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.
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
COMMISSIONER
DANIEL E. WALL
EXECUTIVE
DEPUTY COMISSIONER
PA96-09
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: September 11, 1996
Enclosed are the Second Quarter Empire Plan Experience Report for 1996 and the cover letter to Chief Executive Officers.
This report provides projected 1996 Empire Plan Experience and Projected Premium Rates for 1997.
September 11, 1996
Dear Chief Executive Officer:
Attached is the Participating Agency Second Quarter Report for 1996. This report provides projected 1996 Empire Plan Experience, based on claims paid through June 1996 and projected 1997 premium rates.
Based on claims paid through June 1996, the carriers project a surplus of approximately $168.8 million or 9.4% of premium. The report includes details for each of the carriers and, as in the past, these projections will be revised in each quarterly report based on actual claims experience for 1996.
The 1997 premium rate projections for each of the options are included in Exhibit II. At this point in time, the gross and net premiums are projected to increase approximately .9% and 5.6% respectively; the report explains the basis for these projections and they will continue to be revised in each quarterly report.
The status of Medicare Part B Reimbursement has not changed since the last report. We will notify you as soon as any action is taken on this issue.
Also included with this report is an update of Participating Agency involvement in NYSHIP. Attachment A provides information on the numbers of new and withdrawn agencies, broken down by type.
I hope this report is informative and useful to you. Please don't hesitate to contact me if you have any questions, comments or suggestions.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
EMPIRE PLAN EXPERIENCE REPORT
APRIL - JUNE 1996
produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
George C. Sinnott
President, New York State Civil Service Commission
NYS HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
2ND QUARTER REPORT
PROJECTED 1996 EMPIRE PLAN EXPERIENCE
Based on claims paid through June 1996, the Empire Plan carriers project a composite surplus of $168.8 million or 9.4% of premium. This is $114.3 million over the margin loaded in the 1997 rates. The 1996 annual experience projected by the insurance carriers is reported in Exhibit I. Individual carrier projections are explained as follows:
Blue Cross
Blue Cross projects a 1996 dividend of $95.0 million or 14.8% of the premium. This is $75.8 million over the margin loaded in the 1996 rates and is primarily due to a $43.4 million decrease in the 1995 claim base from what was estimated at the time the 1996 rates were developed. This improvement was caused in large part by Blue Cross's failure to properly assess the impact of electronic claim submissions. The additional $32.4 million of projected dividend is due to the reduction of projected 1996 trend from 7.6% to 1.4%.
MetraHealth Medical
MetraHealth projects a composite 1996 dividend of $32.6 million or 4.5% of premium which is $10.9 million over the margin loaded in the 1996 rates. The modest increase in the projected dividend is attributable to a number of factors including an increase in the 1995 claim base, decrease in the 1996 trend from 5.5% to 4.2% and a $13.8 million decrease in the administrative expense.
The amount of the gains and losses on the components of the program is significantly smaller than what was reported in the 1st Quarter Report as Core premium was shifted to both the NY and PA Enhancements in an equitable manner. Since Participating Agencies with the Core Only option do not benefit from this shift, a premium credit will be calcuIated and applied to either the January or February 1997 bill.
MetraHealth Mental Health and Substance Abuse Program
MetraHealth projects a 1996 surplus of $12.8 million or 11.9% of premium for the Mental Health and Substance Abuse (MHSA) Program. This is $8.0 million over the margin loaded in the 1996 rates and is a result of reducing unnecessary and inappropriate inpatient utilization in the latter half of 1995. These efficiencies were not considered in the development of the 1996 rates. In addition, administrative expenses are approximately $2.3 million lower than the budgeted amount.
Cigna
A 1996 dividend of $28.4 million or 9.0% of premium is estimated by Cigna. This represents a $19.7 million increase over the margin loaded in the 1996 rates. This increase is primarily attributable to higher than anticipated savings generated from the Select Pharmacy Network which became effective on September 1, 1995, and a reduction in the estimated 1996 trend from 17.6% to 12.6%.
1997 PROJECTED PREMIUM RATES
Exhibit II presents the 1997 projected Empire Plan gross and net rates in comparison to the 1996 rates. The 1997 net rates reflect the application of $122.2 million in dividends to all payors. Empire Plan gross premium is projected to increase approximately .9% with a net premium increase projected at 5.6%. The higher rate increase of net premium in relation to the increase in the gross premium, reflects the decreased level of dividend application in 1997.
