1999 cas seminar on health and managed care health care provider excess insurance
DESCRIPTION
This presentation will probably involve audience discussion, which will create action items. Use PowerPoint to keep track of these action items during your presentation In Slide Show, click on the right mouse button Select “Meeting Minder” Select the “Action Items” tab - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/1.jpg)
1999 CAS SEMINAR ON HEALTH AND MANAGED CARE
Health Care Provider Excess Insurance
Prepared By:
Milliman & Robertson, Inc.
Arthur L. Wilmes, FSA, MAAA
![Page 2: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/2.jpg)
Prospective Trends in Healthcare
• Healthcare Providers Need to Consider Strategies That Increase Efficiency
• Forces in the Healthcare Market Will Make It Very Difficult for Status Quo Providers to Compete Effectively
• Healthcare Providers Will Need to Develop Their Patient Management Processes as if They Are Being Paid Under Capitation
![Page 3: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/3.jpg)
Health Care Delivery Systems
• Independent Practice Associations (IPAs)• Physician Practice Management Companies
(PPMCs)• Group Practice Without Walls• Medical Group Practice• Physician Hospital Organizations (PHOs)• Medical Service Organization (MSOs)• Foundation Model
![Page 4: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/4.jpg)
Independent Practice Associations• Umbrella Contracting Entity for Multi-Specialty or
Single Specialty Physicians
• Individual Physicians Reimbursed by the IPA
• Composed of Independent Physicians With Only Central Contracting Being Common
• Not Necessarily a Lean Mean Fighting Machine
• Some States will Regulate Like MCOs
![Page 5: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/5.jpg)
Physician Practice Management Companies
• Tend to Be Venture Capitalized Public Companies
• Last Two Years Have Not Been Kind to PPMCs
• Continue to Be a Force in Healthcare Market
• Approximately 27 Publicly Traded PPMCs
• Combined Equity Value Declined 49.3% During 1998
• Several High Profile Collapses
![Page 6: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/6.jpg)
PPMCs Have Experienced Some Recent Equity Improvement
• At the End of 1998, the Aggregate Stock Value of PPMCs is Up 12.8% Over the Last Six Months of 1998.
• S&P Rose 7.5% During the Same Period.
• Total Capitalization of PPMCs was Estimated at Approximately $4.8 Billion.
• Some of the Largest PPMCs Continue to Have Difficulties.
– Medpartners
– FPA Medical Management
![Page 7: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/7.jpg)
Group Practice Without Walls
• Independent Physicians That Aggregate Their Practices Into a Single Legal Entity
• Legal Merging of All Assets of the Individual Physicians
• Individual Physician Incomes are Affected by the Performance of the GPWW as a Whole
• Independent Nature of Practices Within GPWW Means Independent Action
• Difficult to Align Incentives
• Weak Capitalization
![Page 8: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/8.jpg)
Medical Group Practice Model
• Like the GPWW, but Physicians Become a Fully Integrated Medical Group
• No Multi-Site Independent Practice Groups• Tends to be More Integrated Than a GPWW• Be Wary of Top Heavy Groups
![Page 9: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/9.jpg)
Physician Hospital Organizations
• Joint Hospital and Physician Entity That is Primarily a Negotiating Vehicle
• Integration Tends to Be Weak
• Trial Courtship Before a Serious Relationship
• Open vs. Closed PHOs
• MCOs tend to View PHOs as Ugly Cousins
![Page 10: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/10.jpg)
Medical Service Organizations
• Service Bureau and Contracting Entity for Physicians
• Physicians Remain in Independent Practice
• MSO may purchase all or Some of the Physician’s Assets
• Also Viewed as an Ugly Cousin by MCOs
• Purpose Tends to Be Centralized Common Services
![Page 11: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/11.jpg)
Foundation Model
• Generally Created as a Not-For-Profit Organization Which Purchases Physician’s Practices
• Must Provide a Substantial Community Value/Benefit
• Not Generally Formed With an Eye Towards Planned Resources
• Loose Control Over Physician Behavior
![Page 12: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/12.jpg)
Physician Compensation
• Fee-For-Service• Capitation• Withholds and Risk/Bonus Provisions• Carve-Outs• PCP vs. Specialist vs. Hospital• Individual vs. Pooled Risk• Affecting Physician Behavior
– Product
![Page 13: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/13.jpg)
Reimbursement is Key Underwriting Factor
• Usual and Customary Fees• FFS and Discounts• Relative Value Schedules (RVS)• Capitation• Diagnosis-Related Groups (DRGs)• Per Diems (With and Without Outliers)• Case Rates• Ambulatory Patient Groups (APGs)
![Page 14: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/14.jpg)
Example of Effect of Reimbursement on CPDs
• Prudential• The Travelers• NYL Care
![Page 15: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/15.jpg)
Example of Effect of Reimbursement on CPDs
• Prudential• The Travelers• NYL Care
![Page 16: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/16.jpg)
Case Study - Scope of Engagement
• Feasibility of Offering Stop-Loss Coverage to PCPs for Institutional Services
• 12 PCP Care Councils (Practice Groups)
• $100,000 Excess Maintained by MGA
• Care Councils Going to Full Risk, Want Lower Excess Limits
![Page 17: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/17.jpg)
Historic Costs and Variability
![Page 18: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/18.jpg)
Developing a Claims Probability Distribution
• Combined Individual Distributions of Historic Claims
• Trended Historic Costs by Assumed Incurred Trend
• Assumed a Piece-Wise Lognormal Distribution Developed by Minimum Distance Method
![Page 19: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/19.jpg)
Empirical vs. Lognormal Distribution
![Page 20: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/20.jpg)
Effect of Age and Gender
![Page 21: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/21.jpg)
Effect of Group Size and Confidence Intervals
![Page 22: 1999 CAS SEMINAR ON HEALTH AND MANAGED CARE Health Care Provider Excess Insurance](https://reader035.vdocument.in/reader035/viewer/2022081520/568154a7550346895dc2b57b/html5/thumbnails/22.jpg)
Putting it All Together