tool bid

Document Sample
tool bid
Session 34

Medicare Advantage

Bidding:

Do’s and Don’ts







Liz Hale, FSA, MAAA

CMS Office of the Actuary

elizabeth.hale@cms.hhs.gov







CCA Annual Meeting / October 2007 1

In this session

• Overview of Medicare Advantage

(MA) and Prescription Drug (PD) Bidding

– Basic Terminology

– Bidding Cycle



*****

• Getting started - What information is

available for preparing bids?

• Employer Groups

• Expectations during bid reviews

• Tips

CCA Annual Meeting / October 2007 2

Part I - Basic Terminology

• In general a bid is the plan’s revenue

requirement for:

– Benefit cost

– Non-benefit (administrative) expenses

– Gain or loss margin





• “The bid” , Basic Bid, Standardized Part D

bid, Plan A/B bid….

– Medicare-covered A/B services, i.e. Fee-for

service cost sharing

– Defined Standard Part D coverage





CCA Annual Meeting / October 2007 3

Basic Terminology

• Part D Benchmarks

– Part D National Average Bid Amount is based

on standardized bid and enrollment for

applicable PD bids.

• Transitioning from 2006 method of assigned

weights to weights based on current

enrollment.

– Part D Regional Low-Income Benchmark

Premium varies by PDP region.

• MA benchmarks

– Based on MA ratebook.

– Unique to each plan based on projected

enrollment mix by county.

– Regional PPO benchmark has a plan bid

component.

CCA Annual Meeting / October 2007 4

Bidding Cycle

• Bid Preparation – prior contract year

– February: 45-day Advance Payment Notice

– March: Call Letter with policy guidance

– Early April: MA Payment Capitation Rates (1st Monday)

and Part D benefit parameters

• Bid Submission

– Bids due 1st Monday in June of prior contract year.

• Bid Review Period

– Early June until bid approval the end of August.

– Early August: Benchmarks released.

– Through mid-August: MA Rebate reallocation period.

• Bid Audit

– Subset of plans audited selected in September.

– Field work occurs October through December.



CCA Annual Meeting / October 2007 5

Bid Submission - Purpose of Part D Bid





• Calculate Benchmarks

• Basis for Part D Premiums

• Basis for risk corridor payments (non-

employer group plans)

• Demonstrate actuarial equivalence









CCA Annual Meeting / October 2007 6

Bid Submission - Purpose of MA Bid

• Determine county-level payment rates for each bid

• Determine MA rebates (bid Plan A/B benchmark (Medicare-covered)

– Mandatory supplemental (non-covered) benefits not covered

by rebates

• Specify Part D Target Premium

– Dollar amount or low-income premium subsidy amount







CCA Annual Meeting / October 2007 7

Bid Submission - Requirements



• Bids uploaded electronically to Health Plan

Management System (HPMS)

• Each submission requires:

– Bid Pricing Tools (BPT)

– Plan Benefit Package (PBP)

• Supporting documentation of pricing

assumptions

– Initial bid submission

– Throughout bid review season





CCA Annual Meeting / October 2007 8

Bid Submission - Actuarial certification



• Initial certification due mid-June

– Attestation of compliance with ASOPs, laws,

rules, bid instructions…

– Attestation that bid development is reasonable for

the plan’s PBP.

– Thoroughly check benefits priced for with PBP.





• HPMS required access for certifying actuary

– Letter of appointment from plan each contract

year







CCA Annual Meeting / October 2007 9

Bid Submission - Pricing Assumptions



• Pricing based on actuarial principles and

techniques (Actuarial Standards of

Practice).

• Best estimate as of original bid

submission.

• Cannot introduce new information during

bid review.

• CMS recognizes that not all

arrangements/contracts are finalized





CCA Annual Meeting / October 2007 10

Bid Review



• OACT directs bid desk review by actuarial

contractors

• Determine reasonableness of assumptions

and methods.

