Medicaid Contract Purchasing SpecificationsPurchaser Payments to MCOsThere are two broad categories of payment issues in contracts between state Medicaid agencies and MCOs (or BHOs): (1) those relating to the determination of capitation rates paid to MCOs by state purchasers on behalf of enrolled children; and (2) those relating to payment methodologies used by MCOs with respect to network and out-of network providers serving enrolled children. Generally, the pediatric purchasing specifications do not contain illustrative language that addresses issue (1). However, a few of the specifications discuss federal statutory considerations and refer users to other sources; these specifications are listed below. A number of the pediatric specifications address issue (2); see the discussion of Provider Reimbursement above.
‡The "prime/prime" arrangement has two primary contractors—the MCO and the BHO—to which the state purchaser makes capitation payments. Under this arrangement, a child is enrolled in both the MCO and the BHO. The "prime/subprime" arrangement involves one primary contractor and a subcontractor. The state purchaser contracts with and makes capitation payments to an MCO; the MCO, in turn, subcontracts with the BHO for the provision of behavioral health services.
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