S-1: General form of registration statement for all companies including face-amount certificate companies

Published on October 9, 2001


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EXHIBIT 10.2



JANUARY 2000 - DECEMBER 2001





Contract for Medicaid/BadgerCare HMO Services

Between

HMO

And


Wisconsin Department of
Health and Family Services






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TABLE OF CONTENTS
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Page No.
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ARTICLE I............................................................................................... 1
I DEFINITIONS................................................................................... 1

ARTICLE II.............................................................................................. 7
II. DELEGATIONS OF AUTHORITY...................................................................... 7

ARTICLE III............................................................................................. 7
III. FUNCTIONS AND DUTIES OF THE HMO............................................................... 7
A. Statutory Requirement........................................................ 7
B. Provision of Contract Services............................................... 8
C. Time Limit for Decision on Certain Referrals................................. 18
D. Emergency Care............................................................... 18
E. 24-Hour Coverage............................................................. 19
F. Thirty Day Payment Requirement............................................... 20
G. HMO Claim Retrieval System................................................... 20
H. Appeals to the Department for HMO Payment/Denial of Providers................ 20
I. Payments for Diagnosis of Whether an Emergency Condition Exists.............. 22
J. Memoranda of Understanding for Emergency Services............................ 22
K. Provision of Services........................................................ 22
L. Open Enrollment.............................................................. 23
M. Pre-Existing Conditions...................................................... 23
N. Hospitalization at the Time of Enrollment or Disenroliment................... 23
0. Non-Discrimination........................................................... 24
P. Affirmative Action Plan...................................................... 24
Q. Cultural Competency.......................................................... 25
R. Health Education and Prevention.............................................. 26
S. Enrollee Handbook and Education and Outreach for Newly Enrolled
Recipients................................................................... 27
T. Approval of Marketing Plans and Informing Materials.......................... 29
U. Conversion Privileges........................................................ 31
V. Choice of Health Professional................................................ 31
W. Quality Assessment/Performance Improvement (QAPI)............................ 31
X. Access to Premises........................................................... 52
Y. Subcontracts................................................................. 52
Z.. Compliance with Applicable Laws, Rules or Regulations........................ 52
AA. Use of Providers Certified By Medicaid Program............................... 52
DD. Coordination and Continuation of Care........................................ 54
FE. HMO ID Cards................................................................. 54
FF. Federally Qualified Health Centers and Rural Health Centers
(FQHCS and RHCS)............................................................. 54


HMO Contract for January 1, 2000 - December 31, 2001

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Page No.
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GG. Coordination with Prenatal Care Services, School-Based Services,
Targeted Case Management Services, a Child Welfare Agencies, and
Dental Managed Care Organizations............................................ 55
HH. Physician Incentive Plans.................................................... 57
II. Advance Directives........................................................... 57
JJ. Ineligible Organizations..................................................... 58
KK. Clinical Laboratory Improvement Amendments................................... 60
LL. Limitation on Fertility Enhancing Drugs...................................... 60
MM. Reporting of Communicable Diseases........................................... 60
NN. MedicaBadgerCareare HMO Advocate Requirements................................ 61
00. HMO Designation of Staff Person as Contract Representative................... 64
PP. Subcontracts with Local Health Departments................................... 64
QQ. Subcontracts with Community-Based Health Organizations....................... 65
RR. Prescription Drugs........................................................... 65


ARTICLE IV.............................................................................................. 65
IV. FUNCTIONS AND DUTIES OF THE DEPARTMENT................................................. 65
A. Eligibility Determination.................................................... 65
B. Enrollment................................................................... 67
C. Disenroliment................................................................ 67
D. HMO Enrollment Reports....................................................... 67
E. Utilization Review and Control............................................... 68
F. HMO Review................................................................... 68
G. HMO Review of Study or Audit Results......................................... 68
H. Vaccines..................................................................... 68
I. Coordination of Benefits..................................................... 68
J. Wisconsin Medicaid Provider Reports.......................................... 69


ARTICLE V............................................................................................... 69
V. PAYMENT TO THE HMO..................................................................... 69
A. Capitation Rates............................................................. 69
B. Actuarial Basis.............................................................. 69
C. Renegotiation................................................................ 69
D. Reinsurance.................................................................. 69
E. Neonatal Intensive Care Unit Risk-Sharing.................................... 70
F. Payment Schedule............................................................. 71
G. Capitation Payments For Newborns............................................. 71
H. Cordination of Benefits (COB)................................................ 72
I. Recoupments.................................................................. 74
J. HealthCheck Recoupment....................................................... 75
K. Payment for Aids, HIV-Positive, and Ventilator Dependent..................... 76


HMO Contract for January 1, 2000 - December 31, 2001

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Page No.
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ARTICLE VI...................................................................................... 78
VI. REPORTS, DATA, AND COMPUTER/DATA REPORTING SYSTEM..................................... 78
A. Disclosure...................................................................... 78
B. Periodic Reports................................................................ 79
C. Access to and Audit of Contract Records......................................... 80
D. Records Retention............................................................... 80
E. Special Reporting and Compliance Requirements................................... 80
F. Reporting of Corporate and Other Changes........................................ 81
G. Computer/Data Reporting System.................................................. 81

ARTICLE VII...................................................................................... 83
VII. ENROLLMENT AND DISENROLLMENTS......................................................... 83
A. Enrollment...................................................................... 83
B. Third Trimester Pregnancy Disenrollment......................................... 83
C. Ninth Month Pregnancy Disenrollment............................................. 84
D. Exemptions from Enrollment in any HMO and Disenrollment for
Patients of Certified Nurse Midwives or Nurse Practitioners..................... 84
F. Exemption from Enrollment in any HMO and Disenrollment For
AIDS or HIV-Positive with Anti Retroviral Drug Treatment........................ 84
F. Exemptions from Enrollment in any HMO and Disenrollment for
Patients of Federally Qualified Health Centers.................................. 85
G. Native American Disenrollment................................................... 85
H. Special Disenrollments.......................................................... 85
I. Exemptions from Enrollment in any HMO and Disenrollment for
Recipients With Commercial HMO Insurance or Commercial
Insurance With a Restricted Provider Network.................................... 85
J. Exemption from Enrollment in any HMO and Disenrollment for
Families Where One or More Members are receiving SSI benefits................... 86
K. Voluntary Disenrollment......................................................... 86
L. Section 1115(A) Waiver and State Plan Amendment................................. 87
M. Additional Services............................................................. 87
N. Enrollment/Disenrollment Practices.............................................. 87
0. Enrollee Lock-In Period......................................................... 87

ARTICLE VIII. ................................................................................... 88
VIII. GRIEVANCE PROCEDURES.................................................................. 88
A. Procedures...................................................................... 88
B. Recipient Appeals of HMO Formal Grievance Decisions............................. 90
C. Notifications of Denial, Termination, Suspension, or Reduction of
Benefits to Enrollees........................................................... 90
D. Notifications of Denial of New Benefits to Enrollees............................ 92


HMO Contract for January 1, 2000 - December 31, 2001

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Page No.
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ARTICLE IX............................................................................................. 93
IX. REMEDIES FOR VIOLATION, BREACH, OR NON-PERFORMANCE OF CONTRACT............................... 93
A. Suspension of New Enrollment......................................................... 93
B. Department-Initiated Enrollment Reductions........................................... 93
C. Other Enrollment Reductions.......................................................... 93
D. Withholding of Capitation Payments and Orders to Provide Services.................... 94
E. Inappropriate Payment Denials........................................................ 97
F. Sanctions............................................................................ 97
G. Sanctions and Remedial Actions....................................................... 98

ARTICLE X............................................................................................. 98
X. TERMINATION AND MODIFICATION OF CONTRACT..................................................... 98
A. Mutual Consent....................................................................... 98
B. Unilateral Termination............................................................... 98
C. Obligations of Contracting Parties................................................... 99
D. Modification......................................................................... 100

ARTICLE XI............................................................................................. 101
XI. INTERPRETATION OF CONTRACT LANGUAGE.......................................................... 101
A. Interpretations...................................................................... 101

ARTICLE XII............................................................................................ 101
XIII. CONFIDENTIALITY OF RECORDS................................................................... 101

ARTICLE XIII........................................................................................... 102
XIII. DOCUMENTS CONSTITUTING CONTRACT.............................................................. 102
A. Current Documents.................................................................... 102
B. Future Documents..................................................................... 103

ARTICLE XIV............................................................................................ 103
XIV. MISCELLANEOUS................................................................................ 103
A. Indemnification...................................................................... 103
B. Independent Capacity of Contractor................................................... 104
C. Omissions............................................................................ 104
D. Choice of Law........................................................................ 104
E. Waiver............................................................................... 104
F. Severability......................................................................... 104
G. Force Majeure........................................................................ 105
H. Headings............................................................................. 105
I. Assignability........................................................................ 105
J. Right to Publish..................................................................... 105
K. Year 2000 Compliance................................................................. 105


HMO Contract for January 1, 2000 - December 31, 2001

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Page No.
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ARTICLE XV................................................................................................... 107
XV. HMO SPECIFIC CONTRACT TERMS......................................................................... 107
A. Initial Contract Period....................................................................... 107
B. Renewals...................................................................................... 107
C. Specific Terms of the Contract................................................................ 107

ADDENDUM I................................................................................................... 109
SUBCONTRACTS AND MEMORANDA OF UNDERSTANDING............................................................. 109

ADDENDUM II.................................................................................................. 118
POLICY GUIDELINES FOR MENTAL HEALTH/SUBSTANCE ABUSE AND
COMMUNITY HUMAN SERVICE PROGRAMS........................................................................ 118

ADDENDUM III................................................................................................. 125
RISK-SHARING FOR INPATIENT HOSPITAL SERVICES............................................................ 125

ADDENDUM IV.................................................................................................. 128
CONTRACT SPECIFIED REPORTING REQUIREMENTS............................................................... 128
PART A. REPORTS AND DUE DATES......................................................................... 128
PART B. WISCONSIN MEDICAID/BADGERCARE HMO SUMMARY AND
ENCOUNTER DATA SET............................................................................ 133
PART C. PROVIDER LIST ON TAPE......................................................................... 135
PART D. REPORTS FOR AIDS AND VENTILATOR DEPENDENT..................................................... 137

ADDENDUM V................................................................................................... 139
STANDARD ENROLLEE HANDBOOK LANGUAGE..................................................................... 139

ADDENDUM VI.................................................................................................. 150

ADDENDUM VII................................................................................................. 151
ACTUARIAL BASIS COB REPORT.............................................................................. 152

ADDENDUM VIII................................................................................................ 153
COMPLIANCE AGREEMENT AFFIRMATIVE ACTION/CIVIL RIGHTS.................................................... 153

ADDENDUM IX.................................................................................................. 156
MODEL MEMORANDUM OF UNDERSTANDING HEALTH
MAINTENANCE ORGANIZATION AND PRENATAL CARE
COORDINATION AGENCY..................................................................................... 156

ADDENDUM X................................................................................................... 157
MEMORANDUM OF UNDERSTANDING BETWEEN MILWAUKEE
COUNTY HMOS AND BUREAU OF MILWAUKEE CHILD WELFARE....................................................... 157



HMO Contract for January 1, 2000 - December 31, 2001

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Page No.
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ADDENDUM XI............................................................................................. 160
HEALTHCHECK WORKSHEET.............................................................................. 160

ADDENDUM XII............................................................................................ 161
COMMON CARRIER TRANSPORTATION MEMORANDUM OF
UNDERSTANDING MILWAUKEE COUNTY MEDICAID/BADGERCARE
HMOS AND MILWAUKEE COUNTY DEPARTMENT OF HUMAN
SERVICES........................................................................................... 161

ADDENDUM XIII........................................................................................... 163
MODEL MEMORANDUM OF UNDERSTANDING BETWEEN.......................................................... 163
HEALTH MAINTENANCE ORGANIZATION AND SCHOOL DISTRICT OR.
CESA MEDICAID-CERTIFIED FOR THE SCHOOL BASED SERVICES
BENEFIT............................................................................................ 163

ADDENDUM XIV............................................................................................ 164
GUIDELINES FOR THE COORDINATION OF SERVICES BETWEEN
HMOS, TARGETED CASE MANAGEMENT (TCMs) AGENCIES, AND
CHILD WELFARE AGENCIES............................................................................. 164

ADDENDUM XV............................................................................................. 167
PERFORMANCE IMPROVEMENT PROJECT OUTLINE............................................................ 167

ADDENDUM XVI............................................................................................ 169
TARGETED PERFORMANCE IMPROVEMENT MEASURES DATA SET................................................. 169

ADDENDUM XVII........................................................................................... 183
MEDICAID/BADGERCARE HMO NEWBORN REPORT............................................................. 183

ADDENDUM XVIII.......................................................................................... 185
RECOMMENDED CHILDHOOD IMMUNIZATION SCHEDULE CDC-ACIP
RECOMMENDATIONS, JANUARY-DECEMBER 2000............................................................. 185

ADDENDUM XIX............................................................................................ 185
REPORTING REQUIREMENTS FOR NEONATAL INTENSIVE CARE
UNIT RISK-SHARING.................................................................................. 186

ADDENDUM XX............................................................................................. 188
SPECIFIC TERMS OF THE MEDICAID/BADGERCARE HMO
CONTRACT........................................................................................... 188

ADDENDUM XXI............................................................................................ 195
FORMAL GRIEVANCE EXPERIENCE SUMMARY REPORT......................................................... 195


HMO Contract for January 1, 2000 - December 31, 2001


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Page No.
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ADDENDUM XXII............................................................................................ 196
GUIDELINES FOR THE COORDINATION OF SERVICES BETWEEN
MEDICAID HMOS AND COUNTY BIRTH TO THREE (B-3) AGENCIES.............................................. 196

ADDENDUM XXIII........................................................................................... 202
WISCONSIN MEDICAID HMO REPORT ON AVERAGE BIRTH
COSTS BY COUNTY..................................................................................... 202

ADDENDUM XXIV............................................................................................ 205
LOCAL HEALTH DEPARTMENTS AND COMMUNITY-BASED
HEALTH ORGANIZATIONS A RESOURCE FOR HMOs............................................................ 205

ADDENDUM XXV............................................................................................. 208
GENERAL INFORMATION ABOUT THE WIC PROGRAM, SAMPLE
HMO-TO-WIC REFERRAL FORM, AND STATEWIDE LIST OF WIC
AGENCIES............................................................................................ 208


HMO Contract for January 1, 2000- December 31, 2001

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CONTRACT FOR SERVICES

Between

Department of Health and Family Services

and

HMO

The Wisconsin Department of Health and Family Services and HMO, an insurer with
a certificate of authority to do business in Wisconsin, and an organization
which makes available to enrolled participants, in consideration of periodic
fixed payments, comprehensive health care services provided by providers
selected by the organization and who are employees or partners of the
organization or who have entered into a referral or contractual arrangement with
the organization, for the purpose of providing and paying for Medicaid/Badger
Care contract services to recipients enrolled in the HMO under the
State of Wisconsin Medicaid Plan approved by the Secretary of the United States
Department of Health and Human Services pursuant to the provisions of the Social
Security Act and for the further specific purpose of promoting coordination and
continuity of preventive health services and other medical care including
prenatal care, emergency care, and HealthCheck services, do herewith agree:


ARTICLE I

I. DEFINITIONS

The term "CESA" means Cooperative Educational Service Agencies, which are
cooperatives that include multiple school districts that work together for
purchasing and other coordinated functions. There are 12 CESAs in
Wisconsin.

The term "children with special health care needs" means children who have
or are at increased risk for chronic physical, developmental, behavioral,
or emotional conditions and who also require health and related services
of a type or amount beyond that required by children generally and who are
enrolled in a Children with Special Health Care Needs program operated by a
Local Health Department or a local Title V funded Maternal and Child Health
Program.

The term "Community Based Health Organizations" means non-profit agencies
providing community based health services. These organizations provide
important health care services such as HealthCheck screenings, nutritional
support, and family planning, targeting such services to high risk
populations.

HMO Contract for January 1, 2000 - December 31, 2001

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The term "continuing care provider" means (as stated in 42 CFR 441.60(a)) a
provider who has an agreement with the Medicaid agency to provide:

A. any reports that the Department may reasonably require, and

B. at least the following services to eligible HealthCheck recipients
formally enrolled with the provider as enumerated in 42 CFR
441.60(a) (1)-(5):

1. screening, diagnosis, treatment, and referrals for follow-up
services,

2. maintenance of the recipient's consolidated health history,
including information received from other providers,

3. physician's services as needed by the recipient for acute,
episodic or chronic illnesses or conditions,

4. provide or refer for dental services, and

5. transportation and scheduling assistance.

The term "contract" means the agreements executed between HMOs and the
Department to accomplish the duties and functions, in accordance with the
rules and arrangements specified in this document.

The term "contract services" means those services which the HMO is required
to provide under this Contract.

The term "contractor" means the HMOs awarded the contracts resulting from
the HMO Certification process to provide capitated Managed care in
accordance with the Contract.

The term "cultural competency" means a set of congruent behaviors,
attitudes, practices and policies that are formed within an agency, and
among professionals that enable the system, agency, and professionals to
work respectfully, effectively and responsibly in diverse situations.
Essential elements of cultural competence include understanding diversity
issues at work, understanding the dynamic of difference, institutionalizing
cultural knowledge, and adapting to and encouraging organizational
diversity.

The term "Department" means the Wisconsin Department of Health and Family
Services.

HMO Contract for January 1, 2000 - December 31, 2001

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The term "emergency medical condition" means---

A. A medical condition manifesting itself by acute symptoms of 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 attention to result
in:

1. placing the health of the individual (or, with respect to a
pregnant woman, the health of the woman or her unborn child) in
serious jeopardy,

2. serious impairment of bodily functions, or

3. serious dysfunction of any bodily organ or part; or

B. With respect to a pregnant woman who is in active labor---

1. that there is inadequate time to effect a safe transfer to
another hospital before delivery; or

2. that transfer may pose a threat to the health or safety of the
woman or the unborn child.

C. A psychiatric emergency involving a significant risk of serious harm
to oneself or others.

D. A substance abuse emergency exists if there is significant risk of
serious harm to an enrollee or others, or there is likelihood of
return to substance abuse without immediate treatment.

E. Emergency dental care is defined as an immediate service needed to
relieve the patient from pain, an acute infection, swelling, trismus,
fever, or trauma. In all emergency situations, the HMO must document
in the recipient's dental records the nature of the emergency.

The term "encounter" shall include the following:

1. A service or item provided to a patient through the health care
system. Examples include but are not limited to:

a. Office visits
b. Surgical procedures
c. Radiology, including professional and/or technical components
d. Prescribed drugs
e. Durable medical equipment
f. Emergency transportation to a hospital

HMO Contract for January 1, 2000 - December 31, 2001

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g. Institutional stays (inpatient hospital, rehabilitation stays)
h. HealthCheck screens

2. A service or item not directly provided by the HMO, but for which the
HMO is financially responsible. An example would include an emergency
service provided by an out-of-network provider or facility.

3. A service or item not directly provided by the HMO, and one for which
no claim is submitted but for which the HMO may supplement its
encounter data set. Such services might include HealthCheck screens
for which no claims have been received and if no claim is received,
the HMO's medical chart. Examples of services or items the HMO may
include are:

. HealthCheck services
. Lead Screening and Testing
. Immunizations

4. The terms "services" or "items" as used above include those services
and items not covered by the Wisconsin Medicaid Program, but which the
HMO chooses to provide as part of its Medicaid managed care product.
Examples include educational services, certain over-the-counter drugs,
and delivered meals.

The terms "enrollee" and "participant" mean a Medicaid/BadgerCare
recipient who has been certified by the State as eligible to enroll under
this Contract, and whose name appears on the HMO Enrollment Reports which
the Department will transmit to the HMO every month in accordance with an
established notification schedule. Children who are reported to the
certifying agency within 100 days of birth shall be enrolled in the HMO
their mother is enrolled in from their date of birth if the mother was an
enrollee on the date of birth. Children who are reported to the certifying
agency after the 100th day but before their first birthday may be eligible
for Medicaid/BadgerCare on a fee-for-service basis.

The term "enrollment area" means the geographic area within which
recipients must reside in order to enroll, on a mandatory basis, in the HMO
under this Contract.

The term "experimental surgery and procedures" means experimental services
that meet the definition of HFS 107.035(1) and (2) Wis. Adm. Code. as
determined by the Department.

The term "formally enrolled with a continuing care provider" (as cited in
42 CFR 441.60(d)) means that a recipient (or recipient's guardian) agrees
to use one continuing care provider as the regular source of a described
set of services for a stated period of time.

HMO Contract for January 1, 2000 - December 31, 2001

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The term "HMO" means the health maintenance organization or its parent
corporation with a certificate of authority to do business in Wisconsin,
that is obligated under this Contract.

The term "HMO Encounter Technical Workgroup" means a workgroup composed of
HMO technical staff, contract administrators, claims processing,
eligibility, and/or other HMO staff, as necessary; Department staff from
the Division of Health Care Financing; and staff from the Department's
fiscal agent contractor.

The term "encounter record" means an electronically formatted list of
encounter data elements per encounter as specified in the Wisconsin
Medicaid 2000-2001 HMO Encounter Data User Manual. An encounter record may
be prepared from a single detail line from a claim such as the HCFA 1500 or
UB-92.

The term "Local Health Department" (LHD) means an agency of local
government established according to Chapter 251, Wis. Stats. Local health
departments have statutory obligation to perform certain core functions:
which include assessment, assurance, and policy development for the purpose
of protecting and promoting the health of their communities.

The term "Medicaid" means the Wisconsin Medical Assistance Program operated
by the Wisconsin Department of Health and Family Services under Title XIX
of the Federal Social Security Act, Ch. 49, Wis. Stats., and related State
and Federal rules and regulations. This will be the term used consistently
in this Contract. However, other expressions or words equivalent to
Medicaid are "MA," "Medical Assistance," and "WMAP."

The term "BadgerCare" means part of the Wisconsin Medical Assistance
Program operated by the Wisconsin Department of Health and Family Services
under Title XIX and Title XXI of the Federal Social Security Act, s.
49.655, Wis. Stats., and related State and Federal rules and regulations.
This term will be used throughout this contract.

The term "medical status code" means the two digit (alphanumeric) code that
the Department uses in its computer system to define the type of Medicaid
eligibility a recipient has: the code identifies the basis of eligibility,
whether cash assistance is being provided, and other aspects of Medicaid.
The medical status code is listed on the HMO enrollment reports. Please
refer to Article IV. A. for a list of HMO eligible medical status codes.

The term "medically necessary" means a medical service that meets the
definition of HFS 101 .03(96m) Wis. Adm. Code.

The term "newborn" means an enrollee who is less than 100 days old.

HMO Contract for January 1, 2000 - December 31, 2001

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The term "Post Stabilization Services" means medically necessary non-
emergency services furnished to an enrollee after he or she is stabilized
following an emergency medical condition.

The term "provider" means a person who has been certified by the Department
to provide health care services to recipients and to be reimbursed by
Medicaid for those services.

The term "Public Institution" means an institution that is the
responsibility of a governmental unit or over which a governmental unit
exercises administrative control as defined by federal regulations.

The term "recipient" means any individual entitled to benefits under Title
XIX and XXI of the Social Security Act, and under the Medicaid State Plan
as defined in Chapter 49, Wis. Stats.

The term "risk" means the possibility of monetary loss or gain by the HMO
resulting from service costs exceeding or being less than payments made to
it by the Department.

The term "service area" means an area of the State in which the HMO has
agreed to provide Medicaid services to Medicaid enrollees. The Department
will monitor enrollment levels of HMOs by the service areas of the HMO,
and HMO will indicate whether they will provide dental or chiropractic
services by service area. A service area may be as small as a zip code, may
be a county, a number of counties, or the entire State.

The term "State" means the State of Wisconsin.

The term "subcontract" means any written agreement between the HMO and
another party to fulfill the requirements of this Contract. However, such
term does not include insurance purchased by the HMO to limit its loss with
respect to an individual enrollee, provided the HMO assumes some portion of
the underwriting risk for providing health care services to that enrollee.

The term "Wisconsin Tribal Health Directors Association (WTHDA)" means the
coalition of all Wisconsin American Indian Tribal Health Departments.

Terms that are not defined above shall have their primary meaning
identified in the Wisconsin Administrative Code, Chs. HFS 101-108.

HMO Contract for January 1, 2000 - December 31, 2001

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ARTICLE II


II. DELEGATIONS OF AUTHORITY

The HMO shall oversee and remain accountable for any functions and
responsibilities that it delegates to any subcontractor. For all
subcontracting or delegation of function or authority:

A. There shall be a written agreement that specifies the
delegated activities and reporting responsibilities of the
subcontractor and provides for revocation of the delegation or
imposition of other sanctions if the subcontractor's
performance is inadequate.

