The Empire Plan is a unique health insurance plan designed especially for public employees in New York State. Empire Plan benefits include inpatient and outpatient hospital coverage, medical/surgical coverage, Centers of Excellence for transplants, infertility and cancer, home care services, equipment and supplies, mental health and substance abuse coverage and prescription drug coverage.
DAVID A. PATERSON
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
NANCY G. GROENWEGEN
COMMISSIONER
PA08-16
TO: Participating Agency Health Benefit Administrators
FROM: Robert W. DuBois, Director of the Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: February 23, 2009
Enclosed are the Second and Third Quarter Empire Plan Experience Reports for 2008 and the cover letter to the Chief Executive Officers. The reports present the projected 2008 Empire Plan experience and the approved 2009 premium rates.
February 23, 2009
Dear Chief Executive Officer:
Attached is The Empire Plan Third Quarter Experience Report for 2008. A copy of the Second Quarter Experience Report also is attached for your records. The reports present The Empire Plan experience for 2008 and the projected experience for 2009, based on claims paid through June 30 and September 30, 2008, respectively.
The approved 2009 premium rates are presented in Exhibit II of the Third Quarter Report. As the result of the fiscal challenges being faced by the State and NYSHIP participating agencies, the rate setting process for 2009 received an unprecedented level of attention. Therefore, I would like to take this opportunity to provide you with some of the details of how we achieved the historically low, aggregate premium increase of 1.2% for 2009 and the approach we plan to take in establishing NYSHIP rates moving forward.
Throughout the 2009 rate setting process, the Employee Benefits Division worked closely with the Division of the Budget, our actuarial consultant, and the Plan insurers to assure that the premiums paid by localities participating in NYSHIP would be as low as possible, while still being sufficient to pay for the benefits that enrollees are entitled to under the Plan. Through aggressive negotiations with The Empire Plan insurers, we achieved premium reductions of approximately $74.3 million from their original baseline requests. Also, an approach we have used to a limited extent in the past - retrospective premium agreements with the Plan's insurers - was an integral part of our rate strategy for 2009. Under these agreements, the premium paid to the insurers is reduced by transferring a portion of the risk to the Plan. These retrospective agreements result in essentially no insurer margin being included in the 2009 rates and account for a further reduction in premiums of approximately $174.2 million. Additionally, approximately $275 million in dividend, plus $12 million in interest credits, have been applied to the 2009 NYSHIP rates.
As reflected in the Third Quarter report, for the 2008 Plan Year, The Empire Plan carriers project a net dividend of $428.9 million, or 7.6% of premium. As you may know, consistent with Civil Service Law any surplus premium is added to the stabilization reserve and applied to future years' premiums. During the rate setting process last year, several participating agencies questioned the size of the NYSHIP premium stabilization reserve. Certainly some of it can be attributable to conservatism on the part of the insurers when establishing their premium requirements in recent years. However, other factors have contributed to the substantial growth in the reserve over the past few years, including mid-term negotiations with insurers to attain modifications to contract terms that have resulted in lower Plan costs and mid-year benefit changes that produced savings as the result of collective bargaining between the State and the unions representing its employees. Assuming we achieve the desired results from our approach to the rate setting process for 2009, the magnitude of any future additions to the reserve should be substantially curtailed. Please be assured that we will continue to work together with the Division of the Budget to ensure that NYSHIP rates for local governments are kept as low as possible.
One way in which the Division exchanges information relevant to NYSHIP participating agencies is through the Participating Agency Advisory Council (PAAC). The Council is currently composed of the associations representing the various categories of PAs and labor unions representing PA employees. A list of the current member organizations is enclosed. To better understand the concerns and challenges of PAs, we believe it would be beneficial to expand the Council's membership to include representation from a cross-section of NYSHIP participating agencies. Therefore, we are seeking nominations for Council representatives from PAs. The PAAC meets at the Department's Albany office on a quarterly basis. We will be seeking nominations of PA representatives who are in a senior level position, with knowledge of and responsibility for the agency's employee health benefits. You will receive additional information and a nomination form from us in the next few weeks.
Finally, I would like to remind you that NYSHIP is now offering The Excelsior Plan, a lower cost version of The Empire Plan. This new plan replaced the Empire Plan Core Only option effective January 1, 2009. Please let us know if you would like additional information about the Excelsior Plan.
I hope this report is informative. If you have any questions, comments or suggestions, please don't hesitate to contact me.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
Reports:
Empire Plan Experience Report: Second Quarter – April-June 2008
Empire Plan Experience Report: Third Quarter – July-September 2008
EMPIRE PLAN EXPERIENCE REPORT
SECOND QUARTER
APRIL - JUNE 2008
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
Nancy G. Groenwegen
President, New York State Civil Service Commission
Exhibits
- Projected 2008 Empire Plan Experience
- Projected 2009 PA Premium Rates
- Empire Plan PA 5-Tier Group Rates (2000-2009)
- Empire Plan PA 2-Tier Group Rates (2000-2009)
NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
2nd QUARTER REPORT
PROJECTED 2008 EMPIRE PLAN EXPERIENCE
The Empire Plan carriers project a composite dividend of $342.4 million (6.1% of premium), or $192.2 million more than the margin loaded in the 2008 rates. The 2008 annual experience projected by the insurance carriers is reported in Exhibit I.
