CY 2013 Bid Pricing Tool (BPT) for Medicare Advantage (MA) Plans and Prescription Drug Plans (PDP)-CMS-10142

OMB Approved # 0938-0944

INSTRUCTIONS FOR COMPLETING
THE MEDICARE ADVANTAGE
BID PRICING TOOLS
FOR CONTRACT YEAR 2016

April 3, 2015

CMS-10142 (07/29/2015)

TABLE OF CONTENTS
I. Introduction.................................................................................................................................................... 4
Background ................................................................................................................................................. 4
Document Overview ................................................................................................................................... 4
New for Contract Year 2016 (CY2016) ...................................................................................................... 5
Bidding Resources....................................................................................................................................... 5
II. Pricing Considerations................................................................................................................................... 6
Bidding/Pricing Approach........................................................................................................................... 6
Specific Topics ............................................................................................................................................ 6
III. Data Entry and Formulas ........................................................................................................................... 48
Medicare Advantage ................................................................................................................................. 48
Medical Savings Account.......................................................................................................................... 48
ESRD-SNP ................................................................................................................................................ 48
Data Entry ................................................................................................................................................. 48
MA Worksheet 1 – MA Base Period Experience and Projection Assumptions ............................................... 49
Section I – General Information ................................................................................................................ 49
Section II – Base Period Background Information.................................................................................... 52
Section III – Base Period Data (at Plan’s Risk Factor) for 1/1/2014 – 12/31/2014 .................................. 54
Section IV – Projection Assumptions ....................................................................................................... 55
Section V – Description of Other Utilization Adjustment Factor, Other Unit Cost Adjustment
Factor, and Additive Adjustments ...................................................................................................... 56
Section VI – Base Period Summary for 1/1/2014 – 12/31/2014 (excludes Optional Supplemental) ........ 57
MA Worksheet 2 – MA Projected Allowed Costs PMPM .............................................................................. 60
Section I – General Information ................................................................................................................ 60
Section II – Projected Allowed Costs........................................................................................................ 60
MA Worksheet 3 – MA Projected Cost Sharing PMPM ................................................................................. 63
Section I – General Information ................................................................................................................ 63
Section II – Maximum Cost Sharing Per Member Per Year ..................................................................... 63
Section III – Development of Contract Year Cost Sharing PMPM (Plan’s Risk Factor) ......................... 65
Section IV – Mapping of PBP Service Categories to BPT........................................................................ 71
MA Worksheet 4 – MA Projected Revenue Requirement PMPM................................................................... 72
Section I – General Information ................................................................................................................ 72
Section II – Development of Projected Revenue Requirement ................................................................. 72
Section III – Development of Projected Contract Year ESRD “Subsidy” ................................................ 79
Section IV – For Employer Bid Use Only (“800-series”) ......................................................................... 79
Section V – Projected Medicaid Data ....................................................................................................... 79
MA Worksheet 5 – MA Benchmark PMPM .................................................................................................... 80
Section I – General Information ................................................................................................................ 80
Section II – Benchmark and Bid Development ......................................................................................... 80
Section III – Savings/Basic Member Premium Development ................................................................... 81
Section IV – Standardized A/B Benchmark – Regional Plans Only ......................................................... 82
Section V – Quality Rating ....................................................................................................................... 82
Section VI – County-Level Detail and Service Area Summary ................................................................ 83
Section VII – Other Medicare Information ............................................................................................... 85
Section VIII – Projected CY Member Months .......................................................................................... 86
MA Worksheet 6 – MA Bid Summary ............................................................................................................ 87
Section I – General Information ................................................................................................................ 87
Section II – Other Information .................................................................................................................. 87
Section III – Plan A/B Bid Summary ........................................................................................................ 87

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Section IV – Contact Information and Date Prepared ............................................................................... 92
Section V – Working Model Text Box...................................................................................................... 92
MA Worksheet 7 – Optional Supplemental Benefits ....................................................................................... 93
Section I – General Information ................................................................................................................ 93
Section II – Optional Supplemental Packages........................................................................................... 93
Section III – Comments............................................................................................................................. 94
Section IV – Base Period Summary (entered at the contract level) .......................................................... 94
IV. Appendices................................................................................................................................................ 95
Appendix A – Actuarial Certification .............................................................................................................. 95
Appendix B – Supporting Documentation ....................................................................................................... 98
General ...................................................................................................................................................... 98
Submitting Supporting Documentation ..................................................................................................... 99
MA Checklist for Required Supporting Documentation ......................................................................... 110
SAMPLE Cover Sheet – Submitted with initial bid upload in June........................................................ 111
SAMPLE Cover Sheet – Submitted as a subsequent substantiation upload ........................................... 112
SAMPLE Format for Reliance on Information Supplied by Others ....................................................... 112
SAMPLE Format for Aggregate Gain/Loss Margin Support .................................................................. 113
SAMPLE Format for Summary of Negative-Margin Bids ..................................................................... 114
SAMPLE Format for Product Pairing Supporting Documentation ......................................................... 114
Appendix C – Part B-Only Enrollees ............................................................................................................. 115
Appendix D – Medicare Advantage Products Available to Groups............................................................... 117
Appendix E – Rebate Reallocation and Premium Rounding ......................................................................... 120
I. Rebate Reallocation Permissibility by Plan Type ................................................................................ 120
II. Rebate Reallocation Rules and Examples .......................................................................................... 121
III. Additional Rebate Reallocation Guidance ........................................................................................ 128
IV. Rules for Rounding Premiums .......................................................................................................... 132
V. Summary of Considerations for Rebate Reallocation Resubmissions................................................ 136
Appendix F – Suggested Mapping of MA PBP Categories to BPT Categories ............................................. 137
Appendix G – DE# Summary ........................................................................................................................ 140
Appendix H – Related-Party Administrative and Medical Service ArranGEments ...................................... 143
Appendix I – Medical Savings Account BPT ................................................................................................ 145
Worksheet 1 – MSA Base Period Experience and Projection Assumptions (Corresponding to MA
Worksheet 1) .................................................................................................................................... 145
Worksheet 2 – MSA Total Projected Allowed Costs PMPM (Corresponding to MA Worksheet 2)...... 145
Worksheet 3 – MSA Benchmark PMPM (Corresponding to MA Worksheet 5) .................................... 146
Worksheet 4 – MSA Enrollee Deposit and Plan Payment (No corresponding MA Worksheet) ............ 146
Worksheet 5 – MSA Optional Supplemental Benefits (Corresponding to MA Worksheet 7) ................ 147
Appendix J – End–Stage Renal Disease–Only Special Needs Plans BPT ..................................................... 148
Worksheet 1 – Enrollment and PMPM revenue Projection .................................................................... 148
Worksheet 2 – Projection of benefit cost, non-benefit expenses, and gain/loss margin PMPM ............. 150
Worksheet 3 – Program Experience for Calendar Year 2014 ................................................................. 150
Worksheet 4 – Optional Supplemental Benefits ..................................................................................... 151
Supporting Documentation for ESRD-SNP BPTs .................................................................................. 151
Appendix K – Trending Risk Scores.............................................................................................................. 152

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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 End-Stage Renal Disease-only special needs plans (ESRD-SNPs). For plans with service
area segments, a separate bid must be submitted for each segment. In these Instructions, the
term “bid ID” refers to: (i) the contract and plan number combination for non-segmented plans,
and (ii) the contract, plan, and segment number combination for segmented plans.
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), the MSA
BPT or the ESRD-SNP BPT. The MA BPT is not to be completed for Section 1876 Cost plans,
Section 1833 Cost plans, Programs of All-Inclusive Care for the Elderly (PACE) plans, and
Medicare-Medicaid Plans offered through the Financial Alignment Demonstration. 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 audit by CMS or by any person or
organization that CMS designates. As part of the review and audit 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 CY2015, 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: 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, DE#, Related-Party Requirements, the MSA BPT,
the ESRD-SNP BPT, and Trending Risk Scores.

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INTRODUCTION

NEW FOR CONTRACT YEAR 2016 (CY2016)
Some of the key features that are new or changed for the CY2016 BPT are listed below. The
changes improve the usability and functionality of the BPT and reflect current guidance.
•

Technical
◦ The add-in file (BPT2016.xlam) must be saved under C:\BPT\BPT2016\. See the
BPT technical instructions for more information.

BIDDING RESOURCES
In addition to these Instructions, the following resources provide information on CY2016
bidding:
•
•
•

•
•
•
•

•

The CY2016 Advance Notice and draft CY2016 Call Letter may be found at
http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/
Advance2016.pdf.
The CY2016 Rate Announcement and CY2016 Call Letter may be found at
http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/
Announcement2016.pdf.
The CY2016 Actuarial Bid Training is offered as a web-based conference. The
conference materials, including slides and streaming video downloads, are available at:
http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
bidTraining2016.html and http://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/BidTrainingIntro.html.
Medicare fee-for-service trends may be found at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/FFS-Trends.html.
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
CY2016 bidding process. The conference calls will include live Question and Answer
sessions with CMS actuaries.
For technical questions about the BPT, BPT Batch Tools, HPMS, or the upload process,
refer to the following resources:
◦ The Technical BPT Instructions located in HPMS, under HPMS Home > Plan Bids
> Bid Submission > CY2016 > Documentation > BPT Technical Instructions
◦ The Bid Submission User’s Manual, also available in HPMS, under HPMS Home >
Plan Bids > Bid Submission > CY2016 > Documentation > Bid User’s Manual
◦ HPMS Help Desk: 1-800-220-2028 or [email protected]
For information about benefits and service categories, see—
◦ Chapter 4 of the Medicare Managed Care Manual at http://www.cms.gov/
Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c04.pdf
◦ The CY2016 PBP/SB Software List of Changes located in HPMS, under HPMS
Home > Plan Bids > Bid Submission > CY2016 > Documentation > PBP – SB List
of Changes

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PRICING CONSIDERATIONS

II. PRICING CONSIDERATIONS
BIDDING/PRICING APPROACH
By Part C statute, the bid must represent the revenue requirement of the expected population.
Therefore, the revenue requirement in the MA bid pricing tool (BPT) must reflect the costs for
providing MA services; it must not include the cost for non-MA services (such as Part D).
Further, 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 ID level if the plan existed in CY2014, 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
Affordable Care Act
Bad Debt
Base Period Experience
Benefits and Service Categories
Capitated Arrangements for Medical
Services
Coordination of Benefits (COB)/
Subrogation

Page Topic
Medicare Secondary Payor (MSP)
10
Adjustment
11
Non-Benefit Expenses
11
Optional Supplemental Benefits
16
Out-of-Area Enrollees
18
19

Cost Sharing

19

Credibility
Dual-Eligible Beneficiaries
Employer-only or union-only group
Waiver plans (EGWPs)

21
22

End-Stage Renal Disease (ESRD)

27

Enrollment
Gain/Loss Margin
Hospice Enrollees
Manual Rating

29
29
33
33

CY2016 MA BPT Instructions

27

Page
34
36
38
38

Part B Premium and Buydown

38

Plan Premiums, Rebate Reallocation, and
Premium Rounding
Plan Intention for Target Part D Basic
Premium
Point-of-Service (POS)
Rebate Allocations
Regional Preferred Provider Organizations
(RPPO)
Related-Party Arrangements (Medical and
Non-Benefit)
Risk Score Development for CY2015
Sequestration
Service Area Changes
Supporting Documentation

39
40
41
41
41
42
44
49
50
50

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PRICING CONSIDERATIONS
Affordable Care Act

The Affordable Care Act introduced quality bonus payments (QBPs) to MA organizations
based on a five-star quality rating system. The Affordable Care Act also changed the share of
savings that MA organizations must provide to enrollees as the beneficiary rebate, whereby the
level of rebate is tied to the level of the plan’s QBP rating.
The contract-level ratings for the CY2016 QBP can be found at the following path in HPMS:
HPMS Home > Quality and Performance > Part C Performance Metrics > Quality Bonus
Payment Rating > 2016.
Low-Enrollment Contract

A low-enrollment contract is a contract that could not undertake Healthcare
Effectiveness Data and Information Set (HEDIS) and Health Outcome Survey (HOS)
data collections because it lacked a sufficient number of enrollees to reliably measure
the performance of the health plan. For 2015, a “low” enrollment contract receives a
QBP percentage of 3.5% and a rebate percentage of 65%.
New Contract under New Parent Organization

A new MA contract offered by a parent organization that has not had any MA
contract(s) with CMS in the previous three years is treated as a qualifying contract, per
statute, until the contract has enough data to calculate a star rating. For 2015, a “new
contract under new parent org” receives a QBP percentage of 3.5% and a rebate
percentage of 65%.
New Contract under Existing Parent Organization

For a parent organization that has had MA contract(s) with CMS in the previous three
years, any new MA contract under that parent organization received a weighted average
of the QBP star ratings earned by the parent organization’s existing MA contracts
(weighted by enrollment).
The following table outlines the QBP percentage and rebate percentage for various QBP star
ratings in CY2015.
QBP star
rating
4.5+
4.0
3.5

3.0

CY2015
QBP Percentage
5.0%
5.0%
0.0%, except for:
3.5% for “new contract under new parent org”
3.5% for “low enrollment contract”
0.0%

< 3.0

0.0%

CY2015
Rebate Percentage
70%
65%
65%

50%, except for:
65% Employer/Union Direct PFFS (ED
PFFS) contract
50%

The CY2016 Advance Notice and Rate Announcement contain additional information
regarding the ACA provisions and the Quality Bonus Payment.

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PRICING CONSIDERATIONS
Bad Debt

Bad debt for uncollected enrollee cost sharing for inpatient hospital and skilled nursing facility
care is to be included in medical costs when paid for by the Plan sponsor in limited situations,
such as when private fee-for-service (PFFS) plans have chosen to match this aspect of
Medicare fee-for-service payment rules or when necessary for a plan to maintain access to a
sole provider of a service.
Base Period Experience

The base experience must be based on claims incurred in calendar year 2014 with 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, for the bid ID. Note that
these data must—
•

•
•
•
•
•
•

Be reported without adjustment in Section III except as noted in the pricing
considerations for capitated arrangements for medical services and related-party
arrangements (medical and non-benefit). (Adjustments may be made in Section IV to
accommodate population, benefit design, or other changes between the base period and
the projection period.)
Be submitted in Worksheet 1 at the bid level for all bid IDs with experience data in 2014,
regardless of the level of enrollment.
Reconcile in an auditable manner to the Plan sponsor’s audited financial statements.
Be provided for plans acquired by the Plan sponsor.
Not be used to aggregate data from multiple plans in order to achieve credibility.
Credibility is addressed on Worksheet 2.
Must be reported in total at the bid level for every bid ID if base period experience is
aggregated; do not include partial plan experience on Worksheet 1.
May be reported on more than one bid when plans are aggregated, depending how
enrollment changes are processed.

The medical expenses in Section III must—
•
•
•
•

•
•

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).
Be reported on an allowable basis (before any reduction for reinsurance recoveries or
cost sharing) and on a net basis.
Include any provider incentive payments.
For Employer-only or union-only group waiver plans (EGWPs), reflect the actual cost
sharing provided to groups enrolled. For other plans, reflect the full level of plan cost
sharing in the plan benefit package (PBP) for all enrollees including the DE#
beneficiaries. See the pricing consideration for dual-eligible beneficiaries for more
information about DE# beneficiaries.
Include claim experience for out-of area enrollees.
Include or exclude claim experience for hospice enrollees for the time period that an
enrollee is in hospice status consistent with the development of projected allowed costs.
See the pricing consideration for hospice enrollees.

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PRICING CONSIDERATIONS

•
•
•

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.
Exclude incurred claims for Medicaid benefits.

The net medical and non-benefit expenses and CMS and premium revenue in Section VI must
include all enrollees (that is, include ESRD and hospice and out-of-area). Section VI excludes
optional supplemental benefits. Section VI must be completed in total dollars (not PMPMs).
Data Aggregation

The requirements for reporting base period data for plan consolidations and enrollment
shifts depend on—
•

•

How enrollment changes are processed.
◦ In these Instructions, the term “formal crosswalk” refers to the crosswalk
process submitted in HPMS for plan consolidations (that is consolidated
renewals), whereby members are automatically moved from one bid ID to
another (that is, to one bid ID only). Without an HPMS crosswalk in place,
members are dis-enrolled from the terminating bid ID and must actively select to
enroll in a new bid ID of their choosing.
◦ MARx enrollment transactions are used to automatically move members from
one bid ID to more than one bid ID, for example, when the service area of one
or more segments is redefined. Note that in some cases, an approved crosswalk
is required, for example, when the service area of one or more non-segmented
plans is redefined. In this situation, without an approved crosswalk in place,
members in the affected counties must actively select to enroll in a bid ID of
their choosing.
◦ For more information about MA organization renewals and crosswalks see
section 140 in Chapter 4 of the Medicare Managed Care Manual at
http://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/mc86c04.pdf .
Whether or not enrollment changes that are processed via MARx enrollment
transactions apply to a significant percentage of members in the bid ID from which
the members are moving, as determined by the certifying actuary.

The requirements for reporting base period data for plan consolidations and enrollment
shifts are described below. Such requirements also apply to consolidations and
enrollment shifts between segments.
✔ Rule 1 – Plan Consolidations (that is, Consolidated Renewals)
Base period data for more than one bid ID must be aggregated and reported on
Worksheet 1 of the bid ID into which the members are crosswalked only in the
following circumstances:
•

When two or more plans are consolidated and the members are crosswalked into
an existing or new plan under a formal crosswalk.

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PRICING CONSIDERATIONS

•

When a significant proportion of members in a bid ID (as determined by the
certifying actuary) are crosswalked into existing or new plans through MARx
enrollment transactions.

Note the following:
•

•

Members may be crosswalked each contract year. For BPT reporting purposes,
the actuary must consider the crosswalks from the base period to the contract
period (that is, two years of crosswalks, from CY2014 to CY2015, and then
from CY2015 to CY2016).
This rule applies when members are crosswalked within the same contract and
when members are crosswalked between contracts in accord with the limited
exceptions described in CMS annual renewal and non-renewal guidance.

✔ Rule 2 – Enrollment Shifts
Base period data for more than one plan cannot be aggregated and reported on
Worksheet 1 in the following circumstances:
•
•
•

When an existing member chooses to enroll in a different plan.
When an insignificant proportion of members in a bid ID (as determined by
the certifying actuary) are crosswalked into existing or new plans through
MARx enrollment transactions.
When enrollment changes do not involve a crosswalk whether or not a bid
ID is terminated.

✔ Rule 3 – Partial Experience
Base period experience must be reported in total at the bid level for every
bid ID; do not include partial plan experience on Worksheet 1.
Example 1:

An MA organization offers non-segmented plans H1234-001 and H5678-002 in
CY2014 and non-segmented plan H5678-002 and new non-segmented plan
H5678-003 in CY2016. Plan H1234-001 is consolidated and the membership is
formally crosswalked into H5678-003 for CY2016 in accord with the limited
exceptions described in CMS annual renewal and non-renewal guidance. Base
period experience must be reported on Worksheet 1 of the CY2016 BPTs as
follows:
•
•

For H5678-002, report aggregate base period experience for H5678-002
(Rule 1 and Rule 3).
For H5678-003, report base period experience for H1234-001 (Rule 1 and
Rule 3).

Example 2:

An MA organization offers non-segmented plans 001, 002, and 003 in CY2014
and non-segmented plan 003 and new non-segmented plan 004 in CY2015.
Plan 001 is consolidated and the membership is formally crosswalked to
plan 004 for CY2016 as submitted in HPMS. Plan 002 is terminated for
CY2016 and the certifying actuary expects the membership in such plan to

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PRICING CONSIDERATIONS

enroll evenly between plan 003 and plan 004; however, there is neither formal
crosswalk nor an approved crosswalk exception in place. Base period
experience must be reported on Worksheet 1 of the CY2016 BPTs as follows:
•
•

For plan 003, report base period experience for plan 003 (Rule 2 and
Rule 3). Do not report base period experience for plan 002 (Rule 2).
For plan 004, report base period experience for plan 001 (Rule 1). Do not
report base period experience for plan 002 (Rule 2).

Example 3:

An MA organization offers non-segmented plans 001 and 002 in CY2014 and
plan 002 in CY2016. Plan 001 is consolidated and the membership is formally
crosswalked to plan 002 for CY2015. For CY2016, the service area for plan 002
is reduced to remove most of the counties formerly in plan 001 and an
insignificant proportion of the members that were formerly in plan 001 remain.
Base period experience must be reported on Worksheet 1 of the CY2016 BPTs
as follows:
•

For plan 002, report aggregate base period experience for plan 001 (Rule 1
and Rule 3) and plan 002. Do not exclude plan 001 data for enrollment
shifts in CY2016.

Example 4:

An MA organization offers non-segmented plans 001, 002, 003, and 004 in
CY2014 and plans 003 and 004 in CY2016. Plan 001 is consolidated and the
membership is formally crosswalked to plan 002 for CY2015. Plan 002 is
consolidated and the membership is formally crosswalked to plan 003 for
CY2016. Base period experience must be reported on Worksheet 1 of the
CY2016 BPT as follows:
•
•

For plan 003, report aggregate base period experience for plans 001, 002,
and 003 (Rule 1 and Rule 3).
For plan 004, report base period experience for plan 004.

Example 5:

An MA organization offers PFFS non-network plan H1234-001 and PFFS full
network plan H5678-001 in both CY2014 and CY2016. However for CY2016,
county A in H1234-001 is reclassified from non-network to full network and is
moved from the service area of H1234-001 to the service area of H5678-001. A
significant percentage of members in plan H1234-001 are in county A and are
moved to H5678-001 through MARx enrollment transactions under an approved
crosswalk exception.
Also for CY2016, county B in H5678-001 is reclassified from full network to
non-network and is moved from the service area of H5678-001 to the service
area of H1234-001. In this case, an insignificant percentage of members in
H5678-001 are in county B and are moved to H1234-001 through MARx

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PRICING CONSIDERATIONS

enrollment transactions under an approved crosswalk exception. Base period
experience must be reported on Worksheet 1 of the CY2016 BPTs as follows:
•
•

For H1234-001, report base period experience for H1234-001. Do not report
base period experience for H5678-001 (Rule 2).
For H5678-001, report aggregate base period experience for plans
H1234-001 and H5678-001 (Rule 1 and Rule 3).

