2016 STRATEGIC & FINANCIAL PLAN UPDATE. Prepared for the Connect for Health Colorado Board of Directors May 11, 2015

Transcription

1 2016 STRATEGIC & FINANCIAL PLAN UPDATE Prepared fr the Cnnect fr Health Clrad Bard f Directrs May 11, 2015

2 Executive summary 1) Cnnect fr Health Clrad is apprximately mid-way thrugh its 2016 planning prcess. Reminder cnstant gals in frnt f us: 1. Optimize the custmer experience 2. Stabilize & right-size staffing, systems, prcesses 3. Put Marketplace n the path t financial sustainability 2) We cntinue t receive valuable input t ur many planning elements frm all stakehlders, which is greatly infrming ur planning decisins and recmmendatins 3) We received slid directin during ur past tw jint Finance-Operatins Cmmittee meetings n several f ur mst critical business cases, including: Enrllment prjectins, SHOP, MA Site, Service Center structure, IT planning, Assistance Netwrk planning, Sales Channel planning, and initial financial frecasts 4) SES End-t-End Review RFP results are in; the jint Cmmittee reviewed and recmmends hlding ff n the Review given timing and cst. 5) Tday: 1) Update n the planning and budgeting prcess 2) Gain minimum Assistance Netwrk funding level cmmitment t bridge AN funding 3) SES E2E Review recmmendatin and decisin 4) Intrduce Fee-setting ptins, timing requirements, and apprval prcess 2

3 2016 Budget Prcess Input & Impact Scan Input: Advisry Grups, Bard, Cmmunity, Legislature, Staff, Stakehlder State-based Exchange Budget, Staffing, Fees Cmparisns, as available Strategy & Tactics Business Case Develpment Cntinued Inputs Enrllment Frecasts Operatinal Service Levels Business Driver Case Develpment MA Site Service Ctr. SHOP Medicaid Matching Optimizatin Iteratin: Discretinary Items Cntinued Inputs Business Driver Case Develpment: Sales & Marketing Asst. Netwrk Capital Investments Reserves & Cntingency Revenue: Assessment Fees Recmmendatin Strategy & Budget Integratin Cntinued Inputs Business Plan<>Budget Iteratins Cmmittee, Bard, CMS, LIRC Reviews 3

4 Revenue, Expense & Capacity Drivers Revenue Drivers Health Plan Fee Assessment Plan Pricing Medicaid reimbursement Brad Market Assessment Ancillary Prduct Develpment New funding surces APTC Index Level Expense Drivers Eligibility System functinality Staffing levels Cnsumer interface & service levels Carrier interface efficiency APTC Index mvement, plan-change rate Custmer path visibility Decisin Supprt Audit & Oversight vlume, depth, breadth Medicaid<>APTC Plicy differentials Marketing, Outreach, Channel supprt SHOP functinality Takeaway: There is significant ptential t manage ur revenue and cst drivers thrugh this planning & budgeting decisin prcess. 4

