Community Insurance Plan

EXHIBIT 10.9


CHILD HEALTH PLUS
COMMUNITY INSURANCE PLAN
ELIGIBLE CHILDREN IN NEW YORK STATE


TABLE OF CONTENTS


PAGE
---- I. Introduction...................................................................................... 1


II. Expanded Program Design........................................................................... 9


III. General Information for the Bidder................................................................ 40


IV. Application Format................................................................................ 48


V. Evaluation Criteria............................................................................... 53


VI. Review Process.................................................................................... 59


APPENDICES:


Appendix A - Income Guidelines
Appendix B - Advisory Memoranda
Appendix C - University of Rochester
Final Report to Legislature
Appendix D - Quarterly Enrollment Report
Appendix E - Benefit Package
Appendix F - Procedures and Requirements for Filing
of Rates and Rate Filing Guidelines
Appendix G - Reporting Requirements
Appendix H - Model Application
Appendix I - New York State Standard Clauses (Appendix A)
for all New York State Contracts
Appendix J - Electronic Billing Process
Appendix K - Budget Forms
Appendix L - Bidder's Summary of Proposal
Appendix M - Standard Contract/Bid Insert Form
Stock Item Specification Form


I. INTRODUCTION


A. PURPOSE


The New York State Department of Health (DOH) is issuing this
Request for Proposal (RFP) to voluntarily select and contract with
organizations to provide health insurance coverage, through a
managed care product, to eligible New York State children under the
Child Health Plus program. The New York Health Care Reform Act of
1996 (HCRA of 1996) has expanded the eligibility of the current
program to include children under the age 19 and added inpatient
benefits.


All insurers are eligible to participate in the Child Health
Plus Program. All New York State Medicaid managed care providers are
strongly encouraged to respond to this RFP. It is the goal of the
DOH that every child have a medical home, therefore managed care
products need to be available to all eligible children. The benefits
to insurers of creating a natural linkage between the Child Health
Plus program and Medicaid managed care would include not only
seamless coverage for members of that insurer but also increased
enrollment for the plans.


Improving the health status of New York State's children is
one of DOH's highest priorities. An important way to improve child
health is by increasing access to primary and preventive care. New
York State is taking steps to improve access to care by taking
advantage of key opportunities: the reforming of the State's
Medicaid Program to a managed care system; and reforming the State's
hospital reimbursement methodology so that in addition to
reimbursing hospitals directly for uncompensated care, the State is
subsidizing health insurance for children of low income families
which will emphasize preventive care.


New York is committed to improving the health of children. Low
income children are at particular risk for illness and injury that
affect their health status. In New York State, children of low -
income families, including children on Medicaid, continue to be
over-represented in infant mortality and low birthweight statistics.
These children are more likely to receive care in emergency room
settings for primary health care problems, lack a primary care
provider, and become hospitalized for conditions (e.g. asthma) which
are potentially preventable with high quality ambulatory care. Data
show that these children are also more likely to be less than fully
immunized, suffer


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preventable infectious diseases, and be exposed to toxins such as
lead.


The health care system in New York State is designed to be
proactive, providing children with the health care that focuses on
prevention so that they can lead healthier lives. Under the Child
Health Plus Program, children will have a "medical home" with a
primary care provider who will coordinate his or her health care as
part of a "seamless system", including referrals to specialists,
when appropriate.


In order to promote the objective of "seamless coverage" the
DOH is currently working to develop a joint application process for
Medicaid, Child Health Plus, and the Special Supplemental Food
Program for Women, Infants, and Children (WIC). This joint
application will also have an objective of simplifying
administrative processes for both patient and providers.


Children who enroll in Medicaid or Child Health Plus may
experience changes which make them ineligible for a program.
"Seamless coverage" would allow children the ability to move between
insurance programs without changing providers. The children would
have access to the same provider network, regardless of the payer
(Medicaid or Child Health Plus).


Other DOH projects which are currently underway which focus on
a goal of improving children's health include, but are not limited
to, the following:


- Electronic Birth Certificates


Currently underway in DOH is the implementation of a system of
electronic reporting of birth certificate information. This
system has a goal of simplifying while expediting
bi-directional transfer of information between DOH and health
care providers.


