Medicare duals capitated integration MOU

Coverage, Eligibility, Payment, and Quality Requirements

inv-01: Eligibility, Exclusions, and Enrollment

Eligibility and enrollment criteria for participation in the Demonstration include:

ALL of the following

ALL of the following
- Age 21 or older at time of enrollment
- Entitled to Medicare Part A and enrolled in Medicare Parts B and D
- Receiving full Medicaid (Medi‑Cal) benefits

Residency and geographic limits

Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, or Santa Clara counties
Special rural zip code exceptions (listed San Bernardino, Los Angeles, Riverside zip codes) — eligibility depends on zip code lists in MOU

ALL of the following

Excluded populations
- Individuals under age 21
- Individuals with other private or public comprehensive health insurance
- Individuals enrolled in regional centers, state developmental centers, or intermediate care facilities for the developmentally disabled
- Individuals residing in Veterans' Homes of California
- Individuals in specified 1915(c) waiver programs (certain waivers) unless disenrolled from that program
- Certain rural zip code residents excluded as specified

ALL of the following

Eligible individuals will be notified of their right to select a Participating Plan at least 60 days prior to the effective enrollment date
Passive enrollment (seamless enrollment) may be used when no active choice is made; beneficiaries may opt out up until the last day of the month prior to the effective date
Passive enrollment effective no sooner than 60 days after beneficiary notification; state will provide informational and reminder notices per Appendix 7

ALL of the following

All enrollment effective dates are prospective; beneficiary‑elected enrollment effective first day of month following request
Disenrollment and transfers allowed month‑to‑month and effective first day of following month
State/CMS will monitor enrollment and may suspend passive enrollment for inappropriate shifts or marketing concerns

ALL of the following

Certain groups may enroll only after disenrolling from other specific programs (e.g., PACE, certain 1915(c) waivers) or are subject to county‑specific rules
Los Angeles enrollment may be capped (up to 200,000 individuals) and phased per MOU

ALL of the following

Beneficiaries retain right to opt out and to appeal per existing Medicare/Medi‑Cal processes (see Appeals section); notices and opt‑out windows provided as required

inv-02: Coverage and beneficiary protections

Coverage stance and beneficiary protections under the Demonstration include provision of Medicare and Medicaid covered benefits, prohibitions, and protections:

ALL of the following

Participating Plans must provide the full continuum of Medicare and Medicaid covered services either directly or via subcontract consistent with 42 CFR 422, 423, and 438 and applicable State plan/waiver requirements
Where Medicare and Medi‑Cal overlap, the more generous standard applies; integrated benefit package may include additional benefits beyond statutory coverage

ALL of the following

Participating Plans will not charge Medicare Part C or D premiums or cost sharing for Medicare Parts A and B services; plans will not assess cost sharing for Medi‑Cal services
No enrollee may be balance billed for covered services

inv-03: Beneficiary protections, operational and phase-out criteria

Beneficiary protections, operational safeguards, and phase‑out obligations for Participating Plans and the State include:

ALL of the following

Ensure medically necessary covered benefits are provided consistent with Medicare and Medi‑Cal protections and provided in least restrictive/community settings when appropriate
Provide culturally and linguistically appropriate services, accessible materials, and adequate customer service staffing
Maintain privacy and security of enrollee health records and provide enrollee access per law/contract

ALL of the following

Participating Plans must allow enrollees to maintain current providers/service authorizations for specified periods when continuity criteria met (e.g., up to 6 months Medicare, up to 12 months Medi‑Cal where applicable) and perform assessment within 90 days to identify existing providers

inv-04: Payment and coverage criteria for Demonstration rates

Payment rate construction and application of savings percentages for the integrated capitation payment:

ALL of the following

Baseline spending includes Medicaid, Medicare Parts A & B, and Medicare Part D (Part D NAMBA used for direct subsidy; CY2013 NAMBA = $79.64)
Savings percentages applied to Medicare Parts A & B and Medicaid components only (minimum aggregate savings: Year1=1%, Year2=2%, Year3=4%); Part D excluded from savings application but monitored

ALL of the following

State establishes actuarially sound Medicaid capitation rates per 42 CFR 438.6(c); these serve as Medicaid baseline and will be adjusted by savings percentages; State provides underlying rate data to CMS upon request

ALL of the following

inv-05: Medicaid Risk Adjustment Phases and Computation

Medicaid risk adjustment methodology and phased rate determination process:

ALL of the following

Risk adjustment administered by county in three phases to address enrollment stability and incentives to serve beneficiaries in HCBS settings

Phase I: Apply risk adjustment monthly and retroactively to match actual enrollment during county phase‑in for minimum of one year; ends at start of next fiscal quarter; San Mateo has no Phase I

Phase II: Prospectively applied for one fiscal quarter using preceding‑month enrollment snapshot retroactively applied; San Mateo enters Phase II immediately with tailored timeline

Phase III: Rates based on targeted relative mix for the year and not adjusted during the year; State projects achievable targeted mix; if plan mix causes >2.5% impact to Medicaid component, plan and Medicaid share equally beyond 2.5%

inv-06: Quality Withhold Criteria

Quality withhold structure, measures, and evaluation/payment rules:

ALL of the following

Both payers withhold a percentage of their respective Medicaid and Medicare A/B capitation components; withheld amounts repaid based on plan performance against quality thresholds
Withhold amounts: Demonstration Year 1 = 1% (based on core measures); Year 2 = 2%; Year 3 = 3%

