Medicaid Contract Purchasing SpecificationsPart 12Remedies for NoncomplianceTable of Contents §1201. In General
§1201. In General (a) If Contractor does not comply with, or otherwise fails to perform, a requirement of [drafter insert name of purchasing document] or applicable federal or state law or regulation, Purchaser may apply one or more of the following remedies: K(1) Withholding of Capitation Payments — Notwithstanding [drafter insert references to provisions relating to capitation payments to Contractor]: (A) Purchaser may withhold capitation payments under [drafter insert name of purchasing document] from the date Purchaser notifies Contractor that Purchaser has determined that Contractor does not comply with a requirement of [drafter insert name of purchasing document]. (B) Purchaser shall pay to Contractor any capitation payments withheld under subparagraph (A) within [ ] days after the date Purchaser determines that Contractor complies with such requirement and that Contractor's noncompliance is not likely to recur. K(2) Suspension of Enrollment (A) Purchaser may suspend enrollment of eligible children under [drafter insert name of purchasing document] from the date Purchaser notifies Contractor that Purchaser has determined that Contractor does not comply with a requirement of [drafter insert name of purchasing document] until the date Purchaser determines Contractor complies with such requirement and that Contractor's noncompliance is not likely to recur. (B) The enrollment to which the suspension remedy described in subparagraph (A) applies includes voluntary enrollment, mandatory enrollment, and default enrollment by enrolled children under [drafter insert name of purchasing document]. K(3) Notification of Right to Disenroll Without Cause K(A) Noncompliance — Contractor understands and agrees that Purchaser may permit each enrolled child to terminate enrollment without cause and may notify each enrolled child's family or caregiver of his or her right to terminate enrollment without cause from: (i) the date Purchaser notifies Contractor that Purchaser has determined that Contractor does not comply with a requirement of [drafter insert name of purchasing document], until (ii) the date Purchaser determines that Contractor complies with such requirement and that Contractor's noncompliance is not likely to recur. L(B) Chronic Substandard Performance — If Contractor has repeatedly failed to meet the requirements of §1903(m) and §1932 of the Social Security Act, 42 U.S.C. §1396b(m) and §1396u-2, Contractor shall, consistent with §1932(e)(3) of the Social Security Act, 42 U.S.C. §1396u-2(e)(3), permit enrolled children to terminate enrollment without cause and notify such children of such right to terminate enrollment without cause. K(4) Liquidated Damages (A) Contractor agrees that if Contractor does not comply with or otherwise perform a requirement of [drafter insert name of purchasing document] or applicable federal or state laws or regulations, damage to Purchaser will result, and Purchaser may impose liquidated damages in the amount of: (i) [$ ] per requirement not complied with or performed; or (ii) [$ ] for each day during which Contractor does not comply with or perform a requirement of [drafter insert name of purchasing document]; or (iii) both clauses (i) and (ii). (B) Notwithstanding [drafter insert references to provisions relating to capitation payments to Contractor], Purchaser may impose liquidated damages imposed under subparagraph (A) in the form of a reduction in capitation payments otherwise due Contractor under [drafter insert name of purchasing document]. K(5) Civil Money Penalties — In addition the remedies available to Purchaser under §§1202, 1203, 1205, and 1206, Purchaser may impose civil monetary penalties of not more than [$ ] for each failure by Contractor to comply with or otherwise perform the requirements of [drafter insert name of purchasing document] or federal or state law. K(6) Recoupment of Purchaser Payments to Out-of-Plan Providers —Notwithstanding [drafter insert references to provisions relating to capitation payments to Contractor], if Contractor has failed to furnish one or more item or service covered under Part 1 to an enrolled child, and the child receives the item or service from a provider not participating in Contractor's provider network, Purchaser may: (A) pay the provider for the item or service; and (B) reduce the payments otherwise owed Contractor in an amount equal to the amount Purchaser pays or expects to pay for the item or service, plus any administrative costs incurred by Purchaser in connection with the transaction. L(7) Receivership — Purchaser may appoint temporary management for Contractor under the circumstances specified in §1932(e)(2)(B) of the Social Security Act, 42 U.S.C. §1396u-2(e)(2)(B). K(8) Termination (A) Purchaser may terminate performance by Contractor of duties under [drafter insert name of purchasing document] in whole, or in part, if Purchaser determines that: (i) Contractor fails to comply with any provision of [drafter insert name of purchasing document] and does not correct its non-compliance within [ ] business days; (ii) Contractor has taken an action that threatens the health, safety, or welfare of enrolled children; or (iii) Contractor has taken an action that threatens the fiscal integrity of [drafter insert name of State Medicaid program]. L(b) Procedures in Event of Termination1 (1) Hearing — Purchaser may not terminate performance by Contractor of duties under [drafter insert name of purchasing document] until Contractor has been provided with a hearing as required under §1932(e)(4)(B) of the Social Security Act, 42 U.S.C. §1396u-2(e)(4)(B). (2) Right to Disenroll — Contractor understands and agrees that if Purchaser seeks to terminate [drafter insert name of purchasing document], Purchaser may, under §1932(e)(4)(C) of the Social Security Act, 42 U.S.C. §1396u-2(e)(4)(C): (A) notify all enrolled children (and their families or caregivers) of the hearing under subsection (b)(1); and (B) permit an enrolled child to disenroll immediately without cause.
