Eligible User Manual
Introduction
This Eligible User Manual is presented in six parts: (a) basics, (b) entering the data (variables and parameters), (c) the Work-Product, (d) invoicing, (e) trouble-shooting (f) issue of professional liability and (g) Definitions and Abbreviations.
Basics
The Eligible User should (a) gain access to http://www.awpse.com/awp.php directly or by signing on here and enter its assigned User Name and User Password and hit Go; (b) from the Menu of Work-Products that appears as the next screen, select the subject Work-Product by clicking thereon; (c) from the screen that appears, the storehouse of addressees are shown (as well as the parameters for each of the Plans that are enumerated on the screen) which data should be updated or corrected, following which the Plan of interest should be selected by entering its Number and hitting Go; (d) from the next screen, the selection of managing valuations (or similar) permits the Eligible User to control the relevant parameters or variables that are required; once the valuation is managed, the Valuation Number may be entered and the computer-produced Work-Product will appear in E-mail form (except where an additional step is needed to manage a large storehouse of data as with lag data for claim reserve computations).
Required or recommended practices as well as some how to do hints with respects to the Basics include the following:
(a) Navigate using the Go and Back keys and not the Windows Bar.
(b) When in doubt on meanings, link to Definitions and Abbreviations.
(c) Up to three addressees may be assigned to any particular Plan; any Eligible User
may store an unlimited number of addressees; each addressee has a designation
(E0001, e.g.) where E means Eligible User, P means Plan Sponsor, R means Risk
Manager/Consultant/Broker, T means TPA, C means CPA/Auditor, A means
Actuary, L means Lawyer, I means Insurer, M means MGU, and X means Actuarial
Work-Products, Inc. The E-mail always goes to the addressee having the E Code (there
being only one E Code for any one plan. For processing disciplines, all addressee blanks
should be completed fully even if fictitious information is used. This is particularly true
with E-mail addressees.
(d) While the Eligible User has total privacy by means of it Username and Password,
Actuarial Work-Products, Inc. has the means and the right to enter any Sub-Site at
any time and review the activity of the Eligible User and place its own E-mail address
in the E Code and print out any Work-Product crafted by the Eligible User.
(e) The Eligible User may conveniently view the entered data horizontally being offered
a panoramic view so to speak. By dotting the circle, the selected line may be viewed
for audit or viewed for change; or a new line may be added; or the existing line may
be deleted. Windows permits any screen to be printed out at any time for user
convenience.
(f) When entering data, normal punctuation applies to names, addresses, etc. For
numerals, do not use commas and dollar signs and show a negative numeral as
-989, e.g.
(g) An E-mail Work-Product will appear at the designated E-mail address with 3-5 minutes of
activation. Garbaged input will only rarely prevent a Work-Product from being
produced, albeit in garbaged form.. However, the Eligible User should be certain
that its anti-spam disciplines do not block the receipt of the E-mail by
showing support@awpse.com as an acceptable sender. Such E-mail may be saved,
forwarded, printed out or deleted.
Entering the Data
Introduction
In the commentary that follows, the expression “determined by the wisdom of the Eligible User” appears. When so used, the following words are added by implication “as reviewed and accepted as reasonable and appropriate by Actuarial Work-Products, Inc. based upon the submission of satisfactory evidence provided thereto but limited to those circumstances where an inked, rather than a facsimile, signature is used.”
The Work-Product will set forth the submitted items be they parameters or variables
as an attachment thereto.
Claim Reserve
Three data entry screens for claim reserves should be considered: (a) plan-related, (b) valuation-related and (c) claims-related. Each screen will be considered separately.
Plan-Related Screen
Plan ID and Plan Name. This screen permits one Eligible User to manage multiple Plans
Ea ch separate Plan is assigned its own Number and Name.
Addressee ID Numbers. Up to three Addressees may be assigned to each Plan. These are
selected in scroll fashion from the stored addressees in the database. For the Claim
Reserve Work-Product, Addressee Candidates might include the Eligible User, the
Plan Sponsor, the Outside Auditor, the TPA or the Risk Manager; one of those
shown must be the Eligible User. Actuarial Work-Products, Inc. is, in effect, an
implied or unnamed addressee.