Example 6:

An MA organization offers segmented plan 001 with segments 01, 02, 03, 04,
and 05 for CY2014 and segments 02, 03, 04 for CY2016. For CY2015,
segments 01 and 05 are terminated with crosswalks summarized below and the
service areas for segments 02, 03 and 04 are redefined as summarized below.
•
•
•

•

Segment 01 is terminated and the membership is crosswalked into segments
02 and 04 through MARx enrollment transactions.
For segment 02, counties are added to the service area, but no counties are
removed.
For segment 03 and 04, counties are added to the service area of each
segment. Counties are also removed from the service area of each of these
segments and members in the affected counties are moved to other segments
through MARx enrollment transactions (see table below).
Segment 05 is consolidated and the membership is formally crosswalked
into segment 04.
H1234-001
Segment

Total Members % Members
12/31/2014
Automatically Moved

Segment Crosswalked to

01

20,000

85% (17,000)

04

01

20,000

15% (3,000)

02

02

10,000

N/A

N/A

03

30,000

40% (12,000)

04

03

30,000

15% (4,500)

02

04

40,000

55% (20,000)

03

04

40,000

45% (18,000)

02

05

5,000

100% (5,000)

04

The certifying actuary determines that 40% is a significant percentage of
members in a bid ID to be crosswalked into another bid ID through MARx
enrollment transactions; therefore, Worksheet 1 of the CY2016 BPTs for
segments in H1234-001 must include the following base period experience:

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PRICING CONSIDERATIONS

•
•
•

For segment 02, aggregated data for segment 04 (Rule 1 and Rule 3) and
segment 02. Do not report base period experience for segments 01 and 03
(Rule 2).
For segment 03, report aggregated data for segment 04 (Rule 1 and Rule 3)
and segment 03.
For segment 04, report aggregated data for segments 01, 03, 05 (Rule 1 and
Rule 3), and segment 04.

Benefits and Service Categories

Benefits are defined in Chapter 4 of the Medicare Managed Care Manual (MMCM) as
Medicare-covered, mandatory supplemental, or optional supplemental benefits. Mandatory
supplemental benefits are priced in the BPT as benefit expenses (not non-benefit expenses), for
example, smoking cessation programs and gym memberships.
The user must generally enter input items related to medical expenses separately for each
service category displayed in the BPT. See Appendix F for a suggested mapping of BPT and
PBP service categories.
The certifying actuary must include in non-benefit expenses, the cost of rewards and incentives
that do not qualify as benefits and are marketing tools covered under CMS Marketing
Guidelines.
For more information on benefits, service categories, and segmented bids see:
•

•
•
•

Chapter 3 “Medicare Marketing Guidelines” and Chapter 4 Benefits and Beneficiary
Protections” of the Medicare Managed Care Manual (Publication #100-16) at
http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS019326.html?DLPage=2&DLSort=0&DLSortDir=ascending.
Medicare Marketing Guidelines at http://www.cms.gov/Medicare/HealthPlans/ManagedCareMarketing/FinalPartCMarketingGuidelines.html
Call Letter (included in the Advance Notice) at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html
PBP/SB Software List of Changes located in HPMS, under HPMS Home > Plan Bids >
Bid Submission > CY20XX > Documentation > PBP – SB List of Changes.
Disease Management

Disease management (DM) expenses are to be treated as medical expenses, non-benefit
expenses, or both, depending upon the nature of the expense. For DM services
furnished in a clinical setting by approved providers, costs are to be treated as medical
expenses. The cost of durable medical equipment (DME) associated with DM activities
is typically classified as a medical expense.
For care management services provided under a SNP model of care—for example,
services provided by an interdisciplinary care team as mandated by Medicare
Improvements for Patients and Providers Act (MIPPA) and addressed in a HPMS
memorandum dated September 15, 2008—costs are treated as medical expenses.
Should the team provide additional services, any added costs may be classified by the
certifying actuary as medical expenses or as non-benefit expenses.

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Absent additional CMS guidance, other DM and care coordination costs —such as
those incurred during recruitment, enrollment, and general program communications—
are to be classified as non-benefit, 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.
Medicare-Covered and Non-Covered

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”).

For the third type, values are allocated between Medicare-covered benefits and A/B
mandatory supplemental benefits in Worksheet 4 as specified by the user. This
allocation must be consistent with the benefit type classification in the PBP. For
example:
•
•
•

Out-of-network point-of-service inpatient stays are A/B mandatory
supplemental benefits.
For non-SNPs, physical exams that provide services not included in the required
Annual Wellness Visits are A/B mandatory supplemental benefits.
For SNPs, assessments of enrollees are considered Medicare-covered benefits as
explained in the CY2013 Call Letter.

To maintain consistency with the PBP, the cost to provide Medicaid benefits must be entered in
Worksheet 4 Section V since these benefits are not entered in the PBP as A/B mandatory
supplemental benefits.
Inpatient Hospital Additional Days

CMS developed a 1.2-percent factor based on FFS data that can be used as a “safe
harbor” for 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. Note
that if the cost sharing varies by day of hospital stay, the proportion of cost sharing for
inpatient days that are non-covered will differ from the proportion of inpatient days that
are non-covered. In such case, the actuary may use the “safe harbor” to calculate the
inpatient cost sharing Medicare-covered percentages entered on Worksheet 4, but not
enter 1.2-percent as such percentages.
Non-Covered Limited Benefits

For non-covered limited benefits with no cost sharing, the value of benefits over the
limit must be excluded from projected allowed costs. For example, if the PBP contains
a hearing aid benefit with a $500 annual cost limit, no cost sharing, and an average cost

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of a hearing aid is $2,500, then the allowed PMPM must be based on the $500
maximum benefit. Do not enter a $2,500 cost offset by a cost-sharing entry in
Worksheet 3 for the $2,000 paid by the beneficiary.
Skilled Nursing Facility (SNF)

If the PBP provides skilled nursing facility (SNF) benefits without a three-day prior
in-patient hospital stay, the certifying actuary may price the waiver of the prior
hospitalization requirement as a Medicare-covered benefit.
However, the certifying actuary must allocate the projected allowed cost of SNF
mandatory supplemental benefits (that is, additional days or stays in a SNF that is not
approved for Medicare stays) to non-covered.
Capitated Arrangements for Medical Services

The BPT must reflect base period data, projection factors and cost sharing for medical services
provided under a capitated arrangement, as explained below. Note that each projection factor
must be a blend of the corresponding change in non-capitated and capitated services allowed
costs from the base period to the contract year.
✔ Annual Utilization Per 1,000
Utilization rates entered on Worksheet 1 must be based on claims or encounter data for
the plan/segment whether or not a related party is involved. However, if encounter
data is not available for a certain service, supporting documentation must fully explain
the extenuating circumstances and remedy for the deficiency.
✔ Net PMPM, Allowed PMPM, Net Medical Expenses, and Non-Benefit Expenses
The requirements for the “Net PMPM”, “Net Medical Expenses”, “Non-Benefit
Expenses”, and “Allowed PMPM” entered on Worksheet 1 depend on whether or not a
related party is involved. If the Plan sponsor purchased capitated services from—
•
•

A non-related party, then the allowed cost is the capitation paid for medical services
plus any related cost sharing.
A related party, then the “Related Party Arrangements” pricing consideration
determines whether or not the net PMPM is the full capitation paid or an adjusted
amount.

Global Capitation and Risk-Sharing Arrangements

This subsection contains additional requirements for costs associated with global
capitation and risk-sharing arrangements as described below.
•

•

It is not appropriate to provide risk protection for PD through MA or vice-versa.
Therefore, the MA BPT must not include the portion (determined based on net
allowed costs of services included in the global capitation contract) of global
capitation payments attributable to Part D—the Part D BPT must include such
amount.
The BPT must reflect the benefit costs in the service categories included in the
global capitation contract. If the certifying actuary projects a payment adjustment at

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the end of the contract year, such adjustment must be allocated to service category
based on net medical costs under the global capitation arrangement prior to such
adjustment. Specifically, the adjustment for a particular service category is based
on the ratio of: (i) net medical costs in such service category, and (ii) total net
medical costs of the service categories included in the global capitation contract.
The cost sharing PMPM in Worksheet 3, Section III, column i must be based on
benefits outlined in the PBP. Therefore, in order for the BPT to reflect the appropriate
projected allowed costs and net medical expenses, the effective coinsurance percentage
in column i may not match the coinsurance percentage in the PBP. See the cost sharing
pricing consideration for more information about the calculation of the effective
coinsurance percentage.
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

Any member premium(s) and Part D cost sharing must be excluded from MA Worksheet 3.
Coinsurance

The cost sharing PMPM in Worksheet 3, Section III, column i must be based on benefits
outlined in the PBP. Therefore, in order for the BPT to reflect the appropriate projected
allowed costs and net medical expenses, the effective coinsurance percentage in column i may
not match the coinsurance percentage in the PBP. Examples include, but are not limited to,
adjustments to projected allowed costs and /or net medical expenses for related-party
arrangements under Method 1 Actual Costs, sequestration, global capitation, and risk sharing
arrangements.
Following is an example:
Example: The PBP contains in-network cost sharing of 20%. $3 PMPM of

projected allowed costs must be shifted from medical expense to non-benefit
expense and gain/loss margin in order to satisfy the related party requirements.
BPT values before related-party requirements are taken into account would be as
follows:
(e)
Measuremen
t Unit Code
Coin

(g)
PMPM
25

(i)
Effective Coin
Before OOP Max
.2000

(j)
Effective Coin
After OOP Max
.1900

(k)
In-Network
PMPM
4.75

BPT values that do not recognize the independence of the subcontracted related party are as
follows:

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PRICING CONSIDERATIONS
(e)
Measuremen
t Unit Code
Coin

(g)
PMPM
22

(i)
Effective Coin
Before OOP Max
.2273

(j)
Effective Coin
After OOP Max
.2159

(k)
In-Network
PMPM
4.75

Consistency with PBP

The cost-sharing information entered in the BPT must tie to data in the PBP. 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 MA Worksheet 3. The PBP line numbers in Section IV of MA
Worksheet 3 must be mapped to the BPT line numbers to identify all of the plan cost
sharing.
The cost-sharing descriptions in Worksheet 3 may be used by plan managers, marketing
staff, and plan actuaries to ensure that the benefits priced in the BPT are consistent with
those in the PBP, as part of the quality control process for bid submissions. These
descriptions will be deleted from the finalized BPT and therefore will not be uploaded
to HPMS for use by CMS or CMS reviewers.
Medicare FFS Cost Sharing

For plan cost sharing designed to match Medicare fee-for-service cost sharing (an
approach used by some employer-only or union-only group waiver Plan sponsors), the
actuary may use the FFS actuarial equivalent cost-sharing PMPM shown in MA
Worksheet 4 to estimate the PMPM amount for plan cost sharing. In this case, the user
may enter the entire value of cost sharing in Worksheet 3, column i for the effective
copay/coinsurance before MOOP.
However, the effective copay/coinsurance after MOOP in Worksheet 3, column j must
reflect the expected impact of the OOP max (which is a required PBP entry). Note that
if Worksheet 3 is completed for the total population and the total population includes
non-DE# members, then the effective copay/coinsurance values before and after MOOP
(Worksheet 3 columns i and j) may not be equal.
Further, the actuary may enter the effective copay/coinsurance before the MOOP
(Worksheet 3 column i) for the DE# plan cost sharing in Worksheet 4, Section IIB,
column f.
These approaches do not apply for other levels of cost sharing or for local preferred provider
organization (PPO) plans and regional PPO plans with an annual deductible.
Visitor/Travel Benefits

In-network cost sharing in Worksheet 3 includes mandatory supplemental benefits
offered under the Visitor/Travel Program (that is, Medicare-covered and non-covered
services obtained outside the plan’s service area).

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Credibility
Claims Credibility

This section pertains to the experience credibility percentages in Worksheet 2.
Based on an application of classical credibility theory to Medicare FFS experience,
CMS has established a credibility guideline for projected allowed costs of full
credibility for MA plans of 24,000 base period member months. The formula for partial
credibility is the square root of the result of base period member months divided by
24,000. This formula is a guideline; actuaries may use a different credibility
methodology. However, any method used must be consistently applied among all bids
in the contract.
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 credibility.
◦ 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.

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 for ESRD membership.

Credibility factors are applied to PMPM costs in the BPT. Therefore, actuaries who use
different credibility factors for utilization than for unit costs must develop blended
factors to use in the bid form.
Credibility for Medicare Secondary Payor (MSP)

This section pertains to the application of credibility in developing the MSP adjustment
on Worksheet 5. If the conditions in the manually-rated bids subsection of the MSP
adjustment pricing consideration are met, the MSP adjustment is zero. In other
situations, the manual rate for projected allowed costs and the projected experience rate
must consistently reflect the MSP assumption for the expected bid population and a
credibility factor is not applicable.

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Risk Score Credibility

This section pertains to the application of credibility in developing projected risk scores.
The use of the CMS claims credibility guideline above is not permitted for risk scores.
The certifying actuary must use actuarial judgment in developing a credibility guideline
for risk scores. CMS has not developed a separate credibility guideline for risk scores.
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.
The BPT reflects the difference in cost-sharing liability for certain dual-eligible beneficiaries in
the development of total medical costs.
Medicaid Revenue and Costs

In Worksheet 4 Section V, if the Plan sponsor has a separate contract with a state or
territory for Medicaid services, then enter projected Medicaid revenue and cost for
members of the MA plan.
•

•
•

The projected Medicaid cost—
◦ Includes the cost to provide Medicaid benefits that the Plan sponsor has
contracted to provide plan members under the state or territory Medicaid
program.
◦ Reflects the full cost, which includes benefit expenses and non-benefit
expenses.
◦ May include prescription drug benefits that the Commonwealth of Puerto
Rico requires to be offered in order to participate in the Platino Program
beyond what is submitted in the Part D bid.
The projected Medicaid revenue is the corresponding revenue received from the
state Medicaid program to provide the Medicaid benefits.
The values must be on a per-member-per-month (PMPM) basis.

Worksheet 1 collects the Medicaid data (in total dollars) of revenue and costs in the
base period (Section VI, lines 10a and 10b). These items are defined in the same
manner as for the projection period.
The BPT uses the data entered on Worksheet 4 Section V to calculate an adjusted
gain/loss margin in Worksheet 4, Section V (line 3) as:
•
•
•

Total gain or loss margin (Worksheet 4, Section IIC, line w, column h), plus
Medicaid Projected Revenue (Worksheet 4, Section V, line 1), less
Medicaid Projected Cost (Worksheet 4, Section V, line 2).

The adjusted gain/loss margin will be taken into account in satisfying the gain/loss
margin requirements. For more information on Medicaid benefits, see Chapter 4,
Sections 10.3, 30.4 and 120, of the Medicare Managed Care Manual at:

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http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/
mc86c04.pdf
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-dual eligible). The terms “total population” and “total
beneficiaries” refer to the combined non-DE# and DE# population and beneficiaries,
respectively, and include out-of-area members.
Per federal statute, QMBs and qualified Medicare beneficiaries with full Medicaid
benefits (QMB+) are not liable for Medicare cost sharing; therefore, these individuals
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.
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 2014 membership data posted in HPMS for the contract plan-ID
segment(s) listed in Worksheet 1 for the base period.
Consider the membership in the QMB and QMB+ categories to represent the entire
DE# population only if the percentage of total dual-eligible beneficiaries (who
comprise all dual-eligible categories and not just the QMB and QMB+ categories) 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.

To learn more about the enrollment data posted in HPMS, see the pricing consideration
for risk score definitions and information sources.
Bid Values

The BPT must reflect data and costs for the DE# and non-DE# populations separately,
as explained in this section and summarized in Appendix G. Note that the distinct data
and costs for both the DE# and non-DE# populations must reflect the impact of
out-of-area members.
✔ Worksheet 1 – Base Period Data
The user must enter distinct 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. The DE# risk score default calculation

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may be overwritten by the user, for example, to take into account payments as
well as member months.
All other data on Worksheet 1 are to be entered for the total population.
See the Medicaid Revenue and Costs subsection of this pricing consideration for
information about entering Medicaid data in Worksheet 1.
✔ 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
projected 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, 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, 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
non-DE# 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#
member months equals zero.
The 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,
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—

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•
•

◦ The non-DE# population; or
◦ The total population.
If DE# projected member months are 100 percent of total projected member
months, then the utilization rates entered in Worksheet 3, and hence the
PMPM value of cost sharing, must apply to the total population.
In all other cases, the utilization rates 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, taking into account the reduced or eliminated
cost-sharing liability of dual-eligible beneficiaries, including the state or
territory Medicaid cost sharing (column k). Specifically, the
Medicare-covered net PMPM reflects—
◦ What the plan pays the provider for Medicare-covered services; plus
◦ The actual cost sharing for Medicare-covered services; less
◦ The state or territory Medicaid cost sharing for Medicare-covered
services.
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 the gain/loss margin for all beneficiaries.

Considerations for developing data for DE# beneficiaries in subsection B
include the following:
•
•

•

All values must be calculated on a “per DE# member per month” basis.
In 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.
Also in column f, plan cost sharing must reflect the following:
◦ If projected DE# member months is greater than zero, and non-DE# cost
sharing (Worksheet 4 Section IIA col. f) is greater than zero, then DE#
cost sharing (Worksheet 4 Section IIB col. f) must be greater than zero.
◦ If projected DE# member months equal total member months (that is,
100% DE# plan), then DE# cost sharing (Worksheet 4 Section IIB col. f)
must equal the cost sharing entered on Worksheet 3.

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•

In column k, the “Medicaid Cost Sharing” reflects the cost sharing that the
beneficiary is liable to pay.
◦ The “Medicaid Cost Sharing” includes the following:
‣ Cost-sharing amounts required by state or territory Medicaid
programs based on the eligibility rules for subsidized cost sharing for
DE# beneficiaries in the plan’s service area.
‣ Plan cost sharing for non-covered, non-Medicaid benefits.
◦ The user must—
‣ Calculate the “Medicaid Cost Sharing” 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, and (ii) the projected allowed 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.

See the Medicaid Revenue and Costs subsection of this pricing consideration for
information about entering Medicaid data in Worksheet 4.
✔ Worksheet 5 – Benchmark
The user must enter—
•
•
•

Distinct projected member months and projected risk factor for the non-DE#
population, (including out-of-area members) in Section II (lines 1 and 4).
Projected member months and projected risk factors for out-of-area
members (DE# plus non-DE#) in Section VI (line 38, columns e and f).
County-specific projected member months and projected risk factors for the
total (DE# plus non-DE#) population, excluding out-of-area members, in
Section VI (columns e and f) beginning in line 39).

In Section II, the BPT displays the total member months and member/paymentweighted average risk factor for the total population based on the county-level
information (including out-of-area). Values for the DE# population are
calculated automatically from the values for the total and the non-DE#
populations. The DE# risk score default calculation may be overwritten by the
user, for example, to take into account payments as well as member months.
Considerations for developing projected member months include the following:
•
•

The user must not round projected non-DE# member months to 0 percent or
100 percent, even if non-DE# projected member months are less than
10 percent, or greater than 90 percent, of total projected member months.
CMS expects non-zero DE# projected member months when there are DE#
members in the base period. The DE# projected member months may be

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zero (that is, the user may enter non-DE# projected member months equal to
the member months for the total population) only if—
◦ All of the existing DE# members terminated and the probability of
enrolling DE# members is zero; and
◦ The certifying actuary adequately explains why the DE# projected
membership is zero; and
◦ 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, 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, 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 or union-only group waiver plan (EGWP) bid must reflect: (i) the
composite characteristics of the individuals expected to enroll in the EGWP for the contract
year; and (ii) the expected underwriting assumptions for all EGWP enrollees, in aggregate. In
addition, projected enrollment within the plan’s service area must be consistent with the
location of employer or union groups.
See the enrollment pricing consideration for information about entering enrollment in the BPT
by county and Appendix D, “MA Products Available to Groups”, for group-specific
information.
End-Stage Renal Disease (ESRD)

This subsection applies to the MA BPT. See Appendix J for ESRD-SNPs.
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 Worksheet 1 Section VI, Worksheet 4 Section III, and
Worksheet 5 Section VIII. Note that all Plan sponsors must enter the projected CY ESRD
member months in Worksheet 5.
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 ESRD and non-ESRD plan members (including out-of-area members).
The adjustment is split into two sections, basic benefits and supplemental benefits,
although the entire subsidy is added to A/B mandatory supplemental benefits.
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✔ 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
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 ESRD and non-ESRD members.
✔ 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, including a proportionate share of non-benefit expenses and gain/loss
margin, and allocate such costs across ESRD and non-ESRD plan members.
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. Therefore, if the projected
enrollment in a particular county is zero, the user is to enter for the county code zero (0)
projected member months and not another number such as one (1) or a fraction between zero
and one. There is no requirement to enter member months greater than zero in order to
generate a county-level payment rate.
If a member is assigned to more than one status at the same time, the priority for assigning
status for bid development is: (1) hospice, (2) ESRD, (3) out-of area, and (4) all other statuses.
The pricing considerations for hospice and out-of-area explain which BPT entries must include
the impact of out-of-area and hospice members.
Gain/Loss Margin

Gain/loss margin refers to the additional revenue requirement beyond medical expenses and
non-benefit expenses. It is allocated to Medicare-covered services and A/B mandatory
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supplemental benefits based on the distribution of total medical expenses across these
categories (excluding the impact of the ESRD subsidy).
MA statute requires the MA bid to represent the revenue requirement of the expected
population; therefore, the combined margin for the MA and Part D components of MA-PDs is
not a substitute for MA margin in these Instructions. See the MA-PD Margin Requirements
subsection and the Part D bid instructions for gain/loss margin requirements that are specific to
Part D bids.
When setting gain/loss margins separately for MA and Part D bids, the Plan sponsor must take
into account other CMS requirements such as Total Beneficiary Cost (TBC) or Medicare
Medical Loss Ratio (MLR). CMS expects that the gain/loss margin will be set with appropriate
consideration for the need to remit funds to CMS if the Plan sponsor’s actual claims experience
fails to meet the minimum Medicare MLR requirement. Further, if there is a conflict between
satisfying gain/loss margin requirements and other CMS requirements, flexibility will be given
to the gain/loss margin requirements only to the extent necessary to meet the other CMS
requirements. Such modifications to the gain/loss margin requirements must be fully explained
and supported.
The gain/loss margin requirements are designed to ensure that gain/loss margins are reasonable
and that an MA organization’s MA business is not used to subsidize its other insurance lines of
business. When some benefits offered by a Plan sponsor are funded by an outside source
(such as an employer group), the gain/loss margin must be consistent between the Medicare
benefits and benefits funded by other sources. Further, if the Plan sponsor has a separate
contract with a state or territory for Medicaid services, then the gain/loss margin used to satisfy
the gain/loss margin requirements in these Instructions depends upon the type of program
offered.
•

•

For the Platino program, the Plan sponsor has the option to use one of the following
amounts to satisfy all gain/loss margin requirements:
◦ The gain/loss margin for the bid in Worksheet 4 Section II, or
◦ The adjusted gain/loss margin for the bid calculated in Worksheet 4 Section V.
For other programs, the Plan sponsor must use the adjusted gain/loss margin for the bid
calculated in Worksheet 4 Section V to satisfy all gain/loss margin requirements.

