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.
There has been tremendous venture capital investment in the digital health market in the last few years. However, investors are concerned about the uncertainty surrounding return on investment (ROI) in these digital health start-ups. Actuarial expertise can help venture capitalists gauge the risk or benefit of a potential investment. Milliman’s Darin Muse, Jose Carlo, and Jason Cai provide more perspective in their article “‘A’ is for actuary.”
Here is an excerpt:
Actuaries play a number of key roles within this coalition. Our expertise in healthcare data analytics is currently being leveraged by digital health start-ups in developing business plans, products, and data analytics. Through our experience navigating the regulatory maelstroms of Medicare, Medicaid, and the Patient Protection and Affordable Care Act (ACA), actuaries have also become accustomed to reviewing and interpreting regulations as the landscape rapidly changes. Our familiarity working with state and federal regulatory agencies has matured from necessity, and we use this knowledge to help guide new companies in this space.
However, in order to maximize the funding dollars that are pouring into this industry, actuaries also need to be sitting on the other side of the (funding) table. Lisa Suennen, managing partner at Venture Valkyrie LLC, estimates that nearly 60% of companies that receive funding eventually go bust, yielding zero return on investment. She is certainly not referring just to digital health start-ups, but let us assume for the sake of argument that the $4.2 billion in 2014 digital health funding was funded uniformly across all companies. It does not take an actuary to determine that this results in roughly $2.5 billion that will soon cease its contribution to innovation due to start-up failure. It does, however, take an actuary to help determine how to shrink that number in the years to come.
Enter comparative analysis through the standardization of measurement and evaluation. The actuarial discipline has invested considerable resources in developing best practices to objectively evaluate healthcare intervention programs using vetted, standard measures. So how important are these studies to maximizing digital health funding? Assume you are the managing partner at a VC firm, and you have two digital health start-ups that have caught your eye for a potential seven-figure investment. Each of them has made it through a fair amount of due diligence already, and now you are comparing their purported returns on investments (ROIs). How do you know that the 5:1 ROI is truly better than the 3:1 ROI if the method of measurement is not the same—if it is not standardized in some way? The answer is that you don’t unless you have the time and expertise to dig into both numbers and the assumptions backing them.