ALTCI Actuarial Study

1
ALTCIActuarial Study Final Results

• September 14, 2005

2
Actuarial Study Objectives

• Determine key cost drivers
• Identify financing options that promote the goals
  of ALTCI
• Recommend a Medi-Cal rate structure that will
  best match payment to the risk of the enrolled
  population
• Assess adequacy of Medicare reimbursement for
  ALTCI population

3
Key Considerations

• Individual health plan risk is driven by a number
  of factors, including
• Program design
• Who will be eligible (population subgroups)?
• What services will be covered?
• Integration with Medicare?
• Contracting approach
• Mandatory vs. optional enrollment
• Number of health plans competing
• Operational Issues
• Enrollment and screening/assessment process
• Case management and care coordination
  requirements
• Administrative responsibilities

4
Assumptions

• For our analysis, we assumed
• Mandatory enrollment (for completeness purposes
  only - i.e., so that the entire population would
  be subject to analysis, allowing creation of a
  reimbursement model that would work for a
  voluntary program)
• All adult SPD eligibles (21 and older)
• All services, except specialty mental health,
  dental, and DD waiver services
• ALTCI participating health plans would also have
  to participate in Medicare

5
Whats New from the Previous Presentation?

• Change in population definitions
• Medicare Part B only population included in
  Medi-Cal only population group
• Blended IHSS, MSSP, and Home Care together to
  create a rating category of Community At Risk
• Chronic condition analysis for Medi-Cal community
  population
• Medicare sufficiency analysis

6
Methodology

• Review historical Medi-Cal and Medicare CY1998
  2000 FFS data
• Adjust data to include only populations and
  services expected to be covered under ALTCI
• Project data forward to CY2007 by category of
  service
• Adjust data for significant program changes
  including Medicare Part D

7
CY2000 Medi-Cal DataSan Diego County

• Nursing Home Residents, DD, and At Risk account
  for 28 percent of the total ALTCI membership in
  San Diego, but 74 percent of the total San Diego
  Medi-Cal expenditures

8
San Diego CountyCY2000 Dually Eligible vs.
Medi-Cal Only ABD Membership
Includes recipients with Part B only coverage.
9
San Diego CountyCY2000 Dually Eligible vs.
Medi-Cal Only ABD Medi-Cal Expenditures
Includes recipients with Part B only coverage.
10
San Diego CountyCY2000 Elderly vs. Disabled
Membership
11
San Diego CountyCY2000 Elderly vs. Disabled
Medi-Cal Expenditures
12
Chronic Condition Analysis

• Reviewed 23 chronic disease categories
• Analyzed 3 years of data from CY1998 CY2000 for
  3 counties (Alameda, Contra Costa, and San Diego)
  to enhance credibility
• Separate analysis for Community At Risk and Not
  At Risk
• Reviewed cases with annual Medi-Cal costs in
  excess of 100,000
• Findings show highest cost condition overall for
  Medi-Cal is ventilator dependents
• Of the cases in excess of 100,000 annually, 20
  were ventilator dependent
• Recommendation is to consider a separate risk
  adjustor for ventilator dependents in the
  community

13
San Diego CountyCY2000 Medi-Cal ALTCI PMPM Costs
Includes Part B only recipients.
14
San Diego CountyDually Eligible vs. Medi-Cal
Only CY2000 PMPM ALTCI Medi-Cal and Medicare
Costs
15
Medicare Sufficiency Analysis

• Used base data (1999 and 2000) to calculate
  estimated Medicare reimbursement for 2000
• Utilized 2005 Medicare Reimbursement Rules
• Compared estimated Medicare reimbursement to
  actual Medicare FFS costs for 2000
• Reviewed by population subgroup

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Medicare Sufficiency Findings

• In 2000, Medicare reimbursement would have been
  sufficient for the ALTCI population in total
  (across all population subgroups)
• Sufficiency of Medicare reimbursement is highly
  variable by population subgroup
• See details on the next slide

17
San Diego CountyCY2000 ALTCI Medicare Sufficiency
Includes only recipients with both Part A and B
coverage.
18
Medicare SufficiencyOther Points

• Need to update the analysis
• Because Medicare beneficiaries would not be
  forced to select an ALTCI Plan, the mix of the
  population that chooses is important
• Medicare still working on a frailty adjuster for
  non-PACE plans. This will not be implemented
  before 2007

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ResultsKey Medi-Cal Cost Drivers

• Identified 10 key rating categories
• Setting Nursing Home vs. Community
• Frailty Nursing Home Certifiable/At Risk vs.
  Not At Risk and DD
• Medicare Status Dually Eligible vs. Medi-Cal
  Only
• Category of Assistance Aged vs. Disabled
• Chronic High Risk Conditions Ventilator
  Dependents

20
Recommendations

• Reimbursement needs to be sufficiently
  sophisticated to promote program goals
• Utilize multiple capitation risk groupings
• Include some risk adjustment mechanism
• Incentives should be included to promote
  increased community based services
• Savings achievable through more appropriate use
  of hospital, emergency room and nursing home
  services

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Recommendations (continued)

• Administrative costs should be reflected in rates
  with sufficient consideration of start up costs
• Increased care management should be supported and
  funded
• Implement early reinsurance or risk sharing
• Capitated model should allow for flexibility of
  both Medi-Cal and Medicare funding sources
• Reimbursement mechanisms should continue to be
  refined as the program matures