5 Business Cases in Develpment 5 Descriptin Tp Decisin Cmpnents Directin 1. Enhancements t SHOP prduct ffering Enrllment Targets & 2. Develpment f strategy arund transitin plans Sales Business Case 3. SES functinality, effectuatin rate Service Center Structure/Renegtiatin SHOP Sales Channels Assistance Netwrk (AN) IT, Decisin Supprt, Brker Prtal, V Expectatins regarding service levels 2. Physical lcatin f primary and verflw service centers 3. Strategies fr nn-marketplace calls (re-direct r supprt) 1. Cmpletin f market due diligence and the RFP prcess 2. Financial ROI s f sustaining structure vs. utsurcing 3. Expansin f Small Grup Market t 100 r less 1. Distributin d apprpriate level f sales targets acrss channels 2. Initiatives that will supprt and drive sales and engage key channels 3. Develpment f Brker lead tl 1. Develpment f alignment strategy 2. Refcusing enrllment best practices 3. Significant partnering with Marketing and Outreach teams and cmmunity based champins 1. ROI, Funding Priritizatin 2. Functinality imprvement, regulatry requirements 3. Evaluatin f enhancements in new versin f cde and relative impact n sales & csts 4. Stay n mst current versins f cde t stay under warranty and receive prduct fixes 5. Decisin Supprt tls effectiveness assessment 1. Mderately aggressive 3-year targets presented with enrllment drivers reviewed internally and with the Jint Cmmittee 2. The Cmmittee recmmended prceeding as presented 1. RFP respnses reviewed, including service levels, strategy, lcatins, csts, systems, cntract structure, and management 2. Negtiatin strategy will be discussed in Executive Sessin 1. Tw ptins presented, with ptential ROI and service levels, capacity, functinality, and timelines debated 2. The Cmmittee recmmended prceeding with utsurcing explratin, RFP distributin, and evaluatin f respnses 1. Reviewed sales channel strategies, plans, estimated enrllment prjectins by channel, Bard supprt 2. N Cmmittee recmmendatin sught; input cllected 1. Reviewed Statement f Need, ACA requirements, current status, KPI s, market segmentatin and strategy, timeline, Bard supprt, rec. minimum funding cmmitment ($500k) 2. Cmmittee supprted general directin recgnizing TCHF grant is pending apprval 3. Bard Request: Apprve minimum funding cmmitment t assist in grant award and bridge funding fr the AN 1. Reviewed High-level 3 year IT radmap, current stabilizatin phase cmpnents, Key prjects, prelim cst prjectins 2. N Cmmittee recmmendatin sught; input cllected

6 Business Cases in Develpment Descriptin Tp Decisin Cmpnents Directin Marketing Branding Health Literacy Staffing Plan Fees 1. Educating and raising awareness f financial assistance & Marketplace w/ut advertising $ 2. Better supprt Navigatrs/Brkers w/limited resurces 3. Still meet enrllment gals w/resurce limitatins 1. Balancing replacement cnsulting staff with FTEs and priritizatin f same 2. Staffing plan fr remainder f 2015 that supprts grwth and sustainability. 3. Staffing plan t supprt FY Preliminary perating and capital expenditure mdels & assciated cash flw expectatins 2. Develp revenue budgets and recmmendatins fr fees 3. Timing requirements (Carriers, DOI, Marketplace) 1. Cmmittee in later May 1. Cmmittee in later May 1. Cmmittee reviewed 3-year fee-level scenaris against iterative expense frecasting mdels, cash flw estimates, and additinal cnsideratins 2. Intrducing tpic t Bard tday, decisin required by May 18 6

7 7 SALES GOALS AND CHANNEL INITIATIVES FOR FY 2016

8 Enrllment Prjectins ( ) Primary Enrllment Drivers: Retentin rates New business: General New business: Eligibility prcess imprved thru-put and recapture New business: Transitin plans Life Change Event vlume Effectuatin rate SHOP size grup increase Enrllment Type Cvered Lives 6/30/15 Cvered Lives 6/30/16 % Inc v 2015 Cvered Lives 6/30/17 % Inc v 2016 Cvered % Inc Lives 6/30/18 v 2017 Individual- Grss 142, ,306 59% 256,242 17% 295,178 10% Individual- Effectuatin 111, , , ,142 SHOP: Small Grups % 1,226 60% 1,874 53% Cvered Lives 2,688 6, % 12,256 78% 15,935 30% 8

9 Ratinale fr Sales Targets The third and subsequent Open Enrllment Perids must build ff the success achieved thus far There is the ne and nly pprtunity in OEP III t recapture Individual enrllments lst due t SES cmplicatins Several unique market frces are presenting an increased sales pprtunity in FY16 and FY17: 1.) The end f transitin plans in bth segments, and the expansin f the definitin f small grup business Cnnect fr Health Clrad has refined its partnership with Brkers and Health Cverage Guides-nw we must capitalize n their passin and the bks f business they have entrusted t the Marketplace 9

