An Actuarial Analysis Of The Health And Human Services Commission’s Fiscal Year 2024 Medicaid Managed Care Rates Actuarial Soundness
Learn how the AI-generated research projects were createdOverall Conclusion
The FY 2024 Texas Medicaid managed care capitation rates are actuarially sound overall, with no material program-wide under- or over-funding detected. Milliman identifies several recommendations to strengthen the rate-setting process and reduce future risk, and notes that CMS compliance and ongoing monitoring will continue to be important.
Source Document
Audit Scope
This actuarial analysis evaluates the FY 2024 Texas Medicaid managed care capitation rate development process for six certified programs (STAR, STAR Health, Dental, STAR+PLUS, STAR Kids, and Dual Demonstration) overseen by the Health and Human Services Commission (HHSC). The review covers the concurrent rate-setting process used to set annual capitation payments, including rate structure, base data validation, trend assumptions, programmatic adjustments, non-benefit expenses, CMS compliance, and related documentation. The scope encompasses for each program the enrollment data, historical costs, service categories, and the interrelationships among these factors, with attention to potential risk areas, credibility of risk groups (notably STAR Kids), and potential impact on program funding. Attachments include Milliman’s actuarial report and the Commission’s responses. The analysis relies on materials provided by HHSC and does not independently verify all data.
Key Findings Summary
Milliman concluded that overall HHSC FY 2024 capitation rates are actuarially sound and that there is no program-wide pattern of over- or under-funding.
Actuarial soundness is a forward-looking determination; there is not a binary yes/no outcome, and reasonable variations may exist in rate development given uncertain future experience.
Milliman identified 16 recommendations to improve the actuarial process and mitigate future risk, with 14 retained from the FY 2022 analysis and 2 new recommendations for FY 2024.
View the Findings tab to see all 7 findings
AI-Assisted
AI Scope Summary
Assess actuarial soundness of FY 2024 Texas Medicaid managed care capitation rates and analyze key rate-determinant factors, with recommendations to strengthen the rate-setting process and ensure CMS compliance.
AI-Generated Insight
The audit confirms that Texas’s FY 2024 Medicaid capitation rates are actuarially sound on the whole, but underscores the need for greater granularity and documentation in rate development. Strengthening risk-group credibility, moving trend application to more granular service categories, and expanding non-benefit expense documentation can improve transparency and CMS oversight, potentially reducing future volatility and enhancing confidence in rate settings.