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DEPARTMENTOFHEALTH&HUMANSERVICESCentersforMedicare&MedicaidServicesCenterforConsumerInformation&InsuranceOversight200IndependenceAvenueSWWashington,DC20201Date:January16,2015RE:Final2016ActuarialValueCalculatorMethodologyIntroductionUndertheEssentialHealthBenefits,ActuarialValue,andAccreditationfinalrule(EHBFinalRule)thatwaspublishedintheFederalRegisterat78FR12834onFebruary25,2013,theDepartmentofHealthandHumanServices(HHS)requiresuseofanActuarialValue(AV)Calculatorbyissuersofnon-grandfatheredhealthinsuranceplansofferedintheindividualandsmallgroupmarkets,bothinsideandoutsideoftheAffordableInsuranceExchanges(alsocalled"Marketplaces")forthepurposesofdetermininglevelsofcoverage.
Section1302(d)(2)(A)oftheAffordableCareActstipulatesthatAVbecalculatedbasedontheprovisionofessentialhealthbenefits(EHB)toastandardpopulation.
Thestatutegroupshealthplansintofourtiers:bronze,withanAVof60percent;silver,withanAVof70percent;gold,withanAVof80percent;andplatinum,withanAVof90percent.
TheEHBFinalRuleestablishesthatademinimisvariationof+/-2percentagepointsofAVisallowedforeachtier.
1TheAVCalculatorrepresentsanempiricalestimateoftheAVcalculatedinamannerthatprovidesacloseapproximationtotheactualaveragespendingbyawiderangeofconsumersinastandardpopulation.
ThisdocumentismeanttodetailthespecificmethodologiesusedintheAVcalculation.
Thisdocumentisrevisedfromthe2015versionandalsoupdatedfromthedraft2016version,releasedonNovember21,2014,inresponsetocommentsreceived.
Specifically,thisdocumentincorporatesupdatestoaccountforthefinal2016AVCalculator.
ThefirstpartofthisdocumentprovidesbackgroundthatincludesanoverviewoftheregulationthatallowsHHStomakeupdatestotheAVCalculatoraswellastheupdatesthatareincorporatedintothefinal2016AVCalculator.
Forthesecondpartofthedocument,weprovideadetaileddescriptionofthedevelopmentofthestandardpopulationandtheAVCalculatormethodology.
ThefirstsectiondetailsthedataandmethodsusedinconstructingthecontinuancetablesthatareusedtocalculateAVincombinationwiththeuserinputs.
ThesecondsectiondescribestheAVCalculatorinterfaceandthecalculationofactuarialvaluebasedontheinterfaceandthecontinuancetables.
Thefinal2016AVCalculatorisavailableat:http://www.
cms.
gov/cciio/resources/regulations-and-guidance/index.
html.
Wenotethatthisdoesnotaffectany2015plansandisonlyapplicablefor2016plans.
1Under§156.
400,thedeminimisvariationforcost-sharereductionplansisasinglepercentagepoint.
Final2016ActuarialValueCalculatorMethodologyPage2SummaryofCommentsInlate2014,wesolicitedcommentsonadraftversionofthisdocument,aswellasthedraft2016AVCalculatorandthedraft2016AVCalculatorUserGuide.
Inresponsetocomments,wehavemadesomeeditstoboththeAVCalculatorUserGuideandMethodologydocumentstoprovideadditionalclarificationontheoperationandfunctionoftheAVCalculator,aswellassomeminortechnicalcorrectionstotheAVCalculator.
PartI:BackgroundRegulatoryBackgroundThisdocument,alongwiththe2014ActuarialValue(AV)Calculatorandthe2014AVCalculatorUserGuide,wasoriginallyincorporatedbyreferenceintheEHBFinalRuleandcomprisespartofthefinalrulefordeterminingactuarialvalueat45CFR156.
135.
Arevisedversionofthisdocumentfor2015,alongwiththe2015AVCalculatorand2015AVCalculatorUserGuide,wasincorporatedbyreferenceinthefinalrule,PatientProtectionandAffordableCareAct;HHSNoticeofBenefitandPaymentParametersfor2015(2015PaymentNotice),publishedintheFederalRegisterat79FR13744(March11,2014).
For2016,thisdocument,alongwiththefinal2016AVCalculatorandAVCalculatorUserGuide,arebeingupdatedthroughguidanceundertheparametersestablishedat45CFR156.
