deloitte - public record media · 2015-08-14 · deloitte consulting llp 50 south sixth street...

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Technical Proposal to Provide Audit and Actuarial Services to the Minnesota Office of the Legislative Auditor

Deloitte Consulting LLP 50 South Sixth Street Suite 2800 Minneapolis, MN 55402 USA

Tel: +1612" Fax: +1612-692-4480 www.deloitte.com

August 23, 2013

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Deloittec August 22, 2013

Valerie Bom bach Principal Program Evaluator Office of the Legislative Auditor 658 Cedar St, Room 140 St. Paul, Minnesota 55155

Dear Ms. Bombach:

Deloitte Consulting LLP 50 South Sixth Street Suite 2800 Minneapolis, MN 55402-1538 USA

Tel: + Fax: +1 612 397 4450 www.deloitte.com

Deloitte Consulting LLP ("Deloitte") is pleased to submit our response to your Request for Proposal (RFP) for Audit and Actuarial Services. Please note that we are proposing on the actuarial services only and not on

the audit services. This transmittal letter is executed by Steven N. Wander, Principal, Deloitte Consulting LLP, who is authorized to bind our organization contractually. Steve will serve as the point of contact for you and is available to respond to any questions at the contact information listed below.

This is an important opportunity for Deloitte to continue to support the State of Minnesota and their healthcare programs and we believe we are uniquely qualified to assist with these activities because we are:

• A large actuarial practice with over 100 health actuaries nationally and over 30 health actuaries based in the Minnesota office. Our Minnesota office includes 15 credentialed ASAs and FSAs, and the national leader of our public sector health actuarial practice,

• Committed to the State of Minnesota and have supported projects with the State of Minnesota, Management and Budget (MMB), the Department of Human Services (DHS), the Department of Corrections (DOC), the Department of Health (DOH), the Department of Employment and Economic Development (DEED), and the Department of Commerce (DOC)

• Experienced in Medicaid rate development, Medicaid rate reviews, risk adjustment and other

Medicaid actuarial services,

• Experienced with managing large data warehouses such as for SEGIP and PEIP programs for MMB.

These projects include complete data analytics to track and analyze key measures, chronic conditions, risk adjusted provider group rankings, etc.,

• Committed to develop thought leadership and innovative solutions for our clients including helping the State of Minnesota develop their Advantage Plan and elsewhere aiding a state Medicaid program develop their new accountable care initiative,

• Knowledgeable regarding the applicable federal regulations, the CMS Rate Setting Checklist, and Actuarial Standards of Practice, and

• Skilled at managing complex projects.

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Member of Deloitte Touche Tohmatsu Limited

Office of the Legislative Auditor Valerie Bambach August 22, 2013 Page2

We appreciate the opportunity to respond to this RFP and are devoted to supporting the Office of the Legislative Auditor on this important initiative and to continuing our successful working relationship with the State of Minnesota. If you have any questions or need additional information, please contact me directly at or via email at

Sincerely, Deloitte Consulting LLP

JL' LL By: Steven N. Wander, Principal

Executive Summary ......................................................................................................... 1

1. Firm's Background .................................................................................................... 3

2. Personnel Qualifications and Relevant Experience ................................................ 17

3. Project Approach .................................................................................................... 20

4. Required Forms ...................................................................................................... 27

5. Contract Exceptions ................................................................................................ 33

Appendix- Sample Deliverables ................................................................................... 34

Appendix- Resumes .................................................................................................... 35

Minnesota Office of the Legislative Auditor Audit and Actuarial Services RFP August 23, 2013

Executive Sutnmary

·------------------------------ ---

Our Understand~ng o·~ & Appn)ath to the ~Viinnesota Offke of the legis~ative it\uditOlf' Aud~t and Actuaraal Services Requ~re~-nents

Deloitte Consulting LLP (Deloitte) has developed a response to the Request for Proposal (RFP)

issued on July 29, 2013, that is tailored to meet the specific needs of the Minnesota Office of the Legislative Auditor (OLA). In order to ensure the highest level of service and quality, we have assembled a project team with a proven track record assisting multiple state Medicaid agencies with their unique programs,

similar to those offered by the State of Minnesota (the State). Please note that we are proposing on the actuarial services only and not on the audit services.

We believe our team provides the State with:

• Best Value. We believe our team provides the best value to OLA. We have assembled a local team with significant experience and understanding of actuarial soundness in rate development, risk adjustment methodologies, and certification of final rates. Our team also brings broad strategic, operational, and analytical experience to the table that is generally not provided by actuarial firms. We believe the combination of our experience and breadth of services allows us to complete any actuarial review in the most efficient manner possible and will provide the best

value to the State of Minnesota.

• Breadth of Resources. Our proposed team for this project has significant experience working with Medicaid

programs. We have assembled a team that includes more than credentialed actuaries, data consultants, and

\, section ·. HIGHLIGHTS

Deloitte has one of the largest actuarial

practices with over 100 healthcare actuaries

in the United States

• Over 55 actuaries credentialed as either

Fellows or Associates ofthe Society of

Actuaries (i.e., FSA or ASA),

• 28 health actuaries in Minnesota,

serving public and private sector

healthcare clients.

• 10 credentialed ASA and FSAs on our

proposed team.

• Our proposed team for this engagement

has:

-/ Certified capitation rates as

actuarially sound in 14 states

-/ Worked with an additional 28

states on other aspects of their

Medicaid programs

statisticians- we have also included a policy consultant (i.e., a prior Medicaid Director) in order to be prepared to offer insight and lessons learned. In addition, Deloitte has over 1,000 consultants in our Public Sector Practice, who are focused on serving various state agencies. This depth and breadth of resources is critical as the State continues to grow and adapt to the changing healthcare environment.

Deloitte Consulting LLP Page 1


• A Strong Commitment to the State. We are committed to the working relationship with the State. We deliver quality results on many strategy and technology projects for State agencies and have a consistent track record of successful and timely projects. For example, we have been providing health actuarial services to MMB (formerly DOER) for more than 25 years. This longevity allows us to provide you with the leading resources to successfully

complete these important projects. As a target account, we are able to access the best and the brightest resources of our firm to support this engagement. This contract will be led by staff out of our Minneapolis office so that OLA has the ability to meet with us face-to-face with little notification and negligible travel cost, when needed.

Our approach to the actuarial services is built on a collaborative relationship with OLA. We anticipate working closely with you as data is assessed and validated, rates are evaluated, and actuarial certifications are reviewed for compliance with CMS and actuarial standards. Because of

our local presence, we can meet regularly with OLA staff as needed to review the status of the engagement and deliverables- highlighting any risks with the current work plan. We take project management very seriously and offer project management tools that will keep OLA management and other project stakeholders fully aware of our progress.

We understand the Medicaid capitation rate setting process and the CMS requirements for certifying actuarially sound rates. Having certified actuarially sound rates for a number of state Medicaid programs, we are very familiar with the federal regulation at 42CFR438.6, the CMS Rate Setting Checklist (a.k.a. {{the Checklist"), and the Health Practice Council's Practice Note (issued by American Academy of Actuaries, August 2005) . The principals incorporated into this document are consistent with Actuarial Standards of Practice (ASOPs) and other actuarial guidance, which serves as the basis for sound actuarial practice.

Our team includes members of the Medicaid Workgroup (part of the American Academy of Actuaries) which is working with CMS to update the Medicaid rate setting {{Checklist" and separately developing a formal ASOP, both of which actuaries will use when developing and certifying Medicaid capitation rate ranges. Additionally, through our support ofthe Minnesota MCO procurement and familiarity with Minnesota Health Care Programs, we understand the Minnesota specific MCO laws and regulations.


Minnesota Office of the Legislative Auditor Audit and Actuarial Services RFP August23,2013

1. Firm's Background

Provide the following information to document your firm's qualifications and experience as they relate to the tasks that will be performed under the contract.

a. A summary of your or your firm's capabilities, including years of experience performing similar services and the number of qualified staff that will be available to be assigned under the master contract. Responders to the Audit Services category must provide documentation that they are licensed in accordance with Minnesota Statutes 2012, chapter 326A

Based on a recent study conducted by the Kennedy Consulting Research & Advisory, Deloitte

Consulting is the largest healthcare consulting practice in the nation. Within Deloitte Consulting are more than 1,000 Public Sector professionals with deep state and federal experience, of which more than 600 consultants are dedicated exclusively to Health and Human Services (HHS) engagements.

The Deloitte Team brings a dedicated Medicaid advisory practice that provides sound guidance, direction and options to our clients positioning them for success in large Medicaid transformations. As part of Deloitte's history of successful experience in serving state HHS agencies we have played a significant role in supporting states management of their Medicaid Programs. We have supported designing Medicaid programs, improving Medicaid and MMIS operations, implementing Medicaid cost management initiatives, enhancing Medicaid client service and quality outcomes, developing Medicaid waivers, developing Medicaid fraud and abuse detection programs, and implementing Medicaid third-party liability recovery programs.

Deloitte has been helping to define and transform the Medicaid program since its inception. Our vast assets include a knowledgeable staff, thought leadership and demonstrated methodologies which, when combined with our many years of project experience, form a deep and strong resource pool.

In addition, Deloitte Consulting has one of the largest actuarial practices in the world, with over 100 healthcare actuaries in the United States serving public and private sector healthcare clients. This vast pool of actuaries, dedicated to the health care industry, give us a strong resource base from which to pull. Our Minnesota office, which will serve the Department if we are chosen, includes 28 health actuarial professionals including 15 ASAs and FSAs.

We have a consistent 40 year record of service on public health management issues that involve health insurance pricing, plan design, and risk analyses. Not only do we have deep experience in capitation rate setting, risk adjustment and waiver support, we have also played a leadership role in several of the more provocative statewide healthcare transformation initiatives, including the design and implementation of the Minnesota Advantage Health Plan, the design of Medicaid expansion programs in Massachusetts, and the defining of health reform savings and planning in Maine.



We pride ourselves on being:

• Business oriented (strong technical skills are a given),

• Action-oriented, strategic thinkers,

• Skilled in working with a wide variety of people,

• Exposed to multiple perspectives (customers, providers, insurers, manufacturers, vendors,

regulators),

• Able to access deep specialists in numerous areas due to the diversity of Deloitte,

• Experienced in a wide variety of projects and roles, and

• Able to offer customized solutions.

Over our careers, our proposed team brings Medicaid specific experience across the nation,

including:

• Medicaid consulting experience in 43 States,

• Medicaid actuarial services for State agencies in 37 States, where members of the team:

• Certified Medicaid capitation rates for 14 of those States,

• Consulted on risk adjustment issues for 13 of those States, and provided waiver support services for 9 of those States.

• Medicaid services for providers and health plans in 33 States.

This experience is highlighted in the table below demonstrating our team's career-long knowledge:

- - -

Medicaid Actuarial Med,icaid Actuarial Medicaid Medicaid Consulting

Rate Setting Services Services for Providers Consulting Services for Providers

State for States and Health Plans Services for States and Health Plans

Alabama -1' -1' -1'

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Colorado -1' -1' -1' -1'

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Delaware -1' -1'

Florida -1' -1' -1' -1'

Georgia -1' -1' -1' ../

Hawaii -1' ../

Idaho -1' -1'

Illinois -1' -1'

Indiana -1' -1'

Iowa

Kansas ../

Kentucky -1' -1' -1'

Louisiana -1' -1' -1' -1'

Maine -1' -1' ../ -1'

Deloitte Consulting LLP Page4


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Maryland ../ ../ ../ ../

Massachusetts ../ ../ ../

Michigan ../ ./

Minnesota ./ ./ ./

Mississippi ./

Missouri ./ ./ ../ ./

Nevada ./ ./ ./ ../

New Hampshire ./ ./ ./ ./

New Jersey ../ ./ ./ ./

New Mexico ./ .( ./ ./

New York ./ ./ ../ ./

North Carolina ../ ../ ./ ./

Ohio ./ ./ ../

Oregon ./ ./

Oklahoma ../ ./ ./ ./

Pennsylvania ../ ./ ./ ./

South Carolina ../ ./ ../ ./

Tennessee ../ ../ ./ ./

Texas ./ ../ ../ ./

Vermont ./ ./ ./

Virginia ../

Washington ../ ./ ./

West Virginia ./ ./

Wisconsin ../ ./ ./ ./

Total 37 32 35 32


b. A list of all managed care plans or county-based purchasing organizations in Minnesota for which you, your

company, or proposed staff provided services to during the past five years, including the dates and nature of the

services. To ensure compliance with conflict-of-interest and independence requirements, responders who enter

into a master contract must keep OLA informed of any subsequent changes in their services to these managed care

organizations.

Deloitte LLP, along with its affiliates and related entities, including Deloitte Consulting (the "Deloitte Entities"), is a very large organization with an expansive client roster that is always



changing. At various points our client roster has included managed care plans or county-based purchasing organizations in Minnesota. We do not believe these relationships create any conflicts of interest for this contract because no Deloitte Consulting principals or staff proposed to work on this contract have provided services to any managed care organizations in Minnesota for the past five years, and if we were awarded this contract and reach agreement on mutually acceptable contract terms, we are willing to stipulate that members of the engagement team will not provide services to managed care organizations in Minnesota during the period in which services will be provided to the Minnesota OLA. Additionally, this contract will be led by our actuarial practice, which adheres to the American Academy of Actuaries Code of Professional Conduct, Precept 7, which states that an actuary shall not knowingly perform actuarial services involving an actual or potential conflict of interest unless:

• The actuary's ability to act fairly is unimpaired;

• There has been disclosure ofthe conflict to all present and known prospective principals whose interests would be affected by the conflict; and

• All such principals have expressly agreed to the performance of the actuarial services by the actuary.


c. A list of all entities with which the responder has relationships that could create, or could appear to create, a possible

conflict of interest with the work that is contemplated in this RFP. The list should include the name of the entity, the

relationship, and a discussion of the possible conflict.

Deloitte LLP, along with its affiliates and related entities, including Deloitte Consulting (the "Deloitte Entities"), is a very large organization with an expansive client roster that is always changing. At various points our client roster has included managed care plans or county-based purchasing organizations in Minnesota that could appear to create a possible conflict of interest with the work that is being contemplated in this RFP. We do not believe these relationships do create any conflicts of interest for this contract because no Deloitte Consulting principals or staff proposed to work on this contract have provided services to any managed care organizations in Minnesota for the past five years, and if we were awarded this contract and reach agreement on mutually acceptable contract terms, we are willing to stipulate that members of the engagement team will not provide services to managed care organizations in Minnesota during the period in which services will be provided to the Minnesota OLA.

All new clients to the organization are subject to our Client Acceptance process. This process assesses, among many concerns, whether the potential client would pose any apparent

Deloitte Consulting LLP PageS


independence, business, or legal conflicts. This assessment is broad in scope and encompasses potential conflicts across all offices and affiliates.

Additionally, consistent with the American Academy of Actuaries Code of Professional Conduct, Precept 7, we would disclose a potential conflict to the Minnesota OLA and jointly determine if it

represents a real conflict.

Provide the following information to document your firm's qualifications and experience as they relate to the tasks that will be perfonned under the contract.

d. A description of any complaints filed with or by professional, state, and/or federal licensing or other entities within the

past five years against your organization or its employees. If such complaints exist, please include the date of the complaint(s), including any disciplinary action(s) imposed. Responders who enter into a master contract must

immediately notifY and provide similar information to OLA for any complaints filed subsequent to execution of the

master contract.