Year 1 core measures: Core measures used for Year 1 1% withhold include encounter data compliance, initial health assessments within 90 days, establishment of beneficiary governance board, CAHPS 'Getting Appointments and Care Quickly', customer service (CY2014 only), behavioral health shared accountability process measures (Phase A/B), documentation of care goals, physical access compliance, and case manager contact

Years 2–3 core measures: Years 2 and 3 measures include plan all‑cause readmissions, annual flu vaccine, follow‑up after hospitalization for mental illness, depression screening and follow‑up, reducing risk of falling, controlling blood pressure, Part D medication adherence for oral diabetes meds, behavioral health outcome (ED use reduction for SMI/SUD), documentation of care goals, and case manager contact

inv-07: Risk Mitigation

Risk mitigation and reconciliation basics for plan payments:

ALL of the following

Part D cost reconciliation continues unchanged under Demonstration; CMS will monitor Part D costs and material increases may affect future savings percentages

ALL of the following

Limited down‑side and up‑side risk corridors apply to Medicare A/B and Medicaid eligible costs (excluding Part D); corridors reconciled after risk adjustment and as if full quality withhold paid

ALL of the following

If plan costs exceed the initial capitation rates (excluding Part D), Medicare and Medicaid will reimburse the Prime Contractor Plan 67% of excess costs, provided total payments do not exceed amounts that would have been paid under minimum savings percentages; reconciled contributions proportional to their share of initial capitation (excluding Part D)

ALL of the following

inv-08: Plan selection, enrollment, and care coordination criteria

Plan selection, enrollment operations, and care coordination expectations:

ALL of the following

Applicants must hold Knox‑Keene license or be a county organized health system; be in good financial standing with DMHC; have D‑SNP experience or commit to meet D‑SNP requirements; hold current Medi‑Cal contract; disclose sanctions; not be under CMS sanction in CA; achieve NCQA accreditation by end of year 3; provide complete encounter data; comply with disability accessibility and civil rights laws; establish local stakeholder process

ALL of the following

Enrollment effective dates are prospective; beneficiary‑elected enrollment effective first day of month following request; passive enrollment effective no sooner than 60 days after notice; Participating Plans accept enrollments beginning no earlier than Aug 1, 2013 for Oct 1, 2013 effective start; dis/enrollment processed via MEDS and MARx as specified

ALL of the following

Three‑notice approach (informational 90 days prior, identification 60 days prior with enrollment packet, reminder 30 days prior); materials written at sixth‑grade reading level and in threshold languages; intelligent assignment to prioritize continuity of care in multiple package counties

inv-09: Behavioral health coverage responsibilities

Behavioral health coverage responsibilities, exclusions, and county coordination expectations:

ALL of the following

Participating Plans responsible for Medicare and Medicaid mental health and substance use benefits except those county‑administered specialty mental health and Drug Medi‑Cal services listed in the MOU table; Prime Contractor Plans must coordinate with county agencies to provide seamless access for individuals meeting medical necessity

ALL of the following

Participating Plans must execute Behavioral Health MOUs with county agencies describing administrative responsibilities, points of contact, information exchange processes, annual review and evaluation procedures, and how medical necessity determinations will follow Title 9 (specialty mental health) and Title 22 (Drug Medi‑Cal) rules

ALL of the following

Medical necessity for specialty mental health determined per Title 9 CCR (diagnosis, impairment, intervention) and for Drug Medi‑Cal services per Title 22 CCR; listed county‑administered services are financed/administered by counties and excluded from capitation

inv-10: Network adequacy and contracting

Network adequacy and provider contracting requirements:

ALL of the following

Participating Plans must contract with a sufficient number of providers meeting state and Federal laws, maintain provider listings including new patient availability, and ensure access to specialists, hospitals, LTSS, and accessible facilities
For services where Medicare standards are more stringent, Medicare requirements apply; Medi‑Cal standards apply for LTSS where exclusive

ALL of the following

Plans must contract with safety net and traditional providers, contract with all MSSP organizations and willing CBAS centers in covered zip codes, and meet CBAS maximum 60‑minute drive time standard unless documented exception

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inv-11: IHSS coordination and responsibilities

IHSS coordination and responsibilities within the integrated model:

ALL of the following

Participating Plans shall ensure access to IHSS, assume financial liability for payment of IHSS services for enrollees, and maintain enrollees' employer rights for IHSS (selection, supervision, termination of providers)

ALL of the following

Prime Contractor Plans must enter MOUs with counties to coordinate IHSS assessments, provider enrollment, background checks, registries, payroll and related functions; counties retain statutorily defined functions per Welfare & Institutions Code

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inv-12: Credentialing standards

Credentialing and provider qualification expectations:

ALL of the following

All providers of covered services must be appropriately licensed, certified or registered, in good standing with Medicare and Medicaid/Medi‑Cal, and have a valid NPI; providers terminated from Medicare or Medicaid/Medi‑Cal cannot participate

ALL of the following

Contracted laboratory testing sites must have a CLIA certificate or waiver and CLIA identification number

ALL of the following

Participating Plans shall develop written policies/procedures for initial credentialing, recredentialing, recertification, and reappointment consistent with DHCS Policy Letter 0203 and 42 CFR 422.204; plans may delegate per state rules and may use NCQA deeming where applicable

inv-13: Coverage criteria and benefit requirements

Coverage criteria and required benefit components of the integrated package (with exceptions):

ALL of the following

Participating Plans must include all Medicare and Medi‑Cal covered benefits in the integrated package and abide by the more generous of Medicare and Medi‑Cal standards where they overlap

