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INSTRUCTIONS FOR COMPLETING
THE MEDICARE ADVANTAGE
BID PRICING TOOL
AND
THE MEDICAL SAVINGS ACCOUNT
BID PRICING TOOL
FOR CONTRACT YEAR 2011
March 16, 2010
CMS-10142 (09/30/2010)
TABLE OF CONTENTS
Table of Contents ............................................................................................................................................... 2
I. Introduction.................................................................................................................................................... 4
Background ................................................................................................................................................. 4
Document Overview ................................................................................................................................... 4
New for Contract Year 2011 (CY2011) ...................................................................................................... 5
Bidding Resources....................................................................................................................................... 6
II. Pricing Considerations................................................................................................................................... 8
Bidding/Pricing Approach........................................................................................................................... 8
Specific Topics ............................................................................................................................................ 8
III. Data Entry and Formulas ........................................................................................................................... 34
Medicare Advantage ................................................................................................................................. 34
Medical Savings Account.......................................................................................................................... 34
Data Entry ................................................................................................................................................. 34
MA Worksheet 1 - MA Base Period Experience and Projection Assumptions ............................................... 35
Section I – General Information ................................................................................................................ 35
Section II – Base Period Background Information.................................................................................... 38
Section III – Base Period Data (at Plan’s non-ESRD Risk Factor) for 1/1/2009 – 12/31/2009 ................ 39
Section IV – Projection Assumptions ....................................................................................................... 40
Section V – Description of Other Utilization Adjustment Factor, Other Unit Cost Adjustment
Factor, and Additive Adjustments ...................................................................................................... 42
Section VI – Base Period Summary for 1/1/2009 – 12/31/2009 (excludes Optional Supplemental) ........ 42
MA Worksheet 2 – MA Projected Allowed Costs PMPM .............................................................................. 44
Section I – General Information ................................................................................................................ 44
Section II – Projected Allowed Costs........................................................................................................ 44
MA Worksheet 3 – MA Projected Cost Sharing PMPM ................................................................................. 47
Section I - General Information................................................................................................................. 47
Section II – Maximum Cost Sharing Per Member Per Year ..................................................................... 47
Section III – Development of Contract Year Cost Sharing PMPM (Plan’s non-ESRD Risk Factor) ....... 48
MA Worksheet 4 – MA Projected Revenue Requirement PMPM................................................................... 54
Section I – General Information ................................................................................................................ 54
Section II – Development of Projected Revenue Requirement ................................................................. 54
Section III – Development of Projected Contract Year ESRD “Subsidy” ................................................ 61
Section IV – For Employer Bid Use Only (“800-series”) ......................................................................... 61
Section V – Projected Medicaid Data for DE# Beneficiaries ................................................................... 61
MA Worksheet 5 – MA Benchmark PMPM .................................................................................................... 63
Section I - General Information................................................................................................................. 63
Section II – Benchmark and Bid Development ......................................................................................... 63
Section III – Savings/Basic Member Premium Development ................................................................... 64
Section IV – Standardized A/B Benchmark – Regional Plans Only ......................................................... 64
Section V – County-Level Detail and Service Area Summary (excluding ESRD) ................................... 65
Section VI – Other Medicare Information................................................................................................. 67
MA Worksheet 6 – MA Bid Summary ............................................................................................................ 69
Section I - General Information................................................................................................................. 69
Section II – Other Information .................................................................................................................. 69
Section III – Plan A/B Bid Summary ........................................................................................................ 69
Section IV – Contact Information and Date Prepared ............................................................................... 73
Section V – Working Model Text Box...................................................................................................... 74
CY2011 MA BPT Instructions
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MA Worksheet 7 – Optional Supplemental Benefits ....................................................................................... 75
Section I - General Information................................................................................................................. 75
Section II – Optional Supplemental Packages........................................................................................... 75
Section III - Comments ............................................................................................................................. 77
IV. Appendices................................................................................................................................................ 78
Appendix A - Actuarial Certification ............................................................................................................... 78
Appendix B - Supporting Documentation ........................................................................................................ 81
General ...................................................................................................................................................... 81
Submitting Supporting Documentation ..................................................................................................... 82
MA Checklist for Required Supporting Documentation ........................................................................... 89
SAMPLE Cover Sheet – Submitted with initial bid upload in June.......................................................... 91
SAMPLE Cover Sheet – Submitted as a subsequent substantiation upload ............................................. 92
SAMPLE Format for Reliance on Information Supplied by Others ......................................................... 92
Appendix C – Part B-Only Enrollees ............................................................................................................... 93
Appendix D – Medicare Advantage Products Available to Groups................................................................. 94
Appendix E – Rebate Reallocation and Premium Rounding ........................................................................... 97
I. Rebate Reallocation Rules by Plan Type ............................................................................................... 97
II. Rebate Reallocation Rules and Examples ............................................................................................ 98
III. Additional Rebate Reallocation Guidance ........................................................................................ 106
IV. Rules for Rounding Premiums .......................................................................................................... 109
V. Summary of Considerations for Rebate Reallocation Resubmissions................................................ 112
Appendix F – Suggested Mapping of MA PBP Categories to BPT Categories ............................................. 114
Appendix G – Medical Savings Account BPT............................................................................................... 117
Worksheet 1 - MSA Base Period Experience and Projection Assumptions (Corresponding to MA
Worksheet 1) .................................................................................................................................... 117
Section I - General Information............................................................................................................... 117
Sections II, III, IV, and V ........................................................................................................................ 117
Worksheet 2 – MSA Total Projected Allowed Costs PMPM (Corresponding to MA Worksheet 2)...... 117
Section II – Projected Allowed Costs...................................................................................................... 117
Worksheet 3 – MSA Benchmark PMPM (Corresponding to MA Worksheet 5) .................................... 118
Worksheet 4 – Enrollee Deposit and Plan Payment (No corresponding MA Worksheet) ...................... 118
Section II – Development of Claim Information Intervals ...................................................................... 118
Section III – Development of Summary Information .............................................................................. 119
Worksheet 5 – Optional Supplemental Benefits (Corresponding to MA Worksheet 7) ......................... 119
Appendix H – DE# Summary ........................................................................................................................ 120
CY2011 MA BPT Instructions
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INTRODUCTION
I. INTRODUCTION
BACKGROUND
Medicare Advantage (MA) organizations must submit a separate bid to the Centers for
Medicare & Medicaid Services (CMS) for each plan that they intend to offer under the
Medicare Advantage program, including MA plans, Medical Savings Account (MSA) plans,
and MSA Demonstration (MSA Demo) plans. For plans 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. The MA BPT is not to be completed for Section 1876 Cost plans, Section 1833 Cost
plans, or PACE (Programs of All-Inclusive Care for the Elderly) plans. An actuarial
certification and supporting documentation must be submitted for each bid as described in
Appendix A and Appendix B, respectively.
The submitted bids will be subject to review and negotiation by CMS or by any person or
organization that CMS designates. As part of the review/negotiation process, CMS or its
representative may request additional documentation supporting the information contained in
the BPT. Organizations must be prepared to provide this information in a timely manner.
If the MA plan includes prescription drug benefits under the Medicare Part D program (that is,
an MA-PD plan), then an additional Part D BPT must also be completed and submitted to
CMS. Prescription drug benefits under the Medicare Part D program are not allowed to be
offered with an MSA plan.
DOCUMENT OVERVIEW
This document contains general pricing considerations and detailed instructions for completing
the BPT. Following are the contents of each section:
•
•
•
•
Section I, “Introduction”: contains background information and a list of key changes
from the CY2010 BPT, and provides sources of additional information regarding the
bidding process.
Section II, “Pricing Considerations”: includes guidance for the overall approach to
pricing in the BPT and topic-specific issues for bidders to consider. The section topics
are arranged alphabetically.
Section III, “Data Entry and Formulas”: contains line-by-line instructions on each data
entry field and describes the formulas for calculated cells.
Section IV, Appendices A through H: contain information on Actuarial Certification,
Supporting Documentation, Part B-Only Enrollees, MA Products Available to Groups,
Rebate Reallocation and Premium Rounding, Suggested Mapping of MA Plan Benefit
Package (PBP) Categories to BPT Categories, the MSA BPT, and DE#.
CY2011 MA BPT Instructions
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INTRODUCTION
NEW FOR CONTRACT YEAR 2011 (CY2011)
Key features that are new for the CY2011 BPTs, and key changes from the CY2010 BPTs, are
listed below. The changes improve the usability and functionality of the BPT and reflect
current regulatory guidance. The revisions are grouped by worksheet. See the sections of these
instructions titled “Pricing Considerations” and “Data Entry and Formulas” for more
information regarding these changes.
MA Bid Pricing Tool
•
•
•
•
Two-Year Look-Back Form (2YRLB)
◦ The Two-Year Look-Back Form has been eliminated for CY2011.
Worksheet 1
◦ In Section I, line 14, an input field has been added for “SNP Type”. The field is
displayed on all other worksheets, as well.
◦ In Section I, line 9 (“Enrollee Type”), the drop-down menu options have been
revised for regional plans (RPPOs).
◦ In Section II, line 1, “Time Period Definition” has been pre-populated with
incurred dates (that is, 1/1/2009 through 12/31/2009 in the CY2011 BPT).
◦ In Section II, line 5, “Plans in Base” now accommodates eight entries, rather
than four. Also, member months are now entered in this line, rather than
member month percentages.
◦ In Section III, column d (“Net PMPM”) and column e (“Cost Sharing”) have
been added.
◦ In Section IV, the unit cost adjustment column has been separated into two
columns: column n (“Inflation Trend”) and column o (“Other Factor”).
◦ In Section V, the text box is now also used to describe any “Unit Cost
Adjustment - Other Factors” entered in Section IV, column o.
◦ Section VI has been added to summarize base period revenue, net medical
expenses, non-benefit expenses, and gain/loss margin.
‣ Note: Section VI must be completed in total dollars (not PMPMs), and
include all beneficiaries (i.e., ESRD + hospice + all other).
Worksheet 2
◦ In Section II, column q (“DE# Allowed PMPM”), the default formulas have
been removed.
◦ In Section II, column o (“Total Blended Allowed PMPM”), formulas have been
revised to require data entry in column e (“Utilization Type”).
◦ In Section II, column h (“Projected Experience Allowed PMPM”), formulas
have been revised to incorporate column o from Worksheet 1 (“Unit Cost
Adjustment - Other Factor”).
Worksheet 3
◦ In Section III, column l, formulas have been revised to require data entry in
column e (“Measurement Unit Code”).
◦ A new input field was added to the footnote, in cell H66, to capture the actual
combined plan-level deductible, if applicable.
CY2011 MA BPT Instructions
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INTRODUCTION
•
•
•
Worksheet 5
◦ In Section III, line 1, the “Savings” formula (cell E23) has been revised to
remove logic that is no longer necessary.
◦ In Section VI, columns t and u (formerly “FFS equivalent cost sharing – Part A
and Part B” in last year’s BPT) were removed.
Worksheet 6
◦ In Section IIB, line 3, “plan intention for full Part B premium buy-down” has
been removed.
◦ In Section IIIC, lines 7a, 7b, 8a, and 8b (Part D premiums and rebates) are not
applicable for employer-only or union-only group waiver plans (EGWPs) and
MA-only plans.
Worksheet 7
◦ A “Description” field has been added for each Optional Supplemental Benefit
(OSB) package.
MSA Bid Pricing Tool
•
Worksheet 5
◦ A “Description” field has been added for each OSB package.
BIDDING RESOURCES
In addition to these instructions, the following resources provide information on CY2011
bidding:
•
•
•
•
•
•
The CY2011 Call Letter may be found at
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2011.pdf
The CY2011 Advance Notice may be found at
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2011.pdf
The CY2011 Payment Notice may be found at
TBD
The CY2011 Actuarial Bid Training is offered as a web-based conference. The
conference materials, including slides and streaming video downloads, are available at
TBD
For questions about the bid form, e-mail the CMS Office of the Actuary (OACT) at
[email protected].
OACT will host weekly technical user group calls regarding actuarial aspects of the
CY2011 bidding process. The conference calls will include live Question and Answer
sessions with CMS actuaries. The call-in information is as follows:
◦ Every Thursday from April 15 through June 3, 2010
◦ 11:00am – 12:30pm ET
◦ Dial-In Number: TBD
◦ Password: TBD
◦ Call Leader: TBD
CY2011 MA BPT Instructions
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INTRODUCTION
•
For technical questions about the BPT, HPMS, or the upload process, refer to the
following resources:
◦ The Technical Instructions are located in HPMS, under HPMS Home > Plan
Bids > Bid Submission > CY2011 > Documentation > BPT Technical
Instructions
◦ The Bid Submission User’s Manual, also available in HPMS
◦ HPMS Help Desk: 1-800-220-2028 or [email protected]
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
II. PRICING CONSIDERATIONS
BIDDING/PRICING APPROACH
By statute, the bid must represent the revenue requirement of the expected population.
Therefore, in most circumstances, plan sponsors must use credible bid-specific experience in
the development of projected allowed costs. This approach does not preclude plan sponsors
from reaching specific benefit and premium goals; the gain/loss margin guidance allows
sufficient flexibility to achieve pricing targets provided that the overall margin meets the
requirements in the guidance and that anti-competitive practices are not used.
It is important to note the distinction between reporting base period experience data in
Worksheet 1 and projecting credible data for pricing. Base period experience must be reported
at the bid level if the plan existed in CY2009, regardless of the level of enrollment. This
experience must also be projected in Worksheet 2 and assigned an appropriate level of
credibility by the certifying actuary. Data may be aggregated for determining manual rates to
blend with partially credible projected experience rates or to account for significant changes in
enrollment from the base period to the contract year.
SPECIFIC TOPICS
Topic
Bad Debt
Non-Benefit Expenses
Base Period Experience: Plan Terminations
and Enrollment Shifts
Non-Covered Limited Benefits
Part B Premium and Buydown
Capitated Arrangements for Medical
Services: Base Period Data, Projected
Allowed Costs
Coordination of Benefits (COB)/
Subrogation
Plan Premiums, Rebate Reallocation, and
Premium Rounding
Plan Intention for Target Part D Basic
Premium
Point-of-Service (POS)
Cost Sharing
Credibility
Disease Management
Preventative Services Incentives
Projected Allowed Costs
Dual-Eligible Beneficiaries
Regional Preferred Provider Organizations
(RPPO)
Employer-only or union-only group Waiver
plans (EGWPs)
Rebate Allocations
End-Stage Renal Disease (ESRD)
Enrollment
Risk Score Development for CY2011
Risk Score Definitions and Information
Sources
Gain/Loss Margin
Risk Score Calculation Approaches
Hospice Enrollees
Service Area Changes
Inpatient Hospital Non-Covered Days
Manual Rating
Service Categories
Medicare Secondary Payor (MSP)
Adjustment
Supporting Documentation
CY2011 MA BPT Instructions
Skilled Nursing Facility
Page 8 of 124
PRICING CONSIDERATIONS
Bad Debt
For private fee-for-service (PFFS) plans that match Medicare fee-for-service (FFS) payment
rates, bad debt for uncollected enrollee cost sharing for inpatient hospital and skilled nursing
facility care is to be included in medical costs. Other plans types are prohibited from directly
paying for member cost sharing, but they may adjust fee schedules to account for any cost
sharing that is projected to be uncollected.
Base Period Experience
CMS requires base experience data to be based on claims incurred in calendar year 2009 and
generally expects at least 30 days of paid claim run-out; 2-3 months of paid claim run-out is
preferable.
Worksheet 1 must be completed with data at the bid level, that is, with a contract number,
Plan ID, and segment combination for each bid. Note that these data must—
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Be submitted in Worksheet 1 at the bid level for all plans with experience data in 2009,
regardless of the level of enrollment or the source data for manual rates.
Be provided for plans acquired by the plan sponsor.
Reconcile in an auditable manner to financial data.
Be reported without adjustment in Section III. Adjustments may be made in Section IV
to accommodate population, benefit design, or other changes between the base period
and the projection period.
Not be used to aggregate data from multiple plans in order to achieve credibility.
Credibility is addressed on Worksheet 2.
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 (in-network and out-of-network, Medicare-covered, and
mandatory supplemental).
Be reported on an allowable basis (before any reduction for reinsurance recoveries or
cost sharing) and on a net basis.
Reflect the full level of plan cost sharing in the plan benefit PBP for all enrollees,
including the DE# beneficiaries. See the pricing consideration for dual-eligible
beneficiaries for more information about DE# beneficiaries.
Include capitation amounts allocated to the appropriate service category line on a
reasonable basis. See the pricing consideration for capitated arrangements for medical
services.
Exclude claim experience for hospice enrollees for the time period that an enrollee is in
hospice status. See the pricing consideration for hospice enrollees.
Exclude end-stage renal disease (ESRD) claim experience for the time period that an
enrollee is in ESRD status based on CMS eligibility records.
Exclude claims experience for optional supplemental benefits. Such experience must be
uploaded as supporting documentation with the initial June bid submission.
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
Plan Terminations and Enrollment Shifts
The requirements for reporting base period data for plan terminations and enrollment
shifts are described below.
✔ Rule 1 – Plan Termination
When a plan is terminated and the members are retained and cross-walked into
an existing or new plan, the terminated plan’s base period experience must be
reported on Worksheet 1 of each plan into which the members are cross-walked.
CMS allows data for more than one plan to be aggregated only in this
circumstance. Note that this rule applies when members are cross-walked
within the same contract, and when members are cross-walked between
contracts.
✔ Rule 2 – Shifts in Enrollment
When enrollment shifts among plans and the base period plan is offered in the
contract period, then the base period experience must be reported only in
Worksheet 1 of the base period plan.
✔ Rule 3 – Partial Experience
Base period experience must be reported in total at the bid level for every
contract-plan ID-segment ID; do not include partial plan experience on
Worksheet 1.
Example 1:
An MA organization offers plans 001-00 and 002-00 in CY2009 and plans
002-00 and 003-00 in CY2011. Plan 001-00 terminated and the membership is
cross-walked into plans 002-00 and 003-00 for CY2011. Base period
experience must be reported on Worksheet 1 of the CY2011 BPT as follows:
For plan 002-00 BPT, report aggregate base period experience for plans 001-00
and 002-00 (Rule 1 and Rule 3).
For plan 003-00 BPT, report base period experience for plan 001-00 (Rule 1 and
Rule 3).
Example 2:
An MA organization offers plans 001-00 and 002-00 in CY2009 and plans
002-00 and 003-00 in CY2011. Plan 001-00 terminates and the membership is
cross-walked to plan 003-00 for CY2011. The certifying actuary expects most
of the current membership in plan 002-00 to enroll in plan 003-00 for CY2011;
however, plan 002-00 is still offered. Base period experience must be reported
on Worksheet 1 of the CY2011 BPT as follows:
For plan 002-00 BPT, report base period experience for plan 002-00 (Rule 2 and
Rule 3).
For plan 003-00 BPT, report base period experience for plan 001-00 (Rule 1).
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
Capitated Arrangements for Medical Services
Similar to the requirements for related-party administrative agreements in the non-benefit
pricing consideration, medical costs must reflect the costs that would have been incurred or
projected in the absence of the related-party relationship. Any difference is considered
gain/loss margin.
Base Period Data
If medical services are provided under a capitated arrangement, then the utilization rates
entered on Worksheet 1 must be based on claims or encounter data for the plan whether
or not a related party is involved.
The requirements for the “Allowed PMPM” and “Net PMPM” entered on Worksheet 1
depend on whether or not a related party is involved.
•
•
If a non-related party provides medical services under a capitated arrangement,
the allowed cost is the capitation amount plus any related cost sharing.
If a related party provides medical services under a capitated agreement, the
allowed cost and net medical cost may need to be adjusted.
◦ If the capitation paid to a related party is greater (or less) than the average
cost that the related party would charge a non-related party for such services,
only the average cost is included in the allowed cost. The excess (or
deficiency) is considered gain/loss margin.
◦ If the related party does not have credible data on which to base the average
cost, such as data for a similar arrangement with a non-related party, FFS
data may be used to estimate this amount.
Projected Allowed Costs
The “Blended Rate, Total Allowed PMPM” in Worksheet 2 must reflect only the
average cost that the related party would charge a non-related party for such services.
The excess or deficiency (that is, the difference between the capitation and the average
cost) is considered gain/loss margin.
Coordination of Benefits (COB)/Subrogation
The COB/Subrogation service category is intended to include only those amounts that are to be
settled outside the claim system. If an MA organization 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 MA organization’s net liability amount (before cost-sharing
reductions) may be entered on Worksheet 1, Section III, lines a through q.
Cost Sharing
The cost-sharing information entered in the BPT must tie to data in the PBP and, as such, must
contain enough descriptive information to be easily cross-checked by CMS. 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 per member per month (PMPM) amount
in Worksheet 3. Further, the description entered in each line of Worksheet 3 must identify all
plan cost sharing associated with the PMPM amount on that line.
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
The cost-sharing descriptions in Worksheet 3 are to be used by plan managers, marketing staff,
and plan actuaries to ensure that the benefits priced in the BPT are consistent with those
benefits, as part of the quality control process for bid submissions. CMS recommends 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, any
PBP line numbers must be shown in addition to, and not in lieu of, a description of the costsharing amounts.
For plan cost sharing designed to match Medicare FFS cost sharing (an approach used by some
employer-only or union-only group waiver plan sponsors), the user must enter “Medicare FFS
cost sharing” (or similar wording) in the cost-sharing description for each applicable category.
This wording is needed because the final cost-sharing dollar amounts will not be known when
the bid is initially submitted. Note that this approach applies for the BPT but not the PBP.
The actuary may also use the actuarial equivalent cost-sharing factors shown in Worksheet 4 to
estimate the PMPM amount for plan cost sharing that is designed to match Medicare FFS cost
sharing. In this case, the user may enter the entire value of cost sharing in columns i and j.
This approach does not apply for other levels of cost sharing.
