All GH Specialty COPY COPY Flashcards
Types of people risk
- [I]ndirect employment-related risks: the risk that the wrong people are employed, retained, or promoted
- [A]dverse selection: the risk that the demand for insurance will be positively correlated with the risk of loss
- [M]oral hazard: the risk that people who are insured will be less likely to avoid risk
- [A]gency risk: the risk that a party that is appointed to act on behalf of another will instead act on its own behalf
- [B]ias: type of systemic risk
> Deliberate bias can arise if key risks are intentionally omitted or downplayed
> Unintentional bias may occur due to overconfidence in one’s ability to complete a difficult task
AB AMI
Sweeting Ch. 7
Policy barriers that make it difficult for CO-OPs to compete in the health insurance market
ACA provisions:
> CO-OPs are prohibited from using federal funds for marketing
> “Substantially all” business must be derived from the individual and small-group markets. This makes it harder for CO-OPs to enter the large employer market, which tends to be a bigger and more stable source of revenue
Decisions made by federal policymakers during implementation of this program
> Budget agreements with Congress slashed the program’s $6 B allotment down to $2.4 B
> States were allowed to permit individuals and small employers to remain enrolled, for a transitional period, in their pre-ACA policies. As healthy enrollees stayed on their plans, a sicker risk pool was left for insurers selling on the marketplaces
3. Another budget agreement late in 2014 disabled the ACA’s risk corridor program by requiring it to be budget neutral. As a result, payouts to insurers with losses were only 12.6% of what had been expected
GHS-122-18
Methodology used to develop the Arizona Medicaid risk adjustment model
- Model selected: Symmetry’s Episode Risk Groups (ERG) model
- Type of data used: diagnosis codes and procedural information from medical data and NDC codes from pharmacy data
- Data timing: three months of claim run-out was used
- Eligibility groups: risk adjustment was applied to prospective, non-reconciled risk groups
- Model calibration: the model was recalibrated by developing risk weights through a linear regression model based on Arizona Medicaid data, and then credibility weighting those rates with the model’s original risk weights
- Geographic issues: risk adjustment will take place at the geographical service area and risk group level
- Individual approach: risk scores calculated during the experience period will follow the individual during the rating period. This will accurately reflect movement of individuals between health plans
- Risk factors are updated once per year
- Risk factors for new members: members with at least six months of enrollment (“long” cohort) during the experience period will be given a claims-based risk factor. Other members (“short” cohort) will be given a risk factor that is the average of an age-gender factor and an adjusted plan factor
> Adjusted plan factor = (average ERG risk score of long cohort / pure age-gender factor of long cohort) * pure age-gender factor of short cohort - Phase-in: risk adjustment is being phased in such that only 80% of the 2009 rate is risk adjusted
- Risk factors for newborns: a different approach is needed because newborns have no prior year claims from which to develop condition-based risk scores. Claims of the prior cohort of newborns in the experience period are used to project newborn experience in the rating period
Duncan Ch. 13 (Risk)
Definition and aspects of risk treatment
- Definition of risk treatment: the process of selecting actions and making decisions to transfer, retain, limit, and avoid risk
- Aspects of risk treatment:
> Determining risk [T]olerance
> Choosing risk [A]ppetites
> Setting risk [L]imits
> Performing [R]isk mitigation activities
> Optimizing organizational [O]bjectives relative to risk
TORAL
ASOP #47
Definitions of sensitivity and specificity
When building clinical identification algorithms the proper balance between sensitivity and specificity must be found
- Sensitivity: the percentage of members correctly identified as having a condition (“true positives”)
- Specificity: the percentage of members correctly identified as not having a condition (“true negatives”)
Duncan Ch. 4 (Risk)
Options for allocating the benefits of diversification
- Allocating the full stand-alone capital requirement to each line and retaining the diversification benefit centrally
- Giving the full benefit of diversification to the new line of business that triggers the benefits
- Allocate the benefit in proportion to the stand-alone capital requirements by LOB
- Euler capital allocation principle: consider the marginal contribution of each additional unit of business to the overall capital required. For example: if the required economic capital is proportional to the SD of a loss, then allocate risk capital for a given line of business in proportion to the following ratio:
> The cov. between the loss in that line and total loss
> Divided by the SD for the total loss
Sweeting Ch. 18
Calculation of risk charge for disability income
The risk charege is the sum of:
1. A factor multiplied by earned premium. The factors vary by coverage
Coverage Type $0-50 M $50 M +
Non-Canc. Ind 35% 15%
Other Ind 25.00% 7.00%
Group LT 15% 3.00%
Group ST 5.00% 3.00%
> In applying factors, both individual products are combined and both group products are combined, but the individual and group products are not combined with one another
> For each of individual and group, the largest factor is applied first
2. 5% of claim reserves
Skwire Ch. 39
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
Components of an MTM program for Part D
- Performing or obtaining necessary [A]ssessments of the patient’s health status
- Formulating a medication treatment [P]lan
- Selecting, initiating, modifying, or administering medication {T}herapy
- Monitoring and evaluating the patient’s [R]esponse to therapy
- Performing a comprehensive medication [R]eview to identify, resolve, and prevent medication-related problems
- [D]ocumenting the care delivered and communicating essential information to the patient’s other primary care providers
- Providing verbal [E]ducation and training designed to enhance patient understanding and appropriate use of medications
