Network Ownership

(2 options)

State Holds Contract with Dentist/Group

(i.e., State owns the network)

Vendor Holds Contract with Dentist/Group

(i.e., State rents the network)

Description State’s dental provider contract is used by vendor to develop/manage network.

State sets and controls provider reimbursement. State determines all contracting requirements as

well as decisions over terminations. Vendor typically performs network oversight

(credentialing, analysis including administrative updates in system such as address changes, etc.) and makes disciplinary recommendations to state based on state policy.

Vendor uses their own contract. Provider’s reimbursement tied more to how

vendor is paid by state Vendor has ultimate contract control however

State can request approval for Medicaid related items.

Vendor performs network oversight functions and administrative maintenance.

Advantages State maintains full control yet leverages vendor’s staff and experience to administer network.

Consistency with less disruption should state change vendors.

Ability to more easily change vendors/less risk to state.

Quality oversight performed by vendor following State guidelines.

Somewhat easier administratively for state – no contracts to approve/ manage, etc.

Vendors typically more experienced in managing provider contracts.

Disadvantages Some additional administration burden state. Adds some complexity to vendor management and

oversight as vendor has to request more permission.

Loss of control by state can be somewhat mitigated via vendor negotiation.

Significantly more disruptive to provider network if state elects to change vendors - new network must be created – potentially.

Proposed Delivery System Options for the Colorado Medicaid Dental Program

Holder of Contract 3 Options: Full Risk

Administrative Service Organization (ASO)/Third Party Administrator (TPA)

(Self-Funded)Incentive – Based

Description Full claims/utilization risk is passed on to vendor. Claims expense, administrative expense and any profit/loss are vendor’s responsibility. Vendor is typically paid on per member per month basis (PMPM).

Financial risk for utilization is maintained by State. Vendor is paid a monthly administrative fee only for services performed – typically on a per member per month basis (PMPM).

Financial risk for utilization is typically maintained by State under this model. Vendor paid an administrative fee for services performed (PMPM). Financial incentives – contracts are established annually that pay vendor a bonus for hitting established targets, (e.g., clinical, network, cost, etc.).

Advantages No financial risk to State – more predictable.

Administratively easier for state than alternative.

Vendors have more incentive to manage program costs yet this can be mitigated via incentives under an ASO arrangement

Meaningfully less expensive to State if proper oversight is in place. Savings can be returned to the program via enhanced benefits, reimbursement, outreach initiatives, etc.

State maintains more control over program elements, and can more easily direct/align program to reach desired state objectives.

Generally this model is viewed more favorably by constituencies when proper vendor oversight exists.

Same as ASO above yet with added incentives provided to focus vendor on achieving key benchmarks.

Shared data analysis means unanticipated higher utilization can be mitigated to some degree via stringent oversight by state.

With proper vendor oversight and potentially aligned financial incentives, higher program costs can be mitigated.

Proposed Delivery System Options for the Colorado Medicaid Dental Program

Holder of Contract 3 Options: Full Risk

Administrative Service Organization (ASO)/Third Party Administrator (TPA)

(Self-Funded)Incentive – Based

Disadvantages Expensive – premium is paid to vendor for vendor assuming risk.

Vendors have more incentive to manage program costs. They can be overly aggressive in managing care which impacts enrollee access to care and will frustrate network, potentially limiting provider participation.

Less client choice if network is not big enough.

State holds financial risk for unanticipated high utilization.

Somewhat greater administrative burden on the State.

Vendors have less incentive to closely manage program costs.

More costly than a pure ASO model (however, only if key identified benchmarks are met).

Network Options State rents the network State owns the network OR State rents the network

(see table on Page 1)

State owns the network OR State rents the network

(see table on Page 1)

Proposed Delivery System Options for the Colorado Medicaid Dental Program