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INSTRUCTIONS FOR COMPLETING THE
MEDICARE ADVANTAGE
BID PRICING TOOL
and
MEDICAL SAVINGS ACCOUNT
BID PRICING TOOL
FOR CONTRACT YEAR 2010
September 25, 2008
CMS-10142 (03/2011)
Table of Contents
MA and MSA Introduction .....................................................................................3
MA General Overview...........................................................................................6
MA Worksheet 1 - MA Base Period Experience and Projection Assumptions ......7
MA Worksheet 2 - MA Projected Allowed Costs PMPM .....................................18
MA Worksheet 3 - MA Projected Cost Sharing PMPM .......................................22
MA Worksheet 4 - MA Projected Revenue Requirement PMPM ........................29
MA Worksheet 5 - MA Benchmark PMPM ..........................................................40
MA Worksheet 6 – MA Bid Summary..................................................................48
MA Worksheet 7 – Optional Supplemental Benefits ...........................................56
MA Two-Year Look-Back Form...........................................................................60
Appendix A – Actuarial Certification....................................................................64
Appendix B – Supporting Documentation ...........................................................67
Appendix C – Part B-Only Enrollees ...................................................................77
Appendix D – Medicare Advantage Products Available to Groups .....................78
Appendix E – Plans Serving Qualified Medicare Beneficiaries (QMBs) ..............81
Appendix F – Rebate Reallocation and Premium Rounding ...............................83
Appendix G – Suggested Mapping of MA PBP Categories to BPT Categories ..95
Appendix H - BPT Technical Instructions............................................................97
Appendix I – Medical Savings Account ...............................................................98
Glossary of Terms.............................................................................................102
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Introduction
MA and MSA Introduction
Medicare Advantage organizations must submit a separate bid to the Centers for Medicare &
Medicaid Services (CMS) for each Medicare Advantage (MA), Medical Savings Account
(MSA), and MSA Demonstration (MSA Demo) plan that they intend to offer Medicare
beneficiaries. In the case of a local plan with service area segments, a separate bid must be
submitted for each segment.
Organizations must submit the information via the CMS Health Plan Management System
(HPMS) in the CMS-approved electronic format - the MA Bid Pricing Tool (BPT) or the MSA
BPT, and the Two-Year Look-Back (2YRLB) Form for contracts with enrollment in the
Monthly Membership Report (MMR) for July 2008. An MA bid form is not to be completed for
Cost or PACE plans. An actuarial certification must be submitted for each bid as described
in Appendix A.
The submitted bids will be subject to review, negotiation, and audit by CMS. All data
submitted as part of the bid process are subject to audit by CMS, or by any person or
organization that CMS designates. Additionally, MA organizations (MAO) must give CMS
supporting documentation as noted throughout these instructions and as described in
Appendix B.
If the MA plan includes prescription drug benefits under the Medicare Part D program, then
an additional Part D bid pricing tool must be completed and submitted to CMS. The separate
Part D bid pricing tool captures pricing information regarding any prescription drug benefits
offered by the plan. While the supplemental benefits (either prescription drug or A/B) offered
by the plan may be viewed as a single package, the two types of supplemental benefits are
considered separately for bidding purposes. Prescription drug benefits under the Medicare
Part D program are not allowed to be offered with an MSA plan.
MEDICARE ADVANTAGE
To complete the MA bid form, organizations must provide a series of data entries on the
appropriate form pages. The number of inputs depends on the type of plan and how long it
has operated, among other factors.
Following are the most common steps that an MA organization must complete:
•
For plans with base period experience o
o
o
o
Report the Medicare base period experience.
Illustrate the assumptions used to project the base period costs to the
contract year.
Determine the credibility of the base period data.
If base period experience is not fully credible, provide a summary of the
manual rates and the techniques used in their development.
•
For plans with no base period experience, provide a summary of the manual rates
and the techniques used in their development.
•
Report the estimated cost-sharing values for the contract year.
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Introduction
•
Enter the projected Contract Year (CY) non-benefit expenses and gain/loss margin.
•
Enter the projected enrollment and risk scores by county.
•
Allocate rebates (if any).
•
Enter optional supplemental benefit pricing, if applicable.
Appendix C contains further information regarding MA plans covering Part B-only enrollees.
Appendix D provides information for “group bids” (that is, employer groups and union
groups). Appendix E contains additional guidance regarding MA plans covering Qualified
Medicaid Beneficiaries (QMBs). Appendix F discusses the rebate reallocation period.
Medical Savings Account
To complete the MSA bid form, organizations must provide a series of data entries on the
appropriate form pages. Following are the most common steps that an MA organization
must complete:
•
•
•
•
•
•
For plans with base period experience o Report the base period allowed costs most representative of the MSA plan.
o Enter the estimated adjustments needed to project the base period costs to
the (CY) MSA plan.
o Determine the credibility of the base period data.
o If base period experience is not fully credible, provide a summary of the
manual rates and the techniques used in their development.
For plans with no base period experience, provide a summary of the manual rates
and the techniques used in their development.
Enter the projected enrollment and risk scores by county used as the basis for the
CY MSA plan.
Develop projected claim Information by claim interval.
Enter the projected CY non-benefit costs and gain/loss margin.
Enter optional supplemental benefit pricing, if applicable.
Appendix I contains additional information regarding MSA bidding.
Bidding Resources
In addition to these instructions, information regarding CY2010 bidding may be found at the
following resources:
•
The CY2010 Call Letter contains information and guidance pertaining to CY2010
bidding, and may be found at: http://www.cms.hhs.gov/HealthPlansGenInfo/ or
http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/CallLetter.pdf
•
CMS Annual Bidding Conference was offered as a web-based conference for
CY2010. The conference materials, including slides and streaming video downloads,
are available at:
•
http://www.cms.hhs.gov/apps/events/docs/Conference_ID_356/bidconference.html
The actuarial sessions of the conference are available under the “Bid Pricing Tool
Video Streaming/ Podcast” link.
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Introduction
•
If there are any questions about the bid form, e-mail the CMS Office of the Actuary
(OACT) at [email protected] .
•
The CMS Office of the Actuary will host weekly technical user group calls regarding
actuarial aspects of the CY2010 bidding process. The conference calls will include
live Question & Answer sessions with CMS actuaries.
•
For technical questions regarding the BPT, HPMS, or the upload process, refer to the
following resources:
o
Appendix H of these instructions.
o
The “Bid Submission User’s Manual” (available in HPMS).
o
HPMS Help Desk: 1-800-220-2028 or [email protected] .
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General Overview
MA General Overview
These instructions provide guidance in completing the Medicare Advantage Bid Pricing Tool.
The MA bid form is organized as outlined below:
Worksheet 1 - MA Base Period Experience and Projection Assumptions
Worksheet 2 - MA Projected Allowed Costs PMPM
Worksheet 3 - MA Projected Cost Sharing PMPM
Worksheet 4 - MA Projected Revenue Requirement PMPM
Worksheet 5 - MA Benchmark PMPM
Worksheet 6 - MA Bid Summary
Worksheet 7 - Optional Supplemental Benefits
All worksheets must be completed, with the following exception: if the plan does not offer any
optional supplemental benefit packages, then Worksheet 7 may be left blank.
In addition, each organization must complete the Two-Year Look-Back form, unless it did not
have any Medicare experience in 2008 (that is, if the organization did not file any CY2008
MA BPTs or did not have any enrollment in July 2008).
The following sections explain how to complete the MA bid form and include line-by-line
instructions with user inputs noted. In addition, there is a glossary to assist the user with
unfamiliar terms. The Medicare Benefit Description Report available in HPMS may also be
helpful.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, then enter
a 0 in the cell.
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Worksheet 1
MA Worksheet 1 - MA Base Period Experience
and Projection Assumptions
Worksheet 1 summarizes the base period data for the plan and the key assumptions used to
calculate the projected allowed costs for the contract period. Section I contains general plan
information that will be displayed on all MA BPT worksheets. Section II captures base period
background information. Section III summarizes the base period data for the plan, and
Section IV illustrates the factors used to project the base period data to the contract period.
Section I must be fully completed for all plans (note that some fields may be pre-populated
by the Plan Benefit Package (PBP) software). Sections II and III must be completed for all
plans with experience data for 2008 regardless of the level of enrollment.
All information provided on Worksheet 1 must include the experience for enrollees in hospice
status and exclude the experience for enrollees in End-Stage Renal Disease (ESRD) status,
for the time period that enrollees are in ESRD status based on CMS eligibility records.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B for more details):
•
A reconciliation of base period experience with company financial data.
•
A description of the allocation of allowed costs per member per month (PMPM) by
service category.
•
Support for projection assumptions.
•
Information about “actuarial swapping” or the “actuarial equivalence” category of
customization allowable for employer and union groups, as described in Appendix D.
SECTION I - GENERAL INFORMATION
The fields of Section I have been formatted as the “General” format in Excel, in order to
support the functionality to link spreadsheets. Therefore, certain numeric fields, such as
Plan ID, Segment ID and Region Number, must be entered as text (that is, using a preceding
apostrophe) and must include any leading zeros.
Line 1 – Contract Number
Enter the contract number for the plan. The designation begins with a capital letter H (local
plan), R (regional Preferred Provider Organization plan), or E (Employer/Union Direct
Contract Private Fee-for-Service) and includes four Arabic numerals (for example, H9999,
R9999, E9999). Be sure to include all leading zeros (for example, H0001).
Line 2 – Plan ID
The plan ID (accompanied by the corresponding contract number) forms a unique identifier
for the plan benefit package being priced in the bid form. Plan IDs contain three Arabic
numerals. This field must be entered as a text input (that is, must include a preceding
apostrophe) and must include any leading zeros (for example, ‘001).
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Worksheet 1
If the bid is for a plan that is offered only to employer or union groups, then the plan ID will be
800 or higher. This plan may be referred to as an “800-series plan,” a “group plan,” an
“employer/union-only group waiver plan (EGWP),” or an “employer-only group plan.”
Line 3 – Segment ID
If the bid is for a “service area segment” of a local plan, enter the segment ID. This field
must be entered as a text input (that is, must include a preceding apostrophe) and must
include any leading zeros (for example, ‘01).
Line 4 – Contract Year
This cell is pre-populated with the calendar year to which the contract applies.
Line 5 – Organization Name
Enter the organization’s legal entity name. This information also appears in HPMS and the
PBP.
Line 6 – Plan Name
Enter the plan name of the plan benefit package. This information also appears in HPMS
and the PBP.
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Worksheet 1
Line 7 – Plan Type
Enter the type of MA plan. The valid options are listed in the table below. The MA bid form
is not to be completed for MSA, Cost, and PACE plans. There is a separate MSA Bid Pricing
Tool (see Appendix I).
Note that an MAO must offer at least one benefit plan (of any plan type) that includes Part D
coverage for each service area. This requirement does not apply to Private Fee-for-Service
(PFFS) plans, which can be offered in a service area without Part D coverage.
Type of Plan
Local Coordinated Care Plans:
Health Maintenance Organization (HMO)
Plan Type Code
HMO
Religious Fraternal Benefit HMO
RFB HMO
Health Maintenance Organization with a
Point-of-Service (POS) Option
HMOPOS
Religious Fraternal Benefit HMO
with a POS Option
Provider-Sponsored Organization w/State License
Religious Fraternal Benefit w/ State License
Preferred Provider Organization (PPO)
Religious Fraternal Benefit PPO
RFB HMO POS
PSO State License
RFB PSO State License
LPPO
RFB LPPO
Regional Coordinated Care Plans:
Regional Preferred Provider Organization
RPPO
Private Fee-for-Service Plans:
Private Fee-for-Service (PFFS)
Religious Fraternal Benefit PFFS
PFFS
RFB PFFS
Employer/Union Direct Contract Private Fee-forService Plan:
Employer/Union Direct Contract Private Fee-forService
ED PFFS
Demonstration Plan:
Continuing Care Retirement Community
CCRC
Line 8 – MA-PD Indicator
If the plan is offering Part D benefits during the contract year (and therefore submitting a
separate Rx bid form for the same plan ID), enter “Y”. Otherwise, enter “N”.
Line 9 – Enrollee Type
If the bid prices a plan covering enrollees eligible for both Part A and Part B of Medicare,
enter “A/B”. If the bid prices a plan covering enrollees eligible for Part B only, enter “Part B
Only”. (See Appendix C for additional information regarding Part B-only plans.)
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Worksheet 1
Line 10 – MA Region
If the MA plan is a regional PPO (that is, plan type equals RPPO), then input the region
number associated with the region that the plan will cover. This field must be entered as a
text input (that is, must include a preceding apostrophe) and must include any leading zeros
(for example, ‘01).
For regional PPO plans, valid entries are shown in the following table:
Region
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Description
Northern New England (New Hampshire and Maine)
Central New England (Connecticut, Massachusetts, Rhode Island, and Vermont)
New York
New Jersey
Mid-Atlantic (Delaware, District of Columbia, and Maryland)
Pennsylvania and West Virginia
North Carolina and Virginia
Georgia and South Carolina
Florida
Alabama and Tennessee
Michigan
Ohio
Indiana and Kentucky
Illinois and Wisconsin
Arkansas and Missouri
Louisiana and Mississippi
Texas
Kansas and Oklahoma
Upper Midwest and Northern Plains (Iowa, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, and Wyoming)
Colorado and New Mexico
Arizona
Nevada
Northwest (Idaho, Oregon, Utah, and Washington)
California
Hawaii
Alaska
Line 11 – Actuarial Swap or Equivalences
If an individual-market plan will use actuarial swaps or equivalences for employer or union
groups, enter “Y”. Otherwise, enter “N”. See Appendices B and D for further information on
using swaps or equivalences.
Line 12 – SNP Indicator
If the plan is a Special Needs Plan (SNP), enter “Y”. Otherwise, enter “N”.
Line 13 – Region Name
No user input is required. This field contains the region name, based on the region number
entered previously in this section.
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Worksheet 1
Line 14 – Percentage of Contract Year Enrollees that are Dually Eligible
Enter the percentage of projected enrollees that are dually eligible (that is, eligible for both
Medicare and Medicaid) during the contract period.
SECTION II – BASE PERIOD BACKGROUND INFORMATION
Line 1 – Time Period Definition
CMS generally expects the experience data to be based on a calendar year 2008 incurral
period with at least 30 days paid run-out (preferably at least 2 - 3 months of paid claim runout), except for new plans in 2009.
Enter the incurral dates of the base period data on the first two lines and the “paid through”
date on the third line. For example, if the data reflect payment information through February
2009, then the “paid through” date is 2/29/2009.
Line 2 – Member Months (excluding ESRD)
Enter the total member months represented in the base period experience, excluding ESRD
enrollees for the time period that enrollees are in ESRD status based on CMS eligibility
records.
Line 3 – Non-ESRD Risk Score
Enter the risk score for the population represented in the base period data using the
recalibrated 70 CMS-HCC risk model (hereafter referred to as recalibrated HCC) risk score
for non-ESRD members. The risk score must reflect a mid-year cohort (or be adjusted for
seasonality) as well as reflect non-lagged diagnosis data with full run-out. The population
change adjustment entered in column l of Section IV must be consistent with the
development of the CY2010 risk score.
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Worksheet 1
Line 4 – Completion Factor
Enter the factor used to adjust the paid data to an incurred basis. The base period data must
represent the best estimate of incurred claims for the time period, including any unpaid
claims as of the “paid through” date. The factor entered must be the amount to adjust only
the portion of paid claims that requires completion (that is, omit capitations from the
calculation of this factor).
For example, assume:
Incurred Date
Paid Through Date
Capitation Payments
PTD Claims Requiring Completion
Estimate of Unpaid 2008 Claims as of 2/28/2009
Total Incurred Claims for 2008
The Completion Factor would be calculated as:
Completion Factor = (400 + 30) ÷ 400 = 1.075
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
1/1/2008 – 12/31/2008
2/28/2009
$100
$400
$30
$530
Page 12 of 105
Worksheet 1
Line 5 – Plan Included in Base Period Data
Enter the contract number and plan ID (in the format H9999-999) of the plan for the base
period data. CMS expects that the contract number and plan ID for the base period data will
be the same as that shown in Section I, except for plan ID changes and plan mergers. In the
second column, input each plan’s percentage of total member months reported in Line 2.
Plan IDs are to be reported in descending order of member months, such that the plan with
the largest percentage of base period member months is listed first. For example:
5. Plans in Base
Contract-Plan ID
a. H9999-032
b.
c.
d.
% of Member Months
100%
If, for some reason, more than four plans comprise the base period data, then the plan
sponsor must submit supporting documentation that provides the percentage of base period
member months for each plan included in the base period data. In this situation, plan
sponsors may enter “All Other” for the Contract-Plan ID indicated in Line 5d.
Line 6 – Base Period Description
Use the text box provided to briefly describe changes in the benefit plan, service area, or
contract number / plan ID from 2008 to 2010.
Do not adjust base period data for credibility, as this issue is addressed on Worksheet 2 with
manual rates.
SECTION III – BASE PERIOD DATA (AT PLAN’S
FACTOR)
NON-ESRD
RISK
Section III summarizes the base period data by benefit service category.
General Considerations
CMS generally expects the experience data to be based on a calendar year 2008 incurral
period with at least 30 days paid run-out (preferably at least 2 - 3 months of paid claim runout).
When considering the credibility of plan experience, the actuary must consider ASOP No. 8
Regulatory Filings for Health Plan Entities, paying particular attention to the section “Use of
Past Experience to Project Future Results” (3.2.4). The actuary must also consider ASOP
No. 23, Data Quality, particularly the section entitled “Selection of Data” (3.2).
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Worksheet 1
Worksheet 1 must be completed with data for the plan ID. Note that these data:
•
Must be submitted in Worksheet 1 for all plans with experience data for 2008,
regardless of the level of enrollment.
•
Must be reported without adjustment. Adjustments may be made in Section IV to
accommodate population, benefit design, or other changes for the base period to the
projection period.
•
Can be presented in aggregate for a number of plans only when there are enrollment
changes that are associated with the dissolution of a plan, and retained members are
mapped into existing plans. Each plan must be identified in Line 5, Section II.
•
Cannot be used to aggregate data from a number of plans in order to achieve
credibility.
•
Must be reported in whole at the plan level for every contract-plan number relied
upon when plans are aggregated; plan sponsors cannot include partial plan
experience on Worksheet 1.
•
May be reported on more than one bid when plans are aggregated, depending upon
the mapping of enrollment.
•
Reflect the current best estimate of incurred claims on an experience basis, including
estimates of unpaid claims, but excluding margin for adverse deviation (which must
be included as part of the gain/loss margin on Worksheet 4).
•
Include any provider incentive payments.
•
Include total services (both in-network and out-of-network, Medicare-covered, and
additional services).
•
Reflect costs before any reduction for member cost sharing and reinsurance
recoveries (that is, the experience data must be on an allowable basis).
•
Include capitations allocated to the appropriate service category line on a reasonable
basis.
•
Include hospice enrollees.
•
Exclude ESRD claim experience for the time period that an enrollee is in ESRD
status based on CMS eligibility records.
•
Reflect the full level of plan cost sharing for Qualified Medicare Beneficiaries (QMB)
even if a state Medicaid agency pays all or part of the cost sharing on behalf of the
QMB. (See Appendix E for information regarding QMBs).
Appendix G contains a suggested mapping of benefit categories between the PBP and the
Bid Pricing Tool (BPT). The Medicare Managed Care Manual may also be a helpful
resource regarding benefit definitions:
http://www.cms.hhs.gov/Manuals/IOM/itemdetail.asp?filterType=none&filterByDID=99&sortByDID=1&sortOrder=ascending&itemID=CMS019326
The service categories can be one of three types:
•
Medicare-covered services that may be supplemented, as an A/B mandatory
supplemental benefit, (for example, the cost for additional days not covered by
Medicare in line a, “Inpatient Facility”).
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Worksheet 1
•
Services that can only be Medicare-covered.
•
Services that can only be Non-covered (e.g. line l, “Transportation”).
The benefit costs will be distributed between Medicare-covered and Non-covered benefits
based on the percentages entered in Worksheet 4, columns h and i.
There is no separate service category for POS in the CY2010 BPT. POS base period
experience data must be included in the appropriate service categories.
For Non-covered limited benefits with no cost sharing, the amounts over the limit must not be
included as allowed costs in the bid form.
Example: The PBP contains a hearing aid benefit with a $500 annual cost limit and no
cost sharing. If the average cost of a hearing aid is $2,500, the allowed PMPM in
Column i must be based on the $500 maximum benefit, not on a $2,500 cost offset by a
cost-sharing entry in Worksheet 3 for the $2,000 paid by the beneficiary.
The COB/Subrogation line (line r) is intended to include only those amounts settled outside
the claim system. If an MAO pays claims for its estimated liability only (that is, net of the
amount that is the responsibility of another payer, such as an employer plan or auto policy),
the MAO’s net liability amount (before cost-sharing reductions) may be entered on lines a
through q. [This is a change from the Adjusted Community Rate (ACR) instructions, in which
the detail service claims were to be reported at the full amount (that is, including other payer
liabilities) and at the full COB amount used. Both methods result in the same total allowed
cost across all service categories.]
See Appendix B for information regarding supporting documentation for base period data.
Column c, Lines a through r – Service Category
The benefit service categories are displayed in column c. See Appendix G for a suggested
mapping of BPT and PBP service categories. For more information on benefits and service
categories, see the Medicare Managed Care Manual, Chapter 4 – “Benefits and Beneficiary
Protections” at
http://www.cms.hhs.gov/Manuals/IOM/itemdetail.asp?filterType=none&filterByDID=99&sortByDID=1&sortOrder=ascending&itemID=CMS019326
Column f, Lines a through q – Utilization type
Displays the utilization types entered on Worksheet 2. Utilization Types are required inputs
on Worksheet 2, whether the pricing uses base experience data or manual rates.
Column g, Lines a through q – Annualized Utilization/1,000
Enter the annualized utilization per thousand enrollees for each of the benefit service
categories for the base period data. The utilization/1000 must be reported consistently with
the utilization type displayed in column f.
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Worksheet 1
Column h, Lines a through q – Average Cost
These cells are calculated automatically using the utilization provided in column g and
allowed PMPM provided in column i.
Column i, Lines a through r – Allowed PMPM
Enter the allowed PMPM by service category for the base period.
Input any
COB/Subrogation offsets to costs as a negative number, since line r will be added to total
medical expenses.
See Appendix B for information regarding supporting documentation for the allocation of
allowed PMPM by service category.
Line s – Total Medical Expenses.
Calculated automatically as the sum of lines a through r.
Line t – Subtotal Medicare-Covered service categories
Calculated automatically as the sum of lines a through k.
SECTION IV – PROJECTION ASSUMPTIONS (COLUMNS J THROUGH P)
Section IV contains the utilization, average unit cost, and other adjustment assumptions to
project the base period data to the contract period. The factors in columns j through n are
the total adjustment factor from the base period to the contract period, not annual trend
rates. For example, assume that the base period is calendar year 2008 and that the contract
year is 2010. If the utilization trend is 5% from 2008 to 2009 and 6% for projecting 2009 to
2010, then enter 1.113 in column j (1.05 x 1.06).
See Appendix B for information regarding supporting documentation for projection
assumptions.
Column j, Lines a through r– Util/1000 Trend
Enter the total utilization trend factor from the base period to the contract period by service
category. (Entering 1.000 would indicate 0% trend.) Do not leave blank.
Column k, Lines a through r – Benefit Plan Change
Enter the multiplicative adjustment factor for any benefit plan changes that affect the base
period utilization by service category (for example, increase in coverage level from base
period to contract period). (Entering 1.000 would indicate 0% change.) Do not leave blank.
Column l, Lines a through r – Population Change
Enter any expected demographic or morbidity changes that are necessary to adjust the base
period data to the contract period. (Entering 1.000 would indicate 0% change.) Do not leave
blank.
Column m, Lines a through r – Other Factor
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Worksheet 1
Enter any other utilization factor adjustments by service category. Describe the reason for
any adjustments in Section V if a factor other than 1.000 is used. An example of the use of
this factor is to adjust the base period service area to the contract year service area.
