1. Connecticut Department of Social Services Prospectus: Health Care Contracting Opportunities Charter Oak HUSKY A HUSKY B October 2007 M. Jodi Rell, Governor Michael P. Starkowski, Commissioner

2. Prospectus - Table of Contents

Section Page

Introduction 4

Purpose 5

Opportunity 7

HUSKY A/B/Plus 9

Charter Oak 11

Procurement 14

Timeline 16

Process 18

Rate Setting 21

Section Page

Program Design 27

Target Population 37

Benefits 52

Network 56

Becoming an MCO 60

Sample Contracts 64

Appendices 66

Websites 67

Sample RFP Library 68

Contact Info 69

3. My goal is to make sure that every adult and child in Connecticut has access to health insurance. Governor M. Jodi Rell (December 27, 2006) 4. Introduction: DSS to Release RFP in November 2007

Connecticut Department of Social Services (DSS) anticipates releasing a Request For Proposal (RFP) in November 2007 for qualified carriers and managed care organizations to provide health care services to the combined HUSKY and Charter Oak programs

This prospectus is intended to provide interested parties with background information about the upcoming opportunity to win a contract under DSSs competitive procurement to provide health care services to an estimated 350,000 Connecticut citizens

5. 1. PURPOSE 6. Purpose: Competitively Procure Health Care Contracts July 1, 2008

Section 23 of Public Act 07-02 (June Special Session) authorized DSS to enter into contracts with carriers and managed care organizations effective July 1, 2008, to provide services for the newly created state-sponsored health coverage program known as theCharter Oak Health Plan

• Charter Oak, designed to provide premium assistance in the form of premium subsidies to uninsured adults, with incomes up to 300% of the federal poverty level (FPL), is one piece of the states commitment to provide universal access to affordable health insurance for Connecticut adults of all incomes

DSSs existing managed care programs,HUSKY A & HUSKY B , haveapproximately 320,000 covered lives.DSS will enter into new contracts with carriers and managed care organizations,effective July 1, 2008

7. 2. OPPORTUNITY 8. Opportunity: Combined HUSKY/Charter Oak Procurement

A combined procurement for HUSKY and Charter Oak will cover an estimated 350,000 Connecticut citizens for a period of at least 3 years and up to 5 years, with a total contract value projected to be in excess of $3.5 billion over the five-year contract

Successful bidders will be required to meet the network, operational, contractual, and financial standards as laid out in the RFP and provide services for both HUSKY programs, as well as the Charter Oak program

All 350,000 lives will potentially be available under this new contract.New contractors will have the opportunity to enroll individuals and families through an initial open enrollment period and receive newly eligible individuals and families

9. 3.HUSKY A HUSKY B/HUSKY PLUS 10. DSS Health Care Programs: HUSKY Plan

HUSKY A Comprehensive health care coverage servinglow-income children, parents, relative caregivers with incomes up to 185% of FPL

• Includes pregnant women with incomes up to 250% of FPL

• Traditional Medicaid health coverage

HUSKY B Health coverage for uninsured children in moderate and higher income families, 185% - 300% of FPL (unsubsidized group rate coverage over 300% of FPL)

HUSKY Plus A supplemental program for children with special medical needs available to participants enrolled in HUSKY B (185% -300% of FPL). HUSKY Plus benefits are paid on a feefor-service basis through DSS contracts

11. 4. CHARTER OAK HEALTH PLAN 12. DSS Health Care Programs: Charter Oak Health Plan

Charter Oak is designed to provide an affordable health insurance product to adults of all incomes at a target total premium of $250 per member per month

Charter Oak is not Medicaid: benefits will be based on a commercial model, with enforceable deductibles, co-pays, and coinsurance

For individuals with incomes less than 300% ofFPL, premium will be subsidized by the state according to a fixed sliding scale

13. Charter Oak: FPL Table and Projected Enrollment Total Cost of Monthly Premium 32,800SFY11 Average 21,400SFY10 Average 8,700SFY09 Average Clients Total 14. 5. PROCUREMENT 15. Procurement: Combined to Balance Risk and Simplify Administration

DSS will release a Request for Proposals for thecombinedHUSKY A, HUSKY B and Charter Oak programs in November 2007