Deloitte Consulting is one ofthe leading providers of consulting services, and is routinely involved in complex consulting projects, often involving large-scale systems implementations and multiple service providers. Although we are justifiably proud of our record of client satisfaction, such projects do occasionally give rise to disagreements over contract requirements, and we are occasionally, though rarely, involved in complaints or litigation with clients pertaining to our consulting services.

Deloitte & Touche LLP, like all other major accounting firms, has been named as a defendant in a number of civil lawsuits, most of which are premised on allegations that financial statements issued by clients and reported on by us were incorrect. Based on our experience with these cases and our investigations of the factual circumstances that have given rise to complaints or litigation against Deloitte & Touche LLP, we believe that these can fairly be characterized as incidental to the practice of the accounting profession.

We do not believe that such matters will affect our ability to provide consulting services, or that they will affect our ability to serve the Minnesota OLA in connection with this proposed engagement. Specifics' regarding any current or future litigation is generally confidential.


e. A description of at least two recent projects conducted by the responder that are similar to the work being proposed

here. The projects must have included staff who will be expected to perform work under the OLA contract. For each of



the projects, provide: the name of the project and the client (including the client contact person and telephone number);

a brief project description, including the workplan; a list of the tasks and methods performed, and the staff who

performed them; a list of any tasks that were subcontracted; and the final work product.

The section below provides an overview of two of the states for which our team has performed

similar services. Please note that due to the size and complexity of Deloitte Consulting and our

confidentiality obligations, this does not reflect a complete list of our clients but is representative

of clients and projects our team has worked on in the areas outlined in the RFP. The deliverables

(which includes a description of the tasks performed) for the rate setting projects discussed below

can be found in the Appendix.

State of Texas, Health and Human Services Commission

Health Actuarial Services

December 2005 to Present

Bill Rago, Director, Economic Analysis

4900 N. Lamar Blvd., MC 4001, Austin, TX 78751

Deloitte Consulting began working with HHSC in December of2005 to support several Medicaid initiatives. The services providw to HHSC include Managed Care, fee-for-service (FFS), Primary Care Case Management (PCCM), Non-Emergency Medical Transportation (NEMT), Disproportionate Share Hospital (DSH), and Upper Payment Limit (UPL) programs. We contirue to provide heal1h actuarial servioes on various initiatives.

· Releya.nt Experience - - - - · · · -- - · · .- - -- - · ·

[2] Managed Care Rate Setting

[2] Risk Adjustment

[2] Health Reform Impact Analysis

[2] Data Warehousing

[2] Databook Development

[8] Non-Emergency Medical Transportation

[2] Waiver Strategy and Support

[2] Project Management

[2] Dual Eligible Analysis

[2] Medicaid Cost Containment

[2] Procurement Support

[2] Policy Impact Studies

[2] Data Manipulation and Validation [2] Benefit Modeling

t8l Waiver Cost Effectiveness Analysis [8] IBNR Analysis

t8l Supplemental Payment Analysis (i.e. DSH and [2] FFS and PCCM Reimbursement Strategy UPL)

~ - - -- - ---- - - -- - --- - - - - - -

_ Summa1-y Services Performed

• Rate Setting: Developed capitation rates for the STAR+PLUS managed care program and reviewed the rate methodology of the STAR program. Helped HHSC assess the impact of expanding these managed care programs and carving in/out servioes from the capitation rate.

• Waiver Development: Supported HHSC in the strategic approach and development of two 1115 waivers and multiple 1915(b) waivers. Developed the cost effectiveness md budget neutrality demonstrations for each of the waivers.

• Supplemental Payment Strategy: Performed several impact and projection analyses on DSH and UPL supplemental payment programs. These analyses include the impact of policy decisims, health reform, waiver approvals, and other Medicaid program changes.

• Benefit Analysis: Developed benefit pricing models to assess the impact of various benefit packages offered to new Medicaid eligibles and the health reform expansion population.

• Procurement Support: Provided support in the submission of a request for proposals to transition the Non-emergency Medical Transportation program (NEMT) for a FFS to capitated reimbursement structure. Led the development of the co& section and the associated databook and cost template provided to potential vendors.



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• Data Warehousing: Maintain a data warehouse with over ten years cr claims level data The warehouse includes encounter, FFS, PCCJ\1, and cost report data for each of Texas' Medicaid programs.

• Health Reform Support: Provided support on several Federal Health Reform related analyses including; facilitated visioning sessions with a HHSC workgroup tasked with understanding the health insurance exchange requirements and implementation considerations, analyzed various Medicaid benefit packages that will meet the PPACA requirements and the associated cost savings, and developed an innovative DSH and UPL model to assess lhe impact of health reform on the State's supplemental payments

Project I -STAR+ PLUS Rate Setting: Assist the State Medicaid program in the calculation of actuarially sound capitation rates for the Texas STAR+PLUS program, which provides integrated acute and long term care to eligible in:lividuals in specific service areas. This includes reviewing large amounts of data, trend analysis, rate adjustments, etc. The team also reviewed the Texas STAR, STAR+PLUS, and CHIP rate setting methodology, comparing the mechanics of these various programs to the methodology employed in other states in order to verify the proper usage of available data and maximize the State savings while ensuring appropriate MCO reimbursement.

In addition to developing STAR+PLUS Managed Care rates, we provided !915(b) waiver support and performed a state budget impact evaluation for the expansion of the STAR-Plus program and the Intensive Care Management (ICM) program. STAR-Plus and ICM serve the aged, blind, and disabled populations and get these populations into a well-managed setting. STAR+PLUS uses MCOs to manage the patients' care and ICM uses a non-capitated model for managing the care. The STAR-Pius capitation rates do not pay for most inpatient hospital services in this model, however the MCOs are responsible for reducing inpatient costs. The ICM program is paid entirely fee-for-service with performance targets to reduce costs.

Some of the specific services the team provided include:

• Developing the necessary actuarial work to enable HHSC to set MCO rates in its standard and ST AR+PLUS programs

• Assisting HHSC in monitoring the fmancial performance of the STAR+PLUS hospital carve-out

• Analyzing the impact oflegislative changes to the MCO rates and developing exhibits to illustrate these impacts to HHSC and the MCO's for the STAR+PLUS program

Project 2 - CHIP Buy-In Impact: State buy-in programs are typically impemented to deal with current coverage shortfalls. The State of Texas requested that Deloitte Consulting assist them in estimating the budget impact of offering an expansion of the CHIP program to children whose families are not eligible for Medicaid or SCHIP and also are unable to get access through private coverage. This lack of access may be a result of affordability and/or access issues. The State's CHIP program covered children up to an FPL of200 percent The State had intended to expand coverage to 300 percent FPL at no cost to participants. Children in families with incomes above 300 percent FPL would be required to buy-in to the program by paying a premium equivalent to lhe average cost within the program. Costs in excess of this average for children in families with income in exceeding 300 percent FPL would be fi.mded out of the State's general fund

Deloitte Consulting worked with HHSC to assess the potential impact on the general fund for costs in excess of those under the current CHIP program. As part of our analysis we modeled the anticipated costs associated with adverse selection in conjunction with potentially low take-up rates for this voluntary buy-in program. We also modeled the co:t impact of the anticipated better health status of children in the population expected to enrolL

Project 3 - Managed Care Inpatient Savings Analysis: We helped HHSC determine the cost effectiveness of a hospital carve-out within the ST AR+PLUS managed care program. Specifically, we determined if the cost savings required of each managed care organization met the required contractual minimum. When applicable, we helped the State determine the amount of premium that had to be returned to the State resulting from failure to meet lhe minimum requirements.

Additionally, we assisted the State of Texas Health Human Services Commission ("HHSC") Medicaid program in the determination ofMCO savings levels for the OCC (Other Community Care) and CBA (Community Based Alternatives) programs. Per cortractual agreement, MCO entities agreed to meet certain risk-adjusted inpatient savings targets for these populations. Performance of this project included calculation of risk-adjusted baseline FFS costs and associated MCO costs during the subsequent year. Achievement of savings targets resulted in an incentive payment made to successful MCOs, while failure to meet 1argets resulted in a disincentive.

Project 4- Medicaid Expansion Waiver Support, including Uninsured Benefit Pricing and Take-up Model: The State of Texas HHSC submitted an 1115 waiver to the Centers for Medicare and Medicaid Services ("CMS") with the following goals:

• Increase access to coverage for working uninsured Texans with access to employer sponsored insurance

• Cover the maximum amount of uninsured Texans dependent on the amount of redirected fi.mds available

• Strengthen the employer-based insurance market though premium subsidies for Employer Sponsored Insurance and Multi-share programs

• Incentivize and require more efficient hospital behavior, better coordinated care for the uninsured and greater accountability for local providers

Deloitte Consulting supported HHSC's effort through modeling the cost implications of different benefit designs and determining that the waiver



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meets the CMS budget neutrality requirements.

The benefit design pricing included estimating the enrollment, inherent risk, and cost impact of several different benefit designs and enrollment options to be included in the waiver. The benefit design included a broad range of services which meet the basic healthcare needs of most enrollees_ Deloitte Consulting developed an interactive benefit design model for this project. The model estimaes the cost implications of different benefit designs and benefit limitations for the proposed adult uninsured expansion program. The model provides estirrates of the percent of eligible members who elect coverage, the member's and State's share of costs per member per month (PMPM), and the overall State fimding needed for each benefit structure.

The take-up model and benefit pricing models allowed us to price various benefit designs for differing levels of FPL status and funding levels to assess the costs ofMedicaid expansion to the uninsured in the State. We customized our models to develop the costs for various insurance packages, various outreach efforts, and varying populations (i.e., varying FPL levels, employed, non-employed, etc.)

As part of the waiver, HHSC proposed reforms to he Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL) hospital payments to fund the expansion to the uninsured. Deloitte Consulting conducted a trend analysis on the DSH and UPL hospital payments, projected future DSH and UPL reimbursement over the 5-year waiver period, and estimated the impact of different reform options to the existing DSH and UPL reimbursement methodology.

Some other services Deloitte Consulting provided related to the development of the 1115 include:

• Creating a model to assess the budgetary impact of expanding the Medicaid program to the adult uninsured based on cost sharing and benefit design parameters

• Developing an interactive budget neutrality model for the Commissim to understand the impact of various waiver approaches

• Projecting the aggregate UPL caps, DSH payments, and UPL payments for each hospital over the life of the waiver

• Projecting the waiver funding needed from the State, Federal Government, and enrollees while maintaining waiver budget neutrality requirements

• Developing the costs for the different proposed insurance packages

• Modeling projected uptake rates for the proposed insurance packages

• IdentifYing the savings associated with each of the five years of the proposed waiver for each of be different programs identified by HHSC

• Performing historical and projected data analytics as required by the waiver

• Performing all the budget neutrality calculations as required by the waiver

• Working with HHSC to respond to CMS questions and issues that emanate from the 1115 waiver negotiation

• Finalize financial calculations and any actuarial analytics required for the waiver

Project 5- Hospital Reimbursement Reform: In response to legislative directioQ HHSC requested Deloitte 9.1pport in assessing the impact of various hospital reimbursement reforms. We developed actuarially sound models of numerous rate scenarios to report to both a hospital workgroup and the Commission. The hospital reimbursement models summarized the impact of different reform strategies by hospital and analyzed different reimbursement methodologies that would promote efficiency across hospitals. The hospital payment analyses included rebasing and reforming the hospital rates with more current data and moving the rates into a regionally calculated model. The rebasing allows the State to regulate amounts paid for direct, administration, and capital costs.

Project 6- Uncompensated Care Analysis: Within the State of Texas, uncompensated care is reported at the highest charge levels without accounting for programs that reimburse hospitals (at least in part) for uncompensated care costs. We performed an analysis to understand how uncompensated care is reported and estimate the actual uncompensated care cost across the State. These issues are examined in a report we developed to get a clearer picture of uncompensated care in the State.

Project 7- Non-Emergency Medical Transportation (NEMT) Procurement and Waiver: HHSC arranges NEMT for eligible Medicaid beneficiaries who do not have any other means of transportation to and from providers of services for medical care provided under the State's Medicaid program. The State is considering implementing a fully capitated reimbursement model for two (2) select regions, developing and submitting a request for information across the State to understand current reporting processes, and developing a non-emergency medical transportation 1915(b)(4) waiver for non-full risk broker transportation service areas.

The project included working with HHSC in its actuarial assessment of the potential rate structures associated with the service delivel)' models for NEMT services (e.g., C!Yitated, fee for service, etc.) wring the HHSC's procurement process for such services. Deloitte Consulting services included assessing the current reimbursement structures, supporting the development of a RFP md analyzing cost proposals, and supporting the submission of a 1915(b)(4) waiver.

Funding Structure(s)/Rate Analysis:



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• Assessing the mechanics of the service delivery models in order to capture the appropriate and available data to be used in the actuarial ratesetting analyses,

• Holding visioning sessions to discuss service delivery models,

• Reviewing and analyzing data provided by HHSC,

• Conducting various data and reimbursement evaluation meetings,

• Providing an actuarial review of proposed funding structures, and

• Presenting HHSC with the appropriate rate analyses and data for HHSC to evaluate and utilize in the procurement for future NEMT services.

Actuarial Analysis of Bids:

• Reviewing data and rate components of bids,

• Providing an assessment of the bids' compliance with generally accepted actuarial standards and mathematical soundness,

• Developing an independently calculated rate range to use in evaluating proposed rates,

• Comparing rate proposals across bidders and benchmarking against other states, and

• Assisting HHSC in other rate comparison activities

Actuarial Analysis for Section D ofl915(b)(4) waiver:

We are assisting HHSC with the submission of a 1915(b)(4) waiver to Centers for Medicare & Medicaid Services (CMS). Specifically, we are assisting HHSC in the development of Section D- Cost Effectiveness of the 1915(b)(4) waiver. HHSC is pursuing the waiver in an attempt to preserve the current NEMT service delivel)' model which supports the use of the direct service delivel)' providers and the existing network of transportation providers to meet 1he client transportation needs while receiving at increased matching percentage from the federal government

The following outlines 1he specific project approach and tasks:

• Identify and analyze data needed to complete Section D- Cost Effectiveness

• Develop Section D- Cost Effectiveness appendices for the waiver

• Assist HHSC with responding to CMS questions

Project 8- Managed Care Expansion Waiver Support, including preservation of Upper Payment Limit (UPL) funding: The State of Texas HHSC submitted an 1115 waiver to the Centers for Medicare and Medicaid Services ("CMS") with the goal of expanding managed care statewide while maintaining the projected UPL funding levels to be redirected to:

• Uncompensated care,

• Charity care,

• Hospital investments to improve care through system redesign, and

• Support creation of a coordinated health system

Deloitte Consulting supported HHSC's effort through leading the development of1he budget neutrality requirements of the waiver. This modeling included:

• Forecasting aggregate limit UPLand actual UPL payments by hosptal

• Developing the CMS required budget neutrality files and reports describing the cost effectiveness projections

• Leading budget neutrality discussions with CMS

• Estimating the impact of expanding the managed care programs statewide on the UPL payments

• Conducting a trend analysis on current Medicaid expenditures and supplemental UPL and DSH payments

• Estimating the impact of Federal Health Reform on DSH and UPL

• Developing interactive projection models to analyze various waiver strategies

• Identifying and supporting strategies related to preserving UPL and DSH payment levels post federal health reform

• Leading and participating in hospital workgroup sessions

Project 9 - Health Insurance Exchange Planning: Deloitte Consulting facilitated visioning sessions wi1h a HHSC workgroup tasked with



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understanding the health insurance exchange requirements and implementation considerations. We provided HHSC with an overview ofthe Massachusetts Health Insurance Connector Authority ("Connector") and a comparison of its functionality against the requirements of a health insurance exchange as laid out in the federal health reform legislation, Patient Protection & Affordable Care Act (PPACA).