This projection is based on only six months of 2008 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid as well as the current 2008 trend as compared to the trend assumed during the 2008 premium rate development:
| % of Paid Claims to Projected Incurred Claims |
Projected 2008 Trend | |||
| 2007 | 2008 | @ Final Renewal | @ 2nd Quarter | |
|---|---|---|---|---|
| Blue Cross Hospital | 97.7% | 36.7% | 12.0% | 10.2% |
| UHC Medical | 99.3% | 39.3% | 10.5% | 6.6% |
| GHI MHSA | 99.1% | 35.5% | 6.0% | 10.8% |
| Blue Cross Rx | 99.9% | 47.9% | 9.7% | 4.6% |
The 2008 projected dividend for each carrier as compared to the margin level used in the 2008 premium development is as follows:
| Margin | 2008 Projected Dividend/(Loss) | Increase/(Decrease) | |
|---|---|---|---|
| Blue Cross Hospital | $38,176,000 | $48,849,000 | $10,673,000 |
| UHC Medical | $54,975,000 | $196,868,000 | $141,893,000 |
| GHI MHSA | $1,461,000 | ($4,789,000) | $6,250,000 |
| UHC Rx | $55,516,000 | $101,424,000 | $45,908,000 |
| Total | $150,128,000 | $342,352,000 | $192,224,000 |
The increase in the dividend projection is primarily attributable to the decrease in the 2007 claims base for the medical and prescription drug components projected during the development of the 2008 rates and an improvement in 2008 trend for the medical, hospital and prescription drug programs. There also is a substantial increase in the projected pharma revenue for the prescription drug program. Offsetting the favorable prescription drug program experience is a significant increase in the disabled lives reserve. The reserve amount projected by United Healthcare is considered to be excessively conservative and will be reviewed. In addition, the cost of non-network mental health and substance abuse claims is higher than previously anticipated resulting in a moderate projected loss for that program.
2009 PROJECTED PREMIUM RATES
Exhibit II presents the projected 2009 Empire Plan gross and net premium rates assuming the application of $300.0 million in dividend to all payors. In aggregate, The Empire Plan gross premium is projected to increase approximately 5.3% while the net premium is projected to increase approximately 6.6%.
A range of the projected gross and net premium rate increase is also included (2.5% - 10.7%). Carrier rate projections made at this time of the year have been historically conservative with the rates ultimately approved and implemented being significantly less than the projections contained in 1st Quarter Reports. Each agency should assess its budgetary environment in using the enclosed projections.
Exhibit II also presents the 2008 (effective July 1, 2008) and projected 2009 rates for the Excelsior Plan. As compared to The Empire Plan rates, The Excelsior Plan rates are in aggregate 14.2% lower.
Exhibit III presents the individual and family rate history for the Core plus Medical and Psychiatric Enhancement option based on the 5-tier Empire Plan billing rate history in effect since January 1, 1999. Exhibit IV presents, for illustrative purposes only, the 2-tier rate history from 2000 to 2009.
Exhibit I
2008 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
| BLUE CROSS HOSPITAL | United Healthcare MEDICAL Core | United Healthcare MEDICAL NY Enhancement | United Healthcare MEDICAL PA Enhancement | United Healthcare MEDICAL Combined | GHI MHSA Core | GHI MHSA NY Enhancement | GHI MHSA PA Enhancement | GHI MHSA Combined | UHC DRUG | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) Premium (1) | 1,763,516 | 1,708,877 | 252,939 | 241,776 | 2,203,592 | 105,436 | 1,608 | 982 | 108,025 | 1,536,758 | 5,611891 |
| (B) Incurred Claims (2) | 1,591,022 | 1,428,730 | 203,598 | 192,021 | 1,824,349 | 87,220 | 3,832 | 3,362 | 94,414 | 1,361,782 | 4,871,567 |
| (C) Administrative Expense (3) | 123,645 | 150,607 | 16,319 | 15,449 | 182,375 | 17,833 | 336 | 231 | 18,400 | 73,552 | 397,972 |
| (D) Gain/(Loss) (A-B-C) | 48,849 | 129,540 | 33,022 | 34,306 | 196,868 | 382 | (2,560) | (2,611) | (4,789) | 101,424 | 342,352 |
(1) Earned Premium - Premium which pays for coverage for the period reported (accrual basis).
(2) Incurred Claims - Represents the cost of covered services provided during the period reported by the insurance company (accrual basis).
(3) Administrative Expenses - All charges by the insurance carrier other than for the payment of claims. Includes carrier's cost to administer the program, interest charges, and other retention.
