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1 Statewide Medicaid Managed Care (SMMC) Cost Proposal Magellan Complete Care (Florida MHS Inc., dba Magellan Complete Care) Actuarial Memorandum and Certification Overview The purpose of this memorandum is to document the development of the cost proposal corresponding to the Florida Statewide Medicaid Managed Care ( SMMC ) program and the Florida Agency for Health Care Administration s ( Agency ) solicitation of bids in regards to the rate year. Magellan Complete Care ( Magellan ) is submitting its bid as a capitated Severe Mental Illness ( SMI ) Specialty Managed Medicaid Assistance ( MMA ) Plan, as defined in the Agency s documents supporting its program re procurement procedures. These documents, which provide an overview of the program, benefits provided, specific bid instructions for respondents, rate group structure, as well as a data book with historical program cost data, are publicly available and accessible via the link below: Procure.shtml Member eligibility for the SMI Specialty plan offering is currently determined based on an algorithm that considers both diagnostic and pharmacy data to establish an SMI designation, which is permanent in nature. For the purposes of the rate year cost proposal documented here, it is assumed that the qualifying criteria for SMI designation is unchanged. Magellan has participated in the Florida SMMC program as an SMI Specialty Plan offering in 8 of the 11 defined rate regions since the program s inception in 2014, and currently enrolls approximately 67,000 members, or approximately 25% of the statewide eligible SMI members. The cost proposal summarized here for rate year reflects an expanded service area to include all 11 state regions. The aggregate cost proposal is developed based on an expectation of approximately 69,000 enrolled members, with new expected enrollment associated with the additional regions roughly offset by the loss of current members receiving long term care services that in will only be eligible for one of two prescribed SMMC Long Term Care Plan options. In keeping with the specific rate bid instructions for respondents, the cost proposals developed here are in regards to base rate group categories only. It is expected that final rates will incorporate additional rate cell factors within each rate group to differentiate between age, gender, or SMI in the case of rate groups not already specific to SMI. In addition, it is expected that final rates may incorporate some form of risk adjustment. Both are considered outside the scope of this memorandum and certification.

2 This memorandum will refer to Exhibit C 1, which represents the prescribed framework for submitting the final cost proposal. A single Exhibit C 1 is submitted separately for each of the 11 rate regions being bid, however this actuarial memorandum addresses the cost proposal development of all regions collectively. Summary Results Tables 1a and 1b summarize the weighted average PMPM base rate bid for rate year , by rate region and by rate group, respectively, for the membership contemplated by Magellan s cost proposal. The remainder of this memorandum discusses the specific data, adjustments, and assumptions underlying the cost proposal. Each section of the document is numbered to be consistent with the sections described in the Attachment C cost proposal instructions. Table 1a Summary Weighted Average Base Rates By Rate Region Excluding Maternity Kick Payment Rate Year September 2018 August 2019 Assumed Service Admin Allowance Gain/Loss Margin Total Average Cost Rate Rate Region Members PMPM PMPM % Rate PMPM % Rate PMPM Region 1 1,385 $738 $ % $17 2.0% $841 Region 2 3,323 $575 $ % $13 2.0% $661 Region 3 4,625 $642 $ % $15 2.0% $734 Region 4 8,951 $733 $ % $17 2.0% $836 Region 5 5,519 $697 $ % $16 2.0% $797 Region 6 9,953 $647 $ % $15 2.0% $740 Region 7 9,818 $688 $ % $16 2.0% $787 Region 8 2,284 $588 $ % $13 2.0% $675 Region 9 6,003 $682 $ % $16 2.0% $780 Region 10 5,794 $772 $ % $18 2.0% $876 Region 11 10,981 $736 $83 9.9% $17 2.0% $835 Wtd Aggregate, Excl Kick Pmt 68,635 $692 $ % $16 2.0% $790 2