Gain/loss requirements apply at two levels—the bid (PBP) level and an aggregate level; both
sets of requirements must be met in the initial bid submission and upon bid resubmission or
withdrawal.
Bid (PBP)-Level Requirements

There is flexibility in setting the gain/loss margin at the bid level provided that—
•
•
•
•

The bid offers benefit value in relation to the margin level;
Anti-competitive practices are not used;
The bid margin is non-negative or the special rules for bids with negative margin
outlined below are followed; and
All aggregate-level margin requirements described below are met.

✔ Benefit Value

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The bid must provide benefit value in relation to the margin level. For example, a
significantly high margin for a bid that is not part of a valid product pairing will be
rejected, absent sufficient support that the PBP provides all possible additional
benefits that the expected population can utilize.
✔ Anti-competitive Practices

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.
✔ Bids with Negative Margin

If the projected gain/loss margin in the BPT is negative, the Plan sponsor must
develop, submit, and follow a bid-specific business plan that is to achieve
profitability within 5 years. Exceptions to the 5-year period for unique situations
must be fully explained and supported. CMS expects that in subsequent years, MA
projected gain/loss margins will meet or exceed the year-by-year MA gain/loss
margins contained in the original business plan or in subsequent business plans, if
any.
Exceptions to the business plan requirement are cases in which MA products are
“paired” and the pricing reflects implicit “subsidies” across benefit or service area
offerings as described below.
•

•

The bid IDs in the product pairing must—
◦ Have identical service areas;
◦ All be local coordinated care plans or all be RPPOs or all be PFFS plans;
◦ All be of the same SNP type or all be non-SNPs;
◦ All be EGWPs or all be non-EGWPs; and
◦ Have a positive combined MA gain/loss margin for CY2016.
Examples include a low-benefit plan with a positive margin paired with a
rich-benefit plan with a negative margin, or an MA-only plan paired with the
MA portion of an MA-PD plan.

Aggregate-Level Requirements (Overall Margins)

The aggregate-level requirements are applied separately to each of following MA plan
categories—




General enrollment plans and institutional/chronic care special needs plans
(general enrollment plans & I/C SNPs),
Dual-eligible special needs plans (D-SNPs), and
Employer-only or union-only group waiver plans (EGWPs).

For EGWPs, the gain/loss margins entered in the BPTs must comply with the
aggregate-level margin requirements at the contract level. (That is, the projected
enrollment-weighted average margin for the contract must meet the requirements
outlined below.)

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For both general enrollment plans & I/C SNPs and D-SNPs, the gain/loss margins
entered in the BPTs must comply with the aggregate-level margin requirements at one
of the following three levels: contract level, organization level (that is, the legal entity
that contracts with CMS to provide MA benefits), or parent-organization level. The
Plan sponsor must enter the chosen level of aggregation in the BPT and it must be the
same for all general enrollment plans & I/C SNPs and D-SNPs. The level of
aggregation selected in the MA BPT must match the level selected in the PD BPT. See
the instructions for Worksheet 4, Section IIC line z4.
In these Instructions, “non-Medicare business” refers to all health insurance business
that is not Medicare Advantage or Part D. Non-Medicare business, includes, but is not
limited to, the following lines of business: Medicare-Medicaid, Medicare supplement,
Medicaid, and commercial.
The following requirements apply to general enrollment plans and I/C SNPs. If general
enrollment plans and I/C SNPs are not offered, these requirements also apply,
separately, to D-SNPs and EGWPs.
•
•

•

The aggregate MA margin must be consistent from year to year.
The aggregate MA margin must be consistent with the Plan sponsor’s corporate
requirement, as explained below. This requirement depends upon the volume of the
Plan sponsor’s non-Medicare business and whether or not the Plan sponsor offers
general enrollment plans and I/C SNPs, if D-SNPs are offered.
◦ If the volume of the Plan sponsor’s non-Medicare business for which it has
discretion in rate setting is greater than or equal to 10% of the Plan sponsor’s
total non-Medicare business, then—
‣ For general enrollment plans and I/C SNPs, the aggregate MA margin, as
measured by a percentage of revenue, must be within 1.5 percent of the
Plan sponsor’s margin for all non-Medicare business.
‣ For D-SNPs (if general enrollment plans and I/C SNPs are not offered),
the aggregate MA margin, as measured by a percentage of revenue, must
be no more than 1.5 percent higher and no less than 5 percent lower than
the Plan sponsor’s margin for all non-Medicare business.
‣ For EGWPs (if general enrollment plans and I/C SNPs are not offered),
the aggregate margin as measured by a percentage of revenue, must be
within 1.5 percent of the Plan sponsor’s margin for all non-Medicare
business.
◦ If: (i) the volume of the Plan sponsor’s non-Medicare business for which it
has discretion in rate setting is less than 10% of the Plan sponsor’s total
non-Medicare business, or (ii) the plan sponsor has no non-Medicare
business; then, the aggregate MA margin must be set by taking into account
the degree of risk and capital and surplus requirements of the business.
Although actual aggregate MA margins may vary from year to year, CMS expects
certifying actuaries to price bids such that actual aggregate returns over the long
term are consistent with the margin assumptions used for pricing.

If general enrollment plans and I/C SNPs are offered, the following requirements apply
to D-SNPs.

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•
•

The aggregate MA margin must be consistent from year to year.
The aggregate MA margin as a percentage of revenue is to be no more
than 1 percent higher and no less than 5 percent lower than the aggregate margin for
general enrollment plans and I/C SNPs.
◦ Exceptions for unique situations must be fully explained and supported.
◦ Although actual MA aggregate margins will vary from year to year, CMS
expects certifying actuaries to price bids such that actual aggregate returns
over the long term are consistent with the margin assumptions used for
pricing.

If general enrollment plans and I/C SNPs are offered, the following requirements apply
to EGWPs.
•
•

The aggregate margin must be consistent from year to year.
The aggregate margin as a percentage of revenue must be no more than 1 percent
higher and no less than 5 percent lower than the aggregate MA margin for general
enrollment plans and I/C SNPs.
◦ Although actual aggregate margins will vary from year to year, CMS expects
certifying actuaries to price bids such that actual aggregate returns over the
long term are consistent with the margin assumptions used for pricing.

For bids participating in the Minnesota Senior Health Options program, additional
aggregate-level margin requirements may be found at: http://www.cms.gov/MedicareMedicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-MedicaidCoordination-Office/FinancialAlignmentInitiative/Downloads/MNMOU.pdf
MA-PD Margin Requirements

Plan sponsors have the following two options for setting the margin for the MA and
Part D components of MA-PD bids:
•
•

Set the Part D margin for a bid as a percentage of revenue within 1.5 percent of the
margin for the MA component of the same MA-PD. This method must be applied
consistently for all MA-PD bids submitted by the MA organization.
Set Part D margins equal for all bids within an aggregate-level margin plan category
(for example, general enrollment & I/C-SNPs or D-SNPs) at the level of
aggregation chosen in the BPT. Within each plan category, the Part D margin as a
percentage of revenue must be within 1.5 percent of the aggregate MA margin for
all MA-PD bids at the level of aggregation chosen in the BPT.

Exclusions

Non-insurance revenues pertaining to investments and fee-based activities designed to
influence state or federal legislation such as the cost of lobbying activities cannot be
reflected in the bid. See the announcement about lobbying activities released via an
HPMS memorandum dated October 16, 2009.

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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,
the following data must exclude enrollees for the time period that they are in that status—
•
•
•

Base period member months and base period risk scores in Worksheet 1,
Sections II and III, and
Projected member months (entered by county), and
Projected risk scores.

However, base period data in Worksheet 1, Section VI must include hospice data.
On the other hand, 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. If the projected allowed costs for
mandatory supplemental benefits include claims costs for hospice enrollees, then the mandatory
supplemental medical expenses in Worksheet 1, Section III must include claims for hospice
enrollees for the time period that they are in that status.
The “Monthly Membership Report” (MMR) data include hospice status.
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 the MA rate
book 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 used to weight original Medicare FFS cost sharing on Worksheet 5.
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
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costs, may be found at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/FFS-Data.html under Medicare > Medicare
Advantage Rates & Statistics > Ratebooks & Supporting Data.
Medicare Secondary Payer (MSP) Adjustment

The bid reflects lower claim amounts for enrollees whose primary coverage is not Medicare
(that is, enrollees with Medicare Secondary Payer (MSP) status of aged/disabled MSP or ESRD
MSP) and MA organizations receive reduced payments for such enrollees. Accordingly, the
BPT uses the MSP adjustment, in conjunction with the projected risk score and the
standardized A/B benchmark, to produce a plan A/B benchmark consistent with the plan A/B
bid; therefore, the projected MSP adjustment represents the average payment reduction for the
expected bid population due to MSP enrollees (with the limited exception described in the
Manually Rated Bids subsection in this section). 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 bid specific.
The user may enter a 0% Medicare Secondary Payer (MSP) adjustment in the BPT only if—
•
•

The certifying actuary expects no MSP enrollees in the contract year, or
The requirements in the Manually Rated Bids subsection of this section are met.

MSP data provided by CMS serve as the basis for projecting the MSP adjustment. This
includes—
•

•

•
•

Data described in the following sections of Medicare Advantage and Prescription Drug
Plan Communications User Guide (PCUG) and Appendices, which is available at
http://www.cms.gov/Research-Statistics-Data-and-Systems/CMS-InformationTechnology/mapdhelpdesk/Plan_Communications_User_Guide.html:
◦ 5.1 Part C Payments: describes the calculation of MA payments.
◦ 5.1.5 Part C Payments When Medicare Secondary Payer (MSP) Status Applies:
describes the payment reduction based on MSP status.
◦ F.26 “Monthly MSP Information Data File”: provides specific information
regarding the primary coverage for beneficiaries enrolled in the plan, whose
payments were adjusted for MSP that month. It allows Plan sponsors to reconcile
beneficiary payments.
The following data in the Monthly Membership Detail Report (MMR):
◦ MSP adjustment factor (field 82).
◦ Related fields that provide the payment MSP reduction amount due to MSP for Part
A (field 83) and Part B (field 84).
Rolled-up MSP member counts for the month in the Monthly Membership Summary
Data File.
MSP factors shown in the April Rate Announcement for the applicable payment year.

The method to calculate the MSP adjustment is based on payment dollars as described below.
•

MSP adjustment = 1 – X/Y, where

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X = Bid portion of payment reflecting reduced payments for MSP beneficiaries,
which excludes MA rebates and basic MA premium, if any, as shown in the
example below, and
Y = Bid portion of payment that would be paid if no beneficiaries had a payer that
was primary to Medicare. This is determined by (i) grossing up the payments for
MSP beneficiaries to the amount that would be paid if they did not have a payer that
was primary to Medicare and (ii) adding these payments to the payments for
non-MSP beneficiaries. The resulting value of Y explicitly takes into account the
distinct risk characteristics of MSP beneficiaries as compared to non-MSP
beneficiaries.
Note that MSP adjustment must reflect changes from the source data payment year to the
contract year that impact the relative payment dollars for MSP and non-MSP beneficiaries.
Examples include, but are not limited to, a change in the MSP factor or a change in the distinct
risk characteristics of MSP beneficiaries as compared to non-MSP beneficiaries.
Example:
The source data to project the CY2016 MSP adjustment for H1234-001 is March 2015
MMR data for H1234-001. There is no change in the distinct risk characteristics of
MSP beneficiaries as compared to non-MSP beneficiaries from CY2015 to CY2016.
Step 1: Calculate the CY2015 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X2015).
$12,000,000 = “Total MA Payment” for the plan from a 2015 MMR file. This field
includes all rebates except rebates for reduction of Part B premium and Part D basic
premium and excludes part C basic premium, if any.
$2,253,975 = Sum of rebates for cost-sharing reduction, other mandatory
supplemental benefits, and Part D supplemental benefits for the plan. See the
PCUG for the applicable field names.
X2015 = $12,000,000 – $2,253,975 = $9,746,025.
Step 2: Separate the CY2015 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X2015) into payments for non-MSP enrollees and MSP enrollees
based on MSP status.
$9,692,896 = CY2015 bid portion of payment for non-MSP enrollees
$53,129 = CY2015 bid portion of payment for MSP enrollees
X2015 = $9,746,025 = $9,692,896 + $53,129
Step 3: Calculate the CY2016 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X)
$9,692,896 = CY2016 bid portion of payment for non-MSP enrollees
.173 = CY2015 “MSP factor” for working aged and working disabled
.173 = CY2016 “MSP factor” for working aged and working disabled

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$53,129 = (.173 / .173) * $53,129 = CY2016 bid portion of payment for MSP
enrollees
X = $9,746,025 = $9,692,896 + $53,129
Step 4: Calculate the projected CY2016 bid portion of payment that would be paid if no
beneficiaries had a payer that was primary to Medicare (Y).
Y = $9,692,896 + ($53,129 / .173) = $9,692,896 + $307, 104 = $10,000,000.
Step 5: Calculate the projected CY2016 MSP adjustment to enter into the BPT.
MSP adjustment = 1 – $9,746,025 / $10,000,000 = 0.0254 = 2.54%.
Manually Rated Bids

If the following conditions are met, the actuary does not need to estimate an explicit
MSP adjustment for 100% manually-rated bids and must enter zero (0) in the MSP
adjustment field in Worksheet 5:
•

The basis for both projected allowed costs and projected risk scores is FFS data
that are reduced for MSP.

•

The projected proportion of MSP members is the same as the proportion of MSP
enrollees in the FFS data.

Examples of FFS data located on the CMS website that are reduced for MSP include—
•

Rate calculation data zip files (for example, “risk_scores 2008-2012 NonPACE.csv” from the CY2016 MA Ratebook).

•

Limited Data Sets (or “CMS 5% sample”).

•

FFS Data zip files (for example “FFS data 20XX”).

Non-Benefit Expenses

Non-benefit expenses are all of the bid-specific administrative and other non-medical costs
incurred in the operation of the MA plan.
Worksheet 4 distributes the non-benefit expenses proportionately between Medicare-covered
benefits and A/B mandatory supplemental benefits (excluding the PMPM impact of the ESRD
subsidy). Non-benefit expenses are further 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:
•

Sales & Marketing
◦ This category includes all direct and indirect sales and marketing expenses for the
MA plan.
◦ Examples include, but are not limited to the costs of—
‣ Marketing materials;
‣ Commissions;
‣ Enrollment packages;
‣ Identification cards; and

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‣ Salaries of sales and marketing staff.
• Direct Administration
◦ This category includes all expenses for all functions that are directly related to the
administration of the MA program.
◦ Examples include, but are not limited to—
‣ Customer service.
‣ Billing and enrollment.
‣ Medical management.
‣ Claims administration.
‣ Part C National Medicare Education Campaign (NMEC) user fees. CMS
collects NMEC user fees based on a percentage of revenue; however, the
BPT entry is a PMPM equivalent value consistent with the calculation of
other BPT values. Plan sponsors may use the CMS estimate, which amounts
to $0.28 PMPM on a national basis for CY2016, or develop an alternative
estimate that is consistently applied to all plans in the contract—for example,
the Plan sponsor’s historical amount relative to the CMS annual national
estimate.
‣ Uncollected enrollee premium.
‣ Certain disease management functions. See the “Disease Management”
pricing consideration.
• Indirect Administration
◦ This category includes expenses for functions that may be considered “corporate
services,” such as the position of CEO, accounting operations, actuarial services,
legal services, and human resources.
• Net Cost of Private Reinsurance (that is, reinsurance premium less projected reinsurance
recoveries).
• Insurer Fees.
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 (sales and marketing) 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 is 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 costs of lobbying activities. See the gain/loss pricing
consideration for more information about costs excluded from both non-benefit expenses and
gain/loss margin.
Start-up costs that are not considered capital expenditures under GAAP are reported as follows:

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•
•

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 the MA and Part D components of MA-PD plans
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
Medicare and the other revenue source.
Optional Supplemental Benefits

See the CY2016 Call Letter at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf for the following
requirements regarding the total value of all optional supplemental benefits offered to
non-EGWP plans under each contract:
•
•

The enrollment-weighted contract-level projected gain/loss margin, as measured by a
percent of premium, cannot exceed 15%.
The sum of the enrollment-weighted contract-level projected gain/loss margin and
non-benefit expenses, as measured by a percent of premium, cannot exceed 30% of
revenue.

Out-Of-Area Enrollees

The BPT must reflect the impact of out-of-areas members in the base period experience and in
the projected values for the contract year, including the calculation of the ESRD subsidy.
Enrollees are classified as out-of-area based on the classification used for MA payment.
The user must enter distinct projected member months and projected risk scores for
out-of-areas members in Worksheet 4, Section VI, row 38.
The DE pricing consideration explains that out-of-area members are attributable to the DE# and
non-DE# populations in Worksheet 5, Section II.
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 MA rebate dollars.
Note that the Part B premium amount charged by CMS is not the same for all Medicare
beneficiaries.
•

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 is
added to the Part B premium. The addition of monthly adjustment amounts to the Part B

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•
•
•

premium obligation of higher-income beneficiaries was phased in over 3 years,
beginning in 2007.
Certain beneficiaries’ premium increase is limited by the increase in their Social Security
checks (that is, the “hold harmless” provision).
States, or another third party, may pay the Part B premium for certain beneficiaries.
Certain beneficiaries may pay a late-enrollment penalty.

Given the MA requirement that benefits must be uniform within an MA plan, 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 at the time when the BPT 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 to the Part B premium buydown.
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 (PPO) benchmarks (typically in August). Therefore, for
MA-PD plans, the premium shown on the MA BPT may not be the final plan premium for
CY2016.
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
MA-only plans do not have an opportunity to resubmit in August for rebate reallocations. The
initial June bid submission must reflect the desired plan premium.
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 reallocate 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.
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Appendix E contains information about rebate reallocation and rounding rules, including the
following:
•
•
•
•
•
•
•

A description of the rebate reallocation period.
A summary of the circumstances under which rebate allocation is required, permitted, or
not permitted.
Specific rules for returning to the target Part D basic premium.
Limitations on benefit changes that are permitted during the rebate reallocation period.
Limitations on changes in pricing assumptions that are permitted during the rebate
reallocation period, including a small change in gain/loss margin in order to satisfy Total
Beneficiary Cost (TBC) requirements.
Limitations on significant changes to the BPT when rounding premiums.
Examples of rebate allocation and rounding.

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 PPO benchmarks, MA organizations may reallocate MA rebate dollars in certain
MA-PD 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.” There is no option to target
and reallocate rebates to return to Total Plan Premium.
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 (LIPSA)
applies to the Part D basic premium and does not cover the cost of Part D supplemental
benefits.
CMS expects a consistent estimate of the LIPSA among bids in the same region.
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 point-of-service (POS); therefore, POS base period
experience data and projected allowed costs must be included in the appropriate service
categories.
Section 422.105 of the Code of Federal Regulations and Chapter 4 of the Medicare Managed
Care Manual allow HMOs to offer a POS option as a mandatory or optional supplemental
benefit. Therefore, the projected allowed cost of all POS benefits must be allocated to A/B

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mandatory supplemental benefits or entered in Worksheet 7 consistent with the PBP. The Plan
A/B Bid for Medicare-covered services may not include the cost of POS benefits.
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 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” are rounded by the BPT 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 BPT 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.

Regional Preferred Provider Organizations (RPPOs)

An RPPO plan must cover only enrollees eligible for both Part A and Part B of Medicare. See
Chapter 1 of the Medicare Managed Care Manual (MMCM), which can be found at:
http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c01.pdf.
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.
Related-Party Arrangements (Medical and Non-Benefit)

The related-party requirements apply to all Plan sponsors that enter into any type of
arrangement with or receive services from an entity that is associated with the Plan sponsor by
any form of common, privately held ownership, control, or investment. This includes any
arrangement where the Plan sponsor does business with a related party through one or more
unrelated parties. The requirements apply to all related-party arrangements supporting the bid
which are in effect during the base period and/or contract year.

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The objective of the requirements for related-party medical or service arrangements is to assure
that financial arrangements between the Plan sponsor and related parties (i) not significantly
different from the financial arrangements that would have been achieved in the absence of the
relationship, and (ii) do not provide the opportunity to over- or under- subsidize the bid.
CMS requires all Plan sponsors to disclose whether or not they are in a business arrangement
with a related party. Plan sponsors in a business arrangement with a related party must disclose
and support each and every related-party arrangement at the time of the initial bid submission
and prepare the bid and documentation in accord with the requirements in this section and
Appendix B of these Instructions for each identified related party.
The Plan sponsor may have one or more of the following options for entering in the BPT costs
associated with related-party arrangements, as explained in this pricing consideration and
summarized in Appendix H.
•
•
•

Enter the actual costs of the related party as those of the Plan sponsor when preparing
the BPT (Method 1, Actual Cost).
Show that the arrangement with the related party is comparable to other arrangements
and enter all fees paid by the Plan sponsor to the related party as non-benefit or benefit
expenses (Method 2, Market Comparison and Method 3, Comparable to FFS).
Use 100 percent FFS costs as a proxy for benefit expenses (Method 4, FFS Proxy).

Comparable rate demonstrations must be based on actual contracts which must be available for
review upon request by CMS. Further, when supporting comparable rates through the related
party, such demonstration must be accompanied by a signed attestation from the related party
stating that the actual contracts will be available for review upon request by CMS.
The next two sections describe additional requirements for reflecting in the BPT the cost of
administrative and medical services provided under a related party arrangement for each
available option listed above.
Administrative Related-Party Arrangements
✔ Method 1 Actual Costs for Administrative Services

A Plan sponsor using the actual costs for administrative services method must—
•

•

Prepare the BPT in a manner that does not recognize the independence of the
related party by entering the costs of the related party as those of the Plan
sponsor. Specifically, the Plan sponsor must—
◦ Enter the non-benefit expense and gain/loss margin of the related party as
the non-benefit expense and gain/loss margin, respectively, of the Plan
sponsor.
Provide supporting documentation for the development of the actual cost
method with the initial bid submission as required by these Instructions.

