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

OMB Approved # 0938-0944
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INSTRUCTIONS FOR COMPLETING
THE MEDICARE ADVANTAGE
BID PRICING TOOLS
FOR CONTRACT YEAR 2018

As of September 6, 2016

CMS-10142 (04/30/2017)

TABLE OF CONTENTS
Table of Contents ............................................................................................................................................... 2
I. Introduction.................................................................................................................................................... 5
Definitions ................................................................................................................................................... 5
Background ................................................................................................................................................. 5
Document Overview ................................................................................................................................... 5
New for Contract Year 2018 (CY2018) ...................................................................................................... 6
Bidding Resources....................................................................................................................................... 6
II. Pricing Considerations.................................................................................................................................. 8
Bidding/Pricing Approach........................................................................................................................... 8
Specific Topics ............................................................................................................................................ 8
Affordable Care Act .......................................................................................................................................9
Bad Debt ...................................................................................................................................................... 10
Base Period Experience ............................................................................................................................... 10
Benefits and Service Categories .................................................................................................................. 13
Capitated Arrangements for Medical Services............................................................................................. 15
Coordination of Benefits (COB)/Subrogation ............................................................................................. 16
Cost Sharing ................................................................................................................................................. 16
Credibility .................................................................................................................................................... 18
Dual-Eligible Beneficiaries .......................................................................................................................... 20
Employer/Union Groups .............................................................................................................................. 24
End-Stage Renal Disease (ESRD) ............................................................................................................... 25
Enrollment ................................................................................................................................................... 26
Gain/Loss Margin ........................................................................................................................................ 26
Hospice Enrollees ........................................................................................................................................ 30
Manual Rating.............................................................................................................................................. 31
Medicare Secondary Payer (MSP) Adjustment ........................................................................................... 31
Non-Benefit Expenses ................................................................................................................................. 34
Optional Supplemental Benefits .................................................................................................................. 35
Out-of-Area Enrollees .................................................................................................................................. 36
Part B Premium and Buydown..................................................................................................................... 36
Plan Premiums, Rebate Reallocation, and Premium Rounding ................................................................... 36
Plan Intention for Target Part D Basic Premium ......................................................................................... 37
Point-of-Service (POS) ................................................................................................................................ 38
Rebate Allocations ....................................................................................................................................... 38
Regional Preferred Provider Organizations (PPOs) ..................................................................................... 39
Related-Party Arrangements (Medical and Non-Benefit) ............................................................................ 39
Risk Score Development for CY2017.......................................................................................................... 42
Sequestration ................................................................................................................................................ 46
Service Area Changes .................................................................................................................................. 47
Supporting Documentation .......................................................................................................................... 47

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 1/1/2016 – 12/31/2016 .................................. 53
Section IV – Projection Assumptions ....................................................................................................... 55

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Section V – Description of Other Utilization Adjustment Factor, Other Unit Cost Adjustment
Factor, and Additive Adjustments ...................................................................................................... 57
Section VI – Base Period Summary for 1/1/2016 – 12/31/2016 (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 ................................................................................. 64
Section I – General Information ................................................................................................................ 64
Section II – Maximum Cost Sharing Per Member Per Year ..................................................................... 64
Section III – Development of Contract Year Cost Sharing PMPM (Plan’s Risk Factor) ......................... 66
Section IV – Mapping of PBP Service Categories to BPT........................................................................ 72
MA Worksheet 4 – MA Projected Revenue Requirement PMPM................................................................... 73
Section I – General Information ................................................................................................................ 73
Section II – Development of Projected Revenue Requirement ................................................................. 73
Section III – Development of Projected Contract Year ESRD “Subsidy” ................................................ 80
Section IV – For Employer Bid Use Only (“800-series”) ......................................................................... 81
Section V – Projected Medicaid Data ....................................................................................................... 81
MA Worksheet 5 – MA Benchmark PMPM .................................................................................................... 82
Section I – General Information ................................................................................................................ 82
Section II – Benchmark and Bid Development ......................................................................................... 82
Section III – Savings/Basic Member Premium Development ................................................................... 83
Section IV – Standardized A/B Benchmark – Regional PPO Plans Only ................................................. 84
Section V – Quality Rating ....................................................................................................................... 84
Section VI – County-Level Detail and Service Area Summary ................................................................ 85
Section VII – Other Medicare Information ............................................................................................... 87
Section VIII – Projected CY Member Months .......................................................................................... 88
MA Worksheet 6 – MA Bid Summary ............................................................................................................ 89
Section I – General Information ................................................................................................................ 89
Section II – Other Information .................................................................................................................. 89
Section III – Plan A/B Bid Summary ........................................................................................................ 89
Section IV – Contact Information and Date Prepared ............................................................................... 93
Section V – Working Model Text Box...................................................................................................... 94
MA Worksheet 7 – Optional Supplemental Benefits ....................................................................................... 95
Section I – General Information ................................................................................................................ 95
Section II – Optional Supplemental Packages........................................................................................... 95
Section III – Comments............................................................................................................................. 96
Section IV – Base Period Summary (entered at the contract level) .......................................................... 96
IV. Appendices................................................................................................................................................ 97
Appendix A – Actuarial Certification .............................................................................................................. 97
Appendix B – Supporting Documentation ....................................................................................................... 99
General ...................................................................................................................................................... 99
Submitting Supporting Documentation ................................................................................................... 100
Sample Supporting Documentation......................................................................................................... 112
Appendix C – Part B-Only Enrollees ............................................................................................................. 117
Appendix D – Medicare Advantage Plans Available to employer/Union Groups ......................................... 118
Individual-market plans (“Mixed Enrollment” Plans)............................................................................. 118
Appendix E – Rebate Reallocation and Premium Rounding ......................................................................... 119
I. Rebate Reallocation Permissibility by Plan Type ................................................................................ 119
II. Rebate Reallocation Rules and Examples .......................................................................................... 120

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III. Additional Rebate Reallocation Guidance ........................................................................................ 128
IV. Rules for Rounding Premiums .......................................................................................................... 131
V. Summary of Considerations for Rebate Reallocation Resubmissions................................................ 135
Appendix F – Suggested Mapping of MA PBP Categories to BPT Categories ............................................. 136
Appendix G – DE# Summary ........................................................................................................................ 139
Appendix H – Related-Party Administrative and Medical Service Arrangements ........................................ 142
Appendix I – Medical Savings Account BPT ................................................................................................ 144
Worksheet 1 – MSA Base Period Experience and Projection Assumptions (Corresponding to MA
Worksheet 1) .................................................................................................................................... 144
Worksheet 2 – MSA Total Projected Allowed Costs PMPM (Corresponding to MA Worksheet 2)...... 144
Worksheet 3 – MSA Benchmark PMPM (Corresponding to MA Worksheet 5) .................................... 144
Worksheet 4 – MSA Enrollee Deposit and Plan Payment (No corresponding MA Worksheet) ............ 145
Worksheet 5 – MSA Optional Supplemental Benefits (Corresponding to MA Worksheet 7) ................ 146
Appendix J – End–Stage Renal Disease–Only Special Needs Plans BPT ..................................................... 147
Worksheet 1 – Enrollment and PMPM revenue Projection .................................................................... 147
Worksheet 2 – Projection of benefit cost, non-benefit expenses, and gain/loss margin PMPM ............. 149
Worksheet 3 – Program Experience for Calendar Year 2016 ................................................................. 150
Worksheet 4 – Optional Supplemental Benefits ..................................................................................... 150
Supporting Documentation for ESRD-SNP BPTs .................................................................................. 150
Appendix K – Trending Risk Scores.............................................................................................................. 151
Appendix L – Data Aggregation Examples ................................................................................................... 152

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INTRODUCTION

I. INTRODUCTION
DEFINITIONS
In these Instructions, the term “bid” refers to the Medicare Advantage (MA) Bid Pricing
Tool (BPT) and/or the MA Plan Benefit Package (PBP) required for a contract numberplan ID-segment ID.
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 term “Non-DE#” refers to dual-eligible beneficiaries with full Medicare costsharing 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, including out-of-area members.

BACKGROUND
Medicare Advantage Organizations (MAOs) must submit a separate MA BPT to the Centers
for Medicare & Medicaid Services (CMS) for each bid that they intend to offer under the MA
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 BPT must be submitted for each segment.
MAOs must submit the information via the CMS Health Plan Management System (HPMS) in
the CMS-approved electronic format—the MA 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 (MMPs) offered through a 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 PBP 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:

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INTRODUCTION

•
•
•
•

Section I, “Introduction”: contains a list of key changes from the CY2017 BPT and
provides sources of information that can be accessed for assistance during the bid
submission process.
Section II, “Pricing Considerations”: contains guidance for preparing bids and
presenting pricing results in the BPT.
Section III, “Data Entry and Formulas”: contains directions for completing the seven
worksheets in the MA BPT and explains the formulas for calculated cells.
Section IV, Appendices A through L: contain requirements for and information on
Actuarial Certification, Supporting Documentation, Part B-Only Enrollees, MA
Products Available to Groups, Rebate Reallocation and Premium Rounding, Suggested
Mapping of MA PBP Categories to BPT Categories, DE#, Related-Party Requirements,
the MSA BPT, the ESRD-SNP BPT, Trending Risk Scores, and Data Aggregation
Examples.

NEW FOR CONTRACT YEAR 2018 (CY2018)
The key changes between the CY2017 and CY2018 MA, MSA and ESRD BPTs are listed
below. The changes improve the usability and functionality of the BPTs and reflect updated
guidance.
•

Technical
◦ The add-in file (BPT2018.xlam) must be saved under C:\BPT\BPT2018\.
◦ See the BPT technical instructions for more information.

BIDDING RESOURCES
The following resources provide information on CY2018 bidding:
•
•

•
•
•

•

The CY2018 Advance Notice and Announcement at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
Announcements-and-Documents.html.
The CY2018 Actuarial Bid Training is offered as a web-based conference. The
conference materials, including slides and streaming video downloads, are available at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
BidTraining2018.html.
Medicare fee-for-service (FFS) trends can be found at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/FFSTrends.html.
For questions about the BPT, 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
CY2018 bidding process. The conference calls will include live Question and Answer
sessions with CMS actuaries. For call-in information, see the OACT memorandum
with the subject line “Actuarial User Group Calls” released via HPMS.
For technical questions about the BPT, BPT Batch Tools, HPMS, or the upload process,
refer to the following resources:
◦ The BPT Technical Instructions, located in HPMS, under HPMS Home > Plan Bids
> Bid Submission > CY2018 > Documentation > BPT Technical Instructions

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INTRODUCTION

◦
•

The Bid Submission User’s Manual, also available in HPMS, under HPMS Home >
Plan Bids > Bid Submission > CY2018 > 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, located at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS019326.html.
◦ A memorandum released via HPMS titled “The Contract Year 2018 Medicare
Advantage Bid Review and Operations Guidance.”

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PRICING CONSIDERATIONS

II. PRICING CONSIDERATIONS
BIDDING/PRICING APPROACH
By statute the bid must represent the revenue requirement of the expected population.
Therefore, the revenue requirement in the MA 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, the Medicare Advantage Organization (MAO) must use
credible bid-specific experience in the development of projected allowed costs. This approach
does not preclude the MAO from reaching specific benefit and premium goals; the gain/loss
margin guidance allows sufficient flexibility to achieve pricing targets provided that the overall
margin meets the requirements in the guidance and that anti-competitive practices are not used.
It is important to note the distinction between reporting base period experience data in
Worksheet 1 and projecting credible data for pricing. Base period experience must be reported
at the bid level if the bid existed in CY2016, 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)
9
Adjustment
10
Non-Benefit Expenses
10
Optional Supplemental Benefits
13
Out-of-Area Enrollees

Page

15

36

16

Cost Sharing

16

Credibility
Dual-Eligible Beneficiaries

18
20

Employer/Union Groups

24

End-Stage Renal Disease (ESRD)

25

Enrollment
Gain/Loss Margin
Hospice Enrollees
Manual Rating

26
26
30
31

CY2018 MA BPT Instructions

31
34
35
36

Part B Premium and Buydown
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
(RPPOs)
Related-Party Arrangements (Medical and
Non-Benefit)
Risk Score Development for CY2018
Sequestration
Service Area Changes
Supporting Documentation

36
37
38
38
39
39
42
46
47
47

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PRICING CONSIDERATIONS

Affordable Care Act

The Affordable Care Act (ACA) introduced quality bonus payments (QBPs) to MAOs based on
a five-star quality rating system. The ACA also changed the share of savings that MAOs must
provide to enrollees as the beneficiary rebate, whereby the level of rebate is tied to the level of
the QBP rating for the contract number.
The contract-level quality bonus ratings for the CY2017 QBP can be found in HPMS, under
HPMS Home > Quality and Performance > Part C Performance Metrics > Quality Bonus
Payment Rating > 2017.
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 2017, the quality bonus rating on HPMS for a
“low” enrollment contract is blank and the quality bonus rating on Worksheet 5,
Section V, line 1 must be left blank.
New Contract under New Parent Organization

A new MA contract offered by a parent organization that has not had any MA
contract(s) with the 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 2017, the
quality bonus rating on HPMS for a “new contract under new parent org” is blank and
the quality bonus rating on Worksheet 5, Section V, line 1 must be left blank.
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). For 2017, the user must enter the quality bonus rating from
HPMS as the quality bonus rating in Worksheet 5, Section V, line 1.
The table below outlines the QBP percentage and rebate percentage for various quality bonus
ratings (that is, QBP star ratings) in CY2017.
QBP
star
rating
4.5+
4.0
3.5
3.0
< 3.0
Blank

CY2017
QBP Percentage
5.0%
5.0%
0.0%
0.0%
0.0%
3.5%

CY2017
Rebate Percentage
70%
65%
65%
50%
50%
65%

The CY2017 Advance Notice and CY2017 Call Letter and the CY2017 Rate Announcement
contain additional information regarding the ACA provisions and the QBP.

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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 MAO in limited situations, such as
when private fee-for-service (PFFS) plans have chosen to match this aspect of Medicare FFS
payment rules or when necessary for a plan to maintain access to a sole provider of a service.
Base Period Experience

The experience data must be based on a calendar year 2016 incurred period 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. Note that these data—
•
•
•

•
•
•

Must be submitted on Worksheet 1 for a bid with experience data for 2016, regardless
of the level of enrollment.
Must reconcile in an auditable manner to the MAO’s audited financial statements.
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 from the base period to the
contract period.
May be reported in aggregate for a number of bids only as allowed in the
“Data Aggregation” section of this pricing consideration. Each contract number-plan
ID-segment ID must be identified in Section II, line 5.
Must be provided for plans acquired by the MAO.
May not be used to aggregate data from a number of bids in order to achieve credibility.

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.
Reflect the full level of plan cost sharing in the PBP for all enrollees including the DE#
beneficiaries. See the “Dual-Eligible Beneficiaries” pricing consideration for dualeligible 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 “Hospice Enrollees” pricing consideration for more information about reporting
base period experience.
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

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PRICING CONSIDERATIONS

optional supplemental benefits. Section VI must be completed in total dollars (not
per-member-per-month amounts).
Data Aggregation

The requirements for reporting on Worksheet 1 base period data for more than one bid
due to cross-walks and enrollment shifts are described in Rules 1 through Rule 4 at the
end of this section. These rules apply to cross-walk and enrollment shifts between
segments and depend on the following factors:
•

•

•

How enrollment changes are processed.
◦ In these Instructions, the term “formal cross-walk” refers to the cross-walk
process submitted in HPMS for non-segmented plan consolidations (that is
consolidated renewals), whereby members are automatically moved from
one bid to another (that is, one bid only). Without an HPMS cross-walk in
place, members are dis-enrolled from the terminating plan and must actively
select to enroll in a new plan of their choosing.
◦ Medicare Advantage and Prescription Drug (MARx) enrollment transactions
are used to automatically move members from one bid to more than one bid,
for example, when the service area of one or more segments is redefined.
Note that in some cases, an approved cross-walk is required, for example,
when the service area of one or more non-segmented plans is redefined. In
this situation, without an approved cross-walk in place, members in the
affected counties must actively select to enroll in a bid of their choosing.
Whether or not members cross-walked or moved to a bid via MARx transactions
are dis-enrolled from such bid the following year via MARx transactions, that is,
when to use Rule 4 – Two-Year Perspective. (Note that the dis-enrollment of
members from a bid, in itself, is not a factor—a “dis-enrollment” must be
preceded by a “cross walk” for the previous year.).
Whether or not enrollment changes that are processed via MARx enrollment
transactions apply to a significant proportion of members in the bid from which
the members are moving, that is, when Rule 2 – Enrollment Shifts applies.

The threshold (that is, the level of significance) for determining the significance of the
proportion of members in a bid that are cross-walked into existing or new plans via
MARx enrollment transactions must be the same for each of the MAO’s MA bids that
an actuary certifies.
For more information about MA renewals and cross-walks, see Chapters 4 and 16 of the
Medicare Managed Care Manual at https://www.cms.gov/Regulations-and-Guidance/
Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS019326.html.
 Rule 1 – Cross-walks

Base period data for more than one bid must be aggregated and reported on
Worksheet 1 of the bid into which the members are cross-walked only in the
following circumstances:
•

When two or more plans are consolidated and the members are cross-walked
into an existing or new plan under a formal cross-walk, but are not dis-enrolled

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PRICING CONSIDERATIONS

•

via MARx transactions the following year. If members are cross-walked one
year and dis-enrolled the following year, then Rule 4 applies.
When the proportion of members in a bid that are cross-walked into existing or
new plans via MARx enrollment transactions, subject to Rule 4, is greater than
or equal to the MA level of significance determined by the certifying actuary.
That is, if members are cross-walked one year and dis-enrolled via MARx
transactions the following year then such proportion must be reduced.

Rule 1 applies when members are cross-walked within the same contract and when
members are cross-walked 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 of the bid into which the members are moved or cross-walked to in the
following circumstances:
•
•
•

When an existing member chooses to enroll in a different plan.
When the proportion of members in a bid that are cross-walked into existing or
new plans via MARx enrollment transactions, subject to Rule 4, is less than the
MA level of significance determined by the certifying actuary.
When enrollment changes do not involve a cross-walk whether or not a bid is
terminated.