(Entering 1.000 would indicate 0% adjustment.) Do not leave blank.
Column n, Lines a through r – Unit Cost/Intensity Trend
Enter the unit cost/intensity trend by service category. This factor must reflect the
anticipated unit cost/intensity trend from the base period to the contract period. (Entering
1.000 would indicate 0% trend.) Do not leave blank.
Columns o and p, Lines a through r – Additive Adjustments
Use these columns to reflect adjustments that are additive (adjustments in columns j through
n are multiplicative factors). For example, a benefit that is no longer being offered, but is
included in the base period data, might need to be deleted/removed. In this case, enter the
projected PMPM of the benefit being removed as a negative number in column p. For
benefits that need to be added, if they are not included in the base period experience data
but will be offered in the contract period, utilize the manual rates section of Worksheet 2.
Describe the reason for any additive adjustments in Section V.
SECTION V – DESCRIPTION
ADDITIVE VALUES
OF
OTHER UTILIZATION FACTOR
AND
Use this “text box” field to describe the reason for using a multiplicative factor other than 1.00
in column m and any additive adjustments entered in columns o and p.
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Worksheet 2
MA Worksheet 2 - MA Projected Allowed Costs
PMPM
This worksheet calculates the projected allowed costs for the contract year. For plans
without fully credible experience, it will be necessary to input manual rate information. The
service category lines are the same as those on Worksheet 1. Worksheet 1 must be
completed for plans with experience data in 2008, even if manual rates are used for the
pricing.
All information provided on Worksheet 2 must include the experience for enrollees in hospice
status and exclude the experience for enrollees in ESRD status for the time period that
enrollees are in ESRD status based on CMS eligibility records.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B for more details):
•
The manual rate development.
•
Projected allowed costs for Non-covered services.
•
A credibility approach different from the CMS guideline described in these
instructions, including:
o
0% experience credibility used for a service category with credible data.
o
Blending differences in the credibility for utilization and unit cost.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – PROJECTED ALLOWED COSTS
Plan’s Non-ESRD Risk Factor (for the contract period)
The non-ESRD risk factor for the contract year is obtained from Worksheet 5.
Lines a through r.
Column e – Utilization Type
You must enter the type of utilization in column e for each benefit category that contains
PMPM costs in column o. Do not leave this column blank. If the plan is not using
manual rates, but instead is using base period experience data, entries in this column
are still required.
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Worksheet 2
For each service category line, enter the appropriate utilization type that reflects the
annualized utilization/1000 enrollees entered in column f and i. The valid utilization types
are listed below. Note that the valid utilization types vary by service category.
•
A – Admits
•
D – Days
•
BP – Benefit Period
•
V – Visits
•
P – Procedures
•
T – Trips
•
S – Scripts
•
O – Other
Columns f through h – Projected Experience Rate
Columns f through h are calculated automatically using the information provided in
Sections III and IV on Worksheet 1. No user inputs are needed. Column f calculates the
projected utilization, column g is the expected average cost, and column h is allowed
PMPM for the contract period, projected based on base period experience data.
Columns i through k – Manual Rate
For a plan with less than fully credible experience or no experience, you must enter
manual rate information for the contract period and provide a description of the source of
the manual rate in line u.
General Considerations
The general considerations listed for the base period experience data also apply here
(see Worksheet 1 instructions).
Appendix B describes the required supporting
documentation for manual rating.
Special considerations, and corresponding documentation, are required when using
Medicare FFS data as a manual rating source. Many of the available FFS data are not
directly applicable and/or detailed enough to be used as the sole source for projection of
medical expenses. For example, it is inappropriate to tabulate claims data using
Medicare Public Use Files (PUFs) without making appropriate adjustments for
corresponding demographic, health, and geographic profile of the claimants and to
account for the non-claimants. Similarly, the FFS data published in the BPT and/or MA
ratebook development files are not split by benefit type and another appropriate source
must be used to allocate the data to BPT service categories. Further, as with use of all
manual rating sources, appropriate adjustments must be made to account for claim
expenses that are not reflected in the FFS data, such as claim run-out, inclusion of
expenses not reflected in the data files, and adjustments for medical education
expenses.
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Worksheet 2
Column i – Utilization
Enter Utilization/1000 assumptions by service category in column i for lines a through q.
Do not leave the utilization type (column e) blank.
Column j – Average Cost
Average cost will be calculated automatically based on the entries in columns i and k.
Column k – Allowed PMPM
Enter projected PMPM amounts in column k.
Column l – Experience Credibility Percentage
Enter the experience credibility percentage by service category in column l. This
percentage must be between 0% and 99% if the plan is using a manual rate in the
projection. The credibility assumption may vary by service category, especially when a
subset of providers is reimbursed on a capitation basis or when a new benefit category is
added using a manual rate.
The credibility factors are applied to PMPMs; therefore, any differences in the utilization
and unit cost credibility must be developed into a composite PMPM credibility factor.
Supporting documentation for the method used is required (see Appendix B).
Based on an application of classical credibility theory to Medicare FFS experience, CMS
has established a guideline for full credibility of 24,000 base period member months.
The formula for partial credibility is the square root of the result of base period member
months divided by 24,000. Note that this formula is a guideline; organizations may use a
different credibility approach if appropriate supporting materials are provided. This
includes entering 0% credibility for a service category with credible experience data
(see Appendix B).
As an example, if the member months reflected in the experience period were to equal
6,000, then in the projection of contract year medical expenses, the weight given to
actual trended experience would equal 50 percent [calculated as (6,000/24,000)^(1/2)].
100% credibility weight would be given to actual trended experience if there were 30,000
member months during the experience period.
Columns m through o – Contract Year Rate
Columns m through o calculate the blended contract year rate, based on the projected
experience rate and the manual rate. The Contract Year Rate is included in the plan’s
contract year revenue requirements on Worksheet 4.
Supporting documentation is required for the projected Non-covered allowed costs for
each service category (see Appendix B).
Column p – Percentage of Services Provided Out-of-Network
Enter the percentage of total allowed costs that are expected to be provided out-ofnetwork for each service line. Enter a 0 if zero percent is expected; do not leave the field
blank to indicate 0%.
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Worksheet 2
Line r – COB/Subrogation
Enter any COB/Subrogation offsets to costs as a negative number, since line r will be
added to total medical expenses.
Line s – Total Medical Expenses
Calculated automatically as the sum of lines a through r.
Line t – Subtotal Medicare-Covered Service Categories
Calculated automatically as the sum of lines a through k.
Line u – Manual Rate Description
Use the text box to describe the general approach to manual rating, including a description of
the source of the manual rate. This description is in addition to the required supporting
documentation (see Appendix B).
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Worksheet 3
MA Worksheet 3 - MA Projected Cost Sharing
PMPM
Worksheet 3 summarizes the expected MA cost sharing for the contract year and includes
both in-network and out-of-network cost sharing.
All information provided on Worksheet 3 must include the experience for enrollees in hospice
status and exclude the experience for enrollees in ESRD status for the time period that
enrollees are in ESRD status based on CMS eligibility records.
The cost-sharing information entered on this worksheet must tie to the PBP and, as such,
must contain enough detailed information to be easily cross-checked by CMS. A description
of the cost sharing for each benefit category is required.
Note that although there are not individual entries for each cost-sharing item listed in the
PBP, the value of all cost-sharing items must be reflected in the total PMPM amount on this
worksheet.
Any member premium(s) and Part D cost sharing must be excluded from Worksheet 3.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B for more details):
•
A mapping of cost sharing amounts from pricing categories to BPT service
categories.
•
The process for adjusting cost sharing due to OOP limits.
•
Support for cost sharing utilization assumptions and plan level deductible.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – MAXIMUM COST SHARING PER MEMBER PER YEAR
See Appendix B for information regarding required supporting documentation for out-ofpocket limits.
Line 1 - In-Network
Enter the maximum total dollar amount that a member could pay for in-network cost sharing
for the contract year.
Line 2 – Out-of-Network
Enter the maximum total dollar amount that a member could pay for out-of-network cost
sharing for the contract year.
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Worksheet 3
Line 3 – Combined
Enter the maximum total dollar amount that a member could pay in the contract year for cost
sharing both in- and out-of-network.
Line 4 - Maximum Cost Sharing Description
In the text box provided, briefly explain the methodology used to reflect the impact of
maximum cost sharing on the PMPM values entered in Section III.
SECTION III – DEVELOPMENT OF CONTRACT YEAR COST SHARING
PMPM (PLAN’S NON-ESRD RISK FACTOR)
Section III summarizes the cost sharing for all services included in the plan benefit package.
The service categories are the same as presented in previous worksheets, except that line r
(COB) has been omitted. Please note that for some service categories, (for example,
Inpatient Facility), there is more than one cost-sharing line available. Multiple lines allow you
to enter multiple cost sharing items in a service category to better match the PBP. In
addition to the lines presented, you may also use the ten blank lines at the bottom of the
section to include additional cost-sharing items that do not fit into an already defined service
category line item. Do not insert any additional rows. Supporting documentation for a
mapping of cost-sharing amounts from pricing categories to BPT service categories is
required (see Appendix B).
If the plan’s cost sharing is designed to match Medicare (FFS) cost sharing (for example, a
dual eligible SNP or EGWP plan), then the final cost-sharing dollar amounts will not be
known when the bid is submitted. In order to charge actual Medicare FFS cost sharing, the
cost-sharing description entered for each applicable benefit category should read “Medicare
FFS cost sharing” or similar wording. Note that this approach applies for the BPT and not
the PBP. The actuary may use the actuarial equivalent cost sharing factors shown in
Worksheet 4 to estimate these benefits.
In the case of a Qualified Medicare Beneficiary (QMB) on behalf of whom a state Medicaid
agency pays all or part of the cost sharing, the full level of plan cost sharing must be included
in Section III. See Appendix E for information regarding QMBs.
We expect that the cost sharing for an out-of-service area travel benefit will be entered as
out-of-network cost sharing in columns m and n, with any differences from the out-of-network
cost sharing within the service area clearly described. This expectation applies whether or
not the out-of-service area travel benefit is provided in-network - that is, within the network
established by the MAO or its affiliate for other health plans in other service areas.
Alternatively, the plan sponsor may enter the cost sharing for the travel benefit as in-network.
See Appendix B for information regarding supporting documentation for cost-sharing
utilization assumptions and plan level deductible.
The BPT allows for flexibility in entering cost-sharing information.
examples:
Following are some
Example 1: The PBP contains in-network inpatient cost sharing of $100 per day for both
acute and psychiatric stays with no maximum cost sharing. Assume that the total in-network
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Worksheet 3
inpatient utilization/1000 is 2,000 days, 1,900 of which are for acute and the remaining 100
for psych. These figures could be reflected in the bid form in either of the following ways:
Option A:
Line a1 – Acute
Line a2 – Mental Health
Total
Column g
1,900
100
2,000
Column j
$100.00
$100.00
$100.00
Column k
$15.83
$ 0.83
$16.67
Column g
2,000
2,000
Column j
$100.00
$100.00
Column k
$16.67
$16.67
Option B:
Line a1 – Acute
Total
Example 2: The PBP has in-network professional copays of $10 for PCP, $20 for specialists
excluding mental health (MH) services, $20 copay for MH group sessions, and $40 copay for
individual MH sessions. There is no in-network maximum cost sharing. Assume that innetwork office visit utilization is distributed as follows:
•
PCP
•
MH – Indiv.
50
•
MH – Group
50
•
Other Spec
2,900
•
Total
8,000
5,000
Following are some of the options that could be used to complete the bid form:
Option A: Use the finest level of detail, with individual mental health in line i3 and
group mental health in line i6.
Line i1 – PCP
Line i2 – Specialist excl MH
Line i3 – Mental Health
Line i6 – Other
Total
col g
5,000
2,900
50
50
8,000
$
$
$
$
$
col j
10.00
20.00
40.00
20.00
13.88
col k
$ 4.17
$ 4.83
$ .17
$ .08
$ 9.25
Note that one of the blank rows at the bottom of the form could also be used to enter
one of the mental health copays.
Option B: Same as Option A, but combine the individual and group mental health
copays onto line i3.
Line i1 – PCP
col g col h
5,000 $10 per visit
col j
$ 10.00
col k
$ 4.17
Line i2 – Specialist excl MH
2,900 $20 per visit
$ 20.00
$ 4.83
$ 30.00
$
$ 13.88
$ 9.25
Line i3 – Mental Health
Total
100
$20/visit for group MH sessions,
$40/visit for individual MH
8,000
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Worksheet 3
Option C: Enter all services on one line (for example, i6).
col g
Line i6
Total
8,000
8,000
col h
$10/visit PCP
$20/visit non-MH specialist
$20/visit for group MH
$40/visit for individual MH
col j
col k
$ 13.88
$ 13.88
$ 9.25
$ 9.25
Column c – Service Category
This column is pre-populated for most of the available rows. When the blank rows at the
bottom of the worksheet are used to provide detailed cost-sharing information, the valid
entries are as follows:
•
Inpatient Facility
•
Skilled Nursing Facility
•
Home Health
•
Ambulance
•
DME/Prosthetics/Supplies
•
OP Facility – Emergency
•
OP Facility – Surgery
•
OP Facility – Other
•
Professional
•
Part B Rx
•
Other Medicare Part B
•
Transportation (Non-covered)
•
Dental (Non-covered)
•
Vision (Non-covered)
•
Hearing (Non-covered)
•
Health & Education (Non-covered)
•
Other Non-covered
Technical note: When the blank rows at the bottom of the worksheet are used, the service
category entries must match those listed above exactly. If there is a typographical error in
the entry, the BPT will not recognize the entered cost sharing information on Worksheet 4.
Column d – Service Category Description
This column provides a description for many of the fixed-line cost-sharing items. For lines
with multiple options (for example, Inpatient Facility), the description is intended to help you
provide detailed information that can easily be checked against the PBP. You may input a
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Worksheet 3
description if using a blank row at the bottom of the worksheet to enter additional costsharing lines.
Column e – Measurement Unit Code
For each cost-sharing line, enter the appropriate measurement unit from the list below. The
valid utilization types vary by service category, consistent with previous worksheets.
•
A - Admits
•
D - Days
•
BP - Benefit Period
•
V - Visits
•
P - Procedures
•
T - Trips
•
S - Scripts
•
O - Other
•
Coin - Coinsurance
•
Ded - Deductible (used only for single-line items, such as per-benefit period
deductibles; deductibles that apply to multiple service categories are entered in the
footnote and column f)
Column f – In-Network Effective Plan-Level Deductible PMPM
If there is an in-network plan-level deductible, you must enter the effective amount of the
deductible on each service category line affected. For each service that is subject to the
plan-level deductible, enter an amount such that the sum total represents the effective
PMPM value of the deductible. Enter the actual in-network plan-level deductible amount (for
example, $500) in the footnote.
Columns g through k - In-Network Cost Sharing After Plan-Level Deductible
These fields pertain to all in-network benefits priced in the BPT. Supporting documentation
for a mapping of cost-sharing amounts from categories used in pricing to the BPT service
categories is required (see Appendix B).
Column g – In-Network Util/1000 or PMPM
Enter the projected in-network utilization/1000, or PMPM value in the case of
coinsurance, after the plan-level deductible has been satisfied and including the impact
of the OOP maximum.
Column h – In-Network Description of Cost Sharing / Additional Days / Benefit
Limits
Enter a description of the in-network cost sharing for each service category. This is a text
field.
This BPT field must contain descriptions of all plan cost sharing included in the PBP,
including descriptions of all PBP benefits priced within each BPT service category. Since
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Worksheet 3
each BPT category may map to several PBP benefit categories, this field must provide
details on all benefits priced together within each BPT service category.
All descriptions entered must be easily matched back to the PBP.
This field is to be used by plan managers, marketing staff, and plan actuaries to ensure
that the benefits priced in the BPT are consistent with the benefits in the PBP, as part of
the quality control for your bid submission. We recommend that the actuary include the
PBP service categories (description of the cost-sharing amounts and the corresponding
PBP line numbers) that are priced in each row of Worksheet 3.
However, the
corresponding PBP line numbers may be shown in addition to, and not in lieu of, a
description of the cost-sharing amounts.
Plan sponsors are required to use this field to describe all in-network benefits priced in
the BPT. Even if there is no cost sharing for a particular service category, you must
enter a comment indicating the zero cost-sharing arrangement (that is, $0.00 copay or
0% coinsurance). Do not leave this column blank.
Following are some examples:
•
“(4a) $50/visit, (4b) $25/visit”
•
“$150 days 1 - 5, $0 after day 5, unlimited coverage”.
•
“$100 every two years”.
Column i – Effective Copay/Coinsurance Before OOP Max
Enter the projected effective in-network cost-sharing amount after the plan-level
deductible has been satisfied and before the impact of the OOP max. This amount must
represent either the effective copay (if utilization is entered in column g) or the effective
coinsurance percentage (if PMPM is entered in column g).
Column j – Effective Copay/Coinsurance After OOP Max
Enter the projected effective in-network cost-sharing amount after the plan-level
deductible has been satisfied and including the impact of the OOP max. This amount
must represent either the effective copay (if utilization is entered in column g) or the
effective coinsurance percentage (if PMPM is entered in column g).
Enter the PMPM pricing impact of the in-network OOP maximum in the second footnote
in column k. This value must reflect the PMPM difference in pricing for cost sharing
before the OOP max and after the OOP max has been applied.
Column k – In-Network PMPM
These cells are calculated automatically and reflect the projected cost-sharing value
PMPM for in-network services, excluding the effective in-network plan-level deductible
and including the impact of the OOP maximum. The formula uses the utilization or
PMPM amounts in column g and the effective copay or coinsurance in column j.
•
If the measurement unit is coinsurance (“Coin”), then the calculation is
column g times column j.
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Worksheet 3
•
For measurement units other than coinsurance, the calculation is column g
times column j divided by 12,000.
Column l – Total In-Network Cost Sharing PMPM
These cells are calculated automatically as the sum of columns f and k. This column is the
total projected cost sharing for in-network services.
Column m – Out-of-Network (OON) Description of Cost Sharing / Additional Days /
Benefit Limits
Enter a description for the out-of-network cost sharing of each service category. This is a
text field.
This BPT field must contain descriptions of all plan cost sharing included in the PBP,
including descriptions of all PBP benefits priced within each BPT service category. Since
each BPT category may map to several PBP benefit categories, this field must provide
details on all benefits priced together in each BPT service category.
All descriptions entered must be easily matched back to the PBP.
This field is to be used by plan managers, marketing staff, and plan actuaries to ensure that
the benefits priced in the BPT are consistent with the benefits in the PBP, as part of the
quality control for your bid submission. We recommend that the actuary include the PBP
service categories (description of the cost-sharing amounts and the corresponding PBP line
#s) that are priced in each row of Worksheet 3.
Plan sponsors are required to use this field to describe all out-of-network benefits priced in
the BPT. Even if there is no cost sharing for a particular service category, you must enter a
comment indicating the zero cost-sharing arrangement (that is, $0.00 copay or 0%
coinsurance). For plans that have out-of-network benefits this field blank must not be left
blank.
Column n – Out-of-Network Cost Sharing PMPM
Enter the effective value of cost sharing for out-of-network benefits for each service category.
This column must reflect the total projected cost sharing for all out-of-network services.
Enter the actual OON plan-level deductible in the footnote. Enter the pricing impact of the
OON OOP maximum in the second footnote. (This value must reflect the PMPM difference
in pricing for OON cost sharing both before the OOP maximum and after the OOP maximum
has been applied.)
Column o – Grand Total Cost Share PMPM (In-Network and Out-of-Network)
This column is calculated automatically as the sum of the in-network cost sharing (column l)
and the out-of-network cost sharing (column n).
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Worksheet 4
MA Worksheet 4 - MA Projected Revenue
Requirement PMPM
This worksheet uses the information from previous worksheets for the allowed costs
(Worksheet 2) and cost sharing (Worksheet 3) to determine net medical costs. Non-benefit
expenses and gain/loss margins are entered to establish the plan’s revenue requirements for
the contract year. Values are allocated between Medicare-covered Benefits and A/B
mandatory supplemental benefits and reflect the plan’s non-ESRD risk factor for the contract
period. The allocation of values between Medicare-covered Benefits and A/B mandatory
supplemental benefits must be consistent with the benefit type classification in the PBP.
In Section III, the plan sponsor must enter the projected member months for ESRD enrollees
and may enter the projected ESRD “subsidy”. ESRD enrollees must be excluded from all
other sections of the BPT.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B for more details):
•
Non-benefit expense assumptions.
•
Gain/loss margin.
•
ESRD subsidy information provided.
•
The allocation of allowed costs and cost sharing between Medicare-covered and A/B
mandatory supplemental benefits.
•
The mappings of PBP benefits and BPT pricing when they differ from the suggested
mappings contained in Appendix G.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – DEVELOPMENT OF PROJECTED REVENUE REQUIREMENT
Plan’s non-ESRD Risk Factor (for the contract period)
The non-ESRD risk factor is obtained from Worksheet 5.
Lines a through q and line t.
Column e – Allowed PMPM for Total Benefits
The allowed PMPM is obtained from column o of Worksheet 2. No user inputs are
necessary.
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Worksheet 4
Column f – Cost Sharing for Total Benefits
The total in- and out-of-network cost sharing PMPMs are obtained from column o of
Worksheet 3 (except for lines r, s, and t). No user inputs are necessary.
Column g – Net PMPM for Total Benefits
The Net PMPM is calculated automatically as column e less column f.
Columns h and i - Percentage for Covered Services. The PMPM amounts shown in
columns e through g reflect all benefits covered by the MA plan. In columns h and i, you
must enter the expected percentages of these benefits that represent Medicare-covered
benefits. The percentages in column h are used to allocate allowed costs (column e)
between Medicare-covered (column l) and A/B mandatory supplemental Benefits. The
percentages in column i are used to allocate the plan’s cost sharing (column f) between
Plan Cost Sharing for Medicare-covered services (column k) and cost sharing for A/B
mandatory supplemental Benefits.
For services that are Non-covered as defined, the percentage is defaulted 0.0% (for
example, line l, “Transportation Non-covered”). For all other services, the plan sponsor
must estimate the percentage of covered services for both the allowed costs and the cost
sharing. Enter these percentages in columns h and i. If the plan’s benefit for a service is
richer than that covered by FFS Medicare, the percentage entered must be less than
100%.
Example: The plan sponsor estimates that the Allowed PMPM in column e for
outpatient facility emergency services represents that 99.9% of those costs are
for Medicare-covered services and 0.1% of those costs are for A/B mandatory
supplemental benefits, whereas the cost sharing PMPM in column f represents
that 98.0% of the cost sharing is for Medicare-covered services and 2.0% of the
cost sharing is for A/B Mandatory supplemental benefits. The entries in columns
h and i would be as follows:
(c)
Service Category
f. OP Facility – Emergency
(h)
(i)
% for Cov. Svcs.
Cost
Sharing
Allowed
99.9%
98.0%
See Appendix C for instructions on completing columns h and i for Part B-only plans.
See Appendix B for information regarding supporting documentation for the allocation of
costs and cost sharing between Medicare-covered and mandatory supplemental
benefits.
For the Medicare-covered service categories, lines a through k, the values entered in
columns h and I must generate appropriate pricing for mandatory supplemental benefits
in columns o through p, consistent with the Plan Benefit Package (PBP). In addition, the
relationship of the PBP benefits and the BPT pricing is to be consistent with the
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Worksheet 4
suggested mappings contained in Appendix G. Any deviations from the suggested
mappings must be documented in supporting exhibits. For example, if a plan covers
additional inpatient hospital days, then, absent supporting documentation that identifies a
different mapping, the PMPM pricing for the Non-covered inpatient services is to be
represented in line a, column o, “Net PMPM for Additional Services”.
Column j – Fee-for-Service Medicare Actuarial Equivalent (AE) Cost-Sharing
Proportions
These values are populated automatically based on the enrollment projections entered in
Worksheet 5.