135(g).
Inthe2015PaymentNotice,wefinalizedthefollowingparametersforHHStoupdatetheAVCalculatorinfutureplanyearsunder§156.
135(g)thatmayinclude:1.
UpdatestotheannuallimitoncostsharingandrelatedfunctionsbasedonaprojectedestimatetoenabletheAVCalculatortocomplywith45CFR156.
130(a)(2);2.
UpdatestothecontinuancetablestoreflectmorecurrentenrollmentdatawhenHHShasdeterminedthattheenrolledpopulationhasmateriallychanged;3.
UpdatestothealgorithmswhenHHShasdeterminedtheneedtoadapttheAVCalculatorforusebyadditionalplandesignsortoallowtheAVCalculatortoaccommodatepotentialnewtypesofplandesigns,wheresuchadaptationscanbebasedonactuariallysoundprinciplesandwillnothaveasubstantialeffectontheAVcalculationsperformedbythethencurrentAVCalculator;4.
Updatestothecontinuancetablestoreflectmorecurrentclaimsdatanomorethanevery3andnolessthanevery5yearsandtoannuallytrendtheclaimsdatawhenthetrendingfactorismorethan5percentdifferent,calculatedonacumulativebasis;and5.
UpdatestotheAVCalculatoruserinterfacewhenachangewouldbeusefultoabroadgroupofusersoftheAVCalculator,wouldnotaffectthefunctionoftheAVCalculator,andwouldbetechnicallyfeasible.
Asdiscussedinthepreambleofthe2015PaymentNotice,whenweupdatetheAVCalculatorannually,wewillreleaseadraftversionoftheAVCalculatorforcommentthatwillincludeadraftAVCalculatorMethodologyandUserGuidetoexplaintheupdates.
AspartoftheprocesstoupdatetheAVCalculator,wealsowillconsultwiththeAmericanAcademyofActuaries(AAA)andtheNationalAssociationofInsuranceCommissioners(NAIC)onneededchangesandtakeinconsiderationothercommentsreceivedfromstakeholders.
Final2016ActuarialValueCalculatorMethodologyPage3OverviewoftheUpdatesIncorporatedintotheFinal2016AVCalculatorThissectiondetailsthekeychangesmadetotheAVCalculatorbetweenthefinal2015AVCalculatorandthefinal2016AVCalculator.
Forthe2015AVCalculator,weproposedupdatestotheAVCalculatorthatwerenotfinalized.
Instead,wefinalizedthe2014AVCalculatorasthe2015AVCalculatorwithanupdatedestimatedannuallimitationoncostsharingtohelpensurethatissuersdidnothavetomakebenefitchangesbetweenyear1andyear2.
Therefore,throughoutthisdocument,referencestothe2014AVCalculatorareapplicabletothe2015AVCalculator.
TheAVestimatesproducedbypreviousordraftversionsoftheAVCalculatorarenotvalidforusefor2016.
Onlythefinal2016AVCalculatormaybeusedforthe2016plans.
2Theupdatesdescribedinthissectionaresimilartoupdatesproposedinthe2015AVCalculatorMethodologythatwerenotimplemented.
Thefollowingisadescriptionandexplanationoftheseupdates.
Under§156.
135(g)(1),the2016AVCalculatorincorporatesanannuallimitoncostsharingbasedonaprojectedestimatetoenabletheAVCalculatortocomplywith45CFR156.
130(a)(2).
Forthe2016AVCalculator,theprojectedestimatesofthemaximumoutofpocketcosts(MOOP)limitandrelatedfunctionshavebeensetat$6,850,toaccountfortheestimated2016annuallimitationoncost-sharing.
Thefinal2016annuallimitationoncostsharingwillbedefinedbytheannualHHSnoticeofbenefitandpaymentparametersfinalrule.
IssuersthatarerequiredtomeetAVstandardsmustsubstitutethelimitestablishedintheregulationfortheprojectedestimatesstatedinthefinal2016AVCalculator.
Under§156.
135(g)(2),westatethatwewillupdatethecontinuancetablestoreflectmorecurrentenrollmentdatawhenHHShasdeterminedthattheenrolledpopulationhasmateriallychanged.
Indevelopingthe2016AVCalculator,weconsideredavarietyofdatasourceoptionsforupdatingtheenrollmentdistribution.
Ultimately,wedeterminedthatcurrentavailabledatasourcesdidnotincludecompleteindividualandsmallgroupmarketenrollmentfor2014.
