November 2020 Medicare drug pricing rules: What do you need to know?
The two final rules that were released on November 20 will have sweeping impacts to Medicare Part D and Medicare Part B drug pricing.
In November 2011, a Dutch not-for-profit organization that supports quality healthcare in Africa requested Milliman’s assistance in developing a healthcare program for a major university in Mozambique with a population, including students and staff, of more than 25,000 individuals. After unsuccessfully seeking contracts from private carriers for a healthcare plan at affordable rates (the equivalent of U.S. $12 to $15 per month per enrollee), university officials decided to create a closed-fund, self-managed healthcare system. A major part of the plan called for the expansion of an existing clinic, which had been providing mainly consultative services and referrals for students, into a fully staged health center providing basic medical care, minor surgery, and pre- and postnatal care for students, staff, and their families.
Our assignment was to review a business plan and a premium model designed by the sponsoring organization. We also helped develop the assumptions and the benefits package, and we offered advice on data collection for future refinement of the models.
The models were rather generic, based on projects the sponsoring organization had carried out in Nigeria, Kenya, and Tanzania, with adjustments to fit the demographics of the two target populations in Mozambique (students and staff). The models assumed an inflation rate of 5%, but the economic data we had for Mozambique suggested that an adjustment to 10%–15% would be more realistic.
Lack of data relevant to underwriting is a problem familiar to actuaries working in the developing world, and nowhere is this truer than in Mozambique. The only data available to us were an incomplete price list from a hospital in Maputo, the capital, and a very small self-assessment completed by a few students, yielding fragments of insights into the students’ health status along with their thoughts about what they expected in a healthcare package. Together with the sponsoring organization, we had to make assumptions for everything else—the remaining items for a complete price list, likely utilization rates, inflation, and so on.
We completed our tasks and submitted our final report in July 2012. Progress in Mozambique continues; the upgraded campus clinic is expected to be operative sometime in 2013, and further expansion will follow. The planners’ hope is that eventually the program will provide services to non-university populations from the surrounding areas.
Milliman’s input helped the client develop a plan that will extend healthcare to persons who previously had either no protection or inadequate coverage, and our advice on data gathering will help plan administrators make future adjustments as needed to ensure the program’s lasting viability.
Besides the author of this report, Thomas Snook participated as lead consultant, and Roeleke Uildriks served as peer reviewer.