FLORIDA MEDICAID DRAFT REFORM CAPITATION RATES FOR CONTRACT YEAR SEPTEMBER 23, 2011

Transcription

1 Government Human Services Consulting FLORIDA MEDICAID DRAFT REFORM CAPITATION RATES FOR CONTRACT YEAR SEPTEMBER 23, 2011 Nicholas J. Simmons, FIA, FSA, MAAA Government Human Services Consulting

2 Capitation Rate Setting Process Collected data from four sources HMO Financial Submissions HMO Encounter Submissions PSN Claims Data Medipass Claims data Had several discussions with AHCA and non-reform actuaries regarding basic approach and weighting Had many discussions with the TAP s rates subcommittee Had numerous discussions with AHCA regarding validation of specific data elements 1

3 Methodologies and Weightings Composite Method: (Hospital Inpatient Encounter and PSN Inpatient Claims) + (PSN non-inpatient, non-mental Health Claims) + (Mental Health Encounter Data) + (Legislative Transportation Appropriation) HMO Financial Data Method 50% Weight 50% Weight Pharmacy: (Encounter Data and PSN Claims Method) 100% Weight + Overhead Allowance 2

4 Data Challenges Financial Submissions Transfer Pricing issues Administrative subcapitations Reporting of reinsurance (gross versus net) Specialty rate cells Examples: kickpayment categories, HIV/AIDS Subcapitation cost patterns by rate-cell Retroactive changes to Medipass hospital rates Difficulty repricing to a Medicaid benchmark (days by hospital for example) Non-responsive to follow up (one plan) 3

5 Data Challenges Encounter Data Lack of reasonable Medicaid allowable field on many encounters Deduping issues, and Mental health claims Wide variations in HMO paid amounts relative to Medicaid allowable Comparability issues due to plans terminating and entering Four plans with anomalous and/or missing data fields were excluded (21% of enrollment) 4

6 Adjustments and Projection The exhibits provided by AHCA detail all of the adjustments and projection methodology. Including: Adjusting the Financial Base data for the reporting issues discussed Developing Encounter based trend factors for Hospital Inpatient Inpatient fiscal year basis was provided as an example, calendar year basis and outpatient were done in an exactly comparable manner Developing projected claims by rate cell and service category using each methodology and each base year Combining and weighting the projected claims per the methodology chart Consolidating the over age one rate cells and smoothing the increases by rate cell Adding a loading for overhead expenses Adjusting for Enhanced Benefit Component paid by AHCA 5

7 Financial Base Data Exhibit Months and Expenses as reported and calculated PMPMs IBNR adjustments (plan specific) Add back reinsurance recovery where reported net Redistribute sub capitations Other data adjustments for reporting issues Member month adjustments where applicable Produces adjusted base data carried to Rate Development Exhibits 6

8 Encounter Based Trend Exhibits 2009 Base table SFY 2009 Days by Hospital Repriced at SFY 2009 Medicaid rates Uses the two semester rates as appropriate Repriced at SFY 2010 Medicaid rates Uses the two semester rates Repriced at AHCA Best estimate contract period rate Will true up when actual buy backs are known after 9/30/2011 Add across hospitals and divide time periods to obtain trend factors Same process for 2010 Base Average the prospective portion of the trend from the two base periods and carry to Unit Cost trend exhibits 7

9 Rate Development Exhibits - Financial Separate by base year and category of service. Base years then combined. Adjusted months, dollars and PMPMs from the base development exhibits Already includes IBNR Rate retro factor adjusts for late breaking hospital rate changes in July 2010 semester Trend factors for Utilization and Unit Cost Utilization and Unit cost adjustments available but only used for ER utilization ( efficiency factors ) Risk score adjustment compares HMO plus PSN rate target to HMOs that were source of reporting Produces projected PMPM for contract period Note maintains pricing relative to Medicaid 8

10 Rate Development Exhibits PSN base Separate by base year and category of service. Base years then combined. Base data months, dollars and calculated PMPM Service-specific IBNR factor Utilization and Unit Cost trend factors Utilization and Unit Cost adjustment factors ( managed care savings and contracting adjustments combined) Risk score adjustment Produces projected PMPM for contract period 9

11 Rate Development Exhibits Medipass base Used only for youngest newborn cell and for kick payments Separate by base year and category of service. Base years then combined. Base data months, dollars and calculated PMPM Service-specific IBNR factor Utilization and Unit Cost trend factors Utilization and Unit Cost adjustment factors (used for contracting adjustments ) Produces projected PMPM for contract period 10

12 Rate Development Exhibits Encounter base Used only for Inpatient Hospital and Pharmacy Separate by base year and category of service. Base years then combined. Base data months, dollars on HMO paid basis, and calculated PMPM IBNR factors not used because have run out through March, 2011 Utilization and Unit Cost trend factors Utilization and Unit Cost adjustment factors (used to bring HMO paid price up or down to target percentage of Medicaid) Risk score adjustment Produces projected PMPM for contract period 11

13 Summary Exhibits Carries each method s PMPM from method-specific sheets Combines together where needed by methodology chart Example: Encounter and PSN for Inpatient Right hand columns carry to Overall Summary sheet 12

14 Overall Summary Sheet Brings left and right side of methodology chart together across service categories Top table develops left side of methodology chart Encounter and PSN combined for inpatient PSN base for most other services Milliman s encounter base for mental health Second table develops right side of methodology chart Primarily Financial based Bottom table develops 50/50 weighting Adds Pharmacy Consolidates rate cells Adds Overhead Smooths increases where appropriate 13

15 Enhanced Benefit Actual amounts paid by AHCA are included in other medical costs No trend 12.3% removed to zero out overhead Passed through the combining, averaging and smoothing process In process, 12.3% of premium is added back for overhead Cancels the impact of previous removal Finally Enhanced Benefit is removed from rates as percentage to fund AHCA enhanced benefit pool Varies by region and by TANF/SSI 14

16 Overhead Allowance Target is 12.0% of premium Applied as 12.3% of everything except kick payments 15

17 Actuarial Soundness Each methodology independently develops an actuarially sound estimate of projected claims The combination of the methodologies is therefore also actuarially sound An actuarially sound overhead allowance of 12% of premium is added The resulting rates are considered sound 16

18 Services provided by Mercer Health & Benefits LLC.