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  #21  
Old 06-19-2008, 08:26 AM
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Originally Posted by regan842967 View Post
Did you end up figuring this out? I match your answers pretty closely if I only use data in the project pdf/spreadsheet, with a final blended pmpm of $212.49. But it seems like everybody else in this thread used the $256.90 manual premium pmpm on tab 13 of the pdf on slide 35 of the pricing section. Using this premium I end up with a manual pmpm of $201.25 and a blended pmpm of $213.19.

I don't see anything in the project that says to use the data in the case study, so I think that your method is probably more correct. However, I also don't see anything in the project that says the high option pmpm is based on 2005 data. There is no given manual claim trend, nor does it say anywhere that this cost model is based on 2004 data, so I think it's safe to assume this manual premium applies for 2005, but it's probably worth mentioning in the report.

It probably doesn't matter too much which manual pmpm you use as long as you mention it in the write up, I guess.
I didn't figure it out, but I think my way is correct so I went with it. Even if I did use the Manual Rate from the Case Study, I wouldn't know how to properly adjust the utilization/cost-sharing. On the other hand, I can easily adjust the utilization/cost-sharing from the P0012 Plan.
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  #22  
Old 12-29-2008, 01:04 PM
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Originally Posted by GraffixMan View Post
Can someone help me get on the right track here?

1) The manual PMPM for the Standard Plan (P0002) = $211.98
2) I copied the cost model and adjusted co-pay/utilization to match the group's 2004 plan. PMPM = $197.87. Benefit Factor = $197.87 / $211.98 = 0.9334
3) I copied the cost model and adjusted co-pay/utilization to match the group's 2005 plan. PMPM = $174.79. Benefit Factor = $174.79 / $211.98 = 0.8246
4) The Benefit Factor from 2004 plan to 2005 plan = (0.8912 / 0.9312) = 0.8834
5) I apply this factor to the group's 2004 PMPM. $186.23 * 0.8834 = $164.51
6) I trend this 11% to get the Credible PMPM. $164.51 * 1.11 = $182.60
7) I apply the loss ratio to get Experience PMPM. $182.60 / 0.85 = $214.89
8) I grab the manual PMPM for the 2005 plan from step #3. PMPM = $174.79
9) I apply the size factor. $174.79 * 0.95 = $166.05
10) I appy the loss ratio to get Manual PMPM. $166.05 / 0.85 = $195.35
11) I apply the credibility factor to get Final PMPM. 0.88*$214.89 + 0.12*$216.85 = $212.55

Too bad I don't match anyone else's answers. Help....Please


EDIT:
Sweet Pea, thanks for the help! I updated my flow. AM I getting closer? According to Willi and Mike's numbers....my Exp. PMPM is correct, but my Manual PMPM is $6 off
I don't understand your step #10. If 166.05 is the manual premium adjusted for size, why is it being divided by the loss ratio to get the manual premium? The template from the module examples doesn't seem to have this step in it.
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  #23  
Old 12-30-2008, 03:45 PM
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166.05 isn't the manual premium, it's the claims cost.
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  #24  
Old 12-31-2008, 09:39 AM
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OK - then I still don't understand step #10. If 166.05 is the Manual PMPM adjusted for size, why is it being divided by the loss ratio to get the Manual PMPM? The template from the module examples doesn't seem to have this step in it.
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  #25  
Old 01-29-2009, 01:53 PM
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OK - then I still don't understand step #10. If 166.05 is the Manual PMPM adjusted for size, why is it being divided by the loss ratio to get the Manual PMPM? The template from the module examples doesn't seem to have this step in it.
Sorry I'm a bit late to answer. The Exercise asks to quote Premiums rates.


The calculations I did are (Claims PMPM) / (Loss Ratio) = Premium PMPM

$166 is the Manual Claims PMPM. $195 is the Manual Premium PMPM
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  #26  
Old 06-15-2009, 09:01 AM
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So I think I agree with the outline above, but I still have a few questions. I apologize if these have been asked before, but:

1. Where in the module does it say that the cost model is for 2005? If it's for 2004 then the $174 number for the manual claims PMPM needs a trend adjustment as well, yes? If this is the case then it looks like we can use a manual rating trend of 11% from the module section on pricing manual rates....
2. Why do we think they gave us the benefit indices on the tab that also includes the group size adjustments?
3. Where's the admin in the premium rate? Shouldn't this be included as well? It seems like their sentence abous using any necessary module data would be a pretty sneaky way of telling us to use the admin rates from the module...