B. Before any delegation, the HMO shall evaluate the prospective
subcontractor's ability to perform the activities to be
delegated.

C. The HMO shall monitor the subcontractor's performance on an
ongoing basis and subject the subcontractor to formal review
at least once a year.

D. If the HMO identifies deficiencies or areas for improvement,
the HMO and the subcontractor shall take corrective action.

E. If the HMO delegates selection of providers to another entity,
the HMO retains the right to approve, suspend, or terminate
any provider selected by that entity.


ARTICLE III


III. FUNCTIONS AND DUTIES OF THE HMO

In consideration of the functions and duties of the Department
contained in this Contract the HMO shall:

A. Statutory Requirement

Retain at all times during the period of this Contract a valid
Certificate of Authority issued by the State of Wisconsin
Office of the Commissioner of Insurance.


HMO Contract for January 1, 2000 - December 31, 2001

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B. Provision of Contract Services


1. Promptly provide or arrange for the provision of all
services required under s. 49.46(2), Wis. Stats., and
HFS 107 Wis. Adm. Code; as further clarified in all
Wisconsin Medicaid Program Provider Handbooks and
Bulletins, and HMO Contract Interpretation Bulletins
(CIBs) and as otherwise specified in this Contract
except:

a. County Transportation by common carrier or
private motor vehicle (except as required in
Article III. B (10). HealthCheck). HMOs are
required to arrange for transportation for
HealthCheck visits. When authorized by the
Department, the HMO may provide
non-emergency transportation by common
carrier or private motor vehicle for
HealthCheck visits and be reimbursed by the
County.

HMOs may negotiate arrangements with local
county Departments of Health and Social
Services for common carrier or private
vehicle transportation for HMO services in
general and not just for HealthCheck visits.

The Department will facilitate the
development of such arrangements between the
HMO and the county. HMOs interested in
developing a transportation arrangement with
one or more counties and interested in
Department assistance should contact the
following office either by mail or phone:

Bureau of Managed Health Care Programs
P.O. Box 309
Madison, WI 53701- 0309
Phone Number: (608) 266-7894 or 267-2170
Fax Number: (608) 261-7792

b. Milwaukee County HMOs will provide common
carrier transportation to enrollees.
Transportation services will be limited to:

. Transporting Medicaid/BadgerCare HMO
members only.

. Transportation of Medicaid/BadgerCare
HMO members to and from Medicaid
covered services.


HMO Contract for January 1, 2000 - December 31, 2001

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The HMO is responsible for arranging for the
common carrier transportation and providing
monthly costs incurred to Milwaukee County
Department of Human Services (DHS), of
common carrier transportation arranged. HMO
agrees to submit costs to the DHS within 15
days following the end of each month to:

Milwaukee County DHS
Financial Assistant, Division Administrator
1220 W. Vliet Street
Milwaukee, WI 53206

The DHS is responsible for reimbursing the
HMO for mileage and an administration fee.
The State Department of Health and Family
Services reserves the right to adjust these
rates.

The HMO shall maintain adequate records for
each enrollee which include all pertinent
and sufficient information relating to
common carrier transportation, and make this
information readily available to the
Department of Health and Family Services
(DHFS). HMO agrees to report suspected
abuse by enrollees or providers to the DHFS.

c. Dental, if Article XV and Addendum XX
indicates dental is not covered.

d. Prenatal Care Coordination.

e. Targeted Case Management.

f. School-Based Services.

g. Milwaukee Childcare Coordination.

h. Tuberculosis-related Services.

2. Cover chiropractic services, or in the alternative,
enter into a subcontract for chiropractic services
with the State as provided in Article XV. State law
mandates coverage.

3. Remain liable for provision of care for that period
for which capitation payment has been made in cases
where medical status code changes occur subsequent to
capitation payment.



HMO Contract for January 1, 2000 - December 31, 2001

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4. Be liable, where emergencies and HMO referrals to
out-of-area or non-affiliated providers occur, for
payment only to the extent that Medicaid pays,
including Medicare deductibles, or would pay, its
fee-for-service providers for services to the AFDC
population. For inpatient hospital services, the
Department will provide each HMO per diem rates based
on the Medicaid fee-for-service equivalent. This
condition does not apply to: (1) cases where prior
payment arrangements were established; and (2)
specific subcontract agreements.

5. Changes to Medicaid covered services mandated by
Federal or State law subsequent to the signing of
this Contract will not affect the contract services
for the term of this Contract, unless (1) agreed to
by mutual consent, or (2) unless the change is
necessary to continue to receive federal funds or due
to action of a court of law.

The Department may incorporate any change in covered
services mandated by Federal or State law into the
Contract effective the date the law goes into effect,
if it adjusts the capitation rate accordingly. The
Department will give the HMO 30 days notice of any
such change that reflects service increases, and the
HMO may elect to accept or reject the service
increases for the remainder of that contract year;
the Department will give the HMO 60 days notice of
any such change that reflects service decreases, with
a right of the HMO to dispute the amount of the
decrease within that 60 days. The HMO has the right
to accept or reject service decreases for the
remainder of the Contract year. The date of
implementation of the change in coverage will
coincide with the effective date of the increased or
decreased funding. This section does not limit the
Department's ability to modify the Medicaid/HMO
Contract for changes in the State Budget.

6. Be responsible for payment of all contract services
provided to all Medicaid/BadgerCare recipients listed
as ADDs or CONTINUEs on either the Initial or Final
Enrollment Reports (see Article IV. B and D)
generated for the month of coverage. The HMO is also
responsible for payment of services to all newborns
meeting the criteria described in Article V. G.
"Capitation Payments for Newborns." Additionally, the
HMO agrees to provide, or authorize provision of,
services to all Medicaid enrollees with valid Forward
cards indicating HMO enrollment without regard to
disputes about enrollment status and without regard
to any other identification requirements. Any
discrepancies between the cards and the reports will
be reported to the Department for resolution. The HMO
shall continue to provide and authorize provision of
all contract services until the discrepancy is
resolved. This includes recipients who were PENDING
on the Initial Report and held a valid Forward card
indicating HMO enrollment, but did not appear as an
ADD on the Final Report.


HMO Contract for January 1, 2000 - December 31, 2001

-10-


7. Transplants: As a general principle, Wisconsin
Medicaid does not pay for items that it determines to
be experimental in nature.

a. Procedures that are covered by Medicaid that
are no longer considered experimental are
cornea transplants and kidney transplants.
HMOs shall cover these services.

b. There are other procedures that are approved
only at particular institutions, including
bone marrow transplants, liver, heart,
heart-lung, lung, pancreas-kidney, and
pancreas transplants. HMOs need not cover
the transplantation because there are no
funds in the fee-for-service experience data
(and thus in the HMO capitation rates) for
these services. This relieves the HMO from
paying for expensive follow-up care, as when
there are permanent, expensive requirements
for drugs or equipment.

1) The person to get the transplant
will be permanently exempted from
HMO enrollment the date of the
transplant surgery.

2) In the case of autologous bone
marrow transplants, the person will
be permanently exempted from HMO
enrollment the date the bone marrow
was extracted.

c. Enrollees who have had one or more
transplant surgeries referenced in 7 b,
prior to enrollment in an HMO will be
-------------------
permanently exempted the first of the month
of their HMO enrollment.

8. Dental Care: HMOs that agree to accept the dental
capitation rate for the purpose of covering all
Medicaid dental services must:

a. Cover all dental services as required under
HFS 107.07, provider handbooks, bulletins,
and periodic updates.

b. Provide diagnostic, preventive, and
medically necessary follow-up care to treat
the dental disease, illness, injury or
disability of enrollees while they are
enrolled in an HMO, except as required in
sub. (c).



HMO Contract for January 1, 2000 - December 31, 2001

-11-


c. Complete orthodontic or prosthodontic
treatment begun while an enrollee is
enrolled in an HMO if the enrollee becomes
ineligible or disenrolls from the HMO, no
matter how long the treatment takes.
Medicaid/BadgerCare covers such continuing
services for fee-for-service recipients and
the costs of continuing treatment are
included in the fee-for-service payment data
on which the HMO capitation rates are based.
An HMO will not be required to complete
orthodontic or prosthodontic treatment on an
enrollee who has begun treatment as a
fee-for-service recipient and who
subsequently has been enrolled in an HMO.

[Refer to the chart following this page of
the Contract for the specific details of
completion of orthodontic or prosthodontic
treatment in these situations.]



HMO Contract for January 1, 2000 - December 31, 2001

-12-


RESPONSIBILITY FOR PAYMENT OF ORTHODONTIC & PROSTHODONTIC
TREATMENT WHEN THERE IS AN ENROLLMENT STATUS CHANGE DURING THE
COURSE OF TREATMENT



------------------------------------------------------------------------------------------------------------------------
Who pays for completion of orthodontic and
prosthodontic treatment* where there is an enrollment
status change
---------------------------------------------------------
First HMO Second HMO Fee-for-Service
------------------------------------------------------------------------------------------------------------------------

Person converts from one status to another:

1. Fee-for-service to an HMO covering dental. N/A X
------------------------------------------------------------------------------------------------------------------------
2a. HMO covering dental to an HMO not covering dental,
and person's residence remains within 50 miles of the X
person's residence when in the first HMO.
------------------------------------------------------------------------------------------------------------------------
2b. HMO covering dental to an HMO not covering dental,
and person's residence changes to greater than X
50 miles of the person's residence when in the first HMO.
------------------------------------------------------------------------------------------------------------------------
3a. HMO covering dental to the same or another HMO
covering dental and the person's residence remains X
within 50 miles of the residence when in the first HMO.
------------------------------------------------------------------------------------------------------------------------
3b. HMO covering dental to the same or another HMO covering X
dental and the person's residence changes to greater
than 50 miles of the residence when in the first HMO.
------------------------------------------------------------------------------------------------------------------------
4. HMO with dental coverage to fee-for-service because:

a. Person moves out of the HMO service area but the
person's residence remains within 50 miles of the
residence when in the HMO. X
------------------------------------------------------------------------------------------------------------------------
b. Person moves out of the HMO service area, but the
person's residence changes to greater than 50 miles N/A X
of the residence when in the HMO.
------------------------------------------------------------------------------------------------------------------------
c. Person exempted from HMO enrollment. N/A X
------------------------------------------------------------------------------------------------------------------------
d. Person's medical status changes loan ineligible HMO X N/A
code and the person's residence remains within 50
miles of the residence when in that
HMO.
-----------------------------------------------------------------------------------------------------------------------
e. Person's medical status changes to an ineligible HMO N/A X
code and the person's residence changes to greater
than 50 miles of the residence when in that
HMO.
------------------------------------------------------------------------------------------------------------------------
5a. HMO with dental to ineligible for Medicaid/BC and the X N/A
person's residence remains within 50 miles of the
residence when in that HMO.
------------------------------------------------------------------------------------------------------------------------
Sb. HMO with dental to ineligible for Medicaid/BC and the N/A X
person's residence changes to greater than 50 miles
of the residence when in that HMO.
------------------------------------------------------------------------------------------------------------------------
6. HMO without dental to ineligible for Medicaid/BC. N/A X
------------------------------------------------------------------------------------------------------------------------


HMO Contract for January 1, 2000 - December 31, 2001

-13-


* Orthodontic and prosthodontic treatment are only covered by
Medicaid/BadgerCare for children under 21 as a result of a HealthCheck
referral (HFS 107,07(3)).

9. The following provision refers to payments made by the
HMO. HMO covered primary care and emergency care services
provided to a recipient living in a Health Professional
Shortage Area (HPSA) or by a provider practicing in a HPSA
must be paid at an enhanced rate of 20 percent above the
rate the HMO would otherwise pay for those services.
Primary care providers are defined as nurse practitioners,
nurse midwives, physician assistants, and physicians who
are Medicaid-certified with specialties of general
practice, OB-GYN, family practice, internal medicine, or
pediatrics. Specified HMO-covered obstetric or
gynecological services (see the Wisconsin Medicaid and
BadgerCare Physicians Services Handbook) provided to a
recipient living in a HPSA or by a provider practicing in
a HPSA must be paid at an enhanced rate of 25 percent
above the rate the HMO would otherwise pay providers in
HPSAs for those services.

However, this does not require the HMO to pay more than
the enhanced Medicaid fee-for-service rate or the actual
amount billed for these services. The HMO shall ensure
that the moneys for HPSA payments are paid to the
physicians and are not used to supplant funds that
previously were used for payment to the physicians. The
Department will supply a list of the services affected by
this provision, their maximum fee-for-service rates, and
HPSAs. The HMO must develop written policies and
procedures to ensure compliance with this provision. These
policies must be available for review by the Department,
upon request.

10. HEALTHCHECK----Provide services as a continuing care
provider as defined in Article I, and according to
policies and procedures in Part D of the Wisconsin
Medicaid Provider Handbook related to covered services.

Provide HealthCheck screens at a rate equal to or greater
than 80 percent of the expected number of screens. The
rate of HealthCheck screens will be determined by the
calculation in the HealthCheck Worksheet in Addendum XI.
The Department will complete the worksheet from data
provided by the HMO- from the HMO Utilization Report for
calendar year 2000 and, for calendar year 2001, from
HealthCheck screens the Department retrieves and
identifies from the 2001 encounter data set. The HMO may
complete the worksheet on its own, periodically, as a
means to monitor its HealthCheck screening performance.


HMO Contract for January 1, 2000 - December 31, 2001

-14-


For the 2000 HealthCheck worksheet data calculation, the
number of HealthCheck screens reported on the 2000 HMO
utilization Report must be substantiated by the number
reported on the 2000 encounter data set. If for the year
2000, the encounter data set does not substantiate the
HealthCheck screens reported on the HMO Utilization Report
within 5 percent, the Department will require HMOs to
submit a 2001 HMO Utilization Report.

When the Department completes the HealthCheck worksheet
using encounter data for calendar year 2001, the
Department will identify and retrieve HealthCheck
screening data from the encounter data set as of July 1,
2002. For those HMOs required to submit a 2001 HMO
Utilization Report, the Department will compare the
HealthCheck data submitted on the 2001 HMO Utilization
Report with HealthCheck data reported on the encounter
data set, and utilize the smaller number when completing
the worksheet.

If the HMO provides fewer screens in the contract year
than 80 percent, the Department will recoup the funds
provided to the HMO for the provision of the remaining
screens. This formula will be used:

(0.80 x A - B) x (C - D), where

A = Expected number of screens (Line 6 of
Addendum XI: HealthCheck Worksheet)

B = Number of screens paid in the contract
year as reported in the Encounter Data
Set or on the final Utilization Report
for the year

C = Fee-for-service maximum allowable fee*

D = HMO discount

* The fee-for-service maximum allowable fee is the average
maximum fee for the year. For example, if the maximum
allowable fee for HealthCheck is $50 from January through
June, and $52 from July through December, then the average
maximum allowable fee for the year is $51.

For recipients over 1 year of age, if a recipient requests
a HealthCheck screen, HMO shall provide such screen within
60 days, if a screen is due according to the periodicity
schedule. If the screen is not due within 60 days, then
the HMO shall schedule the appointment in accordance with
the periodicity schedule. For recipients up to 1 year of
age, if a recipient requests a HealthCheck screen, HMO
shall provide such screen

HMO Contract for January 1, 2000 - December 31, 2001

-15-


within 30 days, if a screen is due according to the
periodicity schedule. If the screen is not due within 30
days, then the HMO shall schedule the appointment in
accordance with the periodicity schedule.

11. The HMO must adequately fund physician services provided
to pregnant women and children under 19, so that they are
paid at rates sufficient to ensure that provider
participation and services are as available to the
Medicaid/BadgerCare population as to the general
population in the HMO service area(s).

12. The actual provision of any service is subject to the
professional judgment of the HMO providers as to the
medical necessity of the service, except that the HMO must
provide assessment and evaluation services ordered by a
court. Decisions to provide or not to provide or authorize
medical services shall be based solely on medical
necessity and appropriateness as defined in HFS
101.03(96m). Disputes between HMOs and recipients about
medical necessity can be appealed through an HMO grievance
system, and ultimately to the Department for a binding
determination;the Department's determinations will be
based on whether Medicaid would have covered that service
on a fee-for-service basis (except for certain
experimental procedures discussed in Article III, B. 7).
Alternatively, disputes between HMOs and enrollees about
medical necessity can be appealed directly to the
Department.

HMOs are not restricted to providing Wisconsin Medicaid
covered services. Sometimes, HMOs find that other
treatment methods may be more appropriate than Medicaid
covered services, or result in better outcomes.

None of the provisions of this contract that are
applicable to Wisconsin Medicaid covered services apply to
other services that an HMO may choose to provide, except
that abortions, hysterectomies and sterilizations must
comply with 42 CFR 441 Subpart E and 42 CFR 441 Subpart F.

If a service provided is an alternative or replacement to
a Wisconsin Medicaid covered service, then the HMO or HMO
provider is not allowed to bill the enrollee for the
service.

13. HMO and its providers and subcontractors shall not bill a
Medicaid BadgerCare enrollee for medically necessary
services covered under this Contract and provided during
the enrollee's period of HMO enrollment. HMO and its
providers and subcontractors shall not bill a
Medicaid/BadgerCare enrollee for copayments and/or
premiums for medically necessary services covered under
this Contract and provided


HMO Contract for January 1, 2000 - December 31, 2001

-16-


during the enrollee's period of HMO enrollment. This
provision shall continue to be in effect even if the HMO
becomes insolvent.

However, if an enrollee agrees in advance in writing to
pay for a nonMedicaid/BadgerCare covered service, then the
HMO, HMO provider, or HMO subcontractor may bill the
enrollee. The standard release form signed by the enrollee
at the time of services does not relieve the HMO and its
providers and subcontractors from the prohibition against
billing an enrollee in the absence of a knowing assumption
of liability for a nonMedicaid/BadgerCare covered service.
The form or other type of acknowledgment relevant to an
enrollee's liability must specifically state the
admissions, services, or procedures that are not covered
by Medicaid/BadgerCare.

14. The HMO must operate a program to promote full
immunization of enrollees. The HMO shall be responsible
for administration of immunizations including payment of
an administration fee for vaccines provided by the
Department. For vaccines that are newly approved during
the term of the Contract and not yet part of the Vaccine
for Children program, the HMO will report usage for
reimbursement from the Department. The Department will
identify vaccines which meet these criteria to the HMO.

The HMO, as a condition of their certification as a
Medicaid BadgerCare provider, shall share enrollee
immunization status with Local Health Departments and
other non-profit HealthCheck providers upon request of
those providers without the necessity of enrollee
authorization. The Department is also requiring that Local
Health Departments and other non-profit HealthCheck
providers share that equivalent information with HMOs upon
request. This provision is made to ensure proper
coordination of immunization services and to prevent
duplication of services.

15. Services required under s. 49.46(2). Wis. Stats., and HFS
107 Wis. Adm. Code, include (without limitation due to
enumeration) private duty nursing services, nurse-midwife
services, and independent nurse practitioner services:
physician services, including primary care services, are
not only services performed by physicians, but services
under the direct, on-premises supervision of a physician
performed by other providers such as physician assistants
and nurses of various levels of certification.


HMO Contract for January 1, 2000 - December 31, 2001

-17-


16. Provision of Family Planning Services and Confidentiality
of Family Planning Information: Give enrollees the
opportunity to have their own primary physician for the
provision of family planning services whether that
provider is in-plan or out-of-plan. If the enrollee
chooses an out-of-plan provider, those family planning
services will be paid fee-for-service. The physician does
not replace the primary care provider chosen by or
assigned to the enrollee. All such information and
medical records relating to family planning shall be kept
confidential including those of a minor.

C. Time Limit for Decision on Certain Referrals

Pay for covered services provided by a non-HMO provider to a
disabled participant less than 3 years of age, or to any
participant pursuant to a court order (for treatment),
effective with the receipt of a written request for referral
from the non-HMO provider, and extending until the HMO issues
a written denial of referral. This requirement does not apply
if the HMO issues a written denial of referral within 7 days
of receiving the request for referral.

D. Emergency Care

Promptly provide or pay for needed contract services for
emergency medical conditions and post-stabilization services
as defined in Article I. Nothing in this requirement mandates
HMOs to reimburse for post-stabilization services that were
not authorized by the HMO.

1. Payments for qualifying emergencies (including
services at hospitals or urgent care centers within
the HMO service area(s)) are to be based on the
medical signs and symptoms of the condition upon
initial presentation. The retrospective findings of a
medical work-up may legitimately be the basis for
determining how much additional care may be
authorized, but not for payment for dealing with the
initial emergency.

2. All HMOs, regardless of whether dental care is
included in their contract, are responsible for
paying all ancillary charges relating to dental
emergencies with the only exception being the
dentist's or oral surgeon's direct and office
charges. These charges would include, but are not
limited to, physician, anesthesia, pharmacy and
emergency room in a hospital or freestanding
ambulatory care setting.


HMO Contract for January 1, 2000 - December 31, 2001

-18-


Ambulance Services


1. HMOs may require submission of a trip ticket with ambulance
claims before paying the claim. Claims submitted without a
trip ticket need only be paid at the service charge rate.

2. HMOs will pay a service fee for ambulance response to a call
in order to determine whether an emergency exists, regardless
of the HMO's determination to pay for the call.

3. HMOs will pay for emergency ambulance services based on
established Medicaid criteria for claims payment of these
services.

4. HMO will either pay or deny payment of a complete claim for
ambulance services within 45 days of receipt of the claim.

5. HMOs will respond to appeals from ambulance companies within
the time frame described in Article III. H. Failure will
constitute HMO agreement to pay the appealed claim in full.

E. 24-Hour Coverage

Provide all emergency contract services and post-stabilization services
as defined in this Contract 24 hours each day, 7 days a week, either by
the HMO's own facilities or through arrangements approved by the
Department with other providers. The HMO shall have one (1) toll-free
phone number that enrollees or individuals acting on behalf of an
enrollee can call at any time to obtain authorization for emergency
transport, emergency, or urgent care. (Authorization here refers to the
requirements defined in Addendum V, in the Standard Enrollee Handbook
Language, regarding the conditions under which an enrollee must receive
permission from the HMO prior to receiving services from a non-HMO
affiliated provider in order for the HMO to reimburse the provider:
e.g., for urgent care, for ambulance services for non-emergency care,
for extended emergency services, and other situations.) This number
must have access to individuals with authority to authorize treatment
as appropriate. A response to such call must be provided within 30
minutes (except that response to ambulance calls shall be within 15
minutes) or the HMO will be liable for the cost of subsequent care
related to that illness or injury incident whether treatment is in- or
out-of-plan and whether the condition is emergency, urgent, or routine.

The HMO must be able to communicate with a caller in the language
spoken by the caller or the HMO will be liable for the cost of
subsequent care related to that illness or injury incident whether
treatment is in- or out-of-plan and whether the condition is emergency,
urgent, or routine.


HMO Contract for January 1, 2000 - December 31, 2001

-19-


These calls must be logged with time, date and any pertinent
information related to persons involved, resolution and follow-up
instructions.

The HMO shall notify the Department of any changes of this one toll-
free phone number for emergency calls within 7 working days of change.

F. Thirty Day Payment Requirement

Pay at least 90 percent of adjudicated (clean) claims from
subcontractors for covered medically necessary services within 30 days
of receipt of bill, and 99 percent within 90 days and 100% of the
claims within 180 days of receipt, except to the extent subcontractors
have agreed to later payment. HMO agrees not to delay payment to
subcontractors pending subcontractor collection of third party
liability unless the HMO has an agreement with their subcontractor to
collect third party liability.

G. HMO Claim Retrieval System

Maintain a claim retrieval system that can on request identify date of
receipt, action taken on all provider claims (i.e., paid, denied,
other), and when action was taken. HMO shall date stamp all provider
claims upon receipt. In addition, maintain a claim retrieval system
that can identify, within the individual claim, services provided and
diagnoses of enrollees with nationally accepted coding systems: HCPCS
including level I CPT codes and level II and level III HCPCS codes with
modifiers, ICD-9-CM diagnosis and procedure codes, and other national
code sets such as place of service, type of service, and EOB codes.
Finally, the claim retrieval system must be capable of identifying the
provider of services by the appropriate Wisconsin Medicaid provider ID
number assigned to all in-plan providers. Refer to Article III, section
AA for use of providers certified by the Medicaid program.

H. Appeals to the Department for HMO Payment/Denial of Providers

Provide the name of the person and/or function at the HMO to whom
provider appeals should be submitted.

Provide written notification to providers of HMO payment/denial
determinations which includes:

1. A specific explanation of the payment amount or a specific reason
for the payment denial.

2. A statement regarding the provider's rights and responsibilities
in appealing to the HMO about the HMO's initial determination by
submitting a separate letter or form:

a. clearly marked "appeal"

HMO Contract for January 1, 2000 - December 31, 2001

-20-


b. which contains the provider's name, date of service, date
of billing, date of rejection, and reason(s) claim merits
reconsideration

c. for each appeal

d. to the person and/or function at the HMO that handles
Provider Appeals within 60 days of the initial denial or
partial payment.

