aca reinsurance & high risk pool march 2014

© 2014 DST Systems, Inc. All rights reserved. © 2014 DST Systems, Inc. All rights reserved.

March 19, 2014

ACA Transitional Reinsurance: Identifying and Assessing High Cost Patients

© 2014 DST Systems, Inc. All rights reserved.

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DISCLAIMER


DST

▪ Trusted global provider of technology-based service solutions since 1969 that help our clients grow their business & provide exceptional customer experiences

▪ NYSE Listing: “DST”

▪ 2013 Revenue: $2.66 Billion

▪ Worldwide Associates: 11,500+

▪ Locations: 14 worldwide offices

DST

HS ▪ Solutions to health payers and

providers since 1976

▪ Servicing Commercial, Medicaid, Marketplace, MA/MAPD, & Duals health benefit plans

▪ Core systems used to support 22+ M members / 270 M claims

▪ 41+ M medical claims processed annually in BPO

▪ 25+ M pharmacy members supported

DSTHS At A Glance

© 2014 DST Systems, Inc. All rights reserved. 4

Richard Popper Director, Medicaid & Duals Strategy, DST Health Solutions Group Director, Insurance Programs, CCIIO-CMS 2010-13

Center for Consumer Information & Insurance Oversight

Managed team that implemented & administered:

$5 billion Early Retiree Reinsurance Program

Pre-Existing Condition Insurance Plan

CO-OP Loan Program

Executive Director, Maryland Health Insurance Plan 2002-10 Implemented & administered fastest growing state high risk pool in U.S, with 10% of national HRP enrollment

Assistant Director, California Managed Risk Medical Insurance Plan 2000-02 Responsible for MRMIP & AIM programs for high risk uninsured


No medical underwriting

No pre-existing condition exclusion riders or waiting periods

Few benefit limits and standardized OOP limits

Reduced member cost sharing for those with limited income

Low initial enrollment penalty

Many “qualifying events” that allow enrollment “churn”:

Newly eligible for APTC

Had website enrollment problems

employer coverage not affordable

“Exceptional circumstances as the exchange may provide.”

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Marketplace a significantly different product


Overall structure of transitional reinsurance program Congress included transitional reinsurance program in ACA to improve affordability

Subsidize plan costs of high-risk enrollees to improve premium stability

$10 billion available in 2014, $6 billion in 2015, & $4 billion in 2016

Reinsurance funds generated from assessment of state licensed insurance companies, services or organizations:

$63 & $ 0.11 per capita contribution for 2014; $44 per capita projected for 2015

Reinsurance funds are available for non-grandfathered individual market plans to offset any substantial individual member costs:

2014: HHS will pay 80% of plan per member costs between $45,000 “attachment point” and $250,000 reinsurance cap ($164,000 max per member)

2015: Estimated 50% of plan per member costs between $70,000 attachment point and $250,000 reinsurance cap ($90,000 max per member).


Structure of transitional reinsurance program Allocation of covered cost for individual as expenses rise

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0 $24,000 $48,000 $72,000 $96,000 $120,000 $144,000 $168,000 $192,000 $216,000 $240,000 $264,000

Share of Plan Covered Costs

An Individual Member's Covered Costs

Member OOP Costs Plan Costs

HHS TransitionalReinsurance


Since initial Covered California enrollment is:

Lower than expected

Contains adverse selection from long term uninsured, and

Made up of approximately 20,000 high risk individuals from California Managed Risk Medical Insurance Plan, and Federal Pre-Existing Condition Insurance Plan.

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High cost composition of initial Covered California enrollment

High risk individuals will make up disproportionate share of plan membership


Plan cost exposure & average PMPY costs of high risk enrollees

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

HHSTransitionalReinsurance

Member OOP Costs

PlanCosts

High Risk Pool average $12,471

Calif Duals average $13,625

Fed PCIP average $32,108


Stratified cost comparison of 18,000 member state high risk pool Significant plan expenses for costs not subsidized by transitional reinsurance

Source: MHIP CareEssentials Report 2009

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

Shar

e of

Pla

n Co

vere

d Co

sts



Member OOP Costs

PlanCosts

22% of costs for 84% of members


50.6% of costs for 95.4% of members


62.3% of costs for 98% of members


For large state high risk pool, with income subsidies and benefits comparable to Covered California plans, and 215% MLR:

Only 31% of 2009 net plan costs would have been eligible for 80% subsidy under HHS Transitional Reinsurance

Reinsurance subsidies would have been provided for 3% of members with qualifying catastrophic plan costs over $45,000.

