The medical loss ratio (MLR) measures a health plan’s spending on medical claims and allowable quality investments as a portion of total premium revenue net of taxes and allowable deductions. As a result of the COVID-19 pandemic, many healthcare services have been deferred and/or eliminated in 2020, leading to a reduction in 2020 claims relative to prior years. The claims reduction for the second quarter of 2020 was more pronounced due to lockdowns in most states.
Health plans have critical decisions to make in the upcoming months with limited data available and wide uncertainty on how the pandemic will transition toward the end of 2020 and into 2021.
In this paper, Milliman’s Andrew Bochner, Jennifer Carioto, and Luis Maldonado explore how COVID-19 can affect a health plan’s MLR requirements. They also provide specific considerations for the commercial, Medicare Advantage, and Medicaid markets in 2020 and beyond.
The COVID-19 pandemic and the mitigating actions in response by citizens and governments alike have precipitated unprecedented economic disruption in the United States. The second quarter of 2020 marked the largest single-quarter economic contraction in modern U.S. history, driving unemployment rates from historically low levels in February to peaks last seen during the Great Depression.
The unraveling and recovery of the U.S. economy have had and will continue to have a similarly disruptive influence on the enrollment in and composition of U.S. health insurance markets. These impacts will be felt throughout the health system, including in state Medicaid budgets and hospital, physician, and pharmaceutical margins, as well as in the financial performance of commercial and Medicaid health plans.
To understand the interconnected nature of economic changes and health insurance coverage and to project impacts to U.S. health insurance markets, Milliman built a tool referred to as the COVID-19 Advanced Population Shift model. This model combines detailed information on the economic status, health insurance coverage, and health status of each state’s population prior to the COVID-19 pandemic with emerging information on the economic impact of the pandemic response. It allows forecasting the resulting shifts in enrollment and population morbidity across the healthcare markets while providing insight into the key factors driving change. Milliman’s Fritz Busch, Lindsy Kotecki, and Jeff Milton-Hall summarize the findings in this paper.
The COVID-19 pandemic has created significant mental health challenges for many around the world, both directly due to the consequences of the disease, and indirectly due to the difficult circumstances that arise from mitigation strategies.
During the pandemic, the gap in care for mental illnesses and substance use disorders has been magnified by the reduction in face-to-face office visits for treatment resulting from restrictions on elective care visits, physical distancing guidelines, and the fear of spreading or contracting the disease. This challenge is being addressed by some insurers and providers through rapidly increasing use of telehealth tools to provide treatment for mental illnesses and substance use disorders.
In this article, Milliman’s Steve Melek, Stoddard Davenport, and Travis Gray explain why telehealth visits may become part of the “new normal” for replacing, or at least supplementing, office visit-based treatment for behavioral health conditions.
Millions of Americans with chronic or disabling conditions rely on home and community-based services (HCBS) to meet daily self-care and independent living needs. These services enable participants to remain safely in their homes and communities rather than moving to a nursing home or other institutional setting. State Medicaid programs are the largest payer for HCBS across the United States. The COVID-19 pandemic has presented numerous challenges and had a significant impact on the provision of HCBS.
In this paper, Milliman’s Jill Herbold and Nick Johnson discuss some challenges faced, actions taken, and the impact that the COVID-19 pandemic may have on HCBS for years to come.
Milliman today released the results of a new survey examining changes to hybrid long-term care (LTC) plans in light of the low interest rate environment and COVID-19. The study, “LTC Hybrid Product Survey,” is based on a survey of top writers of life LTC hybrid plans. The report focuses on current topics relative to the National Association of Insurance Commissioners (NAIC) Valuation Manual, Chapter 20 (VM-20), pricing, sales, and investment returns.
Key findings of the survey include:
- When asked about the assumed morbidity margin for a hybrid product under VM-20, 29% of participants assume a margin less than or equal to 10%, 57% assume a margin ranging from 10% to 20%, and the remaining 14% assume a margin of 20% or more.
- The top two primary challenges in modeling LTC hybrid riders under VM-20 are integrating rider cash flows with the base contract and determining the appropriate level and direction of margins for each risk factor under VM-20.
- Hybrid products were repriced once in the last 12 months by 44% of survey participants, repriced two times by 11% of participants, three times or more by 22% of participants, and not at all by the remaining 23% of participants.
- The single most important factor driving repricing by survey participants is the low interest rate environment.
- As a result of COVID-19 or other factors, the majority of survey participants have changed issue age limits on hybrid LTC plans.
- All participants reported they are finding it difficult to meet profit goals given the low interest rate environment.
A brief summary of the survey results is available by visiting the Milliman website here.
The COVID-19 pandemic has dramatically increased the use of telehealth. In this episode of Critical Point, Milliman’s Susan Philip and Mei Kwong, executive director of the Center for Connected Health Policy, talk about what the rise of telehealth could mean for the future of healthcare in the United States. They also discuss what providers, payers, and patients should know about this virtual healthcare service.
To listen to more episodes of Critical Point, click here.