session 118 panel discussion evolution of the health actuary · 2017-05-24 · evolution of the...
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Session 118 PD, Evolution of the Health Actuary
Moderator/Presenter: Joan C. Barrett, FSA, MAAA
Presenters:
Roy Goldman, FSA, CERA, MAAA Brian Edward Pauley, FSA, MAAA
SOA Antitrust Disclaimer SOA Presentation Disclaimer
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Evolution of the Health ActuarySession 118
Joan BarrettBrian PauleyRoy Goldman
June 14, 2017
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Today’s Agenda
Presenter Topics/PerspectiveJoan Barrett • Introduction
• The disruptors• Analytics
Brian Pauley • An up and coming actuaryRoy Goldman • A “retired” executiveAll • Discussion
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About the project
Health Section Council strategic initiativeCharter/Goals Identify disruptors for the next 5-10 years Identify risks and opportunities for actuaries Recommendations to Health Section Council Two HealthWatch articles This session
Scope: US medical only
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Polling Question –When did you attain your ASA?
4
1 2 3 4 5
2%
12%
48%
17%
21%
1. 1970’s2. 1980’s3. 1990’s4. 2000’s5. 2010’s
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Polling Question –What best describes your day-to-day work?
5
1 2 3 4 5 6
67%
6%3%
17%
6%3%
1. Core actuarial work like pricing, product development, reserving and trends for a health plan
2. Non-traditional roles, like provider contracting and medical economics, for a health plan
3. Predictive analytics and/or research
4. ERM/Strategy/Operations5. Consulting on multiple topics6. Something else
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Polling Question –What is your current primary area of practice?
6
1 2 3 4 5 6 7 8 9 10
20%
14%
7%
5%
11%
7%
0%
11%
25%
0%
1. Individual2. Small Group (fully-insured)3. Large Group (fully-insured)4. ASO/Key Accounts (usually under
3,000 lives or so)5. National Accounts/Employee
Benefits6. Medicare/Medicaid7. Supplementary Benefits (Med
Supp,Dental, Vision, etc)8. Disability/LTC9. Executive/Strategy/ERM10. Something else/Not applicable
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The Analytical Perspective
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My Evolution as an Actuary
An A student in math/statisticsSometimes simpler is betterData, data, dataOMG. Competition!Non-actuaries are smart tooTime to make predictive analytics our own
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The Major Disruptors
Next Gen Health Care Reform
Reducing the Chronic Disease Burden
Value-Based Reimbursement/MACRA
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Can you think of other disruptors?
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NextGen Healthcare ReformStakeholder ConcernsConsumers Coverage or no coverage? If coverage, which plan?
Health plans Participate or not participate? If participating, what is pricing strategy?
Will the next bill passed be the final bill or will major changes follow?
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Health Care Analytical Challenges
Estimating the change in the risk pool
Consumer behavior
Quantifying risk
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Polling Question –On average, how much did the Exchange risk scores change from 2014 to 2015 according to SOA research?
12
1 2 3 4
3%
25%
53%
20%
1. 0%2. 5%3. 10%4. 15%
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Predicting a Risk Pool Expand data sources Rx history, with permission Income, nationality and education level Electronic medical records
Winners-losers analyses
Amazon.com like analytics/regression
Consumer behavioral analysis
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Key Behavioral Finance QuestionsQuestions Analytical Concepts Comments
• Coverage or no coverage?• If covered, which plan?
• Selection• Price elasticity• Utility theory• Choice architecture
• How well can an individual forecast his or her needs?
• When will a person over-insure?
• Seek treatment or not?• Timing of treatment?• Services and providers?
• Benefit rush• Price elasticity• Choice architecture
• Health literacy/TMI• Wellness campaign impact• Role of physician
• Healthier lifestyle? • Incentives effectiveness
• What incentives work best for some type of action
• Which actions are most effective in improving quality or reducing costs?
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Risk: Moving Beyond Margins15
• Probability of payout = 34%• Expected profit/loss = $6 PMPM• Probability of losing more than $1 million - 24.8%• Probability of losing more than $5 million - 3.6%
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Pricing Risk vs. Process Risk Process Risk Risk due to random variation, even if pricing is absolutely
correct Mostly due to large claims Credibility: Chance that a sub-group, say a specific
employer, will have different experience than the book Pricing Risk Missed trend Unexpected population shifts
Total Risk Process risk + weighted average of pricing risk by
scenario
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Polling Question –According to the CDC, what percent of total health care expenditures are for the direct care of chronic diseases like diabetes and cancer?
17
1 2 3 4
2%
28%
49%
21%
1. 10%2. 25%3. 50%4. 75%
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What are we doing about the costs?
New technologiesConsumer health appsPredictive analyticsQuality strategies CMS Triple Aim CDC 6/18
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Dynamic Return on InvestmentComponent Traditional ROI Dynamic ROI
Investment • Fixed admin PMPM• Tests, office visits,
sometimes
• Fixed admin PMPM• Test, office visits, etc
Return • Fewer admits, ER visits• Tests office visits,
sometimes
• Fewer admits, ER visits
Payback Period • Fixed period• Usually long enough to
show positive ROI
• Variable period• Reflects fact that patient
may leave before investment is recouped
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Value-Based Reimbursement
Value-Based Reimbursement (VBR) Usually includes a fee-for-service element Includes bonus and/or penalty for meeting specified
quality and efficiency measures
Commercial (VBR) Narrow Networks Accountable care organizations
MACRA Medicare Access and CHIP Reimbursement Act Medicare physicians’ reimbursement
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Provider Challenges
Too much paperworkNew measures to price/manage risk Scorecard measures Percentile risks
Strategic considerations Mix of contracts Long term planning Clinical practice changes to meet optimize income
Cost-shift to commercial?