✔ Method 2 Market Comparison for Administrative Services

A Plan sponsor using the market comparison for administrative services method
must—

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•

Demonstrate through analysis and contract terms, how the fees associated with
the Plan sponsor’s related-party arrangement are comparable to the fees for
similar services in administrative arrangements between the following entities:
◦ The Plan sponsor and unrelated parties, or
◦ The related-party organization and unrelated parties.
In order to meet this requirement, the Plan sponsor must demonstrate at the time
of bid submission that—
◦

•

The contracts with unrelated parties are associated with sufficient costs of
services to be considered valid contracts.
◦ The fees associated with such arrangements are within 5 percent or
$2 PMPM— whichever is greater.
Prepare the BPT in a manner that recognizes the independence of the related
party by entering all costs in the related-party arrangement as non-benefit
expense.

Medical Related-Party Arrangements
✔ Method 1 Actual Costs for Medical Services

A Plan sponsor using the actual cost method for administrative services must—




Prepare the BPT in a manner that does not recognize the independence of the
related party by entering the costs of the related party as those of the Plan
sponsor. Specifically, the Plan sponsor must—
◦ Enter the benefit expense, non-benefit expense, and gain/loss margin of the
related-party as the benefit expense, non-benefit expense and gain/loss
margin, respectively, of the Plan sponsor.
Provide supporting documentation for the development of the actual cost
method with the initial bid submission as required by these Instructions.

See the cost sharing pricing consideration for information regarding the cost sharing
PMPM for coinsurance under related-party Method 1.
✔ Method 2 Market Comparison for Medical Services

A Plan sponsor using the market comparison for medical services method must—
•

Demonstrate through analysis and contract terms, how the fees associated with
the Plan sponsor’s related-party arrangement are comparable to the fees for
providing similar services to a Medicare population in medical arrangements
between the following entities:
◦ The Plan sponsor and unrelated parties in the bid’s service area, or
◦ The related-party organization and unrelated MA organizations.
In order to meet this requirement, the Plan sponsor must demonstrate at the time
of bid submission that—
◦

The contracts with unrelated parties are associated with sufficient costs of
services to be considered valid contracts.

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◦
•

The fees associated with such arrangements are within 5 percent or
$2 PMPM—whichever is greater.
Prepare the BPT in a manner that recognizes the independence of the related
party by entering all costs in the related-party arrangement as net medical
expenses.

✔ Method 3 Comparable to FFS

A Plan sponsor using the comparable to FFS method must—
•
•
•

Demonstrate at the time of bid submission that it is not possible to comply with
Method 1Actual Costs as required by these Instructions.
Demonstrate at the time of bid submission that the fees associated with the
related-party arrangement are comparable to 100% FFS costs, that is, within 5
percent or $2 PMPM—whichever is greater.
Prepare the BPT in a manner that recognizes the independence of the related
party by entering all costs in the related-party arrangement as net medical
expenses.

✔ Method 4 FFS Proxy

A Plan sponsor using the FFS proxy method must—
•

•

Demonstrate at the time of bid submission that it is not possible to comply with
each of the following related-party methods as required by these Instructions—
◦ Method 1 Actual Costs.
◦ Method 2 Actual Costs Market Comparison.
◦ Method 3 Comparable to FFS. In order to meet this requirement, the Plan
sponsor must demonstrate that the fees associated with the Plan sponsor’s
related-party arrangement are not comparable to 100% FFS costs for similar
services.
Prepare the BPT in a manner that recognizes the independence of the related
party by entering 100 percent FFS costs in the BPT as net medical expenses.

Risk Score Development for CY2015

The projected CY2015 risk score must—
•

•
•
•
•

Be based on the methodology for calculating CY2015 risk scores, as discussed in the
CY2015 Rate Announcement.
◦ The CY2015 risk scores will be calculated by blending the normalized risk scores
calculated under the CY2013 risk model and the CY2014 risk model. The
CY2013 model risk scores will be weighted at 67% and the CY2014 model risk
scores will be weighted at 33%.
◦ The blended CY2015 risk scores developed for bids are to be based on risk scores
calculated using each of the CY2013 and CY2014 models, separately projected to
CY2015 and adjusted with that model’s normalization factor, and then blended.
Reflect plan-specific coding trend.
Be appropriate for the expected population.
Include the appropriate MA coding adjustment factor.
Be adjusted for FFS normalization.

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•

For Fully Integrated Dual Eligible (FIDE) SNPs, include a frailty factor, if applicable.
Risk Score Definitions and Information Sources
✔ Member Weighted Versus Member/Payment Weighted

In Worksheet 5, Section VI, line 2, column f (“Total or Weighted Average. . .
Risk Factors”), the BPT calculates a member/payment-weighted average
projected risk score from the county-level projected risk factors (including
out-of-area). In Worksheet 5, Section II, line 4, the BPT captures risk scores for
the DE# versus the non-DE# projected enrollment. The BPT contains a default
calculation for the DE# risk score that is based on a member-weighted formula.
The BPT also contains a default calculation for the DE# risk score entered in
Worksheet 1, Section II, line 3 which is based on a member-weighted formula.
The certifying actuary may override the default DE# formulas in Worksheets 1
and 5, to enter member/payment weighted risk scores for DE#. The certifying
actuary may choose to explain the relationship of the member-weighted and
member/payment-weighted average projected risk scores for DE# in supporting
documentation.
✔ CMS Hierarchical Condition Categories (CMS-HCC) Risk Model

CY2015 risk scores will be calculated using the same approach used for
CY2014, by blending the normalized risk scores calculated under the CY2013
model (weighted at 67%) and the normalized risk scores calculated under the
CY2014 model (weighted at 33%).
Additional information on the CMS-HCC model, including the CY2015
normalization factors, is contained in the CY2015 Rate Announcement.
Information on the CY2013 and CY2014 models can be found in the CY2013
and CY2014 Rate Announcements, respectively.
✔ Normalization Factors

The risk scores calculated for each plan enrollee will be divided by the
appropriate FFS normalization factor. This adjustment accounts for the
underlying trend in risk scores and the effect of that trend on average risk scores
between the model denominator year and the payment year (CY2015), and is
designed to bring the average risk score back to 1.0. Since CMS will be
blending the risk scores from the CY2013 and the CY2014 risk models, the
projected risk scores in the CY2015 bids must incorporate the following two
CY2015 normalization factors:
- 0.992 for the CY2013 risk model.
- 0.978 for the CY2014 risk model.
✔ MA Coding Adjustment Factor

In addition to normalization, the projected risk scores in the CY2015 bids must
reflect the MA coding adjustment factor. This adjustment accounts for the
difference in diagnostic coding pattern differences between MA and FFS. The
CY2015 MA coding adjustment is 5.16 percent. Accordingly, the projected

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CY2015 normalized risk scores must each be multiplied by 0.9484 (which is
1-0.0516).
✔ Risk Adjustment Information Sources

The following materials can be found under the “Announcements &
Documents” link on the “Medicare Advantage Rates and Statistics” page of the
CMS website at http://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/index.html:
•
•
•

“Announcement of Calendar Year (CY) 2015 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies and
Final Call Letter” (2015 Announcement);
“Announcement of Calendar Year (CY) 2014 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies”
(2014 Announcement); and
“Advance Notice of Methodological Changes for Calendar Year (CY) 2015
for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment
Policies and 2015 Draft Call Letter” (2015 Advance Notice).

Also see the links under “Risk Adjustment” and “Ratebooks & Supporting
Data.”
Additional information on the risk adjustment process can be found at
http://www.csscoperations.com/.
Risk Score Calculation Approaches
✔ Preferred Methodology

The preferred method for projecting the CY2015 risk scores is to start with the
CMS-HCC risk scores that are provided by CMS in—
•
•

The plan-level data for the July 2013 enrollee cohort with retroactive
enrollment and status adjustments; or
The beneficiary-level file containing twelve months of 2013 membership
with retroactive enrollment adjustments and status adjustments.

The plan-level data will be available after the publication of the 2015 Rate
Announcement under the “Risk Adjustment” link on the HPMS Home page.
The risk score data posted in HPMS are calculated using the risk model used for
2015 payment and are accompanied by technical notes to assist actuaries with
understanding the material presented. The beneficiary-level data provide the
2013 risk scores calculated using both the risk model used for 2013 payment and
the models to be used for 2015 payment. This data is sent electronically to plan
sponsors around the same time.
There are several advantages to using these 2013 CMS-HCC risk scores in the
projection of the CY2015 blended risk score:
•
•

They are consistent with the base-period medical expenses as they include
data for out-of-area members.
They require no adjustment for seasonality.

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•
•
•

They reflect the most complete MA diagnosis data for 2012 dates of service
submitted through January 31, 2014, which is the final reporting deadline for
this period.
They require no adjustment for risk model changes.
Both the beneficiary-level file and the plan-level data will provide the 2013
scores using both the 2013 and the 2014 models.

Please note that, since the HPMS plan-level risk scores are based on a mid-year
cohort using full calendar-year data with nearly complete run-out, they do not
require explicit adjustment for (i) transition from lagged to non-lagged diagnosis
data, (ii) incomplete run-out of diagnosis data, and (iii) seasonality. However,
the starting risk score is to be projected from 2013 to 2015 with explicit
adjustment for the following factors:
•
•
•

•

Plan-specific coding trend.
Changes in plan population.
Missing diagnosis adjustment. The risk scores provided using the CY2014
model may be missing diagnosis data depending on whether the Plan
sponsor filters for model diagnoses when submitting RAPS data.
◦ If the MA organization does not filter diagnoses for model diagnoses
when submitting RAPS data, then the risk scores calculated using the
CY2014 CMS-HCC model and therefore the risk scores used for 2015
payment may be complete (diagnoses from FFS are complete and CMS
uses all MA diagnoses submitted by the MA organization).
◦ If the MA organization does filter diagnoses when submitting RAPS
data, then the risk scores are not complete. CMS will provide “missing
diagnosis” adjustment factors in the technical notes for the risk scores.
These “missing diagnosis” adjustment factors were derived from FFS
data, and are offered to MA organizations to assist them in determining
how to adjust the risk scores under the CY2014 model. The actual
adjustment will depend on where the MA organization’s 2013 enrollees
were enrolled in 2012 (that is, one of the MA organization’s plans, FFS,
or a plan with another MA organization).
Other appropriate factors.

Finally, the projected risk scores must be normalized by dividing by the
appropriate CY2015 FFS normalization factors and by applying the CY2015
MA coding adjustment factor.
✔ Alternate Approaches

An alternate method for the development of risk scores may be appropriate if the
plan was first offered in 2014, if there was limited enrollment in 2013, or if there
were significant changes in plan or enrollment characteristics between 2013 and
2014.
If a Plan sponsor chooses to develop its risk score by using a methodology
different from that preferred by CMS, then, depending on the starting point, the
following adjustments must be considered:

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•

•

•

•

•

•
•

•

Conversion to a raw risk score.
◦ If the starting risk score is normalized, as it is when beginning with
MMR data, then the certifying actuary may consider converting the
starting risk score to a raw (un-normalized, not adjusted for MA
coding) risk score before making other adjustments.
◦ Note that conversion from 2014 MMR data must adjust for the MA
coding adjustment factor and the normalization factors for both 2013
and 2014. Before removing the effect of the MA coding adjustment
factor and the normalization factors, the certifying actuary may
consider disaggregating the two underlying risk scores. This may
entail calculating one or both of the risk scores.
Impact of lagged versus non-lagged diagnosis data.
◦ If the starting risk score is based on lagged diagnosis data, as it is
when the initial risk scores are used, then an adjustment is required to
transition the scores from lagged to non-lagged. An example is a
starting point of March 2014 MMR data, which contain risk scores
based on the July 2012 to June 2013 diagnosis data.
Run-out of diagnosis data.
◦ If the starting risk score is based on incomplete diagnosis data, as it
may be when the starting point is diagnosis data and will be when the
starting point is MMR data, then an adjustment factor is required to
transition the scores from incomplete to complete diagnosis data.
Starting risk scores from MMR data do not reflect the final
reconciliation.
Seasonality.
◦ If the starting risk score is based on membership that is other than the
July cohort or a full calendar-year cohort, then an adjustment for
enrollment seasonality must be made.
Risk model change.
◦ If the starting risk scores are calculated using a risk model (or
models) other than those to be used for CY2015 payments, then an
adjustment for the risk model change must be made.
◦ The beneficiary-level file provided by CMS for CY2015 bid
development includes risk scores based on: (i) the CY2013 risk
model, and (ii) the two models that will be used to calculate blended
risk scores for payment year CY2015, that is, the CY2013 model and
the CY2014 model.
Missing diagnosis adjustment.
Plan-specific coding trend. Plan-specific coding trends may differ when
risk scores are calculated using different models. Therefore, when
starting with base year risk scores that are already blended, CMS
recommends that plan sponsors assess whether blended scores are to be
disaggregated and trended separately, based on expected bid-specific
trend experiences under each model.
Population changes.

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◦
◦

If the starting risk score is based on a population with different risk
characteristics than the expected population, then an adjustment for
population changes must be made.
Other appropriate factors.

Once projected to CY2015, the scores must be: (i) normalized by dividing by the
appropriate CY2015 FFS normalization factors, and (ii) adjusted by the MA
coding adjustment factor. Note that, if a raw (not normalized) risk score
associated with a different model calibration year is being normalized, the
contract year 2015 FFS normalization factors are not appropriate and must be
adjusted.
Supporting documentation that clearly demonstrates consistency with the
preferred approach is required.
See the credibility pricing consideration for more information about the projection of
risk scores.
Considerations for Trending Risk Scores

See Appendix K for considerations for trending Part C and Part D risk scores.
Sequestration

To the extent that sequestration is assumed to occur during the projection period, net medical
expenses must reflect the expected impact of sequestration on provider payments. Cost sharing
is not reduced under sequestration; therefore, for purposes of completing the BPT, net medical
expenses are be reduced, cost sharing is unaffected, and total allowed costs are reduced to equal
the sum of net medical expenses and cost sharing. Similar modifications must be made to base
period data to the extent that sequestration affected actual provider payments.
Some calculations in the BPT may be affected by the modifications listed above and are to be
handled as follows:
•

•

In the case of coinsurance, the effective cost sharing entered in Worksheet 3 may not
match the cost-sharing percentage in the PBP. In this case, the Plan sponsor must
adequately justify such difference. See the cost sharing pricing consideration for more
information about the calculation of the effective coinsurance percentage.
In the case of the actuarial equivalent cost sharing test (failing “red circle” validations)
on Worksheet 4, the Plan sponsor must adequately demonstrate the requirement that the
plan cost sharing for Medicare-covered benefits entered in the PBP is not greater than
FFS cost sharing.

CMS recognizes that under sequestration the gain/loss margin entered in the BPT is not the
gain/loss margin that the Plan sponsor will actually achieve; however, margin requirements
must be met with the gain/loss margin entered in the BPT.

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Service Area Changes
Segmented Service Areas

See the uniformity of benefit requirements in Chapter 4 “Benefit and Beneficiary
Protections” of the Medicare Managed Care Manual for information on non-RPPO bids
with segmented service areas at http://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Internet-Only-Manuals-IOMsItems/CMS019326.html?DLPage=2&DLSort=0&DLSortDir=ascending.
Pending 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.
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.

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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), the Medical Savings Account (MSA) BPT, and the ESRD-SNP 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 I provides additional guidance in completing the MSA BPT for MSA plans, and
highlights the differences between the MSA BPT and the MA BPT.

ESRD-SNP
Appendix J provides additional guidance in completing the ESRD-SNP BPT for ESRD-SNP
plans, and highlights the differences between the ESRD-SNP 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
zero (0) in the cell.

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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 revenue and expenses.

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 2014 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 Preferred Provider Organization or 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” or an
“employer/union-only group waiver plan (EGWP).

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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 MA 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, ESRD-SNP, Cost, PACE, and Medicare-Medicaid plans. There is a
separate MSA BPT and a separate ESRD-SNP BPT.
Note that an MA organization may offer private-fee-for-service (PFFS) plans in a service area
without Part D coverage. However, for other plan types shown below, an MA organization
must offer at least one benefit plan (of any plan type) that includes Part D coverage for each
service area.
Type of Plan
Local Coordinated Care 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 Coordinated Care Plan:
Regional Preferred Provider Organization (RPPO)
Private Fee-for-Service Plans:
Private Fee-for-Service (PFFS)
Religious Fraternal Benefit PFFS
Employer/Union Direct Contract Private Fee-for-Service Plan:
Employer/Union Direct Contract PFFS
Employer/Union Direct Contract LPPO

CY2016 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

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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

Description
Northern New England (New
Hampshire and Maine)
Central New England
(Connecticut, Massachusetts,
Rhode Island, and Vermont)
New York
New Jersey
Mid-Atlantic (Delaware, District
of Columbia, and Maryland)
Pennsylvania and West Virginia
North Carolina and Virginia
Georgia and South Carolina
Florida
Alabama and Tennessee
Michigan
Ohio
Indiana and Kentucky
Illinois and Wisconsin

Region
15
16
17
18

19

20
21
22
23
24
25
26

Description
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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Line 13 – Region Name

No user input is required. This field displays the region name, based on the region number
entered in line 10.
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.
Line 15 – EGWP

No user input is required. This field displays a yes/no indicator based on the plan ID entered in
line 2.

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 2014 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 2015, then the “paid through” date is
2/28/2015.
Line 2 – Member Months

This line is calculated as the sum of the member months entered in line 5. The total member
months in line 2 represent the base period experience excluding ESRD enrollees for the time
period that enrollees are in ESRD status based on CMS eligibility records and excluding
hospice enrollees for the time period that the enrollees are in hospice status.
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.
Line 3 – Risk Score

Enter the final risk score for the non-ESRD and non-hospice members of the population
represented in the base period data using the CMS-HCC risk model for payment in CY2013.
This factor must include the appropriate MA coding pattern difference adjustment factor and
FFS normalization factor for payment in CY2013.
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. The DE# risk score default calculation may be
overwritten by the user. See the “Pricing Considerations” section of these Instructions for more
guidance.
If DE# members equals zero, then the non-DE# risk score must equal the total risk score.

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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
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 (PTD)
Capitation Payments
PTD Claims Requiring Completion
Estimate of Unpaid 2014 Claims as of 2/28/2015
Total Incurred Claims for 2014
The Completion Factor would be calculated as:
Completion Factor = (400 + 30) ÷ 400 = 1.075

1/1/2014 – 12/31/2014
2/28/2015
$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
crosswalks. In the second column, input each plan’s member months. The sum of the member
months entered in line 5 is displayed as the total member months 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

Contract-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 crosswalked 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.
Data entered must be in the format of either: H####-### or H####-###-## (with the first
character being H, E or R). “All Other” is an acceptable entry in the eighth (that is, 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.

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SECTION III – BASE PERIOD DATA (AT PLAN’S RISK FACTOR) FOR 1/1/2014 –
12/31/2014
Section III summarizes the base period data by benefit service category.
In lines a through r:
✔ Column b, lines a through r – Service Category

The benefit service categories are displayed in column b.
✔ Column c, lines a through q – Utilizers

Enter the number of unique plan enrollees who used each of the service categories for
the base period.
This field must reflect the number of members that incurred a service in the specified
category in the base period. The basis for the determination that a service was used by a
beneficiary must be consistent with the utilization types displayed in column f and the
annualized utilization per thousand entered in column g.
✔ Column d, lines a through q – Net PMPM

Enter the net medical PMPM for each of the benefit service categories for the base
period. Note that line r, COB, is set equal to the allowed PMPM in column i by
formula.
✔ 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.
Note that line r, COB, is set equal to 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.

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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
total adjustment factors from the base period to the contract period, not annual trend rates. For
example, assume that the base period is calendar year 2014 and that the contract year is 2016.
If the utilization trend is 5 percent from 2014 to 2015 and 6 percent for projecting 2015 to
2016, 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. An example of the use of this factor is to reflect the impact on utilization of
changes in medical management. 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. 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 is to reflect the impact on utilization of a change in the service area
from the base period to the contract year.
Entering 1.000 would indicate 0 percent adjustment. Do not leave blank. Do not enter
zero (0).
✔ Column n – Unit Cost Adjustment – Provider Payment Change

Enter the unit cost adjustments for expected changes in provider payments from the
base period to the contract period by service category. Examples of this type of change
include changes in provider reimbursement due to inflation, sequestration, an indexing
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provision in provider contracts, or changes in the capitation amount aside from those
attributable to changes in utilization or benefit changes. 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 factors for unit cost adjustments by service category. An example of
this type of change is a change in unit cost due to intensity of service trend or the impact
on unit costs of the covered population’s change in risk from the base period to the
contract period. 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 – Projected Additive Adjustments

Use these columns to reflect adjustments that are additive; adjustments in columns j
through o are multiplicative factors.
•
•

For a benefit that is no longer being offered, but is included in the base period data,
enter the projected value of such benefit as a negative number in column p and/or q.
The adjustment for a new benefit in the contract year depends upon whether or not
there is base period experience for other benefits in the same service category.
◦ If there is no base period experience for other benefits in the same
service category, then enter the projected value of the new benefit
as—
‣ A positive number in Worksheet 1, column p and/or q, or
‣ A manual rate in Worksheet 2.
◦ If the base period experience for other benefits in the same service
category is 100% credible, then—
‣ Enter the projected value of the new benefit as a positive number in
Worksheet 1, column p and/or q.
‣ Do not change the credibility percentage to 0%; do not enter a manual rate.
◦ If the base period experience for other benefits in the same service
category is less than 100% credible, then—
‣ Enter the projected value of the new benefit as a positive number in
Worksheet 1, column p and/or q.
‣ Enter the appropriate experience credibility percentage for other benefits in
the same service category in Worksheet 2; do not change the credibility
percentage to 0%.
‣ Enter the projected value of all benefits in the service category, including the
new benefit, as a manual rate in 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.

