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Preliminary Response to Memorandum from Administration
From: Joint Fiscal and Leg Council
Date: February 22, 2006
Re: H.861
– Response to Feb 21, 2006 BISHCA Memo regarding Demographic, Actuarial and
Financial Information Needed
Below is the list of questions from the BISHCA memo as
well as our preliminary answers.
Catamount Health costs:
- How were the per member costs of Catamount Health
calculated? Was an appropriate claims base used? Was the claims base
properly adjusted for differences in benefits, eligibility,
demographics, and provider reimbursement?
- Dr. Thorpe took the state employee point of service
plan and adjusted it for:
·
Catamount Health reimbursement level of Medicare plus ten
percent
·
the differences in demographics of the uninsured target group
- What administrative costs have been included?
- By building it off the state employee plan,
comparable administrative costs are included. The administrative costs
of the state plan reflect three different programs rather than the one
proposed with Catamount which should offset other differences in
administrative costs. An additional 1% was added to the state employee
plan assumption of 4% administrative costs.
- What is the assumption for medical inflation?
- There is an 8.5% inflation assumption.
- What are the age, gender, single/family composition,
adult/child composition, and household income assumptions?
- The underlying model Dr. Thorpe uses incorporates this
information. We did not do an analysis at that level of detail.
- We would look to do one as soon as BISCHA’s new Vermont
Health insurance survey is released – the survey may have impacts on
everyone’s plans
- What cost sharing (copayments, coinsurance, and
deductibles) is assumed?
- The model is built on the state employee point of
service plan with similar aggregate cost sharing
- Why do the PMPY costs fluctuate between 2008, 2009, and
2010?
- Because Dr. Thorpe’s model assumes that the first enrollees
will be the sickest of the pool
- How were these cost fluctuations calculated?
- They were calculated by starting from a baseline and
adjusting for selection expectations plus inflation
- Why are the PMPY costs assumed in the 2-15 “balance
sheet different from the costs assumed in the 2-10 “balance sheet”?
- The premium structure and benefit package changed.
The plan was coupled to a different state employee benefit plan option
- How were adoption rates
calculated?
- This is Dr. Thorpe’s
expertise. He based his work on a Congressional Budget Office and Joint
Committee on Taxation study and other studies which were used to build
the model.
Catamount Health premiums:
- Premium contributions for Catamount Health assume 30%
average individual contribution to premium in 2008, 34% in 2009, and 34%
in 2010. How realistic are the enrollment projections given these high
levels of individual premium contribution?
a
The participation rate assumptions are 1/3 to ½ lower than the ones
the administration is using. The administration is assuming 56%
participation Dr. Thorpe’s assumption is 30%. Also, this question is
looking at average premiums and not the sliding scale. Dr. Thorpe’s analysis
is based on national studies and trend analysis mentioned above.
- How many individuals are assumed to be in each income
group?
a
This information has been given to the committee during testimony
and will be forward to the administration – Note the categories are small so
there is considerable movement within them.
- Does the legislative plan assume any enrollment without
a subsidy in the over 350% of FPL group? If the over 350% FPL group
does not enroll in significant numbers, how much additional funding will
be needed to support subsidies for the under 350% FPL group?
a
Yes, assumptions are made that this group will enroll. There is
no internal subsidy assumed
- Even in the subsidized groups, premiums range from 16%
to 55%. How realistic is it that low to moderate-income individuals,
many of whom have rejected their employer’s offer of insurance, will
enroll in Catamount Health at these premium contribution levels?
a
Repeat of earlier questions. The analysis is based on national
analysis of price sensitivity and is less aggressive than the
administration’s participation rate assumptions
- What are the assumptions and
modeling for enrollment projections, given these premium levels?
a
Repeat of earlier question – Se Dr. Thorpe’s Overview of Catamount
Health.
Reinsurance:
- What type of reinsurance is contemplated?
- It is anticipated 75/25 above $30,000 (Reinsurer
pays 75% above $30,000)
- How would this type of reinsurance transfer public,
taxpayer risk and ongoing liability to the private market?
- The way insurance works normally, Catamount pays a
premium in exchange for the insurance company bearing this risk.
- Is the public agency still ultimately responsible for
the payment of claims?
- Yes. The public entity remains liable - that the
reason for reinsurance.
- How were the costs of reinsurance estimated?
- They are based on 10% of claims costs with a 10%
administrative fee
- Are these estimates reasonable?
