maximum amount of net reinsurance cost PMPM for purposes of calculating pre-tax net income on HHSC’s FSR report format.  This limitation does not impact an MCO’s ability to purchase or arrange for reinsurance; it only impacts what is reportable on HHSC’s FSR.  The maximum amount of allowed net reinsurance cost PMPM (i.e., the “Reinsurance Cap”) varies by MCO Program, as described in subpart (d)..
Regardless of the maximum amounts as represented by the Reinsurance Cap, all reinsurance reported on the FSR is subject to audit, and must comply with the UMCM Cost Principles.
(b)   Rates.
The Reinsurance Cap for Rate Period 1, and thereafter unless modified herein, will be:
 
 
Program
Maximum net reinsurance cost, $-PMPM
STAR
$1.00
CHIP
$1.00
STAR+PLUS
$1.00

Section 10.11 Restriction on assignment of fees.

During the term of the Contract, MCO may not, directly or indirectly, assign to any third party any beneficial or legal interest of the MCO in or to any payments to be made by HHSC pursuant to this Contract.  This restriction does not apply to fees the MCO pays to Subcontractors for the performance of the Scope of Work.

Section 10.12 Liability for taxes.

HHSC is not responsible in any way for the payment of any Federal, state or local taxes related to or incurred in connection with the MCO’s performance of this Contract. MCO must pay and discharge any and all such taxes, including any penalties and interest.  In addition, HHSC is exempt from Federal excise taxes, and will not pay any personal property taxes or income taxes levied on MCO or any taxes levied on employee wages.

Section 10.13 Liability for employment-related charges and benefits.

MCO will perform work under this Contract as an independent contractor and not as agent or representative of HHSC. MCO is solely and exclusively liable for payment of all employment-related charges incurred in connection with the performance of this Contract, including but not limited to salaries, benefits, employment taxes, workers compensation benefits, unemployment insurance and benefits, and other insurance or fringe benefits for Staff.

Section 10.14 No additional consideration.

(a)  MCO will not be entitled to nor receive from HHSC any additional consideration, compensation, salary, wages, charges, fees, costs, or any other type of remuneration for Services and Deliverables provided under the Contract, except by properly authorized and executed Contract amendments.
(b)  No other charges for tasks, functions, or activities that are incidental or ancillary to the delivery of the Services and Deliverables will be sought from HHSC or any other state agency, nor will the failure of HHSC or any other party to pay for such incidental or ancillary services entitle the MCO to withhold Services and Deliverables due under the Agreement.
(c)  MCO will not be entitled by virtue of the Contract to consideration in the form of overtime, health insurance benefits, retirement benefits, disability retirement benefits, sick leave, vacation time, paid holidays, or other paid leaves of absence of any type or kind whatsoever.

Section 10.15 Federal Disallowance

If the federal government recoups money from the state for expenses and/or costs that are deemed unallowable by the federal government, the state has the right to, in turn, recoup payments made to the MCOs for these same expenses and/or costs, even if they had not been previously disallowed by the state and were incurred by the MCO, and any such expenses and/or costs would then be deemed unallowable by the state.  If the state retroactively recoups money from the MCOs due to a federal disallowance, the state will recoup the entire amount paid to the MCO for the federally disallowed expenses and/or costs, not just the federal portion.

Article 11. Disclosure & Confidentiality  of Information

Section 11.01 Confidentiality.

(a)  MCO and all Subcontractors, consultants, or agents under the Contract must treat all information that is obtained through performance of the Services under the Contract, including, but not limited to, information relating to applicants or recipients of HHSC Programs, as Confidential Information to the extent that confidential treatment is provided under state and federal law, rules, and regulations.
(b)  MCO is responsible for understanding the degree to which information obtained through performance of this Contract is confidential under State and Federal law, rules, and regulations.
(c)  MCO and all Subcontractors, consultants, or agents not use any information obtained through performance of this Contract in any manner except as is necessary for the proper discharge of obligations and securing of rights under the Contract.
(d)  MCO must have a system in effect to protect all records and all other documents deemed confidential under this Contract that are maintained in connection with the activities funded under the Contract.  Any disclosure or transfer of Confidential Information by MCO, including information required by HHSC, will be in accordance with applicable law.  If the MCO receives a request for information deemed confidential under this Contract, the MCO will immediately notify HHSC of such request, and will make reasonable efforts to protect the information from public disclosure.

 
 

 

(e)  In addition to the requirements expressly stated in this Section, MCO must comply with any policy, rule, or reasonable requirement of HHSC that relates to the safeguarding or disclosure of information relating to Members, MCO’s operations, or MCO’s performance of the Contract.
(f)  In the event of the expiration of the Contract or termination of the Contract for any reason, all Confidential Information disclosed to and all copies thereof made by the MCOI must be returned to HHSC or, at HHSC’s option, erased or destroyed.  MCO must provide HHSC certificates evidencing such destruction.
(g)  The obligations in this Section must not restrict any disclosure by the MCO pursuant to any applicable law, or by order of any court or government agency, provided that the MCO must give prompt notice to HHSC of such order.
(h)   With the exception of confidential Member information, Confidential Information must not be afforded the protection of the Contract if such data was:
(1)  Already known to the receiving Party without restrictions at the time of its disclosure by the furnishing Party;
(2)  Independently developed by the receiving Party without reference to the furnishing Party’s Confidential Information;
(3)  Rightfully obtained by the other Party without restriction from a third party after its disclosure by the furnishing Party;
(4)  Publicly available other than through the fault or negligence of the other Party; or
(5)  Lawfully released without restriction to anyone.

Section 11.02 Disclosure of HHSC’s Confidential Information.

(a)  MCO will immediately report to HHSC any and all unauthorized disclosures or uses of HHSC’s Confidential Information of which it or its Subcontractors, consultants, or agents is aware or has knowledge.   MCO acknowledges that any publication or disclosure of HHSC’s Confidential Information to others may cause immediate and irreparable harm to HHSC and may constitute a violation of State or federal laws.  If MCO, its Subcontractors, consultants, or agents should publish or disclose such Confidential Information to others without authorization, HHSC will immediately be entitled to injunctive relief or any other remedies to which it is entitled under law or equity.  HHSC will have the right to recover from MCO all damages and liabilities caused by or arising from MCO’s, its Subcontractors’, consultants’, or agents’ failure to protect HHSC’s Confidential Information.  MCO will defend with counsel approved by HHSC, indemnify and hold harmless HHSC from all damages, costs, liabilities, and expenses caused by or arising from MCO’s or its Subcontractors’, consultants’ or agents’ failure to protect HHSC’s Confidential Information.  HHSC will not unreasonably withhold approval of counsel selected by the MCO.
(b)  MCO will require its Subcontractors, consultants, and agents to comply with the terms of this provision.

Section 11.03 Member Records

(a)  MCO must comply with the requirements of state and federal laws, including the HIPAA requirements set forth in Section 7.07, regarding the transfer of Member Records.
(b)  If at any time during the Contract Term this Contract is terminated, HHSC may require the transfer of Member Records, upon written notice to MCO, to another entity, as consistent with federal and state laws and applicable releases.
(c)  The term “Member Record” for this Section means only those administrative, enrollment, case management and other such records maintained by MCO and is not intended to include patient records maintained by participating Network Providers.

Section 11.04 Requests for public information.

(a)  When the MCO produces reports or other forms of information that the MCO believes consist of proprietary or otherwise confidental information, the MCO must clearly mark such information as confidential information or provide written notice to HHSC that it considers the information confidential.
(b)  If HHSC receives a request, filed in accordance with the Texas Public Information Act (“Act,”) seeking information that has been identified by the MCO as proprietary or otherwise confidential, HHSC will deliver a copy of the request for public information to MCO, in accordance with the requirements of the Act.
(c)  With respect to any information that is the subject of a request for disclosure, MCO is required to demonstrate to the Texas Office of Attorney General the specific reasons why the requested information is confidential or otherwise excepted from required public disclosure under law.  MCO will provide HHSC with copies of all such communications.

Section 11.05 Privileged Work Product.