Asaresult,wedecidednottoupdatebasedonenrollmentchangesfor2016,butwewillconsiderupdatestotheenrollmentdistributionforthe2017AVCalculator.
Forupdatesunder§156.
135(3)and(5),weusedtheoriginallyproposed2015AVCalculatorupdatesasthebasisforthe2016AVCalculatorupdates.
Theseupdates,whichweregenerallysupportedbystakeholders,weredevelopedbasedonactuariallysoundprinciplesthatwouldnothaveasubstantialeffectontheAVcalculationsperformedbythethencurrentAVCalculatororwereupdatestotheuserinterfacewhenachangewouldbeusefultoabroadgroupofusersoftheAVCalculator,wouldnotaffectthefunctionoftheAVCalculator,andwouldbetechnicallyfeasible.
Becausetheseupdateswereincorporatedintotheproposed2015AVCalculator,wehavealreadyreceivedcommentsontheseupdatesand,asstatedinthe2015PaymentNotice,wetookthesecommentsunderconsiderationwhenweweredevelopingthe2016AVCalculator.
245CFR156.
135states"CalculationofAV.
Subjecttoparagraphs(b)and(d)ofthissection,tocalculatetheAVofahealthplan,theissuermustusetheAVCalculatordevelopedandmadeavailablebyHHSforthegivenbenefityear.
"Final2016ActuarialValueCalculatorMethodologyPage4Akeychangeincludedinthe2016AVCalculatoristheuseofeffectivecoinsurancetodeterminewhentheMOOPlimitisreachedintheAVCalculatorinsteadofthegeneralcoinsurancerate.
Effectivecoinsuranceisdefinedasthenetimpactoftheplanbenefitdesignunitcostfeatures(copaymentsandcoinsurancerates)expressedasanoverallpercentagebenefittoanenrolleeacrossallcoveredservices.
Inthefinal2014and2015releases,theAVCalculatorusedtheuser-specifiedgeneralcoinsuranceratetocalculatethelevelofspendingatwhichanenrolleewouldreachtheMOOP.
Withtheeffectivecoinsurancechange,thiscalculationissimplifiedbyautomaticallyincorporatingallelementsoftheplanbenefitdesignintothecalculationofthelevelofspendingatwhichtheMOOPisreached.
Thischange,whichisbasedonactuariallysoundprinciples,allowstheAVCalculatortoapply100percentcoinsuranceforbothcopaymentbasedandnon-copaymentbasedplansinsteadofonlyallowingtheusertoapply100percentcoinsuranceforcopaymentbasedplans.
Asaresult,thischangeaddsadditionalfunctionalitytotheAVCalculatorandaddressesafrequentcommentthatwereceivedregardingthe2014and2015AVCalculators.
ThiseffectivecoinsurancechangeisaccompaniedbyachangeinthedefaultoperationoftheAVCalculatorwhentheuserleavesthecopaymentfieldblank.
The2014and2015AVCalculatorsapplieda$0copaymenttoselectpartsoftheservicecategoryifthecopayfieldwasleftblank,butstakeholderscommentedthatthisfeaturewasnotintuitivetotheuser.
TohelpsimplifytheoperationoftheAVCalculatorfortheuser,the2016AVCalculatorappliesa$0copaymentfortheentireservicecategorywhenthefieldisleftblank.
3Bymakingtheeffectivecoinsurancechange,wearealsoabletomakeimprovementstothealgorithmsintheAVCalculatortoaddresscommentsreceivedbystakeholdersregardingtheapplicationofthegeneralcoinsurancerateforprescriptiondrugs.
Withtheeffectivecoinsurancealgorithm,the2016AVCalculatorproducesthesameresultswhenageneralcoinsurancerateisspecifiedfordrugsandwhenthesamecoinsuranceratesarespecifiedforindividualdrugtiers.
Also,aspartofthiseffectivecoinsurancechange,anadjustmentismadetotheAVCalculator'salgorithmstousetheinpatientperdayquantityincalculatingthelevelofspendingatwhichtheMOOPisreached,ratherthananylimitedquantityspecifiedbylimitingthenumberofinpatientcopays.
Theinpatientperdayquantityistheaveragenumberofinpatientdaysperenrolleewithnoupperlimitonthenumberofinpatientdaysenforced.