ALL of the following

Durable Medical Equipment (DME) covered per Medi‑Cal rules unless Medicare provides greater access
Dental and vision: preventive, restorative, and emergency benefits required
Transportation: non‑emergency accessible medical transportation required in sufficient supply for timely access

inv-14: Appeals Criteria and Pathways

Appeals timing, pathways, and rules for overlapping services and exhaustion requirements:

ALL of the following

During Year 1 no changes to existing appeals processes; initial appeals (excluding county‑administered IHSS or behavioral health) filed to health plan within 90 days; Medi‑Cal appeals within 90 days of NOA or via State Fair Hearing

ALL of the following

For Medicare, second‑level appeals forwarded to IRE if plan upholds denial; third‑level Medicare appeals to OMHA. For Medi‑Cal, IMR available for certain appeals after plan process; State Fair Hearings remain available for Medi‑Cal benefits per rules

ALL of the following

Services overlapping Medicare and Medicaid will have unified definitions in the three‑way contract; appeals for overlapping benefits start with the health plan and may proceed to IMR or IRE; IMR decisions may be appealed to State Fair Hearing

inv-15: Marketing and Communications Criteria

Marketing, communications, and enrollee materials standards and timing:

ALL of the following

Participating Plans subject to Medicare marketing rules and specified CFRs; plans must receive prior approval for marketing/enrollee communications categories as required by CMS and the State and submit materials via HPMS Marketing Module (Prime Contractors responsible for subcontractor materials)

ALL of the following

Plans may begin marketing no earlier than 90 days prior to the effective enrollment date

ALL of the following

Required materials include Evidence of Coverage (including State‑covered supplemental benefits), Annual Notice of Change starting year 2, Summary of Benefits, combined provider/pharmacy directory, integrated formulary, single ID card, and Part D required notices (with specified exceptions)

inv-16: Oversight and Operational Criteria

Oversight, contract management, call center, and data reporting obligations:

ALL of the following

A CMS‑State Contract Management Team will ensure access, quality, program integrity, compliance, and solvency; team includes CMS and State representatives and relevant departments and will coordinate monitoring, joint notices of non‑compliance, audits, and corrective actions

ALL of the following

Data reporting to CMS and the State will be coordinated and unified where possible and include quality (HEDIS), rebalancing to HCBS, utilization, encounters, enrollee satisfaction (CAHPS), complaints/appeals, enrollment metrics, Part C/D reporting, and Participating Plan dashboard metrics; detailed reporting processes in three‑way contract

ALL of the following

CMS and State may take immediate action for enrollee health/safety or significant financial risk and must notify a Contract Management Team member within 24 hours; Contract Management Team coordinates subsequent action

inv-17: Quality Metrics and Reporting

Unified quality metrics and reporting obligations for Participating Plans:

ALL of the following

Participating Plans required to report measures across access, care coordination/transitions, health and well‑being, mental/behavioral health, patient‑caregiver experience, screening/prevention, LTSS and quality of life; HEDIS, HOS, CAHPS plus state measures and Part D metrics to be reported consistent with Medicare and State rules

ALL of the following

Examples include Antidepressant Medication Management, Initiation and Engagement of AOD Treatment, Follow‑up After Hospitalization for Mental Illness, Screening for Clinical Depression, SNP structure/process measures (Complex Case Management, Coordination of Medicare and Medicaid Benefits, Care Transitions), Care Transition Record transmission, Medication Reconciliation after Discharge, CAHPS variants, and Part D Call Center/Appeals measures

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inv-18: Quality measurement, data sources, and monitoring

Quality measurement, data sources, and monitoring expectations:

ALL of the following

Enumerates measures across domains including Part D performance, CAHPS domains, HEDIS clinical measures (diabetes, cancer screening, BP control), LTSS and behavioral health measures, and utilization/access measures; specify measure stewards/data sources (CMS CTM, MARx, PDE, AHRQ/CAHPS, NCQA/HEDIS, PQA, NQF, IRE, State measures)

ALL of the following

State and federal oversight includes annual joint financial audit reports by DMHC & DHCS, coordination for monitoring and corrective actions, contracting EQRO to audit quality measures and validate encounter data, and ongoing development/refinement of measures in years two and three

ALL of the following

Behavioral Health Shared Accountability Process has Phase A and Phase B process measures and an outcome measure related to ED use reduction for SMI/SUD enrollees

inv-19: Monitoring and Evaluation Requirements

Monitoring and evaluation requirements including evaluator, EQRO, and data submission obligations:

ALL of the following

DHCS will coordinate with DMHC, DSS, and CMS to monitor Participating Plans and institute corrective action plans when appropriate; DMHC & DHCS will submit annual joint financial audit reports

ALL of the following

State will contract an EQRO to audit participating plans' quality measures and validate encounter data

ALL of the following

CMS‑contracted independent evaluator will design state‑specific evaluation plan using mixed methods, provide quarterly rapid‑cycle monitoring reports and annual state‑specific reports, and a final report at demonstration end

ALL of the following

Referenced Codes, Key Values, and Financial Thresholds

Referenced regulatory frameworksmixed

42 C.F.R. Parts 422, 423	Applicable Medicare Advantage and Part D regulatory citation
42 C.F.R. §438	Applicable Medicaid managed care regulatory citation

