Estimates of how the COVID-19 pandemic will financially affect the healthcare sector continue to evolve. Recent attempts to quantify the impact signal the likelihood that, for 2020, the reduction in spending associated with deferred care will outweigh in aggregate the increase in spending required to care for patients with COVID-19. However, at an individual provider entity level, the change in spending will vary based on a multitude of factors such as geography, the nature of services provided, and the demographics of the population served.
What does this mean for the mutual financial responsibilities created through value-based contracts? In short, for any given provider organization, the impact of COVID-19 on its value-based contracts will depend largely on certain actuarial, legal, and strategic aspects of each agreement.
In this paper, Milliman’s Cory Gusland, Anders Larson, and Brian Sweatman discuss 10 key questions that providers should be asking as they assess each of their value-based contracts during this uncertain time.
There has been increased interest from both employers and third-party administrators (TPAs) about incorporating medical trend guarantees into TPA selection analyses. In general, a trend guarantee is defined as an agreement between a TPA and an employer that compensates the employer in the event that the year-over-year trend in medical claims costs exceeds the negotiated amount.
While trend guarantees may offer a useful hedge against
unexpected increases in costs, employers should be diligent in understanding
the fine print. A trend guarantee with a lot of caveats and a tiered payout
schedule may not have a material impact on the value proposition offered by the
TPA submitting guarantees.
Milliman’s Scott Cohen, Paul Sakhrani, and Brian Sweatman offer more perspective in this article.
The initial structure of the Medicare Shared Savings Program (MSSP) allowed accountable care organizations (ACOs) to avoid sharing any losses for a limited time, so that ACOs could experiment with the MSSP without facing potentially serious financial outcomes if they were not able to achieve savings. The Centers for Medicare and Medicaid Services (CMS) has since detected several ways it believes ACOs are acting within the letter of the rules of the MSSP but not necessarily within the spirit. As a result, several facets of its proposed “Pathways to Success” rule aims to bolster the integrity of the program.
In this article, Milliman’s Jason Karcher and Brian Sweatman discuss ways in which ACOs have been identified by CMS as weakening the MSSP’s integrity and how it is proposing to address these concerns.
In 2019, the Centers for Medicare and Medicaid Services (CMS) will begin partially calibrating the HHS-HCC commercial risk adjustment model using actual Patient Protection and Affordable Care Act (ACA) experience from the 2016 EDGE server data submissions. CMS has based the model solely on non-ACA data up to this point.
This article by Milliman’s Zach Davis, Phil Ellenberg, and Brian Sweatman contains four interactive exhibits that allow issuers to review coefficients from the 2019 model. They can also compare how the EDGE data incorporated into the 2019 model will affect risk scores, and the magnitude of the impact on an issuer’s risk adjustment transfer.