§1202. Covered Items and Services (a) In addition to the remedies set forth in §1201, Purchaser may impose the following remedy if Contractor does not comply with, or otherwise fails to perform, the requirements of §002 of the Overview and Parts 1 and 1A: (1) Civil Money Penalty L(A) As authorized under §1932(e)(2)(A)(i) of the Social Security Act, 42 U.S.C. §1396u-2(e)(2)(A)(i), Purchaser may impose a civil money penalty of not more than $25,000 for each instance in which Purchaser determines that Contractor has failed substantially to provide medically necessary items and services that are required under law or under [drafter insert name of purchasing document] to be furnished to an enrolled child. K(B) Purchaser may impose a civil money penalty of not more than [$ ] for each instance in which Purchaser determines that Contractor has unduly delayed the furnishing of items and services covered under Part 1 to an enrolled child.
§1203. Enrollment and Disenrollment of Enrolled Children (a) In addition to the remedies set forth in §1201, Purchaser may impose the following remedy if Contractor does not comply with, or otherwise fails to perform, the requirements of §003 of the Overview and Part 2: L(1) Civil Money Penalty for False Information — As authorized under §1932(e)(2)(A)(i) of the Social Security Act, 42 U.S.C. §1396u-2(e)(2)(A)(i), Purchaser may impose a civil money penalty of not more than $25,000 for each instance in which the Purchaser determines that Contractor has misrepresented or falsified information that is furnished to an enrolled child (or the enrolled child's family or caregiver) or to a potential enrolled child (or such child's family or caregiver), or that Contractor has distributed directly or through any agency or independent contractor marketing materials that do not comply with the requirements of federal law or [drafter insert name of purchasing document]. L(2) Civil Money Penalty for Health Status Discrimination — As authorized under §1932(e)(2)(A)(ii) of the Social Security Act, 42 U.S.C. §1396u-2(e)(2)(A)(ii), Purchaser may impose a civil money penalty of not more than $100,000 for each instance in which Purchaser acts to discriminate among enrolled children on the basis of their health status or the requirements for health care services.
§1204. Quality Measurement and Improvement K(a) In addition to the remedies set forth in §1201, Purchaser may impose the following remedy if Contractor does not comply with, or otherwise fails to perform, the requirements of §007 of the Overview and Part 8: (1) Corrective Action Plan (A) Purchaser may require Contractor to prepare and execute a plan under which Contractor shall correct any failure to comply with or otherwise perform such requirement and shall correct any resulting deficiencies in the quality of items and services covered under [drafter insert name of purchasing document] within [ ] days of notification by Purchaser of such failure. (B) The preparation or execution of a corrective action plan by Contractor under paragraph (1) shall not bar Purchaser from imposing other remedies under this [drafter insert name of purchasing document] during or after the preparation or execution of such plan.