• Rely on a statistical analysis to identify

outliers to direct focus of review.

• Most dialogue on bid issues occurs late June

through early August.

• OACT is involved in sensitive or unresolved

issues.



CCA Annual Meeting / October 2007 11

Bid Resubmissions

• Bid resubmissions must be consistent with the

assumptions originally submitted.

• MA rebate re-allocation

– No changes in Part D benefits or pricing.

– Re-allocate rebates to return to Part D Target

Basic Premium specified in MA BPT.

• Supplemental A/B benefits may not be substantially

redesigned.

• Preferred order of changes in CY2008 Call Letter.

• Slight change in administrative cost and gain loss

margin possible subject to CMS guidance.

– Required, optional or not allowed depending on

plan type and other factors.

CCA Annual Meeting / October 2007 12

Final Actuarial Certification



• Required in late August for all bids

• Attestation that bid development is reasonable

for the plan’s PBP.

• Most recent BPT and PBP.

– Take into account all changes during bid review.









CCA Annual Meeting / October 2007 13

*******









CCA Annual Meeting / October 2007 14

Part II





• Getting started - What information is available

for preparing bids?

• Employer Groups

• Expectations during bid reviews

• Tips









CCA Annual Meeting / October 2007 15

Getting Started



• Main sources of information

– U.S. Government Printing Office (GPO) web site

– CMS web site (public access)

– HPMS





• Google!









CCA Annual Meeting / October 2007 16

GPO Web Site



• Medicare Modernization Act of 2003 (MMA)

– Parts C and D of Title XVIII – Health Insurance for

the Aged and Disabled.

• http://www.ssa.gov/OP_Home/ssact/title18/1800.htm

• Final Rule published in Federal Register

January 28, 2005

– Part 422 Medicare Advantage Program

• http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edock

et.access.gpo.gov/2005/pdf/05-1322.pdf

– Part 423 Medicare Prescription Drug Benefit

• http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edock

et.access.gpo.gov/2005/pdf/05-1505.pdf







CCA Annual Meeting / October 2007 17

CMS Web Site



• http://www.cms.hhs.gov/



• CMS Home >Medicare > Health Plans: xxxx

• CMS Home >Medicare > Prescription Drug

Coverage: Employer Group Waiver Plans

– http://www.cms.hhs.gov/EmpGrpWaivers/



• CMS Home >Research, Statistics, Data and

Systems > Files for Order: xxxx





CCA Annual Meeting / October 2007 18

CMS Web Site



• CMS Home >Medicare > Health Plans:

– Health Plans - General Information

– Benefit Pricing Tool, Bid Form, and Plan Benefit

Package

– Medicare Advantage Rates & Statistics









CCA Annual Meeting / October 2007 19

Health Plans – General Information

• CMS Home >Medicare > Health Plans -

General Information



• Related Links Inside CMS

2008 Combined Call Letter [pdf, 585Kb]

Historical Health Plans Reports, Files & Data

Plan Directory

Medicare Managed Care Manual

Managed Care Training

Prescription Drug Coverage

Medicare Advantage - Rates & Statistics

Monthly Contract and Enrollment Reports



CCA Annual Meeting / October 2007 20

CY 2008 Call Letter - Review for key issues









CCA Annual Meeting / October 2007 21

CY 2008 Call Letter - Review for key issues









CCA Annual Meeting / October 2007 22

CMS Web Site



• CMS Home >Medicare >Health Plans - Benefit

Pricing Tool, Bid Form, and Plan Benefit Package >

Contract Year 2008 Bid Page

– In progress September 2007





• Contract Year 2007 Bid Page - Downloads

– 2007 BPT Instruction [PDF, 288 KB]

2007 Call Letter [PDF, 574 KB]

– 2007 Bid Submission Users Manual is an all-

inclusive document incorporating the various steps

for completing and submitting the BPT and PBP.





