Commonwealth Care Program Update

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CommonwealthCare Program Update

• December 4, 2007

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Presentation Overview

• Provide background, context and data around MCO
  Bid Specifications

• Divided into two parts
• Begin with a program overview that provides
  insight into our members, with a focus on our
  premium-paying members
• Will then highlight key areas of the bid specs
  for discussion

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I. Program Overview

• Goal is to provide insight into our members
  experience, with a focus on premium-paying
  members
• Focusing on data that is consistent with elements
  of the bid specification
• High-level observations
• Members are engaged and active in the program
• Have both the willingness and ability to pay

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Enrollment to Date
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Enrollment Sources

• CommCare enrollees come from UCP conversions,
  MassHealth, or have not presented previously to a
  state program
• Roughly 1/3rd are from places other than
  MassHealth or the UCP

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Eligibles Employment History

• 60 of those eligible for CommCare are working,
  and do not have access to ESI
• None of these individuals have reported access to
  ESI that meet minimum subsidy levels

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Self-Selection by MCO as of 11/15/07

• Member self-selection continues to grow,
  suggesting that members are tracking the status
  of their application and enrolling in a plan they
  select

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CommCare PCP Visits

• CommCare members are availing themselves of PCP
  services consistent with individuals in
  Commercial plans
• 45 of CommCare members have accessed primary
  care services based on claims paid through
  10/31/07
• Number is likely higher because of
• Claims lag
• Based on individuals with at least 3 months
  continuous enrollment
• Based on 9/1/07 enrollment
• 49 of GIC members had a unique PCP visit in 2006

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Members and HealthCare

• CommCare continues to better the lives of its
  members
• Health Risk Assessments (HRAs) are one tool MCOs
  use to identify members with care needs
• 2980 members with chronic conditions have been
  identified to date, including asthma, diabetes,
  cardio-pulmonary, and behavioral health
• The plans also use pharmacy and claims data to
  further identify members with chronic illness and
  develop care management strategies

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Open Enrollment Update (11/27)

• Open enrollment 11/1/07 12/15/07
• 898 Enrollees have requested a plan change or
  Plan Type change between Plan Type 3 or 4
• Overall Net Effects
• BMCHP net 107 enrollees
• NHP net 86 enrollees
• FCHP net 16 enrollees
• Network Health net loss -209 enrollees
• 60 or 7 of the enrollees in the 898 changed Plan
  Types but remained in the same health plan

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Enrollment in PT 2-4 (100-300 FPL)
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Member Buy-up

• 41 of premium paying members have been buying
  something other than the lowest-cost plan 21
  buy within 5 of lowest plan.

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Pharmacy Copay Caps

• Less than 1 of members in PT 1, PT 2, PT 3 met
  their cap and 4 for PT 4
• Based on 7/07 enrollment of 92,000
• 68 of individuals who met cap did so within 6
  months and 98 in 9 months

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Waivers Related to Premiums/Copayments

• Less than 1 of caseload has applied
• 92 of the 177 waivers requested were approved
• Approval reasons include
• Eviction or foreclosure notice
• Shut Off Notice
• Financial circumstances

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Payment Plans

• Less than 1 (179 ) of premium-paying members
  have requested Payment Plans since program
  inception
• Members can request a 3, 6 or 9 month plan over
  the phone no application is required
• Payment plans are a mechanism by which members
  can prevent disenrollment for failure to pay
  their premium

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Disenrollment for Failure to Pay Premiums

• As of 12/1/07, relatively few CommCare members
  have been disenrolled for failure to pay premiums
• 532 members have been disenrolled since September
• 125 (23) were converted from a non
  premium-paying category, and as such never had to
  pay an initial premium to enroll
• 17 (3) members who were disenrolled have come
  back on to the program
• The vast majority of members respond to the
  notices they receive around potential
  cancellation
• In September only 6 of those originally noticed
  were disenrolled

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II. Review of Bid Specifications

• Purpose of this portion of presentation
• Information sharing of various options for
  consideration in MCO bid specs
• Objective information / data to encourage
  dialogue among board members
• Board to provide staff with guidance for
  development of final bid specs
• To be reviewed at 12/13 board meeting

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Bid Process - Goals

• Maintain cap rate increase for FY09 of less than
  10 for all Plan Types, on a composite basis
• Develop bid structure to allow for more
  aggressive bids across all four MCOs
• Mitigate expected cap rate increase in Plan Types
  III IV due to current risk selection
• Grow enrollment and improve risk selection for
  enrollees between 150.1 to 300 of FPL
• Ensure continued development of strong case
  management and utilization programs
• Simplify plan type choices to meet the needs of
  enrollees
• Strengthen program integrity

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Data caveat

• All data represented in this presentation is
  based on immature CommCare-specific data
• Approximately 8 months for PT I (lt100 FPL) and 5
  months for PT II-IV (100-300 FPL) (lagged 90
  days)
• Although a specific percentage or dollar value
  may be presented, that is for ease of discussion
  only. In actuality, there are a range of
  possible outcomes
• A longer history of actual enrollment and claims
  will be required to narrow the range of cost
  estimates

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Medical Claim Cost - Key metrics

• Key Metrics when considering levers
• increase in FY09 Capitation rate (all Plan
  Types) 14
• Break-down of FY09 rate increase
• Unit cost utilization trend 5
• Initial bidding strategy 3 - 5
• Rebasing of underlying cap 4 - 6
• Certain assumptions were required by the
  Connector Authority to determine percentage
  impact.

