Transgender health coverage considerations

This paper written by Milliman’s Susan Philip and Andrew Naugle highlights recent state and federal policy changes concerning healthcare benefits for transgender individuals. The authors also examine health insurance clinical policies governing the coverage of services related to gender transition. Lastly, Susan and Andrew provide future considerations for healthcare payers, including appropriately capturing data relevant to the healthcare needs of the transgender and gender nonconforming population.

First quarter financial results for medical professional liability specialty writers

The medical professional liability (MPL) market began 2016 experiencing similar trends to those seen in recent years. The first quarter of 2016 has seen the market maintain favorable calendar-year financial results despite declining premium volume and steadily increasing operating ratios. If the historical relationship between first quarter and year-end holds, MPL speciality writers can expect weaker financial results, compared with recent years, yet still an overall profitable year. This article by Milliman’s Brad Parker and Eric Wunder provides more perspective.

This article was originally published in the July 2016 issue of the Medical Liability Monitor.

Regulations impact group retiree pharmacy benefit plans

An evolving regulatory landscape is influencing the financial value of Employer Group Waiver Plans (EGWPs) and Retiree Drug Subsidy (RDS) plans. Plan sponsors should monitor the effect that new and proposed rules may have on their group retiree pharmacy benefits. In this article, Milliman actuaries Michelle Angeloni and Tracy Margiott discuss trends and changes affecting EGWPs and RDS plans as highlighted in Figure 2 below.

Figure 2 - group retiree pharmacy benefits market

Cost differences between open and minimally invasive surgery

Numerous studies comparing the safety and efficacy of minimally invasive surgery (MIS) and open surgery have shown that MIS is associated with shorter intensive care and hospital stays and lower rates of transfusion, readmission, surgical site infections, pain, mortality, and time taken to return to normal activities or work. Despite evidence supporting the benefits of MIS, its use varies widely by region and hospital. In this study, Milliman consultants analyze the difference in payer costs between MIS and open surgery in a commercial population for four commonly performed elective surgical procedures.

This article was originally published in the September 2015 issue of Managed Care.

Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

Employer shared responsibility appeal form released
The U.S. Department of Health and Human Services (HHS) issued a health insurance marketplace appeal request form for employers.

To download a copy of the form, click here.

Spending for Social Security and major healthcare programs
The Congressional Budget Office (CBO) published the report “The 2016 Long-Term Budget Outlook,” which describes the agency’s projections of federal spending, revenues, deficits, and debt over the next 30 years.

The CBO projects that spending for Social Security would increase noticeably as a share of the economy—from 4.9% of gross domestic product (GDP) in 2016 to 6.3% in 2046—if current laws generally remained unchanged. Spending for the major healthcare programs is projected to grow even faster—net outlays for those programs would increase from 5.5% of GDP now to 8.9% in 2046. The major healthcare programs include Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), as well as spending on subsidies for health insurance purchased through the marketplaces established by the Patient Protection and Affordable Care Act (ACA) and related spending. About three-quarters of the increase in spending for the major healthcare programs would be for Medicare.

To download the report, click here.

How will providers be reimbursed under MACRA?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) reforms how providers are reimbursed for care provided under Medicare Part B. In their article “MACRA: Overview for providers,” Milliman consultants Colleen Norris and Mary van der Heijde offer questions and answers concerning the three reimbursement adjustment options eligible clinicians will have under MACRA.

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.

MACRA considerations for health plans

In the article “MACRA: Key considerations for health plans,” Milliman consultants Colleen Norris and Mary van der Heijde answer four questions health insurers need to consider about how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) will affect their business:

• How does MACRA affect providers?
• Why is Qualifying Participant status so desirable, yet so challenging to achieve?
• What opportunities might MACRA provide for a health plan?
• For a health plan, what are the challenges associated with MACRA?

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.

Value-based reimbursement makes actuarial expertise a must

Value-based reimbursement presents healthcare providers with risks they have limited experience and expertise addressing. These risks call for actuarial, analytic, and data mining capabilities that can help providers improve their quality of care and succeed in this new environment. Milliman’s article “Are you ready for the new world of value-based reimbursement?” explains how providers can benefit from hiring experts with contracting and data management knowledge.

Here’s an excerpt:

There are many contracting choices offered to clinicians and facilities by both CMS and private payers. Knowing which option at which negotiated rate will work best for them is essential to the survival and prosperity of providers. In addition, ensuring that the contract includes certain types of protection to control risk is critically important and requires forethought and planning. It would be prudent for providers to engage actuaries who possess a deep understanding of actuarial risk to assist in structuring and negotiating these risks. In addition, the reconciliation of payments from these contracts will also require analytic and actuarial resources to ensure all aspects of the contract have been properly applied.