DSS is combining the procurement to allow the successful bidders to balance the familiar risk and large size of the HUSKY enrollment with the less familiar and less predictable size of the Charter Oak enrollment

DSS has a long, proven track record, having administered Medicaid Managed Care since 1995, and the HUSKY Plan (A/B) since 1998. Using this established infrastructure will allow for simplified administration of the combined procurement and reduce the risk to successful bidders by utilizing an existing, known implementation process

16. 6. TIMELINE 17. Timeline: HUSKY/Charter Oak Procurement

Release of Prospectus October 2007

Release of RFP November 2007

RFP Bidders Conference December 2007

RFP Bids Due January 2008

RFP Negotiations February 2008

RFP Awards March 2008

Open Enrollment May 2008

Contract Effective Date July 2008

18. 7. PROCESS 19. Process: Soliciting Feedback and Partnering

DSS is soliciting feedback and interest from qualified carriers and managed care organizations up to the release of the RFP in November 2007.Where appropriate, DSS will incorporate the feedback into the RFP

DSS will make the data available electronically used in the HUSKY rate setting process to help interested parties more fully understand the risk of the HUSKY program and assist in projecting risk of the Charter Oak program

DSS will conduct a Bidders Conference and will provide a question and answer process to allow interested parties to interact with the States health policymakers and more fully understand the HUSKY and Charter Oak programs

20. Process: Soliciting Feedback

Simultaneous with this prospectus, the Department is finalizing the RFP for the combined HUSKY and Charter Oak procurement.Per the attached timeline, DSS expects to release the RFP within the next 30 days.To solicit comments on the procurement prior to the RFP release, DSS has established the[email_address]mailbox

Interested parties should e-mail their comments to this mailbox.All comments will reviewed by the Agency.Any comments requiring responses will be sent to all interested parties that register by submitting an e-mail labeled Request for Registration to the above mailbox

21. 8. RATE SETTING 22. Rate Setting Methodology:HUSKY A & HUSKY B

Rates required to be Actuarially Sound per CMS Requirements

Rates set for State Fiscal Year (SFY).Rates Effective July 1, 2008 will be in effect for SFY09 (July 1, 2008, to July 1, 2009)

Rates are based on Health Plan Financials and Encounter data, adjusted for:

• Demographics

• Unpaid Claims Liability

• Program Changes

• Trend

23. Rate Setting Methodology Changes: Under ConsiderationHUSKY A & HUSKY B

January 1, 2008

• Maternity and newborn kick payments

Future Rate Years - Changes Under Consideration

• Risk-Adjusted Rates

• Pay-for-Performance Incentives

• Minimum Loss-Ratio Standards

• Quality/Evidence-Based Payment Incentives

24. Rate Setting Methodology: Charter Oak

Rates will be Actuarially Sound and able to meet CMS Requirements

Rates will be set for State Fiscal Year (SFY).Rates Effective July 1, 2008 will be in effect for SFY09 (July 1, 2008 to July 1, 2009)

Rates will be based on HUSKY A adults data, adjusted for differences in:

• Demographics

• Plan Design

• Underlying Risk/Acuity

• Reimbursement

• Trend

25. Rate Setting Methodology: Charter Oak

Incentives/Sanctions DSS is considering placing funds at-risk for contractor performance standards in several areas, including:

• Geographic distribution of key provider types for overall network access requirements

• Availability of scheduled appointments for primary care and specialty physicians for meeting appointment scheduling waiting standards

• Telephonic wait times, call abandonment and resolution rates for member and provider customer service standards

• Claims adjudication times for meeting claims payment timeliness requirements

26. HUSKY AActuarially-soundFiscal Year 2005 2007Capitation Rates*FY05 and the First Half of FY06 include capitation amounts for specialty behavioral services ** Second Half of FY06 and FY07 exclude capitation amounts for specialty behavioral services $ 188.59$ 179.90$ 199.03$ 188.80Total $ 263.66$ 252.39$ 271.60$ 257.4740+ F $ 276.01$ 264.28$ 283.57$ 268.5040+ M $ 249.45$ 238.59$ 257.72$ 244.4915-39 F $ 142.80$ 135.94$ 155.12$ 147.0715-39 M $ 110.16$ 104.28$ 123.40$ 117.071-14 $ 677.37$ 650.45$ 669.59$ 635.40