Currently, more than 90% of hospitals (excluding New York
City) report births directly to DOH. Nearly that percentage of
New York City hospitals report electronically to the New
York City Department of Health. The NYC DOH then forwards its
data, once it has been validated, to the State DOH.


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- Immunization Registries


The development of a prototype child immunization registry is
currently underway. This registry will build upon the
electronic birth certificate data base to allow providers to
have access to the immunization status of their pediatric
patients.


DOH currently supports six regional consortia engaged in
designing and promoting the electronic recording of
immunization status in their area. Over time, these regions
are expected to interconnect and begin to include the rest of
the State as well. New York City currently mandates provider
participation in an immunization registry.


- Lead Screening


The DOH Lead Poisoning Prevention Program has been successful
in integrating blood lead screening as part of primary health
care for children. More children are being appropriately
screened within physicians' offices.


In summary, in order to improve the health outcomes of New
York State's children, there must also be a corresponding increase
in access to health care for children of the working poor who are
neither eligible for Medicaid nor covered by health insurance
through their employers. The expansion of the Child Health
program, along with other State initiatives both present and future,
demonstrate the State's commitment to creating a seamless system for
children to access health services.


B. BACKGROUND OF THE CHILD HEALTH PLUS PROGRAM


The current Child Health Plus program provides a subsidized,
primary and preventive health insurance program for uninsured and
underinsured eligible children residing in New York State that are
under the age of 17 (after January 1, 1997, children under the age
of 19); not eligible for Medicaid; and who lack equivalent health
care coverage. Children in households with gross incomes equal to or
less than 222 percent of gross federal poverty levels are eligible
for a premium subsidy under Child Health Plus (please refer to the
income guideline chart in Appendix A). Families above these income
guidelines are able to


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purchase Child Health Plus but do not receive a premium subsidy from New
York State. Equivalent coverage is defined in the program's advisory
memoranda which is enclosed as Appendix B.


C. LEGISLATIVE AUTHORITY


1. New York's Health Care Reform Act of 1996


Legislation enacted as part of the New York Health Care
Reform Act (HCRA) of 1996 continues the Child Health Plus
program through December 31, 1999 and expands the program as
follows:


- from July 1, 1996 through December 31, 1996 provides
benefits for eligible children under the age of 17;


- effective January 1, 1997, children under the age of 19
who meet other eligibility requirements are eligible to
participate in the program;


- inpatient care will be added as a covered benefit in
1997; and


- program funding has been significantly increased to
allow for greater participation of the eligible
population and the expanded benefit package.


2. LEGISLATIVE HISTORY - CHILD HEALTH PLUS


In 1990, Chapters 922 and 923 of the Laws of 1990
(Article 25 of the Public Health Law Section 2510 and 2511)
authorized the Commissioner of Health, in consultation with
the Superintendent of Insurance, to establish a statewide
program to provide subsidized outpatient health insurance for
children under age 13 in low income families. Funding for the
program was limited to $20 million per year. The Department
currently contracts with 15 insurers to provide statewide
coverage for the program. Eligible children began receiving
coverage through the Child Health Plus program in August,
1991. The legislation also authorized the Commissioner of
Health to contract with qualified organizations for purposes
of public education, outreach and recruitment of children. Two
marketing and outreach organizations were selected through a
RFP process.


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Chapter 731 of the Laws of 1993 continued the Child Health
Plus program through December 31, 1995 and increased funding for the
program to $120 million for the two year period. Under this
legislation, contracts with existing insurers, and outreach and
marketing contractors for Child Health Plus, were extended through
1995. The legislation required that the Department implement
measures' to perform an annual review of the participating insurer's
enrollment and recertification procedures. In addition, the
Department was required to conduct a comprehensive evaluation of the
implementation and effectiveness of the Child Health Plus program. A
RFP for the evaluation of the program was issued in May, 1994. The
University of Rochester, Child Health Studies Group, was selected as
the contractor. A summary of the final report which was submitted to
the Governor and Legislature in 1996 is enclosed as Appendix C.


