CONSULTING FOR INSURANCE BROKERS AND SELF-FUNDED GROUPS

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1 CONSULTING FOR INSURANCE BROKERS AND SELF-FUNDED GROUPS Axene Health Partners (AHP) has extensive experience across the entire healthcare system, and our expertise can help entities of every size better understand the healthcare system and how to thrive. The following information will tell you about who we are and how we can help answer the key questions and concerns you face.

2 ABOUT AXENE HEALTH PARTNERS Who is Axene Health Partners? AHP is an independent consultancy that is wholly owned by its management. We have offices nationally, and are nimble to meet the specific needs of our clients. The core of the AHP business model is establishing and building a trust relationship with our clients and contacts. We want to earn the highly valued trust of our clients and contacts and become a trusted advisor to them. This trust-based decision model requires unquestioned integrity, both internally and externally. AHP s commitment to be trustworthy is demonstrated by the quality of staff it recruits and retains, and by the business practices it implements. AHP is serious about its mission statement. AHP s emphasis on having a positive impact on both the health care system and its clients drives its approach to doing business. All AHP products and services are health care focused. All AHP professionals and related staff deeply care about the health care system and our clients who use, work with, or work in the health care system. AHP is committed to delivering high quality work products for a fair and reasonable price, yet reflecting the value of the advice we give. What kind of Consultants do we have? Staff of 34 consultants, mostly Actuaries, three doctors, and an IT development team. Work primarily with Health Plans, Hospitals, Health Systems, and Employee Benefit Companies (Brokers). Also do work with Government Payors, Self-Funded Clients, and Litigation support Staffed with mostly senior consultants and support staff. All support staff are Actuaries that are credentialed with the SOA (Society of Actuaries)

3 IBNR CONSULTING How do I know whether my IBNR/Reserves are reasonable? At Axene Health Partners there are five main ways we consult in the IBNR space. All of these approaches use our proprietary IBNR software called the AHP Claims Projection System (i.e., AHP CPS Model TM ). AHP Consultants are experienced in developing IBNR estimates for their clients (i.e., health plans, self-funded employers, unions, insurance brokers, and government agencies). The Five Ways we Approach IBNR Consultingng Periodic Estimates Annual IBNR Certification Leasing of IBNR Model Hybrid Leasing/Estimates Audits of IBNR Estimates and Process Our IBNR tool called the AHP Claims Projection System (AHP CPS Model TM ) is an Excel-based tool used to develop estimates of incurred but not reported claim liabilities. This model was developed using best-in-class methods from our senior consultants extensive actuarial experience. It utilizes user-friendly features and formula protections in order allow users of all skill levels to utilize the model. The Model uses Microsoft Excel and a combination of formulas and Visual Basic for Applications (VBA) programming to complete calculations.

4 How can I see the impact of different health care plan designs? The AHP Actuarial Value Calculator (AHP AV Calculator) is a program used to develop estimated per member per month (PMPM) costs for a variety of different health care plans designs. It has the capability of pricing HMO, Point of Service, PPO, EPO, Open Access, and traditional indemnity products. Cost estimates can be projected using a variety of adjustments (i.e., trend, geographic region, medical management, demographics, etc.). AHP AV Calculator incorporates AHP Best Practice Norms to reflect the effect of an administrator s medical management effectiveness. AHP AV Calculator can be used in concert with other AHP resources to develop complete estimates of costs. Can I use actual claims experience from a prior year to model changes? This AHP Actuarial Value Adjudication Model has a similar purpose as the AV model discussed above, except that it uses a sample population and their attributed claims to calculate AVs for specific benefit changes. Instead of utilizing continuance tables to approximate the effect of benefit changes, this model uses an actual population and adjudicates their claims based upon the alternate benefits chosen. This model can calculate AVs by age band and by different demographic characteristics. This is a web based tool that is used on a subscription basis. Am I using best-in-class Underwriting practices? We have worked in both small and large group underwriting and have developed many tools and analysis for our clients including: Benefit relativity modeling Experience Rating Models (credibility weighting) Participation Tools Demographic Models Provider Access Modeling Risk Score/ Risk Assessment tools Large Claims Modeling and Pooling Actuarial Cost Models (MARs)

