All GH Specialty Flashcards
Considerations when selecting risk characteristics to use in a risk classification system
- The [R]elationship between the risk characteristics and expected outcomes. Rates are considered equitable for a given risk characteristic if differences in rates reflect material differences in expected costs
- [C]ausality: the risk characteristic should be related to expected outcomes, but it is not necessary to establish a cause and effect relationship
- [O]bjectivity: select risk characteristics that are capable of being objectively determined
- [P]racticality: reflect the trade-offs between practical and other relevant considerations
- [A]pplicable law: considers whether the law limits the choice of risk characteristics
- [I]ndustry practices: consider usual and customary risk classification practices for the given situation
- [B]usiness practices: consider limitations created by business practices for the given situation
CRAP BIO
ASOP #12
Broad areas in the risk-identification process
- Risk identification tools
- Risk identification techniques
- Assessment of the nature of the risks
> Quantifiable risks can be modeled
> Unquantifiable risks can often be analyzed by the groups that identify them - Recording risks in a risk register: the register details all of the risks faced by the organization. It should be constantly updated to reflect the changing nature of risks and the evolving environment
Sweeting Ch. 8
Criteria for selecting drug-diagnosis pairs for a hybrid model
- Select drugs with patterns of [N]on-discretionary prescribing
- Avoid drugs where there are [I]ncentives for over-prescribing
- Avoid drugs where there are [V]ariations in prescribing across providers, practices, and areas
- Carefully consider selection of [H]igh-cost drugs. In some cases, including the drug in the model may reduce the incentives for insurers to strive for greater efficiency
- Avoid drugs indicated for [M]ultiple diagnoses
- Avoid drugs indicated for [d]iagnoses not included in the HHS-HCC model
- Carefully consider selection of drugs in an area exhibiting a rapid rate of [T]echnological change (which could make cost predictions inaccurate when based on previous years of data)
MINT PHD
GHS-120-17
Formulas for calculating HHS-HCC risk scores
- Calculation of predicted plan liabilities for individuals: the total PLRS is the sum of the incremental predicted plan liabilities (coefficients) from the relevant model (based on the enrollee’s age and cost sharing level)
> For adults and children, this is the sum of the age/sex, HCC, and disease interaction coefficients
> For infants, this is the sum of the maturity/disease-severity category and additive sex coefficients
> Some individuals are eligible for reduced cost sharing. An induced demand factor is multiplied by the above sum to determine the final PLRS for them - Calculation of plan averages PLRS: this is the plan’s weighted average of individual PLRSs, where the weights are enrollment months. All plan enrollees are counted in the numerator, but only billable plan enrollees (parents and three oldest children) are counted in the denominator
GHS-119-17
Considerations when performing services related to risk evaluation
- Information about the financial strength, risk profile, and risk environment of the organization. For example, the nature and complexity of the risks faced by the organization, and the degree to which the organization’s different risks interact with one another
- Information about the organization’s risk management system, including:
> The risk tolerance of the org
> The risk appetite of the org
> The components of the org’s ERM control cycle
> The knowledge and experience of management and the board of directors regarding risk assessment and risk management
> The actual execution of the org’s ERM control cycle - The relationship between the organization’s financial strength, risk profile, and risk environment and the organization’s risk management system
- The intended purpose and uses of the actuarial work product
ASOP #46
Description of propensity score matching
- Propensity score matching is a technique used for making a participant (intervention) group comparable to a non-participant group. It can control for observable variables such as age, gender, and geography, but it does not control for important unobservable influences such as willingness to change behavior
- Each member in the participant group is matched with a member of the non-participant group based on propensity scores
- The propensity score, p, is the probability that the member will be in the participant group
> IT is calculated using logistic regression based on that member’s values for the independent variables (such as age and gender)
> This process reduces a large number of variables to a single score
> Members with similar scores can then be matched, even if they are not matched exactly on the independent variables