Column k – Plan Cost Sharing for Medicare-covered Services
This column calculates the portion of the plan’s cost sharing that is attributable to
Medicare-covered benefits (calculated as column f times column i). This column is used
to determine the reduction of A/B cost sharing in column p.
Columns l through n – Medicare-covered using Actuarial Equivalent Cost Sharing
These columns are calculated automatically and are the basis for the costs included in
the Plan A/B Bid.
Column l – Medicare-covered Allowed PMPM
The Medicare-covered Allowed costs are calculated automatically based on the
percentage of Medicare-covered benefits input in column h. Column l is calculated
as column e times column h.
Column m – Fee-for-Service Medicare Actuarial Equivalent Cost Sharing
The FFS Medicare AE cost sharing PMPMs are based on the proportions in column
j. Column m is calculated as column j times column l.
Column n – Net PMPM.
Calculated as column l minus column m.
Columns o through q – A/B Mandatory Supplemental (MS) Benefits
These columns are calculated automatically and are the basis for the costs included in
the A/B mandatory supplemental premium.
Column o – Net PMPM for Additional Services
These amounts reflect the net costs (that is, allowed costs less enrollee cost sharing)
for Non-covered benefits. This column is calculated automatically as the allowed
costs for Non-covered benefits (column e minus column l) less the cost sharing for
Non-covered benefits (column f minus column k).
Column p – Reduction of A/B Cost Sharing
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Worksheet 4
This column is the difference between FFS actuarial equivalent cost sharing and the
plan cost sharing for Medicare-covered services, calculated automatically as column
m minus column k. This reduction is sometimes referred to as the “FFS cost-sharing
buydown.”
Column q – Total A/B Mandatory Supplemental Benefits
This column is calculated automatically as the sum of columns o and p.
Line r – ESRD
This line is populated based on Section III
Line s – Additional Benefits (employer bids only)
This line is populated based on Section IV.
Line u – Total Medical Expenses
The total medical expense is the sum of lines a through t, except for column j. The value in
column n is the net medical cost included in the Plan A/B Bid. The value in column q is the
net medical cost included in the A/B mandatory supplemental premium.
Line v – Non-Benefit Expenses
Enter the non-benefit expense information for total MA benefits in column g for the four
categories described below. These data represent all administrative costs of operating the
Medicare Advantage plan, other than medical, DME/supplies, prescription drugs, and other
benefits.
The worksheet distributes the non-benefit expenses proportionately between Medicarecovered (column n) and A/B mandatory supplemental (column q) for each category. Nonbenefit expenses are also distributed within A/B mandatory supplemental benefits between
“Additional Services” (column o) and “Reduction of A/B Cost Sharing” (column p). The
proportions are described in these instructions and exclude the PMPM impact of the ESRD
subsidy.
The non-benefit expenses must be entered separately on the bid pricing tool for the following
categories:
•
Marketing & Sales (for example, the cost of marketing materials, commissions,
enrollment packages, identification cards).
•
Direct Administration (for example, functions that are directly related to the
administration of the Medicare Advantage program).
Examples of direct
administration functions are as follows:
o
Customer service.
o
Billing and enrollment.
o
Medical management.
o
Claims administration.
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o
Medicare user fees, which are estimated to be $0.36 PMPM on a national
basis for CY2010.
o
Uncollected enrollee premium.
o
Disease management functions (such as patient education and disease
monitoring).
•
Indirect Administration (for example, functions that may be considered “corporate
services,” such as CEO, accounting operations, actuarial services, legal services,
human resources, etc.).
•
Net Cost of Private Reinsurance (that is, reinsurance premium less projected
reinsurance recoveries).
All non-benefit expenses must be reported using the appropriate generally accepted
accounting principles (GAAP) methodology. For example, acquisition expenses and capital
expenditures must be deferred and amortized according to the relevant GAAP standards (to
the extent that is consistent with the organization’s standard accounting practices, if not
subject to GAAP). Also, acquisition expenses (marketing and sales) must be deferred and
amortized in a manner consistent with the revenue stream anticipated on behalf of the newly
enrolled members. Guidance on GAAP standards are promulgated by the Financial
Accounting Standards Board (FASB). Of particular applicability is FASB’s Statement of
Financial Accounting No. 60, Accounting and Reporting by Insurance Enterprises.
Costs not pertaining to administrative activities, including goodwill amortization, income
taxes, changes in statutory surplus, and investment expenses, must be excluded from nonbenefit expenses. Similarly, non-insurance revenues pertaining to investments and feebased activities cannot be reflected in the bid.
Start-up costs that are not considered capital expenditures under GAAP are reported as
follows:
•
Expenditures for tangible assets - for example, a new computer system must be
capitalized and amortized according to relevant GAAP principles.
•
Expenditures for non-tangible assets - for example, salaries and benefits - must be
reported in a manner consistent with the organization’s internal accounting practices
and the reporting of similar expenditures in other lines of business.
Costs that are common to offering a Medicare Advantage-Prescription Drug (MA-PD) plan
must be allocated proportionately between the Medicare Advantage and Part D bid pricing
tools based on total revenue.
Related Party Agreements
The level of disclosure of related-party agreements must demonstrate that the operating
results and financial positions for organizations participating in such agreements are not
significantly different from the operating and financial arrangements that would have been
achieved in the absence of the relationships. This level of disclosure is consistent with our
2009 guidance, and comparable to the level required by GAAP.
The plan sponsor is required to demonstrate that the above is true, and that fees associated
with these transactions are based on appropriately allocated, actual costs that are
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comparable with those experienced by unrelated organizations of similar size and market
position.
To satisfy proprietary concerns, CMS can initiate separate contact with the sponsor and the
subcontracted related party when addressing related-party issues in the bid. Plan sponsors
interested in this level of discussion must request it and identify a point of contact at the
related party at the time of bid submission.
These requirements for related-party agreements apply to a plan sponsor that enters into an
administrative service agreement involving a parent company and subsidiary, or between
subsidiaries of a common parent. A plan sponsor that meets these criteria must provide the
following supporting documentation at the time of bid submission for each related-party
agreement:
•
•
•
•
•
The identity of the related-party organization.
A description of the business arrangement and services provided.
The financial terms.
A point of contact at the related party (when the sponsor is requesting that CMS
enter into a separate discussion with a subcontracted related party).
A demonstration that the operating and financial results of the participating
organizations are not significantly different from those that would have been
achieved by the plan sponsor in the absence of the related party relationships as
outlined below.
A plan sponsor in a related party agreement with an organization that is providing services to
unrelated parties must directly or indirectly, or through agreement with the subcontracted
party, provide the following:
•
•
•
A written summary outlining the terms of actual contracts between the subcontractor
and the comparable, unrelated parties for similar services. The support must
demonstrate that the financial arrangements between related parties are not
significantly different from those that would have been achieved by the plan sponsor
in the absence of the related-party relationships.
An explanation of the disparities in the financial arrangements between related
parties and unrelated parties. The explanation must fully address the advantaged or
disadvantaged positions and, overall, must demonstrate that the financial
arrangements are not significantly different from those that would have been
achieved by the plan sponsor in the absence of the related party relationships.
The actual copies of agreements to CMS upon request.
A plan sponsor in a related-party agreement with an organization that supports only the
MA organization must directly or indirectly, or through agreement with the subcontracted
party do the following:
•
•
•
Prepare the bid pricing tool in a manner that does not recognize the independence of
the subcontracted related party. For purposes of completing the bid pricing tool, the
bid sponsor must consider the gain/ (loss) and non-benefit expense of the relatedparty to be those of the sponsor. The sponsor cannot allocate all administrative
costs in the related party agreement to non-benefit expense.
Develop the gain/(loss) and non-benefit expense of the related-party subcontractor in
accord with the instructions for completing the bid pricing tool.
Support the development of the gain/ (loss) and the actual costs associated with the
non-benefit expense as required by these instructions.
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•
Subcontracted related party agreements for all parties represented in the bid must be
disclosed in accord with the instructions for completing the bid pricing tool.
See Appendix B for information regarding supporting documentation for the non-benefit
expenses.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, enter a
zero ($0.00) in the cell.
Lines v1 through v4 - Non-Benefit Expense. Total non-benefit expenses are input in
column g and allocated proportionately between Medicare-covered (column n) and A/B
mandatory supplemental (column q). Note that the same proportion is used for each line
item. The allocation is based on the relative proportion of the plan’s medical expenses
requirements for Medicare-covered (“bid”) and A/B mandatory supplemental, excluding the
PMPM impact of the ESRD subsidy.
Column g – Non-Benefit Expense PMPM for Total Benefits. Enter the PMPM by
category.
Column n – Non-Benefit Expense PMPM for Medicare-covered. These values are
calculated as column g minus column q.
Column q – Non-Benefit Expense PMPM for A/B Mandatory Supplemental. These
values are calculated based on the relative proportion of A/B mandatory supplemental,
excluding the impact of the ESRD subsidy.
Line v5, columns g, n, and q - Total Non-Benefit Expense. The sum of lines v1 through
v4.
Line v5, columns o and p - Total Non-Benefit Expense for Additional Services and
Reduction of A/B Cost Sharing.
The total non-benefit expense for A/B MS benefits
(column q) is allocated between additional services (column o) and reduction of A/B cost
sharing (column p). The allocation is based on the relative proportions of additional services
and reduction of A/B cost sharing, excluding the impact of the ESRD subsidy.
Line w – Gain/Loss Margin.
Gain/Loss Margin Guidance
Introduction
The user must input the projected PMPM for the gain or loss in column g for total MA
services. Gain/loss margin refers to the additional revenue requirements above and beyond
the requirements needed to cover medical expenses and non-benefit expenses.
The gain/loss margin is distributed proportionately between Medicare-covered and A/B
Mandatory Supplemental. The allocation is based on the relative proportions of the medical
expenses requirements for Medicare-covered and A/B Mandatory Supplemental, excluding
the PMPM impact of the ESRD subsidy.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, enter a
zero ($0.00) in the cell.
See Appendix B for information regarding supporting documentation for the gain/loss margin.
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General Enrollment (that is, non-EGWPs and non-SNPs) plans and Institutional / Chronic
Care SNPs:
Overall Medicare margin levels for general enrollment and institutional / chronic care SNP
plans are to be consistent with the plan sponsor’s corporate requirement. (Please note that
the 2008 bid instructions included the term “individual market,” not “general enrollment,” to
describe non-EGWPs,and non-SNPs.) Overall Medicare margin levels may be determined
either at the contract level or at a more aggregated level. The sponsor’s Medicare margin
requirement, as measured by percentage of revenue, is to be within a reasonable range (for
example, plus or minus 1% or 1.5%) of other lines of business. Additionally, for sponsors
that price based on return on investment (ROI) or return on equity (ROE), the projected
Medicare returns must be consistent with the company’s return requirements. Comparisons
to other lines of business must take into account the degree of risk or reserve levels of the
business.
The overall margin level expectations are likely to be consistent on a year-by-year basis.
Actual organization returns are expected to vary year to year in practice, but to achieve the
organization’s requirement over a longer term period (for example, three to five years).
Individual plan margins may vary from the overall organization level.
The overall margin levels included in the MA and Part D components of MA-PD bids must be
within a reasonable range of each other (for example, plus or minus 1% or 1.5%), with any
variation reflecting the different levels of financial risk for the two components. The individual
Part D margin of an MA-PD bid may be allocated by applying the overall Part D margin
requirement to each Part D bid of the MA-PD organization or, alternatively, in similar
relationships as the MA margins.
For plans with negative margins the plan sponsor must develop and follow a business plan to
achieve profitability.
Exceptions to the business plan requirement are cases in which
multiple MA products are offered in a given service area and the pricing reflects implicit
“subsidies” to mitigate premium spirals.
Anti-competitive practices will not be accepted. For example, significantly low or negative
margins for plans that have substantial enrollment and stable experience, or “bait and switch”
approaches to specific plan margin buildup, will be rejected, absent sufficient support that
such pricing is consistent with these instructions.
Employer-only or Union-only Group Waiver Plans (EGWPs):
The foundation for the claim and administrative costs for EGWPs should be based on
appropriate EGWP experience. The margin assumptions used for general enrollment plans
must be the basis for the margin requirements for EGWPs. Organizations may choose to use
the overall margin levels for general enrollment plans as the basis for the group plan margin
assumptions or may rely on the margins used in comparable general enrollment plans.
There may be small differences (that is, up to 1%) in the margin levels between EGWP and
general enrollment plans. If corresponding general enrollment plans are not offered, then the
margin guidance for general enrollment plans applies to the EGWP margin pricing. That is,
overall EGWP margin levels are to be consistent with the organization’s margin requirement
and this requirement, is to be within a reasonable range (for example, plus or minus 1% or
1.5%) around a return-on-equity or return-on-investment type measure or comparable to
other similar lines of businesses.
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Special Needs Plans Serving Dual-Eligibles (DE-SNPs):
The foundation for the claim and administrative costs for DE-SNPs should be based on
appropriate experience. The margin assumptions used for general enrollment plans should
be the basis for the margin requirements for DE-SNPs. There may be small differences (that
is, up to 1%) in the margin levels between DE-SNP and general enrollment plans.
If corresponding general enrollment plans are not offered, then the margin guidance for
general enrollment plans applies to the DE-SNP margin pricing. That is, overall DE-SNP
margin levels are to be consistent with the organization’s margin requirement, and this
requirement is to be within a reasonable range (for example, plus or minus 1% or 1.5%)
around a return-on-equity or return-on-investment type measure or comparable to other
similar lines of businesses.
Relationship of Margin Requirements and Non-Benefit Expenses:
The development of the margin requirements may reflect revenue offsets not captured in
non-benefit expenses (such as investment expenses, income taxes, and changes in
statutory surplus) and may also include investment income.
Line x – Total Revenue Requirement
The sum of lines u (medical expense), v5 (non-benefit expense), and w (gain/loss margin).
The value in column n is the total revenue requirement of the Plan A/B Bid.
Line y – Percent of Revenue Ratios (excluding ESRD)
These lines calculate the ratio of net medical expense, non-benefit expense, and gain/loss
margin as a percentage of revenue. These ratios exclude the PMPM impact of the ESRD
subsidy.
SECTION III – DEVELOPMENT
ESRD “SUBSIDY”
OF
PROJECTED CONTRACT YEAR
The benchmarks calculated in the CY2010 MA bid form exclude enrollees in ESRD status,
as does the projection of plan expenditures. However, all individuals enrolled in the plan,
including those in ESRD status, are required to pay the same plan premium and are offered
the same benefit package. In an effort to account for the projected marginal costs (or
savings) of plan enrollees in ESRD status, Section III allows for an adjustment to A/B
mandatory supplemental benefits in line r of Section II. This adjustment is split into two
sections: one for basic benefits and the other for supplemental benefits. Section III must be
completed as follows:
•
Projected CY ESRD member months are required for all plans.
•
Completion of the section for basic benefits is optional; however, plan sponsors with
a credible block of ESRD experience are expected to complete this section
•
Plan sponsors with a credible block of ESRD experience must complete the
Mandatory Supplemental section, if the section for basic benefits is completed.
•
Plan sponsors that do not have a credible block of ESRD experience are encouraged
to complete the Mandatory Supplemental section.
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Due to the higher expected level of per-enrollee expenditures, the credibility thresholds for
individuals in ESRD status will typically be lower than those based on non-ESRD
populations.
ESRD CY member months - All plan sponsors must enter the projected CY ESRD member
months. Do not leave this field blank. If no ESRD enrollees are expected during the contract
period, then enter a zero (0) in this field.
Basic benefits - The applicable fields to be completed in the Medicare-covered section are
(I) projected CMS capitation revenue, (ii) projected net medical expenses, and (iii) projected
non-benefit expenses. The projected margin requirement is calculated based on the values
for the non-ESRD bid. All fields in this section are to reflect Medicare levels of cost sharing
(for example, 20 percent cost sharing for Part B services once the deductible has been met)
and must be reported on a “per ESRD member per month” basis.
If the organization does not have fully credible ESRD experience, it may blend the
experience with manual rates similar to what is done on Worksheet 2 for non-ESRD
enrollees.
The form will calculate the plan’s costs for basic benefits of ESRD enrollees and will allocate
these costs across all plan members (ESRD and non-ESRD enrollees).
Supplemental Benefits - The inputs in this section are (i) the projected cost-sharing
reduction PMPM for ESRD enrollees, and (ii) the projected PMPM cost of additional benefits
for ESRD enrollees. Entries must be reported on a “per ESRD member per month” basis.
The form will calculate the incremental cost of supplemental benefits for ESRD enrollees and
will allocate these costs across all plan members (ESRD and non-ESRD).
Supporting documentation for ESRD subsidy is required (see Appendix B).
SECTION IV – FOR EMPLOYER/UNION-ONLY GROUP WAIVER PLAN
(EGWP) BIDS ONLY (“800-SERIES” BIDS)
This section may be used by employer/union-only group waiver plan (EGWP) bids (“800series” plan IDs) to provide CMS with the costs associated with additional “unspecified”
benefits. EGWPs include Employer/Union Direct Contract Private Fee-for-Service plans
(that is, plan type equal to “ED PFFS”).
These services may be funded by rebate dollars. Consistent with individual-market bids, all
rebates available to the plan must be allocated on Worksheet 6.
See Appendix D for further information on group bids.
Line 1. PMPM for Additional (Unspecified) Mandatory Supplemental Benefits
Enter the PMPM value of medical costs associated with additional “unspecified” benefits.
The benefits represented by this value may be customized for each employer or union group
that enrolls in the plan. See Appendix D for further guidance on the use of this field.
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This value will be used in line s of Section II. Note that the non-benefit expenses and
gain/loss margin will be proportionately allocated.
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Worksheet 5
MA Worksheet 5 - MA Benchmark PMPM
This worksheet calculates the A/B benchmark and evaluates whether the plan realizes a
savings or needs to charge a basic premium.
All information provided on Worksheet 5 includes the experience for enrollees in hospice
status and excludes the experience for the enrollees in ESRD status, for the time period that
enrollees are in ESRD status based on CMS eligibility records.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B for more details):
•
The development of projected risk scores.
•
The development of plan-provided ISAR factors, if used (regional PPO plans only).
Below is a brief description of the sections contained in this worksheet:
•
Section II – Summarizes the development of the benchmark and bid.
•
Section III – Summarizes the development of the savings or basic member premium.
•
Section IV – Development of regional A/B benchmark (including the statutory
component of regional benchmark).
•
Section V - Projected plan-specific information for counties within the service area.
•
Section VI – Other Medicare information (populated based on the enrollment
projection).
The A/B benchmark calculation is based on the following data elements:
•
Service Area: Counties within the MA service area defined by their respective Social
Security Administration (SSA) State-County codes.
•
Projected Member Months (excluding ESRD):
months, reported by county.
•
Projected Risk Factor (excluding ESRD):
ESRD enrollees.
•
Medicare Secondary Payer Adjustment Factor: Factor relative to all payments.
•
For RPPOs, the mix of Medicare beneficiaries (nationally) between original Medicare
and Medicare Advantage (used to weight the statutory and plan bid components of
the regional A/B benchmark).
Projected non-ESRD member
Projected average risk factor for non-
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
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SECTION II – BENCHMARK AND BID DEVELOPMENT
Line 1 – Standardized A/B Benchmark (at 1.000 risk score)
This value is obtained from Section IV for regional plans and from Section V for local plans.
Line 2 – Medicare Secondary Payer (MSP) Adjustment
User input is required. Do not leave this field blank. If zero percent is the projected value,
enter a zero (0) in this field.
This entry can be calculated, using the Monthly Membership Report (MMR) data, as the ratio
of total working aged adjustment dollars divided by total payments before reduction for user
fees or working aged. See the description of the Plan Payment Report (APPS Payment
Letter) in Appendix I.12. of the “Medicare Advantage and Prescription Drug Plan
Communications User Guide Version 3.0”.
Line 3 – Weighted Average Risk Factor (excl ESRD)
This value is obtained from Section V.
Line 4 – Conversion Factor
Calculated as (1.000 minus line 2) times line 3.
Line 5 – Plan (or Regional) A/B Benchmark
Calculated as line 1 times line 4.
Line 6 – Plan A/B Bid
This value is obtained from Worksheet 4, then rounded to two decimals.
Line 7 – Standardized A/B Bid (@ 1.000)
Calculation is line 6 divided by line 4, then rounded to two decimals.
SECTION III – SAVINGS/BASIC MEMBER PREMIUM DEVELOPMENT
Line 1 – Savings
The difference between the Plan (or Regional) A/B Benchmark and the Plan A/B Bid, but not
less than zero. This value is rounded to two decimals.
Line 2 – Rebate
Calculated as 75% of the Savings (in line 1). This value is rounded to two decimals.
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Line 3 – Basic Member Premium
The Standardized A/B Bid less the Standardized A/B Benchmark, but not less than zero.
This value is rounded to two decimals.
SECTION IV – STANDARDIZED A/B BENCHMARK – REGIONAL PLANS
ONLY
This section calculates the standardized A/B benchmark for regional PPO plans.
Line 1 – Statutory Component
The PMPM amount, defined by region, is pre-populated by CMS. The weighting is also predetermined by CMS and populated in the bid form.
Line 2 – Plan Bid Component
The plan bid component will be announced by CMS after the regional bids are submitted. It
will likely be announced at the same time that the Part D National Average is announced
(generally in August).
Plan sponsors may input an estimated average regional bid amount in their initial June bid
submission.
For bids that are submitted prior to the announcement of the RPPO averages, there are two
options for completing this field: (i) leave the cell blank, in which case the submitted plan’s
standardized bid (Section II, line 7) is used as the plan bid component, or (ii) input a
reasonable estimate of the average RPPO bid for the region.
The RPPO announcement includes the weighted average MA RPPO bid for each region.
Organizations will be instructed to submit revised RPPO MA BPTs (generally in August) with
the applicable average bid amount entered in line 2. Employer bids (“800-series” bids) are
also required to be resubmitted at that time to reflect the RPPO average bids in line 2. Any
changes in rebates due to the actual plan bid component must be re-allocated at that time.
Line 3 – Standardized A/B Benchmark – Regional Plans
This line is calculated as the weighted average of lines 1 and 2 (if line 2 has a value
entered). If line 2 does not have a value entered (that is, for a pre-announcement bid
submission for which the plan sponsor has not entered an estimate value), the amount from
Section II, line 7 is used in the calculation.
SECTION V – COUNTY LEVEL DETAIL AND SERVICE AREA SUMMARY
(EXCLUDING ESRD)
This section contains detailed data by county and develops plan-specific county-level MA
payment rates. For most plans, the only user inputs are the State-County code (column b),
projected member months (column e), and projected risk factors (column f). Entries must
reflect plan-specific enrollment projections for each county within the service area.
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As with all aspects of the projections for MA-PD plans, the enrollment and risk scores for the
MA plan must be based on a population consistent with the corresponding PD plan.
In the event that the variation in the MA rates is not an accurate reflection of the variation in a
plan’s projected costs in its service area, CMS will consider allowing MA organizations, on a
case-by-case basis, to request that payment rates for RPPOs be developed using planprovided geographic intra-service area rate (ISAR) factors. MA organizations that wish to
propose plan-provided ISAR factors for regional plans must input such amounts in this
section, as described below.
Line 1 – Use of Plan-Provided ISAR Factors
Regional plans that wish to use ISAR factors to develop their county payment rates must
enter “Yes”. (Technical note: Do not enter “Y” in this field; enter the entire word “Yes”)
Line 2 – Total or Weighted Average for the Service Area
The county-level data are summarized in this line, weighted by projected member months.
Line 3 – County-Level Detail
Column b – State-County Code
Enter the Social Security Administration (SSA) State-County codes that define the MA
service area, in accordance with the following:
•
Each State-County code must be entered as a text input (i.e. must include a
preceding apostrophe) and must include all leading zeroes (for example, ‘01000).
This field has been formatted as the “General” format in Excel, in order to support
the functionality to link spreadsheets. Therefore, county codes must be entered
as text (that is, using a preceding apostrophe), including any leading zeros.
•
If the service area has more than one county, do not leave any blank rows
between the first and last State-County code entered. Also, do not leave blank
rows before the first county code entered.
