What are the functions of money;
(10 points) You are the actuary on the network contracting team for a health insurer. (a) (/ point) Describe the importance of network access. (b) (2 points) Describe various provider payment models. You have been asked to address concerns regarding the cost volatility of certain procedures in the insurer's network of three hospitals. Your first focus is cardiac stent procedures. You are given for cardiac stent procedures: Hospital A Hospital B Hospital C Admits 20 40 30 Average Length of Stay (Days) 3.5 2.4 3.1 Allowed Cost per Day $4,000 $4.500 $6,000 Paid Cost per Day $3,400 $3.825 $5,100 (c) (3 points) (i) Calculate a bundled payment. State your assumptions. Show your work. (ii) Recommend which hospital(s), if any, should be re-contracted for this procedure. Justify your answer. Company leadership elected to present bundled payment proposals to all three hospitals. The CEO of Hospital C is a renowned cardiologist and has threatened to terminate their contract with the insurer over this proposal. The insurer's compliance department expressed network adequacy concerns regarding several specialties. You have been asked to consider alternative strategies to remediate the issue with Hospital C. Strategy Terms Rental Network 105% of Hospital C Allowed Tiered Payment System 10% Member Coinsurance for Hospital C Shared Savings Arrangement Set the benchmark equal to the originally proposed bundled rate. Share 50%% of savings or deficit. (d) (2 points) Describe how each strategy could remediate the issue, including pros and cons. (9) (2 points) Calculate the per member per admit financial impact to the insurer of cach alternative relative to the bundled payment proposal. Show your work.(7 points) XYZ is a provider group that will be establishing an Accountable Care Organization (ACO) under the Medicare Shared Savings Program (MSSP) beginning on January 1, 2020. (a) (/ point) Describe the legal requirements for an ACO to be established. (b) (/ point) Explain differences between one-sided and two-sided ACO shared savings models. (c) (2 points) Describe strategies for an ACO to optimize its financial outcomes when entering the MSSP. (d) (/ point) Describe strategies the government could employ to reduce unintended incentives in the MSSP. You are given the following regarding XYZ's Medicare claims history: The annual claims trend is 0%. There are no changes in demographics or case-mix within each cohort. XYZ's claims history by cohort: Cohort A C Number of beneficiaries 500 300 200 Effective Start Date 1/1/2017 1/1/2018 1/1/2019 Year 1 PMPM Claims $900 $1.050 $1,200 Year 2 PMPM Claims $1.000 $1.100 Year 3 PMPM Claims $1.100 (9) (2 points) Calculate the ACO benchmark for 2020. Show your work