3 Table 1b Summary Weighted Average Base Rates By Rate Group Rate Year September 2018 August 2019 Assumed Service Admin Allowance Gain/Loss Margin Total Average Cost Rate Rate Group Members PMPM PMPM % Rate PMPM % Rate PMPM TANF SMI 33,314 $437 $ % $10 2.0% $509 SSI Medicaid Only SMI 24,233 $1,252 $ % $28 2.0% $1,415 SSI Dual Eligible 10,489 $140 $ % $3 2.0% $161 Child Welfare 208 $378 $ % $9 2.0% $443 HIV/AIDS Medicaid Only 322 $3,241 $ % $73 2.0% $3,652 HIV/AIDS Dual Eligible 69 $114 $ % $3 2.0% $132 Mat Kick Pmt Per Delivery 1,388 $3,818 $ % $89 2.0% $4,449 Wtd Aggregate, Excl Kick Pmt 68,635 $692 $ % $16 2.0% $790 Base rates for each individual rate group and rate region combination are summarized in the individual C 1 Exhibits corresponding to each rate region. 1. Starting Base Period Data As part of the Agency s solicitation of cost proposals it has made available a data book containing historical MMA program cost data. A complete description of the data book content, including data sources, delivery systems, and service categorization is contained with the data book material and is publicly available via the link noted above. Although the data book contains multiple years of historical data, the Magellan cost proposal is predicated on the most current one year period (SFY ) as its base starting point. SFY represents the second full year of implementation of the MMA program. This reflects the most recent available data, and excludes the first year of the program where a significant portion of the population was transitioned into MMA from the legacy FFS program. The use of SFY data as the basis for the cost proposal is also consistent with the Agency s rate methodology it will use as a starting point for reviewing respondent cost proposals. The size of the one year of SFY data is assumed to provide a credible data set for the purposes of developing this cost proposal, and this data, including the represented blend of Capitated Plan and FFS Express Enrollment delivery system data, is utilized for the purposes of this cost proposal without adjustment. It is summarized on Exhibit C 1 in Worksheets M.1 M.10, Section A, in columns M O, and in Worksheet M.12, columns K M. 2. Adjustments To Starting Base Period Data Also consistent with the Agency s starting point for reviewing respondent cost proposals, Exhibit C 1 is pre populated with the following set of base data adjustments, representing adjustments deemed necessary to account for specific issues related to historical data quality or completeness. These adjustments were reviewed for reasonability and utilized as part of Magellan s cost 3

4 proposal development without change. These adjustments are recognized on Exhibit C 1 in Worksheets M.1 M.10, Section A, in columns P S, and in Worksheet M.12, columns N P. 1. Expanded Benefits Adjustment to remove the expenses associated with expanded benefits that are not already excluded from the base data. Expanded benefit costs are intended to be funded by individual MMA capitated plans, and are excluded from the medical costs used to set capitation rates. 2. IBNR Adjustment to recognize the value of the claims liability for claims that are estimated to be paid after the paid through date of the base data. 3. Third Party Liability Adjustment required to re state the starting base data to be net of any third party liability collections. 4. Missing Data Acuity Adjustment to account for capitated plan data excluded from the starting base data due to credibility concerns. Because of the permanent nature of the member SMI designation, the average acuity of the SMI population is expected to change over time as the aggregate size of the identified cohort grows. The starting base data is represented to be net of a member re grouping adjustment to reflect the SMI /non SMI membership mix expected within the population during the rate year. No further adjustment is made in regards to changes in the SMI population. No additional adjustments are made to the starting base period data. 3a. Utilization Trend Exhibit C 1, Worksheets M.1 M.10, Section A, column W reflects the estimated utilization trend between the SFY base period and the rate projection period represented by the 12 month period beginning September 1, 2018, or 39 months of total trend. Magellan s cost proposal includes a 1% annualized utilization trend for all services except Hepatitis C and Maternity Kick utilization (each discussed below), which is consistent with it s actual aggregate trend results (adjusted for appropriate one time program impacts) observed for the most recent one year period ending June Although modest variation in utilization trend has been observed across regions, rate and cost categories, a uniform 1% trend is reflected in the cost proposal in order to avoid unintended results attributable to possible mix of services differences between Magellan s cost profile and the cost profile reflected in the starting base data. The Magellan cost proposal reflects a separate specific utilization trend assumption for Hepatitis C medications, reflecting an average annualized trend rate of 32%. This rate represents the blended average of the observed Magellan utilization trend for the most recent one year period ending June 2017 (125% annualized), and a more modest forward looking projection (4% annualized) consistent with recent experience showing materially slower growth. Trend is applied uniformly to the starting base period Hepatitis C costs in each rate group and each rate region. Because the maternity kick payment cost proposal is developed as a per occurrence rate, no utilization trend is assumed. 4

