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HealthChoice CY 2008 Rate Setting Update

HealthChoice CY 2008 Rate Setting Update. Maryland Medicaid Advisory Committee Meeting September 27, 2007. Rate Setting Steps. Create base year data Add program adjustments, such as physician fee increase Create trends from base year to rate year Apply and update risk assessment

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HealthChoice CY 2008 Rate Setting Update

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  1. HealthChoiceCY 2008 Rate SettingUpdate Maryland Medicaid Advisory Committee Meeting September 27, 2007

  2. Rate Setting Steps • Create base year data • Add program adjustments, such as physician fee increase • Create trends from base year to rate year • Apply and update risk assessment • Update rates at mid year to incorporate changes

  3. Process • Met with MCOs monthly starting in February to discuss new rate compilation and any issues • Met with DBM in July to discuss rate impact and obtain approval of rate increase • Submitted rates to MCOs in August 2007 and met individually with all plans • Submitting regulations in September to AELR for January 2008 effective date • MCOs will give notice of intention to participate in CY 2008 by October 1, 2007 • Submit rates to Centers for Medicare and Medicaid Services (CMS) for approval in October, 2007

  4. Actual Trends *To compare on an equivalent basis, program adjustments of 2.9% need to be added to the trends used in the 2007 rates, they are already included in the HFMR results.

  5. MCO Financial Results • YearResult Rate Margin Increase % • CY 00 $ 3,850,332 margin* .4% • CY 01 $ 2,511,347 margin* 4.5 % .2% • CY 02 $ 106,587 margin* 7.9 % --- • CY 03 $29,511,052 margin* 8.5 % 2.2% • CY 04 $26,400,623 margin* 5.3 % 1.8% • CY 05 $58,396,843 margin** 5.8 % 3.7% • CY 06 $28M margin projected 6.3% 1.6% • CY 07 $27M margin projected 5.2% 1.5% • CY 08 4.4%*** *CY 00- 04 Financials reviewed by Clifton Gunderson,LLP, **CY 05 Financials reviewed by Myers and Stauffers ***Actual increase of 6.4% was reduced to account for HIV/AIDS drug carve out.

  6. Impact of Carve Out on Rates • Expense reduction due to removal of one class of drugs for HIV/AIDs recipients caused a reduction in the rate increase of approximately 2%.

  7. 2008 Rate Setting • Overall rate increase of 4.4% with a FY 2008 MCO budget impact of $ 21M GF and $7.5M GF for HIV/AIDS drug carve out to fee-for-service • Rates are based on CY 05 audited consolidated financial data trended forward • Issues included in the base: physician fee increases and cost containment

  8. Rate Setting Adjustments • Most significant adjustments for CY 08 rate setting: • Fixed percentages for profit (1.5%) and contingency margin (.4%) as a percentage of medical expenses • Actual administrative percentage is 12.2% of expenses • Cohort aging analysis with impact of approximately 1% • Efficiency adjustment methodology incorporated with immaterial impact in CY 08 • Stillborn policy change and adjustment incorporated • Dental pool established for achieving utilization goals for non-utilizers of services • Continuing cost containment

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