We expect that the cost sharing for travel benefits (obtained outside the plan’s service area) will
be entered as out-of-network (OON) cost sharing in Worksheet 3 (columns m and n). Further,
if the plan applies different cost sharing for travel benefits than for “local” benefits (obtained
within the service area), then this difference must be specified in the OON cost-sharing
description in column m. However, if the travel benefit is provided in-network—that is, within
the network established by the MA organization or its affiliate for other health plans in other
service areas—then the plan sponsor may enter the cost sharing for the travel benefit as
in-network (Worksheet 3, columns e through j). As is the case with OON cost sharing, if the
plan applies different cost sharing for travel benefits than for “local” benefits (obtained within
the service area), then this difference must be specified in the in-network cost-sharing
description in column h.
Any member premium(s) and Part D cost sharing must be excluded from Worksheet 3.
Credibility
Based on an application of classical credibility theory to Medicare FFS experience, CMS has
established a guideline for full credibility for MA plans of 24,000 total 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. This formula is a guideline; actuaries must consider the
quality of the base period experience when calculating credibility. Plan sponsors may use a
different credibility methodology only if the alternate method is consistently applied among all
plans in the contract and is deemed acceptable by CMS.
The certifying actuary must adhere to the following rules of overriding the CMS credibility
formula for partial credibility.
•
If the CMS formula for partial credibility is applied to base period members months and
the resulting credibility is—
◦ Less than or equal to 20 percent (that is, 960 or fewer MA member months),
then the actuary may override the computed credibility with 0 percent.
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
◦
Greater than or equal to 90 percent (that is, 19,440 or more MA member
months), then the actuary may override the computed credibility with
100 percent credibility.
The override is applicable only to the CMS credibility formula; it is not applicable to any
alternative credibility formula. If the certifying actuary overrides the CMS credibility, then the
override option must be applied consistently among all bids and cannot be applied selectively
to certain bids. If the certifying actuary proposes a variation to the override, then the alternate
credibility method proposal and documentation requirements apply.
The credibility assumption for projected allowed costs may vary—
•
•
•
•
By service category, which may be appropriate if a subset of providers is reimbursed on
a capitation basis or if manual rates are being used for newly added benefits.
By line of business within a contract—for example, special needs plans (SNPs) as
compared to other plans.
From the credibility method used in the development of risk scores, as risk scores tend
to reach full credibility at lower levels of membership.
From the credibility method used for ESRD membership—which may reach full
credibility at lower levels of members months due to the high amount of claims.
Credibility factors are applied to PMPM costs in the BPT. Therefore, actuaries that use
different credibility factors for utilization than for unit costs must develop blended factors to
use in the bid form.
When assessing the credibility of plan experience, actuaries must consider ASOP No. 8,
Regulatory Filings for Health Plan Entities.
Disease Management
Disease management (DM) expenses are to be treated as medical expenses, non-benefit
expenses, or both. DM services furnished in a clinical setting by approved providers are to be
treated as medical expenses. The cost of durable medical equipment (DME) associated with
DM activities is typically classified as supplemental medical expenses. Care management
services provided under a SNP model of care—, for example, services provided by an
interdisciplinary care team—are treated as medical expenses. Guidance for SNP models of
care was released via an HPMS memorandum dated September 15, 2008. Absent additional
CMS guidance, other DM and care coordination efforts—such as costs incurred during
recruitment, enrollment, and general program communications—are to be classified as nonbenefit, or administrative, expenses. In all cases, the classification of DM expenses in the bid
must be explained in the supporting documentation for projected allowed costs and non-benefit
expenses.
Dual-Eligible Beneficiaries
Dual-eligible beneficiaries are individuals who are eligible for both Medicare and Medicaid
benefits under Titles XVIII and XIX of the Social Security Act, respectively. There are several
categories of dual-eligible beneficiaries, such as qualified Medicare beneficiaries (QMBs), with
different benefits based on income and other qualifying circumstances. Some dual-eligible
beneficiaries receive benefits in the form of reduced or eliminated Medicare cost sharing. For
descriptions of the dual-eligible beneficiary categories, and the type of Medicaid benefits to
CY2011 MA BPT Instructions
Page 13 of 124
PRICING CONSIDERATIONS
which they are entitled, see
http://www.cms.hhs.gov/DualEligible/02_DualEligibleCategories.asp.
The BPT reflects the difference in cost-sharing liability for certain dual-eligible beneficiaries in
the development of total medical costs.
Definition of DE#
In the BPT and these instructions, the term “DE#” (d-e-pound) refers to dual-eligible
beneficiaries without full Medicare cost-sharing liability. Included are dual-eligible
beneficiaries who receive benefits in the form of reduced, as well as eliminated,
Medicare cost sharing. The non-DE# population includes dual-eligible beneficiaries
with full Medicare cost-sharing liability and beneficiaries who are not eligible for
Medicaid (that is, non-duals).
Per federal statute, QMBs and qualified Medicare beneficiaries with full Medicaid
benefits (QMB+) are not liable for Medicare cost sharing; therefore, these beneficiaries
are always considered to be DE# beneficiaries. The certifying actuary must determine
which additional beneficiaries are DE# based on the Medicaid cost-sharing policy for
the states or territories in the plan’s service area.
Bidding
The BPT must reflect data and costs for the DE# and non-DE# populations separately,
as explained in this section and summarized in Appendix I.
The certifying actuary may use plan-specific enrollment data available in HPMS, under
the “Risk Adjustment” link, to determine the DE# population as follows:
•
•
•
Consider the membership data posted in HPMS for the July 2009 cohort of the
contract plan-ID segment(s) listed in Worksheet 1 for the base period.
Consider the QMB and QMB+ membership to represent the entire DE#
population only if the percentage of total dual-eligible beneficiaries (which
includes all dual-eligible categories and not just QMB and QMB+) is less than
10 percent of total beneficiaries.
If the percentage of total dual-eligible beneficiaries is greater than or equal to
10 percent of total beneficiaries, then determine which dual-eligible
beneficiaries, in addition to QMB and QMB+ beneficiaries, are DE# based on
the Medicaid cost-sharing policy for the states or territories in the plan’s service
area.
See the pricing consideration for risk score for more information about the risk score
data posted in HPMS.
✔ Worksheet 1 – Base Period Data
The user must enter base period member months and risk scores separately for
the total and non-DE# populations regardless of the size of the actual and
projected DE# populations. The BPT calculates base period member months and
risk scores for the DE# population based on the user-entered values for the total
and non-DE# populations. All other data on Worksheet 1 are to be entered for
the total population.
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✔ Worksheet 2 – Projected Allowed Costs (Blended Rates)
The BPT calculates blended allowed costs for the total population (column o)
based on the projected experience rate and manual rate. The CMS credibility
guideline applies to total (DE# plus non-DE#) member months.
The user must enter projected allowed costs for both the non-DE# and DE#
populations (columns p and q) as follows:
Enter projected allowed costs for the non-DE# beneficiaries in column p and
allowed costs for the DE# beneficiaries in column q.
•
If DE# projected member months are between 10 percent and 90 percent
inclusive of the total projected member months (excluding ESRD), then
enter distinct DE# and non-DE# projected allowed costs (columns p and q).
•
If DE# projected member months are less than 10 percent or greater than
90 percent of the total projected member months (excluding ESRD), then the
user may, at the discretion of the certifying actuary, enter—
◦ Non-DE# projected allowed costs (column p) equal to the projected
allowed costs for the total population (column o); and
◦ DE# projected allowed costs (column q) equal to the projected allowed
costs for the total population (column o).
•
If the projected member months for the DE# population or for the non-DE#
population are equal to zero, then enter projected allowed costs for the nonDE# beneficiaries (column p) and for the DE# beneficiaries (column q)
equal to the projected allowed costs for the total population (column o). Do
not enter zero for these costs.
•
Complete Worksheet 2, column p on a “per non-DE# member per month”
basis, and complete column q on a “per DE# member per month” basis.
✔ Worksheet 3 – Cost Sharing
•
The user must enter cost-sharing information in Worksheet 3 based on benefits
outlined in the PBP, including the case when the number of projected non-DE#
members months equals zero.
The in-network utilization values apply to the total population or to the non-DE#
population as follows:
•
•
If (i) DE# projected member months are less than 10 percent, or greater than
90 percent, but not equal to 100 percent of total projected member months
(excluding ESRD), and (ii) the projected allowed costs in Worksheet 2 for
the total, DE#, and non-DE# populations are all equal, then the utilization
rates entered in Worksheet 3, and hence the PMPM value of cost sharing,
may, at the discretion of the certifying actuary, apply to either—
◦ The non-DE# population; or
◦ The total population.
If DE# projected member months are 100 percent of total projected member
months (excluding ESRD), then the utilization rates entered in Worksheet 3,
and hence the PMPM value of cost sharing, must apply to the total
population.
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In all other cases, the in-network utilization and PMPM value of cost sharing
apply to the non-DE# population.
✔ Worksheet 4 – Projected Required Revenue
•
Total medical expenses are calculated separately for non-DE#s, DE#s, and all
beneficiaries in subsections A, B, and C, respectively.
•
•
•
•
•
•
•
•
•
In subsection A (non-DE#s), net medical expenses for Medicare-covered
benefits (column o) are calculated based on FFS actuarially equivalent
cost-sharing proportions (column k).
In subsection B (DE#s), comparable medical expenses are calculated for
DE# beneficiaries based on state or territory Medicaid cost sharing
(column k).
In subsection C (all beneficiaries), the BPT weights the non-DE# and DE#
costs by their respective projected member months (from Worksheet 5) to
calculate costs for all beneficiaries. The user must enter total non-benefit
expenses and gain/loss margin for all beneficiaries.
Considerations for developing data for DE# beneficiaries include the
following:
All values must be calculated on a “per DE# member per month” basis.
In subsection B, column f, plan cost sharing reflects the cost sharing that
would be paid if the beneficiary actually paid the plan cost sharing in the
PBP.
◦ This amount is calculated automatically based on DE# allowed costs in
Worksheet 2 and the ratio of non-DE# plan cost sharing and allowed
costs in subsection A.
◦ However, the default formulas may be overwritten at the discretion of
the certifying actuary.
In subsection B, column k, the state or territory Medicaid required level of
beneficiary cost sharing reflects the cost sharing that the beneficiary is liable
to pay. This amount includes the following:
◦ Cost-sharing amounts required by state or territory Medicaid programs.
◦ Plan cost sharing for non-covered, non-Medicaid benefits.
The user must enter the plan cost sharing for non-covered, non-Medicaid
benefits because the actual cost sharing (column g) is the minimum of plan
cost sharing (column f ) and the state or territory Medicaid required level of
beneficiary cost sharing (column k). The user must—
◦ Calculate this cost sharing based on the state or territory eligibility rules
for subsidized cost sharing for DE# beneficiaries in the plan’s service
area.
◦ Calculate this cost sharing on a “per DE# member per month” basis as a
weighted average of the PMPM cost sharing for all DE# members.
◦ Enter data in all cases. The cells must not be left blank.
If (i) DE# projected member months are less than 10 percent of total
projected member months (excluding ESRD), and (ii) the projected allowed
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•
costs in Worksheet 2 for the total, DE#, and non-DE# populations are all
equal, then the user may, at the discretion of the certifying actuary, enter—
◦ A zero amount; or
◦ The state or territory Medicaid required level of beneficiary cost sharing,
if any.
In all other cases, the user must enter the state or territory Medicaid required
level of beneficiary cost sharing.
In Section V, if the plan sponsor has a separate contract with a state or territory
for Medicaid services, then enter projected Medicaid revenue and benefits for
members of the MA plan.
The projected Medicaid benefits—
◦ Are those benefits that the plan sponsor has contracted to provide under
the Medicaid program in the state or territory that are not reflected
elsewhere in the bid.
◦ Reflect the full cost, which includes non-benefit expense and gain/loss
margin.
◦ May include prescription drug benefits required by the Commonwealth
of Puerto Rico to be offered in order to participate in the Platino
Program.
•
The projected Medicaid revenue is the corresponding revenue not reflected
elsewhere in the bid.
•
The values must be on a “per-DE#-member-per-month” basis.
✔ Worksheet 5 – Benchmark
•
The user must enter county-specific projected member months and projected
risk factors for the total population in Section V (column e).
In Section II, the BPT automatically calculates total member months and
average risk factor for the total population based on the county-level
information. Values for the DE# population are calculated automatically from
the values for the total and the non-DE# populations.
Non-DE# and DE# projected member months are determined as follows:
•
•
•
The user must enter distinct projected member months for the non-DE#
population.
The user must not round projected DE# member months to 0 percent or
100 percent, even if DE# projected member months are less than 10 percent,
or greater than 90 percent, of total projected member months (excluding
ESRD).
CMS expects non-zero DE# projected member months when there are DE#
members in the base period. The DE# projected member months may be
zero only if—
◦ All of the existing DE# members terminated and the probability of
enrolling DE# members is zero;
◦ The certifying actuary adequately explains why the DE# projected
membership is zero; and
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◦
•
The user enters non-DE# projected member months and risk score equal
to the corresponding values for the total population.
Non-DE# and DE# projected risk scores are determined as follows:
◦ If the projected allowed costs in Worksheet 2 for the total, DE#, and
non-DE# populations are not all equal, then the user must enter a distinct
non-DE# projected risk factor.
◦ If the projected allowed costs in Worksheet 2 for the total, DE#, and
non-DE# populations are all equal, then the user must enter a projected
risk factor for the non-DE# population equal to the projected risk factor
for the total population.
Employer-Only or Union-Only Group Waiver Plans (EGWPs)
Each employer-only group bid must reflect the composite characteristics of the individuals
expected to enroll in the plan for the contract year and the expected underwriting assumptions
for all groups, in aggregate. In addition, projected enrollment within the plan’s service area
must be consistent with the location of employer groups.
Note that the user must enter a county code in Worksheet 5 for each county in the plan’s
service area in order to generate a county-level payment rate, although the projected member
months (and risk factor) can be zero.
See Appendix D, “MA Products Available to Groups”, for more information.
End-Stage Renal Disease (ESRD)
All information provided on Worksheets 1 through 7 must exclude the experience for enrollees
in ESRD status, for the time period that enrollees are in that status based on CMS eligibility
records, with the exception of: (i) Worksheet 1, Section VI and (ii) Worksheet 4, Section III,
“ESRD Subsidy”, as described below. Note that all plan sponsors must enter the projected CY
ESRD member months in the ESRD Subsidy section of Worksheet 4. Do not leave this field
blank.
ESRD Subsidy
The benchmarks calculated in the 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 order to account for the projected marginal costs
(or savings) of plan enrollees in ESRD status, the BPT allows for an adjustment that is
allocated across all plan members (ESRD and non-ESRD enrollees). The adjustment is
split into two sections, basic benefits and supplemental benefits, although the entire
subsidy is added to A/B mandatory supplemental benefits.
✔ Basic Benefits
The inputs 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
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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 BPT will automatically 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 BPT will calculate the incremental cost of supplemental benefits for ESRD
enrollees and will allocate these costs across all plan members (ESRD and nonESRD).
If a zero incremental cost of Mandatory Supplemental (MS) is intended, then the
user may either—
‣
‣
Leave the MS input fields blank; or
Set these costs equal to the projected cost-sharing reduction PMPM and cost
of additional benefits PMPM for non-ESRD enrollees.
Enrollment
The projected enrollment for the MA bid must be consistent with that for the corresponding
Part D bid and must reflect the same underlying population. Acceptable differences in
projected member months entered in the Part D bids include out-of-area members, ESRD
members, and possibly hospice members, as outlined in these instructions.
If the projected enrollment in a particular county in the plan’s service area is zero, the user must
enter the county code with zero projected member months in order to generate a county-level
payment rate for that county.
Gain/Loss Margin
Gain/loss margin refers to the additional revenue requirements beyond medical expenses and
non-benefit expenses. It is allocated to Medicare-covered services and A/B mandatory
supplemental benefits based on the allocation of total medical expenses (excluding the impact
of the ESRD subsidy).
When Medicare benefits are funded by an outside source (such as a state Medicaid program or
an employer group), the gain/loss margin must be consistent for Medicare and the other
funding source (s).
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General Enrollment 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. 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, not to exceed plus or minus 1.5 percent 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 surplus requirements of the business.
The overall margin-level expectations are 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, 3 to 5 years).
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, not to exceed plus or minus
1.5 percent, with any variation reflecting the different levels of financial risk for the two
components. The individual Part D margin of an MA-PD bid can either be the same for
all plans or vary by plan in relation to the MA margin.
There is flexibility in setting gain/loss margin at the plan level provided that the overall
margin meets CMS requirements, anti-competitive practices are not used, the plan
offers benefit value in relation to the margin level, and negative margin satisfies the
guidance in this subsection.
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 —
•
•
MA products are paired in a given service area and the pricing reflects implicit
“subsidies” across benefit or service area offerings—if, for example, a
low-benefit plan with a positive margin is paired with a rich-benefit plan with a
negative margin such that the combined gain/loss margin is positive and satisfies
the guidance in this subsection.
The combined margin for an MA-only and an MA-PD plan with the same MA
benefits is positive and satisfies the guidance in this subsection.
Note that exceptions to the business plan requirement do not include a positive margin
at the contract level or at a more aggregated level.
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.
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Employer-Only or Union-Only Group Waiver Plans (EGWPs)
The foundation for the claim and administrative costs for EGWPs must be based on
appropriate EGWP experience. The margin requirements for EGWPs depend upon
whether or not corresponding general enrollment plans are offered.
•
•
If corresponding general enrollment plans are offered, the assumptions used for
general enrollment plans must be the basis for the margin requirements for
EGWPs. The difference in the margin level between EGWP and general
enrollment plans must not exceed 1 percent, calculated at the contract level.
If corresponding general enrollment plans are not offered, then the margin
guidance for general enrollment plans applies to the EGWP margin pricing.
◦ Overall EGWP margin levels are to be consistent with the organization’s
margin requirement.
◦ Overall EGWP margin levels are to be within a reasonable range of the
margin for other similar lines of business, not to exceed plus or minus
1.5 percent of the margin.
Special Needs Plans Serving Dual-Eligibles (DE-SNPs):
The foundation for the claim and administrative costs for DE-SNPs must be based on
appropriate experience. The margin assumptions used for DE-SNP plans depend upon
whether or not corresponding general enrollment plans are offered.
•
•
If corresponding general enrollment plans are offered, the assumptions used for
general enrollment plans must be the basis for the margin requirements for DESNPs.
◦ Organizations may choose to use the overall margin levels for general
enrollment plans at a contract level or at a more aggregate level as the basis
for the DE-SNP margin assumptions, or they may rely on the margins used
in comparable general enrollment plans.
◦ There may be a small difference (that is, up to 1percent) in the margin level
between DE-SNPs 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.
◦ Overall DE-SNP margin levels are to be consistent with the organization’s
margin requirement.
◦ Overall DE-SNP margin levels are to be within a reasonable range of the
margin for other similar lines of business, not to exceed plus or minus
1.5 percent, of the margin.
Relationship of Margin Requirements and Non-Benefit Expenses
The gain/loss margin 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.
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Hospice Enrollees
When a Medicare Advantage enrollee goes into hospice status, original Medicare assumes
responsibility for Part A and Part B services, and the MA plan continues to cover supplemental
benefits. Since the plan sponsor is not liable for Medicare-covered benefits, in this situation,
base period member months, base period risk scores, projected member months, and projected
risk scores must exclude enrollees for the time period that they are in that status. The “Monthly
membership Report” (MMR) data include hospice status.
However, since hospice enrollees continue to receive mandatory supplemental benefits from
the MA plan, the projected allowed cost PMPM may reflect claim costs for these enrollees for
mandatory supplemental benefits, at the discretion of the certifying actuary—for example, for a
dental or another additional benefit.
Inpatient Hospital Non-Covered Days
CMS developed a 1.2 percent factor based on FFS data that can be used as a “safe harbor” for
determining the proportion of inpatient days that are non-covered. If the non-covered hospital
pricing is based on an assumption other than the safe harbor, support for the data and
methodology used in the development of that assumption is required.
Manual Rating
Manual Rating with FFS Data
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 adjustments for corresponding
demographic, health, and geographic profiles of the claimants and to account for the
non-claimants. Similarly, since the FFS data published in the BPT and/or MA ratebook
development files are not split by benefit type, another appropriate source must be used
to allocate the data to all of the BPT service categories. Further, as is the case with use
of all manual rating sources, 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
excluded from the data, and adjustments for medical education expenses.
FFS Costs Used for the Actuarial Equivalent Cost-Sharing Factors
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, as are the costs for hospice
services, 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 Indirect Medical Education (IME), Graduate Medical Education
(GME), and other costs, may be found at www.cms.hhs.gov under Medicare >
Medicare Advantage Rates & Statistics > Ratebooks & Supporting Data.
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Medicare Secondary Payer (MSP) Adjustment
The Medicare Secondary Payer (MSP) adjustment is used in the BPT to reflect the reduced
payments to MA plans for enrollees whose primary coverage is not Medicare (that is, working
aged and working disabled enrollees). Although CMS reduces payments for MSP status at the
beneficiary level, the BPT applies the MSP adjustment at the bid level.
The projected MSP adjustment must be consistent with the development of projected allowed
costs. MSP data provided by CMS serve as the basis for projecting the MSP adjustment. See
TBD for information about such data. See TBD for information about bid-specific data
available via HPMS.
The BPT uses the MSP adjustment to reduce the standardized A/B benchmark; the method to
calculate the MSP adjustment is described below.
•
MSP adjustment = 1 – A/B, where
A = Actual, total plan payments reflecting reduced payments for MSP beneficiaries, and
B = Total plan payments that would be paid if no beneficiaries had a payer that was
primary to Medicare.
•
The total plan payments used to calculate the MSP adjustment exclude MA rebates.
Example:
A = $9,747,000 and B = $10,000,000
The MSP adjustment = 2.53% = .0253=1 – $9,747,000 / $10,000,000.