> There should still be relatively close matches on those other variables
Duncan Ch. 11
Steps in the process for CMS to assign beneficiaries to an ACO
- Step 1 - the beneficiary is assigned to a participating ACO when:
> The beneficiary has at least one primary care service furnished by a PCP, and
> More primary care services are furnished by PCPs at the participating ACO than from the same types of providers at any other ACO - Step 2: for a beneficiary who has not received any primary care services from a PCP, the beneficiary is assigned to the participating ACO if:
> The beneficiary received at least one primary care service from a specialist physician utilized in assignment at the participating ACO, and
> More primary care services are furnished by specialist physicians utilized in assignment at a participating ACO than from any other ACO
Duncan Ch. 22 (Risk)
Regulatory action levels for health RBC ratios
- Company Action Level (ratio between 150% and 200%) - requires that a company submit a corrective action plan
- Regulatory Action Level (ratio between 100% and 150%) - allows the commissioner to examine the company and issue an order specifying corrective actions
- Authorized Control Level (ratio between 70% and 100%) - allows the commissioner to place the company under regulatory control if deemed to be in the best interest of policyholders and creditors
- Mandatory Control Level (ratio less than 70%) - requires the commissioner to take regulatory control of the company
Due to a trend test, insurers who have an RBC ratio between 200% and 300% and a combined ratio greater than 105% could trigger a company action level event
CRAM
Skwire Ch. 39
Lagging indicators of savings for EHM programs
- Functional [S]tatus
- Quality of life and [W]ell-being
- [A]bsenteeism and presenteeism
- [M]orbidity
- [H]ealthcare claims costs
WHAMS
GHS-125-19
Responsibilities of the CRO
- [I]dentifying and quantifying risks
- [M]anaging the ERM process
- [A]nalyzing risk strategically
- Facilitating the [A]ctivities of the risk management team
- Being a [L]iaison for the CEO, CFO, senior management, and middle management
- Developing organizational [P]&Ps
- Working on [C]oncept development and implementation
- [T]racking key risks
- Facilitating continuous risk [A]ssessment
CAT IMPALA
GHS-123-18
Common features of Medicare prospective payment systems
- A system of [A]verages: providers cannot expect to make a profit on each case, but efficient providers can make a reasonable return on average
- Increased [C]omplexity: DRGs are more complicated than a system based on per diem payments
- [R]elative weights: associated with each patient group to reflect the average resources used by efficient providers
- Conversion [F]actor (base price): the dollar amount for a unit of services. Is multiplied by the relative weight to determine payment
- [O]utliers: unusual cases that require above-average resources and receive extra payments
- [U]pdates: the conversion factor and relative weights are adjusted annually to reflect new technologies and changing practice patterns
- Access and [Q]uality: policymakers monitor PPSs and survey patients to ensure that beneficiaries have adequate access to high quality care and that providers are compensated adequately
QUA CORF
Duncan Ch. 6 (Risk)
Commercially-available diagnosis-based grouper models
- Diagnosis Related Groups: used extensively by CMS and some commercial payers to ensure consistent reimbursement of hospitals for patients with the same risk profile
- Hierarchical Condition Categories (HCCs)
> CMS_HCCs: developed as a health adjuster for Medicare health plans
> HHS-HCCs: developed for risk normalization for ACA plans - Clinical Risk Groups: classifies members of the population based on their burden of chronic medical conditions
- Optum (Impact Pro): primarily used for predicting high risk patients for care coordination
- Chronic Illness and Disability Payment System: developed for adjusting capitated payments for Medicaid beneficiaries
- DxCG Intelligence: uses patient-level information to profile the range and intensity of medical problems for a given population
- Symmetry: the Symmetry Episode grouper technology is the basis for Optum’s predictive and risk adjustment models
- The Johns Hopkins Adjusted Clinical Groups System: patient demographics merged with diagnoses and pharmacy information to produce a series of risk factors and scores. Primarily used for care management
- Milliman Advanced Risk Adjusters (MARA): developed by actuaries and healthcare consultants to provide a set of risk adjustment models that predict risk at a more detailed level than was traditionally available
- SCIO Prospective Financial Risk Model: all-encounter model used to predict risk scores prospectively
- Risk- and severity-adjustment methodologies for measuring inpatient quality care (Truven Health Analytics): created to address mortality, complications, readmissions, and length of stay