Thisisincontrasttoamethodwhichwouldimposeamaximumonthenumberofinpatientdaysforagivenenrolleebeforecalculatingtheaveragenumberofinpatientdaysperenrollee.
ThischangeallowsamorereliablecomparisonofAVforplanswithandwithoutthatfeature.
Inresponsetotheproposed2015AVCalculator,wefoundthatcommentersweresupportiveofthechangetotheeffectivecoinsurancerate.
However,asmallnumberofplansmayexperiencelargershiftsinAVwhenapplying100percentcoinsuranceinthefinal2014and2015Calculatorsversusthefinal2016AVCalculator.
Thisunintuitivebehaviorcanoccurwhenausermayhavemistakenlyused100percentcoinsuranceinthefinal2014or2015AVCalculatorsforaplanbenefitdesignthatwasnotsufficientlycopaymentbasedtobedeemedacopaymentonlyplan.
The2016AVCalculatoralgorithmeliminatesthissourceofusererror.
3TheexceptiontothisoperationisforPrimaryCareandSpecialistOfficeVisitsthathavespecialcost-shareprovisionsfortheircomponentpartsforX-rayservicesbeingperformedintheofficesetting.
Inthesecases,thecopaymentfieldbeingleftblankorbeingsetat$0isapplieddifferentlytotakeintoaccountwhetherthecomponentpartisbeingincludedwithnocost-sharing.
Final2016ActuarialValueCalculatorMethodologyPage5WealsoreceivedacommentrequestingadditionalinformationonhowenteringcertainplandesignsindifferentwaysintotheAVCalculatorcouldyieldslightlydifferentAVs.
TheimplementationoftheeffectivecoinsurancefeaturemeansthatuserinputsaffectAVdynamically.
TheutilizationofeffectivecoinsuranceimpliesthatsubjectingabenefittothegeneralcoinsurancemaygiveadifferentAVversususingaspecificcoinsuranceforindividualbenefits.
Althoughinbothcasestheeffectivecoinsurancerateisidentical,whensubjectingaservicetothegeneralcoinsurancetheeffectivecoinsurancerateisusedwhereaswhensubjectingaservicetoauser-providedspecificcoinsurancetheuser-providedrateisused.
ThismayresultinslightvariationinAVsforwhatappearstobethesamebenefitdesign.
Thedynamicinteractionbetweenuser-inputsandeffectivecoinsurancecancausefractionalshiftsinAVinunexpecteddirectionsincaseswhereaservicehasalargeproportionoftheutilizationinthedeductiblerange;thisisespeciallytrueofprimarycareandspecialistofficevisits.
ThisinteractioniscausedbyanincreaseintheeffectivecoinsuranceratecausingtheMOOPtobeachievedatalaterpointofspending,anincreaseinthelevelofspendingatwhichthedeductibleismetduetogreatercoverageofserviceinthedeductiblerange,oranincreasedoverallMOOPbecauseoffewercopaysoccurringduringthedeductiblerange.
Similarly,largeshiftsinuser-providedcoinsuranceratesforserviceswithalargeproportionofoverallutilizationcancauseshiftsinAVinunexpecteddirectionsduetotheincreaseineffectivecoinsuranceratecausingtheMOOPtobeachievedatalaterpointofspending;thisinteractionisespeciallytrueofinpatienthospitalandemergencyroomservices.
Theutilizationofeffectivecoinsuranceallowsforanaccuraterepresentationofuserinputsduringthecoinsurancerange.
Asnotedinthefinal2016AVCalculatorUserGuide,designatinga"Coinsurance,ifDifferent"rateisforcaseswherethecoinsurancerateisinfactdifferentfromthegeneralcoinsurancerateoftheplan.
ToallowmoreplandesignstousetheAVCalculator,wealsoaddedfunctionalitytothe2016AVCalculatorinseveralareas.
First,forplanswithseparatemedical/drugdeductiblesandseparatemedical/drugMOOPs,the2016AVCalculatorsupportsMOOPsbetweentheindividualseparatedeductibleandtheMOOPlimit,eveniftheMOOPenteredislowerthanthesumoftheseparatemedicalanddrugdeductibles.
The2016AVCalculatoralsoallowsplanswithseparatemedicalanddrugdeductiblesandcombinedMOOPstohaveMOOPslowerthanthesumofthemedicalanddrugdeductibles.