§1205. Data Collection and Reporting (a) In addition to the remedies set forth in §1201, Purchaser may impose the following remedy if Contractor does not comply with, or otherwise fails to perform, the requirements of §008 of the Overview and Part 9: L(1) Civil Money Penalty for False Data — As authorized under §1932(e)(2)(A)(ii) of the Social Security Act, 42 U.S.C. §1396u-2(e)(2)(A)(ii), Purchaser may impose a civil money penalty of not more than $100,000 for each instance in which Purchaser determines that Contractor has misrepresented or falsified data or other information that is provided to Purchaser or the Secretary under [drafter insert name of purchasing document] or under Title XIX of the Social Security Act. K(2) Failure to Submit Accurate, Complete, and Timely Data — Purchaser may withhold all or a portion of the payment otherwise due Contractor in the event Contractor has failed to submit to Purchaser accurate, complete, and timely data of the type required by: (A) §902 relating to EPSDT Data; (B) §904 relating to Access Data; (C) §905 relating to Quality Data; (D) §906 relating to Aggregate Utilization Data; (E) §907 relating to Encounter Data; (F) §908 relating to Complaint and Grievance Data; (G) §909 relating to Expenditure and Claims Data; and K(3) Failure to Submit Accurate, Complete, and Timely Public Health Data — In the case of data required under §903 of Part 9, Purchaser may withhold all or a portion of the payment otherwise due Contractor in the event Contractor has failed to submit to [drafter insert name of appropriate public health agency] accurate, complete, and timely data.
§1206. Enrolled Child Safeguards L(a) In addition to the remedies set forth in §1201, Purchaser may impose the following remedy if Contractor does not comply with, or otherwise fails to perform, the requirements of §009 of the Overview and Part 10: (1) Civil Money Penalty — As authorized under section 1932(e)(2)(A)(i) of the Social Security Act, 42 U.S.C. 1396u-2(e)(2)(A)(i), Purchaser may impose a civil money penalty of not more than $25,000 for each instance in which Contractor, a provider participating in Contractor's provider network, or a provider furnishing items or services covered under Part 1 to an enrolled child with the approval of Contractor, imposes a charge (including a copayment or balance bill) upon an enrolled child or the child's family or caregiver that is not expressly permitted under [drafter insert name of purchasing document] or Title XIX of the Social Security Act.
§1207. Relationship to Other Remedies (a) Other Federal Remedies L(1) Social Security Act Remedies — Imposition of remedies by Purchaser shall not preclude or otherwise prejudice the imposition of remedies by the federal government authorized under Title XI of the Social Security Act, 42 U.S.C.§§1301 -1320c-13 or Title XIX of such Act, 42 U.S.C. §§1396 et seq., with respect to compliance by Contractor with the requirements of [drafter insert name of purchasing document] or federal law. (2) False Claims Act Remedies — [RESERVED]
K§1208. Hearing Prior to Imposition of Civil Money Penalties3 (a) Contractor may request a hearing under the procedures set forth in [drafter insert reference to applicable state law]4 prior to the imposition of a civil money penalty under §1201(a)(5), including: (1) §1202 (relating to the furnishing of items and services covered under Part 1); (2) §1203(a)(1) (relating to false enrollment information); (3) §1203(a)(2) (relating to health status discrimination); (4) §1205(a)(1) (relating to false data); and (5) §1206 (relating to enrolled child safeguards). Endnotes
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Reflected in this Part are provisions from the Balanced Budget Act of 1997 (BBA), P.L. 105-33, under §1932(e) of the Social Security Act, 42 U.S.C. §1396u-2(e) relating to remedies for noncompliance. In particular, this provision requires that each State that enters into (or renews) a Medicaid risk contract with an MCO establish intermediate sanctions (i.e., other than the termination of the contract) that the state may impose if the MCO fails substantially to provide covered items and services to enrollees.
HCFA has published a letter to State Medicaid Directors dated February 20, 1998, www.hcfa.gov/medicaid/bba2208a.htm, providing initial guidance to states regarding intermediate sanctions.
If, as a purchaser, you are interested in purchasing pediatric care for Medicaid-eligible children from managed care organizations on a risk basis, the following language on remedies for noncompliance is for your consideration. Purchasers may also find it useful to review Negotiating the New Health System (3rd Ed.), which provides other options relating to remedies used by state agency purchasers in contracting with Medicaid MCOs. These options may be found at Table 6.4, Volume 2, Part 4, pages 6-322 through 6-484 (www.gwu.edu/~chsrp).