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SECTION VI – BASE PERIOD SUMMARY FOR 1/1/2014 – 12/31/2014 (EXCLUDES
OPTIONAL SUPPLEMENTAL)
Section VI contains a summary of the actual bid-level base period revenue and expenses. This
section must be completed consistently with the “Plans in Base” bid ID information (reported
in Section II line 5) and consistently with the information reported in Section III. See the
“Pricing Considerations” section of these Instructions for more information on reporting base
period data.
Note that Section VI must be completed in total dollars, and it must include all beneficiaries
(that is, ESRD, hospice, and all other, which includes out-of-area members). To reiterate: the
revenue (line 3), net medical expenses (line 4), and non-benefit expenses (line 7e) must include
ESRD and hospice beneficiaries in addition to all other beneficiaries (which include out-of-area
members).
Section VI must 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 earned in the base period in total dollars. Enter
bid-based MA payments and accruals from CMS.
•
•
•
•

Include rebates for the reduction of A/B cost sharing and other A/B mandatory
supplemental benefits.
Include an estimate of the final risk-adjustment reconciliation payment for CY2014,
which will be received in mid-2015, such as the final risk-adjustment reconciliation
payment for the prior year, if appropriate.
Do not include rebates applied to Parts B and D premium buydowns.
Report the CMS revenues gross of user fee reductions and net of sequestration
reductions.

In the first column, enter the amount applicable for ESRD enrollees. In the second column,
enter the amount applicable for hospice enrollees. In the third column, enter the amount
applicable to all other enrollees (including out-of-area members). The sum total is displayed in
the fourth column. Values must be greater than or equal to zero.
Line 2 – Premium Revenue

Enter the revenue from earned MA premiums for the base period in total dollars. Include
premiums associated with Medicare-covered and all A/B mandatory supplemental benefits,
including actual employer and employee premiums for EGWPs. Do not include premiums for
optional supplemental benefits. Do not include Part D premiums.
In the first column, enter the amount applicable for ESRD enrollees. In the second column,
enter the amount applicable for hospice enrollees. In the third column, enter the amount
applicable to all other enrollees (including out-of-area members). The sum total is displayed in
the fourth column. Values must be greater than or equal to zero.

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Line 3 – Total Revenue

This line is calculated as the sum of lines 1 and 2. If base period data is entered in Section III,
then this line total must be completed (that is, must be greater than zero).
Line 4 – Net Medical Expenses

Enter the net medical expenses for the base period in total dollars. Include net medical
expenses associated with Medicare-covered and all A/B mandatory supplemental benefits, and
COB/Subrogation offsets to medical costs. Do not include expenses for optional supplemental
benefits, and do not include expenses for Part D benefits.
In the first column, enter the amount applicable for ESRD enrollees. In the second column,
enter the amount applicable for hospice enrollees. In the third column, enter the amount
applicable to all other enrollees (including out-of-area members).
The sum total is displayed in the fourth column. Values must be greater than or equal to zero.
If base period data is entered in Section III, then this line total must be completed (that is, must
be greater than zero).
Line 5 – Member Months

Enter the base period member months.
In the first column, enter the amount applicable for ESRD enrollees. In the second column,
enter the amount applicable for hospice enrollees. The third column displays the amount
applicable to all other enrollees (including out-of-area), which is equal to the member months
entered in Section II. The sum total is displayed in the fourth column.
Line 6 – PMPMs

Lines 6a through 6d compute base period “per member per month” values for revenue, net
medical expenses, non-benefit expenses, and gain/loss margin.
Line 7 – Non-Benefit Expenses

Enter the MA non-benefit expenses for the base period in total dollars by category. A total is
computed. Values in lines 7a, 7b, 7c, and 7e must be greater than or equal to zero. If base
period data is entered in Section III, then this line total must be completed (that is, must be
greater than zero).
Uncollected premiums must be included in line 7b (“Direct Administration”).
Line 8 – Gain/Loss Margin

Calculated as MA revenue (line 3) less net medical expenses (line 4) less MA non-benefit
expenses (line 7).
Line 9 – Percentage of Revenue

Lines 9a, 9b, and 9c compute the percentage of MA revenue for net medical expenses,
non-benefit expenses, and gain/loss margin for the base period.

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Lines 10a, 10b and 10c – Medicaid Revenue, Medicaid Cost, and Adjusted GLM

See the “Pricing Considerations” section of these Instructions.
The amounts in lines 10a, 10b and 10c are in total dollars (not PMPMs).

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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# plus DE#), 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 cell labels.
•
•
•
•
•
•
•
•

A
– Admits
D
– Days
BP – Benefit Period
V
– Visits
P
– Procedures
T
– Trips
S
– Scripts
O
– Other

✔ Columns f through h – Projected Experience Rate

Columns f through h are calculated automatically using the information provided in
Sections III and IV on Worksheet 1. No user inputs are needed. Column f calculates
the projected utilization, column g is the expected average cost, and column h is
allowed PMPM for the contract period, projected based on base period experience data.
✔ Columns i through k – Manual Rate

For a plan with less than fully credible experience or no experience, 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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✔ 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 credibility entered by the plan does not equal the CMS credibility,
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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•

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-of-network 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 Plan Benefit Package (PBP) is completed and must be—
•
•

“No” if the corresponding in-network, out-of-network, or combined plan-level maximum
enrollee OOP cost is blank in the PBP or if the PBP field is not applicable.
“Yes” if the corresponding in-network, out-of-network, or combined plan-level
maximum enrollee OOP cost is entered in the PBP, including a zero maximum enrollee
OOP cost. The PBP amount must be entered in the corresponding amount field on the
BPT.

The responses to the plan-level OOP maximum drop-down questions are summarized below by
type of plan:
•

•

•

•

For HMO plans and HMO with optional supplemental POS plans enter—
◦ “Yes” for the plan-level in-network OOP maximum.
◦ “No” for the plan-level out-of-network and combined OOP
maximum.
For HMO with mandatory supplemental POS plans enter—
◦ “Yes” for the plan-level in-network OOP maximum in Section D.
◦ “Yes” or “No” for the plan-level out-of-network OOP maximum in
Section D of the PBP, consistent with the PBP. For example, if
there are POS OOP maximums in Section C of the PBP for a sub-set
of service categories, but no plan-level out-of-network (POS) OOP
maximum in Section D, then enter “No” for this question.
◦ “Yes” or “No” for the plan-level combined OOP maximum,
consistent with the PBP.
For local PPO and regional PPO plans enter—
◦ “Yes” for the plan-level in-network OOP maximum.
◦ “Yes” or “No” for the plan-level out-of-network OOP maximum,
consistent with the PBP.
◦ “Yes” for the plan-level combined OOP maximum.
For full network PFFS and partial network PFFS plans enter—

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◦

•

“No” for the plan-level in-network and out-of-network OOP
maximums.
◦ “Yes” for the plan-level combined OOP maximum.
For non-network PFFS plans enter—
◦ “No” for the plan-level in-network and out-of-network plan-level
OOP maximums.
◦ “Yes” for the plan-level combined OOP maximum. Note that this
question corresponds to the non-network maximum enrollee
out-of-pocket cost amount entered on the PBP.

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 or equal to zero.
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. This dollar
amount must match the dollar amount entered in the in-network maximum enrollee OOP cost
field in Section D of the PBP.
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.
This dollar amount must match the dollar amount entered in the out-of-network maximum
enrollee out-of-pocket cost field in Section D of the PBP.
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 one of the following
amounts:
•

•

For non-network PFFS plans, the maximum total dollar amount that a member could pay
in the contract year for cost sharing. This dollar amount must match the dollar amount
entered in the non-network maximum enrollee out-of-pocket cost field in Section D of
the PBP.
For other plans, the maximum total dollar amount that a member could pay in the
contract year for cost sharing both in- and out-of-network. This dollar amount must
match the dollar amount entered in the combined (in-network and out-of-network)
maximum enrollee out-of-pocket cost field in Section D of the PBP. 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.

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SECTION III – DEVELOPMENT OF CONTRACT YEAR COST SHARING PMPM (PLAN’S
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 service-specific cost sharing maximums.
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 psychiatric. The projected impact of the
plan-level in-network cost sharing maximum is $0. 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
Option B:
Column d
Line a1 – Acute
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

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 with no service-specific cost sharing maximums. The
projected impact of the plan-level in-network cost sharing maximum is $0. Assume that
in-network office visit utilization is distributed as follows:
Type of Service
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.

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Line – Description
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 – Description
Line i1 – PCP
Line i2 – Specialist
excl MH
Line i3 – MH
Total

Col g
5,000
2,900
100
8,000

Col h (not in finalized BPT)
$10 per visit

Col j
$10.00

Col k
$4.17

$20 per visit
$40/visit for indiv MH sessions,
$20/visit for group MH

$20.00

$4.83

$30.00
$13.88

$.25
$9.25

Option C: Enter all services on one line (for example, i6).

Line – Description

Line i6
Total

Col g

8,000
8,000

Col h (not in finalized BPT)
$10/visit PCP
$20/visit non-MH specialist
$20/visit for group MH
$40/visit for indiv MH

Col j

Col k

$13.88
$13.88

$9.25
$9.25

Column c – Service Category

This column is pre-populated for most of the available rows. When the blank rows at the
bottom of the worksheet are used to provide detailed cost-sharing information, the valid entries
are as follows:
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Inpatient Facility
Skilled Nursing Facility
Home Health
Ambulance
DME/Prosthetics/Supplies
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)

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•
•
•

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
cost-sharing lines.
Column e – Measurement Unit Code

For each cost-sharing line, enter the appropriate measurement unit that reflects the projected
utilization per 1,000 or PMPM value entered in column g. The valid utilization types are listed
below. Note that the valid utilization types vary by service category, as indicated in the BPT
cells.
•
•
•
•
•
•
•
•
•
•

A
–
Admits
D
–
Days
BP
–
Benefit Period
V
–
Visits
P
–
Procedures
T
–
Trips
S
–
Scripts
O
–
Other
Coin –
Coinsurance
Ded –
Deductible (used only for single-line items, such as per-benefit period
deductibles; plan-level deductibles that apply to multiple service categories and the
pricing impact are entered in the footnote and column f)

Column f – In-Network Effective Plan-Level Deductible PMPM

For each cost-sharing line, enter—
•

The effective PMPM cost of the in-network plan deductible, plan deductible, or annual
deductible contained in Section D of the PBP as summarized below by type of plan:
◦ For local PPO and regional PPO plans, if the PBP contains an annual plan
deductible that is applied to in-network benefits, enter the effective PMPM cost of
such deductible.
◦ For non-network PFFS plans, enter a portion of the effective PMPM cost of the plan
deductible, at the discretion of the certifying actuary.

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◦

•

For other plan types, if the PBP contains an in-network plan deductible and/or a
combined plan deductible that is applied to in-network benefits, enter the effective
PMPM cost of such deductible(s).
A PMPM cost such that the sum total represents the effective PMPM cost of the
deductible(s) that is attributable to in-network benefits.

If an effective cost of a plan-level deductible is entered in column f, then the amount of the
plan-level deductible must be entered in the footnotes. See the instructions for the footnotes in
columns h, k and n for information about plan-level deductible amounts and the applicability to
Part B-Only services.
Note to include the effect of service-specific deductibles entered in Section B of the PBP in
columns g through j.
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—
•
•
•

For the time period for which the cost sharing applies.
After the plan-level deductible has been satisfied.
Before the impact of the OOP maximum.

✔ Column h – In-Network Description of Cost Sharing/Additional Days/Benefit Limits

These cells are text fields that may be used by bid preparers to enter internal
descriptions of in-network plan cost sharing contained in the PBP, including
descriptions of all PBP benefits priced together within each BPT service category and
any benefit limits. These details are useful since each BPT category may map to several
PBP benefit categories.
The text in column h above the “Total” row 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. This text will not be deleted from the working file or from the backup
file during finalization.
Enter the actual combined plan-level deductible amount (if applicable) in the footnote.
✔ 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
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 in certain cases, the effective coinsurance percentage in column i may not
match the coinsurance percentage in the PBP. See the cost sharing pricing
consideration for more information about the calculation of the effective coinsurance
percentage.

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Also 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 footnote.
✔ 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.

Enter the actual in-network plan-level deductible and the pricing impact of the in-network OOP
maximum in the footnote.
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

This column may be used to enter internal descriptions of the out-of-network cost sharing for
each service category. This column will be deleted from the finalized file. See the instructions
for in-network cost sharing in column h for additional information.
Column n – Out-of-Network Cost Sharing PMPM

Enter the effective value of cost sharing for out-of-network benefits for each service category.
This column must reflect the total projected cost sharing for all out-of-network services.
Enter the actual out-of-network plan-level deductible and the pricing impact of the
out-of-network OOP maximum in the footnote.

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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).
Footnotes

The footnotes for columns h, k and n are used to enter plan deductible dollar amounts contained
in Section D of the PBP and to answer questions about the applicability of plan deductibles to
Part B-Only services, as explained below.
If the PBP indicates that the cost sharing is designed to match Medicare FFS cost sharing, enter
the amount of the plan-level deductible as “Medicare FFS”. Do not enter an estimate of the
actual Part B deductible for 2016 or leave the field blank. Specifically,—
•

•

If the PBP indicates that the in-network, out-of-network, or combined plan
deductible is “the Medicare-defined Part B Deductible amount", enter in the BPT
the amount of the corresponding in-network, out-of-network, or combined planlevel deductible as “Medicare FFS”.
If the PBP indicates that the annual deductible is “the Medicare-defined Part A
Deductible amount", “the Medicare-defined Part B Deductible amount", or “the
Medicare-defined Part A and B Deductible amount", enter “Medicare FFS” as the
in-network, out-of-network, or combined plan-level deductible, as explained below.

Otherwise, enter the actual amount, for example, “$500”.
✔ Column h

The first footnote contains the “Actual combined plan level deductible,” which includes
a combined plan deductible, plan deductible, or annual deductible contained in the PBP.
Consistent with the PBP,—
•
◦
◦
•
•

For local PPO and regional PPO plans, the annual deductible always applies to
Medicare-covered out-of-network benefits. Therefore,—
If the PBP indicates that the annual deductible amount applies to in-network
benefits, the annual deductible functions like a combined deductible. In this case,
enter the annual deductible amount in the first footnote.
If the PBP indicates that the annual deductible does not apply to in-network
benefits, leave the first footnote blank.
For non-network PFFS plans, enter the plan deductible amount
For other plan types, enter the combined plan deductible amount.

In the second footnote, consistent with the PBP, enter “Yes” or “No” to the question
“Does the actual combined plan-level deductible apply to Part B-Only?”
✔ Column k

The first footnote contains the “Actual in-network plan-level deductible”, which
includes an in-network plan deductible or annual deductible contained in the PBP.
Consistent with the PBP,—
•

For local PPO and regional PPO plans, an annual deductible always applies to
Medicare-covered out-of-network benefits; therefore, if the PBP indicates that the

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•

annual deductible amount also applies to in-network benefits, the annual deductible
functions like a combined deductible. In this case, leave the first footnote blank.
For other plan types, enter the in-network plan deductible amount.

In the second footnote, consistent with the PBP, enter “Yes” or “No” to the question
“Does the actual in-network plan-level deductible apply to Part B-Only?”
In the third footnote, enter the PMPM pricing impact of the in-network OOP maximum.
This value must reflect the PMPM difference between the pricing for in-network cost
sharing before and after the OOP maximum has been applied. This value must be
greater than or equal to zero.
✔ Column n

The first footnote contains the “Actual out-of-network plan-level deductible,” which
includes an out-of-network plan deductible or annual deductible contained in the PBP.
Consistent with the PBP,—
•
◦
◦
•

For local PPO and regional PPO plans, the annual deductible always applies to
Medicare-covered out-of-network benefits. Therefore,—
If the PBP indicates that the annual deductible amount also applies to in-network
benefits, the annual deductible functions like a combined deductible. In this case,
leave the first footnote blank.
If the PBP indicates that the annual deductible does not apply to in-network
benefits, enter the annual deductible amount in the first footnote.
For other plan types, enter the out-of-network plan deductible amount.

In the second footnote, consistent with the PBP, enter “Yes” or “No” to the question
“Does the actual out-of-network plan-level deductible apply to Part B-Only?”
In the third footnote, enter the PMPM pricing impact of the out-of-network OOP
maximum. This value must reflect the PMPM difference between the pricing for
out-of-network cost sharing before and after the OOP maximum has been applied. This
value must be greater than or equal to zero.

SECTION IV – MAPPING OF PBP SERVICE CATEGORIES TO BPT
Section IV captures the mapping of PBP benefit categories to BPT service categories for all
benefits and services included in the plan benefit package. These cells are pre-populated based
on the suggested mapping of PBP to BPT categories in Appendix F, but must be overwritten by
the user to reflect the actual mapping used in developing PMPM amounts by service category
in the BPT.

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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.” (Total of subsections A and B)

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 risk factor for the
contract period. In Section III, the Plan sponsor may enter the projected ESRD “subsidy”.
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.
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 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.
✔ 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 for each service category (except for line r). If you enter
additional cost-sharing lines on Worksheet 3, then you must verify that the total cost
sharing on Worksheet 4 equals the total on Worksheet 3.
✔ Column g – N/A

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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. You must enter in columns i and j, the expected percentages of 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 or is classified as a mandatory
supplemental benefit in the PBP such as a POS benefit, the percentage entered must be
less than 100 percent.
Example:

The Plan sponsor estimates that 99.92 percent of the allowed PMPM in column
e for outpatient facility emergency services is for Medicare-covered services and
0.08 percent is for A/B mandatory supplemental benefits, whereas 98.03 percent
of the cost sharing PMPM in column f is for Medicare-covered services and
1.97 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

Cost
Allowed Sharing

f. OP Facility –
Emergency

99.92%

98.03%

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
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 mapping entered on

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WORKSHEET 4

Worksheet 3 Section IV. For example, if a plan covers additional inpatient hospital
days, and the plan is using the suggested mapping from Appendix F, 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).
✔ 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.”

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✔ 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 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.”
✔ 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

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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 (Total of Subsections A and B)

The risk factor for total beneficiaries (non-DE# plus DE#) 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.
✔ 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.

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WORKSHEET 4

✔ 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 each of the
categories.
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.
Lines v1 through v5 – 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, v3, and v5 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.

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✔ 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 v6, columns h, o, and r – Total Non-Benefit Expense

The sum of lines v1 through v5. The value must be greater than or equal to zero.
Line v6, 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), v (non-benefit expense), and w (gain/loss margin). The
value in column o is the total revenue requirement of the “Plan A/B Bid.”
Lines y1, y2 and y3 – Percentage of Revenue

These lines calculate the ratio of net medical expense, non-benefit expense, and gain/loss
margin as a percentage of revenue.
Line z – Overall Gain/(Loss) Margin Level

Enter the level at which the overall gain/loss margin requirements are met. See the “Pricing
Considerations” section of these Instructions for more information regarding gain/loss margin.
This line contains a drop-down menu with three options: “Contract”, “Organization” and
“Parent-Organization”. EGWP plans are defaulted to the “Contract” option. The option
selected in the MA BPT must match the option selected in the Part D BPT.
Do not leave this field blank.

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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. Values entered in input cells must be greater than or equal to zero.
CY Member Months (entered by county)

This value is obtained from Worksheet 5.
CY ESRD Member Months

This value is obtained from Worksheet 5.
CY Out-of-Area (OOA) Member Months

This value is obtained from Worksheet 5.
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
This section contains three input cells to capture Medicaid projected revenue and costs. Entries
must be reported on a “per Member per Month” (PMPM) basis. Values must be greater than or
equal to zero. 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 the regional A/B benchmark (including the statutory
component of the regional benchmark). Applies to RPPO plan types only.
Section V – Summary of Quality Bonus Rating information (from CMS).
Section VI – Projected plan-specific information based on projected enrollment.
Section VII – Other Medicare information (populated based on the enrollment
projection).
Section VIII – Projected CY Member Months.

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 and hospice): Projected non-ESRD
non-hospice member months, reported by county of the plan’s service area.
Projected Risk Factor (excluding ESRD and hospice): Projected average risk factor for
non-ESRD non-hospice enrollees, reported by county of the plan’s service area.
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).
Quality Bonus Rating (from CMS).

SECTION I – GENERAL INFORMATION
This section displays the information entered on Worksheet 1, Section I.

SECTION II – BENCHMARK AND BID DEVELOPMENT
Line 1 – Member Months (from Section VI)

The value for projected member months (including out-of-area but excluding ESRD and
hospice) is obtained from Section VI (entered by county of the plan’s service area). You must
enter the projected non-DE# member months (including non-DE# out-of-area). 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.

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Line 2 – Standardized A/B Benchmark (at 1.000 Risk Score)

This value is obtained from Section IV for regional plans and from Section VI 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
projected value, then enter zero (0) in this field. The value entered must be between 0 percent
and 100 percent.
Line 4 – Weighted Average Risk Factor

This member/payment-weighted average value is obtained from Section VI. You must enter
the projected non-DE# value (including non-DE# out-of-area). The DE# value is calculated
based on the total and the non-DE# amounts. The DE# risk score default calculation may be
overwritten by the user. 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 intermediate 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, 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, and 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 Section III, line 1 (“Savings”) times Section V, line 3 (“Rebate %”). This value
is rounded to two decimals.

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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.
Line 1 – Statutory Component for Region

The PMPM amount, defined by region, is pre-populated by CMS. The weighting is also
pre-populated in the bid form by CMS.
Line 2 – Plan Bid Component

The plan bid component of the MA regional PPO benchmark 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 monthly bid amount is announced (typically in August).
Plan sponsors may input an estimated average regional PPO bid amount in their initial June bid
submission.
For bids that are submitted prior to the announcement of the RPPO bid 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 regional PPO announcement includes the weighted-average MA RPPO bid for each region.
MA organizations will be instructed at the time of the announcement to submit revised RPPO
MA BPTs with the applicable average RPPO bid amount entered in line 2. Regional employer
bids (“800-series” bids) must also be resubmitted to reflect the RPPO average bid in line 2.
Any changes in rebates due to the actual plan bid component must be reallocated at the same
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 – QUALITY RATING
This section captures quality rating information released by CMS. See the “Pricing
Considerations” section of these Instructions for more information.

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Line 1 – Quality Bonus Rating (per CMS)

Enter the quality bonus rating (that is, QBP “star rating”) released by CMS for the contract.
The rating is a numeric value from 1.0 through 5.0.
The value entered in the BPT will be validated upon upload. (That is, if the BPT value does not
match the value released by CMS in HPMS, the upload will be rejected.)
Line 2 – New/Low Indicator (per CMS)

Enter the new/low indicator released by CMS for the contract. The four valid options are as
follows:
•
•
•
•

New contract under existing parent org
New contract under new parent org
Low
Not applicable

For plans where the new/low indicator is applicable, the text entered in the BPT will be
validated upon upload. (That is, if the BPT text does not match the text released by CMS in
HPMS, the upload will be rejected.)
Line 3 – Rebate Percentage

The BPT computes the rebate percentage that is used in Section III, line 2.
See the “Pricing Considerations” section of these Instructions for more information.