Subsequent program legislation was enacted in 1994 and 1995
that expanded Child Health Plus to eligible children under age 16,
continued contracts with existing insurers and required a RFP for
continuing marketing and outreach activities be issued. The
program's two existing marketing and outreach contractors were the
sole bidders and were awarded contracts to continue this activity.


D. ALLOCATION AND FUNDING


Provisions established through HCRA of 1996 provide that the
Child Health Plus program shall be financed through the Health Care
Initiatives Pool.


Statewide allocations are available for the program in the
following amounts:


January 1, 1997 - December 31, 1997 $109M January 1, 1998 - December 31, 1998 $150M January 1, 1999 - December 31, 1999 $207M
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It is expected that the contract period will be May 1, 1997
through December 31, 1999. Any extension of the contract period is
dependent upon continuation of the Child Health Plus program by
legislation and allocation of funds.


E. PROGRAM GOAL AND OBJECTIVES


The program goal for Child Health Plus is to provide access to
comprehensive inpatient and outpatient health care services to low
income children by removing financial barriers and providing a
medical home through a managed care product.


Child Health Plus has the following objectives:


- to improve the health status of children participating in the
program by providing a "medical home";


- to provide primary, preventive, outpatient and inpatient
health insurance coverage to low income children by removing
financial barriers to purchasing such coverage through an
individual subsidy program;


- to increase children's access to primary comprehensive and
preventive health care services; and


- to reduce and more effectively target bad debt and charity
care expenditures in New York State.


F. ENROLLMENT TRENDS


The Child Health Plus Program is growing at a rapid rate and
is receiving a great deal of attention as a large-scale statewide
program which offers all children access to affordable health
insurance coverage. It is anticipated that enrollment in the Child
Health Plus program will continue to be strong and constant,
increasing at a steady rate each year. Since March, 1996, enrollment
in the program has been increasing at a steady rate with
approximately 1,500 new enrollees per month. With the addition of
older children, the Department expects this trend to increase.


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[BAR CHART]


[PLOT POINTS TO COME]


Effective January 1, 1997, the age eligibility will be expanded to
include children age 16 through 18, thereby adding a new population to the
current enrollment. During 1997, inpatient care will also be added as
covered benefit.


Figure 1 is a chart depicting enrollment in the program since 1992,
and the projected enrollment of the age 0-14 and age 15-18 year categories
through 1999. Figure 1 depicts that, as of June, 1996, over 106,000
children were enrolled in Child Health Plus. The latest quarterly
enrollment report with enrollment by age and income level is enclosed and
appears as Appendix D.


An evaluation of the Child Health Plus Program recently completed by
the Rochester Child Health Studies Group, found that the Child Health Plus
program has had beneficial effects on improving access to health care,
utilization of primary care services, and on some measures of quality of
care, to a large number of eligible children. It was also found that
Hispanic and African American children, and children in the


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lowest eligible incomes levels were slightly under-represented in the
Child Health Plus population. It is very important in future enrollment
efforts that these populations be effectively reached as part of an
aggressive community outreach effort.


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II. EXPANDED PROGRAM DESIGN


A. ELIGIBLE ORGANIZATIONS


Organizations eligible to submit proposals for participation
in Child Health Plus are the following:


- a commercial insurance company licensed under New York State
Insurance Law; or


- a corporation or health maintenance organization licensed
under Article 43 of the Insurance Laws; or


- a health maintenance organization certified under Article 44
of the New York State Public Health Law; or


- a comprehensive health service plan operating under the
regulations of the Department of Health.


B. ELIGIBILITY CRITERIA


A child is eligible for a subsidy payment if the following
criteria are met:


- the child is a resident of New York State;


- the child is not eligible for medical assistance (Medicaid);


- the child does not have equivalent health insurance coverage;


- the child resides in a household having a gross household
income at or below 222% of the non-farm gross federal income
official poverty level (as defined and annually revised by the
U.S. Office of Management and Budget); and


- the child is a less than 19 years of age.


The RFP has stated all references to the eligibility
thresholds in terms of gross income levels, as enrollment in the
Child Health Plus program will be determined based upon gross income
levels. The 1996 monthly and annual net and gross income thresholds
are presented in Appendix A.