IfthesumofthemedicalanddrugdeductiblesisgreaterthanthecombinedMOOP,theAVCalculatorassumesthatthefullmedicaldeductibleissatisfiedandadjuststheeffectivedrugdeductibleifneeded.
Bothofthesechangesweremadebasedoncommentsreceivedfromstakeholdersthatwantedmoreflexibilityininputtingthekeycost-sharingparametersofplandesignsintotheAVCalculator.
Forclarification,wealsoaddedanerrormessagewhentheMOOPequalsthedeductiblesandthereisacoinsuranceratebelow100percent.
BecausethereisnocoinsurancerangeintheAVCalculatorwhenthedeductiblesequaltheMOOP,thesetypesofplansshouldreflectonly100percentcoinsurancesincethereisnocoinsuranceratebeingapplied.
Also,asclarification,copaysareappliednormallyduringthedeductiblerangefortheseplansiftheuserindicatessuchabenefitstructureintheplanbenefitdesign.
Afeaturewasalsoaddedtoallowservicestobeappliedtothedeductiblefirst,andthencopayments.
ThisfeaturewasaddedbasedoncommentsreceivedtoallowmoreflexibilityintheapplicationofcopaymentsintheAVCalculator.
Final2016ActuarialValueCalculatorMethodologyPage6Additionally,certainotherminormodificationsweremadetothe2016AVCalculator.
Thesemodificationsincludedachangetothecalculationoftheper-member-per-yearbenefitatthelevelofspendingatwhichMOOPisreachedinthecaseofaseparatemedical/drugdeductibleandcombinedMOOPtonolongercalculatethedrugbenefitasexclusivefrommedicalbenefit.
Thismodificationisintendedtoaddressafrequentcommentthatwereceiveregardingtheoperationofthedrugdeductible.
Thischangealignedthecalculationofthebenefitafteradeductiblehasbeenmetwiththecalculationdoneinthecaseofcombineddeductibles.
ThepurposeofthismodificationistosimplifythecalculationwithfewerstepsandtherebyreducethepotentialforimproperinteractionwiththealgorithmstoallowmoreplansdesignstousetheAVCalculator.
Othermodificationsincludedtreatingskillednursingfacilitybenefitsbelow$10,000intotalallowedchargesas$0toavoidfluctuationsinAVduetoerraticutilizationpatterns,andtopreventimproperinteractionwiththealgorithmsintheAVCalculator.
Inresponsetothesechangesthatwereincludedintheproposed2015AVCalculator,severalcommentersnotedconcernsabouttheapplicationofthecapontheserviceunitcostsandwereceivedacommentregardingswitchingbetweenmetaltiers.
Inthecasethatacopaymentisbeingappliedwiththeremainderoftheserviceunitcostapplyingtothedeductible,thecopaymentbeingappliedtoraisethelevelofspendingatwhichthedeductibleismetisnowbeinglimitedtothetotalserviceunitcost.
Thismodificationinthe2016AVCalculatoralignsthistreatmentofcopayswiththecasewheretheremainderoftheserviceunitcostnetofcopaysisabenefittotheenrolleeandwaspreviouslyincorporatedinthe2014and2015AVCalculators.
Additionally,thecopaymentforserviceswithzeroutilizationatthepointatwhichtheeffectivecoinsuranceiscalculatedwillnowbelimitedtothemeanserviceunitcostoftheentiredistributionallowingformoreaccuratecalculationofAVsinvolvingserviceswithlowutilizationandzerodeductibleplans.
Wealsoreceivedcommentsontheproposed2015AVCalculatorregardingslightlyinconsistentresultswhenautomaticallyswitchingbetweenmetaltiers.
ThiswasbeingcausedbyincorrectlyretainingthevariablecontainingthelevelofspendingatwhichMOOPismetbetweeniterationsandhasbeenfixedforthe2016AVCalculator.
Wealsoincludedafewupdatesinthe2016AVCalculatorfromtheproposed2015AVCalculatortoassistusers,includingchangingtheAVoutputfromonedecimalplacetotwodecimalplacestomatchthePlansandBenefitsTemplatethatusesanintegratedversionoftheAVCalculator.
ThepurposeofthischangeistohelpreduceuserconfusionwhencomparingtemplatesandunderstandingtheresultsoftheAVCalculator.
ThischangedoesnotaffecttheestimatesproducedbytheAVCalculator.
