Actuarial Society of Hong Seminar 2015/Data...ASHK_MedicalReform_PSC_RFC_ Actuarial Society of Hong Kong ... Proposed higher limit of HK$150,000, which is similar to current private

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  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Actuarial Society of Hong Kong

    Better Use of Data for Health Insurance Management and VHIS Implementation

    17 April 2015

    Fred Choi FCAS, MASHK

    1

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Agenda

    Overview

    VHIS minimum requirement for standard plan

    VHIS impact on pricing, Data use and refinement

    Data Field Checklist

    Questions and Answers

    2

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Overview

    3

    Food and Health Bureau issued the Voluntary Health Insurance Scheme (VHIS) Consultation Paper in December 2014.

    Generally speaking, insurers are required to provide more comprehensive coverage with more restrictive terms and conditions after implementation of VHIS.

    The bill and subsidiary legislation for VHIS is expected to be introduced in 2015/16. Actual implementation of VHIS will probably be a few years after that.

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Overview

    4

    In-patient Severity Index (2011=100):

    Hong Kong in-patient severity is about 5% over the last years.

    We recommend actuaries to use latest two or three years severity in estimation of in-patient burning costs.

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Overview

    5

    As VHIS is generally more comprehensive and restrictive than current practice, migration to VHIS implied that existing system may be inadequate for the challenge.

    In this presentation, we would like to:

    Identify impact on health insurance cost and pricing due to VHISimplementation

    Discuss what and how data can be use to prepare for VHIS pricing

    Propose data adjustment and judgment

    Propose additional data field and possible data refinement

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Agenda

    Overview

    VHIS Minimum Requirement for Standard Plan

    VHIS Impact on Pricing, Data Use and Refinement

    Data Field Checklist

    Questions and Answers

    6

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS Minimum Requirement for Standard Plan

    7

    There are 12 minimum requirements proposed for VHIS Standard Plan:

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS Minimum Requirement for Standard Plan

    8

    We would discuss those expected to have impact on insurance cost and pricing:

    1. Guaranteed renewal

    3. Coverage of pre-existing conditions

    4. Guaranteed acceptance with premium loading cap

    5. Portable insurance policy

    6. Coverage of hospitalization and prescribed ambulatory procedures

    7. Coverage of prescribed advanced diagnostic imaging tests and non-surgical cancer treatments

    8. Minimum benefit limits

    10. Budget certainty

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Agenda

    Overview

    VHIS Minimum Requirement for Standard Plan

    VHIS Impact on Pricing, Data Use and Refinement

    Data Field Checklist

    Questions and Answers

    9

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS impact on pricing Pre-Existing Condition, Guaranteed acceptance and renewal

    10

    Coverage of pre-existing conditions:

    Increase claim cost

    Actuaries need to determine additional premium loading.

    Guaranteed acceptance and renewal:

    Cannot reject poor insureds, e.g. with pre-existing conditions

    Cannot refine the insurance pool by non-renewing poor insureds

    Increase risks to insurers

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Guaranteed acceptance and renewal

    11

    Frequency:Historical experience of insured with change in health condition after inception. Accumulate experience for poor risk after VHIS implemented

    Severity:

    Historical experience of insured with change in health condition after inception. Accumulate experience for poor risk after VHIS implemented

    Data adjustment / judgement:

    Own data may not be sufficient and credible. May perform industrial study for grouping.

    Data Refinement:

    Standardize diagnosis code, e.g. ICD-9 or ICD-10, to enhance own data reliability

    Guaranteed acceptance and renewal / Coverage of pre-existing conditions:

    Need to estimate additional claim cost and premium loading factors for various situations

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS impact on pricing Portable

    12

    Portable insurance policy:

    Cannot reject poor risk / with pre-existing conditions for Standard Plan

    Cannot re-underwrite if no claims were made in a certain period

    Increase risk for insurers

    We suggest insurers to capture and record underwriting classes of previous insurer or other existing insurers when they accept new policies

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS impact on pricing Hospitalization & ambulatory procedures

    13

    Coverage of hospitalization and prescribed ambulatory procedures:

    Encourage ambulatory procedures, reduce unnecessary hospitalization

    Reduction in severity and claim cost

    Severity become more certain and stable

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Prescribed ambulatory procedures

    14

    Coverage of prescribed ambulatory procedures:

    Minor procedure shift from hospitalization to ambulatory setting

    Expect severity decrease and more certain

    Frequency:Need to consider shift from hospitalization to ambulatory setting due to VHIS

    Severity:

    For hospitalization, reference to historical claim costs. For ambulatory setting, reference to prescribed benefit limits

    Data adjustment / judgement:

    Need to consider the impact due to budget certainty, i.e. higher proportion of panel claims

    Data Refinement:

    Have specific indicator for ambulatory settings. Clinics and doctors information should also be recorded.

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS impact on pricing Diagnostic tests and cancer treatments

    15

    Coverage of prescribed advanced diagnostic imaging tests and non-surgical cancer treatments:

    Typically included in hospital expense or with very low benefit limits

    Coverage significantly enhanced in VHIS

    Increase claim cost, perhaps materially

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Advanced diagnostic imaging tests

    16

    Coverage of prescribed advanced diagnostic imaging tests:

    30% co-insurance to combat moral hazard

    Most current market product do not have separate benefit for this coverage

    Part of miscellaneous hospital expenses

    Frequency:Data may not by readily available, need to start accumulate or adopt benchmark frequency for specific tests

    Severity:

    Based on current market fee or packaged fees

    Data adjustment / judgement:

    May need to apply loading factors as current benefit limits may not capture all incidents

    Data Refinement:

    Separate record hospital expenses about advanced diagnostic tests in database. Type of test should also be recorded.

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Non-surgical cancer treatments

    17

    Coverage of non-surgical cancer treatments:

    Proposed higher limit of HK$150,000, which is similar to current private LoA products

    Frequency:Similar approach as current pricing

    Severity:

    Reference to higher limit product; or adopt increase limit factor based on claims profile; ormake assumption for total loss

    Data adjustment / judgement:

    Higher benefit limit may increase frequency due to adverse selection, need to cross check with market cancer rate

    Data Refinement:

    Nil

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Minimum Benefit Limits

    18

    Frequency:Similar approach as current pricing

    Severity:

    Similar approach as current pricing

    Data adjustment / judgement:

    If the Standard Plan limit is higher than existing product, may need to make reference to data with similar limit

    Data Refinement:

    Nil

    For typical benefit items like Room & Board, Physicians visit, Specialists visit and Surgical:

    Proposed benefit limits similar or slightly lower than current ward products

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Minimum Benefit Limits

    19

    Frequency:Similar approach as current pricing

    Severity:

    Need to exclude those expense covered by separate benefit items

    Data adjustment / judgement:

    Need to consider unreported bill amount due to exhaustion of benefit limit in previous experience

    Data Refinement:

    Separate records for items like advance diagnostic test and non-surgical cancer treatment

    Hospital Expenses benefit item:

    Currently all unclassified expenses will be included in this benefit item

    Under VHIS, some of the expenses (e.g. CT scan) currently included in HE will be listed separately

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    VHIS impact on pricing Budget certainty

    20

    Budget certainty:

    Severity become more certain and stable

    Higher utilization of panel doctor and hospital

    Impact on claim cost depends on network size and bargaining power

  • ASHK_MedicalReform_PSC_RFC_20150417.pptx

    Data use and refinement Budget certainty

    21

    Frequency:Similar approach as current pricing

    Severity:

    Non-panel: current practice;