DOL Number and Other Designation. It is occasionally helpful to describe the Plan in
terms consistent with established Plan practices (DOL Number has legal
implications that might be significant; also, the Other Designation might be used
to distinguish a cafeteria arrangement (gold, silver, bronze options, e.g.)
Benefit Selection (Medical, Rx, Dental, Vision, STD). These are easily selected and are
given no comment.
Claims over Specific This very important parameter must be carefully entered because
its financial effect is significant. It is unfortunate that there is inconsistency among
the many claims processing systems as to whether lag study claims include (gross) or
exclude (net) claims above specific. Where the claims are net, the determined claim
reserve should be shown as the correct liability with the Plan Sponsor not claiming as
an asset the “stop-loss claims due and uncollected”. Where the claims are gross, the
determined claim reserve should not be shown as a correct liability because it is
overstated; the stop-loss carrier and the self-funder should not establish a reserve
for the same unpaid claims. Correcting this overstatement is not easy: (a) recasting
the paid claims to a net basis is the most accurate but too arduous and (b) using the
reserves established by the stop-loss carrier is not practical.The recommended
solution is for the claims administrator to provide an estimate of the “stop-loss
claims due and unpaid” and for such estimate to be used as an asset to
compensate for such overstatement. Stop-loss for this purpose in limited to specific-
only.
Incurred Date Issues. Most commonly, the incurred date for maternity is the date of birth
and for institutional care, the date of discharge. These practices are significant not in
reserve setting but in understanding why the computed reserve might be higher or
lower than expected.
Purpose of the Reserve. Knowing the purpose of the Work-Product is needful in that
regulatory requirements may demand certain variations to the standard Work-
Product; e.g., (a) making special provision for lawsuits or claim-related expenses or
(b) acknowledging that the data has (or has not) been audited.
Valuation-Related Screen
Valuation Number. This distinction is needed when more than one valuation is made on
the same Valuation Date. This occurs when different parameters are used, e.g.
Valuation Date. This is that point of time at which the liability is measured.
Number of Recent Months and Adjustment Percent. These should be taken together
They are needed since this Work-Product bifurcates the claim reserve
determination into (a) measure of laggedness and (b) measure of appropriate
annualized claims. An appropriate annualized claims amount might be 12 (Number
of Recent Months) times 1.00 (Adjustment Percent); or 6 times 2.00, or 3 times
4.00 as determined by the wisdom of the Eligible User and reviewed by Actuarial
Work-Products, Inc. This parameter is useful in allowing for the growth or
contraction of the Plan Sponsor’s work force, e.g.
Sample Begin and End Dates. These dates are determined by the wisdom of the Eligible
User and serve as the basis of the measure of laggedness referred to above .Those
consecutive months that are most representative of the laggedness appropriate to
Valuation Date should be used. The date range, so set, should (a) not extend
beyond the claims that are stored and (b) should be as many as possible so as to
make the statistical sampling results as reasonable as possible.
Previous Valuation Date and Amount. This Work-Product permits the proving-out of up
to five prior valuations. Each selected prior valuation is numbered and assigned a
date; the posted claim reserve associated therewith and the date itself are entered
on the screen.
Claims-Related Screen
Paid Claims by Incurred Month. The Screen permits the claims paid in any month to be
subdivided by incurred month grouping together claims incurred 12 months or
prior as a data-handling convenience. Paid claims history going back more than
several years might be inappropriate in light of trending, benefit practices (Rx, PPO
demands, e.g.) and claims practices (electronic submission, e.g.).
Monte Carlo I Claims Fluctuations and Economic Value of Stop-Loss
Two data entry screens for Monte Carlo I should be considered: (a) plan-related and (b) valuation-related. Each screen will be considered separately.
Plan-Related Screen
Plan ID and Plan Name. This screen permits one Eligible User to manage multiple plans.
Each separate plan is own Number and Name.
Addressee ID Numbers Up to three addressees may be assigned to each Plan. These are
selected in scroll fashion from the stored addressees in the database. For the
MonteCarlo I Work-Product, Addressee Candidates might include the Eligible
User, the Plan Sponsor, the TPA and the Risk Manager; one of those shown must
be the Eligible User. Actuarial Work -Products, Inc. is an implied or unnamed
Addressee.
