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
PA98-02
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: January 23, 1998
Enclosed are the Third Quarter Empire Plan Experience Report for 1997 and the cover letter to Chief Executive Officers.
This report provides projected 1997 experience and actual premium rates for 1998.
January 23, 1998
Dear Chief Executive Officer:
Attached is the Participating Agency Third Quarter Report for 1997. This report provides projected 1997 Empire Plan experience based on claims paid through September 1997 and actual 1998 premium rates.
The Empire Plan carriers project a combined surplus of approximately $90.1 million or 5.2% of premium. The report includes details for each of the carriers and, as in the past, these projections will be revised in the next quarterly report based on actual claims experience for 1997.
The 1998 premium rates are included in Exhibit II. The gross and net premiums will increase 3.7% and 4.9% respectively. The report explains the basis for these rates.
The 1997 PA Regional Meetings for Chief Executive Officers and Health Benefits Administrators were held in late October. The report includes an outline of the material presented.
I hope this report is informative and useful to you. If you have any questions, comments or suggestions, please do not hesitate to contact me.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
EMPIRE PLAN EXPERIENCE REPORT
JULY - SEPTEMBER 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
3RD QUARTER REPORT
PROJECTED 1997 EMPIRE PLAN EXPERIENCE
Based on claims paid through September 1997, the Empire Plan carriers project a composite surplus of $90.1 million or 5.2% of premium. This represents an increase of $39.2 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 as follows:
Blue Cross
Blue Cross projects a 1997 dividend of $30.6 million or 5.4% of premium, which is $13.1 million more than the margin loaded in the 1997 rates. The rating of this component of the Empire Plan was very good given the uncertainties of the impact of HCRA legislation that went into effect on January 1, 1997. In general, the dividend increase is attributable to modestly lower 1997 claim and retention costs than were projected when the rates were developed.
UnitedHealthcare Medical
UnitedHealthcare projects a composite 1997 dividend of $33.3 million or 4.4% of premium representing a $11.1 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 $19.3 million or 19.0% of premium for the Mental Health and Substance Abuse (MHSA) Program. The additional $16.8 million over margin is attributable to the continuous improvement in shifting unnecessary and inappropriate inpatient utilization to a lower cost outpatient setting. Also, both HCRA and Bad Debt and Charity Assessment and retention are projected to be lower than previously estimated.
Cigna
A 1997 dividend of $7.0 million or 2.2% of premium is estimated by Cigna. This represents a $1 .7 million decrease over the margin loaded in the 1997 rates and is primarily attributable to a moderate upturn in trend partially offset by more favorable interest credits received on the dedicated cash account.
1998 PREMIUM RATES
Exhibit II presents the 1998 Empire Plan gross and net rates in comparison to the 1997 rates. The 1998 rate includes a $6 million charge which is required to balance premium previously paid by Participating Agencies under the five tier MediPrime rate structure to premium paid by the plan for this coverage under our contractual two tier rate structure (individual and family only). The 1998 net rates reflect the application of $154.3 million in dividend to all payors. Empire Plan gross premium will increase approximately 3.7% with a net premium increase of 4.9%. 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.
The net rate increase for the MediPrime group is higher than the rate increase for the Plan Prime group because 1998 is the first year that the dividend credit is based on the five tier rate 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 was integral to the 1998 rate development and is the primary reason for the percentage change difference between the MediPrime and PlanPrime groups.
The underlying trend assumptions used by the carriers for the 1998 Participating Agency rates are as follows:
| COMPONENT | TREND |
|---|---|
| Blue Cross | 2.6% |
| UnitedHealthcare Medical Core | 4.8% |
| UnitedHealthcare Medical Enhancement | 7.8% |
| UnitedHealthcare MHSA Core | 0.0% |
| UnitedHealthcare MHSA Enhancement | 0.0% |
| Cigna | 14.5% |
| Composite | 6.0% |
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 III 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
Participating Agency Regional Meetings
The 1997 PA Regional Meetings for Chief Executive Officers and Health Benefits Administrators were held on October 23, 24 and 27 in the Town of Colonie (Albany County), Town of Mount Pleasant (Westchester County) and the Town of Hempstead (Nassau County). About 220 PA representatives attended. Attachment I includes the agenda and an outline of the meeting presentation.
