Medicare Advantage Bid Optimization Platform

Medical Cost Projection (PMPM)

Build up expected medical costs by major category. All values are Per Member Per Month (PMPM).

Medical Cost Components

Inpatient Hospital (PMPM)

Outpatient Services (PMPM)

Physician Services (PMPM)

Pharmacy (PMPM)

DME & Other (PMPM)

Trend & Risk Adjustment

Medical Trend (%)

Pharmacy Trend (%)

Risk Score

Bid Development Calculator

Calculate required bid based on projected medical costs, administrative load, and target margin.

Revenue Components

Projected Medical PMPM (from Cost Build-Up)

Administrative Load (%)

Quality Improvement (%)

Target Profit Margin (%)

Quick Assumptions

Expected Enrollment

Region

Competitive Positioning Analysis

Compare your bid against market competitors to assess pricing competitiveness.

Scenario Testing & Sensitivity Analysis

Test different assumptions and compare outcomes across multiple scenarios.

County-Level Bid Optimization

Analyze bid competitiveness and optimization opportunities by county.

Risk Adjustment Deep Dive

Analyze HCC distribution and validate risk score assumptions.

Methodology & Formulas

1. Medical Cost Projection

Base Medical Cost = Inpatient + Outpatient + Physician + Pharmacy + Other

Trended Medical Cost = (Non-Pharmacy Components × (1 + Medical Trend)) + (Pharmacy × (1 + Pharmacy Trend))

Risk-Adjusted Cost = Trended Medical Cost × Risk Score

2. Bid Calculation

Required Bid = Medical Cost PMPM / (1 - Admin Load% - Quality% - Margin%)

Example: Medical Cost = $1,084, Admin = 12.6%, Quality = 2.5%, Margin = 4%
Bid = $1,084 / (1 - 0.126 - 0.025 - 0.04) = $1,084 / 0.809 = $1,340 PMPM = $16,080 Annual

3. MLR Calculation

MLR = (Medical Claims + Quality Improvement) / Premium Revenue × 100

Federal requirement: MLR must be ≥ 85% for Medicare Advantage plans.

4. Competitive Positioning

Bid Differential = (Your Bid - Market Average) / Market Average × 100

• Competitive: Within ±3% of market
• Overpriced: >3% above market (risk of losing members)
• Underpriced: >3% below market (opportunity to increase margin)

5. Risk Score Impact

Revenue Impact per 0.01 Risk Score = (Bid × Enrollment × 0.01) / Risk Score

Risk scores directly affect CMS payment rates. A plan with 1.15 risk score receives 15% more revenue than baseline to account for sicker population.