Analyzing the Medicare Advantage landscape

Each Medicare Advantage (MA) plan has an associated “value added,” which is defined as the value of benefits provided to a specific plan’s beneficiaries beyond traditional Medicare that are not funded through member premiums. This metric accounts for the value of non-Medicare-covered benefits, reductions in cost sharing to traditional Medicare, any buy-down of the Part B premium, and any additional premium the member if responsible for. Therefore, two plans with identical benefits will have different value added amounts if their premiums vary.

This report by Milliman actuaries highlights changes in the MA value added from 2016 to 2020. The authors focus their analyses on general enrollment and dual-eligible special needs plan types nationwide, excluding any U.S. territories.

Milliman report on U.S. organ and tissue transplants projects 11% rise in average annual cost in 2020

Milliman today released the 2020 edition of its triennial report on the estimated costs of U.S. organ and tissue transplants. The report summarizes average annual costs per member per month (PMPM), including utilization and billed charges, related to the 30 days prior through 180 days after transplant admission for organ and tissue transplants. This includes single-organ transplants such as heart, intestine, kidney, liver, lung, and pancreas, and a number of multiple-organ transplants; tissue transplants include bone marrow and cornea.

While the findings vary greatly by transplant and population type, the study found that for all combined organ and tissue transplants, per member costs based on billed charges saw an average annual increase of 11% for those under age 65, and 10.5% for those age 65 and over when compared to the 2017 report. The analysis also examined trends in hospital lengths of stay, average waiting times for organs, and changes in survival rates between our 2017 and 2020 reports, with results varying by transplant.

New this year, the report also explores emerging innovations and issues in the areas of organ viability and availability, such as the use of bioengineering, xenotransplantation, and anti-Hepatitis C drugs to combat shortages and growing waitlists.

There are a number of scientific and policy initiatives geared at improving the availability of and access to much-needed organ and tissue transplants. As new technologies emerge, Milliman’s research will continue to be an important tool for physicians, insurers, and the public to better understand the utilization, billed charges, and related trends associated with this vital healthcare service.

To view the complete report, click here.

Health Adult Opportunity 1115 waiver option considerations

On January 30, the Centers for Medicare and Medicaid Services (CMS) introduced guidance describing the new Healthy Adult Opportunity (HAO) 1115 waiver option. This option outlines conditions under which a state might convert open-ended matching funding for expansion adults into a block grant or per capita program.

The HAO offers states new flexibilities for their Medicaid programs in return for assuming the financial risk of block grants. State program directors face many complex considerations as they evaluate these options. While the HAO will clearly appeal to states that have previously considered requesting a block grant, the range of policy options made available under this initiative may bear considerations for states across the country.

In this paper, Milliman’s consultants discuss 10 key considerations for states evaluating the HAO.

Equalising risk in global healthcare systems

Health insurance, like most insurance, can be priced using risk ratings, where premiums are set based on the relative risk of insured lives and the propensity to claim. This may result in unaffordable health insurance for the most high-risk members of society. As a result, many governments restrict the use of risk ratings in health insurance markets in favour of “community rating.”

In a community-rated system where all consumers are charged the same premium, many high-risk consumers are protected from paying unaffordable premiums. Other consumers, such as healthier or younger individuals, will generally pay a higher premium to subsidise sicker and often older individuals. Consequently, premium revenue collected by insurers or other risk-bearing entities may no longer truly reflect the underlying risk associated with their insured populations.

In many healthcare systems and health insurance markets around the world where risk rating is not allowed, risk equalisation is used to enhance consumer protection and market stability. Its aim is to compensate for the risk profiles of different groups of the population such that the additional medical expenses associated with high-risk members are shared amongst healthcare providers or insurance companies.

In this paper, Milliman consultants have set out a “how-to” guide to risk equalisation, or risk adjustment. They use illustrative examples from around the world to explain the challenges and practicalities that should be considered in the design and management of a risk equalisation program.

What are the potential effects of prospective and retrospective assignment on key ACO metrics under the MSSP?

At the end of 2018, the Centers for Medicare and Medicaid Services published the Pathways to Success final rule for the Medicare Shared Savings Program (MSSP) giving accountable care organizations (ACOs) renewing July 1, 2019, or later the option to select between prospective and retrospective assignment of patients.

Under prospective assignment, beneficiaries are assigned to an ACO based on services occurring prior to the performance year. Under retrospective assignment, beneficiaries are assigned to an ACO based on services occurring during the performance year. Averages for assignment-eligible fee-for-service beneficiaries can help provide understanding of how the two assignment methodologies affect results.

Retrospective and prospective assignment have significantly different effects on the characteristics of the assigned populations for beneficiaries assigned to primary care physicians and specialists. Prospective and retrospective assignment will ultimately affect the population that is assigned to the ACO because some beneficiaries who are assigned under prospective assignment are not assigned under retrospective and vice versa. The choice between these assignment methodologies can have subtle effects on the ACO’s overall benchmark, risk score, and performance year costs.

In this brief, Milliman’s Sam Shellabarger, Charlie Mills, and Lance Anderson explore in more detail the potential effects of prospective and retrospective assignment on key ACO metrics under the MSSP.

Analysis explores prevalence of behavioral conditions in families

Many social determinants of health have important effects on behavioral health and can apply to all members of a family. Some research has found that having a family member with a mental illness decreases family functioning and is a general stressor for families. With that in mind, payers and providers may find that the diagnosis of a behavioral health condition in one family member could signal that it may be worth screening for circumstances that might affect the entire household. This could provide an opportunity for earlier diagnosis and intervention with other household members who may be at heightened risk for similar behavioral health concerns.

In order to shed more light on how behavioral health conditions affect families, Milliman analyzed the prevalence of several conditions among family members in a national, commercially insured population in 2017. In this paper, Milliman’s Stoddard Davenport and Marissa North expand on existing research by analyzing the prevalence of behavioral conditions in parents of children with behavioral conditions versus those without as well as children of parents with behavioral conditions versus those without.