Risk Management Task Force - HRM Grouplet Minutes

Risk Management
Task Force

Health Risk Management (HRM) Minutes

Health Risk Management (HRM) Subgroup
Specialty Guide Grouplet
May 14, 2003
10:00 a.m. Central Time

Participants:
Carl Westman, Rajeev Dutt, John Stark, Bernie Rabinowitz

Bernie gave a brief report on his thoughts for the modeling group. He will be circulating something shortly. A brief summary follows:

What is the purpose of modeling?
- How much capital do you need?
- Understand the risk and know how to mitigate it
- Determine whether best practices are occurring

How do you model management failure?
- Built up over 5-6 years
- Communication breakdown
- Aggregation of many small items

What is the root cause of the failure? This is what you need to model
- Internal strategic
- Internal process and people
- External direct relationships: networks, customers, agents
- External indirect: economy, political

What are you assuming in the model?

There was a discussion of "root causes" and whether they should be incorporated into our health risk-mapping document. It was decided that this should be a part of the document, however, it would be addressed after we completed the current phase of revisions.

Carl started presenting the Pricing Risk section to the overall group for discussion. Comments were added to the working document. Highlights were as follows:

The underwriting elements of the original definition for anti-selection were replaced with one that focused on the type of risk that attached to the product. The original definition was moved to the underwriting category within the pricing risk section
The competition definition was enhanced to incorporate a company's sub-optimal performance and the speed with which they could react to competitors. This topic still needs further review.

At our next meeting, we will pick up after the "financial viability of capitated entity" section of the pricing risk category.

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The next meeting is on May 28 at 10 a.m. Central Time.