slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Lisa F. Tourville, ASA, MAAA Vice President PowerPoint Presentation
Download Presentation
Lisa F. Tourville, ASA, MAAA Vice President

Loading in 2 Seconds...

play fullscreen
1 / 25

Lisa F. Tourville, ASA, MAAA Vice President - PowerPoint PPT Presentation


  • 114 Views
  • Uploaded on

Inside the Black Box: How Actuaries Price Health Insurance Academy Health Annual Research Meeting June 8 th 2004. Lisa F. Tourville, ASA, MAAA Vice President. Agenda. Discuss historical drivers of trend. Discuss the different ways to define “trend”.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Lisa F. Tourville, ASA, MAAA Vice President' - betha


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

Inside the Black Box: How Actuaries Price Health InsuranceAcademy Health Annual Research Meeting June 8th 2004

Lisa F. Tourville, ASA, MAAA

Vice President

agenda
Agenda
  • Discuss historical drivers of trend.
  • Discuss the different ways to define “trend”.
  • Discuss the components that impact medical expense trends.

Inside the Black Box: How Actuaries Price Health Insurance

top 10 trend drivers by category contribution to trend based on change in pmpm
Top 10 Trend Drivers by CategoryContribution to Trend based on Change in PMPM

Inside the Black Box: How Actuaries Price Health Insurance

top 10 trend drivers by condition contribution to trend based on change in pmpm
Top 10 Trend Drivers by ConditionContribution to Trend based on Change in PMPM

Inside the Black Box: How Actuaries Price Health Insurance

different views of trend
Different Views of “Trend”
  • Financial
    • Net Trend
      • Payers’ liability
      • Excludes patients’ out of pocket expenses
  • Underwriting
    • Underlying Medical Expense Trend (pulling out business mix components)
  • Clinical
    • Allowed Trend
      • Total provider reimbursement
      • Payer + Patient liability
      • Price, Volume and Intensity

Inside the Black Box: How Actuaries Price Health Insurance

slide6

SG UW Wear-off

Product Mix

Cust/Indy Mix

Policy Process

Regulatory

Intensity/Mix

Leveraging

Geographics

Workday

Demographics

Benefit Plan Change

Components of Medical Expense Trend Included in the Ingenix Trend Forecast Model

Health Tech Pipeline

Baseline Utilization

Core Unit Cost / Price

Inside the Black Box: How Actuaries Price Health Insurance

ingenix trend forecast model
Ingenix Trend Forecast Model

Sample

Inside the Black Box: How Actuaries Price Health Insurance

demographics u s population pyramids

2000

Male Female

Projected 2025

Male Female

DemographicsU.S. Population Pyramids

Unless the U.S. population “pyramid” holds the same shape from year to year, there will be an impact on trend due to demographics.

Inside the Black Box: How Actuaries Price Health Insurance

demographics u s population pyramids1

2050: And people wonder why we’re so worried!

DemographicsU.S. Population Pyramids

2050

Male Female

Inside the Black Box: How Actuaries Price Health Insurance

variation by health cost category and geographic region
Variation by Health Cost Category and Geographic Region

Source: TrendAlertTM

Inside the Black Box: How Actuaries Price Health Insurance

customer industry mix

The membership for this new group equaled 1% of the total block of business yet they contributed 40 bps to total net trend in their first year.

Customer / Industry Mix

The impact on Net Trend of One New Group

Inside the Black Box: How Actuaries Price Health Insurance

workday calendar adjustments

Considering the experience period and projection period when experience rating, calendar make-up can have a significant impact!

Workday/Calendar Adjustments

PMPM costs are highest on Mondays. Friday costs are the lowest of the regular work week.

Inside the Black Box: How Actuaries Price Health Insurance

consumer demand colonoscopies per 1 000
“Consumer” DemandColonoscopies per 1,000

Inside the Black Box: How Actuaries Price Health Insurance

consumer demand morbid obesity admits per 1 000
“Consumer” DemandMorbid Obesity Admits per 1,000

Inside the Black Box: How Actuaries Price Health Insurance

consumer demand
Consumer Demand

Inside the Black Box: How Actuaries Price Health Insurance

health technology pipeline
Health Technology Pipeline
  • Be aware of what’s coming down the pipeline.
  • Proactively manage your business to control unnecessary costs.
  • What to look for:
    • New treatments
    • New devices
    • New diagnostic tests
    • Changes in guidelines
    • Brand name patent expirations
    • Move from prescription to over-the-counter
    • Changes in FDA status
    • New medications