Please let me know what you think. I have written everything out but after some more review came up with those questions and they are holding me back from submitting. Thanks!

Last edited by Mason; 06-15-2009 at 09:09 AM..
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  #27  
Old 06-15-2009, 11:14 AM
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Originally Posted by Mason View Post
So I think I agree with the outline above, but I still have a few questions. I apologize if these have been asked before, but:

1. Where in the module does it say that the cost model is for 2005? If it's for 2004 then the $174 number for the manual claims PMPM needs a trend adjustment as well, yes? If this is the case then it looks like we can use a manual rating trend of 11% from the module section on pricing manual rates....
2. Why do we think they gave us the benefit indices on the tab that also includes the group size adjustments?
3. Where's the admin in the premium rate? Shouldn't this be included as well? It seems like their sentence abous using any necessary module data would be a pretty sneaky way of telling us to use the admin rates from the module...

Please let me know what you think. I have written everything out but after some more review came up with those questions and they are holding me back from submitting. Thanks!
I would state your assumptions and submit. I don't think any of these would sink your ship.

(2) These may be unnecessary. A good pricing project would include lots of unncessary elements you should ignore. Much like real life. Or there may be more than one way to skin a cat when calculating rate adjustments.
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  #28  
Old 06-16-2009, 10:04 AM
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Originally Posted by Mason View Post
So I think I agree with the outline above, but I still have a few questions. I apologize if these have been asked before, but:

1. Where in the module does it say that the cost model is for 2005? If it's for 2004 then the $174 number for the manual claims PMPM needs a trend adjustment as well, yes? If this is the case then it looks like we can use a manual rating trend of 11% from the module section on pricing manual rates....
2. Why do we think they gave us the benefit indices on the tab that also includes the group size adjustments?
3. Where's the admin in the premium rate? Shouldn't this be included as well? It seems like their sentence abous using any necessary module data would be a pretty sneaky way of telling us to use the admin rates from the module.
1. It doesn't say it but you're doing the pricing for 2005 and they had a prior carrier in 2004. I think it's safe to assume that it's 2005.
2. Not sure why being on the same tab is a concern as they're both adjustment factors. They could've easily been copied from the same section of their rate manual.
3. They give the target loss ratio. Why is admin needed?
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  #29  
Old 06-16-2009, 03:01 PM
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1. Not sure about this one, I think I'm going to just state what I assumed in the write-up.
2. Yeah, doesn't seem like anyone else used these either.
3. If you take their Cx PMPM and tack on an additional $20 for admin in 2005, then you need more premium to get to your target loss ratio. That's why admin is an issue here. Regardless, I'm leaving it out and saying that it's left out in my write-up.
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  #30  
Old 07-26-2009, 09:34 PM
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Quote:
Originally Posted by Mason View Post
So I think I agree with the outline above, but I still have a few questions. I apologize if these have been asked before, but:

1. Where in the module does it say that the cost model is for 2005? If it's for 2004 then the $174 number for the manual claims PMPM needs a trend adjustment as well, yes? If this is the case then it looks like we can use a manual rating trend of 11% from the module section on pricing manual rates....
2. Why do we think they gave us the benefit indices on the tab that also includes the group size adjustments?
3. Where's the admin in the premium rate? Shouldn't this be included as well? It seems like their sentence abous using any necessary module data would be a pretty sneaky way of telling us to use the admin rates from the module...

Please let me know what you think. I have written everything out but after some more review came up with those questions and they are holding me back from submitting. Thanks!
#1) I just assumed that the pricing model included in the exercise was already for 2005, and has already been adjusted to reflect the group's age-gender factors. I put it at the top of the page in a bright yellow box with bright red letters

#2) It appears that they grabbed the tab out of the case study exercise in the model. I figured they just didn't bother to remove the unnecessary info.

#3) Generally, the admin will be inherent in the loss ratio. They've got some confusing terminology in this module, but I've assumed that their 85% LR is specifically a medical loss ratio - in which case the admin is already implicit in it.
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