(a)  MCO acknowledges that HHSC asserts that privileged work product may be prepared in anticipation of litigation and that MCO is performing the Services with respect to privileged work product as an agent of HHSC, and that all matters related thereto are protected from disclosure by the Texas Rules of Civil Procedure, Texas Rules of Evidence, Federal Rules of Civil Procedure, or Federal Rules of Evidence.
(b)  HHSC will notify MCO of any privileged work product to which MCO has or may have access.  After the MCO is notified or otherwise becomes aware that such documents, data, database, or communications are privileged work product, only MCO personnel, for whom such access is necessary for the purposes of providing the Services, may have access to privileged work product.
(c)  If MCO receives notice of any judicial or other proceeding seeking to obtain access to HHSC’s privileged work product, MCO will:
(1)  Immediately notify HHSC; and
(2)  Use all reasonable efforts to resist providing such access.
(d)  If MCO resists disclosure of HHSC’s privileged work product in accordance with this Section, HHSC will, to the extent authorized under Civil Practices and Remedies Code or other applicable State law, have the right and duty to:
(1)  Represent MCO in such resistance;
(2)  Retain counsel to represent MCO; or
(3)  Reimburse MCO for reasonable attorneys' fees and expenses incurred in resisting such access.
(e)  If a court of competent jurisdiction orders MCO to produce documents, disclose data, or otherwise breach the confidentiality obligations imposed in the Contract, or otherwise with respect to maintaining the confidentiality, proprietary nature, and secrecy of privileged work product, MCO will not be liable for breach of such obligation.

Section 11.06 Unauthorized acts.

Each Party agrees to:
(1)  Notify the other Party promptly of any unauthorized possession, use, or knowledge, or attempt thereof, by any person or entity that may become known to it, of any HHSC Confidential Information or any information identified by the MCO as confidential or proprietary;
(2)  Promptly furnish to the other Party full details of the unauthorized possession, use, or knowledge, or attempt thereof, and use reasonable efforts to assist the other Party in investigating or preventing the reoccurrence of any unauthorized possession, use, or knowledge, or attempt thereof, of Confidential Information;
(3)  Cooperate with the other Party in any litigation and investigation against third Parties deemed necessary by such Party to protect its proprietary rights; and
(4)  Promptly prevent a reoccurrence of any such unauthorized possession, use, or knowledge such information.

Section 11.07 Legal action.

Neither party may commence any legal action or proceeding in respect to any unauthorized possession, use, or knowledge, or attempt thereof by any person or entity of HHSC’s Confidential Information or information identified by the MCO as confidential or proprietary, which action or proceeding identifies the other Party’s information without such Party’s consent.

Section 11.08 Information Security

The HMO and all Subcontractors, consultants, or agents must comply with all applicable laws, rules, and regulations regarding information security, including without limitation the following:
(1)  Health and Human Services Enterprise Information Security Standards and Guidelines;
(2)  Title 1, Sections 202.1 and 202.3 through 202.28, Texas Administrative Code;
(3)  The Health Insurance Portability and Accountability Act of 1996 (HIPAA); and
(4)  The Health Information Technology for Economic and Clinical Health Act (HITECH Act).

Article 12. Remedies & Disputes

Section 12.01 Understanding and expectations.

The remedies described in this Section are directed to MCO’s timely and responsive performance of the Services and production of Deliverables, and the creation of a flexible and responsive relationship between the Parties.  The MCO is expected to meet or exceed all HHSC objectives and standards, as set forth in the Contract.  All areas of responsibility and all Contract requirements will be subject to performance evaluation by HHSC.  Performance reviews may be conducted at the discretion of HHSC at any time and may relate to any responsibility and/or requirement.  Any and all responsibilities and/or requirements not fulfilled may be subject to the remedies set forth in the Contract.

Section 12.02 Tailored remedies.

(a)  Understanding of the Parties.
MCO agrees and understands that HHSC may pursue tailored contractual remedies for noncompliance with the Contract.  At any time and at its discretion, HHSC may impose or pursue one (1) or more remedies for each item of noncompliance and will determine remedies on a case-by-case basis.  HHSC’s pursuit or non-pursuit of a tailored remedy does not constitute a waiver of any other remedy that HHSC may have at law or equity.
(b)  Notice and opportunity to cure for non-material breach.
(1)  HHSC will notify MCO in writing of specific areas of MCO performance that fail to meet performance expectations, standards, or schedules set forth in the Contract, but that, in the determination of HHSC, do not result in a material deficiency or delay in the implementation or operation of the Services.
(2) MCO will, within five (5) Business Days (or another date approved by HHSC) of receipt of written notice of a non-material deficiency, provide the HHSC Project Manager a written response that:
(i)   Explains the reasons for the deficiency, MCO’s plan to address or cure the deficiency, and the date and time by which the deficiency will be cured; or
(ii)  If MCO disagrees with HHSC’s findings, its reasons for disagreeing with HHSC’s findings.
(3)  MCO’s proposed cure of a non-material deficiency is subject to the approval of HHSC. MCO’s repeated commission of non-material deficiencies or repeated failure to resolve any such deficiencies may be regarded by HHSC as a material deficiency and entitle HHSC to pursue any other remedy provided in the Contract or any other appropriate remedy HHSC may have at law or equity.
(c)  Corrective action plan.
(1)  At its option, HHSC may require MCO to submit to HHSC a written plan (the “Corrective Action Plan”) to correct or resolve a material breach of this Contract, as determined by HHSC.
(2)  The Corrective Action Plan must provide:
(i)  A detailed explanation of the reasons for the cited deficiency;
(ii)  MCO’s assessment or diagnosis of the cause; and
(iii)  A specific proposal to cure or resolve the deficiency.
(3)  The Corrective Action Plan must be submitted by the deadline set forth in HHSC’s request for a Corrective Action Plan.  The Corrective Action Plan is subject to approval by HHSC, which will not unreasonably be withheld.
(4)  HHSC will notify MCO in writing of HHSC’s final disposition of HHSC’s concerns.  If HHSC accepts MCO’s proposed Corrective Action Plan, HHSC may:
(i)  Condition such approval on completion of tasks in the order or priority that HHSC may reasonably prescribe;
(ii)  Disapprove portions of MCO’s proposed Corrective Action Plan; or
(iii)  Require additional or different corrective action(s).
Notwithstanding the submission and acceptance of a Corrective Action Plan, MCO remains responsible for achieving all written performance criteria.
(5)  HHSC’s acceptance of a Corrective Action Plan under this Section will not:
(i)  Excuse MCO’s prior substandard performance;
(ii)  Relieve MCO of its duty to comply with performance standards; or
(iii)  Prohibit HHSC from assessing additional tailored remedies or pursuing other appropriate remedies for continued substandard performance.
(d)  Administrative remedies.
(1)   At its discretion, HHSC may impose one (1) or more of the following remedies for each item of material noncompliance and will determine the scope and severity of the remedy on a case-by-case basis:
(i)  Assess liquidated damages in accordance with Attachment B-3, “Liquidated Damages Matrix;”
(ii)  Conduct accelerated monitoring of the MCO.  Accelerated monitoring includes more frequent or more extensive monitoring by HHSC or its agent;
(iii)  Require additional, more detailed, financial and/or programmatic reports to be submitted by MCO;
(iv) Require additional and/or more detailed financial and/or programmatic audits or other reviews of the MCO;
(v)  Decline to renew or extend the Contract;
(vi)  Appoint temporary management under the circumstances described in 42 C.F.R. §438.706;
(vii) Initiate disenrollment of a Member or Members;
(viii) Suspend enrollment of Members;
(ix)  Withhold or recoup payment to MCO;
(x)  Require forfeiture of all or part of the MCO’s bond; or
(xi)  Terminate the Contract in accordance with Section 12.03, “Termination by HHSC.”
(2)  For purposes of the Contract, an item of material noncompliance means a specific action of MCO that:
(i)  Violates a material provision of the Contract;
(ii)  Fails to meet an agreed measure of performance; or
(iii) Represents a failure of MCO to be reasonably responsive to a reasonable request of HHSC relating to the Scope of Work for information, assistance, or support within the timeframe specified by HHSC.
(3)  HHSC will provide notice to MCO of the imposition of an administrative remedy in accordance with this Section, with the exception of accelerated monitoring, which may be unannounced.  HHSC may require MCO to file a written response in accordance with this Section.
(4)   The Parties agree that a State or Federal statute, rule, regulation, or Federal guideline will prevail over the provisions of this Section unless the statute, rule, regulation, or guidelines can be read together with this Section to give effect to both.
(e)  Damages.
(1)  HHSC will be entitled to monetary damages in the form of actual, consequential, direct, indirect, special, and/or liquidated damages resulting from Contractor’s Breach of this Agreement In some cases, the actual damage to HHSC or State of Texas as a result of MCO’s failure to meet any aspect of the responsibilities of the Contract and/or to meet specific performance standards set forth in the Contract are difficult or impossible to determine with precise accuracy.  Therefore, liquidated damages will be assessed in writing against and paid by the MCO in for failure to meet any aspect of the responsibilities of the Contract and/or to meet the specific performance standards identified by the HHSC in Attachment B-3, “Deliverables/Liquidated Damages Matrix.”  Liquidated damages will be assessed if HHSC determines such failure is the fault of the MCO (including the MCO’S Subcontractors, agents and/or consultants) and is not materially caused or contributed to by HHSC or its agents.  If at any time HHSC determines the MCO has not met any aspect of the responsibilities of the Contract and/or the specific performance standards due to mitigating circumstances, HHSC reserves the right to waive all or part of the liquidated damages.  All such waivers must be in writing, contain the reasons for the waiver, and be signed by the appropriate executive of HHSC.
(2)  The liquidated damages prescribed in this Section are not intended to be in the nature of a penalty, but are intended to be reasonable estimates of HHSC’s projected financial loss and damage resulting from the MCO’s nonperformance, including financial loss as a result of project delays.  Accordingly, in the event MCO fails to perform in accordance with the Contract, HHSC may assess liquidated damages as provided in this Section.
(3)  If MCO fails to perform any of the Services described in the Contract, HHSC may assess liquidated damages for each occurrence of a liquidated damages event, to the extent consistent with HHSC's tailored approach to remedies and Texas law.
(4)  HHSC may elect to collect liquidated damages:
(i)  Through direct assessment and demand for payment delivered to MCO; or
(ii)  By deduction of amounts assessed as liquidated damages as set-off against payments then due to MCO or that become due at any time after assessment of the liquidated damages. HHSC will make deductions until the full amount payable by the MCO is collected by HHSC.
(f)  Equitable Remedies
(1)  MCO acknowledges that, if MCO breaches (or attempts or threatens to breach) its material obligation under this Contract, HHSC may be irreparably harmed.  In such a circumstance, HHSC may proceed directly to court to pursue equitable remedies.
(2)  If a court of competent jurisdiction finds that MCO breached (or attempted or threatened to breach) any such obligations, MCO agrees that without any additional findings of irreparable injury or other conditions to injunctive relief, it will not oppose the entry of an appropriate order compelling performance by MCO and restraining it from any further breaches (or attempted or threatened breaches).
(g)  Suspension of Contract
(1)  HHSC may suspend performance of all or any part of the Contract if:
(i)  HHSC determines that MCO has committed a material breach of the Contract;
(ii)  HHSC has reason to believe that MCO has committed, or assisted in the commission of, Fraud, Abuse, Waste, malfeasance, misfeasance, or nonfeasance by any party concerning the Contract;
(iii)  HHSC determines that the MCO knew, or should have known, of Fraud, Abuse, Waste, malfeasance, or nonfeasance by any party concerning the Contract, and the MCO failed to take appropriate action; or
(iv)  HHSC determines that suspension of the Contract in whole or in part is in the best interests of the State of Texas or the HHSC Programs.
(2)  HHSC will notify MCO in writing of its intention to suspend the Contract in whole or in part.  Such notice will:
(i)  Be delivered in writing to MCO;
(ii)  Include a concise description of the facts or matter leading to HHSC’s decision; and
(iii)  Unless HHSC is suspending the contract for convenience, request a Corrective Action Plan from MCO or describe actions that MCO may take to avoid the contemplated suspension of the Contract.