 Rule 3 – Partial Experience

Base period experience must be reported in total at the bid level for every bid; do
not include partial plan experience on Worksheet 1.
 Rule 4 – Two-Year Perspective

For BPT reporting purposes, the actuary must consider the cross-walks from the
base period to the contract period (that is, two years of cross-walks, from CY2016 to
CY2017, and then from CY2017 to CY2018) taking into account MARx
dis-enrollment transactions, as explained below. That is, Rule 4 applies only if
members are: (i) cross-walked both years, or (ii) cross-walked one year and
dis-enrolled the following year.
•

•

For a BPT, that is, “Bid Y,” the MAO must report base period experience of
another bid, that is, “Bid X,” on Worksheet 1 of the Bid Y CY2017 BPT, if—
◦ The proportion of Bid X members who are cross-walked or moved into
Bid Y and who remain in Bid Y for CY2018, is greater than or equal to the
level of significance determined by the certifying actuary.
The calculation of the aforementioned proportion includes the following types of
cross-walks and MARx enrollment and dis-enrollment transactions occurring
over the course of the two year period:
◦ A plan consolidation for CY2017 or a proposed consolidation for CY2018
that moves Bid X members to Bid Y under a formal cross-walk.

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PRICING CONSIDERATIONS

◦

•

A service area expansion (SAE) for CY2017 or a proposed SAE for the
CY2018 that cross-walks or moves Bid X members to Bid Y via MARx
enrollment transactions.
◦ A proposed service area reduction (SAR) for CY2018. However, the
calculation pertains only to prior Bid X members (that is, Bid X members
who were moved to Bid Y for CY2017) in the reduced portion of the service
area of Bid Y who will be dis-enrolled from Bid Y via MARx transactions.
Note that this type of transaction does not involve a cross-walk.
A separate calculation is required for each Bid X from which members are
cross-walked into Bid Y.

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. Benefits must
be priced in the BPT as benefit expenses, not non-benefit expenses. For example, remote
access technologies (such as a nursing hotline), a fitness benefit, and other supplemental
benefits as defined in Chapter 4 of the MMCM must all be priced as benefit expenses. The cost
of value-added items and services must be excluded from the BPT.
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.
For more information on benefits, service categories, and segmented plans see:
•

•

Chapter - 3 Marketing Guides Instructions and Chapter 4 - Benefits and Beneficiary
Protections of the Medicare Managed Care Manual located at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS019326.html.
Medicare Marketing Guidelines at https://www.cms.gov/Medicare/Health-Plans/
ManagedCareMarketing/FinalPartCMarketingGuidelines.html.
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.
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

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classification of DM expenses in the BPT 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:
•
•
•
•

A Skilled Nursing Facility (SNF) waiver of a qualifying 3-day inpatient hospital
stay and the associated SNF stay are Medicare-covered benefits.
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.
Inpatient Facility Additional Days

CMS developed a 1.2-percent factor based on FFS data that the certifying actuary may
use as a “safe harbor” for the proportion of inpatient facility days that are non-covered.
If the non-covered inpatient facility 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.
Further, the certifying actuary may use the inpatient facility “safe harbor” as a basis for
determining the inpatient facility cost-sharing Medicare-covered percentages entered on
Worksheet 4.
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
of a hearing aid is $2,500, then the allowed per-member-per-month (PMPM) must be
based on the $500 maximum benefit. The user must not enter a $2,500 cost offset by a
cost-sharing entry in Worksheet 3 for the $2,000 paid by the beneficiary.

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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 bid 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 MAO 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 Part D through MA or viceversa. 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 for the base period or 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.

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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 MAO pays claims for its estimated liability only (that is,
net of the amount that is the responsibility of another payer, such as an auto policy), the MAO’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 Cost; sequestration,
unless the Medicare fee-for-service (Medicare FFS) pricing option is used; 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)
Measurement
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:
(e)
Measurement
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 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.

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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.
Deductibles

The BPT must reflect in Worksheet 3, Section III, column f, “In-Network Effective
Plan-Level Deductible PMPM,” the in-network impact of the following deductibles,
with exception of the pricing option described in the “Medicare FFS Cost Sharing”
section of this pricing consideration:
•
•

A local preferred provider organization (PPO) or a regional PPO deductible that
applies to one or more in-network benefits.
A plan-level in-network or combined deductible contained in Section D of the
PBP.

Further, the BPT must reflect in Worksheet 3, Section III, columns g through k,
“In-network Cost Sharing After Plan-Level Deductible,” the impact of service-category
specific deductibles included in Section B of the PBP.
Medicare Fee-For-Service (Medicare FFS) Cost Sharing

The Medicare FFS cost sharing pricing option involves the use of Medicare FFS
actuarial equivalent cost sharing in Worksheet 4 to price certain plan cost sharing
designed to match Medicare FFS cost sharing. This option applies to all inpatient
facility services, and/or all SNF services, and/or all Medicare Part B services, as
described below.
•

•

For a local PPO or a regional PPO bid, the Medicare FFS cost sharing pricing
option is available only to price the cost sharing all Medicare Part A and Part B
services. Further, the plan cost sharing for such services must match Medicare
FFS cost sharing and the deductible must be—
◦ A “Medicare-Defined Part A and B Deductible amount combined as a single
deductible.”
◦ “Differentially applied to Part A and Part B Medicare services, reflecting
Original Medicare payment structure.”
For an health maintenance organization (HMO), an HMO with a point-ofservice option (HMOPOS), or a non-network PFFS bid, plan cost sharing must
align with Medicare FFS cost sharing for all inpatient facility services, and/or all
SNF services, and/or all Part B services. That is, if this option is used for—
◦ All inpatient facility services and/or all SNF services, the service–specific
cost sharing for such services must be “Medicare-Defined Cost Shares.”
◦ All Part B services, the in-network plan deductible (HMO), or the combined
plan deductible (HMOPOS), or the plan deductible (non-network PFFS)
must be “Medicare-Defined Cost Shares.”

If the criteria above are met, the certifying actuary has the option to use the FFS
actuarial equivalent cost-sharing in Worksheet 4, to estimate the PMPM amount for

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total plan cost sharing before the impact of the maximum out-of-pocket limit (MOOP).
Further, if the certifying actuary chooses such option, the user must enter on
Worksheet 3, Section III and Worksheet 4, Subsection IIB, DE# cost sharing as
described below.
 Worksheet 3 – Plan Cost Sharing

For the applicable service categories, the user must—
•
•

Enter in column f, zeroes (0) as the in-network cost of the plan deductible.
Enter in column i, the in-network portion of total plan cost sharing as the
in-network effective copay/coinsurance after the plan deductible has been
satisfied and before the impact of the MOOP.

Further, the effective copay/coinsurance after MOOP in column j must reflect the
expected impact of the MOOP. Note that, if Worksheet 3 is completed for the total
population and such population includes non-DE# members, then the effective
copay/coinsurance before and after MOOP (columns i and j, respectively) may not
be equal. In this case, CMS expects the non-DE# reduction of A/B cost sharing
calculated automatically in Worksheet 4 (Section II, Subsection A, column q) to
reflect only: (i) the PMPM value of the MOOP; plus (ii) the impact of related-party
and risk-sharing requirements, if the projected allowed costs used in the calculation
of cost sharing differ from the allowed PMPMs on Worksheet 4.
 Worksheet 4 – Cost Sharing

DE# plan cost sharing in Worksheet 4, Section IIB, column f must be based on total
plan cost sharing before MOOP, as estimated by the certifying actuary using the
FFS actuarial equivalent cost-sharing in MA Worksheet 4.
The Medicare FFS cost sharing pricing option is intended to result in zero
mandatory supplemental benefits for reduced cost sharing consistent with Medicare
FFS cost sharing (aside from the impact of the MOOP). Therefore, cost sharing
priced under this option may not be adjusted for sequestration, which would
incorrectly produce a non-zero mandatory supplemental benefit for reduced cost
sharing.
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 bid’s service area).
Credibility

The credibility guidance in this section is provided as a resource to certifying actuaries, not as a
requirement.
Information on the development of the CMS guidelines for full credibility can be found on the
“Medicare Advantage Rates & Statistics” page of the CMS website at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Bid-Pricing-Toolsand-Instructions-Items/BidGuidance.html.

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Claims Credibility

This section pertains to the credibility percentages on Worksheet 2 and to the ESRD
subsidy on Worksheet 4.
CMS has established MA credibility guidelines as summarized in the following table:
Exposure Required
for Full Credibility

CMS Formula for Partial Credibility

Non-ESRD
Allowed Costs

24,000 member
months

member months
√
24,000

ESRD
Allowed Costs

4,000 member
months

member months
√
4,000

Subject Experience

Risk Score Credibility

This section pertains to the credibility of risk scores based on the CMS preferred
methodology. CMS has not developed credibility guidelines for risk scores based on
alternate approaches or for CMS-HCC ESRD risk scores.
CMS has established MA credibility guidelines as summarized in the following table:
Subject Experience
Estimated Part C risk scores
for development of 2018 bids
as posted on HPMS
Beneficiary-level file to
support 2018 Part C bids as
distributed by CMS

Exposure Required
for Full Credibility

300 beneficiaries

3,600 member
months

CMS Formula for
Partial Credibility

√

number of beneficiaries
300

√

member months
3,600

Overriding the CMS Formulas for Partial Credibility

The following guideline is applicable only to the CMS claims and risk score credibility
formulas presented above; such guideline may not be suitable for any alternative
credibility formula. If the CMS formula for partial credibility is applied and the
resulting credibility is—
•
•

Less than or equal to 20 percent, then the actuary may override the computed
credibility with 0 percent credibility.
Greater than or equal to 90 percent, then the actuary may override the computed
credibility with 100 percent credibility.

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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 MAO has a separate contract with a state or territory
for Medicaid services, then enter projected Medicaid revenue and cost for members of
the MA bid.
•

•
•
•

The projected Medicaid cost—
◦ Includes the cost to provide Medicaid benefits that the MAO has contracted
to provide bid 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 PMPM basis.
Worksheet 1 collects the Medicaid data (in total dollars) of revenue and costs in
the base period (Section VI, lines 10a and 10b1, and 10b2). These items are
defined in the same manner as for the projection period.

For more information on Medicaid benefits, see Chapter 4, Sections 10.3, 30.4 and 210,
of the Medicare Managed Care Manual at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS019326.html.
Determination of DE# Beneficiaries

Per federal statute, QMBs and qualified Medicare beneficiaries with full Medicaid
benefits (QMB Plus) are not liable for Medicare cost sharing; therefore, these
individuals are always considered to be DE# beneficiaries, as defined in the
“Introduction” section of these Instructions.
The certifying actuary must determine which additional beneficiaries are DE# based on
the Medicaid cost-sharing policy for the states or territories in the bid’s service area.
However, the certifying actuary has the option to approximate the DE# population as
described below, if the condition in the second bullet point is satisfied.
•

Start with bid-specific enrollment data available in HPMS, under the “Risk
Adjustment” link and consider the 2016 membership data posted in HPMS for
the contract plan-ID segment(s) listed in Worksheet 1 for the base period.

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•

If the percentage of total dual-eligible beneficiaries (who comprise all
dual-eligible categories and not just the QMB and QMB Plus categories) is less
than 10 percent of total beneficiaries, then—
◦ The certifying actuary may consider the membership in the QMB and QMB
Plus categories to represent the entire DE# population.

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 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

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•

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—
◦ 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 MAO 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.

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PRICING CONSIDERATIONS

•

•

•

•

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.
In column h, plan reimbursement, the user must enter the amount the MAO pays
the providers. After the initial bid submission, CMS expects the plan
reimbursement PMPM value to change only to reflect the value of added or
eliminated mandatory supplemental benefits for—
◦ Additional benefits for services not covered by original Medicare.
◦ Reductions in A/B cost sharing to the extent DE# members are liable for
such cost sharing.
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 bid’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 on Worksheet 4.

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 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 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/Union Groups

An MAO may offer its individual-market MA plans to employer/union group health plan
sponsors and modify benefits for each group, as outlined in Appendix D.
For CY2018, CMS does not require an MA BPT for employer-only or union-only group waiver
plans (EGWPs).

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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 MAOs must enter the projected CY ESRD member
months in Worksheet 5.
ESRD Subsidy

The benchmarks calculated in the MA BPT exclude enrollees in ESRD status, as does
the projection of bid expenditures. However, all individuals enrolled in the bid,
including those in ESRD status, are required to pay the same MA premium and are
offered the same benefit package. In order to account for the projected marginal costs
(or savings) of bid enrollees in ESRD status, the BPT allows for an adjustment that is
allocated across ESRD and non-ESRD bid 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.
 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 bid’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 bid 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.

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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
supplemental benefits based on the distribution of total medical expenses across these
categories (excluding the impact of the ESRD subsidy).
By statute the bid must represent the revenue requirement of the expected population; therefore,
the margin requirements must be met with the gain/loss margin entered in the BPT. In
addition, the combined margin for the MA and Part D components of MA-PD bids cannot be
used to satisfy these Instructions. See the “Instructions for Completing the Prescription Drug
Plan Bid Pricing Tool for Contract Year 2018” for gain/loss margin requirements that are
specific to Part D bids.
The gain/loss margin entered in the BPT must be determined in consideration of other CMS
requirements such as Total Beneficiary Cost (TBC). 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 exceptions to the gain/loss margin requirements must be disclosed, be fully
explained and supported, and ultimately be approved by CMS.
When some benefits offered by the MAO are funded by an outside source (such as a state
Medicaid program, the gain/loss margin must be consistent between the Medicare benefits and
benefits funded by other sources.
Gain/loss margin requirements apply at two levels—the bid level and an aggregate level; both
sets of requirements must be met in the initial bid submission and upon bid resubmission or
withdrawal.
Bid-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.

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 Benefit Value

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 bids that have substantial enrollment and stable experience, or
“bait and switch” approaches to specific bid 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 MA BPT is negative, the MAO must
develop, submit, and follow an MA bid-specific business plan to achieve
profitability within five years as explained below. 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.
•

•

•

Product Pairing: If MA products are “paired” and the pricing reflects implicit
“subsidies” across benefit or service area offerings as described below, then
CMS does not require the MAO to submit a business plan. In this case, the bids
in the MA product pairing must—
◦ Have identical service areas;
◦ All be local coordinated care plans or all be regional PPOs or all be PFFS
plans; and
◦ Have a positive combined MA gain/loss margin for CY2018.
Examples include a low-benefit MA plan with a positive margin paired with a
rich-benefit MA plan with a negative margin, or an MA-only plan paired with
the MA portion of an MA-PD plan.
Alternate Business Plan: If the projected gain/loss margin in the MA BPT is
negative only to comply with the “Aggregate-Level Requirements” or “MA-PD
Margin Requirements” sections of these Instructions (and would otherwise be
positive), then the MAO may submit an alternate MA bid-specific business plan.
An alternate business plan excludes a numeric projection or a numerical
comparison to the prior business plan and consists only of a narrative
explanation. Note that all other requirements applicable to bids with negative
margin, as well as, aggregate level-margin requirements apply; such
requirements are not altered by this option.
Business Plan: If the two situations above do not apply (or the MAO does not
choose one of these options), then the MA bid-specific business plan must
include both a numeric projection and a narrative explanation.
◦ The numeric projection must include, but is not limited to, projected:
member months, risk scores, CMS revenue, MA premium,

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•

Medicare-covered and non-covered medical expenses, non-benefit expenses,
and gain/loss margin.
◦ A suggested negative-margin business plan template can be found at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
Bid-Pricing-Tools-and-Instructions-Items/BidGuidance.html.
Five-Year Period: An exception to the five-year period to achieve profitability
for a unique situation must be disclosed, be fully explained and supported, and
ultimately be approved by CMS.

Aggregate-Level Requirements

The aggregate-level gain/loss margin requirements involve comparisons of aggregate
MA margins for several groupings of MA bids to: (i) a point estimate of the MAO’s
corporate margin, and/or (ii) the aggregate MA margins for other groupings of MA
bids.
 Definitions

In the BPT and these Instructions, the term—
• “MA Plan Category” refers to the following groupings of MA bids:
◦ General enrollment plans and institutional or chronic care special needs
plans (general enrollment plans & I/C SNPs), including MSA and
ESRD-SNP plans; and
◦ Dual-eligible special needs plans (D-SNPs).
The aggregate-level requirements are applied separately to each MA plan
category.
• “Level of aggregation” refers to the level at which the gain/loss margins entered
in the BPTs must comply with the aggregate-level margin requirements. The
MAO may choose one of the following three levels: the contract level,
organization level (that is, the legal entity that contracts with CMS to provide
MA benefits), or parent organization level. The MAO 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 Part D BPT of an MA-PD bid.
• “Aggregate MA margin” refers to the projected enrollment-weighted average
BPT PMPM margin for a specified plan category.
• “Corporate margin requirement” refers to the MAO’s margin requirement using
either the non-Medicare corporate margin basis or the Risk-Capital-Surplus
corporate margin basis as explained below.
◦ The “Non-Medicare” corporate margin basis applies if the volume of the
MAO’s non-Medicare business, for which it has discretion in rate setting, is
greater than or equal to 10% of the MAO’s total non-Medicare business. The
term “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: (i) Medigap (Medicare Supplement); (ii) Medicaid; (iii)
MMPs offered through a Financial Alignment Demonstration; (iv) Stop
Loss; (v) dental, vision, and commercial lines of business; and (vi) the

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◦

non-Part D portion of Section 1876 cost plans, Section 1833 cost plans, and
PACE plans. Non-Medicare business excludes administrative services only
(ASO) business.
Under the “Risk-Capital-Surplus” corporate margin basis, the MAO must set
the corporate margin requirement by taking into account the degree of risk
and capital and surplus requirements of its Medicare business prior to any
impact of sequestration. This definition of corporate margin requirement
applies if: (i) the volume of the MAO’s non-Medicare business, for which it
has discretion in rate setting, is less than 10% of the MAO’s total
non-Medicare business; or (ii) the MAO has no non-Medicare business. The
term “Medicare business” is inclusive of all MA and Part D enrollees
(including, but not limited to: (i) enrollees in hospice or ESRD status; and
(ii) enrollees in SNPs, MSA plans, ESRD-SNPs, and the Part D portion of
PACE plans).

 Year-to-Year Consistency

Although actual margin may vary from year to year, CMS expects certifying
actuaries to price bids such that actual MA aggregate returns over the long term are
consistent with (that is, follow) the margin assumptions used for pricing. That is,
actual aggregate MA margin is to be consistent with the aggregate MA margin used
in pricing, as a percentage of revenue; actual corporate margin is to be consistent
with the corporate margin requirement used for the MA pricing.
 General Enrollment and I/C SNPs

For general enrollment plans and I/C SNPs, if the corporate margin basis is—
•
•

“Non-Medicare,” then the aggregate MA margin for general enrollment plans
and I/C SNPs, as a percentage of revenue, is to be within 1.5 percent of the
MAO’s corporate margin requirement.
“Risk-Capital-Surplus,” then the aggregate MA margin for general enrollment
plans and I/C SNPs, as a percentage of revenue, is to be within 0.5 percent of the
MAO’s corporate margin requirement.

