53-6-707. Payment reductions and adjustments -- freedom to contract. (1) The department shall by rule establish a method to reduce its payments to managed health care entities to take the following into consideration:

(a) any adjustment payments paid to health care facilities under subsection (2)(b) to the extent that those payments or any part of those payments have been taken into account in establishing capitated rates under 53-6-705; and

(b) the implementation of methodologies to limit financial liability for managed health care entities under 53-6-705.

(2) For key services provided by a hospital or nursing facility that contracts with an entity, adjustment payments that are not included in capitated rates must be paid directly to the hospital or nursing facility by the department. Adjustment payments include but are not limited to:

(a) adjustment payments to disproportionate share hospitals as defined by department rule;

(b) perinatal center payments;

(c) payments for direct medical education, indirect medical education, and certified registered nurse anesthetists;

(d) supplemental medicaid payments to hospitals made pursuant to 53-6-149; and

(e) supplemental medicaid payments to nursing facilities made pursuant to 15-60-211.

(3) For any hospital or nursing facility eligible for the adjustment payments described in this section, the department shall maintain, through the period ending June 30, 1996, reimbursement levels in accordance with statutes and rules in effect at the time the payments are made.

(4) The department may not assign an existing agreement with a medicaid provider to a managed health care entity. The managed health care entity shall enter into a new agreement with a provider in order for the provider to be considered a part of the managed health care entity's network of providers.

(5) This part does not limit or otherwise impair the authority of the department to enter into a contract, negotiated pursuant to this part, with a managed health care entity, including a health maintenance organization, that provides for termination or nonrenewal of the contract without cause upon notice as provided in the contract and without a hearing. If available funds are not sufficient to provide medical assistance for all eligible persons, the department may set priorities to limit, reduce, or otherwise curtail the amount, scope, or duration of the medical services made available under the Montana medicaid program and managed care.