C
R D A N
Hea lth Systems and Consulting
Sent by e-mail
May 18, 2015
Anne Krohmer
Minnesota Department of Health
85 East 7th Place, Suite 220
St. Paul, MN 55101
Re:
RFI on State-Based Risk Adjustment Feasibility Assessment
Dear Anne:
We appreciated the opportunity to meet with you, Stefan Gildemeister, and the Milliman
actuarial team assigned to this project at the end of April. We left the meeting feeling confident
that the questions and concerns we raised about this project were heard and will be considered.
We understand that since PrimeWest Health currently doesn't participate in the small group and
individual markets we won't be able to provide the level of feedback as those already
participating in this market, but we feel our perspective as a possible market entrant can also be
valuable to this feasibility study.
Just to refresh, PrimeWest is looking to begin providing coverage to employees of the 13
counties that own PrimeWest starting in 201 7. A few of these counties are below the 100
employee threshold and may end up being classified as small group. Currently we don't
anticipate the total number oflives classified as small group to be more than 400 in 2017. This
would represent less than 10% of the total projected covered lives for Prime West's county
employee coverage program.
One take away from our meeting was that, if Minnesota was to move forward with state-based
risk adjustment after the conclusion of the feasibility study, the earliest they would be looking to
begin the program would be 2018. At that point PrimeWest would have been subject to a year of
risk-adjustment under the federal program, and will have gained preliminary experience with
risk-adjustment that will be valuable for our planning and management whether federal risk
adjustment or a Minnesota-developed alternative is the long-term program.
The questions we raised at our initial meeting are repeated here from the perspective of a new
entrant into the market. We believe these topics are relevant for all potential market entrants.
Page 2
• What level of membership is considered credible for risk adjustment?
• Should there be a risk-adjustment phase-in period for new business? And if so, how
would this work?
• Does Minnesota anticipate they will want to continue the reinsurance program in conjunction with a new risk-adjustment program? • Cost structure should be considered when comparing any applicable fees and compliance
costs required from small organizations vs. large organizations.
In addition to general considerations for new business we would like to also provide feedback to
some of the areas addressed in the RFI.
• The current risk adjustment process has payments netting to zero. Does this make sense
if using a retrospective risk scoring process where risk scores can be compared to
outcomes?
• We agree that having a transparent and open risk score process is valuable, and
recommend that details of the model be released to the plans. The ability for plans to
calculate their own risk scores can be very helpful for financial management and
planning.
We appreciate the opportunity to be involved in the state-based risk adjustment feasibility
assessment and will be very interested in following its progress. Please call me at 651-228-9891
if you have any questions or require any additional information.
Sincerely,
Jared Porter, FSA, MAAA
Cirdan Health Systems and Consulting
Cc: Matt Magnuson, PrimeWest Director of Membership and Program Development
John Klein (Cirdan), PrimeWest CFO