Source: Carrier 2008 2nd Qtr Reports
Exhibit II
Participating Agency Premium Rates
Comparison of 2008 and Projected 2009 Rates
EMPIRE PLAN CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS
Plan Prime: Individual
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 633.79 | 645.20 | 1.8% | 592.38 | 608.29 | 2.7% |
| Best estimate | 633.79 | 669.14 | 5.6% | 592.38 | 632.23 | 6.7% |
| Pessimistic | 633.79 | 693.01 | 9.3% | 592.38 | 656.10 | 10.9% |
Plan Prime: Family
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 1,346.27 | 1,372.86 | 2.0% | 1,258.78 | 1,295.46 | 2.9% |
| Best estimate | 1,346.27 | 1,423.28 | 5.7% | 1,258.78 | 1,345.88 | 6.9% |
| Pessimistic | 1,346.27 | 1,473.53 | 9.5% | 1,258.78 | 1,396.13 | 10.9% |
MedPrime: Individual
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 397.23 | 394.09 | -0.8% | 360.41 | 362.54 | 0.6% |
| Best estimate | 397.23 | 411.68 | 3.6% | 360.41 | 380.13 | 5.5% |
| Pessimistic | 397.23 | 429.28 | 8.1% | 360.41 | 397.73 | 10.4% |
MedPrime: Family - 1
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 1,109.74 | 1,121.73 | 1.1% | 1,026.86 | 1,049.70 | 2.2% |
| Best estimate | 1,109.74 | 1,165.82 | 5.1% | 1,026.86 | 1,093.79 | 6.5% |
| Pessimistic | 1,109.74 | 1,209.81 | 9.0% | 1,026.86 | 1,137.78 | 10.8% |
MedPrime: Family - 2
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 873.21 | 870.61 | -0.3% | 794.94 | 803.93 | 1.1% |
| Best estimate | 873.21 | 908.35 | 4.0% | 794.94 | 841.67 | 5.9% |
| Pessimistic | 873.21 | 946.08 | 8.3% | 794.94 | 879.40 | 10.6% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates
EXCELSIOR PLAN
Plan Prime: Individual
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 551.81 | 564.39 | 2.3% | 513.43 | 530.28 | 3.3% |
| Best estimate | 551.81 | 584.46 | 5.9% | 513.43 | 550.35 | 7.2% |
| Pessimistic | 551.81 | 604.45 | 9.5% | 513.43 | 570.34 | 11.1% |
Plan Prime: Family
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 1,173.06 | 1,202.31 | 2.5% | 1,091.89 | 1,130.82 | 3.6% |
| Best estimate | 1,173.06 | 1,244.59 | 6.1% | 1,091.89 | 1,173.10 | 7.4% |
| Pessimistic | 1,173.06 | 1,286.73 | 9.7% | 1,091.89 | 1,215.24 | 11.3% |
MedPrime: Individual
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 322.07 | 320.23 | -0.6% | 286.19 | 289.57 | 1.2% |
| Best estimate | 322.07 | 334.19 | 3.8% | 286.19 | 303.53 | 6.1% |
| Pessimistic | 322.07 | 348.12 | 8.1% | 286.19 | 317.46 | 10.9% |
MedPrime: Family - 1
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 943.33 | 958.16 | 1.6% | 864.68 | 890.11 | 2.9% |
| Best estimate | 943.33 | 994.32 | 5.4% | 864.68 | 926.27 | 7.1% |
| Pessimistic | 943.33 | 1,030.40 | 9.2% | 864.68 | 962.35 | 11.3% |
MedPrime: Family - 2
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Optimistic | 713.58 | 714.01 | 0.1% | 637.43 | 649.39 | 1.9% |
| Best estimate | 713.58 | 744.05 | 4.3% | 637.43 | 679.43 | 6.6% |
| Pessimistic | 713.58 | 774.06 | 8.5% | 637.43 | 709.44 | 11.3% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates
Exhibit III
EMPIRE PLAN
PA 5 TIER GROUP RATES
2000-2009 Monthly Rates
Core Plus Medical & Psychiatric Enhancements
Individual Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 294.94 | 5.5% | 286.53 | 9.7% |
| 2001 | 325.23 | 10.3% | 314.26 | 9.7% |
| 2002 | 353.81 | 8.8% | 344.66 | 9.7% |
| 2003 | 400.00 | 13.1% | 384.89 | 11.7% |
| 2004 | 448.00 | 12.0% | 438.15 | 13.8% |
| 2005 | 490.41 | 9.5% | 478.49 | 9.2% |
| 2006 | 547.86 | 11.7% | 529.76 | 10.7% |
| 2007 | 600.69 | 9.6% | 564.84 | 6.6% |
| 2008 | 633.79 | 5.5% | 592.38 | 4.9% |
| 2009 projected | 669.14 | 5.6% | 632.23 | 6.7% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.5% | 8.9% |
| Most Recent 10 Years | 9.2% | 9.3% |
| Most Recent 5 Years | 8.4% | 7.6% |
Family Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 607.33 | 5.9% | 590.16 | 11.0% |
| 2001 | 673.67 | 10.9% | 651.09 | 10.3% |
| 2002 | 742.98 | 10.3% | 723.97 | 11.2% |
| 2003 | 842.38 | 13.4% | 811.41 | 12.1% |
| 2004 | 945.29 | 12.2% | 924.74 | 14.0% |
| 2005 | 1,038.64 | 9.9% | 1,013.68 | 9.6% |
| 2006 | 1,164.16 | 12.1% | 1,126.19 | 11.1% |
| 2007 | 1,273.96 | 9.4% | 1,198.07 | 6.4% |
| 2008 | 1,346.27 | 5.7% | 1,258.78 | 5.1% |
| 2009 projected | 1,423.28 | 5.7% | 1,345.88 | 6.9% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.0% | 8.4% |