Section 12.03 Termination by HHSC.

This Contract will terminate upon the Expiration Date.  In addition, prior to completion of the Contract Term, all or a part of this Contract may be terminated for any of the following reasons:
(a)  Termination in the best interest of HHSC.
HHSC may terminate the Contract without cause at any time when, in its sole discretion, HHSC determines that termination is in the best interests of the State of Texas.  HHSC will provide reasonable advance written notice of the termination, as it deems appropriate under the circumstances.  The termination will be effective on the date specified in HHSC’s notice of termination.
(b)  Termination for cause.
HHSC reserves the right to terminate this Contract, in whole or in part, upon the following conditions:
(1)  Assignment for the benefit of creditors, appointment of receiver, or inability to pay debts.
HHSC may terminate this Contract at any time if MCO:
(i)  Makes an assignment for the benefit of its creditors;
(ii)  Admits in writing its inability to pay its debts generally as they become due; or
(iii)  Consents to the appointment of a receiver, trustee, or liquidator of MCO or of all or any part of its property.
(2)  Failure to adhere to laws, rules, ordinances, or orders.
HHSC may terminate this Contract if a court of competent jurisdiction finds MCO failed to adhere to any laws, ordinances, rules, regulations or orders of any public authority having jurisdiction and such violation prevents or substantially impairs performance of MCO’s duties under this Contract.  HHSC will provide at least 30 days advance written notice of such termination.
(3)  Breach of confidentiality.
HHSC may terminate this Contract at any time if MCO breaches confidentiality laws with respect to the Services and Deliverables provided under this Contract.
(4)  Failure to maintain adequate personnel or resources.
HHSC may terminate this Contract if, after providing notice and an opportunity to correct, HHSC determines that MCO has failed to supply personnel or resources and such failure results in MCO’s inability to fulfill its duties under this Contract.  HHSC will provide at least 30 days advance written notice of such termination.
(5)  Termination for gifts and gratuities.
(i)  HHSC may terminate this Contract at any time following the determination by a competent judicial or quasi-judicial authority and MCO’s exhaustion of all legal remedies that MCO, its employees, agents or representatives have either offered or given any thing of value to an officer or employee of HHSC or the State of Texas in violation of state law.
(ii)  MCO must include a similar provision in each of its Subcontracts and must enforce this provision against a Subcontractor who has offered or given any thing of value to any of the persons or entities described in this Section, whether or not the offer or gift was in MCO’s behalf.
(iii)   Termination of a Subcontract by MCO pursuant to this provision will not be a cause for termination of the Contract unless:
(a)   MCO fails to replace such terminated Subcontractor within a reasonable time; and
(b)   Such failure constitutes cause, as described in this Subsection 12.03(b).
(iv)   For purposes of this Section, a “thing of value” means any item of tangible or intangible property that has a monetary value of more than $50.00 and includes, but is not limited to, cash, food, lodging, entertainment, and charitable contributions.  The term does not include contributions to holders of public office or candidates for public office that are paid and reported in accordance with state and/or federal law.

(6)  Termination for non-appropriation of funds.
Notwithstanding any other provision of this Contract, if funds for the continued fulfillment of this Contract by HHSC are at any time not forthcoming or are insufficient, through failure of any entity to appropriate funds or otherwise, then HHSC will have the right to terminate this Contract at no additional cost and with no penalty whatsoever by giving prior written notice documenting the lack of funding.   HHSC will provide at least 30 days advance written notice of such termination.  HHSC will use reasonable efforts to ensure appropriated funds are available.
(7)  Judgment and execution.
(i)   HHSC may terminate the Contract at any time if judgment for the payment of money in excess of $500,000.00 that is not covered by insurance, is rendered by any court or governmental body against MCO, and MCO does not:
(a)   Discharge the judgment or provide for its discharge in accordance with the terms of the judgment;
(b)   Procure a stay of execution of the judgment within 30 days from the date of entry thereof; or
(c)   Perfect an appeal of such judgment and cause the execution of such judgment to be stayed during the appeal, providing such financial reserves as may be required under generally accepted accounting principles.
(ii)   If a writ or warrant of attachment or any similar process is issued by any court against all or any material portion of the property of MCO, and such writ or warrant of attachment or any similar process is not released or bonded within 30 days after its entry, HHSC may terminate the Contract in accordance with this Section.

(8)      Termination for insolvency.
(i)   HHSC may terminate the Contract at any time if MCO:
(a)   Files for bankruptcy;
(b)   Becomes or is declared insolvent, or is the subject of any proceedings related to its liquidation, insolvency, or the appointment of a receiver or similar officer for it;
(c)   Makes an assignment for the benefit of all or substantially all of its creditors; or
(d)   Enters into a contract for the composition, extension, or readjustment of substantially all of its obligations.
(ii)   MCO agrees to pay for all reasonable expenses of HHSC including the cost of counsel, incident to:
(a) The enforcement of payment of all obligations of the MCO by any action or participation in, or in connection with a case or proceeding under Chapters 7, 11, or 13 of the United States Bankruptcy Code, or any successor statute;
(b) A case or proceeding involving a receiver or other similar officer duly appointed to handle the MCO's business; or
(c) A case or proceeding in a State court initiated by HHSC when previous collection attempts have been unsuccessful.

(9)     Termination for Criminal Conviction

HHSC will have the right to terminate the Contract in whole or in part, or require the replacement of a Material Subcontractor, if the MCO or a Material Subcontractor is convicted of a criminal offense in a state or federal court:
(i)   Related to the delivery of an item or service;
(ii)   Related to the neglect or abuse of patients in connection with the delivery of an item or service;
(iii)   Consisting of a felony related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, or
(iv)  resulting in a penalty or fine in the amount of $500,000 or more in a state or federal administrative proceeding.

