actuarial memorandum and certification effective january 1, 2018 · 2019. 8. 2. · molina...

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Molina Healthcare of Texas, Inc.

Covered Texas Individual Rate Submission July 28, 2017

Actuarial Memorandum and Certification

Effective January 1, 2018

The purpose of this actuarial memorandum and certification is to provide information related to Molina Healthcare of Texas, Inc.’s (Molina) Part I Unified Rate Review Template submission to the Texas Individual Marketplace (Texas Marketplace). The actuarial memorandum and certification describe Molina’s rating methodology used to develop rates for Individual products offered on Texas Marketplace effective January 1, 2018. Molina will not market Individual products outside Texas Marketplace. Molina Healthcare of Texas, Inc. is a managed care organization that provides healthcare services for over 482,000 individuals eligible for Medicaid, Medicare, and Marketplace throughout the state of Texas. Molina Healthcare of Texas, Inc. is a licensed state health plan managed by its parent corporation, Molina Healthcare, Inc. Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through our locally operated health plans in 12 states across the nation and in the Commonwealth of Puerto Rico, Molina serves more than 4.2 million members. Dr. C. David Molina founded our company in 1980 as

a provider organization serving low‑income families in Southern California. Today, we continue his

mission of providing high quality and cost‑effective health care to those who need it most.

200 Oceangate Suite 100 Long Beach, CA 800.526.8196

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TABLE OF CONTENTS GENERAL INFORMATION ................................................................................................................ 3

PROPOSED RATE INCREASE(S) ........................................................................................................ 4

MARKET EXPERIENCE ...................................................................................................................... 5

Experience Period Premium and Claims ...................................................................................... 5

Benefit Categories ........................................................................................................................ 6

Projection Factors ........................................................................................................................ 7

Credibility of Experience ............................................................................................................ 13

Paid to Allowed Ratio ................................................................................................................. 13

Risk Adjustment and Reinsurance ............................................................................................. 15

Non-Benefit Expenses and Profit & Risk .................................................................................... 17

PROJECTED LOSS RATIO ................................................................................................................ 21

APPLICATION OF MARKET REFORM RATING RULES ..................................................................... 21

Single Risk Pool .......................................................................................................................... 21

Index Rate .................................................................................................................................. 22

Market Adjusted Index Rate ...................................................................................................... 22

Plan Adjusted Index Rates ......................................................................................................... 23

Calibration .................................................................................................................................. 25

Consumer Adjusted Premium Rate Development ..................................................................... 27

PLAN PRODUCT INFORMATION .................................................................................................... 28

AV Metal Values ......................................................................................................................... 28

AV Pricing Values ....................................................................................................................... 30

Membership Projections ............................................................................................................ 31

Terminated Products ................................................................................................................. 33

Plan Type .................................................................................................................................... 33

Warning Alerts ........................................................................................................................... 33

MISCELLANEOUS INSTRUCTIONS .................................................................................................. 34

Effective Rate Review Information ............................................................................................ 34

Reliance ...................................................................................................................................... 32

Actuarial Certification ................................................................................................................ 35

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GENERAL INFORMATION The information below documents the company identifying and contact information entered into the general information section of Worksheet 1 of the Unified Rate Review Template (URRT).

Company Identifying Information

Company Identifying Information

Legal Name: Molina Healthcare of Texas, Inc.

State: Texas

HIOS Issuer ID: 45786

Market: Texas Individual Marketplace

Effective Date: January 1, 2018

Company Contact Information

Company Contact Information

Contact Name: Evan Swalheim

Telephone #: 888.562.5442 x114611

Email: [email protected]

mailto:[email protected]

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PROPOSED RATE INCREASE(S) Molina’s rate filing reflects the following rate changes by metal tier for Molina’s 251,266 members enrolled effective April 1, 2017 reported as of May 2017. The rate changes vary by metal tier due to changes in the Actuarial Value (AV) Pricing Values assigned to each metal plan that are applied to the Plan Adjusted Index Rate.

Rate Change by Plan

Plan ID Product Name

Metal Tier

Members Rate Change

Average Minimum Maximum

45786TX0010001 Molina Marketplace

Gold 1,050 27.4% 9.7% 112.4%

45786TX0010002 Silver 23,515 41.6% 25.3% 142.4%

45786TX0040001 Molina Marketplace Options

Silver 15,963 47.1% 29.9% 151.3%

0 Bronze NA NA NA NA


Choice

Gold 2,382 32.7% 14.6% 121.8%

45786TX0020002 Silver 157,543 50.3% 33.1% 157.5%

45786TX0020003 Bronze 50,813 15.0% 2.3% 97.9%

Total 251,266 42.8% 2.3% 157.5%

Reason for Rate Increase(s): Molina identified the following factors contributing to the overall increase in Molina’s proposed rates. - Risk Transfer Payments: The risk transfer payments are expected to emerge at a higher level

than what was assumed in the rate development for the current rates. - Trend: Molina trended the experience period claims at a 5.3% annualized trend rate.

- Duration: Molina applied a durational factor in consideration of higher utilization for members in

their second year compared to their first year as fewer first year members are anticipated in the projection period compared to the experience period.

- Provider Reimbursement: Molina anticipates higher unit costs in the projection period than the experience period due to higher reimbursement associated with an expanded provider network.

- Risk and Contingency Margin: A risk and contingency margin is added to our premiums to account for the increased risk and volatility associated with the line of business.

- Individual Mandate Adjustment: An individual mandate adjustment is included in our rates due

to less stringent federal requirements in 2018.

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- Cost Sharing Reduction Adjustment: The rate methodology assumes that Cost Sharing Reduction

subsidies does not continue throughout 2018. As a result, the Paid to Allowed ratios significantly increases in the Silver 100 and Silver 150 plans.

- Health Insurer Fee: The return of the Health Insurer Fee, after the one year moratorium

expiration, increased our proposed rates. Molina identified factors that mitigated the overall rate increase: - Experience Period Morbidity: The single risk pool claims experience is much more favorable than

what was assumed in the rate development for the current rates.

- Risk Transfer Formula: A modification to the 2018 benefit year risk adjustment transfer formula to account for administrative costs will reduce our expected risk transfer payments and resulting premiums compared to the previous year’s risk transfer formula.

MARKET EXPERIENCE Molina’s 2016 experience in Part I of the Unified Rate Review Template (URRT) is based on 1,338,336 member months or 111,528 average members.