Non-Benefit Expenses
Non-benefit expenses are all administrative costs of operating the MA plan, other than medical,
DME/supplies, prescription drugs, and other benefits.
Worksheet 4 distributes the non-benefit expenses proportionately between Medicare-covered
and A/B mandatory supplemental (excluding the PMPM impact of the ESRD subsidy). Nonbenefit expenses are also distributed within A/B mandatory supplemental benefits between
“Additional Services” and “Reduction of A/B Cost Sharing.”
The non-benefit expenses must be entered separately on the BPT for the following categories:
•
•
Marketing & Sales (for example, the cost of marketing materials, commissions,
enrollment packages, identification cards, and the salaries of sales and marketing staff).
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:
◦ Customer service.
◦ Billing and enrollment.
◦ Medical management.
◦ Claims administration.
◦ Medicare user fees, which are estimated to be $0.33 PMPM on a national basis
for CY2011.
◦ Uncollected enrollee premium.
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◦
•
•
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, and
human resources).
Net Cost of Private Reinsurance (that is, reinsurance premium less projected
reinsurance recoveries).
All non-benefit expenses must be reported using appropriate, generally accepted accounting
principles (GAAP). 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 must be excluded from non-benefit expenses.
Such costs include goodwill amortization, income taxes, changes in statutory surplus,
investment expenses, and the cost of lobbying activities. Similarly, non-insurance revenues
pertaining to investments and fee-based activities cannot be reflected in the bid. See the
announcement about lobbying activities released via an HPMS memorandum dated
October 16, 2009.
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.
Non-benefit expenses that are common to offering an MA-PD plan must be allocated
proportionately between the Medicare Advantage and Part D BPTs.
When Medicare benefits are funded by an outside source (such as a state Medicaid program or
an employer group), the non-benefit expenses must be allocated proportionately between the
Medicare revenue and the other funding 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.
These requirements for related-party agreements apply to a plan sponsor that enters into
any type of service agreement involving a parent company and subsidiary or between
subsidiaries of a common parent. CMS requires plan sponsors to disclose all relatedCY2011 MA BPT Instructions
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party agreements at the time of bid submission and to prepare the bid in accord with the
guidance below for each related-party agreement identified.
A plan sponsor in a related-party agreement with an organization that does not have an
agreement with an unrelated party must prepare the BPT in a manner that does not
recognize the independence of the subcontracted related party. A plan sponsor in this
type of agreement must–
•
•
•
•
Disclose the related-party agreement to CMS at the time of bid submission.
Prepare the BPT in a manner that does not recognize the independence of the
subcontracted related party. For purposes of completing the BPT, the plan
sponsor must consider the gain/loss and non-benefit expense of the related party
to be those of the sponsor. The plan 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 these 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 for completing the bid
pricing tool.
A plan sponsor in a related-party agreement with an organization that has an agreement
with an unrelated party must either (i) demonstrate that fees associated with the
sponsor’s related-party transaction are comparable to the fees between the related-party
organization and other related parties of similar size and market position to the plan
sponsor, or (ii) prepare the BPT in a manner that does not recognize the independence
of the subcontracted related party.
To demonstrate that fees associated with a related-party transaction are comparable to
the fees between the related-party organization and other unrelated parties of similar
size and market position, a plan sponsor must—
•
•
•
Disclose the related-party agreement to CMS at the time of bid submission.
Provide a written document at the time of bid submission fully explaining the
manner in which the terms of one or more of the agreements between the
related-party organization and other unrelated parties and the associated fees are
comparable.
Prepare the BPT in a manner that recognizes the independence of the
subcontracted related party by allocating all administrative costs in the relatedparty agreement to non-benefit expense.
A plan sponsor in a related-party agreement with an organization that has an agreement
with an unrelated party and chooses to prepare the BPT in a manner that does not
recognize the independence of the subcontracted related party must–
•
•
Disclose the related-party agreement to CMS at the time of bid submission.
Prepare the BPT in a manner that does not recognize the independence of the
subcontracted related party. For purposes of completing the BPT, the plan
sponsor must consider the gain/loss and non-benefit expense of the related party
to be those of the sponsor. The plan sponsor cannot allocate all administrative
costs in the related-party agreement to non-benefit expense.
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•
•
Develop the gain/loss and non-benefit expense of the related-party subcontractor
in accord with these 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 for completing the bid
pricing tool.
To satisfy proprietary concerns, CMS can initiate separate contact with the plan sponsor
and 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.
Regardless of the bidding approach, plan sponsors must substantiate all information
presented in the BPT pertaining to related-party agreements even when that information
is held by the related party.
Non-Covered Limited Benefits
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 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.
Part B Premium and Buydown
MA enrollees are required to pay the Part B premium, but it may be reduced by the MA
organization through the use of rebate dollars.
Section 1839 of the Social Security Act, as amended by section 811 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and section 5111 of
the Deficit Reduction Act of 2005, 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 Part B
premium. The addition of monthly adjustment amounts to the Part B premium obligation of
higher-income beneficiaries was phased in over 3 years, beginning in 2007.
In addition, some beneficiaries pay less than the standard premium; those whose premium
increase is limited by the increase in their Social Security checks—the “hold harmless”
provision—and those for whom the state or another third party pays for the Part B premium.
Given the MA requirement that benefits must be uniform within an MA plan, the effect of this
provision on MA plans is that the amount of rebate dollars that can be applied to the Part B
premium is limited to the amount pre-populated in the BPT by CMS when the form is released.
The bid pricing tool and instructions are released annually in April, but the Part B premium is
not announced by CMS for the upcoming contract year until several months later. Therefore,
plans must use the CMS pre-populated amount in the bid form to determine the level of rebates
to allocate.
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PRICING CONSIDERATIONS
For plans that have allocated Part B rebates equal to the amount pre-populated at the time that
the bid form is released, CMS can issue further guidance directly to the plan sponsors when the
final Part B premium is announced by CMS.
Plan Premiums, Rebate Reallocation, and Premium Rounding
The MA BPT 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 are
viewed by the enrollee 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 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
preferred provider organization (RPPO) benchmarks (typically in August). Therefore, for
MA-PD plans, the premium shown on the MA BPT may not be the final plan premium for
CY2011.
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 monthly bid amount and regional PPO benchmark calculations. Local MAonly plans do not have an opportunity to resubmit in August for rebate reallocations. The
initial June bid submission must reflect the desired plan premium.
For RPPO 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 PPO benchmarks are
calculated by CMS. Note that after the MA regional PPO 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, and they may need to re-allocate rebates accordingly.
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).
MA-PD plans and regional MA-only plan sponsors have the opportunity to reallocate rebates
after the release of the Part D national average bid amount and regional PPO benchmarks.
Appendix E contains rebate reallocation and rounding rules, including the following:
•
•
•
•
•
•
A description of the rebate reallocation period.
The types of benefit changes that are permitted during the rebate reallocation period.
A summary of the circumstances under which rebate allocation is required, permitted,
or not permitted.
Limitations on significant changes to the BPT when rounding premiums.
Specific rules for returning to the target Part D basic premium.
Examples of rebate allocation and rounding.
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PRICING CONSIDERATIONS
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 during the rebate reallocation period.
Plan Intention for Target Part D Basic Premium
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 MA rebate dollars in certain MAPD bids in order to return to the target Part D basic premium. MA-PD plan sponsors must
choose one of the following two options for the target premium: “Premium amount displayed in
line 7d” or “Low Income Premium Subsidy Amount.”
The target Part D basic premium is the Part D basic premium net of any MA rebate dollars that
were applied to reduce (buy down) the premium; it does not include the Part D supplemental
premium or the MA premium. Similarly, 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.
MA-PD plan sponsors must choose a plan intention for the target Part D basic premium option
in the initial June bid submission and cannot change the chosen target in a subsequent
resubmission. CMS will consider only the option selected in the initial June bid submission as
the plan’s intention.
Point-of-Service (POS)
There is no separate service category for POS; therefore, POS base period experience data and
projected allowed costs must be included in the appropriate service categories.
Preventive Services Incentives
The CY2010 Call Letter outlined requirements for items or services that a plan offers
conditional to an enrollee taking some action (for example, receiving a flu shot) or participating
in some program (for example, a smoking cessation program).
When an incentive program incurs a cost, then this cost must be priced in the bid. The
projected PMPM cost of incentives must be combined with the cost of other non-covered
benefits and entered in line q of the MA BPT. Note that combining the costs with “Other NonCovered” does not change the nature of incentives, which cannot be “benefits”, as explained in
the CY2010 Call Letter. Supporting documentation is required with the initial June bid
submission.
Projected Allowed Costs
The BPT determines net medical costs from projected allowed costs and cost sharing. If (i)
plan cost sharing matches Medicare FFS cost sharing, and (ii) the certifying actuary uses the
actuarial equivalent cost-sharing factors shown in Worksheet 4 to estimate the PMPM value of
the cost-sharing amount in Worksheet 3, then the actuary may adjust the projected allowed
costs in order to reflect this PMPM value of the cost-sharing amount.
This type of adjustment to projected allowed costs does not apply for other levels of cost
sharing.
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PRICING CONSIDERATIONS
Regional Preferred Provider Organizations (RPPOs)
Part B-Only
An RPPO plan must cover enrollees eligible for both Part A and Part B of Medicare.
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 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 plan-provided geographic intra-service area rate (ISAR) factors. See
the instructions for Worksheet 5 for more details on ISAR factors.
Rebate Allocations
The following rules apply for rebate allocations in the initial June bid submission:
•
•
•
•
•
•
•
•
The fifth column of Worksheet 6, Section IIIB 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 rule applies to all bids,
including 800-series EGWP bids.
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 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 Part B premium are subject to the maximum amount
shown on Worksheet 6 when the bid form is released by CMS. See the “Part B
Premium and Buydown” pricing consideration and the instructions for Worksheet 6
Section II for further information about rebates applied to the Part B premium.
Risk Score Development for CY2011
[TBD]
The projected CY2011 risk score must —
•
•
•
•
•
Be based on the risk model used in payment years 2010 and 2011.
Reflect appropriate projection factors, including, but not limited to, the plan’s aggregate
coding trend.
Include a frailty factor, if applicable.
Be adjusted for FFS normalization.
Include the appropriate MA coding pattern differences adjustment factor.
CY2011 MA BPT Instructions
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PRICING CONSIDERATIONS
•
•
Be consistent with the development of projected medical expenses.
Be consistent with the projected risk score for the corresponding Part D bid and must
reflect the same underlying population.
Risk Score Definitions and Information Sources
HCC-Risk Model
The CMS- HCC risk model was calibrated in 2007 to use for MA payments in CY2009
and CY2010. Additional information on the CMS- HCC Model, including the 2011
normalization factor, is contained in the 2011 MA payment notice.
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 2011. This adjustment accounts for the
expectation of higher intensity in the aggregate risk scores for the contract year versus
the model denominator year (2007). Accordingly, the projected risk scores in the
CY2011 bids must reflect the normalization factor of TBD.
MA Coding Pattern Differences Adjustment Factor
In addition to normalization, the projected risk scores in the CY2011 bids must reflect
the MA coding pattern differences adjustment factor, which is TBD percent. To apply
this adjustment, multiply the projected CY2011 normalized risk scores by TBD.
Risk Adjustment Information Sources
The following materials can be found under the “Medicare Advantage Rates and
Statistics” page of the CMS website at
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/:
•
•
•
The 2010 MA ratebook announcement.
The 2011 MA advance payment notice.
The 2011 MA ratebook announcement.
See the links under “Risk Adjustment”, “Announcements & Documents”, and
“Ratebooks & Supporting Data”.
Additional information on the risk adjustment process can be found under
http://www.csscoperations.com/new/usergroup/traininginfo.html
Risk Score Calculation Approaches
Preferred Experienced-Based Approach
The preferred method for projecting the 2011 risk scores for plans with credible risk
score data is use of the CMS- HCC risk scores for the 2009 enrollee cohort. Planspecific risk score data that may be used as the basis for projecting CY2011 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
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PRICING CONSIDERATIONS
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 understanding the material
presented.
There are several advantages to using the 2009 cohort HCC risk scores in the projection
of the CY2011 risk score:
•
•
•
•
•
They are consistent with the base-period medical expenses.
They are based on a mid-year cohort and require no adjustment for seasonality.
They reflect the most complete MA diagnosis data for 2008 dates of service
submitted through January 31, 2010, which is the final reporting deadline for
this period.
They are based on the latest risk model.
The risk score data posted in HPMS are disaggregated by Medicaid status.
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. However, the starting risk score is to be projected from 2009 to 2011
with explicit adjustment for the following factors, as appropriate:
•
•
•
The plan’s aggregate coding trend.
Changes in plan population.
Other appropriate factors.
Finally, the projected risk scores must be normalized by dividing by the 2011 FFS
normalization factor and by adjusting for MA coding pattern differences.
Alternate Experienced-Based Approaches
For plans with credible risk score data, below are alternate approaches to forecasting the
CY2011 MA risk scores.
✔ CMS- HCC model
The first step under this method is to use the CMS- HCC model to generate
scores for the expected plan enrollment. Plans must 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/raparticpantguide_120607.pdf.
The starting risk score is to be trended to CY2011 with explicit adjustment for
the following factors:
•
•
•
•
•
The plan’s aggregate coding trend;
Impact of lagged versus non-lagged diagnosis data;
Run-out of diagnosis data;
Seasonality;
Population changes; and
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PRICING CONSIDERATIONS
•
Other appropriate factors.
Once projected to CY2011, the scores must be normalized by dividing by the
2011 FFS normalization factor and by adjusting for the MA coding pattern
differences adjustment factor. Note that, if you are normalizing a nominal or
actual risk score associated with a different model calibration year, the contract
year 2011 FFS normalization factor is not the appropriate normalization factor.
✔ Monthly Membership Report (MMR) Data
The base scores under this approach are scores from a Monthly Membership
Report (MMR) file. This method may be appropriate if the plan was first
offered in 2010, if there was limited enrollment in 2009 or if there were
significant changes in plan or enrollment characteristics between 2009 and 2010.
The starting “raw” risk scores for this alternative approach are the average risk
scores from one or more of the MMR files for non-adjustment records. Note
that such score is normalized from the model denominator year to the payment
year.
These scores are trended to 2011 with explicit adjustment for the following
factors:
•
•
•
•
•
•
•
•
Conversion to a raw risk score (that is, multiplication by the FFS
normalization factor of the payment year);
The plan’s aggregate coding trend;
Impact of lagged versus non-lagged diagnosis data;
Run-out of diagnosis data;
Seasonality;
Population changes;
A frailty factor, if applicable;
Other appropriate factors.
Finally, the projected scores must be normalized by dividing by the CY2011
FFS normalization factor of TBD.
✔ Other Approaches
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, as is use of the following:
•
•
•
•
•
A normalization factor that differs from the CY 2011 FFS normalization
factor.
A risk model change factor that differs from the bid-specific model change
factor available via HPMS.
Average risk scores from more than one MMR report.
An alternate starting risk score.
Any adjustment factor that is not calculated as described in these
instructions.
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PRICING CONSIDERATIONS
Manual Rating Approach
Plans without appropriate base period experience or without credible risk score data
must estimate risk scores based on the expected medical expenses for their projected
enrollees. Further, the risk scores for new plans must be developed in a manner
consistent with the CMS-HCC model.
Service Area Changes
The initial bid submission must reflect pending service area expansions and changes. The user
must enter county-level data on Worksheet 5 for each county in the proposed service area. If
the pending request is later denied, then the plan sponsor must resubmit a BPT that includes
only the approved counties. The revised bid values must reflect only the change in the service
area.
Service Categories
Following are the three types of service categories:
•
•
•
Services that can be only Medicare-covered.
Services that can be only non-covered (for example, transportation benefits in line 1,
“Transportation (Non-Covered)”).
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”).
See Appendix F for a suggested mapping of BPT and PBP service categories. For more
information on benefits and service categories, see Chapter 4 of the Medicare Managed Care
Manual, “Benefits and Beneficiary Protections,” at
http://www.cms.hhs.gov/Manuals/IOM/itemdetail.asp?filterType=none&filterByDID=99&sortByDID=1&sortOrder=ascending&itemID=CMS019326
Skilled Nursing Facility
MA regulation 42 CFR §422.101(c) states that “MA organizations may elect to furnish, as part
of their Medicare covered benefits, coverage of post hospital SNF care . . . in the absence of
prior qualifying hospital stay that would otherwise be required for coverage of this care.”
When the PBP reflects the waiver of prior hospitalization requirement as a mandatory
supplemental benefit, you do not need to reflect the cost of this “additional benefit” as a
supplemental benefit in the bid pricing tool. It may be priced as a Medicare-covered benefit
instead. Further, certifying actuaries do not need to qualify their actuarial opinions to reflect
this PBP-to-BPT difference.
Supporting Documentation
In addition to the BPT and actuarial certification, organizations must submit supporting
documentation for every bid. See Appendix B for a description of the supporting
documentation requirements including content, quality and timing.
CY2011 MA BPT Instructions
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DATA ENTRY & FORMULAS
III. DATA ENTRY AND FORMULAS
This section contains line-by-line instructions for completing the Medicare Advantage (MA)
Bid Pricing Tool (BPT) and the Medical Savings Account (MSA) BPT. It also describes the
formulas for calculated cells.
MEDICARE ADVANTAGE
To complete the MA bid form, organizations must provide a series of data entries on the
appropriate form pages.
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.
MEDICAL SAVINGS ACCOUNT
Appendix G provides additional guidance in completing the MSA BPT for MSA and MSA
Demonstration (MSA Demo) plans. Appendix G highlights only the differences between the
MSA BPT and the MA BPT.
DATA ENTRY
Do not leave a field blank to indicate a zero amount. If zero is the intended value, then enter a
“0” in the cell.
CY2011 MA BPT Instructions
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WORKSHEET 1
MA WORKSHEET 1 - MA BASE PERIOD EXPERIENCE AND
PROJECTION ASSUMPTIONS
The purpose of Worksheet 1 is to capture bid-specific experience for the base period, regardless
of the level of enrollment and credibility, and to summarize the key assumptions used to project
allowed costs to 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.
Section IV captures the factors used to project the base period data to the contract period.
Section V contains a text field that describes other utilization factors and/or additive factors
used in Section IV.
Section VI contains a summary of the base period data.
Section I must be fully completed for all bids. (Note that some fields may be pre-populated by
the Plan Benefit Package (PBP) software.) Sections II through VI must be completed for all
plans with experience data for 2009 regardless of the level of enrollment.
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. All fields in Section I must be completed;
none can be left blank.
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).
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.”
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WORKSHEET 1
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.
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 completed for MSA, Cost, and PACE plans. There is a separate MSA Bid Pricing Tool.
Note that an MA organization 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-feefor-service (PFFS) plans, which can be offered in a service area without Part D coverage.
Type of Plan
Local Coor dinated Car e Plans:
Health Maintenance Organization (HMO)
Religious Fraternal Benefit HMO
Religious Fraternal Benefit HMO with a Point-of-Service (POS) Option
HMO with a POS Option
Provider-Sponsored Organization (PSO) with a State License
Religious Fraternal Benefit with a State License
Preferred Provider Organization (PPO)
Religious Fraternal Benefit PPO
Regional Coor dinated Car e Plan:
Regional Preferred Provider Organization (RPPO)
Pr ivate Fee-for -Ser vice Plans:
Private Fee-for-Service (PFFS)
Religious Fraternal Benefit PFFS
Employer /Union Dir ect Contr act Pr ivate Fee-for -Ser vice Plan:
Employer/Union Direct Contract PFFS
Employer/Union Direct Contract LPPO
Demonstr ation Plan:
Continuing Care Retirement Community (CCRC)
CY2011 MA BPT Instructions
Plan Type Code
HMO
RFB HMO
RFB HMOPOS
HMOPOS
PSO State License
RFB PSO State License
LPPO
RFB LPPO
RPPO
PFFS
RFB PFFS
ED PFFS
ED LPPO
CCRC
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WORKSHEET 1
Line 8 – MA-PD
If the plan is offering Part D benefits during the contract year (and is therefore submitting a
separate Part D 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.)
If the plan type equals “RPPO”, then the enrollee type must equal “A/B”.
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
Descr iption
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
Region
15
16
17
18
19
20
21
22
23
24
25
26
Descr iption
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 Apply
If an individual-market plan will use actuarial swaps or equivalences for employer or union
groups, enter “Y”. Otherwise, enter “N”. (See Appendix D for further information on using
swaps or equivalences.)
Line 12 – SNP
If the plan is a Special Needs Plan (SNP), enter “Y”. Otherwise, enter “N”.
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WORKSHEET 1
Line 13 – Region Name
No user input is required. This field contains the region name, based on the region number
previously entered in this section.
Line 14 – SNP Type
If the plan is a Special Needs Plan, enter the SNP type. Valid options are “Institutional”,
“Dual-Eligible”, or “Chronic or Disabling Condition”. This entry must match the SNP type in
the PBP.
SECTION II – BASE PERIOD BACKGROUND INFORMATION
Line 1 – Time Period Definition
CMS requires base experience data to be based on claims incurred in calendar year 2009 and
generally expects at least 30 days of paid claims run-out; 2 - 3 months of paid claim run-out is
preferable. See the “Pricing Considerations” section of these instructions for more information.
The incurred dates are pre-populated on the first two lines, as 1/1 through 12/31 for the 2 years
prior to the contract year. Enter the “paid through” date on the third line. For example, if the
data reflect payment information through February 2010, then the “paid through” date is
2/28/2010. The “paid though” date must be a date occurring after the “incurred to” date.
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.
Then enter the subset of member months that represents the non-DE# enrollees. The DE#
subset will be calculated as the difference between the total and the non-DE# amounts entered.
The “member months” fields must not be left blank.
Line 3 – Non-ESRD Risk Score
Enter the risk score for the non-ESRD members of the population represented in the base
period data using the CMS- HCC risk model for payment in CY2009. The risk score must be
normalized for payment in CY2009 and must reflect both a mid-year cohort (or be adjusted for
seasonality) and non-lagged diagnosis data with full run-out. Note that risk scores posted in
HPMS are not normalized, as stated in the accompanying technical notes.