(10) Termination for MCO’S material breach of the Contract.

HHSC will have the right to terminate the Contract in whole or in part if HHSC determines, at its sole discretion, that MCO has materially breached the Contract.  HHSC will provide at least 30 days advance written notice of such termination, unless HHSC in its reasonable determination finds that a shorter notice period is warranted.

Section 12.04 Termination by MCO.

(a)  Failure to pay.
MCO may terminate this Contract if HHSC fails to pay the MCO undisputed charges when due as required under this Contract.  Retaining premium, recoupment, sanctions, or penalties that are allowed under this Contract or that result from the MCO’s failure to perform or the MCO’s default under the terms of this Contract is not cause for termination.  Termination for failure to pay does not release HHSC from the obligation to pay undisputed charges for services provided prior to the termination date.

If HHSC fails to pay undisputed charges when due, then the MCO may submit a notice of intent to terminate for failure to pay in accordance with the requirements of Subsection 12.04(d).  If HHSC pays all undisputed amounts then due within 30 days after receiving the notice of intent to terminate, the MCO cannot proceed with termination of the Contract under this Article.
(b)  Change to HHSC Uniform Managed Care  Manual.
MCO may terminate this agreement if the Parties are unable to resolve a dispute concerning a material and substantive change to the Uniform Managed Care Manual (a change that materially and substantively alters the MCO’s ability to fulfill its obligations under the Contract).  MCO must submit a notice of intent to terminate due to a material and substantive change in the Uniform Managed Care Manual no later than 30 days after the effective date of the policy change.  HHSC will not enforce the policy change for the MCO during the period of time between the receipt of the notice of intent to terminate and the effective date of termination.
(c)  Change to Capitation Rate.
If HHSC proposes a modification to the Capitation Rate that is unacceptable to the MCO, the MCO may terminate the Contract.  MCO must submit a written notice of intent to terminate due to a change in the Capitation Rate no later than 30 days after HHSC’s notice of the proposed change.  HHSC will not enforce the rate change against the MCO during the period of time between the receipt of the notice of intent to terminate and the effective date of termination.
(d)  Notice of intent to terminate.
In order to terminate the Contract pursuant to this Section, MCO must give HHSC at least 90 days written notice of intent to terminate.  The termination date will be calculated as the last day of the month following 90 days from the date the notice of intent to terminate is received by HHSC.

Section 12.05 Termination by mutual agreement.

This Contract may be terminated by mutual written agreement of the Parties.

Section 12.06 Effective date of termination.

Except as otherwise provided in this Contract, termination will be effective as of the date specified in the notice of termination.

Section 12.07 Extension of termination effective date.

The Parties may extend the effective date of termination one (1) or more times by mutual written agreement.

Section 12.08 Payment and other provisions at Contract termination.

(a)  In the event of termination pursuant to this Article, HHSC will pay the Capitation Payment for Services and Deliverables rendered through the effective date of termination.  All pertinent provisions of the Contract will form the basis of settlement.
(b)  MCO must provide HHSC all reasonable access to records, facilities, and documentation as is required to efficiently and expeditiously close out the Services and Deliverables provided under this Contract.
(c)  MCO must prepare a Turnover Plan, which is acceptable to and approved by HHSC.  The Turnover Plan will be implemented during the time period between receipt of notice and the termination date, in accordance with Attachment B-1, RFP Section 9.

Section 12.09 Modification of Contract in the event of remedies.

HHSC may propose a modification of this Contract in response to the imposition of a remedy under this Article.  Any modifications under this Section must be reasonable, limited to the matters causing the exercise of a remedy, in writing, and executed in accordance with Article 8, “Amendments and Modifications.”  MCO must negotiate such proposed modifications in good faith.

Section 12.10 Turnover assistance.

Upon receipt of notice of termination of the Contract by HHSC, MCO will provide any turnover assistance reasonably necessary to enable HHSC or its designee to effectively close out the Contract and move the work to another vendor or to perform the work itself.

Section 12.11 Rights upon termination or expiration of Contract.

In the event that the Contract is terminated for any reason, or upon its expiration, HHSC will, at HHSC's discretion, retain ownership of any and all associated work products, Deliverables and/or documentation in whatever form that they exist.

Section 12.12 MCO responsibility for associated costs.

If HHSC terminates the Contract for Cause, the MCO will be responsible to HHSC for all reasonable costs incurred by HHSC, the State of Texas, or any of its administrative agencies to replace the MCO.  These costs include, but are not limited to, the costs of procuring a substitute vendor and the cost of any claim or litigation that is reasonably attributable to MCO’s failure to perform any Service in accordance with the terms of the Contract

 
Section 12.13 Dispute resolution.

(a)  General agreement of the Parties.
The Parties mutually agree that the interests of fairness, efficiency, and good business practices are best served when the Parties employ all reasonable and informal means to resolve any dispute under this Contract.  The Parties express their mutual commitment to using all reasonable and informal means of resolving disputes prior to invoking a remedy provided elsewhere in this Section.
(b)  Duty to negotiate in good faith.
Any dispute that in the judgment of any Party to this Contract may materially or substantially affect the performance of any Party will be reduced to writing and delivered to the other Party. The Parties must then negotiate in good faith and use every reasonable effort to resolve such dispute and the Parties must not resort to any formal proceedings unless they have reasonably determined that a negotiated resolution is not possible. The resolution of any dispute disposed of by Contract between the Parties must be reduced to writing and delivered to all Parties within ten (10) Business Days.
(c)  Claims for breach of Contract.
(1) General requirement. MCO’s claim for breach of this Contract will be resolved in accordance with the dispute resolution process established by HHSC in accordance with Chapter 2260, Texas Government Code.
(2) Negotiation of claims. The Parties expressly agree that the MCO’s claim for breach of this Contract that the Parties cannot resolve in the ordinary course of business or through the use of all reasonable and informal means will be submitted to the negotiation process provided in Chapter 2260, Subchapter B, Texas Government Code.
(i)  To initiate the process, MCO must submit written notice to HHSC that specifically states that MCO invokes the provisions of Chapter 2260, Subchapter B, Texas Government Code.  The notice must comply with the requirements of Title 1, Chapter 392, Subchapter B of the Texas Administrative Code.
(ii)  The Parties expressly agree that the MCO’s compliance with Chapter 2260, Subchapter B, Texas Government Code, will be a condition precedent to the filing of a contested case proceeding under Chapter 2260, Subchapter C, of the Texas Government Code.
(3) Contested case proceedings. The contested case process provided in Chapter 2260, Subchapter C, Texas Government Code, will be MCO’s sole and exclusive process for seeking a remedy for any and all alleged breaches of contract by HHSC if the Parties are unable to resolve their disputes under Subsection (c)(2) of this Section.
The Parties expressly agree that compliance with the contested case process provided in Chapter 2260, Subchapter C, Texas Government Code, will be a condition precedent to seeking consent to sue from the Texas Legislature under Chapter 107, Civil Practices & Remedies Code. Neither the execution of this Contract by HHSC nor any other conduct of any representative of HHSC relating to this Contract will be considered a waiver of HHSC’s sovereign immunity to suit.
(4) HHSC rules. The submission, processing and resolution of MCO’s claim is governed by the rules adopted by HHSC pursuant to Chapter 2260, Texas Government Code, found at Title 1, Chapter 392, Subchapter B of the Texas Administrative Code.
(5) MCO’s duty to perform. Neither the occurrence of an event constituting an alleged breach of contract nor the pending status of any claim for breach of contract is grounds for the suspension of performance, in whole or in part, by MCO of any duty or obligation with respect to the performance of this Contract.  Any changes to the Contract as a result of a dispute resolution will be implemented in accordance with Article 8, “Amendments and Modifications.”

Section 12.14 Liability of MCO.

(a)  MCO bears all risk of loss or damage to HHSC or the State due to:
(1)  Defects in Services or Deliverables;
(2)  Unfitness or obsolescence of Services or Deliverables; or
(3)  The negligence or intentional misconduct of MCO or its employees, agents, consultants, Subcontractors, or representatives.
(b)  MCO must, at the MCO’s own expense, defend with counsel approved by HHSC, indemnify, and hold harmless HHSC and State employees, officers, directors, contractors and agents from and against any losses, liabilities, damages, penalties, costs, fees, and expenses from any claim or action for property damage, bodily injury or death, to the extent caused by or arising from the negligence or intentional misconduct of the MCO and its employees, officers, agents, consultants, or Subcontractors.  HHSC will not unreasonably withhold approval of counsel selected by MCO.
(c)  MCO will not be liable to HHSC for any loss, damages or liabilities attributable to or arising from


the failure of HHSC or any state agency to perform a service or activity in connection with this Contract.