Deloitte developed a delailed operating model overview of the Connector's business operations. This overview provided HHSC with a pictorial and descriptive explanation of the Connector's core and support functions across multiple state agencies and health care purchasers (Le., employers, Medicaid, individual subsidized, and individual unsubsidized).

Project 10- Hospital Supplemental Reimbursement: The State is anticipating a significant increase in Medicaid enrollment due to the increased federal poverty level (FPL) for Medicaid and the individual mandate, which will cause a significant number of currently un-enrolled Medicaid eligibles to enroll into the program. The increase in Medicaid eligibles will impact the State's uncompensated care costs and enrolled Medicaid population, which directly impacts their Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL) supplemental hospital payments.

We developed a fmancial model that allows the State to understand the impact of health reform and policy decisions on their DSH and UPL payments by year. This flexible model allows the State to quickly understand the fiscal impact of reform and policy decisions by year and by hospital. The model incorporates a complex DSH and UPL payment formula and estimates the impact of health reform on each component within the payment methodology.

Project 11 - Medicaid Benefit Benchmarking: Under PP ACA, states are allowed to amend their Medicaid State plans to incorporate benefit packages other than the standard benefit package for certain populations. These alternate packages are referred to as benchmark and benchmarkequivalent benefit packages. If states propose to offer an altermte benefit package other than the benchmark benefit packages, the State must provide benchmark-equivalent benefit packages that are equivalent to the benchmark coverage.

Deloitte Consulting helped HHSC analyze whether the current Texas Medicaid benefit package will meet the PPACA requirements for the nondisabled adult Medicaid expansion population. Using Texas Medicaid data, we reviewed the benefit requirements and the existing Medicaid plan design to develop benefit plan ratios by service category (i.e., inpatient, outpatient, etc.) for the expansion population. These ratios were then compared to the benchmark plan ratios, which were also developed based on the same Texas Medicaid data. We then determined the actuarial value of the Medicaid plan to the benchmark plans to ensure they met the legislation requirements.

We also helped the State understand the potential fiscal impact of plan design changes made to the current Texas Medicaid benefit package on the expansion population. This analysis allowed the State to identify the impact on both cost and the actuarial value of reducing their existing Medicaid benefits within certain service categories.

Data Warehousing

For these projects, Deloitte houses ten (years) of data including the managed care encounter data, Fee for Service ("FFS")/Primary Care Case Management ("PCCM") data, and cost report data. Due to the size ofthe Texas Medicaid population, over 3 million Medicaid eligible members each month, the data base is vast (included over 120 million claim lines in 2009 and 2010). We collected, loaded, and verified the reasonability of these large data sets which have been loaded to our data server. This claims database for the State combines FFS data and Managed care encounter for approximately 36 million annual TANF, SSI, and ABD & Dual Eligible member months. Resolved issues related to inconsistent encounter data from managed care vendors, incorrect or inconsistent coding from year to year and non-standard service category mappings and utilization metrics.

• Steve Wander

• Chris Schmidt

• Tim FitzPatrick

• Will Eichman

• Jim Hardy

• JeffSmith

• TimEgan

• Scott Peters

• Lindsey Scott

• Hieu Nguyen

Client: State of Maine Department of Health and Human Services (DHHS)



Health Actuarial Services

September 2008 to Present

Stefanie Nadeau

Office of MaineCare Services

Phone: (207)

442 Civic Center Drive

Augusta, ME 04333

Deloitte Consulting's actuarial practice began working with the State of Maine Department of Health and Human Services ("DHHS") in September of2008 to support a number of Medicaid initiatives.

In 2008, Deloitte Consulting's actuarial practice was engaged by DHHS in order to assist in moving to a more consistent methodology of paying providers for hospital services within their Medicaid program. This was done by considering the impact to their current reimbursement levels and process associated with moving to DRG/APC/APG based reimbursements. Deloitte Consulting ultimately provided rate setting services for inpatient hospital, outpatient hospital, outpatient behavioral health, home health, and durable medical equipment

Additionally, the Departmert engaged Deloitte Consulting to provide analytical/actuarial, strategy design, decision and other necessary support to assist with transforming the MaineCare program to promote efficiert delivery of care, and achieve better health ofMaineCare members. The objective of the engagement was to corrpare MaineCare expenditures to national benchmarks and identify potential savings opportunities and weigh them against implementation costs, long vs. short term savings, member/provider disruption, and timing. Ultimately, managed Medicaid model was pursued and Deloitte Consulting has been engaged by DHHS to suwort managed care procurement, rate setting, and a non-emergency Medicaid transportation procurement.

~ Managed Care Rate Setting 181 Project Management ~ Medicaid Cost Containment

~ Risk Adjustment 181 Dual Eligible Analysis ~ Procurement Support

~ Data Warehousing ~ Data Manipulation and Validation ~ Behavioral Health Reimbursement

~ Databook Development ~ Supplemental Payment Analysis (i.e. DSH ~ DRG and APC Development

~ Non-Emergency Medical and UPL) ~ Accountable Care Me1hodology Transportation ~ Reimbursement Strategies

~ - - - '

· S~mmary Services Performed · -<~ - • - --

• Fee-for-Service Rate Setting: Assist DHHS in moving to a more consistent provider reimbursement methodology for hospital services within the Medicaid program. Considerations include 1he impact to their current reimbursement levels and processes associated with moving to DRGIAPCIAPG based reimbursements. Additional rate setting services were provided related to home heal1h and durable medical equipment.

• Behavioral Health Initiative Support and Rate Review: Develop a standardized approach to behavioral health provider reimbursement by conducting a comparative analysis and identifying proposed changes to simplify the reimbursement structure.

• MaineCare Efficiency Delivery Analysis: Perform an Efficiency Delivery Analysis on Maine's Medicaid program to help 1he Department understand cost drivers, the population's health status, and health care needs at a more detailed level.

• MaineCare Cost Savings Opportunities: Help the State identify and assess the savings related to a number of cost containment opportunities. Identified the savings opportunity, estimated savings magnitude, estimated the implementation time to realize the savings, and identified the data and necessary steps to implement the opportunities.

• Non-Emergency Medical Transportation (NEMT) Procurement: Provided support in the development of a request for proposal (RFP) to transition 1he NEMT program from a FFS to capitated reimbursement structure. The RFP procurement effort ilcluded the development of 1he cost section containing the associated databook and cost template provided to potential vendors.

• MaineCare Managed Care Rate Setting and Data book Development: Assist with rate setting for the State's managed Medicaid program by developing actuarially sound capitation rates and a databook. This databook included FFS claims and enrollment data

• Health Reform Implementation Strategy: Deloitte assisted Maine's Department of Health and Human Services develop a "roadm1p" of health reform impacts on the State's Medicaid program.

• Accountable Community Rate Setting Methodology: Deloitte assisted the State of Maine develop a metho:lology for developing a provider specific target cost PMPM for their Accountable Care program.



Project 1 - Fee-for-Service Rate Setting: DHHS hired Deloitte Consulting to assist in moving to a more consistent methodology of paying providers for hospital services within their Medicaid program. Considerations include the impact to their current reimbursement levels and processes associated with moving to DRG/APC/APG based reimbursements. The tasks involved in this project include:

• Qualitative analysis of groupers

• A comparison of the advantages and disadvantages associated with each grouper

• Scenario testing using various relative weight and base rate assumptions on available groupers to consider the impact on hospitals as we11 as on UPL

Development of relative weight assunptions that wi11 reflect various considerations: credibility thresholds, revenue neutrality, fit with Medicaid data

• Development of base rate assumptions that wi11 reflect various considerations: statewide, facility specific, revenue neutrality, inclusion of administrative expenses and capital costs (statewide versus facility based)

Additional rate setting services were provided related to home health and durable medical equipment.

Project 2- Behavioral Health Initiative Support and Rate Review: To help the State of Maine develop a more standardized approach to behavioral health provider reimbursement, we have performed the following activities:

• Understand the current DHHS behavioral health provider reimbursement approach

Facilitate ongoing provider workgroup sessions

• Comparative analysis of DHHS behavioral health provider reimbursement approach and levels

• Desk review of mental retardation rates

• Assist in updating and refining communication needed to introduce proposed changes to Maine legislature

Currently, behavioral health providers are reimbursed based on a combination of local coding and HIP AA compliant coding making it difficult to standardize and assess reimbursement levels. Deloitte Consulting is conducting a comparative analysis and identifYing proposed manges to simplifY the reimbursement structure.

Project 3 - MaineCare Efficiency Delivery Analysis: Deloitte Consulting's scope of services for this engagement included:

• Understanding current MaineCare benefit structure, cost levels, and initiatives

• Supporting the Department in developing data extract specifications

• IdentifYing transformation opportunities and providing strategic guidance

• Providing support for joint DHHS-MeHAF planning processes and assist with communications

• Help the Department understand cost drivers, the population's health status, and health care needs at a more detailed level by performing the fo11owing activities:

o Compared MaineCare expenditures to national benchmarks

o Analyzed managed Medicaid programs implemented in other states

o Performed risk-adjusted efficiency analysis by provider types

o Analyzed cost and utilization patterns for members with chronic conditions

o Developed projection models to analyze feasibility of moving to a managed care model

Project 4- MaineCare Cost Savings Opportunities: Deloitte Consulting worked with the State to identifY and assess the savings related to a number of cost containment opportunities. We identified the savings opportunity, estimated savings magnitude, estimated the implementation time to realize the savings, and identified the data and necessary steps to implement the opportunities. Some of the savings opportunities we assessed include:

• Create special needs tiered waivers to install annual caps on spending. Implementing waivers to have m annual cap on cost of coverage wi11 limit the exposure per individual and focus care on services that are needed rather than wanted For example, waivers can have an annual cap of$0-$10,000, $10,000-$20,000, etc. The cap can be set up to differentiate between those developmerta11y disabled with residential coverage versus nonresidential coverage.

• Implement cost sharing for disabled kids in high-income families. Families that have a higher income are often able to cover partial coverage of disabled child care. Implement cost sharing at a specified threshold (for example, $200,000) or apply a tiered cost sharing approach by family income.

• Review management of non-emergency transportation, including transportation provided by family, volunteers, providers, and common carriers. Review rates for all transit providers. Renegotiate existing transit provider contracts and identifY contracts to eliminate I renegotiate. Determine merits of enhanced transportation coordination (e.g. transportation broker).



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_' , State of Maine Department of Health and Human Services (DHHS)

"Project: Health Actuarial Services

• Reduce reimbursements to hospitals for hospital-acquired conditions, Reduce or eliminate payments to hospitals for hospital-acquired conditions incentivizing providers to care for conditions prior to hospital readmission and encourages hospitals to manage conditions such as infections and ulcers present on admission. The idea is to align payment incentives with the quality of care delivered by a health care organization, Beginning October 1, 2008, Medicare no longer pays hosptals at a higher rate for hospital acquired conditions. This proposal has Medicaid aligned with Medicare policy.

Project 5- Non-Emergency Medical Transportation (NEMT) Procurement: Deloitte Consulting is currently supporting the DHHS with the procurement ofNEMT services from multiple regional brokers, Specifically, DHHS has asked Deloitte to perform analysis to support actuarially sound capitation rates for NEMT services. Deloitte sq>ported the development of the databook for inclusion in the formal request for proposals (RFP) issued to potential vendors and will be developing the finalized actuarially sound capitation rate ranges and rate certification, Through this project Deloitte will provide the fdlowing services:

• Develop a detailed project plan, staffing plan, and timeline

• Work with the State to defme the funding structure(s), including the number of rate cells and regions to be included in the rate analysis

• Summarize the transportation data into a formal databook to include in the RFP. This data will allow the vendors to gain an understanding ofthe historical experience of the NEY!T program and develop their proposed capitation rates

• Development of actuarially sound rate ranges to support DHHS review of proposed vendor bids

• Assess bid compliance with generally accepted actuarial standards and mathematical soundness

Project 6- MaineCare Managed Care Rate Setting and Databook Development: The State enlisted Deloit!:: Consulting to assist with rate setting for their managed Medicaid program by developing a databook. This databook included FFS claims and enrollment data. The rating process applied trend factors to adjust the base period claims cost to the rate setting period. The population and services are phased in through the first three years, Through this project Deloitte will provide the following services:

• Verify the accuracy and reliability of the base period data based on available aggregate reports

• Warehouse five years of historical Medicaid claims data, adding additional data fields and cleansing the data for duplicate or invalid data

• Develop base period PMPMs and compare to various reports to verify accuracy

• Adjust the base data according to the CMS checklist

• Normalize the base data to reflect the Medicaid managed care program in the rate setting period

Trend the normalized data to adjust the base period claims to the rate setting period

• Incorporate administrative expenses and profit margin

• Risk adjustment

Project 7- Health Reform Implementation Strategy: Deloitte assisted Maine's Department of Health and Human Services by delivering a tool called the Maine Health Reform Roadmap, Deloitte's State Health Reform Roadmap is a large wall chart that provides a summary of a state's health reform program. It is a powerful communications tool that has demonstrated to be of great value in state government transformation programs. The model is highly customized to the specific findings of a state's impact assessment and implementation strategy. The roadmap presents a "logic model" that flows from left to right capturing the key components of the state's health reform program

Project 8- Accountable Community Rate Setting Methodology: Deloitte is assisting the State of Maine to develop a methodology for developing a provider specific target cost PMPM for their Accountable Communities program. This methodology is based m our previous rate setting experience, the CMS rate setting checklist, and Actuarial Standards of Practice. We are helping define how the benchmark cost PMPM rates will be set and how members will be attributed to specific Accountable Communities. We have performed research regarding how members may be attributed to a provider community as well as performing analysis on the amount of members that may be attributed, We are also helping Maine draft a concept paper and State Plan Amendment to CMS which outlines how the Accountable Communities program will work.

Project 9- Incurred But Not Paid Analysis: Deloitte has assisted the State of Maine with developing their Incurred But Not Paid ("IBNP") estimates to be included in their fiscal year-end financial statements for several years, This consisted of collection of clams data, data reconciliation, and calculation of a range ofiBNP estimates for several types of service and several enrollment categories. A detailed actuarial memorandum outlining the data received, our methodology, analysis, and range of estimates is developed each year.

Project 10- ICD-10 Remediation and Implementation: Deloitte currently is working withMaineCare on ICD-10 remediation and implementation, including financial impact analysis, conceptual design, code mapping, testing, business process remediation, and project management. This includes collaborating with MaineCare's fiscal agent, vendors, providers, and affected DHHS Program Offices, Specific to performing the financial impact assessment, we are leading m effort to understand potential reimbursement and rate setting impacts driven by the transition from using ICD-9 codes to ICD-10 coding.