| Most Recent 10 Years | 9.6% | 9.8% |
| Most Recent 5 Years | 8.6% | 7.8% |
Individual Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 217.94 | 16.9% | 214.25 | 22.0% |
| 2001 | 245.64 | 12.7% | 239.94 | 12.0% |
| 2002 | 259.96 | 5.8% | 253.82 | 5.8% |
| 2003 | 307.02 | 18.1% | 297.50 | 17.2% |
| 2004 | 341.87 | 11.4% | 334.22 | 12.3% |
| 2005 | 340.50 | -0.4% | 331.93 | -0.7% |
| 2006 | 359.35 | 5.5% | 338.88 | 2.1% |
| 2007 | 363.02 | 1.0% | 333.18 | -1.7% |
| 2008 | 397.23 | 9.4% | 360.41 | 8.2% |
| 2009 projected | 411.68 | 3.6% | 380.13 | 5.5% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 5.4% | 5.9% |
| Most Recent 10 Years | 8.4% | 8.3% |
| Most Recent 5 Years | 3.8% | 2.7% |
Family - 1 Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 530.97 | 10.4% | 518.52 | 16.0% |
| 2001 | 595.25 | 12.1% | 577.95 | 11.5% |
| 2002 | 649.14 | 9.1% | 633.13 | 9.5% |
| 2003 | 749.40 | 15.4% | 724.05 | 14.4% |
| 2004 | 839.18 | 12.0% | 820.82 | 13.4% |
| 2005 | 888.71 | 5.9% | 867.09 | 5.6% |
| 2006 | 975.66 | 9.8% | 935.32 | 7.9% |
| 2007 | 1,036.30 | 6.2% | 966.44 | 3.3% |
| 2008 | 1,109.74 | 7.1% | 1,026.86 | 6.3% |
| 2009 projected | 1,165.82 | 5.1% | 1,093.79 | 6.5% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 6.6% | 7.0% |
| Most Recent 10 Years | 9.3% | 9.4% |
| Most Recent 5 Years | 6.8% | 5.9% |
Family - 2 or More Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 453.22 | 17.1% | 445.51 | 23.5% |
| 2001 | 514.40 | 13.5% | 502.37 | 12.8% |
| 2002 | 555.29 | 7.9% | 542.29 | 7.9% |
| 2003 | 656.42 | 18.2% | 636.67 | 17.4% |
| 2004 | 733.05 | 11.7% | 716.88 | 12.6% |
| 2005 | 738.79 | 0.8% | 720.53 | 0.5% |
| 2006 | 787.16 | 6.5% | 744.45 | 3.3% |
| 2007 | 798.65 | 1.5% | 734.81 | -1.3% |
| 2008 | 873.21 | 9.3% | 794.94 | 8.2% |
| 2009 projected | 908.35 | 4.0% | 841.67 | 5.9% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 5.2% | 5.7% |
| Most Recent 10 Years | 9.1% | 9.1% |
| Most Recent 5 Years | 4.4% | 3.3% |
(1) Represents premiums paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.
Exhibit IV
EMPIRE PLAN
PA 2 TIER GROUP RATES
2000-2009 Monthly Rates
(For Illustrative Purposes Only)
Core Plus Medical & Psychiatric Enhancement
Individual
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 260.67 | 9.0% | 253.98 | 14.4% |
| 2001 | 289.41 | 11.0% | 280.25 | 10.3% |
| 2002 | 313.58 | 8.4% | 305.67 | 9.1% |
| 2003 | 357.44 | 14.0% | 345.36 | 13.0% |
| 2004 | 402.70 | 12.7% | 394.31 | 14.2% |
| 2005 | 433.70 | 7.7% | 423.31 | 7.4% |
| 2006 | 477.33 | 10.1% | 459.25 | 8.5% |
| 2007 | 511.23 | 7.1% | 477.96 | 4.1% |
| 2008 | 536.84 | 5.0% | 498.88 | 4.4% |
| 2009 projected | 560.87 | 4.5% | 526.56 | 5.5% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 7.9% | 7.8% |
| Most Recent 10 Years | 8.9% | 9.1% |
| Most Recent 5 Years | 6.9% | 6.0% |
Family
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 578.26 | 7.3% | 563.03 | 12.7% |
| 2001 | 640.64 | 10.8% | 619.28 | 10.0% |
| 2002 | 703.61 | 9.8% | 685.83 | 10.7% |
| 2003 | 805.64 | 14.5% | 778.82 | 13.6% |
| 2004 | 899.98 | 11.7% | 881.48 | 13.2% |
| 2005 | 968.40 | 7.6% | 945.11 | 7.2% |
| 2006 | 1,073.28 | 10.8% | 1,034.40 | 9.4% |
| 2007 | 1,158.16 | 7.9% | 1,084.90 | 4.9% |
| 2008 | 1,233.38 | 6.5% | 1,150.41 | 6.0% |
| 2009 projected | 1,301.73 | 5.5% | 1,226.60 | 6.6% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.4% | 8.3% |
| Most Recent 10 Years | 9.2% | 9.4% |
| Most Recent 5 Years | 7.7% | 6.8% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
EMPIRE PLAN EXPERIENCE REPORT
THIRD QUARTER
JULY – SEPTEMBER 2008
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
Nancy G. Groenwegen
President, New York State Civil Service Commission
Exhibits
- Projected 2008 Empire Plan Experience
- Projected 2009 PA Premium Rates
- Empire Plan PA 5-Tier Group Rates (2000-2009)
- Empire Plan PA 2-Tier Group Rates (2000-2009)
NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
3rd QUARTER REPORT
PROJECTED 2008 EMPIRE PLAN EXPERIENCE
The Empire Plan carriers project a composite dividend of $428.9 million (7.6% of premium), or $278.8 million more than the margin loaded in the 2008 rates. The 2008 annual experience projected by the insurance carriers is reported in Exhibit I.