5 3b. Provider Unit Cost Trend Exhibit C 1, Worksheets M.1 M.10, Section A, column X, and Worksheet M.12, column T reflects the estimated unit cost trend between the SFY base period and the rate projection period represented by the 12 month period beginning September 1, 2018, or 39 months of total trend. Consistent with the Agency s prescribed rate bid framework, unit cost trends reflected in Magellan s cost proposal exclude the impact of changes to Florida s benchmark FFS Medicaid reimbursement rates from SFY to SFY Therefore, unit cost trend factors included in the cost proposal represent only the expected changes in reimbursement costs for providers that are not contracted in a manner tied to the Florida benchmark fee schedules. Unit cost trend assumptions are developed separately for four distinct categories of service, each discussed below: 1. Pharmacy, excl Hepatitis C The cost proposal reflects a core 6.5% average annual trend rate, consistent with Magellan s most recent observed actual trend (adjusted for the one time impact of the generic Abilify introduction to the State s formulary in mid 2016) for the one year period ending June The actual average trend factor included in the cost proposal, 2.8%, reflects the one time unit cost benefit of the generic Abilify introduction. In order to avoid unintended results attributable to possible mix of services differences between Magellan s cost profile and the cost profile reflected in the starting base data the estimated trend is applied in the cost proposal uniformly for the generic, brand, and other specialty pharmacy cost categories, with no differences by rate group or rate region. 2. Pharmacy, Hepatitis C The cost proposal reflects a projected unit cost for the rate year that is 9.4% lower than the period corresponding to the starting base data. This rate represents the blended average of the observed Magellan unit cost trend for the most recent one year period ending June 2017 ( 25% annualized), and a more modest forward looking rate (8.7% annualized) for the balance of the rate projection period consistent with an assumption that treatment costs per patient will increase at a rate modestly higher than overall pharmacy costs as the rate of introduction of new medications slows. Trend is applied uniformly to the starting base period Hepatitis C costs in each rate group and each rate region. 3. Inpatient, Outpatient, and Physician Services Magellan s cost proposal includes a provision equating to a 2% total reimbursement increase for the approximate statewide 18% of network spend projected to not be tied to the state benchmark fee schedules during rate year The aggregate value of this provision is applied to all rate groups and rate regions uniformly. 4. Other Ancillary Services A 0% trend is reflected in the rate bid, based on an expectation that contracted rates for these services will continue to remain at current levels throughout the rate period covered by the cost proposal. In Exhibit C 1, these services correspond to those not referred to as rate survey cost categories in section 4 of this memorandum. 5

6 4. Provider Contracting Adjustments Exhibit C 1, Worksheets M.1 M.10, Section A, columns Y AA, and Worksheet M.12, columns U W represent adjustments made to the starting base period cost data to re state market average reimbursement levels to reflect Magellan specific reimbursement levels anticipated to be in effect for the period corresponding to the rate year. To assist plans in making the appropriate adjustments, the Agency as part of its data book material included a summary of the results of its periodic network rate survey by rate group and rate region, containing its estimate of SFY aggregate provider contracting levels measured as a percentage of the Florida Medicaid fee for service reimbursement rates. This information was provided for selected inpatient facility, outpatient facility (non ASC), and professional cost categories (the rate survey cost categories ) denoted in the cost proposal template. Table 2 summarizes the Magellan contract reimbursement levels for the same selected cost