Data Warehousing

For the above projects, Deloitte housed the Maine FFS data for four different years covering over 4 million member monhs armually, This data has



.. tii~-n-t:- . " :." State of Maine Department of Health and Human Services (DHHS)

_Project: Health Actuarial Services

over 40 million claim lines per year. We collected, loaded, and verified the reasonability ofthese large data sets which have been loaded to oor data server. We resolved issues related to inconsistent encounter data from managed care vendors, incorrect or inconsistent coding from year to year and non-standard service category mappings and utilization metrics.

• Steve Wander

• Chris Schmidt

• Tim FitzPatrick

• Tim Egan

• Jim Hardy

• Lindsey Scott

• Hieu Nguyen



2. Personnel Qualifications and Relevant Experience

For each individual who will be available for services, describe his or her expertise with the RFP sample tasks, state and federal Medicaid laws, and Minnesota laws for managed care organizations. Provide the individual's name, position/title, years of service, educational degrees, licenses and certifications, and achievements of professional recognition (such as awards). Responders who enter into a master contract must file similar information with OLA for staff hired subsequent to executing the master contract.

·-----·---------------·------------·--·

Our team members have a mix of experiences working across the healthcare spectrum- including work with Medicaid Agencies, Insurance Departments, providers, payers, and public health agencies. The Department will further benefit from having the bench strength of Deloitte's organization and capabilities, within and outside of Deloitte Consulting LLP. We are able to bring the right subject-matter specialists to the table with a larger firm to support any challenges that arise.

Our core team includes resources with experience in Medicaid capitation rate setting and review, state government strategy, health and human services, and health reform. Our core team, the staff, and many of our advisors are located out of our Minnesota office.

• Steven Wander, FSA, MAAA, FCA (Minnesota) will be the Engagement Principal and oversee the project. Steve is a Principal with Deloitte Consulting and leads our public sector health actuarial practice. Steve is a credentialed actuary who has been consulting with other state Medicaid programs for over 20 years, including the State of Minnesota and 17 states where he has provided strategic advice, capitation rate development services, and various waiver related services.

• Chris Schmidt, FSA, MAAA (Minnesota) will be the Project Manager who will oversee the dayto-day aspects of the projects for The State. Chris is a credentialed actuary who has consulted with several Medicaid programs over the past 12 years including the development and review

of Medicaid capitation rates, and Accountable Care target PMPM rates for the states of Texas and Maine.

• Jeff Smith (Phoenix) has assisted over half the state Medicaid agencies on a variety of . Medicaid programs including developing Medicaid managed care capitation rates for 15 states and risk adjustment for a dozen others during the past 25 years. He has worked with all the major Medicaid populations including TANF, SSI, Duals, CHIP, and behavioral health. His past state Medicaid clients for which he helped set capitation rates include Arizona, Colorado, Delaware, Florida, Georgia, Maryland, New Hampshire, New Mexico, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, and Vermont. Additionally, Jeff has

worked with a number of these states on their 1115 and 1915 waiver requests and is very familiar with both state and federal regulations regarding Medicaid.



• Will Eichman, FSA, MAAA (San Francisco) has over 24 years of experience as a health actuary and has experience in 23 states working on Medicaid programs. His experience includes developing and certifying Medicaid rates, including PCCM programs, PACE and pre-PACE programs, and both voluntary and mandatory Medicaid managed care programs over the past 13 years.

• Tim Egan {Minnesota) has extensive Medicaid experience including Medicaid reform analysis, 1115 and 1915{b) waiver development, Medicaid non-emergency medical transportation rate setting, Medicaid RFP development and proposal reviews, Medicaid benchmarking and plan design analysis.

• Jim Hardy (Seattle) more than 25 years of Medicaid experience and is a former Pennsylvania Medicaid Director. He has extensive Medicaid managed care experience, including program design, rate-development, and rate-negotiation and has worked on Medicaid issues in 19

states.

• Tim FitzPatrick, ASA, MAAA {Minnesota) has more than twelve years of public sector healthcare experience and has worked with State governments, employers, and provider groups on issues such as financial analysis, project management, benefit design, reimbursement strategy, waiver support, and rate-setting. He has rate-setting experience developing Medicare and Medicaid rates, including those for pharmacy, managed care, PCCM,

FFS, and non-emergent medical transportation programs with several Medicaid programs, including those in Massachusetts, Maine, Minnesota, Missouri, Ohio, Pennsylvania, South Carolina, Texas, and Virginia.

• Jonathan Herschbach, ASA, MAAA (Minnesota) has over eight years of experience as a health actuary. His breadth of healthcare experience includes consulting for state government, federal government, and employer health plans. He has extensive experience on healthcare industry topics such as ICD-10, Medicare Part D, MarketScan data, data warehousing techniques, database management, data analytics, risk-adjustment methods and software, model building and cost efficiency analysis.

• Scott Peters (Minnesota) has five years of actuarial experience. His experience includes working with state governments, employers, provider groups and a variety of health plans on issues such as financial analysis, benefit design, reimbursement strategy, waiver support, and rate setting.

• Lindsey Scott {Minnesota) has five years of consulting experience working with employers, state governments, health plans, and provider groups on issues such as risk score analysis, rate setting for managed care and accountable care state programs, efficiency and tiering of provider groups, actuarial cost modeling, data warehousing health care claims, value based incentive models, claim reimbursement methodologies, ICD-10, and claim reserves. She has experience in healthcare data analysis and modeling, risk adjustment, SQL programming, and healthcare reimbursement methodologies.

• Nichole Ramsey (Minnesota) has over 5 years of experience in the areas of health actuarial and data management services. She has worked with health plans, provider groups, employers and state governments on issues such as financial analysis and management, benefit design, rate setting, Medicare bid development, underwriting, accountable care solutions and clinical opportunity analysis.



• Hieu Nguyen (Minnesota) has over 2 years of experience as a healthcare actuary. He has completed work on several engagements with public sector clients, including Medicaid managed care payment reform, risk adjustment payment simulation, and Health Insurance Exchange support. He has consulted to health plan clients on benefit design, pricing, rate filing, and estimating incurred but not paid (IBNP) liabilities.

Details regarding each proposed staff's title, years of service, educational degrees, licenses and certifications, and achievements of professional recognition can be found on their resumes in the Appendix.



3. Project Approach

Describe your or your firm's understanding of the objectives and deliverables outlined in this RFP, including a proposed workplan that details how the work will be accomplished, the deliverables, and methods for documenting progress. Responders to the Audit Services category must include a sample workplan for auditing information in a managed care organization's financial statements, including a schedule of major tasks, deliverables, and deadlines. Responders are encouraged to propose additional tasks or activities if they will substantially improve the results of the described work.

Having certified actuarially sound rates for many state Medicaid programs, we are very familiar with the federal regulation at 42CFR438.6, the CMS Rate Setting Checklist (a.k.a. "the Checklist"),

and the Health Practice Council's Practice Note (issued by American Academy of Actuaries, August 2005} and we understand the Medicaid capitation rate setting process and the requirements for certifying actuarially sound rates. The principals incorporated into this document are consistent with Actuarial Standards of Practice (ASOPs) and other actuarial guidance, which serves as the basis for sound actuarial practice.

Our team includes members of the Medicaid Workgroup (part of the American Academy of Actuaries) which is working with CMS to update the Medicaid rate setting "Checklist" and

separately developing a formal ASOP, both of which actuaries will use when developing and certifying Medicaid capitation rate ranges. Additionally, through our support of the Minnesota MCO procurement and familiarity with Minnesota Health Care Programs, we understand the Minnesota specific MCO laws and regulations.

In preparing our proposal, our Team developed a high-level Work Plan that discusses the primary components ofthe engagement as described in the RFP. In addition, we have included a recommended time line setting out when we expect tasks will be completed, and when key deliverables will be completed. These steps will guide us in managing the project and budget while providing and collecting ongoing feedback from OLA.

Our overall approach for any rate setting review project is to partner our team of credentialed actuaries, data consultants, and policy advisors, with the State team to make the most appropriate decisions based on the unique populations and programs. Our experienced team is able to assess rate development activities at the MCOs and assess the components going into the rate methodology including the reasonableness of reserves, the validity of the base data used, and the appropriateness of the administrative loads applied. Our initial kick-off discussions will allow Deloitte and OLA to define the roles that best suit the needs of the State regarding the detailed review of capitation rates for compliance with the appropriate standards and regulations.

Although guidance is provided by the Code of Federal Regulations 438.6(c) (which requires that actuarially sound capitation rates have been developed in accordance with generally accepted actuarial principles and practices, are appropriate for the population and services being covered,



and have been certified by actuaries who meet the qualification standards established by the American Academy of Actuaries and follow the practices established by the Actuarial Standards Board), sufficient flexibility and opportunity exist for the use of different data sources, assumptions, and application that could result in rates that do not fully comply with the federal requirements for setting actuarially sound capitation rates.

Our approach includes a discussion of OLA's short-term and long-term goals for the project and a review of data availability and managed care program changes. Our rate setting review process typically involves the five steps shown in the figure below. Following the figure, we provide a description of the key elements included in each step of the rate setting review process. We provide some options to consider for different populations or programs.

1. Data 2.

Adjustments 3. Risk

Adjustment

~

4. Reserves 5. Non

Medical Load

Below is a high-level description of the capitation rate review process we have used in other states, which will be adjusted for the State specific programs and populations, as needed:

Step 1- Data

Actuarially sound rate ranges start from accurate data that represents the appropriate population,

benefits, and geographic area. In assessing the reasonableness of the data used to set the rates,

we will look at the following types of data:

• Health Plan Encounter Data: True encounter data submitted by MCOs to be validated against summary-level cost information. Current expectations are for encounter data to be the basis for capitation rates starting in 2014.

• Summary-Level Cost Information: Current financial data supplied by MCOs for capitation rate development.

• Other Data Sources: Additional data supplied by MCOs beyond cost data that supplement the development of capitation rates. This could include items such as third party recoveries, unallocated claims adjustments, or special one-time charges or credits based on business practices.

We will take note of when programs shifted from voluntary to mandatory enrollment or when programs shifted from fee-for-service to managed care. We plan to note for each program what specific population is included/excluded and which specific benefits are included/excluded in each geographic area. We will compare the encounter data, financial data, and adjustment data to peer



MCOs as well as access our large Medicaid and commercial data sets to act as a benchmark to assess the appropriateness of the data used.

a) Data Verification & Validation- as we review the data, we will develop a statistical sampling

model to guide our data requests to the participating MCOs. Once we have procured and

organized the data we will:

• review it against control totals for completeness,

• review it against other sources (e.g., State reports) for reasonableness,

• review across time and compare against other known trends,

• check the encounter data submissions for cleaning and processing to remove invalid data,

and

• compare data sets against one another. For example, we plan to reconcile the encounter

data to the health plan financial information submitted to the state, if available. We also

plan to validate against prior years of information for reasonableness.

As previously discussed, the expectation is true encounter data will be used for capitation rate

development starting in 2014. Based on our experience, using true encounter data will provide

a more consistent basis for rate development and provide the opportunity to complete more

comprehensive data validation procedures of the data submitted by MCOs. This should

improve the confidence in the rates developed by the MCOs due to the ability to strengthen

documentation requirements and validation procedures used to support the development of

the capitation rates.

b) Base Data Development- once data has been validated, we will gain an understanding of

which years and sources were used as the base data to develop rates at each MCO. We

will review the creditability of each data set, how long managed care has been in place, and

what type of managed care has been in place. The base data used in rate setting projects

can vary (e.g., a single data source or a combination offee-for-service, encounter, and

financial data). In most cases, MCOs blend several years and multiple sources together

(using different credibility weights and appropriate trends) to develop the base data set.

We will assess the appropriateness of the MCOs blending of these data elements.

Step 2 -Adjustments

Once the base data is prepared for each program, a series of adjustments is made to appropriately trend medical data into the future and to appropriately represent the required services for the applicable population. We will assess each MCO's approach to developing rate adjustments by comparing similar adjustments to other peer MCOs where available, comparing these adjustments to our Medicaid and commercial data set, and reviewing for



consistency with prescribed actuarial standards. Some sample adjustments that will typically

be reviewed include:

a) Payment Rate Adjustments. When legislative (or executive) action results in changes to

state FFS payment rates, it is necessary to adjust historical or future experience to reflect

such changes. We review the applicability of such adjustments to properly measure the

impact on managed care rates when adjustment is necessary. For example, not all FFS

payment adjustments need to trickle down to managed care capitation rates.

b) Policy Change Adjustments. Policy change adjustments are made to account for budget

actions through statutory changes. These projected changes in expenditures are due to

rate, benefit, or eligibility changes occurring after the base period. Adjustments are made

for any policy changes to bring historical data to the rate setting period. These adjustments are sometimes applied to both trended and base data. We assess these policy change

adjustments by comparing the factors across differing MCOs and to the State's own

estimates.

c) Population Change Adjustments. A population change adjustment is made when there is a

difference in the membership reflected in the base data and the current Medicaid

managed care program. Often this shift will result from an implementation of a waiver or

another change in the eligibility requirements. We will review the adjustment factors each

MCO used to the base data for appropriateness in reflecting the current Medicaid managed

care population. For example, if a program is moving from having voluntary enrollment to

mandatory enrollment into MCOs, we will review the adjustments each MCO made to the

data to reflect the change in the population served. This will be particularly applicable to

account for new Medicaid members due to health reform Medicaid expansion. The

Medicaid expansion population will have different risk characteristics and data will need to

be adjusted accordingly.

d) Managed Care Adjustments. Depending on the underlying base data and the State

program goals, an adjustment is generally needed to reflect the appropriate managed care

population if any FFS populations or services move to managed care. There are typically

several differences between the FFS Medicaid, voluntary managed care, and mandatory

managed care programs with respect to covered benefits, provider efficiency, and

reimbursement methods, mix of services, and utilization levels. These factors can have

large variances among differing MCOs based on their historical experience and their degree

of risk adversity. We will assess the managed care adjustments used by each MCO for



reasonableness and note potential outliers.

e) Trend. Our rating review process assesses the trend factors that adjust the base period

claims cost to the rate setting period (projection period). These trend factors incorporate

utilization, cost, and inflation components. We analyze the differences in trend between

eligibility groups, geographic regions, and service categories used across differing MCOs.

Similar to managed care adjustments discussed above, trend adjustments can vary widely

across differing MCOs. We will compare the trend used for different categories of service

as well as aggregated trend across the MCOs and to the State's own assumptions.

f) Other Adjustments. Additional adjustments may be required depending on other outside

forces that may vary year to year. For example, to account for the impact due to making a

methodology change such as moving to the use of true encounter data rather than

summarized data to complete capitation rate development. Off-line adjustments are often

overlooked or inadequately documented or supported. We will review these other

adjustments, if present, for adequate documentation and support.

Step 3- Risk Adjustment

The purpose of developing risk adjusted rates is to match MCO payments with the risk of their

enrolled population. Risk adjustment is highly dependent on timely and accurate encounter

data. Often, an MCO's encounter data system was built off of the plan's claims adjudication

platform and is not optimized for encounter data reporting. For example, many claims systems

do not require a diagnosis to be present in order to process a provider payment. In a case like

this, the claims system would generate an encounter but that encounter may not contain the

appropriate diagnosis code that drives the risk score under the state's risk adjustment

program. We will review MCO's documentation to assess the steps and procedures they have

in place to ensure that encounter data is being reported appropriately.

