The Affordability Review — “Reading the Tea Leaves”

The fall season is a good reality check — back to school, cooler weather, end of summer, and …. Budgeting/financial forecasting. Forecasting is like predicting the future — you have to know how to read the tea leaves and see the efficiencies and interdependencies of your current performance to have a better idea of future performance and challenges.

Regardless of lines of business and marketplaces, companies need to manage to an acceptable loss ratio. Government regulations use this metric across different products and populations. Medicare Advantage demands at least 85% medical loss ratio (MLR), and many Medicaid plans and special needs populations require at least 90% MLR. Administrative costs are constantly squeezed, and risk adjustment is an ongoing process that is sometimes hard to quantify relative to the amount and timing of the additional revenue.

So the process of going through an affordability review is like a readiness audit. It is better to be proactive and look for opportunities before it is too late. An affordability review consists of several steps. An initial onsite visit, including interviews with management across the key departments of medical management, networks, pharmacy, claims, finance, risk adjustment, and marketing, can set the foundation for an in-depth review of internal financial and operating reports. An objective review of claims trends, based on cost and utilization drivers across members, providers, and services, can result in improved financial and operational performance. With collaboration among subject matter experts, initiatives with financial targets and action plans can be developed and monitored.

Even with new products and demonstrations, reports and a monitoring process should be in place on day one. Many Centers for Medicare & Medicaid Services (CMS) demonstrations only last for three years, so waiting for claims data and trends minimizes your window for mitigation.

Resources

Gorman Health Group has subject matter experts in operations and analytics to provide assistance with this process and help cultivate a corporate awareness and discipline toward financial outcomes that deserve a spot with quality and compliance. It is everyone’s responsibility. Contact us to learn more >>

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