Confidential to RBCBSO Entire contents © 2004 Regence Management Information Reporting Dept All...

Confidential to RBCBSOEntire contents © 2004 Regence Management Information Reporting Dept All rights reserved

Board Meeting: 01/18/05

PEBB Mental Health Reconciliation

Management Information Reporting DepartmentOctober 2004

PEBB Mental Health Reconciliation BD attach. 6



Presentation Outline:

1. Background and Contracts Overview

2. How the Settlements were Calculated

3. Final Results




Part 1: Background and Contracts Overview.




During 2002, PEBB’s benefits for mental illness had the following limitations (each 24-month benefit “clock” period):

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70

1

Outpatient Care

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1

Residential Care

19/20 Day Limit (adult/child)

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40

50

1

Inpatient Care

Background: Old Benefit

52 Visit Limit

15/16 Day Limit (adult/child)




During 2002, mental health benefits for PEBB members were limited as follows:

• The benefit “clock” was reset as of January 1, 2000.

• The 24-month benefit “clock” started with the first claim on or after January 1, 2000.

• The benefit clock “resets” with the first claim after the first 24-month benefit period.

Background




Sample “Old” Outpatient Benefit Calculation:

Mar 52000

Member incurs a MH/CD

inpatient claim(Clock Starts)

Benefit “Band” 1

Benefit(ClockReset)

Jan 12000

Member incurs more MH claims

Jan 112002

Member incurs 53rd outpatient

claim – its denied

Mar 52002

24 monthsEnd Benefit

Band 1(Clock Stops)

Apr 142002

Member incurs MH/CD claim:

(New Clock Starts)

Apr 142004

End Benefit Band 2

Benefit “Band” 2

--Time-




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No Limit on Days

Residential Care

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45 Day Limit

In 2003, PEBB changed its mental health benefits to be in full “parity” with other benefits as follows:

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70

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Outpatient Care Inpatient Care

Background


No Limit on Visits

BD attach. 6



• The precise cost of the additional mental health benefits was in question.

• PEBB agreed to pre-pay an additional 1% in premium to cover the costs of the additional mental health benefits.

• The 1% additional premium is an estimate.

Regence - PEBB Contract Overview




• Regence is required to determine the actual costs of the additional benefit.

1% of Premium……...$Y,000,000

Actual Claims Expense - $X ,000,000

Settlement Amount…….$Z ,000,000

• The final settlement will be the difference between the 1% additional premium and the actual claims costs.

Regence - PEBB Contract Overview




• The key to the settlement is to appropriately identify “new benefit claims”

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New Benefit Claims

Old Benefit Claims

Regence-PEBB settlement: only the new benefit claims are included.

Settlement Overview




Part 2: How the Settlement is Calculated.




Inpatient Residential Outpatient

Claims Database

PEBB MH Claims Database

IdentifyPEBB MH

Claims

Clean Data and Flag New Benefit

Days

Clean Data and Flag New Benefit Days

Overall Project Flowchart

Clean Data and Flag New Benefit Visits

Step 1

Steps 2-6

Steps 7-8Determine Regence-PEBB

Settlement




• Extract all PEBB Mental Health Claims since January 1, 2000.

• Data extraction parameters include diagnostic codes, procedure codes, and cause codes.

• Some claims are excluded.

Step 1: Extract All PEBB Mental Health Claims

Claims Database All PEBB MH Claims Database

IdentifyPEBB MH

Claims




• Claims are separated into services.

• Separation criteria include diagnostic codes, procedure codes, place of treatment codes, and cause codes.

Step 2: Separation of Claims According to Type of Service






Step 3: Data Corrections

Adjustments: Match all claim lines with their “adjustment” lines. The resulting “net” amount is used in calculations.

Double Blue: Some PEBB members have coverage under more than one member number which required two corrections:

• Single claims using different member numbers were re-combined into single claims.

• All other claims were reassigned to a single member number.




Step 4: Determine Benefit Periods

• Claims are sorted to determine the date of members’ 1st mental health claim.

• A unique benefit “Reset Date” is determined for each member.

• All claims for a member are grouped into benefit band 1 or 2.

Benefit “Band” 1 Benefit “Band” 2-Time-

“Reset” Date




Step 5: Determine and Cumulate Days and Visits

Data issues:

Misinterpretation of reported days or visits in the data warehouse canoccur:

• A single claim might represent a single visit on a single day, multiple visits on a single day, or multiple visits over multiple days.

• In some cases, the “number of services” reported was mis-coded as minutes instead of “visits”.




Step 5: Determine and Cumulate Days and Visits Corrective measures:

• Visits and days were derived from reported values in the database created in step 1.

• Visit days were validated using an algorithm that checked the reported number of visits against an “expected” number of visits.

• Total visits and days were cumulated.




Step 6: “Flag” New Benefit Days and Visits

• Determine whether the days or visits associated with each 2003 claim are above the limits that existed in 2002.

• “Flag” those 2003 claims with days or visits above the limits (“new benefit” claims).

• Claims can span the 2002 limit. For these claims costs were allocated based on the proportion of days above and below the 2002 limit.

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Step 7: Regence-PEBB Settlement: Determine

“Actual” Costs of New Benefit

Regence-PEBB Settlement

• Sum the total paid amounts in 2003 for all the “flagged” claims above the 2002 benefit limits.




Step 8: Regence-PEBB Settlement: Sum of Flagged Claims Compared to One Percent of Premium

• Dollar total represents the “actual” costs of the new benefit claims. This total will be compared to the 1% of premium in estimated costs that PEBB has paid to determine the settlement amount.

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“Actual” cost of new benefit





Claims Database


IdentifyPEBB MH

Claims

Data Corrections Data Corrections

Determine Benefit Periods



Methodology Recap

Data Corrections

Step 1

Step 2

Step 3

Step 4




Determine and Cumulate Days

Determine and Cumulate Days

Determine and Cumulate Visits

Flag New Benefit Days

Regence-PEBB Settlement: Determine “Actual” Costsof New Benefit (i.e. Flagged Claims Only)

Flag New Benefit Visits

Regence-Reliant Settlement:Determine 2002 & 2003 Utilization Excluding New Benefit Claims (i.e.excluded flagged claims)

Step 5

Step 6

Step 7

Flag New Benefit Days




Step 8

Regence-PEBB Settlement: Sum of Flagged Claims Compared to 1% Premium




Part 3: Final Results.




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(Th

ou

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ollars

)

Residential

Inpatient

Outpatient

Regence - PEBB Contract

Additional MH Benefits Paid: $1,035,331.




PEBB Mental Health Parity 2003 Settlement (Revised 10-08-04)


Mental Health Parity Premium (1-1-03 through 12-31-03)* $2,469,388.31

Less: Additional Mental Health Claims Incurred 1-1-03 to

12-31-03 and Paid 1-1-03 to 6-30-04 due to mental health

parity benefit** ($1,035,331.13)

Difference*** $1,434,057.18

*Please refer to Attachment A.

**Please refer to attached report “Regence-PEBB Mental Health Parity Settlement”.

***If the difference is a positive number, Regence’s liability is limited to the amount of the difference or the total amount of the 2003 mental health premium; whichever is lower.

If the difference is a negative number, PEBB will owe Regence the entire amount of the deficit.

BD attach. 6

Confidential to RBCBSO Entire contents © 2004 Regence Management Information Reporting Dept All...

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