10 What the Ops/Finance Cmmittee Outlined fr the Sales Channel Teams Feedback n Enrllment Targets: Mderately aggressive, dependent n enhancements and driving perfrmance, agreement with targets and directin and.. agree with the belw requests fr Bard supprt f sales: Supprt f aggressive targets thrugh: Accuntability t deliver SES enhancements t the Channels Cmmitting t Assistance Netwrk directin Participating in Brker appreciatin events Visiting the Service Center Participating in cmmunity awareness and brand building events 10

11 11 ASSISTANCE NETWORK STRATEGIC ALIGNMENT

12 Ratinale fr Assistance Site Alignment Strategy Nw is the time t build n 2 years f brad utreach and the fine wrk by 50+ Assistance Sites- best practices, winning strategies, etc. Evlving the prgram t fcus n cntributin t Marketplace sustainability, ie: balance between revenue cntributin and fiscal cnservatism needed t maintain this imperative prgram fr the lng term Ensuring the grants received t supprt Marketplace are nt redundant Fcus resurces, effrts, lessns learned t key cmmunities acrss the gegraphy and demgraphy f Clrad 12

13 Key Perfrmance Indicatrs Acrss All Assistance Sites Ttal OEP1 + Pst OEP 1 + OEP 2 + Pst OEP 2: Oct. 1, 2013-Apr Reached Appintments Medicaid/CHP+ Enrllment (24%) Marketplace Enrlled 230, ,079 27,465 15,566 *Self-Reprted by AS 13

14 Recmmended Site Types fr Cntinued Engagement and Further Budget Develpment Draft Distributin f ~ 2 4 S i t e s Number f Sites Funding Range 2 Less than $50,000 5 $50,000 t $99,999 9 $100,000 t $150,000 8 $200,000 t $250,000 Estimated $3 millin fr distributin ~ 20 t 23 rganizatins gegraphically fcused ~ 3 t 5 rganizatins targeting specific ppulatins statewide 14

15 What the Ops/Finance Cmmittees Outlined fr the Assistance Netwrk Team Cnnect fr Health Clrad endrses the imperative value f the Assistance Netwrk t the missin f Cnnect fr Health Clrad The Cmmittees supprt the Management team in their directin t strategically align the Assistance Netwrk: Based n ur hard-wn cumulative experience tw years pst-launch, Based n a deeper appreciatin fr Clrad s unique needs and reginal diversity, Based n the strng relatinships established with partner rganizatins statewide Awareness that we have submitted a grant applicatin t The Clrad Health Fundatin fr $2,500,000 fr FY and we are seeking apprval fr a base amunt f $500,000 t serve as the required matching perating funds t prceed with securing the grant 15

16 Assistance Netwrk Recmmendatin: Minimum Funding Cmmitment Minimum Funding Cmmitment Request: 1. Request: Prvide cmmitment f a minimum f $500,000 budget allcatin t the FY2016 Assistance Netwrk prgram 2. Why d we need the cmmitment ahead f finalizing the budget 1. Assistance sites (and the Marketplace) wish t retain the trained and talented Health Cverage Guides fr OE3; funding level is required fr Sites t make that cmmitment t their emplyees 2. Matching funds are required t evidence ur cmmitment t the AN Prgram fr the Clrad Health Fundatin t evaluate ur grant prpsal 16

17 17 MEDICAL ASSISTANCE SITE OPTIONS AND DIRECTION

18 Backgrund and Ratinale fr MA Site Capabilities Tp Reasns Have MA Site Capabilities: As custmers prceed thrugh the Eligibility Determinatin phase and if they d NOT receive a RTE, Marketplace-Brkers and HCGs have n way t intervene withut CBMS access Verificatins require access t and in depth knwledge f CBMS Simultaneus Enrllment can be mre tightly cntrlled with end t end interventin ability Currently, Marketplace custmers are being handled by a multitude f Medical Assistance Sites... We need t wn the custmer experience 18