Experience Period Premium and Claims

Paid Through Date: The market experience reported in Worksheet 1, Section I of the URRT represents 2016 incurred claims paid through March 31, 2017. The IBNR factors applied to the 2016 claims experience were updated with data through April 30, 2017. Premiums (Net of MLR Rebate) in Experience Period: The premiums reported in Worksheet 1, Section I of the URRT represent the earned premium from 2016, excluding risk adjustment transfer payments for the 2016 benefit year. Molina has not accrued any amount for MLR rebates for the 2016 benefit year. No amounts were subtracted from the earned premium for any reductions prescribed by the federal MLR formula, such as taxes and assessments. Allowed and Incurred Claims in Experience Period: The following table reports the allowed and incurred claims during the 2016 experience period.

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Allowed claims for the experience period were calculated by adding the plan incurred paid claims and the member cost-sharing for medical and pharmacy claims. The allowed amount reported for capitation is the plan paid amount. Molina applied completion factors to both the allowed and incurred medical claim amounts. The completion factors were developed separately for inpatient and non-inpatient medical claims based on Molina’s Texas Marketplace data. The IBNR factors applied to the 2016 claims experience were updated with data through April 2017. The IBNR factor applied to the allowed and incurred claims is 1.008. Molina does not apply IBNR factors to capitation and pharmacy claims. Molina did not consider ACA related risk adjustment, reinsurance, and risk corridor payments/ receivables in the experience data entered in Worksheet 1, Section I and Section II of the URRT. All medical claims are paid through Molina’s claims system. Pharmacy claims are processed through Molina’s pharmacy benefit manager.

Benefit Categories

Molina assigned all experience claims to benefit categories utilizing Milliman’s MedInsight Health Cost Guidelines (HCG) grouper. The following table displays the measurement units related to each benefit category.

2016 Experience Period Claims (paid through: March 2017)

Item Description Medical Pharmacy Capitation Total

a Allowed $199,043,098 $39,325,830 $347,967 $238,716,895

b Member Cost Share ($24,078,690) ($10,208,865) $0 ($34,287,554)

c = a + b Subtotal $174,964,408 $29,116,966 $347,967 $204,429,341

d IBNR 1.009 1.000 1.000 1.008

e = c x d Subtotal $176,596,272 $29,116,966 $347,967 $206,061,205

f Cost Share Reduction

($36,529,633)

g = e + f Incurred Claims $169,531,572

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Benefit Categories

Benefit Category Description

Inpatient Hospital Days

Outpatient Hospital Visits

Professional Services

Other Medical Services

Capitation Benefit Period

Prescription Drug Prescription

Projection Factors

Changes in the Morbidity of Population: The morbidity of Molina's covered population relative to the entire Texas Marketplace population is expected to slightly decrease between the experience period and the projection period. The relative risk score in the projection period was compared to the relative risk score from the experience period to derive a population morbidity adjustment. Molina used the results from the CMS Final Summary Report on Risk Adjustment for the 2016 Benefit Year released on June 30, 2017 to derive the relative risk of Molina’s members for the 2016 experience period. For the 2017 projection period, Molina estimated the relative risk of its anticipated membership by assuming that the relative risk scores would remain consistent with the 2016 risk scores within each metal tier. The development of Molina’s 2018 relative risk score estimate was normalized to remove expected changes to the statewide risk score. The resulting relative risk score for the 2018 projection period is 0.722, which results in an acuity factor of 0.988 as shown in the table below. The acuity factor was not applied to capitation costs.

Population Morbidity Adjustment ― Experience Rate

Policy Year

Cohort Member Mix Relative

Risk

2016

New Members

Renewal Members

Total 100% 0.731

2017

New Members 60% 0.682

Renewal Members 40% 0.760

Total 100% 0.714

2018

New Members

Renewal Members

Total 100% 0.722

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a 2016 Relative Risk 0.731

b 2018 Relative Risk 0.722

c = b / a Acuity Factor 0.988

Molina also applied an adjustment factor to the experience period claims to account for the anticipated change in the morbidity of the population due to weaker enforcement of the individual mandate and/or the perception of weaker enforcement. As a result, we anticipate a reduced Texas Marketplace population with a higher morbidity than the experience period. We modeled the impact of a subset of our population dropping coverage, which included a portion of: a) members with low claims in the previous year, b) members with higher member premiums, and c) members who are younger. We expect the risk pool to contract and the average morbidity to increase by 1.062. The results of the study are shown in the table below.

Individual Mandate Impact

Mandate Enforced Mandate Not Enforced Mandate

Age Category Member Months Allowed PMPM Member Months Allowed PMPM Impact

a b c = b / a d e f = e / d g = f / c

< 21 182,615 11,785,344 64.54 169,379 11,493,885 67.86 1.051

21 to 29 193,820 20,221,102 104.33 177,529 19,878,191 111.97 1.073

30 to 39 189,545 25,070,456 132.27 172,507 24,698,762 143.18 1.082

40 to 49 279,872 45,801,979 163.65 261,585 45,372,667 173.45 1.060

50 to 59 336,896 85,988,394 255.24 319,580 85,533,072 267.64 1.049

60+ 155,588 51,655,003 332.00 149,045 51,455,204 345.23 1.040

Total 1,338,336 240,522,278 179.72 1,249,625 238,431,781 190.80 1.062

Other Adjustments: Changes in Demographics: Molina applied a factor to the experience period claims to reflect the anticipated change in the demographic mix from the 2016 experience data to the 2018 projection period. The anticipated demographic mix is based largely on a review of enrollment through March 2017 compared to the experience period. Molina anticipates that its 2018 demographics will be consistent with its 2017 demographics for the Silver 100, Silver 150, Gold, and Bronze plans. Molina does not project members in the Silver 200 and Silver 250 plans to remain in 2018 due to the removal of Cost Sharing Design subsidies, which changes the demographic mix slightly. The demographic adjustments were developed for the major categories of service for fee-for-service claims as shown in the table below. Demographic adjustments were not made to capitation costs. The total demographic adjustment made to the 2016 experience period data was 1.021.

