Risk Profile Analysis for Health Plan

Objective

A national health-focused non-profit operating a cost-sharing health model engaged Graeme Group to assess the adequacy of member contributions, quantify key actuarial risks, and identify cost drivers in medical and pharmacy utilization.

Scope of Services

• Validation of pharmacy and medical data for accuracy and completeness
• Analyze risk profile using historical claims and actuarial techniques
• Contribution analysis to allocate member costs to underlying components
• Document findings and provide actionable recommendations

Services Provided

Graeme Group delivered an actuarial service and data analysis package to assess the client’s health risk profile, which comprised:

Data Validation: Graeme Group validated the pharmacy and medical data for quality and completeness. This revealed numerous areas of concern, including missing data, data duplication, and erroneous values. Claims adjudication lags and a high prevalence of $0-paid claims raised further concerns. These issues were incorporated into the Graeme Group risk framework to develop a structured risk map – used to categorize and assess the data. The data was subsequently cleaned and de-duplicated for analysis.

Pharmacy Risk Assessment: Pharmacy claims were analyzed by member activity to assess engagement and cost concentration. High-cost members and medications – such as Ozempic – were isolated, and outliers and payment lags identified. Risk concentration was quantified by unique member to isolate potential high-cost members.

Medical Risk Assessment: Medical claims were reviewed for trends, large claims, and service type distribution. Severity profiling was employed to identify exposure to catastrophic claims, including a $120,000 outlier, and significant cost concentration in surgery and maternity needs. Graeme Group also evaluated pricing adequacy through Medical Loss Ratio (MLR) computation, yielding a 2024 MLR well below market benchmarks. Anomalies in payment status were flagged.

Documentation: A formal actuarial report was prepared detailing methodology, data analysis, and observations. The report was constructed for internal governance and audit-readiness.

Recommendations: Graeme Group provided a focused set of recommendations across cost containment, data governance, and pricing strategy. These were underpinned by statistical modeling of claims data to project a range of potential outcomes (scenario analysis).

Outcome

Graeme Group delivered a targeted health plan risk assessment for a non-profit operating a cost-sharing model. Key outcomes included:

• Resolution of critical data quality issues across medical and pharmacy population data
• Quantified risk exposure, cost concentration, and member engagement in an accessible way for non-actuaries
• Evaluated financial sustainability of the health plans (both pharmacy and medical)
• Delivered audit-ready actuarial documentation