Hospital utilization cuts projected for SoonerHealth+

Posted on: 2/8/17

Managed care plans expressed concerns about low capitation rates for SoonerHealth+ at a bidder’s conference on Feb. 1.  

SoonerHealth+ is the capitated health plan for aged, blind, and disabled SoonerCare (Medicaid) members that the Oklahoma Health Care Authority (OHCA) plans to begin in 2018.  

OHCA was directed in 2015 by House Bill 1566 to issue a request for proposals (RFP) for care coordination services for their aged, blind, and disabled (ABD) members, and the SoonerHealth+ program is the result. Under SoonerHealth+, health plans will be paid fixed per-member, per-month amounts to handle all medical and care coordination services for the ABD members. Rather than contracting with the lowest bidder(s), OHCA is setting “actuarially sound” monthly rates to pay the plans, and awarding contracts based on the plans’ abilities to best meet agency goals.  

The SoonerHealth+ RFP was issued Nov. 30, 2016. OHCA released the capitation rates it will pay to plans on Jan. 18, 2017.  

The Feb. 1 actuarial bidders’ conference was an opportunity for health plans to learn more about the SoonerHealth+ capitated rates. Mike Nordstrom, partner and lead actuary for Mercer Government Human Services Consulting, presented an explanation of the capitation rates, and answered general questions from the health plans.  

Nordstrom said OHCA has “done a superb job” of managing ABD claim costs. Its five-year annualized trend in cost per ABD enrollee was an increase of 0.6 percent.

The rates OHCA is offering the plans are based on recent claims experience for the various eligibility groups to be covered under SoonerHealth+. The historical costs are adjusted for factors expected to change under managed care, including some costs added under full-risk managed care that OHCA does not currently have. To the projected claims expense, OHCA will add MCO administrative expense factors ranging from 4 to 9 percent, depending on the population; an underwriting gain of 2 percent initially, and premium tax of 2.25 percent.  

The plans will need to overcome these additional incurred costs to OHCA, Nordstrom said, “otherwise, SoonerHealth+ does not work.”

The capitated rates assume significant decreases in inpatient and emergency department (ED) utilization of up to 45 percent, depending on the eligibility group. Outpatient hospital services other than ED are assumed to decrease up to 22.5 percent. Behavioral health service utilization is expected to decrease up to 20 percent.

Nordstrom said that no additional amounts will be allowed for implementation costs. He stressed that SoonerHealth+ is a full-risk contract, with health plans assuming all risk for medical expenses of their members. No capitated rate increases will be available if plan expenses are higher than expected.

SoonerHealth+ capitated rates will not include Supplemental Hospital Offset Payment Program (SHOPP) amounts. SHOPP will not supplement the payments that hospitals receive from SoonerHealth+ plans.

The rate book guidance OHCA issued in January showed about 137,000 members will be included in SoonerHealth+, a smaller amount than the 155,000 members described in the November RFP. Nordstrom said most of the difference was  because the program will be voluntary for Native American ABD members. The earlier estimate included all such voluntary members, but the rate book assumed that only 20 to 33 percent of the voluntary population will enroll.

For more information:  
Mercer actuarial bidders’ conference presentation
Earlier Hotline story: SoonerHealth+ managed care RFP released (12/7/16)

(Rick Snyder)