19 MA Site Prjectins Scenari 1- CURRENT STATE with 2015MCD Estimates Scenari 2- Medical Asst. site w/ Crdinated Referral Strategy Wrk Streams Handled by MA Site Eligibility Applicatins (Assumes Expedited Pathway) OPEN ENROLLMENT Nvember - January Enrllment Wrap Ups February - March Life Change Event Enrllments April - Octber TOTAL OPEN ENROLLMENT Nvember - January Enrllment Wrap Ups February - March Life Change Event Enrllments April - Octber TOTAL $154,352 $56,719 $37,813 $248,884 $154,352 $56,719 $37,813 $248,884 Verificatins $66,173 $33,086 $16,543 $115,802 $66,173 $33,086 $16,543 $115,802 Case Maintenance $46,999 $46,999 $46,999 $140,997 $46,999 $46,999 $46,999 $140,997 Medicaid Cases Presenting t Cnnect fr Health Clrad $630,214 $283,596 $37,813 $951,624 $378,129 $113,439 $37,813 $529,380 TOTAL COSTS $897,738 $420,401 $139,168 $1,457,307 # $645,652 $250,243 $139,168 $1,035,063 Subttal withut Medicaid $267,524 $136,805 $101,355 $505,683 # $267,524 $136,805 $101,355 $505,683 Csts Nt included: These Csts reflect Eligibility and Verificatins FTE nly. There are additinal csts assciated with supervisin, audit and appeals that have nt been included. There are als indirect csts t Cnnect fr Health in the areas f Finance, Human Resurces, Infrmatin Technlgy and Administrative Supprt. Additinal Leased Space and Operating Csts may als need t be factred in. 19

20 Optin 1: Marketplace Becmes an M.A. Site Optin 2: Marketplace Cntracts with and M.A. Site OPTION 1: Benefits Gain versight f cases and expand ability t clsely mnitr wrklad Funding thrugh HCPF and marketplace revenue culd ffset cst f staff Culd hire current HCPF cntractrs OPTION 2: Benefits Cntractr will be able t perfrm CBMS related wrk fr ur Marketplace custmers An existing MA sites will have knwledge and experience expediting the start up time MA Site can wrk/accept all general Medicaid cases Ptential cst allcatin frm CMS 20

21 What the Ops/Finance Cmmittee Outlined t the MA Site Prject Team Supprts Optin 2 fr its speed t executin advantage Understands current cntract with HCPF ends 5/15, and the need fr cntinued capabilities are immediate Supprts Medicaid strategic referral initiatives; thus resurcing Medicaid eligible flks t cunties, etc. wh are experts Supprts pursuit f cst allcatin effrts t mitigate csts related t MA Site activities related t Medicaid eligibility 21

22 22 STRATEGIC MARKET DIRECTION SMALL EMPLOYER HEALTH OPTION PROGRAM

23 New Partnership Small Emplyer Marketplace - Ratinale The BEST partnership includes: slid technlgy, small grup expertise and market credibility Current csts utweigh benefits We desire a slutin that leapfrgs the Marketplace int a market leader The need t mve frm slely an IT platfrm t an integrated business slutin is driving an RFP prject t white label A Small Grup Marketplace is required by federal law Clrad is a state f small businesses, with 85% f cmpanies emplying 10 emplyees r less 2016 pses great grwth pprtunity w/transitinal plans 2017 pses great grwth pprtunity w/expanded market 23

24 Financial Imprvement: Small Grup Marketplace Revised Strategy Incremental Revenue/Expense (000 s) Year Revenue $423 $1,083 $1,930 $2,510 Expense** **Preliminary Assumptins $3,002 $1,599 $1,316 $1,334 Margin $(2,579) $(516) $614 $1,176 24