categories, also expressed as a percentage of the Florida Medicaid fee for service reimbursement rates. Results are summarized to show current reimbursement rates, the projected rate year reimbursement rates, as well as the projected share of spend assumed to be tied to the state benchmark fee for service fee schedules. Projected reimbursement rates reflect the benefit of improved network re contracting expecting to be achieved prior to the rate year. For provider contracts not tied to the state benchmark fee schedules, average reimbursement rates are developed and expressed in Table 2 as a percentage of the current fee for service benchmark, and the expectation that the rate year fee for service benchmark will not be materially different. Table 2 Magellan Complete Care Provider Contracting Ratios Relativity To Florida State FFS Inpatient Non ASC Outpatient Professional % Tied % Tied % Tied Current Proj To FFS Current Proj To FFS Current Proj To FFS Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % Reg % % % For the selected cost categories discussed above, the cost proposal reflects the removal of the aggregate provider contracting levels (Worksheets M.1 M.10, Section A, columns Y, and 6

7 Worksheet M.12, columns U) and substitutes the value of Magellan projected provider contracting levels as shown in Table 2 (Worksheets M.1 M.10, Section A, columns Z, and Worksheet M.12, columns V). The projected inpatient contracting ratio in Table 2 is used as the basis for the maternity kick payment contracting adjustment. For categories other than those corresponding to the rate survey cost categories, excluding Pharmacy (discussed below), a single reimbursement adjustment factor is applied for each general category of similar type service (Worksheets M.1 M.10, Section A, columns AA, and Worksheet M.12, column W) to reflect the estimated total difference in contracting levels relative to the base data period. For each category of similar type service, the estimate reflects the difference between the projected Magellan service category reimbursements reflected in Table 2 and the aggregate average baseline reimbursement for all rate survey cost categories combined, as reflected in M.1 M.10 column Y and M.12 column U. As such, the cost proposal assumes that in aggregate the reimbursement relationships for services not addressed by the rate survey material are not materially different than for those services addressed by the rate survey material. The provider cost adjustments discussed above are reflected in the cost proposal for all rate groups excluding Dual Eligible members. Net secondary unit costs on cross over claims for Dual Eligible members are not expected to be materially different from those reflected in the starting base data, and as such no adjustments are applied. For pharmacy, information provided by the Agency in the data book does not include sufficient detail for respondents to adequately compare pharmacy network contracted reimbursement rates. Magellan s cost proposal assumes that its projected pharmacy reimbursement rates are not materially different from those reflected in the aggregate starting base data; therefore, no provider contracting adjustment is included. For rate regions other than regions 1, 3, and 8 approximately 100% of the projected cost corresponds to providers currently under contract. For rate regions 1, 3, and 8 (regions corresponding to Magellan s proposed rate region expansion) it is estimated that approximately 70 80% of the projected cost corresponds to providers currently under contract, with the balance expected to be contracted prior to the rate year. The projected reimbursement rates for the portion of the projected cost not currently under contract are based on guidance from network contracting staff, and reviewed for reasonableness in terms of ability to achieve. 5. Managed Care Savings Adjustments Exhibit C 1, Worksheets M.1 M.10, Section A, columns AB AC reflect two adjustments in regards to managed care savings assumptions, each discussed below: a. Realized UM Achieved To Date (Column AB) Magellan s cost proposal reflects the value of inpatient utilization management results achieved in the periods subsequent to the SFY base data period. The 9% inpatient value recognized, measured as the incremental improvement in hospital admissions avoided specifically as a result of stricter application of medical necessity protocols, is applied to each inpatient cost category. 7