5 Are we tracking the experience of our self-funded groups properly? Prior to the beginning of the plan year, our actuaries create custom Excel-based experience reporting templates. Reports are created so staff at the brokerage/client can easily fill out information throughout the plan year. Our reporting templates are customized to the needs of you (as our client) as well as your client. We use a standardized information request to gather information as efficiently as possible, while being expandable to meet the needs of your clients. What is going on and why is this group losing money? Our actuarial audit and forensics services cover a wide range of services including ROI methodology reviews, reserve restatements, work product inspection, and mapping of historical cost components. The scope may be very specific, such as providing statistical support for an employer considering different stop loss deductibles (likelihood analysis). Other projects are more nebulous, such as providing actuarial analysis when a group s claims experience has unexpectedly changed after switching plan administrators. Finally, we offer a standard actuarial forensics service, where we inspect your new client s reports from the prior actuary, to identify any potential issues you may want to address. The standard service includes review of any claims projections and premium equivalent calculations; restatement of IBNR for previous actuarial certifications; and a report summarizing our findings and recommendations. Included in the report will be a projection of the potential financial impact for your client. Are my Premium Equivalent / Cobra Rates calculated correctly? AHP develops premium equivalent rates for self-funded groups including medical, dental, vision, RX. Along with premium rates, our work can include Rating Tiers, Funding arrangements (employee contributions ), and Plan Factors. As part of the premium development service we also can review both fully insured and self-insured rates to see if they appear to be actuarially sound.

6 How do I keep up with the frequent changes in regulation? Though not strictly actuarial, AHP assists our clients with information and advice on regulatory issues including: Credible Coverage, Benefit Values, EHBs, State Rules, % of Salary Requirements Federal AVs, Federal MVs, Cadillac Tax (if it ever happens) and Mandatory Benefits. What are AHP s technological and data analytic capabilities? AHP has an IT development team that assists with the development of web-based tools, apps, and data storage solutions. These IT solutions can be locally based, cloud based, or a combination of the two. One of the main interests has been the development of Data Lakes/Warehouses for the brokerage or larger self-funded groups. Combing efficient data storage/ access, with the actuarial analytics can assist in making more informed and real-time decisions. Data Lakes/Warehouse Process Overview Data Ingest Analytics Layer BI Dashboard File uploads or streaming data Give meaning to data Data visualization & insights Data Storage Cleaned and curated data Query Tool Query and export raw data

7 How does my covered population look like compared to the norms? The AHP Demographic Model (AHP DM ) is a program used to calculate age/sex loading factors for premium rate development. The average age/sex loading factors are calculated by applying employee/contract distributions to proprietary demographic-specific health care cost factors developed and maintained by Axene Health Partners, LLC. AHP DM utilizes a unique Community Rating by Class (CRC) blending methodology to composite demographically adjusted information for each of three populations (PlanWide, Enrolled Group, and Total Group). This methodology smooths the composite age/sex factor results to develop more useful information and minimize unnecessary adverse selection by groups with outlier demographic characteristics. Are provider fees my large group client is paying on par with what other insurers are getting? The AHP Fee Assessment Model (AHP FAM) is an Excel-based tool used to compare different fee levels or fee schedules to a selected version of Medicare fees. When you compare two sets of fees to Medicare you have baseline information for comparing the two sets of fees. AHP FAM bases its calculations on either a large set of CPT codes, or a small set of 343 distinct CPT codes that we believe to be representative of all codes. The comparison results are grouped into key service categories (i.e., inpatient visits, office visits, etc.). The detailed information is composited into service categories using one of four different distributions of fees. We provide AHP standard information for Commercial, Medicaid and Medicare beneficiaries and there is also the option to use a client specific distribution of fees. We recommend using client specific data as often as possible to be most representative of the underlying data. Brokerage clients may find this very useful when working with large groups that are exploring different networks and payment levels.

8 Healthcare costs are growing fast, where are my healthcare dollars going? AHP MARS involves a sequence of data manipulations (using SAS software), that summarizes detailed healthcare claims data into homogenous service categories, and then calculates various metrics such as utilization rates, PMPM costs, provider discounts, actuarial value, medical loss ratio, and risk score. The reporting interface is developed in Excel, and using Visual Basic for Application (VBA) programming, giving the user the ability to mass produce reports for various time periods, lines of business, market segments, healthcare providers (including PCP attribution), and clinical condition categories. In addition to producing user-friendly reports, AHP MARS gives health plans, hospital systems, and self-funded groups the information needed to make strategic business decisions. Some of these decisions include (but are not limited to) the following: Initiatives to reduce emergency room visits, inpatient admissions, and inpatient length-of-stay Design and evaluation of provider contracts (including risk contracts, value-based payments, and PCP attribution) Design and evaluation of medical management programs Evaluation of risk appetite and decisions regarding market exposure and reinsurance AHP MARS EXAMPLE

9 CONTACT AHP TODAY What else can you help me with? When you or your client needs additional actuarial support, we are here to provide it on consultative basis. Some possible projects include: Strategic evaluations OPEB-related actuarial services ACA-related strategies Detailed claims analysis to determine cost drivers Historical trend analysis Care Management Review and Design Wellness Program Review and design Large Claim Analysis Reinsurance Analysis Cash Flow Testing Risk Based Capital Work is billed using our competitive billing rates. We typically provide a budget and scope in advance to ensure no surprises for you or your client. Contact Joshua W. Axene, ASA, FCA, MAAA at (951) or by at: josh.axene@axenehp.com to learn more about how AHP can help your brokerage Sky Canyon Drive Suite 204 Murrieta, CA 92563