Defined terms referenced (no billing codes present)mixed

No codes listed

Baseline code referencesmixed

NAMBA

National average monthly bid amount used as baseline for Part D direct subsidy

Medicare Parts A & B baseline methodologymixed

Medicare MA projected payment rates / Medicare FFS standardized county rates

Blend used to develop baseline PMPM for Parts A and B

Risk adjustment systemsmixed

CMS-HCC	Medicare Parts A and B risk adjustment methodology (including CMS-HCC ESRD)
RxHCC	Part D prescription drug risk adjustment methodology

Enrollment effective date rulesmixed

No codes listed

Provider identifiers and enrollmentmixed

NPI	Providers must have a valid National Provider Identifier

Provider identifiers and lab certificationmixed

NPI	Providers must have a valid National Provider Identifier
CLIA	Contracted laboratory sites must have CLIA certificate or waiver and CLIA ID

Provider identifiers and lab certificationmixed

NPI	Providers must have a valid National Provider Identifier
CLIA	Contracted laboratory sites must have CLIA certificate or waiver and CLIA ID

Administrative coverage materialsmixed

Not applicable; document references inclusion of Medicare/Medicaid provider and pharmacy directories and integrated formulary but does not list billing/coding codes in this section.

Quality measure sourcesmixed

N/A	Multiple quality measures referenced (CAHPS, NCQA/HEDIS, CMS core measures, PQA, IRE, NQF) rather than specific billing codes.

Los Angeles enrollment cap

Los Angeles enrollment capUp to 200,000 individuals may be enrolled in Participating Plans in Los Angeles County; enrollment will be monitored and stopped when cap is reached.

Cap monitoringCMS and the State will monitor enrollment and stop participation when the enrollment cap is met.

Phased approach referenceLos Angeles subject to county-specific phase-in rules described in enrollment/phase-in provisions.

Demonstration geographic coverage

Demonstration counties (8)Alameda; Los Angeles; Orange; Riverside; San Bernardino; San Diego; San Mateo; Santa Clara.

County models notedIncludes Two-Plan Model counties (Alameda, Los Angeles, Riverside, San Bernardino, Santa Clara), COHS (Orange, San Mateo), and Geographic Managed Care (San Diego).

Geographic limitsService area subject to geographic limitations and joint CMS-State readiness review.

Minimum aggregate savings percentages

Minimum aggregate savings — Year 11% minimum savings percentage applied to Medicare Parts A&B and Medicaid components.

Minimum aggregate savings — Year 22% minimum savings percentage applied to Medicare Parts A&B and Medicaid components.

Minimum aggregate savings — Year 34% minimum savings percentage applied to Medicare Parts A&B and Medicaid components.

Minimum savings percentages

Demonstration Year 1Minimum savings percentage = 1.00% applied to Medicare Parts A&B and Medicaid components (Part D not applicable).

Demonstration Year 2Minimum savings percentage = 2.00% applied to Medicare Parts A&B and Medicaid components (Part D not applicable).

Demonstration Year 3Minimum savings percentage = 4.00% applied to Medicare Parts A&B and Medicaid components (Part D not applicable).

Risk corridor bands (percentage thresholds)

Up-side corridor structure — three bandsThe up-side risk corridor contains three bands expressed as a percentage of combined baseline Medicaid and Medicare A/B: first band equals the difference between the minimum savings percentage and the county-specific interim savings (or to a maximum of 1.5% Y1, 3.5% Y2, 5.5% Y3 if equal), second band is the same size as the first, final band is amounts above the second band's upper limit.

First band sharingIn the first band the Prime Contractor Plan retains 100% of the excess savings.

Second band sharingIn the second band Medicare and Medicaid share 50% of plan savings and the Prime Contractor Plan retains the other 50%.

Financial thresholds

Tangible Net Equity (TNE) requirementParticipating Plans must maintain minimum Tangible Net Equity (TNE) as defined by California regulations (net equity reduced by specified intangible assets).

Working capital and insolvency protectionsPlans must demonstrate adequate working capital, positive cash flow projections, and adequate insolvency protection per DMHC/Title 28 requirements.

Insolvency reserve and reserve standardsPlans must meet State-defined Insolvency Reserve and other solvency standards established by DMHC (Title 28 CCR references).

MOC passing threshold

MOC passing thresholdModel of Care (MOC) must achieve a minimum overall score of 70% based on the defined scoring methodology to meet CMS approval.

Approval duration by score bandScores 70–74%: approval for 1 year; 75–84%: approval for 2 years; ≥85%: approval for 3 years.

Elements and factorsMOC comprises 11 elements scored by factors (0–4) with element totals aggregated to determine the overall score.

Formulary change notice

Formulary change advance noticeParticipating Plans must provide at least 60 days advance notice for Part D formulary changes; this 60-day notice requirement also applies to outpatient prescription or over-the-counter drugs or products covered under Medicaid or as supplemental benefits.

Regulatory citationNotice requirement aligns with 42 CFR §423.120(b)(5) as applied to Participating Plans.

Applies to supplemental Medicaid-covered drugsRequirement extends the Part D formulary change notice to Medicaid outpatient/OTC drugs and supplementary benefits under the Demonstration.