Though the projected net rate increase is considerably higher than the rate increases observed over the previous five years, the 1997 projection has been decreasing as more 1996 paid claim information is observed. The current projection is still viewed to be conservative due to the following points:
- There is general conservatism by the carriers with only six months of actual 1996 paid claim experience.
- The current Prescription Drug contract ends December 31, 1996, and a conditional contract award has been made by the State to Medco Containment Insurance Company of New York. If Medco accepts the award and such award is approved by the Office of the State Comptroller, the incremental change in the rates projected for 1997 would be a reduction of 5.5%, or rates approximating those charged in 1996.
- Though the projected 1997 hospital rates reflect the end of NYPHRM effective December 31, 1996, negotiations regarding inpatient rates between Blue Cross and the hospitals continue with significant savings anticipated.
The underlying trend assumptions used by the carriers for the 1997 Participating Agency rates are as follows:
| Component | Trend |
|---|---|
| Blue Cross | 3.0% |
| MetraHealth Medical Core | 4.8% |
| MetraHealth Medical Enhancement | 8.0% |
| MetraHealth MHSA Core | 3.0% |
| MetraHealth MHSA Enhancement | 3.0% |
| Cigna | 14.7% |
| Composite | 6.0% |
This trend factor reflects a more favorable projection than that used in both the 1995 4th Quarter Report and the 1996 1st Quarter Report.
For comparison purposes, Exhibit Ill presents the individual and family rate history for the Core plus Medical and Psychiatric Enhancements option based on a Two Tier Empire Plan rate structure. The Five Tier rate structure became effective on January 1, 1996.
KEEPING YOU INFORMED
Medicare Part B Reimbursement
There is no change in the status of Medicare Part B Reimbursement. We will keep you informed of any movement on this issue.
Participating Agency Update
Since January 1, 1996, a total of six new agencies enrolled in NYSHIP and three agencies withdrew from the Program. Attachment A is a listing of these agencies by type.
Exhibit I
1996 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
| | BLUE CROSS | METROPOLITAN MEDICAL Core | METROPOLITAN MEDICAL NY Enhancement | METROPOLITAN MEDICAL PA Enhancement | METROPOLITAN MEDICAL Combined | METROPOLITAN MHSA Core | METROPOLITAN MHSA NY Enhancement | METROPOLITAN MHSA PA Enhancement | METROPOLITAN MHSA Combined | CIGNA | TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Premium (1) | 640,229 | 551,500 | 116,900 | 61,200 | 729,600 | 85,200 | 13,800 | 11,200 | 110,200 | 316,561 | 1,796,590 |
| Incurred Claims (2) | 515,808 | 496,100 | 69,800 | 62,700 | 8,600 | 64,900 | 7,400 | 6,500 | 78,800 | 273,269 | 1,496,477 |
| Admin. Expenses (3) | 29,456 | 54,238 | 8,134 | 6,033 | 68,405 | 14,691 | 2,159 | 1,788 | 18,638 | 14,855 | 131,354 |
| Gain/ Loss (A-B-C) | 94,965 | 1,162 | 38,966 | (7,533) | 32,595 | 5,609 | 4,241 | 2,912 | 12,762 | 28,437 | 168,759 |
(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 retention.
Source: 1996 2nd Quarter Report
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1996 and Projected 1997 Rates
CORE ONLY
Plan Prime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 225.10 | 205.15 | -8.9% | 203.90 | 191.45 | -6.1% |
| Best Estimate | 225.10 | 211.45 | -6.1% | 203.90 | 197.75 | -3.0% |
| Pessimistic | 225.10 | 217.68 | -3.3% | 203.90 | 203.98 | 0.0% |
Plan Prime: Family
