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Commonwealth Health Insurance Connector Authority FY 2010 & FY 2011 Administrative Operating Budget Board of Directors Meeting June 10, 2010. Agenda. FY 2010 Health Connector Administrative Operating Budget – Year-End Update

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Commonwealth Health Insurance Connector AuthorityFY 2010 & FY 2011 Administrative Operating BudgetBoard of Directors MeetingJune 10, 2010

agenda
Agenda
  • FY 2010 Health Connector Administrative Operating Budget – Year-End Update
  • FY 2011 Health Connector Administrative Operating Budget – Recommendation
fy10 cca administrative operating budget update
FY10 CCA Administrative Operating Budget Update
  • In December 2009, the A&F subcommittee was presented with a FY10 year-end expense estimate of $32.8 million and a corresponding net loss of ($1.2 million)
        • A&F subcommittee asked CCA management to find solutions to get to breakeven by year-end
  • Current estimate reflects a reduction of the FY10 expense by $3.7 million
        • Result is revised year-end expense estimate of $29.1 million resulting in a net gain of $3.3 million
fy10 cca administrative operating budget update con t
FY10 CCA Administrative Operating Budget Update (con’t)
  • Commonwealth Choice Revenue – $700,953 favorable variance
    • Variance due to a projected 12% increase in member months and 7% increase in composite average premium yield
  • Appeals Program– $163,692 favorable variance
    • Variance due to a lower than budgeted cost per appeal of 25%
  • CommCare Customer Service & Premium Billing – ($344,205) unfavorable variance
    • Variance due to a higher than estimated PMPM rate, additional costs for manual enrollment activities, and postage expenses
  • CommChoice Customer Service & Premium Billing – ($286,498) unfavorable variance
    • Variance due to increased SBSB and broker payments as a result of higher than expected membership growth
fy10 cca administrative operating budget update con t1
FY10 CCA Administrative Operating Budget Update (con’t)
  • Consulting & Professional Support - $762,334 favorable variance
    • Variance due to a lower than expected financial obligation for the Xcelys premium billing system implementation
  • Infrastructure Improvement - $1,406,999 – favorable variance
    • Variance due to a lower than expected financial obligation for Xcelys and a delay in the CommChoice provider search tool project until FY11
  • OPEB Obligation - $545,300 favorable variance
    • Variance due to an overestimate of the FY10 accrual for OPEB (other post-employment benefits) liability
  • FY09 Premium Billing System Accrual Reversal - $700,000 favorable variance
    • Variance due to reversal of FY09 funds not needed in FY10
fy11 cca administrative operating budget recommendation
FY11 CCA Administrative Operating Budget Recommendation
  • FY11 administrative budget challenges:
    • Revenue is flat due to reductions in the CommCare and CommChoice administrative fee from 3.75% to 3.2% and from 4.5% to 3.5%, respectively
    • Combined membership is projected to increase 18% resulting in higher vendor payments for member support
    • No specific revenue received to offset administrative expenses of $1.5 million and $75K for the Bridge program & Student Health Plan, respectively
    • Uncertainty in projecting CommChoice enrollment
fy11 cca administrative operating budget recommendation con t
FY11 CCA Administrative Operating Budget Recommendation (con’t)
  • FY11 administrative budget recommendation is $3.2 million or 11% higher than the FY10 year-end estimate
    • Does not include $2.5 million for outreach and enrollment grants that are legislatively mandated
  • Significant projected expense increases:
    • CommCare Customer Service & Premium Billing (volume)
    • CommChoice Customer Service & Premium Billing (volume)
    • Infrastructure Improvement (discretionary)
fy11 cca administrative operating budget recommendation con t1
FY11 CCA Administrative Operating Budget Recommendation (con’t)
  • Commonwealth Care Revenue – ($810,992) decrease
    • Planned reduction in the administrative fee from 3.75% to 3.2%
  • Commonwealth Choice Revenue – $1,036,347 increase
    • Projected 63% increase in member months, offset by a planned reduction in the administrative fee from 4.5% to 3.5% of health premiums
  • Salary & Benefits – $166,069 increase
    • Increase due to replacing three backfills
    • No salary increases
  • Communications – ($988,428) decrease
    • Planned reduction in the value of broad-based and digital advertising contracts
fy11 cca administrative operating budget recommendation con t2
FY11 CCA Administrative Operating Budget Recommendation (con’t)
  • CommCare Customer Service & Premium Billing - $1,128,599 increase
    • Due to a projected 12% increase in combined CommCare and Bridge MMs
    • Includes $400K Xcelys annual license and infrastructure fee
  • CommCare Enrollment & Eligibility Services - $408,266 increase
    • Increase in MassHealth ISA due to projected membership growth (if funds become available will provide an additional $176K for publication expenses)
  • CommChoice Customer Service & Premium Billing - $1,874,040 increase
    • Increases in SBSB and broker payments due to projected membership growth
fy11 cca administrative operating budget recommendation con t3
FY11 CCA Administrative Operating Budget Recommendation (con’t)
  • Consulting & Professional Support – ($259,060) decrease
    • Decreased utilization of independent consultants
  • Infrastructure Improvement - $906,999 increase
    • Currently evaluating and prioritizing various projects for FY11 including:
      • Small group enhancements
      • CommChoice provider search tool
      • Student health plan
fy11 cca administrative operating budget recommendation con t4
FY11 CCA Administrative Operating Budget Recommendation (con’t)
  • FY11 CCA administrative expense recommendation is fluid and allows for flexibility:
    • Recommendation will be updated and refined based on further information regarding enrollment, revenue and expense
    • Recommendation contains modest discretionary spending (e.g., infrastructure improvement)