Plan and Provider Obligations, Contracts, and Operational Requirements

Note

Demonstration phase‑out and notification

If the Demonstration is terminated, California must submit a draft phase-out plan to CMS no less than 5 months before the effective date of suspension or termination (unless CMS and the State agree to extend the Demonstration). Prior to submission to CMS, California must publish the draft phase-out plan on its website for a 30‑day public comment period and conduct tribal consultation per its approved tribal consultation SPA. California shall summarize and share comments with CMS. Once CMS approves the phase‑out plan, phase‑out activities must begin within 14 days. The phase‑out plan must at minimum describe how affected beneficiaries will be notified (including content that explains how appeal rights continue during phase‑out and any plan transition), processes for administrative reviews of Medicaid eligibility, plans to ensure ongoing coverage (including enrollment of all enrollees in a Part D plan prior to termination), community outreach activities, Participating Plan and State responsibilities, and closeout costs. California must comply with notice and appeal requirements in 42 CFR §§431.206, 431.210, 431.213, 431.220, 431.221, and maintain benefits when required by 42 CFR §431.230. If termination or waiver withdrawal occurs, federal financial participation (FFP) is limited to normal closeout costs associated with terminating the Demonstration, including covered services and administrative disenrollment costs.

Submit draft phase‑out plan ≥5 months before effective date
30‑day public posting and tribal consultation before submission
Begin approved phase‑out activities within 14 days
Ensure Part D enrollment for all enrollees prior to termination
Comply with 42 CFR notice and appeal requirements

Note

Modification process and stakeholder notice

Either CMS or the State may seek to modify this MOU by written request and per Section 1115A(b)(3) of the Social Security Act (e.g., demonstrating improved quality without increasing spending, reducing spending without reducing quality). Any material modification requires written agreement by both parties and must follow a stakeholder engagement process consistent with this Demonstration's requirements. California must also notify CMS of any State Plan, waiver, or State law/statutory changes that may impact the Demonstration.

Material modifications require mutual written agreement
Stakeholder engagement process required for material changes
State must notify CMS of relevant State Plan/waiver/law changes

Note

Termination procedures and notice requirements

This MOU may be terminated in whole or in part. Termination without cause requires a minimum of 90 days' advance notice to the other party and 60 days' advance notice to beneficiaries and the public, except as otherwise permitted. Termination for cause may occur with 30 days' notice for material breach. Termination pursuant to Social Security Act §1115A(b)(3)(B) or due to a change in law may follow the notice periods set forth therein; a material change in law permits termination on 30 days' notice or less if required by law. Upon termination, CMS will provide the State an opportunity to propose and implement a phase‑out plan to assure notice and access to ongoing coverage for Demonstration enrollees.

Termination without cause: 90 days to other party; 60 days to beneficiaries/public
Termination for cause: 30 days' notice for material breach
Change in law: 30 days' notice or less if required by law
CMS to allow phase‑out plan submission upon termination

Billing Rule

Payments to Prime Contractor Plans

Payments to Prime Contractor Plans are split: CMS makes separate risk‑adjusted payments for Medicare Parts A/B and Part D components based on standardized Demonstration payment rates and subject to the same adjustments made for Medicare Advantage and Part D (e.g., user fees, MSP adjustments). The State pays the Medicaid component per the rate structure in Section IV; certain services (e.g., county‑managed specialty behavioral health, IHSS administration costs) are excluded from the capitated payment. The combined capitated payment is intended to be reasonable and sufficient to support access and utilization per individual care plans; CMS and the State will jointly monitor access and plan financial viability.

CMS pays risk‑adjusted Medicare A/B and Part D components
State pays Medicaid component per Section IV
County‑managed specialty behavioral health excluded from capitation
IHSS administration costs excluded from capitation
Joint monitoring of access and financial viability

Billing Rule

Risk corridor structure and reconciliation actions

The Demonstration uses limited up‑side and down‑side risk corridors for all Demonstration Years covering Medicare Parts A/B and Medicaid eligible costs (Part D cost reconciliation continues under existing rules). Corridors are applied per Prime contract and reconciled after risk adjustment and other adjustments, treating the Prime as if it had received full quality withhold payments. CMS and the State will evaluate encounter, cost, and plan financial data and may adjust plan costs downward for excessive payments to plan‑affiliated providers. For the limited down‑side corridor: initial county‑specific capitation rates are established using county‑specific interim savings percentages; if Prime Contractor Plan costs exceed initial capitation rates (excluding Part D payments and costs), Medicare and Medicaid will reimburse the Prime Contractor Plan 67% of the excess, provided total federal/State payments (initial capitation plus risk corridor payments) do not exceed capitation amounts that would have been paid under minimum savings percentages. Medicare and Medicaid contributions to reconciled capitated payments are proportional to their contribution to the initial capitated rates (not including Part D). The three‑way contract will include operational details on corridor implementation.

Limited up‑side and down‑side corridors include Medicare Parts A/B and Medicaid costs
Part D reconciliation continues under current Part D rules
Corridors reconciled after risk adjustment; assume full quality withhold
CMS/State may adjust plan costs for excessive payments to affiliated providers
Down‑side: CMS/State reimburse 67% of costs above initial cap (excl. Part D) within specified limits

Prior Authorization

Assessment and reassessment timing and contact expectations

Participating Plans must perform initial health risk assessments (HRAs) consistent with State standards and contact enrollees within required timeframes using repeated documented outreach (e.g., letter followed by at least two phone calls or in‑person visits). For enrollees identified as higher‑risk by the risk‑stratification algorithm, the assessment must be completed within 45 calendar days of enrollment. For enrollees in nursing facilities or those identified as lower‑risk for developing individual care management plans, assessment must be completed within 90 calendar days of enrollment. Reassessments must occur at least annually (within 12 months of the last assessment) or more frequently as enrollee health requires; the Participating Plan shall consider reason for update, enrollee needs and preferences when determining mode of reassessment. The State will permit mostly in‑person or telephone HRAs, with limited mail or web‑based options only under stakeholder‑approved and CMS‑approved circumstances. Participating Plans must document repeated outreach attempts.