3. A statement advising the provider of the provider's right to
appeal to the Department if the HMO fails to respond to the
appeal within 45 days or if the provider is not satisfied with
the HMO response to the request for reconsideration, and that
all appeals to the Department must be submitted in writing within
60 days of the HMO's final decision.

4. Accept written appeals from providers who disagree with the
HMO's payment/denial determination, if the provider submits the
dispute in writing and within 60 days of the initial
payment/denial notice. The HMO has 45 days from the date of
receipt of the request for reconsideration to respond in writing
to the provider. If the HMO fails to respond within that time
frame, or if the provider is not satisfied with the HMO's
response, the provider may seek a final determination from the
Department.

5. Accept the Department's determinations regarding appeals of
disputed claims. In cases where there is a dispute about an
HMO's payment/denial determination and the provider has
requested a reconsideration by the HMO according to the terms
described above, the Department will hear appeals and make final
determinations. These determinations may include the override of
the HMO's time limit for submission of claims in exceptional
cases. The Department will not exercise its authority in this
regard unreasonably. The Department will accept written comments
from all parties to the dispute prior to making the decision.
Appeals must be submitted to the Department within 60 days of the
date of written notification of the HMO's final decision
resulting from a request for reconsideration. The Department has
45 days from the date of receipt of all written comments to
respond to these appeals. HMOs will pay provider(s) within 45
days of receipt of the Department's final determination.


HMO Contract for January 1, 2000 - December 31, 2001

-21-


I. Payments for Diagnosis of Whether an Emergency Condition
Exists

Pay for appropriate, medically necessary, and reasonable
diagnostic tests utilized to determine if an emergency exists.
Payment for emergency services continue until the patient is
stabilized and can be safely discharged or transferred.

J. Memoranda of Understanding for Emergency Services

HMOs may have a contract or an MOU with hospitals or urgent
care centers within the HMO's service area(s) to ensure prompt
and appropriate payment for emergency services. For situations
where a contract or MOU is not possible, HMOs must identify
for hospitals and urgent care centers procedures that ensure
prompt and appropriate payment for emergency services.

1. Such MOUs shall provide for:

a. The process for determining whether an emergency
exists.

b. The requirements and procedures for contacting the
HMO before the provision of urgent or routine care.

c. Agreements, if any, between the HMO and the
provider regarding indemnification, hold harmless,
or any other deviation from malpractice or other
legal liability which would attach to the HMO or
provider in the absence of such an agreement.

d. Payments for appropriate, medically necessary, and
reasonable diagnostic tests to determine if an
emergency exists.

e. Assurance of timely and appropriate provision of
and payment for emergency services.

2. Unless a contract or MOU specifies otherwise, HMOs are
liable to the extent that fee-for-service would have
been liable for the emergency situation. The Department
reserves the right to resolve disputes between HMOs,
hospitals and urgent care centers regarding emergency
situations based on fee-for-service criteria.

K. Provision of Services

Provide contract services to Medicaid/BadgerCare enrollees
under this Contract in the same manner as those services are
provided to other members of the HMO.


HMO Contract for January 1, 2000 - December 31, 2001

-22-


L. Open Enrollment

Conduct a continuous open enrollment period during which the
HMO shall accept recipients eligible for coverage under this
Contract in the order in which they are enrolled without
regard to health status of the recipient or any other
factor(s).

M. Pre-Existing Conditions

Assume responsibility for all covered medical conditions of
each enrollee as of the effective date of coverage under the
Contract. The aforementioned responsibility shall not apply in
the case of persons hospitalized at the time of initial
enrollment, as provided for in this article.

N. Hospitalization at the Time of Enrollment or Disenrollment

1. The HMO will not assume financial responsibility for
enrollees who are hospitalized at the time of enrollment
(effective date of coverage) until an appropriate
hospital discharge.

2. The Department will be responsible for paying on a fee-
for-service basis all Medicaid covered services for
such hospitalized enrollees during hospitalization.

3. Enrollees, including newborn enrollees, who are
hospitalized at the time of disenroliment from the HMO
shall remain the financial responsibility of the HMO.
The financial liability of the HMO shall encompass all
contract services. The HMO's financial liability shall
continue for the duration of the hospitalization, except
where (1) loss of Medicaid/BadgerCare eligibility
occurs; (2) disenrollment occurs because there is a
voluntary disenrollment from the HMO as a result of one
of the conditions in Addendum II, in which case HMO
liability shall terminate upon disenrollment being
effective; and (3) except where disenrollment is due to
medical status change to a code indicating SSI, 503
case, or institutionalized eligibility. 503 cases are
SSI cases that continue Medicaid eligibility in spite of
social security cost of living increases that cause an
SSI recipient to lose SSI eligibility. In these three
exceptions, the HMO's liability shall not exceed the
period for which it is capitated.

4. Discharge from one hospital and admission to another
within 24 hours for continued treatment shall not be
considered discharge under this section. Discharge is
defined here as it is in the UB-92 Manual.



HMO Contract for January 1, 2000 - December 31, 2001

-23-


O. Non-Discrimination


Comply with all applicable Federal and State laws relating to
non-discrimination and equal employment opportunity including
s. 16.765, Wis. Stats., Federal Civil Rights Act of 1964,
regulations issued pursuant to that Act and the provisions of
Federal Executive Order 11246 dated September 26, 1985, and
assure physical and program accessibility of all services to
persons with physical and sensory disabilities pursuant to
Section 504 of the Federal Rehabilitation Act of 1973, as
amended (29 U.S.C. 794), all requirements imposed by the
applicable Department regulations (45 CFR part 84) and all
guidelines and interpretations issued pursuant thereto, and
the provisions of the Age Discrimination and Employment Act of
1967 and Age Discrimination Act of 1975.

Chapter 16.765, Wis. Stats. requires that in connection with
the performance of work under this Contract, the Contractor
agrees not to discriminate against any employee or applicant
for employment because of age, race, religion, color,
handicap, sex, physical condition, developmental disability as
defined in s. 51.01(5), sexual orientation or national origin.
This provision shall include, but not be limited to, the
following: employment, upgrading, demotion or transfer;
recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for
training, including apprenticeship. Except with respect to
sexual orientation, the Contractor further agrees to take
affirmative action to ensure equal employment opportunities.
The Contractor agrees to post in conspicuous places, available
for employees and applicants for employment, notices to be
provided by the contracting officer setting forth the
provisions of the non-discrimination clause. Addendum VIII
contains further details on the requirements of
nondiscrimination.

With respect to provider participation, reimbursement, or
indemnification -- HMO will not discriminate against any provider who
is acting within the scope of the provider's license or certification
under applicable State law, solely on the basis of such license or
certification. This shall not be construed to prohibit an HMO from
including providers to the extent necessary to meet the needs of the
Medicaid population or from establishing any measure designed to
maintain quality and control cost consistent with these
responsibilities.

P. Affirmative Action Plan

Comply with State Affirmative Action policies. Contracts
estimated to be twenty-five thousand dollars ($25,000) or more
require the submission of a written affirmation action plan or
have a current plan on file with the State of Wisconsin.
Contractors with an annual work force of less than twenty-five
employees are exempted from this requirement; however, such
contractors shall submit a statement to the Division of Health
Affirmative Action/Civil Rights

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Compliance Office certifying that its work force is less than
twenty-five employees.

1. "Affirmative Action Plan" is a written document that
details an affirmative action program. Key parts of an
affirmative action plan are:

a. a policy statement pledging nondiscrimination and
affirmative action in employment;

b. internal and external dissemination of the
policy;

c. assignment of a key employee as the equal
opportunity officer;

d. a work force analysis that identifies job
classification where representation of women,
minorities and the disabled is deficient;

e. goals and timetables that are specific and
measurable, and that are set to correct
deficiencies and to reach a balance of work
force;

f. revision of all employment practices to ensure
that they do not have discriminatory effects; and

g. establishment of internal monitoring and
reporting systems to measure progress regularly.

2. Within fifteen (15) days after the award of a contract,
the affirmative action plan shall be submitted to the
Department of Health and Family Services Box 7850,
Madison, WI 53707-7850. Contractors are encouraged to
contact the Department of Health and Family Services,
Affirmative Action/Civil Rights Compliance Office at
(608) 266-9372 for technical assistance.

3. Addendum VIII contains further details on the
requirements of Affirmative Action Plans.

Q. Cultural Competency

1. HMO shall address the special health needs of enrollees
such as those who are low income or members of specific
population groups needing specific culturally competent
services. HMO shall incorporate in its policies,
administration, and service practice such as (1)
recognizing member's beliefs, (2) addressing cultural
differences in a competent manner, (3) fostering in
staff/providers behaviors and effectively address
interpersonal communication styles which respect
enrollees' cultural


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backgrounds. HMO shall have specific policy
statements on these topics and communicate them to
subcontractors.

2. HMO shall encourage and foster cultural competency
among providers. HMO shall, when appropriate, permit
enrollees to choose providers from among the HMO's
network based on linguistic/cultural needs. HMO shall
permit enrollees to change primary providers based on
the provider's ability to provide services in a
culturally competent manner. Enrollees may submit
grievances to the HMO and/or the Department related
to inability to obtain culturally appropriate care,
and the Department may, pursuant to such grievance,
permit an enrollee to disenroll and enroll into
another HMO, or into fee-for-service in a county
where HMOs do not enroll all eligibles.

R. Health Education and Prevention

1. Inform all enrollees of contributions which they can
make to the maintenance of their own health and the
proper use of health care services.

2. Have a program of health education and prevention
available and within reasonable geographic proximity
to its enrollees. The program shall include health
education and anticipatory guidance provided as a
part of the normal course of office visits, and in
discrete programming.

3. The program shall provide:

a. An individual responsible for the
coordination and delivery of services in the
program.

b. Information on how to obtain these services
(locations, hours, phones, etc.).

c. Health-related educational materials in the
form of printed, audiovisual, and/or personal
communication.

d. Information on recommended check-ups and
screenings, and prevention and management of
disease states which affect the general
population. This includes specific
information for persons who have or who are
at risk of developing such health problems
(e.g., hypertension, diabetes, STD, asthma,
breast and cervical cancer, osteoporosis and
postpartum depression).


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e. Health education and prevention programs.
Recommended programs include: injury control,
family planning, teen pregnancy, sexually
transmitted disease prevention, prenatal
care, nutrition, childhood immunization,
substance abuse prevention, child abuse
prevention, parenting skills, stress control,
postpartum depression, exercise, smoking
cessation, weight gain and healthy birth,
postpartum weight loss, and breast-feeding
promotion and support. Note that any
education and prevention programs for family
planning and substance abuse would supplement
the required family planning and substance
abuse health care services covered in the
Medicaid/BadgerCare program.

f. Promotion of the health education and
prevention program, including use of
languages understood by the population
served, and use of facilities accessible to
the population served.

g. Information on and promotion of other
available prevention services offered outside
of the HMO including child nutrition
programs, parenting classes, programs offered
by local health departments and other
programs.

h. Systematic referrals of potentially eligible
women, infants, and children to the Special
Supplemental Nutrition Program for Women,
Infants, and Children (WIC) and relevant
medical information to the WIC program.
General information about recipient
eligibility requirements for the WIC program,
a statewide list of WIC agencies, as well as
a sample WIC Referral Form that can be used
by HMOs, can be found in Addendum XXV.

4. Health related educational materials produced by the
HMO must be at a sixth grade reading comprehension
level and reflect sensitivity to the diverse cultures
served. Also, if the HMO uses material produced by
other entities, the HMO must review these materials for
grade level comprehension level and for sensitivity to
the diverse cultures served. Finally, the HMO must make
all reasonable efforts to locate and use culturally
appropriate health related material.

S. Enrollee Handbook and Education and Outreach for Newly
Enrolled Recipients

1. Within one week of initial enrollment notification to
the HMO, mail to caseheads an enrollee handbook which
is at the "sixth grade reading comprehension level" and
which at a minimum will include information about:


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a. the phone number that can be used for assistance
in obtaining emergency care or for prior
authorization for urgent care;

b. information on contract services offered by the
HMO;

c. location of facilities;

d. hours of service;

e. informal and formal grievance procedures,
including notification of the enrollee's right to
a fair hearing;

f. grievance appeal procedures;

g. HealthCheck;

h. family planning policies;

i. policies on the use of emergency and urgent care
facilities;

j. when you may have to pay for care; and

k. changing HMOs.

2. The HMO must provide periodic updates to the handbook
as needed explaining changes in the above policies.
Such changes must be approved by the Department prior
to printing.

3. New standard language for the enrollee handbooks
required by this Contract may be included in the
handbooks when they are reprinted.

4. Enrollee handbooks (or substitute enrollee
information approved by the Department which explains
HMO services and how to use the HMO) shall be made
available in at least the following languages:
Spanish, Lao, and Hmong if the HMO has enrollees who
are conversant only in those languages. The handbook
should direct enrollees who are not conversant in
English to the appropriate resources within the HMO
for obtaining a copy of the handbook with the
appropriate language.

5. HMOs may create enrollee handbook language that they
believe is simpler than the standard language of
Addendum V, but this substitute language must be
approved by the Department.


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6. Enrollee handbooks shall be submitted by contractors
during the Certification Application for review and
approval during the pre-contract review stage of the
HMO Certification process. The specific dates for
submittal of enrollee handbooks are prescribed in the
HMO Certification Application.

7. Standard language on several subjects, including
HealthCheck, family planning, grievance and appeal
rights, conversion rights, and emergency and urgent
care shall appear in all handbooks and is included in
Addendum V. Any exceptions to the standard must be
approved in advance by the Department, and will be
approved only for exceptional reasons. Standard
language may change during the course of the contract
period, if there are changes in federal or state
laws, rules or regulations, in which case the new
language will have to be inserted into the enrollee
handbooks as of the effective date of any such
change.

8. In addition to the above requirements sections 1
through 7 for the enrollee handbook, HMOs are
required to perform other education and outreach
activities for newly enrolled recipients. HMOs are to
submit to the Department for prior written approval
an education and outreach plan targeted towards newly
enrolled recipients. This outreach plan will be
examined by the Department during pre-contract
review. Newly enrolled recipients are those
recipients appearing on the enrollment reports
described in Article IV. D. and listed as "ADD-NEW."
The plan must identify at least 2
educational/outreach activities in addition to the
enrollee handbook to be undertaken by the HMO for the
purpose of informing new enrollees of pertinent
information necessary to access services within the
HMO network. The plan must include the frequency
(i.e., weekly, monthly, etc.) of the activity, the
person within the HMO responsible for the activities,
and how activities will be documented and evaluated
for effectiveness.

T. Approval of Marketing Plans and Informing Materials

1. Submit to Department for prior written approval a
marketing plan and all marketing materials and other
marketing activities that refer to Medicaid Title
XIX, BadgerCare, or Title XXI or are intended for
Medicaid/BadgerCare recipients. This requirement
includes marketing or informing materials that are
produced by providers under subcontract to the HMO or
owned by the HMO in whole or in part. The Department
will not approve any materials which are deemed to be
confusing, fraudulent, misleading, or do not
accurately reflect the scope and philosophy of the
Medicaid program and/or its covered benefits.


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2. The Department will review and either approve, approve
with modifications, or deny all informing material within
ten working days of receipt of the informing materials.
Time-sensitive material must be clearly marked by the
HMO and will be approved, approved with modifications or
denied by the Department within ten business days. The
Department reserves the right to determine whether the
material is, indeed, time-sensitive. HMO agrees to engage
only in marketing activities and distribute only those
marketing materials that are preapproved in writing,
except that marketing materials and other marketing
activities are deemed approved if there is no response
from the Department within 10 working days. However,
problems and errors subsequently identified by the
Department must be corrected by the HMO when they are
identified. HMO agrees to comply with in. 6.07 and
3.27, Wis. Admin. Code, and practices consistent with the
Balanced Budget Amendment of 1997 P.L. 105-33 Sec.
4707(a) [42 U.S.C. 1396v(d)(2)].

3. As used in this section, "marketing materials and other
marketing activities" include the production and
dissemination of any promotional material by any medium,
including but not limited to community events, print
media, radio, television, billboards, Yellow Pages, and
advertisements that refer to Medicaid, BadgerCare, Title
XIX, or Title XXI are intended for Medicaid/BadgerCare
recipients. The Department in its sole discretion will
determine whether the marketing materials and/or other
marketing activities refer to Medicaid, BadgerCare, Title
XIX, or Title XXI are intended for Medicaid/BadgerCare
recipients.

4. Approval of marketing plans and materials will be
reviewed by the Department in a manner that does not
unduly restrict or inhibit the HMO's marketing plans.
When applying this provision to specific marketing plans,
material and/or activity, the entire content and use of
the marketing material or activity shall be taken into
consideration.


5. HMOs that fail to abide by these marketing requirements
may be subject to any and all sanctions available under
Article IX. In determining any sanctions, the Department
will take into consideration any past unfair marketing
practices, the nature of the current problem and the
specific implications on the health and well-being of the
Medicaid enrollees. In the event that an HMO's affiliated
provider fails to abide by these requirements, the
Department will evaluate whether the HMO should have had
knowledge of the marketing issue and the HMO's ability to
adequately monitor ongoing future marketing activities of
the subcontractor(s).


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Note: This section has been incorporated in Addendum I.


U. Conversion Privileges

Offer any enrollee covered under this Contract, whose
enrollment is subsequently terminated due to loss of
Medicaid/BadgerCare eligibility, the opportunity to convert to
a private enrollment contract without underwriting. This time
period for conversion following Medicaid/BadgerCare
termination notice will comply with Wisconsin Stats. 632.897
regarding conversion rights.

V. Choice of Health Professional

Offer each enrollee covered under this Contract the
opportunity to choose a primary health care professional
affiliated with the HMO, to the extent possible and
appropriate. If the HMO assigns recipients to primary
physicians, then the HMO shall notify recipients of the
assignment. HMOs must permit Medicaid BadgerCare enrollees to
change primary providers at least twice in any calendar year,
and to change primary providers more often than that for just
cause, just cause being defined as lack of access to quality,
culturally appropriate, health care. Such just cause will be
handled as a formal grievance. If the HMO has reason to
lock-in an enrollee to one primary provider and/or pharmacy in
cases of difficult case management. the HMO must submit a
written request in advance of such lock-in to the Department.
Requests should be submitted to the Contract Monitor.
Culturally appropriate care in this section means care by a
provider who can relate to the enrollee and who can provide
care with sensitivity, understanding, and respect for the
enrollee's culture.

W. Quality Assessment/Performance Improvement (QAPI)

1. The HMO QAPI program must conform to requirements of
42 CFR, Part 400, Medicaid Managed Care Requirements,
Subpart E, Quality Assessment and Performance
Improvement. The program must also comply with 42
Code of Federal Regulations (CFR) 434.34 which states
that the HMO must have a Quality
Assessment/Performance Improvement system that:

a. Is consistent with the utilization control
requirement of 42 CFR 456;

b. Provides for review by appropriate health
professionals of the process followed in
providing health services;

c. Provides for systematic data collection of
performance and patient results:

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d. Provides for interpretation of this data to
the practitioners; and

e. Provides for making needed changes.

2. Quality Assessment/Performance Improvement Program

a. The HMO must have a comprehensive Quality
Assessment/Improvement Program (QAPI)
program that protects, maintains, and
improves the quality of care provided to
Wisconsin Medicaid program recipients. The
HMO must evaluate the overall effectiveness
of its QAPI program annually to determine
whether the program has demonstrated
improvement, where needed, in the quality of
care and service provided to its Medicaid
BadgerCare population.

The HMO must have documentation of all
aspects of the QAPI program available for
Department review upon request. The
Department may perform off-site and on-site
Quality Assessment/Performance Improvement
audits to ensure that the HMO is in
compliance with contract requirements. The
review and audit may include: on-site
visits; staff and enrollee interviews;
medical record reviews; review of all QAPI
procedures, reports, committee activities,
including credentialing activities,
corrective actions and follow-up plans; peer
review process; review of the results of the
member satisfaction surveys, and review of
staff and provider qualifications.

b. The HMO must have a written QAPI work plan
that is ratified by the board of directors
and outlines the scope of activity and the
goals, objectives, and time lines for the
QAPI program. New goals and objectives must
be set annually based on findings from
quality improvement activities and studies.

c. The HMO governing body is ultimately
accountable to the Department for the
quality of care provided to HMO enrollees.
Oversight responsibilities of the governing
body are: approval of the overall QAPI
program and an annual QAPI plan: designating
an accountable entity or entities within the
organization to provide oversight of QAPI:
review of written reports from the
designated entity on a periodic basis which
include a description of QAPI activities,
progress on objectives, and improvements
made: formal review on an annual basis of a
written report on the QAPI program; and
directing modifications to the QAPI program
on an ongoing basis to accommodate review
findings and issues of concern within the
HMO.


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d. The QAPI committee shall be in an organizational
location within the HMO such that it can be responsible
for all aspects of the QAPI program. The committee
membership must be interdisciplinary and be made up of
both providers and administrative staff of the HMO,
including:

1) a variety of health professions (e.g.,
pharmacy, physical therapy, nursing, etc.);

2) qualified professionals specializing in mental
health or substance abuse and dental care on a
consulting basis when an issue related to these
areas arises:

3) a variety of medical disciplines (e.g..
medicine, surgery, radiology, etc.);

4) OB/GYN and pediatric representation; and

5) HMO management or governing body.

6) Enrollees of the HMO must be able to contribute
input to the QAPI Committee. The HMO must have
a system to receive enrollee input on quality
improvement, document the input received,
document the HMO's response to the input,
including a description of any changes or
studies it implemented as the result of the
input and document feedback to enrollees in
response to input received. The HMO response
must be timely.

e. The committee must meet on a regular basis, but not less
frequently than quarterly. The activities of the QAPI
Committee must be documented in the form of minutes and
reports. The QAPI Committee must be accountable to the
governing body.

Documentation of Committee minutes and activities must
be available to the Department upon request.

f. QAPI activities of HMO providers and subcontractors, if
separate from HMO QAPI activities, shall be integrated
into the overall HMO/QAPI program. Requirements to
participate in QAPI activities are incorporated into all
provider and subcontractor contracts and employment
agreements. The HMO QAPI program shall provide feedback
to the providers/subcontractors regarding the
integration of, operation of, and corrective actions
necessary in provider/subcontractor QAPI efforts.


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Other management activities (Utilization Management,
Risk Management, Complaints and Grievances, etc.) must
be integrated with the QAPI program. Physicians and
other health care practitioners and institutional
providers must actively cooperate and participate in the
HMO's quality activities.

The HMO remains accountable for all QAPI functions, even
if certain functions are delegated to other entities. If
the HMO delegates any activities to contractors the
conditions listed in Article 11 of this agreement must
be met.

g. There is evidence that HMO management representatives
and providers participate in the development and
implementation of the QAPI plan of the HMO. This
provision shall not be construed to require that HMO
management representatives and providers participate in
every committee or subcommittee of the QAPI program.

h. The HMO must designate a senior executive to be
responsible for the operation and success of the QAPI
program. If this individual is not the HMO Medical
Director, the Medical Director must have substantial
involvement in the QAPI program. The designated
individual shall be accountable for the QAPI activities
of the HMO"s own providers, as well as the HMO's
subcontracted providers.

i The qualifications, staffing level and available
resources must be sufficient to meet the goals and
objectives of the QAPI program and related QAPI
activities. Such activities include, but are not limited
to, monitoring and evaluation of important aspects of
care and services, facilitating appropriate use of
preventive services, monitoring provider performance,
provider credentialing, involving members in QAPI
initiatives and conducting performance improvement
projects in identified priority areas.

Written documentation listing the staffing resources
that are directly under the organizational control of
the person who is responsible for QAPI (including total
FTEs, percent of time dedicated to QAPI, background and
experience, and role) must be available to the
Department upon request.




