Financial Forecasting: Projecting Costs and Need for ADAPBritten PundNational Alliance of State & Territorial AIDS DirectorsNovember 27, 2012
Disclosures
This continuing education activity is managed and accredited by Professional Education Service Group. The information presented in this activity represents the opinion of the author(s) or faulty. Neither PESG, nor any accrediting organization endorses any commercial products displayed or mentioned in conjunction with this activity.
Commercial support was not received for this activity.
Disclosures (continued)
Britten Pund has no financial interest or relationships to disclose.
Professional Education Services Group staff have no financial interest or relationships to disclose.
Learning Objectives
By the end of the seminar, participants will: – Understand the process NASTAD has taken to gain input
into the creation of an ADAP financial forecasting model, including outcomes from an ADAP Financial Forecasting Consultation and focus groups with ADAP coordinators.
– Learn about the components ADAP coordinators have identified as necessary to create an accurate financial forecasting model to project costs and fiscal need for ADAP.
– Gain practical knowledge on the importance of financial forecasting, including budget projections and identifying future need for a program.
Agenda
April 2012 ADAP Financial Forecasting Consultation
Progress: Creating an ADAP financial forecasting model
Conversation: What is missing?
Conversation: How to implement financial forecasting in your jurisdiction?
Questions and answers
April 2012 ADAP Financial Forecasting Consultation
Current Models
HRSA ADAP Budgeting Tool– Overview
Developed in 2003 Designed to assist State programs in anticipating
program expenditures for budgeting purposes. Utilizes eighteen (18) months of historical data,
and assumes trends in medication expenditures and client utilization will remain constant.
Utilizes Microsoft Excel
Current Models(continued)
– Limitations Can only “hold” three years of data. Lacks the degree of complexity that now exists
within ADAP funding streams. Assumes some inputs (i.e., unduplicated client
counts) that can be entered as non-assumptions. Potential to overestimate true costs (i.e., average
cost per client), therefore skewing an accurate projection.
Current Models(continued)
Other models– Home-grown models using a multitude of formats.
– Multiple models for ADAP projections, Medicare Part D projections, and other payer source projections.
– Independent models from pharmaceutical companies and other private funders.
Defining Financial Forecasting for ADAP
Characteristics of the ideal ADAP financial forecasting model– Predictive– Explanatory– Convenient– Flexible– Adaptable– Simple/understandable– User patience– Margin of error
Identifying Data Elements
Questions to consider:– What data elements should ADAPs include in a
financial forecasting model?
– What trends should ADAPs be monitoring?
– What information do ADAPs need to have to understand the data being inputted?
Identifying Data Elements: Overall Categories
Primary payer source– Medicaid– Medicare Part D– Private insurance– High-risk insurance
pool (including PCIP)– ADAP only
Timeframe– Available funding– Available income– Insurance years– Available data
When do states receive data from contractors
Quality checks Reconciliation
Identifying Data Elements: Overall Categories (continued)
Expenditures– By full-pay and partial-pay clients
Clients– Enrolled vs. served– New vs. recertified– Unmet need and waiting list
Attrition
Identifying Data Elements: Trends
What do you need to know?– Cash flow management– New enrollees (brand new AND lapse in ADAP
coverage)– New users– Attrition– Insurance sub-categories– Average users per month by primary payer source– Average expenditures per month
Identifying Data Elements: Trends(continued)
What do you need to know?– Funding– Rebates/post-acquisition income– Relationship between enrollees and users by primary
payer source– Average number of co-payments– Number of prescriptions– Number of individual drugs (in relation to combination
therapies)
Identifying Data Elements: Timeframe
Minimum – 1 year
Maximum – based on validity of data and overall program timeline
Projecting Fiscal Needs for ADAP
The level and sophistication of data available determines how good the projection will be.
To project, you must acknowledge the basis for historical data.– In what context was the data collected?– What program changes were taking place that could
impact data trends?– Was data collected in the same manner in which it is
collected currently?
Projecting Fiscal Needs for ADAP(continued)
Three steps to projecting ADAP costs:– Analysis of client utilization– Analysis of the average cost per client– Integrate the inflationary trend
End result will be the overall program cost, including:– Changes expected– Changes attributed to clients– Changes attributed to expenditures
Projection Stratification
Time period– Month– Quarter– Six month– Annual
Drug class– What are the most costly medications on the formulary?
Margin of error– Range of expectation from the model– Low-high estimate– What is a sage margin of error (3-5%)?– Seasonality within the program.
Overall Numbers to be Projected
Number of clients served
Program income/rebates
Total cost for clients served
Insurance status
What it will take to eliminate a waiting list and/or cost-containment?
Progress: Creating an ADAP Financial Forecasting Model
Creating a Model: Options to Consider
Consultation participants clearly identified three components to an ADAP financial forecasting model:– Background information detailing factors to consider– The Model– Monitoring resources
Background Information: Factors to Consider
Relationships– Fiscal officer/analyst– Project Officer– ADAP advisory committee– Contractors– Other Ryan White Program part coordinators– Planning and consumer groups– Legislative champions (if allowable)– Contacts at other payer sources– Peer mentor– NASTAD
Background Information: Factors to Consider (continued)
Structure of state ADAP– What is the enrollment process for clients?– How does the ADAP dispense medications?– How does ADAP wrap around other payers?– Program history, detailing major changes nationally
and within state program ADAP timeline
– Systems changes
Background Information: Factors to Consider (continued)
Resources– Glossary of important terms
Categorically or alphabetically categorized?– Definitions of variables included in the model– Variability of projections and seasonality of data– Unmet need– Reference to HRSA policy guidances and Ryan White
legislation
The Model: Factors to Consider
Simple – Number of clients
served– Average cost per client– Margin of error +-3%
Advanced – Simple model with the
addition of: Summary Resources Income Other payers Client enrollment Client utilization Economic factors Expenditures and
prescriptions filled Impact of health reform
Conversation: What is missing?
Conversation: How to implement financial forecasting in you
jurisdiction?
Questions and Answers
Obtaining CME/CE Credit
If you would like to receive continuing education credit for this activity, please visit:
http://www.pesgce.com/RyanWhite2012
Contact Information
Britten PundSenior Manager, Health Care Access
www.NASTAD.org