- Providing information, support services, and resources to enhance patient [A]dherence to drug regimens
- [C]oordinating and integrating MTM services with other health care management services
TRADE CARP
Duncan Ch. 3
Practical issues with applying risk adjustment models
- Risk transfer models generally assume that risk and cost are correlated, so a 1% increase in risk is assumed to increase costs by 1%. But not all cost-risk relationships are linear. As a result, these models overcompensate some plans and undercompensate others
- The Medicare Payment Advisory Commission (MedPAC) identified the following issues related to MEdicare HCCs:
> Although the CMS-HCC risk adjusters map diagnosis codes to 189 HCCs, only 70 HCCs are actually [U]sed for risk scoring
> There is considerable [V]ariation within HCCs in terms of patient severity and experience
> Certain [R]acial groups and income levels are likely to be higher consumers of healthcare, but this is not reflected in the model
> Because the model only uses [O]ne year of data for determining risk scores, for some chronic conditions the model under-predicts since the patient doesn’t have a claim each year
> The standard model does not include a factor for the [N]umber of conditions. But MedPAC has found that this factor would lead to more accurate predictions - Several issues exist in ACA risk adjustment
UV RON
Duncan Ch. 21 (Risk)
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)
Ways in which provider group-based ACOs are expected to generate savings
- The practice should implement “[C]are coordination” to manage the care of the patients who need additional services
- [A]ccess to integrated medical records and consistent management by the physician should reduce the need for tests
- The ACO should develop a [N]etwork of efficient providers and limit the use of less efficient providers
- The focus on quality should result in fewer [U]nnecessary services and better population health
CAN U
Duncan Ch. 22 (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
Components of the Risk Management Economic Model
- [P]revalence of different chronic diseases
- the [C]ost of the chronic disease
- [P]ayer risk - the most savings for the plan will come when the plan is at financial risk for all of the patient’s costs
- [T]argeting and risk - members should be prioritized based on the probability of experiencing the targeted event. Those with the highest risk ranks will be selected for the program
- [E]stimated cost of the target event
- [C]ontact rate - the rate at which the company is able to make contact with targeted members
- [E]ngagement or enrollment rate
- Member [R]e-stratification rates - the initial risk of the member will be re-stratified after the nurse interacts with the member and assesses the member’s risk. Factors that affect whether the member should be re-stratified include the accuracy of the diagnosis, risk factors present, the ability of the DM program to intervene for the condition, the patient’s readiness to change, and the patient’s self-management skills
CREPT PEC
Duncan Ch. 8
Major publishers of health care quality measures
- National Quality Forum (NQF): has the lead responsibility in the US for determining which heatlh care quality measures should be recognized as national standards. Operates under a three-part mission to improve the quality of healthcare by:
> Building consensus on national priorities and goals for performance improvement
> Endorsing national consensus standards for measuring and publicly reporting on performance
> Promoting the attainment of national goals through education and outreach programs - Agency for Healthcare Research and Quality: developed a set of QIs (Quality Indicators) which use hospital data to highlight potential quality concerns. The QIs include IP, prevention, patient safety, and pediatric indicators
- Joint Commission: the primary accrediting body for hospitals, nursing homes, and other care facilities
- CMS: works with health care providers to develop measures of quality. Has the ability and the funding to sponsor various quality initiatives
- Hospital Quality Alliance: formed to develop performance measures of hospital care. One of its products is the “Hospital Compare” website
- Measures Applications Partnership: a public-private partnership convened by the NQF to provide input on the selection of performance measures for public reporting and performance-based payment programs
- American Medical Association Physician Consortium for Performance Improvement: a physician-led consortium focused on clinical quality improvement and patient safety
Duncan Ch. 4 (Risk)
Characteristics and skills of a CRO
- CROs come from various disciplines, including legal, auditing, strategic planning, investor relations, line-operation management, and hazard risk management
- For insurance organizations, insurance, actuarial, and accounting backgrounds are assets
- Excellent communication skills are important
- Key background skills center on math, statistics, finance, and accounting
- A recent survey rated the ability to understand business issues as the most important skill
- A broad health care and business background is also important
GHS-123-18
Factors other than health status that affect drug utilization
- Plan and physician [P]rescribing patterns
- [C]ost sharing features
- Drug [U]tilization management features
- Proclivities of providers for using drug versus non-drug [T]reatments for a medical condition
- The [I]ncome level of enrollees
CUTIP
GHS-120-17
Models typically used to stratify members in a care management program
- Stratify members according to the predictive risk [S}core - but at the top of that list are many members who represent a low opportunity for cost savings. Additionally there is a diverse mix of conditions and demographics that make it hard to select an appropriate intervention.
- [C]ondition-specific model - focus on members with a specific condition, such as diabetes. But any program targeted at a specific condition may miss the greater opportunity of addressing the co-morbid conditions of that population
- [R]ules-based approach - clinicians use a set of rules to identify patients for care management. But the literature suggests that clinicians are not particularly good at identifying patients for management. Also, regression to the mean is likely.
Opportunity analysis is designed to address the shortcomings of these models.