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The approved organization must establish a means test (income)
for assuring that all enrollees meet defined eligibility criteria.
There will be no resource test (asset) required for program
eligibility.


The insurer is responsible for obtaining and maintaining all
documentation necessary to make an eligibility determination.
Detailed eligibility criteria are contained in Appendix B. Some
examples of appropriate documentation are as follows:


- Income


- annual federal and State tax return statements;


- paycheck stubs or other documentation of income;


- written documentation of income by employer; and/or


- attestation of Self-Declaration of Income (Department of
Health Form which can be found in Appendix B).


- Age


- birth certificate of enrolled;


- passport or Visa;


- school record which documents a child's birthdate;


- religious certificate (i.e., baptismal papers); and


- signed affidavit stating witness of birth.


- Equivalent Insurance


- documentation of other insurance coverage.


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- Residency


- current school records, utility bills, or any mail
addressed to the individual which has been postmarked.


A 60 day presumptive period of eligibility is available to
applicant children as a means of providing services under Child
Health Plus when a child appears eligible for the program, but,
pertinent documentation is lacking. The insurer performs an initial
review of the child's age, family's gross income, residency, and
health care coverage, and from the completed application determines
whether the child appears eligible. If one or more pieces of the
documentation to support these variables is not submitted with the
application, the family is allowed up to 60 days to submit the
additional material or the child is disenrolled from the program.
Only one period of presumptive eligibility per child is allowed. DOH
will reimburse the insurer for the subsidy of a presumptively
enrolled child if the child is later found to be ineligible when the
missing documentation is submitted.


The period of eligibility means that period commencing on the
first day of the month in which the child is covered by the insurer
and ending on the last day of the month in which the child's
coverage ceases. All applications must be approved prior to the
effective date of enrollment as there is no retroactive enrollment
in Child Health Plus.


C. BENEFITS


Child Health Plus insurers will be required to provide a
uniform benefit package as part of their managed care product.


Included in the current benefit package, which was mandated
by prior legislation (Chapters 922 and 923 of the Laws of 1990) are:
well-child care; immunizations; x-ray and laboratory tests;
outpatient/ambulatory surgery; diagnosis and treatment of accident,


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illness and injury; emergency care; prescription drugs; outpatient
treatment for alcoholism and substance abuse; short-term
therapeutic services such as chemotherapy, hemodialysis, radiation
therapy, occupational therapy and physical therapy; diabetic
supplies; diabetic education; and nutritional supplements.


The 1997 enhanced benefit package will include inpatient care
(excluding inpatient mental health substance abuse or alcohol
treatment) as a covered benefit as mandated by HCRA of 1996. The
expanded benefit package will also include limited durable medical
equipment (DME) and outpatient mental health visits (up to 20 per
year as part of the 60 visit maximum for outpatient alcohol and
substance abuse) and home visits when in lieu of inpatient
hospitalizations.


A detailed description of the benefit package is included in
Appendix E. Please note, benefits provided under Child Health Plus
are secondary to any other plan of insurance or benefit program
under which an eligible child may have coverage. The insurer must
have any primary coverage pay any applicable portion of a child's
medical cost in the first instance.


Each provider must follow the well-child care guidelines
established by the American Academy of Pediatrics and the
immunization recommendations as delineated by The New York State
Recommended Childhood Vaccination Schedule which are enclosed as
part of Appendix.


D. CO-PAYMENTS


There will be a $2 co-payment required for all physician
visits, except those provided on an inpatient basis, for well child
care, or as otherwise prohibited by insurance law. A $1 to $3
co-payment also can be charged for prescriptions and nutritional
supplements as defined in the benefit package. Insulin has no
co-payment. A $35 co-payment for failure to notify an insurer within
24 hours of emergency room use and/or inappropriate emergency room
visits


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may be charged. No other co-payments are allowed and there are no
deductibles for State subsidized children.


E. PREMIUMS


Insurance premiums that are submitted with this proposal will
be reviewed by the Commissioner of Health along with the New York
State Insurance Department prior to approval. The premium
requests submitted should be valid at least through December 31,
1997. For premium adjustments that may be required January 1, 1998
and beyond, the insurer will be required to submit an application to
DOH and the State Insurance D ...