1、Government Human Services ConsultingFinal Trend Estimates Final Trend Estimates and CY07 Ratesand CY07 RatesTim Doyle,FSA,MAAA Brad RhodesJeff SmithJuly 28,20062Outline of PresentationA.Rate ImpactB.Rate-Setting MethodologyMercer Government Human Services Consulting3A.Rate ImpactnRecall from the Jun
2、e 22,2006 presentation that Trend=Rate IncreasenAggregate rate increase/decrease is due toMedical inflation(trend)Benefit program changesDemographic mix changes(enrollment distribution across rate cells)Other(e.g.,rebasing)nOverall revenue increase/decrease is additionally due toTotal enrollment cha
3、ngesMercer Government Human Services Consulting4A.Rate Impact(continued)nProgram-wide CY07 PMPM increase of 5.2 percent over mid-year CY06 rates based on March member months simulationsnMCO-specific PMPM increases to be distributed after the presentation todayMercer Government Human Services Consult
4、ing5B:Rate-Setting Methodology1.CY04 adjusted HFMR base as starting point2.Program changes3.Medical trends4.Administrative and profit load5.Relational modeling6.Regional factors7.Low birth weight babiesMercer Government Human Services Consulting6B.1:CY04 Adjusted HFMR Base as Starting PointnMCOs sub
5、mitted CY04 HFMRs adjusted forC&G and L&E reviewsNon-State Plan servicesoRemoval of adult dentalFQHC pricingMercer Government Human Services Consulting7B.2:Program ChangesnPhysician fee scheduleIncrease to specified codes effective July 1,2005 and July 1,2006Impacts physician PMPM by 16 percentnPhar
6、macy 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 drugs are excluded from copaysnIncrease in dental fees for restorative services$0.52 million increaseMercer Government Human Services Consulting
7、8B.2:Program Changes (continued)nTPL$1.5 million removed from total expensesMercer Government Human Services Consulting9B.3:Medical TrendsnPreliminary trend ranges presented on June 22,2006nFinal trend estimates presented in this sectionMercer Government Human Services Consulting10Trend Methodologyn
8、Data analysisAnalyze MCO-reported financial and encounter dataAnalyze HSCRC hospital datanTrend estimationPast trends:Assessed based on the historical data Future trends:Assessed with past trends as baseline compared to other benchmarksMercer Government Human Services Consulting11Inpatient Hospital
9、Unit Cost Trends:HSCRC ComponentYear Rate UpdateFY054.81%FY065.01%FY073.56%FY08*3.91%*Forecast HSCRC rate updatesMercer Government Human Services Consulting12Inpatient Trend ConsiderationsnCY04CY05(also 3 months of CY06)trend estimates based on program-specific datanCY05CY07 trend forecasts driven b
10、y HSCRC rate updatesnTrends estimates incorporate HSCRC DRG day limit and GME discount impactMercer Government Human Services Consulting13Inpatient Hospital PMPM Annual Trend by COA and Year F&CDisabled SOBRA AIDSHIVDelivery/BirthTotal CY04/05 5.4%4.9%5.4%5.4%5.1%4.6%5.0%CY05/068.8%8.2%8.8%8.3%8.1%6
11、.7%7.9%CY06/077.7%7.2%7.7%7.3%7.2%6.2%7.0%Total7.3%6.8%7.3%7.0%6.8%5.8%6.6%Mercer Government Human Services Consulting14Outpatient Hospital Unit Cost Trends:HSCRC Component*ForecastYear Rate UpdateFY053.78%FY063.98%FY073.56%FY08*3.22%nHSCRC rate updatesMercer Government Human Services Consulting15Ou
12、tpatient Trend ConsiderationsnCY04CY05(also 3 months of CY06)trend estimates based on program-specific datanCY05CY07 trend forecasts driven by HSCRC rate updatesnTrends estimates incorporate GME discount impact Mercer Government Human Services Consulting16 F&CDisabled SOBRA AIDSHIVDelivery/BirthTota
13、l CY04/05 8.0%8.2%8.0%8.5%8.5%8.0%8.1%CY05/0612.1%13.3%12.1%12.1%12.1%12.1%12.5%CY06/0711.4%12.6%11.4%11.4%11.4%11.4%11.8%Total10.5%11.4%10.5%10.7%10.7%10.5%10.8%Outpatient Hospital PMPM Annual Trend by COA and YearMercer Government Human Services Consulting17Pharmacy Trend ConsiderationsnCY04CY05(a