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Population Demographic Adjustment

Member Mix Claim Costs PMPM

Age Gender Experience

Period Projection

Period IP OP Prof Rx

0-14 M 2.9% 2.6% 52.56 16.59 54.70 8.41

0-14 F 2.7% 2.5% 36.64 13.78 48.89 6.41

15-19 M 2.5% 2.4% 23.03 25.39 32.88 11.49

15-19 F 2.6% 2.4% 18.48 29.56 46.25 12.67

20-29 M 7.8% 8.2% 35.46 28.83 30.74 21.97

20-29 F 9.8% 9.6% 44.27 46.75 68.73 16.82

30-39 M 6.5% 6.2% 43.82 38.57 43.05 34.99

30-39 F 8.4% 7.9% 53.70 68.74 87.02 22.95

40-49 M 9.1% 8.6% 63.31 52.28 54.00 41.64

40-49 F 11.9% 11.9% 61.93 82.57 92.12 31.13

50-59 M 11.2% 11.2% 127.92 84.63 83.22 54.35

50-59 F 13.3% 13.9% 91.93 110.64 112.66 46.53

60+ M 5.2% 5.7% 210.39 127.67 124.47 56.51

60+ F 6.0% 7.0% 146.31 135.33 141.60 59.18

Total 100% 100%

a 2016 77.54 70.98 79.40 34.90

b 2018 79.49 72.63 80.69 35.55

c = b / a Adjustment 1.025 1.023 1.016 1.019

The claim costs to determine the estimated impact of demographic mix changes from 2016 to 2018 are calculated based on Molina’s nationwide 2016 claims experience from 9 states representing over 543,000 members.

Duration Adjustment: Molina conducted a study of member costs by duration and observed higher utilization for members in their second year of duration compared to their first year of duration. A durational factor is applied to Molina’s 2018 pricing in consideration of this phenomenon. A duration factor is applied to the experience period claims to reflect the change in claims due to the average duration mix from the 2016 experience data to the 2018 projection period.

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Since the experience period associated with each member’s durational claims experience varies according to their first enrollment year with Molina, all claims in the durational study were trended to the midpoint of the experience period. Because of the limited data available for membership with enrollment of more than two years, it has been assumed that costs stabilize after two years. The table below shows the adjustment factors that represent the average costs for each duration relative to the costs observed during duration 1. The duration impact on the 2018 projection period is primarily due to fewer new members anticipated for the projection period compared to the 2016 experience period. Duration 1 membership mix is 92% in the experience period compared to only 3% for the projection period. The overall duration adjustment is 1.105.

Duration Adjustment

Member Mix Adjustment Factor

Duration Experience

Period Projection

Period IP OP Prof Rx

1 92% 3% 1.000 1.000 1.000 1.000

2 8% 63% 1.120 1.120 1.120 1.120

3+ 0% 34% 1.120 1.120 1.120 1.120

Total 100% 100%

a 2016 1.010 1.010 1.010 1.010

b 2018 1.116 1.116 1.116 1.116

c = b / a Adjustment 1.105 1.105 1.105 1.105

Cost Sharing Design: Members will utilize services less frequently when their responsibility of cost-sharing increases. Molina calculated the cost sharing design utilization factor by estimating the members by metal tier and cost-sharing subsidy. Molina assigned each metal tier and cost-sharing subsidy tier a cost sharing design utilization factor and calculated the change in the cost sharing design factor between the experience period and the projection period. Molina applied the difference in the factors as an adjustment to the experience period. Cost sharing design utilization factors were developed by comparing allowed claims costs in the experience period by metal tier and cost-sharing plan variation after normalizing for differences in age and estimated risk transfer payments to ensure that differences due to health status are not included in the adjustment.

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Cost Share Design (CSD) Adjustment

Product Name Metal FPL 2016 2018

MMs CSD MMs CSD

Molina Marketplace Gold Base 10,368 1.123 12,205 1.123

Molina Marketplace Silver Base 30,475 1.000 0 1.000

Molina Marketplace Silver CSR 200-250 30,627 0.959 0 0.959

Molina Marketplace Silver CSR 150-200 75,297 0.919 79,522 0.919

Molina Marketplace Silver CSR 100-150 62,470 0.903 91,202 0.903

Molina Marketplace Options Silver CSR 200-250 0 0.976 0 0.976

Molina Marketplace Options Silver CSR 150-200 0 0.936 36,425 0.936

Molina Marketplace Options Silver CSR 100-150 0 0.939 109,148 0.939

Molina Marketplace Choice Gold Base 9,473 1.064 27,536 1.064

Molina Marketplace Choice Silver Base 59,321 0.993 0 0.993

Molina Marketplace Choice Silver CSR 200-250 68,080 0.976 0 0.976

Molina Marketplace Choice Silver CSR 150-200 176,577 0.936 346,521 0.936

Molina Marketplace Choice Silver CSR 100-150 635,736 0.939 1,180,461 0.939

Molina Marketplace Choice Bronze Base 179,605 0.921 582,306 0.921

1,338,029 0.942 2,465,326 0.935

2016 CSD 0.942

2018 CSD 0.935

CSD Factor Adjustment 0.992

Unit Cost Adjustment: Molina applied a factor to represent the difference in anticipated unit costs between 2016 base period and 2018 projection period. Molina has expanded its provider network to support membership growth beginning in 2016 and the Unit Cost Adjustment reflects the difference in average unit costs due to change in utilization mix among the provider network. Internal Reinsurance: Molina applied a factor for reinsurance coverage purchased exclusive of the federal reinsurance program. Changes in Benefits: No factors were applied to adjust the experience period claims for benefit changes.

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Trend Factors: Trend factors were applied separately for unit cost and utilization and by each major benefit category shown in Worksheet 1, Section I of the URRT. Molina trended the experience period claims forward 24 months from the midpoint of the base period, July 2016, to the midpoint of the projection period, July 2018. Unit cost trends were developed by comparing anticipated changes in provider contracts between the 2016 experience period and the 2018 projection period. The contract changes were calculated for the major service categories by weighing fee schedule changes in each rating area with the 2016 membership. Utilization trends were developed through a review of the allowed claims experience from 9 states representing over 543,000 members in 2016 and 212,000 members in 2015. The utilization data was normalized using concurrent risk scores from Milliman’s MARA risk model for each service category to account for differences in demographics and health status between the two comparison periods. Additionally, actuarial judgment was used in choosing the trends when the normalized historical data did not produce reasonable results. The chart below shows each annual trend by category of service.

Annual Claims Trends

Benefit Utilization Unit Cost

Total

IP 2.5% 1.4% 3.9%

OP 2.5% 1.9% 4.4%

Prof 3.0% 0.4% 3.4%

Other 2.5% 1.0% 3.5%

Rx 5.0% 8.0% 13.4%

Cap 0.0% 0.0% 0.0%

Total 3.0% 2.3% 5.3%

The following tables summarize all of the adjustments made to the data in the URRT, Worksheet 1.