- Wakely Risk Assessment model: a transparent, high-performance, and open-code risk assessment model for a commercial population
- Agency for Healthcare Research and Quality (AHRQ) Clinical Classification Software (CCS): diagnosis and procedure categorization scheme
Duncan Ch. 5 (Risk)
Additional challenges faced by CO-OPs when they began operations
- To meet regulatory requirements on short deadlines, CO-OPs had to outsource critical functions such as claims adjudication, customer call centers, and provider networks
- CO-OPs had to decide whether to offer platinum-level coverage, which has lower cost sharing and therefore attracts consumers with significant health needs. Half of the CO-OPs studient offered these plans initially, but then later reversed this decision
- CO-OPs were at a pricing disadvantage since they did not have historical claims data with which to price. And many of them did not have experienced actuaries on staff
- CO-OPs may also be at a disadvantage in the risk adjustment program. To be successful with risk adjustment, an insurer must record every diagnosis of every member, but this is a challenge for CO-OPs who have not yet built the data capacity needed
GHS-122-18
Required disclosures for communications subject to ASOP #46 on risk evaluations in ERM
- The results of the [E]Conomic capital model, their intended use, and any known limitations of the model
- The results of the [S]tress and scenario tests, their intended use, and any known limitations of these tests
- The methodologies and [S]ources of information for identifying and evaluating emerging risks
- Any material [C]hanges in the system, process, methodology, or assumptions from those previously used
- Significant [A]ssumptions used in the risk evaluation and interdependencies among risks and statistical distributions
- The [R]isks included in the risk evaluation and their relative significance, as well as known material risks not included and the rationale for not including them
- Whether and how the modeled future economic conditions have been reviewed and tested for [R]easonableness
SCARERS
ASOP #46
Considerations when developing, reviewing, or maintaining risk evaluation models
Whether models are fit for the purpose:
- The degree to which the models need to be reproducible and [A]daptable to new risks
- The [S]ophistication of the models in proportion to the materiality of the risks they cover
- The practical considerations for the models, including [U]sability, reliability, and cost efficiency
- The statistical and theoretical [L]imitations of the models
- The quality of the [D]ata underlying the models
- The appropriateness of the methodologies used for the model validation and [C]alibration
- The appropriateness of the methodologies used for modeling [D]ependencies among risks
- The appropriateness of the [C]ash flow and discounting methods used in the models
Whether the assumptions are appropriate:
- Whether the assumptions are [S]upportable and appropriately documented
- Whether the assumptions are regularly [R]evisited to determine their appropriateness
- Whether the assumptions regarding anticipated [M]anagement actions are supportable and appropriately documented
CUD SCALD
MRS
ASOP #46
Ways in which provider group-based ACOs are expected to generate savings
- Implementing care coordination to manage the care of the patients who need additional services
- Reducing the need for tests via access to integrated medical records and consistent management by the physician
- Developing a network of efficient providers for referrals and limiting the use of less efficient and more expensive providers
- Focusing on quality, which will result in fewer unnecessary services, and emphasizing preventative services will lead to savings as population health improves
- Reducing duplication of services
- Preventing medical errors
Duncan Ch. 3
Types of clinics that can be used to provide basic health care
- Retail convenient care clinics - many pharmacies, hospitals, and grocery chains have opened retail clinics staffed by nurse practitioners. These clinics offer care on a walk-in basis for common, non-urgent illnesses and are generally open during evenings and on weekends.
- Employer worksite clinics - these are most common at very large employers. They may cover various types of care, such as preventative services, acute care, primary care, pharmacy, disease management, and wellness
- Urgent care clinics - freestanding centers that are staffed by a full range of clinicians, who are directed by physicians. They are generally open longer than physician practices and they offer a full range of ambulatory services, including many that are offered at hospital emergency departments
- Federally qualified health centers (FQHCs) - these are designated by the federal government to provide health care to the underserved and uninsured. An example is a community health center.
