H259 - 2023 Appropriations Act. (SL 2023-134)

Overview: Section 9G.7A of S.L. 2023-134 makes updates to various statutes governing the Department of Health and Human Services’ (DHHS’s) oversight of local management entity/managed care organizations (LME/MCOs), as follows:

• Requires the Secretary of DHHS (Secretary) to reduce the number of LME/MCOs from 6 to either 5 or 4 within 90 days after the budget becomes law, to achieve compliance with an increased minimum population threshold for LME/MCOs. The Secretary is authorized to achieve this reduction by the dissolution, merger, or consolidation of existing LME/MCOs. (Section 9G.7A(a20))
• Reorganizes and amends numerous laws pertaining to dissolutions of LME/MCOs and other mergers and consolidations of LME/MCOs. (Sections 9G.7A(a1)-(a19)) Under the amended statutes, this section of the act does the following:
  • Requires that, when a Tailored Plan contract with that LME/MCO is terminated, the Secretary must dissolve the LME/MCO and reassign the LME/MCO’s Tailored Plan contract and State-funded services contract.
  • Requires that, when assigning an LME/MCO contract that has been terminated and when approving an LME/MCO merger or consolidation, the Secretary must consider specified factors including readiness, historical performance, statewide distribution of covered lives, network adequacy, county input, and geographical contiguity of counties.
  • Updates the statutory solvency standards for LME/MCOs by replacing the statutory formula with a requirement that LME/MCO contracts contain contractual solvency standards based on industry-standard financial accounting measures and require corrective action plans for noncompliant LME/MCOs.
• Limits the time period when counties can request the Secretary’s approval of a realignment with another LME/MCO to the six-month period prior to each rebidding of the Tailored Plan contracts and create a statutory process for counties to formally raise performance concerns about their LME/MCO. DHHS must evaluate concerns raised through the formal process and, if the concern is valid, must take appropriate action under the terms of DHHS’s contract with the LME/MCO, including imposing sanctions or terminating the contract. (Sections 9G.7A(b1)-(b4))
• Requires LME/MCOs to cancel subcontracts, or direct the removal of staff from subcontracts, when directed by DHHS to achieve compliance with contractual or legal requirements. (Sections 9G.7A(c1)-(c6))
• Enables the Secretary to discharge, without being subject to appeal at the Office of Administrative Hearings, key personnel of an LME/MCO for failure to substantially comply with the role description for the key personnel in the LME/MCO’s contract with DHHS. (Sections 9G.7A(d1)-(d4))

This section of the act became effective October 3, 2023.