Section 12.15 Pre-termination Process.

The following process will apply when HHSC terminates the Agreement for any reason set forth in Section 12.03(b), “Termination for Cause,” other than Subpart 6, “Termination for Non-appropriation of Funds.”  HHSC will provide the MCO with reasonable advance written notice of the proposed termination, as it deems appropriate under the circumstances.  The notice will include the reason for the proposed termination, the proposed effective date of the termination, and the time and place where the parties will meet regarding the proposed termination.  During this meeting, the MCO may present written information explaining why HHSC should not affirm the proposed termination.  HHSC’s Associate Commissioner for Medicaid and CHIP will consider the written information, if any, and will provide the MCO with a written notice of HHSC’s final decision affirming or reversing the termination.  An affirming decision will include the effective date of termination.
The pre-termination process described herein will not limit or otherwise reduce the parties’ rights and responsibilities under Section 12.13, “Dispute Resolution;” however, HHSC’s final decision to terminate is binding and is not subject to review by the State Office of Administrative Hearings under Chapter 2260, Texas Government Code.
 
 

Article 13. Assurances & Certifications

Section 13.01 Proposal certifications.

MCO acknowledges its continuing obligation to comply with the requirements of the following certifications contained in its Proposal, and will immediately notify HHSC of any changes in circumstances affecting these certifications:
(1)   Federal lobbying;
(2)   Debarment and suspension;
(3)   Child support; and
(4)   Nondisclosure statement.

Section 13.02 Conflicts of interest.

(a)  Representation.
MCO agrees to comply with applicable state and federal laws, rules, and regulations regarding conflicts of interest in the performance of its duties under this Contract.  MCO warrants that it has no interest and will not acquire any direct or indirect interest that would conflict in any manner or degree with its performance under this Contract.
(b)  General duty regarding conflicts of interest.
MCO will establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational conflict of interest, or personal gain. MCO will operate with complete independence and objectivity without actual, potential or apparent conflict of interest with respect to the activities conducted under this Contract.

Section 13.03 Organizational conflicts of interest.

(a)  Definition.
An organizational conflict of interest is a set of facts or circumstances, a relationship, or other situation under which an MCO or a Subcontractor has past, present, or currently planned personal or financial activities or interests that either directly or indirectly:
(1)  Impairs or diminishes the MCO’s or Subcontractor’s ability to render impartial or objective assistance or advice to HHSC; or
(2)  Provides the MCO or Subcontractor an unfair competitive advantage in future HHSC procurements (excluding the award of this Contract).
(b)  Warranty.
Except as otherwise disclosed and approved by HHSC prior to the Effective Date of the Contract, MCO warrants that, as of the Effective Date and to the best of its knowledge and belief, there are no relevant facts or circumstances that could give rise to an organizational conflict of interest affecting this Contract.  MCO affirms that it has neither given, nor intends to give, at any time hereafter, any economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a public servant or any employee or representative of same, at any time during the procurement process or in connection with the procurement process except as allowed under relevant state and federal law.
(c)  Continuing duty to disclose.
(1)  MCO agrees that, if after the Effective Date, MCO discovers or is made aware of an organizational conflict of interest, MCO will immediately and fully disclose such interest in writing to the HHSC project manager.  In addition, MCO must promptly disclose any relationship that might be perceived or represented as a conflict after its discovery by MCO or by HHSC as a potential conflict.  HHSC reserves the right to make a final determination regarding the existence of conflicts of interest, and MCO agrees to abide by HHSC’s decision.
(2)  The disclosure will include a description of the actions that MCO has taken or proposes to take to avoid or mitigate such conflicts.
(d)  Remedy.
If HHSC determines that an organizational conflict of interest exists, HHSC may, at its discretion, terminate the Contract pursuant to Subsection 12.03(b)(9).
If HHSC determines that MCO was aware of an organizational conflict of interest before the award of this Contract and did not disclose the conflict to the contracting officer, such nondisclosure will be considered a material breach of the Contract.  Furthermore, such breach may be submitted to the Office of the Attorney General, Texas Ethics Commission, or appropriate State or Federal law enforcement officials for further action.
(e)  Flow-down obligation.
MCO must include the provisions of this Section in all Subcontracts for work to be performed similar to the service provided by MCO, and the terms "Contract," "MCO," and "project manager" modified appropriately to preserve the state's rights.

Section 13.04 HHSC personnel recruitment prohibition.

MCO has not retained or promised to retain any person or company, or utilized or promised to utilize a consultant that participated in HHSC’s development of specific criteria of the RFP or who participated in the selection of the MCO for this Contract.
Unless authorized in writing by HHSC, MCO will not recruit or employ any HHSC personnel who have worked on projects relating to the subject matter of this Contract, or who have had any influence on decisions affecting the subject matter of this Contract, for two (2) years following the completion of this Contract.

Section 13.05 Anti-kickback provision.

MCO certifies that it will comply with the Anti-Kickback Act of 1986, 41 U.S.C. §51-58 and Federal Acquisition Regulation 52.203-7, to the extent applicable.

Section 13.06 Debt or back taxes owed to State of Texas.

In accordance with Section 403.055 of the Texas Government Code, MCO agrees that any payments due to MCO under the Contract will be first applied toward any debt and/or back taxes MCO owes State of Texas.  MCO further agrees that payments will be so applied until such debts and back taxes are paid in full.

Section 13.07 Outstanding debts and judgments.

MCO certifies that it is not presently indebted to the State of Texas, and that MCO is not subject to an outstanding judgment in a suit by State of Texas against MCO for collection of the balance. For purposes of this Section, an indebtedness is any amount or sum of money that is due and owing to the State of Texas and is not currently under dispute. A false statement regarding MCO’s status will be treated as a material breach of this Contract and may be grounds for termination at the option of HHSC.

Article 14. Representations & Warranties

Section 14.01 Authorization.

(a)  The execution, delivery and performance of this Contract has been duly authorized by MCO and no additional approval, authorization or consent of any governmental or regulatory agency is required to be obtained in order for MCO to enter into this Contract and perform its obligations under this Contract.
(b)  MCO has obtained all licenses, certifications, permits, and authorizations necessary to perform the Services under this Contract and currently is in good standing with all regulatory agencies that regulate any or all aspects of MCO’s performance of this Contract. MCO will maintain all required certifications, licenses, permits, and authorizations during the term of this Contract.

Section 14.02 Ability to perform.

MCO warrants that it has the financial resources to fund the capital expenditures required under the Contract without advances by HHSC or assignment of any payments by HHSC to a financing source.

Section 14.03 Minimum Net Worth.

The MCO has, and will maintain throughout the life of this Contract, minimum net worth that complies with standards adopted by TDI.  Minimum net worth means the excess total admitted assets over total liabilities, excluding liability for subordinated debt issued in compliance with Chapter 843 of the Texas Insurance Code.

Section 14.04 Insurer solvency.

(a)  The MCO must be and remain in full compliance with all applicable state and federal solvency requirements for basic-service health maintenance organizations, including but not limited to, all reserve requirements, net worth standards, debt-to-equity ratios, or other debt limitations. In the event the MCO fails to maintain such compliance, HHSC, without limiting any other rights it may have by law or under the Contract, may terminate the Contract.
(b)  If the MCO becomes aware of any impending changes to its financial or business structure that could adversely impact its compliance with the requirements of the Contract or its ability to pay its debts as they come due, the MCO must notify HHSC immediately in writing.
(c)  The MCO must have a plan and take appropriate measures to ensure adequate provision against the risk of insolvency as required by TDI. Such provision must be adequate to provide for the following in the event of insolvency:
(1)  continuation of Covered Services, until the time of discharge, to Members who are confined on the date of insolvency in a hospital or other inpatient facility;
(2)  payments to unaffiliated health care providers and affiliated healthcare providers whose Contracts do not contain Member “hold harmless” clauses acceptable to the TDI;
(3)  continuation of Covered Services for the duration of the Contract Period for which a capitation has been paid for a Member;
(4)  provision against the risk of insolvency must be made by establishing adequate reserves, insurance or other guarantees in full compliance with all financial requirements of TDI and the Contract.
Should TDI determine that there is an immediate risk of insolvency or the MCO is unable to provide Covered Services to its Members, HHSC, without limiting any other rights it may have by law, or under the Contract, may terminate the Contract.

Section 14.05 Workmanship and performance.