Inside the Black Box: How Actuaries Price Health Insurance

pipeline example ovacheck test for ovarian cancer
Pipeline Example: OvaCheck Test For Ovarian Cancer
  • Expected Release Date: Q1 2005
  • Impact Grades in linearly over 4 quarters
  • Ultimate Utilization: 97 per 1,000
  • Expected Technology Cost: $165 (off-setting costs: $0)
  • Peak PMPM: (97*(165-0)/12000) = $1.33
  • HCC Split: Professional = 20%; Ancillary = 80%

Source: Ingenix Health Technology PipelineTM

Inside the Black Box: How Actuaries Price Health Insurance

pipeline example impact of generics
Pipeline Example:Impact of Generics

A generic equivalent is introduced to the market. Total scripts reduce slightly. Overall costs decrease significantly.

Inside the Black Box: How Actuaries Price Health Insurance

pipeline understanding and managing the problem
Pipeline: Understanding and managing the problem

$20M

New Medical Developments as a whole add significantly to Medical Trend

Technologies that increase quality of care and desired outcomes

ACTION: Encourage adoption and incent utilization

Brave New World, Old-Fashioned Fear: Advances Are Coming At A Furious Rate-- Health Plans Find It Difficult To Separate The Cost-Efficient From The Rest

John Carroll, Managed Care Magazine 2/1/2004

Six years ago, the health care economist Michael Chernew concluded from a review of the evidence that the driving force behind rising health care costs was new technology. "It's not increased waste, it's not fraud, it's not increased lawsuits, it's not the fact that people on average are older -- all of that may contribute, but the predominant factor relates to the development and utilization of new medical techniques, of which there are an enormous number," he said in a 1998 study.

The University of Michigan professorconcluded that

$15M

Therapeutic advantage when appropriately applied

ACTION: Limit use to appropriate population

$10M

Therapeutic advantage is unproven

ACTION: Restrict or control utilization

$5M

“…but the predominant factor relates to the development and utilization of new medical techniques…”

Pro-actively addressing the impact of new medical technologies could save a 25,000 employee organization $10 million annually

Inside the Black Box: How Actuaries Price Health Insurance

core unit cost price
Core Unit Cost - Price
  • Models have been developed and are used to assign a value to existing contracts (physician and facility).
  • Models are populated and forecasts are established using all available information from contract negotiators working directly with the providers.
  • Outlier provisions and percent of charge contracts leave little protection to contract increases.
  • Non-par payment rates cause volatility in forecasts.
  • Mergers and closings result in variability of market share and also impact results.

Inside the Black Box: How Actuaries Price Health Insurance

medical care cpi rolling 3 month averages
Medical Care CPI Rolling 3-Month Averages

CPI is a combination of Non Par and Par Revenues. Non Par cost increases are generally higher than Par. Result: Non Par trend impact is likely higher than CPI.

Inside the Black Box: How Actuaries Price Health Insurance

cost per day for selected markets
Cost per Day for Selected Markets

Cost per Day varies significantly by geographic market. Contract negotiations also vary.

Consider the whole picture!

Inside the Black Box: How Actuaries Price Health Insurance

baseline utilization and intensity mix of services
Baseline Utilization and Intensity (Mix of Services)
  • Historical experience is normalized for all other identified trend components.
  • Regression analyses are performed on units resulting in possible forecasts.
  • Legislative and economical influences are considered (health care reform, NHE, etc.).
  • Management initiatives of the client are considered.
  • Final projections are established using a combination of all information gathered above and pass through an actuarial peer review process.

Inside the Black Box: How Actuaries Price Health Insurance

benefit plan design impact of tier placement in rx
Benefit Plan Design Impact of Tier Placement in Rx

A drug goes over the counter. In tiered plans, Brand #1 is placed in Tier 3 and Brand #2 is placed in Tier 2.

Inside the Black Box: How Actuaries Price Health Insurance

inside the black box how actuaries price health insurance

Inside the Black Box: How Actuaries Price Health Insurance

Contact Information

Lisa F. Tourville, ASA, MAAA

Vice President

12125 Technology Drive

Eden Prairie, MN 55344

Email: lisa.tourville@ingenix.com

Phone: 952-833-7559