This projection is based on only nine months of 2008 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid as well as the current 2008 trend as compared to the trend assumed during the 2008 premium rate development:
| % of Paid Claims to Projected Incurred Claims |
Projected 2008 Trend | |||
| 2007 | 2008 | @ Final Renewal | @ 3rd Quarter | |
|---|---|---|---|---|
| Blue Cross Hospital | 98.9% | 61.8% | 12.0% | 9.2% |
| UHC Medical | 99.7% | 64.2% | 10.5% | 6.4% |
| GHI MHSA | 99.4% | 59.3% | 6.0% | 9.4% |
| Blue Cross Rx | 99.9% | 70.6% | 9.7% | 4.3% |
The 2008 projected dividend for each carrier as compared to the margin level used in the 2008 premium development is as follows:
| Margin | 2008 Projected Dividend/(Loss) | Increase/(Decrease) | |
|---|---|---|---|
| Blue Cross Hospital | $38,176,000 | $83,769,000 | $45,593,000 |
| UHC Medical | $54,975,000 | $227,954,000 | $172,979,000 |
| GHI MHSA | $1,461,000 | ($3,776,000) | ($5,237,000) |
| UHC Rx | $555,516,000 | $120,988,000 | $65,472,000 |
| Total | $150,128,000 | $428,935,000 | $278,807,000 |
The increase in the dividend projection is primarily attributable to the decrease in the 2007 claims base for the medical and prescription drug components projected during the development of the 2008 rates and an improvement in 2008 trend for the medical, hospital and prescription drug programs. There also is a substantial increase in the projected pharma revenue for the prescription drug program. Offsetting the favorable prescription drug program experience is a significant increase in the disabled lives reserve. The reserve amount projected by United Healthcare is considered to be excessively conservative and will be reviewed. In addition, the cost of non-network mental health and substance abuse claims is higher than previously anticipated resulting in a moderate projected loss for that program.
2009 PROJECTED PREMIUM RATES
Exhibit II presents the approved 2009 Empire Plan gross and net premium rates. In aggregate, The Empire Plan gross premium decreases 0.6% while the net premium increases 1.2%. In aggregate, The Excelsior Plan gross premium increases 1.6% while the net premium increases 4.1%. The 2009 rates are based on a 2008 premium level generating a 7.6% dividend, an aggregate trend of 9.2% and a margin level equal to 0.0% of premium. In addition, $275.0 million in all-payor dividend was used to mitigate the net premium increase.
Also contributing to this favorable rate increase is the use of retrospective premium arrangements. A retro premium arrangement provides for the payment of a reduced premium level throughout the year with a provision for an additional premium payment at settlement in the event that claims and expenses exceed the premium paid throughout the year. This strategy is used when we believe the carriers' premium demand is overly conservative. Any necessary retrospective premium payment would be funded through available dividends. While the retro premium liability is approximately $174.2 million, the State and its benefit consultant, Buck Consultants, do not expect that any retro payment will be necessary.
Exhibit III presents the individual and family rate history for the Core Plus Medical and Psychiatric Enhancement option based on the 5-tier Empire Plan billing rate history in effect since January 1, 2000. Exhibit IV presents, for illustrative purposes only, the 2-tier rate history from 2000 to 2009.
Exhibit I
2008 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
| BLUE CROSS HOSPITAL | United Healthcare MEDICAL Core | United Healthcare MEDICAL NY Enhancement | United Healthcare MEDICAL PA Enhancement | United Healthcare MEDICAL Combined | GHI MHSA Core | GHI MHSA NY Enhancement | GHI MHSA PA Enhancement | GHI MHSA Combined | UHC DRUG | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) Premium (1) | 1,764,333 | 1,708,595 | 253,107 | 241,315 | 2,203,017 | 105,611 | 1,614 | 981 | 108,206 | 1,536,436 | 5,611,992 |
| (B) Incurred Claims (2) | 1,557,807 | 1,403,790 | 199,271 | 189,741 | 1,792,802 | 86,509 | 3,816 | 3,315 | 93,640 | 1,343,304 | 4,787,553 |
| (C) Administrative Expense (3) | 122,757 | 150,359 | 16,318 | 15,584 | 182,261 | 17,777 | 335 | 230 | 18,342 | 72,114 | 395,474 |
| (D) Gain/(Loss) (A-B-C) | 83,769 | 154,446 | 37,518 | 35,990 | 227,954 | 1,325 | (2,537) | (2,564) | (3,776) | 121,018 | 428,965 |
(1) Earned Premium - Premium which pays for coverage for the period reported (accrual basis).