Adjustments -- Experience to Projection Period (Population Risk Morbidity)

a b c = a*b

Benefit Category Acuity Factor

Individual Mandate

Population Risk

Morbidity

Inpatient Hospital 0.988 1.062 1.049

Outpatient Hospital 0.988 1.062 1.049

Professional 0.988 1.062 1.049

Other Medical 0.988 1.062 1.049

Capitation 0.988 1.062 1.049

Prescription Drug 0.988 1.062 1.049

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Adjustments -- Experience to Projection Period (Other)

a b c d e f g h = prod(a:g)

Benefit Category Utilization

Adjustment Demographic Adjustment

Unit Cost Adjustment

Duration Factor

Cost Sharing Design

Non-EHB Benefits

Reinsurance Total

Inpatient Hospital 1.000 1.025 1.180 1.105 0.992 1.000 1.002 1.330

Outpatient Hospital 1.000 1.023 1.161 1.105 0.992 1.000 1.002 1.306

Professional 1.000 1.016 1.041 1.105 0.992 1.000 1.002 1.163

Other Medical 1.000 1.016 1.041 1.105 0.992 1.000 1.002 1.163

Capitation 1.000 1.000 1.000 1.105 0.992 1.000 1.002 1.099

Prescription Drug 1.000 1.019 1.000 1.105 0.992 1.000 1.002 1.120

Inclusion of Capitation Payments: All capitated payments are included in the experience data and rate development.

Credibility of Experience

Molina calculated the credibility percentage to apply to the experience data based on experience period member months and the credibility formula below:

Molina Credibility Table

Member Months Experience Period Manual Rate

Low High Weight Weight

0 11,999 0.0% 100.0%

12,000 23,999 50.0% 50.0%

24,000 + 100.0% 0.0%

Molina’s 2016 experience in Part I of the Unified Rate Review Template (URRT) is based on 1,338,336 member months, resulting in a credibility percentage of 100.0%. Molina believes this method is consistent with the applicable American Academy of Actuaries’ Actuarial Standards of Practice (ASOP) No. 25 Credibility Procedures.

Paid to Allowed Ratio The Paid to Allowed ratio reflects the estimated cost-sharing in the projection period. The actuarial value (AV) for each product was based on Molina’s actual claims experience, and was adjusted based on expected cost-sharing differences between the 2016 and 2018 plans. For plans that are not in the

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experience period, Molina Marketplace Options plans, the Paid to Allowed ratios were derived from the Molina Marketplace Choice plans, multiplied by a ratio of the differences in values from the AV Calculator. This rate methodology assumes the Cost Sharing Reduction subsidies are not funded. The Paid to Allowed ratios for the Silver 100 and Silver 150 plans represent the amounts without the Cost Sharing Reduction subsidies.

Paid to Allowed Ratio -- Plans with 2016 Experience

a b c d = a * (c /

b)

Plan ID Product Name Metal

2016 Paid to

Allowed Ratio

2016 AV Calculator

Values

2018 AV Calculator

Values

2018 Paid to

Allowed Ratio

45786TX0010001 Molina Marketplace Gold 83.1% 80.8% 78.4% 80.6%

45786TX0010002 Molina Marketplace Silver 90.4% 91.3% 90.7% 89.9%


Choice Gold 83.1% 80.1% 77.0% 79.9%


Choice Silver 92.1% 93.2% 93.3% 92.3%


Choice Bronze 60.4% 61.9% 62.5% 61.0%

Paid to Allowed Ratio -- Plans without 2016 Experience

a b c d = a * (c /

b)

Plan ID Product Name Metal

2018 Choice

Plan Paid to

Allowed Ratio

2018 Choice

Plan AV Calculator

Values

2018 Options Plan

AV Calculator

Values

2018 Paid to

Allowed Ratio


Options Silver 92.3% 93.3% 92.9% 91.9%


Options Bronze 61.0% 62.5% 62.7% 61.2%

The Paid to Allowed ratio is the average of the AVs weighted by projected members. The table below documents the Paid to Allowed ratio factor entered into the URRT, Worksheet I, Section III.

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Paid to Allowed Ratio

Plan ID Product Name Metal Member

% Paid to Allowed

45786TX0010001 Molina Marketplace Gold 0.5% 0.806

45786TX0010002 Molina Marketplace Silver 6.9% 0.899

45786TX0040001 Molina Marketplace Options Silver 5.9% 0.919

45786TX0020001 Molina Marketplace Choice Gold 1.1% 0.799

45786TX0020002 Molina Marketplace Choice Silver 61.9% 0.923

45786TX0020003 Molina Marketplace Choice Bronze 23.6% 0.610

Total 100% 0.845

Risk Adjustment and Reinsurance

Experience Period Risk Adjustment PMPM: Molina used the results from the CMS Final Summary Report on Risk Adjustment for the 2016 Benefit Year which was published by CMS on June 30, 2017. The report includes a risk transfer payable of $93.18 per member per month (PMPM) or $124,695,669 for the 2016 experience period.

Projected Risk Adjustments PMPM: Molina estimated the risk transfer amount for 2018 using the 2016 experience period risk transfer amounts. The 2018 risk transfer estimates were developed by projecting 2017 relative risk scores and transfer payments, then projecting 2018 relative risk scores and transfer payments. The population was grouped into the following cohorts:

- 2017 Renewal Members – Some of Molina’s current members previously had coverage in 2016 and renewed with Molina in 2017. Molina relied on the renewal member’s 2016 experience and risk scores and assumed their relative risk score would be consistent in 2017.

- 2017 New Members – To estimate the relative risk of the 2017 new members, Molina referred to the estimated risk scores and transfer amounts from the 2016 experience

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period. Estimated risk scores were adjusted in consideration of the metal tier mix between the 2016 members and the 2017 new members.

- 2018 Members – Molina assumed the 2018 members would have the same relative risk scores as the 2017 members, with consideration for the metal tier mix between the two years.

The risk transfer payment amounts in the projection period reflect expected changes in the relative risk of the population, changes to the statewide premium, and a modification to the 2018 benefit year risk adjustment transfer formula which reduces the total transfer payment by 14% to account for administrative costs. The following table summarizes the development of the 2018 risk transfer estimate.