Althoughthedisplayedtotalisroundedtothenearesthundredth,onlytheexactpointestimateproducedbytheAVCalculatordetermineswhetherornotaplaniswithinthedeminimisvariationpermittedforagivenmetaltier.
AfeaturewasalsoaddedforuserstosavetheirAVcalculationoutputwithacustomizableprefixtab.
ThefeatureisintendedtoassistusersandsavethemtimeindevelopingtheirAVcalculations.
Apop-upwindowisincludedinthe2016AVCalculatorforusersinputtingcost-sharingreduction(CSR)planstodirectuserstoselecttheCSRmetaltierlevel.
Thisfeaturewasaddedtomakethisselectionmoreintuitivetotheuser.
UpdatestotheUserGuideandpop-upboxesareincludedinthe2016AVCalculatortoassistusersinunderstandingthefunctionalityoftheAVCalculatorandtohelpprovidetechnicalassistanceininputtingdifferenttypesofplandesigns.
Lastly,weunlockedtheAVCalculatorinresponsetocommentsreceivedabouttheproposed2015AVFinal2016ActuarialValueCalculatorMethodologyPage7Calculator.
ThisallowsuserstoviewthesourcecodefortheAVCalculatoralgorithmashasbeenthecaseforboththefinal2014and2015AVCalculators.
Notethattheworkbookstructureisalsounlockedsothatusersmaymakecopiesofoutputtabs.
However,usersshouldnotmoveorcopytheoriginal"AVCalculator"tab,asdoingsowillresultincalculationerrorsforsubsequentruns.
Thisaddedfunctionalityshouldonlybeusedafterreviewingtherelevantinstructionscontainedinthe2016AVCalculatorUserGuide.
Additionally,usersshouldnotrevealhiddenrowsinthe"AVCalculator"tab.
DoingsoinvalidatestheAVestimatesproducedbytheAVCalculatorduetothepotentialintroductionofcalculationerrors.
Inresponsetotheproposed2015AVCalculator,commentersweregenerallysupportiveoftheaboveupdatestothealgorithmsbasedonHHS'sdeterminationfortheneedtoadapttheAVCalculatorforusebyadditionalplandesignsortoallowtheAVCalculatortoaccommodatepotentialnewtypesofplandesigns,aswellastheaboveupdatestotheuserinterface.
Alloftheaboveupdatesunder§156.
135(g)(3)wereimplementedwiththeintentiontonothaveasubstantialeffectontheAVcalculationsperformedbythethencurrentAVCalculator.
Inadditiontotheupdatesthatwemade,wealsoreceivedavarietyofcommentsandstakeholderfeedbackonadditionalchangestobetterimprovethealgorithmsandtheuserinterface.
Whileweconsideredthesecomments,wedidnotimplementthesechangesinthe2016AVCalculatorduetoourdesiretolimitthechangesbetweenthe2016versionand2015versionoftheAVCalculator.
Specifically,wefoundthatseveralofthealgorithmrecommendationswhereeithertoocomplextoimplementorwouldrequireaclaimsdatarefreshtoimplement.
Fortheuserinterfacerecommendations,wewereconcernedthatsomeoftherecommendationsmightbeconfusingforcertaingroupsofAVCalculatorusers.
Regardless,weintendtotakethesecommentsunderconsiderationindevelopingfutureversionsoftheAVCalculator.
Wereceivedsimilarcommentsregardingthedraft2016AVCalculator.
Specifically,wereceivedcommentsregardingwhenthedataisrefreshedintheAVCalculatorinfutureyears,recommendationsforupdatestotheuserinterface,andcommentsabouttheprocessforfutureupdates.
Asaresultofthecommentsreceivedonthedraft2016AVCalculator,wemadesometechnicalcorrectionsinthefinal2016AVCalculator.
Thesetechnicalcorrectionsincludedtwochangestothex-rayportionoftheeffectivecoinsurancecalculation.
Weremovedadouble-countingoftheunclassifiedportionofx-raysfromtheeffectivecoinsurancealgorithminthecaseswherethex-rayservicesaresplitintoprimarycareandspecialtycomponents.
Additionally,thedraft2016AVCalculatorwasnotcountingtheunclassifiedportionofx-rayswhenx-rayswerenotsubjecttoacoinsuranceorcopayandeitherprimarycareorspecialistvisitswerenotsubjecttoacoinsurance.
Thishasbeencorrectedbynolongersplittingthex-raysintoitscomponentpartswhenx-raysarenotsubjecttoacoinsurancebecausethisqualifiesasa"specialcost-sharingprovision"pertheUserGuide'sinstructions.
WealsocorrectedaruntimeerrorbypreventingthecalculatorfromdividingbyzeroinaspecificcasewheretheeffectivecoinsurancewasarbitrarilyclosetooneandcorrectedtwoprorationvariablereferencesintheHSAportionofthecode.
Becauseourtechnicalcorrectionswerelimited,mostplanswillnotseeanAVimpactbetweenthedraftandfinalversionsofthe2016AVCalculatorandofthoseplansthatareimpacted,theAVchangeshouldberelativelyminor.
WealsonotethattheMay16,2014FAQsclarifythatissuersmustalwaysuseanactuariallyFinal2016ActuarialValueCalculatorMethodologyPage8justifiableprocesswheninputtingtheirplandesignsintotheAVCalculator4andthattheAVCalculatorisintendedtoestablishacomparisontoolandwasnotdevelopedforpricingpurposes.
Finally,oneofthenewupdatesinthe2016AVCalculator,whichwasnotintheproposed2015AVCalculator,isanupdatetothetrendintheclaimsdataintheAVCalculatortoaccountfor2015and2016.
Under§156.
135(g)(4),westatethatwewillconsiderannuallytrendingtheclaimsdatawhenthetrendingfactorismorethan5percentdifferent,calculatedonacumulativebasis.
Specifically,theunderlyingcontinuancetablesforthe2016AVCalculatorhavebeenupdatedtoaccountfortheclaimcostsbeingtrendedforwardanadditionaltwoyearsfromthefinal2015AVCalculator,whichwasbasedonestimated2014claimcosts,atarateof6.
5percentperannum.
WedevelopedthetrendfactorbasedonananalysisofaggregatedpremiumratedatacollectedthroughtheUnifiedRateReviewTemplates(URRT)for2014and2015.
Thesedatawererepresentativeoftheindividualandsmallgroupmarketandaccountedforotheractuarialadjustments,suchastheimpactoftransitionalreinsurance.
This6.
5percenttrendestimatereflectstheprojectedclaimsdistributionchangestothestandardpopulationthatwouldbeenrolledinmetallevelplans,andwasestimatedspecificallyforusewiththeAVcalculatoronly.
Webelievethisestimateisconsistentwithcurrentindustryestimates.
However,wenotethatsomeavailabledata,particularlyforbroaderemployer-sponsoredcoverage,haveshownslowergrowthintotalmedicalexpenditures.
Wesoughtcommentonwhethersuchestimatesareapplicableinthiscontext,andonwhetherthereareotherpublisheddataorprojectionsthatcouldbetakenintoconsiderationforestimatesforfutureyears.
Inresponsetothedraft2016AVCalculator,thecommentsgenerallyagreedwiththetrendingratebeingappliedintheAVCalculatortoaccountfor2015and2016.
Wealsoreceivedcommentsforfutureconsiderationregardingthetrendingfactorandtheupdatingoftheclaimsdata.
ThischangeinthetrendestimateaffectsallcurrentAVsinthe2016AVCalculator.
BasedoncommentsandupdatesdetailedinthisSection,wehaveupdatedtherestofthisdocumentandtheUserGuideinaccordancewiththefinal2016AVCalculatormethodologiesandoperations.
PartII:AVCalculator'sMethodologyandOperationDataSourcesandMethodsThissectiondescribesthedataandmethodsusedtocreatethebuildingblocksoftheAVCalculator,includingthedevelopmentofthestandardpopulation.
TheinputsforAVcalculationareinformationonutilization,cost-sharingandtotalcostsforhealthservicesforastandardpopulationofhealthplanenrolleesresemblingthosethatwerelikelytobecoveredbyindividualandsmallgroupmarkethealthinsurancein2014;thestandardpopulationdevelopedfor2014isnotmodifiedforthe2016AVCalculator.
Thisinformationisusedtocreateaseriesofcontinuancetablesthatdescribethedistributionofclaimsspendingforapopulationofhealthinsuranceusersthatwerefertoasthestandardpopulation.
Thestandardpopulationisthebasisforthesecontinuancetablesfromautilizationperspective.
4SeeFrequentlyAskedQuestionsonHealthInsuranceMarketReformsandMarketplaceStandards(Question3)http://www.
cms.
gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Final-Master-FAQs-5-16-14.
pdf.