Higher‑risk enrollees: HRA within 45 days of enrollment
Nursing facility or lower‑risk enrollees: HRA within 90 days of enrollment
Reassessments: at least annually (within 12 months) or as needed
Documented repeated outreach (letter + ≥2 phone calls or in‑person visits)
Mode of HRA largely in‑person/telephone; limited mail/web options require approval

Note

Overlapping services unified appeal pathway

Services for which Medicare and Medicaid overlap (e.g., Home Health, Durable Medical Equipment, skilled therapies, excluding Part D) will be defined uniformly and will have a designated, unified appeal pathway set forth in the three‑way contract. Appeals for overlapping services will start with the Participating Plan and proceed to the appropriate external reviewer (IMR or IRE) as specified; the deciding entity's decision is controlling on the health plan. Individuals retain the right to a State Fair Hearing regardless of the designated appeal pathway. The three‑way contract will detail the designated appeal pathway for overlapping services and how the plan, county, and external reviewers coordinate.

Overlapping services defined uniformly in the three‑way contract
Appeals begin with the Participating Plan and may proceed to IMR or IRE
Deciding entity's determination is controlling on the plan
Enrollees retain State Fair Hearing rights where applicable

Note

Future appeals exhaustion requirement (proposed)

Future policy changes will require exhaustion of plan and external review appeals before State Fair Hearings become available for most Demonstration appeals. Under the stated future‑years approach, beneficiaries will have a 90‑day timeframe to request an appeal and will be required to exhaust plan and external review processes prior to seeking a State Fair Hearing, consistent with working principles developed with stakeholders and CMS. The Part D appeals process will remain separate and will not be integrated with Medi‑Cal appeals.

Beneficiaries will have 90 days to request an appeal under the future process
Exhaustion of plan and external review appeals will be required before State Fair Hearing (except where law provides otherwise)
Part D appeals remain separate and are not integrated

Defined Terms and Acronyms

Prime Contractor Plans (Participating Plans)

Defined role namePrime Contractor Plans (also referred to as Demonstration Plans) — health plans or qualified entities jointly selected by CMS and the State to provide integrated Medicare and Medicaid benefits under the Demonstration.

AccountabilityPrime Contractor Plans enter a three-way contract with CMS and the State and are accountable for integrated care delivery and oversight of subcontracted plans.

Provision of servicesRequired to provide Medicare and Medicaid-covered services, directly or through subcontracts, and may offer additional benefits under capitation.

Subcontracted Plans

Subcontracted Plans — defined termSubcontracted Plans are Medicare Advantage Prescription Drug (MAPD) plans or other contracted plan partners used by Prime Contractor Plans to offer multiple plan benefit packages under the Demonstration.

Relationship to Prime ContractorSubcontracted Plans operate under contract to Prime Contractor Plans and must comply with Demonstration requirements through the Prime Contractor's oversight.

Participating Plan

Participating Plan — definitionParticipating Plan: a Prime Contractor Plan or Subcontracted Plan contracted to provide and be accountable for the continuum of Medicare and Medicaid covered services to enrollees under the Demonstration.

ResponsibilitiesResponsible for networks, customer service, reporting, compliance, and ensuring access to medically necessary services per Medicare and Medi-Cal rules.

Selection and monitoringCMS and California jointly select and monitor Participating Plans; readiness review required prior to accepting enrollment.

Care Coordinator

Care Coordinator — definitionA person employed or contracted by the Primary Care Provider or the Participating Plan who is accountable for providing care coordination services, participates in initial assessment and ICTs, and supports safe transitions in care.

FunctionsAssures appropriate referrals, timely two‑way transmission of enrollee information, obtains information about non-primary care services, and facilitates ICT meetings.

Role on ICTsServes on one or more Interdisciplinary Care Teams and coordinates care team activities.

Clinical Care Manager

Clinical Care Manager — definitionA licensed registered nurse or other individual licensed to provide Clinical Care Management responsible for intensive monitoring, follow-up, care coordination, and clinical management of high‑risk enrollees.

ScopeProvides intensive monitoring and clinical management for high‑risk members as part of care coordination standards.

IntegrationWorks with ICTs and Participating Plan staff to implement individualized care plans and follow-up.

CBAS / LTSS

CBAS / LTSS — definitionCommunity-Based Adult Services (CBAS) are outpatient, facility‑based services delivering skilled nursing, therapies, personal care, caregiver training, meals and transportation; LTSS includes IHSS, CBAS, MSSP, and skilled nursing/subacute services covered by Medi‑Cal.

LTSS examplesIncludes IHSS, Multipurpose Senior Services Program (MSSP), CBAS, and nursing facility/subacute care services.

PurposeSupports beneficiaries' ability to remain in community settings and addresses long‑term support needs under the Demonstration.

MOU

MOU — definitionMemorandum of Understanding (MOU): the document that details the principles under which CMS and the State plan to implement and operate the Demonstration and outlines preparatory activities prior to executing three‑way contracts.

PurposeSets forth demonstration objectives, roles, waiver authorities, and operational expectations to be formalized in three‑way contracts.

Relationship to contractsMOU precedes and informs the three‑way contract terms and readiness requirements.

Participating Plan (alt)

Alternate reference for Prime Contractor PlanParticipating Plan (alternate): the term used interchangeably with Prime Contractor Plan to refer to entities contracted to provide integrated care under the Demonstration.