SECTION VI – COUNTY-LEVEL DETAIL AND SERVICE AREA SUMMARY
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), projected risk factors (column f) by county, and
out-of-area enrollment data. Entries must reflect bid-specific non-ESRD non-hospice
enrollment projections for each county within the service area, including the case in which
member months are projected to be zero. There is no requirement to enter member months
greater than zero in order to generate a county level payment rate.
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 VI.
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”.)

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Line 2 – Total or Weighted Average for the Service Area

The county-level data are summarized in this line, weighted by projected member months
(including out-of-area in row 38). The projected risk factors are also weighted by MA ratebook
rates.
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 county, “99999” in rows 39 through 9999. Out-of-area
enrollees must be captured in row 38.
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 DE#
and non-DE# members, but exclude ESRD and hospice members. Out-of-area projected
member months must be entered in row 38.
See the “Pricing Considerations” section of these Instructions for more guidance.

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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 non-hospice membership by county.
The risk factors for out-of-area members must be entered in row 38.
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 VII – 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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The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in Section VII.
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.

SECTION VIII – PROJECTED CY MEMBER MONTHS
This section captures and summarizes the various components of the plan’s member months.
Line 1 – Member Months entered by county (from Section VI)

This value is obtained from Section VI.
Line 2 – ESRD Member Months

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.
This amount is used on Worksheet 4 Section III.
Line 3 – Hospice Member Months

Enter the projected CY hospice member months. Do not leave this field blank. If no hospice
enrollees are expected during the contract period, then enter a zero (0) in this field.
Line 4 – Out-of-Area (OOA) Member Months

This value is obtained from Section VI.
Line 5 – Total Member Months

Calculated as the sum of line 1 through 4.
The enrollment for the MA bid must be based on a population consistent with the
corresponding Part D bid.

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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 allocating rebates to
buy down the Part B premium.
Line 1 – Maximum Part B Premium Buydown Amount, per CMS
This value is pre-populated by CMS 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.
Section C – Rebate Allocations
Line 1 – Reduce A/B Cost Sharing
Enter the PMPM amount of rebates to reduce A/B cost sharing.
Line 2 – Other A/B Mandatory Supplemental Benefits
Enter the PMPM amount of rebates to apply toward other A/B mandatory supplemental
benefits.

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 displays some benchmark and risk score information
from Worksheet 5.

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•
•

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.

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 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 – 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
Plan sponsors may choose which of the following category, or categories, in which to allocate
rebates.
•
•
•

Reduce A/B cost sharing.
Other A/B mandatory supplemental benefits.
Part B premium buydown.

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•
•

Part D basic premium buydown.
Part D supplemental premium buydown.

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.
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
The fourth column displays the portion of the total MA rebate that is allocated to each of the
rebate options. Note that the rebate allocations 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 applies to 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.
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WORKSHEET 6

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.
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 (that is, 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.

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WORKSHEET 6

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.
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. The value must be greater than or equal to zero. This field is not
applicable to MA-only plans and EGWP plans (that is, it must be equal to zero in these
cases).
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. The 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.

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WORKSHEET 6

SECTION IV – CONTACT INFORMATION AND DATE PREPARED
Plan sponsors must identify three persons as MA plan bid contact, MA certifying actuary, and
additional MA BPT actuarial contact. The MA certifying actuary and additional MA BPT
actuarial contact must be readily available and authorized to discuss the development of the
pricing of the bid.
In this section, enter the name, phone number, and e-mail information for all three contacts; in
addition, credentials are a required input for the certifying actuary. For the phone number,
enter all ten digits consecutively without parentheses or dashes. Do not leave any part of this
section blank.
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 from 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, and the
package name/description must match the PBP.

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 – Description

For each package, enter a description of the OSB package. This description must match the
description/package 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.
Column d – Allowed Medical Expense: PMPM

Enter the projected contract year allowed medical expense PMPM for each package.
Column e – Enrollee Cost Sharing: PMPM

Enter the projected enrollee cost sharing PMPM for each package.
Column f – Net PMPM Value

Column f is calculated automatically as the allowed PMPM (column d) minus the cost sharing
PMPM (column e).
Column g – Non-Benefit Expense

Enter the total projected contract year non-benefit expense PMPM for each OSB package
offered.
Column h – Gain/Loss Margin

Enter the total projected contract year gain/loss margin PMPM for each OSB package offered.

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WORKSHEET 7
Column i – Premium

The sum of columns f (medical expenses), g (non-benefit expenses), and h (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.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
Column j – 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.

SECTION IV – BASE PERIOD SUMMARY (ENTERED AT THE CONTRACT LEVEL)
This section contains a summary of the actual contract-level base period revenue and expenses.
Note that Section IV must be completed in total dollars (not PMPMs), and it must include all
optional supplemental benefit packages that were provided in the base period.

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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 the actuarial certification, the actuary must certify that 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 . . .
ASOP No. 23, Data Quality.
ASOP No. 25, Credibility Procedures
ASOP No. 41, Actuarial Communications.
ASOP No. 45, The Use of Health Status Based Risk Adjustment Methodologies.

The certifying actuary must also certify that the actuarial work supporting the bid complies
with applicable laws, rules, CY2016 bid instructions, and current CMS guidance. The actuarial
work supporting the bid must be consistent and reasonable with respect to the plan benefit
package.
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.
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. The
instructions contained in this appendix must be followed by all actuaries who will be certifying
CY2016 bids.
If a certification is not submitted via the HPMS certification module, the bid will not be
considered for CMS review and approval.
Every MA BPT requires a certification. 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 for EGWPs. However, a certification is still required for the MA
portion of “800-series” employer bids.
Additional information regarding the actuarial certification process (including technical
instructions for completing the HPMS certification module) will be included in an initial
actuarial certification deadline memorandum released via HPMS.
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 CY2016 bid
instructions, and current CMS guidance.

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, in accordance with federal law, the bid is based on the “average revenue
requirements in the payment area for a Medicare Advantage/Prescription Drug enrollee
with a national average risk profile.”
Attestation that the data and assumptions used in the development of the bid are
reasonable for the plan’s benefit package (PBP).
Attestation that the bid was prepared in compliance with 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.

Certification Module Access

Detailed instructions regarding how to apply for access to the CY2016 certification module are
released via an HPMS memorandum regarding consultant access or electronic signature access
to HPMS.

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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, if requested,
must be made available to CMS reviewers within 48 hours, as required by these Instructions.
Plan sponsors must upload supporting documentation consistent with the final certified bid.
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 reliance.
In preparing supporting documentation, the actuary must consider ASOP No. 41, Actuarial
Communications. In accordance with Section 3.2, “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 and additional MA BPT
actuarial contacts must be available to respond to inquiries from CMS reviewers regarding the
submitted bids.
Supporting documentation must be easily understood by CMS reviewers and must include the
following:
•
•
•
•

The rationale for the assumption, including quantitative support and details, rather than
just narrative descriptions of assumptions.
Plan-specific variations in addition to the overall pricing assumption or methodology.
Values that match entries in the current BPT and tie to the PBP.
Excel spreadsheets with working formulas, rather than pdf files, accompanied by a
narrative explanation of the inputs and the calculations and their components.

Supporting documentation must be clearly labeled and include the following information:
•
•
•
•
•

The bid ID. At a minimum, the contract number and organization name 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.
A reference to MA, Part D, or both.
A hard-coded date.
Contract/Plan number or organization name and topic in the beginning of the file name.
The word “revised”, if any information in the file is revised or appended during bid
review.

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APPENDIX B

Acceptable forms of supporting documentation include, but are not limited to, the following
items:
•
•
•
•
•
•

Meeting minutes that include comprehensive documentation of discussions related to bid
development.
E-mail correspondence related to bid development.
A complete description of data sources—for example, a report’s official name/title, file
name, date obtained, source file, etc.
Intermediate calculations showing each step taken to calculate an assumption.
A summary of contractual terms of administrative services agreements.
A business plan.

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 can be 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.
Excel spreadsheets with no or a vague explanation of the bid-specific inputs and
calculations.
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.

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APPENDIX B
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 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 at the time of
the initial June bid submission in order to be immediately available to CMS and reviewers at
that time or be readily available upon request as explained below.
•
•
•

•

The “Initial June Bid Submission” section in this appendix describes supporting
documentation items that Plan sponsors must upload to HPMS with the initial June bid
submission.
The “Upon Request by CMS Reviewers” section of this appendix describes materials
that Plan sponsors and certifying actuaries must provide within 48 hours of request by
CMS reviewers and upload to HPMS prior to bid approval.
When a BPT is resubmitted, the Plan sponsor must upload a summary of changes,
including the cause and effect of each revision, authorized by CMS or CMS reviewers.
If multiple BPTs are submitted at the same time, the supporting documentation must
include a mapping of specific bid changes and bid IDs.
Prior to bid approval,—
◦ Plan sponsors and certifying actuaries must revise supporting documentation
consistent with the final certified bid. Note that the upload of e-mail
correspondence to HPMS alone does not satisfy this requirement.
◦ Plan sponsors must upload revised supporting documentation and e-mail
correspondence supporting bid resubmissions to HPMS.

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APPENDIX B
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, 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.
A document titled “Related Party Declaration,” which states whether or not the Plan
sponsor is in a related-party arrangement (Worksheets 1 and 4).
Support for sequestration’s effect on the bid, including a detailed description of how it is
reflected in pricing assumptions.
Support for the claims 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 between the credibility for utilization and
that for 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.
A detailed description of the process used for adjusting cost sharing due to maximum
OOP limits, including how the PMPM impact of the maximum OOP was determined.
(Worksheet 3).
Support for non-benefit expense assumptions. The required elements include—
◦ A reconciliation of the base period non-benefit expenses reported in the BPT and
auditable material such as corporate financials and plan-level operational data
(Worksheet 1).
◦ A description of the expenses included in each non-benefit expense category in
the BPT. (Worksheet 4)
◦ Detailed support for the development of projected non-benefit expenses
(Worksheet 4). The required elements include—
‣ A description of the methodology used to develop projected non-benefit
expenses.
‣ A description of the data source and its relationship to the base period
non-benefit expenses reported in the BPT.
‣ An explanation for significant differences between actual and expected
non-benefit expenses for CY2013, CY2014 and CY2015, including a
description of how that knowledge was incorporated into the CY projection.

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APPENDIX B

‣

•

A demonstration of the development of each line item using relevant data,
assumptions, contracts, financial information, business plans, and other
projections.
Justification of the gain/loss margin (Worksheet 4). The required elements include—
◦ Support for overall MA margin levels including—
‣ The Plan sponsor’s margin requirement for all non-Medicare business,
including any change in such requirement in the prior two years, and
identification of these lines of business.
‣ A description of the methodology used to develop the gain/loss margin
assumption and the level at which the aggregate margins are determined.
‣ For Plan sponsors that choose to satisfy aggregate-level gain/loss requirements
at the organization level, a list of the MA contract numbers offered by the
organization.
‣ A demonstration of consistency of projected margins from year to year.
‣ A demonstration of consistency between the aggregate margin for general
enrollment plans & I/C SNPs (or for other gain/loss margin categories, if
applicable) and the applicable measure of the Plan sponsor’s margin
requirement, that is, (i) the Plan sponsor’s margin requirement for all
non-Medicare business, or (ii) the Plan sponsor’s capital and surplus
requirement. Acceptable support for scenario (ii) includes, but is not limited
to, a demonstration of risk-based capital needs or an illustration of return on
investment or equity requirements.
‣ A demonstration of consistency between the aggregate margin for general
enrollment plans & I/C SNPs and other gain/loss margin categories, if
applicable.
‣ A detailed justification for unique situations, in which the aggregate margin
for D-SNPs is outside of the stated range of the aggregate margin for general
enrollment plans & I/C SNPs combined, including–
- A description of extenuating circumstances supporting an exception.
- Evidence of the absence of anti-competitive practices and solvency issues.
- Actions taken to bring the margin differential into compliance with these
Instructions.
‣ A demonstration of consistency between (projected) aggregate margins and
actual aggregate returns over the long term. If historically these items have
been inconsistent, provide an explanation for how this is addressed in the
current bid submission, for example, how pricing assumptions have been set to
make the projected margin more consistent with actual returns.
‣ Justification for bids with relatively large projected overall gain/loss margin,
including an explanation of how the PBP offers benefit value in relation to the
margin level.
‣ Support for a bid with a high margin that is not in a valid product pairing,
including one of the following items:
- An explanation of a need for a contingency margin that correlates to the
“risk” to the plan sponsor, low credibility, and/or significant claims
variability from year to year.

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APPENDIX B

•

- A demonstration of incremental benefit and premium changes being made
over time to reduce margin while maintaining stability, including a
justification that the PBP is providing all possible benefits that the
expected population can utilize.
◦ Support for bids with negative margins, including one of the following items:
‣ For a new bid ID, or a bid ID with a zero or positive projected gain/loss
margin for the prior contract year, a bid-specific, year-by-year, numeric
business plan that demonstrates profitability within 5 years.
‣ For a bid ID with a negative projected gain/loss margin for the prior contract
year, a numerical comparison of the gain/loss margin to the MA margin in the
original business plan. The required elements include—
- Details and sources of deviation from the original business plan.
- An explanation and demonstration as to how the targeted margin in the
original business plan will be met, if the bid ID is progressing towards a
positive margin less rapidly than projected in the original business plan,
including—
• A revised business plan demonstrating that the bid will reach
profitability within 5 years of the original business plan.
• A description of benefits reductions or premium increases for CY2016.
- The year the bid reaches profitability or becomes part of a valid product
pairing.
- A copy of the original business plan uploaded to HPMS in a separate file.
‣ A description of the MA product pairing, which includes the gain/loss margin
for each bid ID and shows that such bids—
- Have identical service areas,
- Are all local coordinated care plans, or all RPPOs, or all PFFS plans,
- Have the same SNP type (or are all non-SNPs),
- Are all EGWPs or all non-EGWPs, and
- Have a positive combined gain/loss margin.
◦ A detailed justification for unique situations, in which a business a plan does not
achieve profitability within 5 years, including—
‣ A description of extenuating circumstances supporting an exception.
‣ Evidence of the absence of anti-competitive practices and solvency issues.
‣ Actions taken to bring the margin differential into compliance with these
Instructions.
◦ For MA-PD plans, a description of the approach for setting the Part D margin in
relation to the MA margin.
◦ For bids in the Platino program, a statement as to which BPT margin was used to
satisfy all gain/loss margin requirements.
◦ A detailed explanation of the need for flexibility in the gain/loss margin
requirements in order to satisfy other CMS requirements.
Detailed support for the development of projected risk scores (Worksheet 5). The
required elements include—

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APPENDIX B

◦
◦
◦
◦
◦
◦

A detailed description, and corresponding numerical demonstration, of the
methodology used to develop projected CY2016MA risk scores.
A description of the source data for the development of the projected CY2016 MA
risk scores.
A description of all projection factors and the basis for the factors.
A statement about the consistency between the development of the projected risk
scores for the plan population and the development of projected medical expenses.
A demonstration that the method used is consistent with the preferred
development approach in these Instructions, including an explanation for using an
alternate approach, if applicable.
Justification for and a description of the credibility assumption for actual plan risk
scores.

The following documentation requirements apply to all bids for which the below elements
pertain:
•

•

Detailed support for the development of base period experience (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—
◦ 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 eight plans constitute the base period data (see Worksheet 1, Section II,
line 5).
◦ Reconciliation of base period experience with the audited financial statements and
bid-level operational data (Worksheet 1). The data are to be reported on an
incurred, rather than an accounting or GAAP, basis, including claims paid,
unloaded claim reserves, non-benefit expenses, and revenues. Because the results
reflect an experience period versus accounting period, the data need not be based
on an audited GAAP financial basis.
◦ Justification for the lack of encounter data for services provided under capitated
arrangements including—
‣ An explanation for the deficiency.
‣ A detailed description of the steps that the Plan sponsor has taken or is taking
to obtain encounter data for subsequent year’s bid submissions.
‣ A description of the data source for utilization per 1,000 and the basis for any
adjustments.
Detailed qualitative and quantitative support for the development of each projection
factor (Worksheet 1). The required elements include—
◦ A description of the source data, including the data’s relevance to the MA plan.
◦ A summary of the Plan sponsor’s historical trends including—
‣ The percentage trends.
‣ A description of the methodology used to analyze the data.
‣ The numeric calculations.
◦ Any applicable adjustments to the source data, such as considerations for—

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APPENDIX B

‣

•
•
•

•

Plan sponsor’s experience, including an explanation for significant differences
between actual and expected claims for CY2013, CY2014 and CY2015, and a
description of how that knowledge was incorporated into the projection
factors.
‣ Industry and/or internal studies.
‣ Benefit design analysis.
‣ A change in the mix of services, including the rationale for the type of
projection factor used to reflect such change.
‣ A change in the mix of provider arrangements such as capitated and risk
sharing arrangements.
◦ Justification for combining data for multiple service categories.
Support for the allocation of enrollment between DE# and non-DE# beneficiaries
including the basis for classifying dual-eligible enrollees as DE# (Worksheets 1 and 5).
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 data and methodology used in the development of appropriate
manual rates for the expected population (Worksheet 2). 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.
‣ Factors to reflect lower claims for expected MSP enrollees in the projected
population.
‣ Techniques and factors used to adjust for differences in health care delivery
system and plan design of the source data as compared to the MA plan.
‣ Methodology and data used to gross up reimbursements to an allowed-cost
basis.
◦ Data and methodology used to project the data from base period to CY2016.
◦ 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).

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APPENDIX B

•
•

•

The rationale for projecting a zero cost of a benefit that is included in the PBP whether
or not the cost of the benefit in the base period data or in the manual rate source data is
zero or insignificant. Indicate which $0 cost benefits each PBP includes.
Support, at the benefit level, for non-covered services (Worksheet 2, lines l through q,
column o), if any, including a breakdown of the PMPM value shown in the BPT. For
example, a $4.00 PMPM in column o of row p, “Health and Education,” is to be shown
in the supporting documentation as $1.50 PMPM for a smoking cessation program and
$2.50 PMPM for nutritional counseling. (Detailed support for the pricing of each
additional benefit is available upon request.)
Detailed support for related-party medical and administrative service arrangements
(Worksheets 1 and 4).
◦ A Plan sponsor in a related-party arrangement must provide the following:
‣ Declaration of every related-party arrangement.
‣ Disclosure of all services provided in every related-party arrangement.
‣ A summary that explains the relationship of the parties involved and common
ownership, control and investment.
‣ A summary of the contractual terms of each relationship that includes a
description of the services provided and money exchanged.
‣ Disclosure of the method used in preparing the bid for each arrangement. The
options are Actual Cost Method (for Administrative Services and for Medical
Services), Market Comparison Method for Administrative Services (through
Plan sponsor or through related party), Market Comparison for Medical
Services (through Plan sponsor or through related party), Comparable to FFS
Method, and FFS Proxy Method.
‣ Supporting documentation for each arrangement, as outlined below.
◦ A Plan sponsor that chooses the Actual Cost Method must provide a qualitative
and quantitative summary of the development of the actual costs associated with
the non-benefit expense, gain/loss margin, and medical expense, if applicable.
◦ A Plan sponsor that chooses the Market Comparison Method for Administrative
Services or for Medical Services must provide the following support:
‣ A demonstration that the contracts with the unrelated parties or unrelated MA
organizations are associated with sufficient costs to be considered valid
contracts.
‣ For related-party administrative arrangements between the Plan sponsor and
unrelated parties, a demonstration that the fees associated with such
arrangements are within 5 percent or $2 PMPM, whichever is greater.
‣ For related-party administrative arrangements between the related-party
organization and unrelated parties,—
- A demonstration that the fees associated with such arrangements are
within 5 percent or $2 PMPM, whichever is greater.
- A signed attestation from the related party stating that the actual contracts
will be available for review upon request by CMS.
‣ For related-party medical arrangements between the Plan sponsor and
unrelated parties in the bid’s service area, a demonstration that the fees

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APPENDIX B

•

•

associated with such arrangements are within 5 percent or $2 PMPM,
whichever is greater.
‣ For related-party medical arrangements between the related-party organization
and unrelated MA organizations,—
- A demonstration that the fees associated with such arrangements are
within 5 percent or $2 PMPM, whichever is greater.
- A signed attestation from the related party stating that the actual contracts
will be available for review upon request by CMS.
◦ A Plan sponsor that chooses the Comparable to FFS Method must—
‣ Provide written evidence of a good-faith, but unsuccessful, effort to obtain the
actual costs of the related party to provide medical services to the Plan sponsor
under the related-party arrangement.
‣ Demonstrate that the fees associated with the related party arrangement are
comparable to 100% FFS for similar services, that is, within 5 percent or $2
PMPM, whichever is greater.
◦ A Plan sponsor that chooses the FFS Proxy Method must—
‣ Provide written evidence of a good-faith, but unsuccessful, effort to obtain the
actual costs of the related party to provide medical services to the Plan sponsor
under the related-party arrangement.
‣ Demonstrate that the fees associated with the related party arrangement are not
comparable to 100% FFS for similar services, that is, within 5 percent or $2
PMPM, whichever is greater.
‣ Provide one of the following elements:
- A declaration that: (i) the related-party organization does not have an
arrangement to provide similar services with an unrelated party, or (ii) the
Plan sponsor does not have an arrangement to provide similar services
with unrelated providers in the bid’s service area.
- Evidence of a good-faith, but unsuccessful, effort to obtain sufficient
information about fees for similar services in medical arrangements
between: (i) the related-party organization and unrelated parties, or (ii) the
Plan sponsor and unrelated providers in the bid’s service area.
- A demonstration that fees for similar services are not comparable between:
(i) the related-party organization and unrelated parties, or (ii) the Plan
sponsor and unrelated providers in the bid’s service area.
A detailed demonstration that coinsurance or copayment amounts for which CMS does
not have an established amount (such as coinsurance for inpatient or SNF, or copayment
for durable medical equipment) satisfies CMS service category requirements
(Worksheet 3).
Support for a global capitation arrangement or risk sharing arrangement. The required
elements include—
◦ A description of the arrangement.
◦ A demonstration of the methodology used to allocate the impact of the
arrangement to BPT service categories (including the allocation to the MA and PD
BPTs, if the arrangement applies to Part D services)

CY2016 MA BPT Instructions

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APPENDIX B

•

•
•
•

•
•
•
•
•

•

Support for the development of the contract year ESRD subsidy (Worksheet 4). This
required documentation includes the following:
◦ Base period (for example, 2014) revenues and medical expenditures for Medicarecovered 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.
Detailed support for the MSP adjustment, including justification for a zero amount.
(Worksheet 5).
Support for zero projected DE# member months when there are DE# members in the
base period (Worksheet 5).
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 factor(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.
Support for the projected medical expense, projected non-benefit expense, and projected
gain/loss margin for specific OSB packages (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).
For EGWPs, 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 and detailed support for how CY2015 bid audit findings and
observations and compliance issues were corrected 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 Appendix B.
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.