•
Do not enter the same State-County code more than once.
•
Do not insert any additional rows in the worksheet.
•
Do not input the out-of-area (OOA) county, “99999.” OOA enrollees are not
represented in the benchmark calculation.
•
The county codes entered in the BPT must match the service area defined in
HPMS by the MA organization.
Technical note: In the “finalized” MA BPT file, the county level section will be sorted in a
descending order, based on the county codes entered in column b. See the technical
instructions (Appendix H) for further information.
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Column c – State
The worksheet will display the applicable state name based on the corresponding code
entered in column b. No user entry is required.
Column d – County Name
The worksheet will display the applicable county name based on the corresponding code
entered in column b. No user entry is required.
Column e – Projected Member Months (excluding ESRD)
Enter the projected contract year member months for each county in the service area.
The projected member months must include both aged and disabled members, but
exclude ESRD members. The projected member months are to be developed using data
on members enrolled in the plan as of early 2009. (Technical note: The data will display
as whole values but can be entered with decimal places.)
Column f – Non-ERSD Projected Risk Factor
Enter the risk factors for the projected non-ESRD membership by county. In accordance
with Appendix B, supporting documentation for the development of the projected risk
scores is required.
Risk Score Development for CY2010
General:
The projected CY2010 risk score must:
•
•
•
•
•
Be based on the 2010 recalibrated HCC risk model.
Reflect appropriate projection factors.
Include a frailty factor, if applicable.
Be adjusted for FFS normalization.
Be consistent with the development of projected medical expenses.
Additionally, as described below, different approaches are to be followed for plans with
appropriate base period experience versus plans without such experience.
HCC-Risk Model:
CMS implemented an updated version of the Medicare Advantage CMS-HCC 70 risk
model that will be used for payments in CY2010. The risk model was recalibrated based
on predicted fee-for-service (FFS) per capita costs for 2008 and FFS claims data for
2004 and 2005. Frailty factors were also recalibrated for CY2010.
Additional information on the update to the HCC Model, including the 2010 normalization
factor, is contained in the CY2010 MA advance payment notice and the MA ratebook
announcement. These can be found under the “Medicare Advantage Rates and
Statistics” page of the CMS website at:
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/
See the links under “Risk adjustment”, “Announcements & Documents”, and “Ratebooks
& Supporting Data”.
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Additional information on the risk adjustment process can be found under:
http://www.csscoperations.com/new/usergroup/traininginfo.html
Normalization:
At time of payment, the risk scores for each plan enrollee will be divided by a factor,
known as the FFS normalization factor for 2010. This adjustment accounts for the
expectation of higher intensity in the aggregate risk scores for the contract year versus
the model calibration year (2008). Accordingly, the projected risk scores in the 2010 bids
must reflect the normalization factor.
Approaches:
Acceptable approaches for the development of risk scores depend on whether the plan
pricing is based on manual rates or on actual plan experience.
Plans that are priced using a manual rating approach must estimate risk scores based on
the expected medical expenses for their projected enrollees. Further, the risk scores for
new plans must be developed consistent with the recalibrated HCC model. Details of
this model may be found at http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/,
under “risk adjustment.”
The preferred basis for projecting the 2010 risk scores for experienced-rated plans is use
of the recalibrated HCC risk scores for the 2008 enrollee cohort. Plan-specific risk score
data that may be used as the basis for projecting CY2010 risk scores are available in
HPMS under the “Risk Adjustment” link from the HPMS Home page. (Note: You must
have HPMS user access to view this information. The HPMS weblink is either
https://32.90.191.19/hpms/secure/home.asp or https://gateway.cms.hhs.gov, depending
on your firm’s connection method.) The risk score data posted in HPMS are
accompanied by technical notes to assist actuaries with interpreting the data presented.
There are several advantages to using the 2008 cohort recalibrated HCC risk scores in
the projection of the CY2010 risk score: (i) they are consistent with the base-period
medical expenses; (ii) they are based on a mid-year cohort and require no adjustment for
seasonality; (iii) they reflect the most complete MA diagnosis data for 2006 dates of
service submitted through January 31, 2009, which is the final reporting deadline for this
period; and (iv) they are based on the latest risk model.
The projection of scores from 2008 to 2010 must reflect relevant projection factors, which
include, but are not limited to, coding intensity trends (inclusive of FFS normalization and
plan specific trend), and changes in plan population. Please note that the HPMS
reported scores are based on a mid-year cohort with nearly complete run-out of data and
require no explicit adjustment for (i) transition from lagged to non-lagged diagnosis data,
(ii) incomplete reporting of diagnosis data, and (iii) seasonality. Finally, the projected
“raw” scores must be normalized by dividing by the 2010 FFS normalization factor.
The preferred alternate approach to forecasting the CY2010 MA risk scores for
experience-rated plans is to use the revised risk adjustment model to generate scores for
their expected enrollment. Risk score development for the expected plan enrollment
should use the revised 2010 CMS-HCC model (which can be found at:
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/ under the “Risk Adjustment” link)
and follow the requirements for appropriate diagnostic data sources for the CMS-HCC
risk adjustment model, which can be found at:
http://www.csscoperations.com/new/usergroup/2007raps/ra-particpantguide_120607.pdf.
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Worksheet 5
The starting “raw” risk scores for this alternative approach are to be trended to 2010 with
explicit adjustment for the following factors as appropriate:
•
Plan specific coding intensity;
•
Impact of lagged versus non-lagged diagnosis data;
•
Run-out of diagnosis data;
•
Seasonality;
•
Population changes; and
•
Other appropriate factors.
Finally, the projected “raw” scores must be normalized by dividing by the 2010 FFS
normalization factor.
If the method used to develop projected risk scores is not one of the approaches
described above, then supporting documentation that clearly demonstrates consistency
with these approaches is required.
Column g – Plan-Provided ISAR Factors
CMS may allow MA organizations, on a case-by-case basis, to request that regional plan
payment rates be developed using plan-provided geographic intra-service area rate
(ISAR) factors in the event that the variation in the MA rates is not an accurate reflection
of the variation in a regional plan’s projected costs in its service area.
MA organizations that wish to propose plan-provided ISAR factors for regional plans
must complete the following steps:
(i)
Enter “Yes” in line 1, in response to the question: “Use of plan-provided ISAR?”
(Technical note: Do not enter “Y” in this field; enter the entire word “Yes.”)
(ii)
Enter the plan-provided ISAR factors in column g of the county-level detailed
table. Factors can be in the form of either PMPM values or a relative scale.
(iii)
Provide support for the development of the plan-provided ISAR factors in
accordance with Appendix B.
Column h – MA Risk Ratebook: Unadjusted
The worksheet will display the applicable published Ratebook risk rates for the contract
period. If enrollee type is “A/B,” the amounts shown are the total of Part A and Part B. If
enrollee type is “Part B Only,” the amount shown is the Part B rate.
Column i – MA Risk Ratebook: Risk-Adjusted
The worksheet will calculate the risk-adjusted rates based on the rates in column h and
the risk scores entered in column f.
Column j – ISAR Scale
The worksheet will calculate the ISAR scale based on either the plan-provided ISAR
factors in column g (if provided) or the Ratebook rates in column h.
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Worksheet 5
Column k – ISAR-Adjusted Bid
The worksheet will calculate the ISAR-adjusted bid based on the ISAR scale in column j
and the Standardized A/B Bid in Section II. Note that the payment rates represent
coverage for Medicare Part A and Part B (except for Part-B only plans). The values will
then be separated into Part A and Part B payment rates in columns l and m.
Columns l through m – Risk Payment Rates
These columns are calculated based on the ISAR-adjusted bid in column k and the risk
ratebook proportions for Part A and Part B.
SECTION VI – OTHER MEDICARE INFORMATION
This section contains county-level Medicare information used in the bid form. This section is
populated based on the county codes input in column b and the projected member months
entered in column e.
Please note that the FFS costs used for the actuarial equivalent cost sharing do not include
home health care costs since there is no cost sharing for home health services in Medicare
FFS. Experience for ESRD enrollees is excluded, and the costs for hospice services are
excluded as well, since MA enrollees do not receive Medicare-covered hospice services
through the MA plan. However, hospice enrollees have not been excluded in calculating the
PMPM FFS Costs. Further details on the development of the cost-sharing factors, such as
the handling of IME, GME, and other costs, may be found at www.cms.hhs.gov under
Medicare > Medicare Advantage Rates & Statistics > Ratebooks & Supporting Data.
Columns n through p – Original Medicare Cost-Sharing Proportional Factors
These columns are populated based on the enrollment projections and are used in
column j of Worksheet 4.
Columns q through s – FFS Costs used to weight Original Medicare Cost Sharing
These columns are populated based on the enrollment projections and are used in the
weighted averages (row 36) of columns n through p.
Columns t through u – FFS Equivalent Cost Sharing
These columns are populated based on the enrollment projections.
Columns v through w – Metropolitan Statistical Area (MSA). These columns are
populated based on the enrollment projections. The names shown are based on
Metropolitan and Micropolitan statistical areas, as defined by the Office of Management
and Budget, December 2006. While not directly used in the BPT calculations, this
information is helpful to CMS during bid reviews.
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Worksheet 6
MA Worksheet 6 – MA Bid Summary
Worksheet 6 summarizes the results of the calculations of the bid form. In addition, some
user inputs are required, as described below.
All information provided on Worksheet 6 includes the experience for enrollees in hospice
status and excludes the experience for the enrollees in ESRD status, for the time period that
enrollees are in ESRD status based on CMS eligibility records.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – OTHER INFORMATION
Section A – Part B Information
Line 1 – CMS Estimate of “Standard” Contract Year Part B Premium
This value is pre-populated by CMS.
Section 1839 of the Act, as amended by Section 811 of the 2003 MMA and Section 5111 of
the 2005 Deficit Reduction Act, provides for an income-related reduction in the government
subsidy of the Medicare Part B premium. Under this provision, for those beneficiaries
meeting specified income thresholds, a monthly adjustment amount will be added to the
standard Part B premium. We use the term “standard” to mean the premium amount
excluding any income-based adjustments (as well as excluding other adjustments, such as
late enrollment penalties).
Generally, effective 2007, the standard Part B premium amount becomes the lowest Part B
premium a beneficiary would pay, with higher-income beneficiaries paying greater Part B
premiums. (The only beneficiaries who pay less than the standard Part B premium are those
whose Part B premium increase is limited by the increase in their Social Security check (the
“hold harmless” provision) and those for whom the state or another third party pays for the
Part B premium).
The addition of monthly adjustment amounts to the Part B premium obligation of higherincome beneficiaries will be phased in over three years, beginning in 2007. Given the MA
requirement that benefits must be uniform within an MA plan, the effect of this provision on
MA plans is that the lowest Part B premium a plan can offer is the estimated standard
amount net of rebates. MA enrollees are required to pay the standard Part B premium, but it
may be reduced by the MA organization through the use of rebate dollars.
The amount pre-populated in the BPT is the CMS estimated value of the standard Part B
premium for the contract year at the time that the bid form is released.
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Worksheet 6
See Section IIB for further information regarding allocating rebates to the standard Part B
premium.
Line 2 – Part B % of USPCC
This value is pre-populated by CMS. For “Part B-Only” bids, this percentage is used to
estimate the Part A portion of the plan benchmark, which is used in line 3.
Line 3 – Maximum for Part A Package on Part B-Only Members
Lines a through c do not require any user inputs. These lines use bid information to
calculate the maximum that can be charged to Part B-Only members for Part A services. On
line d, enter the amount for Part B-Only members for Part A services. The amount entered
in line d cannot be greater than the maximum value shown to the right. If the bid’s Enrollee
Type is “A/B,” then this field must be left blank.
Note: the MA premium (for Basic and Mandatory Supplemental benefits) actually charged to
all plan enrollees is calculated in Section IIIC, line 6.
Section B – Rebate Allocation for CY Standard Part B Premium
Line 1 – PMPM Rebate Allocation for Standard CY Part B Premium
Enter the PMPM amount of rebates to reduce the standard Part B premium.
Line 2 – Rounded Part B Rebate Allocation
The PMPM amount entered in line 1 is rounded to one decimal (that is, the nearest dime) to
comply with withhold system requirements.
Line 3 – Does the plan sponsor intend to reduce the entire CY standard Part B
premium using rebates?
CMS is considering allowing plans the ability to fully reduce the standard Part B premium.
The bid pricing tool and instructions are released annually in April, but the standard Part B
premium is not released by CMS for the upcoming contract year until several months later.
Therefore, plans must use the CMS pre-populated Part B premium estimate in the bid form
(Section IIA, line 1) to determine the level of rebates to allocate.
If a plan (i) has allocated Part B rebates (in Section IIB, line 2) equal to the estimated CY
standard Part B premium pre-populated at the time that the bid form is released (in
Section IIA, line 1), and (ii) intends to fully reduce the standard CY Part B premium (that is,
reduce the standard Part B premium to $0.00), then enter “Yes” in this line. (Technical note:
Do not enter “Y” in this field; enter the entire word “Yes.”)
CMS will release further guidance directly to the plan sponsors of those plans that meet
these criteria (that is, plans that have allocated rebates equal to the CMS pre-populated
estimate and have entered “Yes” in this line), if it is determined by CMS that the full reduction
is feasible for CY2010.
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Worksheet 6
SECTION III – PLAN A/B BID SUMMARY
Section III summarizes the bid pricing tool information in three sections. Section A is an
overview of the Plan A/B Bid and the costs of A/B mandatory supplemental benefits. Section
A also contains some benchmark and risk score information from Worksheet 5. Section B
contains the MA rebate allocation. Section C develops the MA premium, and requires the
input of the Part D premium information. Consistent with previous worksheets, any optional
supplemental benefits/premiums are excluded.
Section A – Overview
This section summarizes information entered on previous worksheets.
Line 1 – Allowed Medical Cost
The allowed PMPM at the plan’s contract year non-ESRD risk factor. These amounts are
obtained from Worksheet 4.
Line 2 – Less Cost Sharing
Values are obtained from Worksheet 4.
Line 3 – Net Medical Cost
The sum of lines 1 and 2.
Line 4 – Non-Benefit Expenses
These amounts are obtained from Worksheet 4.
Line 5 – Gain/Loss Margin
These amounts reflect the estimated net gain/loss for the plan, including the amount of risk
margin desired. These amounts are obtained from Worksheet 4.
Line 6 – Total Revenue Requirement
The sum of lines 3 through 5. These amounts are the required revenue at the plan’s nonESRD risk factor and are calculated prior to any rebate allocation.
Line 7 – Standardized A/B Benchmark
This amount is obtained from Worksheet 5.
Line 8 – Plan A/B Benchmark (or Regional A/B Benchmark for RPPO plans)
This amount is obtained from Worksheet 5.
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Worksheet 6
Line 9 – Non-ESRD Risk Factor
This amount is obtained from Worksheet 5.
Line 10 – Conversion Factor
This amount is obtained from Worksheet 5.
Section B – MA Rebate Allocation
This section captures how the plan intends to apply rebates to the various options:
•
Reduce A/B cost sharing.
•
Other A/B mandatory supplemental benefits.
•
Standard Part B premium buydown.
•
Part D basic premium buydown.
•
Part D supplemental premium buydown.
Plan sponsors may choose which category, or categories, in which to allocate rebates.
See Appendix F for information regarding the reallocation of rebates (permitted for certain
plans) after the publication of the Part D National Average Bid Amount by CMS.
Line 1 – MA Rebate Available
This amount is obtained from Worksheet 5.
Lines 2 through 6 – Rebate Allocations by Category
In the fourth column, enter the portion of the total MA rebate that is allocated to each of the
A/B rebate options. Note that the rebate allocations for Part B and Part D premiums are
actually entered in separate sections of this worksheet, to ensure that the rebate allocations
are rounded to comply with withhold system requirements.
The first three columns distribute the allocated rebate among medical expenses, non-benefit
expenses, and gain/loss in the same proportion as used in Worksheet 4. The fifth column
contains the maximum value that may be entered for each rebate category.
The following rules apply for rebate allocations:
•
The fifth column of this section shows the maximum amount that may be applied for
each rebate option. Each rebate allocation cannot exceed the applicable maximum.
Note that if the maximum value is negative (such as a negative Part D basic premium
before rebates), then the rebate allocation must be blank or zero.
•
The total rebates allocated must equal the total rebates available. Plans are not
permitted to under- or over-allocate rebates in total. This applies to all bids, including
800-series EGWP bids.
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Worksheet 6
•
No rebate allocations may be negative.
•
Rebate allocations for “Reduce A/B Cost Sharing” and “Other A/B Mandatory
Supplemental Benefits” must be rounded to two decimals.
•
The rebate allocations for standard Part B premium, Part D basic premium, and Part
D supplemental premium are rounded by the BPT to one decimal (that is, the nearest
dime) due to withhold system requirements.
•
Employer-only group bids (that is, “800-series” plans) cannot allocate rebates to Part
D.
•
MA-only bids cannot allocate rebates to Part D.
•
Rebates allocated to buy down the estimated standard Part B premium are subject to
the maximum amount shown on Worksheet 6. This maximum is the estimated
CY2010 standard Part B premium at the time when the bid form is released by CMS.
See the instructions for Section IIB for further information about rebates applied to
the standard Part B premium.
Line 7 – Total Rebate Allocated
The sum of lines 2 through 6. This amount must equal the amount in line 1. If there are any
“unallocated” rebates shown, including pennies, these amounts must be distributed among
the categories available.
Section C – Development of Estimated Plan Premium
The MA Bid Pricing Tool calculates the plan’s premium for services under the Medicare
Advantage program. Estimated Part D premiums, calculated in the separate Part D BPT, are
then entered in the MA BPT in order to:
•
Underscore the relationship of MA rebates and Part D premiums.
•
Recognize the integrated relationship of the MA and Part D programs, which is often
viewed as a single product with a single premium.
•
Display the total estimated plan premium (sum of MA and Part D).
When the bid is initially submitted in June, the Part D basic premium entered in the MA BPT
is an estimated value. The actual premium will be calculated by CMS when the Part D
National Average Bid Amount is determined (typically in August). Therefore, for MA-PD
plans, the premium shown on the MA BPT may not be the final plan premium for CY2010.
For local MA-only plans, the premium shown on the MA BPT in the initial June submission is
the final actual premium (not an estimate) since these plans are not affected by the Part D
National Average or Regional PPO benchmark calculations. Local MA-only plans do not
have an opportunity to resubmit in August for rebate reallocations. The initial June bid
submission must reflect the desired plan premium.
If a local MA-only plan sponsor wishes to offer a “whole-dollar” premium, the initial June bid
submission must reflect a total premium that is rounded to the nearest dollar. The bid
assumptions (such as gain/loss margin) must support the desired plan premium and the
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Worksheet 6
desired level of premium rounding. Local MA-only plans will not be given an opportunity to
round the premiums after the initial June bid submission.
Example: The initial June bid submission for a local MA-only plan includes a $0.00
basic MA premium (as Bid < Benchmark) and a $61.30 mandatory supplemental MA
premium. The plan sponsor would like to offer a “whole-dollar” premium to their
enrollees. Before submitting the BPT to CMS (via HPMS upload), the actuary would
slightly revise the bid assumptions, such as gain/loss margin, to accomplish the
rounded premium. Plan sponsors are not allowed to make significant changes to the
BPT in order to round premiums. For example, the actuary could reduce the
gain/loss margin by 30 cents ($0.30) to achieve the $61.00 rounded premium. This
adjustment must be completed before the BPT is submitted to CMS in early June.
MA-PD plans and regional MA-only plan sponsors do have the opportunity to reallocate
rebates after the release of the Part D National Average Bid Amount and RPPO
benchmarks. However, there are specific guidelines regarding what types of changes are
permitted during the rebate reallocation period. Also, there are very specific rules regarding
the amount/level of rounding permitted. Plan sponsors are not allowed to make significant
changes to the BPT in order to round premiums during the rebate reallocation period. Plans
are also subject to the rules regarding the Part D target premium. See Appendix F for the
premium and rounding rules that were released in the CY2007 Call Letter.
It is important to note that for all plans, the initial June bid submission must reflect the
desired level of premium rounding, since there are specific rules regarding the level of
premium rounding permitted thereafter (such as during the rebate reallocation period).
MA-PD plans must identify, in the MA BPT Worksheet 6 Section IIIC, line 10, their intention
for the Part D target premium in their initial June bid submission. See instructions for line 10
of this section for further information on the Part D target premium.
For regional PPO plans, the initial bid submission in June contains an estimated MA
premium. The actual MA premium will not be known until August, when the regional
benchmarks are calculated by CMS. Note that after the MA regional benchmarks are
released by CMS, all regional MA plan sponsors are required to resubmit the MA BPTs in
order to reflect the actual plan bid component (in Worksheet 5 cell K17). Regional MA plan
sponsors may need to re-allocate rebates accordingly. Note that this requirement also
applies to EGWP regional MA plans (that is, all EGWP RPPOs are required to resubmit the
MA BPTs in August after the announcement of the regional MA benchmarks).
Line 1 – A/B Mandatory Supplemental Revenue Requirements
This amount is obtained from Section IIIA.
Line 2 – Less Rebate Allocations
These amounts are obtained from Section IIIB, lines 2 and 3.
Line 3 – A/B Mandatory Supplemental Premium
The sum of lines 1 and 2.
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Worksheet 6
Line 4 – Basic MA Premium
This amount is obtained from Worksheet 5.
Line 5 – Total MA Premium (excluding Optional Supplemental)
The sum of lines 3 and 4.
Line 6 – Rounded MA Premium (excluding Optional Supplemental)
The total MA premium from line 5 is rounded to one decimal (that is, the nearest dime) to
comply with withhold system requirements.
Line 7 – Part D Basic Premium
In line 7a, enter the Part D basic premium prior to rebates (found on the separate Part D bid
form) after rounding. This amount must equal the amount on the Part D BPT (that is, the
amount prior to application of any MA rebates). Note: The Part D basic premium prior to
rebates must be entered in the MA BPT, even if no MA rebates are allocated to buy-down
the Part D basic premium. MA-only plans and EGWP plans must leave this field blank.
In line 7b, enter the rebates that the plan sponsor wishes to allocate to the Part D Basic
premium. The Part D rebate allocation should be rounded to one decimal. If it is not
rounded to one decimal, then the bid form will round these rebates to one decimal (in line
7c), to comply with withhold system requirements.
Line 7d calculates the estimated Part D basic premium net of rebates. Line 7d equals line 7a
minus line 7c.
The Part D Basic Premium in the MA BPT is an estimate when the bid is initially submitted in
June. The actual plan premium will be calculated by CMS when the Part D National Average
Bid Amount is determined (generally in August).
Note that the Part D basic premium prior to rebates is permitted to be a negative number.
Line 8 – Part D Supplemental Premium
In line 8a, enter the Part D supplemental premium prior to rebates (found on the separate
Part D bid form) after rounding. This amount must equal the amount on the Part D BPT (that
is, the amount prior to application of any MA rebates). Note: The Part D supplemental
premium prior to rebates must be entered in the MA BPT, even if no MA rebates are
allocated to buy down the Part D supplemental premium. MA-only plans and EGWP plans
must leave this field blank.
In line 8b, enter the rebates that the plan sponsor wishes to allocate to the Part D
Supplemental premium. The Part D rebate allocation should be rounded to one decimal. If it
is not rounded to one decimal, then the bid form will round these rebates to one decimal (in
line 8c), to comply with withhold system requirements.
Line 8d calculates the Part D supplemental premium net of rebates. Line 8d equals line 8a
minus line 8c.
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Worksheet 6
Line 9 – Total Estimated Plan Premium
The sum of the rounded MA, Part D basic, and Part D supplemental premiums after rebates.
This amount excludes any optional supplemental MA premiums (calculated on Worksheet 7).
Line 10 – Plan Intention for target Part D basic premium
When MA-PD bids are initially submitted in June, the Part D basic premium in the bid forms
is an estimated amount. The actual Part D Basic premium will not be known until CMS
releases the Part D National Average Bid Amount. MA-PD plans can “target” either the
estimated Part D basic premium submitted in June or they can “target” the low-income
premium subsidy amount (which is also not known until it is released later by CMS) as the
basic Part D premium amount. The low-income premium subsidy amount applies to the Part
D basic premium and does not cover the cost of Part D supplemental benefits. The Part D
bid instructions contain further information regarding the target Part D premium options.