63% of 2009 net plan costs would not have been subsidized by HHS Transitional Reinsurance

39% of 2009 net plan costs were for members who incurred PM costs between $10,000 to $45,000, ineligible for HHS Reinsurance in 2014

20% of net plan costs would be in “100% plan cost phase.”

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Significant portion of plan costs not covered under HHS transitional reinsurance


Stratified 2011 costs of 20,000 member Federal Pre-Existing Condition Insurance Plan (PCIP)

Source: Federal PCIP Claims Incurred 2011, paid thru 1/2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

Shar

e of

Pla

n Co

vere

d Co

sts



Member OOP Costs

PlanCosts







For Federal Pre-Existing Condition Insurance Plan

370% MLR and no income subsidies:

74% of 2011 Federal PCIP net plan costs would have been eligible to receive 80% HHS Transitional Reinsurance subsidies

Reinsurance subsidies would have been provided for 8% of members with qualifying catastrophic net plan costs over $45,000.

25% of 2011 net plan costs would not have been subsidized by HHS Transitional Reinsurance

15% of costs would be in “100% plan cost phase”

Issue for Covered California plans:

Will initial plan cost exposure have wide distribution, like state high risk pools, where majority of high costs are not subsidized by HHS reinsurance

Or will plans have more catastrophic cost exposure, like PCIP, with significant amount of costs covered by transitional reinsurance.

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Comparison of sample cost exposure below HHS transitional reinsurance

0%

10%

20%

30%

40%

50%

60%

70%

$5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

Cumulative Percent of Plan Cost

Individual Member Total Annual Plan Cost

Federal PCIP 2011

State High Risk Pool 2009

$45,000 HHS Transitional Reinsurance

Attachment Point


Common diagnosis cost drivers below reinsurance attachment point for state high risk pool Diagnosis % of plan costs Average 2009 PMPY cost

HIV/AIDS 11.1% $12,127

Osteoarthritis 4.4% $6,420

Coronary Artery 3.1% $4,511

Leukemia 2% $38,318

Breast Cancer 1.9% $8,907

Colon Cancer 1.9% $31,618

Bipolar Disorder 1.8% $5,074

Crohn’s Disease 1.4% $15,844

Cerebrovascular Disease

1.3% $4,713

MS 1.3% $20,049

Cirrhosis of Liver 1.2% $24,121 Source: MHIP CareEssentials Report 2009


Common diagnosis cost drivers for Federal Pre-existing Health Insurance Plan

Diagnosis % of plan costs /2

Cancer 19.8%

Maintenance Chemotherapy, radiation 8.8%

Osteoarthritis 6.3%

Spondylosis / disc disorders 6.2%

Coronary Artery & other heart disease 4.7%

High risk behavioral health & substance abuse admissions more prevalent in individual market

Diagnosis % of plan inpatient admissions /1

Psychosis 6%

Vaginal Labor & Delivery 4.6%

Alcohol/Drug Abuse & Rehab 2%

1 – MHIP CareEssentials Report 2009 2 – 2012 & 2013 Federal PCIP reports, cms.gov


Rx claims are early warning indicators - should be monitored closely to identify high cost enrollees

Drug Cost per fill Treatment

Thalomid, Revlimid, Tasigna, Sprycel, Gleevec

$13,439 - $6,434 Myeloma/Leukemia

Saizen, Serostim, Nutropin $10,128 - $7,801 Human Growth Hormone

Enbrel $8,880 Rheumatoid Arthritis

Humira $8,880 Rheumatoid Arthritis, Crohn’s Disease

Copaxone, Rebif $7,228 - $6,661 MS

Tracleer $4,993 Pulmonary Arterial Hypertension

Atripla, Trizivir $4,353 - $3,348 HIV/AIDS

Tarceva $3,617 Lung Cancer

Zyprexa $3,389 Bipolar Disorder / Schizophrenia

Ondansetron $3,017 Nausea from Chemotherapy, Radiation

Novolog $2,816 Diabetes

Source: MHIP monthly Rx report March 2010


Initial average plan costs for high risk pool members will decrease over time, but often remains above premium