CURE
Duncan Ch. 3
Subfactors scored in the S&P analysis of an insurer’s ERM
- Risk management [C]ulture: the analysis of this subfactor focuses on the importance of ERM in all key aspects of the insurer’s business operations and corporate decision-making
- Risk [C]ontrols: this subfactor analyzes the processes and procedures insurers employ to manage their key risk exposures within certain general categories
- [E]merging risk management: this subfactor analyzes how the insurer addresses risks that are not a current threat to creditworthiness, but could become a threat in the future. it also assesses the insurer’s level of preparedness if those emerging risks materialize
- Risk [M]odels: the analysis of this subfactor focuses on assessing the robustness, consistency, and completeness of the insurer’s risk models
- [S]trategic risk management: this subfactor assesses the insurer’s program to optimize risk-adjusted returns and to evaluate and prioritize strategic options on a level playing field
MC SEC
GHS-121-18
Definitions related to risk used in the S&P analysis of ERM
- Risk appetite: the framework that establishes the risks that the insurer wishes to acquire, avoid, retain, and/or reduce
- Risk preferences: qualitative risk appetite statements that guide the insuerer in the selection of risks
- Risk tolerances: quantitative risk appetite statements that guide the insurer in the selection of risks. These statements typically specify maximum acceptable losses and are often probabilistic in nature
- Risk limits: quantitative boundaries that constrain specific risk-taking activities
GHS-121-18
Reasons that CO-OPs failed
- Some were unable to sign up a sifficient number of customers to enable them to cover their fixed costs
- For most CO-OPs, enrollment was relatively strong, but revenue was insufficient to offset higher-than-expected claims costs
- For CO-OPs with very high enrollment, they lacked the capacity to provide good service and they had cash flow problems. They had to rely on federal solvency loans to pay claims, but these loans were limited after Congress slashed program funding
- Payments from the ACA premium stabilization programs came much later than when costs were incurred. The payments for the 2014 plan year didn’t come until September 2015, which was too long to wait for one CO-OP that therefore went insolvent
- Lower than expected payments from the risk corridor program was the breaking point for one CO-OP
GHS-122-18
Definition, requirements, and goals of an Own Risk and Solvency Assessment (ORSA)
- Definition: a confidential internal self-assessment of the risk associated with an insurer’s current business plan and the sufficiency of capital resources to support those risks
- Requirements for an insurer subject to ORSA:
> Conduct an ORSA at least annually to assess the adequacy of its risk management framework and solvency position
> Internally document the process and results of the assessment
> Provide a confidential high-level ORSA summary report annually to the lead state commissioner if the insurer is a member of an insurance group and, upon request, to the domiciliary state regulator - Primary goals of ORSA:
> Foster an effective level of ERM at all insurers, through which each insurer identifies, assesses, monitors, prioritizes, and reports on its material and relevant risks, using appropriate techniques and in a manner that is adequate to support risk and capital decisions
> Provide a group-level perspective on risk and capital as a supplement to the existing legal entity view
DRG
GHS-116-19
Approaches for defining coverage periods for health reinsurance
- “Losses occurring during”: claims are covered only if they occur during the agreement year, regardless of the effective date of risks accepted by the insurer. It is most commonly used for excess arrangements
- “Risk attaching”: provides that the reinsurance period for each underlying risk from the insurer coincides with the insurer’s policy year. Is commonly used for proportional reinsurance
GHS-117-16
Processes included in the ERM control cycle
- Risks are [I]dentified
- Risks are [E]valuated
- Risk appetites are [C]hosen
- Risk [L]imits are set
- Risks are [A]ccepted or avoided
- Risk [M]itigation activities are performed
- Actions are taken when risk limits are [B]reached
ICE BALM
ASOP #46
How ERM differs from traditional risk management
- Traditional health care risk management examines risks individually
> This approach maintains that risks are best managed within functional silos and that shareholder value is maximized through risk transfer
> But this approach fails to appreciate relationships among risks. And it lacks the optimization of collective risk management through an enterprise approach - ERM uses common metrics across risk domains to determine the effectiveness of risk management approaches. With an integrated enterprise-wide view of risk, the risk manager focuses on opportunities as well as risks
GHS-123-18