Wolf administration proposes profit-sharing agreement with managed Medicare organizations, ensuring taxpayer money benefits vulnerable Pennsylvanians


Today, Governor Tom Wolfe announced that the State of Pennsylvania is proposing to enter into a new profit-sharing agreement with the Physics Managed Medical Care (PH) organizations. Under the proposed agreement, PH-MCO’s dividend will be set at 3% annually with the condition that additional dividends are invested in approved projects and initiatives that directly benefit the health and well-being of Pennsylvania residents. The agreement will become effective for 2023.

“At a time when managed care organizations are seeing incredible returns, it is only right that the extra dollars are being directed to helping the people those organizations serve,” Governor Wolf said. “This agreement is a responsible use of public money, and it will cap annual profits to allow wealth to be shared among those most in need.”

“Managed care organizations are important partners in our work to help Medicaid recipients access the care and services needed to achieve the health and quality of life they deserve,” Acting Secretary Snead said. “This profit-sharing agreement will allow us to ensure that taxpayer resources for this program can be used to increase investment in the program’s mission or back to offset program costs, and I am grateful for our partners’ mutual commitment to continue building an innovative and transformative Medicaid program with responsible use of public resources.”

Medicaid MCOs operate similarly to private health insurance companies in that they coordinate provider networks and are exposed to all costs of care for services covered by Medicaid. The Department of Homeland Security works with GCC organizations to negotiate and determine the rates paid on a monthly basis based on the number of their members. Prices are actually sound and depend on the cost of healthcare and use of the service. The cap rates have been developed to ensure the program remains financially solvent while allowing a modest profit of around 2-3%.

The physical health program has been operating in a steady state for several years, and over the past three years, DHS has noted an overall earnings increase of more than 3% across the program. DHS predicts that this trend is likely to continue. The current environment provides an opportunity to require significant investment by PH-MCOs in the Medicaid pool and to ensure that taxpayer money is spent on the population that the funding was intended to benefit.

Under the proposed profit-sharing agreement, major companies would be able to maintain a profit of 3% per annum. For earnings above 3%, each MCO will have the opportunity to submit proposals to retain those earnings for use to support initiatives that align with Department of Homeland Security goals to improve access to care and retain providers, and invest in social determinants of health such as housing, food security, employment support, health equity, and programs that focus on community development. Proposals should include measurable goals that will be approved and tracked by the Department of Homeland Security’s Office of Medical Assistance Programs. If approved programs do not meet these goals, all or part of the retained earnings may be refunded by the Department of Homeland Security.

Since taking office in 2015, the Wolf administration has committed to leveraging the Pennsylvania Medicaid Program to ensure access to care for low-income and vulnerable Pennsylvania residents while striving for quality and innovation that can deliver better outcomes for the people it serves. Medicaid covers more than 3 million Pennsylvanians, and prioritizing quality in this program and the health and well-being of this population is essential to ensuring a healthy and thriving Commonwealth.

For more information about the Medicaid Program in Pennsylvania, visit www.dhs.pa.gov.

Governor Wolfe served two terms as an ever-serving leader for the people of Pennsylvania. Learn more about how him Pennsylvania’s priorities It fueled the return of the Commonwealth, leaving Pennsylvania in a much better place than it was when he arrived.

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