Step 4 - Reserves

States require an insuring entity to maintain sufficient reserve levels to ensure that the

insuring entity can meet expected and (reasonable) unexpected claim demands and remain

solvent. Most state regulating bodies are only concerned about the insuring entity having

sufficient reserves to cover expected claims and not so concerned if these reserves are too

large. In addition, the definition of excess reserve levels is often not well defined.

While MCOs maintain these reserves to meet both statutory and business operating

requirements, they generally have significant leeway in establishing the amount of reserves

they carry. As conservative business enterprises, MCOs often overestimate their reserve



needs. Any such over reserving directly contributes to higher capitation rates. We will review

the MCO's reserving methodology for appropriateness, consistency, and accuracy in addition

to assessing whether the reserving methodology is in compliance with generally accepted

accounting principles and actuarial standards.

Step 5 - Non-Medical Load {Administration)

The next step in our rate setting review process is to assess the fixed and variable

administrative expenses, as well as risk margin/profit for the MCOs for appropriateness. We

analyze these historical costs by MCO, program, and geographic region. We supplement this

Minnesota Medicaid-specific information with additional regional and national Medicaid

financial reports to determine the appropriateness ofthe non-medical load used by the MCOs.

It is important to take into account necessary changes to non-medical load- for example, as

contract requirements change or as the enrolled population changes.

Deliverables

Throughout the rate setting review process, we will update documentation outlining the

process and assumptions used. These notes will form the basis of our reports to the OLA.

Separate reports will be generated for:

• Review and assessment of MCO's reserves and liabilities,

• Evaluation of the MCO's administrative load including the appropriateness of expenses

and investment income used,

• Assessment of the MCO's encounter, claims, and other data reporting processes,

• Assessment ofthe State's rate setting approach for compliance with federal Medicaid

rate certification requirements.

Each report will describe our project approach, our assessment process, document the

approach and methodology used to set rates by the MCOs, and note any outliers or issues that

are revealed. Finally, we will assess the State's adherence to applicable actuarial standards

and CMS rate certification requirements and note any areas of possible non-compliance.

Our team will also be prepared to meet with OLA, the MCOs, and state agency representatives

as needed to describe our approach, findings, and conclusions. Additionally, we are available

to provide testimony on our findings with appropriate notice.

Time Line

Depending on data availability and issues uncovered during the review process, we expect the

typical rate review project to take six to eight weeks to complete. Our expected time line is

shown below:



Step

Kick-Off Mtg

Collect Data

Review Data

Review Adjustments

Review Risk Adjustment Data

Assess Reserves

Analyze Admin Loads

Write Reports

Deloitte Consulting LLP

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Page 26


4. Required Forms

Complete and submit the "'Affidavit ofNoncollusion;· which is Attachment A of this RFP. Any other written materials that are listed below under "'General Requirements" and that apply to you as the responder also must be completed and submitted.

This page intentionally left blank.



----------------------- --

STATE OF MINNESOTA AFFIDAVIT OF NONCOLLUSION

I swear (or affirm) under the penalty of perjury:

1. That I am the Responder (if the Responder is an individual), a partner in the company (if the Responder is a partnership), or an officer or employee of the responding corporation having authority to sign on its behalf (if the Responder is a corporation);

2. That the attached Proposal submitted in response to the Department of Human Services Request for Proposals has been arrived at by the Responder independently and has been submitted without collusion with and without any agreement, understanding or planned common course of action with, any other Responder of materials, supplies, equipment or services described in the Request for Proposal, designed to limit fair and open competition;

3. That the contents of the Proposal have not been communicated by the Responder or its employees or agents to any person not an employee or agent of the Responder and will not be communicated to any such persons prior to the official opening of the Proposals; and

4. That I am fully informed regarding the accuracy of the statements made in this affidavit.

Responder's Firm Name: Deloitte consuiZ LLP

Authorized Signature: ~ /1. h

Date: 8/22/2013

Subscribed and sworn to me this AA day of ~u:;} QID\3

\l~~'f!bag -hLp-~ i ~:atcL ~o aryP bhc

My commission expires: ) - ;3>)-.;2!:) ][ f2 "'


KATHRYN MARIE KORKOWSKI SIB.BET NOTARY PUBLIC-MINNESOTA Uy Commiision E~pires Jill. 31, 201 &

Page 28


Responders should review and understand OLA's standard contract terms and conditions in preparing their response. A sample Master Contract and Work Order contract are attached for reference. Much of the language reflected in the contracts is required by statute. Responders also should be aware that responder and all assigned staff who enter into a work order contract will be required to complete an OLA project independence form and may be subject to a criminal background check for each work order contract entered into. If you take exception to any of the terms. condition. or language in the contract, you must indicate those exceptions in your response to the RFP. Responders are cautioned that certain or material exceptions may result in your proposal being disqualified from further review and evaluation. Only those exceptions indicated in your response to the RFP will be available for discussion or negotiation.

By signing this form, I acknowledge that the above named Responder accepts, without qualification, all terms and conditions stated in this RFP except those clearly outlined as exceptions in Section 5 Contract Exceptions of this RFP response.

I I I Authorized signature: JL-11 JJJ__-Printed Name: Steven N. Wander

Title: Principal

Date: August 22, 2013

Telephone:



For all contracts estimated to be in excess of$100,000, Responders are required to complete and submit the "Affirmative Action Data" page (Appendix H). As required by Minn. R., part 5000.3600, "It is hereby agreed between the parties that Minn. Stat. § 363A.36 and Minn. R., parts 5000.3400- 5000.3600 are incorporated into any contract between these parties based upon this specification or any modification of it. A copy of Minn. Stat. § 363A.36 and Minn. R., parts 5000.3400- 5000.3600 are available upon request from the contracting agency."

-------

STATE OF MINNESOTA AFFIRMATIVE ACTION CERTIFICATION

If your response to this solicitation is or could be in excess of $100,000, complete the information requested below to determine whether you are subject to the Minnesota Human Rights Act (Minnesota Statutes 363A.36) certification requirement, and to provide documentation of compliance if necessary. It is your sole responsibility to provide this information and-if required-to apply for Human Rights certification prior to the due date and time of the bid or proposal and to obtain Human Rights certification prior to the execution of the contract. The State of Minnesota is under no obligation to delay proceeding with a contract until a company receives Human Rights certification

BOX A- For companies which have employed more than 40 full-time employees within Minnesota on any single working day during the previous 12 months. All other companies proceed to BOX B

Your response will be rejected unless your business: has a current Certificate of Compliance issued by the Minnesota Department of Human Rights (MDHR) -or-

has submitted an affirmative action plan to the MDHR, which the Department received prior to the date and time the responses are due.

Check one of the following statements if you have employed more than 40 full-time employees in Minnesota on any o;:ingle working day during the previous 12 months: It: We have a current Certificate of Compliance issued by the :MD HR. Proceed to BOX C. Include a copy of

your certificate with your response. 0 We do not have a current Certificate of Compliance. However, we submitted an Affirmative Action Plan to

the :MDHR for approval, which the Department received on (date). [If the date is the same as the response due date, indicate the time your plan was received: (time). Proceed to BOXC.

0 We do not have a Certificate of Compliance, nor has the MDHR received an Affirmative Action Plan from our company. We acknowledge that our response will be rejected. Proceed to BOX C. Contact the Minnesota Department of Human Rights for assistance. (See below for contact information.)

Please note: Certificates of Compliance must be issued by the Minnesota Department of Human Rights. Affirmative Action Plans approved by the Federal government, a county, or a municipality must still be received, reviewed, and approved by the Minnesota Department of Human Rights before a certificate can be issued.


Minnesota Office of the Legislative Auditor Audit and Actuarial Services RFP August23, 2013

BOX B- For those companies not described in BOX A

Check below.

0 We have not employed more than 40 full-time employees on any single working day in Minnesota within the previous 12 months. Proceed to BOX C.

BOX C- For all companies

By signing this statement, you certify that the information provided is accurate and that you are authorized to sign

on behalf of the responder. You also certifY that you are in compliance with federal affirmative action requirements

that may apply to your company. (These requirements are generally triggered only by participating as a prime or

subcontractor on federal projects or contracts. Contractors are alerted to these requirements by the federal government.)

Name of Company: Deloitte Consulting LLP ,

Authorized Signature: ~ ;1, ~~ Printed Name: Steven N. Wander

For assistance with this form, contact:

Minnesota Department of Human Rights, Compliance Services Section

Mail:

Web:

Email:

190 East 5th St., Suite 700 St. Paul, MN 55101

www.humanrights.state.mn.us

[email protected]


TCMetro:

Fax:

Date August 22, 2013

Telephone number:

Title: Principal

(651) 296-5663

(651) 296-9042

Toll Free:

TTY:

800-657-3704

(651) 296-1283

Page 31


/v1innf~<ool(l l)ep.-~rlrnr~nf ,,(

HUMAN RIGHTS

CERTIFICATE OF COMPLIANCE

DELOITTE CONSULTING, LLP is hereby certified as a contractor by the Minnesota Department of Human Rights. This certificate is valid from 2/15/2013 to 2/15/2015.

This certification is subject to revocation or suspension prior to its expiration if the department issues a finding of noncompliance or if your organization fails to make a good faith effort to implement its affirmative action plan.

Minnesota Department of Human Rights

FOR THE DEPARTMENT BY:

f-N·h Kevin M. Lindsey, Commissioner

AN FQI IAI OPPORTUNITY FMI'I DYm

r1l:em.1n Building " CJ23 Rob,,rl Stret•l North o S.1int l'<.tul, ,\t\ii'Hle!:~<.>t(l SS 1 S!i Tel 651.53~,.11 00 • l"J Y • Toll 1=ree 1.800.657.370·~ o I'· ax • W\\'\V.hurn<HHigh1$.$1c'tl(~.n,n.us



5. Contract Exceptions Minnesota Office of the Legislative Auditor

Request for Proposal

Qualified Contractors to Submit Proposals to Provide Actuarial Services

Deloitte Consulting LLP ("Deloitte Consulting") is pleased to submit this proposal to the Minnesota Office

of the Legislative Auditor ("OLA") in response to its Request for Proposal, dated July 29, 2013, (the "RFP") for the performance of certain consulting services. We believe, however, that certain of the provisions included in the RFP should be modified or clarified for this particular engagement.

Our experience has indicated that almost without exception we have been able to reach agreement with each of our clients that has awarded us an engagement. In the vast majority of these cases, we have had some concerns over the proposed terms and conditions included in the RFP. We are confident that our experience with OLA will be no different. We believe that the basis for this success lies in the benefit of the negotiation process which allows each party to understand the other's reasonable concerns. Deloitte Consulting reserves the right to negotiate clarifications, exceptions and additional provisions to meet the circumstances of the engagement as finally awarded.

Our proposal is being made subject to the condition that Deloitte Consulting and OFA subsequently reach and enter into a mutually agreeable definitive written agreement for the proposed services. We anticipate further clarification and discussion during negotiations to include, but not be limited to the following sections in the Proposed Terms: RFP Insurance Requirements, page 10; Master Contract, Section 1 Term of Master Contract; Section 2.2 Scope of Work- For the Actuarial Services Category; Section 3 Time; Section 4 Consideration and Payment; Section 5 Conditions of Payment; Section 7.1 Assignment; Section 8 Indemnification; Section 9 State Audits; Section 10 Government Data Practices and Intellectual Property; Section 12 Workers' Compensation and Other Insurance; Section 16 Payment to Subcontractors; Section 17 Termination; Section 19 Conflict of Interest; Section 20 Criminal Background Checks; Section 21 E-Verify Certification; Exhibit A Work Order Contract. Examples of additional provisions that would be proposed for inclusion in a final contract include, but are not limited to, limitation on damages, client responsibility, acceptance of deliverables, confidentiality, dispute resolution, force majeure, limitation on warranties, and subcontractors. If we are awarded this engagement, we intend to negotiate in good faith with OFA to reach such an agreement as expeditiously as possible.



Appendix - Resumes Steven Wander, FSA, MAAA, FCA Minneapolis, MN

Experience Summary

Over 20 years of experience serving several State Medicaid programs as a health actuary and leader ofDeloitte's Public Sector health actuarial practice Consulted with Health Maintenance Organizations (HMOs), large national health insurers, Blue Cross/Blue Shield plans, medical device companies, health care providers, Government agencies, and employers on issues such as Medicaid managed care implementation, health insurance exchanges, health reform, riskadjustment, Medicaid rate-setting and rate certification, and product development Most recent projects include health reform analysis and planning, health insurance exchange planning and implementation, risk adjustment implementation, Medicaid managed care expansion, Medicaid rate-setting and certification, and Medicare Advantage bid development and certification.

Special Qualifications

Principal - Deloitte Consulting LLP

Qualifications Summary -~~-- -------- - --- -~- -- ----~~--- ·-·- - ---- -----

• FSA, MAAA, and FCA

• Over 20 years of experience as a health actuary and leader ofDeloitte's Public Sector health actuarial practice

• Medicaid actuarial/rate-setting experience in 17

States throughout his career • Medicaid provider reimbursement experience

including physician fee schedule development and other fee schedule development such as inpatient hospital, outpatient hospital, durable medical equipment, behavioral health, and non-emergency medical transportation

• Implementation of risk-adjustment for Medicare, Medicaid, and commercial insurance programs

• Health Insurance Exchange planning support in four states including reinsurance, risk adjustment, and risk corridor programs

State of Texas Health and Human Services (HHSC) (7 years)- Lead Actuarial Principal supporting Medicaid related actuarial services and rate-setting. Performed a number of reimbursement-related projects over the past seven years, including the development and certification of capitation rates for the STAR+PLUS managed care programs, which include aged, blind, and disabled Medicaid enrollees and dual eligible members. These capitation rates include all Medicaid covered medical and nursing home services. Also performed an analysis of the risk sharing and risk-adjustment methodologies in the STAR+PLUS and STAR programs based on the Chronic Illness and Disability Payment System (CDPS) methodology. We maintain a data warehouse with over 10 years of claims-level data, including encounter, fee-for-service, primary care case management (PCCM), and cost report data for each of Texas' Medicaid programs. State of Maine Department of Health and Human Services (DHHS) (5 years)- Lead Actuarial Principal supporting Medicaid-related actuarial service and rate-setting. Provided rate-setting services for the State's proposed managed Medicaid programs by developing actuarially sound capitation rates and a data book. This data book included fee-for-service claims and enrollment data. Also performed an efficient delivery analysis on Maine's Medicaid program that included risk-adjustment based on the CDPS methodology to help the Department understand cost drivers, the population's health status, and health care needs at a more detailed level. In addition, helped DHHS move to a more consistent provider reimbursement methodology for hospital services within the Medicaid program that involved moving to DRG/ APC/ APG based reimbursements. Assisted with the development of a standardized approach to behavioral health provider reimbursement by conducting a comparative analysis and identifying proposed changes to simplify the reimbursement structure. Supported the maintenance of a data warehouse with over four years of MaineCare data covering over 4 million member months annually and over 40 million claim lines per year.



