Stop-loss coverage is purchased by self-insured employers looking for coverage from catastrophic medical and pharmacy claims. Based on the most recent data available from S&P Global Intelligence, the stop-loss market stands at approximately $24 billion in premium.
In March, Milliman sent survey participation requests to a wide range of employer stop-loss market participants. Of those receiving a request, 25 provided survey responses. This survey is an update to Milliman’s prior employee stop-loss market survey, which was published in May 2019.
In this paper, Milliman’s Rob Bachler, Nick Johnson, Brian Reed, and Mike Hamachek summarize the findings from the most recent stop-loss survey.
With calendar year 2021 Medicare Advantage (MA) deadlines
rapidly approaching, state Medicaid agencies and MA plans offering Dual
Eligible Special Needs Plans (D-SNPs) must quickly determine how to fulfill new
integration requirements mandated by the Bipartisan Budget Act of 2018.
D-SNPs have become increasingly popular among both MA organizations and dual eligible beneficiaries because of their ability to tailor benefit designs to the needs of this population. Approximately one-quarter of the nation’s 11 million dual eligible beneficiaries are enrolled in one of the 550+ D-SNPs offered throughout the United States as of January 2020.
In this paper, Milliman’s Nick Johnson, Chris Kunkel, and Annie Hallum summarize the new integration requirements and also discuss considerations for stakeholders.
Stop-loss coverage is purchased by self-insured employers
looking for coverage from catastrophic medical and pharmacy claims. Based on
the most recent data available from S&P Global Intelligence, the stop-loss
market stands at approximately $20 billion in premium.
In March 2019, Milliman sent survey participation requests
to approximately 30 employer stop-loss carriers, and 25 provided responses. The
survey asked questions about various topics, including:
- Portfolio characteristics, such as employer size
and types of coverage purchased
- Underwriting measures, such as persistency and
- Pricing measures, such as a carrier’s average
discretionary discount and target loss ratios
- Historical results, both loss ratio and growth
- Product terms offered
In this paper, Milliman’s Rob Bachler, Nick Johnson, and Mike Hamachek provide results of the survey.
In February, the Center for Medicare and Medicaid Innovation released a Request for Applications (RFA) for the Medicare Part D Payment Modernization Model (PMM). The PMM is a voluntary program whose goal is to reduce Part D federal reinsurance costs by adding new program flexibilities and introducing a two-sided risk-sharing arrangement around federal reinsurance costs. Interested Part D plan sponsors were required to submit an application to the Centers for Medicare and Medicaid Services (CMS) by March 15 in order to participate in the 2020 plan year.
There are many unknowns and questions regarding the PMM RFA. Some of these questions are:
• Who is eligible to participate (and who would want to)?
• What types of formulary or other program flexibility might be offered?
• What costs are associated with participating?
• Will this really result in Part D savings?
• How should plans determine information required for the application without insight on key program aspects?
• How would the benchmark be calculated?
• How could this be affected by the U.S. Department of Health and Human Services (HHS) proposal to move drug rebates to point of sale?
• What are the financial implications to the bid?
• What are the potential risks with participating?
In this article, Milliman’s actuaries discuss the answers to these questions.
As states consider implementing managed long-term services and supports (MLTSS) programs and as managed care organizations consider participating in them, it is important to understand what level of savings from managed care may be achievable. This paper by Milliman’s Nick Johnson, Andrew Keeley, and Ali Khan examines Minimum Data Set frequency reports and U.S. Census Bureau American Community Survey population data to compare nursing home usage in states with MLTSS to states without MLTSS.
Prescription drug plan sponsors must consistently evaluate and update their pharmacy benefit manager (PBM) contracts to control costs. In their article “Medicare Part D PBM contracting strategy,” Milliman actuaries Michael Polakowski, Nick Johnson, and Todd Wanta highlight numerous contract provisions that plan sponsors should examine and renegotiate to reduce pharmacy expenses.
Here’s an excerpt:
As contracting has become more complex, the following contract provisions are becoming more common as plan sponsors look to reduce their pharmacy expenses.
• Price protection. In the current environment of high-cost trends for brand-name drugs, price protection can offer more inflation protection than discount guarantees. Any price increases above a predefined threshold are paid back to the PBM by the manufacturer and considered rebates by the Centers for Medicare and Medicaid Services (CMS). Plan sponsors should carefully consider how price protection can affect Medicare bids and end-of-year settlements.
• Membership. More favorable dispensing fees, discounts, and/or rebates may be achieved for plan sponsors with higher membership counts. Improved contracting levels are specified directly in the PBM contract.
• Discount/rebate guarantees. Discount and rebate guarantees may be presented in many different forms, e.g., rebates per brand-name script or on a per member per month (PMPM) basis, or discounts off AWP or the maximum allowable cost (MAC) list. Rebate guarantees may exclude certain drugs. At a minimum, plan sponsors should ensure the targets are clearly understood and auditable. Plan sponsors should be wary of proprietary definitions when industry definitions are available for reference. Plan sponsors should also ensure that reimbursement mechanisms are in place if targets are not achieved.
• Rebate maximization. Because of the structure of the Part D benefit, rebates can be a more effective way to reduce Medicare bids than discounts. Over the last few years (and with the increasing cost of specialty drugs), plan sponsors have increasingly negotiated with PBMs to maximize rebates rather than discounts. The financial incentives for this approach are discussed by Milliman consultants Adam Barnhart and Jason Gomberg in a recent article for the AIDS Institute, “Financial Incentives in Medicare Part D.”1
• Multi-year agreements. Some PBMs have been willing to provide discount or rebate improvements over time if plan sponsors commit to multi-year contracts. Plan sponsors should be sure to verify that the improvements are contractually guaranteed and meet or beat market-wide improvements. Even multi-year discounts should have market check provisions to allow plan sponsors the ability to receive better terms when the market changes.