Also enter the risk score for the non-DE# subset. The DE# subset will be calculated based on
the total and non-DE# amounts entered. If DE# members equals zero, then the non-DE# risk
score must equal the total risk score.
Line 4 – Completion Factor
Enter the multiplicative 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
CY2011 MA BPT Instructions
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WORKSHEET 1
only the portion of paid claims that requires completion (that is, omit capitations from the
calculation of this factor).
For example, assume the following:
Incurred Date
Paid Through Date
Capitation Payments
PTD Claims Requiring Completion
Estimate of Unpaid 2009 Claims as of 2/28/2010
Total Incurred Claims for 2009
The Completion Factor would be calculated as:
Completion Factor = (400 + 30) ÷ 400 = 1.075
1/1/2009 – 12/31/2009
2/28/2010
$100
$400
$30
$530
Line 5 – Plan/Segments 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. If the segment is “01” or greater, include the segment ID (H9999-999-01). CMS
expects that the contract number, Plan ID, and segment ID, if applicable, for the base period
data will be the same as that shown in Section I, except for Plan ID changes and plan
cross-walks. In the second column, input each plan’s member months. The sum of the member
months entered must equal the 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 member months is listed first. For example:
5. Plans in Base
Contr act-Plan ID
a. H9999-032
b. H8888-004-02
c.
d.
Member Months
5,000
1,000
If members of more than eight plans are cross-walked into the Plan ID of the bid, then the plan
sponsor must submit supporting documentation that provides the base period member months
for each plan included in the data. In this situation, plan sponsors may enter “All Other” for the
contract number/Plan ID indicated in the last line.
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/segment ID from the base period to the contract year.
SECTION III – BASE PERIOD DATA (AT PLAN’S NON-ESRD RISK FACTOR) FOR
1/1/2009 – 12/31/2009
Section III summarizes the base period data by benefit service category.
In lines a through r:
✔ Column c, lines a through r – Service Category
The benefit service categories are displayed in column c. See Appendix F for a
suggested mapping of BPT and PBP service categories. For more information on
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benefits and service categories, see Chapter 4 of 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 d, lines a through r – Net PMPM
Enter the net medical PMPM for each of the benefit service categories for the base
period.
✔ Column e, lines a through r – Cost Sharing
These fields are calculated automatically, as the difference between column i (allowed
PMPM) and column d (net PMPM). The values must be greater than or equal to zero.
Line r, COB, must equal zero.
✔ Column f, lines a through q – Utilization type
Column f displays the utilization types entered on Worksheet 2. Utilization types are
required inputs on Worksheet 2, whether the pricing is based on base period 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.
✔ 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. Value should be greater than zero if
base period member months are greater than zero.
Line t – Subtotal Medicare-Covered Service Categories
Calculated automatically as the sum of lines a through k.
SECTION IV – PROJECTION ASSUMPTIONS
Section IV contains the utilization, average unit cost, and other adjustment assumptions to
project the base period data to the contract period. The values in columns j through n are the
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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 2009 and that the contract year is 2011.
If the utilization trend is 5 percent from 2009 to 2010 and 6 percent for projecting 2010 to
2011, then enter “1.113” in column j (1.05 x 1.06).
In lines a through r:
✔ Column j – Utilization Adjustment - Utilization/1,000 Trend
Enter the utilization trend factor from the base period to the contract period by service
category. Entering 1.000 would indicate 0 percent trend. Do not leave blank. Do not
enter zero (0).
✔ Column k – Utilization Adjustment - Benefit Plan Change
Enter the multiplicative adjustment factor for any benefit plan changes (for example,
increase in coverage level from base period to contract period) that affect the base
period utilization by service category. Entering 1.000 would indicate 0 percent change.
Do not leave blank. Do not enter zero (0).
✔ Column l – Utilization Adjustment - Population Change
Enter any expected demographic or morbidity changes that are necessary to adjust the
base period data to the contract period. The population change adjustment entered in
column l of Section IV must be consistent with the development of the CY2011 risk
score. Entering 1.000 would indicate 0 percent change. Do not leave blank. Do not
enter zero (0).
✔ Column m – Utilization Adjustment - Other Factor
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 would be to adjust the base period service area to the contract year
service area. Entering 1.000 would indicate 0 percent adjustment. Do not leave blank.
Do not enter zero (0).
✔ Column n – Unit Cost Adjustment - Inflation Trend
Enter the unit cost trend factor from the base period to the contract period by service
category. Entering 1.000 would indicate 0 percent trend. Do not leave blank. Do not
enter zero (0).
✔ Column o – Unit Cost Adjustment - Other Factor
Enter any other unit cost factor adjustments by service category. Describe the reason
for any adjustments in Section V if a factor other than 1.000 is used. Entering 1.000
would indicate 0 percent adjustment. Do not leave blank. Do not enter zero (0).
✔ Columns p and q – Additive Adjustments
Use these columns to reflect adjustments that are additive; adjustments in columns j
through o 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 adjustment as a negative number in column q. For benefits that need
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WORKSHEET 1
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 OF OTHER UTILIZATION ADJUSTMENT FACTOR, OTHER
UNIT COST ADJUSTMENT FACTOR, AND ADDITIVE ADJUSTMENTS
Use this “text box” field to describe the reason for using a multiplicative factor other than 1.000
in columns m and o, and any additive adjustments entered in columns p and q.
SECTION VI – BASE PERIOD SUMMARY FOR 1/1/2009 – 12/31/2009 (EXCLUDES
OPTIONAL SUPPLEMENTAL)
Section VI contains a summary of the actual base period revenue and expenses. This section
must be completed consistently with the “Plans in Base” information, reported in Section II
line 5.
Please note that Section VI must be completed in total dollars (not PMPMs), and must include
all beneficiaries (i.e., ESRD + hospice + all other). To reiterate: the revenue (line 3), net
medical expenses (line 4), and non-benefit expenses (line 5e) should include ESRD and hospice
beneficiaries in addition to all other beneficiaries.
Section VI should not include amounts that are entered in Worksheet 1 of the Part D bid pricing
tool (for example, do not include MA rebates applied to Part D premiums).
Section VI must not include Optional Supplemental benefits.
This section must not be left blank.
Line 1 – CMS Revenue
This field captures MA revenue from CMS for the base period. Enter bid-based MA payments
and accruals from CMS, including rebates for the reduction of A/B cost sharing and other A/B
mandatory supplemental benefits. The payment accrual must account for the final risk
adjustment reconciliation payment for CY2009, which will be received in mid-2010. Do not
include rebates applied to Parts B and D premium buydowns. Also, report the CMS revenues
gross of user fee reductions.
Line 2 – Premium Revenue
Enter the revenue from earned MA premiums for the base period. Include premiums associated
with Medicare-covered and A/B mandatory supplemental benefits. Do not include premiums
for Optional Supplemental benefits. Do not include Part D premiums.
Note that uncollected premiums must be included in Line 5d (Direct Administration).
Line 3 – Total Revenue
This line is calculated as the sum of lines 1 and 2.
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Line 3b – Subset Revenue (ESRD and hospice)
Similar to lines 1 and 2, enter the revenue (from CMS and premiums) for the base period
associated with the ESRD and hospice beneficiaries. This amount is a subset of the amount
entered in Line 3 (Total Revenue).
Line 4 – Net Medical Expenses
Enter the net medical expenses for the base period. Include net medical expenses associated
with Medicare-covered and A/B mandatory supplemental benefits. Do not include expenses
for Optional Supplemental benefits and do not include expenses for Part D benefits.
Line 4b – Subset Net Medical Expense (ESRD and hospice)
Similar to line 4, enter the net medical expenses for the base period associated with the ESRD
and hospice beneficiaries. This amount is a subset of the amount entered in Line 4 (Net
Medical Expenses).
Line 5 – Non-Benefit Expenses
Enter into lines 5a through 5d the MA non-benefit expenses for the base period. Line 5e
computes the total MA non-benefit expenses.
Line 6 – Gain/Loss Margin
Calculated as MA revenue (line 3) less net medical expenses (line 4) less MA non-benefit
expenses (line 5e).
Line 7 – Percent of Revenue
Lines 7a, 7b, and 7c compute the percentage of MA revenue for net medical expenses, nonbenefit expenses, and gain/(loss) margin for the base period.
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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.
SECTION I – GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – PROJECTED ALLOWED COSTS
Lines 1 and 2 – Projected Member Months and Projected Risk Factor
The projected member months and projected risk factors are obtained from Worksheet 5 for
total, non-DE#, and DE# members.
In lines a through r:
✔ Column e – Utilization Type
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 manual rates are not used, entries
in this column are still required and are displayed on Worksheet 1.
For each service category line, enter the appropriate utilization type that reflects the
annualized utilization/1000 enrollees entered in columns f and i. The valid utilization
types are listed below. Note that the valid utilization types vary by service category, as
indicated in the BPT cells.
•
•
•
•
•
•
•
•
A
D
BP
V
P
T
S
O
–
–
–
–
–
–
–
–
Admits
Days
Benefit Period
Visits
Procedures
Trips
Scripts
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, enter manual rate
information for the contract period, and provide a description of the source of the
manual rate in line u.
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WORKSHEET 2
✔ Column i – Annual Utilization/1,000
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 PMPM amounts in column k.
✔ Line r – COB/Subrogation (outside claim system)
Enter any COB/Subrogation offsets to costs as a negative number, since line r will
be added to total medical expenses.
✔ Column l – Experience Credibility Percentage
Enter the experience credibility percentage by service category in column l.
The percentage entered must be between 0 percent and 100 percent. This percentage
must be between 0 percent and 99 percent if the plan is using a manual rate in the
projection. The percentage must equal 100 percent if a manual rate is not being used in
the projection.
Between lines s and t of column l, the BPT displays the credibility percentage that is
calculated based on CMS guidance and the base period member months entered on
Worksheet 1. If the CMS credibility does not equal the credibility entered by the plan,
then supporting documentation must be uploaded to HPMS.
✔ Columns m through o – Blended Rate
Columns m through o calculate the blended contract year rate, based on the projected
experience rate, the manual rate, and the credibility percentage.
Note that, in column o, if the allowed PMPM is greater than zero and a utilization type
is not entered, the BPT results in an error. A utilization type must be entered in
column e for all service categories in which allowed PMPMs are projected.
PMPM values in column o must be greater than or equal to zero, with the exception of
line r (COB/Subrg.), which may be negative.
✔ Columns p and q – Non-DE# and DE# Allowed PMPMs
Columns p and q capture the separate allowed PMPM costs for non-DE# and DE#
enrollees. Column p must be entered on a “per non-DE# member per month” basis, and
column q must be entered on a “per DE# member per month” basis. The amounts
entered in columns p and q are used on Worksheet 4.
The BPT contains validations such that the total allowed PMPM in column o must be
approximately equal to the weighted average of the non-DE# and DE# PMPMs.
•
For each service category, the PMPM value for the total population must be within
$0.05 (5 cents) of the weighted average of the non-DE# and DE# PMPMs.
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WORKSHEET 2
•
The BPT will finalize only if the total PMPM for all enrollees is within $0.50
(50 cents) of the weighted average of the non-DE# and DE# PMPMs.
See the “Pricing Considerations” section of these instructions for more information on
the reporting requirements of DE# pricing.
Enter any COB/Subrogation offsets to costs as a negative number, since line r will be
added to total medical expenses.
PMPM values entered in columns p and q must be greater than or equal to zero, with the
exception of line r (COB/Subrg.), which may be negative.
✔ Column r – 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 percent. The percentage entered must be between 0 percent and
100 percent.
If the plan has OON cost sharing PMPM on Worksheet 3, or is an RPPO plan type, then
it is expected that the percentage of services provided out-of-network on Worksheet 2
will be greater than 0 percent.
Line s – Total Medical Expenses
Calculated automatically as the sum of lines a through r. Values must be greater than or equal
to zero.
Line t – Subtotal Medicare-Covered Service Categories
Calculated automatically as the sum of lines a through k. Values must be greater than or equal
to zero.
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). If the experience credibility used is less than 100 percent,
then the manual rate description must not be left blank.
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WORKSHEET 3
MA WORKSHEET 3 – MA PROJECTED COST SHARING PMPM
Worksheet 3 summarizes the projected MA cost sharing for the contract year and includes both
in-network and out-of-network cost sharing.
See the “Pricing Considerations” section of these instructions for more information on cost
sharing in general and the cost sharing for DE# beneficiaries.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – MAXIMUM COST SHARING PER MEMBER PER YEAR
The responses to the plan-level (out-of-pocket) OOP maximum drop-down questions depend
on how Section D of the PBP is completed for network plans (for example, HMO and POS)
and non-network plans (for example, PPO).
For network plans, the response to the plan-level (out-of-pocket) OOP maximum drop-down
questions must be “No” if the corresponding in-network, out-of-network, or combined Plan
Level Maximum Enrollee Out-of-Pocket Cost is blank in Section D of the PBP. However, if an
in-network, out-of-network, or combined Plan Level Maximum Enrollee Out-of-Pocket Cost is
entered in Section D of the PBP, the corresponding response on the BPT must be “Yes,” and
the amount entered on the PBP must be entered in the corresponding amount field on the BPT.
For non-network plans, if a Maximum Enrollee Out-of-Pocket Cost is entered in Section D of
the PBP, the combined plan-level OOP maximum response on the BPT must be “Yes” and the
amount entered on the PBP must be entered in the amount field on the BPT. Further, the innetwork and out-of-network plan-level OOP maximum responses should be “No”.
When the response to the OOP maximum drop-down question is “Yes”, the entry in the OOP
maximum amount field must be numeric and greater than 0.
Any service-level category OOP maximums must be described in column h and must not be
considered plan level in Section II.
Line 1 – In-Network
In the first field, select “Yes” or “No” to the question “Is there a plan-level in-network OOP
maximum?” If the answer is “Yes”, then enter in the second field the maximum total dollar
amount that a member could pay for in-network cost sharing for the contract year.
Line 2 – Out-of-Network
In the first field, select “Yes” or “No” to the question “Is there a plan-level out-of-network
OOP maximum?” If the answer is “Yes”, then enter in the second field 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
In the first field, select “Yes” or “No” to the question “Is there a plan-level combined OOP
maximum?” If the answer is “Yes”, then enter in the second field the maximum total dollar
amount that a member could pay in the contract year for cost sharing both in- and out-ofnetwork. The answer is “Yes” only if the plan has a combined in-network and out-of-network
OOP maximum. Do not sum separate in-network and out-of-network OOP maximums.
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. A number of 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.
The BPT allows for flexibility in entering cost-sharing information. Following are some
examples:
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 inpatient utilization/1000 is 2,000 days, 1,900 of which are for acute and the
remaining 100 for psych. There is no in-network cost sharing maximum. These figures
could be reflected in the bid form in either of the following ways:
Option A:
Column d
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:
Column d
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 for MH group sessions, and $40
for individual MH sessions. There is no in-network maximum cost sharing. Assume
that in-network office visit utilization is distributed as follows:
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WORKSHEET 3
Type of Ser vice
PCP
Mental Health – Individual
Mental Health – Group
Other Spec
Total
Utilization
5,000
50
50
2,900
8,000
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 MH in line i3 and group
MH in line i6.
Line - Descr iption
Line i1 – PCP
Line i2 – Specialist excl MH
Line i3 – Mental Health
Line i6 – Other
Total
Column g
5,000
2,900
50
50
8,000
Column j
$ 10.00
$ 20.00
$ 40.00
$ 20.00
$ 13.88
Column 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 MH copays.
Option B: Same as Option A, but combine the individual and group MH copays
onto line i3.
Line - Descr iption
Line i1 – PCP
Line i2 – Specialist
excluding MH
Line i3 – MH
Total
Col g
5,000
Col h
$10 per visit
Col j
$ 10.00
Col k
$ 4.17
2,900
$20 per visit
$ 20.00
$ 4.83
$ 30.00
$ 13.88
$ .25
$ 9.25
100
8,000
$20/visit for group MH
sessions, $40/visit for
individual MH
Option C: Enter all services on one line (for example, i6).
Line - Descr iption
Line i6
Total
Col g
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
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WORKSHEET 3
•
•
•
•
•
•
•
•
•
•
•
•
•
DME/Prosthetics/Supplies
Outpatient (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
description if you are 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 types vary by service category, as indicated in the BPT cells.
•
•
•
•
•
•
•
•
•
•
A
D
BP
V
P
T
S
O
Coin
Ded
– Admits
– Days
– Benefit Period
– Visits
– Procedures
– Trips
– Scripts
– Other
– Coinsurance
– 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
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WORKSHEET 3
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. If an effective deductible is entered in column f, then an actual
deductible must be entered in the footnote.
Columns g through k - In-Network Cost Sharing after Plan-Level Deductible
These fields pertain to the in-network cost sharing priced in the BPT.
✔ 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, including
any benefit limits. This is a text field.
This BPT field must provide descriptions of all plan cost sharing contained in the PBP,
including descriptions of all PBP benefits priced together within each BPT service
category. These details are necessary since each BPT category may map to several PBP
benefit categories.
All descriptions entered must be easily matched back to the PBP.
Plan sponsors are to use this field to describe all in-network benefits priced in the BPT.
The user must enter a description for each service category based on the following
rules:
•
•
•
•
•
Show the PBP line number and specific cost sharing amount for each item in the
BPT line.
Show both minimum and maximum cost-sharing amounts, if applicable.
Enter information in the following format:
◦ “(4a) $50/visit, (4b) $25/visit”
◦ “9a $150, 9b $150”
◦ “$150 days 1 - 5, $0 after day 5, unlimited coverage”
◦ “$100 eye exam every 2 years”
Enter cost sharing designed to match Medicare FFS cost sharing (that is, original
Medicare cost sharing) as “FFS.”
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” or
“0%”). Do not leave this column blank.
In the footnote of column h, enter the actual combined (in-network and out-of-network)
plan-level deductible (if applicable), consistent with the PBP.
✔ Column i – In-Network 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
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WORKSHEET 3
represent either the effective copay (if utilization is entered in column g) or the effective
coinsurance percentage (if PMPM is entered in column g).
Note that this cell is not used to calculate the in-network PMPM in column k. However,
if a value is entered in column j, then a corresponding value must be entered in column i
for each service category.
✔ Column j – In-Network 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). This cell is used to
calculate the in-network PMPM in column k. The values in column j must be less than
or equal to the corresponding values in column i.
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.
For measurement units other than coinsurance, the calculation is column g times
column j divided by 12,000.
✔ Column l – Total In-Network Cost Share 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.
Note that, in column l, if the cost sharing PMPM is greater than zero and a utilization
type is not entered, the BPT result is an error. A utilization type must be entered in
column e for all service categories into which cost sharing PMPMs are entered.
✔ Column m – Out-of-Network 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. See the instructions for in-network cost sharing in line h for additional
information.
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, the user
must enter a comment indicating the zero cost-sharing arrangement (that is, $0.00 copay
or 0 percent coinsurance). For plans that have out-of-network benefits, this field must
not be left blank.
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WORKSHEET 3
✔ 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-ofnetwork services.
Enter the actual out-of-network plan-level deductible in the footnote.
Enter the pricing impact of the out-of-network OOP maximum in the second footnote.
This value must reflect the PMPM difference in pricing for out-of-network cost sharing
both before 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 allowed costs (Worksheet 2) and cost sharing (Worksheet 3) to
determine net medical costs in Section II. Below are the subsections contained in Section II:
•
•
•
Subsection A - “Non-DE# (Non-Dual Eligible Beneficiaries AND Dual Eligible
Beneficiaries with full Medicare cost sharing liability)”.
Subsection B - “DE# (Dual-Eligible Beneficiaries without full Medicare cost sharing
liability)”.
Subsection C - “All Beneficiaries”.
Subsection C is the weighted average total of subsections A and B.
Non-benefit expenses and gain/loss margin are entered in Section IIC 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.
The plan sponsor may use Section IV to provide the costs associated with additional
“unspecified” benefits for employer/union-only group waiver plan (EGWP) bids. Section V
captures projected Medicaid data for DE# beneficiaries.
See the “Pricing Considerations” section of these instructions for information on completing
Worksheet 4 for DE# beneficiaries.
SECTION I – GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – DEVELOPMENT OF PROJECTED REVENUE REQUIREMENT
Subsection A – Non-Dual-Eligible Beneficiaries and Dual-Eligible Beneficiaries with Full
Medicare Cost-Sharing Liability (Non-DE#)
The non-ESRD risk factor for non-DE# beneficiaries is obtained from Worksheet 5 and
displayed at the top of this section.
In lines a through r:
✔ Column e – Allowed PMPM for Total Benefits
The allowed PMPM is obtained from column p of Worksheet 2.
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WORKSHEET 4
✔ Column f – Plan Cost Sharing for Total Benefits
The total in-network and out-of-network cost sharing PMPMs are obtained from
column o of Worksheet 3 (except for line r). The total cost sharing must equal the total
on Worksheet 3.
✔ Column g – N/A
This column is left intentionally blank; it is not applicable to this section.
✔ Column h – Net PMPM for Total Benefits
The net PMPM is calculated automatically as column e less column f. Values must be
greater than or equal to zero.
✔ Columns i and j – Percentage for Covered Services
The PMPM amounts shown in columns e, f, and h reflect all benefits covered by the
MA plan. In columns i and j, you must enter the expected percentages of these benefits
that represent Medicare-covered. The percentages in column i are used to allocate
allowed costs (column e) between Medicare-covered (column m) and A/B mandatory
supplemental benefits. The percentages in column j are used to allocate the plan’s cost
sharing (column f) between plan cost sharing for Medicare-covered services (column l)
and cost sharing for A/B mandatory supplemental benefits.
The percentage entered must be between 0 percent and 100 percent.
For services that are non-covered as defined, the percentage is defaulted to 0.0 percent
(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 i and j. If the plan’s benefit for a
service is richer than that under FFS Medicare, the percentage entered must be less than
100 percent.