Indiana University (IV) Health Plans (14 years)- Lead actuarial Principal supporting IU Health Plans (formerly M-Plan and Clarian Health Plans) with rate-setting, actuarial, and provider reimbursement services. Responsibilities included annual preparation and certification of Medicare Advantage bids; creating the bid tools and preparing actuarial documentation and certification; and analysis of historical claims data to ensure accuracy of data submitted for Medicare HCCrisk-adjustment. Conducted chart reviews to identify the potential for capturing additional diagnosis codes and determining potential revenue opportunities due to risk score improvements. Also developed a risk-adjusted network capitation model for the client based on the DxCG risk-adjustment model and helped them move their existing data warehouse from a PC environment into a non-relational Oracle environment. This included cleansing and standardizing the data and developing a consistent methodology for counting utilization and grouping data into common service categories. State of Indiana, Family and Social Services Administration -Lead actuarial specialist helping FSSA to determine the best approach to implementing a Health Insurance Exchange required by PPACA by performing a gap assessment. This project included an analysis of the PPACA legislation specific to the Exchange to define the business functions required to support the Exchange implementation and operations. We also developed the reference Exchange technology operating model that was used during the assessment. Actuarial support included advice and analysis regarding reinsurance, risk-adjustment, and risk corridors. Wisconsin Department of Health and Human Services: Developed a functioning health insurance exchange prototype which simulates a health insurance exchange customer portal including data exchanges, eligibility and comparing health plans. Actuarial support included advice and analysis regarding reinsurance, risk-adjustment, and risk corridors.

Professional Experience

Deloitte Consulting LLP, Principal, 1997 -Present Towers Perrin Health Care Consulting, Actuarial Consultant, 1991- 1997 Western Life Insurance Company, Assistant Actuary, 1990 -1991; Small Group Health Insurance Actuary

Education and Certifications

Bachelor of Mathematics- University of Minnesota, 1990 Fellow of the Society of Actuaries (FSA) Member of the American Academy of Actuaries (MAAA) Fellow of the Conference of Consulting Actuaries (FCA)



Christopher Schmidt, FSA Minneapolis, MN

Experience Summary

More than II years of health care actuarial experience and heaithcare claims data anaiytics, including Medicare, Medicaid, and dual eligible rate-setting Significant experience warehousing large Medicaid, Medicare, and Commercial data sets and performing a wide array of data mining and data analytics Experience developing Medicaid managed care capitation rates and benchmark PMPM rates for dual eligible and Medicaid only members Significant experience both developing and reviewing actuarially sound Medicare Advantage and Medicare Part D rates including rates for Special Needs Plans and dual eligible members Experience performing risk score calculations and applying risk score adjustments to claims data


Texas HHSC (2 years)- Mr. Schmidt provided the Texas HHSC with Medicaid capitated managed care rate-setting for dual eligible and Medicaid only members. He was the Project Manager responsible for assisting the State Medicaid program in calculating actuarially sound capitation rates and developing a rate book for the Texas

Specialist Leader - Deloitte Consulting LLP

Qualifications Summary ··----~--~ ----·--~·~-....-- -------~~- ·-- -~---~----,...------

• More than II years of experience as a health actuary and in performing data analytics

• Medicaid actuarial/rate-setting experience including dual eligible rate setting

• Significant experience with integrated programs for dual eligible members including cost-savings studies and rate setting

• Experience developing and reviewing Medicaid capitated rate books

• Medicare Advantage and Part D bid development including Special Needs Plans with dual eligible members

• Medicare Advantage and Part D bid review services for CMS, including the review of Special Needs Plans for dual eligible members

• Risk-adjustment experience for Medicare, Medicaid. and commercial insurance programs

• Financial soundness analysis of Medicaid health plan

• Significant experience warehousing and working with large Medicaid, Medicare, and commercial claims data sets

STAR+PLUS program, which provides integrated acute and long-term care to eligible individuals in specific service areas. The rates were based on a blend of FFS, encounter, and fmancial data. The team reviewed the Texas STAR, STAR+PLUS, and CHIP rate-setting methodology, and compared the mechanics of these various programs to the methodologies employed by other States in order to verify proper usage of available data and maximize State savings. He provided 1915(b) waiver support and performed a State budget impact evaluation for the expansion of the STAR+PLUS program and the ICM program.

The team collected, loaded, warehoused, and verified the reasonability of several years of STAR and STAR+PLUS encounter data and FFS/PCCM data sets comprised of approximately 36 million annual TANF, SSI, ABD, and dual eligible member months. His team also resolved issues related to inconsistent encounter data from managed care vendors, incorrect or inconsistent coding from year to year, and non-standard service category mappings and utilization metrics. CMS (6 years)- Project Manager responsible for assisting CMS in reviewing Medicare Advantage and Medicare Part D bids for years 2006 through 20 II. Reviewed bids submitted by numerous plans and evaluated the actuarial soundness of the development of allowed costs, administrative expenses, risk and demographic scores, gain/loss margins, enrollment projections, and other areas. This included the review of Special Needs Plan bids and bids with dual eligible members.

Assisted CMS with the development of the suggested methodology for State Medicaid managed care programs to follow in order to claim l 00% Federal match on increased Medicaid payments for primary care services to eligible primary care providers. Assisted CMS with the review of the methodologies provided by the State and commented on the adequacy of the proposed methodology or the need for followup questions. As part of this project, we reviewed the Medicaid managed care rating documents and actuarial certifications for over 30 states.



State of Maine Department of Health and Human Services (DHHS) (2 years)- Assisted the State of Maine in developing a methodology for developing a provider specific benchmark cost PMPM for their Accountable Communities program using a methodology mirroring Medicaid managed care capitation rate setting. This methodology was based on previous rate setting experience, the CMS rate setting checklist, and Actuarial Standards of Practice. We helped define how the benchmark cost PMPM rates would be set and how members would be attributed to specific Accountable Communities. Have also assisted the state with developing fee-for-service rates, IBNP analysis and ICD-10 reimbursement impact analysis. Virginia Hospital and Healthcare Association (VHHA) (2 months)- Assessed opportunities in which improved care coordination for dual eligible members could elevate quality and lower health care costs. Gained experience with dual eligible system reform and analysis. Analyzed Medicaid claims data provided by Virginia's Department of Medical Assistance Services. Performed data analyses of dual eligible and Medicaid-only members support VHHA's effort to identify: 1) the gaps between current care and bestpractice care patterns, 2) the variance of those gaps among providers and regions within Virginia, and 3) the potential net savings of improving care coordination for Medicaid and Medicare. Minnesota Departments of Health and Commerce (6 months)- Project Manager responsible for analyzing data received from the Minnesota DHS and a Medicaid health plan to better understand the current and future financial position of the Medicaid health plan. The analysis included a review of cash

flows, an evaluation ofiBNR estimates, and a summarization of observed claim trends. Gained experience in Medicaid health plan fmancial analysis. Was also a member of an Advisory Group with the Department of Health to make recommendations on the development of consistent guidelines and reporting requirements, including development of a reporting template, for health maintenance organizations and county-based purchasing plans that participate in publicly funded programs. BlueCross BlueShield Northern Plains Alliance (2 years- 2006 and 2007 bid years)- Project Team Lead responsible for assisting in the analysis, rate development, bid process, and offering of Medicare Advantage PPO products and Medicare Part D products for a group of Blue Cross Blue Shield plans. Gained experience in MA and prescription drug plan rate development. Helped the client with bid strategy development of the MA PPO and Medicare Part D product offerings, including rate-setting assumptions and adjustments such as trend and risk scores. Assisted with the creation of three-year pro forma fmancial projections to assess the profitability of the Medicare products, and with the development of Medicare Advantage and Medicare Part D Special Needs Plan bids for the Minnesota Senior Health Options (MSHO) dual eligible population. University Health Care, Inc. (UHC) (2 years)- Project Manager responsible for assisting UHC with analysis of the Medicaid data book, rate development and actuarial certification. Analyzed the data book and rate development and provided feedback, questions for clarification, and possible issues with rate calculations. Assisting in negotiation of rate development questions and issues with the State.


Deloitte Consulting LLP, Manager, 08/2001- Present


BA, Financial Management, University of St. Thomas, 200 I FSA MAAA



Jim Hardy Seattle, WA

Experience Summary

More than 25 years of Medicaid experience; former Pennsylvania Medicaid Director Extensive Medicaid managed care experience, including program design, rate-development, and rate-negotiation Created Medicaid managed care quality incentive program in Pennsylvania Currently assisting State ofNew Hampshire in the implementation of a Statewide, implementation of Statewide Medicaid program for all populations including the dual eligible members' Medicaid managed care program


Specialist Leader- Deloitte Consulting LLP

Qualifications Summary ~-~·~----- e•-- ~---· -~-·--v•,.,-: •r• -·~--.-,.,. -• ----· -~-...--,.,

• lO years of risk-adjustment experience

• 15 years of rate development experience

• 10 years of experience with Quality Incentives and Pay for Performance programs for Medicaid managed care

• Former Pennsylvania Medicaid Director

• Responsible for Medicaid managed care program for 1.2 million consumers, including dual eligible individuals

• Worked on Medicaid issues in 19 States

New Hampshire Department of Health and Human Services (2011 -Present)- Project leader for team supporting Statewide Medicaid managed care expansion. Assists with program design, RFP development, model contract development, quality incentive program development, and payment reform incentive program development. Currently assisting with program design which will add waiver and long-term care services to the managed care program. State of Kansas (1 year)- Assisted State with implementing stakeholder engagement process to inform program design for Statewide expansion of Medicaid managed care. Project also included high-level analysis of managed care options for dual eligible populations. Maine DHHS (1 year)- Project Leader supporting program design of Statewide managed care strategy. Assisted with drafting sample RFPs, program design for complex populations including dual eligible populations, rate-development strategy, and quality incentive program design. State of Minnesota (1 year): Assisted State with implementing a competitive rate bidding program for the State's Medicaid managed care program. Commonwealth of Pennsylvania ( 4 years)- Medicaid Director and Director of FFS operations and Medicaid Policy for Pennsylvania. Oversaw Medicaid managed care program for 1.2 million consumers, oversaw rate development activities and led rate negotiations with managed care plans. Implemented managed care quality improvement incentive program. Oversaw transition of enrollment of dual eligible individuals into SNPs. 15 years of experience assisting managed care plans in numerous States in their rate negotiations with State Medicaid programs.


Deloitte Consulting LLP, Specialist Leader, 07/2010- Present McKesson Health Solutions, General Manager, 07/2008-07/2010 Sellers Dorsey, Associate, 02/2007 - 6/2008 Commonwealth of Pennsylvania, Medicaid Director, Director of Fee Service Operations and Policy, 09/2003 - 2/2007 JLH Enterprises, President, 0111997- 09/2003 S. R. Wojdak and Associates, Managing Partner, 01/1990-12/1996


BA, University ofPennsylvania, 1977



Timothy FitzPatrick, ASA, MAAA Minneapolis, MN

Experience Summary

More than twelve years of public sector healthcare experience; has worked with State governments, employers, and provider groups on issues such as fmancial analysis, project management, benefit design, reimbursement strategy, waiver support, and rate-setting Rate-setting and other financial experience gained on projects with several Medicaid programs, including those in Massachusetts, Maine, Minnesota, Missouri, Ohio, Pennsylvania, South Carolina, Texas, and Virginia

Senior Manager- Deloitte Consulting LLP

Qualifications Summary ·~--- --- ~-- ~~~---·- ~ ~- ·-·~"' ~,- -.-c-~·~- ~--r -~--~-,..,--~-~~

• ASA and MAAA

• More than 12 years of experience leading teams performing fmancial analytics on Medicaid programs, including managed care rate-setting and strategic analyses

• Supported rate development for integrated Medicaid programs, including dual eligible members and PACE programs

• MA and Part D bid development for managed

care organizations • MA and Part D bid review for CMS

Demonstrated ability leading teams in assessments,

options development and analysis, vision and strategy development, and implementation planning More than 12 years of experience developing • Pro~ided Medicaid reimbursemen~ strategy Medicare and Medicaid rates, including pharmacy, services to States, plans, and providers managed care, PCCM, FFS, and non-emergency medical transportation programs


State of Texas Health and Human Services (HHSC) (8 years) - Currently leading project providing strategic and analytical support for a variety of reimbursement reform initiatives. Responsible for developing flexible projection models to aid the State in understanding the impact of national healthcare reform on Medicaid reimbursement. Support several Medicaid initiatives, including managed care ratesetting, inpatient savings analysis, waiver support and fmancial development, hospital reimbursement reform impact analyses, uncompensated care study, supplemental payment (i.e. disproportionate share and upper payment limit) modeling, non-emergency medical transportation rate-setting, procurement support, and data warehousing. Helped the State successfully receive approval and implement a Medicaid waiver that allows them to expand their Managed Care program statewide and provides the ability to payout up to $29 billion for uncompensated care and care improvement opportunities over the 5 year waiver period. Maine DHHS (2 years, 6 months)- Currently the health actuarial client lead, supporting Medicaid reimbursement analyses for the State. Helping the State transition their Medicaid program into a share savings program designed to improve quality and cost of care by paying for performance and increasing transparency. Working with the State to implement their Accountable Communities program, which is an ACO-like program, by providing actuarial cost projections and conducting attribution analyses. Provided procurement support and calculated actuarially sound capitation rates for the non-emergency medical transportation program. CMS (9 years)- Team lead for Deloitte's CMS bid review project, responsible for reviewing Medicare Advantage and Medicare Part D bids from 2006 through 2014. Project includes reviewing bids submitted by numerous plans. This initiative evaluates the reasonableness of the development of all areas of the bid including, but not limited to, the development of allowed costs, administrative expenses, risk and demographic scores, gain/loss margins, and enrollment projections. In addition, developed tools to simplify the review process and provided recommendation to CMS as to whether or not the bids were actuarially reasonable. State of Minnesota Department of Human Services (DHS) (8 months)- Supported the State with a competitive procurement for healthcare services under their Medicaid managed care programs. Provided consultation on the structure of Minnesota DHS' competitive procurement, including establishing criteria for the RFP language, evaluating the cost bids, and making recommendations regarding development of the data book components. Also worked with Minnesota DHS to understand the potential impact and approach for applying their innovative employee health program, Advantage, to the State's Medicaid programs. In



addition, developed a proposed approach for, identified the considerations and potential obstacles of, and projected the high-level savings of implementing a tiered network concept in their Medicaid programs. State of Minnesota Management and Budget (MMB) (9 years)- Developed pricing tools and underwriting strategy for a healthcare program sponsored by the State for public employees. Produced underwriting quotes, renewals, and fmancial reporting for the program on a monthly basis. In addition, worked with the State to determine the underwriting strategy and rate recommendations for larger groups. Data Validation and Warehousing (10 years)- Responsible for the collection, loading, and verification of the reasonability of supporting data used in our analyses for each of the projects listed above, as well as others. These large data sets were loaded to our Deloitte data server. As part of our data warehousing process, we have resolved issues related to inconsistent encounter data from managed care vendors, incorrect or inconsistent coding from year to year, and non-standard service category mappings and utilization metrics.

Experience Prior to Deloitte (4 years)

Medicaid Reimbursement Projects: Validated, cleansed, and utilized Medicaid data sources for data analytics and reporting Developed rate-setting methodologies based on FFS data, fmancial reports, and encounter data for the State of Missouri, State of Ohio, and Commonwealth of Pennsylvania Developed trend projections, analysis of claims run-out, and estimation of programmatic changes Established credibility of the MCO fmancial reports by reviewing and monitoring premiums and claim experience. Performed fmancial review of Health and Productivity Management vendors

Pharmacy-Related Projects: Managed maximum allowable cost pricing and list development for Medicaid programs. Assisted in performing a clinical pharmacy audit including review of copay structure, clinical programs, and preferred drug list.