CMS may grant exceptions to this requirement in limited circumstances. If this
requirement is not met, this situation must be disclosed, be fully explained and
supported, and ultimately be approved by CMS.
 D-SNPs

If general enrollment plans and I/C SNPs are offered, then—
•

The aggregate MA margin for D-SNPs, 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.

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If general enrollment plans and I/C SNPs are not offered, and the corporate margin
basis is—
•
•

“Non-Medicare,” then the aggregate MA margin for D-SNPs, as a percentage of
revenue, is to be no more than 1.5 percent higher and no less than 5 percent
lower than the MAO’s corporate margin requirement.
“Risk-Capital-Surplus,” then the aggregate MA margin for D-SNPs, as a
percentage of revenue, is to be within 0.5 percent of the MAO’s corporate
margin requirement.

CMS may grant exceptions to this requirement in limited circumstances. If this
requirement is not met, this situation must be disclosed, be fully explained and
supported, and ultimately be approved by CMS.
 Minnesota Senior Health Options Program

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

See the “Instructions for Completing the Prescription Drug Plan Bid Pricing Tool for
Contract Year 2018” for gain/loss margin requirements that affect MA-PD bids.
Exclusions

Non-insurance revenues pertaining to investments, fee-based activities designed to
influence state or federal legislation such as the cost of lobbying activities, and the costs
of value-added items and services (VAIS) cannot be reflected in the bid. See the
announcement about lobbying activities released via an HPMS memorandum dated
October 16, 2009 and Chapter 4 of the Medicare Managed Care Manual for more
information about VAIS.
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 bid continues to cover supplemental
benefits. Since the MAO 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.
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
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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 bid. 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
costs, can be found under Medicare > Medicare Advantage Rates & Statistics >
Ratebooks & Supporting Data at https://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html.
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 MAOs 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.

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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
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS012673.html:
◦ 5.1 Part C Payment Calculation: 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.27 “Monthly MSP Information Data File”: provides specific information
regarding the primary coverage for beneficiaries enrolled in the bid, whose
payments were adjusted for MSP that month. It allows MAOs 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
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 CY2018 MSP adjustment for Hxxxx-001-000 is March
2017 MMR data for Hxxxx-001-000. There is no change in the distinct risk

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characteristics of MSP beneficiaries as compared to non-MSP beneficiaries from
CY2017 to CY2018.
Step 1: Calculate the CY2017 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X2017).
$12,000,000 = “Total MA Payment” for the bid from a 2017 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 bid. See the PCUG
for the applicable field names.
X2017 = $12,000,000 – $2,253,975 = $9,746,025.
Step 2: Separate the CY2016 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X2016) into payments for non-MSP enrollees and MSP enrollees
based on MSP status.
$9,692,896 = CY2017 bid portion of payment for non-MSP enrollees
$53,129 = CY2016 bid portion of payment for MSP enrollees
X2017 = $9,746,025 = $9,692,896 + $53,129
Step 3: Calculate the CY2018 bid portion of payment reflecting reduced payments for
MSP beneficiaries (X)
$9,692,896 = CY2018 bid portion of payment for non-MSP enrollees
0.173 = CY2017 “MSP factor” for working aged and working disabled
0.173 = CY2018 “MSP factor” for working aged and working disabled
$53,129 = (.173 ÷ .173) × $53,129 = CY2018 bid portion of payment for MSP
enrollees
X = $9,746,025 = $9,692,896 + $53,129
Step 4: Calculate the projected CY2018 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 CY2018 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.

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•

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 2010-2014 NonPACE.csv” from the CY2018 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 bid.
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
◦ Examples include, but are not limited to the cost of—
▪ Marketing materials;
▪ Rewards and incentives allowed under 42 CFR § 422.134;
▪ Commissions;
▪ Enrollment packages;
▪ Identification cards; and
▪ Salaries of sales and marketing staff.
Direct Administration
◦ 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. MAOs may use the CMS estimate, which is $0.25 PMPM on a national
basis for CY2017, or develop an alternative estimate that is consistently applied
to all bids in the contract—for example, the MAO’s historical amount relative to
the CMS annual national estimate;
▪ Uncollected enrollee premium; and
▪ Certain disease management functions. See the “Benefits and Service
Categories” pricing consideration for more information about the classification
of disease management expenses.
Indirect Administration
◦ Examples include, but are not limited to, functions that may be considered
“corporate services,” such as—

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•
•

◦ 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.
◦ This category includes only the Health Insurance Providers Fee imposed by
Section 9010 of the Patient Protection and Affordable Care Act, as amended.

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 non-medical costs incurred in the operation of the MA bid must be
excluded from non-benefit expenses. Such costs include income taxes, changes in statutory
surplus, and investment expenses; and the cost of lobbying activities and value-added items and
services. See the “Gain/Loss Margin” pricing consideration for more information.
Start-up costs that are not considered capital expenditures under GAAP are reported as follows:
•
•

Expenditures for tangible assets (for example, a new computer system) must be
capitalized and amortized according to relevant GAAP principles.
Expenditures for non-tangible assets (for example, salaries and benefits) must be
reported in a manner consistent with the organization’s internal accounting practices
and the reporting of similar expenditures in other lines of business.

Non-benefit expenses that are common to the MA and Part D components of MA-PD bids 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),
the non-benefit expenses must be allocated proportionately between Medicare and the other
revenue source.
Optional Supplemental Benefits

See the CY2017 Call Letter at https://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/Announcements-and-Documents.html for the following
requirements regarding the total value of all optional supplemental benefits offered to bids
under each contract:
•

The enrollment-weighted contract-level projected gain/loss margin, as measured by a
percent of premium, cannot exceed 15%.

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•

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 5, 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 MAO
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 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 bid, 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,
MAOs must use the CMS pre-populated amount in the BPT 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 bid’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—

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PRICING CONSIDERATIONS

•
•
•

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, 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 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 CY2018.
For local MA-only plans, the premium shown on the MA BPT in the initial bid 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 MA regional PPO benchmark calculations. Local
MA-only plans do not have an opportunity to resubmit in August for rebate reallocations. The
initial bid submission must reflect the desired plan premium.
For regional PPO plans, the initial bid submission contains an estimated MA premium. The
actual MA premium will not be known until August, when the MA regional PPO benchmarks
are calculated by CMS. Note that after the regional PPO benchmarks are released by CMS, all
regional PPO 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.
MA-PD and regional MA-only sponsors have the opportunity to reallocate rebates after the
release of the Part D national average bid amount and MA regional PPO benchmarks.
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 bids, the initial 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, MAOs may reallocate MA rebate dollars in certain MA-PD
bids in order to return to the target Part D basic premium. MA-PD sponsors must choose one

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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 sponsors must choose a plan intention for the target Part D basic premium option in the
initial bid submission and cannot change the chosen target in a subsequent resubmission. CMS
will consider only the option selected in the initial 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 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 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. MAOs are not
permitted to under- or over-allocate rebates in total.
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.
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.

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Regional Preferred Provider Organizations (PPOs)

A regional PPO plan must cover only enrollees eligible for both Part A and Part B of
Medicare. See Chapter 1 of the MMCM, which can be found at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-ManualsIOMs-Items/CMS019326.html.
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
MAOs, on a case-by-case basis, to request that payment rates for regional PPOs 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 MAOs that enter into any type of arrangement with
or receive services from an entity that is associated with the MAO by any form of common,
privately held ownership, control, or investment. This includes any arrangement where the
MAO 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.
The objective of the requirements for related-party medical or service arrangements is to assure
that financial arrangements between the MAO 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 MAOs to disclose whether or not they are in a business arrangement with a
related party. MAOs 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 for
each identified related party.
The MAO 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 that of the MAO 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 MAO 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 by CMS upon request. When supporting comparable rates through the related party, the
MAO must include with the rate analysis a signed attestation from the related party stating that
the actual contracts will be available upon request for review by CMS.

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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. Note that, if a related-party arrangement includes both
administrative services and medical services, the requirements in the “Administrative RelatedParty Arrangements” section and the “Medical Related-Party Arrangements” section apply
separately to the costs associated with such administrative and medical services, respectively.
Administrative Related-Party Arrangements
 Method 1 Actual Cost for Administrative Services

An MAO 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.
Under this method, the BPT is prepared as follows:
•
•

The actual cost of the non-benefit services provided by the related party is
entered as the non-benefit expense of the MAO. The gain/loss margin of the
related party is excluded from the non-benefit expense of the MAO.
When entering gain/loss margin in the BPT, the MAO may consider the
gain/loss margin of the related party, subject to the gain/loss margin
requirements.

Supporting documentation of the development of the actual cost method for
administrative services must be provided with the initial bid submission as required
in Appendix B.
 Method 2 Market Comparison for Administrative Services

An MAO using the market comparison for administrative services method must—
•

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

•

The contract with the unrelated party is associated with sufficient costs of
services to be considered a valid contract.
◦ The fees associated with such arrangements are within 5 percent.
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
expenses.

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Medical Related-Party Arrangements
 Method 1 Actual Cost for Medical Services

An MAO using the actual cost method for medical services must prepare the BPT in
a manner that does not recognize the independence of the related party. Under this
method, the BPT is prepared as follows:
•
•

The actual cost of the medical services provided by the related party is entered
as the medical expense of the MAO. The gain/loss margin of the related party is
excluded from the medical expense of the MAO.
When entering gain/loss margin in the bid, the MAO may consider the gain/loss
margin of the related party, subject to the gain/loss margin requirements.

Supporting documentation of the development of the actual cost method for medical
services must be provided with the initial bid submission as required in Appendix B.
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

An MAO using the market comparison method for medical services must—
•

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

•

The contract with the unrelated party is associated with sufficient costs of
services to be considered a valid contract.
◦ 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 medical expenses.

 Method 3 Comparable to FFS

An MAO using the comparable to FFS method must—
•
•
•

Demonstrate at the time of bid submission that it is not possible to comply with
Method 1 Actual Cost 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 medical expenses.

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PRICING CONSIDERATIONS
 Method 4 FFS Proxy

An MAO 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 Cost.
◦ Method 2 Market Comparison.
◦ Method 3 Comparable to FFS. To meet this requirement, the MAO must
demonstrate that the fees associated with the MAO’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 medical expenses.

Risk Score Development for CY2017

The projected CY2017 risk score must—
•

•
•
•
•
•

Be based on the methodology for calculating CY2017 risk scores, as discussed in the
CY2017 Rate Announcement.
◦ The CY2017 risk scores will be calculated using the 2017 CMS-HCC risk
adjustment model. Risk scores will be a blend of—
▪ 25% of the risk score calculated with diagnoses from encounter data and FFS
claims; and
▪ 75% of the risk score calculated with diagnoses from Risk Adjustment
Processing System (RAPS) and FFS claims.
Reflect the expected risk score trend at the bid level.
Be appropriate for the expected population.
Be adjusted for FFS normalization.
Include the appropriate MA coding adjustment factor.
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 Worksheet 1 and
Worksheet 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.

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 CMS Hierarchical Condition Categories (CMS-HCC) Risk Model

CY2017 risk scores will be calculated using the 2017 CMS-HCC risk adjustment
model (that is, the “2017 Model”).
Additional information on the CMS-HCC model, including the CY2017 HCC
model coefficients, normalization factor, and MA coding adjustment factor, is
contained in the CY2017 Advance Notice and Rate Announcement.
 Normalization Factors

At time of payment, the risk score for each enrollee will be adjusted by the
appropriate Part C normalization factor for the CMS-HCC model. This adjustment
accounts for the underlying FFS trend in risk scores and the effect of that trend on
average risk scores between the model denominator year and the payment year
(CY2017), and is designed to bring the average risk score back to 1.0. Accordingly,
the projected 2017 risk scores must reflect the CY2017 Part C normalization factor
of 0.998.
 MA Coding Adjustment Factor

In addition to normalization, the projected risk scores in the CY2017 bids must
reflect the 2017 MA coding adjustment factor. This adjustment accounts for the
difference in diagnostic coding pattern differences between MA and FFS. The
CY2017 MA coding adjustment is 5.66 percent. Accordingly, the projected
CY2017 normalized risk scores must be multiplied by 0.9434 (which is 1-0.0566).
 Risk Adjustment Information Sources

•

•

The following materials can be found through the “Announcements &
Documents” link on the “Medicare Advantage Rates & Statistics” page of the
CMS website at https://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/Announcements-and-Documents.html:
◦ “Announcement of Calendar Year (CY) 2017 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies and
Final Call Letter” (2017 Rate Announcement).
◦ “Advance Notice of Methodological Changes for Calendar Year (CY) 2017
for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment
Policies and 2017 Call Letter” (2017 Advance Notice).
Additional information can be found
◦ Under the “Risk Adjustment” and “Ratebooks & Supporting Data” links at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
index.html.
◦ At http://www.csscoperations.com/.
◦ In the February 18, 2015 memorandum released via HPMS titled "Guidance
for Reporting and Returning Medicare Advantage Organization and/or
Sponsor Identified Overpayments to the Centers for Medicare & Medicaid
Services."

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Risk Score Calculation Approaches
 Preferred Methodology

The preferred method for projecting the CY2017 risk scores is to start with the
CMS-HCC risk scores that are provided by CMS in—
•
•

The bid-level data for the July 2015 enrollee cohort with retroactive enrollment
and status adjustments; or
The beneficiary-level file containing 12 months of 2015 membership with
retroactive enrollment and status adjustments.

The bid-level data will be available after the publication of the 2017 Rate
Announcement through the “Risk Adjustment” link on the HPMS Home page. The
risk score data posted in HPMS are calculated using the 2017 Model used for 2017
payment and are accompanied by technical notes to assist actuaries with
understanding the material presented.
Beneficiary-level data will be sent electronically to MAOs around the same time
and will provide payment year 2015 risk scores calculated using both the two
models used for 2015 payment, as well as the 2017 model, accompanied by
technical notes. In addition, the beneficiary-level data will provide a set of 2015
risk scores calculated using the CMS-HCC risk adjustment model recalibrated for
2017 that actuaries may use (along with the 2015 risk scores calculated using the
2017 Model) for calculating final 2015 base period risk scores to enter on
Worksheet 1 of the MA BPT.
There are several advantages to using these 2015 CMS-HCC risk scores in the
projection of the CY2017 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.
They reflect the most complete MA diagnosis data for 2014 dates of service
submitted through the applicable risk adjustment deadline, which is the final
reporting deadline for this period.
They require no adjustment for risk model changes.
In both the plan-level data and the beneficiary-level file, they are based on the
risk model that will be used for 2017 payment.
Please note that since the HPMS bid-level risk scores are based on a mid-year
cohort using full calendar year data with 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 2015 to 2017 with explicit adjustment
at the bid level for the following factors:
◦
◦
◦

Bid-specific coding trend.
Changes in bid population.
Other appropriate factors.

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MAOs must take into account the effect of future changes in the risk score due to
reporting of expected overpayments.
Finally, the projected risk scores must be normalized by dividing by the appropriate
CY2017 FFS normalization factors and by applying the CY2017 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 2016, if there was limited enrollment in 2015, or if there
were significant changes in plan or enrollment characteristics between 2015 and
2017.
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:
•
•

•

•

•

•

Conversion to risk model-specific unblended risk scores.
◦ If the starting risk score is a blended score, then the certifying actuary must
produce an unblended risk score before the conversion to raw scores.
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 the alternative is to take into account
the normalization factor used in calculating the starting risk score when
normalizing the projected risk score.)
Impact of lagged (initial risk score) versus non-lagged (midyear risk score)
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 2016 MMR data, which contain risk
scores based on the July 2014 to June 2015 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 (midyear) to complete (final) 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 CY2017 payments, then an adjustment for the risk
model change must be made.

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PRICING CONSIDERATIONS

•

•

Bid-specific coding trend.
◦ Bid-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.
◦ 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 CY2017, the scores must be: (i) normalized by dividing by the
appropriate CY2017 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 2017 FFS
normalization factors are not appropriate and must be adjusted.
Also note that the risk scores in the files listed below are set to an average of 1.0
using the yearly averages; these files include the average raw risk scores for each
year, so that the scores can be unnormalized, if this is desired.
•
•

The rate calculation data zip files (for example, “risk_scores 200x-201x NonPACE.csv” from the CY201x MA Ratebook).
FFS Data zip files (for example “FFS data 201x”), such risk scores.

Supporting documentation that clearly demonstrates consistency with the preferred
approach is required.
Other Considerations

See the “Credibility” pricing consideration for more information about the projection of
risk scores.
See Appendix K for considerations for trending MA and Part D risk scores.
Sequestration

To account for sequestration during the projection period, net medical expenses must reflect the
impact of sequestration on provider payments. Cost sharing is not reduced under sequestration;
therefore, for purposes of completing the BPT, net medical expenses are 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 MAO must adequately
justify such difference. See the “Cost Sharing” pricing consideration for more
information about the calculation of the effective coinsurance percentage.

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•

In the case of the actuarial equivalent cost sharing test (failing “red circle” validations)
on Worksheet 4, the MAO 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.

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-regional
PPO bids with segmented service areas at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS019326.html.
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 MAO 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 AND FORMULAS

III. DATA ENTRY AND FORMULAS
This section includes line-by-line instructions for completing the Medicare Advantage (MA)
Bid Pricing Tool (BPT), the Medical Savings Account (MSA) BPT, and the End-Stage Renal
Disease-only special needs plans (ESRD-SNP) BPT. It also describes the formulas for
calculated cells.

MEDICARE ADVANTAGE
To complete the MA BPT, organizations must provide a series of data entries on the
appropriate form pages.
The MA BPT 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 bid does not include
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-SNPs,
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.
Do leave a field blank if—
•
•

The field does not apply, for example, Worksheet 1, Sections II and III, when no base
period experience is reported.
These Instructions state to leave a field blank, for example, the in-network and
out-of-network plan deductibles when the annual deductible for a local or regional
Preferred Provider Organization (PPO) functions as a combined deductible.

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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 bid 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 bid.
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
bids with experience data for 2016 regardless of the level of enrollment.

SECTION I – GENERAL INFORMATION
The fields of Section I have been formatted as the “General” format in Excel to support the link
functionality to other 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 zeroes. All fields in Section I must be completed;
none can be left blank.
Line 1 – Contract Number

Enter the contract number for the bid. The designation begins with a capital letter H (local
plan) or R (regional PPO plan) and includes four Arabic numerals (for example, H9999,
R9999). Be sure to include all leading zeroes (for example, H0001).
Line 2 – Plan ID

Plan IDs contain three Arabic numerals; however, this field is to be entered as a text input (that
is, with a preceding apostrophe). Be sure to include all leading zeroes (for example, ‘001).
Line 3 – Segment ID

If the bid is in a non-segmented plan, enter zero (0). Otherwise, enter the segment ID. This
field is to be entered as a text input (that is, with a preceding apostrophe). Be sure to include all
leading zeroes (for example, ‘000 or ‘001).
Line 4 – Contract Year

This cell is pre-populated with the calendar year to which the contract applies.

