Tag Archives: SOA

Medicaid encounter data: The next national data set

Quality encounter data is necessary for successful Medicaid managed care programs. States and managed care organizations have partnered to work toward solutions for developing and transmitting complete and accurate encounter data. In this article, Milliman’s Jennifer Gerstorff and WellCare Health Plans’ Sabrina Gibson discuss the need for, and challenges of, collecting Medicaid encounter data as well as the future of Medicaid encounter data.

Copyright © 2016. The Society of Actuaries, Schaumburg, Illinois.
 Reproduced by permission.

Milliman Advanced Risk Adjustment™ (MARA™) software tops the competition in risk scoring study

laurent-dianeMilliman’s popular Milliman Advanced Risk Adjusters™ (MARA™) software topped the competition in the latest study by the Society of Actuaries (SOA), “Accuracy of Claims-Based Risk Scoring Models.” Milliman achieved the highest overall performance among concurrent models, beating out 11 other vendors. MARA’s prospective models scored similarly well, ranking at or near the top in all four primary metrics measured.

MARA’s performance is proof of what we’ve known all along—the Milliman Advanced Risk Adjusters software is a leader in claims-based risk scoring models, and one of the most accurate tools on the market.

Since the passage of the Patient Protection and Affordable Care Act (ACA), risk scoring models play a central role in predicting or explaining healthcare expenditures. As in each of the previous SOA studies, coefficient of determination, or R2, was used as one measure of predictive accuracy and indicates how well data fit a statistical model. With an R2 of 55.4%, MARA’s concurrent diagnosis and pharmacy model (CxAdjuster) leads the competition with the highest observed R2 for uncensored costs. For costs censored at $250,000, the same model achieved the highest R2 to occur in the study, at 66.7%.

We were especially pleased that in an exploration of ensemble methods of modeling, more weight was put on the MARA model than any other. To me that indicates that giving MARA the most credence resulted in the best performing composite prediction.

MARA models are valued by clients because they produce separate risk scores for major categories of service, including inpatient, outpatient, emergency room, physician, pharmacy, and other medical care. Beyond risk scores, all MARA models provide a probability of inpatient admission and emergency room visits, plus the contribution of clinical risk drivers for more than 1,000 medical conditions.

The study, released Monday October 25, is published by the Society of Actuaries.

The actuary’s role in payment reform

Spector_JulietWith the goal of more affordable medical spending, there has been continued attention to increasing the value of healthcare through arrangements in which healthcare providers and payers work together through sharing financial risk (i.e., payment reform) to better align incentives to provide quality care at more affordable prices. Although the idea of integrated delivery systems and providers taking on risk is not new, there has been a renewed focus on these value-based arrangements. It is important for stakeholders to understand the elements of these arrangements as well as some of the practical issues and impediments that have determined their past success or failure.

The Society of Actuaries (SOA) engaged Milliman to prepare this issue paper for public educational purposes. It is intended for a multidisciplinary audience, including providers1; health insurers; health actuaries; Medicare, Medicaid, and the Patient Protection and Affordable Care Act (ACA) policymakers; and those pursuing an actuarial career. This paper helps the multidisciplinary audience understand the actuary’s role in payment reform. In addition, the paper can be used by actuaries to think about key issues when pricing their employers’ and clients’ own payment reforms.

To properly implement payment reform, several stakeholders are involved, including policymakers, healthcare attorneys, actuaries, healthcare providers, coding specialists, data analysts, information technology specialists, administrators, etc. (“the payment reform team”). The actuary, an expert on risk, can help the provider understand the various risks the provider is taking when selecting a payment model. The actuary also leads the pricing exercise and helps quantify the risk, calculates the correct price for the selected payment model, and helps project and model the cash flows.

The main body of the paper, at a high level, can be broken down into the following four sections:

1. The risks and various payment models. All payment arrangements have the potential for both adverse risk as well as opportunity, depending on the circumstances. Additionally, no one payment structure is the best in all circumstances.

2. General pricing implications to think about when pricing and modeling all payment models.

3. Ten case studies of various payment models to further illustrate ideas from prior parts of the paper. The case studies illustrate the value that actuaries can add to projects for the stakeholders. They also illustrate what potential payment reform projects could look like.