SRC
Duncan Ch. 9
Steps for developing a risk map
This is a visual aid to depict the frequency of occurrence and possible severity of an organization’s risks
- [I]dentify the risks to be analyzed and their correlation to all other risks
- [D]evelop the threshold of acceptable exposure: this often varies based on the specific risk. And it relates to risk appetite
- [E]valuate the [s]everity of impact if a risk event occurred and identify what percentage of the organization would be impacted
IDEs
GHS-123-18
Calculation of average per capita expenditure for ACOs
- Expenditures are calculated for ACO-assigned beneficiaries separately for the following Medicare enrollment types:
> ESRD
> Disabled
> Aged/dual
> Aged/non-dual - Expenditures are defined as total Med Part A and B FFS payments from any provider for SSP-eligible months
- Claims are assessed after three months of run-out. And a CF is applied by CMS
- Average per capita expenditure = SUM(claims^k * t^k)/SUM(t^k)
> The k values represent the different beneficiaries, and t^k is the exposure period of the kth ben
> This calc is done separately for each combo of Medicare enrollment type and benchmark and performance year
Duncan Ch. 22 (Risk)
LTC pricing assumptions that missed the mark and lead to the insolvency of Penn Treaty
- Lapse rates: when the policyholder voluntarily stops paying premiums, rates were lower than expected
> [L]apse rate assumptions for LTC insurance was mostly based on history of lapses on annuities which turned out to be too high - [M]ortality: death either before or during receipt of LTC benefits. Mortality was lower than expected
> Assumptions were based on general population data, and not adjusted for the healthier people that were choosing to purchase the insurance (anti-selection) - [I]nterest rates: premiums invested and accumulate interest. Interest rates have been low since the ‘08 financial crisis
> Assets that were intended to coincide with the lapse and mortality assumptions matured too early relative to the intended risk they would cover. This also led to lower rates - Claim [I]ncidence: likelihood that a policyholder will require LTC
- Benefit utilization: what % of the daily limit does the insured use while receiving LTC
- Claim [T]ermination: likelihood of recovery for a policyholder already receiving LTC benefits
(The last 3 assumptions led to claim costs that were significantly higher than expected)
U LIMIT
GHS-127-19
Types of systemic risk
- [F]inancial infrastructure: e.g., a bank unable to pay back loans from other banks
- [L]iquidity risk: can become systemic if run on banks occurs
- [C]ommon market positions: feedback risk is the risk that a change in an investment’s price will result in further changes in the same direction. This could impact all investors who have a common investment position
- [E]xposure to a common counter-party: risk that a relatively small failure will cascade through several layers of investors
CLEF
Sweeting Ch. 7
Recommended practices for actuarial communications
- Actuarial communications should meet the following [R]equirements:
> The form and content of the communication must be appropriate for the given circumstance
> The communication should be clear
> Each communication should be issued within a reasonable time period
> All actuaries responsible for the communication should be clearly identified - The actuary should complete an actuarial report if the actuary intends the findings to be [R]elied upon by any intended user
- Some circumstances (such as regulations) may [C]onstrain the content of an actuarial report. In these cases, the actuary should follow the guidance of this standard to the extent reasonably possible
- The actuary should recognize the risk of unintended [U]sers misusing an actuarial document, and should take reasonable steps to ensure it is clear and presented fairly
CURR
ASOP #41
Recommended financial metrics for EHM programs
- Directly-monetized claim savings - one of the following metrics should be selected
> Cost trend compared with industry peers: compares trend to peers without EHM
> Adjusted-expected compared to actual cost trend: compares observed and expected trends. The adjusted-expected trend is the product of:
– trend components that are impactible by EHM (util and risk net of demographics) these are forecasted before the year
– Trend components that are non-impactible by EHM (demographics, price per unit, and plan design)
> Chronic vs. non-chronic trend comparison: used for disease management. Compares expected trend (from the non-chronic population) to observed trend (from the chronic population)
> Cost or trend comparison of program participants vs non-participants: compares cost trajectories of the two groups, after neutralizing the impact of non-EHM differences
> Comparison with matched controls in a non-exposed population: compares cost trajectories of members who meet criteria for EHM program targeting in the employer’s population with members who meet criteria in a comparison population that does not have an EHM program - The monetized impact on utilization that is potentially preventable by EHM: monetizes a downward trend in ER and hospital visits and procedures that can be prevented by EHM
- Financial impact based on a model that links to what occurred during the program and characteristics of program participants
- Reduction or prevention of lifestyle-related health risk factors: relates reduction in or prevention of lifestyle-related health risk factors to published evidence on the economics of preventing and reducing such risk factors
GHS-125-19
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
Rating factors allowed by the ACA
- [A]ge (limited to 3:1)
- Geographic [L]ocation
- [F]amily size
- [T]obacco use (limited to 1.5:1)
FLAT
Duncan Ch. 21 (Risk)
Description of opportunity analysis for care management programs
- Definition: a data-driven analytical process that extends traditional predictive modeling by matching opportunities within a population to care management programs and services
- To perform the analysis, the following components are required:
> Knowledge of member benefit design
> Information on any evidence-based care management programs currently in place or that could reasonably be introduced
> Eligibility and claims data for the past 2-3 years - Is retrospective, it looks at past data to identify pockets of opportunity
- Is applied prospectively, once a profile of an opportunity population is identified, all current members meeting that profile can be included in the program
Duncan Ch. 9
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
Groups in which the CRO should participate
- The [B]oard or a board risk review committee: the board expects the CRO to identify and review the major areas of risk. The CRO will usually report directly to the board or a committee
- Executive [R]isk committee: may be chaired by the CRO, and includes the CEO and CFO. IT provides oversight of risk, reviews compliance with risk policies, and monitors breaches of risk tolerance limits.