Source: Mercer analysis of high risk pool plans 2009

$13.910

$20.398

$10.065 $9.433

$0.000

$5.000

$10.000

$15.000

$20.000

$25.000

FY08 FY09

Short Term Subscribers Long Term Subscribers

Plan cost comparison among subscribers not subject to preexisting condition exclusion


Third Party Payers, such as:

Hospitals and other providers

AIDS Drug Assistance Program

Disease Advocacy Organizations (American Cancer, Hemophilia Societies)

Provider networks

Plan benefit structure and authorization requirements.

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Monitoring drivers of high cost enrollment


Recommendations


Interface directly with plans claim and Rx systems, to quickly enable care managers to identify patients at high risk for hospitalization or costly complications, and determine proactive interventions

Evaluate gaps in care through review of member’s overall clinical profile

Measure and report HEDIS compliance status

Evaluate performance of providers, including prescribing patterns, medication screenings, diagnosis testing, preventive visits and benchmarking with peer providers

Have predictive modeling to stratify claims diagnosis, often prior to high cost claims, for early interventions and care coordination.

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Utilize effective data analytics software


Receipt of reinsurance and risk adjustment payments dependent on plan establishing a “distributed data collection approach”

Plans must establish an “edge server”

Secure, dedicated, electronic server environments to house medical and pharmacy claims, encounter data, and enrollment information

Issuers directed to make data accessible to HHS to install, update, and operate common software to monitor plan costs

Plans expected to load claims and enrollment data to edge server monthly

Offers plans an opportunity to actively monitor claims expenses and identify high cost member for interventions.

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HHS Edge Server Month submission a useful opportunity to monitor high cost members


All diagnoses – most high risk members suffer from multiple conditions (cancer and depression), and the most acute often masks additional care needs

Medication inventory and adherence

Condition severity

Recent and major surgeries and procedures

Nursing and rehabilitation therapies

High risk factors (weight, tobacco, substance abuse)

Supportive assistance (family, caregivers)

Language, education, cognitive, locomotion capabilities and needs.

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Utilize effective member assessment tools


Complete, record and update health risk assessments

Create patient-centered care plans to monitor and close existing care gaps and engage members

Integrate care for comorbidities, including both medical and behavioral health conditions

Track quality of care issues

Maintain a complete history of all member activity for those enrolled in a care plan

Real-time interface with core claims systems for up to date eligibility, benefits, and claims history

View member profiles, medical claims, and pharmacy data.

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Utilize effective care management systems


Apply medication therapy management and reconciliation

Process utilization management referrals and authorizations

Complete discharge planning surveys

Assist with transitional care plans and schedule necessary appointments and equipment use

Integrate with care analysis software for stratification and identification of members needing outreach and intervention.

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Effective care management systems, cont’d


Develop specialized care management teams

Medical staff focus on standard care management and utilization management practices is not enough

Must move beyond pregnancy, diabetes and asthma

Prevalence of significant, multiple chronic disease in initial Covered California population far exceeds standard Medi-Cal and commercial enrollment

Core staff needed to focus on intensive care management

Lower member to case manager ratios necessary during 2014 and 2015

Enrollment of high cost cases will continue after open enrollment ends

Due to significant SEP options for those newly diagnoses with high cost conditions

Don’t neglect young members - 23% of high risk pool enrollee were under age 30, with frequent behavioral health & substance abuse conditions.


Questions

Richard Popper Director, Duals & Medicaid Strategy

[email protected]

410.294.8215

Jill Singletary Senior Sales Executive

[email protected]

214.695.8372

www.dsthealthsolutions.com

mailto:[email protected]

mailto:[email protected]

aca reinsurance & high risk pool march 2014

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