- Yes, although they are estimates and may be
low given the lack of experience with the program
- When will the actual
reinsurance program and cost estimates be disclosed?
- The bill is permissive
about reinsurance. We disclosed them above.
Medicaid enrollment:
- When would each of the Medicaid program changes being?
a
See generally, H.861 Secs. 22(a) for effective dates &
implementation.
b
Medicaid reimbursement changes – July 1, 2006 (Sec. 8, 21(a) & 22(a))
c
The premium changes are July 1, 2007 (Sec. 10, 11 & 22(a))
d
Chronic care RFP no later than January 1, 2007 (Sec. 5 & 22(a))
e
AHS chronic care plan by January 1, 2007 (Sec. 6)
- How were per member costs for new enrollment in Medicaid
calculated? Were all Medicaid population categories included, or just
VHAP? Was an appropriate claims base used? Was the claims base
properly adjusted for differences in benefits, eligibility,
demographics, and provider reimbursement?
a
No adjustment for provider reimbursement for traditional Medicaid
beyond the proposal built in to the balance sheet.
- What administrative costs have been included?
a
Dr. Thorpe included 5% of the program costs for administration.
The administration did a similar proposal in Medicaid with no administrative
costs other $110,000 for marketing. The administration has no claims costs in
their proposal.
- What is the assumption for medical inflation?
a
6% percent for the new Medicaid enrollees based on discussions
with OVHA.
- What are the age, gender, single/family composition,
adult/child composition, and household income assumptions?
a
Model built on average per member per month. Dr. Thorpe could
go through the details if necessary
- How were adoption rates calculated?
a
See questions above
- Why do the PMPY costs
fluctuate so much between 2008, 2009 and 2010? Why are these numbers so
different from the PMPY costs assumed on the 2-10 “balance sheet?
a
See questions above – (selection, timing of those who don’t
have insurance coming in)
Medicaid premium reductions and other program changes:
- How large is the reduction from current levels, and from
current revenue?
a. 35% in VHAP; 50% in Dr.
Dino. Also see revenue on balance sheet
- How would the reductions be allocated across the
Medicaid populations?
a. See
related charts (Premium Comparison Chart)
b. See
H.861, Sec. 10 & 11
- What is the cost impact of implementing “presumptive
eligibility”?
a. It
is not in the bill we are not sure what you are referring to exactly.
- What other Medicaid program changes, if any, are
assumed?
a. Changes
in chronic care management based on the governor’s model, and OVHA
initiatives.
- What modeling was done to translate these program
changes into projections of the number of new Medicaid beneficiaries?
a. With
the exception of the changes in premium there are no program changes likely
to effect enrollment
Chronic care:
- How were the chronic care cost savings numbers
calculated?
- In consultation with OVHA, the literature and Dr.
Thorpe’s experience in this field. Dr. Thorpe has used his experience
with well designed programs in other states and targets 5% savings over
time.
- What information exists on the baseline of chronic
conditions for Medicaid populations, how these populations are treated
currently, and the cost of their treatment?
- OVHA testified to House Health Care on this issue
and would be a proper source on this question.
- How reliable are the financial projections of cost
savings?
- We think they are conservative but they are
projections and as such are subject to change.
- How realistic is it that $10 million in savings will be
achieved in the second year of the program?
- In part those savings are based on OVHA’s 1%
initiative. It is an estimate based on $300 million of spending so it
would require a 3% overall cost reduction in the second year or the
program’s first year.
- Are the savings net of administrative costs of
administering the chronic care management program? What are the
estimated administrative costs of the program?
- The savings are net of
administrative costs
- What are the per member
costs of the health risk assessment? Where have the costs of the health
risk assessment, and treatment associated with the health risk
assessment, been included in the costs of Catamount Health, and the
costs of Medicaid?
- It is built into the
premium structure of the CIGNA plan. We will do it differently but it
is covered under state employee plan
Medicaid funding of Blueprint costs:
- Is it reasonable to assume that Medicaid’s share of
Blueprint should be 38% of the total Blueprint costs.
a
It is a consensus number developed during the design of global
commitment and comes from the Administration list of MCO
investments
- What percent of health care costs are attributable to
Medicaid? Under 30%?
a
This number is based on % pop on Medicaid, underinsured or
uninsured as allowed under the waiver
- What proportion of the
insured population is enrolled in an OVHA comprehensive program? Under
20%?
a
Do not understand the question
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