- [E]RM committee: consists of the CEO, COO, chief nursing officer, CFO, CRO, CMO, chair of the investment committee, and chair of the audit committee. Is responsible for ongoing identification and assessment of risk
- [O]rganization risk leaders (such as risk management, legal, and finance leaders): the CRO is responsible for training and, in some organizations, supervision of some members of this group
BORE
GHS-123-18
Economic capital and risk optimization measures
Definition of economic capital: the additional value of funds needed to cover potential outgoings, falls in asset values, and rises in liabilities at some given risk tolerance over a specified time horizon
- Risk-adjusted return on capital (ra) = risk-adjusted return / economic capital. Is well suited for comparing different lines of business within a firm
- Economic income created (EIC) = (ra - rh) * EC, where rh is the hurdle rate of return and EC is the economic capital. Is the rate of return that each unit of a product sold must earn to cover the additional amount of risk it generates
- Shareholder value (SV) = EC * (ra - rg) /(rh - rg), where rg is the rate of growth of the cash flows. Represents the discounted present value of all future cash flows
- Shareholder value added (SVA) = EC * [(ra - rg) /(rh - rg) - 1] = SV - EC
Sweeting Ch. 18
S&P approach for assessing insurance companies’ ERM practices
- The S&P analysis examines whether insurers execute risk management practices in a systematic, consistent, and strategic manner across the enterprise in order to limit future losses within an optimal risk/reward framework
- The analysis is tailored to each insurer’s risk profile
- Five main areas (subfactors) are scored as positive, neutral, or negative
- Then the insurer’s ERM is scored based on the assessment of the five subfactors.
GHS-121-18
Considerations when performing services regarding the evaluation of emerging risks
- The potential impact of emerging risks across various time horizons
- The potential secondary effects from an organization’s assumed actions in light of the onset of an emerging risk
ASOP #46
Measurement domains applicable to EHM programs
- Financial outcomes
- Health impact
- Participation
- Satisfaction
- Organizational support
- Productivity and performance
- Value on investment
FISH POP
Benefits of being designated an FQHC
- [R]eimbursement for services provided under Medicare and Medicaid
- Medical [M]alpractice coverage
- Eligibility to purchase medications for [O]utpatients at reduced cost
- Access to [N]ational Health Service Corps
- [A]ccess to the Vaccine for Children Program
- Eligibility for various other federal grants and [P]rograms
PRO MAN
Duncan Ch. 3
Describe how the risk parameters were developed for H2 in the HRBC formula
- To develop the risk parameters for UW risk, the work group developed a stochastic “ruin theory” model
- The model was used to determine the level of capital needed to give a 95% probability that the company would not become insolvent over the next 5 years
- The key factors that impacted the risk for a scenario include:
- Risk of catastrophic claims & other statistical fluctuations in claim levels
- Risk of misestimation trends & pricing errors
- Length of time needed to recognize a pricing error, implement an adjustment, and have the adjustment become effective
Risk identification techniques
- [B]rainstorming: this is an unrestrained or unstructured group discussion
- [I]ndependent group analysis: without collaboration, all participants write down ideas on risks that might arise. These ideas are aggregated and there is a discussion. Risks are then anonymously ranked
- [S]urveys: participants are given a list of questions about different aspects of the organization to try to draw out the risks faced
- [G]ap analysis: consists of a survey that asks two types of questions: the desired level of risk exposure and the actual level of exposure
- [D]elphi technique: begins with an initial survey of experts who comment on risks anonymously and independently. Is followed by subsequent surveys that are based on earlier responses. Continues until there is a consensus or stalemate.
- [I]nterviews: individuals are interviewed independently to identify the organization’s risks
- [W]orking groups: comprised of a small number of individuals who have familiarity with the risks identified. They investigate more fully the risks which have been identified already.
