REPORT TITLE:
QUEST


DESCRIPTION:
Requires DHS to compensate community health centers treating
QUEST patients based on risk factor adjustment.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1562
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO QUEST. 


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

 1      SECTION 1.  The legislature finds that it is in the best
 
 2 interest of the State to assure that funds appropriated for
 
 3 Medicaid managed care services under QUEST are distributed
 
 4 equitably to health plans under contract with QUEST.  The
 
 5 legislature further finds that the capitation methodology used by
 
 6 QUEST to compensate providers is outdated, being based on a fee-
 
 7 for-service model that presumes a healthy population being served
 
 8 by QUEST.  The capitation methodology overcompensates QUEST
 
 9 health plans and providers who treat relatively healthy
 
10 populations, while it undercompensates plans and providers that
 
11 care for a disproportionate share of patients who are high risk
 
12 and need more than average medical attention, such as teenagers,
 
13 HIV positive individuals, and chronic diseases.  Compensation
 
14 should be designed to encourage plans to seek out and provide
 
15 care for the most needy.
 
16      The legislature further finds that data used by the
 
17 department of human services (DHS) to develop risk factor
 
18 adjustment for the initial contract period was pre-QUEST
 
19 fee-for-service data which has demonstrably failed to accomplish
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 the intended outcome of risk factor adjustment.  In fact, the
 
 2 reverse has occurred.  Moreover, DHS has failed to annually
 
 3 adjust the risk factor.
 
 4      The legislature further finds that correcting the inequity
 
 5 will ensure that providers receive reasonable compensation for
 
 6 their services in caring for people who need the most health
 
 7 care.  This requires a redistribution of QUEST resources to spend
 
 8 funds for the intended target population of the medically needy.
 
 9      The legislature further finds that the data used to develop
 
10 the risk factor adjustment for the QUEST rebid effective July 1,
 
11 1999, is obsolete, based on actual member experience for the
 
12 first two years of the QUEST program.  In the case of at least
 
13 one plan, application of current data completely reverses the
 
14 outcome of the risk factor adjustment.  At least one plan has
 
15 substantial adverse selection, which is unreasonable and unfair
 
16 to ignore, and application of obsolete data to this plan ignores
 
17 actual experience.
 
18      The purpose of this Act is to establish a risk factor
 
19 adjustment system to compensate QUEST providers.
 
20      SECTION 2.  Chapter 346, Hawaii Revised Statutes, is amended
 
21 by adding a new section to be appropriately designated and to
 
22 read as follows:
 
23      "§346-    Payment methodology for QUEST.  (a)  The
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 department shall compensate health plans providing services to
 
 2 QUEST patients based upon risk factor adjustment for serious
 
 3 medical conditions.
 
 4      (b)  As used in subsection (a), "risk factor adjustment"
 
 5 means a method of compensation that accounts for patient health
 
 6 risk characteristics of the QUEST patients being served by a
 
 7 particular community health center, for example, chronic
 
 8 diseases, HIV patients, or pregnant teenagers."
 
 9      SECTION 3.  The department of human services shall adjust
 
10 its current payment to community health centers based upon this
 
11 Act.
 
12      SECTION 4.  New statutory material is underscored.
 
13      SECTION 5.  This Act shall take effect upon its approval.