25 25 The Small Business Marketplace- Prject Timeline

26 What the Ops/Finance Cmmittee Outlined t the Small Grup Prject Team Cnfirmed the pprtunities fr grwth Supprts the imperative t select a partner wh can ffer an integrated business slutin Understands partner selectin will ccur in early June 26

27 27 SERVICE CENTER & INFORMATION TECHNOLOGY

28 Service Center Planning Timeline Review prpsals frm vendrs t 4/24 Present summary findings t Ops Cmmittee 4/28 Additinal negtiatins and review 4/24 5/7 Bard apprval n negtiatin strategy - 5/11 Cntinued negtiatins 5/26 Final cntract week f 6/4 FY 2016 Service center budget finalized week f 6/4 Item Range Cmments Ttal cst f service center Answer time SLA Cntract types Cntract cmmitment Wrk lcatin $ $17.8M (33% reductin frm FY ~4.5M savings) 80/300 t 8/360 4 r 5 years Bth vendrs prvided prpsals with exclusins, this is the all in cst Bth assume SES savings. Bth include SHOP csts. Bth vendrs are able t define ther SLAs and be held accuntable t them Variable/fixed with SLA and credits r nt t exceed price Bth retain call center staff in Clrad Springs, bth use reginal lcatins with lwer cst f living fr verflw and/r lwer skill staff Technlgy refresh Amrtized ver term f cntract nt priced separately 28

29 Key IT prjects ver next 20 mnths OEP Begins Prjects FY2015 FY 2016 FY 2017 Calendar Year 2015 Calendar Year 2016 Q Q Q Q Q Q Q Q Shared Eligibility System Imprvements SES imprvements Fllw n SES imprvements 2015 Marketplace imprvements Marketplace 3.0 Carrier EDI imprvements Change EDI implementatin Renewals Cmplete Change EDI OEP Onging imprvements Target architecture / 2016 Marketplace imprvements ( 4.0 ) Planning and Preparatin Executin SHOP Implementatin Transitin BI imprvements Planning and implementatin Onging imprvements Service Center Technlgy Refresh Planning and implementatin Onging imprvements 29 Cntract review and renegtiatin Planning and analysis Negtiatin

30 Preliminary IT prject cst prjectins fr FY 2016 / 2017 Prject FY 2016 Cst Prjectins FY 2017 Cst Prjectins Ttal FY 2016/17 Prjectins Cmments SES imprvements $ 4,800,000 $ 800,000 $ Assumes additinal changes are 5,600,000 needed after September 2015 Assumes limited ability t make changes t Marketplace fr Marketplace OEP ther than SES (e.g, defect $ 750,000 $ - $ 750,000 Imprvements fixes, renewals prcessing imprvements, sme usability imprvements) Carrier EDI imprvements $ 500,000 $ 300,000 $ 800,000 Assume EDI will be cmpletely wrking with all carriers by end f FY 2016 and nging imprvements csts are abut $300K/yr 30 Migratin t target architecture/ 2017 OEP changes* SHOP migratin* $ 1,000,000 $ 1,400,000 $ 2,400,000 Assumes that we will reduce the number f prducts in the Marketplace t allw us t realize mre fully the benefit f hcentive prduct enhancements and reduce verall M&O csts Assume net neutral during FY 2016 due t service center cst reductins, sme capital may be required initially BI imprvements $ 250,000 $ 200,000 $ 450,000 Service center technlgy refresh Included in service center prpsals Other prjects and Includes desktp maintenance and $ 500,000 $ 800,000 $ 1,600,000 nging csts ther csts, Ttal $ 7,800,000 $ 2,700,000 $ 10,000,000 * waiting fr prpsals frm vendrs NOTE: These are preliminary (+/- 25%) cst estimates fr new / nging prject wrk. Ttal annual IT csts (nt including staff csts) include the abve prject wrk plus ~$8M in annual license, maintenance and peratins, and hsting fees.

