#79 (New): COVID-19 Risk Corridor Reconciliation Reporting Template

DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, Maryland 21244-1850

December 20, 2021
Dr. Judy Mohr Peterson
Med-QUEST Division Administrator
State of Hawai’i, Department of Human Services
601 Kanokila Blvd, Room 518
PO Box 700190
Kapolei, HI 96709-0190
Dear Dr. Mohr Peterson:
Hawai’i submitted a Managed Care Risk Mitigation COVID-19 Public Health Emergency (PHE) section
1115 demonstration application on October 22, 2021. This letter serves as time-limited approval of the
request included in the state’s Managed Care Risk Mitigation COVID-19 PHE section 1115
demonstration application, which will be approved as an amendment under the “Hawai’i QUEST
Integration” section 1115(a) demonstration (Project Number 11-W-00001/9).
On March 13, 2020, the President of the United States issued a proclamation that the COVID-19 outbreak
in the United States constitutes a national emergency by the authorities vested in him by the Constitution
and the laws of the United States, including sections 201 and 301 of the National Emergencies Act (50
U.S.C. 1601 et seq.), and consistent with section 1135 of the Social Security Act (Act) as amended (42
U.S.C. 1320b-5). On March 13, 2020, pursuant to section 1135(b) of the Act, the Secretary of Health and
Human Services invoked his authority to waive or modify certain requirements of titles XVIII, XIX, and
XXI of the Act as a result of the consequences of the COVID-19 pandemic, to the extent necessary, as
determined by the Centers for Medicare & Medicaid Services (CMS), to ensure that sufficient health care
items and services are available to meet the needs of individuals enrolled in the respective programs and
to ensure that health care providers that furnish such items and services in good faith, but are unable to
comply with one or more of such requirements as a result of the COVID-19 pandemic, may be
reimbursed for such items and services and exempted from sanctions for such noncompliance, absent any
determination of fraud or abuse. This authority took effect on March 15, 2020, with a retroactive
effective date of March 1, 2020. We note that the emergency period will terminate upon termination of
the public health emergency (PHE), including any extensions.
In response to the section 1115(a) demonstration opportunity announced to states on March 22, 2020 in
State Medicaid Director Letter (SMDL) #20-002, 1 on October 22, 2021, Hawai’i submitted an 1115
COVID-19 demonstration application to address the COVID-19 PHE. CMS has determined that the
state’s application is complete, consistent with the exemptions and flexibilities outlined in 42 CFR §

See SMDL #20-002, “COVID-19 Public Health Emergency Section 1115(a) Opportunity for States,” available at
https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/smd20002-1115template.docx.

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431.416(e)(2) and 431.416(g). 2 CMS expects that states will offer, in good faith and in a prudent manner,
a post-submission public notice process, including tribal consultation as applicable, to the extent
circumstances permit.
This amendment would test whether, in the context of the current COVID-19 PHE, an exemption from
the regulatory prohibition in 42 CFR § 438.6(b)(1) promotes the objectives of Medicaid. To that end, the
expenditure authority is expected to support states with making appropriate, equitable payments during
the PHE to help maintain beneficiary access to care. This exemption allows states to enter into or modify
a risk mitigation arrangement with a Medicaid managed care plan after the applicable rating period has
begun.
CMS has determined that this amendment – including the expenditure authority detailed below –promotes
the objectives of Medicaid because it is necessary to ensure appropriate, equitable payment for services
during the PHE, and it assists the state in delivering the most effective care to its beneficiaries in light of
the COVID-19 PHE. To that end, the demonstration amendment is expected to help the state furnish
medical assistance in a manner intended to protect, to the greatest extent possible, the health, safety, and
welfare of individuals and providers who may be affected by the COVID-19 PHE. This authority is
effective regardless of whether the state substantially complied with the regulation by, for example,
submitting unsigned contracts and rate certification documents for CMS review either before or after the
effective date of the new regulation but before the start of the rating period.
As part of ongoing managed care oversight, CMS will investigate how providing this authority results in
either increased or decreased payments to plans, given the significant fluctuations in utilization that may
occur during a pandemic. In addition, CMS’s managed care oversight efforts will include an assessment
of whether and how payments under the retroactive risk mitigation arrangements, which must be
developed in accordance with all other applicable requirements in 42 CFR § 438, including §§ 438.4 and
438.5, and generally accepted actuarial principles and practices, are sufficient to cover costs under the
managed care contract. Finally, CMS will ascertain how the implementation of risk mitigation after the
start of the rating period, which may not truly address the uncertainty inherent in setting capitation rates
prospectively, compares to not allowing retroactive risk sharing during a PHE, which may lead to
substantially inaccurate or inequitable payments given the severe disruption in utilization. As with all
section 1115 demonstrations, CMS will take into account the experience of the state and the managed
care plans in this demonstration, gathering more information about the efficacy of such a demonstration
during a PHE.

