Medicaid Managed Care Underwriting Margin Model
July 2024
Authors:
Mardo Atoyan, MBA
Principal
HealthCare Analytics
Tom Donlon, FSA, MAAA, FCA
Managing Director
Legacy 3 Consulting
Grant Porter, PhD
Senior Consultant
Faulkner Consulting Group
Description
This report and the accompanying Excel model are intended to be used in their entirety by qualified actuaries setting rates or evaluating rates for Medicaid Managed Care programs to develop the underwriting margin component of the capitation rates. It should not be relied on for any other purpose. The methodologies and assumptions discussed in this paper as well as the calculations in the Excel model are not intended to account for all possible scenarios. Users should use actuarial judgment to determine if model results are appropriate for the specific circumstances of the program being evaluated. Actual underwriting margin results will vary from the model estimates.
Materials
Medicaid Managed Care Underwriting Margin Model
Previous Managed Care Underwriting Margin Models
2022 Medicaid Managed Care Underwriting Margin Model
Acknowledgments
We are thankful to the dedicated professionals from the Society of Actuaries Project Oversight Group (POG) who similarly recognize that establishing an adequate underwriting margin is paramount for maintaining the financial viability of the sector while being mindful of its potential implications for state and federal taxpayers. The final project benefited from the varied subject-matter expertise, general commentary and specific feedback provided by members of the POG including a member representing the Center for Medicare and Medicaid Services, an economist, a risk specialist, health plan actuaries, and state Medicaid capitation rate certifying actuaries.
The POG membership included the following persons:
Chair: Sabrina Gibson, FSA, MAAA
Bryan Bjork, FSA, MAAA
Tristan Cope, ASA
Elizabeth Gould, FSA, MAAA
George Mansour, MBA
Ian McCulla, FSA, MAAA
Jaredd Simons, ASA, MAAA
Mathew Stahl, ASA, MAAA, CERA
Steve Wander, FSA, MAAA, FCA
David Wierz
We are grateful to the SOA and its staff for bringing together the members of the POG and for sponsoring the project. Thank you to Achilles Natsis, FSA, MAAA, FLMI, for managing the project and keeping us accountable and Erika Schulty for administrative support throughout.
We also appreciate the generous support of the authors of the prior studies, including Sara Teppema and Jarred Simmons, who spoke with us on the last iteration of this project about their experience and findings from their respective studies in 2017 and 2019.
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