History of Actuarial Research Corporation

Actuarial Research Corporation is a veteran owned small business, founded in 1975 by Gordon R. Trapnell.  Prior to forming ARC, Mr. Trapnell was the senior actuary responsible for Medicare in the Social Security Administration. He left the Social Security Administration to form ARC in 1974.  He recruited an actuarial staff to assist the Office of the Assistant Secretary for Planning and Evaluation (ASPE) in the Department of Health Education and Welfare (now Health and Human Services) to develop and price national health policies. The team also provided consultant services to other clients.  ARC continues to work with ASPE today, providing services that include assembling actuarial cost models, actuarial cost estimates and analysis, health economic analysis, simulation model development and systems analysis.

Over several decades ARC expanded into contracts with other federal agencies, including DOL, CMS, DoD, and CBO; and into consulting work for foundations, non-profit firms, private health insurers and HMOs. ARC also acquired private contract work, setting premium rates for State Managed Medicaid plans and for Medicare cost plans. During this period, ARC’s work continued to focus on actuarial projections and the quantitative analysis of health insurance and health policy issues. Some key projects included the development of the ARC Long Term Care Pricing and Reserving Model, development of the first risk adjusted state rating system for managed Medicaid programs, analysis of revenue requirements and recommended provider payment rates and enrollee premiums for private health plans, and estimates of the costs of national health insurance proposals relied on by several presidential administrations and Congress (including technical assistance to the Clinton Administration’s Health Care Reform Task Force, to the Bush Administration’s White House Task Force on Health Risk Pooling, and to drafters of the Medicare Part D Prescription Drug program).

ARC has a lengthy track record in policy simulation.  Blending data from multiple sources and employing actuarial techniques for simulating change, ARC built a model used by multiple administrations including during the development of the ACA.  In 2008, ARC was asked by the CMS Office of the Actuary (OACT) to develop a long range forecasting model for Medicaid that could inform a report paralleling the Trustees Reports for Medicare Parts A and B. This contract, in addition to other modeling work for CMS, ASPE, and other non-governmental organizations, has led to a number of new actuarial and statistical modeling projects for OACT and other clients.

Work with Medicare pilots and demonstrations dates to 2003, when ARC won a contract to provide financial reconciliation and actuarial support to CMS for the Medicare Health Support pilot. This work was expanded to include identifying beneficiaries eligible for the demonstration, assigning these beneficiaries to intervention and control groups and providing additional technical analyses. ARC also was asked to determine whether participating disease management organizations were meeting their financial performance goals and obligations to CMS. The successful performance of this work led to a number of subsequent demonstration support, monitoring, implementation and evaluation contracts and related responsibilities.

In addition to policy analysis, ARC has provided actuarial assistance to clients.  For example, in 2005, we developed the prototype bidding forms for Parts C and D of Medicare that evolved into the current versions of the “bid pricing tools” (BPTs).  This work led to contracts to review bids from sponsors of Medicare Advantage and Prescription Drug Plans.  In 2009, ARC provided cost estimates to the Office of the Secretary of HHS that demonstrated that the options considered for implementation of the CLASS Act public long-term care (LTC) financing program were not feasible.  ARC continues to perform further work on national options for LTC.

Past Projects

ARC senior staff members have worked with federal entities, state agencies, and private clients on a variety of projects where they have provided expert actuarial analysis, policy evaluation and technical support services for health insurance issues. In addition to developing actuarial techniques and preparing cost estimates, ARC has provided technical assistance, implementation, monitoring, evaluation and operational support to many demonstration projects, with a special focus on the development and implementation of methods to determine program savings and performance-based financial incentives for the Medicare and Medicaid programs.

Our project experience and profile of health care financial studies include activities such as:

  1. Analysis of the Medicare program, Medicaid program and other federal health insurance programs
  2. Studies of national health policy issues
  3. Studies related to state health financing reform
  4. Analysis of TRICARE and other military health care programs
  5. Analysis of mental health, alcohol, and drug abuse costs
  6. Studies related to long-term care insurance
  7. Evaluation of alternative approaches to the provision of Medicare and Medicaid services
  8. Prescription drug studies