REPORT TITLE:
QUEST


DESCRIPTION:
Requires DHS to annually review the risk factor adjustment used
to compensate health plans treating QUEST patients and to include
high risk health characteristics in its payment methodology.
(HB1413 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1413
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO QUEST. 


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that it is in the best
 
 2 interest of the State to assure that funds appropriated for
 
 3 medicaid managed care services under QUEST are distributed
 
 4 equitably to health plans under contract with QUEST.  The
 
 5 legislature further finds that the capitation methodology used by
 
 6 QUEST to compensate providers should be examined further, as it
 
 7 may overcompensate those health plans and providers who treat
 
 8 relatively healthy populations while at the same time under-
 
 9 compensate those plans and providers which care for a
 
10 disproportionate share of high risk patients who need more than
 
11 average medical attention, known as "adverse selection."
 
12      The legislature further finds that data used by the
 
13 department of human services to develop the risk factor
 
14 adjustment for the initial contract period was based on pre-QUEST
 
15 fee-for-service data.  However, this methodology has been
 
16 unsuccessful in attempting to render equitable distributions to
 
17 all health plans.
 
18      The legislature further finds that correcting this inequity
 
19 will ensure that providers receive reasonable compensation for
 
20 their services in caring for people who need the most health
 

 
Page 2                                                     1413
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 care.  In reviewing risk factor adjustments, the legislature
 
 2 recognizes that any future redistribution of QUEST resources will
 
 3 not result in an additional expense to the State and will ensure
 
 4 that QUEST dollars are spent for the intended purpose of
 
 5 providing health care to the indigent.
 
 6      The purpose of this Act is to direct the department of human
 
 7 services to apply the actuarially valid risk factor adjustment
 
 8 derived from actual QUEST member experience in calculating its
 
 9 compensation to QUEST providers.
 
10      SECTION 2.  Chapter 346, Hawaii Revised Statutes, is amended
 
11 by adding a new section to be appropriately designated and to
 
12 read as follows:
 
13      "�346-    Payment methodology for QUEST.  The department
 
14 shall conduct an annual review of the risk factor adjustment used
 
15 to calculate payments to health plans under contract with the
 
16 department to provide medicaid services.
 
17      As used in this section, "risk factor adjustment" means a
 
18 method of compensation, derived from actual QUEST member
 
19 experience, that accounts for different risk characteristics
 
20 associated with the medical assistance eligibility groups,
 
21 including age, gender, and geographical location of the
 
22 recipient.  The department shall, in consultation with all
 
23 contracted health plans, also include in its methodology the
 

 
Page 3                                                     1413
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 health characteristics of the QUEST patients being served and
 
 2 identify those characteristics which are to be considered high
 
 3 risk."
 
 4      SECTION 3.  New statutory material is underscored.
 
 5      SECTION 4.  This Act shall take effect upon its approval.