Contractual statusSuch entities enter into three‑way contracts with CMS and the State and are accountable for subcontractor oversight.

Terminology noteDocuments use 'Prime Contractor Plan' and 'Participating Plan' interchangeably in defining responsibilities.

Medicare-Medicaid Enrollees

Medicare‑Medicaid Enrollees — definitionIndividuals entitled to Medicare Part A and enrolled in Parts B and D, receiving full Medi‑Cal benefits and no other comprehensive private or public health coverage (full‑benefit dual eligibles).

Eligibility notesThese enrollees are the target population for the Demonstration and must meet other residency and exclusion criteria as specified in the MOU.

TerminologyReferred to as 'Medicare‑Medicaid Enrollees' or 'dual eligibles' in the MOU and appendices.

Beneficiary outreach/notification of enrollment processes

Beneficiary outreach/notification standardEligible individuals must be notified of their right to select a Participating Plan no fewer than 60 days prior to the effective date of enrollment; passive enrollment requires prior notices and opportunity to opt out.

Passive enrollment noticesThree notices described: informational (90 days prior), identification (60 days prior with enrollment packet), and reminder (30 days prior); materials at sixth‑grade reading level and in threshold languages.

Opt‑out timing and effective dateIndividuals may opt out up until the last day of the month prior to the effective enrollment date; beneficiary‑elected enrollments effective first day of following month.

Institutionalized, HCBS High, HCBS Low, Community Well

Population categories — summaryFour Medicaid risk adjustment population categories: Institutionalized; HCBS High; HCBS Low; Community Well.

PurposeCategories used to compute Medicaid risk‑adjusted blended rates and incent serving beneficiaries in home/community settings.

ApplicationUsed across rate setting phases to weight relative cost factors and compute plan risk‑adjusted rates.

Institutionalized

Institutionalized — definitionIndividuals in long‑term care aid codes and/or residing in a long‑term care facility for 90 or more days.

Use in risk adjustmentCategory used to weight Relative Cost Factors for Medicaid blended rate calculations.

ImplicationReflects higher cost setting compared with community categories for rate incentives.

HCBS High

HCBS High — definitionIndividuals identified as high utilizers of home and community‑based services (e.g., receive CBAS, are MSSP clients, or receive IHSS and are classified as 'severely impaired').

ExamplesIncludes CBAS recipients, MSSP clients, and IHSS recipients classified as severely impaired (SI).

Role in ratesUsed in Medicaid risk adjustment to reflect higher LTSS utilization in community settings.

HCBS Low

HCBS Low — definitionIndividuals identified as low utilizers of home and community‑based services; typically IHSS recipients classified as 'not severely impaired'.

Distinguishing featuresLower intensity of LTSS use compared with HCBS High; used in risk adjustment categorization.

Use in rate methodologyWeighted to reflect lower expected costs within Medicaid blended rates.

Community Well

Community Well — definitionIndividuals living in the community with no Medi‑Cal covered HCBS services; not residents of long‑term care facilities and do not utilize CBAS, MSSP, or IHSS.

Population roleRepresents lower‑cost community population for Medicaid risk adjustment.

Implication for careLess intensive LTSS needs; categorized separately for prospective rate adjustments.

Prime Contractor Plan

Prime Contractor Plan (duplicate) — definitionPrime Contractor Plans (Participating Plans): health plans or qualified entities jointly selected by CMS and the State to provide integrated Medicare and Medi‑Cal benefits and enter three‑way contracts.

AccountabilityResponsible for oversight of subcontracted plans and meeting readiness and contractual obligations.

License requirementMay hold a Knox‑Keene license, be a county organized health system, or meet equivalent licensing/qualification standards.

ICT

ICT — Interdisciplinary Care Team definitionAn ICT is a person‑centered team built around the enrollee that integrates medical, behavioral health, and LTSS care; may include enrollee, caregivers, primary physician, nurse, case manager, social worker, IHSS representatives, behavioral health providers, pharmacist, and other professionals.

ICT functionsDevelops and implements the Individualized Care Plan, participates in assessments, supports transitions of care, and ensures culturally and linguistically appropriate services.

Enrollee choiceEnrollee may limit or disallow the role of IHSS providers, family members, or caregivers on the ICT.

ICT (alt)

ICT (alt) — definitionInterdisciplinary Care Team (ICT): a composite team that ensures integration of medical, behavioral health, and LTSS services around enrollee preferences and needs.

Membership competenciesTeams must include members knowledgeable in person‑centered planning, cultural competence, accessibility, independent living, recovery, and wellness.

Role in care planningICTs collaborate to create individualized care plans with measurable objectives and reassessment timeframes.

IHSS coordination

IHSS coordination — definitionParticipating Plans must enter MOUs with counties for IHSS coordination; counties retain eligibility assessment, provider enrollment, background checks, registry and payroll functions while coordinating with plans on assessments and service delivery.

County responsibilitiesCounties assess, approve and authorize IHSS hours; enroll IHSS providers; conduct background checks; maintain registries; and perform payroll functions per state law.

Plan responsibilitiesPlans must coordinate IHSS delivery with other covered benefits, share data, and support integration while respecting county statutory roles.

BH-MOU

BH‑MOU — definitionBehavioral Health Memorandum of Understanding (BH‑MOU): local agreements between Participating Plans and county agencies that describe service coordination, administrative coordination, information exchange, performance tracking measures, and shared financial accountability.