For MA-PD plans, this field contains a drop-down menu with two options. MA-PD plan
sponsors must choose one of the two options: “Premium amount displayed in line 7d” or
“Low Income Premium Subsidy Amount.” When CMS later releases the Part D National
Average Bid Amount and low-income subsidy amounts, MA-PD plan sponsors will have the
opportunity to reallocate rebates to return to the target Part D basic premium amount. Based
on the option selected in this field in the initial June bid submission, the plan will be able to
return to the target chosen at that time.
The plan intention for the target Part D basic premium is chosen in the initial June bid
submission. The plan sponsor cannot change the chosen target in a subsequent
resubmission. CMS will consider only the option chosen in the June bid submission as the
plan’s intention.
For MA-only plans and EGWPs, the target Part D basic premium is not applicable.
SECTION IV – CONTACT INFORMATION AND “DATE BID PREPARED”
In this section, enter the name, phone number, and e-mail information for the plan contact,
the MA certifying actuary, and an additional MA BPT contact in the event that the certifying
actuary is not available. For the phone number, enter all 10 digits consecutively without
parentheses or dashes. Do not leave any part of this section blank.
The persons named in this section must be available for any actuarial questions and issues
that arise during the review of the bid by CMS.
Section IV also contains a field labeled “Date Prepared.” This field must contain the date
that the BPT was prepared. If the BPT is revised and resubmitted during the bid review
process, then this date field is to be updated accordingly.
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Worksheet 7
MA Worksheet 7 – Optional Supplemental
Benefits
Worksheet 7 contains the actuarial pricing elements for any optional supplemental benefit
packages to be offered during the contract year, up to a maximum of five optional
supplemental packages.
For each of the five packages, the worksheet contains 20 category lines. If additional
category lines are needed, then provide a supporting exhibit that shows all of the benefit
category details, and include a summary of those category lines on this worksheet. Do not
insert any additional rows into the form.
MAOs may be required to provide supporting documentation for the items listed below (see
Appendix B):
•
Contract-level MA optional supplemental experience for CY2008, including the
following:
o
o
o
o
o
•
Member months
Earned premiums
Incurred benefits
Non-benefit expenses
Gain-loss margin
Further support on the benefit, non-benefit expenses and gain/loss margins for
specific optional supplemental plans available for CY2010.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – OPTIONAL SUPPLEMENTAL PACKAGES
Column b – Package ID
Enter an identification (ID) number to signify which package of optional supplemental
benefits is being priced. The number 001 is used to identify the first package. Whole
numbers in sequence (that is, 002, 003) identify additional packages of optional
supplemental benefits. Enter the package IDs that correspond to the packages enumerated
and described in the PBP.
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Worksheet 7
Column c – Service Category
Enter the service category. Valid entries are those consistent with the categories included
on Worksheet 1:
•
Inpatient Facility
•
Skilled Nursing Facility
•
Home Health
•
Ambulance
•
DME/Prosthetics/Supplies
•
OP Facility – Emergency
•
OP Facility – Surgery
•
OP Facility – Other
•
Professional
•
Part B Rx
•
Other Medicare Part B
•
Transportation (Non-covered)
•
Dental (Non-covered)
•
Vision (Non-covered)
•
Hearing (Non-covered)
•
Health & Education (Non-covered)
•
Other Non-covered
Column d – Benefit Category/Pricing Component
Enter a description of the benefit category/pricing component.
Column e – Allowed Medical Expense: Utilization Type
Enter the appropriate measurement unit from the list used for column e of Worksheet 2.
Column f – Allowed Medical Expense: Annual Utilization/1000
Enter the projected contract year annual utilization per thousand enrollees for allowed
medical expenses for each benefit category.
Column g – Allowed Medical Expense: Average Annual Cost
Enter the projected contract year average annual cost for allowed medical expenses for each
benefit category.
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Worksheet 7
Column h – Allowed Medical Expense: PMPM
Column h is calculated automatically using the utilization reported in column f and the
average cost information reported in column g.
Column i – Enrollee Cost Sharing: Measurement Unit Code
Enter the appropriate cost-sharing measurement unit using the codes provided for column e
of Worksheet 3.
Column j – Enrollee Cost Sharing: Utilization/1000 or PMPM
Enter the projected contract year utilization per thousand enrollees or the PMPM value in the
case of coinsurance.
Column k – Enrollee Cost Sharing: Average Cost Sharing
Enter the projected contract year average per-service cost sharing amount or coinsurance
percentage.
Column l – Enrollee Cost Sharing: PMPM
Column l is calculated automatically using the utilization (or PMPM) reported in column j and
the average cost (or coinsurance percentage) reported in column k.
Column m – Net PMPM Value
Column m is calculated automatically as the Allowed PMPM (column h) minus the cost
sharing PMPM (column l).
Column n – Non-Benefit Expense
Enter the total projected contract year non-benefit expense for each optional supplemental
package offered. See Appendix B for information regarding supporting documentation for
optional supplemental packages’ non-benefit expenses.
Column o – Gain/(Loss) Margin
Enter the total projected contract year gain/loss margin for each optional supplemental
package offered. See Appendix B for information regarding supporting documentation for
optional supplemental packages’ gain/loss margin.
Column p – Premium
The sum of columns m (medical expenses), n (non-benefit expenses), and o (gain/loss
margin). The premiums are rounded to one decimal to comply with premium withhold
system requirements.
Column q - Projected Member Months
Enter the total projected contract year member months for each optional supplemental
package offered (not average members).
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Worksheet 7
SECTION III - COMMENTS
Enter any comments needed to describe the optional benefit packages.
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Two-Year Look-Back Form
MA Two-Year Look-Back Form
The Two-Year Look-Back Form provides CMS with data aggregated at the contract level,
rather than at the bid level. It also provides a summary of costs separated by individualmarket versus employer/union-only (i.e., EGWP) group market. This information assists CMS
in evaluating the consistency between bids and recent historical experience.
The form requires the user to input actual incurred revenue and expense information for the
calendar year two years prior to the contract year being priced. In contract year 2010, the
experience year is 2008.
The projected figures (to be reported in columns f through h) are based on the CY2008 bid
submissions for the contract. CMS provides this information for plan use in HPMS, as
described below.
You must submit a Two-Year Look-Back Form for CY2010 for all contracts for which there is
a CY2008 MA BPT and there is enrollment in the MMR for July 2008. If data are posted in
HPMS for the contract, then a 2YRLB form must be uploaded.
The Two-Year Look-Back Form must be completed at the contract level (that is, H#), not at
the plan level as BPTs are completed. This worksheet must be completed in “per member
per month” values (PMPMs).
The data reported must include experience for Hospice enrollees, such that revenues consist
of member supplemental premiums and benefits consist of supplemental claims for these
enrollees. Data for ESRD enrollees must be excluded.
MAOs may be required to provide supporting documentation for the item(s) listed below (see
Appendix B):
•
Additional level of detail (for example, to separate SNP and non-SNP bids).
Contract Number
Enter the contract number.
Organization Name
Enter the organization name.
Contract Year
Displays the contract year.
Experience Year
Displays the experience year, which is two years prior to the contract year.
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Two-Year Look-Back Form
Line 1 - Revenue
Complete columns f and g (original projection) using information from CMS, which is
described in the below section, “Source of original projection data from CMS.” Column h is
the weighted average of columns f and g. The user must enter data on actual incurred
experience into columns j and k. Column l is the weighted average of columns j and k.
Columns n, o, and p calculate the ratio of actual-to-projected and do not require any user
input.
Enter bid-based MA payments from CMS plus rebates for the reduction of A/B cost sharing
and other A/B mandatory supplemental benefits in line 1a. Do not include rebates applied to
Parts B and D premium buydowns. Also, report the CMS revenues gross of user fee
reductions.
Enter member premium for basic A/B benefits and mandatory supplemental benefits in line
1b.
Line 2 - Net Medical Expenses
Columns f and g must be completed using information from CMS. Column h is the weighted
average of columns f and g. Columns j and k refer to data entered in footnote 2. Column l is
the weighted average of columns j and k. Columns n, o, and p do not require user input.
The net medical expenses are to be reported on an experience (or incurred) basis, rather
than GAAP (or accounting year) basis.
Line 3 - Non-Benefit Expenses
Columns f and g must be completed using information from CMS. Column h is the weighted
average of columns f and g. The user must enter data in columns j and k. Column l is the
weighted average of columns j and k. Columns n, o, and p do not require user input.
Reinsurance information is entered in footnote 3.
Line 4 - Profit/(Loss) Before Taxes and Investment Income
All columns are calculated automatically as revenue (line 1c) less medical expenses (line 2d)
and non-benefit expenses (line 3e).
Line 5 - Key Statistics
Line 5a - Member Months
Complete columns f and g using information from CMS, which was calculated as the
July 2008 MMR enrollment times 12. Enter data from company financial records in
columns j and k.
Line 5b - Non-ESRD Risk Factor
Complete columns f and g using information from CMS. Enter the actual 2008 nonESRD risk factor for the contract in columns j and k.
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Two-Year Look-Back Form
Lines 5c, 5d, and 5e
These fields are calculated automatically. No user input is required.
Source of original projection data from CMS. The source of the data for columns f and g is
the 2008 Medicare Advantage (MA) BPTs for the contract. CMS provides this information in
HPMS at the following location: HPMS Home > Plan Bids > Bid Submission > CY2010> Download
> 2-Year Lookback Projection Data. The data posted at this link must be manually entered into
the Two-Year Look-Back Form.
Each line of data provided by CMS represents the average of the BPT values, weighted by
actual enrollment as reported in the July 2008 MMR. Following are the specific MA BPT
elements used in the calculation of each field:
1a CMS Revenue: Sum of
(1) Lesser of Plan A/B Bid (Worksheet 5, cell E18) and Plan A/B Benchmark (BPT
worksheet 5, cell E17); and
(2) MA rebates to reduce A/B cost sharing (BPT worksheet 6, cell L25); and
(3) MA rebates applied to other A/B mandatory supplemental benefits (BPT
worksheet 6, cell L26).
1b. Premium: Sum of basic member premium and mandatory supplemental premium,
rounded (BPT worksheet 6, cell R31).
1c. Total: Sum of 1a and 1b.
2a. Covered Benefits (excluding risk sharing): BPT Worksheet 4, cell N41.
2b. A/B Mandatory Supplemental benefits: BPT Worksheet 4, cell Q41.
2c. Regional PPO Risk Sharing Paid/(Received): Total risk-sharing payment adjustment from
RPPO risk-sharing reconcilation worksheet.
2d. Total: sum of 2a, 2b, and 2c.
3a. Marketing & sales: BPT Worksheet 4, cell G43.
3b. Direct Administration: BPT Worksheet 4 cell G44.
3c. Indirect Administration: BPT Worksheet 4, cell G45.
3d. Net Cost of Private Reinsurance: BPT Worksheet 4, cell G46.
3e. Total: sum of 3a, 3b, 3c, and 3d.
4. Profit/(loss) Before Taxes and Investment Income: 1c minus 2d minus 3e.
5a. Member months (excl ESRD): members on July 2008 MMR times 12.
5b. Non-ESRD risk factor: BPT worksheet 6, cell E16 (AA16 for demonstration plans).
Footnote 2:
Incurred in Experience Year and Paid Through - Enter the “paid through” date.
Net Medical Expenses.
a. Covered Benefits (excluding risk share). Enter data in the first two columns,
and the total weighted average is calculated automatically in the third column.
The user must enter data in the next two columns for Claim Reserves, and a total
weighted average is calculated automatically.
b. A/B Mandatory Supplemental Benefits. Enter data in the first two columns,
and the total weighted average is calculated automatically in the third column.
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Two-Year Look-Back Form
The user must enter data in the next two columns for Claim Reserves, and a total
weighted average is calculated automatically.
c. Regional PPO Risk Share Paid/(Received). Enter data in the first two columns,
and the total weighted average is calculated automatically in the third column.
The user must enter data in the next two columns for Claim Reserves, and a total
weighted average is calculated automatically.
d. Total. Calculates the sum of lines a through c.
Footnote 3:
Actual Incurred Components of Net Reinsurance.
a. Private Reinsurance Premium. Enter data in the first two columns.
b. Private Reinsurance Recoveries. Enter data in the first two columns.
c. Net Reinsurance Cost. The sum of lines a and b.
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Appendix A
Appendix A – Actuarial Certification
CMS requires an actuarial certification to accompany every bid submitted to HPMS. A
qualified actuary who is a member of the American Academy of Actuaries (MAAA) must
complete the certification. The objective of obtaining an actuarial certification is to place
greater responsibility on the actuary’s professional judgment and to hold him/her accountable
for the reasonableness of the assumptions and projections.
Actuarial Standards of Practice and Other Considerations
In preparing the actuarial certification, the actuary must consider whether the actuarial work
supporting the bid conforms to the current Actuarial Standards of Practice (ASOP), as
promulgated by the Actuarial Standards Board. While other ASOPs apply, particular
emphasis is placed on the following:
•
ASOP No. 5, Incurred Health and Disability Claims.
•
ASOP No. 8, Regulatory Filings for Health Plan Entities. Particular focus is placed
on the following sections: “Use of Business Plans to Project Future Results” (3.2.3),
“Use of Past Experience to Project Future Results” (3.2.4), “Recognition of Plan
Provisions” (3.2.5), “New Plans or Benefits” (3.2.6), “Regulatory Benchmark” (3.2.8),
and “Reasonableness of Assumptions” (3.2.9).
•
ASOP No. 23, Data Quality. Particular focus is placed on the following sections:
“Selection of Data” (3.2), “Reliance on Data Supplied by Others” (3.3), “Reliance on
Other Information Relevant to the Use of Data” (3.4), “Review of Data” (3.5), “Use of
Data”(3.7), and “Communications and Disclosures” (Section 4).
•
ASOP No. 25, Credibility Procedures Applicable to Accident and Health, Group Term
Life, and Property/Casualty Coverages.
•
ASOP No. 31, Documentation in Health Benefit Plan Ratemaking. Particular focus is
placed on the following section: “Extent of Documentation” (3.2).
•
ASOP No. 41, Actuarial Communications. Particular focus is placed on the following
sections: “Reliance on Other Sources” (3.1.6) and “Actuarial Report” (3.3.3).
The certifying actuary must also consider whether the actuarial work supporting the bid
complies with applicable laws, rules, CY2010 bid instructions, and current CMS guidance. In
addition, he/she must consider whether the actuarial work supporting the bid is consistent
and reasonable with the plan benefit package and the organization’s current business plan.
Certification Module
The certification module contains the following features:
•
Standardized required language (the required elements are described in a
subsequent section of this appendix)
•
The ability to append free-form text language to the required standardized language.
•
A summary of key information from the submitted bids
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Appendix A
•
Links to additional information regarding the bid package (such as the PBP, BPT,
substantiation, etc.)
•
The ability to certify multiple bids/contracts
•
The ability to print and save the submitted certification
An initial actuarial certification must be submitted via the HPMS certification module in June.
The actuary must also certify the final bid (that is pending CMS approval) via the certification
module in August following the CMS publication of the Part D National Average Monthly Bid
Amount, the Part D base beneficiary premium, the Part D regional low-income premium
subsidy amounts, and the MA regional benchmarks. Actuaries are not required to certify
every intermittent resubmission throughout the bid review process, but may do so if they
wish.
As was instructed in previous contract years, material changes to the certification language
(after the initial June certification submission) are not permitted without prior written
permission from the CMS Office of the Actuary.
Plan sponsors may have multiple actuaries assigned to one contract to perform the
certifications. For example, a consulting actuary may certify the Part D portion of a bid, while
an internal plan staff actuary may certify the MA portion of the bid. Also, one actuary may
certify plan Hxxxx-001, while a different actuary may certify plan Hxxxx-002. The instructions
contained in this appendix should be followed by all actuaries who will be doing any
certifications for CY2010 bids.
If a certification is not submitted via the HPMS certification module, the bid will not be
considered for CMS review and approval.
Every MA BPT requires a certification. Every PD BPT requires a certification. Since Part D
BPTs are not submitted for “800-series” EGWP employer bids, a Part D actuarial certification
is not required. However, a certification is still required for the MA portion of “800-series”
employer bids.
Required Certification Elements
The certification module contains the following information, as part of the standardized
language:
•
The certifying actuary’s name/user ID and the date, “stamped” when the certification
is submitted,
•
Attestation that the actuary submitting the certification is a member of the American
Academy of Actuaries (MAAA).
As such, the actuary is familiar with the
requirements for preparing Medicare Advantage and Prescription Drug bid
submissions and meets the Academy’s qualification standards for doing so.
•
The specific contract, plan ID, and segment ID of the bid associated with the
certification.
•
The contract year of the bid contained in the certification.
•
Indication of whether the certification applies to the Medicare Advantage bid, the
Prescription Drug bid, or both.
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Appendix A
•
Attestation that the certification complies with the applicable laws, 1 rules, 2 CY2010
bid instructions, and current CMS guidance.
•
Attestation that, in accordance with Federal law, the bid is based on the “average
revenue requirements in the payment area for a Medicare Advantage/Prescription
Drug enrollee with a national average risk profile.”
•
Attestation that the data and assumptions used in the development of the bid are
reasonable for the plan’s benefit package (PBP).
•
Attestation that the data and assumptions used in the development of the bid are
consistent with the organization’s current business plan.
•
Attestation that the bid was prepared based on the current standards of practice, as
promulgated by the Actuarial Standards Board of the American Academy of
Actuaries, and that the bid complies with the appropriate ASOPs.
•
A statement that, in accordance with ASOP 23, any data and assumptions provided
by reliances were reviewed for reasonableness and consistency, and that supporting
documentation for the reliance on information provided by others is uploaded with the
bid.
Please refer to ASOP No. 23, Data Quality, and ASOP No. 41, “Actuarial Communications”,
for additional details regarding reliances. Also see Appendix B for information regarding
supporting documentation required for reliances.
If you have any questions regarding the CY2010 certification instructions, please contact the
CMS Office of the Actuary at [email protected].
Certification Module Access
Detailed instructions regarding how to apply for access to the CY2010 certification module
were released via HPMS on February 14, 2008.
1
Social Security Act sections 1851 through 1859; and Social Security Act sections 1860D-1
through 1860D-42.
2
42 CFR Parts 400, 403, 411, 417, 422, and 423.
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Appendix B
Appendix B – Supporting Documentation
In addition to the bid pricing tool and actuarial certification, organizations must provide CMS
with supporting documentation for every bid, as described in these instructions.
Unless otherwise noted, plan sponsors must upload all required supporting documentation at
the time of the initial June bid submission. Additional supporting documentation must be
made readily available to CMS reviewers upon request, as indicated in these instructions.
Supporting documentation requirements apply regardless of the source of the assumption whether it was developed by the actuary, the plan sponsoring organization, or a third party.
If the actuary relied upon others for certain bid data and/or assumptions, they are still subject
to the same documentation requirements. The actuary himself must be prepared to produce
all substantiation pertaining to the bid, even if it was prepared by others, or is based on a
reliance.
In preparing supporting documentation, the actuary must consider ASOP No. 31,
Documentation in Health Benefit Plan Ratemaking. In accordance with Section 3.2, “Extent
of Documentation”, the materials provided must be written “with sufficient clarity that another
actuary practicing in the same field could make an objective evaluation of the
reasonableness of the work product.”
All data submitted as part of the bid process are subject to review and audit by CMS, or by
any person or organization that CMS designates. Certifying actuaries must be available to
respond to inquiries from CMS reviewers regarding the submitted bids.
Supporting documentation must:
•
•
•
•
Be clearly labeled and easily understood by CMS reviewers.
Include quantitative support and details, rather than just narrative descriptions of
assumptions.
Clearly identify if it is related to MA, Part D or both.
Clearly identify the bid(s) relating to the support. At a minimum, the contract number
must appear on the first page. Specific plan numbers must be included where
appropriate, such as on the first page, or in a separate chart, or as an attachment.
Acceptable forms of supporting documentation include, but are not limited to, the following
items:
•
•
•
•
•
•
Meeting minutes from discussions related to bid development.
E-mail correspondence related to bid development.
A complete description of data sources - for example, a report’s official name/title,
file name, date obtained, source file, etc.
Intermediate calculations showing each step taken to calculate an assumption.
A summary of contractual terms of administrative services agreements.
A business plan.
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Appendix B
Supporting documentation that is not acceptable or that may result in a request for additional
information includes, but is not limited to, the following items:
•
A reference to the supporting documentation for another plan such as “the same as
for plan Hxxxx-xxx” and not the documentation itself.
The supporting
documentation for a plan must be self-contained.
•
General descriptions of pricing that do not include plan-specific information.
•
A statement that the source of a pricing assumption is “professional judgment,“ with
no additional explanation, reasoning, supporting factors, studies, etc.
•
“Living worksheets” that are overwritten with current data.
Supporting
documentation must include the version of the worksheet that was used in bid
preparation.
•
Information obtained after the bids are submitted.
•
A statement that a pricing assumption or methodology is assumed acceptable
based on its inclusion in a bid that was approved by CMS in a prior contract year.
Data, assumptions, methodologies, and projections must be determined to be
reasonable and appropriate for the current bid, independent of prior bid filings.
Submitting Supporting Documentation
Supporting materials must be in electronic format (Microsoft Excel, Microsoft Word, or Adobe
Acrobat) and must be uploaded to HPMS. CMS will not accept paper copies of supporting
documentation. Note that multiple substantiation files can be submitted to HPMS at one time
by using “zip” files, which compress multiple files into one file (.zip file extension). Also, one
file can be uploaded to multiple plans in HPMS by using the CTRL key when plans are
selected. However, documentation must not be uploaded to plans that it does not pertain to.
It is not acceptable to upload materials to multiple plans when the material only pertains to
one plan ID. That is, do not upload support to contracts/plans for which the substantiation
does not apply.
Cover Sheet
Organizations often upload multiple files of supporting documentation. To expedite the bid
review process, organizations must upload a “cover sheet” that lists all of the supporting
documentation that is uploaded (or is provided in the bid form). The filename must include
the phrase “cover sheet.” A cover sheet is required for each upload of substantiation.
The cover sheet must include detailed information for each support item, such as the
filename and the location within the file, if applicable. The cover sheet must clearly identify
the bid IDs and whether the substantiation is related to MA, Part D or both.
Note that some documentation requirements apply to every bid (for example, every bid
contains a risk score assumption), while other documentation requirements will apply only to
bids that contain certain assumptions (for example, manual rate documentation applies only
if a bid’s projection is based on manual rates). For documentation categories that apply for a
subset of bids that contain a specified assumption, the cover sheet must not refer to a
“range” of bid IDs (such as “plans 001 – 030”, or “all plans under contract Hxxxx”). For these
items, the cover sheet should contain the exact bid IDs (contract/plan/segment) that the
documentation applies to.
For subsequent substantiation uploads, the cover sheet must summarize the additional
documents uploaded at that time (i.e., the cover sheet should not be maintained as a
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Appendix B
cumulative list). The subsequent cover sheets must also contain the exact bid IDs, rather
than a “range” of bid IDs.
Sample check lists and cover sheets for the initial June bid submission, and for subsequent
substantiation uploads, are provided at the end of this appendix.
Timing
Plan sponsors and certifying actuaries must prepare all supporting documentation at the time
of the initial June bid submission and upload certain documentation into HPMS at the time of
that initial June bid submission. These items are described in the “Initial June Bid
Submission” section below.
Other supporting documentation materials are not required to be uploaded with the initial
June bid submission, but must be prepared at that time in order to be readily available to
CMS reviewers upon request. See the “Upon Request by CMS Reviewers” section of this
appendix for more information. If substantiation is requested by CMS reviewers, it is
expected to be provided within 48 hours. These materials will be reviewed at audit. CMS
recommends that these materials can be uploaded with the initial June bid submission.
