Health Care Cost Trends 2020

Background and Purpose  

The Health Care Cost Trends Program Steering Committee (HCCT PSC) is kicking off its search for 2020 research projects. The Health Care environment in the United States is reaching a tipping point as trends continue to outpace inflation. According to the National Health Expenditure data report produced by CMS, the cost of healthcare is now greater than 18% of GDP.  The 18/11 Initiative report, jointly produced by the Society of Actuaries and the Kaiser Family Foundation, states that while the US is spending 18%, other industrialized countries are spending an average of 11% of GDP on health care (thus the 18/11). In 2019, the SOA formed its Health Care Cost Trends Strategic Research Program to conduct research related to this topic.  The committee leadership polled the group to seek a preferential hierarchy amongst the topics which are of greatest interest for research. The preferred topics chosen by the committee are as follows:

  1. Innovations in Health Care
  2. Impact of Public Health on Health Care Approaches and Outcomes
  3. Cost and Utilization Trend
  4. High Cost Claimant
  5. Behavioral Health

One or more of the topics can be included in the response.  More detailed information on these topics can be found in the Appendix below.

Research Objective

The Health Care Cost Trends Program Steering Committee (HCCT PSC) is seeking a researcher or team of researchers to perform a study focusing on one of the preferred topics put forth by the HCCT PSC. Four steps are necessary to accomplish this:

  1. The researchers will define their objective and process. These include:
    1. Concisely defining the purpose of their study
    2. Providing background of what other researchers have done in the area 
    3. Use of relevant data
    4. Specifically describing the method(s) be used in the study
    5. Summarizing the potential results
    6. Discussing any impact on future trends
  2. The researchers will incorporate the findings of the study into a report to be made available on the Society of Actuaries website that discusses the importance of these findings. 
  3. The researchers will be expected to help promote the work. This includes:
    1. Writing articles for section newsletters
    2. Hosting webinars
    3. Presenting at Society of Actuaries Meeting Sessions
    4. Media Outreach
  4. Special Consideration will be given to proposals that include the following:
    1. Value to the profession – those proposals with greater applicability to a wide range of members will have greater appeal to the selection committee vs. those that only apply to a smaller niche
    2. Impact to the public – topics with interests across different stakeholder groups will get greater consideration than those which only address practicing actuaries

Letter of Intent

Parties that wish to participate must submit a brief Letter of Intent (LOI) providing the following information:

  1. List the topics addressed in the research
  2. The proposed title of the report and purpose of the research
  3. A description of a literature review and its findings
  4. A description of the research project (data and specific methods) and how it might be used by practicing health actuaries now or in the future
  5. A description of the expected deliverables, tools or other resources
  6. A rough estimate of the funding requirements, the ability of the applicant(s) to access any data needed  
  7. The qualifications (including any actuarial designations and any relevant experience in industry) of the applicant(s)
  8. A timeframe for completion of the research
  9. LOIs will be no more than 2 pages, with no less than 1-inch margins, no less than 11-point font, and no less than a space and a half. Quality of writing in the LOI will be a decision factor

Letters should be submitted to Erika Schulty, eschulty@soa.org, by the end of the day on September 30, 2019. Decisions on whether an applicant will be invited to submit a full proposal based on the LOI will be communicated by October 21, 2019.

Full Proposal

Parties who are invited to submit a full proposal would then provide the following information:

  1. Resumes of the researcher(s), including any graduate student(s), undergraduate(s), actuarial analyst(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  2. A more detailed description of the approach to be used (literature search, data, method), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
  3. A description of the expected deliverables and any supporting data, tools or other resources.
  4. Cost estimates for the research, including computer time, salaries, report preparation, and material costs. Such estimates can be in the form of hourly rates, but in these cases, time estimates would also be included. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor. Any amount funded will not be impacted by additional costs. Indirect costs will be limited to 10% of funding and total cost estimates typically do not exceed 100,000 for SOA sponsored projects.
  5. A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions.  The HCCT PSC is interested in completing this project in a timely manner. 
  6. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
  7. Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.  

Those that are requested to provide a proposal should submit it to Erika Schulty, eschulty@soa.org, by December 9, 2019. It is anticipated that all proposers will be informed of the status of their proposal by January 24, 2020.

Note: Proposals are considered confidential and proprietary.

Selection Process

The HCCT PSC will appoint a Project Oversight Group (POG) to oversee the project.  The HCCT PSC and POG are responsible for recommending which proposal to fund.  Input from other knowledgeable individuals also may be sought, but the HCCT PSC and POG will make the final recommendation, subject to SOA leadership approval. Actuarial participation is preferred in these proposals. The SOA's Health Research Actuary will provide staff actuarial support. Proposals will be principally funded through the HCCT Research budget.

Questions

Any questions regarding this RFP should be directed to Achilles Natsis, SOA Health Research Actuary (phone: 847-273-8846; email:  anatsis@soa.org).    

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries and the researcher.

The Health Care Cost Trends Program Steering Committee reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Health Care Cost Trends Program Steering Committee also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Health Care Cost Trends Program Steering Committee may choose to seek public exposure or media attention for the research.  By submitting a proposal, the researchers agree to cooperate with the Health Care Cost Trends Program Steering Committee in publicizing or promoting the research and responding to media requests.

The Health Care Cost Trends Program Steering Committee may also choose to market and promote the research to members, candidates and other interested parties.  The researchers agree to perform promotional communication requested by the Health Care Cost Trends Program Steering Committee, which may include, but are not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Appendix – RFP Preferred Topics

Innovations in Health Care

Different strategies for combating the continued rise of health care costs coupled with sub-optimal outcomes have been emerging in the US health care landscape. Innovations in Health Care could include new treatment protocols, new payment methodologies, or a completely revamped health care system. Innovations might result in greater costs but also greater efficacy of treatments.

A better understanding of how some of these health care systems interventions work, as well as the implications on the current health care environment, would help actuaries evaluate these new programs and ideas as they arise and help in their implementation. When properly implemented, these new programs and ideas could help improve the effectiveness of the US health care system by incentivizing providers to high quality care with less waste, helping to bend down the cost curve.

Impact of Public Health on Health care Approaches and Outcomes

The Impact of Public Health on the health care environment in the United States has become increasingly important over time as rising health care costs can be increasingly attributed to lack of adequate investment in public health. Medical and dental care providers who account for the public health status of their membership and attempt to address current and potential public health issues will be better prepared to take action that mitigates the impact of public health on the conditions of their members.   When public health is properly accounted for and addressed, there can be favorable implications on how the health care systems work as well as the current cost structure and trends.

Cost and Utilization Trends

The health care environment in the United States is reaching a tipping point as trends continue to outpace inflation. Understanding some of the factors of the trends and variations in these trends can help generate potential solutions to the current health care inflation, as well as a better understanding of what trends to expect in the future in the event of different market disruptions.

High Cost Claimants

In the current United States health care environment, about 5% of the population is responsible for 50% of health care costs. Large employers, insurers, government entities, and other payers are looking for better ways to prospectively identify these potential high cost members and help mitigate their risk through predictive analytics to identify these members, and then use care/case/utilization management programs and provider contracting to mitigate their costs.

Behavioral Health

Over recent years, Behavioral Health has become an increasing driver of costs and trends in health care. With the advent of Mental Health parity and the opioid crisis, there has been a renewed focus on mental health and substance abuse. Insurers and Mental Health / Behavioral Health providers are, attempting to better understand the future of behavioral health while also exploring better integration with physical and oral health to help drive lower trends, more efficient care, and better outcomes for those involved.