Advanced analytics and data management is another area that requires additional focus in order to be successful. Providers need to have a data analytic strategy with tools and resources to develop a quantitative-based plan of action that focuses clinical resources on the areas of highest importance.

A first step in this process is to complete a review of current capabilities and a gap analysis. This expertise should include capabilities in medical cost and trend analytics, population health, quality analytics, and risk score analytics (see Figure 1). In addition, development of a data warehouse and the necessary analytic tools and reporting functions will set the organization on a path to success.


Milliman MedInsight chosen by two state-based organizations and a leading community coalition to identify unnecessary costs and procedures in healthcare delivery

Milliman announced today that its healthcare tool, the MedInsight® Health Waste Calculator, has been chosen by two state All Payer Claims Databases (APCDs) and a leading Regional Health Improvement Collaborative to aid in their identification of unnecessary costs and procedures in healthcare delivery.

The Virginia Center for Health Innovation (VCHI), Oregon Health and Hospitals, and the Washington Health Alliance (WHA) have all licensed the MedInsight Health Waste Calculator to support their statewide initiatives to identify and eliminate waste in their healthcare systems.

“In Virginia, an important component of our state health innovation plan is to reduce utilization of low-value medical tests and procedures so that we can free up needed resources to advance high-value care. Our medical and business communities want to do what they can to better ensure that patients and providers are choosing wisely when it comes to healthcare,” said Beth Bortz, President and CEO of VCHI.

The Health Waste Calculator is an analytic tool that is powered by Milliman’s MedInsight software and encapsulates Value-Based Insurance Design (VBID) Health’s market knowledge on wasteful healthcare spending. The tool identifies and quantifies the use of unnecessary or potentially harmful clinical services, including those defined by national initiatives such as the U.S. Preventive Services Task Force and Choosing Wisely. Using the Health Waste Calculator, each state will be able to report on countless aspects of healthcare but the typical starting points are reports by county, region, or even health system, using these metrics:

• Percentage of individuals exposed to at least one potentially wasteful service.
• Percentage of potentially wasteful services in each market, what is called the Waste and Quality indices.
• Cost metrics of the waste impact as a baseline for them to work from as they implement strategies to realize greater efficiencies.

Mark Fendrick, Director of VBID, stated, “The achievement of Triple Aim in healthcare is to improve quality, enhance patient experience, and lower costs, which requires us to spend more on evidence-based services and less on those that do not produce health. The MedInsight Health Waste Calculator can identify, and potentially reduce, the use of low-value services to free up needed resources to reduce important gaps in care.”

MedInsight is used by over 300 health plans, employers, at-risk providers/accountable care organizations (ACOs), state governments, community health coalitions, and third-party administrators.

For more information about Milliman’s MedInsight products, click here.

Transitional policies result in higher medical loss ratios

A new Milliman analysis shows that the percentage of transitional policy members in a state’s health exchange market appears to correlate with higher medical loss ratios. In the analysis, Milliman consultants Erik Huth and Jason Karcher quantify the effect that transitional policies had on issuers’ 2014 individual market performances and how it may result in 2017 rate increases for transitional states.

Here’s an excerpt:

The table in Figure 3 shows that issuers in transitional states had higher 2014 loss ratios but appear to not have taken large enough 2015 and 2016 rate increases to achieve profitable 2016 loss ratios (assuming 2014 to 2016 significant cost savings are not realized in other ways). Although issuers’ 2017 rate increases will reflect their 2015 experience and updated projections, there is potential for transitional states to see higher rate increases in 2017.

Figure 3

The graph in Figure 4 shows the 2014 ACA loss ratio and the average 2014 to 2016 statewide QHP base rate change for each state. The gray line represents an illustrative 2014 to 2016 rate increase needed to target an 85% 2016 loss ratio given the 2014 loss ratio and assuming a 5% annual claim trend. For example, a state with an 85% 2014 loss ratio would require a 10.25% 2014 to 2016 rate increase to target an 85% 2016 loss ratio (i.e., 5% annual rate increases to cover the 5% annual claim trend to maintain the 85% loss ratio). States well underneath the line indicate a possible need for higher 2017 increases than states closer to the line. Keep in mind that projected 2016 loss ratios are merely illustrative. There are many factors that will affect a state’s overall 2016 loss ratio and required 2016 and 2017 rate increases, such as, but not limited to, changes in experience and statewide morbidity levels, wear-off of pent-up demand, provider contracting, claim trends, population migration and characteristics, and product and issuer mix. These values also represent a statewide composite, while specific issuers could have materially different results than the average.

Figure 4