31 31 FINANCIAL SCENARIOS

32 Directinal Cntext: SBM State Cmparisn Enrllment 150,000 YTD CO State #1 State #2 State #3 State #4 100K 180K 100K 180K 100K 180K 100K 180K Annual Revenue $ 27.5M $ 40M $ 44M $ 43M $50M Exchange Admin Fees $ 6.5M 1.4% $ 25M $ 14M $ 8M Brad Market Assessment $16M $ 1.25 $ 25M $ 20M Medicaid Recvery/Gen Fund $ 15M $ 19M $ 29M $ 20M Other $ 5M $ 2M OPEX TBD $ 37M $ 50M $ 43M $50M Call Center $ 21M $ 18M $ 20M $ 12M $ 28M Salaries/Fringes $ 6M $ 9M $ 8M $ 7M $ 14M Headcunt Takeaways (Abve figures are apprximate and in mtin as SBM s are in their planning prcesses as well) Other similarly situated SBM s are generating $12m-22m greater revenue, primarily thru Medicaid reimbursement and/r higher Admin fees/assessments. Service Center expenses, generally the largest expense item, are in similar ranges Staffing mdels vary, but indicate the Marketplace is staffed at apprximately 2/3 ther SBM levels.

33 DRAFT I: Financial Scenaris: Revenue Cash Basis Estimates ($000's) Draft Revenue Scenaris - May 1, 2015 update Wrking Mdel FY %/$1.60 Mdel 3.5%/$1.80 Mdel 4.5%/$1.80 Mdel Estimate FY 2016 FY 2017 FY 2018 FY 2016FY 2017 FY 2018 FY 2016 FY 2017 FY Assessment Fees 5, Health Plan Assessment Fees 987 7,795 14,031 22,394 9,617 24,187 27,993 11,047 31,098 35,991 Special Brad Market Assessment 4,500 19,260 17, ,980 19, ,980 19,440 0 Tax Credit Dnatins 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Shp (w/ new investment) , ,500 2, ,925 2,575 Visin Fundatin Grants (estimates nly - n cmmitments made r received) 2,500 2,500 1,000 1,000 2,500 1,000 1,000 2,500 1,000 1,000 Interest Incme Medicaid Cst Recvery (PLACEHOLDER) 2,500 2,000 2,000 2,500 2,000 2,000 2,500 2,000 2,000 Level 2 Grant 60, CverClrad 14, Ttal Revenue 92,796 37,911 40,104 32,021 40,453 53,150 38,020 41,883 60,486 46,593 33

34 Draft I: Financial Scenaris: Expenses FY 2016 Draft Expense Mdels - May 1, 2015 Update 1st Draft. Hi-Level Expense Categry FY 2015 Frecast 3.5% - Revenue Driven Mdel Strategy-Based Mdel General & Administrative 7,325 9,172 10,672 Salaries & Benefits ,126 Rent, Tech Infrastructure, equip, cnnectivity Other 1, Marketing & Public Relatins 4,771 1,000 2,000 Assistance Netwrk 6,040 3,000 5,000 Operatins 2,683 1,260 1,260 Business Develpment Carrier Supprt & Other Operatins Training Other Custmer Service Center (net f SES savings) 21,280 17,623 17,623 Technlgy 10,942 8,889 9,389 Hsting 2,108 2,053 M&O Csts 6,653 5,588 Additinal Marketplace Maintenance/Enhancements Other SHOP Savings (100) (100) Ttal Operating Expense 53,041 40,944 45,944 Technlgy CapEx and Other Prjects Cmpletin f Carrier Crdinatin Prject Marketplace Imprvements/Licenses 15,531 2,800 2,800 SES (includes 2,200k in new SES prject) 7,060 3,650 3,650 Shp MA Site TBD TBD EDI Other Ttal CapEx and Prjects 22,591 8,100 8, Ttal Cash Outlays 75,632 49,044 54,044