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Line 5 – Organization Name

Enter the MAO’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 BPT is not
completed for Section 1876 and Section 1833 Cost plans; PACE and MSA plans; ESRD-SNPs;
and MMPs offered through a Financial Alignment Demonstration. There is a separate MSA
BPT and a separate ESRD-SNP BPT.
Note that an MAO may offer PFFS plans in a service area without Part D coverage. However,
for other plan types shown below, an MAO 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

Plan Type Code
HMO
RFB HMO
RFB HMOPOS
HMOPOS
PSO State License
RFB PSO State License
LPPO
RFB LPPO
RPPO
PFFS
RFB PFFS

Line 8 – MA-PD

If the bid provides coverage under a Medicare Advantage Prescription Drug Plan (MA-PD), as
defined in Chapter 1 of the Medicare Managed Care Manual, enter “Y”. Otherwise, enter “N”.
Line 9 – Enrollee Type

If the bid covers enrollees eligible for both Part A and Part B of Medicare, enter “A/B”. If the
bid covers 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,” 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

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input (that is, must include a preceding apostrophe) and must include any leading zeroes (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 Swapping or Actuarial Equivalence Apply

If an individual-market plan will use actuarial swapping or actuarial equivalence for employer
or union groups, enter “Y”. Otherwise, enter “N”. (See Appendix D for further information on
using actuarial swapping or equivalence.)
Line 12 – SNP

If the plan is a Special Needs Plan (SNP), enter “Y”. Otherwise, enter “N”.
Line 13 – Region Name

No user input is required. This field 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 – VBID

If the PBP includes benefits offered under the Medicare Advantage Value-Based Insurance
Design (MA-VBID) model, enter “Y”. Otherwise, enter “N”.

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Line 16 – 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 2016 and
generally expects at least 30 days of paid claims run-out; 2 - 3 months of paid claim run-out is
preferable.
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 2017, then the “paid through” date is
2/29/2017.
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 models used for payment in
CY2016. This risk score must incorporate the appropriate MA coding adjustment factor and
normalization factors for payment in CY2016.
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 “Dual-Eligible Beneficiaries” pricing consideration for more
information about base period risk scores.
If DE# members equals zero, then the non-DE# risk score must equal the total risk score.
Line 4 – Completion Factor

Enter the multiplicative factor used to adjust the paid data to an incurred basis. The base period
data must represent the best estimate of incurred claims for the time period, including any
unpaid claims as of the “paid through” date. The factor entered must be the amount to adjust
only the portion of paid claims that requires completion (that is, omit capitations from the
calculation of this factor).

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For example, assume the following:
Incurred Date
Paid Through Date (PTD)
Capitation Payments
PTD Claims Requiring Completion
Estimate of Unpaid 2016 Claims as of 2/29/2017
Total Incurred Claims for 2016
The Completion Factor would be calculated as:
Completion Factor = (400 + 30) ÷ 400 = 1.075

1/1/2016 – 12/31/2016
2/29/2017
$ 100
$ 400
$ 30
$ 530

Line 5 – Bids Included in Base Period Data

The “Contract-Plan ID-Segment ID” columns in line 5 must include the contract number,
plan ID, and Segment ID of each bid (including a segment ID of zero (0) for a non-segmented
plan), for which: (i) base period data is required to be reported in Worksheet 1 in accord with
the “Base Period Experience” pricing consideration, and (ii) such base period data exists.
The required format is “H####-###-###” (with the first character being H, E or R and ending in
“000” for a non-segmented plan).
The BPT calculates the “Contract-Plan ID-Segment ID” in cell N14 based on the contract
number, plan ID, and Segment ID in Section I. However, the “Contract-Plan ID-Segment ID”
in cell N14 may be overwritten by the user, that is, if the base period data excludes the
experience of the bid.
In the second column, the user must enter each bid’s base period member months. The sum of
the member months entered in line 5 is displayed as the total member months in line 2.
If base period data is reported for more than eight bids, then the MAO must include in
supporting documentation the base period member months for such bids. Further, the user
must: (i) enter in cells N14:N17 and P14:P16, the contract-plan ID of the seven bids with the
greatest number of base period member months, and (ii) enter in cell P17, “All Other”.
Line 6 – Base Period Description

Use the text box provided to briefly describe changes in the benefit plan, service area, or
contract number-plan ID-segment ID from the base period to the contract year.

SECTION III – BASE PERIOD DATA (AT PLAN’S RISK FACTOR) FOR 1/1/2016 –
12/31/2016
Section III summarizes the base period data by benefit service category.
In lines a through q:
 Column b – Service Category

The benefit service categories are displayed in column b.
 Column c – Utilizers

Enter the number of unique bid enrollees who used each of the service categories for the
base period.

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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 – Net PMPM

Enter the net medical PMPM for each of the benefit service categories for the base
period.
 Column e – 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.
 Column f – 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 – 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 – Average Cost per Unit

These cells are calculated automatically using the utilization provided in column g and
allowed PMPM provided in column i.
 Column i – Allowed PMPM

Enter the allowed PMPM by service category for the base period.
Line r – COB/Subrogation (outside claims system)

The Coordination of Benefits (COB)/Subrogation service category is intended to include only
those amounts that are to be settled outside the claim system. See the “COB/Subrogation”
pricing consideration for more information.
 Column b – Service Category

COB/Subrogation is displayed in lieu of a service category.
 Column d – Net PMPM

Line r, COB, is set equal to the allowed PMPM in column i by formula.
 Column e – Cost Sharing

Line r, COB, is set equal to zero.
 Column i – Allowed PMPM

Enter 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 2016 and that the contract year is 2018.
If the utilization trend is 5 percent from 2016 to 2017 and 6 percent for projecting 2017 to
2018, 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 this field 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 this field 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. An example of the use of this factor is to
remove the base period experience for certain membership in order for the projected
experience rate calculated in Worksheet 2 to be based on actual experience of base
period membership continuing in the bid for the contract year. Entering 1.000 would
indicate 0 percent change. Do not leave this field blank. Do not enter zero (0).
 Column m – Utilization Adjustment – Other Factor

Enter any other utilization factor adjustments by service category. 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. 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 this field blank. Do not enter zero (0).
 Column n – Unit Cost Adjustment – Provider Payment Change

Enter the unit cost adjustments by service category for expected changes in provider
payments from the base period to the contract period aside from those attributable to
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changes in utilization or benefit changes. Examples of this type of change include
changes in provider reimbursement due to inflation, sequestration, an indexing
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 this field 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
this field 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 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.

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SECTION V – DESCRIPTION OF OTHER UTILIZATION ADJUSTMENT FACTOR, OTHER
UNIT COST ADJUSTMENT FACTOR, AND ADDITIVE ADJUSTMENTS
Use this “text box” field to describe the reason for using a multiplicative factor other than 1.000
in columns m and o, and any additive adjustments entered in columns p and q.

SECTION VI – BASE PERIOD SUMMARY FOR 1/1/2016 – 12/31/2016 (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 information (reported in
Section II line 5) and consistently with the information reported in Section III. See the
“Base Period Experience” pricing consideration 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 BPT. (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 CY2016,
which will be received in mid-2017, 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. Do
not include premiums for optional supplemental benefits. Do not include Part D premiums.
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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 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, respectively.
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).

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

See the “Dual-Eligible Beneficiaries” pricing consideration for more information about
Medicaid data.
The amounts in lines 10a, 10b, 10b1, 10b2, and 10c are in total dollars (not PMPMs).
Line 10b computes the Medicaid cost from Medicaid benefit expenses (line 10b1) and
Medicaid non-benefit expenses (line 10b2).
Line 10c computes adjusted gain/loss margin for the bid as gain/loss margin (line 8) plus net
Medicaid revenue (line 10a) less Medicaid cost (line 10b).

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MA WORKSHEET 2 – MA PROJECTED ALLOWED COSTS PMPM
This worksheet calculates the projected allowed costs for the contract year. For bids 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 q:
 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
D
BP
V
P
T
S
O

–
–
–
–
–
–
–
–

Admits
Days
Benefit Period
Visits
Procedures
Trips
Scripts
Other

 Columns f through h – Projected Experience Rate

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

For a bid 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. 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.
 Column l – Credibility Percentage

Enter the 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 bid 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.
 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.
 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.
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 “Dual-Eligible Beneficiaries” pricing consideration for more information about
the reporting requirements of DE# pricing.
PMPM values entered in columns p and q must be greater than or equal to zero.

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 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 bid has OON cost sharing PMPM on Worksheet 3, or is a regional PPO plan, then
it is expected that the percentage of services provided out-of-network on Worksheet 2
will be greater than 0 percent.
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 k – Manual Rate – Allowed PMPM

Enter any PMPM any COB/Subrogation offsets to costs.
 Column l –Credibility Percentage

For a bid with less than fully credible experience or no experience, enter the credibility
percentage subject to the conditions described above for lines a through q, column l.
 Column o – Blended Rate

Calculated automatically based on the projected experience rate, the manual rate, and
the credibility percentage.
 Columns p and q – Non-DE# and DE# Allowed PMPMs

Enter in columns p and q, the separate allowed PMPM costs for non-DE# (on a
“per non-DE# member per month” basis) and DE# (on a “per DE# member per month”
basis), respectively, subject to the conditions described above for lines a through q,
columns p and q.
 Column r – Percentage of Services Provided Out-of-Network

Enter the percentage of COB/Subrogation offsets to costs that are expected to be
provided out-of-network subject to the conditions described above for lines a through q,
column r.
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.

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WORKSHEET 2
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 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 “Cost Sharing” and “Dual-Eligible Beneficiaries” pricing considerations 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
Lines 1 through 3 – Plan-Level Out-of-pocket Maximums

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.

Note that the question in line 3 regarding a combined plan-level maximum enrollee OOP cost
applies to a non-network PFFS maximum enrollee out-of-pocket cost amount.
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.
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, even if the
PBP includes, in Section C, a POS OOP maximum for a subset of service
categories.
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.
◦ “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.

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•

•

◦ “Yes” for the plan-level combined OOP maximum.
For full network PFFS and partial network PFFS plans enter—
◦ “Yes” or “No” for the plan-level in-network and out-of-network OOP maximums,
consistent with the PBP.
◦ “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.

 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-ofnetwork 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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WORKSHEET 3

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 BPT in either of the following ways:
Option A:

Column d
Line a1 – Acute
Line a2 – Mental Health
Total

Column g
1,900
100
2,000

Column j
$100.00
$100.00
$100.00

Column k
$15.83
$ 0.83
$16.67

Column g
2,000
2,000

Column j
$100.00
$100.00

Column k
$16.67
$16.67

Option B:

Column d
Line a1 – Acute
Total

Example 2: The PBP has in-network professional copays of $10 for PCP, $20 for

specialists excluding mental health (MH) services, $20 for MH group sessions, and $40
for individual MH sessions 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

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Utilization
5,000
50
50
2,900
8,000

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Following are some of the options that could be used to complete the BPT:
Option A: Use the finest level of detail, with individual MH in line i3 and group

MH in line i6.
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
$ 0.17
$ 0.08
$ 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

Col g
5,000
2,900

Line i3 – MH
Total

100
8,000

Col h (not in finalized BPT)
$10 per visit
$20 per visit
$40/visit for indiv MH sessions,
$20/visit for group MH

Col j
$10.00

Col k
$4.17

20.00

4.83

30.00
$13.88

0.25
$9.25

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

Line – Description

Col g

Line i6
Total

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

In lines a1 through q:
 Column c – Service Category

This column is pre-populated with line numbers and benefit service categories.
 Column d – Service Category Description

This column is pre-populated with 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.
 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.

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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 line t and column f, respectively)
 Column f – In-Network Effective Deductible PMPM

See the “Cost Sharing” pricing consideration for information about pricing deductibles
and entering such pricing in column f or in other columns on Worksheet 3.
 Columns g through k – In-Network Cost Sharing after 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 line t.
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).

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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.
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 line v.
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 line t and line v, respectively.
 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.
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Enter the actual out-of-network plan-level deductible and the pricing impact of the
out-of-network OOP maximum in the line t and line v, respectively.
 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).
In blank lines between q and s:
 Column c – Service Category

This column may be used to provide internal numbering (cells B55:B64) and detailed
cost-sharing information. The valid entries for service category (cells C55:C64) are as
follows:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Inpatient Facility
Skilled Nursing Facility
Home Health
Ambulance
DME/Prosthetics/Diabetes
Outpatient (OP) Facility – Emergency
OP Facility – Surgery
OP Facility – Other
Professional
Part B Rx
Other Medicare Part B
Transportation (Non-covered)
Dental (Non-covered)
Vision (Non-covered)
Hearing (Non-covered)
Suppl. Ben. Chpt 4 (Non-covered)
Other Non-covered

Technical note: The benefit service category entries (cells C55:C64) must match exactly
those listed above. 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

Enter one of the valid cost-sharing items shown in rows a1 through q.
 Columns e through o

If a benefit service category is entered in column C (C55:C64), then then the
instructions for lines a1 through q, columns e through o apply.
Line s – Total

Calculated automatically as the sum of column f, k, l, or o (or not applicable).

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WORKSHEET 3
Line t – Plan-Level Deductible Amounts

The cells in columns h, k and n are used to enter plan-level deductible amounts consistent with
Section D of the PBP as described below by plan type. When entering such amounts in the
BPT, if the PBP indicates that the amount of a deductible is—
•

•

A Medicare-defined deductible (for example, the Medicare-defined Part B deductible)
instead of a dollar amount, enter “Medicare FFS” as the amount of such deductible. Do
not enter an estimate of the actual Medicare-defined deductible for 2018 or leave the
cell blank.
A dollar amount, enter the amount of such amount, for example, “$500.”

If entry in the BPT of a deductible amount is not required, leave the field blank. Do not enter
zero (0) as the deductible amount.
 LPPO and RPPO Plan Types

For a bid with an “LPPO” or a “RPPO” plan type, the deductible always applies to
Medicare-covered out-of-network benefits. Therefore, consistent with the PBP, if the
deductible—
•

•
•
•

Applies to one or more in-network benefits, such deductible is similar to a combined
deductible. In this case,—
◦ Enter in column h, “Actual combined plan level deductible,” the deductible
amount or “Medicare FFS”.
◦ Leave blank column k, “Actual in-network plan-level deductible” and column n,
“Actual out-of-network plan-level deductible.”
Does not apply to any in-network benefits, such deductible is similar to an out-ofnetwork deductible. In this case,—
Leave blank column h, “Actual combined plan-level deductible” and column k,
“Actual in-network plan-level deductible.”
Enter in column n, “Actual out-of-network plan level deductible,” the deductible
amount or “Medicare FFS”.

 Plan Types Other Than LPPO and RPPO

Consistent with the PBP,—
•
•
•

Enter in column h, combined plan deductible amount or “Medicare FFS”.
Enter in column k, an in-network plan deductible amount or “Medicare FFS”.
Enter in column n, an out-of-network plan deductible amount or “Medicare FFS”.

Line u – PMPM Impact of MOOP

Consistent with the PBP,—
•
•

Enter in column k, the PMPM pricing impact of the in-network OOP maximum. Such
value must reflect the PMPM difference between the pricing for in-network cost sharing
before and after the OOP maximum is applied.
Enter in column n, the PMPM pricing impact of the out-of-network OOP maximum.
Such value must reflect the PMPM difference between the pricing for out-of-network
cost sharing before and after the OOP maximum is applied.

The PMPM values must be greater than or equal to zero.

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WORKSHEET 3

SECTION IV – MAPPING OF PBP SERVICE CATEGORIES TO BPT
Section IV captures the mapping of PBP benefit categories to BPT service categories. The
cells for PBP categories 1a through 18b 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 in the BPT.
If the PBP includes benefits offered under the MA-VBID model, the user must enter the
mapping for PBP categories 19a and 19b.

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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 bid’s
revenue requirements for the contract year. Values are allocated between Medicare-covered
benefits and A/B mandatory supplemental benefits and reflect the bid’s risk factor for the
contract period. In Section III, the MAO may enter the projected ESRD “subsidy.”
Section V captures projected Medicaid data.
See the “Dual-Eligible Beneficiaries” pricing considerations 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

This column is left intentionally blank; it is not applicable to this section.

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WORKSHEET 4
 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 bid. The user must enter in columns i and j, the expected percentages of benefits
that represent Medicare-covered. The percentages may differ for Non-DE# and DE# as
explained below.
•

•

For Non-DE# in subsection A,—
◦ The BPT uses the percentages in column i, to allocate allowed costs (column e)
between Medicare-covered (column m) and A/B mandatory supplemental
benefits.
◦ The BPT uses the percentages in column j, 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.
For DE# in subsection B,—
◦ The BPT uses the percentages in column i, to allocate provider reimbursement
plus actual cost sharing for total benefits (column e) between Medicare-covered
(column m) and A/B mandatory supplemental benefits.
◦ The BPT uses the percentages in column j, to allocate the plan’s cost sharing
(column f) between actual 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 defined in the PBP as non-covered, the percentage for Medicarecovered services is defaulted to 0.0 percent (for example, line l, “Transportation Noncovered”). For all other services, the MAO must estimate the percentage of covered
services. For example, if the MAO’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 user must enter in column i, a percentage less than 100 percent.
Non-DE# Example:

The MAO 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)
Service Category
f. OP Facility – Emergency

(i)

(j)

% for Covered Services
Allowed
Cost Sharing
99.92%
98.03%

See Appendix C for instructions on completing columns i and j for Part B-only plans.

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WORKSHEET 4

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
Worksheet 3 Section IV. For example, if a bid covers additional inpatient hospital days,
and the bid 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 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 cost sharing that is attributable to
Medicare-covered benefits (calculated as column f times column j). This column is
used to determine the reduction of A/B cost sharing in column q.
Plan cost sharing for Medicare-covered services is compared to Medicare FFS
actuarially equivalent cost sharing in the BPT “red-circle” validations.
 Columns m through o – Medicare-Covered using Actuarial Equivalent Cost Sharing

These columns are calculated automatically and are the basis for the costs included in
the “Plan A/B Bid.”
Column m – Allowed PMPM

The Medicare-covered allowed costs are calculated automatically based on the
percentage of Medicare-covered benefits input in column i. Column m is calculated as
column e times column i.
Column n – Fee-for-Service Medicare Actuarial Equivalent (AE) Cost Sharing

The FFS Medicare AE cost sharing PMPMs are based on the proportions in column k.
Column n is calculated as column k times column m.
Column o – Net PMPM

Calculated as column m minus column n.
 Columns p through r – A/B Mandatory Supplemental (MS) Benefits

These columns are calculated automatically and are the basis for the costs included in
the A/B mandatory supplemental premium.
Column p – Net PMPM for Additional Services

These amounts reflect the net costs (that is, allowed costs less enrollee cost sharing) for
non-covered benefits. This column is calculated automatically as the allowed costs for
non-covered benefits (column e minus column m) less the cost sharing for non-covered
benefits (column f minus column l). These values must be greater than or equal to zero
(except line r, COB, which may be negative).