Insurance-Related Projects: Implemented pricing actions necessary to achieve loss ratio and competitive goals. Reviewed premium and loss data, expenses, rating plans and programs; industry data; exposure; frequency, severity and pure premium trends; rating laws and regulations; and competitors' rates. Produced Large Loss Study, Loss and Claim Development Study, Expense Analysis and Rate Review. Enhanced and produced reports to understand the impact of underwriting and pricing actions.


Deloitte Consulting LLP, Senior Manager, 2004- Present Mutual Services Insurance Company, Actuarial Analyst, 1999-2001 Mercer Government Human Services Consulting, Actuarial Consultant, 2001 - 2004


BS, Mathematics, University of Minnesota, 1999 ASA MAAA



Jeffrey Smith Phoenix,AZ

Experience Summary More than thirty years of experience specializing in proving strategic and fmancial consulting services for health reform planning initiatives and public sector programs, including Medicare, Medicaid, and national health insurers. Served as lead consultant to New York Medicaid in the design, development, implementation, and operation of the Partnership Plan including waiver development and submission, capitation rate certification, health plan procurement, and reinsurance design. Designed, developed, andloperated Medicaid risk

adjustment programs in 10 states including New York. Served as State Medicaid Practice Leader for nationally recognized public sector consulting firm overseeing all aspects of staffmg and client service delivery Served as Actuarial Practice Leader for two nationally recognized Medicaid consulting fmns and oversaw capitation rate certification for over half the nation's Medicaid programs. Served as VP Finance for nation's largest Medicaid health plan and oversaw all actuarial, risk adjustment, and reinsurance operations. Assisted the CMS in reviewing MA and Part D bids.


Specialist Leader- Deloitte Consulting LLP

Qualifications Summary for Financial Alignment

Actuarial and Rate-setting Services -..----~~--- ---~-------- -- --,~-~~-~ .... ---~~--~-~

Thirty years of health insurer, Federal, and State government experience including HHS, CMS, and Medicaid including New York

Actuarial Practice Leader at two nationally recognized public sector consulting firms overseeing Medicaid capitated rate certification and risk adjustment implementation

Comprehensive program management experience across

multiple large-scale engagements

Experience conducting detailed research and medical cost analysis, pricing support, data validation, IBNR analysis, Medicaid managed care, cost containment, and policy impact studies

Experience with health reform planning and implementation

Medicaid experience in AL, AZ, CA, CO, CT, DC, DE, FL, GA, IL, IA, KY, ME, MD, Ml, MN, MO, MT, NE, NJ, NM. NY, NC, OH, OK, OR. PA, RI, SC, TN, TX, VT, WV, WI, and CMS.

New York, DOH, Partnership Plan (10+ years)- Jeff served as the lead actuarial consultant to New York's Medicaid during the development of the Partnership Plan. Jeff provided strategic planning and actuarial modeling support for the 1115 waiver submission. After CMS approval was obtained, Jeff led the actuarial team providing actuarial consulting support to develop capitation rates, conducted stakeholder meetings, and negotiated with health plans on behalf of the State. Jeff also served as the lead consultant to DOH in the development of New York's risk adjustment program for Medicaid. He and his team worked with State staff to design the methodology, assess and modify the data collection process, developed data testing procedures, conducted "Dry Runs" of the risk adjustment process, held stakeholder education sessions, certified the resulting risk adjusted capitation rates, and provided ongoing actuarial and consulting support. New Jersey, DFYS, Medicaid, (10+ years) Jeff oversaw the actuarial team that assisted DFYS with the development, implementation, and on-going operation of the Medicaid managed care program; oversaw the development of the program waiver calculations and negotiations with CMS; developed the capitation rate methodology used; met with prospective MCOs to explain the upcoming managed care program; developed the RFP and scoring tool used to procure MCOs for the program; conducted the competitive procurement ofMCOs; negotiated fmal rates with MCOs; oversaw the development of the MCO fmancial reporting tool; oversaw MCO readiness, operational, and financial reviews; led the development, implementation, and ongoing operations of the risk-adjustment methodology used by the Medicaid managed care program including encounter data submission requirements; provided strategic and operational consultation on the development ofNJ's CHIP program. Georgia, DCH, Medicaid/CHIP, (7 years) Jeff led the consulting team working with DCH staff to develop, implement, and provide on-going support of Georgia's Medicaid managed care program in the Atlanta metropolitan area; He oversaw the development of the program waiver calculations and



negotiations with CMS; developed the actuarially sound capitation rate methodology used; met with prospective MCOs to explain the upcoming managed care program; developed the RFP and scoring tool used to procure MCOs for the program; conducted the competitive procurement of MCOs; negotiated final rates with MCOs; oversaw the development of the MCO fmancial reporting tool; oversaw MCO readiness, operational, and financial reviews; provided strategic and operational consultation on the development and implementation of GA's Peach Care (CHIP) program; worked with the Georgia State Health Policy Center to analyze potential program, operational, and cost-savings of the introduction of a managed LTC program for the governor; consulted to the budget office on budget revisions reflecting the implementation of Medicaid managed care; and assisted in the development and implementation of a DRG-based hospital reimbursement system to replace the cost-based system. Florida, AHCA, Risk Adjustment (3 years)- Jeff worked with the Florida Agency for Health Care Administration (Medicaid) to design, develop, implement, and operate the risk adjustment model used in Florida's Medicaid Reform waiver. Jeff met with State legislators to provide education on risk adjustment, assisted legislative staff in draft enabling legislation, consulted with AHCA on the design and operation of various risk adjustment models, test the supporting data, and developed the fmal risk adjustment methodology adopted. Because of the unique situation Florida found itself in regarding its encounter data system, Jeff designed the nation's first risk adjustment methodology based solely on pharmacy claims. He conducted education sessions for health plans and AHCA staff and represented AHCA at monthly Technical Advisory Group meetings. Pennsylvania, DPW, Risk Adjustment (10+ years)- Jeff was the lead consultant to the Department of Public Welfare (DPW) in its implementation of risk adjustment. Jeffworked with DPW staff to examine the various risk adjustment models available, assess their merits, and choose the one most appropriate for Pennsylvania. He also reviewed and tested the supporting encounter data and recommended changes in the Commonwealth's data collection practices to strengthen data accuracy, tested the risk adjustment model, ran "Dry Runs" to share with Medicaid health plans, conducted stakeholder education, met with CMS to obtain approval for the approach, and calculated the risk scores. North Carolina, DMA, Medicaid (10+ years)- Jeff led the consulting team that worked with DMA on a variety of strategic and actuarial projects. Jeff oversaw the development and certification of the capitation rates for the Mecklenburg Managed Care program. He work with DMA staff to develop the Community Care of North Carolina program and conducted annual analysis of program cost savings for the State's legislature. Jeff conducted an Efficient Network analysis for DMA that used the ERG risk assessment model to determine potential savings under different Medicaid provider network assumptions.


Deloitte Consulting LLP, Specialist Leader, 02/2012- Present The Lewin Group, Senior Vice President, State Medicaid Practice Leader, 03/2010-02/2012 AmeriChoice, Vice President, Finance- 12/2007-03/2010 Mercer Consulting, Principal- 05/1985- 12/2007 General American Life Insurance Company, Underwriter- 0111981-05/1985


BS, Finance, Arizona State University, 1980



William Eichman, FSA, MAAA San Francisco, CA

Experience Summary

More than 24 years of experience as a health actuary Focus includes both fmancial reporting and healthcare pricing, ranging from standard ratesetting projects to complex Pay-for-Performance (P4P) engagements, including product development, plan design, pricing and capitation, provider reimbursement, and provider quality metrics Experience includes numerous assignments related to risk-adjustment, health reform, health insurance exchanges, and product development Experience includes developing and certifying Medicaid rates, including PCCM programs, PACE and pre-PACE programs, and both voluntary and mandatory Medicaid managed care programs over the past 13 years

Senior Manager - Deloitte Consulting LLP

Qualifications Summary _____ ,.,. __ --- -- --. --~- . -- . ~ __ .,.....,.. ___ ~ ~- -- ... -~~ ~-~~

• More than 24 years of experience as a health actuary

• Experience in 23 States working on Medicaid

programs

• Extensive experience across Medicare, Medicaid, and Commercial populations in 42 States

• Certified Medicaid managed care rate in five States

• Developed and certified MA dual eligible rates in 13

States

• Assisted Medicaid Agencies and/or PACE plans with rate-setting in five States

• Member of the AICP A

Extensive professional experience with the delivery and fmance ofhealthcare services under both private and public sector products, covering the commercial, Medicare, and Medicaid populations Experience over the course of professional career providing services across a wide array of clients, including insurance companies, health plans, employers and State governments across the country Member ofthe American Institute of Certified Public Accountants (AICPA) with both professional accounting and financial management experience


Total Community Options ( 4 months)- Provided assessment of appropriate rating methodologies for PACE programs. Worked with the client and the State ofCalifomia to present these recommendations for the State's consideration. Capital Blue Cross of Pennsylvania (2 months)- Built a business case framework to assist the client in developing their recommendation to management regarding future entry into the Medicaid market. Engagement team built a five year actuarial analysis of revenue and expenses that incorporated estimated medical and administrative costs for the Medicaid populations included in the client's service area for Pennsylvania's Medicaid managed care program. Texas HHSC (3 years)- Developed and certified managed care rates for the STAR+PLUS dual eligible medical/long-term care program. Measured inpatient cost savings resulting from vendor administration of the State's Intensive Care Management (ICM) and STAR+PLUS programs, including measurement of the associated performance incentives/penalties. Provided Medicaid Expansion Waiver Support, including development of an Uninsured Benefit Pricing and Take-up Model. Arcadian Health Plan (5 years)- Developed MA pricing for both dual eligible SNP plans and non-dual eligible plans. Responsible for the assessment of potential profitability of new markets being considered by the company. In addition to product pricing, assisted with the development of insurance liabilities on an ongoing basis, including filing of actuarial opinions regarding the liabilities reported by the company. Salud!, New Mexico Medicaid Program (4 years)- Developed actuarially sound (certified) rate ranges for use by Salud! Program in negotiations with MCOs. Actively involved in contract negotiations with Salud!'s three MCOs, including thorough review ofMCO fmancial Statements. Assisted Salud! staff with 1915 Waiver filings. Assisted Salud! staff with budgetary impact analysis of proposed programmatic changes. Regularly provided other related actuarial services. New York Medicaid Program (3 years)- Developed actuarially sound (certified) rate ranges for use in mainstream Medicaid program, as well as expansion Family Health Plus (FHPlus) program. Reviewed



troubled MCO financial Statements to assist State in identifying operational changes that could improve MCO performance (both profit and quality) North Carolina Medicaid Program (3 years)- Developed actuarially sound (certified) rate ranges for use in Mecklenburg managed care program. Assisted State staff with 1915 Waiver filings. Assisted State staff with budgetary impact analysis of proposed programmatic changes. Lead a project to assess the opportunity for program quality improvement and State cost savings by implementing a P4P program for primary care physicians within the PCCM program (Statewide). Regularly provided other actuarial services. Humana, Inc. Benefit Design, Broward County Medicaid Demonstration Program (3 months)Developed models to assess the cost impact to Humana, Inc. of various benefit designs within Florida's demonstration Medicaid program, located in Broward County. This demonstration program introduced aspects of consumerism into the Medicaid program. Modeled 20 different scenarios in helping Humana staff identifY the allowable mix of benefits they intended to offer within the demonstration program. Benefit designs varied significantly between the T ANF and SSI populations. Phoenix Children's Hospital (PCH), Children's Rehabilitative Services (CRS) Program (8 months)Led a project to assist PCH in preparing to participate in the capitated Arizona CRS program. Modeled anticipated utilization measures for the CRS population to help PCH identifY resource needs for the proposed contract period. This included a clinical assessment of their network capacity to accept this risk. In addition, the engagement team assisted PCH in identifying third-party administrators to provide emollment and claims adjudication/payment services, as well as producing significant portions of the RFP for these services (on behalf of PCH). In addition, began development of cost models to assist PCH with their bid submission to the AHCCCS, before the project was delayed due to a change in the State's procurement process.


Deloitte Consulting LLP, Senior Manager, 04/2007- Present Reden & Anders, Senior Consultant, 06/2005 - 04/2007 Blue Shield of California, 04/2004 - 06/2005 Mercer Human Resource Consulting, Associate, 0711999 - 04/2004 Pima Capital Co., Assistant Controller, 0311996-0711999 Milliman, Consulting Actuary, 1211987-03/1996


BS, Actuarial Science, University of Illinois, 1987 MAAA FSA Member of the AICP A



Timothy Egan Minneapolis, MN

Experience Summary

More than eight years of consulting experience working with State and Federal Governments, health plans, employers and provider groups Experience in a variety of projects including Medicaid reform analysis, 1115 and 1915(b) waiver development, Medicaid non-emergency medical transportation rate setting, Medicaid RFP development and proposal reviews, Medicaid benchmarking and plan design analysis, data warehousing state government and Medicaid data, Medicare Part D bid reviews, and small and large group underwriting Current project manager for PEIP overseeing daily underwriting and program strategy support Tim has worked closely with the State of Texas HHSC over the past three years managing multiple Medicaid reform initiatives Breadth of fmancial analysis and modeling experience gained through a variety of actuarial Medicaid initiatives Significant experience with large Medicare, Medicaid, state government, and commercial datasets, including data warehousing and data validation services

Special Qualifications Specific to F AARSS Tasks

Texas HHSC (3 years, ongoing)- Currently the Project Manager supporting a variety of Medicaid reform initiatives. Actuarial support includes 1115 waiver support and financial development, Medicaid Benchmark plan design analysis,

Manager - Deloitte Consulting LLP

Qualifications Summa1·y ~-~ ~ -- .. -- ~~ - ~ -- ~ ~- -~-- --~- ------------

• Current Project Manager for Texas HHSC supporting a variety of health actuarial initiatives related to health care reform and fmancial implications of the Medicaid program

• Oversaw the development of fmancial projection models to successfully implement a 1115 Medicaid waiver in Texas to expand their managed care program while maintaining supplemental payment funds

• More than seven years of experience managing annual CMS MA and Part D bid reviews

• Current Project Manager for PEIP responsible for overseeing daily underwriting, fmancial support, and program strategy services

• Significant experience working with large Medicare, Medicaid, state government, and commercial datasets including data warehousing and data validation

• Breadth of experience developing actuarial projection models to estimate the fmancial impact of Medicaid reimbursement strategies and MA bid strategies

• Responsible for the development of financial models to replicate Medicare's Inpatient Prospective Payment System (IPPS) against a large national health plan's claims data

Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL) payment modeling, nonemergency medical transportation rate-setting, procurement support, and data warehousing. Recently assisted the State with developing and implanting an 1115 Medicaid waiver which allowed them to expand Medicaid managed care statewide. Currently supporting the State in the waiver implementation including development of reporting tools, actuarial analysis, and strategy support. CMS (7 years, annual basis)- Team Lead and Program Manager for Deloitte's review of the CMS MA and Medicare Part D bids. Services include reviewing bids submitted by health plans to determine the actuarial reasonableness of the bid development, and the development of allowed costs, administrative expenses, risk scores, gain/loss margins, administrative expenses, and enrollment projections. In addition, provides support for the development of internal review tools and provides recommendations of whether the bids are passing CMS defined thresholds. MMB (7 years, ongoing) - Currently the Project Manager supporting monthly actuarial and underwriting strategy services for the State's Public Employee Insurance Program (PEIP). Services include underwriting quotes, renewals, fmancial analysis, and data warehousing. Also assists in the development of underwriting strategies and two-year fmancial projection models which model future revenue and claims projections for the public employee's groups. Blue Cross Blue Shield of Michigan (BCBSM) (7 years, annual basis)- Currently manages actuarial staff in the annual review of actuarial Incurred But Not Reported (IBNR) claim liabilities. This process involves analyzing client claims and enrollment data using internal Deloitte models which incorporate a



variety of calculations such as historical trends, historical completion factors, paid claim Per Member Per Months (PMPMs), program seasonality, payment day adjustments, and claim outlier adjustments. Other duties include managing the review of other actuarial liabilities including Premium Deficiency Reserves, Supplemental Liabilities Reserves, and MA and Medicare Part D reconciliation liabilities.


