Tag Archives: Susan Pantely

MACRA deadlines and timeframes

While many of the programs of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) start after 2019, there are some aspects that will begin by 2017. In this article, Milliman’s Pamela Pelizzari, Susan Pantely, and Mary Huizinga explore key deadlines and timeframes associated with MACRA. The figure below represents an overall view of many of the MACRA activities from 2016 to 2027. The authors describe each one in the article.


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.

Reserve considerations

Pantely-SusanHealth actuaries have been estimating incurred but not paid (IBNP) claim liabilities for decades. As claim payments moved from manual to electronic methods, payments processing has become quicker. This has caused IBNP to decrease as a percentage of total incurred claims. However, it is still critical to estimate total incurred claims before all claims are paid in order to evaluate profitability and set future premiums.

Typically, the IBNP estimate is based on completion factors developed from historical payment patterns. This methodology, however, can be volatile for the most recent months, with minimal runout. For recent months, a per unit trend analysis is typically used (such as monthly cost per member, per employee, per hospital day, etc.).

In order to improve accuracy of IBNP claim estimates, additional information can be used to inform the trend analysis for the recent months. This includes:

Working days. Working days in a month varies based on when weekends and holidays fall, impacting the availability of care as well as the claim processing capability of carriers. The impact on incurred services varies by setting. Hospitals empty out over holiday periods and specialists may work fewer hours on holidays and weekends. Prescription drugs have a pattern as well that varies by weekday, weekend days, and holidays. However, Medicaid nursing homes may be paid on a monthly basis regardless of the number of days or holidays in the month.
Claim payment pattern indicators. Traditionally, these include claim inventory, preauthorization, real-time reports from hospitals on inpatient days and/or admissions, and reported high-dollar claims.
Tracking the flu season. Wall Street investors follow the flu season to see the impact on health insurers. Higher-than-typical numbers of flu cases will lead to increased claims and vice versa. Some organizations track the flu at more granular levels, such as regional flu counts for high-risk members.
Weather. Snow days, flooding, and other weather-related events should be measured. These events can have an effect on incurred claims similar to additional holidays, and also can produce a pent-up demand impact later.
One-time events. Items that may impact claim processing such as system conversion or the transition to ICD-10 have the potential to impact claim payment patterns. System conversions often create significant claim backlogs and the potential for overpayments until corrections work through the system edits.
Seasonality. The seasonal curve for typical commercial business keeps getting steeper, with larger deductibles and maximum out-of-pocket expenses. This impacts the timing of incurred claims and the resulting IBNP significantly throughout the year, but typically it’s most exaggerated at year-end and the first quarter. Some specialty blocks or employer groups exhibit clear seasonal patterns. Dental plans, Medicare Supplement, school groups, and other cohorts present very different claim costs by month.
Benefit changes and risk scores. January 1 can cause major changes for Medicare, business related to the Patient Protection and Affordable Care Act (ACA), and some large plans. Benefit changes may have significant impact on cost-sharing and seasonality as noted above. A review of the change in risk score or monthly premium can help determine if the risk profile of membership may also be materially different from the prior month. These items could influence incurred claims and resulting IBNP estimates in the first quarter.
Comparison of prior completion factors. More sophisticated organizations will look not only at averages but at percentiles. Completion factors falling into higher/lower percentiles relative to prior months should be reviewed with more scrutiny.
Staffing changes. Looking at the number of claim payers working per claim submitted may be a useful metric for smaller plans that adjudicate their own claims.
Large claimants. It is often useful to estimate hospital costs on a contract-by-contract basis, taking into consideration stop-loss provisions and other hospital-specific items. Some plans perform analytics to determine if there is backlog in some key facilities, increased claim denials that are due to new policies put into place, and any changes in the claim adjudication process that can throw off prior relationships between inventory and actual claim payment.

Reserving can sometimes feel more like art than science. Many of these factors can improve your estimates, but what is good for some blocks of business does not always improve the estimates for others. A successful valuation team will also incorporate frequent monitoring, communication between pricing and forecasting personnel, input from claim payment personnel, and evaluations of the reasons for deviations from the expected.

The proposed federal exchange auto-enrollment process: Implications for consumers and insurers

The U.S. Department of Health and Human Services (HHS) has proposed, for the federal health exchange, that the majority of policyholders receiving premium subsidy assistance will be automatically reenrolled in the same plan unless they elect otherwise during the 2015 open enrollment period. State-run exchanges may follow this guidance but also have the option of requiring consumers to reenroll through the exchange or proposing an alternative reenrollment methodology. Approximately 83% of enrollees on the exchanges receive federal subsidies. Policyholders who are automatically reenrolled will receive the same dollar-amount subsidy for 2015 as they did in 2014. In most cases, this will be less than the advanced subsidy that would be applicable if the policyholder enrolls through the exchange in 2015 through the “redetermination” process.

The proposed federal exchange auto-enrollment process only impacts a policyholder’s net premium contribution—total premium less Advanced Premium Tax Credit (APTC)—prior to the reconciliation process. Regardless of how a policyholder enrolls in a plan in 2015, the final premium subsidy will be reconciled with enrollees’ 2015 tax returns to ensure consistency with the prescribed subsidy formula of the Patient Protection and Affordable Care Act (ACA).

This Milliman healthcare reform briefing paper by Paul Houchens and Susan Pantely summarizes the potential implications for policyholders and insurance companies related to changes in federal subsidies and the renewal process.

Double the ACOs

Yesterday, Health & Human Services announced 89 new accountable care organizations (ACOs), doubling the number of Medicare ACOs.

With this in mind we’ve pulled together all of our ACO research into a single location. Here you go:

Also, this video offers a nice overview of the ACO concept.

Checking in on ACOs

With accountable care organizations (ACOs) soon to serve more than a million Medicare patients, it is clear that this model of care delivery is receiving an unprecedented test of its viability, and, if it works as intended, may reshape how healthcare is paid for on a larger scale. Cigna alone plans to have more than a million people enrolled in ACOs by 2014, and says it believes that ACOs are going to be important regardless of the Supreme Court’s ruling on the Patient Protection and Affordable Care Act (PPACA).

With so much focus on the topic, it’s worth taking a look back at some of the research and analysis on ACOs published by Milliman on the topic over the past couple of years.

First, for a good summary of ACOs—what they are and how they work—start with this overview video featuring a number of Milliman experts.

For many observers, the key question about ACOs is whether they represent a financially viable model compared to fee-for-service. Effective financial management will be key to success. Milliman has produced a number of relevant papers:

With all the attention on Medicare ACOs, it’s easy to forget that they exist in the private market, as well. For more on such entities, look at “ACOs Beyond Medicare,” which describes the potential advantages for providers who partner with a private insurer rather than with CMS. A 2011 Managed Healthcare Executive roundtable featuring Milliman consultant Rob Parke also discussed ACOs in the private market.

A number of other papers have also been published discussing various aspects of ACOs such as:


Aiming at accountability

With the proposed accountable care organization (ACO) regulations issued yesterday, it’s all eyes on ACOs. This video captures the cost challenge and explores how ACOs may offer a solution.

We have a large library of ACO materials–you’ll find them here. Highlights include papers and posts about:

Check back soon for more on ACOs and the new regulations.