Example:
The plan sponsor estimates that 99.9 percent of the allowed PMPM in column e
for outpatient facility emergency services is for Medicare-covered services and
0.1 percent is for A/B mandatory supplemental benefits, whereas 98.0 percent of
the cost sharing PMPM in column f is for Medicare-covered services and
2.0 percent of the cost sharing is for A/B mandatory supplemental benefits. The
entries in columns i and j would be as follows:
(c)
(i)
(j)
% for Cov. Svcs
Service Category
Allowed
Cost Sharing
f. OP Facility – Emergency
99.9%
98.0%
See Appendix C for instructions on completing columns i and j for Part B-only plans.
For the Medicare-covered service categories (lines a through k), the values entered in
columns i and j must generate appropriate pricing for mandatory supplemental benefits
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WORKSHEET 4
in columns p through r, consistent with the PBP. In addition, the relationship of the
PBP benefits and the BPT pricing is to be consistent with the suggested mappings
contained in Appendix F. 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 p, “Net PMPM for Additional Services.”
✔ Column k – FFS Medicare Actuarial Equivalent (AE) Cost-Sharing Proportions
These values are populated automatically based on the enrollment projections entered in
Worksheet 5.
✔ Column l – 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 j). This column is
used to determine the reduction of A/B cost sharing in column q.
Plan cost sharing for Medicare-covered services is compared to Medicare FFS
actuarially equivalent cost sharing in the BPT “red-circle” validations.
✔ Columns m through o – 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 m – Allowed PMPM
The Medicare-covered allowed costs are calculated automatically based on the
percentage of Medicare-covered benefits input in column i. Column m is
calculated as column e times column i.
✔ Column n – Fee-for-Service Medicare Actuarial Equivalent (AE) Cost Sharing
The FFS Medicare AE cost sharing PMPMs are based on the proportions in
column k. Column n is calculated as column k times column m.
✔ Column o – Net PMPM
Calculated as column m minus column n.
Columns p through r – 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 p – 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 m) less the cost sharing for non-covered
benefits (column f minus column l). These values must be greater than or equal to zero
(except line r, COB, which may be negative).
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✔ Column q – Reduction of A/B Cost Sharing
This column is the difference between FFS AE cost sharing and the plan cost sharing
for Medicare-covered services, calculated automatically as column n minus column l.
This reduction is sometimes referred to as the “FFS cost-sharing buydown.”
✔ Column r – Total A/B Mandatory Supplemental Benefits
This column is calculated automatically as the sum of columns p and q.
Line s – Total Medical Expenses
The total medical expense is the sum of lines a through r, except for columns i, j and k.
Subsection B – Dual-Eligible Beneficiaries without Full Medicare Cost-Sharing Liability
(DE#)
The non-ESRD risk factor for DE# beneficiaries is obtained from Worksheet 5 and displayed at
the top of this section.
In lines a through r:
✔ Column e – Reimbursement plus Actual Cost Sharing for Total Benefits
Calculated automatically as the sum of columns g and h.
✔ Column f – Plan Cost Sharing for Total Benefits
This column contains a formula that may be overwritten by the user. The default
formula divides the non-DE# beneficiary cost sharing by the non-DE# allowed, and
then multiplies by the DE# allowed from column q of Worksheet 2. See the “Pricing
Considerations” section of these instructions for more guidance.
✔ Column g – Actual Cost Sharing for Total Benefits
Calculated automatically as the minimum of columns f and k.
✔ Column h – Plan Reimbursement for Total Benefits
Calculated automatically as column q from Worksheet 2 less column f.
✔ Columns i and j – Percentage for Covered Services
See instructions under Worksheet 4, subsection IIA, columns i and j.
✔ Column k – State Medicaid Required Beneficiary Cost Sharing
Enter values in accordance with the “Pricing Considerations” section of these
instructions.
✔ Column l – Actual Cost Sharing for Medicare-Covered Services
Calculated automatically as column g times column j.
✔ Columns m through o – Medicare-Covered using Medicaid Cost Sharing
These columns are calculated automatically and are the basis for the costs included in
the “Plan A/B Bid.”
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WORKSHEET 4
✔ Column m – Allowed PMPM
The Medicare-covered allowed costs are calculated automatically based on the
percentage of Medicare-covered benefits input in column i. Column m is
calculated as column e times column i.
✔ Column n – Medicaid Cost Sharing
Calculated automatically as column k times column j.
✔ Column o – Net PMPM
Calculated as column m minus column n.
Columns p through r – 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 p – Net PMPM for Additional Services
This column is calculated automatically as the allowed costs for non-covered benefits
(column e minus column m) less the cost sharing (column g minus column l). These
values must be greater than or equal to zero (except line r, COB, which may be
negative).
✔ Column q – Reduction of A/B Cost Sharing
This column is calculated automatically as column n minus column l.
✔ Column r – Total A/B Mandatory Supplemental Benefits
This column is calculated automatically as the sum of columns p and q.
Line s – Total Medical Expenses
The total medical expense is the sum of lines a through r, except for columns i and j.
Subsection C – All Beneficiaries
The non-ESRD risk factor for total beneficiaries is obtained from Worksheet 5 and displayed at
the top of this section.
In lines a through q and t:
✔ Columns e through g – N/A
These columns are left intentionally blank; they are not applicable to this section.
✔ Column h – Net PMPM for Total Benefits
The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
✔ Columns i through n – N/A
These columns are left intentionally blank; they are not applicable to this section.
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WORKSHEET 4
✔ Column o – Net PMPM for Medicare-Covered Benefits
The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
Columns p through r – 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 p – Net PMPM for Additional Services
The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
✔ Column q – Reduction of A/B Cost Sharing
The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
✔ Column r – Total A/B Mandatory Supplemental Benefits
This column is calculated automatically as the sum of columns p and q.
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. The value in column o is the net
medical cost included in the “Plan A/B Bid.” The value in column r 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 h for the four
categories listed below.
•
•
•
•
Marketing & Sales
Direct Administration
Indirect Administration
Net Cost of Private Reinsurance
The worksheet distributes the non-benefit expenses proportionately between Medicare-covered
(column o) and A/B mandatory supplemental (column r) for each category. Non-benefit
expenses are also distributed within A/B mandatory supplemental benefits between “Additional
Services” (column p) and “Reduction of A/B Cost Sharing” (column q).
See the “Pricing Considerations” section of these instructions for more information regarding
non-benefit expenses.
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WORKSHEET 4
Lines v1 through v4 – Non-Benefit Expenses
Total non-benefit expenses are input in column h and allocated proportionately between
Medicare-covered (column o) and A/B mandatory supplemental (column r). Note that the same
proportion is used for each line item. The allocation is based on the relative proportion of the
plan’s medical expense requirements for Medicare-covered (“bid”) and A/B mandatory
supplemental, excluding the PMPM impact of the ESRD subsidy.
✔ Column h – Non-Benefit Expense PMPM for Total Benefits
Enter the PMPM by category. Lines v1, v2, and v3 must be greater than or equal to
zero.
✔ Column o – Non-Benefit Expense PMPM for Medicare-Covered
These values are calculated as column h minus column r.
✔ Column r – 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 h, o, and r - Total Non-Benefit Expense
The sum of lines v1 through v4. The value must be greater than or equal to zero.
Line v5, columns p and q - Total Non-Benefit Expense for Additional Services and
Reduction of A/B Cost Sharing
The total non-benefit expense for A/B mandatory supplemental benefits (column r) is allocated
between additional services (column p) and reduction of A/B cost sharing (column q). 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
Enter the projected PMPM for the gain/loss in column h for total MA services. Do not leave
this field blank.
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
expense requirements for Medicare-covered and A/B mandatory supplemental, excluding the
PMPM impact of the ESRD subsidy.
See the “Pricing Considerations” section of these instructions for more information regarding
gain/loss margin.
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 o is the total revenue requirement of the “Plan A/B Bid.”
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Line y – Percent of Revenue (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 OF PROJECTED CONTRACT YEAR ESRD “SUBSIDY”
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.
Non-ESRD CY Member Months
This value is obtained from Worksheet 5.
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
See the “Pricing Considerations” section on ESRD for more information.
Supplemental Benefits
See “Pricing Considerations” section on ESRD for more information.
SECTION IV – FOR EMPLOYER BID USE ONLY (“800-SERIES”)
This section may be used for employer/union-only group waiver plan bids (“800-series”
Plan IDs) and employer/union direct contract private fee-for-service plans (that is, plan type
equal to “ED PFFS”) to provide CMS with the PMPM costs associated with additional
“unspecified” benefits. 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.
This value will be used in line s of Section IIC.
SECTION V – PROJECTED MEDICAID DATA FOR DE# BENEFICIARIES
This section contains two input cells: line 1, “Medicaid Projected Revenue,” and line 2
“Medicaid Projected Benefits (not in bid).” Entries must be reported on a “per DE# Member
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WORKSHEET 4
Per Month” basis. See the “Pricing Considerations” section of these instructions for more
guidance.
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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 member premium.
Below is a brief description of the sections contained in this worksheet:
•
•
•
•
•
•
Section I – General information entered on Worksheet 1.
Section II – Summary of development of the benchmark and the bid.
Section III – Summary of development of the savings or basic member premium.
Section IV – Development of regional A/B benchmark (including the statutory
component of regional benchmark). Applies to RPPO plan types only.
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): Projected non-ESRD member months,
reported by county.
Projected Risk Factor (excluding ESRD): Projected average risk factor for non-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).
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – BENCHMARK AND BID DEVELOPMENT
Line 1 – Projected Member Months
The value for total projected member months (excluding ESRD) is obtained from Section V.
You must enter the projected non-DE# member months. The value for DE# member months is
calculated as the difference between the total and the non-DE# amounts. See the “Pricing
Considerations” section of these instructions for more guidance.
Line 2 – 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 3 – Medicare Secondary Payer (MSP) Adjustment
User input is required. Note that this field is formatted as a percentage; therefore, if the value is
2.53 percent, enter “2.53” or “0.0253”. Do not leave this field blank. If zero percent is the
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WORKSHEET 5
projected value, then enter a “0” in this field. The value entered must be between 0 percent and
100 percent.
Line 4 – Weighted Average Risk Factor (excluding ESRD)
This value is obtained from Section V for total members. You must enter the projected nonDE# value. The DE# value is calculated based on the total and the non-DE# amounts. See the
“Pricing Considerations” section of these instructions for more guidance.
If the value for DE# members equals zero, then the non-DE# risk score must equal the total risk
score.
Line 5 – Conversion Factor
Calculated as (1.000 minus line 3) times line 4. This is an intermediary step in the BPT
calculations.
Line 6 – Plan (or Regional) A/B Benchmark
Calculated as line 2 times line 5. The BPT finalization process will verify that this value must
be greater than zero.
Line 7 – Plan A/B Bid
This value is obtained from Worksheet 4, then rounded to two decimals. The BPT finalization
process will verify that this value must be greater than zero.
Line 8 – Standardized A/B Bid (@ 1.000)
Calculated as line 7 divided by line 5, then rounded to two decimals.
SECTION III – SAVINGS/BASIC MEMBER PREMIUM DEVELOPMENT
Line 1 – Savings
Calculated as 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 percent of the savings (in line 1). This value is rounded to two decimals.
Line 3 – Basic Member Premium
Calculated as the standardized A/B bid less the standardized A/B benchmark, but not less than
zero. This value is rounded to two decimals.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
SECTION IV – STANDARDIZED A/B BENCHMARK – REGIONAL PLANS ONLY
This section calculates the standardized A/B benchmark for regional PPO plans.
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WORKSHEET 5
Line 1 – Statutory Component for Region
The PMPM amount, defined by region, is pre-populated by CMS. The weighting is also prepopulated in the bid form by CMS.
Line 2 – Plan Bid Component
The plan bid component will be announced by CMS after the bids are submitted. It will likely
be announced at the same time that the Part D national average is announced (typically 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 plan’s submitted
standardized bid (Section II, line 8) 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 at that time to submit revised RPPO MA BPTs with the
applicable average bid amount entered in line 2. Regional employer bids (“800-series” bids)
must also be resubmitted 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. Appendix E contains
additional guidance regarding the rebate reallocation period.
Line 3 – Standardized A/B Benchmark
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, if the plan sponsor has not entered an estimated
value for a pre-announcement bid submission), the amount from Section II, line 8 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 codes (column b),
projected member months (column e), and projected risk factors (column f) by county. Entries
must reflect plan-specific enrollment projections for each county within the service area. Plans
are permitted to project zero enrollment in a particular county in order to generate a countylevel payment rate for that county.
As with all aspects of the projections for MA-PD plans, the enrollment and risk scores for the
MA bid must be based on a population consistent with the corresponding Part D bid.
Payment rates for RPPOs may be developed using plan-provided geographic intra-service area
rate (ISAR) factors on a case-by-case basis, as explained in the “Pricing Considerations”
section of these instructions.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in Section V.
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WORKSHEET 5
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 (that is, must include a
preceding apostrophe) and must include all leading zeroes (for example, ‘01000).
This field is 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) and must include 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. Any service area discrepancies between the BPT and
HPMS may result in delays during bid review and could affect the approval timeline
of the bid.
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 BPT
technical instructions for further information.
✔ Column c – State
The BPT 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 BPT 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
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, and
include both DE# and non-DE# members, but exclude ESRD members.
See the “Pricing Considerations” section of these instructions for more guidance.
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WORKSHEET 5
Technical note: The data will display as whole values but can be entered with decimal
places.
If member months are entered in a particular row of column e, then a corresponding
county code and a risk score must be entered in columns b and f, respectively.
✔ Column f – Projected Risk Factors
Enter the risk factors for the projected non-ESRD membership by county.
If a risk score is entered in a particular row of column f, then a corresponding county
code must be entered in column b.
✔ Column g – Plan-Provided ISAR Factors
If the plan sponsor has support for plan-specific ISAR factors for a regional PPO,
then—
•
•
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”.)
Enter the plan-provided ISAR factors in column g of the county-level section.
Factors can be in the form of either PMPM values or a relative scale.
✔ Column h – MA Risk Ratebook: Unadjusted
The BPT 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 BPT 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 BPT 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.
✔ Column k – ISAR-Adjusted Bid
The BPT 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 and is populated
based on the county codes input in column b and the projected member months entered in
column e.
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WORKSHEET 5
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in Section VI.
Columns n through p – Original Medicare Cost-Sharing Proportional Factors
These columns are populated based on the enrollment projections and are used in column k of
Worksheet 4, Section IIA.
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 – 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. Though this information is not directly used in the BPT calculations, it is used by
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.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – OTHER INFORMATION
Section A – Part B Information
See the “Pricing Considerations” section for further information regarding the CMS estimate of
the Part B premium and allocating rebates to buy down this premium.
Line 1 – CMS Estimate of Part B Premium
This value is pre-populated by CMS and is the CMS estimated value at the time that the bid
form is released.
Section B – Rebate Allocation for Part B Premium
Line 1 – PMPM Rebate Allocation for Part B Premium
Enter the PMPM amount of rebates to reduce the 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.
After the actual Part B premium is published, CMS will release further guidance directly to the
plan sponsors of those plans that have allocated Part B rebates (in Section IIB, line 2) equal to
the CMS pre-populated estimate at the time that the bid form was released (in Section IIA, line
1), if it is determined by CMS that the full reduction is feasible for CY2011.
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, and it 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 to be excluded.
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WORKSHEET 6
Section A – Overview
This section summarizes information entered on previous worksheets.
Line 1 – Net Medical Cost
These amounts are obtained from Worksheet 4.
Line 2 – Non-Benefit Expenses
These amounts are obtained from Worksheet 4.
Line 3 – 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 4 – Total Revenue Requirement
The sum of lines 1 through 3. These amounts are the required revenue at the plan’s non-ESRD
risk factor and are calculated prior to any rebate allocation.
Line 5 – Standardized A/B Benchmark
This amount is obtained from Worksheet 5.
Line 6 – Plan A/B Benchmark (or Regional A/B Benchmark for RPPO Plans)
This amount is obtained from Worksheet 5.
Line 7 – Non-ESRD Risk Factor
This amount is obtained from Worksheet 5.
Line 8 – Conversion Factor
This amount is obtained from Worksheet 5.
Section B – MA Rebate Allocation
This section captures the method that the plan intends to use to apply rebates to the following
various options:
•
•
•
•
•
Reduce A/B cost sharing.
Other A/B mandatory supplemental benefits.
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 E for information regarding the reallocation of rebates (permitted for certain
plans) after the publication of the Part D and MA regional benchmarks.
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WORKSHEET 6
Line 1 – MA Rebate
This amount is obtained from Worksheet 5.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
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. See the “Pricing
Considerations” section of these instructions for more information on rebate allocation.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in these fields.
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. The BPT will not finalize if there are any invalid
values (such as “#N/A”, “#DIV/0!”, “#REF!”, “#NAME?”, etc.) in this field.
Section C – Development of Estimated Plan Premium
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.
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. Value must be greater than or equal to zero.
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WORKSHEET 6
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
Line 7 – Part D Basic Premium
✔ Line 7a - Prior to Rebates
Enter the Part D basic premium prior to rebates after rounding (found on the separate
Part D bid form). 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. This field is not applicable to MA-only plans and
EGWP plans.
✔ Lines 7b and 7c – A/B Rebates Allocated to the Part D Basic Premium
Enter the rebates that the plan sponsor wishes to allocate to the Part D basic premium.
The Part D rebate allocation must be rounded to one decimal. If this is not done, then
the bid form will round these rebates to one decimal (in line 7c), to comply with
withhold system requirements. This field is not applicable to MA-only plans and
EGWP plans.
✔ Line 7d - Part D Basic Premium
The estimated Part D basic premium net of rebates is calculated automatically as 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, outside the
BPT, when the Part D national average monthly bid amount is determined (typically in
August).
Note that the Part D basic premium prior to rebates can be a negative number.
This field is not applicable to MA-only plans and EGWP plans, and it must be equal to
zero.
If the plan intention for the target premium (cell R47) equals “Low Income Premium
Subsidy Amount” and the plan enters Part D basic rebates (cell R36) greater than zero,
then the Part D basic premium after rebates (cell R37) must be greater than zero.
Line 8 – Part D Supplemental Premium
✔ Line 8a - Prior to Rebates
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. This field is not applicable to
MA-only plans and EGWP plans.
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WORKSHEET 6
Note that if the Part D basic premium is negative, then the Part D supplemental
premium must offset the negative amount. That is, the sum of the Part D basic and
supplemental premiums must be greater than or equal to zero.
✔ Lines 8b and 8c – A/B Rebates Allocated to the Part D Supplemental Premium
Enter the rebates that the plan sponsor wishes to allocate to the Part D Supplemental
premium. The Part D rebate allocation must be rounded to one decimal. If this is not
done, then the bid form will round these rebates to one decimal (in line 8c), to comply
with withhold system requirements. This field is not applicable to MA-only plans and
EGWP plans.
✔ Line 8d - Part D Supplemental Premium
Calculates the Part D supplemental premium net of rebates. Line 8d equals line 8a
minus line 8c. Value must be greater than or equal to zero. This field is not applicable
to MA-only plans and EGWP plans, and it must be equal to zero.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”,
“#REF!”, “#NAME?”, etc.) in this field.
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, which are calculated on
Worksheet 7. Value must be greater than or equal to zero.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
Line 10 – Plan Intention for Target Part D Basic Premium
For MA-PD plans, this field contains a drop-down menu with two options: “Premium amount
displayed in line 7d” or “Low Income Premium Subsidy Amount.” MA-PD plan sponsors
must choose one of these two options for the target Part D basic premium in the initial June bid
submission and cannot change the chosen target in a subsequent resubmission. CMS will
consider only the option chosen in June as the plan’s intention.
For MA-only plans and EGWPs, the target Part D basic premium is not applicable.
See the “Pricing Considerations” section of these instructions for more information on the
target Part D basic premium.
SECTION IV – CONTACT INFORMATION AND DATE PREPARED
In this section, enter the name, phone number, and e-mail information for the MA plan bid
contact, the MA certifying actuary, and an additional MA BPT actuarial contact who is familiar
with the bid development in the event that the certifying actuary is not available. For the phone
number, enter all ten digits consecutively without parentheses or dashes. Do not leave any part
of this section blank.
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WORKSHEET 6
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. Three distinct people are to be entered in this
section.
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 field must be updated accordingly.
SECTION V – WORKING MODEL TEXT BOX
This section contains multiple cells that may be used by bid preparers to enter internal notes—
for example, to facilitate communication between BPT and PBP preparers, or to track internal
version schemes.
Section V will be deleted from the finalized file and therefore will not be uploaded to HPMS.
Bid preparers must not enter information in this section meant to be communicated to CMS or
to CMS reviewers, as CMS will not have access to it. Section V will not be deleted from the
working file or the backup file during finalization.
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WORKSHEET 7
MA WORKSHEET 7 – OPTIONAL SUPPLEMENTAL BENEFITS
Worksheet 7 contains the actuarial pricing elements for any optional supplemental benefit
(OSB) packages to be offered during the contract year, up to a maximum of five.
The PBP packages must be entered in the same order as they are entered in the PBP.
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.
SECTION I - GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.
SECTION II – OPTIONAL SUPPLEMENTAL PACKAGES
Column b – Package ID
Displays the identification (ID) number to signify which package of optional supplemental
benefits is being priced. The number “1” is used to identify the first package. Sequential
numbers (that is, 2, 3) identify additional packages of optional supplemental benefits. The
package IDs must correspond to the packages enumerated and described in the PBP.
Column c – Service Category
On the first line for each package, enter a description of the OSB package. This description
should match the description/title/name entered in the PBP for each package. Examples:
“Enhanced Dental”, “Gold Package”, etc. The description field must not be left blank when
there is an optional supplemental package entered.
On each subsequent line, 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)
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WORKSHEET 7
•
•
•
•
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/1,000
Enter the projected contract year annual utilization per thousand enrollees for allowed medical
expenses for each benefit category.