DOL Number and Other Designation. It is occasionally helpful to describe the Plan in
terms consistent with established Plan practices (DOL Number has legal
implications which might be significant; also, the Other Designation might be
used to distinguish a cafeteria arrangement (gold, silver, bronze options, e.g.).
Benefits Included in the Aggregate. The balance of the Plan-Related Screen is devoted to
describing those benefits, if any, that are included in the aggregate stop-loss.
Valuation-Related Screen
Valuation Number. Where more than one valuation (or computation) is made on any one
Valuation Date (often occasioned by varying parameters) assigning a number to
each Valuation is needed.
Computation Date. This date is usually the beginning of the Projection Period (typically
a 12-month period).
Projection Period. A time period (typically 12-months in duration) that matches such
critical plan parameters/variables as projected claims, census, stop-loss terms, etc.
Variable-Corridor Aggregate Stop-Loss. This parameter is usually 125%.
Plan Sponsor Above Specific Excluded. This is the best possible estimate of the
estimated paid claims (to be paid by the Plan Sponsor), for the indicated Plan
Benefits and for the shown census (assumed to be constant) where such claims
exclude claims that are to be reimbursed by specific stop-loss.
Plan Sponsor Above Specific Included. Same as above except claims include claims that
are to be reimbursed by specific stop-loss.
Census. Such census must be consistent with projected claims and, for computational
convenience, is assumed to be constant throughout the Projection Year.
Stop-Loss Terms. These terms are applicable for the Projection Year will come from
such carrier’s fee quote proposal. For computational and model-building convenience
the best results will be found by showing all of the stop-loss on a mature (or paid)
basis.
Number of Trials. For this Work-Product, the number of trials should always be more
than 100 but always be less than 1000.
Lognormal Dispersal Index, This index (quotient of variance divided by the mean) is
needed to simulate with the lognormal distribution. For best results it must always be a
parameter. Based upon three studies of size made by Carlton Harker, a reasonable
and practical Index, consistent with the results of such studies, may be found as
follows:
Specific Stop-Loss Amount Dispersal Index
Below $50,000 4.0
$50,000 to 100,000 4.3
$100,000 to 250,000 4.6
$250,000 and Over 4.8
Percent of Covered Persons with One or More Claims. This percentage is used to
Determine, how many of the computed covered persons will have at least one
claim. This number is needed to properly configure the lognormal curve and
thereby make the simulation workable.. Based upon several studies of size by
Carlton Harker, a reasonable and practical percent, consistent with the results of
such studies are as follows:
Benefits Provided Percent
Medical (no Rx) 75%
Medical and Rx 80%
Medical, Rx and Dental 85%
Monte Carlo II Economic Value of Plan Benefits and Managed Care Arrangements
Two data entry screens for Monte Carlo II should be considered: (a) Plan-related and
(b) Valuation-related.
Plan-Related Screen
Since this screen is the same as that of Monte Carlo I, no comments are offered.
Valuation-Related Screen
This Work-Product contemplates that a single Plan may offer the participant a triple-option Plan (Option A, Option B and Option C). One example of such is a hospital plan where (a) care in-facility is Option A, (b) care in an allied facility is Option B and (c) out-of-area care is Option C.
Valuation Number. Same as Monte Carlo I.
Computation Date. Same as Monte Carlo I.
Projection Period. Same as Monte Carlo I.
Calendar Year Deductible. This variable is entered for each of the Options. For a one-
option Plan, the entry for Option B and Option C is zero. The deductible is that
applicable to the individual without regard to family. This is because the
Simulation is by covered person; the Simulation is not able to distinguish between
individual and family tiers. The Simulation is also unable to recognize single or
per occurrence deductibles.
Participant Copay Rate. This variable is entered for each Option. Comments offered for
the Calendar Year Deductible also apply to the Participant Copay.
Out-of Pocket (Excluding Deductible). This variable is entered for each Option.
Comments offered for the other variables also apply to the Out-of-Pocket limit.
Specific Stop-Loss Limit. This Variable is entered for each Option. Comments
offered for the other variables also apply to the Specific Stop-Loss Limit.