Deloitte Consulting LLP, Manager, 06/2004 -Present


BS, Mathematics, University of Minnesota, 2005 BS, Economics, University of Minnesota, 2005 Pursuing certification as an FSA, and has successfully completed six of the required exams

Author for the Tasks

Task 4 - Capitated Rates Task 6 - Preliminary Modeling



Jonathan Herschbach, ASA, MAAA Minneapolis, MN

Experience Summary

Over eight years of experience as a health actuary Breadth of health care experience consulting for state government, federal government, and employer health plans


Government Employer Health Plan- Manage a risk-adjusted cost efficiency analysis to create a tiered provider network for a large employer plan consisting of 3 health plans and 50-60 provider groups.

Senior Consultant- Deloitte Consulting LLP

Qualifications Summary - ----~ -·-- ----- -- ---....-. ----- ~~~ ~- -------------- .. --,--

ASA,MAAA

Experience on healthcare industry topics such as ICD-1 0, Medicare Part D, Marketscan data, data warehousing techniques, database management, data analytics, risk-adjustment methods and software, model building and cost efficiency analysis. Expert knowledge of SQL, DxCG, ACG, and HCC risk adjustment, and database management tools

Government Employer Health Plan- Format raw data and warehouse it onto a SQL server on a monthly

basis. Analyze this data for year-end renewal purposes as well as various ad hoc reports. Medicare Part D Health Plans - Developed premiums for Part D plans, created a dynamic tool that would fill out CMS bid tool in order to submit bids for- 50 Part D plans. Various Health care Payers -Assist in analysis of incurred but not paid reserves for both audit and certification purposes. Including claim, contract, benefit, and premium deficiency reserves. Large National Health Plan -Remediation of I CD-I 0 transition issues related to provider contracting by building simulated ICD-10 re-pricing models to assess the fmancial impact ofiCD-10 as well as assisting in the collaboration with providers' natively coded ICD-10 inpatient claims.


Deloitte Consulting LLP, Senior Consultant, 2005- Present


Master of Science- Pharmaceutical Chemistry, University of Wisconsin- Madison Bachelor of Science- Chemistry and Mathematics, University of Minnesota- Duluth Associate of the Society of Actuaries (ASA) Member of the American Academy of Actuaries (MAAA)



Scott Peters Senior Consultant- Deloitte Consulting LLP

Minneapolis, MN

Experience Summary

Five years of actuarial experience. Experience working with state governments, employers, provider groups and a variety of health plans on issues such as financial analysis, benefit design, reimbursement strategy, waiver support and rate setting. Recent experiences include working on a ACA risk adjustment program simulation, Medicaid 1915(b) and 1115 strategy and support, Medicare bid development review, hospital reimbursement reform, benefit pricing, developing fmancial analyses used in budget forecasting, rate filing reviews, and ICD-10 fmancial neutrality analysis and strategy development.

Qualifications Summary ,.~....,-~, •-•-----~--~-rr- ----~--~~--- ------ ---..............,~--~--

o 5 years of experience as an actuary in consulting for both health plans and public sector clients

o ACA risk adjustment program simulations and calculation of transfer payments and charges

o ICD-1 0 financial impact analysis for both state and health plans

o Medicaid 1915(b) and 1115 strategy and support

o Medicare Part D bid reviews

Consulted with major health plans and state governments on business and technology operations related to ICD-1 0 impact, setting up of governance processes, health insurance exchanges and issues related to rating changes due to ACA · Involved in various areas of project management including leading large teams consisting of a mix of Deloitte consultants, client team members, and specialist contractors


Commonwealth of Massachusetts (5 months)- Lead team to develop complete understanding of Medicaid rate development and reimbursement methods. Collected and reviewed Fee-For-Service (FFS) and Encounter claims data and rate data. Determined where ICD-10 implementation could cause a fmancial impact to rate development or reimbursement, complete analysis to calculate estimated impact ranges and determine potential options to mitigate impact and determine steps required to maintain budget neutrality. State of New York (4 months)- Lead team that developed an HHS HCC risk adjustment model for use in an ACA risk adjustment program simulation. Collected data from all impacted health plans within the state, completed data validation procedures, calculated risk scores for all provided members, determined transfer payment and charges by risk pool for each participating insurer. Produced reports for each health plan and an actuarial memorandum to document the analysis for the state of New York. State of Texas (3 years)- Have worked on several projects including a Medicaid benchmarking and cost savings analysis, managed care expansion waiver support, including preservation of upper payment limit (UPL), and hospital reimbursement reform analysis. Each has required the collection and review of encounter and rate data. Examples of the work completed for these analyses include a cost analysis based on current Medicaid & CHIP plan designs to determine the level of savings realized from making changes in specific cost sharing components, completing an analysis to determine the impact of expanding the managed care programs statewide on the UPL payments, and Conducting a trend analysis on current Medicaid expenditures and supplemental UPL and DSH payments. WeliPoint (2 years)- Lead team of actuaries that identified the appropriate data needed for our analysis from each regional and enterprise data system, performed data cleansing and data validation checks to identify and correct data issues, performed impact analysis for changing from ICD-9 to ICD-1 0 at the provider, contract and claim level depending on the level of accuracy and confidence required.


Deloitte Consulting LLP, Senior Consultant, 2010- Present Mercer, Actuarial Analyst, 2008-2010


Bachelor of Chemistry University of Minnesota - Twin Cities, 2005



Lindsey Scott Minneapolis, MN

Experience Summary

Consulting for Deloitte Consulting since July 2008. Consulted with employers, state governments, health plans, and provider groups on issues such as risk score analysis, rate setting for managed care and accountable care state programs, efficiency and tiering of provider groups, actuarial cost modeling, data warehousing health care claims, value based incentive models, claim reimbursement methodologies, ICD-1 0, and claim reserves. She has experience in healthcare data analysis and modeling, risk adjustment, SQL programming, and healthcare reimbursement methodologies.



Qualifications Summary ~-..·<!""~- -.- ---- ---------~~~~--~----~---~~-----.....---

• Over 4 years of experience as a health actuary

• Medicaid rate setting for accountable care and

managed care programs

• Provider tiering for State employee health plan involving risk adjustment and efficiency analysis

• DRG base rate setting for State Medicaid program

• Data warehousing health care claims

State of Maine Accountable Care Rate Setting (1 year)- Senior Consultant supporting Medicaid target rates. Performed member attribution analysis to allocate members to primary care provider to manage their care. Developed target rates for each Accountable Community by accounting for all inpatient, outpatient, physician, and pharmacy claims for a member and allocated these cost to a primary care provider to manage. Aided in writing a SPA describing how the rates were developed by documenting the base year data, trends, and data adjustments utilized to develop the rates. State of Maine Managed Care Rate Setting (DHHS) (0.5 years)- Consultant supporting Medicaidrelated actuarial service and rate-setting. Performed a feasibility analysis for implementing alternate payment methodologies for a state's Medicaid population. The payment methodology decided was managed care. Supported the development of actuarial sound capitation rates and a databook. This data book included fee-for-service claims and enrollment data. State of Maine Development of Inpatient DRG Medicaid Reimbursement Rates (DHHS) (1 year)As an analyst aggregated Medicaid inpatient claims data to match historical reimbursement based on previous payment methodology for each hospital within the state. Developed state specific DRG weights using the state's utilization patterns with CMS v25 DRGs. Developed DRG base rates for each hospital using the historical reimbursement and state specific weights. Modeled the winners/losers by hospital comparing total reimbursement using the base rates vs. the historical payment methodology. This analysis was used to show which hospitals would be gaining/losing money when switching to the new system. State of Minnesota Efficiency and Tiering Analysis (3 years)- Senior Consultant supporting State employee provider tiering analysis. Responsibilities included summarizing all claims for a member including inpatient, outpatient, physician and pharmacy. Performing risk adjustment to determine how effectively a provider managed the member's cost vs. their illness burden. Attributed all members to a provider group and evaluated expected and actual costs to tier providers that managed members more effectively. The goal is to drive members to more efficient providers by giving them a lower tier which allows members to have lower cost sharing to see lower tier providers. State of Minnesota Data Validation and Warehousing (4 years)- Consultant assisting in the collection, loading, and verification of the reasonability of warehousing Blue Cross and Preferred One claims and membership data monthly. These large data sets were loaded to our Deloitte data server. As part of our data warehousing process, we have resolved issues related to inconsistent encounter data from managed care vendors, incorrect or inconsistent coding from year to year and non-standard service category mappings and utilization metrics. State of Minnesota Vendor Cost Scoring for Employee PHR (0.5 years): As a Consultant received 11 RFPs and developed a total cost for each vendor to implement a PHR. Created summary deliverables comparing these costs among vendors and assigned points based on whose costs were the lowest. Took part in odd interviews to evaluate the top 5 vendors' products live which helped identity additional add-on



costs that weren't originally included in the RFPs. Developed a final cost for each of the fmal vendors and developed a fmalized point system based on the lowest cost.




B.S. Actuarial Science and Mathematics -University of Iowa, 2008



Nichole Ramsey Minneapolis, MN

Experience Summary

Over 5 years of experience in the areas of health actuarial and data management services Worked with health plans, provider groups, employers and state governments on issues such as financial analysis and management, benefit design rate setting, Medicare bid development, underwriting, accountable care solutions and clinical opportunity analysis



Qualifications Summary ---~~-- -------- ~-""'"'""~.....--...... -- ~ ---- ----~---- -~---- ___ ...,. • Over 5 years of experience in the areas of health

actuarial and data management services

• Underwriting experience with state governments and health plans

• Data management and data warehousing experience with multiple state governments and health plans

State of Minnesota Public Employee Insurance Program (PEIP) ( 4 years)- Produce underwriting quotes and renewals on a monthly basis for a public employer. Apply debit underwriting based on specific individual medical conditions. Assist senior leadership in developing underwriting strategies and recommendations for the client State of Minnesota Management and Budget (MMB) (3 years) - Manage the data warehouse including claims from three different health plans and a PBM. Create quarterly reports to summarize the claims and enrollment experience for the quarter State of Wisconsin Employee Trust Funds (ETF) (4 years)- Develop a risk adjusted tiered health plan model to manage the selection of pricing risks inherent with multiple HMOs. Provide on-going assistance with health plan renewals and rate development encompassing more than 20 HMOs and three self~ insured plans. Assist in evaluating the cost impact of specific benefit plan coverage changes and legislative bills Virginia Hospital and Healthcare Association (VHHA) (4 months)- Assisted in highlighting opportunities where improved care coordination could elevate quality and lower health care for Virginia's dual eligible and Medicaid-only populations. Performed data analyses to assist in VHHA's needs to identify the gaps between current care and what a best-practice care pattern would yield, how those gaps vary among providers and regions and what the net savings of improving care coordination could be for Medicaid and Medicare.




Bachelor of Business- University ofNebraska, 2008



Hieu Nguyen Minneapolis, MN

Experience Summary

Over 2 years of experience as a health care actuary Completed work on several engagements with public sector clients, including Medicaid managed care payment reform, risk adjustment payment simulation, and Health Insurance Exchange support Consulted health plan clients on benefit design, pricing, rate filing, and estimating incurred but not paid (IBNP) liabilities


New York State Department of Financial

Consultant- Deloitte Consulting LLP

Qualifications Summary ~~---- --~ --~·----~- -----~~~---..--....,., ___ _, __ .., __ -~=----.,.,....._

• Over 2 years of experience as a health actuary

• Medicaid managed care knowledge through budget

neutrality waiver demonstration

• Consulted on State-based Health Insurance Exchange

(HIX) issues from simulating risk-adjustment

payments to designing a HIX plan management portal

• Health care claims data warehousing and analysis

Services - Consultant quantifying the impact of the Risk Adjustment program on the commercial individual and small group insurance markets. Developed an Excel and SQL-based model to calculate risk scores based on individual age, gender, and diagnostic information. Applied language in the HHS proposed rule on risk transfer payments to develop a risk adjustment simulation. Validated health plan data and model results. State of Connecticut Health Insurance Exchange - Consultant working on designing the plan management portal for the State-based Exchange. Engaged state insurance regulators throughout the design phase to ensure that development achieved key functional requirements for the system. Applied plan benefits knowledge and insurance industry insight to support development of the insurer portal for managing health plans on the Exchange. Co-facilitated requirements and design confmnation sessions with client stakeholders. Supported creation and detailed review of all plan management design phase deliverables. State of Minnesota Data Validation and Warehousing (1 year)- Consultant organizing the collection, loading, and verification ofmonthly claims and membership data from the State of Minnesota's plan vendors. Created summaries on a quarterly and annual basis of key health plan statistics such as average cost PMPM, utilization per 1000, and prevalence of specified chronic conditions. Center for Medicare and Medicaid Services (2 years)- Consultant performing annual reviews on the actuarial soundness of private plan-sponsored Medicare Part D bids. Used a bid review system consisting of modules contained within Health Plan Management System (HPMS) and separate worksheet modules developed and provided by the Office of the Actuary (OACT). Performed the reviews using the bid Excel modules and supporting data from CMS' HPMS, and documented the written review and contractor signofffor all bids assigned. State of Texas Health and Human Services (HHSC)- Analyst developing an 1115 Medicaid waiver to expand Medicaid managed care statewide while redirecting projected Upper Payment Limit (UPL) funding levels to provide for uncompensated care and investments into state hospitals. Loaded, tested, and analyzed historical health claims and membership data to create a demonstration of future-state budget neutrality under the provisions of the waiver. Assistant Secretary for Planning and Evaluation, Department of Health and Human Services (HHS) -Analyst testing the implications of key components of health care reform, including new risk-based payments, reinsurance assessments, and the addition of new uninsured populations through the adoption of insurance exchanges. Constructed an insurance market simulation of claims and membership activity under sets of health reform pricing assumptions. Designed summaries communicating key fmancial metrics. Conducted model diagnostics including user testing and error handling.


Deloitte Consulting LLP, Consultant, 20 I 0 - Present Thrivent Financial for Lutherans, Actuarial Intern, 2009




Bachelor of Science in Business- University of Minnesota, 2010 International Summer Scholar- Copenhagen Business School, Denmark, 2008


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