The resulting 2018 risk transfer payable estimate is $130.58 per member per month (PMPM). Molina added $0.14 PMPM in projected risk adjustment user fees to the $130.44 PMPM risk transfer payable estimate and entered the total of $130.58 PMPM in the URRT Worksheet I, Section III. The

Item Term Description Molina Statewide

a PLRS i Plan Liability Risk Score 1.170 1.463

b IDF iInduced Demand Factor 1.025 1.031

c GCF i Geographic Cost Factor 1.028 1.000

PLRS x IDF x GCF 1.232 1.509

Molina Relativity 0.817

g AV iActuarial Value 0.682 0.678

h ARF iAllowable Rating Factor 1.614 1.539

i IDF iInduced Demand Factor 1.025 1.031

j GCF i Geographic Cost Factor 1.028 1.000

AV x ARF x IDF x GCG 1.159 1.076

Molina Relativty 1.077

-0.261

m Statewide Average Premium 581.76

Statewide Average Premium Adjusted 500.31

o = l x n T iMolina Risk Transfer Estimate -130.44

p Risk Adjustment User Fee -0.14

r = o + p Total Risk Transfer -130.58

l = f - k

n = m x 86%

Risk Transfer Estimate

f = c x d x e

f(Molina) / f(Statewide)

k = g x h x I x j

k(Molina) / k(Statewide)

sP

x 86%

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anticipated transfer revenue was applied to the Index Rate in the development of the Market Wide Paid Index. Experience Period Reinsurance PMPM: Molina relied on internal estimates for the 2016 experience period. Projected ACA Reinsurance Recoveries Net of Reinsurance Premium: Not applicable.

Non-Benefit Expenses and Profit & Risk

Administrative Expense Load: Molina reviewed administrative costs booked to Marketplace products from 2014 to 2016 to develop administrative costs required to manage the Texas Marketplace population. Molina used an internal administrative cost budget on a PMPM basis and converted the costs to an overall percentage of premiums to apply to the Texas Marketplace rates. Amounts for broker commissions were added to the administrative costs. The expected administrative expense load is 11.9%. The administrative expense is lower than the 13.5% administrative expense load included in Molina’s previously approved rate filing.

Administrative Expense Load

Description PMPM % of Premium

Corporate and Plan Expense $36.66 7.5%

Bank Service Charges $0.79 0.2%

Quality Expenses $12.26 2.5%

Broker Commissions $8.73 1.8%

Total $58.44 11.9%

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The administrative expense load varies by metal tier as shown in the table below. Corporate and Plan Expense and Quality Expenses were applied by constant percentage loads. Bank Service Charges and Broker Commissions were applied as fixed PMPM values for all plans.

Administrative Expense Load

Product Name Metal Corporate

& Plan Expense

Bank Service Charges

Quality Expenses

Broker Commissions

Total % of

Premium

a b c d e f g = sum (c:f)

Molina Marketplace

Gold $41.83 $0.79 $13.99 $8.73 $65.33 11.7%

Silver $38.90 $0.79 $13.01 $8.73 $61.42 11.8%

Molina Marketplace

Options Silver $39.76 $0.79 $13.30 $8.73 $62.58 11.8%

Molina Marketplace

Choice

Gold $41.45 $0.79 $13.86 $8.73 $64.83 11.7%

Silver $39.95 $0.79 $13.36 $8.73 $62.82 11.8%

Bronze $26.28 $0.79 $8.79 $8.73 $44.58 12.7%

Total $36.66 $0.79 $12.26 $8.73 $58.44 11.9%

- Broker Commissions: Molina expects broker commissions of $8.73 PMPM in 2018, based on

Molina’s broker-sold business in 2017 and a projection of new and renewing members sold through the broker channel.

Commission Estimate

Policy Cohort

Broker Commission Commission

Year Sold % $ PMPM

2018

New Members (Open Enrollment) 48% $3,767,344 $1.87

New Members (Special Enrollment) 52% $0 $0.00

Renewal Members (Open Enrollment) 48% $12,632,430 $6.26

Renewal Members (Special Enrollment) 48% $1,217,034 $0.60

Total 48% $17,616,808 $8.73

Profit & Risk Margin: Molina’s target after-tax margin is 3.0%. The target margin is unchanged from Molina’s previously approved rate filing. Risk and Contingency Margin: A risk and contingency margin is added to our premiums to account for the increased risk and volatility associated with the line of business. The risk and contingency margin is consistently applied for all metal tiers and considers legislative/political risk, changes in

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competitor participation, enrollment volatility, profitability volatility, provider contracting structure risk, shifts in metal mix, risk transfer estimate volatility, and not having an opportunity to revise risk adjustment estimates is made available after the initial rate filing. The risk and contingency margin is 4.0%. Taxes and Fees: Molina’s 10.0% estimate of taxes and fees is higher than the previously approved rate filing estimate of 5.3%. The increased taxes and fees estimate is due to the return of the Health Insurer Fee that was not included in the prior year’s rate filing. The taxes and fees estimate is comprised of the following: - Texas Marketplace Exchange Fee: Texas Marketplace will charge a fee of 3.5% of premium for

Molina’s members enrolled in Texas Marketplace. The Exchange user fee is applied at the Market adjusted Index Rate.

- Health Insurer Fee: A Health Insurer Fee (HIF) of 3.1% is included in the taxes and fees section of

the URRT. Molina’s tax department provided estimates for the HIF of 2.0%, grossed up to 3.1% to account for the non-deductible nature of the HIF in determining income tax expenses.

- PCORI Fee: Molina expects to pay $2.47 per member per year (PMPY) in patient centered

outcome (PCORI) fees. - Federal Income Tax: An estimated 1.6% of premiums will be paid in Federal income taxes based

on an anticipated 35% federal tax rate.

Taxes and Fees

Taxes and Fees PMPM % of Premium

Health Insurer Fee $15.10 3.1%

PCORI Fee ($2.47 PMPY) $0.21 0.0%

Premium Tax & Other Fees $8.58 1.8%

Federal Taxes $7.92 1.6%

Exchange Fee $17.16 3.5%

Total Taxes and Fees $48.97 10.0%

Single Risk Pool Premium $490.35

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Taxes and Fees vary by metal tier as shown in the table below.

Taxes and Fees

Product Name Metal Health Insurer

Fee

PCORI Fee

Premium Tax & Other Fees

Federal Taxes

Exchange Fee

Total % of

Premium

a b c d e e f g = sum (c:f)

Molina Marketplace

Gold $17.23 $0.21 $8.34 $9.04 $16.68 $51.50 9.2%

Silver $16.02 $0.21 $8.91 $8.40 $17.82 $51.36 9.9%

Molina Marketplace

Options Silver $16.38 $0.21 $9.04 $8.59 $18.07 $52.29 9.8%

Molina Marketplace

Choice

Gold $17.08 $0.21 $8.30 $8.96 $16.59 $51.12 9.2%

Silver $16.46 $0.21 $9.06 $8.63 $18.13 $52.48 9.8%

Bronze $10.83 $0.21 $7.13 $5.68 $14.25 $38.09 10.8%

Total $15.10 $0.21 $8.58 $7.92 $17.16 $48.97 10.0%

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PROJECTED LOSS RATIO The projected medical loss ratio (MLR) for 2018 using the federally prescribed MLR methodology is 81.8%.