.Annual Medical Cost. The Simulation is designed to trifurcate the Annual Medical
Cost of the Individual (or covered person) between that paid by the individual.
that paid by the Plan Sponsor and that paid by the stop-loss For practical purposes.
Submitted Charges and Annual Medical Cost are synonymous. Consider the
Case where the average annual total submitted charges per covered person is $4200.
What is need is the following information; (a) if all the covered persons had received all of their care in-facility, the submitted charges would have been $3,800; (b)
had received all of their care in an allied facility, the submitted charges would have
been $$4,000 or (c) had received all of their care out-of-network, the submitted charges
would have been $4,800. This variable reflects the discounts offered by the three groups of networks.
Penetration Factor. These three factors are percentages and represent the portion of the total submitted charges that will come from each of the three groups of facilities.
Number of Trials. For this Work-Product, the Number of Trials should always be greater
than 100,000 and less than 1,000,000.
Lognormal Dispersal Index. The same Index applicable to Monte Carlo I is also
applicable to Monte Carlo II.
Work-Product
The Work-Product may be an actuarial communication, opinion, certification, attestation,
or report depending upon the characteristics of the model creating it or its use or purpose
and is sent as an E-mail to the Addressee with the E-Code (E000l, e.g.).
All Work-Products are designed similarly in that they are (a) very structured and
formatted, (b) have actuarial accountability as supported by a facsimile signature, (c) stress
transparency by clearly indicating its purpose, the parties involved therewith, the relevant
information needed to understand it and all submitted and inputted data upon which the
computations were made and (d) have internal edits, controls, rudimentary data reviews,
etc.
Two Choices of the Eligible User
The Eligible User my chose to (a) request the data to be inputted by Actuarial Work-
Products, Inc. (for an additional fee) or (b) request that the facsimile signature be replaced
by an inked signature (for an additional fee). Either or both of these choices are available.
Data Input Choice
This is accomplished by sending the basic data or documentation to Actuarial Work-
Product, Inc.
Inked Signature Choice
When the Eligible User makes such request, Actuarial Work-Products, Inc. responds as
follows: (a) prints out a hard copy of the subject Work-Product, (b) performs an edit and
data review as may be appropriate (usually requiring the submission of basic data or
documentation) and forwards the inked Work-Product to the Eligible User (or other
Addressees as may be requested).
Invoicing
Actuarial Work-Products, Inc. posts its fees on it Website and updates them biannually on
January 1 and July 1. The basis of the fees is as follows: (a) one-time initiation fee, (b) a fee
for each E-mail, (c) a fee to convert a facsimile signature to an inked signature and (d) a data
entry fee. A Sample of an Invoice, computer-prepared at the end of each month may be
viewed by the reader.
Trouble-Shooting
Actuarial Work-Products has been designed so that there should be no need for trouble-
shooting. Steps taken to achieve this end include the following: (a) system is simple and
carefully constructed, (b) an Eligible User (or its assigns) must be computer-literate or its
User Name and Password will be revoked, and (c) great pains have been taken to ensure that all
possible questions have been dealt with in the narrative in a logical and lucid manner.
Even so, glitches, bugs, surprises or malfunctions will occur. When they do, the Eligible User
should do the following: First; if the matter is non-urgent, send an appropriate E-mail to
openline@carolina.rr.com; Second, if the matter is urgent, call Carlton Harker at 336-759-2035 or
E-mail harker2@earthlink,net
Professional Liability
On the presumption that (a) there are no countervailing issues of law and (b) no issues of fraud,
deception or misrepresentation, the Eligible User and Actuarial Work-Product, Inc. agree that
any legally-valid professional error dispute that results in significant financial harm to the End User
will be handled as follows:
Actuarial Work-Products, Inc. Computer programming and systems errors are the full
responsibility of such firm. Data entry errors of such firm shall be deemed to be clerical errors and thereby correctible to the extent permitted by law and based on facts and
facts and circumstances.
Eligible User. Data entry errors of the Eligible User shall be deemed to be clerical errors
and thereby correctible to the extent permitted by law and based on facts and circumstances.
Definitions and Abbreviations
Go to Definitions and Abbreviations.
