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1、Final Trend Estimates and CY07 Rates,Tim Doyle, FSA, MAAA Brad RhodesJeff Smith,July 28, 2006,Final Trend Estimates and CY0,Outline of Presentation,A. Rate ImpactB. Rate-Setting Methodology,Mercer Government Human Services Consulting,Outline of PresentationA. Rate,A. Rate Impact,Recall from the June
2、 22, 2006 presentation that Trend = Rate IncreaseAggregate rate increase/decrease is due toMedical inflation (trend)Benefit program changesDemographic mix changes (enrollment distribution across rate cells)Other (e.g., rebasing)Overall revenue increase/decrease is additionally due toTotal enrollment
3、 changes,Mercer Government Human Services Consulting,A. Rate ImpactRecall from the,A. Rate Impact (continued),Program-wide CY07 PMPM increase of 5.2 percent over mid-year CY06 rates based on March member months simulationsMCO-specific PMPM increases to be distributed after the presentation today,Mer
4、cer Government Human Services Consulting,A. Rate Impact (continued)Prog,B: Rate-Setting Methodology,1. CY04 adjusted HFMR base as starting point2. Program changes3. Medical trends4. Administrative and profit load5. Relational modeling6. Regional factors7. Low birth weight babies,Mercer Government Hu
5、man Services Consulting,B: Rate-Setting Methodology1.,B.1: CY04 Adjusted HFMR Base as Starting Point,MCOs submitted CY04 HFMRs adjusted forC&G and L&E reviewsNon-State Plan servicesRemoval of adult dentalFQHC pricing,Mercer Government Human Services Consulting,B.1: CY04 Adjusted HFMR Base,B.2: Progr
6、am Changes,Physician fee scheduleIncrease to specified codes effective July 1, 2005 and July 1, 2006Impacts physician PMPM by 16 percentPharmacy copay$3 copay for all brand drugs not on the preferred drug list, $1 copay for all generic drugs for adults. Pregnant women, children, and family planning
7、drugs are excluded from copaysIncrease in dental fees for restorative services$0.52 million increase,Mercer Government Human Services Consulting,B.2: Program ChangesPhysician,B.2: Program Changes (continued),TPL$1.5 million removed from total expenses,Mercer Government Human Services Consulting,B.2:
8、 Program Changes,B.3: Medical Trends,Preliminary trend ranges presented on June 22, 2006Final trend estimates presented in this section,Mercer Government Human Services Consulting,B.3: Medical TrendsPreliminary,Trend Methodology,Data analysisAnalyze MCO-reported financial and encounter dataAnalyze H
9、SCRC hospital dataTrend estimationPast trends: Assessed based on the historical data Future trends: Assessed with past trends as baseline compared to other benchmarks,Mercer Government Human Services Consulting,Trend MethodologyData analysis,Inpatient Hospital Unit Cost Trends: HSCRC Component,*Fore
10、cast,HSCRC rate updates,Mercer Government Human Services Consulting,Inpatient Hospital Unit Cost,Inpatient Trend Considerations,CY04CY05 (also 3 months of CY06) trend estimates based on program-specific dataCY05CY07 trend forecasts driven by HSCRC rate updatesTrends estimates incorporate HSCRC DRG d
11、ay limit and GME discount impact,Mercer Government Human Services Consulting,Inpatient Trend Considerations,Inpatient Hospital PMPM Annual Trend by COA and Year,Mercer Government Human Services Consulting,Inpatient Hospital PMPM F&,Outpatient Hospital Unit Cost Trends: HSCRC Component,*Forecast,HSCR
12、C rate updates,Mercer Government Human Services Consulting,Outpatient Hospital Unit Cost,Outpatient Trend Considerations,CY04CY05 (also 3 months of CY06) trend estimates based on program-specific dataCY05CY07 trend forecasts driven by HSCRC rate updatesTrends estimates incorporate GME discount impac
13、t,Mercer Government Human Services Consulting,Outpatient Trend Consideration,Outpatient Hospital PMPM Annual Trend by COA and Year,Mercer Government Human Services Consulting,F&CDisabled SOBRA AIDS,Pharmacy Trend Considerations,CY04CY05 (also 3 months of CY06) trend estimates based on MCO-specific d
14、ataCY05CY07 trend forecasts based on pharmacy industry research,Mercer Government Human Services Consulting,Pharmacy Trend ConsiderationsC,Pharmacy PMPM Annual Trend by COA and Year,Mercer Government Human Services Consulting,F&CDisabled SOBRA AID,Physician Trend Considerations,CY04CY05 (also 3 mont
15、hs of CY06) trend estimates based on MCO-specific dataCY05CY07 trend forecasts based on above baseline and industry research,Mercer Government Human Services Consulting,Physician Trend Considerations,Physician PMPM Annual Trend by COA by Year,Mercer Government Human Services Consulting,Physician PMP
16、M Annual Trend,Summary of Average Annual Trends by COA and COS(CY04CY07),*Reflects -9.3% trend for CY04/05 and 3.8% trend for both CY05/06 and CY06/07.,Mercer Government Human Services Consulting,Summary of Average Annual Tre,Summary of Consolidated COS Annual Trend by COA and Year,Mercer Government
17、 Human Services Consulting,F&CDisabled SOBRA AIDS,B.4: Administrative and Profit Load,From the audited CY04 HFMR base cost, grouped separately by F&C and DisabledMedical management costsAdministrative costsAdministrative trendsMedical management (at CPI +): 3.76 percent Administrative costs (at CPI)
18、: 2.80 percentAdditional itemsUnderwriting Gain: 1.5 percent of medical expenseReinsurance Administration Costs: $2.4 million added to baseRisk/Contingency Margin: 0.4 percent of medical expenseState policy decision: loading capped at CY06 level of 12.6 percent,Mercer Government Human Services Consu
19、lting,B.4: Administrative and Profit,Administrative and Profit Load Allocation,Premium Tax: 2.3 percent of medical expenseOverall, loading over medical portion of CY07 rates is 14.9 percentMedical management, underwriting gains, risk/contingency margin, reinsurance administration, and premium tax as
20、 variable loading (proportionally to medical component of rate)Administrative costs as fixed loading Variable by F&C and Disabled Variable by rate cell groupingsAdministration costs for RACs75 percent fixed and 25 percent variable,Mercer Government Human Services Consulting,Administrative and Profit
21、 Load,B.5: Relational Modeling,Standard actuarial stepFor smoothingTo reflect improved RAC assignment due to better encounter data and RAC relativitiesTo incorporate aging of RAC cohorts,Mercer Government Human Services Consulting,B.5: Relational ModelingStanda,B.6: Regional Factors,City versus Rest
22、 of State (ROS) regional factors based on the regional analysis presentation on June 22, 2006Results in City/ROS differential of 23 percent for demographic rate cells and 14 percent for RACsLast year the differential was 27 percent for demographic rate cells and 17 percent for RACs,Mercer Government
23、 Human Services Consulting,B.6: Regional FactorsCity vers,B.7: Low Birth Weight Babies,UMBC analysis applied to newborn/delivery kick payment and 1 F&C Adjusted to recognize 90 percent of differential in base cost analysisAdjusted for differential trend,Mercer Government Human Services Consulting,B.7: Low Birth Weight Babies U,