WIGDIBS
Sweeting Ch. 8
Definition and key principles of enterprise risk management (ERM)
Definition: ERM is a structured analytical process that focuses on identifying and eliminating the financial impact and volatility of a portfolio of risks, rather than focusing on risk avoidance alone. It is integrated risk management
Essential principles of ERM
- ERM recognizes a broad range of risks confronted by the organization and acknowledges that those risks represent either sources of capital or potential losses
- A comprehensive or “holistic” approach is critical for managing diverse risks. An enterprise-wide view recognizes all of the potential threats to the organization’s objectives and recognizes that risks are not isolated
GHS-123-18
Experience items included in the Medicare Bid Pricing Tool
BPT is an Excel workbook pricing form for each of Part C and D which CMS requires MA plans to use. The following past experience items are projected forward two years from the base to contract year
- Average population risk score
- Enrollment level (mem mos)
- Revenue
- Claims
- NBEs
- Profit
Duncan Ch. 14 (Risk)
Structure of Medicare ACOs
- An ACO is a network that is either physician-practice based or hospital based that shares the responsibility for providing care to patients
- The MSSP has two models of gainsharing:
> One-sided: ACO and CMS share 50/50 in gains
> Two-sided: ACO shares in more, but also shares in losses - The ACO must meet certain requirements to be allowed to share savings with CMS:
> The ACO must meet certain quality standards in the following domains: patient/caregiver experience, care coordination/patient safety, preventative health, and at-risk population
> Savings must surpass a hurdle rate, which ranges between 2% for the largest ACOs and 4% for smaller ACOs - The ACO must manage all of the medical health care needs of at least 5,000 Medicare beneficiaries for at least 3 years
- Patients do not enroll in the ACO, they are “attributed” to an ACO because they have received the plurality of their primary care from an ACO provider
> The patient is assigned to a PCP who is accountable for providing quality care, reducing util, and convincing the patient not to seek care outside the ACO network
Duncan Ch. 22 (Risk)
The implications to consumers when an LTC insurer underprices their product
- Policyholders face the risk of their insurer becoming insolvent
> This risk becomes greater with LT products with little historical data - Consumers should consider both price and capital strength when purchasing such products
- Policyholders should be aware that guaranty funds may be short should an insurer fail
GHS-127-19
Types of interventions conducted by pharmacists
- Drug utilization review - these programs manage price by substituting lower-cost alternatives for higher-cost drugs, and they manage utilization by requiring prior authorization for certain drugs
- Medication Therapy Management (MTM) - Part D plans are required to have MTM programs, which aim to improve medication use and reduce adverse events for beneficiaries that have multiple chronic conditions, are taking multiple Part D drugs, and are likely to incur annual costs of at least $4,000 for all covered Part D drugs.
- Pharmacist-delivered care management programs - pharmacists can collaborate with PCPs on medication optimization and medication safety. These programs often focus on drug adherence, which is measured in one of two ways:
> Medication possession ratio = number of days supply in the patient’s possession / number of days during the measurement period during which the patient could have had the drug
> Proportion of days covered = number of days of coverage / total number of days in the measurement period
CUM
Duncan Ch. 3
Characteristics of chronic conditions that make them suitable for disease management programs
- Once contracted, the disease remains with the patient for the rest of the patient’s [L]ife
- The disease is often [M]anageable with a combination of pharmaceutical therapy and lifestyle change
- Patients can take [R]esponsibility for their own conditions
- The average [A]nnual cost is sufficiently high to warrant spending resources to manage the condition
- The expected cost of the non-[A]dherent patient is high
LAMAR
Duncan Ch. 3
Questions to ask when selecting financial metrics for an EHM program
- Do we have enough baseline claims data and is it of high enough quality
- Do we have fully-adjudicated claims? If not, a dollar-based analysis is not possible?
- Is our membership size more than approximately 25,000?
- Do we have the analytic resources available to use a sophisticated methodology?
- Which EHM components are we implementing?
- Is the structure of our EHM program reasonably close to those in published savings literature?
- Does our consultant have a large benchmarking database that includes employers in our industry?
- Do our leading indicators indicate the program has achieved enough initial success to make it plausible ot detect a sizable enough savings to demonstrate ROI?
GHS-125-19
Description of the Consumer Operated and Oriented Plan (CO-OP) Program
- This program was created by the ACA with the intent of increasing competition among health plans and giving consumers the option of a nonprofit insurer
- The ACA requires that a majority of each CO-OP’s board be composed of plan members. And profits must be reinvested to the benefit of the members
- The ACA created the following loan programs, which were critical for these start-up plans to compete with established insurers:
> Start-up loans to help CO-OPs create the infrastructure necessary to operate
> Solvency loans to help CO-OPs establish sufficient capital to meet state solvency standards
GHS-122-18
Procedures and uses of the simplified RBC estimations
- For health insurance, if H2 is the dominant risk, then RBC can be shown to be equal to H2
> At the limit, as the other risks go to 0, the RBC will be equal to H2 - A result of this is: when H2 is dominant, and the other risks are negligible: RBC Ratio^new ~ RBC Ratio^prior * [H2^prior/H2^new]
> While not precise, one can quickly determine the outer limit of any changes to future RBC ratios with the use of simplified assumptions - Midyear estimates of RBC changes can be easily made
- The estimation can be used to quantify (or reconcile) various changes
> Material emerging information
> Asset mix changes