8 b. Incremental Inpatient Admit Reductions (Column AC) A 4% aggregate savings adjustment is applied to each of the inpatient cost categories to reflect additional admission rate reductions expected to be achieved for the period corresponding to the rate year. Results are expected to be derived from focused member care coordination program enhancements. The magnitude of impact projected was evaluated for reasonableness based on a review of Magellan historical readmission rate results and an evaluation of potentially avoidable admissions, and through discussions with clinical leadership. For each of the managed care factor adjustments discussed above, application is made uniformly for all rate groups and all rate regions, with the exception of the Dual Eligible rate groups which are assumed not to reflect material benefit form the activities described. Similarly, no impact is assumed in regards to the projected maternity kick payment costs. 6. Other Cost Proposal Adjustments (Multiplicative) Exhibit C 1, Worksheets M.1 M.10, Section A, column AG reflects a cost proposal adjustment specific to non emergent transportation costs, with impact reflected only in regards to rows 53 and 54 of the cost proposal template. Because of the unique nature of Magellan s provider contract arrangement for these services, it is the intent of the cost proposal to construct the projected care expense for rate year in a manner that equates to a $9.50 weighted average PMPM for non emergent transportation services for all covered members. Cost savings resulting from the projection in reference to costs otherwise implied by the base data are expected to be achieved from a combination of lower unit costs per service as well as improved utilization management controls. Table 3 shows the derivation of the cost factor applied. Table 3 Non Emergent Transportation Cost Adjustment Factor (a) Wtd Avg PMPM Cost Projection, Prior to Adjustment $10.96 (b) Estimated Magellan Member Acuity Adjustment 1.07 (c) = (a) / (b) Wtd Avg PMPM Cost Projection, Prior to Adjustment, Magellan Acuity Basis $10.27 (d) Cost Proposal Targeted PMPM $9.50 (e) = (d) / (c) Cost Proposal Adjustment Factor Weighted average cost projections considered above are developed based on the approximately 69,000 members contemplated by Magellan s aggregate cost proposal. Estimated risk acuity is developed based on Magellan s actual aggregate risk adjustment value, calculated net of membership in rate cells not otherwise subject to risk adjustment, for the most 8

9 recent period (rate year ) during which a material risk adjustment methodology was applied to Magellan s membership, adjusted to approximate an appropriate application to transportation costs. The cost proposal adjustment factor is applied to all rate cells and all rate regions in the cost proposal uniformly. 7. Other Cost Proposal Adjustments (Additive) There are no adjustments that correspond to this section of the cost proposal template. 8. Proposed Administrative Cost Allowance Administrative allowance provisions for the Magellan cost proposal have been developed based on the composition and volume of expected membership summarized in Tables 1a and 1b. Aggregate and component expense levels are developed primarily based on Magellan s calendar year 2018 internal budgeting and planning process, with additional adjustments to reflect in particular both the additional membership anticipated in regards to the proposed expansion to include rate regions 1, 3, and 8, as well as the impact of changed member composition resulting from the removal of current membership receiving long term care services that in will only be eligible for one of two prescribed SMMC Long Term Care Plan options. As part of the budgeting and planning process described above, certain corporate expenses are allocated to the local Florida plan as described in a Master Services agreement between Magellan Health (parent company) and Florida MHS Inc. This agreement stipulates, in accordance with SSAP 25, that Magellan Health will allocate the actual administrative costs incurred by the parent company. Certain expenses are allocated on a volume basis (claim, calls, contracts volume, for example). All other costs, such as management information services, legal and regulatory, cash and asset management, and similar corporate management costs, are allocated based on the proportion of local care management center costs. For the purposes of this cost proposal, an additional expense analysis was performed to further represent the composition of total projected administrative expenses in terms of both fixed and variable components for each major cost category. Fixed costs were expressed as a per member per month cost (a single rate for Dual Eligible members, and a separate single