35 Summary: DRAFT I Financial Scenaris FY Revenue Mdels FY %/2.8%/$1.60 Mdel 3.5%/$1.80 Mdel 4.5%/$1.80 Mdel Estimate FY FY 2016 FY FY 2016 FY 2017 FY 2018 FY 2016 FY 2017 FY 2018 Ttal Revenue 92,796 37,911 40,104 32,021 40,453 53,150 38,020 41,883 60,486 46,593 Expense Categry FY 2016 Expense Mdels FY 2015 Frecast 3.5%- Revenue Driven Mdel 1st Draft, Hi-Level' Strategy-based Mdel Ttal Cash Outlays, including CapEx 75,632 49,044 54,044 Takeaway: Budget prcess is in initial stages as planning wrk cntinues. Operatinal csts can be cvered at the mid-level funding mdel. There is strategic wrk t d n bth the revenue and expense sides f the bttm line equatin, mst ntably cntinuing pursuit f Medicaid reimbursement. 35

36 Optimal Expense Level Cash Flw Cash Balance Frecast ($000's) Using Optimal Expense Budget Budget Mdel 6/30/15 12/31/15 6/30/16 12/31/16 6/30/17 12/31/17 6/30/18 1.8%/2.8%/$1.60 Mdel 26,000 18,200 9,500 8,700 NA NA NA 3.5%/$1.80 Mdel 26,000 18,200 12,000 18,400 13,300 8,400 NA 4.5%/$1.80 Mdel 26,000 18,200 13,500 23,900 22,700 21,000 16,200 Takeaways: Brad Market Assessment Fee runs CY Many ptins exist t backfill the revenue surce and/r reduce expense between nw and 2017 Additinal rganizatinal capacity investment is required t cntinue the sustainability path 36

37 37 FY 2016 FEE DISCUSSION

38 2016 Assessment Fees Marketplace Revenue Surces Timing: Health Insurance Carrier Assessment; Brad Market Assessment, Carrier tax credit dnatins, grant revenue, Other CMS reimbursement levels fr Medicaid supprt is under research, retrspectively and prspectively Setting the Carrier Assessment Fee level fr CY 2016 is required presently fr carriers t accurately set and submit plan rates due t DOI by 5/29 Timeline allws fr adequate Marketplace testing time in the fall Health Insurance Carrier Assessment: Bard establishes Health Insurer Assessment fr calendar year 2016 Cash receipt frm the fee level set nw will primarily impact FY 2017 Current fee is set at 1.4% f effectuated premiums; n cap in place Brad Market Assessment (HB ) Bard establishes brad market Health Insurer Assessment fr calendar years 2014, 2015 and 2016; fee is capped at $1.80 pmpm Cash receipt frm the fee level set nw will impact FY 2017 revenue 2014 Fee was waived; 2015 rate is set at $1.25 pmpm 38

39 Health Insurance Carrier Assessment Cnsideratins fr setting fee: Rates set nw will impact cash fr 2 mnths f FY2016 and mst f FY Budget and lng-term frecast are nt yet cmpleted, i.e. true csts f peratin and capital requirements are in prcess fllwing plan develpment Optimal peratins budget requires fee increase and Medicaid reimbursement funding fr lng-term sustainability Cash Flw frecasts at current budget prjectins (incmplete) utilizing Reserves t bridge funding surces: At previusly prjected level, peratins funded thrugh CY2016 At 3.5% (FFM level), peratins funded at least thrugh CY2017 At 4.5%, peratins funded thrugh at least CY2018 Additinal unbudgeted funding requirements: Capital investment, Operatinal Reserves, New prduct develpment, unfreseeable revenue/cst impacts Fee level impacts carrier margins and Marketplace ROI; and ultimately cnsumers Cntext: Other States fee levels vary greatly given State structures (up t 4.5% plus addl. Funding surces), and Medicaid reimbursement 39

