Cascade Health Alliance chooses Milliman PRM Analytics for population risk management

Milliman PRM Analytics™ (PRM), a leader in data-driven value-based healthcare support systems, today announced that Cascade Health Alliance (CHA), a coordinated care organization (CCO) serving Klamath County, Oregon, has selected the PRM Platform and its suite of cloud-based analytic and population risk management solutions to support their growing clinical integration initiatives.

“By giving us greater ability to better manage our population health, the PRM tool allows for more efficient risk stratification and management,” said Peter Waziri, CHA’s Chief Financial Officer. “Working with Milliman and PRM Analytics will help CHA to better serve our members by allowing staff deeper insights to those members’ health information.”

“We are pleased to be selected by Cascade to help them manage their risk-based populations. Milliman continues to be the industry leader in helping providers manage population risk. PRM™ represents a disruptive approach to population stratification and management. The analysis focuses on the prospective opportunity for potentially avoidable costs so the patient care team can focus on them in advance. Care management can then be focused on the patients with the greatest potential to ‘bend the cost curve’ resulting in the optimal deployment of limited care management team resources,” said Art Wilmes, FSA, MAAA, a Principal and Consulting Actuary in Milliman’s Indianapolis office.

“I have access to new ways of seeing cross-sectional data and how it all works together,” said Angela Leach, CHA’s medical informatics analyst. “Case managers will use it to get at-a-glance profiles of patients they are caring for, and the quality management department can use it to find ‘hot spots’ that may benefit from additional programs.”

The case management team at CHA can use PRM Analytics in a variety of ways, according to Diane Barr, Director of Case Management. “We can identify high-cost members, plus we can filter for diagnosis and identify members for disease management,” Barr said. “We can also look at an individual member to determine their utilization, chronic conditions and other details. The best part is we can do risk stratification and identify members that are at the highest risk for re-hospitalization or emergency department utilization. The program is easy to use and provides us with volumes of useful information.”

Mini-medical plans and the “what can I afford” question

Prior to the Patient Protection and Affordable Care Act (ACA), mini-medical plans had no standard meaning, though they typically shared a few characteristics. Such plans provided limited coverage that could be exhausted quickly and/or result in significant out-of-pocket expenses if enrollees needed comprehensive services.

Total annual benefit limits may have been as high as $250,000 with more typical limits ranging from $10,000 to $50,000. Coverage was provided on an expense-incurred basis and used for traditional comprehensive health insurance, with lower premiums the trade-off for dollar-value benefit levels that fell below traditional health insurance.

The ACA effectively eliminated the expense-incurred mini-med market with the prohibition of annual limits on essential health benefits. What role might mini-med plans play in a post-ACA environment? Milliman’s Nick Ortner provides perspective in his article “What can I afford? Mini-med 2.0 and cost-coverage questions in a post-ACA world.”

The potential cost of gene therapy may surprise payers

An estimated 80% of rare diseases are genetic. For patients diagnosed with rare genetic diseases, gene therapies may offer an adequate treatment option. However, gene therapies may be costly for payers using the current payment models in the U.S. healthcare system. Milliman actuaries Anne Jackson and Jessica Naber discuss the issue in the article “The future is now: Are payers ready for gene therapies?

Substantial amount of ACA plans’ revenue comes from cost-sharing payments

Politico Pulse cited a new study performed by Milliman that examines cost-sharing reduction (CSR) subsidies under the Patient Protection and Affordable Care Act (ACA). The study was commissioned by the Association for Community Affiliated Plans.

Here’s the excerpt from the morning briefing:

FIRST IN PULSE: COST-SHARING SUBSIDIES ARE A SIGNIFICANT SHARE OF OBAMACARE REVENUES — Cost-sharing subsidies accounted for 7.8 percent of health plan revenues for customers enrolled in Obamacare plans in 2015, according to a new study commissioned by the Association for Community Affiliated Plans.

The study conducted by Milliman also found a huge discrepancy between states that expanded Medicaid and those that didn’t. Cost-sharing subsidies accounted for 4.8 percent of revenues in expansions states, but that share more than doubled in states that didn’t expand coverage. The amount of money at stake: $4.9 billion in assistance to 5.2 million exchange customers in 2015.

Why it matters: The future of the cost-sharing subsidies is in limbo. House Republicans sued to block the funding and won an initial court battle. But they’re being pushed by health plans to continue the payments now that they’re in control of the federal government. Otherwise, insurers warn, the Obamacare markets could collapse on their watch. “The loss of CSR payments in 2017 would trigger significant losses for many insurers in the individual market,” the study concludes. Read the report here.

Considerations for Medicaid reform proposals

Republican Medicaid reform proposals have thus far focused on converting federal funding from the current approach of proportional federal and state financing to either block grants or per capita caps. While these funding approaches may sound relatively straightforward, understanding the implications of such changes requires consideration of several factors.

In this paper, Milliman consultants break down the detailed considerations into two primary categories: initial benchmark development and annual growth rates. Defining the assumptions and methodologies used to establish benchmarks and growth rates is key to aligning service cost with funding under alternative federal financing for Medicaid. Without consideration of these concepts, the actual cost of Medicaid relative to the federal budget for Medicaid will begin to diverge, and the gap may become wider over time. As this theoretical funding gap emerges, states will be at increased risk for funding additional program cost.

Yearly shared-risk arrangement check-up considerations

Providers should review contract provisions with Medicare Advantage organizations (MAOs) as well as the Centers for Medicare and Medicaid Services (CMS) revenue adjustments yearly to understand the financial implications of their shared-risk arrangements. Milliman’s Simon Moody and Kim Hiemenz offer perspective in their article “Providers should do annual check-ups on Medicare Advantage risk-sharing contracts.”

Here’s an excerpt:

Many providers enter into shared-risk arrangements with MAOs. The most common method used in MA shared-risk arrangements is a medical loss ratio (MLR) target, i.e., claims divided by revenue. This type of arrangement is often referred to as a “Percentage of Premium.” Revenue includes both member premium and CMS revenue. This approach is often used for MA risk deals because it aligns the carrier’s and provider’s incentives, particularly the incentive to ensure accurate coding. An MAO’s revenue from CMS is directly tied to its risk score; that is, if an MAO’s risk score improves, then its revenue increases. All else equal, as revenue improves, the medical loss ratio also improves. Thus, MA coding improvement creates a win-win situation for both plan and provider in MLR target arrangements.

Significant revenue components are outside the control of MAOs

Cost targets based on revenue introduce additional considerations because there are a number of factors that affect the revenue an MAO will receive from CMS. Many of these factors are beyond the control of both the MAO and the provider because they are set by CMS. Changes in these “external” factors will directly affect the MLR and significant changes in these factors from one year to the next could inadvertently make the target MLR stated in the shared risk arrangement inconsistent with the parties’ goals.

Figure 1 includes key factors set by CMS that influence an MAO’s revenue.