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3. Monitoring and Evaluation

a. The QAPI program must monitor and evaluate
the quality of clinical care on an ongoing
basis. Important aspects of care (i.e.,
acute, chronic conditions, high volume, high
risk preventive care and services) are
studied and prioritized for performance
improvement and/or development of practice
guidelines. Standardized quality indicators
must be used to asses improvement, assure
achievement of minimum performance levels,
monitor adherence to guidelines, and
identify patterns of over utilization and
under utilization. The measurement of
quality indicators must be supported by
appropriate data collection methodologies
and must be used to analyze and improve
clinical care and services.

b. Provider performance must be measured
against practice guidelines and standards
adopted by the QAPI Committee. Areas
identified for improvement must be tracked
and corrective actions taken when warranted.
The effectiveness of corrective actions must
be monitored until problem resolution
occurs. Reevaluation must occur to assure
that the improvement is sustained.

c. The HMO must use appropriate clinicians to
evaluate the data on clinical performance,
and multi disciplinary teams to analyze and
address data on systems issues.

d. The HMO must also monitor and evaluate care
and services in certain priority clinical
and non-clinical areas of interest specified
by the Department.

e. The HMO must make documentation available to
the Department upon request regarding
quality improvement and assessment studies
on plan performance, which relate to the
enrolled population. See reporting
requirements in Article III. W. Section 13,
Priority Areas.

f. Practice guidelines: The HMO must develop or
adopt practice guidelines that are
disseminated to providers and to enrollees
as appropriate or upon request. The
guidelines should be based on reasonable
medical evidence or consensus of health
professionals; consider the needs of the
enrollees; developed or adopted in
consultation with the contracting health
professionals, and reviewed and updated
periodically.



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4. Access

a. The HMO must provide medical care to its
Medicaid/BadgerCare enrollees that is as accessible to
them, in terms of timeliness, amount, duration, and
scope, as those services are to nonenrolled
Medicaid/BadgerCare recipients within the area served
by the HMO.

The HMO must have a Medicaid certified primary care
provider within a 20 mile distance from any enrollee
residing in the HMO service area. A service area for an
HMO will be specified down to the zip code. Therefore,
all portions of each zip code in the HMO service area
must be within 20 miles from a Medicaid certified
primary care provider.

b. Network Adequacy:

The HMO must assure that its delivery network is
sufficient to provide adequate access to all services
covered under this agreement. In establishing the
network, the HMO must consider:

1) The anticipated enrollment with particular
attention to pregnant women and children:

2) The expected utilization of services, considering
enrollee characteristics and health care needs.

3) The number and types of providers required to
furnish the contracted services.

4) The number of network providers not accepting new
patients.

5) The geographic location of providers and
enrollees, distance, travel time, normal means of
transportation used by enrollees and whether
provider locations are accessible to enrollees
with disabilities.

This access standard does not prevent a recipient from
choosing and HMO when the recipient resides in zip code
that does not meet the 20 mile distance standard.
However, the recipient will not be automatically
assigned to that HMO. If by some circumstance the
recipient has been assigned to the HMO or has chosen
the HMO and becomes dissatisfied with access to medical
care, the recipient will be allowed to disenroll from
the HMO for reason of distance.

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Primary care providers are defined to include, but are
not limited to, Physicians and Physician Clinics with
specialties in general practice, family practice,
internal medicine, obstetrics and gynecology,
adolescent medicine and pediatrics, FQHCs, RHCs, Nurse
Practitioners, Nurse Midwives, Physician Assistants,
and Tribal Health Centers. HMOs may define other types
of providers as primary care providers. If they do so,
the HMOs must define these other types of primary care
providers and justify their inclusion as primary care
providers during the precontract review phase of the
HMO Certification process.

c. The HMO must have written protocols to ensure that
enrollees have access to screening, diagnosis and
referral, and appropriate treatment for those
conditions and services covered under the Wisconsin
Medicaid program.

d. The HMO must also provide medically necessary high risk
prenatal care within two weeks of the enrollee's
request for an appointment, or within three weeks if
the request is for a specific HMO provider.

e. The HMO must have written standards for the
accessibility of care and services which are
communicated to providers and monitored. The standards
must include the following: waiting times for care at
facilities; waiting times for appointments; specify
that providers' hours of operation do not discriminate
against Medicaid/ BadgerCare enrollees; and whether or
not provider(s) speak member's language. The HMO must
take corrective action if its standards are not met.

f. The HMO must have a mental health or substance abuse
provider within a 35 mile distance from any enrollee
residing in the HMO service area or no further than the
distance for non-enrolled recipients residing in the
service area.

g. The HMO must have a dental provider, when appropriate,
within a 35 mile distance from any enrollee residing in
the HMO service area or no further than the distance
for non-enrolled recipients residing in the service
area. The HMO must also give consideration to whether
the dentist is accepting new patients, and where full
or part-time coverage is available.

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5. Health Promotion and Prevention Services

a. The HMO must identify at-risk populations for
preventive services and develop strategies for reaching
Medicaid/ BadgerCare members included in this
population. Local health departments and community-
based health organizations can provide the HMO with
special access to vulnerable and low-income population
groups, as well as settings that reach at-risk
individuals in their communities, schools and homes.
Public health resources can be used to enhance the
HMO's health promotion and preventive care programs.

b. The HMO must have mechanisms for facilitating
appropriate use of preventive services and educating
enrollees on health promotion. At a minimum, an
effective health promotion and prevention program
includes: tracking of preventive services, practice
guidelines for preventive services, yearly measurement
of performance in the delivery of such services, and
communication of this information to providers and
enrollees.

6. Provider Selection (credentialing) and Periodic Evaluation
(recredentialing)

a. The HMO must have written policies and procedures for
provider selection and qualifications. For each
practitioner, including each member of a contracting
group that provides services to the HMO's enrollees,
initial credentialing must be based on a written
application, primary source verification of licensure,
disciplinary status, eligibility for payment under
Medicaid and certified for Medicaid. The HMO must
periodically monitor (no less than every two years)
the provider's documented qualifications to assure that
the provider still meets the HMO's specific
professional requirements.

b. The HMO must periodically monitor (no less than every
two years) the provider's documented qualifications to
assure that the provider still meets the HMO's specific
professional requirements.

c. The HMO must also have a mechanism for considering the
provider's performance. The method must include
updating all the information (except medical education)
utilized in the initial credentialing process.
Performance evaluation must include information from:
the QAPI system, reviewing enrollee complaints and
enrollee satisfaction surveys, and the utilization
management system.

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d. The selection process must not discriminate against
providers such as those serving high-risk populations,
or specialize in conditions that require costly
treatment. The HMO must have a process for receiving
advice on the selection criteria for credentialing and
recredentialing practitioners in the HMO's network.

e. If the HMO delegates selection of providers to another
entity, the organization retains the right to approve,
suspend or terminate any provider selected by that
entity.

f. The HMO must have a formal process of peer review of
care delivered by providers and active participation of
the HMO's contracted providers in the peer review
process. This process may include internal medical
audits, medical evaluation studies, peer review
committees, evaluation of outcomes of care, and systems
for correcting deficiencies. The HMO must supply
documentation of its peer review process upon request.

g. The HMO must have written policies that allow it to
suspend or terminate any provider for quality
deficiencies. There must also be an appeals process
available to the provider that conforms to the
requirements of the HealthCare Quality Improvement Act
of 1986 (42 USC (S)11101 etc. Seq.).

h. In addition to the requirements in this section, the
names of individual practitioners and institutional
providers who have been terminated from the HMO
provider network as a result of quality issues must be
immediately forwarded to the Department and reported to
other entities as required by law (42 USC (S)11101 et.
Seq.).

i. Institutional Provider Selection--For each provider,
other than an individual practitioner, the HMO
determines, and verifies at specified intervals, that
the provider is:

1) licensed to operate in the State, if licensure is
required, and in compliance with any other
applicable State or Federal requirements; and

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2) the HMO verifies that the provider
is reviewed and approved by an
approved accrediting body (if the
provider claims accreditation), or
is determined by the HMO to meet
standards established by the HMO
itself.

7. Enrollee Feedback on Quality Improvement

a. The HMO must have a process to maintain a
relationship with its enrollees that promotes
two way communication and contributes to
quality of care and service. The HMO must
show a commitment to treating members with
respect and dignity.

b. Annually, the HMO must conduct an internal
satisfaction of care survey of a
representative sample of enrolled Medicaid!
BadgerCare recipients. The survey must be
designed to identify potential problems and
barriers to care, and should cover, at a
minimum, the following three areas:

1) care process - attention received as a
patient (i.e.. provider sensitivity);

2) structure or delivery of care - assess
impediments to care such as waiting
times, choice of provider, physical
accessibility; and

3) perceived quality of care - thoroughness
of exams and results or health status
outcomes.

The Department must approve the survey
instrument and plan. The HMO shall have
systems in place for acting on survey results
and shall report to the Department the survey
results and any quality management projects
planned in response to survey results.

c. The HMO is encouraged to find additional ways
to involve Medicaid/BadgerCare enrollees in
quality improvement initiatives and in
soliciting enrollee feedback on the quality
of care and services the HMO provides. Other
ways to bring enrollees into the HMO's
efforts to improve the health care delivery
system include but are not limited to: focus
groups, consumer advisory councils, enrollee
participation on the governing board, the
QAPI committees or other committees, or task
forces related to evaluating services. All
efforts to solicit feedback from enrollees
must be approved by the Department.



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8. Medical Records


a. The HMO must have policies and procedures for
participating provider medical records content
and documentation that have been communicated
to providers and a process for evaluating its
providers' medical records based on the HMO's
policies. These policies must address patient
confidentiality, organization and completeness,
tracking, and important aspects of
documentation such as accuracy, legibility, and
safeguards against loss, destruction, or
unauthorized use. The HMO must also have
confidentiality policies and procedures that
are applicable to administrative functions that
are concerned with confidential patient
information.

b. Patient medical records must be maintained in
an organized manner (by the HMO, and/or by the
HMO's subcontractors) that permits effective
patient care, they must reflect all aspects of
patient care and be readily available for
patient encounters, for administrative
purposes, and for Department review.

c. Because HMOs are considered contractors of the
State and are therefore (only for the limited
purpose of obtaining medical records of its
enrollees) entitled to obtain medical records
according to Wisconsin Administrative Code, HFS
104.01(3), the Department will require
Medicaid-certified providers to release
relevant record to the HMO to assist in
compliance with this section. Where HMOs have
not specifically addressed photocopying
expenses in their provider contracts or other
arrangements, the HMOs are liable for charges
for copying records only to the extent that the
Department would reimburse on a fee-for-service
basis.

d. The HMO must have written confidentiality
policies and procedures in regard to
confidential patient information. Policies
and procedures must be communicated to HMO
staff, members, and providers. The transfer
of medical records to out-of-plan providers
or other agencies not affiliated with HMO
(except for the Department) are contingent
upon the receipt by the HMO of written
authorization to release such records signed
by the enrollee or, in the case of a minor,
by the enrollee's parent, guardian. or
authorized representative.



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e. The HMO must have written quality standards
and performance goals for participating
provider medical record documentation and be
able to demonstrate, upon request of the
DHFS, that the standards and goals have been
communicated to providers. The HMO must
actively monitor established standards and
provide documentation of standards and goals
upon request of the Department.

f. Medical records must be readily available
for HMO-wide Quality Assessment/Performance
Improvement (QAPI) and Utilization
Management (UM) activities and provide
adequate medical and other clinical data
required for (QAPI)/UM, and Department use.

g. The HMO must have adequate policies in regard
to transfer of medical records to ensure
continuity of care when enrollees are treated
by more than one provider. This may include
transfer to local health departments subject to
the receipt of a signed authorization form as
specified in Article III. W. 8 (d) above (with
the exception of immunization status
information described in Article III. B. 14.,
which doesn't require enrollee authorization).

h. Requests for completion of residual functional
capacity evaluation forms and other impairment
assessments, such as queries as to the presence
of a listed impairment, shall be provided
within 10 working days of request (at the
discretion of the individual provider and
subject to the provider's medical opinion of
its appropriateness) and according to the other
requirements listed above; the HMO and its
providers and subcontractor may charge the
enrollee, authorized representative, or other
third party a reasonable rate for the
completion of such forms and other impairment
assessments. Such rates may be reviev~ed by the
Department for reasonableness and may be
modified based on this review.

i. Minimum medical record documentation per chart
entry or encounter must conform to the
Wisconsin Administrative Code, Chapter HFS
106.02. (9)(b) Medical record content.


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9. Utilization Management (UM)


a. The HMO must have documented policies and
procedures for all UM activities that
involve determining medical necessity, and
the approval or denial of medical services.
Qualified medical professionals must be
involved in any decision-making that
requires clinical judgment. Criteria used to
determine medical necessity and
appropriateness must be communicated to
providers.

b. If the HMO delegates any part of the TIM
program to a third party, the delegation
must meet the requirements in Article II
Delegations of Authority.

c. If the HMO utilizes phone triage, nurse
lines or other demand management systems,
the HMO must document review and approval of
qualification criteria of staff and of
clinical protocols or guidelines used in the
system. The system's performance will be
evaluated annually in terms of clinical
appropriateness.

d. The policies specify time frames for
responding to requests for initial and
continued service determinations, specify
information required for authorization
decisions, provide for consultation with the
requesting provider when appropriate, and
provide for expedited responses to requests
for authorization of urgently needed
services, In addition, the HMO must have in
effect mechanisms to ensure consistent
application of review criteria for
authorization decisions (interrater
reliability).

Within the timeframes specified above, the
HMO must give the enrollee and the
requesting provider written notice of:

1) the decision to deny, limit, reduce,
delay or terminate a service along
with the reasons for the decision.

2) the enrollee's right to file a
grievance or request a state fair
hearing.

Authorization decisions must be made within
the following time frames and in all cases
as expeditiously as the enrollee's condition
requires:

1) within 14 days of the receipt of the
request, or


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2) within 72 hours if the physician indicates or
the HMO determines that following the
ordinary time frame could jeopardize the
enrollee's health or ability to regain
maximum function.

One extension of up to 14 days may be allowed if
the enrollee requests it or if the HMO justifies
the need for more information.

e. Criteria for decisions on coverage and medical
necessity are clearly documented, are based on
reasonable medical evidence, current standards of
medical practice, or a consensus of relevant
health care professionals, and are regularly
updated.

f. The HMO oversees and is accountable for any
functions and responsibilities that it delegates
to any subcontractor. (See Article II Delegations
of Authority).

g. Postpartum discharge policy for mothers and
infants must be based on medical necessity
determinations. This policy must include all
follow-up tests and treatments consistent with
currently accepted medical practice and applicable
federal law. The policy must allow at least a 48-
hour hospital stay for normal spontaneous vaginal
delivery, and 96 hours for a cesarean section
delivery, unless a shorter stay is agreed to by
both the physician and the enrollee. HMOs may not
deny coverage, penalize providers, or give
incentives or payments to providers or enrollees.
Post hospitalization follow-up care must be based
on the medical needs and circumstances of the
mother and infant. The Department may request
documentation demonstrating compliance with this
requirement.

10. External Quality Review Contractor

a. The HMO must assist the Department and the
external quality review organization under
contract with the Department in identification of
provider and enrollee information required to
carry out on-site or off-site medical chart
reviews. This includes arranging orientation
meetings for physician office staff concerning
medical chart review, and encouraging attendance
at these meetings by HMO and physician office
staff as necessary. The provider of service may
elect to have charts reviewed on-site or off-site.

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b. When the professional review organization under
contract with the Department identifies an adverse
health situation in which follow-up is needed to
determine whether appropriate care was provided,
the HMO will be responsible for the following
tasks:

1) Assign a staff person(s) to conduct follow-up
with the provider(s) concerning each adverse
health situation identified by the
Department's professional review
organization, including informing the
provider(s) of the QAPI finding and
monitoring the provider's resolution of the
QI finding;

2) Inform the HMO's QAPI Committee of the final
QAPI finding and involve the QAPI Committee
in the development, monitoring and resolution
of the corrective action plan; and

3) Submit a corrective action plan or an opinion
in writing to the Department within 60 days
that addresses the measures that the HMO and
the provider intend to take to resolve the
QAPI finding. The HMO's final resolution of
all cases must be completed within six (6)
months of HMO notification. A case is not
considered resolved by the Department until
the Department approves the response provided
by the HMO and provider.

c. The HMO will facilitate training provided by the
Department to its providers.

11. Dental Services Quality Improvement

a. The HMO QAPI Committee and QAPI coordinator will
review subcontracted dental programs quarterly to
assure that quality dental care is provided and
that the HMO and the contractor comply with the
following:

1) The HMO or HMO affiliated dental provider
must advise the enrollee within 30 days of
effective enrollment of the name of the
dental provider and the address of the dental
provider's site. The HMO or HMO affiliated
dental provider must also inform the enrollee
in writing how to contact his/her dentist (or
dental office), what dental services are
covered, when the coverage is effective, and
how to appeal denied services.

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2) An HMO or HMO affiliated dental provider who
assigns all or some Medicaid/BadgerCare HMO
enrollees to specific participating dentists
must give enrollees at least 30 days after
assignment to choose another dentist.
Thereafter, in accordance with Article III.
V., the HMO and/or affiliated provider must
permit enrollees to change dentists at least
twice in any calendar year and more often
than that for just cause.

3) HMO-affiliated dentists must provide a
routine dental appointment to an assigned
enrollee within 90 days after the request.
Enrollee requests for emergency treatment
must be addressed within 24 hours after the
request is received.

4) Dental providers must maintain adequate
records of services provided. Records must
fully disclose the nature and extent of each
procedure performed and should be maintained
in a manner consistent with standard dental
practice.

5) The HMO affirms by execution of this Contract
that the HMO's peer review systems are
consistently applied to all dental
subcontractors and providers.

6) The HMO must document, evaluate, resolve, and
follow up on all verbal and written
complaints they receive from
Medicaid/BadgerCare enrollees related to
dental services.

12. Accreditation

a. The Department encourages the HMO to actively
pursue accreditation by the National Committee for
Quality Assurance (NCQA), the Joint Commission on
Accreditation of Healthcare Organizations (JCAHO)
or other recognized accrediting body approved by
the Department.

b. The achievement of full accreditation by one of
the above organizations by the HMO may result in:
reduction of on-site internal Quality Improvement
program audits; fewer requests for periodic
documentation to determine compliance with
contract requirements: and fewer medical record
reviews.

Where accreditation standards conflict with the
standard set forth in this agreement, the agreement
prevails unless the accreditation standard is more
stringent.

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13. Performance Improvement Priority Areas

a. The HMO must develop and ensure implementation of
program initiatives to address the specific clinical
needs that have a higher prevalence in the HMO's
enrolled population served under this agreement. These
priority areas must include clinical and non-clinical
Performance Improvement projects. The Department
strongly advocates the development of collaborative
relationships among HMOs, Local Health Departments,
community based behavioral health treatment agencies
(both public and private), and other community health
organizations to achieve improved services in priority
areas. Linkages between managed care organizations and
public health agencies is an essential element for the
achievement of the public health objectives,
potentially reducing the quantity and intensity of
services the HMO needs to provide. The Department and
the HMO are jointly committed to on-going collaboration
in the area of service and clinical care improvements
by the development and sharing of "best practices."

Annually, for the priority areas specified by the
Department and listed below, the HMO must monitor and
evaluate the quality of care and services through
performance improvement projects for at least two of
the listed areas in Article III, W. 13 (c) or (d)
below, or an HMO may propose alternative performance
improvement topics to be addressed by making a request
in writing to the Department. The final or on-going
status report for each project must be submitted by
October 1, 2000, and October 1, 2001. The performance
improvement topic must take into account: the
prevalence of a condition among. or need for a specific
service by, the HMO enrollees served under this
agreement, enrollee demographic characteristics and
health risks; and the interest of consumers or
purchasers in the aspect of care or services to be
addressed. The final annual report must include an
overview of the performance improvement project that
addresses all of the information in the Performance
Improvement Project Outline in Addendum XV.

b. Performance reporting will utilize standardized
indicators appropriate to the performance improvement
area. Minimum performance levels must be specified for
each performance improvement area, using normative
standards derived from regional, national norms, or
from norms established by an appropriate practice
organization. Goals for improvement for the "Priority
Areas" listed in c. of this section, may be set by the
organization itself.

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The organization must assure that improvements are sustained
through periodic audits of relevant data and maintenance of
the interventions that resulted in the improvement. The HMO
agrees to open at least one new performance improvement
project in 2001 with the report on that project to be
submitted to the Department by October 1, 2002. In all
cases, not less than two performance improvement projects
must be reported to the Department in any year and not less
than three different projects must be reported to the
Department between 2000 and 2002.

The organization must implement a performance improvement
project in the area if a quality improvement opportunity is
identified. The HMO must report to the Department on each
study, including those areas where the HMO will not pursue a
performance improvement project.

c. Clinical Priority Areas: 1) prenatal services; 2)
identification of adequate treatment for high-risk
pregnancies, including those involving substance abuse; 3)
evaluating the need for specialty services; 4) availability
of comprehensive, ongoing nutrition education, counseling,
and assessments; 5) Family Health Improvement Initiative:
Smoking Cessation; 6) children with special health care
needs; 7) outpatient management of asthma; 8) the provision
of family planning services, 9) early postpartum discharge
of mothers and infants; 10) STD screening and treatment; and
11) high volume/high risk services selected by the HMO.

Non-Clinical Priority Areas: 1) grievances, appeals and
complaints; 2) access to and availability of services.

In addition, the HMO may be required to conduct performance
improvement projects specific to the HMO and to participate
in one annual statewide project that may be specified by the
Department.

d. Targeted Performance Improvement Measures

The HMO must develop and implement programs that address the
specific performance improvement initiatives described
below. In addition, the HMO must measure and report activity
in the six areas using the standardized indicators
described. (The data reporting guidelines and specifications
for reporting activity are found in Addendum XVI.)


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The HMO's activity in these areas must be reported (along
with all other required data) to the Department by October
1, 2001, for calendar year 2000. Unless otherwise noted
within a specific targeted performance improvement measure.
the Department may specify minimum performance levels and
require that the HMOs develop action plans to respond to
performance levels below the minimum performance levels. In
subsequent years that this Contract is in force, the
Department may require the same or different Targeted
Performance Improvement Measures.

1) Immunization Performance Improvement

The objective for the year 2000 is to increase to 90
percent the proportion of children who are two years of
age who are fully immunized (Healthy People 2000 goal).
Immunization series complete is defined by the most
recent Advisory Committee on Immunization Practices
(ACIP) schedule found in Addendum XVIII.

If the organization's rate on this measure is below the
90 percent objective and the organization did not achieve
an improvement in adverse outcomes of at least 10 percent
in the current reporting year over the previous reporting
year, the organization must report a plan of action to
the Department. Such plans may include, but are not
limited to, initiation of a performance improvement
project, increased outreach to members and providers,
provider and member education or any other actions
designed to increase delivery of childhood immunization
services. The Department may directly monitor the
delivery of immunization services to children from birth
to age one using encounter data and other resources at
its disposal to assess the sufficiency of immunizations
in the first year of life.

2) Dental Preventive Care Performance Improvement

The objective for calendar year 2000 is that HMO
enrollees under this agreement will receive preventive
dental services at a rate greater than or equal to 110
percent of the preventive dental services rate for
Medicaid fee-for-service (FFS) recipients. The baseline
year for determining the FFS rate that will be used for
comparison is described in Addendum XVI. This measure
applies only in situations where the HMO receives the
capitation


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-49-


payment for total dental care in accordance with the
HMO's Medicaid/BadgerCare Contract.

3) Lead Toxicity Screening Performance Improvement

The minimum performance level for calendar year 2000 is
65 percent of all enrollees served under this agreement
with their first or second birthday during the
reporting period. Two rates must be reported, one for
one year olds and one for two year olds. The minimum
performance level for calendar year 2001 is 85 percent
of all Medicaid/BadgerCare enrollees with their first
or second birthday during the reporting period
(calendar year). Detailed instructions for calculation
of these measures are included in Addendum XVI.

4) Mental Health Follow Up Care Performance Improvement

The minimum performance level for calendar years 2000
and 2001 is a rate of ambulatory follow-up treatment
within 7 and 30 days of discharge after inpatient care
for treatment of selected mental health disorders, that
represents a reduction of 10 percentage points in
adverse outcomes each year from the HMO prior baseline.
For example:

The 1999 HMO rate for follow-up at 30 days is 80
percent. The adverse outcome is represented by the
20 percent that did not have a follow-up visit
within 30 days. The minimum performance level for
2000 would be calculated as a 10 percent
improvement on the adverse outcomes as follows:
.10 x 20 = 2.0. Thus, the minimum performance
level for 2000 would be eighty two percent: 80 +
2.0= 82 percent.

5) Substance Abuse Follow-up Care Performance Improvement.

The minimum performance level for calendar year 2000
and 2001 is a rate of ambulatory follow-up treatment
within 7 and 30 days of discharge after inpatient care
for substance abuse for individuals with specific
substance abuse disorders, that represents a reduction
of 10 percentage points in adverse outcomes each year
from the HMO prior year baseline. See example 4) above
in


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Mental Health Follow Up Care Performance Improvement
for information on calculation of this measure.

6) Outpatient Management of Diabetes

This targeted performance improvement project is
designed to measure and improve performance of
outpatient management services for people with Type 1
or Type 2 diabetes. The goal for 2000 is establishment
of baseline data for the provision of the following
services to enrollees with diabetes:

. Hemoglobin A1c (HbA1c) testing, CPT-4 code 83036;

. Lipid profile testing, CPT-4 procedure codes 80061,
83720 or 83721.

