DEPARTMENT OF HEALTH & HUMAN SERVICES
HEALTH CARE FINANCING ADMINISTRATION

Center for Health Plans and Providers
Health Plan Purchasing and Administration Group
7500 Security Boulevard
Baltimore, Maryland 21244-1850

March 2, 1998

Attached are the capitation rate tables for Calender Year 1999. The instructions that you need to complete the Adjusted Community Rate Proposals ( ACR's) that will be due to our office by May 1, 1998, for contract periods beginning January 1, 1999, will be forthcoming , within the next week to 10 days. The format of these ACR's WILL BE THE SAME AS USED IN PREVIOUS YEARS but the instructions will reflect the impact of various provisions of the Balanced Budget Act of 1997( BBA). ( We will not be implementing the new ACR format until June 1, 1998 because we recognize the need for plan training and systems changes and validation needed in both HCFA and the plans' systems.) As these BBA issues are resolved, the instructions will be finalized and transmitted to you. In this forthcoming package of ACR instructions, we will also highlight for you aspects of the new enhanced ACR format which will, as stated above , not be effective until June 1, 1998. If you have any questions, please call either Howard Rubenstein on (410) 786-7635 or Neal Stroheker on (410) 786-7637.

 
DEPARTMENT OF HEALTH & HUMAN SERVICES
HEALTH CARE FINANCING ADMINISTRATION

Center for Health Plans and Providers
Health Plan Purchasing and Administration Group
7500 Security Boulevard
Baltimore, Maryland 21244-1850

March 2, 1998

We are enclosing capitation rate tables and demographic factors used to calculate payment rates for your plan’s 1999 adjusted community rate (ACR) proposal. Payment rates reflect a 3.5 percent increase in the National Per Capita Medicare+Choice Growth Percentage. The increase in rates may vary per individual plan. For 1999, all county rates are either (I) at the "floor" amount of $379.84 (or, if lower, the 1998 floor increased by the National Per Capita Medicare+Choice Growth Percentage for areas outside of the 50 States and the District of Columbia), or (ii) 2 percent greater than the 1998 level.

If you have any questions, please call either Sol Mussey on (410) 786-6386 or Ronnie Tan on (410) 786-0820.

Enclosures

Enclosure I The table below shows the National Per Capita Medicare+Choice Growth Percentage (Parts A and B) for 1998 and 1999. The Balanced Budget Act of 1997 changed the methodology for determining payments to managed care plans. The new payment methodology is based on increases in the National Per Capita Medicare+Choice Growth Percentage. Since the new payment methodology requires determining payment rates based on the 1997 rates, we are showing the increases in the per capita rates from 1997 forward. These growth percentages reflect adjustments of -0.8 percent in 1998 and -0.5 percent in 1999 as required by section 1853(c)(6)(B) of the Social Security Act. In addition, the increases for 1997 to 1998 reflect adjustments of -0.74 percent, 0.97 percent, and 2.18 percent for aged, disabled, and ESRD, respectively, to account for corrections to prior estimates, as required under section 1853 (c)(6)(C). This data was furnished by the Office of the Actuary.

The following table compares the monthly actuarial equivalent of Medicare's deductible and coinsurance for 1999 with 1998.

¹ Includes the amounts for outpatient psychiatric charges.

Enclosure II




KEY ASSUMPTIONS AND FINANCIAL INFORMATION

Attached is a table which compares the published USPCCs with current estimates for 1990 to 1999. We are also providing the attached set of tables which summarize many of the key Medicare assumptions used in the calculation of the USPCCs. The USPCCs are the basis for the National Per Capita Medicare+Choice Growth Percentage. Most of the tables include information for the years 1993 through 2000. Caution should be employed in the use of this information. It is based upon nationwide averages, and local conditions can differ substantially from conditions nationwide.

Comparison of the Published USPCC with Current Estimates

Summary of Key Projections Under Present Law¹
Part A

Part B⁵

¹ Percent change over prior year.
² For entire year, 3.55% rural and 2.55% urban updates
³ For entire year, 3.3% rural and 1.8% urban updates
⁴ For entire year, 8.4% rural and 1.1% urban updates
⁵ Percent change in charges per aged Part B enrollee

Enrollment Projections Under Present Law (In Millions)
Non-ESRD

ESRD Part A

ESRD Part B

Part A Projections Under Present Law¹

¹ Average reimbursement per enrollee on an incurred basis, except where noted.





Part B Projections Under Present Law¹

¹ Average reimbursement per enrollee on an incurred basis.



Claims Processing Costs as a Fraction of Benefits

Approximate Calculation of the USPCC for Aged Beneficiaries
The following procedure will approximate the actual calculation of the USPCCs from the underlying assumptions for the contract year for both Part A and Part B. Because some of the underlying assumptions (Part A) are actually developed on a quarterly basis rather than an annual basis and some of the assumptions (Part B) are developed on a fiscal year rather than a calendar year basis, the following will only approximate the actual USPCC calculation.

Part A:

The Part A USPCC for aged beneficiaries can be approximated by using the assumptions in the tables titled "Part A Projections" and "Claims Processing Costs, as a Fraction of Benefits". Information in the Part A projections table is presented on a calendar year per capita basis. One can add the per capita amounts over all types of providers (excluding hospice) for the aged. Next, multiply this amount by 1 plus the loading factor for administrative expenses from the table labeled Claims Processing Costs, as a Fraction of Benefits. Then, divide by 12 to put on a monthly basis. The last step is to multiply by .98495 to get the USPCC for the aged non-ESRD. This final factor is the relationship between the total and non-ESRD per capita reimbursements in 1999. This factor does not necessarily hold in any other year.

Part B:

The Part B USPCC can be approximated by using the assumptions in the tables titled "Part B Projections" and "Claims Processing Costs, as a Fraction of Benefits". Information in the Part B projections table is presented on a calendar year per capita basis. One can add the per capita amounts over all types of providers for the aged. Next, multiply by 1 plus the loading factor for administrative expenses and divide by 12 to put on a monthly basis. Then multiply by .96369 to get the USPCC for the aged non-ESRD.

Source: HCFA web site: www.hcfa.gov