Wolf Administration Proposes Profit-Sharing Agreement ​with Medical Assistance Managed Care Organizations, Ensuring Taxpayer Dollars Benefit Vulnerable Pennsylvanians

October 14, 2022

Governor Tom Wolf today announced that Pennsylvania is proposing to enter a new profit-sharing agreement with its Medical Assistance physical health (PH) managed care organizations (MCOs). Under the proposed agreement, PH-MCOs will be limited to 3% profits annually with the requirement to invest additional profits in approved projects and initiatives that directly benefit the health and well-being of Pennsylvanians. The agreement would take effect for the 2023 contract year.

“At a time of when managed care organizations are seeing incredible returns, it is only right that excess dollars be funneled back into helping the very people those organizations serve,” said Gov. Wolf. “This agreement is a responsible use of public money, and will put a cap on annual profits to allow the wealth to be shared among those who need it most.”

“Managed care organizations are important partners in our work to help Medical Assistance recipients access the care and services necessary to achieve the health and quality of life they deserve,” said Acting Secretary Snead. “This profit-sharing agreement will allow us to ensure that taxpayer resources for this program can be used to further invest in the program’s mission or be returned to offset program costs, and I am grateful for our partners’ shared commitment in continuing to build a Medical Assistance program that is innovative and transformative while responsibly utilizing public resources.”

MCOs function in the Medical Assistance program similarly to insurers for private health insurance, in that they coordinate provider networks and are at risk for all costs of care for services covered by the Medical Assistance program. DHS works with MCOs to negotiate and set rates paid on a monthly basis based on their number of members. Rates are actuarily sound and based on cost of health care and service utilization. Capitation rates are developed to ensure the program remains financially solvent while allowing for a modest profit of approximately 2-3%.

The physical health program has been operating in a steady sate for several years and, over the last three years, DHS noted an overall increase in profits in excess of 3% across the program. DHS expects this trend is likely to continue. The current environment presents an opportunity to require significant investments by the PH-MCOs into the Medical Assistance population and to ensure taxpayer dollars are spent on the population the funding was intended to benefit.

Under the proposed profit-sharing agreement, MCOs will be able to maintain 3% profit annually. For profits that exceed 3%, each MCO will have the opportunity to submit proposals to retain these profits to be used to support initiatives that align with DHS’ goals of improving access to care and provider retention, investing in social determinants of health such as housing, food security, employment supports, achieving health equity and programs that focus on community development. Proposals must include measurable goals that will be approved and tracked by DHS’ Office of Medical Assistance Programs. If the approved programs do not meet these goals, all or part of the profits retained may be recouped by DHS.

Since taking office in 2015, the Wolf Administration has been committed to leveraging Pennsylvania’s Medical Assistance program to ensure access to care to lower income and vulnerable Pennsylvanians while striving for quality and innovation that can deliver better outcomes for the people it serves. Medical Assistance 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, thriving commonwealth.

For more information about Pennsylvania’s Medical Assistance program, visit www.dhs.pa.gov.

Gov. Wolf has served for two terms as a leader consistently at work for the people of Pennsylvania. Learn more about how his Priorities for Pennsylvania have fueled the commonwealth’s comeback, leaving Pennsylvania in a much better place than when he arrived.

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