In a normal year, a major medical plan may be able to determine it's current status to budget with a few common tools or calculations such as an Incurred But Not Paid (IBNP) calculation. However given the disruption to the health care system determining the current profitability of a plan may be difficult to determine.
This page is designed to be a collaborative guide to helping health plans and others at risk for major medical insurance to accurately project the current and future state of the plan.
-
COVID-19 case count
Do you have an accurate data on high cost COVID-19 cases? Do you have any initial estimates from severity such as a utilization review system?
-
Elective case count
Do you have an estimates on the fall in elective procedures such as data from a prior authorization system?
-
Prescription Duration Adjustments
For plans that include pharmacy have you seen prescription durations increase potentially creating more "seasonality" in your pharmacy claims, e.g. March high, April and May low, another bump in June, due to a large number of 90 day fills in March?
Determining future care liabilities in many cases will depend on estimates of avoided vs deferred care. This section lists some items to consider during scenario development for future liabilities. Additional data including likely impact's across service types can be found at the Society of Actuaries Impact of COVID-19 on Deferred Medical Costs and Future Pent-Up Demand Research Brief.
-
Provider capacity
Once "normal" returns to a geography, what is your estimate that the health system future non-COVID-19 capacity? Do you need to model both increases above a "normal baseline" estimate for providers having spare capacity and impairments due to ongoing COVID-19 related care.
-
COVID-19 Related Care
Do you need to estimate future COVID-19 related care? Is that estimate consistent with the non-COVID-19 related capacity. Are you modeling these expenses as more of a steady state or do you include the possibility of a second wave?
-
Market mix
Based on the overall capacity of the geography what do you think future market mix for the health system will be? Will certain segments be depressed either by patient choice, commercial members returning to the health system before Medicare members? Or by provider choice, early outreach, preferential scheduling of commercial members before Medicare/Medicaid members?
-
Chronic Severity
Have physical distance measures resulting in a worsening of health for members with chronic conditions? Does this impact future claims?
-
Contract Continuation
Some states are requiring continuation of the policies during the COVID-19 pandemic. While these premiums are earned, given economic disruptions, this may lead to a higher than normal allowance for bad debt while claim costs may or may not be smaller.
-
2021 Rate Review
As the rate review process continues for 2021, what are assumptions/scenarios that would cause a plan to generate a PDR? Can you model these to generate early operational indicators that a PDR is needed?
-
Current Year Risk Reserve
Based on current projections you may need to adjust reserves for risk-based provider contracts. These contracts may or may not be positive in the plan's favor based on the local geography's exposure to COVID-19.
-
Current Year Measurement Adjustments (Risk/Quality)
Based on the disruption of the health system, do you need to proactively adjust a provider quality metrics. For example, if you require two measurements per year of HbA1c for patients witt diabetes, is that measure still appropriate? If your provider quality measurement year runs from July to July, do you need to make adjustments based on an inability for patients/providers to receive/perform services?
-
Prior Year Reporting Adjustments (Risk/Quality)
Do you need to adjust the receipt of any prior year reporting based on provider operational disruptions?
-
Future Year Contract Provisions
Based on this year's disruption of the health system should you begin to work with a provider group to alter the impact of this year on future years contract? Will this year lead to an abnormally high or low baseline year that can/should be avoided?
-
Review of Incurred Claims
An overall lower claim projection for the year may result in a rebate back to members based on the medical loss ratio. Do you have enough information to start projecting this rebate if applicable?
-
Provision of Bad Debt
Note that based on your state regulations, there may be an abnormal number of months in which members are covered but for which you cannot collect premiums which is an adjustment to the MLR.
-
Priority Evaluation and Management (E&M) Visits
Given the anticipated bottle necks in care delivery at the end of the year, can you start scheduling with known high risk score members who do not have an E&M visit to guarantee a recorded score? Do you need to reach out to some members with chronic conditions now to ensure that they have a covered E&M visit in case they do not continue with your plan after the epidemic.
This document is not intended to be an actuarial communication or express an actuarial opinion. It is provided to encourage discussion and offer additional viewpoints on the current situation. No action should be taken without appropriate actuarial review.