1. Financial Forecasting: Projecting Costs and Need for ADAP Britten Pund National Alliance of State & Territorial AIDS Directors November 27, 2012

2. Disclosures This continuing education activity is managed and accredited by Professional Education Service Group. The information presented in this activity represents the opinion of the author(s) or faulty. Neither PESG, nor any accrediting organization endorses any commercial products displayed or mentioned in conjunction with this activity. Commercial support was not received for this activity.

3. Disclosures (continued) Britten Pund has no financial interest or relationships to disclose. Professional Education Services Group staff have no financial interest or relationships to disclose.

4. Learning Objectives  By the end of the seminar, participants will: –Understand the process NASTAD has taken to gain input into the creation of an ADAP financial forecasting model, including outcomes from an ADAP Financial Forecasting Consultation and focus groups with ADAP coordinators. –Learn about the components ADAP coordinators have identified as necessary to create an accurate financial forecasting model to project costs and fiscal need for ADAP. –Gain practical knowledge on the importance of financial forecasting, including budget projections and identifying future need for a program.

5. Agenda  April 2012 ADAP Financial Forecasting Consultation  Progress: Creating an ADAP financial forecasting model  Conversation: What is missing?  Conversation: How to implement financial forecasting in your jurisdiction?  Questions and answers

6. April 2012 ADAP Financial Forecasting Consultation

7. Current Models  HRSA ADAP Budgeting Tool –Overview  Developed in 2003  Designed to assist State programs in anticipating program expenditures for budgeting purposes.  Utilizes eighteen (18) months of historical data, and assumes trends in medication expenditures and client utilization will remain constant.  Utilizes Microsoft Excel

8. Current Models (continued) –Limitations  Can only “hold” three years of data.  Lacks the degree of complexity that now exists within ADAP funding streams.  Assumes some inputs (i.e., unduplicated client counts) that can be entered as non-assumptions.  Potential to overestimate true costs (i.e., average cost per client), therefore skewing an accurate projection.

9. Current Models (continued)  Other models –Home-grown models using a multitude of formats. –Multiple models for ADAP projections, Medicare Part D projections, and other payer source projections. –Independent models from pharmaceutical companies and other private funders.

10. Defining Financial Forecasting for ADAP  Characteristics of the ideal ADAP financial forecasting model –Predictive –Explanatory –Convenient –Flexible –Adaptable –Simple/understandable –User patience –Margin of error

11. Identifying Data Elements  Questions to consider: –What data elements should ADAPs include in a financial forecasting model? –What trends should ADAPs be monitoring? –What information do ADAPs need to have to understand the data being inputted?

12. Identifying Data Elements: Overall Categories  Primary payer source –Medicaid –Medicare Part D –Private insurance –High-risk insurance pool (including PCIP) –ADAP only  Timeframe –Available funding –Available income –Insurance years –Available data  When do states receive data from contractors  Quality checks  Reconciliation

13. Identifying Data Elements: Overall Categories (continued)  Expenditures –By full-pay and partial-pay clients  Clients –Enrolled vs. served –New vs. recertified –Unmet need and waiting list  Attrition

14. Identifying Data Elements: Trends  What do you need to know? –Cash flow management –New enrollees (brand new AND lapse in ADAP coverage) –New users –Attrition –Insurance sub-categories –Average users per month by primary payer source –Average expenditures per month

15. Identifying Data Elements: Trends (continued)  What do you need to know? –Funding –Rebates/post-acquisition income –Relationship between enrollees and users by primary payer source –Average number of co-payments –Number of prescriptions –Number of individual drugs (in relation to combination therapies)

16. Identifying Data Elements: Timeframe  Minimum – 1 year  Maximum – based on validity of data and overall program timeline

17. Projecting Fiscal Needs for ADAP  The level and sophistication of data available determines how good the projection will be.  To project, you must acknowledge the basis for historical data. –In what context was the data collected? –What program changes were taking place that could impact data trends? –Was data collected in the same manner in which it is collected currently?

18. Projecting Fiscal Needs for ADAP (continued)  Three steps to projecting ADAP costs: –Analysis of client utilization –Analysis of the average cost per client –Integrate the inflationary trend  End result will be the overall program cost, including: –Changes expected –Changes attributed to clients –Changes attributed to expenditures

19. Projection Stratification  Time period –Month –Quarter –Six month –Annual  Drug class –What are the most costly medications on the formulary?  Margin of error –Range of expectation from the model –Low-high estimate –What is a sage margin of error (3-5%)? –Seasonality within the program.

20. Overall Numbers to be Projected  Number of clients served  Program income/rebates  Total cost for clients served  Insurance status  What it will take to eliminate a waiting list and/or cost-containment?

21. Progress: Creating an ADAP Financial Forecasting Model

22. Creating a Model: Options to Consider  Consultation participants clearly identified three components to an ADAP financial forecasting model: –Background information detailing factors to consider –The Model –Monitoring resources

23. Background Information: Factors to Consider  Relationships –Fiscal officer/analyst –Project Officer –ADAP advisory committee –Contractors –Other Ryan White Program part coordinators –Planning and consumer groups –Legislative champions (if allowable) –Contacts at other payer sources –Peer mentor –NASTAD

24. Background Information: Factors to Consider (continued)  Structure of state ADAP –What is the enrollment process for clients? –How does the ADAP dispense medications? –How does ADAP wrap around other payers? –Program history, detailing major changes nationally and within state program  ADAP timeline –Systems changes

25. Background Information: Factors to Consider (continued)  Resources –Glossary of important terms  Categorically or alphabetically categorized? –Definitions of variables included in the model –Variability of projections and seasonality of data –Unmet need –Reference to HRSA policy guidances and Ryan White legislation

26. The Model: Factors to Consider  Simple –Number of clients served –Average cost per client –Margin of error +-3%  Advanced –Simple model with the addition of:  Summary  Resources  Income  Other payers  Client enrollment  Client utilization  Economic factors  Expenditures and prescriptions filled  Impact of health reform

27. Conversation: What is missing?

28. Conversation: How to implement financial forecasting in you jurisdiction?

29. Questions and Answers

30. Obtaining CME/CE Credit If you would like to receive continuing education credit for this activity, please visit: http://www.pesgce.com/RyanWhite2012

31. Contact Information Britten Pund Senior Manager, Health Care Access bpund@NASTAD.org www.NASTAD.org