MLR Demonstration

Federal Prescribed MLR Formula

MLR = [(i + q - s + n - r)/{(p + s - n + r) - t - f - (s - n + r)}] + c

s = transitional reinsurance receipts $0.00

n = risk corridors and risk adjustment payments $130.58

r = issuer’s risk corridors and risk adjustment receipts $0.00

= s - n + r ($130.58)

MLR = [(i + q - -130.58)/{(p + -130.58) - t - f - (-130.58)}] + c

i = incurred claims $218.04

q = expenditures on quality improving activities $12.26

= i + q $230.30

MLR = [(230.30 - -130.58)/{(p + -130.58) - t - f - (-130.58)}] + c

MLR = [(360.88)/{(p + -130.58) - t - f - (-130.58)}] + c

p = earned premiums $490.35

MLR = [(360.88)/{(490.35 + -130.58) - t -f - (-130.58)}] + c

MLR = [(360.88)/{(359.78) - t -f - (-130.58)}] + c

t = Federal and State taxes and assessments $31.81

f = licensing and regulatory fees, incl. transitional reins $17.16

= -t - f ($48.97)

MLR = [(360.88)/{(359.78) - 48.97 - (-130.58)}] + c

MLR = [(360.88)/{441.38}] + c

MLR = [81.8%] + c

c = credibility adjustment, if any 0.0%

MLR = [81.8%] + 0.0%

MLR = 81.8%

APPLICATION OF MARKET REFORM RATING RULES

Single Risk Pool

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Molina’s single risk pool is in accordance with 45 CFR part 156, §156.80. Molina has no transitional products/plans or grandfathered products that should be included in the development of the single risk pool.

Index Rate The index rate is developed following the specifications of 45 CFR part 156.80(d)(1). The index rate for the projection period is estimated to be $257.92. The index rate represents the estimated total allowed claims experience for the essential health benefits within the Covered Texas Marketplace. The index rate does not include adjustments for the risk adjustment and reinsurance programs or an adjustment for the Covered Texas Marketplace user fee. The projected allowed claims in Worksheet 1, Section III of the URRT is $257.92, which is consistent with the Projected Allowed Claims PMPM in the exhibit below.

Index Rate

Item Description Allowed Claims

a 2016 Allowed Claims $179.72

b Demographic Adjustment 1.021

c Duration Factor 1.105

d Unit Cost Adjustment 1.099

e Utilization Trend 1.061

f Unit Cost Trend 1.046

g Acuity Adjustment 0.988

h Reinsurance 1.002

i Individual Mandate Adjustment 1.062

j = product(a:i) Cost Sharing Design 0.992

k = product(a:j) Index Rate $257.92

l = j + k Non-EHB 0.00

m = k + l Projected Allowed Claims $257.92

Market Adjusted Index Rate

The market adjusted index rate is developed following the specifications of 45 CFR part 156.80(d)(1). Molina modified the index rate provided in URRT Worksheet I to a market adjusted index rate as follows:

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Market Adjusted Index Rate

Item Description Paid Basis

Adjustment Allowed

Basis Comments

a URRT Index Rate $257.92 URRT,

Worksheet 1

b Risk Adjustment $130.58 0.845 $154.46

c Exchange Fee $17.16 0.845 $20.30 See Taxes &

Fees

d Market Adjusted Index Rate $432.68 d = a + b + c

Plan Adjusted Index Rates

The plan adjusted index rates are developed following the specifications of 45 CFR part 156.80(d)(2).The plan adjusted index rates are entered in Worksheet 2, Section IV, of the URRT Template. Molina calculated the plan adjusted index rates by applying plan specific level adjustments for actuarial value, cost sharing utilization, additional benefits, and administrative costs, excluding exchange user fees, to the market adjusted index rate.

Plan Adjusted Index Rates

Product Name Metal Market

Adjusted Index Rate

Actuarial Value

Cost Sharing

Adj.

Benefits in Addition to EHBs

Admin Costs

Plan Adjusted

Index Rate

a b c d e f g h = product (c:g)

Molina Marketplace Gold 432.68 0.806 1.200 1.000 1.336 559.43

Silver 432.68 0.899 1.000 1.000 1.339 520.28

Molina Marketplace Options

Silver 432.68 0.919 1.000 1.000 1.338 531.85

Molina Marketplace Choice

Gold 432.68 0.799 1.200 1.000 1.336 554.42

Silver 432.68 0.923 1.000 1.000 1.338 534.30

Bronze 432.68 0.610 0.983 1.000 1.355 351.49

- AV and Cost Sharing Design: The table below shows the details of Molina’s AVs and Cost Sharing

Design Adjustment factors:

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Actuarial Value and Cost Sharing Adjustment

Plan ID Product Name Metal Member Actuarial Value Cost Sharing Adj.


Gold 1,017 0.806 1.200

45786TX0010002 Silver 14,227 0.899 1.000


Options Silver 12,131 0.919 1.000


Choice

Gold 2,295 0.799 1.200

45786TX0020002 Silver 127,248 0.923 1.000

45786TX0020003 Bronze 48,526 0.610 0.983

Total 205,444 0.845 1.000

- Provider Network, Delivery System Characteristics, and Utilization Management Practices:

Molina did not vary plan rates for variation of provider network, delivery system characteristics, and utilization management.

- Catastrophic plans: Not Applicable.

- Administrative costs, excluding Exchange User Fees: Molina converted all administrative costs, excluding the Covered Texas Marketplace Fee, to a multiplicative factor, which varies for each plan according to differences in premium. The overall multiplicative factor is shown in the table below.

Administrative Costs Excluding Exchange Fee

Item Description % of Premium

a Administrative Expense Load 11.9%

b Profit Margin 3.0%

c Risk & Contingency 4.0%

d Taxes & Fees excl Exchange Fee 6.5%

e = a + b + c + d

Total 25.4%

f= 1 / (1 - e) Administrative Factor 1.341

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The administrative factors vary by metal tier as shown in the table below.