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Medical Claims Cost - Data

• Connector analyzed actual claims incurred through
  June 2007, paid through September 2007, and
  projected these costs forward to FY09
• Estimates are preliminary, based on initial
  claims experience, and will be refined as more
  information is available
• Estimates include assumptions for
• Under-reporting of claims, IBNR, population risk
  dynamics, and changes in unit price and
  utilization
• Changes in risk due to the individual mandate and
  the demographic impact of changes to Plan Type
  IIA (elimination of enrollee contribution and
  December Auto-Assignment)

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Discussion of Levers

• This presentation will focus on eight levers that
  present the greatest impact on trend and/or
  represent significant policy options
• If time permits, there are an additional five
  levers identified at end of the presentation
  which will also be presented
• The chart on the following slide focuses on the
  impact of a lever to the cap rate. A full
  discussion of any lever will also include the
  policy implication and impact to members

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Summary of Key Levers
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1. Eliminate auto-assignment

• Elimination of Auto Assignment
• Consideration has been given to eliminating the
  auto-assignment process for Plan Type I and
  requiring that only members who choose an MCO
  will be enrolled
• Auto-assigned enrollees are generally younger and
  healthier than those that exercise choice
• Auto-assignment successfully encouraged two of
  the MCOs to bid substantially below the midpoint
  of the actuarially sound rate range during the
  Year 1 bidding process
• Some bids needed to be raised above the minimum
  rate range
• Removing the auto-assignment algorithm will
  remove one of the incentives for MCOs to bid
  competitively

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1. Eliminate auto-assignment (cont)
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1. Eliminate auto-assignment (cont)
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1. Eliminate auto-assignment (cont)
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2. Provider Reimbursement Rates

• Provider Reimbursement Rates
• Initial development of rate range assumed
  provider rates at some percentage above
  then-current Medicaid levels
• Providers, especially facilities, are continuing
  to put upward pressure on unit cost
• Goal is to reduce the provider unit price in
  program to approximate Medicaid levels
• Actuarially sound rate range for FY09 will be
  developed assuming unit price is less than
  current reimbursement levels

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3. Co-pays

• At present, co-pays for CommCare are generally
  lower than the commercial market
• Aligning co-pays to ensure equity for individuals
  of similar income and with the existing
  commercial market can help reduce the potential
  for crowd-out
• Differences in cost sharing may make ESI less
  attractive relative to CommCare. As the program
  matures, the potential for movement from private
  to public insurance may increase

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3. Co-Pay Comparison (cont)
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3. Co-pay Options PT II (cont)
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3. Co-Pay Options PT III (cont)
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3a. Out-of-Pocket Maximums

• Out-of-Pocket Maximums (OOP Max)
• Current OOP Max is at the service type level
• Members have an OOP Max, but is limited to
  shoebox approach (members keeping receipts)
• This lever would require MCOs to implement system
  changes
• To mitigate impact on member of higher co-pays,
  could include an OOP Maximum
• Connector actuaries have modeled OOP Max at
  different levels
• Will have the effect of increasing the capitation
  rate
• Range is between 0.6 to 2.9

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3a. Out-of-Pocket Maximums (cont)
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3b. Combining Co-pays OOP Max

• The Co-pay and Out-of-Pocket Maximum levers are
  not mutually exclusive
• Both levers can work in concert with each other
  to balance the impact on members of cost sharing

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4. Dental Benefit

• The Connector has been asked to estimate the cost
  of adding a dental benefit to Plan Types other
  than Plan Type I
• Plan Type I includes a dental benefit
• CCA actuaries estimate that the average cost for
  a full dental benefit is approximately 25 to 30
  pmpm.
• Reducing this benefit to preventive services only
  would reduce the cost to approximately 12 to 15
  pmpm.
• Incremental spend - Full Dental benefit 35
  Million (midpt of range)
• Incremental spend - Preventive benefit 17
  Million (midpt of range)

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5. Merging PT III (higher co-pay) IV (lower
co-pay)

• Members between 200-300 of the FPL currently
  have two plan choices, III and IV, which many
  members find difficult and complicates program
  administration
• Having only one plan design for this group would
  simplify choices for enrollees, and could also
  help with the current risk selection challenges
  evident in Plan Type IV
• Preliminary analysis by Connector actuaries
  indicates that blending Plan Types III and IV
  would result in a combined rate that is 2.1 to
  3.1 below what it would be if they remained
  separate
• One MCO may be impacted negatively, due to higher
  than average enrollment in Plan Type IV, but
  Connector should be able to find a way to
  mitigate impact

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5. Merging PT III IV (cont)
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6. Reinsurance PT III IV

• Reinsurance for PT III/IV
• Premium increases needed to cover expected PT
  III/IV costs in FY09 could be significant
• Covering a portion of the cost of claims through
  reinsurance would allow plans to enter more
  competitive bids
• Savings would be offset by reinsurance payments
  program would be targeted to be budget neutral

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7. Risk Adjusted Premiums

• Methodology to adjust MCO payments based on
  actual disease burden of population
• Mitigates financial impact of risk selection
  between plans
• Requires minimum of 12-18 months of robust
  clinical data would likely begin with pilot in
  FY09 to assess financial implications
• Budget neutral to state would adjust relative
  payments between MCOs

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8. Contract Review / Audit

• Connector Authority will include as part of bid
  specs the following (not an all-inclusive list)
• Monitor access to care standards
• Accuracy of claims payment audit
• Review of provider contracts
• Impact of utilization and care management
  programs
• Level of MCO financial and management reporting

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Other Levers

• Program Design
• Expanding Regions for Auto-assignment
• Rx Formulary
• CommonHealth Population
• Tiering of Academic Medical Center Rates
• Rate Structure
• Enrollee Contribution - Cost Differential