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Board adopts Kaiser reconciliation approach; directs actuarial smoothing
Summary
After Aon Hewitt reported Kaiser’s final Medicare Advantage rate fell from $346.45 to $324.12 — saving about $2.8 million — the board voted to set the funds aside and direct actuaries to design a policy that smooths reconciliations over a multi‑year period; the motion passed unanimously.
Aon Hewitt actuary Anil Kocher reported that Kaiser’s final Medicare Advantage rate for the 2014 rating period came in at $324.12, down from the preliminary $346.45 posted in June. Kocher said the lower final figure yields about $2.8 million in favorable difference to the trust.
Staff proposed two approaches: refund the difference or hold it and apply the amount to the 2015 rate calculation. The staff recommendation favored setting the funds aside and applying them to 2015 (or otherwise smoothing reconciling items) to avoid creating artificial volatility in future rates.
Commissioner Scott moved to adopt staff option 2 and to direct the trust actuary to draft policy recommendations that would include smoothing the reconciliation over a three‑year period; the motion was seconded and the board approved it unanimously. The board also discussed the option of a multi‑year smoothing fund and asked staff to present a formal policy proposal in January.
The board’s action leaves the reconciliation funds available to be applied to future rate calculations under a smoothing approach rather than being returned immediately to plans or members.