The goal for 2001 will be for the HMO to improve the
above rates of service provision by a 10 percent
reduction in adverse outcomes from the baselines
established in 2000.

7) Satisfaction with referral for MH/SA services
performance improvement: This performance improvement
area establishes a baseline measure of enrollee
satisfaction with referral for mental health and
substance abuse services based on enrollee responses to
the following specific questions. These questions will
be included in the standardized Consumer Assessment of
Health Plan (CAHPS) survey administered by the
Department.

This measure assesses the number of enrollees
indicating they "need help with an alcohol, drug or
mental health problem" as the denominator and the
number of enrollees that indicate they did or did not
actually get counseling or help as the numerator. The
results will be aggregated by the Department or its
contractor and reported to the respective HMO. The
Department will share analysis of the baseline data for
the survey questions conducted in 1999 with HMOs. The
Department will work closely with HMOs to review or
revise if necessary survey questions for 2000 and 2001.
Survey questions will be reviewed for reasonableness,
validity and reliability. The


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Department will work closely with
HMOs to set reasonable minimum
performance levels once it is
determined that the survey questions
are reasonable, reliable and valid.

X. Access to Premises

Allow duly authorized agents or representatives of the State
or Federal government, during normal business hours, access to
HMO's premises or HMO subcontractor's premises to inspect,
audit, monitor or otherwise evaluate the performance of the
HMO's or subcontractor's contractual activities and shall
within a reasonable time, but not more than 10 working days,
produce all records requested as part of such review or audit.
In the event right of access is requested under this Section,
the HMO or subcontractor shall, upon request, provide and make
available staff to assist in the audit or inspection effort,
and provide adequate space on the premises to reasonably
accommodate the State or Federal personnel conducting the
audit or inspection effort. All inspections or audits shall be
conducted in a manner as will not unduly interfere with the
performance of HMO's or subcontractor's activities. The HMO
will be given 15 business days to respond to any findings of
an audit before the Department shall finalize its findings.
All information so obtained will be accorded confidential
treatment as provided under applicable laws, rules or
regulations.

Y. Subcontracts

Assure that all subcontracts shall be in writing, shall comply
with the provisions of Addendum I, shall include any general
requirements of this Contract that are appropriate to the
service or activity identified in Addendum I, and assure that
all subcontracts shall not terminate legal liability of the
HMO under this Contract. The HMO may subcontract for any
function covered by this Contract, subject to the requirements
of this Contract.

Z. Compliance with Applicable Laws, Rules or Regulations

Observe and comply with all Federal and State laws, rules or
regulations in effect when the Contract is signed or which may
come into effect during the term of the Contract, which in any
manner affects HMO's performance under this Contract, except
as specified in Article III, Section B.

AA. Use of Providers Certified By Medicaid Program

Except in emergency situations, use only providers who have
been certified by the Medicaid program for those services
required under this Contract. The Department reserves the
right to withhold retrospectively from the capitation payments
the monies related to services provided by non-Medicaid-
certified providers, at the Medicaid fee-for-service rate for
those services. (See

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Wisconsin Administrative Code. Chapter HFS 105, for provider
certification requirements.) Every Medicaid HMO will require
each physician providing services to enrollees to have a
unique physician identifier, as specified in Section 1173(b)
of the Social Security Act.

BB. Reproduction and Distribution of Materials

Reproduce and distribute at HMO expense, according to a
reasonable Department timetable, information or documents sent
to HMO from Department that contain information the
HMO-affiliated providers must have in order to fully implement
this Contract.

CC. Provision of Interpreters

Provide interpreter services for enrollees as necessary to
ensure availability of effective communication regarding
treatment, medical history or health education and/or any
other component of this contract. Furthermore, the HMO must
provide for 24 hour a day, 7 day a week access to interpreter
services in languages spoken by those individuals otherwise
eligible to receive the services provided by the HMO or its
provider. Also, upon a recipient or provider request for
interpreter services in a specific situation where care is
needed, the HMO shall provide an interpreter in time to assist
adequately with all necessary care, including urgent and
emergency care. The HMO must clearly document all such actions
and results. This documentation must be available to the
Department at the Department's request.

1. Professional interpreters shall be used, when needed,
where technical, medical, or treatment information or
other matters, where impartiality is critical, are to
be discussed or where use of a family member or
friend as interpreter is otherwise inappropriate.
Family members, especially children, should not be
used as interpreters in assessments, therapy and
other situations where impartiality is critical.

2. The HMO will maintain a current list of interpreters
who are on "on call" status to provide interpreter
services. Provision of interpreter services must be
in compliance with Title VI of the Civil Rights Act.

3. The HMO must designate a person responsible for the
administration of interpreter/translation services.

4. The HMO must receive Department approval of written
policies and procedures for the provision of
interpreter services.





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53


DD. Coordination and Continuation of Care


Have systems in place to ensure well managed patient care,
including at a minimum:

1. Management and integration of health care through
primary provider/gatekeeper/other means.

2. Systems to assure referrals for medically necessary,
specialty, secondary and tertiary care.

3. Systems to assure provision of care in emergency
situations, including an education process to help
assure that enrollees know where and how to obtain
medically necessary care in emergency situations.

4. Specific referral requirements. HMO shall clearly
specify referral requirements to providers and
subcontractors and keep copies of referrals (approved
and denied) in a central file or the patient's
medical records.

5. Systems to assure provision of a clinical
determination, within 10 working days, at the request
of the enrollee, of the medical necessity and
appropriateness of an enrollee to continue with MH or
Substance Abuse providers who are not subcontracted
by the HMO. If the HMO determines that the enrollee
does not need to continue with the non-contracted
provider, it must ensure an orderly transition of
care.

EE. HMO ID Cards

The HMO may issue their own HMO ID cards. The HMO may not deny
services to an enrollee solely for failure to present an HMO
issued ID card. The Forward ID card will always determine HMO
enrollment, even where an HMO issues HMO ID cards.

FF. Federally Qualified Health Centers and Rural Health Centers
(FQHCS and RHCS)

If an HMO contracts with a facility or program, which has been
certified as an FQHC or RHC by the Medicaid program, for the
provision of services to its enrollees, the HMO must negotiate
payment rates for that FQHC or RHC on the same basis as it
negotiates with other clinics and primary providers and the
HMO must increase the FQHC's or RHC's payment in direct
proportion to the annual increase for physicians' services in
the capitation rate paid to the HMO. In other words, if an HMO
receives a 10 percent increase from the Department for
physicians' services, the contracted rates paid to the FQHC or
RHC either through capitation or fee-for-service, must be
increased by at least 10 percent

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54


over those that were in effect on the date this Contract is
signed. The Department will notify the HMOs of the percentage
increase for physician services made in the capitation rates
by the Department when such changes occur. An HMO which
contracts with an FQHC or RHC must report to the Department
within 45 days of the end of each quarter (for example,
January 1 - March 31 is due May 15) the total amount paid to
each FQHC or RHC, per month and as reported on the 1099 forms
prepared by the HMO for each FQHC or RHC. FQHC or RHC payments
include direct payments to a medical provider who is employed
by the FQHC or RHC. The report should be for the entire HMO,
aggregating all service areas if the HMO has more than one
service area.

GG. Coordination with Prenatal Care Services, School-Based
Services, Targeted Case Management Services, a Child Welfare
Agencies, and Dental Managed Care Organizations

1. Prenatal Care Services-- The HMO must sign an MOU
(Addendum IX) with all agencies in the HMO service
area that are Medicaid-certified prenatal care
coordination agencies. The MOU will be effective on
the effective date of the agency's PNCC certification
or when both HMO and PNCC agency have signed it,
whichever is later. In addition, if the PNCC wants to
negotiate additional provisions into the MOU, the HMO
must negotiate in good faith and document those
negotiations. Such documentation must be available to
the Department for review on request. In addition,
the HMO must assign an HMO medical representative to
interface with the care coordinator from the prenatal
care coordination agency. This HMO representative
shall work with the care coordinator to identify what
Medicaid covered services, in conjunction with other
identified social services, are to be provided to the
enrollee. The HMO is not liable for medical services
directed outside of their provider network by the
care coordinator unless prior authorized by the HMO.
In addition, the HMO is not required to pay for
services provided directly by the Prenatal Care
Coordinating provider: such services are paid on a
fee-for-service basis by the Department. The main
purpose of the MOU is to assure coordination of care
between the HMO, that provides medical services, and
the Prenatal Care Coordinating Agency, that provides
outreach, risk assessment, care planning, care
coordination, and follow-up.

2. School-Based Services-- The HMO must sign an MOU
(Addendum XIII) with all School-Based Services (SBS)
providers in the HMO service area who are
Medicaid-certified (a School-Based Services provider
is a school district or Cooperative Educational
Service Agency (CESA) and not the individual schools
within the school district). The MOU will be
effective on the date when both the HMO and the SBS
provider have signed it or the date the SBS provider
is Medicaid-certified, whichever is

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later. As described in Addendum XIII, the purpose of
the MOU is to develop policies and procedures to
avoid duplication of services and to promote
continuity of care between the HMO and SBS provider.
There are many situations where schools cannot
provide services: after school hours, during school
vacations, and during the summer, and these
situations may interrupt the course of treatment or
otherwise affect the continuity of care. In addition,
the fact that HMOs and SBS providers may provide the
same services could lead to the duplication of
services. Therefore, an MOU is essential for the
avoidance of duplication of services and the
assurance of continuity of care. School-based
services are paid fee-for-service by Medicaid. SBS
providers, as a requirement of Medicaid/BadgerCare
certification, will be directed to negotiate MOUs
with HMOs.

3. Targeted Case Management-- The HMO must assign an HMO
medical representative to interface with the case
manager from the Targeted Case Management (TCM)
agency. This HMO representative shall work with the
case manager to identify what Medicaid covered
services, in conjunction with other identified social
services, are to be provided to the enrollee. The HMO
is not required to pay for medical services directed
outside of their provider network by the case manager
unless prior authorized by the HMO. The Department
will distribute a statewide list of
Medicaid-certified TCM agencies to the HMOs and
periodically update the list. Addendum XIV contains
guidelines for how HMOs and TCM agencies should
coordinate care.

4. Child Welfare Agencies-- Milwaukee County HMOs must
designate at least one individual to serve as a
contact person for the Bureau of Milwaukee Child
Welfare (BMCW) agency. If the HMO chooses to
designate more than one contact person, the HMO
should identify the service area for which each
contact person is responsible. The HMO must provide
all Medicaid covered mental health and substance
abuse services to individuals identified as clients
of the BMCW agency. Disputes regarding the medical
necessity of services identified in the Family
Treatment Plan will be adjudicated using the dispute
process outlined in Addendum X, except that HMOs will
provide court ordered services in accordance with
Addendum II. Addendum X contains guidelines for how
Milwaukee County HMOs and the Bureau of Milwaukee
Child Welfare agency will work together to provide
mental health and substance abuse services.


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5. Dental Managed Care Pilot Programs-- Once the
Department's contract with dental managed care
organizations (MCOs) has been finalized, HMOs
providing contract services to enrollees residing in
Ashland, Bayfield, Douglas and Iron Counties shall
sign MOUs with the contracted MCOs to provide
Medicaid dental services. The purpose of the MOUs
shall be to:

. Coordinate dental services provided by MCO
dental providers in HMO affiliated hospitals
and emergency rooms: and

. Ensure necessary and appropriate information
is shared between an enrollee's primary
dental provider and an enrollee's primary
care physician.

The MOU shall be signed by both parties. It will be
the responsibility of the Department's MCO(s) to
initiate contracts with the HMO for implementation.

HH. Physician Incentive Plans

A physician incentive plan is any compensation arrangement
between the HMO and a physician or physician group that may
directly or indirectly have the effect of reducing or limiting
services provided with respect to individuals enrolled with
the HMO.

1. The HMO shall fully comply with the physician
incentive plan requirements specified in 42 CFR s.
417.479(d) through (g) and the requirements relating
to subcontracts set forth in 42 CFR s. 417.479(i), as
those provisions may be amended from time to time,
and shall submit to the Department its physician
incentive plans as required under 42 CFR s. 434.470
and as requested by the Department.

II. Advance Directives

Maintain written policies and procedures related to advance
directives. An advance directive is a written instruction,
such as a living will or durable power of attorney for health
care, recognized under Wisconsin law (whether statutory or
recognized by the courts of Wisconsin) and relating to the
provision of such care when the individual is incapacitated.
HMO shall:

1. Provide written information at time of HMO enrollment
to all adults receiving medical care through the HMO
regarding: (a) the individual's rights under
Wisconsin law (whether statutory or recognized by the
courts of Wisconsin) to make decisions concerning
such medical care, including the right to accept or
refuse medical or surgical treatment and


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the right to formulate advance directives; and (b)
the HMO's written policies respecting the
implementation of such rights.

2. Document in the individual's medical record whether
or not the individual has executed an advance
directive.

3. Shall not discriminate in the provision of care or
otherwise discriminate against an individual based on
whether or not the individual has executed an advance
directive. This provision shall not be construed as
requiring the provision of care which conflicts with
an advance directive.

4. Ensure compliance with requirements of Wisconsin law
(whether statutory or recognized by the courts of
Wisconsin) respecting advance directives.

5. Provide education for staff and the community on
issues concerning advance directives.

The above provisions shall not be construed to prohibit the
application of any Wisconsin law which allows for an objection
on the basis of conscience for any health care provider or any
agent of such provider which as a matter of conscience cannot
implement an advance directive.

JJ. Ineligible Organizations

Upon obtaining information or receiving information from the
Department or from another verifiable source, exclude from
participation in the HMO all organizations which could be
included in any of the following categories (references to the
Act in this section refer to the Social Security Act):

1. Entities Which Could Be Excluded Under Section
1128(b)(8) of the Social Security Act.--These are
entities in which a person who is an officer,
director, agent or managing employee of the entity,
or a person who has direct or indirect ownership or
control interest of 5 percent or more in the entity
has:

a. Been convicted of the following crimes:

1) Program related crimes, i.e., any
criminal offense related to the
delivery of an item or service under
Medicare or Medicaid (see Section
1128(a)(1) of the Act);

2) Patient abuse, i.e., criminal
offense relating to abuse or neglect
of patients in connection with the
delivery of health care (see Section
1128(a)(2) of the Act);


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3) Fraud, i.e., a State or Federal
crime involving fraud, theft,
embezzlement, breach of fiduciary
responsibility, or other financial
misconduct in connection with the
delivery of health care or involving
an act or omission in a program
operated by or financed in whole or
part by Federal, State or local
government (see Section 1128(b)(1)
of the Act);

4) Obstruction of an investigation,
i.e., conviction under State or
Federal law of interference or
obstruction of any investigation
into any criminal offense described
in subsections a, b, or c (see
Section 1128(b)(2) of the Act): or

5) Offenses relating to controlled
substances, i.e., conviction of a
State or Federal crime relating to
the manufacture, distribution,
prescription or dispensing of a
controlled substance (see Section
1128(b)(3) of the Act).

b. Been Excluded, Debarred, Suspended or
Otherwise Excluded from participating in
procurement activities under the Federal
Acquisition Regulation or from participating
in non procurement activities under
regulations issued pursuant to Executive
Order No. 12549 or under guideline
implementing such order.

c. Been Assessed a Civil Monetary Penalty under
Section 1128A of the Act. --Civil monetary
penalties can be imposed on individual
providers, as well as on provider
organizations, agencies, or other entities
by the DHHS Office of Inspector General.
Section 1128A authorizes their use in case
of false or fraudulent submittal of claims
for payment, and certain other violations of
payment practice standards. (See Section
1128(b)(8)(B)(ii) of the Act.)

2. Entities Which Have a Direct or Indirect Substantial
Contractual Relationship with an Individual or Entity
Listed in subsection A.--A substantial contractual
relationship is defined as any contractual
relationship which provides for one or more of the
following services:

a. The administration, management, or provision
of medical services;

b. The establishment of policies pertaining to
the administration, management, or provision
of medical services; or

c. The provision of operational support for the
administration, management, or provision of
medical services.


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3. Entities Which Employ, Contract With, or Contract Through Any
Individual or Entity That is Excluded From Participation in
Medicaid under Section 1128 or 1128A, for the Provision
(Directly or Indirectly) of Health Care, Utilization Review,
Medical Social Work or Administrative Services.--For the
services listed, HMO must exclude from contracting any entity
which employs, contracts with, or contracts through an entity
which has been excluded from participation in Medicaid by the
Secretary under the authority of Section 1128 or 1128A of the
Act.

HMO attests by signing this Contract that it excludes from
participation in the HMO all organizations which could be
included in any of the above categories.

KK. Clinical Laboratory Improvement Amendments

Use only certain laboratories. All laboratory testing sites
providing services under this Contract must have a valid Clinical
Laboratory Improvement Amendments (CLIA) certificate along with a
CLIA identification number, and comply with CLIA regulations as
specified by 42 CFR Part 493, "Laboratory Requirements." Those
laboratories with certificates will provide only the types of
tests permitted under the terms of their certification.

LL. Limitation on Fertility Enhancing Drugs

The HMO must get prior authorization from the Chief Medical
Officer in the Division of Health Care Financing before an HMO
provider treats an enrollee with any of the following drug
products: Chorionic Gonadotropin, Clomiphene, Gonadorelin,
Menotropins, Urofollitropin and any other new fertility enhancing
drugs.

MM. Reporting of Communicable Diseases

As required by Wis. Stats. 252.05, 252.15(5)(a)6 and
252.17(7)(9b), Physicians, Physician Assistants, Podiatrists,
Nurses, Nurse Midwives, Physical Therapists, and Dietitians
affiliated with a Medicaid HMO shall report the appearance,
suspicion or diagnosis of a communicable disease or death
resulting from a communicable disease to the Local Health
Department for any enrollee treated or visited by the provider.
Reports of human immunodeficiency virus (HIV) infection shall be
made directly to the State Epidemiologist. Such reports shall
include the name, sex, age, residence, communicable disease, and
any other facts required by the Local Health Department and
Wisconsin Division of Public Health. Such reporting shall be made
within 24 hours of learning about the communicable disease or
death or as specified in Wis. Admin. Code HFS 145.04, Appendix A.
Charts and reporting forms on communicable diseases are available
from the Local Health Department. Each laboratory subcontracted
or otherwise affiliated with the HMO shall report the
identification or suspected

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identification of any communicable disease listed in Wis. Admin.
Rules 145,. Appendix A to the local health department; reports of
HIV infections shall be made directly to the State
Epidemiologist.

NN. MedicaBadgerCareare HMO Advocate Requirements

Each HMO must employ a Medicaid/BadgerCare HMO Advocate during
the entire contract term. The HMO Advocate is to work with both
enrollees and providers to facilitate the provision of Medicaid
benefits to enrollees; is responsible for making recommendations
to management on any changes needed to improve either the care
provided or the way care is delivered; and must be in an
organizational location within the HMO which provides the
authority needed to carry out these tasks. The detailed
requirements of the HMO Advocate are listed below:

1. Functions of the Medicaid/BadgerCare HMO Advocate(s)

a. Investigation and resolution of access and cultural
sensitivity issues identified by HMO staff, State staff,
providers, advocate organizations, and enrollees.

b. Monitoring formal and informal grievances with the
grievance personnel for purposes of identification of
trends or specific problem areas of access and care
delivery. An aspect of the monitoring function is the
ongoing participation in the HMO grievance committee.

c. Recommendation of policy and procedural changes to HMO
management including those needed to ensure and/or
improve enrollee access to care and enrollee quality of
care. Changes can be recommended for both internal
administrative policies and for subcontracted providers.

d. Act as the primary contact for enrollee advocacy groups.
Work with enrollee advocacy groups on an ongoing basis to
identify and correct enrollee access barriers.

e. Act as the primary contact for local community based
organizations (local governmental units, non-profit
agencies, etc.). Work with the local community based
organizations on an ongoing basis to acquire knowledge
and insight regarding the special health care needs of
enrollees.

f. Participate in the Advocacy Program for Managed Care that
is organized by the Department. Such participation
includes the following: attendance, on an as needed
basis, at the Regional

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Forums chaired by a Department staff person, at the
semiannual Statewide Forum; work with Division of Health
Care Financing Managed Care staff person assigned to the
HMO on issues of access to medical care and quality of
medical care; work with the Enrollment Contractor staff
persons on issues of access to medical care, quality of
medical care, and enrollment/disenrollment; attendance,
on an as needed basis, at bi-monthly Advocacy Team
meetings, which will be attended by the Division of
Health Care Financing Managed Care Staff, enrollment
contractor staff, community based organizations,
recipient service representatives from the Fiscal Agent,
and EDS ombuds.

g. Ongoing analysis of internal HMO system functions, with
HMO staff, as these functions affect enrollee access to
medical care and enrollee quality of medical care.

h. Organization and provision of ongoing training and
educational materials for HMO staff and providers to
enhance their understanding of the values and practices
of all cultures with which the HMO interacts.

i. Provision of ongoing input to HMO management on how
changes in the HMO provider network will affect enrollee
access to medical care and enrollee quality and
continuity of care. Participation in the development and
coordination of plans to minimize any potential problems
that could be caused by provider network changes.

j. Review and approve all HMO informing material to be
distributed to enrollees for the purpose of assessing
clarity and accuracy.

k. Provision of assistance to enrollees and their authorized
representatives for the purpose of obtaining medical
records.

l. The lead advocate position will be responsible for
overall evaluation of the HMO's internal advocacy plan
and will be required to monitor any contracts the HMO may
enter into for external advocacy with culturally diverse
associations or agencies. The lead advocate will be
responsible for training the associations or agencies and
assuring their input into the HMO's advocacy plan.

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2. Staff Requirements and Authority of the
Medicaid/BadgerCare HMO Advocate

a. At a minimum one HMO Advocate must be
located in the organizational structure so
that the Advocate has the authority to
perform the functions and duties listed in
(1)(a-l).

The HMO Certification Application requires
HMOs to state the staffing levels to perform
the functions and duties listed in (1)(a-1)
in terms of number of full and part time
staff and total Full Time Equivalents (FTEs)
assigned to these tasks. The Department
assumes that an HMO acting as an
Administrative Service Organization (ASO)
for another HMO will have one Advocate or
FTE position for each ASO contract as well
as maintaining their own internal advocate.
An HMO may employ less than a Full Time
Equivalent (FTE) advocate position, but must
justify to the satisfaction of the
Department why less than one FTE position
will suffice the HMO's enrollee population.
The HMO must also regularly evaluate the
advocate position, workplan, and job duties
and allocate an FTE advocate position to
meet the duties listed in (1)(a-l) if there
is significant increase in the HMO's
enrollee population or in the HMO service
area. The Department reserves the right to
require an HMO to employ an FTE advocate
position if the HMO does not demonstrate
adequacy of a part-time advocate position.

In order to meet the requirement for the
Advocate position statewide, the DHFS
encourages HMOs to contract or have a formal
memorandum of understanding for advocacy
and/or translation services with
associations or organizations who have
culturally diverse populations within the
HMO service area. However, the overall or
lead responsibility for the advocate
position will be within each HMO. HMOs must
monitor the effectiveness of the
associations and agencies under contract and
may alter the contract(s) with written
notification to the Department.

b. The HMO Advocate shall have authority for
facilitating and assuring access to all
medically necessary services as stipulated
in this Contract for each enrollee.


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c. The HMO Advocate staffing levels submitted
in the HMO Certification Application shall
be maintained, and solely devoted to the
functions and duties listed in (1)(a-l)
throughout the contract term. Changes in the
HMO Advocate staffing levels must be
approved by the Department thirty days prior
to the effective date of the change.

d. The HMO Advocate shall develop prior to
contract signing, and shall maintain and
modify as necessary, throughout the Contract
term, a Medicaid/BadgerCare HMO Advocacy
workplan, with time lines and activities
specified.

OO. HMO Designation of Staff Person as Contract Representative

The HMO is required to designate a staff person to act as
liaison to the Department on all issues that relate to the
contract between the Department and the HMO. The contract
representative will be authorized to represent the HMO
regarding inquiries pertaining to the Contract, will be
available during normal business hours, and will have decision
making authority in regard to urgent situations that arise.
The Contract representative will be responsible for follow-up
on contract inquiries initiated by the Department.

PP. Subcontracts with Local Health Departments

The Department encourages the HMO to contract with local
health departments for the provision of care to
Medicaid/BadgerCare enrollees in order to assure continuity
and culturally appropriate care and services. Local health
departments can provide HealthCheck outreach and screening,
immunizations, blood lead screening services, and services to
targeted populations within the community for the prevention,
investigation, and control of communicable diseases (e.g.,
tuberculosis, HIV/AIDS, sexually transmitted diseases,
hepatitis and others). WIC projects provide nutrition services
and supplemental foods, breastfeeding promotion and support;
and immunization screening. Many projects screen for blood
lead poisoning during the WIC appointment.