(a)  All Services and Deliverables provided under this Contract will be provided in a manner consistent with the standards of quality and integrity as outlined in the Contract.
(b)  All Services and Deliverables must meet or exceed the required levels of performance specified in or pursuant to this Contract.
(c)  MCO will perform the Services and provide the Deliverables in a workmanlike manner, in accordance with best practices and high professional standards used in well-managed operations performing services similar to the Services described in this Contract.

Section 14.06 Warranty of deliverables.

MCO warrants that Deliverables developed and delivered under this Contract will meet in all material respects the specifications as described in the Contract during the period following its acceptance by HHSC, through the term of the Contract, including any subsequently negotiated by MCO and HHSC.  MCO will promptly repair or replace any such Deliverables not in compliance with this warranty at no charge to HHSC.

Section 14.07 Compliance with Contract.

MCO will not take any action substantially or materially inconsistent with any of the terms and conditions set forth in this Contract without the express written approval of HHSC.

Section 14.08 Technology Access

(a)  MCO expressly acknowledges that State funds may not be expended in connection with the purchase of an automated information system unless that system meets certain statutory requirements relating to accessibility by persons with visual impairments.  Accordingly, MCO represents and warrants to HHSC that this technology is capable, either by virtue of features included within the technology or because it is readily adaptable by use with other technology, of:
(1)   Providing equivalent access for effective use by both visual and non-visual means;
(2)   Presenting information, including prompts used for interactive communications, in formats intended for non-visual use; and
(3)   Being integrated into networks for obtaining, retrieving, and disseminating information used by individuals who are not blind or visually impaired.
(b)  For purposes of this Section, the phrase "equivalent access" means a substantially similar ability to communicate with or make use of the technology, either directly by features incorporated within the technology or by other reasonable means such as assistive devices or services that would constitute reasonable accommodations under the Americans with Disabilities Act or similar State or Federal laws.  Examples of methods by which equivalent access may be provided include, but are not limited to, keyboard alternatives to mouse commands and other means of navigating graphical displays, and customizable display appearance.
(c)  In addition, all technological solutions offered by the MCO must comply with the requirements of Texas Government Code §531.0162.  This includes, but is not limited to providing technological solutions that meet federal accessibility standards for persons with disabilities, as applicable.

Section 14.09 Electronic & Information Resources Accessibility Standards

(a)   Applicability
The following Electronic and Information Resources (EIR) requirements apply to the Contract because the MCO perform services that include EIR that: (i) HHSC employees are required or permitted to access; or (ii)  members of the public are required or permitted to access.  This Section does not apply to incidental uses of EIR in the performance of a Contract, unless the Parties agree that the EIR will become property of the State or will be used by the HHSC’s clients or recipients after completion of the Contract.  Nothing in this section is intended to prescribe the use of particular designs or technologies or to prevent the use of alternative technologies, provided they result in substantially equivalent or greater access to and use of a Product.
(b) Definitions.
For purposes of this Section:
“Accessibility Standards” means the Electronic and Information Resources Accessibility Standards and the Web Site Accessibility Standards/Specifications.
Electronic and Information Resources” means information resources, including information resources technologies, and any equipment or interconnected system of equipment that is used in the creation, conversion, duplication, or delivery of data or information.  The term includes, but is not limited to, telephones and other telecommunications products, information kiosks, transaction machines, Internet websites, multimedia resources, and office equipment, including copy machines and fax machines.
“Electronic and Information Resources Accessibility Standards” means the accessibility standards for electronic and information resources contained in Volume 1 Texas Administrative Code Chapter 213.
“Web Site Accessibility Standards/ Specifications” means standards contained in Volume 1 Texas Administrative Code Chapter 206.
“Product” means information resources technology that is, or is related to, EIR.
(c)   Accessibility Requirements.
Under Texas Government Code Chapter 2054, Subchapter M, and implementing rules of the Texas Department of Information Resources, HHSC must procure Products that comply with the Accessibility Standards when such Products are available in the commercial marketplace or when such Products are developed in response to a procurement solicitation. Accordingly, MCO must provide electronic and information resources and associated Product documentation and technical support that comply with the Accessibility Standards.
(d)  Evaluation, Testing, and Monitoring.
(1)  HHSC may review, test, evaluate and monitor MCO’s Products and associated documentation and technical support for compliance with the Accessibility Standards.  Review, testing, evaluation and monitoring may be conducted before and after the award of a contract.  Testing and monitoring may include user acceptance testing.
Neither (1) the review, testing (including acceptance testing), evaluation or monitoring of any Product, nor (2) the absence of such review, testing, evaluation or monitoring, will result in a waiver of the State’s right to contest the MCO’s assertion of compliance with the Accessibility Standards.
(2)  MCO agrees to cooperate fully and provide HHSC and its representatives timely access to Products, records, and other items and information needed to conduct such review, evaluation, testing and monitoring.
(e)  Representations and Warranties.
(1)  MCO represents and warrants that: (i) as of the Effective Date of the Contract, the Products and associated documentation and technical support comply with the Accessibility Standards as they exist at the time of entering the Contract, unless and to the extent the Parties otherwise expressly agree in writing; and (ii) if the Products will be in the custody of the state or an HHS Agency’s client or recipient after the Contract expiration or termination, the Products will continue to comply with such Accessibility Standards after the expiration or termination of the Contract Term,  unless HHSC and/or its clients or recipients, as applicable, use the Products in a manner that renders it noncompliant.
(2)  In the event MCO should have known, becomes aware, or is notified that the Product and associated documentation and technical support do not comply with the Accessibility Standards, MCO represents and warrants that it will, in a timely manner and at no cost to HHSC, perform all necessary steps to satisfy the Accessibility Standards, including but not limited to remediation, replacement, and upgrading of the Product, or providing a suitable substitute.
(3)  MCO acknowledges and agrees that these representations and warranties are essential inducements on which HHSC relies in awarding this Contract.
(4)  MCO’s representations and warranties under this subsection will survive the termination or expiration of the Contract and will remain in full force and effect throughout the useful life of the Product.
(f) Remedies.
(1)  Pursuant to Texas Government Code Sec. 2054.465, neither MCO nor any other person has cause of action against HHSC for a claim of a failure to comply with Texas Government Code Chapter 2054, Subchapter M, and rules of the Department of Information Resources.
(2)  In the event of a breach of MCO’s representations and warranties, MCO will be liable for direct, consequential, indirect, special, and/or liquidated damages and any other remedies to which HHSC may be entitled under this Contract and other applicable law.  This remedy is cumulative of any and all other remedies to which HHSC may be entitled under this Contract and other applicable law.




Article 15. Intellectual Property

Section 15.01 Infringement and misappropriation.

(a)  MCO warrants that all Deliverables provided by MCO will not infringe or misappropriate any right of, and will be free of any claim of, any third person or entity based on copyright, patent, trade secret, or other intellectual property rights.
(b)  MCO will, at its expense, defend with counsel approved by HHSC, indemnify, and hold harmless HHSC, its employees, officers, directors, contractors, and agents from and against any losses, liabilities, damages, penalties, costs, and fees from any claim or action against HHSC that is based on a claim of breach of the warranty set forth in the preceding paragraph.  HHSC will promptly notify MCO in writing of the claim, provide MCO a copy of all information received by HHSC with respect to the claim, and cooperate with MCO in defending or settling the claim.  HHSC will not unreasonably withhold, delay or condition approval of counsel selected by the MCO.
(c)  In case the Deliverables, or any one (1) or part thereof, is in such action held to constitute an infringement or misappropriation, or the use thereof is enjoined or restricted or if a proceeding appears to MCO to be likely to be brought, MCO will, at its own expense, either:
(1)  Procure for HHSC the right to continue using the Deliverables; or
(2)  Modify or replace the Deliverables to comply with the Specifications and to not violate any intellectual property rights.

Section 15.02 Exceptions.

MCO is not responsible for any claimed breaches of the warranties set forth in Section 15.01 to the extent caused by:
(a) Modifications made to the item in question by anyone other than MCO or its Subcontractors, or modifications made by HHSC or its contractors working at MCO’s direction or in accordance with the specifications; or
(b) The combination, operation, or use of the item with other items if MCO did not supply or approve for use with the item; or
(c) HHSC’s failure to use any new or corrected versions of the item made available by MCO.