Medicare Risk Contracts
A special reports was prepared for PA retirees and dependent survivors to explain Medicare Risk HMOs. This report was mailed to retiree homes and a small supply was sent to PA Health Benefit Administrators. Additional copies of this publication may be obtained by contacting our Communications Unit at (518) 457-7577.
Exhibit I
1997 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
|
| BLUE CROSS | UnitedHealthcare MEDICAL - Core | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | GHI MHSA - Core | GHI MHSA - | GHI MHSA - | GHI MHSA - | CIGNA | TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|---|
| A Premium (1) | 563,377 | 593,3000 | 83,400 | 76,300 | 753,000 | 82,400 | 10,400 | 8,500 | 101,300 | 312,376 | 1,730,053 |
| B Incurred Claims (2) | 501,141 | 518,871 | 68,985 | 56,045 | 643,901 | 53,416 | 6,431 | 5,025 | 64,872 | 292,097 | 1,502,011 |
| C Administrative Expense (3) | 31,685 | 60,957 | 7,957 | 6,912 | 75,826 | 13,973 | 1,737 | 1,424 | 17,134 | 13,313 | 137,958 |
| D Gain/(Loss) (A-B-C) | 30,551 | 13,472 | 6,458 | 13,343 | 33,273 | 15,011 | 2,232 | 2,051 | 19,294 | 6,966 | 90,084 |
(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.
(4) Excludes the impact of any increase in the Disabled Lives Liability.
Source: 1997 3rd Quarter Reports
Exhibit II
Empire Plan
Participating Agency Premium Rates
Comparison of 1998 and Final 1999 Rates
Mediprime Rate Structure
CORE Only - Non - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual (61) | 226.25 | 233.78 | 3.3% | 212.92 | 213.42 | 0.2% |
| Family (62) | 465.78 | 483.20 | 3.7% | 436.52 | 438.81 | 0.5% |
CORE Only - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual | 141.10 | 161.07 | 14.2% | 128.07 | 144.57 | 12.9% |
| Family - 1 medicare | 381.17 | 411.20 | 7.9% | 352.21 | 370.65 | 5.2% |
| Family - 2 medicares | 295.30 | 337.71 | 14.4% | 266.64 | 301.00 | 12.9% |
CORE PLUS MEDICAL ENHANCEMENT - Non - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual (61) | 258.45 | 565.36 | 2.7% | 238.01 | 244.95 | 2.9% |
| Family (62) | 530.18 | 546.09 | 3.0% | 484.94 | 501.61 | 3.4% |
CORE PLUS MEDICAL ENHANCEMENT - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual | 150.37 | 167.82 | 11.6% | 130.24 | 151.35 | 16.2% |
| Family - 1 medicare | 422.64 | 449.26 | 6.3% | 377.71 | 408.71 | 8.2% |
| Family - 2 medicares | 313.84 | 350.95 | 11.8% | 269.22 | 314.34 | 16.8% |
CORE PLUS MEDICAL AND PSYCHIATRIC ENHANCEMENTS - Non - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual (71) | 261.80 | 267.89 | 2.3% | 240.22 | 246.07 | 2.4% |
| Family (72) | 537.96 | 552.00 | 2.6% | 489.22 | 503.78 | 3.0% |
CORE PLUS MEDICAL AND PSYCHIATRIC ENHANCEMENTS - Medicare
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual | 150.53 | 167.91 | 11.5% | 129.28 | 151.34 | 17.1% |
| Family - 1 medicare | 427.23 | 452.73 | 6.0% | 378.82 | 409.76 | 8.2% |
| Family - 2 medicares | 315.24 | 351.98 | 11.7% | 267.15 | 314.25 | 17.6% |
(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
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1985 | 95.71 | 92.85 | ||
| 1986 | 91.97 | -3.9 | 91.49 | -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 | 227.35 | 3.4% | 204.38 | 3.0% |
Individual Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 7.4% | 6.8% |
| Most Recent 10 Years | 5.0% | 3.9% |
| Most Recent 5 Years | 1.2% | 1.0% |
Family
| Year | Gross Rate | % Changes | 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 | 468.99 | 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 | 514.28 | 3.7% | 463.62 | 3.7% |
Family Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 8.0% | 7.5% |
| Most Recent 10 Years | 4.9% | 3.9% |
| Most Recent 5 Years | 1.4% | 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 rate schedule effective 1/1/96.