The Department encourages HMOs to work closely with local
health departments as noted in Addendum XXIV - Recommendations
for Coordination between HMOs and Local Health Departments and
Community-Based Health Organizations.

Local health departments have a wide variety of resources that
could be coordinated with HMOs to produce more efficient and
cost effective care for HMO enrollees. Examples of such
resources are ongoing programs of medical services, materials
on health education, prevention, and disease states, expertise
on outreaching specific subpopulations, communication networks
with varieties of medical providers, advocates,
community-based health organizations, and


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social service agencies, and access to ongoing studies of and
information about health status and disease trends and
patterns.

QQ. Subcontracts with Community-Based Health Organizations

The Department encourages the HMO to contract with
community-based health organizations for the provision of care
to Medicaid/BadgerCare enrollees in order to assure continuity
and culturally appropriate care and services. Community-based
organizations can provide HealthCheck outreach and screening,
immunizations, family-planning services, and other types of
services.

The Department encourages HMOs to work closely with
community-based health organizations as noted in Addendum
XXIV - Recommendations for Coordination between HMOs and Local
Health Departments and Community-Based Health Organizations.

Community-based health organizations may also provide
services, such as WIC services, that HMOs are required by
Federal law to coordinate with and refer to, as appropriate.

RR. Prescription Drugs

I. If an HMO elects not to cover dental services, the
HMO is liable for the cost of all medically necessary
prescription drugs when ordered by a certified
Medicaid dental provider.

2. When an enrollee elects to use a family planning
provider that is non-HMO affiliated, the HMO is
liable for the cost of all medically necessary drugs
when ordered by a certified Medicaid family planning
provider.

ARTICLE IV


IV. FUNCTIONS AND DUTIES OF THE DEPARTMENT

In consideration of the functions and duties of the HMO contained in
this Contract, the Department shall:

A. Eligibility Determination

Identify Medicaid/BadgerCare recipients who are eligible for
enrollment in HMOs as a result of eligibility under the
following eligibility status:


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===============================================================================================================
Med Stat Cap Rate* Description
===============================================================================================================

31, WN A AFDC-Regular
---------------------------------------------------------------------------------------------------------------
32 A AFDC-Unemployed
---------------------------------------------------------------------------------------------------------------
38,39 A AFDC-Related, No Cash Payment
---------------------------------------------------------------------------------------------------------------
CC, CM, GC, PC A Healthy Start Children
---------------------------------------------------------------------------------------------------------------
E2 A AFDC-Related, No Cash Payment
---------------------------------------------------------------------------------------------------------------
GE A Healthy Start Children Ages 15-18
---------------------------------------------------------------------------------------------------------------
N1, N2 A Medicaid Newborn
---------------------------------------------------------------------------------------------------------------
UA, WU A AFDC-Related, Unemployed
---------------------------------------------------------------------------------------------------------------
WH A AFDC Employed over 100 Hours a Month
---------------------------------------------------------------------------------------------------------------
X1, X2, X3, X4 A AFDC-Related, No Cash Payment
---------------------------------------------------------------------------------------------------------------
B1 A BadgerCare -- Income equal or greater than 100% of FPL,
and less than or equal to 150% of FPL, Kids. No premium.
---------------------------------------------------------------------------------------------------------------
B4 A BadgerCare -- Income equal or greater than 100% of FPL,
and less than or equal to 150% of FPL, Adults. No premium.
---------------------------------------------------------------------------------------------------------------
B2 A BadgerCare -- Income greater than 150% of FPL, and less than
185% of FPL, Kids, Premium.
---------------------------------------------------------------------------------------------------------------
B5 A Income greater than 150% of FPL, and less than 185% of FPL,
Adults, Premium.
---------------------------------------------------------------------------------------------------------------
B3 A Income equal or greater than 185% of the FPL, and less than
200% of the FPL, Kids, Premium.
---------------------------------------------------------------------------------------------------------------
B6 A Income equal or greater than 185% of the FPL, and less than
200% of the FPL, Adults, Premium.
---------------------------------------------------------------------------------------------------------------
GP A Income less than 100% of FPL, Adults Parents of OBRA kids
(AFDC), No premium.
---------------------------------------------------------------------------------------------------------------
95 B Pregnant Women in Intact Families
---------------------------------------------------------------------------------------------------------------
A6, A7, A8, A9 B Pregnant Woman, IRCA Alien
---------------------------------------------------------------------------------------------------------------
E3, E4 B Extension for Pregnant Woman
---------------------------------------------------------------------------------------------------------------
PW, P1 B Healthy Start Pregnant Women
===============================================================================================================


*A = AFDC/Healthy Start Children/BadgerCare capitation rate.
*B = Pregnant Women Healthy Start capitation rate.

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B. Enrollment

Promptly notify the HMO of all Medicaid/BadgerCare recipients enrolled in
the HMO under this Contract. Notification shall be effected through the HMO
Enrollment Reports. All recipients listed as an ADD or CONTINUE on either
the Initial or Final HMO Enrollment Report are members of the HMO during
the enrollment month. The reports shall be generated in the sequence
specified under HMO ENROLLMENT REPORTS. These reports shall be in both tape
and hard copy formats or available through electronic file transfer
capability and shall include Medical Status Codes. The Department will make
all reasonable efforts to enroll pregnancy cases as soon as possible.

C. Disenrollment

Promptly notify the HMO of all Medicaid/BadgerCare recipients no longer
eligible to receive services through the HMO under this Contract.
Notification shall be effected through the HMO Enrollment Reports which the
Department will transmit to the HMO for each month of coverage throughout
the term of the Contract. The reports shall be generated in the sequence
under HMO ENROLLMENT REPORTS. Any recipient who was enrolled in the HMO in
the previous enrollment month, but does not appear as an ADD or CONTINUE on
either the Initial or Final HMO Enrollment Report for the current
enrollment month, is disenrolled from the HMO effective the last day of the
previous enrollment month.

D. HMO Enrollment Reports

For each month of coverage throughout the term of the Contract, the
Department shall transmit "HMO Enrollment Reports" to the HMO. These
reports will provide the HMO with ongoing information about its Medicaid/
BadgerCare enrollees and disenrollees and will be used as the basis for the
monthly capitation claims described in Article V--PAYMENT TO THE HMO. The
HMO Enrollment Reports will be generated in the following sequence:

1. The Initial HMO Enrollment Report will list all of the HMO's enrollees
and disenrollees for the enrollment month who are known on the date of
report generation. The Initial HMO Enrollment Report will be received
by the HMO on or before the fifth day of each month covered by the
Contract. A capitation claim shall be generated for each enrollee
listed as an ADD or CONTINUE on this report. Enrollees who appear as
PENDING on the Initial Report and are reinstated into the HMO during
the month will appear as a CONTINUE on the Final Report and a
capitation claim shall be generated at that time.


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2. The final HMO Enrollment Report will list all of the HMO's enrollees
for the enrollment month, who were not included in the Initial HMO
Enrollment Report. The Final HMO Enrollment Report will be received
by the HMO on or before the tenth day of each month subsequent to the
coverage month. A capitation claim shall be generated for each
enrollee listed as an ADD or CONTINUE on this report. Enrollees in
PENDING status will not be included on the final report.

E. Utilization Review and Control

Waive, to the extent allowed by law, any present Department requirements
for prior authorization, second opinions, co-payment, or other Medicaid
restrictions for the provision of contract services provided by the HMO to
enrollees, except as may be provided in Addendum II.

F. HMO Review

Submit to HMOs for prior approval materials that describe specific HMOs
and that will be distributed by the Department or County to recipients.

G. HMO Review of Study or Audit Results

Submit to HMOs for a 15 business day review/comment period, any HMO
Medicaid/BadgerCare audits, the annual HMO Comparison Report, HMO Consumer
Satisfaction Reports, or any other HMO Medicaid studies the Department
releases to the public.

H. Vaccines

Provide certain vaccines to HMO providers for administration to Medicaid/
BadgerCare HMO enrollees according to the policies and procedures in the
Wisconsin Medicaid and BadgerCare Physicians Services Handbook. The
Department will reimburse the HMO for the cost of vaccines that are newly
approved during the contract year and not yet part of the Vaccine for
Children program. The cost of the vaccine shall be the same as the cost to
the Department of buying the new vaccine through the Vaccine for Children
program. The HMO retains liability for the cost of administering the
vaccines.

I. Coordination of Benefits

Maintain a report of recovered money reported by the HMO and its
subcontractor.


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J. Wisconsin Medicaid Provider Reports

Provide a monthly electronic listing of all Wisconsin Medicaid certified
providers to include, at a minimum, the name, address, Wisconsin Medicaid
provider ID number, and dates of certification in Wisconsin Medicaid.


ARTICLE V


V. PAYMENT TO THE HMO

A. Capitation Rates

In full consideration of contract services rendered by the HMO, the
Department agrees to pay the HMO monthly payments based on the
capitation rate specified in Addendum VII. The capitation rate shall
be prospectively designed to be less than the cost of providing the
same services covered under this Contract to a comparable Medicaid
population on a fee-for-service basis. The capitation rate shall not
include any amount for recoupment of losses incurred by the HMO under
previous contracts. The Department shall have the right to make
separate payments to subcontractors directly on a monthly basis when
the Department determines it is necessary to assure continued access
to quality care. Such separate payment will be made only to
subcontractors that receive more than 90 percent of the contracted
monthly capitation rate from the Department to the HMO.

B. Actuarial Basis

The capitation rate is calculated on an actuarial basis (specified in
Addendum VII) recognizing the payment limits set forth in 42 CFR
447.361.

C. Renegotiation

The monthly capitation rates set forth in this article shall not be
subject to renegotiation during the contract term or retroactively
after the contract term, unless such renegotiation is required by
changes in Federal or State laws, rules or regulations.

D. Reinsurance

The HMO may obtain a risk-sharing arrangement from an insurer other
than the Department for coverage of enrollees under this Contract,
provided that the HMO remains substantially at risk for providing
services under this Contract.


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E. Neonatal Intensive Care Unit Risk-Sharing

The Department agrees to reimburse each HMO for a portion of the neonatal
intensive care unit (NICU) costs incurred by the HMO if the HMO's average
number of NICU days per thousand member year exceeds 75 days per thousand
member year during the contract period. This reimbursement shall be
provided in the following manner:

1. The Department shall reimburse the HMO for the average number of NICU
days per thousand member years that the HMO exceeds 75 NICU days per
thousand member years during the contract period. For each day that
the HMO's average number of NICU days per thousand member years
exceeds 75 NICU days per thousand member years, the Department will
reimburse the HMO for ninety percent (90%) of the HMO's NICU cost per
day, not to exceed $1,443 per day.

2. The HMO's NICU cost per day shall include the HMO's NICU inpatient
payment per day and the HMO's associated physician payments.
Associated physician payments refers to total HMO payments made by the
HMO to the physician(s) for services provided to the infant during the
NICU stay. Associated physician payments will be divided by the number
of days reported for the NICU stay to determine the HMO's payment per
day of associated physician payments.

3. Neonatal intensive care unit days cover any newborn transferred or
directly admitted after birth, to a Level II, Level III or Level IV
SCN/NICD for treatment and/or observation under the care of a
neonatologist or pediatrician. NICU coverage will continue until the
infant is deemed medically stable to be discharged to a newborn
nursery, medical floor or home.

NICU days will also cover any newborn infant transferred or directly
admitted after birth to a Level II, Level III or Level IV SCN/NICD who
requires transfer to another institution for a severe, compromised
physical status, diagnostic testing or surgical intervention which
cannot be provided for at the hospital of initial admission. NICU
coverage will continue until the infant is transferred back to the
initial hospital and deemed medically stable to be discharged to a
newborn nursery, medical floor or home.

Level I facilities are those which are designed primarily for the care
of neonatal patients who have no complications but which are able to
provide competent emergency services when the need arises. Level II
facilities provide a full range of services for low birthweight
neonates who are not sick, but require frequent feeding, and neonates
who require more hours of nursing than do normal neonates. Level III
facilities


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provide a full range of newborn intensive care services for neonatal
patients who do not require intensive care but require 6-12 hours of
nursing each day. Level IV facilities provide a full range of services
for severely ill neonates who require constant nursing and continuous
cardiopulmonary and other support.

Note: HMOs cannot claim additional reimbursement under both the NICU
risk-sharing policy and the ventilator dependent policy for the same
enrollee on the same date of service.

4. HMOs must submit all data requested by the Department for calculating
the NICU reimbursement in the format specified by the Department
before May 1 of the following calendar year. The data and data format
required is defined in Addendum IX. The Department will calculate the
NICU reimbursement amount by county.

5. NICU reimbursement shall be made by the Department to the HMO after
the end of the contract year, following submittal of all needed NICU
data from the HMO. The Department will reimburse the HMO within sixty
days of receipt of all necessary data from the HMO. A final adjustment
to the NICU reimbursement amount may be made by the Department one
year after the initial payment. This adjustment will be based on
updated NICU days and eligible months.

F. Payment Schedule

Payment to the HMO shall be based on the HMO Enrollment Reports which the
Department will transmit to the HMO according to the schedule in Article
IV. D. Payment for each person listed as an ADD or CONTINUE on the HMO
Enrollment Reports shall be made by the Department within 60 days of the
date the report is generated. Also, all retroactive capitation payments for
newborns shall be paid within 60 days of the child's first appearance on an
enrollment report. (See Article V. G.) Any claim that is not paid within
these time limits shall be denied by the Department and the recipient shall
be disenrolled from the HMO for the capitation month specified on the
claim. Notification of all paid and denied claims shall be given through
the weekly Remittance Status Report, which is available on both tape and
hard copy.

G. Capitation Payments For Newborns

The HMO shall authorize provision of contract services to the newborn
child of an enrolled mother for the first ten days of life. The child's
date of birth should be counted as day one. In addition, if the child is
reported within 100 days of its date of birth, the HMO shall provide
contract services to the child from its date of birth until the child is
disenrolled from the HMO. The HMO will receive a separate capitation
payment for the month of birth and for all other


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months the HMO is responsible for providing contract services to the child.
If the child is not reported within 100 days of its date of birth the child
will not be retroactively enrolled into the HMO. In this case the HMO is
not responsible for payment of services provided prior to the child's
enrollment and will receive no capitation payments for that time period and
may recoup from providers for any services that were authorized in that 100
day time period. The providers who gave services in this 100 day time
period may then bill the Department on a fee-for-service basis. More
detailed information for providers on billing the Department on a fee-for-
service basis in these situations can be found in Part A, Section IX, of
the Wisconsin Medicaid Provider Handbook

HMOs, or their providers, must complete an HMO Newborn Report (example and
instructions in Addendum XVII) for newborns. The HMO shall report all
births to the Department's fiscal agent as soon as possible after the date
of birth, but at least monthly. Prompt HMO reporting of newborns will
facilitate retroactive enrollment and capitation payments for newborns,
since this newborn reporting will ensure the newborn's Medicaid/BadgerCare
eligibility for the first 12 months of life contingent upon the newborn
continuously residing with the mother.

H. Coordination of Benefits (COB)

The HMO must actively pursue, collect and retain all monies from all
available resources for services to enrollees covered under this Contract
except where the amount of reimbursement the HMO can reasonably expect to
receive is less than the estimated cost of recovery (this exception does
not apply to collections for AIDS and ventilator dependent patients), or
except as provided in Addendum II. COB recoveries will be done by post-
payment billing (pay and chase) for certain prenatal care and preventive
pediatric services. Post-payment billing will also be done in situations
where the third party liability is derived from a parent whose obligation
to pay is being enforced by the State Child Support Enforcement Agency and
the provider has not received payment within 30 days after the date of
service.

1. Cost effectiveness of recovery is determined by, but not limited to
time, effort, and capital outlay required to perform the activity. The
HMO must be able to specify the threshold amount or other guidelines
used in determining whether to seek reimbursement from a liable third
party, or describe the process by which the HMO determines seeking
reimbursement would not be cost effective, upon request of the
Department.


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2. To assure compliance, records shall be maintained by the HMO of all
COB collections and reports shall be made quarterly on the form
designated by the Department in Addendum VI. HMOs must be able to
demonstrate that appropriate collection efforts and appropriate
recovery actions were pursued. The Department has the right to review
all billing histories and other data related to COB activities for
enrollees. HMOs must seek from all enrollees information on other
available resources. HMOs must also seek to coordinate benefits
before claiming reimbursement from the Department for the AIDS and
ventilator dependent enrollees:

a. Other available resources may include, but are not limited to,
all other State or Federal medical care programs which are
primary to Medicaid, group or individual health insurance,
ERISAs, service benefit plans, the insurance of absent parents
who may have insurance to pay medical care for spouses or minor
enrollees, and subrogation/workers compensation collections.

b. Subrogation collections are any recoverable amounts arising out
of settlement of personal injury, medical malpractice, product
liability, or Worker's Compensation. State subrogation rights
have been extended to HMOs under s. 49.89(9), Act 31, Laws of
1989. After attorneys' fees and expenses have been paid, the HMO
shall collect the full amount paid on behalf of the enrollee.

3. Section 1912(b) of the Social Security Act must be construed in a
beneficiary-specific manner. The purpose of the distribution provision
is to permit the beneficiary to retain TPL benefits to which he or she
is entitled to except to the extent that Medicaid (or the HMO on
behalf of Medicaid) is reimbursed for its costs. The HMO is free,
within the constraints of State law and this contract, to make
whatever case it can to recover the costs it incurred on behalf of its
enrollee. It can use the Medicaid fee schedule, an estimate of what a
capitated physician would charge on a fee-for-service basis, the value
of the care provided in the market place or some other acceptable
proxy as the basis of recovery. However, any excess recovery, over and
above the cost of care (however the HMO chooses to define that cost),
must be returned to the beneficiary. HMOs may not collect from amounts
allotted to the beneficiary in a judgement or court-approved
settlement. The HMO is to follow the practices outlined in the DHFS
Casualty Recovery Manual.

4. Where the HMO has entered a risk-sharing arrangement with the
Department, the COB collection and distribution shall follow the
procedures described in Addendum III of this Contract. Act 27, Laws of
1995 extended assignment rights to HMOs under s. 632.72.


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5. COB collections are the responsibility of the HMO or its
subcontractors. Subcontractors must report COB information to the HMO.
HMOs and subcontractors shall not pursue collection from the enrollee,
but directly from the third party payer. Access to medical services
will not be restricted due to COB collection.

6. The following requirement shall apply if the Contractor (or the
Contractor's parent firm and/or any subdivision or subsidiary of
either the Contractor's parent firm or of the Contractor) is a health
care insurer (including, but not limited to, a group health insurer
and/or health maintenance organization) licensed by the Wisconsin
Office of the Commissioner of Insurance and/or a third-party
administrator for a group or individual health insurer(s), health
maintenance organization(s), and/or employer self-insurer health
plan(s):

a. Throughout the Contract term, these insurers and third-party
administrators shall comply in full with the provision of
subsection 49.475 of the Wisconsin Statutes. Such compliance
shall include the routine provision of information to the
Department in a manner and electronic format prescribed by the
Department and based on a monthly schedule established by the
Department. The type of information provided shall be consistent
with the Department's written specifications.

b. Throughout the Contract term, these insurers and third-party
administrators shall also accept and properly process postpayment
billings from the Department's fiscal agent for health care
services and items received by Wisconsin Medicaid enrollees.

7. If, at any time during the contract term, any of the insurers or third
party administrators fail, in whole or in part, to adhere to the
requirements of (Article V. H. subsection 6. (a.) or (6.(b.)) above,
the Department may take the remedial measures specified in Article IX.
D. 1. and Article X. B. (2).

I. Recoupments

The Department will not normally recoup HMO per capita payments when the
HMO actually provided service. However, in situations where the Medicaid
enrollee cannot use HMO facilities, the Department will recoup HMO
capitation payments. Such situations are described more fully below:

1. The Department will recoup HMO capitation payments for the following
situations where an enrollee's HMO status has changed before the 1st
day of a month for which a capitation payment has been made:


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a. enrollee moves out of the HMO's service area

b. enrollee enters a public institution

c. enrollee dies

2. The Department will recoup HMO capitation payments for the following
situations where the Department initiates a change in an enrollee's
HMO status on a retroactive basis, reflecting the fact that the HMO
was not able to provide services. In these situations, recoupments for
multiple month's capitation payments are more likely.

a. correction of a computer or human error, where the person was
never really enrolled in the HMO.

b. disenrollments of enrollees for reasons of pregnancy and
continuity of care, or for reasons specified in Addendum II.

3. In instances where membership is disputed between two HMOs, the
Department shall be the final arbitrator of HMO membership and
reserves the right to recoup an inappropriate capitation payment.

4. If an HMO enrollee moves out of the HMO service area, the enrollee
will be disenrolled from the HMO on the date the enrollee moved as
verified by the eligibility worker. Any capitation payment made for
periods of time after disenrollment will be recouped.

5. If a contract is terminated, recoupments will be handled through a
payment by the HMO within 30 days of contract termination.

J. HealthCheck Recoupment

The Department will determine the amount of the HMO's HealthCheck
recoupment, by service area, by following the algorithm defined in Article
III. B. (10) and by using the number of screens and eligibles reported in
the second semi-annual Utilization Report. Data provided by the HMO must
agree with medical record documentation. Before completing the recoupment,
the Department will inform the HMO of the intended action and allow the
HMO thirty days to review and respond to the calculation. The second semi-
annual Utilization Report will be considered complete and final.


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K. Payment for Aids, HIV-Positive, and Ventilator Dependent

The Department will pay the HMO's costs of providing Medicaid-covered
services to HMO enrollees who meet the criteria in this section, by HMO
service area. These payments will be made based on the data submitted by
the HMO to the Department on a quarterly basis. The data submission and
payment schedule is included as Addendum IV to this Contract. Reimbursement
already provided to the HMO in the form of capitation payments for
qualified enrollees will be deducted from 100 percent reimbursement
payments. 100 percent reimbursement refers to full reimbursement of HMO
costs for providing Medicaid services to the above enrollees. The criteria
for enrollees are:

1. Ventilator Assisted Patients----Costs incurred for enrollees who need
ventilator treatment services qualify for reimbursement if the
enrollee meets the following criteria:

a. For the purposes of this reimbursement, a ventilator-assisted
patient must have died while on total respiratory support or must
meet all of the criteria below:

1) The patient must require equipment that provides total
respiratory support. This equipment may be a volume
ventilator, a negative pressure ventilator, a continuous
positive airway pressure (CPAP) system, or a Bi (inspiratory
and expiratory) PAP. The patient may need a combination of
these systems. Any equipment used only for the treatment of
sleep apnea does not qualify as total respiratory support.

2) The total respiratory support must be required for a total
of six or more hours per 24 hours.

3) The patient must have total respiratory support for at least
30 days which need not be continuous.

4) The patient must have absolute need for the respiratory
support, as documented by appropriate blood gases.

b. The HMO will submit the following written documentation to
qualify enrollees for reimbursement at the same time as the
quarterly reports identified in Addendum IV:

1) The Department's designated form.


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2) A signed statement from the doctor attesting to the need of
the patient.

3) Copies of progress notes which show the need for
continuation of total ventilatory support, any change in the
type of ventilatory support and the removal of the
ventilatory support.

Copies of lab reports must be submitted if the progress notes do
not include blood gas levels.

c. Dates of enhanced funding are based on the following methodology:

1) Day one is the day that the patient is placed on the
ventilator. If the patient is on the ventilator for less
than six hours on the first day, the use must continue into
the next day and be more than six total hours.

2) Each day that the patient is on the ventilator for a part of
any day, as long as it is part of the six total hours per 24
hours, counts as a day for enhanced funding.

3) The period of enhanced funding starts on the first day of
the month that the patient was placed on ventilator support.
It ends on the last day of the month after which the patient
is removed from the ventilatory support, or at the end of
the hospital stay, whichever is later.

2. HMOs cannot claim additional reimbursement under both the NICU risk-
sharing policy and the ventilator dependent policy for the same
enrollee on the same date of service.

3. AIDS or HIV-Positive with Anti Retroviral Drug Treatment----Costs for
services provided to enrollees with a confirmed diagnosis of AIDS, as
indicated by an ICD-9-CM diagnosis code or HIV-Positive who are on
anti retroviral drug treatment approved by the Food and Drug
Administration, qualify for reimbursement. Written requests to qualify
enrollees for reimbursement must be submitted by the HMO to the
Contract Monitor. These requests should be batched and submitted with
the reports identified in Addendum IV. A signed statement from a
physician that indicates a diagnosis of AIDS or HIV-Positive and that
the patient is on an Anti Retroviral Drug treatment must accompany
each request. One hundred percent reimbursement will be effective for
services provided on or after the first day of the month in which
treatment begins.