14、lso 3 months of CY06)trend estimates based on MCO-specific datanCY05CY07 trend forecasts based on pharmacy industry researchMercer Government Human Services Consulting18 F&CDisabled SOBRA AIDSHIVDelivery/BirthTotal CY04/05 5.5%6.1%5.5%7.6%7.6%5.5%6.1%CY05/067.6%8.4%7.6%9.9%9.9%7.6%8.3%CY06/077.6%8.4
15、%7.6%9.9%9.9%7.6%8.3%Total6.9%7.6%6.9%9.1%9.1%6.9%7.6%Pharmacy PMPM Annual Trend by COA and Year Mercer Government Human Services Consulting19Physician Trend ConsiderationsnCY04CY05(also 3 months of CY06)trend estimates based on MCO-specific datanCY05CY07 trend forecasts based on above baseline and
16、industry researchMercer Government Human Services Consulting20Physician PMPM Annual Trend by COA by Year F&CDisabled SOBRA AIDSHIVDelivery/BirthTotal CY04/05 3.2%3.0%3.3%4.0%4.0%3.0%3.2%CY05/065.0%4.7%5.0%5.9%5.9%5.0%4.9%CY06/075.0%4.7%5.0%5.9%5.9%5.0%4.9%Total4.4%4.2%4.4%5.3%5.3%4.3%4.4%Mercer Gove
17、rnment Human Services Consulting21Summary of Average Annual Trends by COA and COS(CY04CY07)F&CDisabled SOBRAAIDSHIVDelivery/BirthTotalInpatient Hospital7.3%6.8%7.3%7.0%6.8%5.8%6.6%Outpatient10.5%11.4%10.5%10.7%10.7%10.5%10.8%Physician 4.4%4.2%4.4%5.3%5.3%4.3%4.4%Dental 6.7%5.4%6.7%5.4%5.4%0.0%6.7%Ph
18、armacy6.9%7.6%6.9%9.1%9.1%6.9%7.6%All Other*-1.0%-0.6%-1.0%-0.6%-0.5%-1.0%-0.8%Total6.7%6.8%7.2%7.5%7.7%5.6%6.6%*Reflects-9.3%trend for CY04/05 and 3.8%trend for both CY05/06 and CY06/07.Mercer Government Human Services Consulting22 F&CDisabled SOBRA AIDSHIVDelivery/BirthTotal CY04/05 4.4%4.3%5.0%5.
19、3%5.5%4.3%4.4%CY05/068.0%8.3%8.5%8.8%9.0%6.5%8.0%CY06/077.7%7.8%8.1%8.3%8.6%6.0%7.5%Total6.7%6.8%7.2%7.5%7.7%5.6%6.6%Summary of Consolidated COS Annual Trend by COA and YearMercer Government Human Services Consulting23B.4:Administrative and Profit LoadnFrom the audited CY04 HFMR base cost,grouped se
20、parately by F&C and DisabledMedical management costsAdministrative costsnAdministrative trendsMedical management(at CPI+):3.76 percent Administrative costs(at CPI):2.80 percentnAdditional itemsUnderwriting Gain:1.5 percent of medical expenseReinsurance Administration Costs:$2.4 million added to base
21、Risk/Contingency Margin:0.4 percent of medical expensenState policy decision:loading capped at CY06 level of 12.6 percentMercer Government Human Services Consulting24Administrative and Profit Load AllocationnPremium Tax:2.3 percent of medical expensenOverall,loading over medical portion of CY07 rate
22、s is 14.9 percentMedical management,underwriting gains,risk/contingency margin,reinsurance administration,and premium tax as variable loading(proportionally to medical component of rate)Administrative costs as fixed loading oVariable by F&C and Disabled oVariable by rate cell groupingsAdministration
23、 costs for RACso75 percent fixed and 25 percent variableMercer Government Human Services Consulting25B.5:Relational ModelingnStandard actuarial stepnFor smoothingnTo reflect improved RAC assignment due to better encounter data and RAC relativitiesnTo incorporate aging of RAC cohortsMercer Government
24、 Human Services Consulting26B.6:Regional FactorsnCity versus Rest of State(ROS)regional factors based on the regional analysis presentation on June 22,2006nResults in City/ROS differential of 23 percent for demographic rate cells and 14 percent for RACsLast year the differential was 27 percent for d
25、emographic rate cells and 17 percent for RACsMercer Government Human Services Consulting27B.7:Low Birth Weight Babies nUMBC analysis applied to newborn/delivery kick payment and 1 F&C nAdjusted to recognize 90 percent of differential in base cost analysisnAdjusted for differential trendMercer Government Human Services Consulting