> Customer portfolio changes
> Income gains and losses
> Unmet assumptions
GHS-128-19
Formulas for calculating an MCO’s risk score for the Arizona Medicaid program
- Average ERG risk score for long cohort
> An unadjusted risk score is calculated as the sum over all risk factors and demographics of the risk weights multiplied by frequencies. The frequencies are the portion of the cohort with each risk factor or demographic
> For the Transitional Aid to Needy Families (TANF) group, the final risk score equals the unadjusted risk score divided by a scaling factor - Total average risk score = % of members in long cohort * average ERG risk score for long cohort + % of members in short cohort * risk factor for short cohort
> Risk factor for short cohort + 50% * adjusted plan factor for short cohort + 50% * pure age-gender factor of short cohort - The above formulas are calculated for the given MCO and for all MCOs in total. The MCO’s relative risk score = MCO total average risk score / average risk score for all MCOs
- Relative risk score with phase-in = 80% * relative risk score + 20% * 1.0000
- A budget neutrality adjustment may also be applied to get the final relative risk score
Duncan Ch. 13 (Risk)
Considerations in quantifying available capital and risk capital
- How the insurer defines solvency for the purpose of determining risk capital and liquidity requirements
- The accounting or valuation basis for measuring risk capital requirements and available capital
- The subset of business included in the analysis of capital
- The time horizon over which risks were modeled and measured
- The risks modeled in the measurement of risk capital
- The method used to quantify the risk exposure
- The risk capital metric used in determining aggregate risk capital
- The defined security standard used in determining risk capital requirements
- The method of aggregation of risks and any diversification benefits considered
MASTA MASS
GHS-116-19
Ways in which the ACÁ addresses anti selection and instability inherent in guaranteed issue requirement
- Subsidies for limited income individuals
- Employers required to provide insurance, residents ineligible for employer coverage must purchase individual coverage or pay a penalty
- A risk adjustment mechanism transfers revenue from low risk populations to high risk populations
Challenges with patient classification systems based on coding systems
- Need for new [D]RGs: due to new diseases and new procedures
- ICD [C]oding: some codes may not be sufficiently precise as diseases and procedures are refined
- [U]pcoding: providers may be tempted to exaggerate a patient’s secondary diagnoses to get paid more
- New coding [S]ystems: adopting the new ICD-10 systems will be a major challenge for hospitals and CMS
SCUD
Duncan Ch. 6 (Risk)
Criteria for a beneficiary to be assigned to a participating ACO
- The beneficiary must have a record of Medicare [E]nrollment
- The beneficiary must have at least one month of [B]oth Part A and B enrollment, and cannot have any months of Part A or Part B only enrollment
- The beneficiary cannot have any months of Medicare [G]roup health plan enrollment
- The beneficiary must be assigned to only [O]ne Medicare shared savings initiative
- The beneficiary must live in the [U]S or US territories and possessions
- The beneficiary must have a [P]rimary care service with a physician at the ACO
- The beneficiary must receive the largest [S]hare of their primary care services from the participating ACO
BEG SOUP
Duncan Ch. 22 (Risk)
Considerations for designing an economic capital model
- Must agree on what the model will be used for
- Must agree on what risks will be modeled
- Must decide which approach to use
> Factor table: requires a certain amount of capital to be held for each unit of a particular activity
> Deterministic approach: stress test that considers the amount a firm would lose under different scenarios
> Stochastic approach: use a stochastic, parametric, or empirical model to produce a large number of simulated results - Decide whether the model will be run on an enterprise-wide basis, or whether individual models will be run for each business line with the results being combined later
- Consider what output is required from the model
UR BOA
Sweeting Ch. 18
Considerations related to stress and scenario testing
- The extent to which various stress tests reflect similar or different degrees of [A]dversity
- Any items in the organization’s business plan that describe how the organization will function during an [E]xtreme event
- That an extreme event scenario may be a single event or a [S]eries of events
- How actions of various stakeholders and markets during extreme events may differ from those during “[N]ormal” times
- Whether assumed [I]nterdependencies are appropriate under the stress or scenario testing assumptions
- How to define situations that result in a [N]on-quantifiable risk
- Some stress and scenario tests will be [H]ypothetical situations for which the actuary will not need to determine whether the scenario is realistic
HI ANNES
ASOP #46
Criteria for evaluating hybrid risk adjustment models
- Clinical face [V]alidity: should be clinical validity in the relationship between the risk markers (diagnoses and drugs) and health care expenditures, and in the relationship between drugs and associated diagnoses
- Empirical/predictive [A]ccuracy: drugs added to the model should increase the model’s accuracy in predicting health expenditures
- [I]ncentives for prescription drug utilization: adding drugs should be done in a way that minimizes incentives for over-prescription of drugs to maximize risk transfers, but does not discourage needed drugs
- [S]ensitivity to variations in prescription drug utilization: should incorporate variations in drug utilization that measure differences in enrollee health status, not variation due to other factors
- Incentives for diagnosis [R]eporting: accurate and complete diagnosis reporting should not be discouraged by reducing predicted expenditures when additional diagnoses are appropriately reported
DAVIS
GHS-120-17
Describe steps for conducting a focused review of literature about successful care
management programs.
Step 1: Search for relevant publications
- Purpose is to cast a wide net to identify all potential research studies that
have shown a simultaneous improvement in quality and reduction in cost.