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WORKSHEET 4
Column q – Reduction of A/B Cost Sharing

This column is the difference between FFS AE cost sharing and the plan cost sharing
for Medicare-covered services, calculated automatically as column n minus column l.
This reduction is sometimes referred to as the “FFS cost-sharing buydown.”
Column r – Total A/B Mandatory Supplemental Benefits

This column is calculated automatically as the sum of columns p and q.
Line s – Total Medical Expenses

The total medical expense is the sum of lines a through r, except for columns i, j, and k.
SUBSECTION B – Dual-Eligible Beneficiaries without Full Medicare Cost-Sharing Liability
(DE#)

The 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 “DualEligible Beneficiaries” pricing consideration for more information about plan cost
sharing.
 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

Enter values in accord with the “Dual-Eligible Beneficiaries” pricing consideration.
 Columns i and j – Percentage for Covered Services

See instructions under Worksheet 4, subsection IIA, columns i and j.
 Column k – State Medicaid Required Beneficiary Cost Sharing

Enter values in accordance with the “Pricing Considerations” section of these
instructions.
 Column l – Actual Cost Sharing for Medicare-Covered Services

Calculated automatically as column g times column j.
 Columns m through o – Medicare-Covered using Medicaid Cost Sharing

These columns are calculated automatically and are the basis for the costs included in
the “Plan A/B Bid.”

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Column m – Allowed PMPM

The Medicare-covered allowed costs are calculated automatically based on the
percentage of Medicare-covered benefits input in column i. Column m is calculated as
column e times column i.
Column n – Medicaid Cost Sharing

Calculated automatically as column k times column j.
Column o – Net PMPM

Calculated as column m minus column n.
 Columns p through r – A/B Mandatory Supplemental (MS) Benefits

These columns are calculated automatically and are the basis for the costs included in
the A/B mandatory supplemental premium.
Column p – Net PMPM for Additional Services

This column is calculated automatically as the allowed costs for non-covered benefits
(column e minus column m) less the cost sharing (column g minus column l). These
values must be greater than or equal to zero (except line r, COB, which may be
negative).
Column q – Reduction of A/B Cost Sharing

This column is calculated automatically as column n minus column l.
Column r – Total A/B Mandatory Supplemental Benefits

This column is calculated automatically as the sum of columns p and q.
Line s – Total Medical Expenses

The total medical expense is the sum of lines a through r, except for columns i and j.
SUBSECTION C – All Beneficiaries (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.
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 Columns p through r – A/B Mandatory Supplemental (MS) Benefits

These columns are calculated automatically and are the basis for the costs included in
the A/B mandatory supplemental premium.
Column p – Net PMPM for Additional Services

The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
Column q – Reduction of A/B Cost Sharing

The PMPM is calculated automatically as the weighted average of subsections A and B,
based on projected enrollment in Worksheet 5.
Column r – Total A/B Mandatory Supplemental Benefits

This column is calculated automatically as the sum of columns p and q.
Line r – ESRD

This line is populated based on Section III.
Line s – Additional Benefits (employer bids only)

N/A for CY2018.
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).
 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 bid’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 – Total Non-Benefit Expense
Column h – Total Non-Benefit Expense PMPM

The sum of lines v1 through v5 for Total Benefits. The value must be greater than or
equal to zero.
Columns p and q – Non-Benefit Expense PMPM 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.
Columns o and r – Non-Benefit Expense PMPM for Medicare-Covered and A/B
Mandatory Supplemental

The sum of lines v1 through v5. The value must be greater than or equal to zero.
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.
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 through 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.
Lines z1 through z3 – Overall Gain/(Loss) Margin Level

These fields pertain to the corporate margin requirement and the level at which the overall
gain/loss margin requirements are met. See the “Gain/Loss Margin” pricing consideration for
more information regarding aggregate-level gain/loss margin requirements.
 Line z1 – Corporate Margin Requirement % of Revenue

Enter the corporate margin requirement as a percent of revenue.

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 Line z2 – Corporate Margin Basis

This line contains a drop-down menu with two options: “Non-Medicare” or “RiskCapital-Surplus”. The option selected in the MA BPT must match the option selected
in the Part D BPT.
Do not leave this field blank.
 Line z3 – Overall Gain/(Loss) Margin Level

This line contains a drop-down menu with three options for the gain/loss margin level
of aggregation: “Contract,” “Organization,” and “Parent-Organization.” The level
selected in the MA BPT must match the level selected in the Part D BPT of an MA-PD.
Do not leave this field blank.
Lines z4 through z5 – Negative Bid-Level Gain/(Loss) Margin

These fields pertain to an MA bid with a negative projected gain/loss margin in line w. See the
“Gain/Loss Margin” pricing consideration for more information regarding bid-level gain/loss
margin requirements.
 Line z4 – Valid Product Pairing

If, in the contract year, the bid satisfies the requirements for the MA product pairing
exemption to the bid-specific business plan requirement, enter “Yes” to the question, “Is
the bid part of a valid product pairing?” Otherwise, enter “No”.
 Line z5 – Bids in Product Pairing

If the answer in line z4 to the product pairing question is “Yes,” enter in line z5,
columns j through n, the contract number-Plan ID-Segment ID (including a segment of
zero (0) for a non-segmented plan) of each MA bid in the product pairing.
The required format is “H####-###-###” (with the first character being H, E or R and
ending in “000” for a non-segmented plan).
Leave columns l through n blank to the extent the preceding cells in line z5 identify
each bid in the MA product pairing.
If there are more than five bids in the product pairing, then the MAO must include in
supporting documentation the contract number-Plan ID-Segment ID of each bid not
identified in line z5.

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.

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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 “End-Stage-Renal Disease (ESRD)” pricing considerations for more information about
this section of the BPT.
Supplemental Benefits

See the “End-Stage-Renal Disease (ESRD)” pricing considerations for more information about
this section of the BPT.

SECTION IV – FOR EMPLOYER BID USE ONLY (“800-SERIES”)
N/A for CY2018.

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 “Dual-Eligible Beneficiaries” pricing consideration for more information
about Medicaid data.

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MA WORKSHEET 5 – MA BENCHMARK PMPM
This worksheet calculates the A/B benchmark and evaluates whether the bid generates a
savings or the need 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 only to a “RPPO” plan type.
Section V – Summary of Quality Bonus Rating information (from CMS).
Section VI – Projected bid-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 bid’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 bid’s service area.
Medicare Secondary Payer Adjustment Factor: Factor relative to all payments.
For regional PPO plans, 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 bid’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 information
about projected member months.
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.
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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 “Projected Risk Score for CY2018” pricing consideration for
more information about the DE# risk score default calculation.
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.
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.

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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 this field.

SECTION IV – STANDARDIZED A/B BENCHMARK – REGIONAL PPO 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 BPT 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).
MAOs may input an estimated average regional PPO bid amount in their initial bid submission.
For bids that are submitted prior to the announcement of the regional PPO 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 regional PPO bid for the region. The MA regional PPO
announcement includes the weighted-average MA regional PPO bid for each region. MAOs
will be instructed at the time of the announcement to submit revised regional PPO MA BPTs
with the applicable average regional PPO bid amount entered 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 MAO 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 “Affordable Care
Act” pricing consideration for more information about QBP star ratings and rebate percentages.
Line 1 – Quality Bonus Rating (per CMS)

Enter the numeric quality bonus rating (that is, QBP “star rating”) released by CMS for the
contract (that is, a numeric value from “1.0” through “5.0”) or leave the cell blank. 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.)

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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:
•
•
•
•

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

If 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.

SECTION VI – COUNTY-LEVEL DETAIL AND SERVICE AREA SUMMARY
This section contains detailed data by county and develops bid-specific county-level MA
payment rates. For most bids, 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 regional PPOs may be developed using plan-provided geographic intraservice 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”.)
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.

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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 zeroes.
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 MAO. 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 information
about projected member months.
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.

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 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 MAO 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 BPT and is populated
based on the county codes input in column b and the projected member months entered in
column e.
The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in Section VII.

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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 bid’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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MA WORKSHEET 6 – MA BID SUMMARY
Worksheet 6 summarizes the results of the calculations of the BPT. 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
SUBSECTION 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 BPT is released.
SUBSECTION 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.
SUBSECTION 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 BPT information in three subsections.
•
•

Subsection 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.
Subsection B contains the MA rebate allocation.

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•

Subsection 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.

SUBSECTION 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 bid, 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 bid’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 Regional PPO 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.
SUBSECTION B – MA Rebate Allocation

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

See Appendix E for information regarding the reallocation of rebates (permitted for certain
bids) after the publication of the Part D and MA regional benchmarks.

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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.
SUBSECTION C – Development of Estimated Plan Premium
Line 1 – A/B Mandatory Supplemental Revenue Requirements

This amount is obtained from Section IIIA.
Line 2 – Less Rebate Allocations

These amounts are obtained from Section IIIB, lines 2 and 3.
Line 3 – A/B Mandatory Supplemental Premium

The sum of lines 1 and 2.
Line 4 – Basic MA Premium

This amount is obtained from Worksheet 5.
Line 5 – Total MA Premium (excluding Optional Supplemental)

The sum of lines 3 and 4.
Line 6 – Rounded MA Premium (excluding Optional Supplemental)

The total MA premium from line 5 is rounded to one decimal (that is, the nearest dime) to
comply with withhold system requirements. Value must be greater than or equal to zero.

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WORKSHEET 6

The BPT will not finalize if there are any invalid values (such as “#N/A”, “#DIV/0!”, “#REF!”,
“#NAME?”, etc.) in this field.
Line 7 – Part D Basic Premium
 Line 7a – Prior to Rebates

Enter the Part D basic premium prior to rebates after rounding (found on the separate
Part D BPT). 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.
 Lines 7b and 7c – A/B Rebates Allocated to the Part D Basic Premium

Enter the rebates that the MAO 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
BPT 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.
 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 (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 user enters Part D basic rebates (cell R36) greater than zero,
then the Part D basic premium after rebates (cell R37) must be greater than zero.
Line 8 – Part D Supplemental Premium
 Line 8a – Prior to Rebates

Enter the Part D supplemental premium prior to rebates (found on the separate
Part D BPT) 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.
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.

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WORKSHEET 6
 Lines 8b and 8c – A/B Rebates Allocated to the Part D Supplemental Premium

Enter the rebates that the MAO 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 BPT 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.
 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 (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 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, the target Part D basic premium is not applicable.
See the “Pricing Considerations” section of these Instructions for more information on the
target Part D basic premium.

SECTION IV – CONTACT INFORMATION AND DATE PREPARED
MAOs must identify three persons as MA plan bid contact, MA certifying actuary, and MA
additional actuarial BPT contact. The MA certifying actuary and MA additional actuarial BPT
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;
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 is populated with a
date/time stamp during the BPT finalization.

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WORKSHEET 6

SECTION V – WORKING MODEL TEXT BOX
This section contains multiple cells that may be used by bid preparers to enter internal notes—
for example, to facilitate communication between BPT and PBP preparers or to track internal
version schemes.
Section V will be deleted from the finalized file and therefore will not be uploaded to HPMS.
Bid preparers must not enter information in this section meant to be communicated to CMS or
to CMS reviewers, as CMS will not have access to it. Section V will not be deleted from the
working file or the backup file during finalization.

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WORKSHEET 7

MA WORKSHEET 7 – OPTIONAL SUPPLEMENTAL BENEFITS
Worksheet 7 contains the actuarial pricing elements for any optional supplemental benefit
(OSB) packages to be offered during the contract year, up to a maximum of five.
The PBP packages must be entered in the same order as they are entered in the PBP, 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
GENERAL
CMS requires an actuarial certification to accompany every bid submitted to HPMS. 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 Part D
BPT requires a certification.
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.
Certification Module

The certification module contains the following features:
•
•
•
•
•
•

Standardized required language.
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.
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.
Multiple actuaries may be 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 certifying actuaries.
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.

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APPENDIX A

Detailed instructions regarding how to apply for access to the certification module are released
via an HPMS memorandum regarding consultant access or electronic signature access to
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 completed.
Declaration 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 number, plan ID, and segment ID of the bid(s) being certified.
The contract year of the bid(s) contained in the certification.
Indication of whether the certification applies to the MA bid(s), the PD (Part D) bid(s),
or both.
Attestation that the bid(s) are in compliance with the applicable laws1, rules2, CY2018
bid instructions, and current CMS guidance.
Attestation that, in accordance with Federal law, the bid(s) are 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(s) are
reasonable for the plan’s benefit package (PBP).
Attestation that the bid(s) were prepared in compliance with the current standards of
practice, as promulgated by the Actuarial Standards Board of the American Academy of
Actuaries3.

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.

3

Emphasis is placed on, but not limited to, the following Actuarial Standards of Practice (ASOPs):
• ASOP No. 5, Incurred Health and Disability Claims
• ASOP No. 8, Regulatory Filings for Health Benefits, Accident and Health Insurance, and Entities
Providing Health Benefits (Revised)
• 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

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APPENDIX B

APPENDIX B – SUPPORTING DOCUMENTATION
GENERAL
In addition to the BPT and actuarial certification, MAOs must provide CMS with supporting
documentation for every bid, as described in these Instructions.
Unless otherwise noted, MAOs must upload all required supporting documentation at the time
of the initial June bid submission. Additional supporting documentation must be made
available to CMS reviewers upon request, and within 48 hours of the request, as required by
these Instructions. MAOs 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 MAO, 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 clearly labeled and easily understood by CMS reviewers.
Explain the rationale for the assumptions, including quantitative support and details,
rather than just narrative descriptions of assumptions.
Describe bid-specific variations in addition to the overall pricing assumption or
methodology.
Match the values entered in the current BPT and tie to the PBP.
Include Excel spreadsheets with working formulas, rather than pdf files, and a narrative
explanation of the inputs and the calculations and their components.
Clearly identify it is related to MA, Part D, or both.
Clearly identify the bid(s) relating to the support. At a minimum, the contract number
and organization name must appear on the first page. Specific bid numbers must be
included where appropriate, such as on the first page, in a separate chart, or as an
attachment.
Include a hard-coded date.
Include the contract-plan ID (or organization name) and topic in the beginning of the
file name.
Include the topic in the name of each worksheet in an Excel workbook.
Be labeled “revised” if any information in the file is revised or appended during bid
desk 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.
A complete description of data sources—for example, a report’s official name/title, file
name, date obtained, source file, the precise name of any published tables used, etc.
Intermediate calculations showing each step taken to calculate an assumption.
A summary of contractual terms of administrative services arrangements.
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 accessible only through a secure server link that requires a password.
A reference to the supporting documentation for another bid, such as “the same as for
plan Hxxxx-xxx-xxx,” and not the documentation itself. The supporting documentation
for a bid must be self-contained.
Excel spreadsheets with a vague explanation or no explanation of the bid-specific inputs
and calculations.
PDF files with the “Copy” function disabled.
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 bid filings in previous years.

SUBMITTING SUPPORTING DOCUMENTATION
Supporting materials must be in electronic format (for example, 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 note that although one
file can be uploaded to multiple bids in HPMS, documentation must not be uploaded to bids to
which it does not pertain. Similarly, it is not acceptable to upload to multiple bids materials
specific to a Part D plan, MA bid, or certain contract number.
More requirements about the upload of substantiation files are located in HPMS, under
HPMS Home > (Plan Bids) Bid Submission > CY2018 > (Upload) Substantiation > Next, for
example, the “Notes” section.

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APPENDIX B
Cover Sheet

To expedite the bid review process, MAOs must upload a “cover sheet” that lists all of the
supporting documentation that is uploaded or provided with 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 bids for which such
support item applies 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
contract number-plan ID-segment ID (such as “plans 001 – 030” or “all plans under contract
Hxxxx”). For these items, the cover sheet must contain the exact contract number-plan IDsegment IDs 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 contract
number-plan ID-segment IDs rather than a “range” of contract number-plan ID-segment 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

MAOs and certifying actuaries must prepare all supporting documentation at the time of the
initial June bid submission so that it is immediately available to CMS and reviewers at initial
bid submission or readily available upon request as explained below.
•
•
•

•

The “Initial June Bid Submission” section of Appendix B describes supporting
documentation materials that MAOs must upload to HPMS with the initial June bid
submission.
The “Upon Request by CMS Reviewers” section of Appendix B describes materials that
MAOs and certifying actuaries must provide within 48 hours of request by CMS
reviewers.
When a BPT is resubmitted, the MAO must upload to HPMS a summary of changes,
including the cause and effect of each revision authorized by CMS or CMS reviewers,
or proposed by the MAO for rebate reallocation.
◦ If a BPT is resubmitted for rebate reallocation, CMS expects the upload of the
summary of changes to occur by the end of the rebate reallocation period.
◦ If multiple BPTs are resubmitted at the same time, the supporting documentation
must include a mapping of specific bid changes to contract number-plan IDsegment IDs.
◦ Sample BPTs are not to be uploaded to HPMS.
Prior to the final actuarial certification,—
◦ MAOs and certifying actuaries must revise supporting documentation consistent
with the final certified bid.

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APPENDIX B

◦
◦

MAOs are not to upload to HPMS correspondence from the bid review process, for
example, e-mail.
CMS expects revised supporting documentation to have the same file name as the
original substantiation file except for a different date or a word such as “revised.”

Initial June Bid Submission

The following documentation requirements apply to all bids (as all bids contain these
assumptions):
1. A cover sheet outlining the documentation files, as described above.
2. A product narrative that offers relevant information about plan design, the product
positioning in the market (such as high/low), enrollment shifts, changes in service area,
type of coverage, contractual arrangements, marketing approach, and any other pertinent
information that would help expedite the bid review. For dual-eligible SNPs, include a
statement indicating how the plan conforms to state and territorial Medicaid regulations for
benefits, cost sharing, care management, and margins.
3. A document titled “Related-Party Declaration” that states whether or not the MAO is in a
related-party arrangement (Worksheets 1, 2 and 4).
4. Support for sequestration’s effect on the bid, including a qualitative and quantitative
description of how it is reflected in pricing assumptions.
5. Support for the claims credibility assumptions (Worksheet 2), including—
5.1.

A statement of the credibility methodology used—for example, the CMS guideline or
the CMS override.

5.2.

A description of the credibility methodology used if it varies from the CMS guideline
or the CMS override.