Column g – Allowed Medical Expense: Average Cost
Enter the projected contract year average annual cost for allowed medical expenses for each
benefit category.
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).
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WORKSHEET 7
Column n – Non-Benefit Expense
Enter the total projected contract year non-benefit expense for each OSB package offered.
Column o – Gain/Loss Margin
Enter the total projected contract year gain/loss margin for each OSB package offered.
Column p – Premium
The sum of columns m (medical expenses), n (non-benefit expenses), and o (gain/loss margin).
The premiums are automatically rounded to one decimal to comply with premium withhold
system requirements. Premium values must be greater than zero if an OSB package is offered
and must be equal to zero if an OSB package is not offered.
Column q - Projected Member Months
Enter the total projected contract year member months for each OSB package offered.
SECTION III - COMMENTS
Enter any comments needed to describe the OSB packages.
CY2011 MA BPT Instructions
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APPENDIX A
IV. APPENDICES
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.
ASOP No. 23, Data Quality.
ASOP No. 25, Credibility Procedures Applicable to Accident and Health, Group Term
Life, and Property/Casualty Coverages.
ASOP No. 41, Actuarial Communications.
The certifying actuary must also consider whether the actuarial work supporting the bid
complies with applicable laws, rules, CY2011 bid instructions, and current CMS guidance. In
addition, he/she must consider whether the actuarial work supporting the bid is consistent and
reasonable with respect to 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.
Links to additional information regarding the bid package such as the PBP, BPT, and
supporting documentation.
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 they may do so if they wish.
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APPENDIX A
Note that in the event that the PBP changes after the “final” bid is certified, the bid that is
uploaded into HPMS with the revised PBP must be recertified whether or not the BPT changes.
As was instructed in previous contract years, material changes to the certification language
(after the initial June certification submission) are not allowed 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. If a
certification is not submitted via the HPMS certification module, the bid will not be considered
for CMS review and approval. The instructions contained in this appendix must be followed by
all actuaries who will be certifying CY2011 bids.
Every MA BPT requires a certification. Likewise, 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
Part D bid, or both.
Attestation that the certification complies with the applicable laws, 1 rules, 2 CY2011 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).
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 A
•
•
•
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 No. 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 CY2011 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 CY2011 certification module
were released via an HPMS memorandum dated March 3, 2010.
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APPENDIX B
APPENDIX B - SUPPORTING DOCUMENTATION
GENERAL
In addition to the BPT and actuarial certification, plan sponsors 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
available to CMS reviewers upon request, and within 48 hours of the request, as required by
these instructions.
Supporting documentation requirements apply regardless of the source of the assumption,
whether it was developed by the actuary, the plan sponsor, or a third party. If the actuary relied
upon others for certain bid data and/or assumptions, those individuals are subject to the same
documentation requirements. The actuary 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. 41, Actuarial
Communications. In accordance with Section 3.3.3, “Actuarial Report,” the materials provided
must be written “with sufficient clarity that another actuary qualified in the same practice area
could make an objective appraisal of the reasonableness of the actuary’s work.”
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.
Explain the rationale for the assumption, including quantitative support and details,
rather than just narrative descriptions of assumptions.
Describe plan-specific variations in addition to the overall pricing assumption or
methodology.
Tie to the values entered in the current BPT and the PBP.
Include Excel spreadsheets with working formulas, rather than pdf files.
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, 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.
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APPENDIX B
•
•
A summary of contractual terms of administrative services agreements.
A business plan.
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:
•
•
•
•
•
•
•
Materials that are accessed only through a secure server link that requires a password.
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 of the data points underlying the assumptions–for example,
supporting factors, studies or public information.
“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 (.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 to which it does not pertain. It is not
acceptable to upload to multiple plans materials specific to a Part D plan, MA plan or certain
contract ID.
Cover Sheet
To expedite the bid review process, plan sponsors must upload a cover sheet that lists all of the
supporting documentation that is uploaded or provided on 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–and 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 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 to 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
CY2011 MA BPT Instructions
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APPENDIX B
cover sheet must contain the exact bid IDs (contract/plan/segment) to which the documentation
applies.
For subsequent substantiation uploads, the cover sheet must summarize the additional
documents uploaded at that time (that is, the cover sheet must not be maintained as a
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 and upload
required documentation into HPMS at the time of the initial June bid submission. These items
are described in the “Initial June Bid Submission” section below.
Moreover, CMS recommends that other supporting documentation materials be uploaded with
the initial June bid submission, though this is not required. See the “Upon Request by CMS
Reviewers” section of this appendix for more information. However, these materials must be
prepared at that time in order to be readily available to CMS reviewers upon request. When
additional substantiation is requested by CMS reviewers, it must be provided within 48 hours
and uploaded into HPMS prior to bid approval. The CMS bid reviewer will determine whether
the plan sponsor or the CMS bid reviewer will upload additional substantiation provided in email correspondence and will communicate this requirement to the plan sponsor during bid
review.
Initial June Bid Submission
The following documentation requirements apply to all bids (as all bids contain these
assumptions):
•
•
•
A cover sheet outlining the documentation files, as described above.
A product narrative that offers relevant information about plan design, the product
positioning in the market (such as high/low), enrollment shifts, service area changes,
type of coverage, contractual arrangements, related-party arrangements for medical and
administrative service, marketing approach and any other pertinent information that
would help expedite the bid review. For dual-eligible SNPs, include a statement
indicating 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 –
◦ A statement of the credibility approach used - for example, the CMS guideline
or the CMS override.
◦ A description of the credibility methodology used if it varies from the CMS
guideline or the CMS override.
◦ The method for blending differences in the credibility for utilization and unit
cost into a composite PMPM credibility factor.
◦ Justification for any variation in the credibility approach by line of business.
◦ An explanation for a zero credibility percentage for a service category with
credible data.
CY2011 MA BPT Instructions
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APPENDIX B
•
•
•
•
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 –
◦ A summary of the non-benefit expenses by category of expense or by line item.
◦ An analysis that demonstrates the development of each line item using relevant
data, assumptions, contracts, financial information, business plans, and other
experience.
◦ A description of the relationship between the non-benefit expense line items
reported in the BPT and auditable material such as corporate financials and planlevel operational data.
Justification of the gain/loss margin (Worksheet 4). The required elements include –
◦ Support for overall margin levels, including a description of the methodology
used to develop margin assumptions, demonstration of year-by-year consistency,
and supporting data.
◦ A demonstration of year-by-year consistency between the expected overall
margin level and the plan sponsor’s corporate margin requirement over time (for
example 3 to 5 years) including any change in the plan sponsor’s corporate
margin requirement in the prior 2 years.
◦ Support for bids with negative margins – that is, a business plan that illustrates
profitability within a few years.
◦ A comparison of the gain/loss margin to the original business plan for plans with
negative margins in prior years. This comparison includes details and sources of
deviation from prior years’ business plans and justification that conditions
causing any deviations will not continue indefinitely.
◦ 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) and/or (ii) demonstration of corporate return
requirement(s). 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.
Detailed support for the development of projected risk scores (Worksheet 5). The
required elements include–
◦ A detailed description, and corresponding numerical demonstration, of the
methodology used to develop projected CY MA risk scores.
◦ A description of the source data for the development of the projected CY MA
risk scores.
◦ A description of all projection factors and the basis for the factors.
◦ A demonstration that the method used is consistent with one of the approaches
described in these instructions. Examples of items to address include —
‣ A normalization factor that differs from the CY FFS normalization factor.
CY2011 MA BPT Instructions
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APPENDIX B
‣
◦
A risk model change factor that differs from a bid-specific model change
factor available via HPMS.
‣ Average risk scores from more than one MMR report.
‣ A variation in the source risk score or any adjustment factor.
A demonstration that the development of the projected risk scores is consistent
with the development of projected medical expenses, if the plan pricing is based
on manual rates.
The following documentation requirements apply to all bids that contain these specified
assumptions:
•
•
•
•
Detailed support for base period experience and projections (Worksheet 1). This
documentation, which is based on regulatory authority for the review of materials that
pertain to any aspect of services provided, is also required in cases in which medical
services are provided under a capitated arrangement. The required elements include–
◦ Detailed support for projection factors (Worksheet 1).
◦ A description of the allocation of allowed costs by service category when the
allocation method is not based on plan experience data (Worksheet 1).
◦ Information regarding the base period member months, if for some reason more
than four plans constitute the base period data (see Worksheet 1, Section II, line
5).
Support for the pricing, including utilization and unit cost, of preventive services
incentive programs (Worksheets 1 and 2, line k).
Support for claim costs for hospice enrollees for mandatory supplemental benefits when
these costs are included in the projected allowed cost PMPM.
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 development of the manual rates, if manual rates are used. The required elements
include–
◦ A description of the source data, including the data’s 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.
◦ Consideration of any adjustments made for annual volatility of the source data.
◦ Any applicable adjustments to the 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; and
‣ 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 CY2011.
CY2011 MA BPT Instructions
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APPENDIX B
◦
•
•
•
•
•
•
•
A description of the source of data for the development of corresponding
CMS- HCC model risk scores, and how that source compares to the risk profiles
of the population underlying the manual rate source data.
◦ 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.
◦ All other applicable factors and/or adjustments.
Support for non-DE# projected allowed costs (Worksheet 2).
A mapping of PBP benefit categories and BPT pricing categories for any deviations
from the suggested mappings in Appendix F (Worksheet 2).
An explanation for a zero cost of a benefit that is included in the PBP.
The rationale for including the cost of a benefit that is included the PBP in non-benefit
expenses.
Support, at the benefit level, for non-covered services (Worksheet 2, lines l through r,
column o), if any, including a breakdown 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.
A detailed description of the process used for adjusting cost sharing due to maximum
OOP limits (Worksheet 3).
Disclosure of related-party service agreements (Worksheets 1 and 4).
◦ A plan sponsor in a related-party agreement with an organization and prepares
the BPT in a manner that does not recognize the independence of the
subcontracted related party must provide the following:
‣ 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 plan sponsor in a related-party agreement with an organization that is
providing services to unrelated parties and chooses to demonstrate that the terms
and fees associated with their agreement are comparable to those obtained by
unrelated parties of the organization must provide the following:
‣ 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 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
CY2011 MA BPT Instructions
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APPENDIX B
•
•
•
•
•
•
•
•
•
achieved by the plan sponsor in the absence of the related-party
relationships.
Support for the development of the contract year “ESRD subsidy” (Worksheet 4). This
documentation includes the following:
◦ Base period (for example, 2009) revenues and medical expenditures for
Medicare-covered benefits provided to enrollees in ESRD status.
◦ The source for, and the development process of, any manual rates used.
◦ Relevant base-to-contract year trend factors.
◦ A short narrative on the credibility approach applied to the ESRD experience.
Support for zero projected DE# member months when there are DE# members in the
base period.
Support for the development of plan-provided ISAR factors (Worksheet 5), if used.
(This requirement 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.
Aggregate contract-level optional supplemental experience for CY2009 (Worksheet 7).
In accordance with Appendix D, support for actuarial swaps/equivalence customization
allowable for employer and union groups enrolled in individual-market plans, when
used (that is, when indicated in the “General Information” section of Worksheet 1).
An explanation of the consistency between the pricing in the bid and the expected
underwriting assumptions for all groups, in aggregate. This documentation includes, but
is not limited to a description of the underwriting methodology.
The input sheet(s) for the pricing model used in the development of the bid.
An explanation of how CY2010 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 that issue.
Support for reliance on information supplied by others that —
◦ Identifies the source(s) of the information – for example, name, position,
company, date;
◦ Identifies the information relied upon;
◦ States the extent of the reliance – for example, whether or not checks as to
reasonableness have been applied; and
◦ Indicates to which plan(s) the reliance information applies.
See the sample format at the end of this appendix.
Upon Request by CMS Reviewers
It is not required that the items below be uploaded with the initial June bid submission, but they
must be prepared at that time in order to be readily available for CMS reviewers upon request.
If substantiation is requested by CMS reviewers, it must be provided within 48 hours. These
materials will be reviewed at audit:
CY2011 MA BPT Instructions
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APPENDIX B
•
•
•
•
•
•
•
•
•
•
•
•
•
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 reflect an
experience period versus accounting period, the data need not be based on an audited
GAAP financial basis.
Support for the pricing of the non-covered services, including 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 when the formulas provided in the BPT for DE# plan cost sharing
(Worksheet 4, Section IIB, column f) are overwritten at the discretion of the certifying
actuary.
Support for variation in the gain/loss margin that accounts for the difference in risks
between products for EGWPs and DE-SNPs (Worksheet 4).
Copies of related-party agreements for a plan sponsor who has entered into a relatedparty agreement with an organization that is providing services to unrelated parties.
Support for the allocation of enrollment between DE# and non-DE# beneficiaries
(Worksheet 5).
Support for the benefit, non-benefit expenses and gain/loss margins for specific OSB
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.
A letter supporting any information upon which the certifying actuary relied, if
applicable. This letter must be signed by the person (source) who provided the
information.
Communication between CMS reviewers and the plan sponsor 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, at any point during the bid desk review process.
CY2011 MA BPT Instructions
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APPENDIX B
MA CHECKLIST FOR REQUIRED SUPPORTING DOCUMENTATION
Initial June Bid Submission - Required for All Bids
Cover sheet
Product narrative
Credibility assumption
Cost-sharing category mapping
Non-benefit expenses
Gain/loss margin (include comparison of gain/loss margin to original business plan for plans with negative
margins in prior years)
Projected risk scores
Initial June Bid Submission - Required for All Bids with Specified Assumptions
Base period experience and projections
Preventive services incentive programs
Hospice claims costs for mandatory supplemental
Manual rate development
Non-DE# projected allowed costs
Mapping of PBP and BPT service categories
Zero cost benefit
Cost of medical benefit in non-benefit expenses
Non-covered services benefit-level summary
Adjustment to cost sharing for OOP maximum
Disclosure of related-party agreements
ESRD "subsidy"
Zero DE# member months
Adjustment to cost sharing for OOP maximum
Disclosure of related-party agreements
“ESRD subsidy"
ISAR factors
Optional Supplemental Experience for 2009
Actuarial swaps/equivalences
EGWP comparison of bid pricing and expected underwriting assumptions
Input sheets for pricing model
Bid audit results
Reliance information
Upon Request by CMS Reviewers
Reconciliation of base period experience with company financial data
Non-covered services pricing details
Cost-sharing utilization and plan-level deductible
Allocation of allowed costs/cost sharing to Medicare-covered and non-covered
Override of formulas for DE# plan cost sharing
CY2011 MA BPT Instructions
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APPENDIX B
Related-party agreements
Gain/loss margin for EGWPs and DE-SNPs
Enrollment allocation between DE# and non-DE#
Optional supplemental benefit packages
Differences in EGWP and general market pricing assumptions
Reliance letter
Bid review communications
Other
CY2011 MA BPT Instructions
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APPENDIX B
SAMPLE COVER SHEET – SUBMITTED WITH INITIAL BID UPLOAD IN JUNE
Supporting Documentation Cover Sheet #1
CY2011 Bid Submission
Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: June 1, 2010
Documentation
Requir ement
Cover sheet
Product
narrative
Credibility
assumption
Cost sharing
mapping
Non-benefit
expenses
Gain/loss
margins
Risk scores
Manual rates
ESRD subsidy
File Name
Cover Sheet 6-1-2010.pdf
Cover Sheet 6-1-2010.pdf
Location within
File (if
Applicable)
Page 1
Pages 2-4
Applies to:
MA, PD, or
Both
both
both
All bids
Cover Sheet 6-1-2010.pdf
Page 5
both
All bids
Cover Sheet 6-1-2010.pdf
Page 6
both
All bids
AdminProfit.xls
Sheet 1
both
All bids
AdminProfit.xls
Sheet 2
both
All bids
Risk CY2011.xls
both
H1234-003-0
S9999-001-0
H1234-001-0
H1234-004-0
Manual.xls
MA-Sheet 1
PD-Sheet 2
Section II
Manual.xls
Section I
MA
Specific
Bid ID(s) or
N/A
All bids
All bids
CY2011 MA BPT Instructions
PD
Page 91 of 124
APPENDIX B
SAMPLE COVER SHEET – SUBMITTED AS A SUBSEQUENT SUBSTANTIATION UPLOAD
Supporting Documentation Cover Sheet #2
CY2011 Bid Submission
Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: July 16, 2010
Documentation
Requir ement
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 7-16-2010.doc
Location
within File (if
Applicable)
n/a
Applies to:
MA, PD, or
Both
both
Email1.doc
n/a
MA
Email2.doc
n/a
PD
Email3.doc
n/a
PD
SAMPLE FORMAT FOR RELIANCE ON INFORMATION SUPPLIED BY OTHERS
Bid ID
H1234-002-00
MA or PD
or Both
MA and PD
Sour ce
(Name, Position, Company)
Joe Smith, Director of Finance,
ABC Health Plan
H1234-002-00
MA and PD
Jane Doe, Medicare Analyst,
ABC Health Plan
CY2011 MA BPT Instructions
Type of
Infor mation
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 92 of 124
APPENDIX C
APPENDIX C – PART B-ONLY ENROLLEES
This appendix includes bid requirements for plans that cover only enrollees eligible for
Medicare Part B. An RPPO plan must cover enrollees eligible for both Medicare Part A and
Part B.
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, MA organizations 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.
MA organizations 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 Medicare-covered (Worksheet 4,
Section II, columns i and j):
•
•
•
The Medicare-covered proportion of inpatient services (line a) must equal zero
(0) percent.
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
at http://www.cms.hhs.gov/manuals/iom . We estimate that for calendar year 2011,
about 5 percent 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 percent.
CY2011 MA BPT Instructions
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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 (MA) 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, MA organizations 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, and only those benefits in your bids that are candidates for swaps need to be
identified. When you make specific swaps in negotiations with employers or unions,
you can do so in the context of the CMS general approval of your candidates, 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 covered
and non-covered Medicare 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 that you submit to CMS.
Employer-Only or Union-Only Group Waiver Plans (EGWPs)
The MMA gives employers and unions multiple options for providing Medicare coverage to
their Medicare-eligible active employees and retirees. Under the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), those options include making special
CY2011 MA BPT Instructions
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APPENDIX D
arrangements with MA organizations to purchase customized benefits for their active
employees and retirees or contracting directly with CMS to sponsor a MA plan.
Under section 1857(i) of the Social Security Act (SSA), CMS may waive or modify
requirements for the kinds of arrangements that “hinder the design of, the offering of, or 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: (i) MA organizations that
offer or administer employer/union-only sponsored group waiver plans (“EGWPs” or
“employer-only group plans”); and (ii) 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 TBD.
Also see Chapter 9 of the Medicare Managed Care Manual (MMCM), which can be found at:
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 MA plans that are available
only to employer and union groups. These plans must follow all MA bidding requirements,
except those that are specifically waived per Chapter 9 of the MMCM.
Following are some of the key features to be reflected in employer-only group bids:
•
•
•
The pricing in the bid must reflect the expected underwriting assumptions for all
groups, in aggregate.
◦ Each employer-only group bid must reflect the composite characteristics of the
individuals expected to enroll in the plan for the contract year. These
characteristics include, but are not limited to, the following: risk scores,
geographical distribution of enrollees, non-benefit expenses, and gain/loss
margins.
◦ Projected enrollment within the plan’s service area must be consistent with the
location of employer groups.
The cost sharing priced in Worksheet 3 must correspond to that contained in the PBP.
◦ The PBP can be prepared using either the expected composite benefit plan or the
Medicare fee-for-service benefit provisions.
◦ If the PBP reflects Medicare fee-for-service benefits and an MA rebate is
generated, then the user may enter the PMPM value of the medical costs
associated with these additional “unspecified” benefits in Worksheet 4,
Section IV.
Generally, CMS expects 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.
CY2011 MA BPT Instructions
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APPENDIX D
•
•
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.
Following are the guidelines for rebates:
◦ 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.
◦ The allocation of rebates may vary from employer to employer within the
employer-only group plan. (The bid form contains one allocation.)
◦ 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.
◦ Part B premium buydowns (that is, rebate allocation) must be the same for all
enrollees within the same employer-only group plan.
◦ 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.
◦ 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.
◦ All rebates must be accounted for and must be used only for the purposes
provided for in law. Documentation that supports the use of all of the rebates on
a detailed basis must be retained by the employer-only group plan.
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 will be required to resubmit the MA BPTs in order to
reflect the actual plan bid component (in Worksheet 5, cell M17). Regional MA plans may
need to reallocate rebates accordingly. Note that this requirement also applies to EGWP
regional MA plans (that is, all EGWP RPPOs will be required to resubmit the MA BPTs in
August after the announcement of the regional MA benchmarks).
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.
CY2011 MA BPT Instructions
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APPENDIX E
APPENDIX E – REBATE REALLOCATION AND PREMIUM ROUNDING
Organizations may resubmit bids in order to reallocate MA rebate dollars for certain plan bids
after CMS publishes 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.
Rebate reallocation is required for some MA plans, is permitted (but not required) for others,
and is not permitted for certain plans, as indicated in this appendix. The rebate reallocation
guidance applies to plans with all types of pricing arrangements, including risk sharing and
global capitation, and to pricing assumptions that were developed as a percent of revenue.
CMS will announce the exact dates of the rebate reallocation period when the Part D and MA
benchmarks are released.
In addition to reallocation guidance, this appendix provides premium rounding rules and
describes the premium rounding that is permissible during rebate reallocation.
I. REBATE REALLOCATION RULES BY PLAN TYPE
MA-PD plan sponsors may resubmit bids to reallocate rebates in order to return to the target
Part D basic premium. Some MA-PD plans are required to reallocate rebates.
The target premium is communicated to CMS in the MA BPT in the initial June bid
submission. The target may not be changed after initial submission.
MA-PD plan sponsors have two options for the target premium. They can set it equal to—
•
•
The basic Part D premium net of rebates (that is, the amount displayed in line 7d of
Worksheet 6, Section IIIC), or
The low-income premium subsidy amount.
