Tag Archives: Mary van der Heijde

How will providers be reimbursed under MACRA?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) reforms how providers are reimbursed for care provided under Medicare Part B. In their article “MACRA: Overview for providers,” Milliman consultants Colleen Norris and Mary van der Heijde offer questions and answers concerning the three reimbursement adjustment options eligible clinicians will have under MACRA.

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.

MACRA considerations for health plans

In the article “MACRA: Key considerations for health plans,” Milliman consultants Colleen Norris and Mary van der Heijde answer four questions health insurers need to consider about how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) will affect their business:

• How does MACRA affect providers?
• Why is Qualifying Participant status so desirable, yet so challenging to achieve?
• What opportunities might MACRA provide for a health plan?
• For a health plan, what are the challenges associated with MACRA?

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.

Ten considerations for risk adjustment strategy

The federal risk adjustment program is set up to transfer funds from payers with lower-risk populations to those with higher-risk populations. This was done to “level the playing field” among insurers by removing the incentive to attract only healthy individuals.

Milliman consultants Mary van der Heijde and Jordan Paulus offer some considerations for carriers in their paper “Risk adjustment: Overview and opportunity: Top 10 notable issues related to the federal risk adjuster.”

Risk corridor calculation

Risk corridors are intended to protect health insurers from having premiums that end up being too high or too low. However, some aspects of the rule’s formula and language pose challenges in this risk-sharing agreement between insurers and the federal government.

In the article “Risk corridors under the ACA,” Milliman consultants provide three scenarios showing the complexities of risk corridor calculations. This excerpt demonstrates the results of a mispricing scenario:

Because the goal of the program is to cushion against pricing uncertainties, let us modify our example to see what happens when our issuer prices its product 10 percent higher than what would have been ideal (above and beyond the priced-for profit margin), and when our issuer prices its product 10 percent lower than what would have been ideal. Does the risk corridor “protect” against these scenarios?

Just to be clear, given all the “profits” floating around: The line labeled “Priced Profit Margin” in Figure 2 is the profit the issuer intended to make. The “Profits” line is the profit amount used in the risk corridor formula after applying the floor. Finally, the last two lines show the approximate profit margins the issuer experiences as a percentage of total premium before and after the impact of the risk corridor program.

In both scenarios shown in Figure 2, the transfer payment between the plan and HHS mitigates the impact of the deviation from pricing assumptions to some degree, but far from completely. In the overpricing scenario, the allowable administrative costs are capped at 20 percent of after-tax premiums, plus taxes and fees. If this cap were not present, then the issuer would be permitted to deduct its entire allowable administrative costs (including the large profit), and there would be no risk corridor payment made.

Similarly, in the underpricing scenario, if the profits were not floored (at 3 percent of after-tax premiums), then there would be no risk corridor payment received. This explains why the cap and floor are needed—without them, the program doesn’t make sense (assuming that it is to be based on actual expenses rather than pricing assumptions).

Risk corridors

Originally published in Health Watch, October 2013 by the Society of Actuaries.

Discussing ACA’s three Rs: Reinsurance, risk corridors, and risk adjustment

The October 2013 edition of Health Watch focuses on the “three Rs” of the Patient Protection and Affordable Care Act (ACA): reinsurance, risk corridors, and risk adjustment. Milliman consultants contributed three articles on these issues:

• The cover article, “Risk corridors under the ACA” by Doug Norris, Mary van der Heijde, and Hans Leida, examines the technical and strategic considerations of the risk corridor provision.

• In the article “Strategies for leveraging the ACA risk adjuster,” Jason Siegel outlines operational strategies that health plans could deploy to optimize their risk adjustment performances.

Rob Damler’s article, “Medicaid expansion under the Affordable Care Act,” examines how expected increases to the Medicaid population could affect different demographics and risk compositions within existing state programs.

Lessons from Brazil: Regulatory changes in the health insurance market

Both Brazil and the United States have distinct experiences with reforming their respective healthcare systems. While the two countries have different systems and have pursued different types of reform on different timetables, there are lessons to be learned by looking at the two countries side by side.

Major healthcare reform has already occurred in Brazil over the past couple of decades. It is possible to draw relevant parallels between some of those changes and what the Patient Protection and Affordable Care Act (PPACA) includes for the United States.

There is much discussion about what will happen in the United States if the individual mandate is eliminated and underwriting remains prohibited. Taking a look at the evolution of Brazil’s healthcare system may provide some insight into this possibility and other possible outcomes of healthcare reform in the United States.

This new paper expores the comparison between health reform in Brazil and the United States.