Initial June Bid Submission
Documentation requirements that apply to all bids (as all bids contain the following
assumptions):
•
A cover sheet outlining the documentation files, as described above.
•
A product narrative that gives relevant information about plan design, the product
positioning in the market (such as, high/low), changes in service area, type of
coverage, contractual arrangements, marketing approach and any other pertinent
information that would help expedite the bid review. For Dual Eligible SNPs, include
a statement of how the plan conforms to state and territorial Medicaid regulations for
benefits, cost sharing, care management and margins.
•
Support for the credibility assumptions (Worksheet 2) including:
o
The credibility approach used, and an indication of whether of not it differs
from the CMS guideline described in these instructions.
o
An explanation for 0% credibility for a service category with credible data.
o
The method for blending differences in the credibility for utilization and unit
cost into a composite PMPM credibility factor.
•
A mapping of cost sharing information from categories used in pricing to the BPT
service categories (Worksheet 3).
•
Support for non-benefit expense assumptions (Worksheet 4). The required elements
include :
•
o
A summary of the non-benefit expenses by category of expense, or line item.
o
An analysis that demonstrates the development of each line item using relevant
data, assumptions, contracts, financial information, business plans and other
experience.
Justification of the gain/loss margin (Worksheet 4). Note that supporting
documentation requirements are the same regardless of the source of the
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Appendix B
assumption: whether developed by the actuary, the plan sponsoring organization, or
a third party. The required elements include:
o
o
o
o
o
•
Support for overall margin levels, including a description of methodology
used to develop margin assumptions, demonstration of year-by-year
consistency, and supporting data.
Support for bids with negative margins, that is, a business plan that illustrates
profitability within few years.
Justification of the margin for bids with relatively large projected overall
gains/losses. Examples of support to be provided are (i) illustration of return
on investment/equity requirement(s), (ii) demonstration of corporate return
requirement(s), and/or (iii) other supporting documentation.
The
development of margin requirements may reflect revenue offsets not
captured in non-benefit expenses (such as investment expenses, income
taxes, and changes in statutory surplus) and may also include investment
income.
If applicable, further analysis of the organization’s ROI / ROE and distinctions
between recouping start-up costs versus ongoing organizational gain/loss.
In future years, comparisons to the original business plan including details
and source of deviation from prior years’ plans.
Detailed support for the development of projected risk scores (Worksheet 5). The
required elements include:
o
o
o
o
A detailed description of and corresponding numerical demonstration of the
methodology used to develop projected CY2010 MA risk scores.
A description of the source data for the development of the projected CY2010
MA risk scores.
A description of all projection factors and the basis for the factors.
A statement about the consistency between the development of the projected
risk scores for the plan population and the development of projected medical
expenses, if the plan pricing is based on manual rates.
Documentation requirements that apply to all bids that contain the following specified
assumptions:
•
Detailed support for base period experience and projections (Worksheet 1), that
includes:
o
o
•
A description of the allocation of allowed costs by service category when the
allocation method is not based on plan experience data.
Information regarding the base period member month distribution, if for some
reason more than four plans comprise the base period data (see
Worksheet 1, Section II line 5).
Detailed support for the manual rate development (Worksheet 2), including a
description/illustration of the underlying data source(s) and data/methodology used in
The required
the development of the manual rates, if a manual rate is used.
elements include:
o
o
A description of the source data, including its relevance to the MA plan and
the precise name of any published tables used.
Credibility standards applied to the data and corresponding adjustments, if
applicable.
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Appendix B
o
o
o
o
o
o
o
•
Consideration of any adjustments made for annual volatility of the source
data.
Any applicable adjustments to source data, such as:
➢ Approach and factors applied to account for incomplete claim run-out
and/or expenditures that are not reflected in the source data;
➢ Addition of Medicare-covered benefits not reflected in the source
data;
➢ Exclusion of Non-covered benefits reflected in the source data;
➢ Techniques and factors used to reflect differences between the
underlying population and that expected of the MA plan;
➢ Techniques and factors used to adjust for differences in health care
delivery system and plan design of the source data as compared to
the MA plan;
➢ Methodology and data used to gross-up reimbursements to an
allowed-cost basis.
Data and methodology used to project the data from base period to CY2010.
A description of the source of data for the development of corresponding
CY2010 recalibrated CMS-HCC 70 model risk scores, and how it compares
to the risk scores of the population underlying the manual rate source data.
All other applicable factors and/or adjustments
The reasonableness of allowed costs and projection factors for costs based
on capitated payments to related parties.
The allocation of projected allowed costs by service categories.
Support, at the benefit level, for Non-covered services (Worksheet 2, lines l through
r, column o), if any. This includes a break-down of the PMPM value shown in the
BPT. (Detailed support for the pricing of each additional benefit is available upon
request.)
For example, a $4.00 PMPM in column o of row p, Health and Education, is to be
shown in the supporting documentation as $1.50 PMPM for a smoking cessation
program and $2.50 PMPM for nutritional counseling.
•
Detailed description of the process used for adjusting cost sharing due to maximum
out-of-pocket limits (Worksheet 3).
•
A mapping of PBP benefit categories and BPT pricing categories for any deviations
from the suggested mappings in Appendix G. (Worksheet 4).
•
Disclosure of related-party administrative service agreements (Worksheet 4). The
required elements for each related-party agreement include:
o
o
o
o
o
o
The identity of the related-party organization.
A description of the business arrangement and services provided.
The financial terms.
A point of contact at the related party (when the sponsor is requesting that
CMS enter into a separate discussion with a subcontracted related party).
A demonstration that the operating and financial results of the participating
organizations are not significantly different from those that would have been
achieved by the plan in the absence of the related party relationships as
outlined below.
Additional support for a plan sponsor in a related party agreement with an
organization that is providing services to unrelated parties as described in
these instructions for Worksheet 4.
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Appendix B
o
•
Additional support for a plan sponsor in a related party agreement with an
organization that supports only the MA organization as described in these
instructions for Worksheet 4.
Support for the development of the contract year ESRD “subsidy” (Worksheet 4).
This documentation could include the following:
o
Base period (for example, 2008) revenues and medical expenditures for
Medicare-covered benefits provided to enrollees in ESRD status.
o
The source for, and the development process of, any manual rates used.
o
Relevant base-to-contract year trend factors.
o
A short narrative on the credibility approach applied to the ESRD experience.
•
Support for the development of plan-provided ISAR factors (Worksheet 5), if used
(applies to RPPOs only). A description of the methodology and data source(s) used
to calculate the ISAR scale(s) must be included. The factors must reflect the
requirements for medical expense, non-benefit expense, and gain/loss margin.
Additionally, the support must illustrate the county-level medical costs (such as unit
costs and/or utilization) and retention (that is, non-benefit expense and gain/loss
margin) that were assumed in the development of the factors.
•
In accordance with Appendix D, support for actuarial swaps/equivalence
customization allowable for employer and union groups enrolled in individual-market
plans, if used. (Indicated in the General Information section of Worksheet 1.)
•
An explanation of how CY2009 bid audit findings and observations were addressed
in the current bid for the same plan. To the extent that an issue applies to other
plans in the same contract or parent organization, the documentation for the audited
plan must describe how the bids for all plans are treated consistently regarding such
issue.
•
Support for reliance on information supplied by others that:
o Identifies the source(s) of the information - for example name, position, company,
date;
o
Identifies the information relied upon; and
o
States the extent of the reliance - for example, states whether or not checks as to
reasonableness have been applied; and
o
Indicates which plan(s) the reliance information applies to.
See the sample format at the end of this appendix.
Upon Request by CMS Reviewers
The following items are not required to be uploaded with the initial June bid submission, but
must be prepared around that time in order to be readily available to provide to CMS
reviewers upon request. If these materials are requested by CMS reviewers, the requested
substantiation is expected to be provided within 48 hours. These materials will be reviewed
at audit:
•
Reconciliation of base period experience with company financial data (Worksheet 1).
The data are to be reported on an incurred, rather than an accounting or GAAP
basis, including both claims paid and unloaded claim reserves. Because the results
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Appendix B
reflect an experience period versus accounting period, the data need not be based
on an audited GAAP financial basis.
•
Support for projection assumptions (Worksheet 1).
•
Support for the pricing of the Non-covered services that includes utilization and unit
cost (Worksheet 2, lines l through r, column o). (Support, at the benefit level is
required in the initial June bid submission.)
•
Support for cost sharing utilization assumptions and plan level deductible (Worksheet
3).
•
Support for allocation of allowed costs and cost sharing between Medicare-covered
and A/B Mandatory Supplemental benefits (Worksheet 4).
•
Support for variation in the gain or loss margin that accounts for the difference in
risks between products for EGWPs and DE-SNPs (Worksheet 4).
•
Aggregate contract-level
(Worksheet 7).
•
Further support on the benefit, non-benefit expenses and gain/loss margins for
specific Optional Supplemental Benefit Packages (Worksheet 7).
•
Justification for significant differences in the assumptions between corresponding
employer-only group and individual-market products (such as the relationship of the
bid to the benchmark). See Appendix D for more information.
•
Additional level of detail regarding the Two-Year Look-Back information, for example,
to separate SNP and non-SNP bids (Two-Year Look-Back Form).
•
If applicable, a letter supporting any information upon which the certifying actuary
relied. Such letter must be signed by the person (source) who provided the
information.
•
Communication between CMS reviewers and the organization throughout the bid
review process (that is, e-mail communication).
•
Additional information (not specified in this list) may be requested by CMS reviewers,
as needed.
optional
supplemental
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
experience
for
CY2008
Page 73 of 105
Appendix B
MA Checklist for Required Supporting Documentation
Initial June Bid Submission - Required for all bids
Cover Sheet
Product Narrative
Credibility Assumption (Worksheet 2)
Cost Sharing Category Mapping (WS3)
Non-Benefit Expenses (WS4)
Gain/Loss Margin (WS4)
Projected Risk Scores (WS5)
Initial June Bid Submission - Required for all bids with specified assumptions
Base Period Experience and Projections ( WS1)
Manual Rate Development (WS2)
Non-covered Services Summary (WS2)
Adjustment to Cost Sharing for OOP Maximum (WS3)
Mapping of PBP and BPT Service Categories (WS 4)
Disclosure of Related Party Agreements (WS4)
ESRD “subsidy” (WS 4)
ISAR factors, if used (WS 5)
Actuarial swaps/ equivalences
Bid Audit Results
Reliance Information
Upon Request by CMS Reviewers
Reconciliation of base period experience with company financial data (WS1)
Projection assumptions (WS1)
Non-covered Services Pricing Details (WS4)
Cost Sharing Utilization and Plan Level Deductible (WS3)
Allocation of allowed costs/cost sharing to Medicare–covered and Non-covered (WS4)
Gain Loss Margin for EGWPs and DE-SNPs (WS4)
Optional Supplemental Benefit Experience (WS7)
Optional Supplemental Benefit Assumptions (WS7)
EGWP versus Individual Market Assumptions
Two-Year Look-Back
Reliance Letter
Bid Review Communications
Other
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Appendix B
SAMPLE Cover Sheet – Submitted with initial bid upload
Supporting Documentation Cover Sheet
CY2010 Bid Submission
Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: June 1, 2009
Documentation
Requirement
Cover Sheet
Product Narrative
Credibility Assumption
Cost Sharing Mapping
Non-Benefit Expenses
Gain/Loss Margins
Risk Scores
Manual Rates
ESRD subsidy
Specific
Bid ID(s) or
N/A
All bids
All bids
All bids
All bids
All bids
All bids
All bids
H1234-003-0
S9999-001-0
H1234-001-0
H1234-004-0
Applies to:
MA, PD, or
both
both
both
both
both
both
both
both
Manual.xls
Location
within File (if
applicable)
Page 1
Pages 2-4
Page 5
Page 6
Sheet1
Sheet2
MA-Sheet 1
PD-Sheet 2
Section II
Manual.xls
Section I
MA
File Name
Cover Sheet 6-1-08.pdf
Cover Sheet 6-1-08.pdf
Cover Sheet 6-1-08.pdf
Cover Sheet 6-1-08.pdf
AdminProfit.xls
AdminProfit.xls
Risk CY09.xls
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
PD
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Appendix B
Sample Cover Sheet – Submitted as a subsequent substantiation upload
Supporting Documentation Cover Sheet #2
CY2010 Bid Submission
Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: July 16, 2009
Documentation
Requirement
Cover Sheet
E-mail communication
with CMS Bid
Reviewers
E-mail communication
with CMS Bid
Reviewers
E-mail communication
with CMS Bid
Reviewers
Specific
Bid ID(s) or
N/A
H1234-001-0
H1234-003-0
H1234-004-0
H1234-801-0
H9999-001-0
S9999-001-0
H1234-001-0
H1234-003-0
H1234-004-0
H9999-001-0
H9999-001-0
S9999-001-0
H9999-001-0
S9999-001-0
File Name
Cover Sheet 7-16-08.doc
Location
within File (if
applicable)
n/a
Applies to:
MA, PD, or
both
both
E-mail1.doc
n/a
MA
Email2.doc
n/a
PD
Email3.doc
n/a
PD
Sample Format for Reliance on Information Supplied by Others:
MA or PD
or Both
Source
(Name, position, company)
H1234-002-00
MA and PD
Joe Smith, Director of Finance,
ABC Health Plan
H1234-002-00
MA and PD
Jane Doe, Medicare Analyst,
ABC Health Plan
Bid ID
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
Type of Information
Administrative
expenses, gain/loss
margin
Claim modeling, risk
score
Comments
I have not performed any
independent audit or
otherwise verified the
accuracy of these data or
information.
Page 76 of 105
Appendix C
Appendix C – Part B-Only Enrollees
Medicare beneficiaries with Medicare coverage only under Part B have not been allowed to
elect an MA plan since December 31, 1998 unless they were members of employer or union
groups.
However, Medicare beneficiaries (with Part B coverage under Medicare) who were Medicare
enrollees of a Section 1876 contractor on December 31, 1998 were considered to be
enrolled with that organization on January 1, 1999 if the organization had an MA contract for
providing benefits on the latter date. Health benefit coverage that MA organizations provide
to such remaining Part B-only enrollees constitutes a separate MA plan (which requires a
separate bid submission).
CMS encourages MA organizations to submit as few plans as possible for their pre-1999
Part B-only members, rather than duplicating each of their A/B plans. In fact, an MA
organization can submit one plan for all its pre-1999 Part B-only members under an MA
contract if they are in the same type of plan. In addition, if the plan is offering the pre-1999
Part B-only members the same benefits at the same price as those offered to A/B members
(that is, members eligible for both Part A and Part B of Medicare), the plan sponsor is not
required to submit a separate bid for the Part B-only members.
On the other hand, MAOs that enroll Medicare beneficiaries with Part B-only coverage in an
employer-only group plan must prepare a separate Part B-only bid. If a separate Part B-only
plan is not created, the CMS managed care payment system will reject any enrollments
submitted on behalf of individuals without Part A.
MAOs are to prepare Part B-only bids in much the same way as those prepared for Part A/B
members.
In completing the bids for Part B-only plans, MA organizations must give special
consideration to allocating the portion of services that are considered to be Medicarecovered (Worksheet 4, Section II, columns h and i):
•
For “Part B-Only” plans, the Medicare-covered proportion of inpatient services (line
a) must equal 0%.
•
While the majority of Medicare expenditures for skilled nursing facilities (SNFs) are
covered under Part A (Hospital Insurance), in certain circumstances benefits are
covered under Part B (Supplementary Medical Insurance). Guidance on these
covered services can be found in Section 70 of Chapter 8 of the “Medicare Benefit
Policy Manual” under http://www.cms.hhs.gov/manuals/iom . We estimate that for
calendar year 2010, about 5% of Medicare expenditures for SNFs will be covered
under Part B.
•
Also, as is stated in Section 60.3 of Chapter 7 of the “Medicare Benefit Policy
Manual”, if a beneficiary is enrolled only in Part B and is qualified for the Medicare
home health benefit, then all of the home health services are financed under Part B.
Thus, for most Part B-only plans, the Medicare-covered proportion of home health
services (line c) will be 100%.
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Appendix D
Appendix D – Medicare Advantage Products
Available to Groups
(Employer Groups and Union Groups)
Organizations have two options for offering Medicare Advantage products to members of
employer and union groups: individual-market plans and Employer-only or Union-only Group
Waiver Plans (that is, EGWP or “800-series” plans).
Individual-Market Plans (“mixed enrollment” plans)
Essentially, MAOs may either offer their individual-market products without modification, or
they may tailor the products to specific employer and union groups through two types of
allowable customization: “actuarial swapping” or “actuarial equivalence.”
Actuarial Swaps.
If you are requesting the actuarial swapping category of
customization, identify in the supporting documentation both the benefits that might be
swapped during negotiations with employers and/or unions and the MA plan covering
those benefits. Only supplemental benefits not covered under original Medicare are
eligible for actuarial swapping. You need to identify only those benefits in your bids that
are candidates for swaps. When you make specific swaps in negotiations with
employers or unions, in the context of the CMS general approval of your candidates, you
can do so without obtaining further approval from CMS for the actual swaps.
Actuarial Equivalence.
If you request the actuarial equivalence category of
customization allowable for employer and union groups, provide the following information
as supporting documentation:
•
•
•
The cost-sharing amounts you intend to change and the MA plan containing the cost
sharing.
Any modification to the premium you will charge.
Any improvement in the benefit related to the changed cost sharing.
Unlike the actuarial swapping flexibility, this customization can apply to both Medicarecovered benefits and Non-covered benefits.
Please retain in your files a package of documents with computations supporting the
proposed changes under these two types of allowable customization. Do not include those
packages of documents in the backup material you submit to CMS.
Employer-only or Union-only Group Waiver Plans (EGWPs)
The Medicare Modernization Act (MMA) gives employers and unions a number of options for
providing Medicare coverage to their Medicare-eligible active employees and retirees. Under
the MMA, those options include making special arrangements with MA organizations to
purchase customized benefits for their active employees and retirees or contracting directly
with CMS to sponsor a Medicare Advantage plan.
Under sections 1857(i) of the Social Security Act (SSA), CMS may waive or modify
requirements for these kinds of arrangements that “hinder the design of, the offering of, or
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Appendix D
the enrollment in” these employer or union-only sponsored group plans. CMS may exercise
its statutory waiver authority for two basic types of MA plan entities: (1) MA organizations
that offer or administer employer/union-only sponsored group waiver plans (“EGWPs” or
“employer-only group plans”); and (2) employers/unions that directly contract with CMS to
themselves offer an employer/union-only sponsored group waiver plan (“Direct Contract”
EGWPs).
CMS has issued guidance waiving or modifying a number of requirements for these entities.
CMS waiver guidance is located at http://cms.hhs.gov/EmpGrpWaivers .
Also see Chapter 9 of the “Medicare Managed Care Manual”(MMCM):
http://www.cms.hhs.gov/Manuals/IOM/itemdetail.asp?filterType=none&filterByDID=99&sortByDID=1&sortOrder=ascending&itemID=CMS019326 .
As described in Chapter 9 of the MMCM, organizations may offer Medicare Advantage plans
that are available only to employer and union groups. These products must follow all
Medicare Advantage bidding requirements, except those that are specifically waived per
Chapter 9 of the MMCM.
The following are some of the key features to be reflected in employer-only group bids:
•
Each employer-only group bid must reflect the composite characteristics of the
individuals expected to enroll in the plan for the contract year. These assumptions
include, but are not limited to, the following: risk scores, geographical distribution of
enrollees, non-benefit expenses, and gain/loss margins.
•
The cost sharing priced in Worksheet 3 must correspond to that contained in the
Plan Benefit Package (PBP). The PBP can be prepared using either the expected
composite benefit plan or the Medicare fee-for-service benefit provisions.
•
Generally, CMS would expect that actuarial and financial assumptions supporting
each employer-only group bid would bear a reasonable relationship to corresponding
individual-market products offered by the organization. Significant differences
between corresponding employer-only group and individual-market products (such
as the relationship of the bid to the benchmark) must be based on actual credible
experience. Organizations must provide documentation in support of differences in
actuarial/financial assumptions between the corresponding products.
•
There is no requirement to charge the filed MA basic and supplemental premium to
each employer or union group that enrolls in the plan. However, the average
premium charged, weighted by enrollees, across all groups enrolled in the plan must
correspond to (that is, be consistent with) the filed premium. This rule on premiums
does not apply when the Medicare fee-for-service bidding approach is utilized since
these filed plans, and resulting premiums, are not an accurate depiction of what is
actually being offered to employer/union groups.
•
The following are the guidelines for rebates:
o
Similar to CMS’ payment on behalf of beneficiaries enrolled in individualmarket plans, a uniform rebate amount will be paid by CMS on behalf of each
individual enrolled in an employer-only group plan.
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Appendix D
o
The allocation of rebates may vary employer to employer within the
employer-only group plan. (The bid form contains one allocation).
o
Employer-only group bids cannot reflect an allocation of rebates to the Part D
basic premium or the Part D supplemental premium. However, plans may, in
fact, allocate rebates to the Part D premium when negotiating with
employer/union groups.
o
Part B premium buydowns (that is, rebate allocation) must be the same for all
enrollees within the same employer-only group plan.
o
Consistent with individual-market bids, rebates allocated to reduce members’
Part B premium will be transferred to the Social Security Administration, not
the MA organization.
o
All groups enrolled in an employer-only plan with supplemental A/B rebates
(both reduction in A/B cost sharing and additional benefits) must receive
supplemental benefits equal to the amount of the A/B rebate allocation.
However, A/B supplemental benefits provided to each employer may be
customized. Further, MA organizations may use the field in Worksheet 4
Section IV Line 1, “PMPM for additional/unspecified MS benefits”, to account
for A/B supplemental benefits that are likely to be customized.
o
All rebates must be accounted for and must be used only for the purposes
provided in law. Documentation must be retained by the employer-only
group plan that supports the use of all of the rebates on a detailed basis.
For regional PPO EGWP plans, the initial June bid submission contains an estimated MA
premium. The actual MA premium will not be known until August, when the regional
benchmarks are calculated by CMS. Note that after the MA regional benchmarks are
released by CMS, all regional MA plan sponsors are required to resubmit the MA BPTs in
order to reflect the actual plan bid component (in Worksheet 5, cell K17). Regional MA plans
may need to re-allocate rebates accordingly. Note that this requirement also applies to
EGWP regional MA plans (that is, all EGWP RPPOs are required to resubmit the MA BPTs
in August after the announcement of the regional MA benchmarks).
The CY2010 Call Letter contains additional guidance regarding employer-only group bidding.
Please refer to the announcement released via HPMS on February 28, 2007 regarding the
Part D EGWP bidding policy. Another announcement was released via HPMS on April 3,
2007 to clarify the bidding requirements for EGWP bids.
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
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Appendix E
Appendix E – Plans Serving Qualified Medicare
Beneficiaries (QMBs)
The following guidance was released in the CY2007 Call Letter regarding plans
serving QMBs.
F. Bidding Instructions for Plans Serving Qualified Medicare Beneficiaries
The MA bidding rules specify that the development of contract year total allowed medical
expenses, which are reflected on a per-member per-month (PMPM) basis, include the sum of
projected plan reimbursements and enrollee cost sharing. The plan reimbursements reflected in
the bid must reflect the actual projected plan payments to providers for health care services.
The basis of each category of enrollee cost sharing is the product of per-service requirements, as
reflected in the plan benefit package (PBP), and expected utilization. MA plans subtract from
total allowed medical expenses the PMPM value of fee-for-service Medicare actuarially
equivalent cost sharing.
Section 1902(a)(10)(E)(i) of the Act requires State Medicaid Agencies to pay cost sharing
amounts on behalf of Qualified Medicare Beneficiaries (QMBs). (The term QMB is defined in
section 1905(p)(1) of the Act.) Paragraphs (n)(1) and (2) of section 1902 of the Act provide
authority, when certain conditions are met, for State Medicaid agencies to reduce or eliminate
cost sharing amounts on behalf of such beneficiaries through the State Medicaid Plan. In such
cases paragraph (n)(3) exempts QMB beneficiaries from paying Medicare Advantage plan
Medicare cost sharing (see section 1905(p)(3)) and requires providers to accept the sum of
Medicare Part C payments and any amount paid (or reduced/eliminated) by the State Medicaid
Agency as payment in full for the item or service in question.
