Managed Care Contracts & Trend Factors


From an actuary:  “Medical cost trends include components for many drivers.  Net unit price increases from providers drives half of the effect in general.  So a 5% increase in a schedule will drive a 10% overall cost increase.  The rest of the components include: increased utilization, coding creep, deductible leveraging, etc…”

Editor’s Note: Is this confirmation from an experienced actuary/underwriter that escalator clauses common to all Managed Care Contracts are the driving force behind trend factors?