(2) Incurred Claims - Represents the cost of covered services provided during the period reported by the insurance company (accrual basis).
(3) Administrative Expenses - All charges by the insurance carrier other than for the payment of claims. Includes carrier’s cost to administer the program, interest charges, and other retention.
Source: Carrier 2008 3rd Quarter Experience Report
Exhibit II
Empire Plan
Participating Agency Premium Rates
Comparison of 2008 and 2009 Rates
Mediprime Rate Structure
EMPIRE PLAN
Plan Prime
| Gross Rates (1) 2008 | Gross Rates (1) 2009 | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Individual | 633.79 | 630.73 | -0.5% | 592.38 | 598.58 | 1.0% |
| Family | 1,346.27 | 1,350.26 | 0.3% | 1,258.78 | 1,282.17 | 1.9% |
Medprime
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Individual | 397.23 | 384.38 | -3.2% | 360.41 | 359.22 | -0.3% |
| Family - 1 medicare | 1,109.74 | 1,103.90 | -0.5% | 1,026.86 | 1,042.81 | 1.6% |
| Family - 2 medicares | 873.21 | 857.54 | -1.8% | 794.94 | 803.45 | 1.1% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
EXCELSIOR PLAN
Plan Prime
| Gross Rates (1) 2008 | Gross Rates (1) 2009 | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Individual | 551.81 | 557.49 | 1.0% | 513.43 | 529.17 | 3.1% |
| Family | 1,173.06 | 1,197.21 | 2.1% | 1,091.89 | 1,137.16 | 4.1% |
Medprime
| Gross Rates (1) 2008 | Gross Rates (1) 2009 (3) | Gross Rates (1) % Change | Net Rates (2) 2008 | Net Rates (2) 2009 (3) | Net Rates (2) % Change | |
|---|---|---|---|---|---|---|
| Individual | 322.07 | 320.35 | -0.5% | 286.19 | 296.43 | 3.6% |
| Family - 1 medicare | 943.33 | 960.08 | 1.8% | 864.68 | 904.43 | 4.6% |
| Family - 2 medicares | 713.58 | 722.95 | 1.3% | 637.43 | 671.71 | 5.4% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit III
EMPIRE PLAN
PA 5 TIER GROUP RATES
2000-2009 Monthly Rates
Core Plus Medical & Psychiatric Enhancements
Individual Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 294.94 | 5.5% | 286.53 | 9.7% |
| 2001 | 325.23 | 10.3% | 314.26 | 9.7% |
| 2002 | 353.81 | 8.8% | 344.66 | 9.7% |
| 2003 | 400.00 | 13.1% | 384.89 | 11.7% |
| 2004 | 448.00 | 12.0% | 438.15 | 13.8% |
| 2005 | 490.41 | 9.5% | 478.49 | 9.2% |
| 2006 | 547.86 | 11.7% | 529.76 | 10.7% |
| 2007 | 600.69 | 9.6% | 564.84 | 6.6% |
| 2008 | 633.79 | 5.5% | 592.38 | 4.9% |
| 2009 | 630.73 | -0.5% | 598.58 | 1.0% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.1% | 8.5% |
| Most Recent 10 Years | 8.5% | 8.7% |
| Most Recent 5 Years | 7.2% | 6.5% |
Family Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 607.33 | 5.9% | 590.16 | 11.0% |
| 2001 | 673.67 | 10.9% | 651.09 | 10.3% |
| 2002 | 742.98 | 10.3% | 723.97 | 11.2% |
| 2003 | 842.38 | 13.4% | 811.41 | 12.1% |
| 2004 | 945.29 | 12.2% | 924.74 | 14.0% |
| 2005 | 1,038.64 | 9.9% | 1,013.68 | 9.6% |
| 2006 | 1,164.16 | 12.1% | 1,126.19 | 11.1% |
| 2007 | 1,273.96 | 9.4% | 1,198.07 | 6.4% |
| 2008 | 1,346.27 | 5.7% | 1,258.78 | 5.1% |
| 2009 | 1,350.26 | 0.3% | 1,282.17 | 1.9% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 7.6% | 8.0% |
| Most Recent 10 Years | 9.0% | 9.3% |
| Most Recent 5 Years | 7.5% | 6.8% |
Individual Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 217.94 | 16.9% | 214.25 | 22.0% |
| 2001 | 245.64 | 12.7% | 239.94 | 12.0% |
| 2002 | 259.96 | 5.8% | 253.82 | 5.8% |
| 2003 | 307.02 | 18.1% | 297.50 | 17.2% |
| 2004 | 341.87 | 11.4% | 334.22 | 12.3% |
| 2005 | 340.50 | -0.4% | 331.93 | -0.7% |
| 2006 | 359.35 | 5.5% | 338.88 | 2.1% |
| 2007 | 363.02 | 1.0% | 333.18 | -1.7% |
