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
PA97-10
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: September 4, 1997
Enclosed are the Second Quarter Empire Plan Experience Report for 1997 and the cover letter to Chief Executive Officers.
This report provides projected 1997 experience and projected 1998 premium rates.
September 4, 1997
Dear Chief Executive Officer:
Attached is the Participating Agency Second Quarter Report for 1997. This report provides projected 1997 Empire Plan Experience and estimated 1998 rates.
The Empire Plan carriers project a combined surplus of approximately $79.4 million or 4.5% of premium. Current projections of 1998 rates reflect increases of approximately 2.1% in the gross rates and 4.7% in the net rates.
The report provides details for each of the carriers and discusses the basis for these projections, which are all based on claims paid through June 1997. Future reports will include revisions based on the latest claims data available.
I hope this report is informative and useful to you. If you have any questions, comments or suggestions, please don't hesitate to contact me.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
EMPIRE PLAN EXPERIENCE REPORT
APRIL - JUNE 1997
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 1997 EMPIRE PLAN EXPERIENCE
Based on claims paid through June 1997, the Empire Plan carriers project a composite surplus of $79.4 million or 4.5% of premium. This represents an increase of $28.5 million from the margin loaded in the 1997 rates. The 1997 annual experience projected by the insurance carriers is reported in Exhibit I. Individual carrier projections are explained below.
Blue Cross
Blue Cross projects a 1997 dividend of $24.2 million or 4.2% of premium. This represents an increase of $6.6 million over the margin loaded in the 1997 rates. At this time, the rating of this component of the Empire Plan is considered very good given the impact of the HCRA legislation on January 1, 1997. In general, the modest dividend increase is attributable to slightly lower 1997 claim and retention costs than what were projected at the time the rates were developed.
UnitedHealthcare Medical
UnitedHealthcare projects a composite 1997 dividend of $27.6 million or 3.6% of premium representing a $5.4 million increase over the margin loaded in the 1997 rates. This dividend increase is due to the overestimation of the Health Care Reform Act (HCRA) charge from the amount projected at the time the 1997 rates were developed, partially offset by an understatement of the Open and Unreported Claims Reserve as of 12/31/96.
UnitedHealthcare Mental Health and Substance Abuse Program
UnitedHealthcare projects a 1997 surplus of $16.5 million or 16.0% of premium for the Mental Health and Substance Abuse (MHSA) Program. This represents an increase of $14.0 million over the margin loaded in the 1997 rates and is attributable to the continuous improvement in shifting unnecessary and inappropriate inpatient utilization to a lower cost outpatient setting. In addition, both HCRA Bad Debt and Charity Assessment and retention are projected to be lower than previously estimated.
Cigna
A 1997 dividend of $11.2 million or 3.6% of premium is estimated by Cigna. This represents a $2.5 million increase over the margin loaded in the 1997 rates and is primarily attributable to the favorable interest credits received on the dedicated cash account.
1998 PREMIUM RATES
Exhibit II presents the projected 1998 Empire Plan gross and net rates in comparison to the 1997 rates. The 1998 net rates reflect the application of $155.4 million in dividend to all payors. Empire Plan gross premium is projected to increase approximately 2.1% with a net premium increase of 4.7%. The higher rate increase of net premium in relation to the increase in the gross premium reflects the decreased level of dividend application in 1998.
New contracts, effective 1/1/98, are expected to be awarded for the Prescription Drug and Managed Mental Health and Substance Abuse Programs. It is further expected that such awards may reduce the rate of increase by approximately 2% - 3% from the projections made in Exhibit II. Each Participating Agency should assess its financial situation in using the quoted range of rates contained in Exhibit II.
The projected net rate increase for the MediPrime group is higher than the rate increase for the PlanPrime group. 1998 will be the first year that the dividend credit is based on the five tier structure. Consequently, while the total Participating Agency dividend remains the same as it would have been under the two tier rate structure, the allocation is different. This results in a lower amount of dividend being allocated to MediPrime. Historically, dividend credits are allocated in relation to the original premiums billed. Since MediPrime premium is lower than PlanPrime premium, the dividend allocation reflects this premium differential. This practice is integral to the 1998 rate development.
The composite rate increase under the 5 tier basis is also modestly greater than the composite rate increase under the 2 tier basis. This is due to the fact that the 1996 5 tier rate generated approximately $6 million less than the 2 tier premium liability due to the Empire Plan carriers. Since any deviation between the 2 tier and 5 tier rates are adjusted in subsequent premium rates, we have assumed the recoupment of this deficit in presenting the projected 1998 rates. As with the actual amount of dividend to be applied, the decision on how much, if any, of this deficit will be recouped in 1998 will be made later in the year.