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a. For AIDS and HIV -- Positive enrollees retroactively
disenrolled under Article VII of this Contract, the HMO will
have to back out the cost of the care provided during the
backdated period from the reports in Addendum IV. Part D.

b. Submission of Data -- As required by the Wisconsin
Administrative Code HFS 106.03, payment data or adjustment
data for AIDS and/or vent enrollees must be received by the
Department's fiscal agent within 365 days after the date of
the service. If the HMO cannot meet this requirement, the
HMO must provide documentation that substantiates the
delay. The Department will make the final determination to
pay or deny the services. The Department will exercise its
discretion reasonably in making the determination to waive
the 365-day billing requirement.

4. NICU days for which the HMO will collect 100 percent reimbursement
cannot be counted under the NICU risk-sharing policy in this Contract.
(HMOs cannot choose between the 100 percent policy and the NICU
policy; if a cost qualifies under the 100 percent policy, it must be
reported under that policy.)

The HMO will manage the care of these enrollees, produce quarterly
cost and utilization reports and meet with the Department on a
quarterly basis to discuss cost and other issues related to care
management for these.

5. The HMO must submit reports (eligibility summary, cost summary,
inpatient hospital utilization summary, and detail) to the Department
according to the schedule and in the format specified in Addendum IV.


ARTICLE VI


VI. REPORTS, DATA, AND COMPUTER/DATA REPORTING SYSTEM

A. Disclosure

The HMO and any subcontractors shall make available to the Department,
the Department's authorized agents, and appropriate representatives of
the U.S. Department of Health and Family Services any financial
records of the HMO or subcontractors which relate to the HMO's
capacity to bear the risk of potential financial losses, or to the
services performed and amounts paid or payable under this Contract.
The HMO shall comply with applicable record keeping requirements
specified in HFS 105.02(1)-(7) Wis. Adm. Code, as amended.


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B. Periodic Reports

The HMO agrees to furnish within the Department's time frame and
within the Department's stated form and format, information and/or
data from its records to the Department, and to the Department's
authorized agents, which the Department may require to administer this
Contract, including but not limited to the following:

1. Summaries of amounts recovered from third parties for services
rendered to enrollees under this Contract in the format specified
in Addendum VI.

2. Enrollee summary utilization data to be submitted semiannually
via electronic media and to include the data elements in the
format specified in the Wisconsin Medicaid HMO Utilization
Reporting User Manual for Reporting Period 2000.

The Department will compare the summary data reported in this
manner to data extracted from the encounter data set for the same
time period using logic from the definitions obtained in the
Wisconsin Medicaid HMO Utilization Reporting User Manual to
ensure the completeness of the encounter data set. Based on the
magnitude of any differences between the two data sets (summary
vs. encounter), the Department retains the right to require the
HMO to continue submitting summary utilization data during 2001.

An encounter record for each service provided to enrollees. The
Encounter data set will include at least those data elements
specified in Addendum IV. The encounter data set must be
submitted monthly via electronic media. Refer to Article I,
Definitions, for the definition of an encounter.

3. Information and/or data to support the Department's monitoring
and evaluation of the Medicaid/BadgerCare HMO Program to include,
at a minimum, a Verification Data File supporting the utilization
data from subpart 2, above.

4. Copies of all formal grievances and documentation of actions
taken on each grievance, as specified in Article VIII. A. (11).

5. Birth Cost as specified in Addendum XXIII.


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C. Access to and Audit of Contract Records

Throughout the duration of the Contract, and for a period of five (5)
years after termination of the Contract, the HMO shall provide duly
authorized representatives of the State or Federal government access
to all records and material relating to the Contractor's provision of
and reimbursement for activities contemplated under the Contract. Such
access shall include the right to inspect, audit and reproduce all
such records and material and to verify reports furnished in
compliance with the provisions of the Contract. All information so
obtained will be accorded confidential treatment as provided under
applicable laws, rules or regulations.

D. Records Retention

The HMO shall retain, preserve and make available upon request all
records relating to the performance of its obligations under the
Contract, including claim forms, paper and electronic, for a period of
not less than five (5) years from the date of termination of the
Contract. Records involving matters which are the subject of
litigation shall be retained for a period of not less than five (5)
years following the termination of litigation. Microfilm copies of the
documents contemplated herein may be substituted for the originals
with the prior written consent of the Department, provided that the
microfilming procedures are approved by the Department as reliable and
are supported by an effective retrieval system.

Upon expiration of the five (5) year retention period, the subject
records shall, upon request, be transferred to the Department's
possession. No records shall be destroyed or otherwise disposed of
without the prior written consent of the Department.

E. Special Reporting and Compliance Requirements

The HMO shall comply with the following State and Federal reporting
and compliance requirements for the services listed below, for the
entire HMO, aggregating all service areas if the HMO has more than one
service area:

1. Abortions shall comply with the requirements of Chapter 20.927,
Wis. Stats., and with 42 CFR 441 Subpart E--Abortions.

2. Hysterectomies and sterilizations shall comply with 42 CFR 441
Subpart F--Sterilizations.

Sanctions in the amount of $10,000.00 may be imposed for non-
compliance with the above special reporting and compliance
requirements.


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F. Reporting of Corporate and Other Changes

If corporate restructuring or any other change affects the continuing
accuracy of certain information previously reported by the HMO to the
Department, the HMO shall report the change in information to the
Department. The HMO shall report each such change in information as soon
as possible, but not later than 30 days after the effective date of the
change. Changes in information covered under this section include all of
the following:

1. Any change in information previously provided by the HMO in response
to questions posed by the Department in the current HMO Certification
Application or any previous RFB for Medicaid/BadgerCare HMO Contracts.
This includes any change in information originally provided by the HMO
as a "new HMO," within the meaning of the HMO Certification
Application or RFB.

2. Any change in information relevant to Article III, Section JJ of this
Contract, relating to ineligible organizations.

3. Any change in information relevant to Section 4 of Addendum I of this
Contract, relating to ownership and business transactions of the HMO.

G. Computer/Data Reporting System

The HMO must maintain a computer/data reporting system that meets the
Department's following requirements. The HMO is responsible for complying
with all of the reporting requirements established by the Department and
with assuring the accuracy and completeness of the data as well as the
timely submission of data. The data submitted must be supported by records
available to the Department or its designee. The Department reserves the
right to conduct on-site inspections and/or audits prior to awarding the
Contract. The HMO must have a contact person responsible for the
computer/data reporting system and in a position to answer questions from
the Department and resolve problems identified by the Department in regard
to the requirements listed below:

1. The HMO must have a claims processing system that is adequate to meet
all claims processing and retrieval requirements specified in this
Contract, specifically Article III. G.

2. The HMO must have a computer/data collection, processing, and
reporting system sufficient to monitor HMO enrollment/ disenrollment
(in order to determine on any specific day which recipients are
enrolled or disenrolled from the HMO) and to monitor service
utilization for the Utilization Management requirements of Quality
Improvement that are specified in Article III. W. (9) of the Contract.


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3. The HMO must have a computer/data collection, processing, and
reporting system sufficient to support the Quality Improvement (QI)
requirements described in Article III. W. The system must be able to
support the variety of QI monitoring and evaluation activities,
including the monitoring/evaluation of quality of clinical care and
service (III. W. (3)); periodic evaluation of HMO providers (III.
W.(6)(b)); member feedback on QI (III. W. (7)(b) and (c)); maintenance
of and use of medical records in QI (III. W. (8)(f) and (i)); and
monitoring and evaluation of priority areas (III. W. (13)(a) - (f)).

4. The HMO must have a computer and data processing system sufficient to
accurately produce the data, reports, and encounter data set, in the
formats and time lines prescribed by the Department in this contract,
that are included in Addendum IV of the Contract. HMOs are required to
submit electronic test encounter data files as required by the
Department in the format specified in the 2000-2001 HMO encounter data
user manual and timelines specified in Addendum IV of the Contract and
as may be further specified by the Department. The electronic test
encounter data files are subject to Department review and approval
before production data is accepted by the Department. Production
claims or other documented encounter data must be used for the test
data files.

5. The HMO must capture and maintain a claim record of each service or
item provided to enrollees, using HCFA 1500, UB-92, NCPDP, or other
claim, or claim formats that are adequate to meet all reporting
requirements of this contact. The computerized database must be a
complete and accurate representation of all services covered by the
HMO for the contract period. The HMO is responsible for monitoring the
integrity of the data base, and facilitating its appropriate use for
such required reports as encounter data, summary utilization data, and
targeted performance improvement studies.

6. The HMO must have a computer processing and reporting system that is
capable of following or tracing an encounter within its system using a
unique encounter record identification number for each encounter.

7. The HMO reporting system must have the ability to identify all denied
claims/encounters using national ANSI EOB codes.

8. The HMO system must be capable of reporting original and reversed
claim detail records and encounter records.

9. The HMO system must be capable of correcting an error to the encounter
record within 90 days of notification by the Department.


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10. The HMO must notify the Department of all significant changes to
the system that may impact the integrity of the data, including
such changes as new claims processing software, new claims
processing vendors and significant changes in personnel.


ARTICLE VII


VII. ENROLLMENT AND DISENROLLMENTS

A. Enrollment

The HMO shall accept as enrolled all persons who appear as enrollees
on the HMO Enrollment Reports and newborns as defined in Article I.
Enrollment in the HMO shall be voluntary by the recipient except where
limited by Departmental implementation of a State Plan Amendment or a
Section 1115(a) waiver. The current State Plan Amendment and 1115(a)
waiver requires mandatory enrollment into an HMO for those service
areas in which there are two or more HMOs with sufficient slots for
the HMO eligible population. The Department reserves the right to
assign a Medicaid/BadgerCare recipient to a specific HMO when the
recipient fails to choose an HMO during a required enrollment period.

The HMO shall designate, in Article XV, and Addendum XX, of this
Contract, their maximum enrollment level for the different service
areas of the HMO throughout the State. The Department may take up to
60 days, from the date of written notification, to implement maximum
enrollment level changes. The HMO shall accept as enrolled all
persons who appear as enrollees on the HMO Enrollment Reports and
newborns up to the HMO specified enrollment level for a particular
service area. The number of enrollees may exceed the maximum
enrollment level by 5 percent on a temporary basis. The Department
does not guarantee any minimum enrollment level. The maximum
enrollment level for a service area may be increased or decreased
during the course of the contract period based on mutual acceptance of
a different maximum enrollment level.

B. Third Trimester Pregnancy Disenrollment

Enrollees who are in their third trimester of pregnancy when they are
expected to enter an HMO may be eligible for disenrollment. In order
for disenrollment to occur, the enrollee must have been automatically
assigned or reassigned. In addition, they must be seeking care from a
provider (physician and/or hospital) who is either not affiliated with
the HMO to which they were assigned or is affiliated but the HMO is
closed to new enrollment. Disenrollment requests can only be made by
the enrollee and/or casehead. Disenrollment requests must be made
before the end of the second month in the HMO or before the birth,


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whichever occurs first. Disenrollment requests should be directed to
the Enrollment Contractor or the Department's assigned HMO Contract
Monitor.

C. Ninth Month Pregnancy Disenrollment

Enrollees who deliver or are expected to deliver the first month they
are assigned to a HMO may be eligible for disenrollment. In order for
disenrollment to occur, the enrollee must have been automatically
assigned or reassigned and must not have been in the HMO to which they
were assigned or reassigned within the last seven months. In addition,
they must be seeking care from a provider (physician and/or hospital)
not affiliated with the HMO to which they were assigned. Disenrollment
requests can be made by the HMO, a provider, or the recipient.
Requests for ninth month pregnancy disenrollments should be directed
to the Department's assigned HMO Contract Monitor.

D. Exemptions from Enrollment in any HMO and Disenrollment for Patients
of Certified Nurse Midwives or Nurse Practitioners

1. Enrollees may be eligible for an exemption from enrollment if:

a. they reside in a service area of a certified nurse midwife
or nurse practitioner; and

b. they choose to receive their care from a certified nurse
midwife or nurse practitioner; and

c. the certified nurse midwife or nurse practitioner is not
affiliated with any HMO in the service area; or

d. the certified nurse midwife or nurse practitioner is not
independently certified as a provider of any HMO within the
service area.

2. Exemptions and disenrollment requests may be made by the enrollee
and should be directed to the Department's Enrollment Contractor.
Exemptions will be processed as soon as possible and will be
effective as of the first of the month of request.

E. Exemption from Enrollment in any HMO and Disenrollment For AIDS or
HIV-Positive with Anti Retroviral Drug Treatment

Enrollees with a confirmed diagnosis of AIDS, as indicated by an ICD
-9-CM diagnosis code, or HIV-Positive who are on anti retroviral drug
treatment approved by the Federal Food and Drug Administration, are
eligible for an exemption. The casehead may apply for the exemption.
The HMO shall not counsel or otherwise influence an enrollee or
potential enrollee in such a way as


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to encourage exemption from enrollment or continued enrollment.
Exemptions will be processed as soon as possible. Disenrollment will
be effective with the first day of the month in which anti retroviral
treatment begins or in which the enrollee was diagnosed with AIDS
except that disenrollment will not be backdated more than nine (9)
months from the date the request is received.

F. Exemptions from Enrollment in any HMO and Disenrollment for Patients
of Federally Qualified Health Centers

1. Enrollees may be eligible for an exemption from enrollment if:

a. they reside in the service area of an FQHC;

b. they choose to receive their primary care from the FQHC; and

c. the FQHC is not affiliated with any HMO within the service
area.

2. Exemption and Disenrollment requests may be made by the casehead
and should be directed to the Department's assigned HMO Contract
Monitor. Exemptions will be processed as soon as possible and
will be effective as of the first of the month of the request.

G. Native American Disenrollment

Enrollees who are Native American and members of a federally
recognized tribe are eligible for disenrollment. Only the enrollee can
make disenrollment requests.

H. Special Disenrollments

The HMO may request and the Department may approve disenrollment for
specific cases or persons where there is just cause. Just cause is
defined as a situation where enrollment would be harmful to the
interests of the recipient or in which the HMO cannot provide the
recipient with appropriate medically necessary contract services for
reasons beyond its control.

I. Exemptions from Enrollment in any HMO and Disenrollment for Recipients
With Commercial HMO Insurance or Commercial Insurance With a
Restricted Provider Network

Enrollees who have commercial HMO insurance may be eligible for
exemption from enrollment in any HMO or disenrollment, if the
commercial HMO does not participate in Medicaid. In addition,
enrollees who have commercial insurance which limits enrollees to a
restricted provider network (e.g., PPOs, PHOs, etc.) may be eligible
for an exemption from enrollment in any HMO or


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disenrollment. Requests for exemption and disenrollment should be
directed to the Department's Enrollment Contractor. Exemptions will be
processed as soon as possible and will be effective as of the first of
the month of the request.

J. Exemption from Enrollment in any HMO and Disenrollment for Families
Where One or More Members are receiving SSI benefits

1. Families may be eligible for exemption from enrollment if:

a. there are one or more members in the family who are
receiving SSI benefits, and

b. the SSI member receives primary care from a provider who
does not accept any Medicaid HMO, and

c. other family members receive their primary care from the
same provider as the SSI member.

2. Exemption and Disenrollment requests may be made by the SSI
member, parent or guardian and should be directed to the
Department's Enrollment Contractor. Exemptions will be processed
as soon as possible and will be effective as of the first of the
month of request.

K. Voluntary Disenrollment

All enrollees shall have the right to disenroll from the HMO pursuant
to 42 CFR 434.27(b)(1) unless otherwise limited by a State Plan
Amendment or a Section 1115(a) waiver of federal laws, or pursuant to
Addendum II. A voluntary disenrollment shall be effective no later
than the first day of the second month after the month in which the
enrollee requests termination. The HMO will promptly forward to the
Department or its designee all requests from enrollees for
disenrollment. Wisconsin currently has a State Plan Amendment and an
1115(a) waiver which allows the Department to "lock-in" enrollees to
an HMO for a period of 12 months in mandatory HMO service areas,
except that disenrollment is allowed for good cause as described in
Sections B. through J. above. The lock-in policy is described more
completely in Section O below. Addendum II allows voluntary exemptions
and disenrollment from HMOs for a variety of reasons. Because of these
two Department policies, voluntary disenrollment is limited to the
situations described in Sections B. through K. of Article VII. and
Addendum II.


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L. Section 1115(A) Waiver and State Plan Amendment

Should the Department, at any time during the Contract, obtain a State
Plan Amendment, a waiver or revised waiver authority under the Social
Security Act (as amended), the conditions of enrollment described in
the Contract, including but not limited to voluntary enrollment and
the right to voluntary disenrollment, shall be amended by the terms of
said waiver and State Plan Amendment.

M. Additional Services

The HMO shall not obtain enrollment through the offer of any
compensation, reward, or benefit to the enrollee except for additional
health-related services which have been approved by the Department.

N. Enrollment/Disenrollment Practices

The HMO shall permit the Department to monitor enrollment and
disenrollment practices of the HMO under this Contract. The HMO will
not discriminate in enrollment/disenrollment activities between
individuals on the basis of health status or requirement for health
care services, including those individuals who have AIDS or are HIV-
Positive. This section shall not prevent the HMO from assisting in the
disenrollment process for individuals who can be in a different
medical status code.

O. Enrollee Lock-In Period

Under the Department's State Plan Amendment and waiver authority of
Section 1115(a) of the Social Security Act (as amended), in mandatory
HMO service areas, enrollees will be locked in to an HMO for twelve
months. The first 90 days of the 12-month lock-in period will be an
open enrollment period in which the enrollee may change their HMO. The
conditions of disenrollment as specified in VII. B - K still apply
during this lock-in period.


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ARTICLE VIII



VIII. GRIEVANCE PROCEDURES

Medicaid/BadgerCare enrollees may grieve regarding any aspect of
service delivery provided or arranged by the HMO.

A. Procedures

The HMO shall:

1. Have written policies and procedures that detail what the
grievance system is and how it operates.

2. Identify a contact person in the HMO to receive grievances
and be responsible for routing/processing.

3. Operate an informal grievance/complaint process which
enrollees can use to get problems resolved without going
through the formal, written grievance process.

4. Operate a formal grievance process which enrollees can use
to grieve in writing.

5. Inform enrollees about the existence of the formal and
informal grievance/complaint processes and how to use the
formal and informal grievance process.

6. Attempt to resolve complaints informally.

7. Respond to written complaints (i.e., formal grievances)
in writing within 10 business days of receipt of grievance,
except that in cases of emergency or urgent (expedited
grievances) situations, HMOs must resolve the grievance
within 2 business days of receiving the complaint or sooner
if possible. This represents the first response. More
complete procedures are described in Section B. of this
Article.

8. Operate a grievance appeals process within the HMO which
enrollees can use to appeal any negative response to their
grievance to the Board of Directors of the HMO. The HMO
Board of Directors may delegate this authority to review
appeals to an HMO grievance appeal committee, but the
delegation must be in writing. If a grievance appeal
committee is established, the Medicaid HMO Advocate must be
a member of the committee.


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9. Grant the enrollee the right to appear in person before the
grievance committee, to present written and oral information. The
enrollee may bring a representative to this meeting. The HMO must
inform the enrollee in writing of the time and place of the
meeting at least 7 calendar days before the meeting.

10. Maintain a record keeping system for informal grievances in the
form of a "log" that includes a short, dated summary of each of
the problems, the response, and the resolution. This log shall
distinguish Medicaid/BadgerCare from commercial enrollees, if
the HMO does not have a separate log for Medicaid. The HMO must
submit quarterly reports to the Department of all informal
grievances/complaints. The analysis of the log will include the
number of informal grievances/complaints divided into two
categories, program administration and benefits denials. The
first report is due April 10, 2000.

11. Maintain a record keeping system for formal grievances that
includes a copy of the original grievance, the response, and the
resolution. This system shall distinguish Medicaid/BadgerCare
from commercial enrollees. Beginning April 10 of each year and
quarterly thereafter, the HMO shall forward copies of all formal
grievances and documentation of actions taken on each grievance,
for the previous quarter, to the Department, in the format
specified under Addendum XXI.

12. Notify the enrollee who grieves, at the time of the initial HMO
grievance decision denying the grievance, that the enrollee may
appeal to the Division of Hearings and Appeals (DHA) or the
Department.

13. Assure that individuals with the authority to require corrective
action are involved in the grievance process.

14. Distribute to their gatekeepers* and IPAs the informational flyer
on enrollee's grievance rights `(the ombudsman brochure). When a
new brochure is available, the HMO shall distribute copies to
their gatekeepers and IPAs within three weeks of receipt of the
new brochure.

15. Assure that their gatekeepers* and IPAs have written procedures
for describing how enrollees are informed of denied services. The
HMO will make copies of the gatekeeper's and IPA's grievance
procedures available for review upon request by the Department.


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*The word "gatekeeper" in this context refers to any entity that
performs a management services contract, a behavioral health
science IPA, or a dental IPA, and not to individual physicians
acting as a gatekeeper to primary care services.

B. Recipient Appeals of HMO Formal Grievance Decisions

The enrollee may choose to use the HMO's formal grievance process or
may appeal to the State instead of using the HMO's formal grievance
process. If the enrollee chooses to use the HMO's process, the HMO
must provide a first response within 10 business days and a final
response within 30 calendar days of receiving the grievance. If the
HMO is unable to resolve the grievance within 30 calendar days, the
time period may be extended another 30 calendar days from receipt of
the grievance if the HMO notifies the enrollee in writing that the HMO
has not resolved the grievance, when the resolution may be expected
and why the additional time is needed. The total timeline for HMOs to
finalize a formal grievance may not exceed 60 calendar days from the
date of the receipt of the grievance. Any formal grievance decision by
the HMO may be appealed by the enrollee to the Department. The
Department shall review such appeals and may affirm, modify, or reject
any formal grievance decision of the HMO at any time after the formal
appeal is filed by the enrollee. The Department will give final
response within 30 days from the date the Department has all
information needed for a decision. Also, an enrollee can submit a
formal, written grievance directly to the Department. Any formal
decision made by the Department under this section is subject to
enrollee appeal rights to the extent provided by State and Federal
Laws and rules. The Department will receive input from the recipient
and the HMO in considering appeals.

C. Notifications of Denial, Termination, Suspension, or Reduction of
Benefits to Enrollees

1. When an HMO, its gatekeepers,* or its IPAs discontinues,
terminates, suspends, limits, or reduces a service (including
services authorized by an HMO the enrollee was previously
enrolled in or services received by the enrollee on a Medicaid
fee-for-service basis), the HMO shall notify the affected
enrollee(s) in writing of:

a. The nature of the intended action.

b. The reasons for the intended action.

c. The fact that the enrollee if appealing the action must do
so within forty-five (45) days.


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d. An explanation of the enrollee's right to appeal the HMO's
decision to the Department.

e. The fact that the enrollee, if appealing the HMO action, may
file a request for a hearing with the Division of Hearings
and Appeals (DHA) and the address of the DHA.

f. The fact that the enrollee can receive help in filing a
grievance by calling either the Enrollment contractor or the
Ombudsman.

g. The telephone number of both the Enrollment contractor and
the Ombudsman.

*The word "gatekeeper" in this context refers to any entity that
performs a management services contract, a behavioral health
science IPA, or a dental IPA, and not to individual physicians
acting as a gatekeeper to primary care services.

This notice requirement does not apply when an HMO, its
gatekeeper or its IPA triages an enrollee to proper health care
provider or when an individual health care provider determines
that a service is medically unnecessary.

The Department must review and approve all notice language prior
to its use by the HMO. Department review and approval will occur
during the Medicaid certification process of the HMO and prior to
any change of the notice language by the HMO.

2. If the recipient files a request for a hearing with the Division
of Hearings and Appeals within 10 days of the effective date of
the decision to reduce, limit, terminate or suspend benefits,
upon notification by the Division of Hearings and Appeals:

a. The Department will notify the enrollee they are eligible to
continue receiving care but may be liable for care if DHA
overturns the decision; and

b. The Department will put the enrollee on fee-for-service
status effective the first of the month in which the
enrollee received the termination, reduction, or suspension
notice from the HMO; and:

1) If the Division of Hearings and Appeals reverses the
HMO's decision, the Department will recoup from the HMO
the amount paid for any benefits provided to the
enrollee during the period of the enrollee's fee-for-
service status while the decision was pending. The
enrollee will


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be reenrolled into the HMO following the resolution of
the medical condition, the completion of medical,
psychological or dental services or the end of medical
necessity of the service(s) unless the HMO has reversed
its original decisions and agrees to reimburse the
provider(s) for services provided to the enrollee
during the administrative hearing process.

2) If the Division of Hearings and Appeals upholds the
HMO's decision, the Department may pursue reimbursement
from the enrollee for all services provided to the
enrollee during their fee-for-service period. The
enrollee will be reenrolled into the HMO no later than
the end of the second month following notification from
the DHA.