6. 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).
7. Support for non-benefit expense assumptions (Worksheets 1 and 4). The required elements
include—
7.1.

A reconciliation of the base period non-benefit expenses reported in Worksheet 1 of
the BPT to auditable material such as corporate financials and bid-level operational
data.

7.2.

A description of the expenses included in each non-benefit expense category in the
BPT.

7.3.

Detailed support for the development of projected non-benefit expenses. The
required elements include—
7.3.1. A description of the methodology used to develop non-benefit expenses.
7.3.2. An analysis that demonstrates the development of each line item using
relevant data, assumptions, contracts, financial information, business plans
and other experience.

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APPENDIX B

7.3.3. A description of the relationship between the non-benefit expense line items
reported in the BPT and auditable material such as corporate financials and
plan-level operational data.
7.3.4. An explanation for significant differences between actual and expected
non-benefit expenses for CY2014, CY2015 and CY2016, including a
description of how that knowledge was incorporated into the contract year
projection.
8. Justification of the gain/loss margin (Worksheet 4). The required elements include—
8.1.

A demonstration of how the corporate margin requirement is set, including an
explanation for any change from the prior year.

8.2.

Support for overall MA margin levels, including—
8.2.1. The level at which overall margins are determined.
8.2.2. A list of the MA contract numbers offered by the organization, if aggregate
gain/loss requirements are met at the organization level.

8.3.

A detailed justification for limited situations, in which: (i) the aggregate margin for
general enrollment plans & I/C SNPs combined is outside of the stated range of the
corporate margin; or (ii) the aggregate margin for D-SNPs is outside of the stated
range of the aggregate margin for general enrollment plans & I/C SNPs combined, or
the corporate margin, as applicable. This includes—
8.3.1. A description of the limited circumstances supporting an exception.
8.3.2. Evidence of the absence of anti-competitive practices and solvency issues.
8.3.3. Actions taken to bring the margin differential into compliance with these
Instructions.

8.4.

A demonstration of consistency between the projected aggregate margins for MA
and the actual aggregate returns over the long term. If the returns have been
inconsistent historically, provide an explanation of how this is addressed in the
current bid submission. For example, how pricing assumptions have been made to
bring the projected margin closer to the actual returns.

8.5.

A detailed justification of the need for flexibility in the gain/loss margin
requirements in order to satisfy other CMS requirements such as TBC.

8.6.

Support for a bid with a negative margin, including one of the four items outlined
below.
8.6.1. A description of the MA product pairing that includes the gain/loss margin
for each MA bid and shows that such bids—
a. Have identical service areas;
b. Are all local coordinated care plans, or all regional PPO plans, or all
PFFS plans; and
c. Have a positive combined gain/loss margin for CY2018.

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APPENDIX B

8.6.2. An alternate MA bid-specific business plan that includes a demonstration that
the MA bid margin is negative only in order to satisfy an aggregate-level
margin requirement.
8.6.3. For a new bid, or a bid with a zero or positive projected gain/loss margin for
the prior contract year, an MA bid-specific, year-by-year, numeric business
plan that demonstrates profitability within five years, including, but not
limited to, the elements listed below. A suggested negative-margin business
plan template can be found at https://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/Bid-Pricing-Tools-and-InstructionsItems/BidGuidance.html.
a. For each year, projected: member months, risk scores, CMS revenue, MA
premium, Medicare-covered and mandatory supplemental benefit medical
expenses, non-benefit expenses, and gain/loss margin.
b. An explanation of steps taken in the contract year and to be taken in each
future year to achieve profitability, that is, a year-by-year description of
benefit and premium changes, and other actions.
c. The year that profitability will be achieved or the MA bid becomes part of
a valid product pairing.
8.6.4. For an MA bid with a negative projected gain/loss margin for the prior
contract year, a numerical comparison of the projected gain/loss margin to the
MA margin in the original or most recent MA bid-specific numeric business
plan. The required elements include—
a. Details and sources of deviation from the original or most recent MA
business plan.
b. An explanation and demonstration of how the targeted margin in the
original or most recent MA business plan will be met, if the bid is
progressing toward a positive margin more slowly than projected in the
original or most recent business plan. This includes, but is not limited
to,—
i. A revised business plan demonstrating that the MA bid will reach
profitability within five years of the original MA business plan. The
revised business plan must include the detailed numeric and narrative
information required in 8.6.3. (a through c).
ii. Copies of the original and most recent MA business plans uploaded to
HPMS in a separate file.
8.7.

A detailed justification for a unique situation, in which an MA bid-specific business
plan does not achieve profitability within five years, including—
8.7.1. A description of the unique circumstances supporting an exception.
8.7.2. Evidence of the absence of anti-competitive practices and solvency issues.
8.7.3. Actions taken to bring the margin differential into compliance with these
Instructions.

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APPENDIX B

9. Detailed support for the development of projected risk scores (Worksheet 5). The required
elements include—
9.1.

A detailed description, and corresponding numerical demonstration, of the
methodology used to develop projected CY2018 MA risk scores.

9.2.

A description of, and the rationale for choosing, the source data for the development
of the projected CY2018 MA risk scores, including—
9.2.1. Identification of the source of the starting risk score and, if not the
CMS-provided risk scores, an explanation of why the alternative source was
appropriate.
9.2.2. For an alternative approach, identification of the years used, the population
incorporated, and any data points used as a basis in developing the CY2018
risk score.

9.3.

A description of the methodology used to derive each projection factor, including—
9.3.1. A summary of the consideration for using or not using the projection factor, a
description of and the rationale for choosing the source data, and the data
points used in the derivation of the projection factor.
9.3.2. For the bid-specific coding trend, a statement about the risk score years
utilized, the number of years used and whether the scores are normalized or
raw.

9.4.

A statement about the consistency between the development of the projected risk
scores for the bid population and the development of projected medical expenses.

9.5.

An explanation for significant differences between actual and expected risk scores
for CY2014, CY2015 and CY2016, including a description of how that knowledge
was incorporated into the CY2018 projection.

9.6.

For an alternate approach, a demonstration that the method used is consistent with
the preferred development approach in these Instructions, including an explanation of
why such approach is more appropriate than the CMS preferred approach.

9.7.

A statement of the credibility approach used—for example, the CMS guideline or the
CMS override.

9.8.

A description of the credibility methodology used if it varies from the CMS guideline
or the CMS override.

The following documentation requirements apply to all bids that contain these specified
assumptions:
10. Support for the development of the base period data (Worksheet 1).
10.1. Detailed qualitative and quantitative support for the development of the base period
experience. 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—

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APPENDIX B

10.1.1. A description of the allocation of allowed costs by service category when the
allocation method is not based on bid experience data.
10.1.2. Information regarding the base period member months, if more than eight
bids constitute the base period data.
10.1.3. Justification for the lack of encounter data for services provided under
capitated arrangements including—
a. An explanation for the deficiency.
b. A detailed description of the steps that the MAO has taken or is taking to
obtain encounter data for subsequent year’s bid submissions.
c. A description of the data source for utilization per 1,000 and the basis for
any adjustments.
10.2. Reconciliation of base period experience to the MAO’s audited financial statements
and bid-level operational data. 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.
10.3. Cross-walk information regarding data aggregation. See the sample format at the
end of Appendix B. The required elements include—
10.3.1. A list of all bids involved in approved cross-walks for CY2017 and proposed
cross-walks for CY2018 considered for base period data aggregation.
10.3.2. A statement of the intention to submit a cross-walk exception for CY2018, if
applicable.
10.3.3. The rationale for determining the level of significance. A detailed calculation
of the proportion of members cross-walked to the contract number-plan IDsegment ID from others bid(s) listed on Worksheet 1, Section II5, Plans in
Base, for example, numerical components of the numerator and the
denominator.
11. Detailed qualitative and quantitative support for the development of each projection factor
(Worksheet 1). The required elements include—
11.1. A description of the source data, including the data’s relevance to the MA bid.
11.2. A summary of the MAO’s historical trends including—
11.2.1. The percentage trends.
11.2.2. A description of the methodology used to analyze the data.
11.2.3. The numeric calculations.
11.3. Any applicable adjustments to the source data, such as considerations for—
11.3.1. Industry and/or internal studies.
11.3.2. Benefit design analysis.

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APPENDIX B

11.3.3. A change in the mix of services, including the rationale for the type of
projection factor used to reflect such change.
11.3.4. A change in the mix of provider arrangements such as capitated and risk
sharing arrangements.
11.4. An explanation for significant differences between actual and expected claims for
CY2014, CY2015, and CY2016, including a description of how that knowledge was
incorporated into the projection factors.
11.5. Justification for combining data for multiple service categories.
12. 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—
12.1. A description of the source data, including the data’s relevance to the MA bid and the
exposure (expressed in member months) as used to develop the manual rate.
12.2. Consideration of any adjustments made for annual volatility of the source data.
12.3. Any applicable adjustments to the source data, such as—
12.3.1. Approach and factors applied to account for incomplete claim run-out and/or
expenditures that are not reflected in the source data.
12.3.2. Techniques and factors used to reflect differences between the underlying
population and that expected of the MA bid.
12.3.3. 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.
12.3.4. Addition of Medicare-covered benefits not reflected in the source data.
12.3.5. Factors to reflect lower claims for expected MSP enrollees in the projected
population.
12.3.6. Exclusion of non-covered benefits reflected in the source data.
12.3.7. Methodology and data used to gross up reimbursements to an allowed-cost
basis.
12.4. Data and methodology used to project the data from base period to CY2018
12.5. The reasonableness of allowed costs and projection factors for costs based on
capitated payments to related parties.
12.6. The allocation of projected allowed costs by service categories.
12.7. All other applicable factors and/or adjustments.
13. Detailed support for related-party medical and administrative service arrangements
(Worksheets 1, 2, 3 and 4).
13.1. An MAO in a related-party arrangement must provide the following:
13.1.1. Declaration of every related-party arrangement.
13.1.2. Disclosure of all services provided in every related-party arrangement.

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APPENDIX B

13.1.3. A summary that explains the relationship of the parties involved and common
ownership, control and investment.
13.1.4. A summary of the contractual terms of each relationship that includes a
description of the services provided and money exchanged.
13.1.5. Disclosure of the method used in preparing the bid for each arrangement.
The options are: (i) for administrative service arrangements, Actual Cost for
Administrative Services Method or Market Comparison for Administrative
Services Method; and (ii) for medical service arrangements, Actual Cost for
Medical Services Method, Market Comparison for Medical Services Method,
Comparable to FFS, or FFS Proxy Method.
13.2. An MAO that chooses the Actual Cost for Administrative Services Method must
provide a qualitative and quantitative summary of the development of the related
party’s non-benefit expense.
13.3. An MAO that chooses the Market Comparison for Administrative Services Method
through the MAO (or through the related party) must—
13.3.1. Demonstrate that the contract with the unrelated party is associated with
sufficient costs to be considered a valid contract.
13.3.2. Show that the fees associated with the related-party arrangement are within
5 percent of the fees for similar services in the administrative arrangements
between the MAO and the unrelated party (or between the related-party
organization and the unrelated party).
13.3.3. For related-party administrative arrangements between the related-party
organization and an unrelated party, provide a signed attestation from the
related party stating that the actual contract will be available for review upon
request by CMS.
13.4. An MAO that chooses the Actual Cost for Medical Services Method must—
13.4.1. Provide a qualitative and quantitative analysis of the development of the
related party’s medical expense associated with the related-party
arrangement.
13.5. An MAO that chooses the Market Comparison for Medical Services Method through
the MAO (or through the related party) must—
13.5.1. Demonstrate that the contract with the unrelated MAO (or with the unrelated
party) is associated with sufficient costs to be considered a valid contract.
13.5.2. Show that the fees associated with the related-party arrangement are within
5 percent, or $2 PMPM, whichever is greater, of the fees for providing similar
services to a Medicare population in medical arrangements between the MAO
and the unrelated party in the bid’s service area (or between the related-party
organization and the unrelated MAO).
13.5.3. For related-party medical arrangements between the related-party
organization and an unrelated MAO, provide a signed attestation from the

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APPENDIX B

related party stating that the actual contracts will be available for review upon
request by CMS.
13.6. An MAO that chooses the Comparable to FFS Method must—
13.6.1. 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 MAO
under the related-party arrangement.
13.6.2. 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.
13.7. An MAO that chooses the FFS Proxy Method must—
13.7.1. 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 MAO
under the related-party arrangement.
13.7.2. 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.
13.7.3. Provide one of the following elements:
a. A declaration that: (i) the related-party organization does not have an
arrangement to provide similar services with an unrelated party, or (ii) the
MAO does not have an arrangement to provide similar services with
unrelated providers in the bid’s service area.
b. 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 MAO and unrelated providers in the bid’s service area.
c. A demonstration that fees for similar services are not comparable
between: (i) the related-party organization and unrelated parties, or (ii)
the MAO and unrelated providers in the bid’s service area.
14. The input sheet(s) for the pricing model used in the development of the bid.
15. An explanation of and detailed support for how CY2017 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 bids in the same contract or parent organization, the
documentation for the audited bids must describe how the bids for all plans are treated
consistently regarding that issue.
16. Support for reliance on information supplied by others that—
16.1. Identifies the source(s) of the information—for example, name, position, company,
date;
16.2. Identifies the information relied upon;
16.3. States the extent of the reliance—for example, whether or not checks as to
reasonableness have been applied; and
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APPENDIX B

16.4. Indicates to which bid(s) the reliance information applies.
See the sample format at the end of this appendix.
17. Detailed qualitative and quantitative support for the development of the components of
pricing assumptions pertaining to the MAO’s participation in the Medicare Advantage
Value-Based Insurance Design (MA-VBID) model, including an explanation for and a
demonstration of the VBID pricing by VBID intervention for each applicable BPT value.
18. Support for the development of DE# and non-DE# bid values. The required elements
include—
18.1. 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).
18.2. Support for non-DE# projected allowed costs (Worksheet 2).
18.3. Justification for changes in the DE# plan reimbursement, including the derivation of
the revised plan reimbursement PMPMs in Worksheet 4, column h.
18.4. Support for zero projected DE# member months when there are DE# members in the
base period (Worksheet 5).
19. Support for claim costs for hospice enrollees for mandatory supplemental benefits when
these costs are included in the projected allowed cost PMPM.
20. The rationale for projecting a zero cost of a benefit in the PBP, including the source data, an
explicit statement that the projected cost for the contract year is zero or essentially zero, and
a list of each benefit in the bid priced in such manner.
21. 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, “Suppl. Ben. Chpt 4 (Non-Covered),” is to
be shown in the supporting documentation as $1.50 PMPM for a smoking and tobacco
cessation counseling and $2.50 PMPM for medical nutrition therapy. (Detailed support for
the pricing of each additional benefit is available upon request.)
22. Support for the development of projected cost sharing (Worksheet 3). The required
elements include—
22.1. A detailed demonstration of how coinsurance or copayment amounts, for which CMS
does not have an established amount (for example, coinsurance for inpatient or
copayment for durable medical equipment), satisfies CMS service category
requirements. The MAO must upload this demonstration under the “cost sharing
justification upload” section in the Bid submission module of HPMS located under
HPMS Home > Plan Bids > Bid Submission > CY2018 > Substantiation > Select
Applicable Contact Number.
22.2. The determination of the PMPM impact of deductibles.
23. Support for a global capitation arrangement or risk sharing arrangement. The required
elements include—
23.1. A description of the arrangement.

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APPENDIX B

23.2. A demonstration of the methodology used to allocate the impact of the arrangement
to BPT service categories (including the allocation to the MA and Part D BPTs, if the
arrangement applies to Part D services)
24. Support for the development of the contract year ESRD subsidy (Worksheet 4). This
required documentation includes the following:
24.1. Base period (for example, 2016) revenues and medical expenditures for Medicarecovered benefits provided to enrollees in ESRD status.
24.2. The source for, and the development process of, any manual rates used.
24.3. Relevant base-to-contract year trend factors.
24.4. A statement of the credibility approach used—for example, the CMS guideline or the
CMS override.
24.5. A description of the credibility methodology used if varies from the CMS guideline
or the CMS override.
25. Detailed support for the MSP adjustment, including justification for a zero amount.
(Worksheet 5).
26. Support for the development of plan-provided ISAR factors (Worksheet 5), if used. (This
requirement applies to regional PPOs 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.
27. Support for the projected medical expense, projected non-benefit expense, and projected
gain/loss margin for specific optional supplemental benefit packages (Worksheet 7).
28. Support for actuarial swapping/equivalence customization for employer/union groups
enrolled in individual-market plans (Worksheet 1).
29. – 34. For future use
Upon Request by CMS Reviewers

It is not required that the items below be uploaded with the initial June bid submission, but they
must be prepared at that time in order to be readily available for CMS reviewers upon request.
If substantiation is requested by CMS reviewers, it must be provided by the certifying actuary
or additional MA BPT contact within 48 hours. These materials will be reviewed at audit:
35. Copies of related-party contracts.
36. 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.
37. An explanation of how certain findings from the Office of Financial Management (OFM)
audit were addressed in the current bid.
38. Justification of benefit value in relation to the gain/loss margin. The required elements
include—

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APPENDIX B

38.1. An explanation of how the PBP offers benefit value in relation to the margin.
38.2. Support for an MA bid with a high margin, including—
38.2.1. An explanation of a need for a contingency margin that correlates to the
“risk” to the MAO, low credibility, and/or significant claims variability from
year to year.
38.2.2. 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.
39. 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.)
40. Detailed support for cost-sharing utilization assumptions (Worksheet 3).
41. Support for allocation of allowed costs and cost sharing between Medicare-covered and
A/B mandatory supplemental benefits (Worksheet 4).
42. 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.
43. Support for the calculation of the “Medicaid Cost Sharing” (Worksheet 4, Section IIB,
column k), including cost sharing required by state or territory Medicaid programs in the
bid’s service area based on the eligibility rules for subsidized cost sharing for
DE# beneficiaries.
44. Support that changes in PMPM bid values as a result of rebate reallocation are consistent
with the pricing approach and methodologies used in the initial June bid submission.
Additional information not specified in this list may be requested by CMS reviewers, as
needed, at any point during the bid desk review process.