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 499.74 | 455.18 | -8.9% | 372.35 | 424.93 | -5.6% |
| Best Estimate | 499.74 | 469.41 | -6.1% | 372.35 | 439.16 | -2.5% |
| Pessimistic | 499.74 | 483.49 | -3.3% | 372.35 | 453.24 | 0.7% |
MediPrime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 155.11 | 146.86 | -5.3% | 133.91 | 133.54 | -0.3% |
| Best Estimate | 155.11 | 150.54 | -2.9% | 133.91 | 137.22 | 2.5% |
| Pessimistic | 155.11 | 154.11 | -0.6% | 133.91 | 140.79 | 5.1% |
MediPrime: Family - 1
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 429.76 | 396.91 | -7.6% | 383.74 | 367.05 | -3.5% |
| Best Estimate | 429.76 | 408.49 | -4.9% | 383.74 | 378.63 | -0.4% |
| Pessimistic | 429.76 | 419.91 | -2.3% | 383.74 | 390.05 | 2.6% |
MediPrime: Family - 1
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 359.53 | 338.35 | -5.9% | 309.98 | 308.87 | -0.4% |
| Best Estimate | 359.53 | 347.30 | -3.4% | 309.98 | 317.82 | 2.5% |
| Pessimistic | 359.53 | 356.07 | -1.0% | 309.98 | 326.59 | 5.4% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1996 and Projected 1997 Rates
CORE PLUS MEDICAL ENHANCEMENT
Plan Prime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 230.91 | 227.92 | -1.3% | 204.00 | 210.83 | 3.3% |
| Best Estimate | 230.91 | 235.42 | 2.0% | 203.90 | 218.33 | 7.0% |
| Pessimistic | 230.91 | 242.85 | 5.2% | 203.90 | 225.76 | 10.7% |
Plan Prime: Family
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 512.24 | 504.20 | -1.6% | 449.50 | 466.36 | 3.8% |
| Best Estimate | 512.24 | 521.00 | 1.7% | 449.50 | 483.16 | 7.5% |
| Pessimistic | 512.24 | 537.66 | 5.0% | 449.50 | 499.82 | 11.2% |
MediPrime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 158.35 | 159.58 | 0.8% | 131.44 | 142.89 | 8.7% |
| Best Estimate | 158.35 | 163.93 | 3.5% | 131.44 | 147.24 | 12.0% |
| Pessimistic | 158.35 | 168.17 | 6.2% | 131.44 | 151.48 | 15.2% |
MediPrime: Family - 1
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 439.69 | 435.88 | -0.9% | 376.95 | 398.43 | 5.7% |
| Best Estimate | 439.69 | 449.51 | 2.2% | 376.95 | 412.06 | 9.3% |
| Pessimistic | 439.69 | 462.98 | 5.3% | 376.95 | 425.53 | 12.9% |
MediPrime: Family - 2
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 366.90 | 367.27 | 0.1% | 309.98 | 330.23 | 8.6% |
| Best Estimate | 366.90 | 377.74 | 3.0% | 309.98 | 340.70 | 12.0% |
| Pessimistic | 366.90 | 388.03 | 5.8% | 309.98 | 350.99 | 15.4% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1996 and Projected 1997 Rates
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS
Plan Prime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 234.59 | 230.86 | -1.6% | 207.66 | 212.64 | 2.4% |
| Best Estimate | 234.59 | 238.51 | 1.7% | 207.66 | 220.29 | 6.1% |
| Pessimistic | 234.59 | 246.10 | 4.9% | 207.66 | 227.88 | 9.7% |
Plan Prime: Family
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 521.96 | 511.98 | -1.9% | 459.16 | 470.66 | 2.5% |
| Best Estimate | 521.96 | 529.18 | 1.4% | 459.16 | 487.86 | 6.3% |
| Pessimistic | 521.96 | 546.25 | 4.7% | 459.16 | 504.93 | 10.0% |
MediPrime: Individual
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 158.65 | 159.82 | 0.7% | 131.72 | 142.01 | 7.8% |
| Best Estimate | 158.65 | 164.18 | 3.5% | 131.72 | 146.37 | 11.1% |
| Pessimistic | 158.65 | 168.44 | 6.2% | 131.72 | 150.63 | 14.4% |
MediPrime: Family - 1
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 446.03 | 440.96 | -1.1% | 383.23 | 400.06 | 4.4% |
| Best Estimate | 446.03 | 454.85 | 2.0% | 383.23 | 413.95 | 8.0% |