D. Notifications of Denial of New Benefits to Enrollees

When an HMO, its gatekeeper, or IPA denies a new service, the HMO
shall notify the affected enrollee (s) in writing of:

1. The nature of the intended action.

2. The reasons for the intended action.

3. The fact that the enrollee if appealing the action must do so
within forty-five (45) days.

5. An explanation of the enrollee's right to appeal the HMO's
decision to the Department.

6. The fact that the enrollee can receive help in filing a grievance
by calling either the Enrollment contractor or the Ombudsman.

7. The telephone number of both the Enrollment contractor and the
Ombudsman.

If the enrollee was not receiving the service prior to the denial, the
HMO is not required to provide the benefit while the decision is being
appealed.

HMO grievance procedures must be reviewed and approved by the
Department prior to signing the HMO Contract. All changes to HMO
grievance procedures require prior review and approval by the
Department.


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ARTICLE IX


IX. REMEDIES FOR VIOLATION, BREACH, OR NON-PERFORMANCE OF CONTRACT

A. Suspension of New Enrollment

Whenever the Department determines that the HMO is out of
compliance with this Contract, the Department may suspend the
HMO's right to receive new enrollment under this Contract. The
Department, when exercising this option, must notify the HMO in
writing of its intent to suspend new enrollment at least 30 days
prior to the beginning of the suspension period. The suspension
will take effect if the non-compliance remains uncorrected at the
end of this period. The Department may suspend new enrollment
sooner than the time period specified in this paragraph if the
Department finds that enrollee health or welfare is jeopardized.
The suspension period may be for any length of time specified by
the Department, or may be indefinite. The suspension period may
extend up to the expiration of the Contract as provided under
Article XV.

The Department may also notify enrollees of HMO non-compliance
and provide an opportunity to enroll in another HMO.

B. Department-Initiated Enrollment Reductions

The Department may reduce the maximum enrollment level and/or
number of current enrollees whenever it determines that the HMO
has failed to provide one or more of the contract services
required under Article III or that the HMO has failed to maintain
or make available any records or reports required under this
Contract which the Department needs to determine whether the HMO
is providing contract services as required under Article III. The
HMO shall be given at least 30 days to correct the non-compliance
prior to the Department taking any action set forth in this
paragraph. The Department may reduce enrollment sooner than the
time period specified in this paragraph if the Department finds
that enrollee health or welfare is jeopardized.

C. Other Enrollment Reductions

The Department may also suspend new enrollment or disenroll
enrollees in anticipation of the HMO not being able to comply
with federal or state law at its current enrollment level. Such
suspension shall not be subject to the 30 day notification
requirement.


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D. Withholding of Capitation Payments and Orders to Provide Services

Notwithstanding the provisions of Article V, the Department may
withhold portions of capitation payments as liquidated damages or
otherwise recover damages from the HMO on the following grounds:

1. Whenever the Department determines that the HMO has failed
to provide one or more of the medically necessary Medicaid
covered contract services required under Article III, the
Department may either order the HMO to provide such service,
or withhold a portion of the HMO's capitation payments for
the following month or subsequent months, such portion
withheld to be equal to the amount of money the Department
must pay to provide such services.

If the Department orders the HMO to provide services under
this section and the HMO fails to provide the services
within the timeline specified by the Department, the
Department may withhold an amount up to 150 percent of the
fee-for-service amount for such services from the HMO's
capitation payments.

When it withholds payments under this section, the
Department must submit to the HMO a list of the participants
for whom payments are being withheld, the nature of the
service(s) denied, and payments the Department must make to
provide medically necessary services.

If the Department acts under this section and subsequently
determines that the services in question were not covered
services:

a. In the event the Department withheld payments it shall
restore to the HMO the full capitation payment, or

b. In the event the Department ordered the HMO to provide
services under this section, it shall pay the HMO the
actual documented cost of providing the services.

2. If the HMO fails to submit required data and/or information
to the Department or the Department's authorized agents, or
fails to submit such data or information in the required
form or format, by the deadline specified by the Department,
the Department may immediately impose liquidated damages in
the amount of $1,500 per day for each day beyond the
deadline that the HMO fails to submit the data or fails to
submit the data in the required form or format, such
liquidated damages to be deducted from the HMO's capitation
payments.


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3. If the HMO fails to submit State and Federal reporting and
compliance requirements for abortions, hysterectomies and
sterilizations, the Department may impose liquidated damages
in the amount of $10,000 per reporting period.

4. If the HMO fails to correct an error to the encounter
record within the timeframe specified, the Department may
assess liquidated damages of $5 per erred encounter record
per month until the error has been corrected. The liquidated
damage amount will be deducted from the HMO's capitation
payment. When applied, these liquidated damages will be
calculated and assessed on a monthly basis.

If upon audit or review, the Department finds that the HMO
has, without Department approval, removed an erred encounter
record, the Department may assess liquidated damages for
each day from the date of original error notification until
the date of correction.

The term "erred encounter record" means an encounter record
that has failed an edit when a correction is expected by the
Department.

The following criteria will be used prior to assessing
liquidated damages:

. The Department will calculate a percentage rate by
dividing the number of erred records not corrected
within 90 days (numerator), by the total number of
records in error (denominator) and multiply the result
by 100.

. Records failing non-critical edits, as defined in the
Wisconsin Medicaid/BadgerCare HMO 2000-2001 Encounter
Data User Manual, will not be included in the
numerator.

. If this rate is 2 percent or less, liquidated damages
will not be assessed.

. The Department will calculate this rate each month.

5. Whenever the Department determines that the HMO has failed
to perform an administrative function required under this
Contract, the Department may withhold a portion of future
capitation payments. For the purposes of this section,
"administrative function" is defined as any contract
obligation other than the actual provision of contract
services. The amount withheld by the Department under this
section will be an amount that the Department determines in
the reasonable exercise of its discretion to approximate the
cost to the Department to perform the


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function. The Department may increase these amounts by 50
percent for each subsequent non-compliance.

Whenever the Department determines that the HMO has failed
to perform the administrative functions defined in Article
V. H. (1) and (2), the Department may withhold a portion of
future capitation payments sufficient to directly compensate
the Department for the Medicaid/BadgerCare program's costs
of providing health care services and items to individuals
insured by said insurers and/or the insurers/employers
represented by said third party administrators.

6. In any case under this Contract where the Department has the
authority to withhold capitation payments, the Department
also has the authority to use all other legal processes for
the recovery of damages.

7. Notwithstanding the provisions of this subsection, in any
case where the Department deducts a portion of capitation
payments under subsection (2) above, the following
procedures shall be used:

a. The Department will notify the HMO's contract
administrator no later than the second business day
after Department's deadline that the HMO has failed to
submit the required data or the required data cannot be
processed.

b. The HMO will be subject to liquidated damages without
further notification per submission, per data file or
report, beginning on the second business day after the
Department's deadline.

c. If the late submission of data is for encounter data,
and the HMO responds with a submission of the data
within five (5) business days from the deadline, the
Department will rescind liquidated damages if the data
can be processed according to the criteria published in
the Wisconsin Medicaid/BadgerCare HMO 2000-2001
Encounter Data User Manual. The Department will not
edit the data until the process period in the
subsequent month.

d. If the late submission is for any other required data
or report, and the HMO responds with a submission of
the data in the required format within five (5)
business days from the deadline, the Department will
rescind liquidated damages and immediately process the
data or report.


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e. If the HMO repeatedly fails to submit required data or
reports, or data that cannot be processed, the
Department will require the HMO to develop an action
plan to comply with the contract requirements that must
meet Department approval.

f. If the HMO, after a corrective action plan has been
implemented, continues to submit data beyond the
deadline, or continues to submit data that cannot be
processed, the Department will invoke the remedies
under Article IX, section A (SUSPENSION OF NEW
ENROLLMENT), from section B (DEPARTMENT-INITIATED
ENROLLMENT REDUCTIONS), or both, in addition to
liquidated damages that may have been imposed for a
current violation.

g. If an HMO notifies the Department it is discontinuing
contracting with the Department at the end of a
contract period, but reports or data are due for a
contract period, the Department retains the right to
withhold up to two months of capitation payments
otherwise due the HMO which will not be released to
the HMO until all required reports or data are
submitted and accepted after expiration of the
contract. Upon determination by the Department that the
reports and data are accepted, the Department will
release the monies withheld.

E. Inappropriate Payment Denials

HMOs that inappropriately fail to provide or deny payments for
services may be subject to suspension of new enrollments, withholding,
in full or in part, of capitation payments, contract termination, or
refusal to contract in a future time period, as determined by the
Department. The Department will select among these sanctions based
upon the nature of the services in question, whether the failure or
denial was an isolated instance or a repeated pattern or practice, and
whether the health of an enrollee was injured, threatened or
jeopardized by the failure or denial. This applies not only to cases
where the Department has ordered payment after appeal, but also to
cases where no appeal has been made (i.e., the Department is
knowledgeable about the documented abuse from other sources).

F. Sanctions

Section 1903(m)(5)(B)(ii) of the Social Security Act vests the
Secretary of the Department of Health and Human Services with the
authority to deny Medicaid payments to an HMO for enrollees who enroll
after the date on which the HMO has been found to have committed one
of the violations identified in the federal law. State payments for
enrollees of the contracting organization are


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automatically denied whenever, and for so long as, Federal payment for
such enrollees has been denied as a result of the commission of such
violations.

G. Sanctions and Remedial Actions

The Department may pursue all sanctions and remedial actions with
HMOs that are taken with Medicaid fee-for-service providers,
including any civil penalties not to exceed the amounts specified in
the Balanced Budget Amendment of 1997 P.L. 105-33 Sec. 4707(a) [42
U.S.C. 1396v(d)(2)].


ARTICLE X


X. TERMINATION AND MODIFICATION OF CONTRACT

A. Mutual Consent

This Contract may be terminated at any time by mutual written
agreement of both the HMO and the Department.

B. Unilateral Termination

This Contract between the parties may be terminated only as
follows:

1. This Contract may be terminated at any time, by either
party, due to modifications mandated by changes in Federal
or State laws, rules or regulations, that materially affect
either party's rights or responsibilities under this
Contract. In such case, the party initiating such
termination procedures must notify the other party, at least
90 days prior to the proposed date of termination, of its
intent to terminate this Contract. Termination by the
Department under these circumstances shall impose an
obligation upon the Department to pay the Contractor's
reasonable and necessarily incurred termination expenses.

2. This Contract may be terminated by either party at any time
if it determines that the other party has substantially
failed to perform any of its functions or duties under this
Contract. In such event, the party exercising this option
must notify the other party, in writing, of this intent to
terminate this Contract and give the other party 30 days to
correct the identified violation, breach or non-performance
of Contract. If such violation, breach or non-performance of
Contract is not satisfactorily addressed within this time
period, the exercising party may terminate this Contract.
The termination date shall always be the last day of a
month. The Contract may be terminated by the Department
sooner than the time period specified in this paragraph if
the Department


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finds that enrollee health or welfare is jeopardized by
continued enrollment in the HMO. A "substantial failure to
perform" for purposes of this paragraph includes any
violation of any requirement of this Contract that is
repeated or ongoing, that goes to the essentials or purpose
of the Contract, or that injures, jeopardizes or threatens
the health, safety, welfare, rights or other interests of
enrollees.

3. By either party, in the event Federal or State funding of
contractual services rendered by the Contractor become or
will become permanently unavailable. In the event it becomes
evident State or Federal funding of claims payments or
contractual services rendered by the Contractor will be
temporarily suspended or unavailable, the Department shall
immediately notify the Contractor, in writing, identifying
the basis for the anticipated unavailability or suspension
of funding. Upon such notice, the Department or the
Contractor may suspend performance of any or all of the
Contractor's obligations under this Contract if the
suspension or unavailability of funding will preclude
reimbursement for performance of those obligations. The
Department or Contractor shall attempt to give notice of
suspension of performance of any or all of the Contractor's
obligations by 60 calendar days prior to said suspension, if
this is possible; otherwise, such notice of suspension
should be made as soon as possible. In the event funding
temporarily suspended or unavailable is reinstated, the
Contractor may remove suspension hereunder by written notice
to the Department, to be made within 30 calendar days from
the date the funds are reinstated. In the event the
Contractor elects not to reinstate services, the Contractor
shall give the Department written notice of its reasons for
such decision, to be made within 30 calendar days from the
date the funds are reinstated. The Contractor shall make
such decision in good faith and will provide to the
Department documentation supporting its decision. In the
event of termination under this Section, this Contract shall
terminate without termination costs to either party.

C. Obligations of Contracting Parties

When termination of the Contract occurs, the following obligations
shall be met by the parties:

1. Where this Contract is terminated unilaterally by the Department,
due to non-performance by the HMO or by mutual consent with
termination initiated by the HMO:

a. The Department shall be responsible for notifying all
enrollees of the date of termination and process by which
the enrollees will continue to receive contract services;
and


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b. The HMO shall be responsible for all expenses related to
said notification.

2. Where this Contract is terminated on any basis not given in (1)
above:

a. The Department shall be responsible for notifying all
enrollees of the date of termination and process by which
the enrollees will continue to receive contract services;
and

b. The Department shall be responsible for all expenses
relating to said notification.

3. Where this Contract is terminated for any reason:

a. Any payments advanced to the HMO for coverage of enrollees
for periods after the date of termination shall be returned
to the Department within the period of time specified by the
Department; and

b. The HMO shall supply all information necessary for the
reimbursement of any outstanding Medicaid/BadgerCare claims
within the period of time specified by the Department.

4. If a contract is terminated, recoupments will be handled through
a payment by the HMO within 90 days of contract termination.

D. Modification

This Contract may be modified at any time by written mutual consent of
the HMO and the Department or when modifications are mandated by
changes in Federal or State laws, rules or regulations. In the event
that changes in State or Federal law, rule or regulation require the
Department to modify its contract with the HMO, notice shall be made
to the HMO in writing. However, the capitation rate to the HMO can be
modified only as provided in Article V relating to RENEGOTIATION.

If the Department exercises its right to renew this Contract, as
allowed by Article XV, the Department will recalculate the capitation
rate for succeeding calendar years. The HMO will have 30 days to
accept the new capitation rate in writing or to initiate termination
of the Contract. If the Department changes the reporting requirements
during the contract period, the HMO shall have 180 days to comply
with such changes or to initiate termination of the Contract.


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ARTICLE XI


XI. INTERPRETATION OF CONTRACT LANGUAGE

A. Interpretations

The Department has the right to final interpretation of the
contract language when disputes arise. The HMO has the right to
appeal to the Department or invoke the procedures outlined in
Chapter 788, Wis. Stats. if it disagrees with the Department's
decision. Until a decision is reached, the HMO shall abide by the
interpretation of the Department.


ARTICLE XII


XIII. CONFIDENTIALITY OF RECORDS

A. The parties agree that all information, records, and data
collected in connection with this Contract shall be protected
from unauthorized disclosure as provided in Chapter 19,
Subchapter II, Wis. Stats., HFS 108.01, Wis. Admin. Code, and 42
CFR 431 Subpart F. Except as otherwise required by law, rule or
regulation, access to such information shall be limited by the
HMO and the Department to persons who, or agencies which, require
the information in order to perform their duties related to this
Contract, including the U.S. Department of Health and Human
Services and such others as may be required by the Department.

B. The HMO agrees to forward to the Department all media contacts
regarding Medicaid/BadgerCare enrollees or the
Medicaid/BadgerCare program.


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ARTICLE XIII


XIII. DOCUMENTS CONSTITUTING CONTRACT

A. Current Documents

The contract between the parties to this Contract shall include,
in addition to this document, existing Medicaid Provider
Publications addressed to HMOs, the terms of the most recent HMO
Certification Application issued by this Department for
Medicaid/BadgerCare HMO Contracts, any Questions and Answers
released pursuant to said HMO Certification Application by this
Department, and an HMO's signed application. The terms of the HMO
Certification Application are also part of this Contract even if
the HMO had a Medicaid/BadgerCare HMO Contract in the prior
contract period and consequently did not have to answer all the
questions in the HMO Certification Application. In the event of
any conflict in provisions among these documents, the terms of
this Contract shall prevail. The provisions in any Question and
Answer Document shall prevail over the HMO Certification
Application. And the HMO Certification Application terms shall
prevail over any conflict with an HMO's actual signed
application. In addition, the Contract shall incorporate the
following Addenda:

I. Subcontracts and Memoranda of Understanding

II. Policy Guidelines for Mental Health/Substance Abuse
and Community Human Service Programs

III. Risk-Sharing for Inpatient Hospital Services (if the
HMO has elected to risk-share with the Department)

IV. Contract Specified Reporting Requirements

V. Standard Enrollee Handbook Language

VI. COB Report Format

VII. Actuarial Basis

VIII. Compliance Agreement: Affirmative Action/Civil Rights

IX. Model MOU for Prenatal Care Coordination

X. Bureau of Milwaukee Child Welfare MOU

XI. HealthCheck Worksheet

XII. Common Carrier Transportation MOU for Milwaukee
County

XIII. Model MOU for School Districts or CESAs

XIV. Guidelines for Coordination of Services between HMOs,
Targeted Case Management Agencies, and Child Welfare
Agencies


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XV. Performance Improvement Project Outline

XVI. Targeted Performance Improvement Measures Data Set

XVII. Medicaid/BC HMO Newborn Report

XVIII. Recommended Childhood Immunization Schedule

XIX. Reporting Requirements for NICU Risk-Sharing

XX. Specific Terms of the Medicaid/BC HMO Contract

XXI. Formal Grievance Experience Summary Report

XXII. Guidelines for the Coordination of Services Between
Medicaid HMOs and County Birth to Three (B-3)
Agencies

XXIII. Wisconsin Medicaid HMO Report on Average Birth Cost
by County

XXIV. Local Health Departments and Community-Based Health
Organizations - A Resource for HMOs

XXV. General Information About the WIC Program, Sample
HMO-to-WIC Referral Form, and Statewide List of WIC
Agencies


B. Future Documents

The HMO is required, by this Contract, to comply with all future
Medicaid Provider Publications addressed to the HMOs and Contract
Interpretation Bulletins issued pursuant to this Contract.

C. The documents listed above constitute the entire Contract between the
parties and no other expression, whether oral or written, constitutes
any part of this Contract.


ARTICLE XIV


XIV. MISCELLANEOUS

A. Indemnification

The HMO agrees to defend, indemnify and hold the Department harmless,
with respect to any and all claims, costs, damages and expenses,
including reasonable attorney's fees, which are related to or arise
out of:

1. Any failure, inability, or refusal of the HMO or any of its
subcontractors to provide contract services;


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2. The negligent provision of contract services by the HMO or
any of its subcontractors; or

3. Any failure, inability or refusal of the HMO to pay any of
its subcontractors for contract services.

B. Independent Capacity of Contractor

Department and HMO agree that HMO and any agents or employees of HMO,
in the performance of this Contract, shall act in an independent
capacity, and not as officers or employees of Department.

C. Omissions

In the event that either party hereto discovers any material omission
in the provisions of this Contract which such party believes is
essential to the successful performance of this Contract, said party
may so inform the other party in writing, and the parties hereto shall
thereafter promptly negotiate in good faith with respect to such
matters for the purpose of making such reasonable adjustments as may
be necessary to perform the objectives of this Contract.

D. Choice of Law

This Contract shall be governed by and construed in accordance with
the laws of the State of Wisconsin. HMO shall be required to bring all
legal proceedings against Department in Wisconsin State courts.

E. Waiver

No delay or failure by either party hereto to exercise any right or
power accruing upon noncompliance or default by the other party with
respect to any of the terms of this Contract shall impair such right
or power or be construed to be a waiver thereof. A waiver by either of
the parties hereto of a breach of any of the covenants, conditions, or
agreements to be performed by the other shall not be construed to be a
waiver of any succeeding breach thereof or of any other covenant,
condition, or agreement herein contained.

F. Severability

If any provision of this Contract is declared or found to be illegal,
unenforceable, invalid or void, then both parties shall be relieved of
all obligations arising under such provision; but if such provision
does not relate to payments or services to Medicaid/BadgerCare
enrollees and if the remainder of this Contract shall not be affected
by such declaration or finding, then each

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provision not so affected shall be enforced to the fullest extent
permitted by law.

G. Force Majeure

Both parties shall be excused from performance hereunder for any
period that they are prevented from meeting the terms of this Contract
as a result of a catastrophic occurrence or natural disaster including
but not limited to an act of war, and excluding labor disputes.

H. Headings

The article and section headings used herein are for reference and
convenience only and shall not enter into the interpretation hereof.

I. Assignability

Except as allowed under subcontracting, the Contract is not assignable
by the HMO either in whole or in part, without the prior written
consent of the Department.

J. Right to Publish

The Department agrees to allow the HMO to write and have such writing
published provided the HMO receives prior written approval from the
Department before publishing writings on subjects associated with the
work under this Contract.

K. Year 2000 Compliance

Contractor warrants that:


1. All computer hardware, software or processes that we use in
administering this contract have been tested for and will be
fully Year 2000 compliant, which means they are capable of
correctly and consistently handling all date-based functions
before, during and after the Year 2000;

2. The date change from 1999 to 2000, or any other date changes,
will not prevent goods, services or licenses from operating in a
merchantable manner, for the purposes intended and is accordance
with all applicable plans and specifications and without
interruption before, during and after the Year 2000;

3. Contractor's internal systems will be Year 2000 compliant, such
that Contractor will be able to deliver goods, services and
licenses as required by this contract.


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Contractor will not be held responsible for its failure to comply
with this Year 2000 standard if such noncompliance results
directly or indirectly from invalid or noncompliant information
and/or data furnished to it by the Department or its
representatives, agents, affiliates or subcontractors.

In addition, the Contractor shall develop a written contingency
plan which will ensure the protection of the health and safety of
its clients and the ability to meet its contract obligations in
the event that the Contractor experiences failures attributable
to the date change from 1999 to 2000, or any other date change.


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ARTICLE XV


XV. HMO SPECIFIC CONTRACT TERMS

A. Initial Contract Period

The respective rights and obligations of the parties as set forth
in this Contract shall commence on January 1, 2000, and, unless
earlier terminated under Article X, shall remain in full force
and effect through December 31, 2001. The specific terms for
enrollment, rates, risk-sharing, dental coverage, and
chiropractic coverage are as specified in C.

B. Renewals

By mutual written agreement of the parties, there may be one (1)
one-year renewal of the term of the Contract. An agreement to
renew must be effected at least forty-five (45) calendar days
prior to the expiration date of any contract term. The terms and
conditions of the Contract shall remain in full force and effect
throughout any renewal period, unless modified under the
provision of Article X., Section D.

C. Specific Terms of the Contract

The specific terms of the Medicaid/BadgerCare HMO Contract that
the HMO is agreeing to are indicated by the Department in a
completed Addendum XX - Specific Terms of the Medicaid/BadgerCare
HMO Contract. These specific terms include the following items:
the service area to be covered; and, whether dental services and
chiropractic services will be provided by the HMO and the HMO's
maximum enrollment level for each area; finally, whether the HMO,
on a State-wide basis, will participate or not participate in
risk-sharing under Addendum III. The Department has completed
Addendum XX based on the information supplied the Department by
the HMO in the HMO Certification Application.

In WITNESS WHEREOF, the State of Wisconsin has executed this
agreement:

Managed Health Services
--------------------------------------------------------------------------------
(Name of HMO) State of Wisconsin
================================================================================
Official Signature Official Signature

/s/ ILLEGIBLE /s/ ILLEGIBLE
--------------------------------------------------------------------------------
Title Title
President and CEO Deputy Administrator
--------------------------------------------------------------------------------
Date 3/29/00 9/19/00
--------------------------------------------------------------------------------


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Note: The following subcontract with the Department for Chiropractic Services is
not effective unless signed below.

SUBCONTRACT FOR CHIROPRACTIC SERVICES

A. THIS AGREEMENT is made and entered into by and between the HMO and the
Department of Health and Family Services.

The parties agree as follows:

1. The Department agrees to be at risk for and pay claims for
chiropractic services covered under this Contract.

2. The HMO agrees to a deduction from the capitation rate of an amount of
money based on the cost of chiropractic services. This deduction is
reflected in the Contract that is being signed on the same date.

B. This is the only subcontract for services that the Department is entering
into with the HMO.

C. The provisions of the Contract regarding subcontracts, in Addendum I, do
not apply to this subcontract.

D. The term of this subcontract is for the same period as the Contract between
HMO and Department for medical services.

Signed: /s/ ILLEGIBLE /s/ ILLEGIBLE

FOR FOR
HMO: Managed Health Services STATE: State of Wisconsin
------------------------------- -----------------------------

TITLE: President and CEO TITLE: Deputy Administrator
----------------------------- -----------------------------

DATE: 3/29/00 DATE: 9/19/00
------------------------------ ------------------------------

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