ALTCI Actuarial Study

1. June 22, 2005 ALTCIActuarial Study

2. Actuarial Study Objectives • Determine key cost drivers • Identify financing options that promote the goals of ALTCI • Recommend a rate structure that will best match payment to the risk of the enrolled population

3. Methodology • Review historical Medi-Cal and Medicare CY1998-2000 FFS data • Adjust data to include only populations and services expected to be covered under ALTCI • Project data forward to CY2007 by category of service • Adjust data for significant program changes including Medicare Part D

4. CY2000 DataSan Diego County • Nursing Home Residents, MSSP, DD, IHSS, and Home Care (HC) account for 30 percent of the total ALTCI membership in San Diego, but 74 percent of the total San Diego Medi-Cal expenditures.

5. San Diego CountyCY2000 Dually Eligible vs. Medi-Cal OnlyABD Membership

6. San Diego CountyDually Eligible vs. Medi-Cal OnlyCY2000PMPM ALTCI Medi-Cal Costs

7. San Diego CountyElderly vs. Disabled Membership

8. Alameda, Contra Costa, and San Diego CountiesCY1998–2000 Medi-Cal CostsHigh Cost Chronic Conditions

9. Total $495 Total Setting NH $2,492 Community $303 NHC $2,492 MSSP $1,172 IHSS $752 Well $182 DD $436 Frailty Medicare Status Medi-Cal Only $4,708 Medi-Cal Only $710 Dual $28 Medi-Cal Only $368 Medi-Cal Only $532 Dual $2,153 Dual $1,174 Dual $557 Medi-Cal Only $1,337 Dual $277 Aged $2,291 Disabled $1,855 Aged $36 Disabled $18 Aged $537 Disabled $577 Category of Aid Aged $196 Disabled $402 Aged $3,023 Disabled $4,910 Aged $963 Disabled $1,363 San Diego CountyCY2000 Medi-Cal ALTCI PMPM Costs

10. Preliminary ResultsKey Cost Drivers • Setting – Nursing Home vs. Community • Frailty – Nursing Home Certifiable/At Risk vs. Well • Medicare Status – Dually Eligible vs. Medi-Cal Only • Category of Assistance – Aged vs. Disabled • Chronic High Risk Conditions – TBD

11. Preliminary Recommendations • Reimbursement needs to be sufficiently sophisticated to promote program goals • Incentives should be included to promote increased community based services • Savings achievable through more appropriate use of hospital, emergency room and nursing home services • Administrative costs should be reflected in rates with sufficient consideration of start up costs • Increased care management should be supported and funded

12. Preliminary Recommendations (continued) • Implement early reinsurance or risk sharing • Capitated model should allow for flexibility of both Medi-Cal and Medicare funding sources

13. Next Steps • Complete projections • Assess adequacy of Medicare reimbursement • Finalize recommended rating structure • Submit final report and recommendations