- Two ways to do so:
o Pearl necklace approach
o More thorough approach is to build search strategy using Medical
Search Headings (MeSH) indexing system within PubMed: type
key concept into MeSH
Step 2: Assess the quality of evidence
- A peer reviewed paper is likely to be of higher quality than typical white
paper or vendor-published studies that have not been subjected to
independent review
- A randomized controlled trial can provide robust evidence of efficacy
- In general, recommendations should be based on studies ranked towards
the top of the hierarchy of evidence (i.e. meta-analyses, systematic
reviews, and randomized controlled trials)
Step 3: Determine generalizability
- Determine if the programs identified in the literature search are likely to
be effective in the population of interest
- In general, should favor studies conducted in the United States within the
past 5 years on similar patient populations
Sources of data for a clinical identification algorithm
- Diagnoses in a medical record: highly reliable, seldom available for actuarial work
- Medical claims: one of the most common sources
- Drug claims: the other most common source
- Laboratory values
- Self-reported data
Duncan Ch. 4 (Risk)
Formula for health RBC after covariance
- RBCAC = H0 + (H1^2 + H2^2 + H3^2 + H4^2)^.5
> H0 is the Asset Risk for Affiliates: the risk that a stock investment in an affiliate may lose value
> H1 is the Asset Risk for Other Assets: the risk that investments may default or decrease in value
> H2 is the Underwriting Risk: the risk of having inadequate premiums in the future
> H3 is the Credit Risk: the risk of not recovering the amounts owed to the insurer
> H4 is the Business Risk: includes several miscellaneous types of risk, such as administrative expense risk and excessive growth risk - Authorized control level capital + RBCAC/2
- Health RBC ratio = total adjusted capital/authorized control level capital
Skwire Ch. 39
Reasons why the ACA uses a concurrent risk adjustment model
- For the [F]irst year of the ACA, most exchange participants were expected to be previously uninsured, so no historical data was available to perform a prospective calculation
- Prospective risk adjustment models are less [A]ccurate than concurrent models, as demonstrated in different SOA comparative studies
- The [C]hurn rate of members through the exchanges has been high, so even in later years many plans still will not have claims data on members
FAC
Duncan Ch. 21 (Risk)
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
Adaptions made to CMS-HCCs to develop HHS-HCCs
- Prediction [Y]ear: the CMS-HCC risk adjustment model is prospective, but the HHS-HCC risk adjustment model is concurrent
- [P]opulation: the CMS-HCCs were developed using data from the elderly and disabled Medicare populations. The HHS-HCCs were modified to reflect medical conditions and cost patterns for commercial poulations
- Type of [S]pending
> The CMS-HCCs are set up to predict non-drug medical spending, while the HHS-HCCs predict the sum of medical and drug spending
> The CMS-HCCs predict Medicare provider payments while the HHS-HCCs predict commercial insurance payments
SPY
GHS-119-17
Principles for developing grouper models
These principles guided the development of the Diagnostic Cost Groups, but they are universal and continue to be promoted in other publications
- Diagnostic categories should be clinically [M]eaningful
- Diagnostic categories should predict medical [E]xpenditures
- Diagnostic categories should have adequate [S]ample sizes to permit stable estimates
- [H]ierarchies should be used to characterize the illness level within each disease process
- Diagnostic classification should encourage [S]pecific coding
- Diagnostic classification should not reward coding [P]roliferation
- Providers should not be penalized for recording [A]dditional diagnoses
- The classification system should be internally [C]onsistent
- The diagnostic system should assign [A]ll codes (ICD-9/10)
- [D]iscretionary diagnostic categories should be excluded
SHE’S MADCAP
Duncan Ch. 5 (Risk)
Types of care management methods
- Pre-Authorization - requires a provider to obtain approval before performing a service
- Concurrent review - monitoring a member’s care while the member is still receiving care in a hospital or nursing home
- Case Management - typically involves a health care professional who coordinates the care of a patient with a serious disease or illness (such as stroke, AIDS, or cancer)
- Demand management - refers to certain passive forms of informational intervention, often provided over the telephone. Includes nurse advice lines and shared decision making
- Disease management - focuses on chronic conditions with certain characteristics that make them suitable for clinical intervention
- Specialty case management - a care manager who has expertise in a particular area coordinates care for patients in that area
- Population health management - the entire membership of a health plan is evaluated, using statistical tools to identify potential high-cost patients who can benefit from some type of voluntary intervention program
- Patient-centered medical home - this model returns to the physician the responsibility for coordinating all of the patient’s care
- Accountable Care Organization (ACO) - a network of doctors and hospitals share responsibility for providing patient care. The PCP is accountable for providing quality care and reducing utilization
- Non-traditional provider interventions and care settings - pharmacists and different types of clinics can be used to provide various interventions
- Gaps in care and quality improvement programs - improving clinical quality and addressing gaps in care is a major focus of ACOs and the Electronic Health Record meaningful use initiative
- Telehealth, telemedicine, and automated monitoring systems
> Telehealth encompasses a broad spectrum of technology-enabled health care services
> Telemedicine is the electronic transmission of medical information to remote specialists who help diagnose and treat the patient
> Automated (or patient) monitoring systems provide patient data to providers. The data can trigger alerts so that the provider can make appropriate interventions - Bundled payment initiatives - these initiatives bundle payments for multiple services across a single episode of care. The goal is to improve coordination and quality of care and lower costs by aligning the financial incentives of multiple providers
Duncan Ch. 3
Definitions of modeled and measured savings for EHM calculations
- Modeled savings are estimated by multiplying factors from published studies by the utilization reductions or other results of the EHM program
> The use of a savings model is strongly recommended for organizations who do not have the population size and funds required for a valid claims savings measurement study - Measured savings are estimated by comparing actual claims to what claims would have been without EHM
GHS-125-19
Commercially-available episode grouper models
Episode grouper models group all services that are associated with a particular diagnosis or procedure into a single group