Section 15.03 Ownership and Licenses

(a)  Definitions.
For purposes of this Section 15.03, the following terms have the meanings set forth below:
(1)    “Custom Software” means any software developed by the MCO: for HHSC; in connection with the Contract; and with funds received from HHSC.  The term does not include MCO Proprietary Software or Third Party Software.
(2)   “MCO Proprietary Software” means software: (i) developed by the MCO prior to the Effective Date of the Contract, or (ii) software developed by the MCO after the Effective Date of the Contract that is not developed: for HHSC; in connection with the Contract; and with funds received from HHSC.
(3)  “Third Party Software” means software that is: developed for general commercial use; available to the public; or not developed for HHSC.  Third Party Software includes without limitation: commercial off-the-shelf software; operating system software; and application software, tools, and utilities.
(b)  Deliverables.
The Parties agree that any Deliverable, including without limitation the Custom Software, will be the exclusive property of HHSC.
(c)  Ownership rights.
(1)  HHSC will own all right, title, and interest in and to its Confidential Information and the Deliverables provided by the MCO, including without limitation the Custom Software and associated documentation.  For purposes of this Section 15.03, the Deliverables will not include MCO Proprietary Software or Third Party Software.  MCO will take all actions necessary and transfer ownership of the Deliverables to HHSC, including, without limitation, the Custom Software and associated documentation prior to Contract termination.
(2)  MCO will furnish such Deliverables, upon request of HHSC, in accordance with applicable State law. All Deliverables, in whole and in part, will be deemed works made for hire of HHSC for all purposes of copyright law, and copyright will belong solely to HHSC. To the extent that any such Deliverable does not qualify as a work for hire under applicable law, and to the extent that the Deliverable includes materials subject to copyright, patent, trade secret, or other proprietary right protection, MCO agrees to assign, and hereby assigns, all right, title, and interest in and to Deliverables, including without limitation all copyrights, inventions, patents, trade secrets, and other proprietary rights therein (including renewals thereof) to HHSC.
(3)  MCO will, at the expense of HHSC, assist HHSC or its nominees to obtain copyrights, trademarks, or patents for all such Deliverables in the United States and any other countries.  MCO agrees to execute all papers and to give all facts known to it necessary to secure United States or foreign country copyrights and patents, and to transfer or cause to transfer to HHSC all the right, title, and interest in and to such Deliverables.  MCO also agrees not to assert any moral rights under applicable copyright law with regard to such Deliverables.
(d)  License Rights
HHSC will have a royalty-free and non-exclusive license to access the MCO Proprietary Software and associated documentation during the term of the Contract.  HHSC will also have ownership and unlimited rights to use, disclose, duplicate, or publish all information and data developed, derived, documented, or furnished by MCO under or resulting from the Contract.  Such data will include all results, technical information, and materials developed for and/or obtained by HHSC from MCO in the performance of the Services hereunder, including but not limited to all reports, surveys, plans, charts, recordings (video and/or sound), pictures, drawings, analyses, graphic representations, computer printouts, notes and memoranda, and documents whether finished or unfinished, which result from or are prepared in connection with the Scope of Work performed as a result of the Contract.
(e)  Proprietary Notices
MCO will reproduce and include HHSC’s copyright and other proprietary notices and product identifications provided by MCO on such copies, in whole or in part, or on any form of the Deliverables.
(f)  State and Federal Governments
In accordance with 45 C.F.R. §95.617, all appropriate State and Federal agencies will have a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, translate, or otherwise use, and to authorize others to use for Federal Government purposes all materials, the Custom Software and modifications thereof, and associated documentation designed, developed, or installed with federal financial participation under the Contract, including but not limited to those materials covered by copyright, all software source and object code, instructions, files, and documentation.

Article 16. Liability

Section 16.01 Property damage.

(a)  MCO will protect HHSC’s real and personal property from damage arising from MCO’s, its agent’s, employees.’ Consultants’, and Subcontractors’ performance of the Scope of Work, and MCO will be responsible for any loss, destruction, or damage to  HHSC’s property that results from or is caused by MCO’s, its agents’, employees’, consultant’s, or Subcontractors’ negligent or wrongful acts or omissions.  Upon the loss of, destruction of, or damage to any property of HHSC, MCO will notify the HHSC Project Manager thereof and, subject to direction from the Project Manager or her or his designee, will take all reasonable steps to protect that property from further damage.
(b)  MCO agrees to observe and encourage its employees and agents to observe safety measures and proper operating procedures at HHSC sites at all times.
(c)  MCO will distribute a policy statement to all of its employees and agents that directs the employee or agent to promptly report to HHSC or to MCO any special defect or unsafe condition encountered while on HHSC premises.  MCO will promptly report to HHSC any special defect or an unsafe condition it encounters or otherwise learns about.

Section 16.02 Risk of Loss.

During the period Deliverables are in transit and in possession of MCO, its carriers or HHSC prior to being accepted by HHSC, MCO will bear the risk of loss or damage thereto, unless such loss or damage is caused by the negligence or intentional misconduct of HHSC.  After HHSC accepts a Deliverable, the risk of loss or damage to the Deliverable will be borne by HHSC, except loss or damage attributable to the negligence or intentional misconduct of MCO’s agents, employees, consultants, or Subcontractors.

Section 16.03 Limitation of HHSC’s Liability.

HHSC WILL NOT BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL, OR CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES UNDER CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHER LEGAL THEORY.  THIS WILL APPLY REGARDLESS OF THE CAUSE OF ACTION AND EVEN IF HHSC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
HHSC’S LIABILITY TO MCO UNDER THE CONTRACT WILL NOT EXCEED THE TOTAL CHARGES TO BE PAID BY HHSC TO MCO UNDER THE CONTRACT, INCLUDING CHANGE ORDER PRICES AGREED TO BY THE PARTIES OR OTHERWISE ADJUDICATED.
MCO’s remedies are governed by the provisions in Article 12.
 
 

Article 17.  Insurance & Bonding

Section 17.01 Insurance Coverage.

(a)  Statutory and General Coverage
MCO will maintain, at the MCO’s expense, the following insurance coverage:
(1)  Business Automobile Liability Insurance for all owned, non-owned, and hired vehicles for bodily injury and property damage;
(2)  Comprehensive General Liability Insurance of at least $1,000,000.00 per occurrence and $5,000,000.00 in the aggregate (including Bodily Injury coverage of $100,000.00 per each occurrence and Property Damage Coverage of $25,000.00 per occurrence); and
(3)  If MCO’s current Comprehensive General Liability insurance coverage does not meet the above stated requirements, MCO will obtain Umbrella Liability Insurance to compensate for the difference in the coverage amounts.  If Umbrella Liability Insurance is provided, it must follow the form of the primary coverage.
(b)  Professional Liability Coverage.
(1)  MCO must maintain, or cause its Network Providers to maintain, Professional Liability Insurance for each Network Provider of $100,000.00 per occurrence and $300,000.00 in the aggregate, or the limits required by the hospital at which the Network Provider has admitting privileges.
(2)  MCO must maintain an Excess Professional Liability (Errors and Omissions)  Insurance Policy for the greater of $3,000,000.00 or an amount (rounded to the nearest $100,000.00) that represents the number of Members enrolled in the MCO in the first month of the applicable State Fiscal Year multiplied by $150.00, not to exceed $10,000,000.00.
(c)  General Requirements for All Insurance Coverage
(1)   Except as provided herein, all exceptions to the Contract’s insurance requirements must be approved in writing by HHSC. HHSC’s written approval is not required in the following situations:
(i) An MCO or a Network Provider is not required to obtain the insurance coverage described in Section 17.01 if the MCO or Network Provider qualifies as a state governmental unit or municipality under the Texas Tort Claims Act, and is required to comply with, and subject to the provisions of, the Texas Tort Claims Act.
(ii)  An MCO may waive the Professional Liability Insurance requirement described in Section 17.01(b)(1) for a Network Provider of Community-based Long-term Services and Supports.  An MCO may not waive this requirement if the Network Provider provides other Covered Services in addition to Community-based Long Term Services and Supports, or if a Texas licensing entity requires the Network Provider to carry such Professional Liability coverage.   An MCO that waives the Professional Liability Insurance requirement for a Network Provider pursuant to this provision is not required to obtain such coverage on behalf of the Network Provider.
 
