Actuarial Objective

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Definition of 'Actuarial

Analysis'

The examination of risk by a highly educated

and certified professional statistician.Actuarial analysis uses statistical models tomanage financial uncertainty by makingeducated predictions about future events.Insurance companies, banks, governmentagencies and corporations use actuarialanalysis to design optimal insurance policies,retirement plans and pension plans and toanalyze investment risks.

Investopedia explains

'Actuarial Analysis'For example, actuarial analysis is an essential taskperformed by insurance companies to analyzedata and estimate the probability of an insuranceclaim being filed for a given event. This workallows insurance companies to predict with areasonable degree of accuracy the amount ofclaims they will pay out, which helps themdetermine what premiums they must charge toremain profitable.

Definition of 'Actuarial

Assumption'

An actuarial assumption is an estimate of anuncertain variable input into a financial model,normally for the purposes of calculating

premiums or benefits. For example, a commonactuarial assumption relates to predicting aperson's lifespan, given their age, gender, healthconditions and other factors. Actuaries uselarge tables of statistical data which correlatethe uncertain variable to a variety of keypredictive variables. Given the values for thepredictive variables a sound actuarial


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assumption can be made for the uncertainvariable.

Investopedia explains

'Actuarial Assumption'

Actuarial assumptions are important becausethey allow for the equitable transfer of risk inmany situations. For instance, whenunderwriting life insurance policies, it isimportant to understand the probability that theinsured might pass away during the policyperiod. Given an accurate actuarial assumptionfor this probability, it is easy to calculate a fairpremium for such a policy. Without the abilityto accurately figure these probabilities, very few

people would be willing to provide insurance. Ifthey were, it would have to be more expensiveto allow room for unexpected losses.

J Manag Care Pharm.2007 Apr;13(3):262-72.

Actuarial analysis of private payer administrative claims data for women

with endometriosis.Mirkin D,Murphy-Barron C,Iwasaki K.

Source

Milliman, Inc, New York, NY 10119, USA. [email protected]

Abstract

BACKGROUND:

Endometriosis is a painful, chronic disease affecting 5.5 million women and girls in the UnitedStates and Canada and millions more worldwide. The usual age range of women diagnosed withendometriosis is 20 to 45 years. Endometriosis has an estimated prevalence of 10% amongwomen of reproductive age, although estimates of prevalence vary greatly. Endometriosis is themost common gynecological cause of chronic pelvic pain, but published information on itsassociated medical care costs is scarce.
http://www.ncbi.nlm.nih.gov/pubmed/17407392http://www.ncbi.nlm.nih.gov/pubmed/17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Mirkin%20D%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Mirkin%20D%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Murphy-Barron%20C%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Murphy-Barron%20C%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Murphy-Barron%20C%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Iwasaki%20K%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Iwasaki%20K%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Iwasaki%20K%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Iwasaki%20K%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Murphy-Barron%20C%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed?term=Mirkin%20D%5BAuthor%5D&cauthor=true&cauthor_uid=17407392http://www.ncbi.nlm.nih.gov/pubmed/17407392


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OBJECTIVE:

The aim of this study was to determine (1) the prevalence of endometriosis in the United States,(2) the amount of health care services used by women coded with endometriosis in a commercialmedical claims database during 1999 to 2003, and (3) the endometriosis-related costs for 2003,

the most recent data available at the time the study was performed.

METHODS:

This study was a retrospective review of administrative data for commercial payers, whichincluded enrollment, eligibility, and claims payment data contained in the Medstat Marketscandatabase for approximately 4 million commercial insurance members. All claims andmembership data were extracted for each woman aged 18 to 55 years who had at least 1 medicalor hospital claim with a diagnosis code for endometriosis (International Classification ofDiseases, Ninth Revision, Clinical Modification [ICD-9-CM] codes 617.00-617.99) for 1999through 2003. Claims data from 1999 through 2003 were used to determine prevalence and

health care resource utilization (i.e., annual admission rate, annual surgical rate, distribution ofendometriosis-related surgeries, and prevalence of comorbid conditions). The cost analysis wasbased on claims from 2003 only. Cost was defined as the payer-allowed charge, which equals thenet payer cost plus member cost share.

RESULTS:

The prevalence of women with medical claims (inpatient and/or outpatient) containing ICD-9-CM codes for endometriosis was 1.1% for the age band of 30 to 39 years and 0.7% over theentire age span of 18 to 55 years. The medical costs per patient per month (PPPM) for womenwith endometriosis were 63% greater ($706 PPPM) than those of the average woman per

member per month ($433) in 2003; inpatient hospital costs accounted for 32% of total directmedical costs. Between 1999 and 2003, these women with endometriosis who were identified byeither inpatient and/or outpatient claims had high rates of hospital admission (53% for anyreason; 38% for an endometriosis-related reason) and a high annual surgical procedure rate(64%). Additionally, women with endometriosis frequently suffered from comorbid conditions,and these conditions were associated with greater PPPM costs of 15% to 50% for women with anendometriosis diagnosis code, depending on the condition. Interstitial cystitis was associatedwith 50% greater cost ($1,061 PPPM); depression, 41% ($997 PPPM); migraine, 40% ($988PPPM); irritable bowel syndrome, 34% ($943 PPPM); chronic fatigue syndrome, 29% ($913PPPM); abdominal pain, 20% ($846 PPPM); and infertility, 15% ($813 PPPM).

