Machine learning algorithms are closely related to techniques that actuaries have already been using for decades. Actuaries are thus in an excellent position to add machine learning to their existing skill set. This article by Judith Houtepen and Sjors Altemuhl compares machine learning with traditional statistical techniques, discusses how machine learning can add value in the existing Dutch healthcare landscape and describes what the role of the actuary must be.
Stop-loss coverage is purchased by self-insured employers
looking for coverage from catastrophic medical and pharmacy claims. Based on
the most recent data available from S&P Global Intelligence, the stop-loss
market stands at approximately $20 billion in premium.
In March 2019, Milliman sent survey participation requests
to approximately 30 employer stop-loss carriers, and 25 provided responses. The
survey asked questions about various topics, including:
Portfolio characteristics, such as employer size
and types of coverage purchased
Underwriting measures, such as persistency and
Pricing measures, such as a carrier’s average
discretionary discount and target loss ratios
In China, the Million Medical product, which is generally
defined as a high-limit and high-deductible reimbursement product, has become
the most popular medical product since its launch in August 2016. Million
Medical products have removed a lot of restrictions from the previous medical
reimbursement products. For instance, medical reimbursement is no longer
restricted to the listed items in the social health insurance catalogue, and the
annual limit is much higher than before. Instead, Million Medical products
reimburse all reasonable medical expenses, with a high limit, while keeping the
premium affordable with a higher deductible.
While the Million Medical product has grown in popularity, with more and more insurers beginning to offer this option, its underwriting margin has been narrowing. This trend will likely continue into the future. More effort is needed to better manage the product and make it a more sustainable medical reimbursement product in China. Milliman’s Jiang Guanjun and Qiuwen Peng offer more perspective in this article.
Medical inflation generally refers to the annual increase in the cost of medical treatment per insured life. It encompasses both changes in the average cost of treatment for the same basket of services and changes in the frequency of seeking treatment for a steady-state portfolio. It is impacted by anything that will change the cost per insured life for the same services, ranging from technological medical advances to shifts in costs and from social and national healthcare systems to private insurance payers. A change in the mix of services will impact the relative weights that each service contributes to the ‘basket’ of goods (similarly to a calculation of RPI). Using risk adjustment as a true measure of inflation, the effects of a change in the mix of lives in a portfolio would be stripped out, although most cited measures do not remove this element and instead quote inflation inclusive of mix changes.
Continuing from our first blog, which focussed on the potential impact of Brexit on PMI market size, in this blog we examine factors that will impact the average cost of treatments through the supply of medical professionals, cost of drugs, changes in general inflation and the economic health of the UK.
The figure below summarises how the topics we cover impact medical inflation.
Comprehensive medical coverage is a mandatory benefit
available to all Medicaid recipients nationwide, but dental benefits under
Medicaid vary widely.
Each state’s Medicaid and/or Children’s Health Insurance
Program guidelines provide mandatory comprehensive dental coverage for
children, but there is no nationwide minimum requirement for dental coverage
for adults. Adult dental benefits under Medicaid vary by state, ranging from no
coverage to comprehensive coverage of all classes of service. Benefits within a
state may also vary by Medicaid population. Certain subgroups may receive
additional dental benefits or dental benefits different from other Medicaid
As an optional benefit, Medicaid adult dental benefits are subject to change with state budgets, leading to uneven dental coverage over time. Provider availability also limits access to dental coverage for the adult Medicaid population. Medicaid enrollees may face additional barriers to accessing dental care such as transportation to appointments and differences in language. The expansion of eligibility for Medicaid in many states thrust more adult beneficiaries into the system. In expansion states that offer adult dental benefits, an influx of newly insured beneficiaries may be seeking dental care.
In this paper, Milliman’s Joanne Fontana, Catherine Lewis, and Tory Carver explore the relationships among a state’s adult Medicaid dental benefit, provider reimbursement, and dental care utilization rates. They aim to shed light on the relationship between reimbursement and utilization in a dental program.
On January 9, 2018, the Centers for Medicare and Medicaid Services (CMS) announced a new voluntary bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI Advanced). The model started on October 1, 2018, and CMS has indicated that there will be an additional opportunity for new entrants to start on January 1, 2020, with the application period opening in April 2019. BPCI Advanced replaces the current BPCI models, which have been in operation for five years.
The bottom line for organizations interested in pursuing BPCI Advanced is whether the potential rewards for participating offset the risks and costs associated with that participation. The BPCI Advanced program offers proactive industry stakeholders flexibility to develop innovative care and gainsharing models, even if they had not previously participated in BPCI. However, both new entrants and experienced entities in the bundled payment space will need to balance these opportunities with target price and contractual structuring considerations in order to determine how they are best positioned to participate in the program.
In this paper, Milliman’s Daniel Muldoon and Pamela Pelizzari examine several factors, which can influence an organization’s decision to enter BPCI Advanced, and, if appropriate, its decision to share risk with a convening organization.
Ropes & Gray’s Devin Cohen, Evander Williams, and Michael Lampert also co-authored the paper.
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