| 2008 | 397.23 | 9.4% | 360.41 | 8.2% |
| 2009 | 384.38 | -3.2% | 359.22 | -0.3% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 4.9% | 5.4% |
| Most Recent 10 Years | 7.7% | 7.7% |
| Most Recent 5 Years | 2.5% | 1.5% |
Family - 1 Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 530.97 | 10.4% | 518.52 | 16.0% |
| 2001 | 595.25 | 12.1% | 577.95 | 11.5% |
| 2002 | 649.14 | 9.1% | 633.13 | 9.5% |
| 2003 | 749.40 | 15.4% | 724.05 | 14.4% |
| 2004 | 839.18 | 12.0% | 820.82 | 13.4% |
| 2005 | 888.71 | 5.9% | 867.09 | 5.6% |
| 2006 | 975.66 | 9.8% | 935.32 | 7.9% |
| 2007 | 1,036.30 | 6.2% | 966.44 | 3.3% |
| 2008 | 1,109.74 | 7.1% | 1,026.86 | 6.3% |
| 2009 | 1,103.90 | -0.5% | 1,042.81 | 1.6% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 6.2% | 6.6% |
| Most Recent 10 Years | 8.7% | 8.9% |
| Most Recent 5 Years | 5.7% | 4.9% |
Family - 2 or More Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 453.22 | 17.1% | 445.51 | 23.5% |
| 2001 | 514.40 | 13.5% | 502.37 | 12.8% |
| 2002 | 555.29 | 7.9% | 542.29 | 7.9% |
| 2003 | 656.42 | 18.2% | 636.67 | 17.4% |
| 2004 | 733.05 | 11.7% | 716.88 | 12.6% |
| 2005 | 738.79 | 0.8% | 720.53 | 0.5% |
| 2006 | 787.16 | 6.5% | 744.45 | 3.3% |
| 2007 | 798.65 | 1.5% | 734.81 | -1.3% |
| 2008 | 873.21 | 9.3% | 794.94 | 8.2% |
| 2009 | 857.54 | -1.8% | 803.45 | 1.1% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 4.8% | 5.4% |
| Most Recent 10 Years | 8.5% | 8.6% |
| Most Recent 5 Years | 3.3% | 2.4% |
(1) Represents premiums paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.
Exhibit IV
EMPIRE PLAN
PA 2 TIER GROUP RATES
2000-2009 Monthly Rates
(For Illustrative Purposes Only)
Core Plus Medical & Psychiatric Enhancement
Individual
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 260.67 | 9.0% | 253.98 | 14.4% |
| 2001 | 289.41 | 11.0% | 280.25 | 10.3% |
| 2002 | 313.58 | 8.4% | 305.67 | 9.1% |
| 2003 | 357.44 | 14.0% | 345.36 | 13.0% |
| 2004 | 402.70 | 12.7% | 394.31 | 14.2% |
| 2005 | 433.70 | 7.7% | 423.31 | 7.4% |
| 2006 | 477.33 | 10.1% | 459.25 | 8.5% |
| 2007 | 511.23 | 7.1% | 477.96 | 4.1% |
| 2008 | 536.84 | 5.0% | 498.88 | 4.4% |
| 2009 | 527.09 | -1.8% | 497.91 | -0.2% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 7.7% | 7.6% |
| Most Recent 10 Years | 8.3% | 8.5% |
| Most Recent 5 Years | 5.6% | 4.8% |
Family
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 2000 | 578.26 | 7.3% | 563.03 | 12.7% |
| 2001 | 640.64 | 10.8% | 619.28 | 10.0% |
| 2002 | 703.61 | 9.8% | 685.83 | 10.7% |
| 2003 | 805.64 | 14.5% | 778.82 | 13.6% |
| 2004 | 899.98 | 11.7% | 881.48 | 13.2% |
| 2005 | 968.40 | 7.6% | 945.11 | 7.2% |
| 2006 | 1,073.28 | 10.8% | 1,034.40 | 9.4% |
| 2007 | 1,158.16 | 7.9% | 1,084.90 | 4.9% |
| 2008 | 1,233.38 | 6.5% | 1,150.41 | 6.0% |
| 2009 | 1,230.02 | -0.3% | 1,165.24 | 1.3% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.2% | 8.1% |
| Most Recent 10 Years | 8.7% | 8.9% |
| Most Recent 5 Years | 6.5% | 5.8% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Second & Third Quarter Report - 2008
Empire Plan Benefit Changes – Effective January 1, 2009
As indicated in previous reports, negotiated agreements between the State and unions representing State employees include Empire Plan benefit changes. Benefit changes affecting PAs, effective January 1, 2009, were discussed at the fall 2008 PA Regional Meetings and detailed information was distributed to PA Health Benefits Administrators with PA Memo 08-21, dated December 8, 2008. In addition, The Empire Plan At A Glance for 2009 was mailed directly to all enrollees prior to the end of the year.