- [M]edicare Episode Grouper Model: developed by CMS for organizing administrative claims into information about resource use that can be used to support various program objectives
- [E]pisode Treatment Groups: a case-mix adjustment system that combines IP, ambulatory, and Rx claims to build a complete treatment episode from onset of symptoms to completion of treatment
- [T]ruven Medical Episode Groups: used by payers and providers to compare medical and surgical options and costs in the treatment of diseases and medical conditions
MET
Duncan Ch. 5 (Risk)
Key principles of an effective ERM framework
- Risk [C]ulture and governance
> A governance structure that clearly defines roles, responsibilities, and accountabilities
> And a risk culture that supports accountability in risk-based decision-making - Risk [I]dentification and prioritization process: the risk management function is responsible for ensuring that the process is appropriate and functioning properly at all organizational levels
- A formal risk [A]ppetite statement and associated risk tolerances and limits: understanding of the risk appetite statement ensures alignment with risk strategy by the board of directors
- Risk [M]anagement and controls: managing risk is an ongoing ERM activity, operating at many levels within the organization
- Risk [R]eporting and communication: provides key constituents with transparency into the risk-management processes. Facilitates active, informal decisions on risk-taking and management
MICRA
GHS-116-19
Considerations when designing risk capital targets or risk capital thresholds
- [V]aluation bases
- Principal’s [O]bjectives for capital
- Normal and adverse [E]nvironments
- Time [H]orizon over which the capital is assessed
- [M]ethods used to aggregate results: including diversification of benefits and interdependence among the risks
- Alignment with any existing risk [A]ppetite and risk tolerance
- Approach used to determine “[S]ufficient” level of capital
- Merits of using a [R]ange for the risk capital targets versus a single number
- Whether the insurer will be able to [A]ccess additional capital if and when needed
- The [R]elationship of risk capital targets or risk capital thresholds relevant to the current capital and risks
HER SAMOVAR
ASOP #55
Conditions that would exclude a member from a disease management program
- End-stage renal disease (ESRD): this condition is excluded because management of the condition may delay cost, but it cannot ultimately reduce or postpone those costs
- Transplants: claims are high up to a period shortly after the transplant, at which point the claims are reduced and stabilized
- HIV, AIDS, mental health: privacy issues make it difficult or impossible for a vendor to receive complete data feeds, or manage the member
- Members who are institutionalized: these members may not be reachable, or may not benefit from disease management interventions
- Members with catastrophic claims: these members are not manageable by the DM program, and are often subject to management by another program
- Members who are eligible for other management programs
Duncan Ch. 12
Common hypotheses for the member selection patterns observed in Medicare Advantage plans vs traditional Medicare FFS
Those enrolling in MA plans have been observed to be materially healthier. Theories:
- Healthy enrollees are less reluctant to change benefit plans, so they are more likely to sign on with MA
- Managed care organizations restrict access to certain network health care providers. Since less healthy Medicare enrollees generally have established provider relationships, they are more reluctant to leave traditional Medicare and risk losing access to their preferred providers
Duncan Ch. 14 (Risk)
Risk identification tools
- SWOT analysis: identifies organization’s:
> Strengths (e.g., market dominance, economies of scale, and effective leadership)
> Weaknesses (e.g., high costs, lack of direction, and financial weaknesses)
> Opportunities (e.g., innovation, additional demand, and cheap funding)
> Threats (e.g., new competitors, price pressure, falling liquidity, and increased regulation) - Risk checklists: lists that are used as a reference for identifying risks in a particular organization or situation
- Risk prompt lists: similar to checklists, but rather than seeking to pre-identify every risk, they simply identify categories of risk that should be considered
- Risk taxonomy: more detailed than a prompt list, containing a description and categorization of all risks that might be faced
- Risk trigger question: lists of situations or areas in an organization that can lead to risk
- Case studies: can suggest specific risks to consider, particularly if there are similarities to the organization in the case study
- Risk-focused process analysis: involves constructing flow charts for every process used by the organization and analyzing the points at which risks can occur
Sweeting Ch. 8
Required documentation related to data quality
- The [S]ource of the data
- Any [L]imitations on the use of the actuarial work product due to uncertainty about data quality
- Whether the actuary [R]eviewed the data, and any limitations due to data that was not reviewed
- A summary of [U]nresolved concerns the actuary may have about questionable data values
- A summary of any significant steps the actuary has taken to [I]mprove the data
- A summary of significant judgmental [A]djustments or assumptions the actuary applied to the data or to the results
- The existence of results that are highly uncertain or potentially [B]iased due to the quality of the data
- The [E]xtent of the actuary’s reliance on data and other information supplied by others
- [D]isclosures in accordance with ASOP #41 if:
> Any material assumption or method was prescribed by law
> The actuary relies on other sources and thereby disclaims responsibility for any material assumption or method
> The actuary has otherwise deviated materially from the guidance of this ASOP
ABSURD LIE
ASOP #23
Other definitions of operational risk
- Crime risk: results from the dishonest behavior of individuals (e.g. internal or external fraud)
- Technology risk: risk of a technology failure, including loss or disclosure of confidential information, data corruption, and computer system failure
- Cyber risk: failure of information technology systems, typically where there is online activity (e.g. theft of client lists)
- Regulatory risk: risk that an org. will be negatively impacted by a change in legislation or regulation, or that it will fail to comply with current legislation or regulation
- People risk
- Legal risk: risk arising from poorly-drafted legal documents
- Model risk: risk that financial models used to assess risk or otherwise help make financial decisions are flawed
- Data risk: risk of using poor data
- Reputational risk: failures related to other risks can lead to a loss of confidence in the organization and a subsequent loss of business
- Project risk: various operational risks in the context of a particular project
- Strategic risk: risk that the organization will not make a conscious decision of what its strategy is and how it intends to implement it.
Sweeting Ch. 7