Former Milliman Actuary Blasts Old Firm, Questions Integrity

A letter from the former Milliman actuary has come to light where the former consultant claims “The Milliman Seattle Health Practice places its profit ahead of doing the right thing.”

Alan Mills, the letter’s author and former senior actuarial consultant for Milliman, was the lead consultant for the state’s effort to establish a health benefit exchange.  He was also the lead for Milliman in helping the state redesign the K-12 benefits system that was so controversial this legislative session.

The letter came to light publicly this week as part of the evidence in the case against the Health Care Authority brought by Community Health Plan of Washington (CHPW) and Columbia United Providers (CUP).  It casts doubt on the quality of the actuarial work underpinning the policy decisions – and thus the policy decisions themselves – regarding both the exchange formation and the K-12 benefit redesign.

Mills writes that he resigned for three general issues, offering substantive examples in the letter:  “low quality,” “inflated costs” and “low professional integrity.”

Mills writes:

“Based on over thirty years of actuarial consulting practice, with several consulting firms, I found the quality of work produced by the Seattle Health Practice to be extremely low. Work is not adequately checked or peer reviewed; nor are there adequate formal processes in place for such checking or peer review. As a result, the Seattle Health Practice consistently produces work that is poorly communicated, and that often has serious flaws.”

Regarding the costs of Milliman’s work:

“The fees that Milliman Seattle Health Practice charges are inflated, by design.  Milliman could introduce several ways to streamline work processes and reduce fees – and I suggested several – but it elects to operate in ways that maximize its income, enriching its equity principals at the expense of the State.”

On the matter of “low professional integrity,” Mills points to the K-12 insurance matter:

“Last week I informed Tim Barclay, one of the Seattle Health Practice equity principals, that I would have to excuse myself from the project, for the following reasons: It appeared to me that John Williams, the HCA project director, was planning to base his recommendations for a redesigned system on inadequate data, in effect relying on vague impressions instead of facts. I told John several times that I strongly objected to such an approach, and felt that it would likely produce biased results.

John responded by telling me not to mention my concerns again and threatening to dismiss Milliman from the project. Consequently, I informed Tim Barclay that, according to the actuarial code of professional conduct, I would have to excuse myself from the project. And I drafted a letter to John, giving reasons why I must excuse myself. As a courtesy, I showed the draft letter to Tim.

Although Tim could point out nothing specifically inappropriate with the substance or the tone of the letter, he strongly objected to sending it. He said that the livelihoods of several people in the Seattle Health Practice (including his) depend on income from the State, and that the letter might anger John and disrupt the income. (Incidentally, I should mention that in over thirty years of working as a consultant, with hundreds of clients, I have never made another such decision about working with a client. I should also mention that no one within Milliman disagreed with my assessment of John’s handling of the K-12 project.)”

The letter is as damning a letter as you’ll read in generally polite Seattle.  It was released in August, 2011.  Whether it has had any impact during the last 7 months on Milliman’s “near monopoly” of work by the State of Washington is unclear.