ComponentsBH‑MOUs must delineate clinical and administrative responsibilities, points of contact, data exchange processes, dispute resolution, and standardized screening/referral/linkage approaches.

Readiness requirementBH‑MOUs must be in place by the readiness review and by October 1, 2013.

TNE

TNE — Tangible Net Equity definitionTangible Net Equity (TNE) is net equity reduced by the value assigned to intangible assets (e.g., goodwill, going concern value, organizational expense, start‑up costs, unsecured affiliate obligations, long‑term prepayments, non‑returnable deposits) per Title 28 CCR §1300.76(e).

Use in financial standardsTNE is the metric used to assess minimum financial requirements for Participating Plans under California solvency rules.

Regulatory referenceDefined consistent with California DMHC regulations and applied in demonstrating financial stability.

Model of Care (MOC) standard

Model of Care (MOC) standard — definitionMOC standard: an evidence‑based Model of Care with 11 clinical and non‑clinical elements scored via factors; overall score must be at least 70% to meet CMS approval.

Scoring methodologyEach factor scored 0–4; element totals aggregated (out of up to 160 points) to produce overall percentage score used for approval and duration determinations.

Parallel State reviewParticipating Plans must meet both CMS and State approval standards; plans may cure and resubmit to improve MOC scores.

Overlapping Services

Overlapping Services — definitionServices for which Medicare and Medicaid overlap (e.g., Home Health, DME, skilled therapies, excluding Part D) will be defined in a unified way in the three‑way contract and designated as required plan benefits.

Appeals pathwayAppeals for overlapping services start with the health plan and may proceed to IMR or IRE; IMR decisions may be appealed to State Fair Hearing in certain cases.

Coverage coordinationThe unified definition clarifies which program (Medicare vs. Medicaid) governs benefit responsibility and appeals processing.

Core Quality Measures

Core Quality Measures — definitionA unified set of quality metrics across domains (access, care coordination, health/well‑being, behavioral health, CAHPS, HEDIS, Part D metrics, LTSS measures) that Participating Plans must report for monitoring and withhold calculations.

Measure sourcesIncludes HEDIS, CAHPS, HOS, Part D measures, PQA, NCQA, NQF and State‑specified measures as stewards and data sources.

UseMeasures used for implementation monitoring, plan performance assessment, cross‑plan comparisons, and partial application to quality withhold payments.

CAHPS

CAHPS — definition and examplesConsumer Assessment of Healthcare Providers and Systems (CAHPS): beneficiary experience survey tool (examples: Getting Needed Care, Getting Care Quickly, Overall Rating of Plan) used across settings including plan, home health, and nursing home with supplemental items (ECHO) for behavioral health.

Steward/data sourceAHRQ/CAHPS are the stewards and data sources for CAHPS measures under the Demonstration.

ApplicationCAHPS‑derived measures included in the combined core metrics and used for monitoring and quality withhold calculations.

HEDIS/NCQA

HEDIS/NCQA — definition and examplesHEDIS (NCQA) measures: standardized clinical quality measures (examples include diabetes care measures, breast/colorectal screening, blood pressure control, plan all‑cause readmissions) required for reporting under Medicare and supplemented by State measures.

Steward/data sourceNCQA/HEDIS serve as measure stewards and data sources for multiple clinical quality indicators in the core set.

Use in withholdA subset of these HEDIS measures will be used in quality withhold evaluations in Demonstration Years 1–3.

Part D / Appeals data sources

Part D / Appeals data sources — definitionPart D and appeals data sources include PDE (Part D Event) data, Pharmacy Quality Alliance (PQA) metrics, and Independent Review Entity (IRE) data used for appeals and Part D performance measures.

Measure examplesPart D Call Center metrics, Part D appeals auto‑forward rates, medication adherence measures derived from PDE data.

UseData used for Part D monitoring, reporting and to inform quality metrics included in the core set; Part D not subject to savings percentage or withhold but is monitored.

EQRO

EQRO — definitionExternal Quality Review Organization (EQRO): a contracted entity the State will use to audit Participating Plans' quality measures and validate encounter data.

FunctionsConduct audits of quality measures, validate encounter data, and support monitoring activities in conjunction with DHCS and DMHC.

EngagementState will contract an EQRO to perform audits and encounter validation as part of oversight and annual reporting processes.

EQRO (duplicate)

EQRO (duplicate) — definitionExternal Quality Review Organization (EQRO): State‑contracted organization to audit plan quality measures and validate encounter data for the Demonstration.

Oversight roleSupports DHCS and DMHC monitoring and annual joint reporting on financial and quality audits.

Data validationResponsible for validating encounter submissions and ensuring compliance with contract reporting requirements.

Independent evaluator

Independent evaluator — definitionAn independent evaluator contracted by CMS to design a state‑specific evaluation plan using mixed methods to measure, monitor, and evaluate the Demonstration's impact on quality, utilization, cost, and beneficiary experience; provides quarterly rapid‑cycle monitoring and annual reports.

ResponsibilitiesConducts quantitative and qualitative analyses, uses a comparison group, submits quarterly and annual reports, and a final report at Demonstration end.

Data cooperationCalifornia and Participating Plans must submit required data and cooperate with the evaluator for monitoring and evaluation activities.

OpenPayer

Medicare‑Medicaid Duals Capitated Integration Demonstration (California) MOU

Coverage, Eligibility, Payment, and Quality Requirements

Referenced Codes, Key Values, and Financial Thresholds

Plan and Provider Obligations, Contracts, and Operational Requirements

Defined Terms and Acronyms