Hoosier Care Connect Capitation Rate Presentation Family and Social Services Administration

1. Hoosier Care ConnectCapitation Rate PresentationFamily and Social Services Administration Presented by Robert M. Damler, FSA, MAAA Principal and Consulting Actuary Christine Mytelka, FSA, MAAA Consulting Actuary August 5, 2014

2. Overview • July 24, 2014 Hoosier Care Connect Capitation Rate Development and Certification • Aged, Blind, and Disabled Non-Dual Population • Three year contract • April 1, 2015 – December 31, 2015 • Calendar Year 2016 • Calendar Year 2017 • Actuarially Sound Rate Range

3. DataBase Data for Rate Development • Primarily SFY 2012 and SFY 2013 claims and enrollment data • Fee for service claims • Encounter data for MA-U • Pharmacy and dental: fee for service • Hospital data: At Medicaid reimbursement (without HAF, without GME) • Pharmacy data: Before rebates

4. Covered PopulationsPopulations to be Covered by MCOs • Aged, Blind, and Disabled • Includes prior spend-down individuals that are now fully eligible • Child and Adult Rate Cells • Retroactive Medicare Eligible Rate • Population exclusions • Medicare enrolled • Long term care (institutional and waiver) • Foster care and adoption assistance • Limited benefit

5. Covered ServicesServices to be Provided by MCOs • Indiana Health Coverage Program covered services excluding: • Medicaid Rehabilitation Option Services • Nursing home services indicated for more than 30 days • Institutional hospice services • ICF/ID and PRTF services • HCBS waiver services • First Steps and school corporation services • Newly covered services under managed care: • Dental • Pharmacy

6. Adjustments – Base DataAdjustments Made to Base Data for Historical Actuarial Models • Encounter data repriced at Medicaid reimbursement • Spend-down liability repricing • Removal of GME, HAF • May and June 2013 Pharmacy Completion

7. Adjustments – FFS ProjectionAdjusting Base Data to Rate Period Midpoint • Utilization Trend • Claims Completion • Reimbursement Changes • Emergency Reimbursement Reduction Expirations • Physician Fee Schedule Increase • Pharmacy Dispensing Fee Rate Change • Third Party Liability (Pay and Chase)

8. Adjustments – Managed CareAdjusting Data to a Risk-Based Managed Care Environment • Pharmacy Copayment • Managed Care Utilization • Managed Care Contracting • Pharmacy Dispensing Fee Only

9. Non-Medical Adjustments • Administration Load • Variable load of 9.0% for adult and child rate cells • Retroactive Medicare eligible administrative load set equal to adult rate • Includes allowance for administration, profit, and risk/contingency • Withhold of 1.5% in the first contract year • Health Insurer Assessment Fee • No adjustment in the first contract period

10. Risk Mitigation • Risk adjustment will be performed initially using fee-for-service data • Cost neutral to state • Will use an actuarially sound risk adjustment methodology

11. Limitations This presentation has been prepared for the State of Indiana, Family and Social Services Administration and their consultants and advisors. Any user of the material presented should possess a certain level of expertise in actuarial science and healthcare modeling and have access to the full report issued by Milliman. The material may not be provided to third parties without the prior written consent of Milliman. Even if distribution is allowed, this material is not meant to benefit or be relied upon by any third parties. Milliman does not intend to benefit and assumes no duty or liability to third parties who receive this presentation, even if we consent to its release. Milliman recommends that any recipient be aided by its own actuary or other qualified professional when reviewing this presentation. In developing this presentation, we relied on data and other information obtained from FSSA and its vendors. We have not audited or verified this data and other information. We performed a limited review of the data used directly in our analysis for reasonableness and consistency. If the underlying data or information is inaccurate or incomplete, the results of our analysis may likewise be inaccurate or incomplete. The presenters of this material are members of the American Academy of Actuaries and meet the Qualification Standards of the Academy for performing the analyses contained herein. To the best of our knowledge and belief, this information is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices. The services provided for this project were performed under the contract between Milliman and FSSA approved May 14, 2010, as amended December 30, 2013.