New Empire Plan Benefit Cards
New health insurance cards were issued to all Participating Agency enrollees for use beginning January 1, 2009. The reissuance of cards, with copayment code D, to replace the cards with copayment code A, was necessary due to the January 1, 2009 effective date of PA benefit changes. The effective dates of benefit changes varies for different groups of enrollees (for some groups, the changes were effective July 1, 2008; for others, the effective date will be July 1, 2009) With the changes in copayment codes, each enrollee group (State bargaining units, State unrepresented, Participating Employers) now has their own copayment code.
Empire Plan Mental Health and Substance Abuse Program
As announced at the fall 2008 PA Regional Meetings, effective January 1, 2009, The Empire Plan Mental Health and Substance Abuse Program is insured by United Health Care and administered by Optum Health. This change is reflected in the 2009 At A Glance previously distributed to all enrollees. We have been working closely with UHC/Optum to ensure a smooth transition.
Dependent Eligibility Audit
As discussed at the fall 2008 PA Regional Meetings, the Department of Civil Service is proceeding to implement a Dependent Eligibility Audit and, as a result of the competitive bidding process, has awarded a contract to Budco, a company with extensive experience in this field. This project will include a 60-day amnesty period followed by an audit of enrolled dependents. Budco will provide call center services for enrollees as well as review proofs and handle appeals. Participating Agencies will be kept informed as the project timetable and activities are developed.
Medicare Part D Employer Subsidy Update
To date, NYSHIP applied for and received estimated Employer Subsidies through the third quarter of 2008 (through September); the latest subsidy was applied to the bill issued in January for February 2009 coverage. The Department will continue to credit PA bills as the employer subsidies are received.
The Excelsior Plan Replaces Core Only Option
As indicated in the previous report, effective January 1, 2009, the Core Only option of The Empire Plan was discontinued and replaced with The Excelsior Plan, a lower cost option of The Empire Plan, which is now available to local governments and school districts. Information on this new option is available on the Department's website: www.cs.state.ny.us. Any questions about this new option may be directed to the Public Employer Liaison Unit.
PA Regional Meetings
The 2008 PA Regional Meetings were an overwhelming success. More than 600 PA representatives attended the meetings held in Saratoga Springs, Nanuet (Rockland County) and Long Island. Thanks to all who attended – we look forward to seeing you again in fall of 2009!
Income-Related Medicare Part B Premium Adjustment for 2007
The Employee Benefits Division continues to receive numerous inquiries from PA HBAs and retired Medicare eligible enrollees about this issue. As announced in prior reports and explained in PA Memo 07-13, effective January 1, 2007, the Federal government began charging an income-related monthly adjustment amount (IRMAA) in addition to the standard Medicare Part B premium ($93.50 for 2007 and $96.40 for 2008) to higher income Medicare beneficiaries. NYSHIP rules require reimbursement of this additional amount for enrollees and dependents subject to the IRMAA. If you have questions about IRMAA or need guidance on reimbursement procedures refer to PA Memo 07-31, issued on December 21, 2007. The memo describes procedures the State is following to reimburse State and PE retirees for the additional cost of their Part B premium.
Prompt Payment of NYSHIP Premium
As indicated in previous reports, the Employee Benefits Division has been aggressively monitoring agencies that fail to submit premium payments in a timely manner. This procedure includes suspension of claims for enrollees of any agency that falls three months behind in their premiums. To avoid disruption of your employees' benefits, please be sure to submit your premium payments by the due date, as we must submit premium to the Empire Plan insurers on time. You may wish to consider submitting your payments electronically to promote timely payments. Attached are guidelines to initiate electronic transfer of funds.
GASB 45 Census Reports
As indicated in previous reports, NYSHIP will provide agency census reports upon request for use in complying with the provisions of GASB 45. Since the data included in these reports will be current at the time they are provided, it is important that your agency NYBEAS file is up-to-date, including correctly identifying and coding retirees before requesting census reports. To request a copy of your agency's census information, please send an e-mail to: Kevin.Hill@cs.state.ny.us and include your name, agency name & code number, mailing address, phone number and e-mail address. For additional information about GASB 45, please refer to PA Memos 06-11 and 06-18.
Transmission of Reports Electronically
Many agencies receive the Empire Plan Experience Report via E-mail. If you would like to be added to our distribution list, you may contact us at the address or E-mail below.
CEO / HBA Name and Address Changes
Please be sure to notify EBD of any changes in the names and/or addresses (including E-mail address) of your agency's CEO or HBA, so that we may keep our mailing lists up-to-date. This updated information should be sent to:
Debbie D’Orazio
NYS Department of Civil Service
Employee Benefits Division
Alfred E. Smith State Office Building
Albany, NY 12239
or E-mail: Deborah.Dorazio@cs.state.ny.us
Attachments:
PA08-16 - PDF Version2nd Quarter Report - PDF Version
Exhibits I - PDF Version
Exhibits II - PDF Version
Exhibits III - PDF Version
Exhibits IV - PDF Version
3rd Quarter Report - PDF Version
Exhibits I - PDF Version
Exhibits II - PDF Version
Exhibits III - PDF Version
Exhibits IV - PDF Version
NYSHIP News - PDF Version
PA Advisory Council Members