PL 005 RISK CORRIDOR ILLUSTRATION.pdf
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- Attached to
- NEMT MEDICAL TRANSPORTATION
- Solicitation number
- 5400029919
- Issued by
- Richland County, South Carolina
About this file
This file is a risk corridor illustration document prepared by Milliman for the South Carolina Department of Health and Human Services (SCDHHS) related to the SFY 2028 Non-Emergency Medical Transportation (NEMT) Capitation Rate Development. The document illustrates a 2-sided uniform risk corridor structure for the NEMT broker model, where benefit expenses within +/- 2% of target result in full risk to the broker, expenses between 2% and 4% from target are shared equally (50/50) between SCDHHS and the broker, and expenses greater than 4% from target result in full risk to SCDHHS. The base capitation rate is $11.00 PMPM, comprising $2.15 PMPM for administration expenses, $0.22 PMPM for margin, and $8.64 PMPM for benefit expenses. With a projected exposure of 12,160,000 members, the target benefit expenditures total $105,000,000.
The illustration presents two scenarios demonstrating the risk corridor mechanics. Scenario 1 depicts lower-than-expected claims with actual broker benefit expenses of $98,000,000 (93.3% of target), resulting in a state recoupment of $3,850,000 and a total estimated broker margin of 5.0%. Scenario 2 depicts higher-than-expected claims with actual benefit expenses of $110,000,000 (104.8% of target), resulting in a broker payment of $1,850,000 to the state and a total estimated margin of negative 1.0%. This risk-sharing framework establishes clear financial incentives and protections for both parties under the capitated payment model for NEMT services.
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Text version
3/23/2026
2-Sided Uniform Risk Corridor Illustration
- Benefit expenses +/- 2% from target = full risk to the broker
- Benefit expenses between 2% and 4% from target = shared equally between SCDHHS and the broker (i.e., 50%/50%)
- Benefit expenses greater than 4% from target = full risk to SCDHHS
South Carolina Department of Health and Human Services South Carolina Department of Health and Human Services
SFY 2028 Non-Emergency Medical Transportation Capitation Rate Development SFY 2028 Non-Emergency Medical Transportation Capitation Rate Development
Risk Corridor - For Illustration Only Risk Corridor - For Illustration Only
Scenario 1: Lower than Expected Claims Scenario 2: Higher than Expected Claims
SFY 2028 Draft Capitation Rate by Component SFY 2028 Draft Capitation Rate by Component
(A) Capitation Rate PMPM $ 11.00 (A) Capitation Rate PMPM $ 11.00
(B) Administration Expenses PMPM $ 2.15 (B) Administration Expenses PMPM $ 2.15
(C) Margin PMPM $ 0.22 (C) Margin PMPM $ 0.22
(D) = (A) - (B) - (C) Benefit Expense PMPM $ 8.64 (D) = (A) - (B) - (C) Benefit Expense PMPM $ 8.64
(E) Projected Exposure 12,160,000 (E) Projected Exposure 12,160,000
SFY 2028 Actual Benefit Expense Relative to Target SFY 2028 Actual Benefit Expense Relative to Target
(F) = (E) * (D) Target Benefit Expenditures $ 105,000,000 (F) = (E) * (D) Target Benefit Expenditures $ 105,000,000
(G) Actual Broker Benefit Expense $ 98,000,000 (G) Actual Broker Benefit Expense $ 110,000,000
(H) = (G) / (F) Percent of Target 93.3% (H) = (G) / (F) Percent of Target 104.8%
(I) =(H) - 100% Amount Subject to Risk Corridor (6.7%) (I) =(H) - 100% Amount Subject to Risk Corridor 4.8%
Risk Corridor Calculation Risk Corridor Calculation
(J) +/- 2% from Target 100% NEMT Broker / 0% SCDHHS (2.0%) $ 0 (J) +/- 2% from Target 100% NEMT Broker / 0% SCDHHS 2.0% $ 0
(K) +/- 2-4% from Target 50% NEMT Broker / 50% SCDHHS (2.0%) $ (1,050,000) (K) +/- 2-4% from Target 50% NEMT Broker / 50% SCDHHS 2.0% $ 1,050,000
(L) +/- 4%+ from Target 0% NEMT Broker / 100% SCDHHS (2.7%) $ (2,800,000) (L) +/- 4%+ from Target 0% NEMT Broker / 100% SCDHHS 0.8% $ 800,000
(M) = (J)+(K)+(L) Payment (State Recoupment) $ (3,850,000) (M) = (J)+(K)+(L) Payment (State Recoupment) $ 1,850,000
Resulting NEMT Broker Projected Margin Resulting NEMT Broker Projected Margin
Explicit Margin Included in Non-Benefit Costs 2.0% Explicit Margin Included in Non-Benefit Costs 2.0%
Margin gain/(loss) from actual Benefit Expense 6.7% Margin gain/(loss) from actual Benefit Expense (4.8%)
Margin gain/(loss) from Risk Corridor (3.7%) Margin gain/(loss) from Risk Corridor 1.8%
Total Estimated Margin 5.0% Total Estimated Margin (1.0%)
Note: Values are rounded. Note: Values are rounded.
Risk Corridor Calculation Milliman Page 1
PL 005 RISK CORRIDOR ILLUSTRATION
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