SAMPLE SUPPORTING DOCUMENTATION
MA Checklists 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

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APPENDIX B

Initial June Bid Submission – Required for All Bids with Specified Assumptions
Base period data
Projection factors
Manual rates
Related-party arrangements
Input sheets for pricing model
Bid audit results and compliance issues
Reliance information
VBID
DE# and non-DE#
Hospice claims costs for mandatory supplemental
Zero projected benefit cost
Non-covered services benefit-level summary
Cost sharing
Global capitation or risk sharing arrangement
ESRD “subsidy”
MSP adjustment
ISAR factors
Optional supplemental benefit (OSB)
Employer or union groups

Upon Request by CMS Reviewers
Related-party contracts
Reliance letter
OFM audit results
Benefit value/margin
Non-covered services pricing
Cost-sharing utilization
Allocation of allowed costs/cost sharing to Medicare-covered and non-covered
DE# plan cost sharing override
State and territory cost sharing requirements
Rebate reallocation pricing
Other

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APPENDIX B
SAMPLE MA Cover Sheets
MA Cover Sheet #1 - CY2018 Initial Bid Submission

Organization Name: Health One
Contract(s): Hxxxx, Hyyyy, and Szzzz
Date: June 5, 2017
Documentation
Requirement
Cover sheet

Specific
Bid(s) or N/A
All bids

Product narrative

All bids

Credibility
assumption
Cost sharing
mapping
Non-benefit
expenses
Gain/loss
margins
Risk scores

All bids

Related-Party
declaration
Sequestration

All bids

Manual rates

Hxxxx-003

ESRD subsidy

Hxxxx-001
Hxxxx-004

All bids
All bids
All bids
All bids

All bids

CY2018 MA BPT Instructions

File Name
Cover Sheet HealthOne
6-5-2017.pdf
Cover Sheet HealthOne
6-5-2017.pdf
Cover Sheet HealthOne
6-5-2017.pdf
Cover Sheet HealthOne
6-5-2017.pdf
HealthOne AdminProfit
6-5-2017.xls
HealthOne AdminProfit
6-5-2017.xls
HealthOne Risk CY2018
6-5-2017.xls
HealthOne Cover Sheet
6-5-2017.pdf
Cover Sheet 6-52017.pdf
Manual Hxxxx 6-52017.xls
Manual 6-5-2017.xls

Location within File
(if Applicable)
Page 1

MA, PD
or Both
both

Pages 2-4

both

Page 5

both

Page 6

both

Sheet 1

both

Sheet 2

both

MA-Sheet 1
Part D-Sheet 2
Page 7

both

Page 7

both

Section II

MA

Section I

MA

both

Page 114 of 155

APPENDIX B
MA Cover Sheet #2 - CY2018 Subsequent Bid Submission

Organization Name: Health One
Contract(s): Hxxxx, Hyyyy, and Szzzz
Date: July 15, 2017
Documentation Specific
Requirement
Bid(s) or N/A
Cover sheet
Hxxxx-001
Hxxxx-003
Hxxxx-004
Hxxxx-801
Hyyyy-001
Szzzz-001
Gain/loss
Hxxxx-001
margins
Hxxxx-003
Hxxxx-004
Hyyyy-001
Manual rates
Hxxxx-003

File Name
Cover Sheet 7-15-2017.doc

Location within
MA, PD
File (if Applicable) or Both
N/A
both

HealthOne AdminProfit
Revised 07-15-2017.xls

Sheet 1

both

Manual Rates Revised
6-6-2017.xls

Section I

MA

SAMPLE Reliance on Information Supplied by Others

Bid
Hxxxx002

MA, PD
or Both
MA and
Part D

Hxxxx002

MA and
Part D

Source
(Name, Position,
Company)
Joe Smith,
Director of Finance,
ABC Health Plan
Jane Doe,
Medicare Analyst,
ABC Health Plan

CY2018 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 115 of 155

APPENDIX B
Cross-walk Supporting Documentation

Bid:

Hxxxx-001

Significance Level (for all bids):

30%

Determination of the Level of Significance:
[Describe the determination of the level of significance used as a threshold for reporting
aggregated period experience.]
CY 2018 WK1 Reporting for:

(c)
CY2016
CY2016 Total
Bid
MMs
Hxxxx001
3,000
Hxxxx002
500,000

Hxxxx-001

Member Months (MMs)
(d)
Include
# Cross(e)
(f)
(g)
CY2016 Base
walked from # Removed # Remaining % Remaining Period Data
CY2016 Bid
From
in Reporting in Reporting
CY2018
to Reporting Reporting
Bid
Bid
Reporting Bid
Bid
Bid
(d-e)
(f/c)
(WK1)
—

2,500

N/A

N/A

Yes

10,000

—

10,000

2.0%

No

Hxxxx003

200

150

80

70

35.0%

Yes

Hxxxx004

6,000

3,000

—

3,000

50.0%

Yes

Hxxxx005

6,000

1,000

—

1,000

16.7%

No

CY2018 MA BPT Instructions

Relevant
Crosswalk
N/A
Ongoing bid
Plan 001:
CY2017 SAE
Plan 001:
CY2017 SAE;
Intend to file
CY2018 SAR
Crosswalk
Exception
Request
Plan 001: Intend
to file CY2018
SAE Crosswalk
Exception
Request
Plan 001: Intend
to file CY2018
SAE Crosswalk
Exception
Request

Page 116 of 155

APPENDIX C

APPENDIX C – PART B-ONLY ENROLLEES
This appendix includes bid requirements for plans that cover only enrollees eligible for
Medicare Part B. A regional PPO 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 MAOs provide to such remaining
Part B-only enrollees constitutes a separate MA plan (which requires a separate bid
submission).
CMS encourages MAOs 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 MAO 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 MAO is not required to submit a separate bid for the Part B-only
members.
MAOs are to prepare Part B-only bids in much the same way as those prepared for Part A/B
members. For Part B-only plans, MAOs 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 https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS012673.html. 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
Part B-only plans, the Medicare-covered proportion of home health services (line c) will
be 100 percent.

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APPENDIX D

APPENDIX D – MEDICARE ADVANTAGE PLANS AVAILABLE TO
EMPLOYER/UNION GROUPS
INDIVIDUAL-MARKET PLANS (“MIXED ENROLLMENT” PLANS)
An MAO may offer its individual-market MA plans to employer/union group health plan
sponsors and modify benefits for specific employer/union groups through two types of
allowable customization: “actuarial swapping” or “actuarial equivalence.”
Actuarial Swapping

If an MAO requests the actuarial swapping category of customization, the MAO must
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. The MAO may make specific swaps in negotiations with
employers or unions in the context of the CMS general approval of the candidates,
without obtaining further approval from CMS for the actual swaps.
Actuarial Equivalence

If an MAO requests the actuarial equivalence category of customization allowable for
employer and union groups, the MAO must provide the following information as
supporting documentation:
•
•
•

The proposed change in cost-sharing amounts and the MA plan containing such cost
sharing.
Any modification to the premium charged.
Any improvement in the benefit related to the changed cost sharing.

Unlike the actuarial swapping flexibility, this customization may apply to both covered
and non-covered Medicare benefits.
An MAO must retain in its files, but not upload to HPMS, a package of documents with
computations supporting the proposed changes under these two types of allowable
customization.
For more information on employer/union group sponsorship of individual MA plans, see
Chapter 9 of the Medicare Managed Care Manual (MMCM) at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-ManualsIOMs-Items/CMS019326.html.

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APPENDIX E – REBATE REALLOCATION AND PREMIUM ROUNDING
MAOs may resubmit bids in order to reallocate MA rebate dollars for certain bids and return to
the target Part D basic premium after CMS publishes the Part D benchmarks (that is, the Part D
national average monthly bid amount, the Part D base beneficiary premium, and the Part D
regional low-income premium subsidy amounts), and the MA regional benchmarks.
Consequently, rebate reallocation is required for some MA bids, is permitted (but not required)
for others, and is not permitted for certain bids, as indicated in this appendix.
Note that in order to satisfy all CMS rebate reallocation requirements, it may not be possible
for the MAO to reach the total estimated plan premium prior to rebate reallocation. Rebate
reallocation is only an opportunity to get back to the target Part D basic premium and reflect
the published MA regional benchmarks in the BPT.
Rebate reallocation may involve minimal benefit changes in order to fully reallocate rebates.
In such case, revisions to MA pricing assumptions for the incremental change in benefits and
the associated impact on other pricing assumptions, as described in this appendix, are permitted
only for the bids involved in rebate reallocation. Note that this step, which may include a
minor change in gain/loss margin to satisfy TBC requirements, is separate from, and must be
completed prior to, any change in gain/loss margin permitted under the premium rounding
rules.
Also note that the Part D bid must be unchanged (aside from a rare exception to address a
negative Part D basic premium). However, when resubmitting bids during or after rebate
reallocation period, plans must update the national average monthly bid amount and base
beneficiary premium in the Part D BPT.
CMS will announce the exact dates of the rebate reallocation period when the Part D and MA
benchmarks are released.

I. REBATE REALLOCATION PERMISSIBILITY BY PLAN TYPE
MA-PD 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 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, since these plans do
not submit a Part D BPT.
All regional PPO plans must resubmit during the rebate reallocation period, to reflect the
published MA regional PPO benchmarks within their bids.
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The tables below 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.
MA-PD Plans with MA Rebate Dollars in the Initial June Bid Submission

Type of Plan
Local
Local
Local

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

RPPO

Rebate Reallocation

Premium
Rounding

Example

Required

Permitted

1

Permitted
Permitted
Required, to reflect the
published MA regional
benchmarks

Permitted
Permitted

2
3

Permitted

4

* Impact on the Part D basic premium net of rebates (line 7D of Worksheet 6, Section IIIC) of
reflecting the CMS published benchmarks.
MA-PD Plans with No MA Rebate Dollars in the Initial June Bid Submission

Type of Plan
Local
RPPO

Rebate Reallocation
Not permitted
Required, to reflect the published
MA regional benchmarks

Premium Rounding
Permitted

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 MAO 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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B. Negative Part D Basic Premium Net of Rebate after Part D Benchmark Announcement

If, after reflecting announced Part D benchmarks, the Part D basic premium net of rebate is less
than zero, rebate reallocation is required.
The amount of rebate allocated to buy down the Part D basic premium cannot exceed the
amount of the pre-rebate premium. Therefore, if the premium resulting from application of the
national average monthly bid amount and the base beneficiary premium is negative, then the
“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 MAO 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 MAO 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 MAO 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 MAO 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 MAO 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 MAO 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 MAO
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 MAO 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 MAO 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
After
Rebate
Rebate
Rebate
Bid
Release of Reallocation Reallocation Reallocation
Submission Benchmark
Option 1
Option 2
Option 3
$55
$53
$53
$53
$53

CY2018 MA BPT Instructions

$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)

Initial June
After
Rebate
Rebate
Rebate
Bid
Release of Reallocation Reallocation Reallocation
Submission Benchmark
Option 1
Option 2
Option 3

Plan intention for target
Part D basic premium
(IIIC, line 10)

$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 MAO 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. MAOs 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 MAO 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 BPT.
G. Examples in which Target Part D Basic Premium Is the Low-Income Premium Subsidy
Amount (LIPSA) and the Plan Desires to Reach the LIPSA (Including Di Minimis)
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 post-benchmark is lower than the LIPSA, and
LIPSA is designated as the target Part D basic premium, then the MAO may increase
the Part D basic premium in order to reach the LIPSA by either (i) reallocating rebates
to reduce other beneficiary premiums (A/B mandatory supplemental, Part B, and/or

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APPENDIX E

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.
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 net of rebate
post-benchmark is less than the LIPSA. To reach the LIPSA, the only option that the
MAO has is to reallocate $3 of rebates to other benefits/premiums (adding mandatory
supplemental benefits as needed).
Part D Basic Premium Prior to Rebate (line 7a) after Part D Benchmark
Announcement Is Less than LIPSA

If the post-benchmark Part D basic premium prior to rebate (line 7a) is lower than the
LIPSA, and LIPSA is designated as the target Part D basic premium, then the postrebate reallocation Part D basic premium net of rebate will necessarily be lower than the
LIPSA and the MAO is not allowed to achieve the LIPSA. To be as close to the LIPSA
as possible, the MAO may increase the final Part D basic premium by reallocating the
entire rebate that was applied to Part D basic premium to other beneficiary premiums
(A/B mandatory supplemental, Part B, and/or Part D supplemental).

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Example 5b

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
Option

$33

$32

$32

$3
$30

$3
$29

$0
$32

LIPSA
Not applicable

LIPSA
$34

Not applicable
$34

The LIPSA is greater than expected, and the post-benchmark Part D basic premium net
of rebate is less than the LIPSA. To try to reach the LIPSA, the only option the MAO
has is to reallocate $3 to other 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,
and LIPSA is designated as the target Part D basic premium, then the MAO may lower
the Part D basic premium to the 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 MAO 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 MAO intends to return to the LIPSA 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.
Example 5c (Similar to Example 3)

MA BPT Worksheet 6,
Initial June Bid
Section IIIC, Line—
Submission
7a. Part D basic premium
prior to rebates (rounded)
$35
7c. MA rebates allocated to
Part D basic premium
(rounded)
$15
7d. Part D basic premium
$20
10. Plan intention for target
Part D basic premium
LIPSA
LIPSA
Not applicable

After Release
of Benchmark

Rebate
Reallocation

$40

$40

$15
$25

$25
$15

Not applicable
$15

Not applicable
$15

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 MAO has is
to reallocate rebates from other benefits/premiums to the Part D basic premium.

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APPENDIX E
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 MAO 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 MAO 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 MAO cannot
volunteer to waive the de minimis amount.
Example 5d (MA rebates allocated to Part D basic premium equal total MA rebates)

Total MA rebates post-benchmarks are $23.
MA BPT Worksheet 6,
Initial June Bid
Section IIIC, Line—
Submission
7a. Part D basic premium
prior to rebates (rounded)
$35
7c. MA rebates allocated to
Part D basic premium
(rounded)
$15
7d. Part D basic premium
$20
10. Plan intention for target
Part D basic premium
LIPSA
LIPSA
Not applicable

After Release
of Benchmark

Rebate
Reallocation

$40

$40

$15
$25

$23
$17

Not applicable
$15

Not applicable
$15

The difference between the $17 Part D basic premium post-benchmark and the $15
LIPSA is $2. The MAO 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 MAO 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 CY2018. Also note that information regarding CMS’
de minimis policy for CY2017 released via an HPMS memorandum dated July 29, 2016
includes the requirement that MA-PDs “allocate all of their MA rebates to buy down the
Part D basic premium.”
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.

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APPENDIX E
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 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
MAOs 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 MA regional PPO benchmark.

CMS will not allow the MAO to eliminate one benefit and then add another 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 MAO 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.

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APPENDIX E
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 MAO 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 MAO to accomplish rebate reallocation by changing
the value of benefits by more than $3, for example, by moving $15 out of A/B costsharing 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 MAO 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 MAO could, for example, eliminate from the A/B mandatory supplemental
benefit package the coverage of a non-Medicare covered item or service.
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

MAOs 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), MAOs may not offer an MA coordinated care plan in
an area unless that plan (or another MA plan offered by the same MAO in the same service
area) includes required prescription drug coverage. In accord with Chapter 5 of the Prescription
Drug Benefit Manual, for purposes of meeting this requirement, an MA organization is
considered to be an MA parent organization.
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.

MAOs are required to comply with this rule. If necessary, MAOs must reallocate rebate dollars
from other benefits to achieve the required Part D supplemental benefit in the plan.

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APPENDIX E

To restate: MAOs offering coordinated care plans must offer in an area either (i) a basic-only
Part D plan or (ii) a basic plus supplemental Part D plan for which the supplemental premium
(net of rebates) equals zero. Failure to meet this requirement will result in the organization’s
inability to offer a Part D benefit. In addition, MAOs 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).
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.)
MA Pricing

This section describes changes in MA pricing assumptions allowed or required by CMS as a
result of benefit changes made due to rebate reallocation. Such modifications to pricing
assumptions are separate from, and exclude, any adjustment to the gain/loss margin pertaining
to premium rounding as permitted in Section IV, Rule 3 of this appendix. That is, a change in
gain/loss margin under the “50 cents rounding rule” applies after the MA pricing changes
described in this section are made.
Incremental Benefit Changes

The BPT must reflect the value of A/B mandatory supplemental benefits added or
eliminated as a result of rebate reallocation, including the impact of such changes on
other pricing assumptions, consistent with the pricing approach and methodologies
utilized in the initial June bid submission. (That is, incremental changes in the cost of
benefits and the MA regional PPO benchmark must “flow-through” the original pricing
structure supporting the initial June bid submission.) Examples include, but are not
limited to changes in—
•
•

Projected allowed costs due to induced utilization related to changes in cost sharing.
Non-benefit expenses priced as a percentage of revenue or a percentage of premium,
such as insurer fees.

The BPT will automatically reflect (that is, calculate by formula) the following small
changes to bid values:
•
•

A small change due to the automatic (that is, calculated by formula) proportional
allocation of non-benefit expenses and the gain/loss margin in the BPT formulas.
A small change in the ESRD subsidy due to the automatic impact of changes in
mandatory supplemental benefits, non-benefit expenses and gain/loss margin.

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APPENDIX E

Further, CMS expects the provider reimbursement pricing assumption for DE# to be
impacted by rebate reallocation due only to changes in additional benefits for services
not covered by original Medicare. See the “Dual-Eligible Beneficiaries” pricing
consideration for more information.
Total Beneficiary Cost

If the MAO 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 based on the CMS published Part D and MA
regional benchmarks and the related post-benchmark, pre-rebate reallocation premiums.
However, it does not take into account benefit changes resulting from rebate
reallocation.
•
•
•

First recalculate the plan’s TBC taking into account the premium changes associated
with the CMS published Part D and MA regional benchmarks prior to any changes
to benefits.
Then, calculate the (minimum) amount of premium change needed to satisfy TBC
requirements.
Gain/loss margin may change by the amount necessary to produce such premium
change.

Note that the MAO may not further adjust margin in order to account for any change in
TBC generated by benefit changes made during rebate reallocation.
Local MA Plan Segments

The above rules on rebate reallocation apply to bids for local MA plan segments, with the
clarifications below.
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 MAO 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.

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APPENDIX E

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 BPT, PDPs are permitted to round their premiums to either the nearest $0.10 or
the nearest $0.50.
Rule 2 – Local MA-Only Plans

For local MA-only plan bids, the plan premium submitted in the initial June bid submission is
considered the final premium, as these bids are not affected by the Part D national average
calculation or the MA regional plan benchmark calculations. Local MA-only plans will not be
given an opportunity to round the premiums after the initial June bid submission. If a local
MA-only MAO 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 and Regional PPO Plans

Rounding Rule 3 applies to local MA-PD plans and regional PPO plans that are allowed to or
are required to participate in the rebate reallocation process. During rebate reallocation, MAOs
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 no more 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.)
Further, if the plan has rebate dollars, then the MAO may round total premium by making a
small change in the gain/loss margin that results 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).

Note that this rule applies separately from, and after, all other bid adjustments CMS allows
during rebate reallocation as explained in the “MA Pricing” and “Total Beneficiary Cost”
sections of this appendix.