The MA Organization determines what level of cost sharing it wishes to have for any given MA
plan. This is true for all plans, including those that primarily serve QMBs. The MA Organization
may determine the desired level of plan cost sharing irrespective of whether a state Medicaid
agency will pay the plan or its providers some, all or none of this cost sharing for QMBs.
These instructions clarify that the cost sharing component of the bids filed on behalf of QMBs
must reflect plan cost sharing, as reflected in the PBP. That is, the cost sharing component of
allowed medical expenses will include all cost sharing charged by the plan, even though some or
all of that cost sharing may not be paid to the plan or its providers because of the application of
SSA Section 1902(n). In other words, regardless of whether a state Medicaid agency pays on
behalf of a QMB some, all, or no cost sharing — either directly to the provider, or through a
contractual arrangement with the MA Organization — the full level of plan cost sharing must be
reflected in the development of allowed costs (MA bid Worksheet 2) and enrollee cost sharing
requirements (MA bid Worksheet 3). Please note that this guidance is not intended to limit an
MA Organization’s flexibility to determine how much to pay its providers or how to determine
projected payments to providers.
For example, an MA plan that charges cost sharing that is actuarially equivalent to full Medicare
fee-for-service will include the PMPM equivalent of full Medicare fee-for-service cost sharing in
their allowed costs. Per SSA Section 1902(n), CMS will consider Medicaid payments made on
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Appendix E
behalf of any QMBs enrolled in this MA plan as meeting the cost sharing obligation of these
individuals.
This guidance does not change the requirement that plan cost sharing in the PBP must be the
same for all enrollees. Therefore, if an MA Organization offers a plan that serves both QMBs and
non-QMBs and includes cost sharing that is less than that charged in Medicare fee-for-service,
the cost sharing component of the plan’s allowed costs must reflect this plan-level cost sharing
for both QMBs and non-QMBs.
Reimbursements of QMB cost sharing by Medicaid State Agencies may take the form of a
payment to either MA Organizations or the providers. The reimbursements reflected in the
allowed cost component of each bid must reflect the projected payments from the MA
Organization to the providers, less any projected payments from Medicaid agencies to the MA
organization for cost-sharing. Payments made directly from Medicaid State Agencies to providers
should not be netted from allowed costs. To the extent that the provider does not collect from the
State Medicaid agency (either directly or through the MA Organization) the full amount of cost
sharing, CMS does not consider the plan to be waiving the Part C cost sharing amounts.
These instructions are consistent with last year’s QMB bidding instructions and there is no
change intended.
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
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Appendix F
Appendix F – Rebate Reallocation and Premium
Rounding
Following CMS’ publication of the Part D National Average Monthly Bid Amount, the Part D
base beneficiary premium, the Part D regional low-income premium subsidy amounts, and
the MA regional benchmarks, MA organizations may reallocate Part C rebate dollars in the
MA BPT for certain plan bids.
As discussed in these instructions for Worksheet 6, all RPPO plans (including EGWPs) must
resubmit during the rebate reallocation period, in order to update the bids to reflect the
regional benchmarks released by CMS.
MA-PD plans are permitted to reallocate Part C rebate dollars in order to return to the target
Part D basic premium in accordance with the “Plan Intention for Target Part D Basic
Premium” entered in the MA BPT in the initial June bid submission. The target Part D basic
premium is the Part D basic premium net of any Part C rebate dollars that were applied to
reduce (buy down) the premium, and does not include the Part D supplemental premium or
the Part C premium.
CMS will allow only minor changes to administrative costs and margin in accordance with the
rebate reallocation guidance in this appendix. This guidance applies to all types of pricing
arrangements, including risk sharing and global capitation, and to pricing assumptions that
were developed as a percent of revenue.
The CY2009 Call Letter includes the following guidance regarding rebate reallocation
(page 17):
D. Rebate Reallocation
In situations where MA-PD plans are allowed to reallocate Part C rebate dollars in
order to return to the target Part D basic premium, (due to “insufficient allocation”
resulting in a Part D basic premium larger than the target premium or due to a
reduction in the total amount of rebate for a regional plan), MAOs should make
reallocations that reflect the following priorities. Specifically, there may not be any
reduction of rebate allocated to priority (3) unless reductions have first been made to
priority (1), then priority (2) noted below.
1. Reduce or remove non-Medicare covered benefits;
2. Increase cost sharing for widely-used services such as primary care visits; and
3. As a last resort, increase cost sharing for more limited-use services such as
inpatient, skilled nursing facility (SNF), and home health care.
MA plans that do not adhere to this guidance may be asked to resubmit.
Attachment E-1, CY2010 MA & MSA BPT instructions PRA.doc
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Appendix F
The following guidance was released in the CY2007 Call Letter regarding the rebate
reallocation period and premium rounding:
Rebate Reallocation and Premium Rounding
This guidance is organized into five sections: Section I presents terminology. Section II
discusses rules for rebate reallocation by plan type. Section III provides guidance for
changes that can be made to funding of Part D and Part C benefits during the rebate
reallocation period. Section IV covers several additional topics, and Section V discusses
premium rounding rules.
I. Terminology
Rebate Reallocation Period. Following CMS’ publication of the Part D national average
monthly bid amount, the Part D base beneficiary premium, the Part D regional low-income
premium subsidy amounts, and the MA regional benchmarks, MA organizations may
reallocate Part C rebate dollars in the MA bid pricing tool for certain MA plan bids (BPT).
Rebate reallocation is one aspect of the annual MA bid negotiation process that takes place
in August. Rebate reallocation is required for some MA plans, is optional for others, and is
not allowed for certain plans, as discussed in this guidance.
The rebate reallocation period is about five to seven business days. After changes to rebate
allocation and/or premium rounding, the MA organization will re-submit the bid package via
HPMS. CMS will announce the exact dates of the rebate reallocation period at the time we
publish the Part D and MA regional plan amounts.
Target Part D basic premium. The target Part D basic premium is the Part D basic premium
net of any Part C rebate dollars that were applied to reduce (buy down) the premium. MA
organizations will provide the target Part D basic premium in the initial June bid submission
via the bid pricing tools. Once CMS publishes the national average Part D bid and other
amounts, CMS calculates each plans’ actual Part D basic and actual total plan premium. MA
organizations that are required, or that can opt, to reallocate rebate dollars to return to the
target Part D basic premium can do so only during the rebate reallocation period.
Standard Part B premium. The standard Part B premium is the full-subsidy monthly Part B
premium amount. Beginning in 2007, beneficiaries meeting specified income thresholds will
have a monthly adjustment amount added to the full-subsidy amount. Given the MA
requirement of uniform premiums within a plan, effective 2007, the lowest Part B premium an
MA plan can offer is the estimated standard amount net of rebates. This may not result in a
zero Part B premium for all enrollees. OACT will continue to provide the estimate of the
standard Part B premium each year for bidding purposes.
II. Rebate Reallocation Rules – When Can Rebate Be Reallocated?
II.A. MA-only Plans.
For local MA-only plan bids, the plan premium submitted in the initial June bid submission is
considered the final CY premium, as these plans are not affected by calculations of the Part
D national average bid or the MA regional plan benchmarks. Thus, the rebate reallocation
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Appendix F
period does not apply to local MA-only plans. That is, MA organizations will not have an
opportunity during the rebate reallocation period to resubmit local MA-only plan bids to round
their premiums. If an MA organization desires a “whole-dollar” premium, it should be
submitted as such in the initial June submission.
II.B. Local and Regional MA-PD Plans with No Part C Rebate Dollars.
Local and regional MA-PD plans with no Part C rebate dollars would only participate in the
Rebate Reallocation Period to round premiums in order to adjust the Part D basic premium
resulting from application of the Part D national average bid. See Section III.B.4. for the case
where the plan’s target Part D basic premium is the Low Income Premium Subsidy (LIPS)
amount.
Regional MA-PD plans with no Part C rebate dollars in the initial June bid submission that
end up with rebate dollars after comparison of the final MA regional benchmark to the plan
bid must participate in rebate reallocation to apply those rebate dollars to fund reduction(s) in
supplemental benefit premiums, a Part B premium reduction, and/or a return to the target
Part D basic premium.
II.C. Local and Regional MA-PD plans that Allocated Excess or Insufficient Part C
Rebate to the Part D Basic Premium
Organizations must provide in the MA BPT the target Part D basic premium. The MA
organization has two options for specifying the target Part D basic premium: (1) The lowincome premium subsidy benchmark for the region (i.e., whatever amount is equivalent to a
zero premium for full subsidy low-income beneficiaries); or (2) a specific dollar amount net of
Part C rebates (e.g., zero).
Once CMS has announced the national Part D Base Beneficiary Premium, the resulting Part
D basic beneficiary premium may be higher or lower than the plan’s target premium. If more
rebate dollars were allocated to achieve the plan’s target premium than are actually needed,
this “excess” allocation results in premium lower than the target premium. This includes the
possibility that the resulting premium is a negative number. Conversely, if none of the Part C
rebate dollars were allocated to achieve the plan’s target Part D basic premium or if not
enough rebate dollars were allocated to achieve the plan’s target premium, this “insufficient”
allocation results in a premium is higher than intended.
Below are the rules for addressing excess and insufficient rebate allocation to the Part D
basic premium.
II.C1. Rebate reallocation to adjust the Part D basic beneficiary premium (net of
rebate) must return to the target premium provided in the initial June bid
submission. We will not accept a partial return to the target premium except in
the following situation: where the plan intends to return to the target premium
and all of the rebate has been reallocated to reduce the Part D basic premium,
but the resulting premium is still greater than the target premium.
II.C2. If the Part D basic beneficiary premium (net of rebate) is less than zero,
rebate reallocation is required.
The amount of rebate allocated to buy down the Part D basic premium cannot exceed the
amount of the pre-rebate premium. Therefore, if premium resulting from application of the
National Average Monthly Bid Amount and the Base Beneficiary Premium is negative, the
“excess” rebate allocated to buy-down the Part D basic premium must be reallocated to buy-
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Appendix F
down the Part C or Part D supplemental premiums or the estimated Part B standard
premium, in order to return to the target premium.
Example II.C2: Required Rebate Reallocation, given “Excess” Allocation
June - initial bid
submission
August – Part D
benchmarks published
Rebate Reallocation
Required
Estimate pre-rebate D basic
$36
premium
Identify target premium (post$0
rebate premium)
Determine rebate amount to apply $36
to pre-rebate D basic premium to
“buy down” to target
Outcome of nat’l Part D average
$34
bid and base premium:
-$2 [$34-$36]
August pre-rebate D basic
premium
August post-rebate premium,
applying June rebate allocation
Identify rebate allocation needed
$34 [$34 – 0]
to move August pre-rebate
premium to target premium
[August pre-rebate – June target]
Calculate “excess” rebate
$2 [$36-$34]
[June rebate – August rebate]
MA organization must reallocate $2 of “excess” rebate
to other benefits to return to target premium of $0
In example C2 above, the required change is the shift from a $36 to a $34 rebate allocation
to the Part D basic premium in order to return to the target premium of $0.
II.C3. Rebate reallocation to reduce the premium for Part C or D supplemental
benefits is optional if the Part D basic beneficiary premium (net of rebate) is
lower than the target premium but not less than zero.
The MA organization has two options: leave the final Part D basic premium (net of rebate)
unchanged (i.e., at the level resulting from application of the National Average Monthly Bid
Amount and the Base Beneficiary Premium); or reallocate rebate to fund other portions of the
plan benefit package in order to return to the target D basic premium. Rebate can be
reallocated to reduce beneficiary premiums for the Part C and D supplemental benefits.
If the MA organization elects to allocate the “excess” rebate dollars to the other benefits, the
final Part D basic premium must be the target premium. That is, we will not accept a partial
return to the target premium (see rule C1). Thus, in example C3 below, if the MA
organization does not want to maintain the August post-rebate premium of $15, only a return
to $20 is acceptable, not $18.
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Appendix F
Example II.C3: Optional Rebate Reallocation, given “Excess” Initial
Allocation
June - initial bid
submission
August – Part D
benchmarks published
Estimate pre-rebate D basic premium
$35
Identify target premium (post-rebate premium)
$20
Determine rebate amount to apply to pre-rebate D
basic premium to “buy down” to target premium
$15
Outcome of nat’l Part D average bid and base
premium:
$30
$15 [$30$15]
August pre-rebate D basic premium
August post-rebate premium, applying June rebate
allocation
Identify rebate allocation needed to move August
pre-rebate premium to target premium [August prerebate – June target]
$10 [$30$20]
Calculate “excess” rebate
$5 [$15-$10]
[June rebate – August rebate]
Rebate Reallocation
Options
(a) No rebate reallocation; leave at post-rebate D basic premium of
$15.
(b) Reallocate $5 of “excess” rebate to other benefits to return to
target premium of $20
II.C4. Rebate reallocation from the Part C or D supplemental premiums to the
Part D basic premium in order to meet the target premium is optional if the Part
D basic beneficiary premium (net of rebate) is higher than the target premium.
The MA organization has two options: leave the final Part D basic premium (net of rebate)
unchanged (i.e., at the level resulting from application of the National Average Monthly Bid
Amount and the Base Beneficiary Premium); or reallocate rebate that had been applied to
reduction of Part C and D supplemental premiums or the estimated Part B standard premium
toward the Part D basic premium, in order to return to the target D basic premium.
If the MA organization does elect to reallocate additional rebate dollars from other benefits,
the final Part D basic premium must be the target premium (see rule C1). Thus, in example
C4 below, if the MA organization does not want to leave the August post-rebate premium of
$25, only a return to $20 is acceptable, not $23.
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Appendix F
Example II.C4: Optional Rebate Reallocation, given “Insufficient” Initial Allocation
June - initial bid
submission
August – Part D
benchmarks
published
Rebate
Reallocation
Options
Estimate pre-rebate D basic premium
$35
Identify target premium (post-rebate premium)
Determine rebate amount to apply to pre-rebate D
basic premium to “buy down” to target premium.
Outcome of nat’l Part D average bid and base
premium:
August pre-rebate D basic premium
August post-rebate premium, applying June
rebate allocation
Identify rebate allocation needed to move August
pre-rebate premium to target premium
[August pre-rebate – June target]
Calculate “insufficient” rebate
[August rebate to achieve target premium – June
rebate]
(a) No rebate reallocation; leave at post-rebate D
basic premium of $25.
(b) Reallocate $5 of rebate from other benefits to
the Part D basic premium to increase total rebate
to $20, thus buying the $40 premium down to the
target premium of $20.
$20
$15
$40
$25 [$40-$15]
$20 [$40-$20]
$5 [$20-$15]
II.C5. Regional MA plans also must adjust rebate allocation to account for any
increase or decrease in total rebate dollars.
Once CMS has determined the MA regional benchmarks, there may be an increase or
decrease in the total rebate dollars in a regional plan bid. The allocation of rebate dollars to
fund the premium for Part C or Part D basic or supplemental benefits or the estimated Part B
standard premium reduction must be revised to reflect the new total.
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Appendix F
Example II.C5: Regional Plan Decrease in Total Rebate combined with
“Excess” Initial Allocation to Part D Basic Premium
June - initial bid submission
August – Part D and MA
regional benchmarks published
Rebate Reallocation Options
Estimate total rebate dollars
$55
Estimate pre-rebate D basic premium
$35
Identify target premium (post-rebate premium)
$20
Determine rebate amount to apply to pre-rebate D
$15
basic premium to “buy down” to target premium.
Outcome of nat’l Part D average bid and base
$53
premium:
$30
Final total rebate dollars
$15 [$30-$15]
August pre-rebate D basic premium
August post-rebate premium, applying June rebate
allocation
Identify change in amount of total rebate
-$2
Identify rebate allocation needed to move August pre- $10 [$30-$20]
rebate premium to target premium
[August pre-rebate – June target]
Calculate “excess” rebate
$5 [$15-$10]
[June rebate – August rebate]
Reconcile reduced total rebate with “insufficient” D
$3 [$5-$2]
basic allocation
(a) Leave D basic premium at post-rebate premium of $15. Subtract $2
of rebate from other benefits to adjust for reduced total rebate
(b).Return to target premium of $20. Allocate $3 of rebate to other
benefits.
Section III. How Can Rebate Be Reallocated: Changes Allowed to Funding of Benefits
during Rebate Reallocation Period
III.A. Changes Allowed to Funding of the Part D Basic and Supplemental Benefits
During the rebate reallocation period, rebate dollars not used to reach the target premium for
basic Part D coverage may be used to buy down the Part D supplemental premium.
However, no modifications are allowed to the benefit design or pricing of the Part D basic
benefit or the supplemental benefit offered under the “enhanced alternative” design.
Changing the Part D benefit design would affect projected reinsurance due to the change in
induced demand for basic Part D benefits. This change in reinsurance has an impact on the
pricing of basic Part D benefits and, in turn, affects both the National Average Monthly Bid
Amount and the Base Beneficiary Premium. The National Average Monthly Bid Amount and
the Base Beneficiary Premium can not be recalculated after being announced; thus, there
can be no change in Part D benefit design.
Specifically, this prohibition includes the rule that no changes are allowed to the allowed
costs, administrative costs, or gain/loss margin in the Part D basic and supplemental
benefits.
III.B. Changes Allowed to Funding of the Part C Supplemental Benefits
The Part C mandatory supplemental benefit includes additional items and services not
covered by Medicare and reductions in cost sharing for Part A/B items and services from
levels actuarially equivalent to average cost sharing under original Medicare. During the
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Appendix F
rebate reallocation period, for a plan with “excess” rebate, an MA organization could further
buy down the initial Part C supplemental premium or could add new non-drug benefits (e.g.,
a vision benefit) to the Part C supplemental package and then buy down the new Part C
supplemental premium to the initial level. Significant changes to the Part C benefits will result
in additional benefit reviews. No changes in Part D benefits or pricing will be accepted.
CMS will not allow MA organizations to substantially redesign Part C supplemental benefits
during the rebate reallocation period. We expect only marginal adjustments during the rebate
reallocation period, and we will evaluate reallocations for differences in materiality.
Example: acceptable change in supplemental cost sharing. After application of the
National Average Monthly Bid Amount and the Base Beneficiary Premium, an MAPD plan’s Part D basic premium shifts from $0 to -$3, which means it has credited $3
of rebate where it is not needed. Rebate reallocation is required. The MA
organization may decide to reallocate this $3 to buy-down the cost of a benefit in the
Part C mandatory supplemental package.
However, we will not allow the MA organization to accomplish reallocation by moving
$15 out of A/B cost sharing reductions and moving $18 into the additional benefit.
We would consider this to be a substantial redesign of the supplemental benefit.
III.B1. Administrative costs and gain/loss margins.
If the value of non-drug additional benefits is being increased as a result of reallocating
rebate, there will be changes in the supplemental administrative costs and the gain/loss
margin that reflect the new level of the benefit. Administrative costs and the gain/loss margin
are allocated proportionately. Therefore, we will allow only minor changes to administrative
costs and margins.
III.B2. Elimination of a Part C supplemental benefit.
To return a MA-PD plan with insufficient rebate to the target Part D basic premium, the MA
organization could eliminate a Part C supplemental benefit. To return a regional plan with a
decrease in the total amount of rebate to the exact amount of total rebate, the MA
organization could, for example, eliminate from the Part C supplemental benefit package the
coverage of a non-Medicare covered item or service.
The value of the added or eliminated Part C supplemental benefit should match the amount
of rebate that must be shifted to return to the Part D target premium. For a regional plan, the
value of added benefits should match the net shift in total Part C rebate dollars due to an
increase or decrease in those total rebate dollars after application of the regional benchmark
and/or returning to the Part D target premium.
We reiterate that we will not allow substantive redesigning of the Part C supplemental
package. For plans with excess rebate, we will not allow the MA organization to eliminate
one additional benefit and add another additional benefit.
III.B3. First-time allocation of rebate dollars to the Part D basic premium during the
rebate reallocation period.
Some MA-PD plans with Part C rebate dollars may have opted in the June bid submission to
not allocate any of the rebate to buying down the Part D basic premium. For these plan bids,
if the Part D basic premium after application of the National Average Monthly Bid Amount
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Appendix F
and the Base Beneficiary Premium ends up lower or higher than the target premium, CMS
would allow a return to the plan’s target premium. No partial return would be allowed.
In the first situation where the Part D basic premium ends up lower than the target premium,
the MA organization may return to the target premium by adding an additional benefit to the
Part C supplemental package, including the appropriate level of administrative cost and
gain/loss margin. This additional benefit must have a value equal to the difference between
the Part D basic target premium and the post-national average Part D basic premium.
For example, if no Part C rebate dollars were allocated to buy-down the Part D basic
premium, resulting in a target premium of $25, but the plan’s Part D basic premium ended up
being $23, the MA organization could add an additional benefit worth $2 pmpm to the Part C
supplemental benefit to return to the target premium.
III.B4. MA-PD Plans with no Part C rebate and LIPS as Target Part D Basic Premium
If an MA-PD plan, including a Special Needs Plan, has no Part C rebate and specified that
the Low Income premium subsidy amount is the target premium, but ends up with a Part D
basic premium above the Low Income subsidy amount after the application of the National
Average Monthly Bid Amount and the Base Beneficiary Premium, the plan cannot return to
the target premium. The plan cannot have a final Part D premium that is zero for the full
subsidy Low Income beneficiaries.
III.C. Changes Allowed to the standard Part B premium reduction.
The other use of rebate dollars allowed under §422.266 is reduction of the Part B premium.
During the rebate reallocation period, rebate dollars may be shifted into or away from funding
a reduction in the estimated standard Part B premium, under the reallocation rules described
in other sections. Note that the maximum amount of rebate that can be allocated to reduce
the Part B premium is equal to the amount of the estimated standard Part B premium. OACT
will continue to provide the estimate of the standard Part B premium each year for bidding
purposes.
Section IV — Miscellaneous Guidance
IV.A. Every plan bid must allocate the exact amount of the plan’s total rebate.
The exact amount of the plan’s total rebate must be allocated among the various options
described above. MA organizations must account for all rebate dollars in a plan’s bid.
Moreover, the amount of rebate allocated to a supplemental benefit or the Part B standard
premium reduction must not exceed the value of that benefit. For example, if the Part D
supplemental premium is $50, an MA organization may not allocate more than $50 to buy
down that premium. Rebate allocations to the standard Part B premium cannot exceed the
estimated amount provided by CMS in the bid pricing tool.
IV.B. MA organizations must meet the §423.104(f) requirement on type of drug
coverage offered by certain plans, and must reallocate rebate if necessary to meet this
requirement.
In accordance with 42 CFR §423.104(f), MA organizations may not offer an MA coordinated
care plan in an area unless either that plan (or another MA plan offered by the same MA
organization in the same service area) includes required prescription drug coverage.
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Appendix F
Required prescription drug coverage is defined by 42 CFR §423.100 as MA-PD plan
coverage of Part D drugs that is either:
-- Basic prescription drug coverage (i.e., defined standard coverage, actuarially
equivalent standard coverage or basic alternative coverage); or
-- Enhanced alternative coverage with no beneficiary premium for the Part D
supplemental benefit. An MA-PD plan must apply rebate dollars to reduce to zero the
beneficiary premium for the Part D supplemental benefit.
MA organizations are required to comply with this requirement. If necessary, MA
organizations must reallocate rebate dollars from other benefits to achieve the required Part
D supplemental benefit in the plan.
To restate: MA organizations offering coordinated care plans must offer in an area either (a)
a basic-only Part D plan or (b) a basic plus supplemental Part D plan where the
supplemental premium equals zero. Failure to meet this requirement will result in the inability
to offer a Part D benefit. In addition, for MA organizations offering coordinated care plans,
failure to offer a Part D benefit in an area will result in the organization being unable to offer a
Part C benefit as well, pursuant to the rules of 42 C.F.R. §422.4(c).
IV.C. Local MA Plan Segments.
The above rules on rebate reallocation apply to bids for local plan segments, with the
following clarifications.
