A. The Commonwealth assures that the capitated rates will be equal to or less than the cost to the agency of providing those same fee-for-service State Plan approved services on a fee-for-service basis, to an equivalent nonenrolled population group based upon the following methodology rates are set at a percent of fee-for-service costs. Rates are set at a percentage of fee-for-service costs.

B. To determine the amount that would otherwise have been paid (AWOP) under the State Plan for a comparable population, the Commonwealth uses base period encounter data adjusted for comparable populations and services to those provided by the Program of All-Inclusive Care for the Elderly (PACE) program, specifically individuals 55 years of age or older who historically receive services in an institutional setting or enrolled in a home and community based services (HCBS) § 1915(c) waiver. The historical data is adjusted to reflect modifications of payment arrangements between the data period and the contract period as well as benefit or eligibility changes that occurred prior to the beginning of the contract period. The base period data is also updated to reflect expected increases in utilization and cost for the contract period covered by the rates. An allowance for administrative costs is added to the AWOPs along with a provision for underwriting gain.

C. The final capitation rates are determined as a percentage discount off of the amount that would otherwise have been paid for these populations.

D. The PACE capitation rates vary by region and by eligibility status (dual-eligible and non-dual-eligible).

E. The State Medicaid Agency Commonwealth assures that the rates were set in a reasonable and predictable manner.

C. F. The Commonwealth will submit all capitated rates to the Centers for Medicare and Medicaid Services (CMS) regional office for prior approval.