4. Best practices and key takeaways observed for the various payment models.

Despite the many roadblocks payment reform faces, it appears that increased data sharing, results of decreased total costs of care and better quality, and implementation challenges shared through literature—along with the results of actual Medicare, commercial, and Medicaid programs—are propelling the momentum forward. In this paper, we have outlined the general steps and considerations for designing, implementing, and measuring results of existing payment reform models. As stakeholders become more skilled at managing the practical details of these contracts and enhance their infrastructures to collect and process meaningful quality and savings metrics for their target populations, defining the key features that hinder or help the success of payment reform models will become easier. In doing so, providers and stakeholders will refine and implement more sophisticated payment reform models to better manage costs and quality of medical care.

1The term “providers” is meant to be broad and includes any provider or organization that provides healthcare services, including doctors, hospitals, C-suite, board members, management, etc.

Top Milliman blog posts in 2014

Milliman consultants had another prolific publishing year in 2014, with blog topics ranging from healthcare reform to HATFA. As 2014 comes to a close, we’ve highlighted Milliman’s top 20 blogs for 2014 based on total page views.

20. Mike Williams and Stephanie Noonan’s blog, “Four things employers should know when evaluating private health exchanges,” can help employers determine whether a PHE makes sense for them.

19. Kevin Skow discusses savings tools that can help employees prepare for retirement in his blog “Retirement readiness: How long will you live in retirement? Want to bet on it?

18. The Benefits Alert entitled “Revised mortality assumptions issued for pension plans,” published by Milliman’s Employee Benefit Research Group, provides pension plan sponsors actuarial perspective on the Society of Actuaries’ revised mortality tables.

17. In her blog, “PBGC variable rate premium: Should plans make the switch?,” Milliman’s Maria Moliterno provides examples of how consultants can estimate variable rate premiums using either the standard premium funding target or the alternative premium funding target for 2014 and 2015 plan years.

16. Milliman’s infographic “The boomerang generation’s retirement planning” features 12 tips Millennials should consider when developing their retirement strategy.

15. “Young uninsureds ask, ‘Do I feel lucky?’” examines the dilemma young consumers face when deciding to purchase insurance on the health exchange or go uninsured.

14. Last year’s #1 blog, “Retiring early under ACA: An unexpected outcome for employers?,” is still going strong. The blog authored by Jeff Bradley discusses the impact that the Patient Protection and Affordable Care Act could have on early retirees.

13. Genny Sedgwick’s “Fee leveling in DC plans: Disclosure is just the beginning” blog also made our list for the second consecutive year. Genny explains how different fee assessment methodologies, when used with a strategy to normalize revenue sharing among participant accounts, can significantly modify the impact of plan fees in participant accounts.

12. Doug Conkel discusses how the Supreme Court’s decision to rule on Tibble vs. Edison may impact defined contribution plans in his blog “Tibble vs. Edison: What will it mean for plan sponsors and fiduciaries?

11. In her blog “Retirement plan leakage and retirement readiness,” Kara Tedesco discusses some problems created by the outflow of retirement savings. She also provides perspective on how employers can help employees keep money in their plans.

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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.

Medicare Advantage hierarchical condition categories: Updated study results

The pressure on Medicare Advantage (MA) plans to ensure that risk scores appropriately reflect the health status of their population under the Patient Protection and Affordable Care Act (PPACA) continues to increase. Payment rates from the fee-for-service (FFS) phase-in as well as changes in star ratings for MA plans have been impacted.

The Centers for Medicare & Medicaid Services (CMS) assigns a risk score to every MA member based on the member’s characteristics, including age, gender, disability status, Medicaid status, and “health” status. The majority of revenue received by MA plans is based on the risk scores of their members, and the health status is the primary variable in the calculation of the risk score.

CMS determines the diseases/hierarchical condition categories (HCCs) for each member based on ICD-9 diagnosis codes. Identifying and submitting all appropriate ICD-9 diagnosis codes to CMS results in a higher risk score for the member and an increased payment to the MA plan.

This article, first published in the October 2012 issue of the Society of Actuaries’ Health Watch newsletter, discusses accurate diagnostic coding as an important revenue tool.