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Cost-Shifting: Historical Perspective
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Health Plan Analytical Challenges
Projecting cost-ShiftingNew measuresCompetitionNetwork negotiations Price
VBR impact on pricing and reserving
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My Vision of the End Game
Actuaries become the undisputed risk management profession Break open the “black box” to measure and monitor risk Provide recommendations to decision-makers Business acumen + analytics key to our success
Policy makers, C-Suite seek out the voice of the actuary for leading edge insights, direction
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A Few Parting Thoughts“All models are wrong, but some are useful”- George Box
“Statisticians, like artists, have the bad habit of falling in love with their models”- George Box
“An approximate answer to the right problem is worth a good deal more than an exact answer to an approximate problem” - John Tukey
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An Up and Coming Actuary
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My Health Actuary Evolution
From C math student to FSA
Scientist turned actuary
Life to health insurance
Success in a recent non-actuarial, health operations role
The next episode
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Polling Question –Have you ever changed your career path?
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1 2 3 4
51%
7%
20%22%
1. No2. Yes, I changed my practice
area3. Yes, I went from a non-
actuarial career to an actuarial career
4. Yes, I shifted from an actuarial career to a non-actuarial focus, like sales
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Value-Added Experiences
John Maxwell Team certified leadership speaker, trainer and coach
Having non-actuary leaders and direct reports
SOA volunteer experiences
My recent job search
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My Evolution -- SOA Volunteer
Leading volunteers is a different skill to develop
Opportunity to perform executive and operational duties without having to change jobs at work
Education versus section volunteer work
Communication
Networking
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Polling Question –What best describes your current SOA volunteer involvement?
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1 2 3
73%
10%17%
1. Little or no involvement2. I occasionally volunteer
(speaking, articles, etc)3. I am highly engaged on a
regular basis
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Skills to Add to Your Evolution
Learn to think like a CEOUnderstand what leadership is, for most really don’tStrategic partner > the answerAccounting has its place. But, don’t get sucked into ‘the
number’Get in the weeds without getting muddyIf you are in your comfort zone, you are not growingHave a well-formed opinionBe different!
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My Vision of the End Game “Health” and “well-being” are turning into
corporate buzzwordsA case for privatization – the Medicare Part D
programValue-based care and making sure everyone has
skin in the game to reach a common goalRemoving HMO from the dictionary and truly
coordinating careThere will continue to be lots of work for health
actuaries, but remember that leadership is ALWAYS in demand
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A “Retired” Executive
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My Evolution as a Health ActuaryFrom the college classroom to pension consultingFrom pension consulting to a large insurerEarly experiences with computers Exams without calculators Using a Service Bureau How to take a square root in Cobol Where should we put that first PC? Where should one put the outlets?
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Job Experiences
Never reported to an actuaryBenefit design, Pricing, Filing, and ReservingBenefit and Provider ContractingCompliance and Advertising ReviewClaim administrationSystems and Data AnalysisCFOInterim CEOChief Actuary – build an actuarial community
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Reacting to New Legislation/RegulationPricing and plan design for ACA was “Actuarial Nirvana”READ the legislation or regulationComment at least internallySign up for daily e-mails Health Affairs blog BenefitsLink.com AIS Daily Health briefing
Join industry committees or work individually Strengthen the voice of the actuary in public policy Influence both legislation and regulation We need to be timely and take a stand where we have the
expertise
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Skills for new Legislation or Initiatives
Actuaries are often the only ones who know both the big picture and the detailsVolunteer to direct teams of other expertsLead or participate on Strategic Planning teams White Papers Enterprise Risk Management/ORSA
Help develop winning Tactical Plans Use Predictive Analytics Create Scenarios with probabilities
Make RECOMMENDATIONS
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Polling Question –Which of the following best describes your involvement in the 2010 ACA roll-out?
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1. Not applicable to my situation at the time
2. Participated in pricing and implementation for my employer or client
3. Strategic consulting/decision-making for my employer or client
4. Participated in SOA/Academy efforts in addition to my job responsibilities
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Opportunities for Actuaries
CFO of insurer/health plan/medical group/ACOMedical management evaluation/Quality Improvement
(e.g., STARS)Provider arrangements/ contract negotiationsRisk Adjustment processing and accuracyPredictive analytics (e.g., medical mgmt. programs,
target marketing, risk adjustment, program evaluation)Risk Management/Public PolicyCareers or rotations at CMS, CBO, or CCIIO
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My Vision of the End Game Importance of an individual mandate…or else single payer Traditional Medicare
Not a true single payer/insurer Cannot control costs or quality
Let federal government be single payer and insurer but bid out management of the health system in various regions to private companies Paid on fee basis Provide admin services to beneficiaries and providers Coordinate beneficiaries’ care Designing incentive systems for providers to deliver quality care in the
most efficient manner Develop incentive systems for beneficiaries to take better care of their
health Bonuses for exceeding targets for quality and efficiency
Plenty of roles left for actuaries!
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