KRS 205.5356: Contracts for Medicaid services by managed care organizations --

Required terms and provisions -- Prohibited actions -- Requirements --

Disenrollment of beneficiary with unknown address -- Penalties.

Any contract entered into, renewed, or extend ed on or after April 14, 2026, by the

cabinet, or any subdivision thereof, and any managed care organization for the delivery

of Medicaid services shall include the following provisions:

(1) The managed care organization shall be prohibited from:

(a) Contacting or providing any incentive for Medicaid providers to resubmit

claims after an initial submission for the purpose of increasing the managed

care organization's risk score;

(b) Contracting with a vendor or other subcontractor for the purpose of engagin g

in activities the managed care organization is prohibited from engaging in

under paragraph (a) of this subsection;

(c) Penalizing a primary care provider for the primary care provider's inability to

make contact with a Medicaid enrollee that has been ass igned to the primary

care provider's roster if the primary care provider has made a good -faith

effort, as defined by the Department for Medicaid Services in its contract with

a managed care organization, to contact the enrollee;

(d) Advertising or otherwis e marketing the Medicaid program except to indicate

the managed care organization's participation in the Medicaid program; and

(e) 1. For the purposes of assessing, evaluating, or determining network

adequacy, counting or otherwise including in any analysi s of network

adequacy an inactive Medicaid provider.

2. As used in this paragraph, "inactive Medicaid provider" means an

enrolled Medicaid provider who has submitted fewer than one (1)

encounter or claim for payment for Medicaid covered services to a given

managed care organization within the previous twelve (12) months;

(2) The managed care organization shall be required to:

(a) Notify the Department for Medicaid Services and the Social Security

Administration in the appropriate county within five (5) business days of

receiving notice from any source of the death of a Medicaid enrollee served

by the managed care organization;

(b) Collaborate with the Department for Medicaid Services to implement and

execute a value -based payment model that aligns incentives for enrollees,

providers, managed care organizations, and the Commonwealth to improve

quality and health care outcomes. The va lue-based payment model required

under this subsection shall include a two percent (2%) withhold from each

managed care organization's capitation amount that can be earned back in full

or in part by the managed care organization through the achievement of

designated value-based measures that shall include but not be limited to:

1. Hospital readmission rates;

2. Cancer screening rates;

3. Child and adolescent well care visits;

4. Prenatal and postpartum care;

5. Emergency department utilization rates;

6. Behavioral health treatment and counseling services; and

7. Recovery services; and

(c) Comply with:

1. This section and KRS 205.533, 205.534, 205.5355(2), and 205.556;

2. All terms, conditions, requirements, performance standards, and

obligations created unde r or included in the contract between the

managed care organization and the cabinet for the delivery of Medicaid

services;

3. KRS 304.17A-708; and

4. All sections of Subtitle 17A of KRS Chapter 304 listed in KRS 205.522;

(3) (a) If the Department for Medic aid Services receives mail returned as

undeliverable following an attempt to contact a Medicaid beneficiary by first -

class mail, the department shall make a good -faith effort to obtain the

beneficiary's current and correct address. The good-faith effort shall include:

1. First, requesting the beneficiary's current and correct address from his or

her managed care organization;

2. Accessing and reviewing all available state and federal data sources,

including but not limited to the National Change of Address database,

from which the department might obtain the beneficiary's current and

correct address; and

3. Attempting to obtain the beneficiary's current and correct address

directly from the beneficiary by attempting to contact him or her

through at least two (2) of the following means of communication:

a. Telephone;

b. Text message; and

c. Email message.

(b) 1. The good -faith effort required under paragraph (a) of this subsection

shall continue for at least thirty (30) days after the date on which the

department first requested the beneficiary's current and correct address

from his or her managed care organization.

2. If the department is able to obtain the beneficiary's current and correct

address, the department shall resend any mail that was returned to the

department as undeliverable.

3. If the department is not able to obtain the beneficiary's current and

correct address within thirty (30) days after the date on which the

department first requested the beneficiary's current and correct address

from his or her managed care organization, th e department shall, to the

extent permitted under federal law, disenroll the individual from the

Medicaid program pending any appeal that may be required or

guaranteed under federal law;

(4) The Department for Medicaid Services shall, in all instances, exe rcise its rights

under a contract with a Medicaid managed care organization to impose all remedies

available to the department under the terms of the contract, at law, or equity if the

department determines that the managed care organization or a subcontra ctor acting

on behalf of the managed care organization has:

(a) Violated any provision of the contract between the department and the

managed care organization; or

(b) Failed to fully comply with any applicable state or federal law or regulation,

compliance with which is mandated expressly or implicitly by the contract;

and

(5) (a) Penalties for violations of state and federal law related to the Medicaid

program, including but not limited to this section, and any other contract

requirements or prohibitions imposed upon the managed care organization by

the cabinet, including but not limited to:

1. The penalty for a violation of subsection (1)(a) or (b) of this section

shall be at least five hundred dollars ($500) for each claim a managed

care organization requests or incentivizes a provider to resubmit;

2. The penalty for a violation of subsection (1)(c) of this section shall be at

least one thousand dollars ($1,000) per violation;

3. The penalty for a violation of subsection (1)(d) of this section shall be at

least five thousand dollars ($5,000) per violation;

4. The penalty for a violation of subsection (1)(e) of this section shall be at

least ten thousand dollars ($10,000) for each inactive provider included

in an analysis of network adequacy; and

5. The penalty for a violation of subsection (2)(a) of this section shall be at

least one thousand dollars ($1,000) per violation.

(b) All penalties and fines imposed or assessed against a Medicaid managed care

organization by the Cabinet for Health and Family Serv ices, including but not

limited to those penalties established in paragraph (a) of this subsection, shall

be deposited into the Medicaid managed care organization compliance fund

established in KRS 205.5357.