actuarial overview of premium rate development presented by susan e. pantely, fsa, maaa milliman,...
TRANSCRIPT
Actuarial Overview of Premium Rate Development
Presented bySusan E. Pantely, FSA, MAAAMilliman, Inc.San Francisco, CA
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Step 1: Project Experience to Future
January 2010 – December 2010 July 2011 – June 2012
Typically, estimating costs 18 months or more in future
July 2010 January 2012
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Step 2: Summarize Current Experience
Savvy plans will engage ACO-providers in marketing/sales efforts
PMPM Claim Cost = Utilization x Cost / 12,000Example: 56 x $4,815 = $22.51
BenefitUtilization Per
1,000
Allowed Average Charge
Per Member Per Month Claim Cost
Inpatient Facility Medical 56 days $4,815 $22.51 Medical - Other Newborn 15 days $4,446 5.50 Surgical 50 days $4,830 20.11 Psychiatric 12 days $1,229 1.27 Alcohol & Drug Abuse 7 days $1,229 0.67 Maternity 24 days $4,446 8.76 Skilled Nursing Facility 19 days $1,338 2.07
182 days $60.89
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Trend Considerations
Utilization
Historical Experience
New Practice Patterns
Changes in Benefits
Changes in Demographics
Selection
Introduction of New Technology or Drugs
Underlying Population Health Status (e.g. increasing # of diabetics)
Average Cost
Historical Experience
Provider Contracting Info
New Technology
Intensity (e.g. shift to more expensive procedures)
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Step 3: Final Rates
Final rates = Projected Cost of Claims (Step 2) + Administrative Costs + Future Targeted Profit
Actuaries develop rates, not rate increases
Rate development does NOT include recovering prior losses
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Individual Market: Impact of Selection
$0 $1,000 $30,000
Average Member Cost = $5,548
Average Member Cost = $6,238 (14% increase)
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Effective January 2011, Male and Female Premium Rates Must be Identical in CA This will cause significant variation in rate increases. Example
based on age 25-29 claim costs. This example does not consider males dropping coverage, which is possible.
Female: $410
Male: $152
Unisex: $281