CCA Annual Meeting / October 2007 23

CMS Web Site

Instructions For Completing The MA Bid Pricing Tool For CY 2008



Table of Contents



Introduction........................................................................................................................ 3

General Overview............................................................................................................. 5

Worksheet 1 - MA Base Period Experience and Projection Assumptions.............. 7

Worksheet 2 - MA Projected Allowed Costs PMPM................................................. 16

Worksheet 3 - MA Projected Cost Sharing PMPM ................................................... 19

Worksheet 4 - MA Projected Revenue Requirement PMPM .................................. 25

Worksheet 5 - MA Benchmark PMPM ........................................................................ 35

Worksheet 6 – MA Bid Summary ................................................................................ 42

Worksheet 7 – Optional Supplemental Benefits........................................................ 49

Two-Year Look-Back Form........................................................................................... 52

Appendix A – Actuarial Certification............................................................................ 55

Appendix B – Supporting Documentation .................................................................. 61

Appendix C – Part B-Only Enrollees........................................................................... 67

Appendix D – Medicare Advantage Products Available to Groups........................ 68

Appendix E – Plans Serving Qualified Medicaid Beneficiaries (QMBs) ................ 71

Appendix F – Rebate Reallocation and Premium Rounding................................... 73

Appendix G – Suggested Mapping of MA PBP Categories to BPT Categories... 84

Appendix H - BPT Technical Instructions................................................................... 86

Appendix I – Red-Circle Validation Edits.................................................................... 87

Glossary of Terms.......................................................................................................... 91







CCA Annual Meeting / October 2007 24

CMS Web Site

Instructions for Completing The Medicare Prescription Drug

Plan BPT for CY 2008

Table of Contents



Introduction........................................................................................................................ 4

Special Considerations.................................................................................................... 5

Worksheet 1 - Rx Base Period Experience................................................................ 17

Worksheet 2 - PDP Projection of Allowed/Non-Benefit............................................ 30

Worksheet 3 - Contract Period Projection for Defined Standard Coverage ......... 35

Worksheet 4 - Standard Coverage with Actuarially Equivalent Cost Sharing ...... 39

Worksheet 5 - Alternative Coverage ........................................................................... 41

Worksheet 6 - Script Projections for Defined Standard, Actuarially Equivalent, or

Alternative Coverage ..................................................................................................... 44

Worksheet 7 – Summary of Key Bid Elements ......................................................... 52

Appendix A – Actuarial Certification............................................................................ 54

Appendix B – Supporting Documentation .................................................................. 60

Appendix C – Employer/Union-only Group Requirements ...................................... 66

Appendix D – Calculation of the National Average Monthly Bid Amount.............. 67

Appendix E – Calculation of Low Income Benchmark Premium Amounts ........... 69

Appendix F - Bid Pricing Tool Technical Instructions............................................... 71

Appendix G – Red-Circle Validation Edits.................................................................. 72

Glossary of Terms.......................................................................................................... 77





CCA Annual Meeting / October 2007 25

CMS Web Site

• CMS Home >Medicare > Health Plans - Medicare

Advantage Rates & Statistics > Overview



• FFS Data

• Risk adjustment

• Part D Benefit Factors

– Notification of Changes in Medicare Part D

Payment

– Parameter amounts for std benefit and low-income

subsidy benefit









CCA Annual Meeting / October 2007 26

CMS web site

• CMS Home >Medicare > Health Plans -

Medicare Advantage Rates & Statistics >

Overview

• Actuarial Bid Questions

• Announcements & Documents

– Information on payment methodology

– Advance notices and announcements

• Ratebooks & Supporting Data

– Payment ratebooks, rate calculation data,

benchmarks

– Fee-for-service actuarial equivalent cost sharing

factors

– Prescription drug plan base beneficiary premium

CCA Annual Meeting / October 2007 27

CMS Web Site

• CMS Home >Research, Statistics, Data and

Systems > Health > Files for Order:

– Files for Order - General Information

– Limited Data Sets





• Limited Data Sets (LDS)

– Beneficiary level health information but exclude

specified direct identifiers.