The underlying trend assumptions used by the carriers for the 1998 Participating Agency rates are as follows:
| Component | Trend |
| Blue Cross | 1.9% |
| UnitedHealthcare Medical Core | 4.4% |
| UnitedHealthcare Medical Enhancement | 8.0% |
| UnitedHealthcare MHSA Core | 3.0% |
| UnitedHealthcare MHSA Enhancement | 3.0% |
| Cigna | 13.0% |
| Composite | 5.6% |
These factors reflect the continuing favorable trends observed by the Empire Plan carriers which are reflective of strong claims management and prudent plan design changes made over the recent years.
For comparison purposes, Exhibit Ill presents the Individual and Family rate history for the Core Plus Medical and Psychiatric Enhancements option based on the Two Tier Empire Plan rate structure in effect prior to January 1, 1996.
KEEPING YOU INFORMED
Empire Plan Benefits on Internet
We are pleased to announce that Empire Plan benefit summaries including premium rates, for Participating Agencies and the Participating Provider Directory are now available on the Department of Civil Service Web Site on the Internet at http: // www.cs.state.ny.us. (For further details, please refer to memorandum PA 97-09, which is reproduced on the following page.)
We have improved and expanded the Employee Benefits section of the Department of Civil Service Web site on the Internet at http://www.cs.state.ny.us.
The Empire Plan Participating Provider Directory is now easier to search. An improved design makes It simpler to find providers by location, specialty or name.
We have also made It easier for you to compare benefits and premium rates for each of the three Empire Plan benefit packages available to Participating Agencies. On the Employee Benefits home page, click on "About Benefits the Department Offers Local Governments of New York State" and select "Empire Plan Premium Rates." Each package indicator on the rate sheet links to "The Empire Plan at a Glance" for that package.
In addition, we have added telephone numbers and Web addresses for the retirement systems, Medicare and other government agencies. If your agency has a Web site, we invite you to link your site to ours for the convenience of your Empire Plan enrollees.
If you link your site to ours or you have questions, please contact the Communications Unit at (518) 457-7577.
As indicated, information on the HCRA and related surcharge will be provided in a future issue of the Empire Plan report which will be mailed directly to enrollees.
Exhibit I
1997 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
| BLUE CROSS | METRAHEALTH MEDICAL Core | METRAHEALTH MEDICAL NY Enhancement | PA Enhancement | Combined | Core | METRAHEALTH MHSA NY Enhancement | METRAHEALTH MHSA PA Enhancement | Combined | CIGNA | TOTAL | |
| Premium (1) | 572,745 | 602,398 | 83,629 | 79,035 | 765,062 | 83,622 | 10,395 | 8,850 | 102,867 | 316,491 | 1,757,165 |
| Incurred Claims (2) | 515,817 | 532,283 | 72,287 | 58,953 | 663,523 | 57,466 | 6,931 | 5,425 | 69,822 | 291,273 | 1,540,435 |
| Admin. Expenses (3) | 32,765 | 59,636 | 7,410 | 6,923 | 73,969 | 13,565 | 1,635 | 1,368 | 16,568 | 13,969 | 137,271 |
| Gain/Loss (A-B-C) | 24,163 | 10,479 | 3,932 | 13,159 | 27,570 | 12,591 | 1,829 | 2,057 | 16,477 | 11,249 | 79,459 |
(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: 1997 2nd Quarter Report
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1997 and Projected 1998 Rates
CORE ONLY
Plan Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 226.25 | 223.53 | -1.2% | 212.92 | 205.80 | -3.3% |
| Best Estimate | 226.25 | 230.75 | 2.0% | 212.92 | 213.02 | 0.0% |
| Pessimistic | 226.25 | 239.09 | 5.7% | 212.92 | 221.36 | 4.0% |
Plan Prime: Family
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 465.78 | 461.35 | -1.0% | 436.52 | 422.26 | -3.3% |
| Best Estimate | 465.78 | 476.44 | 2.3% | 436.52 | 437.35 | 0.2% |
| Pessimistic | 465.78 | 493.81 | 6.0% | 436.52 | 454.72 | 4.2% |
Medi Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 141.10 | 154.20 | 9.3% | 128.07 | 139.30 | 8.8% |
| Best Estimate | 141.10 | 157.15 | 11.4% | 128.07 | 142.25 | 11.1% |
| Pessimistic | 141.10 | 160.79 | 14.0% | 128.07 | 145.89 | 13.9% |
Medi Prime: Family-1