Welcome
1997
Participating Agency
Regional Meeting
presented by
The New York State Health Insurance Program
State of New York Department of Civil Service
1997 Projected Empire Plan Experience
|
| BLUE CROSS | UnitedHealthcare MEDICAL - Core | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | GHI MHSA - Core | GHI MHSA - | GHI MHSA - | GHI MHSA - | CIGNA | TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|---|
| A Premium (1) | 563,434 | 604,100 | 83,700 | 79,500 | 767,300 | 82,400 | 10,400 | 8,500 | 101,300 | 312,376 | 1,744,410 |
| B Incurred Claims (2) | 496,218 | 533,360 | 71,584 | 58,251 | 663,195 | 53,416 | 6,431 | 5,025 | 64,872 | 292,097 | 1,516,382 |
| C Administrative Expense (3) | 31,499 | 60,738 | 7,820 | 6,716 | 75,274 | 13,973 | 1,737 | 1,424 | 17,134 | 13,313 | 137,220 |
| D Gain/(Loss) (A-B-C) | 35,717 | 10,002 | 4,296 | 14,533 | 18,831 | 15,011 | 2,232 | 2,051 | 19,294 | 6,966 | 90,808 |
(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.
(4) Excludes the impact of any increase in the Disabled Lives Liability.
Source: 1997 Rate Renewal and 3rd Quarter Report.
Core Plus Enhancements
1998 Projected Rates
Plan Prime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 261.80 | 256.61 | -2.0% | 240.22 | 240.72 | 0.2% |
| Pessimistic | 261.80 | 267.71 | 2.3% | 240.22 | 251.13 | 4.5% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 537.96 | 527.06 | -2.0% | 489.22 | 491.52 | 0.5% |
| Pessimistic | 537.96 | 549.86 | 2.2% | 489.22 | 512.79 | 4.8% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 150.53 | 159.08 | 507% | 129.28 | 145.13 | 12.3% |
| Pessimistic | 150.53 | 165.96 | 10.3% | 129.28 | 151.41 | 17.1% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 427.23 | 430.26 | 0.7% | 378.82 | 396.66 | 4.7% |
| Pessimistic | 427.23 | 448.88 | 5.1% | 378.82 | 413.81 | 9.2% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 315.24 | 331.73 | 5.2% | 267.15 | 300.03 | 12.3% |
| Pessimistic | 315.24 | 346.08 | 9.8% | 267.15 | 313.01 | 17.2% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
HIPAA
Health Insurance Portability and Accountability Act of 1996
Timeline:
1/1/97 Changes to COBRA implemented
6/1/97 ERs required to provide Certificates of coverage to EEs and dependents who have lost coverage since 10/1/96
7/1/97 1st renewal or collective bargaining agreement after this date ERs must accept Certs and can no longer establish eligibility rules based upon health nor can ERs require proofof good health
1/1/98 Mental Health Parity act goes into effect
Medicare + Choice
New Medicare choices that may affect NYSHIP
Effective 1/1/98 (November)
Organizations can enter into contract with HCFA to offer Medicare+Choice health care plans. These can be HMOs, PPOs, PSOs (Provider Sponsored organizations) FFS plans or combined Catastrophic Coverage plans and MSAs
Additional cost for this coverage?
Accident Reporting System
24/7 Call Center for State EEs to report Accidents
Call center immediately notifies Agency of accident with 70% of information needed for C-2 already collected
Faster notification of accident to SIF results in faster case management which results in faster return to work
Improved reporting capability to agencies and SIP which affords opportunity to analyze accident information
Allows implementation of ONECARDRx Pilot program
Robert Wood Johnson Foundation Grant
ONECARDRx for state employee worker compensation claims is one of only 10 projects selected nationwide by the RWJ Foundation
$250,000 grant to implement a pilot program to determine the effectiveness of allowing injured employees to use their Health Insurance Card to obtain prescription drugs needed due to on the job injurIes.
Benefits of ONECARDRX:
Employees receive drugs without up front cost
Employers receive benefit of discounts at pharmacy
Status of Enrollment Management System (EMS)
Delayed until at least 1999
Reasons:
Year 2000
PeopleSoft 6.0 implementation
Citrix (Winframe) implementation
Benefits
Better, newer version of PeopleSoft without need to retrain
Faster response time
ability to use your own computer