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  #1  
Old 02-21-2019, 05:10 AM
juandeoyar juandeoyar is offline
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Default MA Risk adjustment

Hi,

I've read an article about MA Risk Scores of Corey Berger, Health Watch magazine (October 2018). While talking about the background he said that more than 80% of the revenue is risk-adjusted in a retrospective way. So every MA beneficiary is scored by demographic factors and hierarchical condition categories (diagnosis based from last year claims). I just want to ask the following:
Does this regulation vary from state to state? How often are these relativities adjusted and how are they calculated (if it is public)? What's the margin that actuaries have in ratemaking for these risk-adjusted benefits?
I just want a brief guide that help me to go deep on this topic, such as CMS reports or something that MA actuaries follow day to day.

Thank you!

Last edited by juandeoyar; 02-21-2019 at 05:46 AM..
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  #2  
Old 02-21-2019, 09:21 AM
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packman packman is offline
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Does this regulation vary from state to state? -- No. Same for all.

How often are these relativities adjusted and how are they calculated (if it is public)? -- Sometimes every year. Sometimes every two or three years. Sometimes blended models in one year (like now). And yes, they are all public available.

What's the margin that actuaries have in ratemaking for these risk-adjusted benefits? Not sure what you were asking for exactly.

Quote:
Originally Posted by juandeoyar View Post
Hi,

I've read an article about MA Risk Scores of Corey Berger, Health Watch magazine (October 2018). While talking about the background he said that more than 80% of the revenue is risk-adjusted in a retrospective way. So every MA beneficiary is scored by demographic factors and hierarchical condition categories (diagnosis based from last year claims). I just want to ask the following:
Does this regulation vary from state to state? How often are these relativities adjusted and how are they calculated (if it is public)? What's the margin that actuaries have in ratemaking for these risk-adjusted benefits?
I just want a brief guide that help me to go deep on this topic, such as CMS reports or something that MA actuaries follow day to day.

Thank you!
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  #3  
Old 02-21-2019, 09:29 AM
juandeoyar juandeoyar is offline
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Default

Quote:
Originally Posted by packman View Post
Does this regulation vary from state to state? -- No. Same for all.

How often are these relativities adjusted and how are they calculated (if it is public)? -- Sometimes every year. Sometimes every two or three years. Sometimes blended models in one year (like now). And yes, they are all public available.

What's the margin that actuaries have in ratemaking for these risk-adjusted benefits? Not sure what you were asking for exactly.
In the last question I meant how much the actuaries can deviate from the regulated rate structure, or is it completely independent (retrospective revenue and underwriting)?

Thank you.
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Old 02-21-2019, 09:39 AM
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packman packman is offline
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Risk-adjusted part of the revenues are paid according to actual enrolled members' risk scores, not according to what you predict.

That been said, CMS has a preferred risk score projection method (and an alternative one as well). Assumptions for risk score projection are under reviewers' scrutiny. A/E ratio is expected to be within 5% range.



Quote:
Originally Posted by juandeoyar View Post
In the last question I meant how much the actuaries can deviate from the regulated rate structure, or is it completely independent (retrospective revenue and underwriting)?

Thank you.
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  #5  
Old 02-21-2019, 10:38 AM
WhosOnFirst WhosOnFirst is offline
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Quote:
Originally Posted by juandeoyar View Post
Hi,

I've read an article about MA Risk Scores of Corey Berger, Health Watch magazine (October 2018). While talking about the background he said that more than 80% of the revenue is risk-adjusted in a retrospective way. So every MA beneficiary is scored by demographic factors and hierarchical condition categories (diagnosis based from last year claims). I just want to ask the following:
Does this regulation vary from state to state? How often are these relativities adjusted and how are they calculated (if it is public)? What's the margin that actuaries have in ratemaking for these risk-adjusted benefits?
I just want a brief guide that help me to go deep on this topic, such as CMS reports or something that MA actuaries follow day to day.

Thank you!
When you say MA, do you mean Medicare Advantage or do you mean Massachusetts?
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  #6  
Old 02-21-2019, 10:51 AM
juandeoyar juandeoyar is offline
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Medicare
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  #7  
Old 02-22-2019, 04:50 AM
juandeoyar juandeoyar is offline
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Quote:
Originally Posted by packman View Post
Risk-adjusted part of the revenues are paid according to actual enrolled members' risk scores, not according to what you predict.

That been said, CMS has a preferred risk score projection method (and an alternative one as well). Assumptions for risk score projection are under reviewers' scrutiny. A/E ratio is expected to be within 5% range.
Does the regulator allow risk score projections based on machine learning algorithms?

Last edited by juandeoyar; 02-22-2019 at 06:08 AM..
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  #8  
Old 02-25-2019, 07:17 AM
juandeoyar juandeoyar is offline
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I'll update this post after I read one article of Milliman actuaries called "Regulatory Oversight in Medicare Advantage".
Medicare Advantage Organizations must submit every year a bid with the actuarial projections for each proposed plan (prospective way) and, after a comparison with the benchmarks, the member premium is determined. CMS is in charge of analyzing the adopted methodologies and data. In the other side, a retrospective risk adjustment methodology is used to reconcilie actual members' utilization costs.
Therefore, the actuarial projections will affect the member premium and the amount used for supplemental benefits. The margin of action that actuaries have on pricing will be conditioned by the benchmarks calculated by CMS, capped profit margins, cost sharing limits, etc..
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