CY2016 MA BPT Instructions

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APPENDIX B

If substantiation is requested by CMS reviewers, it must be provided within 48 hours. These
materials will be reviewed at audit:
•
•
•
•
•
•
•
•
•
•

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.)
Detailed 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.
Copies of related-party contracts.
Support for the calculation of the “Medicaid Cost Sharing” in column k, including cost
sharing required by state or territory Medicaid programs in the plan’s service area based
on the eligibility rules for subsidized cost sharing for DE# beneficiaries (Worksheet 4).
Justification for significant differences between the assumptions of 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) that was not uploaded to HPMS during bid
review.
An explanation as to how certain findings from the Office of Financial Management
(OFM) audit were addressed in the current bid.

Additional information not specified in this list may be requested by CMS reviewers, as
needed, at any point during the bid desk review process.

CY2016 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
Related-party declaration
Sequestration
Claims credibility assumption
Adjustment to cost sharing for maximum OOP limit
Non-benefit expenses
Gain/loss margin
Projected risk scores

Initial June Bid Submission – Required for All Bids with Specified Assumptions
Base period experience and reconciliation
Projection factors
Enrollment allocation (DE#/non-DE#)
Hospice claims costs for mandatory supplemental
Manual rate development
Non-DE# projected allowed costs
Zero cost benefit
Non-covered services benefit-level summary
Related-party arrangements
Coinsurance/copay satisfies service category requirements
Global capitation or risk sharing arrangement
ESRD "subsidy"
MSP adjustment
Projected zero DE# member months
ISAR factors
Optional supplemental benefit (OSB) packages pricing assumptions
Actuarial swaps/equivalences
EGWP comparison of bid pricing and expected underwriting assumptions
Input sheets for pricing model
Bid audit results and compliance issues
Reliance information

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APPENDIX B
Upon Request by CMS Reviewers
Non-covered services pricing
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
Related-party contracts
State and territory cost sharing requirements
Differences in EGWP and general market pricing assumptions
Reliance letter
Bid review communications
OFM audit results
Other

SAMPLE COVER SHEET – SUBMITTED WITH INITIAL BID UPLOAD IN JUNE
Supporting Documentation Cover Sheet #1
CY2016 Bid Submission

Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: June 2, 2016
Documentation
Requirement
Cover sheet
Product
narrative
Credibility
assumption
Cost sharing
mapping
Non-benefit
expenses
Gain/loss
margins
Risk scores
Related-Party
declaration
Sequestration
Manual rates
ESRD subsidy

Specific
Bid ID(s) or
N/A
All bids
All bids

File Name
Cover Sheet 6-1-2016.pdf
Cover Sheet 6-1-2016.pdf

Location within
File (if
Applicable)
Page 1
Pages 2-4

Applies to:
MA, PD, or
Both
both
both

All bids

Cover Sheet 6-1-2016.pdf

Page 5

both

All bids

Cover Sheet 6-1-2016.pdf

Page 6

both

All bids

AdminProfit.xls

Sheet 1

both

All bids

AdminProfit.xls

Sheet 2

both

All bids

Risk CY2016.xls

both

All bids

Cover Sheet 6-1-2016.pdf

MA-Sheet 1
PD-Sheet 2
Page 7

All bids
H1234-003-0
S9999-001-0
H1234-001-0
H1234-004-0

Cover Sheet 6-1-2016.pdf
Manual.xls

Page 7
Section II

both
PD

Manual.xls

Section I

MA

CY2016 MA BPT Instructions

both

Page 111 of 153

APPENDIX B

SAMPLE COVER SHEET – SUBMITTED AS A SUBSEQUENT SUBSTANTIATION UPLOAD
Supporting Documentation Cover Sheet #2
CY2016 Bid Submission

Organization Name: Health One
Contract(s): H1234, H9999, and S9999
Date: July 16, 2016
Documentation
Requirement
Cover sheet

E-mail
communication
with CMS bid
reviewers
E-mail
communication
with CMS bid
reviewers
E-mail
communication
with CMS bid
reviewers

Specific
Bid ID(s) or
N/A
H1234-001-0
H1234-003-0
H1234-004-0
H1234-801-0
H9999-001-0
S9999-001-0
H1234-001-0
H1234-003-0
H1234-004-0
H9999-001-0
H9999-001-0
S9999-001-0

H9999-001-0
S9999-001-0

File Name
Cover Sheet 7-16-2016.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

Source
(Name, Position, Company)
Joe Smith, Director of
Finance, ABC Health Plan

H1234-002-00

MA and PD

Jane Doe, Medicare Analyst,
ABC Health Plan

CY2016 MA BPT Instructions

Type of
Information
Administrative
expenses,
gain/loss margin
Claim modeling,
risk score

Comments

I have not performed
any independent audit
or otherwise verified
the accuracy of these
data or information.

Page 112 of 153

APPENDIX B

SAMPLE FORMAT FOR AGGREGATE GAIN/LOSS MARGIN SUPPORT
Note that a numerical summary of aggregate gain/loss margins is a component of required
aggregate gain/loss supporting documentation, and does not, in itself, fully satisfy such
requirements.
Overall Gain (Loss) Margin Level Designated in BPT: Organization
Organization Name: Health One

Aggregate
Grouping
Corporate
Requirement

MA Bid IDs
N/A

Adjusted
Gain/Loss Adjusted
Margin
Gain /Loss
PMPM
Margin %
N/A

Comparison

Difference

N/A

N/A

MA General
Enrollment and
I/C SNP
(“GE”)

H1234-001-00,
H1234-002-00,
H5678-001-00,
H5678-001-00

MA D-SNP

H1234-003-00,
H1234-004-00

MA “GE” –
MA D-SNP

EGWP

H1234-801-00,
H1234-802-00
H5678-801-00,
H5678-802-00

MA “GE” –
EGWP
MA “GE” –
EGWP

H1234-001-00,
H1234-002-00,
H5678-001-00,
H5678-001-00
H1234-003-00,
H1234-004-00,
H5678-003-00,
H5678-004-00

MA “GE” –
PD “GE” 1

EGWP

MA-PD
General
Enrollment and
I/C SNPs
MA-PD
D-SNPs

MA “GE” –
Corporate

MA D-SNP –
Part D
D-SNP2

1

The Part D margin for each bid is within 1.5 percent of the margin in the MA component of the same MA-PD.

2

The Part D margin for each bid is within 1.5 percent of the margin in the MA component of the same MA-PD.

CY2016 MA BPT Instructions

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APPENDIX B

SAMPLE FORMAT FOR SUMMARY OF NEGATIVE-MARGIN BIDS

MA Bid ID
H4444-003-00

CY2016
MA
Gain/Loss
Margin
PMPM

CY2016
MA
Gain /Loss
Margin %

1st First
Year of
Negative
Projected
G/L Margin
2016

1st Year
Profita
ble
2021

1st Year
Bid is in
a Valid
Product
Pairing
N/A

H7777-002-00

2015

N/A

2019

H7777-003-00

2015

2018

20191

Bids in the
Valid Product
Pairing
N/A
H7777-001-00,
H7777-002-00,
H7777-003-00
H7777-001-00,
H7777-002-00,
H7777-003-002

SAMPLE FORMAT FOR PRODUCT PAIRING SUPPORTING DOCUMENTATION
Service
Area
55010
55010
55010
Average
55020
55020
55020
Average

MA Bid ID
H5555-001-01
H5555-002-01
H5555-003-01

Plan
Type
LPPO
LPPO
LPPO

SNP Type
N/A
N/A
N/A

H5555-001-02
H5555-002-02
H5555-003-02

LPPO
LPPO
LPPO

N/A
N/A
N/A

MA Projected
Member Months

CY2016 MA
Gain /Loss
Margin %

1

Note that it is acceptable to omit the date the bid becomes part of a valid product pairing because the bid
becomes profitable in an earlier year.
2

Note that it is acceptable to omit the bid IDs for the valid product pairing because the bid becomes profitable in
an earlier year.

CY2016 MA BPT Instructions

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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 or union-only group waiver plan must prepare a separate Part Bonly 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.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/
mc86c08.pdf. We estimate that for calendar year 2015, 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

CY2016 MA BPT Instructions

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APPENDIX C

Part B-only plans, the Medicare-covered proportion of home health services (line c) will
be 100 percent.

CY2016 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

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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 employer/union-only sponsored group waiver
plans (EGWPs): (i) MA organizations that offer or administer employer/union-only sponsored
group waiver plans (that is, “800-series plans” in an “H” or “R” contract); and (ii)
employers/unions that directly contract with CMS to themselves offer an employer/union-only
sponsored group waiver plan (that is, Employer/Union “Direct Contract” PPO or PFFS plans).
Chapter 9 of the Medicare Managed Care Manual (MMCM), which can be found at
http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c09.pdf,
describes the offering of these EGWPs 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.
Below are some of the key features to be reflected in EGWP bids. The term “group” refers to
employer and union groups.
•
•
•

•

•

Base period data must reflect actual experience for all group members enrolled in the
EGWP, across all groups.
Total projected allowed costs for Medicare-covered services must reflect the composite
characteristics of the individuals expected to enroll in the EGWP for the contract year,
across all groups.
The pricing in the bid must reflect the expected underwriting assumptions for all groups,
in aggregate, that is,—.
◦ Each EGWP bid must reflect the composite characteristics of the
individuals expected to enroll in the EGWP for the contract year,
across all groups. 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 with the required maximum
out-of-pocket limit (MOOP).

If the PBP reflects Medicare fee-for-service benefits with a MOOP and an MA
rebate is generated, then the user must 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.

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•

•

Organizations must provide documentation in support of differences in actuarial/
financial assumptions between the corresponding products.
There is no requirement to charge the filed MA basic and supplemental premium to each
group that enrolls in the EGWP. However, if the PBP reflects the expected composite
benefit plan, then the average premium charged, weighted by all members enrolled in the
EGWP across all groups, must correspond to (that is, be consistent with) the filed
premium.
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 EGWP.

The allocation of rebates may vary from group to group within the EGWP
subject to the requirements listed below. (The bid form contains one allocation.)
‣ The total rebate must be uniform for all members enrolled in the EGWP.
‣ MA organizations may allocate rebates to the Part D premium when
negotiating with specific groups; however, EGWP bids cannot reflect an
allocation of rebates to the Part D basic premium or the Part D supplemental
premium in the bid form.
‣ The Part B premium buydown rebate allocation in the bid form applies for
all members enrolled in the EGWP.
‣ All group members enrolled in an EGWP 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 group 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.
◦ 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 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 MA organization.

For RPPO 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).

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APPENDIX E – REBATE REALLOCATION AND PREMIUM ROUNDING
Organizations may resubmit bids in order to reallocate MA rebate dollars for certain plan bids
and return to the target Part D basic premium 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.
Note that in order to satisfy all CMS rebate reallocation requirements, it may not be possible
for the Plan sponsor to reach the total plan premium prior to rebate reallocation. Rebate
reallocation is only an opportunity to get back to the target Part D basic premium.

I. REBATE REALLOCATION PERMISSIBILITY 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 rebate reallocation permissibility 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.

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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 Scenario*
Premium decreases
below $0
Premium decreases
but is greater than $0

Rebate Reallocation

Premium
Rounding

Example

Required

Permitted

1

Permitted

Permitted

2

Premium increases

Permitted
Required, to reflect the
published MA regional
benchmarks

Permitted

3

Permitted

4

RPPO

* 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
Not permitted
Required, to reflect the published
MA regional benchmarks

Premium Rounding
Permitted (excluding EGWP)

Rebate Reallocation
Not permitted; these plans are not
affected by the Part D and MA
regional benchmarks
Required, to reflect the published
MA regional benchmarks

Premium Rounding
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 Part D basic premium indicated in the initial June bid submission; there is no option to
target and reallocate rebates to return to Total Plan Premium.
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.

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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
“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 Worksheet 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 June Bid
Submission

After Release
of Benchmark

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. In other words,
a partial return to the target premium will not be accepted.

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Example 2.

MA BPT Worksheet 6,
Section IIIC, Line—
7a. Part D basic premium
prior to rebates (rounded)
7c. MA rebates allocated
to Part D basic premium
(rounded)

Initial June Bid
Submission

After
Release of
Benchmark

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 one of 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.
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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Example 3.

MA BPT Worksheet 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 June Bid
Submission

After
Release of
Benchmark

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 one of 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.
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 Worksheet 6
Total MA rebate (IIIB,
line 1)
MA rebates allocated to
benefits other than Part D
basic premium (IIIB,
lines 2-4 and 6)
MA rebates allocated to
Part D basic premium
(rounded) (IIIB, line 5)
Total rebates allocated
(IIIB, line 7)
Unallocated rebates
A/B Supp premium prior
to rebates (IIIC, line 1)

Initial June
Bid
Submission
$55

After
Release of
Benchmark
$53

Rebate
Reallocation
Option 1
$53

Rebate
Reallocation
Option 2
$53

Rebate
Reallocation
Option 3
$53

$40

$40

$38

$43

$38

$15

$15

$15

$10

$15

$55
$0

$55
-$2

$53
$0

$53
$0

$53
$0

$50

$50

$50

$50

$48

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APPENDIX E

MA BPT Worksheet 6
A/B Supp premium net of
rebates (rounded) (IIIC,
line 3)
Part D basic premium
prior to rebates (rounded)
(IIIC, line 7a)
Part D basic premium net
of rebates (IIIC, line 7d)
Total MA-PD premium
(IIIC, line 9)
Plan intention for target
Part D basic premium
(IIIC, line 10)

Initial June
Bid
Submission

After
Release of
Benchmark

Rebate
Reallocation
Option 1

Rebate
Reallocation
Option 2

Rebate
Reallocation
Option 3

$10

$10

$12

$7

$10

$35

$30

$30

$30

$30

$20

$15

$15

$20

$15

$30
Premium
amount
displayed in
line 7d

$25

$27

$27

$25

Not
applicable

Not
applicable

Not
applicable

Not
applicable

The MA organization has one of the following three 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.
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 such
that the total rebates allocated equal the total rebates available.

Make a change to A/B supplemental benefits as discussed in the section III in Changes
Allowed to Funding of the A/B Mandatory Supplemental Benefits. Reduce the rebate
allocation to benefits other than the Part D basic premium by $2 such that the total rebates
allocated equal the total rebates available. Leave the basic Part D premium net of rebate at the
post-Part D benchmark announcement premium of $15.
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 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
designated as the target Part D basic premium, then the MA organization may increase

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APPENDIX E

the Part D basic premium in order to reach the target LIPSA by either (i) reallocating
rebates to reduce other beneficiary premiums (A/B mandatory supplemental, Part B,
and/or Part D supplemental), or (ii) 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.
Example 5a.

MA BPT Worksheet 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 June Bid
Submission

After
Release of
Benchmark

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.
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.

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Example 5b. (Similar to Example 3)

MA BPT Worksheet 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 June Bid
Submission

After
Release of
Benchmark

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.
Part D Basic Premium Net of Rebate after Part D Benchmark Announcement Is
Greater than LIPSA - De Minimis Election

The Part D basic premium post-benchmark is greater than the LIPSA and LIPSA is designated
as the target Part D basic premium. If (i) the MA organization has no rebates or has allocated
all of the MA rebates to the Part D basic premium, and (ii) the difference between the Part D
basic premium post-benchmark and the LIPSA is between $0 and the de minimis amount
published by CMS, the MA organization may volunteer to waive the portion of the Part D basic
premium equal to this difference.
Conversely, if the difference between the Part D basic premium post-benchmark and the
LIPSA is greater than the de minimis amount published by CMS, the MA organization
cannot volunteer to waive the de minimis amount.
Example 5c (MA rebates allocated to Part D basic premium equal total MA rebates)
MA BPT Worksheet 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 June Bid
Submission

After Release
of Benchmark

Rebate
Reallocation

$35

$40

$40

$15
$20

$15
$25

$23
$17

LIPSA
Not applicable

Not applicable
$15

Not applicable
$15

The difference between the $17 Part D basic premium post-benchmark and the $15
LIPSA is $2. The MA organization may volunteer to waive $2 of the $17 Part D basic
premium to reach the target LIPSA only if CMS publishes a de minimis amount greater
than or equal to $2. If CMS publishes a de minimis amount less than $2, the MA
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APPENDIX E

organization may not participate in the de minimis program or waive any portion of the
$17 Part D basic premium.
Note that the de minimis amounts in this example are hypothetical and do not reflect
CMS’ de minimis policy for CY2016.
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 Worksheet 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 June Bid
Submission

After
Release of
Benchmark

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. (Note that in the rare
case, in which the basic Part D premium is negative after the release of the national average and
base beneficiary premium, limited changes may be allowed to enhance the Part D benefits in
order to create a Part D supplemental premium that offsets the Part D basic premium.)

Changes Allowed to Funding of the A/B Mandatory Supplemental Benefits

The A/B mandatory supplemental benefit includes reductions in cost sharing for Part A/B items
and services from levels actuarially equivalent to average cost sharing under original Medicare
and additional items and services not covered by original Medicare. CMS will not allow MA

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APPENDIX E

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
PPO plan, the value of added or eliminated benefits is required to match one of the following
amounts:
•
•

The net shift in (i) total MA rebate dollars due to an increase or decrease in those dollars
after application of the regional benchmark, and (ii) a shift in rebates dollars allocated to
Part D basic premium to return to the Part D target premium.
The shift in total MA rebate dollars due to an increase or decrease in those dollars after
application of the regional PPO benchmark.

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 changing the value of benefits by more than $3, for example, 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.

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APPENDIX E

The CY2010 Call Letter included the following guidance regarding benefit changes during
rebate reallocation (page 22):
“III. Bidding
Rebate Re-allocation

. . . In situations when MA-PD plans are allowed to re-allocate Part C rebate dollars in order
to return to the Target Part D basic premium (due to “insufficient allocation” resulting in a
Part D basic premium larger than the target premium or due to a reduction in the total
amount of rebate for a regional plan), MAOs should make re-allocations that reflect the
following priorities. Specifically, there may not be any reduction of rebate allocated to
priority (3) unless reductions have first been made to priority (1), then priority (2) noted
below.

1. Reduce or remove non-Medicare covered benefits;
2. Increase cost sharing for widely-used services such as primary care visits; and
3. As a last resort, increase cost sharing for more limited-use services such as inpatient,
skilled nursing facility (SNF), and home health care.
MAOs that do not adhere to this guidance may be asked to resubmit.”
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 allocated for this purpose may be increased
or decreased. However, the maximum amount of rebate that can be allocated to reduce the
Part B premium is equal to the amount pre-populated by CMS in the BPT.
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

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APPENDIX E

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).
MA Pricing

CMS will allow only minor changes to the BPT as explained below, that is, the PMPM value of
each pricing assumption is essentially fixed prior to rebate reallocation. 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 the
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 Appendix E).
A small change resulting from the proportional allocation of non-benefit expenses
and the gain/loss margin in the BPT.
A small change in gain/loss margin in order for the bid to satisfy CMS Total
Beneficiary Cost (TBC) requirements.

CMS will also allow a small change in the ESRD subsidy due to the automatic (that is,
calculated by formula) impact of changes in mandatory supplemental benefits, nonbenefit expenses and gain/loss margin as a result of rebate reallocation and rounding.
Changes to Medicare-Covered

CMS will allow only the minor modifications specified below 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 the gain/loss margin may not change except
for—
•
•
•

A small change, if any, in allowed costs directly related to a change in utilization
due to the change in A/B mandatory supplemental benefits.
A small change in non-benefit expenses and the gain/loss margin resulting solely
from the proportional allocation of non-benefit expenses and the gain/loss margin in
the BPT.
A small change in gain/loss margin in order for the bid to satisfy CMS TBC
requirements.

Total Beneficiary Cost

If the Plan sponsor chooses to modify the PBP as a result of rebate reallocation, CMS
will allow a minor change in gain/loss margin in order to satisfy CMS TBC
requirements as explained below. Such adjustment is separate from other small changes

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APPENDIX E

in gain/loss margin allowed in these Instructions, for example, a small change in margin
in order to round premium.
•

•

Step 1: Before reallocating rebates, adjust gain/loss margin only to the extent
necessary to satisfy TBC requirements based on the pre-rebate reallocation
change in TBC, (that is, the change in TBC resulting solely from the premium
changes associated with the national average and base beneficiary premium, and
prior to any changes to benefits), then
Step 2: Participate in rebate reallocation making benefit changes while
complying with TBC requirements.

Local MA Plan Segments

The above rules on rebate reallocation apply to bids for local MA plan segments, with the
following clarifications.
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. Therefore, prior to the
allocation of rebates to buy down the premium, the Part D basic and supplemental premium
must be the same across segments. However, the amount of rebates allocated to buy down
Part D basic and supplemental premiums may differ by segment.
See Chapters 1 and 4 of the Medicare Managed Care Manual for requirements for MA plan
segments.

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 the nearest one decimal: 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

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APPENDIX E

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
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 the 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
savings retained by Medicare, the total margin may change by slightly more than $0.50.
Specifically, the Medicare-covered margin (Worksheet 4, cell O107) would be limited to:
•
•
•

At the 70% rebate level: limited to a $0.71 Medicare-covered margin change, to result in
a $0.50 change in rebates ($0.71 × 70% = $0.50).
At the 65% rebate level: limited to a $0.77 Medicare-covered margin change, to result in
a $0.50 change in rebates ($0.77 × 65% = $0.50).
At the 50% rebate level: limited to a $1.00 Medicare-covered margin change, to result in
a $0.50 change in rebates ($1.00 × 50% = $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.
Note that this rule applies separately from, and after, all other bid adjustments CMS allows
during rebate reallocation are made, for example, a small change in gain/loss margin in order to
satisfy TBC requirements.
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.)