– 5% Sample of FFS data

– Requires a formal request for CMS approval.







CCA Annual Meeting / October 2007 28

CMS Web Site

• Adjust FFS Data appropriately for pricing MA

plans

– FFS data for actuarial equivalence calculations

excludes ESRD, service categories with no cost

sharing (home health) and hospice services

provided outside MA plan.

– Adjustments to LDS

• Credibility – limited data in certain areas &

service categories

• Claims completion, population differences, etc.

– See MA bid instructions





CCA Annual Meeting / October 2007 29

CMS Web Site



• (2008) Bid Conference-OACT Video

Streaming/Podcast.

– Event Date 03/01/2008

– http://cms.hhs.gov/events/event.asp?id=360

– CMS Home > Site Tools & Resources > Event

Calendar > Upcoming Events









CCA Annual Meeting / October 2007 30

HPMS





• https://gateway.cms.hhs.gov



• Two levels of access available to certifying

actuary

– “Type of functionality”

– Described in Appendix A of bid instructions

– Actuarial Certification Profile Only or

– Actuarial Certification Profile and Plan Profile







CCA Annual Meeting / October 2007 31

HPMS

• Actuarial Certification Profile Only:

– Actuarial Certification Process

• HPMS March 9, 2007 release

• Application:

http://www.cms.hhs.gov/InformationSecurity/D

ownloads/EUAaccessform.pdf

– Upload Substantiation (supporting

documentation)

– View BPTs and PBPs for assigned plans

– HPMS Guidance on Home page





CCA Annual Meeting / October 2007 32

HPMS

• Actuarial Certification Profile and Plan Profile:

– HPMS Home> Plan Bid > Bid Submission

• MA, MSA, PD and 2-Year Lookback BPT

Spreadsheets

• MA, MSA, PD and 2-Year Lookback BPT

Instructions

• Bid User’s Manual

• Bid Pricing Tool Technical Instructions

– HPMS Home > Risk Adjustment

– Plan specific risk score data

– HPMS Guidance on Home page



CCA Annual Meeting / October 2007 33

HPMS

• HPMS Guidance on Home page

– Listed by release date

– Search by topic and/or date range

– Examples:

• CY2008 Actuarial Certification Process

• Part D National Average Monthly Bid Amount, PD

Basic Premium, PD Regional LIPS, MA Regional

PPO Benchmarks

• MA Payment Rates

• February 28, 2007 - “2008 Employer Group Waiver

Policy – Elimination of the Requirement for Entities

Offering EGWPs to Submit Part D Bids”



CCA Annual Meeting / October 2007 34

Employer Groups & Union Groups - MA



• “800-series” plans

• Two Options for employer coverage

– Individual-market products

– Employer-only or Union-only Group Waiver Plans

(EGWPs)

• Individual-market product offerings

– Without modification or through “Actuarial Swaps”

or “Actuarial Equivalence”.

– Plan retains supporting documentation.

• See bid instructions



CCA Annual Meeting / October 2007 35

EGWPs - MA



• Pricing approaches

– FFS build-up

– Composite

– Rebates must be used

• Flexibility allowed in providing coverage to

different groups

• Bid review includes consistency of pricing with

individual plans.

• MA only plans: Not necessary to submit

separate BPTs for CY and non-CY business.





CCA Annual Meeting / October 2007 36

EGWPs – Part D





• Two options for employer coverage

– Purchase customized benefits from a PDP or

MA-PD pursuant to CMS waivers.

– Contract directly with CMS to become a PDP

and provide customized benefits pursuant to

CMS waivers.