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APPENDIX E
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 MAO could round the plan premium to
$30.00 by generating $0.42 of additional rebates to allocate to the basic Part D premium
by slightly reducing the gain/loss margin for MA benefits. (The gain/loss margin for
Part D benefits must not change.)
Example b1: An MA-PD plan has no premium for Medicare-covered or A/B

mandatory supplemental benefits, and an initial basic Part D premium (target premium)
of $30. (This situation could occur if (i) the bid equals the benchmark, and no
A/B supplemental benefits are offered, or (ii) the plan applies rebates to reduce the A/B
mandatory supplemental premium to zero.) If the post-Part D benchmark
announcement bid results in a total plan premium of $32.42, the MAO 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 MAO 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 MAO 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 MAO 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 MAO 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 MAO 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 MAO
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

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APPENDIX E

basic premium is $32.00, and the low-income premium subsidy amount is $31.60. The
plan has the following three options:
Option 1: The plan can maintain its Part D basic premium of $32.00. The plan’s

beneficiaries eligible for the full subsidy will pay a Part D basic premium of $0.40.
Option 2: The MA-PD plan can reallocate $.40 of the rebates that were allocated to

the A/B mandatory supplemental premium to its Part D basic premium, thus
reducing the premium to the low-income premium subsidy amount of $31.60. To
account for the reduction in rebates applied to the A/B mandatory supplemental
premium, the MA-PD plan may either increase its A/B mandatory supplemental
premium by $0.40 or reduce its gain/loss margin appropriately to eliminate the
premium increase. Enrollees not eligible for the low-income subsidy would pay a
Part D basic premium of $31.60.
Option 3: In order to be able to offer a rounded Part D basic premium to enrollees

not eligible for the low-income subsidy, MA-PD plans are permitted in this situation
to reallocate A/B mandatory supplemental rebates to reduce their Part D basic
premium to the nearest whole-dollar amount below the regional low-income
premium subsidy amount. Therefore, the MA-PD plan can reallocate $1.00 of its
A/B mandatory supplemental rebates to its Part D basic premium, reducing the
Part D basic premium to $31.00, which is the nearest whole-dollar amount below
the regional low-income premium subsidy 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 MAO could increase the MA
gain/loss margin requirements to increase each MA premium by $0.10. When added to

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APPENDIX E

the $37.90 Part D premium, the total plan premium for each segment becomes a wholedollar 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 MAO
would like to offer a whole-dollar premium to the plan’s enrollees. Before submitting
the initial BPT to CMS (via HPMS upload), the actuary would slightly revise the
gain/loss margin to accomplish the rounded premium. For example, the actuary could
reduce the gain/loss margin by $0.30 to achieve the $61.00 rounded premium. This
adjustment must be completed before the BPT is submitted to CMS in early June. Note
that MAOs 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 regional PPO plans must resubmit during the rebate reallocation period, in order to
reflect the published regional MA benchmarks.
If the Part D national average monthly bid amount and base beneficiary premium 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
national average monthly bid amount and base beneficiary premium 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.
Re-submitted bids must continue to satisfy CMS requirements, such as service category
cost sharing, meaningful difference, and TBC evaluations.

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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 Services
Worldwide Emergency/Urgent Coverage
Partial Hospitalization

6
7a
7b

Home Health Services
Primary Care Physician Services
Chiropractic Services

7c
7d

7f

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

7g

Other Health Care Professional Services

7h

Psychiatric Services

7d
7e

CY2018 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

Professional: Specialist excl. MH;
or Professional: Other
Professional: Specialist excl. MH; or
Professional: Other
Professional: Mental Health

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APPENDIX F

PBP
line #
7i

BPT
line #
i4

Corresponding BPT Category:
Description/Note (Worksheet 3)
Professional: Therapy (PT/OT/ST)

h1

OP Facility - Other: Lab

h2

OP Facility - Other: Radiology

g or h

9a

PBP Category
Physical Therapy and Speech Language
Pathology Services
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

Dialysis Services
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 Zero Dollar Preventive
Services

h4
q

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/Diabetes: DME
DME/Prosthetics/Diabetes: Prosthetics/
Diabetes
DME/Prosthetics/ Diabetes: Prosthetics/
Diabetes
OP Facility - Other: Renal Dialysis
Other Non-Covered

q
q
q
q
q
q

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

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

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)

8a
8b

13b
13c
13d
13e
13f
13g
13h
14a

14b

Annual Physical Exam

14c

p

14d

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

14e

Other Medicare-covered Preventive Services

i1, i2
or i6

15

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

j

CY2018 MA BPT Instructions

i1, i2
or i6

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

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APPENDIX F

PBP
line #
16a
16b
17a
17b
18a
18b
19a
19b

PBP Category
Preventive Dental
Comprehensive Dental
Routine Eye Exams/Other
Eye Wear
Hearing Exams
Hearing Aids
Reduced Cost Sharing for VBIDs
Additional Benefits for VBID

1

CMS does not suggest any particular BPT category.

2

CMS does not suggest any particular BPT category.

CY2018 MA BPT Instructions

BPT
line #
m
m
n1
n2
o1
o2
1
2

Corresponding BPT Category:
Description/Note (Worksheet 3)
Dental (Non-Covered)
Dental (Non-Covered)
Vision (Non-Covered): Professional
Vision (Non-Covered): Hardware
Hearing (Non-Covered): Professional
Hearing (Non-Covered): Hardware
Actuary’s discretion
Actuary’s discretion

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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 Medicaid programs,
and of the types of Medicaid benefits to which these beneficiaries are entitled, see
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/
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 Medicaid Program)
QMB (Qualified Medicare Beneficiary) only
QMB Plus full Medicaid benefits
SLMB (Special Low-Income Medicare Beneficiary) only
SLMB Plus 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.

A

Dual

Category of
Dual Eligible
Medicaid
Program
QMB and QMB
Plus

B

Dual

Other Medicaid

B
C

Dual
Non-Dual

Other Medicaid
Non-Medicaid

Medicaid
Grouping

Dual
Eligible

CY2018 MA BPT Instructions

Medicaid
Status Code

Medicare Cost-Sharing
Liability

01, 02
03, 04, 05,
06, 08, 09, 99
03, 04, 05,
06, 08, 09, 99
Blank

None
Reduced (as determined
by the certifying actuary)
Full (as determined by
the certifying actuary)
Full

DE#
Status
DE#
DE#
Non-DE#
Non-DE#

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APPENDIX G

The table below outlines the requirements for classifying dual-eligible beneficiaries that are not
QMB or QMB Plus (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.
Medicaid
Grouping/Status Code
A: 01, 02
B: 03, 04, 05, 06, 08, 09, 99
B: 03, 04, 05, 06, 08, 09, 99
C: Blank

DE# Determination
for Base Period Data
DE#
May consider as non-DE# or
determine actual classification

Condition
None
<10% total dual-eligible
beneficiaries
10% to 100% total dualeligible beneficiaries
None

Must determine actual classification
Non-DE#

BPT Values

The table below 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
WS4 IIB
WS5 II

10% to
90% DE#

Input Item
Utilization and PMPM
values
State Medicaid required
beneficiary cost sharing
(column k)

<10% DE#
Enter non-DE# or
total values
Enter zero or
appropriate
values2

>90% DE#
Enter non-DE# or
total values1
Enter appropriate
values2

N/A

Non-DE# risk factor

Enter total values

Enter total values

N/A

N/A

The next table summarizes the determination of certain BPT values when (i) the value for the
DE# projected member months is less than 10 percent, or greater than 90 percent, of the total
projected member months 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
WS5 II

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)2
Determine distinct non-DE#
and DE# values

Non-DE# risk factor

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.

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APPENDIX G

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.
BPT Area
WS3
WS4 IIB
WS5 II

Input Item

Determination of BPT Values

Cost-sharing values and description

Reflect PBP package

Plan cost sharing (column f)
Non-DE# member months

CY2018 MA BPT Instructions

Default to non-DE# ratio of plan
cost sharing or override formulas
Determine distinct non-DE# and
DE# values

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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 “Related-Party Arrangements (Medical and Non-Benefit)” pricing consideration for a
complete explanation of the requirements.

Method
Method 1 Actual Cost

Method 2 Market Comparison
– through MAO
Method 2 Market Comparison
– through Related Party

CY2018 MA BPT Instructions

Availability

Unrelated
Party

Always
available

N/A

Alternative
to Method 1

Provides
similar
services

Criteria

NBE in BPT

•

Support method

Actual cost
of RP

•

Compare to contracts
with sufficient costs of
services
Show fees within 5%

Fees paid by
MAO

•

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APPENDIX H

SUMMARY OF MA RELATED-PARTY REQUIREMENTS – MEDICAL SERVICES
ARRANGEMENTS
See the “Related-Party Arrangements (Medical and Non-Benefit) pricing consideration for a
complete explanation of the requirements.

Method
Method 1 Actual Cost

Method 2 Market
Comparison
– through MAO

Availability
Always
available

Alternative to
Method 1

Unrelated Party
N/A

•
•
•

Similar services
Medicare
population
Bid’s service area

•

Support method

•

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

•

•
•

Method 2 Market
Comparison
– through Related Party

Alternative to
Method 1

•
•
•

MAO
Similar services
Medicare
population
Attest to contract
availability

•

•

Method 3
Comparable to FFS

Cannot
satisfy
Method 1

Method 4 FFS Proxy

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

CY2018 MA BPT Instructions

N/A

•

•

N/A

Net Medical
in BPT
Actual cost of
RP

Criteria

•

Fees paid by
MAO

Fees paid by
MAO

Fees paid by
MAO

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 BPT 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 CY2017 for MSA plans is $11,650.
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.

WORKSHEET 3 – MSA BENCHMARK PMPM (CORRESPONDING TO MA
WORKSHEET 5)
Follow the instructions for MA Worksheets 5 and 6 for the appropriate inputs.

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APPENDIX I

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.
Line b – Non-Benefit Expenses

Enter the non-benefit expense information.
Do not leave a field blank to indicate a zero amount. If zero is the intended value, enter
zero (0) in the cell.
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APPENDIX I
Line c – Gain/Loss Margin

Input the projected PMPM for the gain/loss margin for Medicare-covered services provided.
See the “Gain/Loss Margin” pricing consideration for more information regarding gain/loss
margin.
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 BPT 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 2016
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 number, 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.

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APPENDIX J
 Column d – ESRD Status (D / T / F)

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

Projected risk scores must—
•
•
•

•

Be based on the CMS-HCC ESRD risk model that will be used for payment year
2017 (“ESRD Model”).
Reflect appropriate projection factors.
Be adjusted for normalization using the 2017 normalization factor shown below for
the applicable segment of the ESRD Model.
◦ For dialysis and transplant, 0.994.
◦ For functioning graft, 1.051.
Reflect the MA coding adjustment factor as follows:
◦ For post-graft risk scores, apply the 2017 MA coding adjustment factor.
◦ For dialysis risk scores and transplant factors, there is no MA coding adjustment.

See the Announcement of Calendar Year (CY) 2017 Medicare Advantage Capitation
Rates and Medicare Advantage and Part D Payment Policies for more information about
the ESRD Model and related normalization factors and MA coding adjustment factor.
 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) 2018 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.

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APPENDIX J
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.
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 MAO’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
MAO 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.

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APPENDIX J

WORKSHEET 3 – PROGRAM EXPERIENCE FOR CALENDAR YEAR 2016
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 CY2016. All revenues are to be reported on an earned basis, including retroactive
adjustments. Revenues for 2016 are to include an estimate of the final risk adjustment
settlement to be received in mid-2017.

SECTION IV – MEDICAL BENEFITS (PMPM)
Enter the paid through date for claims incurred and claims incurred in CY2016. CMS generally
expects at least 30 days of paid claims run-out; 2 - 3 months of paid claim run-out is preferable.
Medical benefits are to be reported net of enrollee cost sharing.
Enter the paid through date for and claim reserves for 2016. 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.

CY2018 MA BPT Instructions

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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 are 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 (for example, 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 bid-specific. It can be generated from the risk
scores that CMS sends to MAOs to support bidding; however, MAOs should also
consider whether other years in their trends have a different conversion factor (for
example, 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.
▪ MAOs 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 MAO 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, MAOs are to assess whether
there are bid-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.

CY2018 MA BPT Instructions

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APPENDIX L

APPENDIX L – DATA AGGREGATION EXAMPLES
This appendix includes examples for aggregating base period experience on Worksheet 1 of the
MA Bid Pricing Tool (BPT).
Example 1: Formal Cross-walk

An MAO offers non-segmented plans 001, 002 and 003 in CY2016 and CY2017, and
non-segmented plans 002 and 003 in CY2018. Plan 001 is consolidated and the membership is
formally cross-walked into plan 003 for CY2018 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 CY2018 BPTs as follows:
•
•

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

Example 2: Formal Cross-walk and Enrollment Shift

An MAO offers non-segmented plans 001, 002, and 003 in CY2016 and CY2017, and
non-segmented plan 003 and new non-segmented plan 004 in CY2018. Plan 001 is consolidated
and the membership is formally cross-walked to plan 003 for CY2018 as submitted in HPMS.
Plan 002 is terminated for CY2018 and the certifying actuary expects the membership in
plan 002 to enroll evenly between plan 003 and plan 004; however, there is no formal cross-walk
or approved cross-walk exception in place. Base period experience must be reported on
Worksheet 1 of the CY2018 BPTs as follows:
•
•

For plan 003, report base period experience for plans 001and 003 (Rule 1 and Rule 3).
For plan 004, do not report base period experience (Rule 2). Data aggregation is not
allowed.

Example 3: PFFS Non-network/Net-work County Reclassification

An MAO offers PFFS non-network plan Hxxxx-001 and PFFS full network plan Hyyyy-001 in
both CY2016, CY2017 and CY2018. However for CY2017, county A in Hxxxx-001 is
reclassified from non-network to full network and is removed from the service area of
Hxxxx-001 to the service area of Hyyyy-001. The proportion of Hxxxx-001 members in county
A that are moved to Hyyyy-001 via MARx enrollment transactions under an approved cross-walk
exception is greater than the MA level of significance determined by the certifying actuary.
Also for CY2018, county B in Hyyyy-001 is reclassified from full network to non-network and is
moved from the service area of Hxxxx-001 to the service area of Hxxxx-001. In this case, the
proportion of Hyyyy-001 members in county B that are moved to Hxxxx-001 via MARx
enrollment transactions under an approved cross-walk exception is less than the MA level of
significance. Base period experience must be reported on Worksheet 1 of the CY2018 BPTs as
follows:
•
•

For Hxxxx-001, report base period experience for Hxxxx-001. (Rule 2 and Rule 3) Data
aggregation is not allowed.
For Hyyyy-001, report aggregate base period experience for plans Hxxxx-001 and
Hyyyy-001. (Rule 1 and Rule 3)

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APPENDIX L
Example 4: Cross-walks in Successive Years

An MAO offers plan 001 with 100 members and plan 002 in CY2016. In CY2017, 50 members
stayed in plan 001 and 50 members were cross-walked to plan 002 via MARx enrollment
transactions. For 2018, 25 members stay in plan 001 and 25 members are cross-walked to
plan 002 via MARx enrollment transactions. The certifying actuary sets the MA level of
significance at 60%.

CY2016

CY2017

CY2018

Plan 001 Members
Remaining in Plan 002

County A

25 in plan 001

25 in plan 001

25 in plan 001

N/A

County B

25 in plan 001

25 in plan 001

25 → plan 002

25

County C

50 in plan 001

50 → plan 002

50 in plan 002

50

Total

100

75

Members in plan 001 are cross-walked as shown in the table below.
The proportion of plan 001 members in the plan 002 bid for CY2018, resulting from both the
CY2017 and CY2018 cross-walks is 75/100 or 75%. Since such percentage is above the 60%
threshold established by the certifying actuary, base period experience must be reported on
Worksheet 1 of the CY2018 BPTs as follows:
•
•

For plan 001, report base period experience for plan 001. (Rule 3)
For plan 002, report base period experience for plan 001 and plan 002. (Rule 1, Rule 3,
and Rule 4)

Example 5: Service Area Reduction

An MAO offers non-segmented plans 001 and 002 in CY2016 and plan 002 in CY2018.
Plan 001 is consolidated and the membership is formally cross-walked to plan 002 for CY2017.
For CY2018, 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.
The certifying actuary sets the MA level of significance at 40%.
Members in plan 001 are cross-walked as shown in the table below.
CY2016

CY2017

CY2018

Counties A…C

200 in plan 001

200 →plan 002

→0 in plan 002

County D

100 in plan 001

100 →plan 002

100 in plan 002

Total

300

100

The proportion of plan 001 members remaining in plan 002 after taking into account the CY2017
cross-walks from plan 001 to plan 002 and the CY2018 service area reduction for plan 002 is
100/300 or 33%. Since such percentage is below the 40% threshold established by the certifying
actuary, base period experience must be reported on Worksheet 1 of the CY2018 BPTs as
follows:

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APPENDIX L

•

For plan 002, report base period experience for plan 002. Data aggregation is not
allowed.

Example 6: Service Area Expansion and Service Area Reduction

Plan 001 covers counties A through Y in 2016 and undergoes an exception-based cross-walk in
2017 via MARx enrollment transactions, whereby counties B through Y are cross-walked to
plan 002 and county A is not.
Plan 002 undergoes a service area reduction in 2018, whereby counties B through X are
terminated. Plan 002 also undergoes a service area expansion for new county Z that does not
involve an exception based cross-walk since the plan sponsor does not currently offer a plan in
county Z. Therefore, only counties Y and Z are in the service area of plan 002 for 2018.
The certifying actuary sets the significance threshold at 25%.
Members in plan 001 and plan 002 are cross-walked as shown in the table below.

CY2016

CY2017

CY2018

CY2018 Plan 001
Members Remaining
in Plan 002

County A

200 in plan 001

200 in plan 001

200 in plan 001

N/A

Counties B...X

500 in plan 001

500 →plan 002

→0 in plan 002

0

County Y

300 in plan 001

300 →plan 002

300 in plan 002

300

Total

1000

300

The proportion of plan 001 members in the plan 002 bid for CY2017, resulting from both the
CY2017 and CY2018 cross-walks and the CY2018 service area reduction for plan 002 is
300/1000 or 30%. Since such percentage is above the 25% threshold established by the
certifying actuary, base period experience must be reported on Worksheet 1 of the CY2018 BPTs
as follows:
•
•

For plan 001, report base period experience for plan 001. Data aggregation is not
allowed. (Rule 3)
For plan 002, report base period experience for plan 001 and plan 002. (Rule 3 and
Rule 4)

CY2018 MA BPT Instructions

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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.

CY2018 MA BPT Instructions

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