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APPENDIX E
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
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

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APPENDIX E

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 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.
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 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 low-income premium subsidy. The plan’s
beneficiaries eligible for the full subsidy would not pay a Part D basic premium,
since such 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 low-income premium subsidy as if the LIPSA were
$31.80. 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 between the Part D
basic premium and the LIPSA (that is, $31.80 less $31.76) rounds to zero when
such 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

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APPENDIX E

premium. This adjustment must be completed before the BPT is submitted to CMS in
early June. Note that 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.
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.

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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. The cost sharing reported on Worksheet 3 must clearly identify
where PBP benefit service categories are priced within 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 and a list of PBP/SB software changes. In addition, the Medicare
Managed Care Manual may be a helpful resource regarding benefit design.
PBP
line #
1a
1b
2
3
4a
4b
4c
5

PBP Category
Inpatient Hospital – Acute
Inpatient Hospital - Psychiatric
Skilled Nursing Facility
Cardiac and Pulmonary Rehabilitation
Services
Emergency Care
Urgently Needed Care
Worldwide Emergency Coverage
Partial Hospitalization

6
7a
7b

Home Health Services
Primary Care Physician Services
Chiropractic Services

7c
7d

Occupational Therapy Services
Physician Specialist Services Excluding
Psychiatric Services (exclude Radiology)
Physician Specialist Services Excluding
Psychiatric (Radiology only)
Mental Health Specialty Services – NonPhysician
Podiatry Services

7d

7e
7f
7g

Other Health Care Professional Services

7h
7i

Psychiatric Services
Physical Therapy and Speech Language
Pathology Services

CY2016 MA BPT Instructions

BPT
line #
a1
a2
b
h5

Corresponding BPT Category:
Description/Note (Worksheet 3)
Inpatient Facility: Acute
Inpatient Facility: Mental Health
Skilled Nursing Facility
Outpatient Facility - Other: Other

f
f
f
h3
h5
c
i1
i2
i6
i4
i2
i6
i5

Outpatient Facility - Emergency
Outpatient Facility - Emergency
Outpatient Facility - Emergency
OP Facility - Other: Mental Health; or
OP Facility - Other: Other
Home Health
Professional: PCP
Professional: Specialist excl. MH; or
Professional: Other
Professional: Therapy (PT/OT/ST)
Professional: Specialist excl. MH; or
Professional: Other
Professional: Radiology

i3

Professional: Mental Health

i2
i6
i2
i6
i3
i4

Professional: Specialist excl. MH;
or Professional: Other
Professional: Specialist excl. MH; or
Professional: Other
Professional: Mental Health
Professional: Therapy (PT/OT/ST)

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APPENDIX F

PBP
line #
8a

BPT
line #
h1

Corresponding BPT Category:
Description/Note (Worksheet 3)
OP Facility - Other: Lab

h2

OP Facility - Other: Radiology

g or h

9a

PBP Category
Outpatient Diagnostic Procedures/Tests/Lab
Services
Outpatient Diagnostic/Therapeutic
Radiological Services
Outpatient Hospital Services

9b
9c
9d

Ambulatory Surgical Center (ASC) Services
Outpatient Substance Abuse
Outpatient Blood Services

10a
10b
11a
11b

Ambulance Services
Transportation Services
Durable Medical Equipment (DME)
Prosthetics/Medical Supplies

g
h5
h5 or
k
d
l
e1
e2

11c

Diabetes Supplies and Services

e2

12
13a

h4
q
q
q
q
q
q
q

Other Non-Covered
Other Non-Covered
Other Non-Covered
Other Non-Covered
Other Non-Covered
Other Non-Covered

13h
14a

End-Stage Renal Disease
Acupuncture and Other Alternative
Therapies
OTC Items
Meal Benefit
Other 1
Other 2
Other 3
Dual Eligible SNPs with Highly Integrated
Services
Medicare-Medicaid Plan
Medicare-covered Preventive Services

OP Facility - Surgery; or
OP - Facility - Other (all sub-categories)
OP Facility - Surgery
OP Facility - Other: Other
OP Facility - Other: Other or Other
Medicare Part B
Ambulance
Transportation (Non-Covered)
DME/Prosthetics/Supplies: DME
DME/Prosthetics/Supplies:
Prosthetics/Supplies
DME/Prosthetics/Supplies:
Prosthetics/Supplies
OP Facility - Other: Renal Dialysis
Other Non-Covered

14b

Annual Physical Exam

q
k, i1,
i2 or
i6
i1, i2
or i6

14c

p

14d

Eligible Supplemental Benefits as Defined
in Chapter 4
Kidney Disease Education Services

Other Non-Covered
Other Medicare Part B; Professional:
PCP; Professional: Specialist excluding
MH; or Professional: Other
Professional: PCP; Professional:
Specialist excluding MH; or
Professional: Other
Health & Education (Non-Covered)

14e

Diabetes Self-Management Training

i1, i2
or i6

15

Medicare Part B Rx Drugs (includes Part D
home infusion drugs included in bundled
services)
Preventive Dental
Comprehensive Dental

j

Professional: PCP;
Professional: Specialist excluding MH;
or Professional: Other
Professional: PCP;
Professional: Specialist excluding MH;
or Professional: Other
Part B Rx

m
m

Dental (Non-Covered)
Dental (Non-Covered)

8b

13b
13c
13d
13e
13f
13g

16a
16b

CY2016 MA BPT Instructions

i1, i2
or i6

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APPENDIX F

PBP
line #
17a
17b
18a
18b

PBP Category
Eye Exams
Eye Wear
Hearing Exams
Hearing Aids

CY2016 MA BPT Instructions

BPT
line #
n1
n2
o1
o2

Corresponding BPT Category:
Description/Note (Worksheet 3)
Vision (Non-Covered): Professional
Vision (Non-Covered): Hardware
Hearing (Non-Covered): Professional
Hearing (Non-Covered): Hardware

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APPENDIX G

APPENDIX G – DE# SUMMARY
Medicaid Eligibility Data

The Medicaid status codes in the beneficiary-level file provided by CMS indicate the Medicaid
eligibility status of the beneficiary as reported by the respective state Medicaid agency. These
codes are shown in the table below. For descriptions of the dual-eligible beneficiary categories,
and of the types of Medicaid benefits to which these beneficiaries are entitled, see
http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/medicare_beneficiaries_dual_eligibles_at_a_glance.pdf.
Medicaid
Status Code
01
02
03
04
05
06
08
09
99
Blank

Medicaid State-Reported Code (Dual-Eligible Category)
QMB only
QMB + full Medicaid benefits
SLMB only
SLMB + full Medicaid benefits
QDWI (Qualified Disabled and Working Individual)
QI (Qualified Individual)
Full-benefit dual-eligible beneficiaries who do not have QMB or SLMB
status
Other dual-eligible beneficiaries without full Medicaid benefits—for
example, those in Pharmacy Plus and 1115 drug-only demonstrations
Unknown, including Medicaid-eligible beneficiaries reported by plans
and territories
Non-Medicaid

Classifying Dual-Eligible Data

The HPMS plan-level data also 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
Grouping
A

Dual
Eligible
Dual
Dual

B

Category 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

Medicare Cost-Sharing
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#. The
percentages in the table below represent the number of total dual-eligible beneficiaries relative
to total members per the HPMS plan-level data.

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APPENDIX G
Medicaid
Grouping/Status Code

DE# Determination
for Base Period Data

Condition

A: 01, 02

None

DE#

B: 03, 04, 05, 06, 08, 09,
99

<10% total dual-eligible
beneficiaries

May consider as non-DE# or
determine actual classification

B: 03, 04, 05, 06, 08, 09,
99

10% to 100% total dualeligible beneficiaries

Must determine actual classification

None

Non-DE#

C: Blank
BPT Values

The following table outlines the determination of certain BPT values when the certifying
actuary chooses to set the projected DE#, non-DE#, and total allowed costs all equal on
Worksheet 2.
BPT Area
WS3

Input Item
Utilization and PMPM
values

WS4 IIB

State Medicaid required
beneficiary cost sharing
(column k)

WS5 II

Non-DE# risk factor

>90% DE#
Enter non-DE# or
total values1

Enter zero or
appropriate
values2

Enter
appropriate
values3

N/A

Enter total
values

Enter total
values

N/A

1

Enter total values if DE# projected member months equal total projected member months.

2

Plus plan cost sharing for non-covered, non-Medicaid benefits.

3

Plus plan cost sharing for non-covered, non-Medicaid benefits.

CY2016 MA BPT Instructions

10% to
90% DE#

<10% DE#
Enter non-DE# or
total values

N/A

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APPENDIX G

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 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.
BPT Area
WS3
WS4 IIB

Input Item

Determination of BPT Values

Utilization and PMPM values

Enter non-DE# values

State Medicaid required beneficiary
cost sharing (column k)

Determine appropriate values
(including zero)1

Non-DE# risk factor

Determine distinct non-DE#
and DE# values

WS5 II

The table below outlines the determination of BPT values in which the requirements are the
same for all bids regardless of the percentage of DE# members.

1

BPT Area

Input Item

WS3

Cost-sharing values and description

WS4 IIB

Plan cost sharing (column f)

WS5 II

Non-DE# member months

Determination of BPT Values
Reflect PBP package
Default to non-DE# ratio of plan
cost sharing or override formulas

Determine distinct non-DE#
and DE# values

Plus plan cost sharing for non-covered, non-Medicaid benefits.

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APPENDIX H

APPENDIX H – RELATED-PARTY ADMINISTRATIVE AND MEDICAL
SERVICE ARRANGEMENTS
This appendix outlines some of the requirements for each of the methods used to reflect in the
BPT costs associated with related-party administrative services arrangements.

Summary of MA Related-Party (RP) Requirements - Administrative Services Arrangements

See the pricing consideration for related-party arrangements for a complete explanation of the
requirements.
Method

Method 1 Actual Cost

Method 2 Market
Comparison – through Plan
sponsor
Method 2 Market
Comparison – through
Related Party

CY2016 MA BPT Instructions

Availability

Always
available

Unrelated
Party

NBE in
BPT

Criteria

Actual
cost of
RP

N/A

•

Support method

•

Alternative

Provides
similar

to Method 1

services

Compare to contracts
with sufficient costs
of services
Show fees within 5%
or $2 PMPM—
whichever is greater

•

Fees paid
by
Plan
sponsor

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APPENDIX H

Summary of MA Related-Party Requirements – Medical Services Arrangements

See the pricing consideration for related-party arrangements for a complete explanation of the
requirements.
Method
Method 1 Actual
Cost
Method 2 Market
Comparison –
through Plan sponsor

Availability

Always
available

Unrelated Party
N/A
•
•

Alternative

•

to Method 1

•
•

Method 2 Market
Comparison –
through Related Party

•
•

Similar services
Medicare
population
Bid’s service area
MA organization
Similar services
Medicare
population
Attest to contract
availability

•

Support method

•

Compare to
contracts with
sufficient costs of
services
Fees within 5% or
$2 PMPM—
whichever is
greater

•

•

Method 3
Comparable to FFS

Cannot
satisfy
Method 1

Method 4 FFS Proxy

Cannot
satisfy
Method 1,
or Method
2, or
Method 3

CY2016 MA BPT Instructions

N/A

•

•

N/A

Net Medical
in BPT

Criteria

•

Actual cost of
RP

Fees paid by
Plan sponsor

Demonstrate
Method 1 not
possible
Fees within 5% of
100% FFS or $2
PMPM—whichever
is greater
Show Method 1, 2,
or 3 not possible
Show fees NOT
comparable to
100% FFS

100% FFS

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APPENDIX I

APPENDIX I – MEDICAL SAVINGS ACCOUNT BPT
This appendix provides guidance for completing the Medical Savings Account Bid Pricing
Tool for Medical Savings Account (MSA) plans offered to Medicare beneficiaries. 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 – MSA Enrollee Deposit and Plan Payment PMPM
Worksheet 5 – MSA 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

MSA is the only valid plan type.
Line 8 – Deductible Amount

Enter the deductible amount that each beneficiary will pay for Medicare-covered benefits. The
maximum deductible for CY2015for MSA plans is $10,750.
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.

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APPENDIX I

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 – MSA 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 (PLAN’S RISK
FACTOR AND EXCLUDE SERVICES COVERED WITHIN THE DEDUCTIBLE)
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 total projected member months to the highest claim interval expected by members and
enter the allocation as a percentage.
For example, if projected member months for members expected to incur annual claims of
$11,500 represent 20 percent of total projected member months, and projected member months
for members expected to incur annual claims of $4,400 represent 10 percent of total projected
member months, then enter 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.

SECTION III – DEVELOPMENT OF SUMMARY INFORMATION (PLAN’S RISK FACTOR)
Line a – Medicare-Covered Plan Medical Expenses PMPM

This cell displays the sum of column g of Section II.

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APPENDIX I
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
zero (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
zero (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.
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 – MSA OPTIONAL SUPPLEMENTAL BENEFITS (CORRESPONDING TO
MA WORKSHEET 7)
Follow the instructions for MA Worksheet 7 for the appropriate inputs.

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APPENDIX J

APPENDIX J – END–STAGE RENAL DISEASE–ONLY SPECIAL NEEDS
PLANS BPT
This appendix provides guidance for completing the ESRD-SNP BPT for ESRD-SNP plans
offered to Medicare beneficiaries. This appendix highlights only the differences between the
ESRD-SNP BPT and the MA BPT.
The ESRD-SNP bid form is organized as outlined below:
Worksheet 1 – Enrollment and PMPM Revenue Projection
Worksheet 2 – Projection of benefit cost, non-benefit expenses, and gain/loss margin PMPM
Worksheet 3 – Program Experience for Calendar Year 2014
Worksheet 4 – Optional Supplemental Benefits

WORKSHEET 1 – ENROLLMENT AND PMPM REVENUE PROJECTION
SECTION I – GENERAL INFORMATION
Follow the instructions for MA Worksheet 1 for the appropriate inputs.
Line 2 – Contract-Plan-Segment

This field concatenates the contract ID, plan ID and segment ID.
Line 4 – Service Area

Enter a brief description of the service area.
Line 5 – Plan Type

“ESRD SNP” is pre-populated.

SECTION II – SERVICE AREA SUMMARY
Follow the instructions for MA Worksheet 5 for the appropriate inputs.
✔ Column a – State/County Code

Similar to MA BPT Worksheet 5, enter the county codes associated with the plan’s
service area.
Technical note regarding the ESRD-SNP BPT: the rates populated in column (g) are
“state-wide” rates for dialysis and transplant statuses. Therefore, plans may enter one
county code (example: entering 05430 for California) and report the dialysis member
months and risk scores for the state in that row. Similarly, one county code may be
entered for the state-wide transplant information. In other words, the dialysis and
transplant member months and risk scores do not need to be reported at the county level.
Functioning graft rates are “county-specific”, and therefore member months and risk
scores must be reported at the county level for functioning graft status.
✔ Column d – ESRD Status (D /T /F)

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APPENDIX J

Enter the ESRD status: “D” for dialysis, “T” for transplant, or “F” for functioning graft
(that is, postgraft).
✔ Column f – Projected Risk Score

Projected risk scores must:
•
•
•
•

Be based on the CMS-HCC ESRD Model.
Reflect appropriate projection factors.
Be adjusted for FFS normalization.
Reflect the MA coding adjustment factor as follows: postgraft risk scores must
reflect the MA coding adjustment factor in the Announcement of Calendar Year
(CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and
Part D Payment Policies. Dialysis risk scores and transplant factors should not
incorporate the MA coding adjustment.

✔ Column h – Percentage of MSP Member Months

Enter the percentage of Medicare Secondary Payer (MSP) member months applicable for
the ESRD status and county/state indicated.
✔ Column i – Projected CMS Monthly Capitation

This field is calculated automatically.

SECTION III – ESRD MSP ADJUSTMENT FACTORS FOR CY (FROM APRIL RATE
ANNOUNCEMENT)
This section contains the MSP adjustment factors released by CMS in the Announcement of
Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and
Part D Payment Policies. Line 1 contains the MSP factor for functioning graft, and line 2
contains the MSP factor for dialysis/transplant.

SECTION IV – SUMMARY DATA
Line 1 – Part C Mandatory Monthly Enrollee Premium

This amount is obtained from Worksheet 2.
Line 2 – Part C Monthly Plan Revenue

This field is calculated automatically.
Line 3 – Part D Premium (Basic plus Supplemental) Net of Reductions

This information is obtained from Worksheet 2.
Line 4 – Plan Intention for Target Part D Basic Premium

This information is obtained from Worksheet 2.
Line 5 – Quality Bonus Rating (per CMS)

Follow the instructions for MA Worksheet 5.

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APPENDIX J
Line 6 – New/low indicator (per CMS)

Follow the instructions for MA Worksheet 5.

WORKSHEET 2 – PROJECTION OF BENEFIT COST, NON-BENEFIT EXPENSES, AND
GAIN/LOSS MARGIN PMPM
SECTION II – PROJECTION OF PLAN COSTS
The medical expense projection is to be consistent with the population reflected in the revenue
projections on Worksheet 1. The medical expense projections may be based on a blend of
trended plan experience and other data sources.
The allowed costs in rows 16-31 must include only Medicare-covered services. Additional
services such as inpatient coverage beyond lifetime reserve days and preventive services not
covered by original Medicare must be reflected in additional services on row 37.
The supplemental benefits columns are calculated automatically and reflect cost sharing
enhancements to the Medicare-covered benefit package.
For guidance on reporting non-benefit expenses, gain/loss margin and related parties, see the
“Pricing Considerations” section and MA Worksheet 4 section of these Instructions.

SECTION III – DEVELOPMENT OF ESTIMATED PLAN PREMIUM AND REDUCTIONS
Follow the instructions for MA Worksheet 6.
In this appendix, the term “excess funds” refers to the difference between the CMS capitation
payment and the Plan sponsor’s cost to provide Medicare-covered benefits. Regarding the
rebate reallocation period and the ESRD-SNP BPT, note that—
•

•

After CMS publishes the Part D national average monthly bid amount, the Part D base
beneficiary premium, and the Part D regional low-income premium subsidy amounts, the
Plan sponsor may return to the target Part D basic premium by reallocating “excess
funds” allocated in the initial submission to the supplemental benefit items in rows 56
through 60 of Worksheet 2.
Generally, the rules in effect for other MA-PD plans for changes to the funding of
benefits during the rebate reallocation period apply to reallocation of excess funds. For
more information about rebate reallocation see Appendix E of these Instructions.

WORKSHEET 3 – PROGRAM EXPERIENCE FOR CALENDAR YEAR 2014
SECTION II – CONTACT INFORMATION
Follow the instructions for MA Worksheet 6.

SECTION III – REVENUES
Enter member months, CMS payments (on a PMPM basis), and enrollee premium (on a PMPM
basis) for CY2014. All revenues are to be reported on an earned basis, including retroactive

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APPENDIX J

adjustments. Revenues for 2014 are to include an estimate of the final risk adjustment
settlement to be received in mid-2015.

SECTION IV – MEDICAL BENEFITS (PMPM)
Enter claims incurred in CY2014 and paid through March 31, 2015. Medical benefits are to be
reported net of enrollee cost sharing.
Claim reserves as of March 31, 2015 are to be reported for 2014. Organizations may allocate
claim reserves to appropriate categories in situations where reserves are developed at a
consolidated level.
For “Utilizers” column, follow the instructions for MA Worksheet 1.
For guidance on reporting non-benefit expenses and gain/loss margin, see the “Pricing
Considerations” section of these Instructions.

WORKSHEET 4 – OPTIONAL SUPPLEMENTAL BENEFITS
Follow the instructions for MA Worksheet 7 for the appropriate inputs.

SUPPORTING DOCUMENTATION FOR ESRD-SNP BPTS
See Appendix B for supporting documentation requirements.

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APPENDIX K

APPENDIX K – TRENDING RISK SCORES
This appendix includes the following considerations for trending Part C and Part D risk scores.
•
•
•
•
•
•

•
•
•

•

Include the most recent annual consecutive calendar risk scores that are available.
Use raw risk scores, that is, not normalized and not adjusted for MA coding patterns.
Reflect the same amount of paid claims run-out for each year’s risk scores.
Use final risk scores from each year or apply a completion factor to the last set of scores to
approximate a final score.
Use the same cohort for each year (e.g., the July cohort).
Use the same model to estimate all payment year scores. If possible, use the risk
adjustment model for the upcoming payment year or apply a conversion factor to each
payment year’s risk scores to convert to a single risk model.
◦ The model conversion factor should be plan-specific. It can be generated from the
risk scores that CMS sends to Plan sponsors to support bidding; however, Plan
sponsors should also consider whether other years in their trends have a different
conversion factor (e.g., when the population mix differs).
◦ The conversion factor can be derived by calculating risk scores from a year under two
different models. The factor can be a ratio of the scores under each model.
‣ The risk scores should have the same run-out and be calculated using the same
cohort.
‣ Plan sponsors should note that when converting risk scores from one model to
another, a conversion between denominator years is, more than likely,
occurring also. The risk scores in the conversion factor should be raw if the
factor will be applied to an old model raw risk score, which is then projected
to the payment year.
Divide cohorts into meaningful subgroups using the same considerations used to determine
allowed costs and project enrollment in each subgroup to the payment year.
Weight subgroup risk scores by enrollment in each subgroup per year to determine annual
risk scores for trending.
Compare year over year risk scores to obtain a trend factor. Unless the Plan sponsor is
anticipating changes in coding efforts or population characteristics, more than two years of
risk scores will help minimize the effect of random changes in coding patterns and
enrolled population. If deviations from previous trend are expected in the payment year,
provide justification for such changes in the supporting documentation.
◦ If starting with base year risk scores that are blended, plan sponsors are to assess
whether there are plan-specific risk score trends unique to each model and adjust their
overall trend accordingly.
Use this trend factor to project from base period risk scores to payment (contract) year raw
risk scores.

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According to the Paperwork Reduction Act of 1995, no persons are required to respond
to a collection of information unless it displays a valid OMB control number. The valid
OMB control number for this information collection is 0938-0944. The time required to
complete this information collection is estimated to average 30 hours per response,
including the time to review instructions, search existing data resources, gather the data
needed, and complete and review the information collection. If you have comments
concerning the accuracy of the time estimate(s) or suggestions for improving this form,
please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer,
Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

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