Administrative Costs Excluding Exchange Fee

Product Name Metal Admin. Expense

Load

Profit Margin

Risk & Contingency

Taxes & Fees (excl. Exchange

Fee) Total

Admin. Factor

a b c d e f g = sum (c:f) h = 1 / (1-g)

Molina Marketplace

Gold 11.7% 3.0% 4.0% 6.2% 24.9% 1.332

Silver 11.8% 3.0% 4.0% 6.4% 25.3% 1.338

Molina Marketplace

Options Silver 11.8% 3.0% 4.0% 6.4% 25.2% 1.337

Molina Marketplace

Choice

Gold 11.7% 3.0% 4.0% 6.2% 24.9% 1.332

Silver 11.8% 3.0% 4.0% 6.4% 25.2% 1.337

Bronze 12.7% 3.0% 4.0% 6.8% 26.5% 1.360

Total 11.9% 3.0% 4.0% 6.5% 25.4% 1.341

Calibration

Age Curve Calibration: Molina calibrated the Plan Adjusted Index Rates to an age 21 rate. Molina estimates the average composite age factor by multiplying the expected age distribution by the age factors. The calibration factor of 0.607 equals the age factor at age 21 divided by the average age factor (1.000 / 1.648). Please note an additional adjustment was implemented in the age calibration process to account for the dependent cap where only the 3 eldest children’s premiums contribute to the family premium.

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Age Curve Calibration

Age Member

% Age

Factor Age

Member %

Age Factor

Age Member

% Age

Factor

0 - 14* 0.2% 0.000 31 1.3% 1.159 49 2.4% 1.706

0 - 14 4.8% 0.765 32 1.3% 1.183 50 2.5% 1.786

15 0.6% 0.833 33 1.4% 1.198 51 2.5% 1.865

16 0.6% 0.859 34 1.4% 1.214 52 2.6% 1.952

17 0.6% 0.885 35 1.4% 1.222 53 2.6% 2.040

18 0.8% 0.913 36 1.5% 1.230 54 2.6% 2.135

19 2.2% 0.941 37 1.4% 1.238 55 2.5% 2.230

20 2.4% 0.970 38 1.5% 1.246 56 2.6% 2.333

21 2.3% 1.000 39 1.5% 1.262 57 2.5% 2.437

22 2.0% 1.000 40 1.6% 1.278 58 2.4% 2.548

23 1.8% 1.000 41 1.7% 1.302 59 2.5% 2.603

24 1.6% 1.000 42 1.8% 1.325 60 2.4% 2.714

25 1.5% 1.004 43 1.9% 1.357 61 2.3% 2.810

26 1.8% 1.024 44 2.0% 1.397 62 2.3% 2.873

27 1.6% 1.048 45 2.2% 1.444 63 2.3% 2.952

28 1.5% 1.087 46 2.3% 1.500 64+ 3.5% 3.000

29 1.4% 1.119 47 2.3% 1.563 Total 100.0% 1.648

30 1.3% 1.135 48 2.3% 1.635 Adj Fx 1 /

Total 0.607

*% of membership impacted by the 3 children under age 21 dependent cap.

Molina estimated the average age of the single risk pool to be 41 years of age by multiplying the expected age distribution percentages by the age. Molina assumed an average age of 8 for the Age 0-14 cohort in the average age estimate. Premium rates are based on the attained age as of the coverage effective date and will not be re-rated/adjusted when a birthdate occurs during the year after the coverage starts. Geographic Factor Calibration: Molina applied geographic factors to the index rate in the calculation of region specific rates. The geographic factors are based solely on the provider reimbursement expectations in each region. The calibration factor of 0.990 equals 1.000 divided by the weighted average geographic factor (1.000 / 1.010).

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Geographic Factor Calculation

Geographic Members

Allowed Claims

Geographic

Region Factor

Region 4 2,071 $263.07 1.020

Region 5 1,415 $245.02 0.950

Region 8 79,974 $265.65 1.030

Region 9 12,409 $255.34 0.990

Region 10 96,206 $257.92 1.000

Region 12 8,256 $250.18 0.970

Region 15 2,713 $270.81 1.050

Region 26 2,399 $252.76 0.980

Total 205,444 $257.92 1.010

Calibration 1 / Total 0.990

A table summarizing Molina’s 2017 and 2018 geographic factors is provided below.

Geographic Factor Calculation

Geographic 2017 Factor

2018 Factor Region

Region 4 1.150 1.020

Region 5 1.000 0.950

Region 8 1.020 1.030

Region 9 1.050 0.990

Region 10 1.040 1.000

Region 12 1.100 0.970

Region 15 0.940 1.050

Region 26 0.930 0.980

Consumer Adjusted Premium Rate Development

The Consumer Adjusted Premium Rates are calibrated to an age 21 premium with an area factor of 1.00. Only the allowable rating factors will be applied to the Consumer Adjusted Premium Rates. Molina has included a document identified as “2018 TX Molina Rates” that demonstrates how each allowable consumer level adjustment is applied to the Consumer Adjusted Premium Rates to determine the premiums.

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Consumer Adjusted Premium Rates

Product Name Metal Plan Adjusted

Index Rate Age

Calibration Area

Calibration

Consumer Adjusted

Premium Rate

a b c d e f = product (c:e)

Molina Marketplace

Gold 559.43 0.607 0.990 335.95

Silver 520.28 0.607 0.990 312.45

Molina Marketplace

Options Silver 531.85 0.607 0.990 319.39

Molina Marketplace

Choice

Gold 554.42 0.607 0.990 332.95

Silver 534.30 0.607 0.990 320.87

Bronze 351.49 0.607 0.990 211.08

PLAN PRODUCT INFORMATION

AV Metal Values All benefit plans Molina proposes to offer in Texas Marketplace meet ACA essential health benefit (EHB) requirements. Their AV values were calculated exclusively by using HHS’s AV Calculator.

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Actuarial Metal Values

Plan ID Product Name Metal FPL Actuarial

Value

45786TX0010001

Molina Marketplace

Gold Base 0.784

45786TX0010002 Silver

Base 0.709

CSR 200-250 0.737

CSR 150-200 0.873

CSR 100-150 0.937

45786TX0040001 Molina

Marketplace Options

Silver

Base 0.711

CSR 200-250 0.740

CSR 150-200 0.876

CSR 100-150 0.947

45786TX0020001

Molina Marketplace

Choice

Gold Base 0.770

45786TX0020002 Silver

Base 0.678

CSR 200-250 0.740

CSR 150-200 0.880

CSR 100-150 0.949

45786TX0020003 Bronze Base 0.625

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AV Pricing Values

AV pricing value of each plan only includes the allowable modifiers to the index rate, as described in 45 CFR Part 156, §156.80(d)(2). Cost-sharing adjustments ensure that differences due to health status were not included in the adjustment. The modifiers are applied to the index rate as shown in the following table.

Actuarial Value Pricing

Product Name Metal Actuarial

Value Cost Sharing

Adj.