CONCLUSIONS:

Women with endometriosis have a high hospital admission rate and surgical procedure rate and ahigh incidence of comorbid conditions. Consequently, these women incur total medical costs thatare, on average, 63% higher than medical costs for the average woman in a commercially insuredgroup.

Canadian Healthcare Fund Analysis and Model


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Research StudiesProposal Requests

Canadian Healthcare Fund Analysis and Model

BACKGROUND and PURPOSE

It is well known that Canada has a public healthcare system. Part of the overall managementactivities of this program is periodic review of costs and the responsibility of the federalgovernment to negotiate with the provinces an amount for future funding of the various healthprograms for the next renewal period. The current funding period will expire in 2014. A credible,objective model to estimate future growth is needed.

RESEARCH OBJECTIVE

The objective of this research would be to contract with a Canadian researcher or a jointU.S./Canadian team to investigate underlying factors which are critical to Canadian Healthcareand would be useful to the upcoming renewal. Some of the items of interest include:

a. A brief comparison of Canadian and U.S Healthcare systems. An introductorycomparison of health care funding and freedom of choosing providers in the U.S. andCanada.

b. Determining sources for Canadian healthcare data.c. General healthcare cost trends in Canada.d. Historical utilization and projected utilization on a macro-economic basis.e.

How much of provincial and federal budgets will projected costs consume, assuming thecurrent tax base is maintained.

f. How much the Federal Health Transfer will cover (if the current formula is maintained).g. What human resources will be needed from the total workforce (if current productivity

levels and/or progression are maintained for the various health care providers).h. To what health conditions and/or practitioners will most of the future resources be

directed.i. Projected amount of funding needed to adequately cover costs for the next negotiated

period.

Aggregate cost data at a macro-economic level would be needed. Sources for data may include

the Canadian Institute of Health Data Base, Statistics Canada, or other reliable sources. Theresearcher(s) would need to be familiar with the possible sources of health care information.

An approximate budget of $20,000 (U.S.) has been established for the project. The researcher(s)is to examine one or more of the above issues and summarize the results in a report madeavailable to SOA membership.

Benefits to the selected researcher, the SOA and CIA would include:


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Useful information for members related to U.S and Canadian Healthcare Key research on a public policy issue Enhanced image of the actuary Actuarial voice in important public policy issues (in this case, National Canadian

Healthcare)

Potential for significant promotion and media attention

It is expected that the researcher(s) will work closely with a Project Oversight Group (POG) inmeeting the objectives of the project. The researcher(s) will also provide the POG with periodicprogress reports. Members of this group will be available to provide feedback and guidance tothe researcher(s) as needed.

PROPOSAL

To facilitate the evaluation of proposals, the following information should also be submitted:

A.

Identification of the issues the researcher(s) will address in the study.B. Resumes of the researcher(s), including any graduate student(s) expected to participate,indicating how their background, education, and experience bear on their qualifications toundertake the research. If more than one researcher is involved, a single individual shouldbe designated as the lead researcher and primary contact. The person submitting theproposal must be authorized to speak on behalf of all the researchers as well as for thefirm or institution on whose behalf the proposal is submitted.

C. An outline of the approach to be used, emphasizing issues that require specialconsideration. Details should be given regarding the techniques to be used, collateralmaterial to be consulted, and possible limitations of the analysis, specifically what theResearcher(s) will do with inconclusive or otherwise incomplete survey results.

D.

Cost estimates for the research. We expect to reach agreement on a fixed cost for thisproject with the Researcher(s).

While cost will be a factor in the evaluation of the proposal, it will not necessarily be thedecisive factor.

E. A schedule for completion of the research, identifying key dates or time frames forresearch completion and report submissions.

F. Ideas regarding the form and distribution of the final report, both for immediate releaseand for permanent reference (e.g., submission to theNorth American Actuarial Journalor other SOA publication).

G. Other related factors that give evidence of a proposer's capabilities to perform in asuperior fashion should be detailed.

SELECTION PROCESS

The SOA's sponsoring committees are responsible for the selection of the proposal to be funded.Input from other knowledgeable individuals also may be sought, but the sponsoring committeeswill make the final decision. The SOA's Research Actuary will provide staff actuarial support.


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Questions

Any questions regarding this RFP should be directed by fax, or e-mail to: Ronora Stryker, SOAResearch Actuary (Fax: 847-273-8514; e-mail:[email protected]).

NOTIFICATION OF INTENT TO SUBMIT PROPOSAL

If you intend to submit a proposal, please send written notification by November 23, 2011to:

Jan SchuhSOA Sr. Research Administratorf: 847.273.8556email:[email protected]

SUBMISSION OF PROPOSAL

Please e-mail a copy of the proposal to:

Jan Schuh [email protected]

Proposals must be received no later than December 2, 2011. It is anticipated that all researcherswho have submitted proposals will be informed of the status of their proposal no later thanDecember 9, 2011.

Note: Proposals are considered confidential and proprietary.

CONDITIONS

The Society of Actuaries reserves the right to not award a contract for this research. Reasons fornot awarding a contract could include, but are not limited to, a lack of acceptable proposals or afinding that insufficient funds are available to proceed. The Society of Actuaries also reservesthe right to redirect the project as is deemed advisable.

The Society of Actuaries intends to copyright and publish the results of this research. Theresearch will be considered work-for-hire and all rights thereto belong to the Society ofActuaries. However, appropriate credit will be given to the Researcher(s).
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Actuarial Objective

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