This choice is designated on line 10 of Worksheet 6 Section IIIC; it is called the “Plan Intention
for target Part D basic premium.”
The target Part D basic premium concept does not apply to MA-only plans and EGWP plans,
since these plans do not submit a Part D BPT.
All RPPO plans, including EGWPs, must resubmit during the rebate reallocation period, to
reflect the published RPPO benchmarks within their bids.
The following tables summarize bid resubmission rules that apply during the rebate reallocation
period for various plan types and rebate scenarios and show where examples can be found in
this appendix. Additionally, the tables indicate if premium rounding is permitted during rebate
reallocation.
CY2011 MA BPT Instructions
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APPENDIX E
MA-PD Plans with MA Rebate Dollars in the Initial June Bid Submission
Type of Plan
Local (excluding
EGWP)
Local (excluding
EGWP)
Local (excluding
EGWP)
Rebate Scenar io*
Premium decreases
below $0
Premium decreases
but is greater than $0
Premium increases
RPPO
Rebate Reallocation
Rules
Pr emium
Rounding
Rules
Example
Required
Permitted
1
Permitted
Permitted
2
Permitted
Required, to reflect the
published MA regional
benchmarks
Permitted
3
Permitted
4
* Impact on the Part D basic premium net of rebates (line 7D of Worksheet 6, Section IIIC) of
reflecting the CMS published benchmarks.
MA-PD Plans with No MA Rebate Dollars in the Initial June Bid Submission
Type of Plan
Local
RPPO
Rebate Reallocation Rules
Not applicable
Required, to reflect the published
MA regional benchmarks
Pr emium Rounding Rules
Permitted (excluding EGWP)
Rebate Reallocation Rules
Not permitted; these plans are not
affected by the Part D and MA
regional benchmarks
Required, to reflect the published
MA regional benchmarks
Pr emium Rounding Rules
Not permitted; premiums must
reflect desired rounding in the
initial June bid submission
Permitted
MA-Only Plans
Type of Plan
Local
RPPO
Permitted
II. REBATE REALLOCATION RULES AND EXAMPLES
A. Return to the Target Premium
When rebates are reallocated, the Part D basic premium net of rebate must be returned to the
target premium indicated in the initial June bid submission. CMS will not accept a partial return
to the target premium, except in the following situation: the plan sponsor intends to return to
the target premium, and the entire rebate has been reallocated to reduce the Part D basic
premium, but the resulting premium is still greater than the target premium.
B. Negative Part D Basic Premium Net of Rebate after Part D Benchmark Announcement
If, after reflecting announced Part D benchmarks, the Part D basic 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 the premium resulting from application of the
national average monthly bid amount and the base beneficiary premium is negative, then the
CY2011 MA BPT Instructions
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APPENDIX E
“excess” rebate allocated to buy down the Part D basic premium must be reallocated to buy
down the other premiums (the A/B mandatory supplemental premium, the Part D supplemental
premium, and/or the Part B premium).
Example 1.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated to
Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for target
Part D basic premium
Initial J une Bid
Submission
After Release
of Benchmar k
Rebate
Reallocation
Resubmission
$36
$34
$34
$36
$0
Premium amount
displayed in line 7d
$36
-$2
$34
$0
Not applicable
Not applicable
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. The “excess” $2 is allocated to
buy down other premiums.
C. Part D Basic Premium Net of Rebate after Part D Benchmark Announcement Is Less than
Target Part D Basic Premium, but Not Less than Zero
Rebate reallocation to reduce the other premiums (A/B mandatory supplemental, Part B, and/or
Part D supplemental) is optional if the Part D basic premium net of rebate is lower than the
target Part D basic premium, but not less than zero. The MA organization has the following two
options for rebate allocation:
•
•
Leave the final Part D basic premium net of rebate unchanged (that is, at the level
resulting from application of the national average monthly bid amount and the base
beneficiary premium), or
Reallocate rebate in order to return to the target Part D basic premium. The rebate may
be reallocated to reduce other beneficiary premiums (A/B mandatory supplemental,
Part B, and/or Part D supplemental).
Note: If the MA organization elects to allocate the “excess” rebate dollars to the other
premiums, then the final Part D basic premium must equal the target premium. That is, a partial
return to the target premium will not be accepted.
CY2011 MA BPT Instructions
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APPENDIX E
Example 2.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
Option 1
Rebate
Reallocation
Option 2
$35
$30
$30
$30
$15
$15
$15
$10
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
$20
Premium amount
displayed in line
7d
$15
$15
$20
Not
applicable
Not
applicable
Not
applicable
The MA organization has the following two options for rebate allocation:
•
•
No rebate reallocation; leave the Part D basic premium at the post-Part D benchmark
announcement basic premium of $15. Resubmission is not necessary, or
Reallocate $5 of rebates to other premiums in order to return to the target Part D basic
premium of $20.
Note: If the MA organization does not want to leave the post-Part D benchmark announcement
premium at $15, only a return to $20 is acceptable, not a partial return of, for example, $18.
D. Part D Basic Premium Net of Rebate after Part D Benchmark Announcement Is Greater
than Target Part D Basic Premium
Rebate reallocation from other premiums (A/B mandatory supplemental, Part B, and/or Part D
supplemental) to the Part D basic premium in order to meet the target Part D basic premium is
optional if the Part D basic beneficiary premium net of rebate is higher than the target premium
(that is, the plan has insufficient rebates). The MA organization has the following two options
for rebate allocation:
•
•
Leave the final Part D basic premium net of rebate unchanged (that is, 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 the reduction of other premiums (A/B
mandatory supplemental, Part B, and/or Part D supplemental) 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 except in the following situation: the plan sponsor
intends to return to the target premium, and the entire rebate has been reallocated to
reduce the Part D basic premium, but the resulting premium is still greater than the
target premium.
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APPENDIX E
Example 3.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
Option 1
Rebate
Reallocation
Option 2
$35
$40
$40
$40
$15
$20
Premium amount
displayed in line
7d
$15
$25
$15
$25
$20
$20
Not
applicable
Not
applicable
Not
applicable
The MA organization has the following two options for rebate allocation:
•
•
No rebate reallocation; leave the Part D basic premium at the post-Part D benchmark
announcement Part D basic premium of $25. Resubmission is not necessary, or
Reallocate $5 of rebates from other premiums in order to return to the target Part D
basic premium of $20.
Note: If the MA organization does not want to leave the post-Part D benchmark announcement
premium at $25, only a return to $20 is acceptable, not a partial return of, for example, $23,
unless $23 is the result of allocating all rebates to the Part D basic premium.
E. Increase or Decrease in RPPO Total Rebate Dollars
Once CMS announces the MA regional benchmarks, there may be an increase or decrease in
the total rebate dollars in a regional plan’s bid. The allocation of rebate dollars must be revised
to reflect the new total rebate dollars.
Example 4.
MA BPT Wor ksheet 6
Section, IIIB, line 1.
Total MA rebate
Section, IIIB, lines 2-4
and 6. MA rebates
allocated to benefits other
than Part D basic
premium
Section, IIIB, line 5. MA
rebates allocated to
Part D basic premium
(rounded)
Section, IIIB, line 7.
Total rebates allocated
Unallocated rebates
CY2011 MA BPT Instructions
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
Option 1
Rebate
Reallocation
Option 2
$55
$53
$53
$53
$40
$40
$38
$43
$15
$15
$15
$10
$55
$0
$55
-$2
$53
$0
$53
$0
Page 101 of 124
APPENDIX E
MA BPT Wor ksheet 6
Section, IIIC, line 7a.
Part D basic premium
prior to rebates (rounded)
Section, IIIC, line 7d.
Part D basic premium net
of rebates
Section, IIIC, line 10.
Plan intention for target
Part D basic premium
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
Option 1
Rebate
Reallocation
Option 2
$35
$30
$30
$30
$20
Premium amount
displayed in line
7d
$15
$15
$20
Not
applicable
Not
applicable
Not
applicable
The MA organization has the following two options for rebate allocation:
•
•
Leave the basic Part D premium net of rebate at the post-Part D benchmark
announcement premium of $15. Subtract $2 of rebates that were allocated to other
premiums such that the total rebates allocated equal the total rebates available, or
Reduce the rebate allocation for the basic Part D premium by $5 in order to return to the
target Part D basic premium of $20. Reallocate $3 of rebates to other premiums in
order to return to the target Part D basic premium of $20.
F. 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 each benefit (A/B mandatory supplemental, Part B,
Part D) 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 Part B premium cannot exceed the estimated amount
provided by CMS that is pre-populated in the bid pricing tool.
G. Examples in which Target Part D Basic Premium Is the Low-Income Premium Subsidy
Amount (LIPSA) (and the Plan Desires to Return to the Target)
Part D Basic Premium Net of Rebate after Part D Benchmark Announcement Is Less
than LIPSA
If the Part D basic premium net of rebate is lower than the LIPSA, and LIPSA is the
target, then the MA organization may increase the Part D basic premium in order to
reach the target LIPSA by —
•
•
Reallocating rebates to reduce other beneficiary premiums (A/B mandatory
supplemental, Part B, and/or Part D supplemental), and
Adding A/B mandatory supplemental benefits, in accordance with this appendix,
and reallocating rebates to reduce the premium for the newly added benefits.
Note: The final Part D basic premium must equal the target premium unless all of the
rebates are allocated to the Part D basic premium and it is still less than the LIPSA.
CY2011 MA BPT Instructions
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APPENDIX E
Example 5a1.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
LIPSA
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
$35
$30
$30
$15
$20
$15
$15
$12
$18
LIPSA
Not applicable
Not
applicable
$18
Not
applicable
$18
The LIPSA is less than expected, and the Part D basic premium post-benchmark is less
than the LIPSA. To return to the target LIPSA, the only option that the MA
organization has is to reallocate rebates to other benefits/premiums.
Example 5a2.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
LIPSA
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocatio
n
$35
$37
$37
$15
$20
$15
$22
$14
$23
LIPSA
Not applicable
Not
applicable
$23
Not
applicable
$23
The LIPSA is greater than expected, and the Part D basic premium post-benchmark is
less than the LIPSA. To return to the target LIPSA, the only option the MA
organization has is to reallocate rebates to other benefits/premiums.
CY2011 MA BPT Instructions
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APPENDIX E
Example 5a3.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
LIPSA
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
$35.00
$35.60
$35.60
$15.00
$20.00
$15.00
$20.60
$0.00
$35.60
LIPSA
Not applicable
Not
applicable
$36.00
Not
applicable
$36.00
The LIPSA is greater than expected, and the Part D basic premium post-benchmark is
less than the LIPSA. Even after the MA organization reallocates the entire $15 of
rebates to other benefits/premiums, the $35.60 Part D basic premium net of the
reallocated rebates is still less than the LIPSA of $36.
The MA organization could follow premium rounding rules to further increase the Part
D basic premium to $36.00.
Part D Basic Premium Net of Rebate after Part D Benchmark Announcement Is
Greater than LIPSA
If the Part D basic premium net of rebate post-benchmark is greater than the LIPSA,
then the MA organization may lower the Part D basic premium to the target LIPSA by
reallocating the rebate to the Part D basic premium that was applied to buy down other
premiums (A/B mandatory supplemental, Part B, and/or Part D supplemental). If the
MA organization chooses to reallocate additional rebate dollars from other premiums,
the final Part D basic premium must equal the LIPSA except in the following situation:
the plan sponsor intends to return to the target premium, and the entire rebate has been
reallocated to reduce the Part D basic premium, but the resulting premium is still greater
than the LIPSA.
CY2011 MA BPT Instructions
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APPENDIX E
Example 5b. (Similar to Example 3)
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated to
Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for target
Part D basic premium
LIPSA
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
$35
$40
$40
$15
$20
$15
$25
Not
applicable
$15
$25
$15
Not
applicable
$15
LIPSA
Not applicable
The LIPSA is less than expected, and the Part D basic premium post-benchmark is
greater than the LIPSA. To return to the target LIPSA, the only option the MA
organization has is to reallocate rebates from other benefits/premiums to the Part D
basic premium.
Plans with No, or Insufficient, MA Rebates
If a plan has no, or insufficient, MA rebates and has specified that the target is the
LIPSA, but the plan’s Part D basic premium post-benchmark is above the LIPSA, then
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.
Example 5c.
MA BPT Wor ksheet 6
Section, IIIB, line 1.
Total MA rebate
Section, IIIC, line 7a.
Part D basic premium
prior to rebates (rounded)
Section, IIIC, line 7c. MA
rebates allocated to
Part D basic premium
(rounded)
Section, IIIC, line 7d.
Part D basic premium
Section, IIIC, line 10.
Plan intention for target
Part D basic premium
LIPSA
Initial J une Bid
Submission
After Release
of Benchmar k
Rebate
Reallocation
$28.00
$28.00
$28.00
$35.00
$44.40
$44.40
$15.00
$15.00
$28.00
$20.00
$29.40
$16.40
LIPSA
Not applicable
Not applicable
$15.00
Not applicable
$15.00
The LIPSA is less than expected, and the Part D basic premium post-benchmark is
greater than the LIPSA. Even after the MA organization reallocates all available $28.00
of rebates to the Part D basic premium, the $16.40 Part D basic premium net of the
reallocated rebates is still greater than the LIPSA of $15.00.
CY2011 MA BPT Instructions
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APPENDIX E
The MA organization could follow premium rounding rules to further reduce the Part D
basic premium to $16.00. In this case, the plan’s beneficiaries who are eligible for the
full subsidy would pay a Part D basic premium of $1.00.
H. First-Time Allocation of Rebate Dollars to Part D Basic Premium during the Rebate
Reallocation Period.
In the June bid submission, an MA-PD plan with MA rebate dollars may have opted not to
allocate any of the rebate to buying down the Part D basic premium. For these bids, if the
Part D basic premium after application of the Part D national average monthly bid amount and
the base beneficiary premium were to be higher than the target premium, CMS would allow a
return to the plan’s target premium.
Example 6.
MA BPT Wor ksheet 6,
Section IIIC, Line —
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)
7d. Part D basic premium
10. Plan intention for
target Part D basic
premium
Initial J une Bid
Submission
After
Release of
Benchmar k
Rebate
Reallocation
Option 1
Rebate
Reallocation
Option 2
$10
$15
$15
$15
$0
$10
Premium amount
displayed in line
7d
$0
$15
$0
$15
$5
$10
Not
applicable
Not
applicable
Not
applicable
III. ADDITIONAL REBATE REALLOCATION GUIDANCE
Changes Allowed to Funding of the Part D Basic and Supplemental Benefits
During the rebate reallocation period, rebate dollars that are 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. That
is, this prohibition includes that no changes are permitted to the allowed costs, administrative
costs, or gain/loss margin in the Part D basic and supplemental benefits.
Changes Allowed to Funding of the A/B Mandatory Supplemental Benefits
The A/B mandatory supplemental benefit includes additional items and services not covered by
original Medicare and reductions in cost sharing for Part A/B items and services from levels
actuarially equivalent to average cost sharing under original Medicare. CMS will not allow
MA organizations to substantially redesign A/B mandatory supplemental benefits during the
rebate reallocation period. CMS expects only marginal adjustments during this period and will
evaluate material differences.
The value of the added or eliminated A/B mandatory supplemental benefit is required to 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 is required to match the net shift in total MA rebate dollars
CY2011 MA BPT Instructions
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APPENDIX E
due to an increase or decrease in those dollars after application of the regional benchmark
and/or return to the Part D target premium. CMS will not allow the MA organization to
eliminate one additional benefit and then add another additional benefit.
When the Part D basic premium net of rebate is lower than the target Part D basic premium
after the Part D benchmark announcement, the MA organization could—
•
•
•
Further buy down the initial A/B mandatory supplemental premium;
Reduce plan cost sharing and then buy down the new A/B mandatory supplemental
premium to the initial level; or
Add new non-drug benefits (for example, vision) to the A/B mandatory supplemental
benefit package and then buy down the new A/B mandatory supplemental premium to
the initial level.
Example 7.
After application of the national average monthly bid amount and the base beneficiary
premium, an MA-PD organization’s Part D basic premium net of rebates shifts from $0
to -$3. The MA organization is required to reallocate $3 of rebates and may decide to
buy down the cost of a benefit in the A/B mandatory supplemental package.
However, CMS will not allow the MA organization to accomplish rebate reallocation
by moving $15 out of A/B cost-sharing reductions and moving $18 into an additional
benefit. We would consider this to be a substantial redesign of the A/B mandatory
supplemental benefit.
When the Part D basic premium net of rebate is greater than the target Part D basic premium
after the Part D benchmark announcement, the MA organization could—
•
•
Buy down less of the A/B mandatory supplemental premium; or
Eliminate or reduce an A/B mandatory supplemental benefit (for example, provide an
eye exam less frequently), and then buy down the new A/B mandatory supplemental
premium to the initial level.
Similarly, to return a regional plan with a decrease in the total amount of rebate to the original
premium, the MA organization could, for example, eliminate from the A/B mandatory
supplemental benefit package the coverage of a non-Medicare covered item or service.
See the CY2010 Call Letter for additional guidance regarding benefit changes during rebate
reallocation.
Changes Allowed to the Part B Premium Reduction
One use of rebate dollars allowed under 42 CFR §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 Part B premium, under the reallocation rules described in other
sections of this appendix. 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 Part B premium released by
CMS in the BPT.
CY2011 MA BPT Instructions
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APPENDIX E
Plans Required to Include Prescription Drug Coverage
MA organizations must meet the 42 CFR §423.104(f) requirement on type of drug coverage
offered by certain plans and must reallocate the 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 that plan (or another MA plan offered by the same MA organization
in the same service area) includes required prescription drug coverage.
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 (that is, 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 rule. 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 (i) a
basic-only Part D plan or (ii) a basic plus supplemental Part D plan for which the supplemental
premium (net of rebates) equals zero. Failure to meet this requirement will result in the
organization’s inability to offer a Part D benefit. In addition, MA organizations that offer
coordinated care plans but that fail to offer a Part D benefit in an area will be unable to offer an
MA benefit as well, under the rules of 42 C.F.R. §422.4(c).
Non-Benefit Expenses and Gain/Loss Margins
This guidance applies to all pricing arrangements and methodologies, including percent of
revenue, risk sharing, and global capitation.
Changes to A/B Mandatory Supplemental
CMS will allow only the following minor changes to non-benefit expenses and gain/loss
margin as a result of rebate reallocation:
•
•
•
A change, if any, in non-benefit expenses related to the incremental change of
A/B mandatory supplemental benefits.
A small change in the gain/loss margin related to premium rounding (see
premium rounding rules in this appendix).
A small change resulting from the proportional allocation of non-benefit
expenses and the gain/loss margin in the BPT.
Changes to Medicare-Covered
CMS will not allow modifications to the pricing of Medicare-covered benefits as a
result of rebate reallocation. That is, the PMPM value of allowed costs, non-benefit
expenses, and gain/loss margin may not change, with the following exception: CMS
will allow small changes in non-benefit expenses and gain/loss margin resulting solely
CY2011 MA BPT Instructions
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APPENDIX E
from the proportional allocation of non-benefit expenses and the gain/loss margin in the
BPT.
Local MA Plan Segments
The above rules on rebate reallocation apply to bids for local plan segments, with the following
clarifications.
The MA plan’s health care benefit package must be the same across plan segments, though the
package can be priced differently. MA basic and mandatory supplemental premiums and cost
sharing may differ across the service areas for the 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; it may not vary across segments. The amount of rebate
allocated to buy down Part D premiums, the initial target Part D basic premium, and the final
Part D basic beneficiary premium must be identical across the entire service areas.
IV. RULES FOR ROUNDING PREMIUMS
This section describes system requirements for rounded premiums and the circumstances in
which the plan sponsor may round premiums in order to reach plan premium goals.
Rule 1 – System Requirements Regarding Premiums and Rebates
To comply with premium withhold system requirements, the BPTs round the following
premiums to one decimal (that is, to the nearest dime): MA (the sum of basic plus mandatory
supplemental), Part D basic, and Part D supplemental. No pennies are allowed.
Rebate dollars allocated to reduce the Part B and Part D premiums are rounded to one decimal.
Rebate dollars allocated to reduce the A/B mandatory supplemental premium are 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.
Rule 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 these bids are not affected by the Part D national average
calculation or the MA regional plan benchmark calculations. Local MA-only plans will not be
given an opportunity to round the premiums after the initial June bid submission. 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 desired
level of premium rounding.
Rule 3 – Local MA-PD Plans (excluding EGWPs) and RPPOs
Regional plans and local MA-PD plans (excluding local EGWPs) may participate in the rebate
reallocation process. During rebate reallocation, MA organizations may round the total plan
CY2011 MA BPT Instructions
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APPENDIX E
premium to the nearest dollar (up or down) by slightly increasing or reducing the gain/loss
margin in the MA bid, as long as the change in margin results in a total plan premium change
of less 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 MA basic and
mandatory supplemental premiums and the Part D basic and supplemental premiums.)
If the plan has rebate dollars, then the MA organization may make a small change in the
gain/loss margin to result in an increase or decrease in rebate dollars of no more than $0.50.
Note that, in order to account for the proportional allocation of the total gain/loss margin to
Medicare-covered and A/B mandatory supplemental in the BPT, and also to account for the
25-percent savings retained by Medicare, the total margin may change by slightly more than
$0.50. Specifically, the Medicare-covered margin (Worksheet 4, cell Q105) would be limited
to a $0.67 change, to result in a $0.50 change in rebates ($0.67 x 75% = $0.50).
If the plan A/B bid is equal to or greater than the A/B benchmark, the MA organization may
make a small change in the gain/loss margin resulting in a premium increase or decrease of up
to $0.50.
Examples of rounding.
Example (a). An MA-PD plan has no premium for Medicare-covered or A/B mandatory
supplemental benefits, and an initial basic Part D premium (target premium) of $30.