Expenditure Authority
CMS is approving expenditure authority for the state to add or modify a risk sharing arrangement after the
start of the rating period to maintain capacity during the emergency. This expenditure authority applies
only to contracts and rating periods that begin or end during the COVID-19 PHE. This expenditure
authority allows the state to add or modify the risk sharing mechanism(s) after the start of the rating
Pursuant to 42 CFR 431.416(g), CMS has determined that the existence of unforeseen circumstances resulting
from the COVID-19 PHE warrants an exception to the normal state and federal public notice procedures to expedite
a decision on a proposed COVID-19 section 1115 demonstration. States applying for a COVID-19 section 1115
demonstration are not required to conduct a public notice and input process. CMS is also exercising its discretionary
authority to expedite its normal review and approval processes to render timely decisions on state applications for
COVID-19 section 1115 demonstrations. CMS will post all section 1115 demonstrations approved under this
COVID-19 demonstration opportunity on the Medicaid.gov website.
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period as specified in the state’s contracts with its Medicaid managed care plans. The authority would
exempt, as necessary, the state from compliance with the current requirements in section 438.6(b)(1),
until the end of the PHE. The authority would allow one or more retroactive risk mitigation arrangements
to remain in place even if the state and the managed care plan had agreed to these arrangements after the
requirements in section 438.6(b)(1) became effective. This authority is effective regardless of whether
the state substantially complied with the regulation by, for example, submitting unsigned contracts and
rate certification documents for CMS review either before or after the effective date of the new
regulation, but before the start of the rating period.
If the contract and rating period begins or ends during the COVID-19 PHE and the contract was signed
prior to the last day of the PHE, CMS is hereby granting expenditure authority to permit the state to
retroactively implement one or more risk sharing arrangements for the full duration of the rating period.
If the rating period ended on or after March 1, 2020 and ended prior to the last day of the PHE, the state
can retroactively implement one or more risk sharing arrangements for the full duration of the rating
period. If the rating period began after March 1, 2020, and prior to the last day of the PHE, the state can
retroactively implement one or more risk sharing arrangements for the full duration of the rating period.
A state can only retroactively implement risk sharing arrangements under this demonstration for multiple
rating periods if the contract signature criteria as well as the rating period beginning and/or ending criteria
are met for each rating period.
Monitoring and Evaluation Requirements
Consistent with CMS requirements for monitoring and evaluation of section 1115 demonstrations, the
state will be required to develop an Evaluation Design and a Final Report, that will consolidate the
demonstration’s monitoring and evaluation requirements. The draft Evaluation Design will be due to
CMS no later than 180 calendar days after approval of the demonstration. The draft Final Report will be
due to CMS 18 months after either the expiration of the demonstration approval period or the end of the
latest rating period covered under the state’s approved expenditure authority, whichever comes later.
CMS will provide guidance to help the state fulfill the monitoring and evaluation requirements, including
assistance in developing the Evaluation Design. Given the unique circumstances and time-limited nature
of the demonstration, CMS expects Hawai’i to undertake data collection or analyses that are meaningful
but not unduly burdensome for the state. Specifically, the state should focus on qualitative methods and
descriptive statistics to address evaluation questions that will support understanding the successes,
challenges, and lessons learned in implementing the demonstration. The state is also expected to review
42 CFR § 431.428 to ensure that the Final Report captures all applicable requirements stipulated for an
annual report (e.g., incidence and results of any audits, investigations or lawsuits, or any state legislative
developments that may impact the demonstration). The Evaluation Design and the Final Report will
cover all risk sharing arrangements and rating periods under the scope of the demonstration.
Once approved, per 42 CFR § 431.424(e), the state is required to post the Evaluation Design to its
Medicaid agency website within 30 calendar days of CMS approval. Likewise, per the standard Public
Access requirement associated with section 1115 demonstration deliverables, the state will post the CMSapproved Final Report to its website within 30 calendar days of CMS approval.
Per 42 CFR § 431.420(f), the state must comply with any requests for data from CMS and/or its federal
evaluation contractors.
In addition to the section 1115 monitoring and evaluation requirements outlined above, the state must
separately comply with the applicable managed care reporting requirements per 42 CFR § 438.66 and
section 1936(b) of the Social Security Act.

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Other Information
Approval of this expenditure authority is conditioned upon continued compliance with the previously
approved STCs, which set forth in detail the nature, character and extent of anticipated federal
involvement in the project.
In addition, the approval is subject to CMS receiving written acceptance of this award within 15 days of
the date of this approval letter. Your project officer is Gavin Proffitt. Mr. Proffitt is available to answer
any questions concerning implementation of the state’s section 1115(a) demonstration amendment and his
contact information is as follows:
Centers for Medicare & Medicaid Services
Center for Medicaid and CHIP Services
Mail Stop S2-25-26
7500 Security Boulevard
Baltimore, Maryland 21244-1850
Email: [email protected]
We appreciate your state’s commitment to addressing the significant challenges posed by the COVID-19
pandemic, and we look forward to our continued partnership on the Hawai’i QUEST Integration section
1115(a) demonstration. If you have any questions regarding this approval, please contact Ms. Judith Cash,
Director, State Demonstrations Group, Center for Medicaid and CHIP Services, at (410) 786-9686.
Sincerely,

Daniel Tsai
Deputy Administrator and Director
Enclosure
cc: Brian Zolynas, State Monitoring Lead, Medicaid and CHIP Operations Group