CCA Annual Meeting / October 2007 37

EGWPs – Part D





• Part D bid pricing tool not required for

EGWPs, i.e., “800-series plans”



• Payment based on Part D National Average

Bid Amount

– Low income cost sharing subsidy and

reinsurance payments based on actual

experience

– No catastrophic reinsurance for non-CY plans







CCA Annual Meeting / October 2007 38

Expectations

• Supporting documentation is prepared in

advance

– Filed with initial bid submission or available upon

request within 2 days

– “…with sufficient clarity that another actuary

practicing in the same field could make an objective

evaluation of the reasonableness of the work

product.” ASOP # 31.

• Benefit cost projections

– Based on experience data, if credible.

– Consistent with group expected to enroll.





CCA Annual Meeting / October 2007 39

Expectations

• Projected risk scores

– Plans with experience have risk scores to use for

projection purposes.

– Appropriate adjustments for coding intensity,

normalization, etc.

– Developed consistently with projection of manual

rates for plans without experience.

• Administrative expenses

– Related party agreements must be comparable with

competitive arrangements.

– Part D arrangements with PBMs must reflect full

costs of services prior to any PBM rebate withhold.





CCA Annual Meeting / October 2007 40

Expectations

• Rx Rebates/ Direct Indirect Remuneration

– Plans project full value of rebates or DIR

expected to be reported in contract year.

– This includes amounts withheld by providers.





• FAQ 2007 Part D reporting requirements

– http://www.cms.hhs.gov/PrescriptionDrugCovCo

ntra/Downloads/PartDReportingRequirementsF

AQ.pdf

– CMS Home >Medicare > Prescription Drug

Coverage Contracting > Plan Reporting and

Oversight: Downloads



CCA Annual Meeting / October 2007 41

Expectations

• Gain / loss margin

– Beginning CY2008 focus on margin generally at

organizational level

• Implicit cross subsidizations will be permitted

– Bids may not include anti-competitive practices

– MA group and dual-eligible SNP

• Bids have different competitive position

• Generally, will be tracked closely to individual

market

– MA-PD bids

• Overall margins of MA and Part D components

within reasonable range of each other

• For example +/- 1% or 1.5%



CCA Annual Meeting / October 2007 42

Tips for Efficient Bid Review



• Start preparing bids early

– Estimate payment rates

– Format supporting documentation

• Apply early for HPMS actuarial certification

access.

• Thoroughly check PBP for consistency with

BPT before bid submission and certification.

• Designate back-up for questions during bid

review.





CCA Annual Meeting / October 2007 43

MA Bidding: Do’s and Don’ts

Client Perspective









Ashley Mosko

Blue Cross and Blue Shield of Alabama

CCA Conference

October 23, 2007

Plan Information



• 3.7 million members

served nationwide



• 145,000 C Plus

members



• 8,000 each MAPD and

PDP

Background



• New plan to Medicare Risk



• Limited individual market perspective



• Conservative outlook



• Marketing approach

Blending



• Actuarial match



• Goals of organization



• Benefit Decoding

Schedule to Succeed



• Start early, model often



• Start earlier, model more often



• Sanity check built in



• Do not torture your Actuary!

Bid Pricing Tool v. Plan Benefit

Package



• Right staff in the right seat on the bus



• Translation of bid into benefit categories, cost

sharing, etc.



• Don’t touch that button! Checklist review.

Post Bid Review



• Good, bad and ugly



• Competitive Analysis



• Begin preparation for next year’s bid


Share This Document


Related docs
Other docs by Casey Beldon
starting your own buissness
Views: 62  |  Downloads: 6
sales and management
Views: 217  |  Downloads: 13
prepaid debit credit cards
Views: 440  |  Downloads: 17
upromise credit cards
Views: 4  |  Downloads: 0
microsoft outlook real estate
Views: 32  |  Downloads: 1
start corp
Views: 1  |  Downloads: 0
office for lease
Views: 45  |  Downloads: 1
power of attorney real estate form
Views: 412  |  Downloads: 10
marketing project plan
Views: 541  |  Downloads: 58
what is triple net lease
Views: 54  |  Downloads: 1
by registering with docstoc.com you agree to our
privacy policy

You are almost ready to download!

You are almost ready to download!