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 381.17 | 392.75 | 3.0% | 352.21 | 356.48 | 1.2% |
| Best Estimate | 381.17 | 403.60 | 5.9% | 352.21 | 367.33 | 4.3% |
| Pessimistic | 381.17 | 416.27 | 9.2% | 352.21 | 380.00 | 7.9% |
Medi Prime: Family-2
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 295.30 | 322.43 | 9.2% | 266.64 | 289.00 | 8.4% |
| Best Estimate | 295.30 | 329.01 | 11.4% | 266.64 | 295.58 | 10.9% |
| Pessimistic | 295.30 | 336.98 | 14.1% | 266.64 | 303.55 | 13.8% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1997 and Projected 1998 Rates
CORE PLUS MEDICAL ENHANCEMENT
Medi Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 258.45 | 252.29 | -2.4% | 238.01 | 234.55 | -1.5% |
| Best Estimate | 258.45 | 261.03 | 1.0% | 238.01 | 243.29 | 2.2% |
| Pessimistic | 258.45 | 270.88 | 4.8% | 238.01 | 253.14 | 6.4% |
Medi Prime: Family
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 530.18 | 518.87 | -2.1% | 484.94 | 479.77 | -1.1% |
| Best Estimate | 530.18 | 537.00 | 1.3% | 484.94 | 497.90 | 2.7% |
| Pessimistic | 530.18 | 557.40 | 5.1% | 484.94 | 518.30 | 6.9% |
Medi Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 150.37 | 160.82 | 6.9% | 130.24 | 145.95 | 12.1% |
| Best Estimate | 162.32 | 164.11 | 9.1% | 147.52 | 149.24 | 14.6% |
| Pessimistic | 150.37 | 168.10 | 11.8% | 130.24 | 153.23 | 17.7% |
Medi Prime: Family-1
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 422.64 | 428.13 | 1.3% | 377.71 | 391.89 | 3.8% |
| Best Estimate | 422.64 | 440.84 | 4.3% | 377.71 | 404.60 | 7.1% |
| Pessimistic | 422.64 | 455.38 | 7.7% | 377.71 | 419.14 | 11.0% |
Medi Prime: Family-2
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 313.84 | 335.66 | 7.0% | 269.22 | 302.28 | 12.3% |
| Best Estimate | 313.84 | 342.94 | 9.3% | 269.22 | 309.56 | 15.0% |
| Pessimistic | 313.84 | 351.61 | 12.0% | 269.22 | 318.23 | 18.2% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1997 and Projected 1998 Rates
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS
Plan Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 261.80 | 254.24 | -2.9% | 240.22 | 235.25 | -2.1% |
| Best Estimate | 261.80 | 263.08 | 0.5% | 240.22 | 244.09 | 1.6% |
| Pessimistic | 261.80 | 273.03 | 4.3% | 240.22 | 254.04 | 5.8% |
Plan Prime: Family
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 537.96 | 523.46 | -2.7% | 489.22 | 481.03 | -1.7% |
| Best Estimate | 537.96 | 541.83 | 0.7% | 489.22 | 499.40 | 2.1% |
| Pessimistic | 537.96 | 562.46 | 4.6% | 489.22 | 520.03 | 6.3% |
Medi Prime: Individual
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 150.53 | 160.92 | 6.9% | 129.28 | 145.95 | 12.9% |
| Best Estimate | 150.53 | 164.21 | 9.1% | 129.28 | 149.24 | 15.4% |
| Pessimistic | 150.53 | 168.21 | 11.7% | 129.28 | 153.24 | 18.5% |
Medi Prime: Family-1
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 427.23 | 430.86 | 0.8% | 378.82 | 392.46 | 3.6% |
| Best Estimate | 427.23 | 443.71 | 3.9% | 378.82 | 405.31 | 7.0% |
| Pessimistic | 427.23 | 458.40 | 7.3% | 378.82 | 420.00 | 10.9% |
Medi Prime: Family-2
| GROSS RATES (1) 1997 | GROSS RATES (1) 1998 | GROSS RATES (1) % Change | NET RATES (2) 1997 | NET RATES (2) 1998 | NET RATES (2) % Change | |
| Optimistic | 315.24 | 336.54 | 6.8% | 267.15 | 302.16 | 13.1% |
| Best Estimate | 315.24 | 343.86 | 9.1% | 267.15 | 309.48 | 15.8% |
| Pessimistic | 315.24 | 352.58 | 11.8% | 267.15 | 318.20 | 19.1% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit III
EMPIRE PLAN
PA GROUP RATES
1985-1998 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 | 219.87 | 0.3% | 198.37 | 3.2% |
| 1998 Projected | 227.36 | 3.4% | 208.33 | 5.0% |
| Average Percent Increase | Gross rate | % Change | Net Rate | % Change |
| From Inception | 7.4% | 6.9% | ||
| Most Recent 10 Years | 5.0% | 4.1% | ||
| Most Recent 5 Years | 1.2% | 1.4% |
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 | 495.81 | 1.0% | 447.22 | 4.4% |
| 1998 Projected | 504.65 | 1.8% | 462.42 | 3.4% |
| Average Percent Increase | Gross rate | % Change | Net Rate | % Change |
| From Inception | 7.9% | 7.4% | ||
| Most Recent 10 Years | 4.7% | 3.8% | ||
| Most Recent 5 Years | 1.0% | 1.7% |
*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.