1. ALTCI Actuarial Study June 22, 2005

2. Mercer Government Human Services Consulting 2 Actuarial Study Objectives Determine key cost drivers Identify financing options that promote the goals of ALTCI Recommend a rate structure that will best match payment to the risk of the enrolled population

3. Mercer Government Human Services Consulting 3 Methodology Review historical Medi-Cal and Medicare CY1998-2000 FFS data Adjust data to include only populations and services expected to be covered under ALTCI Project data forward to CY2007 by category of service Adjust data for significant program changes including Medicare Part D

4. Mercer Government Human Services Consulting 4 CY2000 Data San Diego County Nursing Home Residents, MSSP, DD, IHSS, and Home Care (HC) account for 30 percent of the total ALTCI membership in San Diego, but 74 percent of the total San Diego Medi-Cal expenditures.

5. Mercer Government Human Services Consulting 5 San Diego County CY2000 Dually Eligible vs. Medi-Cal Only ABD Membership

6. Mercer Government Human Services Consulting 6 San Diego County Dually Eligible vs. Medi-Cal Only CY2000 PMPM ALTCI Medi-Cal Costs

7. Mercer Government Human Services Consulting 7 San Diego County Elderly vs. Disabled Membership

8. Mercer Government Human Services Consulting 8 Alameda, Contra Costa, and San Diego Counties CY1998–2000 Medi-Cal Costs High Cost Chronic Conditions

9. Mercer Government Human Services Consulting 9 San Diego County CY2000 Medi-Cal ALTCI PMPM Costs Total $495 Total NH $2,492 Community $303 Setting NHC $2,492 MSSP $1,172 IHSS $752 Well $182 DD $436 Frailty Medi-Cal Only $4,708 Dual $2,153 Medi-Cal Only $710 Dual $1,174 Dual $28 Dual $557 Medi-Cal Only $368 Medi-Cal Only $1,337 Medi-Cal Only $532 Dual $277 Medicare Status Aged $2,291 Disabled $1,855 Aged $3,023 Disabled $4,910 Aged $537 Disabled $577 Aged $963 Disabled $1,363 Aged $36 Disabled $18 Aged $196 Disabled $402 Category of Aid

10. Mercer Government Human Services Consulting 10 Preliminary Results Key Cost Drivers Setting – Nursing Home vs. Community Frailty – Nursing Home Certifiable/At Risk vs. Well Medicare Status – Dually Eligible vs. Medi-Cal Only Category of Assistance – Aged vs. Disabled Chronic High Risk Conditions – TBD

11. Mercer Government Human Services Consulting 11 Preliminary Recommendations Reimbursement needs to be sufficiently sophisticated to promote program goals Incentives should be included to promote increased community based services Savings achievable through more appropriate use of hospital, emergency room and nursing home services Administrative costs should be reflected in rates with sufficient consideration of start up costs Increased care management should be supported and funded

12. Mercer Government Human Services Consulting 12 Preliminary Recommendations (continued) Implement early reinsurance or risk sharing Capitated model should allow for flexibility of both Medi-Cal and Medicare funding sources

13. Mercer Government Human Services Consulting 13 Next Steps Complete projections Assess adequacy of Medicare reimbursement Finalize recommended rating structure Submit final report and recommendations