Tag Archives: Daniel Perlman

Five financial statements considerations for health actuaries to think about

Health actuaries have seen unprecedented challenges this year because of the ongoing COVID-19 pandemic. It has disrupted all facets of the U.S. healthcare system. How the pandemic affects an insurer’s financial statement will vary based on the distribution between lines of business, areas of service, and support channels.

As chief financial officers and actuaries attempt to determine the pandemic’s effect on year-end financial statements, the following five issues will require additional attention:

  1. Premium deficiency reserves
  2. Provider financial solvency
  3. Incurred but not reported (IBNR) claim estimates
  4. ACA risk adjustment
  5. Appropriate documentation

Milliman’s Catherine Murphy-Barron, Doug Norris, and Daniel Perlman take a closer look at these five issues in their article “Year-end health actuarial work: Five things to consider in light of COVID-19.”

Overview of proposed price transparency rule

The Transparency in Coverage proposed rule from the U.S. Departments of Treasury, Labor, and Health and Human Services aims to make healthcare pricing less opaque. Health plans commonly come with cost-sharing requirements, and these cost-sharing levels have increased over time. Most healthcare providers do not prominently list, post, or publish the prices for their services.

In this paper, Milliman consultant Daniel Perlman explains more about the Transparency in Coverage proposed rule and its potential implications for the industry. He also presents some examples of how price transparency works outside of healthcare in markets that share some common features with the healthcare market.

What should qualified health plans understand about the CMS Quality Rating System?

The Centers for Medicare and Medicaid Services (CMS) issued a Quality Rating Information Bulletin in August 2019, announcing that public display of 2019 quality rating information by all exchanges will begin during the individual market open enrollment period for the 2020 plan year. The initial guidance regarding this program was released in October 2018, and there have been several deadlines for health plans to meet throughout 2019. However, there may be some uncertainty for both plans and consumers regarding what the quality scores represent, how they are developed, and/or how they may be used now or in the future.

This paper by Milliman’s Dustin Grzeskowiak, Darin Muse, and Daniel Perlman provides some clarity on these topics, general background on the program, and a summary of the 2019 quality information published by CMS in the public use file.

Impact of Mental Health Parity and Addiction Equity Act

What has happened to utilization and costs for mental health and substance use disorder benefits as the mental health parity laws and associated rules were slowly rolled out? This paper by Milliman consultants presents an analysis of healthcare utilization and cost patterns during the six-year period from 2008 through 2013 and suggests that the Mental Health Parity and Addiction Equity Act has driven increases in access to, and benefit richness for, mental health and substance use disorder benefits.

Nonquantitative treatment limitations in the spotlight

Nonquantitative treatment limitations (NQTLs) continue to be a source of difficulty for many health plans in attaining compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Now that a few years have passed since the implementation of the final rules, we can see examples of MHPAEA enforcement related to NQTLs and the types of NQTLs being investigated and settled. In this paper, Milliman consultants provide perspective.

How the Cures Act affects parity of behavioral health services

perlman_j_danielPresident Obama signed the 21st Century Cures Act (Cures Act) into law on December 13. This lengthy bill has gotten attention mostly for its funding of cancer research, reforms to the U.S. Food and Drug Administration (FDA) drug approval process, funding for opioid addiction treatment, and policies to address suicide prevention and serious mental illnesses. Additionally, there are important provisions related to enforcement of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

MHPAEA requires parity of benefits for mental health/substance use (behavioral) conditions and medical/surgical (physical) conditions in health plans that cover both physical and behavioral benefits. It applies to self-funded employer-based plans, and also to insured plans in the large group, small group, and individual markets. MHPAEA applies to quantitative items, such as financial requirements (copays, deductibles, etc.) and some types of treatment limitations (such as annual visit limits). It also applies to nonquantitative items, such as medical management practices and drug formulary design.

The quantitative items have historically received the most attention from health plans and employer plan sponsors, perhaps because there is a clear mathematical test in MHPAEA’s implementing regulations for how to comply. We have seen less attention paid to MHPAEA’s requirements for nonquantitative treatment limitations (NQTLs), where the regulations are less specific. However, NQTLs are just as important in the regulations, and in fact they have been the driving factor behind a number of publicly disclosed enforcement actions under MHPAEA or similar state parity laws.

There are two repeatedly occurring themes throughout the parity-related provisions of the Cures Act. First, the Cures Act seeks to strengthen enforcement of MHPAEA generally. Second, it requires the implementing federal departments (Treasury, Health and Human Services, and Labor) to provide further clarification regarding the NQTL rules under MHPAEA.

Here are key provisions of the Cures Act as related to behavioral health parity:

• The Cures Act requires the departments responsible for enforcement to issue a compliance program guidance document within 12 months. This document should provide concrete examples of what does and does not comply with MHPAEA, including actual examples of findings from investigations. For NQTLs, the examples must provide clear detail to explain the finding of compliance or noncompliance. This document is to be updated every two years with further examples of compliance and noncompliance.

• The law requires the departments to prepare a similar guidance document for health insurers and plan sponsors. This also needs to provide examples of how to comply with the disclosure requirements of MHPAEA. The Cures Act requires the guidance document to provide examples of disclosing information related to what NQTLs there are in a plan, what factors are used to apply an NQTL, and how the plan ensures that they are applied at parity.

• The law enumerates several even more specific types of information for which the departments must provide guidance related to NQTL compliance. For example, the final rules implementing MHPAEA state that in order for an NQTL to be compliant when applied to behavioral services, there must be parity between medical/surgical and behavioral care in the “processes, strategies, evidentiary standards, or other factors used in applying” the NQTL. The Cures Act seeks more clarity and examples regarding the meaning of those terms.

• If a plan issuer or sponsor is found to have violated MHPAEA at least five times, this will trigger an audit by the departments of plan documents in order to help improve compliance. It remains to be seen how “five times” will be defined and interpreted.

• The U.S. Department of Health and Human Services (HHS) is required to produce an “action plan” to improve federal and state coordination of enforcement of MHPAEA.

• For each of the next five years, the departments must submit a report to Congress summarizing the results of all closed federal investigations completed in the past year regarding serious violations of MHPAEA. This report must have detail on how many investigations there were, what benefit classes were examined, what the investigations were about, and how the final decisions were reached.

• The Government Accountability Office (GAO) must prepare a report detailing how well insurers and plan sponsors are complying with MHPAEA. The Cures Act specifically lists NQTL compliance as something to be included in this report, along with a discussion of how well MHPAEA is being enforced.

• There is a brief clarification in the Cures Act that benefits for eating disorders (including residential treatment for eating disorders), if provided, must be provided at parity under MHPAEA.

In short, the Cures Act does not introduce new parity requirements per se, but rather seeks greater clarity and enforcement of existing rules (particularly with respect to NQTLs).