Benefits in Addition to

EHBs

Administration Costs

AV Pricing Value

a b c d e f g = product (c:f)

Molina Marketplace Gold 0.806 1.200 1.000 1.336 1.293

Silver 0.899 1.000 1.000 1.339 1.202


Silver 0.919 1.000 1.000 1.338 1.229


Gold 0.799 1.200 1.000 1.336 1.281

Silver 0.923 1.000 1.000 1.338 1.235

Bronze 0.610 0.983 1.000 1.355 0.812

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Membership Projections

Molina is filing Texas Marketplace rates in nine counties representing eight rating regions. Molina considered the number of existing members that would renew with Molina as well as estimating the number of new members likely to purchase a product in Texas Marketplace by applying a market share adjustment, an estimate of what percentage of the Texas Marketplace population would likely select a Molina offering. The market share adjustment took into consideration that Molina members were likely to be lower income and more dependent on subsidies. Molina expects most of new 2018 members to come from other carriers. Molina’s enrollment projections by plan, including cost-sharing reduction eligible plans, were based on the proportion of enrollment enrolled in those plans as of April 2017.

Membership Projections by Region

Region Current

Members Projected Members

Region 4 2,379 2,071

Region 5 1,389 1,415

Region 8 102,024 79,974

Region 9 14,084 12,409

Region 10 115,915 96,206

Region 12 9,872 8,256

Region 15 2,806 2,713

Region 26 2,875 2,399

Total 251,344 205,444

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Membership Projections by Plan

Plan ID Product Name Metal FPL Members

45786TX0010001

Molina Marketplace

Gold Base 1,017

45786TX0010002 Silver Base 0

45786TX0010002 Silver CSR 200-250 0

45786TX0010002 Silver CSR 150-200 6,627

45786TX0010002 Silver CSR 100-150 7,600

45786TX0040001


Silver Base 0

45786TX0040001 Silver CSR 200-250 0

45786TX0040001 Silver CSR 150-200 3,035

45786TX0040001 Silver CSR 100-150 9,096

45786TX0020001


Gold Base 2,295

45786TX0020002 Silver Base 0

45786TX0020002 Silver CSR 200-250 0

45786TX0020002 Silver CSR 150-200 28,877

45786TX0020002 Silver CSR 100-150 98,372

45786TX0020003 Bronze Base 48,526

Total 205,444

Molina plans to offer its products in the counties listed by region below.

County List

Geographic County County

Region

Region 4 Jefferson

Region 5 Cameron

Region 8 Collin Dallas

Region 9 El Paso

Region 10 Harris

Region 12 Webb

Region 15 Hidalgo

Region 26 Starr

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Terminated Products

A summary of Molina’s terminated, renewing, and new products is provided in the following table:

Terminated Plans and Mapping

Plan ID Plan Effective

Period Plan

Name Metal Tier

Mapping ------>

New Plan ID

NA NA NA NA NA NA

Renewing Plans


Period Plan

Name Metal Tier

Actuarial Value (AV)

AV (% Chg)

45786TX0040001 Jan 2017 -- Molina Marketplace Options

Silver Silver 0.711 0.6%

45786TX0020001 Jan 2015 -- Molina Marketplace Choice Gold Gold 0.770 -1.9%

45786TX0020002 Jan 2015 -- Molina Marketplace Choice Silver Silver 0.678 -5.8%

45786TX0020003 Jan 2015 -- Molina Marketplace Choice

Bronze Bronze 0.625 1.0%

45786TX0010001 Jan 2014 -- Molina Marketplace Gold Gold 0.784 -1.5%

45786TX0010002 Jan 2014 -- Molina Marketplace Silver Silver 0.709 -1.1%

New Plans


Period Plan

Name Metal Tier

Actuarial Value (AV)

AV (% Chg)

NA NA NA NA NA NA

Plan Type All benefit plans are comprehensive HMO individual products.

Warning Alerts

Warning Alert 1: The Total Allowed Claims (TAC) in row 61 of Worksheet 2, Section III of the URRT generated a warning alert because the claims in Section III were decreased for the amount of payments into the risk adjustment program, in accordance of the instructions. Warning Alert 2: The Allowed Claims PMPM in row 74 of Worksheet 2, Section III of the URRT generated a warning alert for the same reason as the Total Allowed Claims (TAC) in row 61 of Worksheet 2, Section III. Section I instructions state not to reflect payments under the risk

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adjustment program and Section III instructions state to adjust the claims for risk adjustment transfers. The table below shows the difference between the total allowed claims in Worksheets 1 and 2.

Warning - Total Allowed Claims

Item Location Row

# Description Value

URRT Variance Before Risk Adjustment Consideration

a WS2, III 61 Total Allowed Claims $125,990,923

b WS1, I 16 Allowed Claims $240,522,278

c = b / a - 1 Variance % 91%

URRT Variance After Risk Adjustment Consideration

d WS2, III 61 Total Allowed Claims $125,990,923

e WS2, III 71 Net Amount of Risk Adjustment -$114,330,605

f = d - e Total Allowed Claims with Risk Adjustment $240,321,528

g WS1, I 16 Allowed Claims $240,522,278

h = g / f -1 Variance % 0.1%

MISCELLANEOUS INSTRUCTIONS

Effective Rate Review Information

Not applicable.

Reliance

Not applicable.

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Actuarial Certification

I, Evan Swalheim, as a member in good standing with the American Academy of Actuaries, hereby certify, to the best of my knowledge and judgment, the following:

The projected index rate is:

a. In compliance with all applicable State and Federal Statutes and Regulations (45 CFR 156.80 and 147.102),

b. Developed in compliance with the applicable Actuarial Standards of Practice, c. Reasonable in relation to the benefits provided and the population anticipated to be

covered, d. Neither excessive nor deficient.

The index rate and only the allowable modifiers as described in 45 CFR 156.80(d)(1) and 45 CFR 156.80(d)(2) were used to generate plan level rates.

The percent of total premium that represents essential health benefits included in Worksheet 2, Sections III and IV was calculated in accordance with actuarial standards of practice. The geographic rating factors reflect only differences in the costs of delivery and do not include differences for population morbidity by geographic area. The 2018 AV Calculator was used to determine the AV Metal Values shown in Worksheet 2 of the Part I Unified Rate Review Template. Adjustments were made for non-standard plan design elements according to the letter described in the reliance section above.

7/27/2017

Evan Swalheim, ASA, MAAA Date Director, Actuarial Services Molina Healthcare Inc.

actuarial memorandum and certification effective january 1, 2018 · 2019. 8. 2. · molina...

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