Medical Trend Flashcards
Medical Cost Trend
Purpose of Trend Analytics
- Reveal insights into current benefit and rate structure and identify emerging areas of concern
- Assist in setting future premium rates and budgets
Medical Cost Trend
3 Key Purposes for Medical Cost Trend
- Financial reporting
- Pricing
- Experience analysis
Medical Cost Trend
Financial Reporting (Purpose and Incurred Claims Formula)
- Determine financial performance during given period
- IC = Net Paid Claims + Reserves End of Year - Reserves Beg. of Year
Medical Cost Trend
Pricing (Purpose and Claims Basis Types)
Used to project experience to new time period for premium rate setting
- Eligible
- Allowed
- Net Paid
Medical Cost Trend
Experience Analysis Purpose
Look at how experience for specific block of business is changing over time
Medical Cost Trend
Trend Components
- Core Cost (UC, Severity, Mix of Services)
- Core Util
- One-Time Changes
- Population Shifts
- Structural Changes
- Alternative Payment Models
- Leveraging
Medical Cost Trend
Core Cost Trend (Definition, Pieces)
Rate of increase in covered cost per service
- UC
- Severity
- Mix of Services
Medical Cost Trend
Core Utilization Trend
Changes in utilization due to external forces such as:
- Pandemic shutdowns
- Economy
- WCD
Medical Cost Trend
One-Time Changes (Definition, Examples)
Represents response to specific one-time events based on specific, identifiable situations
- Trend that is expected to return back to normal = high flu season
- Sustained change may occur and won’t revert back = legislation
- New technologies
Medical Cost Trend
Population Shifts (Definition, Examples)
Underlying population may shift as members leave and enter group
- Geographic
- Demographic
- Age/Gender Mix
Medical Cost Trend
Structural Changes (Definition, Examples)
Trend needs to reflect leveraging change and expected changes in insured’s behavior
- Benefit changes
- Changes to clinical programs
- Network Changes
Medical Cost Trend
Benefit Rush-Hush-Crush
- Rush: People rush to use benefits with outgoing plan
- Hush: Less usage in next quarter because people already got treatment
- Crush: Usage returns to normal, but trend rate is very high because of abnormally low prior year
Medical Cost Trend
Alternative Payment Models
- Alternatives to FFS = Capitation
- Alternative Payment Models = Value-based payment models
Medical Cost Trend
Leveraging
Trend on allowed amounts are usually different than trend on paid amounts after cost-sharing is considered
Medical Cost Trend
Questions to Consider when Monitoring Trend
- How accurate were original trend and PMPM estimates?
- Which assumptions drive variation from expected to actual trend estimates?
- How can process be modified to be more accurate?
- What other factors (expected or unexpected) drove the trends?