40 State-based Exchange Value Prpsitins Gear strategies tward Clrad s specific needs, gegraphy, and ppulatins Stakehlders are able t prvide input and feedback t design, functinality, training, peratins The Marketplace and State wn the data, and can use it, reprt n it, and learn frm it (e.g. FFM des nt prvide its data t the states) Decisin Supprt tls available t cnsumers, brkers, HCG s N Wrng Dr Cnsumer supprt Lcal gvernance f the Marketplace Brkers, Cverage Guides and interfaces with Medicaid supprts are lcal and directly cnnected t the Marketplace (certified) FFM, by cmparisn, excludes abve elements and their funding (i.e. Federal Marketplace excludes abve services, resulting in state-based csts nt included in the FFM 3.5% fee) Ecnmic develpment jbs stay in Clrad Others?? 40

41 Brad Market Health Insurance Carrier Assessment Cnsideratins Brad Market Assessment was carried ver frm Cver Clrad (CC rate $38.00 pmpm) 3 year fee: 1 st year f fee waived; 2 nd year $1.25 (67% f cap) $1.25 rate generates apprx. $14m ; $1.80 rate generates apprx. $21m Cnverted t a % f the average Marketplace premium, $1.25 =.35%; $1.80 =.5% Cash receipt frm rate set nw begins apprx. 12 mnths later Maximizing the fee during its shrt availability is key fr bridging funding frm Federal Grants t earned revenue, and assisting with additinal unbudgeted funding requirements and sustaining reserves 41

42 Fee Recmmendatin: CY 2016 In rder t build and bridge revenue as vlume is built up t ensure sustainability; ensure adequate capital, peratinal reserves and sufficient near-term capacity t gain system and staffing stability: 1. Carrier Assessment: 3.5% r higher 2. Brad Market Assessment: $1.80 pmpm 3. Aggressively cntinue pursuit f Medicaid recapture funding 4. Cntinue lng-term revenue strategy develpment as a primary Finance Cmmittee fcus pst-budget cmpletin 42

43 43 SES E2E REVIEW

44 SES End-t-End Review: Request fr Prpsal (RFP) timeline 3/25 RFP delivered t 6 selected vendrs 3/27 - Vendr prvides ntificatin that they intend t respnd t RFP 3/31 - Vendr submits questins 4/3 - Marketplace respnds t vendr questins 4/17 All RFP respnses will be submitted (4 received) 4/24 Initial shrtlisting and review cmplete and shrtlist ntificatins made 4/28 Present prpsal summary t Operatins Cmmittee t gain apprval t prceed with vendr presentatins 5/8 Shrtlisted vendr presentatins cmplete 5/11 Bard meeting final review and permissin t award 5/15 Final decisins and cntract award 6/5- Selected vendr cntract negtiatins cmplete 6/8 Prject start date. 44

45 SES End-t-End Review: Summary f Prpsals 45 Average cst frm 4 respnding vendrs is $323K. Excludes indirect csts f: Running RFP prcess (exec team) Supprt the investigatin (Cnnect fr Health Clrad, HCPF, OIT, CGI, Delitte, etc) Time t cmplete review and present findings ranges frm 6 weeks t 4 mnths. We have shrtlisted 2 vendrs fr additinal cnversatins if the Bard apprves: Bth vendrs expect t cmplete the assessment in ~10 weeks Average cst ~$200K As part f the due diligence prcess / next steps, we are asking shrtlisted vendrs t prvide an estimate f impact n staff and vendrs t determine verall cst f the assessment. Cntent f review SES and the integratin pints with upstream and dwnstream systems IT requirements Testing Reprts and dcumentatin Systems and peratins fr helping peple navigate the SES Call center Call/issue reprting Rles and respnsibilities Enrllment issue prcess Csts Gvernance Vendr versight Gvernance structure