OVERVIEW OF MLTSS CAPITATION RATE DEVELOPMENT METHODOLOGY (C) MERCER 2015 0 MERCER 2015 0
C A P I T A T I O N R A T E S E T T I N G O B J E C T I V E S Develop a payment structure that will best match premiums to the risk of the covered population. Meets the Centers for Medicare and Medicaid Services requirements in 42 CFR Actuarial Standards of Practice and rate-setting guide. MERCER 2015 1
K E Y C O N S I D E R A T I O N S Individual health plan risk is driven by a number of factors, including: Program design: - Who will be eligible (population subgroups) - What services will be covered - Integration with Medicare for dual eligibles Operational issues: - Enrollment and screening/assessment procedures - Case management and care coordination - Administrative responsibilities MERCER 2015 2
Determine categories of aid ( premium rates ) Develop base data: Project data forward to contract period Apply impact for any changes to services Administration, premium taxes, underwriting gain (provision for cost of capital) MERCER 2015 3
D E T E R M I N E A C T U A R I A L L Y S O U N D R A T E C A T E G O R I E S O F A I D Covered populations: Dual eligibles, Non Duals - Nursing Facility - Special Needs Nursing Facilities - Home and Community Based Assisted Living MERCER 2015 4
D E T E R M I N E A C T U A R I A L L Y S O U N D R A T E C A T E G O R I E S O F A I D ( C O N T D ) Covered services: Long-term care services, - including, but not limited to, nursing facility, home- and communitybased services (HCBS) waiver services, home health care, personal care, medical day care and therapies Acute care services - including, but not limited to, inpatient hospital, outpatient hospital, pharmacy, physician, transportation, dental, substance abuse and behavioral health MERCER 2015 5
D E T E R M I N E A C T U A R I A L L Y S O U N D R A T E C A T E G O R I E S O F A I D ( C O N T D ) Identify key Medicaid cost drivers: Setting (nursing facility, HCBS Waiver, Personal Preference Option) Frailty (nursing home high/low, community nursing home certifiable) Medicare status Category of eligibility (aged, blind, disabled) County/region Age/gender Chronic high-risk conditions (ventilator dependents) MERCER 2015 6
M L T S S MERCER 2015 7
B A S E D A T A MERCER 2015 8
B A S E D A T A ( C O N T D ) Reliance on FFS claims and eligibility data in the development of the MLTSS rates Additional data sources may include: Recent MCO encounter data for HCBS population Review by level of care, category of service, utilization and cost components Include only covered populations and services Base data adjustments anticipated: Completion factors for claim payment process Financial transactions outside claims data, such as pharmacy rebates Patient liability Retroactive eligibility period, prior period coverage, enrollment lag MERCER 2015 9
B A S E D A T A ( C O N T D ) Review and evaluate: - Acute care services managed care efficiencies: - Inpatient hospital - Emergency room - Pharmacy - Long-term care services managed care efficiencies: - Shift recipients in nursing home to community settings - Prevent or delay nursing home admissions from the community MERCER 2015 10
P R O S P E C T I V E T R E N D D E V E L O P M E N T MERCER 2015 11
P R O S P E C T I V E T R E N D D E V E L O P M E N T Mercer will rely upon (including but not limited to) the following for projections: Information/actual trends from FFS data, including utilization per 1,000 members, unit cost and per-member-per-month trends by category of service Professional experience in working with other state Medicaid programs Outlooks in the New Jersey marketplace that influence Medicaid programs Regional and national economic indicators Consumer Price Index (adjusted to incorporate utilization) State inflation factors (for example, nursing facility per diem) MERCER 2015 12
A D J U S T E D F F S E X P E R I E N C E MERCER 2015 13
P R O G R A M M A T I C C H A N G E S Annual trend factors Adjusted FFS experience historical year(s) trended forward Annual trend factors Base costs for contract period Programmatic + + changes Admin and U/W gain loading = Risk adjusted rate factors + Final capitation rates MERCER 2015 14
P R O G R A M M A T I C C H A N G E S Enrollees new to Medicaid Health acuity- impact on PMPM Enrollees from existing Acute Services population Changes due to healthcare reform Changes in Acute Care services MERCER 2015 15
A D M I N I S T R A T I O N & U N D E R W R I T I N G ( U / W ) G A I N L O A D I N G Adjusted FFS experience historical year(s) Annual trend factors Adjusted FFS experience historical year(s) trended forward Annual trend factors Base costs for contract period Programmatic + + changes Admin and U/W gain loading = Risk adjusted rate factors + Final capitation rates MERCER 2015 16
A D M I N I S T R A T I O N & U N D E R W R I T I N G ( U / W ) G A I N L O A D I N G Plan administration Operating Overhead Care Management - regional costs NJ State Premium tax Underwriting gain / cost of capital MERCER 2015 17
A C T U A R I A L L Y S O U N D R A T E S Adjusted FFS experience historical year(s) Annual trend factors Adjusted FFS experience historical year(s) trended forward Annual trend factors Base costs for contract period Programmatic + + changes Admin and U/W gain loading = Risk adjusted rate factors + Final capitation rates MERCER 2015 18
A C T U A R I A L L Y S O U N D R A T E S Based on average risk of covered / anticipated population Potential for risk adjustment No National Risk Model for MLTSS exists. Developing one to include recipient assessments / ADLs Possibility for SFY18 MERCER 2015 19
MLTSS RATE DEVELOPMENT - ENHANCEMENTS (C) MERCER 2015 20 MERCER 2015 20
M L T S S F I N A N C I A L A N D E N C O U N T E R D A T A R E Q U I R E M E N T S E N C O U N T E R D A T A The State and CMS expect the use of encounter data within the rate setting process Current uses of MCO encounter data: Risk adjusted rates Rate setting program changes Clinically-based rate setting cost management effectiveness Plan benchmarking on utilization and cost Validation of plan financial reports Mercer and the State will continue to look for ways to utilize encounter data within the MLTSS rate setting process Anticipated that encounter data will be utilized in developing MLTSS capitation rates and risk adjustment methodology MERCER 2015 21
P A C E F I N A N C I A L A N D E N C O U N T E R D A T A R E Q U I R E M E N T S F I N A N C I A L D A T A Strong reliance of financial data for capitation rates Financial reports/delivery Income statement will be a key quarterly financial report Standardized and accurate financial reporting is critical Review of web-based process - Plans submit via web-portal - Real-time edits with instantaneous feedback to plans on submission Financial validation Agreed Upon Procedures (AUP) provide assurance by third-party that Plans are following financial reporting procedures Quarterly Desk reviews : - Cost comparison between Plans, reported medical expenses compared to encounters (98%) - Accurate and complete IBNR accruals, which is critical to overall accuracy of financial reporting MERCER 2015 22