The plan’s health care benefit package must be the same across plan segments. However,
the Part C package can be priced differently across segments, e.g., basic and supplemental
premiums and cost-sharing may differ across segments.
Segmentation does not apply to the Part D benefit. The Part D prescription drug benefit must
be uniform across a plan’s service area; thus it may not vary across segments. The amount
of rebate allocated to buy-down Part D premiums, the initial target D beneficiary premium,
and the final D beneficiary premium must be identical across the entire service areas.
Section V. Rules for Rounding Premiums
1. The bid pricing tools round the following premiums to one decimal (i.e., to the nearest
dime) to comply with premium withhold system requirements: Part C (the sum of basic +
mandatory supplemental), Part D basic and Part D supplemental. No pennies are allowed.
Rebate dollars allocated to reduce the Part B standard and Part D premiums are rounded to
one decimal.
Rebate dollars allocated to reduce the Part C mandatory supplemental premium are still
rounded to two decimal places.
Note: Prescription Drug Plans (PDPs) express their intention to round the Part D premium in
the initial June bid submission, because the rebate reallocation period does not apply to
PDPs. In the Part D bid pricing tool, PDPs are permitted to round their premiums to either the
nearest $0.10 or the nearest $0.50.
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Appendix F
2. Local MA-only plans. For local MA-only plan bids, the plan premium submitted in the initial
June bid submission is considered the final premium, as they are not affected by the Part D
National Average calculation or the MA regional plan benchmark calculations. Local MA-only
plans will not have an opportunity to resubmit bids to round their premiums. Therefore, if an
organization desires a “whole-dollar” premium, it should be submitted as such in the initial
June submission.
3. Regional plans and local MA-PD plans. Regional plans and local MA-PD plans may
participate in the rebate reallocation process. During rebate reallocation, MA organizations
may round the total plan premium to the nearest dollar (up or down) by increasing or
reducing the gain/loss margin for Part A/B benefits, as long as there is an offsetting reduction
of no more than $0.50. (The total plan premium is defined at 42 CFR §422.262(b) as the
consolidated monthly premium consisting of some combination of the Part C basic and
mandatory supplemental premiums and Part D basic and supplemental premiums).
If the plan has rebate dollars, the Part A/B gain/loss margin can be changed to result in an
increase or decrease of $0.50 of rebate dollars. Note that in order to account for the 25
percent of savings retained by the Trust Funds for plans with bids below benchmarks, the
margin can be changed up to a maximum change of $0.67 since this will result in a change
of up to $0.50 in rebates ( $0.67 x 75% = $.50).
If the plan A/B bid is equal to or greater than the A/B benchmark, the Part A/B gain/loss
margin can be slightly changed to result in a premium increase or decrease of up to $0.50.
The rebate reallocation period is not an opportunity to significantly change the benefit
package or the bid. For example, one-half of one percent (0.5%) of revenue is considered by
CMS to be a significant amount of the average gain/loss margin, and thus a significant
change in the bid.
Examples of rounding.
Example (a): An MA-PD plan has no premium for A/B basic or supplemental benefits, and an
initial basic Part D premium (target premium) of $30. (This could happen if: (1) the bid equals
the benchmark and no A/B supplemental benefits are offered; or (2) the bid is less than the
benchmark, the plan has A/B mandatory supplemental benefits, and applies rebates to
reduce the Part C supplemental premium to zero. If the post-national-average-drug-bid total
plan premium is $30.42, the MA organization could round the plan premium to $30.00, and
slightly reduce the gain/loss margin for Part A/B benefits to result in the $0.42 premium
reduction. (The gain/loss margin for Part D benefits may not change.)
Example (b). An MA-PD plan has no premium for A/B benefits or supplemental benefits, and
an initial basic Part D premium (target premium) of $30. (This could happen if the bid equals
the benchmark and no A/B supplemental benefits are offered or if the plan applies rebates to
reduce the Part C supplemental premium to zero). If the post-national average drug-bid
results in a total plan premium of $32.42, the MA organization could opt to make a slight
reduction in the gain/loss margin for A/B benefits that would result in a $0.42 premium
reduction and a premium of $32.00.
The MA organization could not round the premium to anything lower than $32. For example,
the organization could not round to a combined premium of $30 by reducing the gain/loss
margin to result in a premium change of $2.42. To return to the target premium of $30, the
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Appendix F
MA organization would have to engage in rebate reallocation. See earlier sections of this
appendix for guidance on rebate reallocation.
Example (c). An MA-PD plan has no rebates, and an initial total plan premium of $25. The
post-national average drug-bid total plan premium is $26.52. The MA organization can round
the premium to the nearest dollar (i.e., $27.00), up to a maximum change of $0.50 by
increasing the gain/loss margin accordingly.
Example (d). The target Part D basic premium for an MA-PD plan with A/B supplemental
benefits is the Regional Low Income Premium Subsidy amount. After the Part D national
average monthly bid amount is calculated, the MA-PD plan ends up with a Part D basic
premium of $32.00, which is 40 cents over the Regional Low Income Premium Subsidy
Amount of $31.60. The MA-PD plan has the following 3 options.
Option 1. The MA-PD plan can maintain its Part D basic premium of $32.00. The plan’s full
subsidy eligible beneficiaries will pay a Part D basic premium of $0.40.
Option 2. The MA-PD plan can reallocate 40 cents of the rebates that were allocated to the
Part C supplemental premium to its Part D basic premium, thus reducing the premium to the
Regional Low Income Premium Subsidy Amount of $31.60. To account for the reduction in
rebates applied to Part C mandatory supplemental premium, the MA-PD plan may either
increase its Part C supplemental premium by 40 cents or reduce its gain/loss margin
appropriately. Non-low income subsidy eligible enrollees would pay a Part D basic premium
of $31.60.
Option 3. In order to be able to offer a rounded Part D basic premium to non-low-incomesubsidy eligible enrollees, MA-PD plans are permitted in this situation to reallocate A/B
supplemental rebates to reduce their Part D basic premium to the nearest whole dollar
amount below the Regional Low Income Premium Subsidy Amount. Therefore, the MA-PD
plan can reallocate $1.00 of its A/B supplemental rebates to its Part D basic premium,
reducing the Part D basic premium to $31.00, the nearest whole dollar amount below the
Regional Low Income Premium Subsidy Amount of $31.60. To account for the reduction in
A/B supplemental rebates applied to Part C, the MA-PD plan must increase its Part C
supplemental premium by $1.00. Please note that in this option, the MA-PD plan forgoes 60
cents in potential Low Income Premium Subsidy dollars per full subsidy eligible beneficiary.
Example (e). An MA-PD plan has 3 segments, with Part C premiums of $51, $76, $110. The
post-national-average-drug-bid Part D basic premium is $37.90. To end up with whole- dollar
total plan premiums, the MA organization could increase the MA gain/loss margin
requirements to increase each Part C premiums by $0.10. When added to the $37.90 Part D
premium, the total plan premium for each segment is a whole dollar amount - $89, $114, and
$148.
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Appendix G
Appendix G – Suggested Mapping of MA PBP
Categories to BPT Categories
The Medicare Advantage Bid Pricing Tool contains benefit categories that do not correlate
line-by-line with the MA Plan Benefit Package (PBP). The BPT was developed to include a
reasonable number of benefit categories for pricing purposes and to provide benefit
groupings that are consistent with organizations’ accounting and claims systems.
The chart below provides a suggested mapping of the PBP and BPT benefit categories. This
mapping is not intended to represent the only method of reporting benefits in the BPT; rather,
it contains one suggested method that may be used. Other reasonable mappings may also
be used at the actuary’s discretion; however, supporting documentation is required for
mappings different from the one in this appendix (see Appendix B for more details). The cost
sharing reported on Worksheet 3 must clearly identify which PBP benefit service categories
are priced in each of the BPT service categories (see Worksheet 3 instructions for more
details).
HPMS contains a “Medicare Benefit Description Report” with further information regarding
the PBP service categories. In addition, the Medicare Managed Care Manual may be a
helpful resource regarding benefit design.
PBP
line
#
PBP Service Category
Corresponding BPT Category (Worksheet 3)
1a
Inpatient Hospital - Acute
a1. Inpatient Facility: Acute
1b
Inpatient Psychiatric Hospital/Facility
a2. Inpatient Facility: Mental Health
2
Skilled Nursing Services
b. Skilled Nursing Facility
3
Comprehensive Outpatient Rehabilitation Facility (CORF)
h5. Outpatient Facility - Other: Other
4a
Emergency Care/Post Stabilization Care
f. Outpatient Facility – Emergency
4b
Urgently Needed Services
5
Partial Hospitalization
f. Outpatient Facility – Emergency
h3. OP Facility - Other: Observation; or h5. OP Facility Other: Other
6
Home Health Services
c. Home Health
7a
Primary Care Physician Services
i1. Professional: PCP
7b
Chiropractic Services
i2. Professional: Specialist excl. MH; or i6. Professional: Other
7c
i4. Professional: Therapy (PT/OT/ST)
i2. Professional: Specialist excl. MH; or i6. Professional: Other
7d
Independent Occupational Therapy Services
Physician Specialist Services Excluding Psychiatric
Services (exclude Radiology)
Physician Specialist Services Excluding Psychiatric
(Radiology only)
7e
Mental Health Specialty Services - Non-Physician
i3. Professional: Mental Health
7f
Podiatry Services
i2. Professional: Specialist excl. MH; or i6. Professional: Other
7g
Other Health Care Professional Services
i2. Professional: Specialist excl. MH; or i6. Professional: Other
7d
i5. Professional: Radiology
7h
Psychiatric Services
i3. Professional: Mental Health
7i
Physical/Speech Therapy
i4. Professional: Therapy (PT/OT/ST)
8a
OP Diagnostic Procedures and tests and Lab Services
h1. OP Facility - Other: Lab
8b
OP Diagnostic and Therapeutic Radiological Services
9a
Outpatient Hospital Services
h2. OP Facility - Other: Radiology
g. OP Facility - Surgery; or h. OP - Facility - Other (all subcategories)
9b
Ambulatory Surgical Center (ASC) Services
g. OP Facility - Surgery
9c
Outpatient Substance Abuse Services
h5. OP Facility - Other: Other
9d
Cardiac Rehabilitation Services
h5. OP Facility - Other: Other
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Appendix G
PBP
line
#
PBP Service Category
Corresponding BPT Category (Worksheet 3)
10a
Ambulance
d. Ambulance
10b
Transportation
l. Transportation (Non-covered)
11a
Durable Medical Equipment (DME)
e1. DME/Prosthetics/Supplies: DME
11b
Prosthetics/Medical Supplies
e2. DME/Prosthetics/Supplies: Prosthetics/Supplies
11c
Diabetes Monitoring Supplies
e2. DME/Prosthetics/Supplies: Prosthetics/Supplies
12
Renal Dialysis
h4. OP Facility - Other: Renal Dialysis
13a
Blood
k. Other Medicare Part B
13b
r. Other Non-covered
13c
Acupuncture
Other 1 (Over-the-counter Rx)
13d
Other 2
r. Other Non-covered
13e
Other 3 (Non emergent, urgent and post-stabilization
services outside of US)
14a
r. Other Non-covered
Health Education/Wellness Programs
r. Other Non-covered
q. Health & Education (Non-covered) or k. Other Medicare
Part B
14b
Immunizations
i1. Professional: PCP
14c
(Routine) Physical Exams
i1. Professional: PCP
14d
Pap Smears and Pelvic Exams Screening
14e
Prostate Cancer Screening
14f
Colorectal Screening
14g
Bone Mass Measurement
i1. Professional: PCP; i2. Professional: Specialist excl MH; or
i6. Professional: Other
14h
Mammography Screening
14i
Diabetes Monitoring
14j
Nutritional Training (diabetes and renal disease)
15
16b
Medicare Part B Drugs
Preventative Services (Prophylaxis (cleaning), Fluoride
Treatment, Dental X-Rays, Oral Exams)
Comprehensive Services (Emergency, Diagnostic,
Restorative, Endodontics/Periodontics /Extractions,
Prosthodontics, Other Oral/Maxillofacial Surgery, Other
Services)
m. Dental (Non-covered)
17a
Eye Exams
n1. Vision (Non-covered): Professional
17b
Eye Wear
n2. Vision (Non-covered): Hardware
18a
Hearing Exams
o1. Hearing (Non-covered): Professional
18b
Hearing Aids
o2. Hearing (Non-covered): Hardware
16a
j. Part B Rx
m. Dental (Non-covered)
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Appendix H
Appendix H - BPT Technical Instructions
CMS strongly encourages all BPT users and certifying actuaries to read the Technical
Instructions before working with the CY2010 bid tools.
The CY2010 BPT Technical Instructions are located in HPMS under:
HPMS Home > Plan Bids > Bid Submission > CY2010 > Documentation > BPT Technical Instructions
If you have any technical questions regarding the Bid Pricing Tool workbooks, please contact
the HPMS Help Desk at 1-800-220-2028, or via e-mail at [email protected] .
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Appendix I
Appendix I – Medical Savings Account
This appendix provides guidance in completing the MSA Bid Pricing Tool for Medical
Savings Account (MSA) and Medical Savings Account Demonstration (MSA Demo) plans
offered to Medicare beneficiaries. Any future reference to MSA plans in this Appendix also
pertains to MSA Demo plans unless otherwise noted. This appendix will highlight only the
differences in the MSA BPT from the MA BPT.
The MSA bid form is organized as outlined below:
Worksheet 1 - MSA Base Period Experience and Projection Assumptions
Worksheet 2 - MSA Total Projected Allowed Costs PMPM
Worksheet 3 - MSA Benchmark PMPM
Worksheet 4 – Enrollee Deposit and Plan Payment PMPM
Worksheet 5 - Optional Supplemental Benefits
WORKSHEET 1 - MSA BASE PERIOD EXPERIENCE AND PROJECTION
ASSUMPTIONS (CORRESPONDING TO MA WORKSHEET 1)
Line 7 – Plan Type
Enter either MSA or MSA Demo.
Line 8 – Deductible Amount
Enter the deductible amount that each beneficiary will pay for Medicare-covered Benefits.
The Maximum deductible for CY2009 for both MSA and MSA Demo plans is $10,500. The
Minimum deductible for CY2009 for MSA and MSA Demo plans are $0 and $2,200,
respectively.
Line 9 – Enrollee Type
Only enrollees eligible for both Part A and Part B of Medicare can enroll. This cell is prepopulated with “A/B.”
Base period data in Sections II, III, IV, and V should only include Medicare-covered medical
expenses.
WORKSHEET 2 - MSA TOTAL PROJECTED ALLOWED COSTS PMPM
(CORRESPONDING TO MA WORKSHEET 2)
Data in Section II must only include Medicare-covered medical expenses.
WORKSHEET 3 - MSA BENCHMARK PMPM (CORRESPONDING
MA WORKSHEET 5)
TO
Follow MA Worksheet 5 instructions for the appropriate inputs.
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Appendix I
WORKSHEET 4 – ENROLLEE DEPOSIT
CORRESPONDING MA WORKSHEET)
AND
PLAN PAYMENT (NO
This worksheet calculates the MSA monthly plan revenue requirement and enrollee deposit.
All information provided on Worksheet 4 must exclude ESRD enrollees.
MAOs may be required to provide supporting documentation for the development of the
items listed below (see Appendix B):
•
Annual average claim amounts by claim interval.
•
Percentage of member months in the highest claim interval.
•
Gross claims over the deductible on a PMPM basis by claim interval.
•
Services covered within the deductible. (MSA Demo only)
•
Cost-sharing offset over the deductible. (MSA Demo only)
•
Plan’s out-of-pocket maximum. (MSA Demo only)
•
Non-benefit expense assumptions.
•
Gain/loss margin.
SECTION II – DEVELOPMENT OF CLAIM INFORMATION INTERVALS
Column c – Annual Projected Claim Interval
The column is pre-populated with annual projected claim intervals.
Column d – Annual Average Claim Amount
Enter the annual average claim amount paid in each claim interval.
Column e – Percentage of Member Months (Use Only the Highest Claim Interval)
Allocate the total projected member months to the highest claim interval expected by
percentage.
For example, if 20% of the member months are expected to incur annual claims of $11,500,
and 10% are expected to incur annual claims of $4,400, then put 20% only in the interval
containing $11,500 and 10% only in the interval containing $4,400. The sum of column e
must equal 100%.
Column f – Gross Claims (PMPM)
This column calculates total allowed Medicare-covered claims on a per-member per-month
basis for each claim interval. No entry is required. The sum of column f must equal the total
Medicare-covered medical expenses shown in column o of Worksheet 2.
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Appendix I
Column g – Gross Claims Over Deductible (PMPM)
Enter the total allowed Medicare-covered claims on a per member per month basis over the
deductible for each claim interval expected to be paid by the MSA plan. Enter 0 for claim
intervals below the deductible.
Cell G32 (MSA Demo Only) Services Covered Within the Deductible
Input the PMPM value of services that the plan is expected to cover within the deductible.
Cell G33 (MSA Demo only) – Cost Sharing Offset Over the Deductible
Input the PMPM value of beneficiary cost sharing over the deductible.
SECTION III – DEVELOPMENT OF SUMMARY INFORMATION
Line a – Medicare-covered Medical Expenses PMPM
This cell displays the sum of column g of Section II.
Line b – Non-Benefit Expenses
Enter the non-benefit expense information. Please refer to the discussion in Worksheet 4 of
the MA bid instructions for further guidance.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, enter a 0
in the cell.
CMS may request supporting documentation for non-benefit expenses during the bid review
process.
Line c – Gain/Loss Margin
Input the projected PMPM for the gain or loss for Medicare-covered services provided.
Please refer to the discussion in Worksheet 4 of the MA bid instructions for further guidance.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, enter a 0
in the cell.
Line d – Total Plan Revenue Requirement
This cell is calculated automatically as the sum of projected Medicare-covered medical
expense, non-benefit expense, and gain/loss margin.
Line e – Projected Plan Benchmark
This cell displays the value from Section III column h line 1 of Worksheet 3 - the weighted
average for the service area of the risk-adjusted ratebook values.
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Appendix I
Line f – Projected Monthly Enrollee Deposit
This cell calculates the monthly enrollee deposit by subtracting the total plan revenue
requirement from the projected plan benchmark. For CY2009, the deductible must exceed,
by at least $1,000, the annual deposit into the enrollee’s savings account (MSA Demo only).
Line g – Percent of Plan Revenue Ratios
These cells calculate the ratio of medical expense, non-benefit expense, and gain/loss as a
percentage of revenue.
Line h – Standardized Plan Benchmark
This cell displays the value from Section III column g line 1 of Worksheet 3 - the weighted
average for the service area of the unadjusted ratebook values.
WORKSHEET 5 – OPTIONAL SUPPLEMENTAL
(CORRESPONDING TO MA WORKSHEET 7)
BENEFITS
Follow MA Worksheet 7 instructions for the appropriate inputs.
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Glossary
Glossary of Terms
The Medicare Advantage program uses a number of terms that have specialized meanings.
Many of the terms have been used for several years (for example, Plan Type) and are
generally not included in this glossary. The terms included here are primarily those that
came about as a direct result of the Medicare Modernization Act (MMA) or the development
of the bid form.
A/B Mandatory Supplemental Benefits. Health care services not covered by traditional FFS
Medicare (Parts A and B) that an MA enrollee must purchase as part of an MA plan. The
benefits may include reductions in cost sharing for Medicare benefits, non-prescription drug
benefits not covered by Medicare, and Part B and Part D premium buy-downs.
A/B Mandatory Supplemental Premium.
Mandatory Supplemental Benefits.
The premium charged to an enrollee for A/B
Allowed Costs. Medical costs before reduction for member cost sharing. This term is not
uniquely associated with the MMA, but it has not previously been used in the Adjusted
Community Rate (ACR) form.
Average 1.000 Risk Factor. Representation of an average Medicare beneficiary in terms of
demographic and health status, as measured by CMS’ risk adjustment models.
Basic Member Premium. The MA premium charged to an enrollee for A/B services, if the
standardized bid is above the standardized benchmark.
Covered. An abbreviation for Medicare-covered services.
EGWP. An abbreviation for Employer/Union-Only Group Waiver Plan (that is, “800-series”
plan). Also known as a group plan or employer-only group plan.
EGWP Supplemental Benefits. Benefits offered to employer/union-only groups that are
above and beyond what is covered in the MA plan.
ISAR. An abbreviation for intra-service area rate. See Worksheet 5 instructions for more
information about ISAR.
Local plan. An MA plan other than a Regional PPO plan type. Service areas are defined by
county.
MA. An abbreviation for Medicare Advantage.
MAO. An abbreviation for Medicare Advantage Organization.
MA-PD plan. An MA plan that offers prescription drug coverage under Part D of the Social
Security Act.
MA Rebate. An amount equal to 75% of Savings.
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Glossary
Manual Rates. Rates that are used when the base period experience data are deemed to be
less than fully credible. In such cases, the projected experience rate is weighted with the
estimated costs developed under some other (fully credible) basis in the proportion to which
the experience data are deemed credible. The term “manual rates” is not uniquely
associated with the MMA, but it is not a term previously used in the Adjusted Community
Rate (ACR) form.
Optional Supplemental Benefits. Health care services not covered by Medicare that an MA
enrollee might choose to purchase as part of an MA plan.
Plan A/B Benchmark. The Standardized A/B Benchmark multiplied by the plan’s projected
risk factor (for local plans).
Plan A/B Bid. The amount that the MAO estimates as its monthly required revenue to
provide benefits for A/B services (at the plan’s projected risk factor).
Plan Benefit Package (PBP). The summary of benefits offered by the MA plan. Health plans
fill out a separate form and submit the information to CMS.
Plan Bid Component. The weighted average of the Regional PPO A/B bids (at 1.000) based
on projected enrollments.
Prescription Drug Plan (PDP). Prescription drug coverage that is offered under a policy,
contract, or plan that has been approved as meeting CMS requirements and that is offered
by an organization that has a contract with CMS.
Regional A/B Benchmark. The Standardized A/B Benchmark multiplied by the plan’s
projected risk factor (for regional plans).
Regional Plan. A coordinated care plan structured as a preferred provider organization
(PPO) that serves one or more entire MA regions, as defined by CMS. An MA regional plan
(i) must have a network of contracting providers that have agreed to a specific
reimbursement for the plan’s covered services, and (ii) must pay for all covered services
whether provided in- or out-of-network. Service areas are defined by region.
Reinsurance. A term referring to two different concepts:
In the MA program for A/B services, reinsurance refers to the situation in which an MAO is
ceding risk to commercial carriers. Also known as private reinsurance.
Under Medicare Part D, reinsurance refers to the Federal Government’s coverage of 80% of
costs over the catastrophic coverage level.
Savings. The difference between the Plan (or Regional) A/B Benchmark and the Plan A/B
Bid (not less than zero).
Special Needs Plan (SNP). Any type of MA coordinated care plan that exclusively enrolls
special needs individuals.
Standardized A/B Benchmark. For local plans, the weighted average MA payment rate for
the plan’s service area based on the plan’s projected enrollment. For regional plans, the
benchmark is based on the Statutory Component and the Plan Bid Component. The term
“standardized” indicates that the benchmark is based on a “1.000” average risk profile.
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Glossary
Standardized A/B Bid. The Plan A/B Bid divided by the plan’s projected risk factor (that is,
the bid at a 1.000 risk factor).
Statutory Component. The rate used in calculating the regional benchmark, based on
regional rates weighted by Medicare-eligible beneficiaries.
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According to the Paperwork Reduction Act of 1995, no persons are required to respond to a
collection of information unless it displays a valid OMB control number. The valid OMB
control number for this information collection is 0938-0944. The time required to complete
this information collection is estimated to average 5 hours per response, including the time to
review instructions, search existing data resources, gather the data needed, and complete
and review the information collection. If you have comments concerning the accuracy of the
time estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security
Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland
21244-1850.
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| File Type | application/pdf |
| File Title | MA BPT instructions |
| Author | CMS/OACT |
| File Modified | 2008-10-03 |
| File Created | 2008-10-03 |