| Pessimistic | 446.03 | 468.58 | 5.1% | 383.23 | 427.68 | 11.6% |
MediPrime: Family - 1
| | GROSS RATES (1) 1996 | GROSS RATES (1) 1997 | GROSS RATES (1) % Change | NET RATES (2) 1996 | NET RATES (2) 1997 | NET RATES (2) % Change |
|---|---|---|---|---|---|---|
| Optimistic | 369.87 | 369.64 | -0.1% | 307.07 | 329.16 | 7.2% |
| Best Estimate | 369.87 | 380.24 | 2.8% | 307.07 | 339.76 | 10.6% |
| Pessimistic | 369.87 | 390.65 | 5.6% | 307.07 | 350.17 | 14.0% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit III
EMPIRE PLAN
PA GROUP RATES
1985-1997 Monthly Rates
Individual
| Core plus Med. & Psych. Enh. | Gross rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| 1985* | 95.71 | | 92.85 | |
| 1986 | 91.97 | -3.9% | 91.45 | -1.5% |
| 1987 | 103.14 | 12.1% | 101.65 | 11.1% |
| 1988 (1) | 142.01 | 37.7% | 141.52 | 39.2% |
| 1989 | 168.72 | 18.8% | 168.05 | 18.7% |
| 1990 (2) | 179.50 | 6.4% | 167.09 | -0.6% |
| 1991 (3) | 202.09 | 12.6% | 185.09 | 10.8% |
| 1992 | 198.85 | -1.6% | 181.81 | -1.8% |
| 1993 | 214.30 | 7.8% | 194.64 | 7.1% |
| 1994 | 213.83 | -0.2% | 197.39 | 1.4% |
| 1995 | 214.70 | 0.4% | 193.54 | -2.0% |
| 1996 (4) | 219.20 | 2.1% | 192.27 | -0.7% |
| 1997 (4) Projected | 221.43 | 1.0% | 203.29 | 5.7% |
| Average Percent Increase | Gross rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| From Inception | | 7.8% | | 7.3% |
| Most Recent 10 Years | | 8.5% | | 7.8% |
| Most Recent 5 Years | | 2.2% | | 2.3% |
Family
| Core plus Med. & Psych. Enh. | Gross rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| 1985* | 203.97 | | 197.57 | |
| 1986 | 195.31 | -4.2% | 194.30 | -1.7% |
| 1987 | 222.39 | 13.9% | 219.20 | 12.8% |
| 1988 (1) | 324.13 | 45.7% | 323.06 | 47.4% |
| 1989 | 383.42 | 18.3% | 381.95 | 18.2% |
| 1990 (2) | 403.75 | 5.3% | 380.15 | -0.5% |
| 1991 (3) | 464.39 | 15.0% | 417.36 | 9.8% |
| 1992 | 445.64 | -4.0% | 407.76 | -2.3% |
| 1993 | 479.37 | 7.6% | 426.35 | 4.6% |
| 1994 | 484.69 | 1.1% | 446.94 | 4.8% |
| 1995 | 486.99 | 0.5% | 440.35 | -1.5% |
| 1996 (4) | 491.07 | 0.8% | 428.27 | -2.7% |
| 1997 (4) Projected | 495.67 | 0.9% | 454.52 | 6.1% |
| Average Percent Increase | Gross rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| From Inception | | 8.4% | | 7.9% |
| Most Recent 10 Years | | 9.1% | | 8.4% |
| Most Recent 5 Years | | 2.2% | | 2.3% |
*Statewide Plan Premium Rates
(1) 1988 rates represent the effective amounts of the 1/88 and 8/88 rate changes.
(2) No change in effective net rate over 1989.
(3) Represents rates effective 1/1/91 - 6/30/91.
(4) Represents 2 tier Empire Plan Rates; 5 tier schedule effective 1/1/96.
NYS DEPARTMENT OF CIVIL SERVICE
EMPLOYEE BENEFITS DIVISION
PARTICIPATING AGENCY UPDATE
PREPARED JULY 31, 1996
NEW PARTICIPATING AGENCIES IN 1996
| AGENCY TYPE | AGENCY NAME | DATE |
|---|---|---|
| SCHOOL DISTRICTS | SACHEM CENTRAL SCHOOL DISTRICT (SUFFOLK CO.) | 1/1/96 |
| SCHOOL DISTRICTS | PATCHOGUE-MEDFORD SCHOOLS (SUFFOLK CO.) | 1/1/96 |
| SCHOOL DISTRICTS | ROCKY POINT PUBLIC SCHOOLS (SUFFOLK CO.) | 2/1/96 |
| VILLAGE | SADDLEROCK (NASSAU CO.) | 6/1/96 |
| MISCELLANEOUS | SOUND BEACH FIRE DISTRICT (SUFFOLK CO.) | 1/1/96 |
| MISCELLANEOUS | HEWLETT BAY FIRE DISTRICT (NASSAU CO.) | 9/1/96 |
TOTAL NEW PA'S: 6
WITHDRAWALS SINCE JANUARY 1, 1996
| AGENCY TYPE | AGENCY NAME | DATE |
|---|---|---|
| VILLAGE | TIVOLI (DUTCHESS CO.) | 5/31/96 |
| MISCELLANEOUS | NYS SCHOOL BOARDS ASSOCIATION (ALBANY CO.) | 3/31/96 |
| MISCELLANEOUS | ONEONTA HOUSING AUTHORITY (ONEIDA CO.) | 6/30/96 |
TOTAL WITHDRAWALS: 3