 
(2)  MCO or the Network Provider is responsible for any and all deductibles stated in the insurance policies.
(3) Insurance coverage must be issued by insurance companies authorized to conduct business in the State of Texas.
(4)  With the exception of Professional Liability Insurance maintained by Network Providers, all insurance coverage must name HHSC as an additional insured. In addition, with the exception of Professional Liability Insurance maintained by Network Providers and Business Automobile Liability Insurance, all insurance coverage must name HHSC as a loss payee.
(5)  Insurance coverage kept by the MCO must be maintained in full force at all times during the Term of the Contract, and until HHSC’s final acceptance of all Services and Deliverables.  Failure to maintain such insurance coverage will constitute a material breach of this Contract.
(6)  With the exception of Professional Liability Insurance maintained by Network Providers, the insurance policies described in this Section must have extended reporting periods of two (2) years.  When policies are renewed or replaced, the policy retroactive date must coincide with, or precede, the Contract Effective Date.
(7)  With the exception of Professional Liability Insurance maintained by Network Providers, the insurance policies described in this Section must provide that prior written notice be given to HHSC at least 30 calendar days before coverage is reduced below minimum HHSC contractual requirements, canceled, or non-renewed.  MCO must submit a new coverage binder to HHSC to ensure no break in coverage.
(8)  The Parties expressly understand and agree that any insurance coverages and limits furnished by MCO will in no way expand or limit MCO’s liabilities and responsibilities specified within the Contract documents or by applicable law.
(9)  MCO expressly understands and agrees that any insurance maintained by HHSC will apply in excess of and not contribute to insurance provided by MCO under the Contract.
(10)  If MCO, or its Network Providers, desire additional coverage, higher limits of liability, or other modifications for its own protection, MCO or its Network Providers will be responsible for the acquisition and cost of such additional protection.  Such additional protection will not be an Allowable Expense under this Contract.
(11)  MCO will require all insurers to waive their rights of subrogation against HHSC for claims arising from or relating to this Contract.
(d)  Proof of Insurance Coverage
(1)  Except as provided in Section 17.01(d)(2), the MCO must furnish the HHSC Project Manager original Certificates of Insurance evidencing the required insurance coverage on or before the Effective Date of the Contract.  If insurance coverage is renewed during the Term of the Contract, the MCO must furnish the HHSC Project Manager renewal certificates of insurance, or such similar evidence, within five (5) Business Days of renewal.  The failure of HHSC to obtain such evidence from MCO will not be deemed to be a waiver by HHSC and MCO will remain under continuing obligation to maintain and provide proof of insurance coverage.
(2)  The MCO is not required to furnish the HHSC Project Manager proof of Professional Liability Insurance maintained by Network Providers on or before the Effective Date of the Contract, but must provide such information upon HHSC’s request during the Term of the Contract.

Section 17.02 Performance Bond.

(a) The MCO must obtain a performance bond with a one (1) year term.  The performance bond must be renewable and renewal must occur no later than the first day of each subsequent State Fiscal Year.  The performance bond must continue to be in effect for one (1) year following the expiration of the final renewal period.  MCO must obtain and maintain the performance bonds in the form prescribed by HHSC and approved by TDI, naming HHSC as Obligee, securing MCO’s faithful performance of the terms and conditions of this Contract. The performance bonds must comply with Chapter 843 of the Texas Insurance Code and 28 T.A.C. §11.1805.  At least one (1) performance bond must be issued. The amount of the performance bond(s) should total $100,000.00 for each MCO Program within each Service Area that the MCO covers under this Contract.  Performance bonds must be issued by a surety licensed by TDI, and specify cash payment as the sole remedy.  MCO must deliver each renewal prior to the first day of the State Fiscal Year.
(b) Since the CHIP Perinatal Program is a subprogram of the CHIP Program, neither a separate performance bond for the CHIP Perinatal Program nor a combined performance bond for the CHIP and CHIP Perinatal Programs is required.  The same bond that the MCO obtains for its CHIP Program within a particular Service Area also will cover the MCO’s CHIP Perinatal Program in that same Service Area.

Section 17.03 TDI Fidelity Bond

The MCO will secure and maintain throughout the life of the Contract a fidelity bond in compliance with Chapter 843 of the Texas Insurance Code and 28 T.A.C. §11.1805.  The MCO must promptly provide HHSC with copies of the bond and any amendments or renewals thereto.

Subject: Attachment B-1 - Medicaid and CHIP Managed Care Servies RFP, Section 6


DOCUMENT HISTORY LOG
STATUS1
DOCUMENT REVISION2
EFFECTIVE DATE
DESCRIPTION3
Baseline
n/a
September 1, 2011
Initial version of Attachment B-1, RFP Sections 1 – 5, “Introduction; Procurement Strategy; General Instructions & Requirements; Submission Requirements; and Evaluation Process & Criteria.”
 
 
 
 
 
 
 
 
 
1  Status should be represented as “Baseline” for initial issuances, “Revision” for changes to the Baseline version, and “Cancellation” for withdrawn versions
2 Revisions should be numbered in accordance according to the version of the issuance and sequential numbering of the revision—e.g., “1.2” refers to the first version of the document and the second revision.
3  Brief description of the changes to the document made in the revision.


Table of Contents

1. Introduction.............................................................................................................1-6
1.1 Point-of-Contact.........................................................................................................1-6
1.2 Procurement Schedule...............................................................................................1-6
1.3 Purpose......................................................................................................................1-7
1.4 Mission Statement......................................................................................................1-8
1.5 Mission Objectives.....................................................................................................1-8
1.6 Overview of the HHSC MCO Programs.....................................................................1-9
1.6.1 STAR....................................................................................................................1-10
1.6.2 STAR+PLUS........................................................................................................1-10
1.6.3 CHIP.....................................................................................................................1-10
1.7 Other HHSC Managed Care Programs....................................................................1-11
1.8 Eligible Populations for HHSC MCO Programs........................................................1-12
1.8.1 STAR Program Eligibility......................................................................................1-12
1.8.2 STAR+PLUS Eligibility.........................................................................................1-13
1.8.3 CHIP Program Eligibility.......................................................................................1-14
1.9 Authorization............................................................................................................1-15
1.10 Eligible Respondents................................................................................................1-15
1.11 Term of Contract......................................................................................................1-16
1.12 Development of Contracts........................................................................................1-16
1.13 Medicaid and CHIP Service Areas...........................................................................1-16
2. Procurement Strategy and Approach...................................................................2-18
2.1 HHSC Model Management Strategy........................................................................2-18
2.2 Performance Measures and Associated Remedies.................................................2-19
3. General Instructions and Requirements...............................................................3-20
3.1 Strategic Elements...................................................................................................3-20
3.1.1 Contract Elements................................................................................................3-20
3.1.2 HHSC’s Basic Philosophy:  Contracting for Results.............................................3-20
3.2 External Factors.......................................................................................................3-20
3.3 Legal and Regulatory Constraints............................................................................3-20
3.3.1 Delegation of Authority.........................................................................................3-20
3.3.2 Conflicts of Interest...............................................................................................3-21
3.3.3 Former Employees of a State Agency..................................................................3-21
3.4 HHSC Amendments and Announcements Regarding this RFP...............................3-22
3.5 RFP Cancellation/Partial Award/Non-Award............................................................3-22
3.6 Right to Reject Proposals or Portions of Proposals.................................................3-22
3.7 Costs Incurred..........................................................................................................3-22
3.8 Protest Procedures...................................................................................................3-22
3.9 Vendor Conference..................................................................................................3-23
3.10 Questions and Comments........................................................................................3-23
3.11 Modification or Withdrawal of Proposal....................................................................3-23
3.12 News Releases........................................................................................................3-24
3.13 Incomplete Proposals...............................................................................................3-24
3.14 State Use of Proposal Information...........................................................................3-24
3.15 Property of HHSC.....................................................................................................3-24
3.16 Copyright Restriction................................................................................................3-24
3.17 Additional Information...............................................................................................3-25
3.18 Multiple Responses..................................................................................................3-25
3.19 No Joint Proposals...................................................................................................3-25
3.20 Use of Subcontractors..............................................................................................3-25
3.21 Texas Public Information Act....................................................................................3-26
3.22 Inducements.............................................................................................................3-26
3.23 Definition of Terms...................................................................................................3-26
4. Submission Requirements....................................................................................4-27
4.1 General Instructions.................................................................................................4-27
4.1.1 Economy of Presentation.....................................................................................4-28
4.1.2 Number of Copies and Packaging........................................................................4-29
4.1.3 Due Date, Time, and Location..............................................................................4-29
4.2 Part 1 – Business Proposal......................................................................................4-30
4.2.1 Section 1 – Executive Summary..........................................................................4-30
4.2.2 Section 2 – Respondent Identification and Information........................................4-31
4.2.3 Section 3 – Corporate Background and Experience............................................4-33
4.2.4 Section 4 – Material Subcontractor Information...................................................4-38
4.2.5 Section 5 – Historically Underutilized Business (HUB) Participation....................4-40
4.2.6 Section 6 – Certifications and Other Required Forms..........................................4-45
4.3 Part 2 – Programmatic Proposal..............................................................................4-45
4.3.1 Section 1 – Proposed Programs, Service Area, and Capacity.............................4-47
4.3.2 Section 2 – Experience Providing Covered Services...........................................4-48
4.3.3 Section 3 – Value-added Services.......................................................................4-49