rate for non Dual Eligible members) and allocated uniformly to each member contemplated in the cost proposal, with no variation by rate region. Variable costs for each major cost category were allocated to members in each rate group and each rate cell based on projected total claim cost relativities for each. As such, a greater share of variable expenses are appropriately attached to the highest cost membership and geographies within the state. Table 4 summarizes the proposed administrative expense allowances and components discussed above. The identified expense categories correspond to those prescribed in Exhibit C 1, Worksheet N.1. Because of internal cost tracking limitations, separate expenses are not shown for the Membership cost category; related expenses are included in the Customer Service cost category. 9

10 Table 4 Summary of Weighted Average Administrative Expenses Total Fixed Var % Fixed % Corp Expense Category PMPM PMPM PMPM PMPM Alloc Claims $8 $0 $8 5% 95% Provider Network Devel and Management $7 $4 $3 61% 53% Customer Service $6 $2 $4 36% 0% Membership $0 $0 $0 n/a n/a Utilization Review $7 $1 $6 11% 0% Quality Management $4 $1 $3 30% 0% Case and Disease Management $13 $2 $11 13% 0% Other Healthcare Services $2 $2 $1 72% 0% Business Development/ Marketing/ Sales $1 $0 $0 88% 0% Finance $1 $1 $0 95% 0% Information Systems $7 $2 $4 35% 100% Other Management and Administration $27 $6 $20 23% 74% Total Administrative Allowance $82 $22 $60 27% 46% The per delivery administrative cost allowance for the Maternity Kick payment is assumed to be the same as the per member administrative cost allowance for the TANF SMI rate group. The weighted average total administrative cost allowances proposed by rate region and by rate group, expressed both in terms of per member per month expense as well as expense expressed as a percentage of the aggregate cost proposal, are summarized in Tables 1a and 1b, respectively. 9. Proposed Gain / Loss Margin Magellan s cost proposal reflects a 2% gain / loss margin provision, uniform for all rate groups and rate regions. 10. Membership As part of the rate proposal development, a sensitivity analysis was performed in regards to the aggregate margin expected under different enrolled membership scenarios. The results of the testing, summarized in Table 5, are based on an assumption that fixed administrative expenses are held constant at the level corresponding to the baseline bid membership level, and that non fixed administrative expenses are variable consistent with the administrative expenses developed and discussed in section 8 of this memorandum. 10

11 Avg PMPM PMPM PMPM PMPM % Scenario Description Mbrs Revenue Care Admin Margin Margin Baseline Actual Bid 68,635 $790 $692 $82 $16 2.0% Scenario 1 10% Additional Membership, Uniform 75,499 $790 $692 $80 $18 2.3% Scenario 2 10% Less Membership, Uniform 61,772 $790 $692 $84 $13 1.7% Scenario 3 25% Additional Membership, Uniform 85,794 $790 $692 $77 $20 2.6% Scenario 4 25% Less Membership, Uniform 51,477 $790 $692 $89 $8 1.1% Scenario 5 Exclude Dual Eligible Membership 58,077 $904 $792 $95 $17 1.9% Scenario 6 Exclude Expansion Regions 1, 3, 8 60,342 $797 $699 $85 $13 1.6% Scenario 7 Exclude 2 Largest Regions (6,11) By Mbrshp 47,701 $790 $691 $91 $7 0.9% Scenario 8 Exclude 2 Smallest Regions (1,8) By Mbrshp 64,967 $793 $695 $83 $15 1.8% Scenario 9 Exclude Region 11 57,654 $781 $684 $85 $12 1.5% Results exclude Maternity Table 5 Membership Sensitivity Testing The set of scenarios included is not exhaustive, but collectively demonstrate that sufficient levels of margin can be expected under a reasonable range of possible enrolled membership outcomes. 11. Statement of Rate Adjustments Excluded From Cost Proposal The following items are assumed to be excluded from the submitted cost proposal and the corresponding rate negotiation process for the MMA program: a. Seasonality adjustments that may be needed for differences in timing between the rate year period assumed for the cost proposal and the actual program implementation schedule; b. Adjustments that may be necessary for the adding of nursing facility service costs for adults that are excluded from the SMMC LTC program as a covered benefit under MMA; c. The impact that, subject to CMS approval, may result from the transition of Medicaid recipients receiving home and community based waiver services through the Project AIDS Care, Traumatic Brain Injury, and Adult Cystic Fibrosis waivers into the LTC Program; d. The impact that the implementation of the LTC program Express Enrollment, which will transition more members into the LTC Medicaid Only and LTC Dual Eligible rate groups faster; e. The impact that the enrollment of certain CMSN members into MMA capitated plans may have, resulting from the Florida Department of Health s rescreening process that identified CMSN members that did not meet current CMSN enrollment criteria; 11

