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Pennsylvania Proposing New Profit-Sharing Agreement With Physical Health MCOs

PH-MCOs will be limited to 3% profits annually with the requirement to invest additional profits

October 24, 2022Governor Tom Wolf of Pennsylvania recently proposed a new profit-sharing agreement that the state is seeking to enter into with its Medical Assistance physical health (PH) managed care organizations (MCOs). 

Under the new proposed agreement, PH-MCOs will be limited to 3% of the profits. Any excess profits will need to be invested in approved projects and initiatives that directly benefit the health of Pennsylvanians. This agreement will go into effect for the contract year 2023. 

The Pennsylvania DHS has seen an increase in profits in excess of 3% across the program and expects this trend to continue. The goal of the proposed agreement is to ensure that taxpayer dollars are spent on the population that the funding is intended to benefit. 

“At a time 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 Governor Tom 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.”

Acting Secretary Snead added, “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. 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.”

Under this new agreement, MCOs can maintain a 3% profit annually. Any profits that exceed 3% will need to be invested in initiatives that directly support the health and well-being of Pennsylvanians. PH managed care organizations can submit proposals to invest the excess profits in initiatives that improve access to care and provider retention, social determinants of health, and achieving health equity. 

For more information about Pennsylvania’s Medical Assistance program, click here.

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