(This situation could occur if (i) the bid equals the benchmark, and no A/B mandatory
supplemental benefits are offered, or (ii) the bid is less than the benchmark, and the plan
has A/B mandatory supplemental benefits and applies rebates to reduce the A/B
mandatory supplemental premium to zero.) If the post-Part D benchmark
announcement total plan premium is $30.42, the MA organization could round the plan
premium to $30.00 by generating $0.42 of additional rebates to allocate to the basic
Part D premium by slightly reducing the gain/loss margin for MA benefits. (The
gain/loss margin for Part D benefits must not change.)
Example (b1). An MA-PD plan has no premium for Medicare-covered or A/B
mandatory supplemental benefits, and an initial basic Part D premium (target premium)
of $30. (This situation could occur if (i) the bid equals the benchmark, and no
A/B supplemental benefits are offered, or (ii) the plan applies rebates to reduce the A/B
mandatory supplemental premium to zero.) If the post-Part D benchmark
announcement bid results in a total plan premium of $32.42, the MA organization could
opt to generate $0.42 of additional rebates to allocate to the basic Part D premium by
making a slight reduction in the gain/loss margin for MA benefits that would result in a
premium of $32.00.
The MA organization could not use the rounding rules to adjust 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 premium of $30, the MA organization would have to engage in
rebate reallocation. See earlier sections of this appendix for guidance on rebate
reallocation.
Example (b2). An MA-PD plan has A/B mandatory supplemental benefits, an initial
basic Part D premium (target premium) of $30, and a total plan premium of $70.00. If
CY2011 MA BPT Instructions
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APPENDIX E
the post-Part D benchmark announcement bid results in a basic Part D premium of
$28.55 and a total plan premium of $68.55, the MA organization could opt to make a
slight change in the gain/loss margin for MA benefits in order to achieve a $0.45
increase in premium for A/B mandatory supplemental benefits, resulting in a total plan
premium of $69.00.
The MA organization could not use the rounding rules to adjust the premium to
anything higher than $69. For example, the organization could not round to a combined
premium of $70 by increasing the gain/loss margin to result in a premium change of
$1.45. To return to the target premium of $30, the 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-Part D benchmark announcement total plan premium is $26.52. The MA
organization could round the plan premium to the nearest dollar (that is, $27.00) by
increasing the gain/loss margin to generate a $0.48 MA premium.
Example (d). The target Part D basic premium is the low-income premium subsidy
amount. After the Part D national average monthly bid amount is calculated, the Part D
basic premium is $32.00, and the low-income premium subsidy amount is $31.60. The
plan has the following three options:
Option 1. The plan can maintain its Part D basic premium of $32.00. The plan’s
beneficiaries eligible for the full subsidy will pay a Part D basic premium of
$0.40.
Option 2. The MA-PD plan can reallocate $.40 of the rebates that were allocated
to the A/B mandatory supplemental premium to its Part D basic premium, thus
reducing the premium to the low-income premium subsidy amount of $31.60.
To account for the reduction in rebates applied to the A/B mandatory
supplemental premium, the MA-PD plan may either increase its A/B mandatory
supplemental premium by $0.40 or reduce its gain/loss margin appropriately to
eliminate the premium increase. Enrollees not eligible for the low-income
subsidy 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
enrollees not eligible for the low-income subsidy, MA-PD plans are permitted in
this situation to reallocate A/B mandatory 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 mandatory supplemental rebates to its Part D basic
premium, reducing the Part D basic premium to $31.00, which is the nearest
whole-dollar amount below the regional low-income premium subsidy amount
of $31.60. To account for the reduction in A/B mandatory supplemental rebates
applied to MA, the MA-PD plan must increase its A/B mandatory supplemental
premium by $1.00 and cannot offset the reduction by a change in the gain/loss
margin. Please note that in this option, the MA-PD plan forgoes $0.60 in
potential low-income premium subsidy dollars per each beneficiary eligible for
the full subsidy.
CY2011 MA BPT Instructions
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APPENDIX E
Example (e). The target Part D basic premium is the LIPSA. After the Part D national
average monthly bid amount is calculated, the low-income premium subsidy amount is
$31.76. Since Part D premiums must be rounded to the nearest dime (that is, one
decimal), it is acceptable for the plan to round the Part D basic premium to $31.70 or to
$31.80, as follows:
Option 1. If the plan were to round the Part D basic premium to $31.70, then it
would receive $31.70 as the 100-percent subsidy. The plan’s beneficiaries
eligible for the full subsidy would not pay a Part D basic premium, since the
premium is lower than the LIPSA.
Option 2. If the plan were to round the Part D basic premium to $31.80, then it
would receive $31.80 as the 100 percent subsidy. In this case, the plan’s
beneficiaries eligible for the full subsidy would not pay a Part D basic premium,
since the $0.04 difference (that is, $31.80 less $31.76) rounds to zero when the
premiums are rounded to one decimal.
Example (f). An MA-PD plan has three segments, with MA premiums of $51, $76, and
$110. The Part D basic premium after the benchmark announcement is $37.90. To
ultimately achieve whole-dollar total plan premiums, the MA organization could
increase the MA gain/loss margin requirements to increase each MA premium by $0.10.
When added to the $37.90 Part D premium, the total plan premium for each segment
becomes a whole-dollar amount: $89, $114, and $148.
Example (g). The initial June bid submission for a local MA-only plan includes a $0
basic MA premium and a $61.30 mandatory supplemental MA premium. The plan
sponsor would like to offer a whole-dollar premium to the plan’s enrollees. Before
submitting the initial BPT to CMS (via HPMS upload), the actuary would slightly
revise the gain/loss margin to accomplish the rounded premium. For example, the
actuary could reduce the gain/loss margin by $0.30 to achieve the $61.00 rounded
premium. This adjustment must be completed before the BPT is submitted to CMS in
early June. Plan sponsors are not allowed to make significant changes to the BPT in
order to round premiums. Local MA-only plans do not participate in rebate
reallocation.
V. SUMMARY OF CONSIDERATIONS FOR REBATE REALLOCATION RESUBMISSIONS
When preparing resubmissions during the rebate reallocation period, plans should review the
following considerations:
•
•
•
•
•
All RPPOs (including EGWPs) must resubmit during the rebate reallocation period, in
order to reflect the published regional MA benchmarks.
If the national average monthly bid amount (NAMBA) and base beneficiary premium
(BBP) result in a Part D basic premium that is lower than the rebates allocated to Part D
basic, then the bid must be resubmitted.
When resubmitting bids during the rebate reallocation period, plans must update the
NAMBA and BBP in the Part D BPT.
The Part D bid must be unchanged.
The Part D basic premium net of rebates must equal the target.
CY2011 MA BPT Instructions
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APPENDIX E
•
•
•
If the LIPSA is targeted, the resubmitted Part D basic premium net of rebates must be
equal to the plan’s LIPSA (rounded to the nearest dime or rounded down to the nearest
dollar).
The “plan’s intention for the target premium” in the MA BPT must be unchanged.
Changes to MA pricing assumptions (benefit/non-benefit /gain/loss) must be consistent
with these instructions.
CY2011 MA BPT Instructions
Page 113 of 124
APPENDIX F
APPENDIX F – SUGGESTED MAPPING OF MA PBP CATEGORIES TO
BPT CATEGORIES
The Medicare Advantage (MA) Bid Pricing Tool (BPT) 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, though 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 #
1a
1b
2
3
4a
4b
5
PBP Ser vice Categor y
Inpatient Hospital - Acute
Inpatient Psychiatric Hospital/Facility
Skilled Nursing Services
Comprehensive Outpatient
Rehabilitation Facility (CORF)
Emergency Care/Post Stabilization Care
Urgently Needed Services
Partial Hospitalization
6
7a
7b
Home Health Services
Primary Care Physician Services
Chiropractic Services
7c
7f
Independent Occupational Therapy
Services
Physician Specialist Services Excluding
Psychiatric Services (exclude
Radiology)
Physician Specialist Services Excluding
Psychiatric (Radiology only)
Mental Health Specialty Services Non-Physician
Podiatry Services
7g
Other Health Care Professional Services
7h
Psychiatric Services
7d
7d
7e
CY2011 MA BPT Instructions
BPT
line #
a1
a2
b
h5
Cor r esponding BPT Ser vice Categor y:
Descr iption/Note (Wor ksheet 3)
Inpatient Facility: Acute
Inpatient Facility: Mental Health
Skilled Nursing Facility
Outpatient Facility - Other: Other
f
f
h3
h5
c
i1
i2
i6
i4
Outpatient Facility - Emergency
Outpatient Facility - Emergency
OP Facility - Other: Observation; or
OP Facility - Other: Other
Home Health
Professional: PCP
Professional: Specialist excl. MH; or
Professional: Other
Professional: Therapy (PT/OT/ST)
i2
i6
Professional: Specialist excl. MH; or
Professional: Other
i5
Professional: Radiology
i3
Professional: Mental Health
i2
i6
i2
i6
i3
Professional: Specialist excl. MH;
or Professional: Other
Professional: Specialist excl. MH; or
Professional: Other
Professional: Mental Health
Page 114 of 124
APPENDIX F
PBP
line #
7i
8a
8b
9a
9b
PBP Ser vice Categor y
Physical/Speech Therapy
OP Diagnostic Procedures and tests and
Lab Services
OP Diagnostic and Therapeutic
Radiological Services
Outpatient Hospital Services
BPT
line #
i4
h1
Cor r esponding BPT Ser vice Categor y:
Descr iption/Note (Wor ksheet 3)
Professional: Therapy (PT/OT/ST)
OP Facility - Other: Lab
h2
OP Facility - Other: Radiology
g or h
OP Facility - Surgery; or
OP - Facility - Other (all sub-categories)
OP Facility - Surgery
g
9c
9d
10a
10b
11a
11b
Ambulatory Surgical Center (ASC)
Services
Outpatient Substance Abuse Services
Cardiac Rehabilitation Services
Ambulance
Transportation
Durable Medical Equipment (DME)
Prosthetics/Medical Supplies
11c
Diabetes Monitoring Supplies
e2
12
13a
13b
13c
13d
13e
14a
Renal Dialysis
Blood
Acupuncture
Over-the-counter Rx
Meal Benefit
Other
Health Education/Wellness Programs
14b
14c
14d
Immunizations
(Routine) Physical Exams
Pap Smears and Pelvic Exams
Screening
Prostate Cancer Screening
Colorectal Screening
Bone Mass Measurement
Mammography Screening
Diabetes Monitoring
Nutritional Training (diabetes and renal
disease)
Medicare Part B Drugs
Preventive 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)
h5
k
r
r
r
r
q or
k
i1
i1
i1, i2
or i6
14e
14f
14g
14h
14i
14j
15
16a
16b
CY2011 MA BPT Instructions
h5
h5
d
l
e1
e2
OP Facility - Other: Other
OP Facility - Other: Other
Ambulance
Transportation (Non-Covered)
DME/Prosthetics/Supplies: DME
DME/Prosthetics/Supplies:
Prosthetics/Supplies
DME/Prosthetics/Supplies:
Prosthetics/Supplies
OP Facility - Other: Renal Dialysis
Other Medicare Part B
Other Non-Covered
Other Non-Covered
Other Non-Covered
Other Non-Covered
Health & Education (Non-Covered); or
Other Medicare Part B
Professional: PCP
Professional: PCP
Professional: PCP;
Professional: Specialist excluding MH;
or Professional: Other
j
m
Part B Rx
Dental (Non-Covered)
m
Dental (Non-Covered)
Page 115 of 124
APPENDIX F
PBP
line #
17a
17b
18a
18b
PBP Ser vice Categor y
Eye Exams
Eye Wear
Hearing Exams
Hearing Aids
CY2011 MA BPT Instructions
BPT
line #
n1
n2
o1
o2
Cor r esponding BPT Ser vice Categor y:
Descr iption/Note (Wor ksheet 3)
Vision (Non-Covered): Professional
Vision (Non-Covered): Hardware
Hearing (Non-Covered): Professional
Hearing (Non-Covered): Hardware
Page 116 of 124
APPENDIX G
APPENDIX G – MEDICAL SAVINGS ACCOUNT BPT
This appendix provides guidance in completing the Medical Savings Account Bid Pricing Tool
for Medical Savings Account (MSA) and Medical Savings Account Demonstration (MSA
Demo) plans offered to Medicare beneficiaries. Any reference to MSA plans also pertains to
MSA Demo plans unless otherwise noted. This appendix highlights only the differences
between the MSA BPT and 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)
SECTION I - GENERAL INFORMATION
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 CY2011 for both MSA and MSA Demo plans is $TBD. The
minimum deductible amounts for CY2011 for MSA and MSA Demo plans are $TBD and
$TBD, respectively.
Line 9 – Enrollee Type
This cell is pre-populated with “A/B”.
SECTIONS II, III, IV, AND V
Base period data in Sections II, III, IV, and V must include only Medicare-covered medical
expenses.
WORKSHEET 2 – MSA TOTAL PROJECTED ALLOWED COSTS PMPM
(CORRESPONDING TO MA WORKSHEET 2)
SECTION II – PROJECTED ALLOWED COSTS
Data in Section II must include only Medicare-covered medical expenses.
CY2011 MA BPT Instructions
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APPENDIX G
WORKSHEET 3 – MSA BENCHMARK PMPM (CORRESPONDING TO MA
WORKSHEET 5)
Follow the instructions for MA Worksheets 5 and 6 for the appropriate inputs.
WORKSHEET 4 – ENROLLEE DEPOSIT AND PLAN PAYMENT (NO CORRESPONDING
MA WORKSHEET)
This worksheet calculates the MSA monthly plan revenue requirement and enrollee deposit.
Consistent with other MSA worksheets, information provided on Worksheet 4 must exclude
ESRD enrollees.
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 percent of the member months are expected to incur annual claims of
$11,500, and 10 percent are expected to incur annual claims of $4,400, then put 20 percent only
in the interval containing $11,500 and 10 percent only in the interval containing $4,400. The
sum of column e must equal 100 percent.
Column f – Gross Claims (PMPM)
This column calculates total allowed Medicare-covered claims on a PMPM 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.
Column g – Gross Claims over Deductible (PMPM)
Enter the total allowed Medicare-covered claims on a PMPM basis over the deductible for each
claim interval expected to be paid by the MSA plan. Enter zero (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.
CY2011 MA BPT Instructions
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APPENDIX G
SECTION III – DEVELOPMENT OF SUMMARY INFORMATION
Line a – Medicare-Covered Plan Medical Expenses PMPM
This cell displays the sum of column g of Section II (plus cell G32 less cell G33 for MSA
Demos).
Line b – Non-Benefit Expenses
Enter the non-benefit expense information. Please refer to the “Pricing Considerations” section
of these 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 c – Gain/Loss Margin
Input the projected PMPM for the gain/loss margin for Medicare-covered services provided.
Please refer to the “Pricing Considerations” section of these 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.
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 CY2011, 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 margin 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 BENEFITS (CORRESPONDING TO MA
WORKSHEET 7)
Follow the instructions for MA Worksheet 7 for the appropriate inputs.
CY2011 MA BPT Instructions
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APPENDIX H
APPENDIX H – DE# SUMMARY
Medicaid Eligibility Data
The HPMS beneficiary-level files for the July 2009 cohort include a Medicaid status code,
which indicates the Medicaid eligibility status of the beneficiary as reported by the respective
state Medicaid agency. The codes are shown in the table below. For descriptions of the dualeligible beneficiary categories, and the types of Medicaid benefits to which these beneficiaries
they are entitled, see http://www.cms.hhs.gov/DualEligible/02_DualEligibleCategories.asp.
Medicaid
Status Code
01
02
03
04
05
06
08
09
99
Blank
Medicaid State-Repor ted Code (Dual-Eligible Categor y)
QMB only
QMB + full Medicaid benefits
SLMB only
SLMB + full Medicaid benefits
QDWI (Qualified Disabled and Working Individual)
QI (Qualified Individual)
Full-benefit dual-eligibles who do not have QMB or SLMB status
Other dual-eligibles without full Medicaid benefits, for example,
Pharmacy Plus and 1115 drug-only demonstrations
Unknown, including Medicaid eligibles reported by plans and territories
Non-Medicaid
Classifying Dual-Eligible Data
The HPMS plan-level data and beneficiary-level files for the July 2009 cohort include a
Medicaid grouping indicator as shown in the table below. This table illustrates how the data
for dual-eligible beneficiaries are classified as DE# or non-DE#. The certifying actuary must
consider the Medicaid cost-sharing policy for the states or territories in the plan’s service area
when determining which beneficiaries in Medicaid grouping B are in the DE# population.
Medicaid
Gr ouping
A
Dual
Eligible
Dual
Dual
B
Categor y of Dual
Eligible
QMB and QMB+
Other Medicaid
Medicaid
Status Code
01, 02
03, 04, 05,
06, 08, 09,
99
03, 04, 05,
06, 08, 09,
99
Non-Medicaid
Blank
Other Medicaid
Dual
B
C
Nondual
Medicar e Cost-Shar ing
Liability
None
DE#
Status
DE#
Reduced (as determined by
the certifying actuary)
DE#
Full (as determined by the
certifying actuary)
Non-DE#
Full
Non-DE#
The following table outlines the requirements for classifying dual-eligible beneficiaries that are
not QMB or QMB+ (that is, Medicaid Indicator B: Other Medicaid) as DE# or non-DE# based
on the HPMS enrollment data for the July cohort. The percentages in the table below represent
the number of total dual-eligible beneficiaries relative to total members.
CY2011 MA BPT Instructions
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APPENDIX H
Medicaid
Gr ouping/Status Code
A: 01, 02
B: 03, 04, 05, 06, 08, 09, 99
B: 03, 04, 05, 06, 08, 09, 99
N/A
C: Blank
Condition
None
<10% total dual-eligible
beneficiaries
10% to 100% total dualeligible beneficiaries
All members are enrolled
after July 2009
None
DE# Deter mination
for Base Per iod Data
DE#
May consider as non-DE# or
determine actual DE# percentage
Must determine actual
DE# percentage
Must determine actual
DE# percentage
Non-DE#
Reporting Base Period Data
The user must separately enter total and non-DE# base period member months and risk scores,
including zero values.
Other BPT Values
The percentages in the headings of the following table represent the number of DE# projected
member months relative to total projected member months.
If the value for the DE# projected member months or for the non-DE# projected member
months equals zero, then the user must enter projected allowed costs for the non-DE#
beneficiaries (column p) and for the DE# beneficiaries (column q) equal to the projected
allowed costs for the total population (column o).
If the value for the DE# projected member months is less than 10 percent, or greater than
90 percent of the total projected member months (excluding ESRD), then the user may, at the
discretion of the certifying actuary, enter—
Non-DE# projected allowed costs (column p) equal to the projected allowed costs for the
total population (column o); and
DE# projected allowed costs (column q) equal to the projected allowed costs for the total
population (column o).
CY2011 MA BPT Instructions
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APPENDIX H
The following table outlines the determination of certain BPT values in the situation above
when the certifying actuary chooses to set the projected DE#, non-DE#; and total allowed costs
all equal.
BPT
Ar ea
Input Item
WS3
In-network utilization
WS4
IIB
WS5
II
10% to
90% DE#
Condition
Equal non-DE#, DE#,
and total allowed costs
<10% DE#
Enter
non-DE# values
>90% DE#
Enter total
values
State Medicaid
required beneficiary
cost sharing (column k)
Equal non-DE#, DE#,
and total allowed costs
Enter zero 3
Enter amount 4
N/A
Non-DE# risk factor
Equal non-DE#, DE#,
and total allowed costs
Enter total
values 5
Enter zero
N/A
N/A
The next table summarizes the determination of certain BPT values when (i) the value for the
DE# projected member months is less than 10 percent, or greater than 90 percent of the total
projected member months (excluding ESRD) and the certifying actuary chooses to separately
calculate DE# and non-DE# projected allowed costs; or (ii) the value for the DE# projected
member months is between 10 percent and 90 percent inclusive of the total projected member
months (excluding ESRD).
BPT Ar ea
WS3
WS4, IIB
WS5 II.
Deter mination of BPT Values
In-network utilization
Condition
Unequal non-DE#, DE#,
and total allowed costs
State Medicaid
required beneficiary
cost sharing (column k)
Unequal non-DE#, DE#,
and total allowed costs
Determine appropriate values
(including zero)
Non-DE# risk factor
Unequal non-DE#, DE#,
and total allowed costs
Determine distinct non-DE# and
DE# values
Input Item
3
Plus plan cost sharing for non-covered, non-Medicaid benefits.
4
Plus plan cost sharing for non-covered, non-Medicaid benefits.
Enter distinct non-DE# values
5
In the special case where the value for the DE# projected member months is zero (and supported appropriately),
the user must input non-DE# member months and risk factor equal to member months and risk factor for the total
population.
CY2011 MA BPT Instructions
Page 122 of 124
APPENDIX H
The table below outlines the determination of BPT values that is the same for all bids (that is,
regardless of the percentage of DE# members).
BPT Ar ea
WS3
WS4, IIB
WS4, VI
WS5, II
Input Item
Cost-sharing values
and description
Plan cost sharing
(column f)
DE# Medicaid data
Non-DE# member
months
Condition
Deter mination of BPT Values
None
Reflect PBP package
None
Default to non-DE# ratio of plan cost
sharing or override formulas
None
Determine appropriate values
None
Determine distinct non-DE# and
DE# values 6
6
In the special case where the value for the DE# projected member months is zero (and supported appropriately),
the user must input non-DE# member months and risk factor equal to member months and risk factor for the total
population.
CY2011 MA BPT Instructions
Page 123 of 124
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
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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.
CY2011 MA BPT Instructions
Page 124 of 124
| File Type | application/pdf |
| File Title | INSTRUCTIONS FOR COMPLETING MEDICARE ADVANTAGE BID PRICING TOOL AND MEDICAL SAVINGS ACCOUNT BID PRICING TOOL FOR CONTRACT YEAR 2 |
| Author | CMS/OACT |
| File Modified | 2010-03-17 |
| File Created | 2010-03-17 |