12 f. The restructuring of the existing MMA rate group structure, risk adjustment process, or other changes, if necessary, to develop actuarially sound rate mechanisms for any new specialty populations covered by one or more Specialty Plans; g. The application of final rate cell factors to final negotiated rates by rate group and rate region; h. Florida Medicaid FFS hospital, physician, and other provider reimbursement rates that may be in effect for rate year ; i. Costs related to the inclusion of the Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) wraparound payments which make up the difference between capitated plan payments and the Agency s encounter reimbursement rates; j. Costs related to the MMA Physician Incentive Program (MPIP). The MMA data book reflects a time period prior to the October 2016 implementation of the MPIP and therefore fully excludes all costs associated with the MPIP; k. Adjustments that may be necessary for the compliance with the Medicaid managed care regulation published by the Centers for Medicare and Medicaid Services that disallows capitation payments eligible for the federal match for members aged 21 to 64 with a stay of more than 15 days in a given calendar month in an Institute for Mental Disease (IMD); l. Costs related to the impact of the July 1, 2016 program change that provided Medicaid eligibility to lawfully residing children if they meet all other eligibility requirements; m. Costs that may be related to the development of the medical school faculty physician group value based purchasing arrangement; n. Costs related to the MMA organ transplant kick payment amount; o. Costs related to the development of the Behavioral Health Reform Waiver Services enhanced payment amount for temporary housing assistance and other supportive behavioral health services; p. Costs associated with any other program changes excluded from the Attachment C cost proposal instructions and rate methodology narrative; q. Costs related to the federal health insurance provider fee (HIPF); r. Cost adjustments that may be required to comply with the Mental Health Parity and Addiction Equity Act; 12. Actuarial Certification Attached at end of this document. 12

13 Statewide Medicaid Managed Care (SMMC) Cost Proposal Magellan Complete Care (Florida MHS Inc., dba Magellan Complete Care) Actuarial Certification I, Daniel M. Harris, am Vice President of Medical Economics of Magellan Healthcare, Inc. I am a member in good standing with the American Academy of Actuaries, and meet its Qualification Standards for issuing Statements of Actuarial Opinion. I have examined the actuarial assumptions and actuarial methods used in developing the submitted cost proposal in reference to the Florida Statewide Medicaid Managed Care (SMMC) solicitation for rate year full risk capitation rates. To the best of my knowledge and belief, the proposed capitation rates are in compliance with the provisions of Actuarial Standard of Practice No. 49 Medicaid Managed Care Capitation Rate Development and Certification. In my opinion, the proposed capitation rates are actuarially sound, have been developed in accordance with generally accepted actuarial principles and practices, provide for all reasonable, appropriate, and attainable costs during the September 2018 August 2019 time period for which they were intended, and are appropriate for the populations to be covered and the services to be provided. In making my opinion, I have relied upon the accuracy of the underlying data book summaries and related narrative provided by the Florida Agency for Health Care Administration as part of their rate bid solicitation. I did not audit the information contained in the data provided, however I reviewed the material for reasonableness and found there to be no material defects. In other respects, my examination included such review of the underlying assumptions and methods used and such tests of the calculations as I considered necessary. Apart from the provisions of Actuarial Standard of Practice No. 49, actuarial methods, considerations, and analyses used in forming my opinion conform to the appropriate additional Standards of Practice as promulgated from time to time by the Actuarial Standards Board, whose standards form the basis of this Statement of Opinion. Daniel M. Harris, ASA, MAAA October 19,