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
PA99-21
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: December 31, 1999
Enclosed are the Third Quarter Empire Plan Experience Report for 1999 and the cover letter to Chief Executive Officers.
This report provides projected 1999 experience and actual premium rates for the year 2000.
December 31, 1999
Dear Chief Executive Officer:
Attached is the Participating Agency Third Quarter Report for 1999. This report provides projected 1999 Empire Plan experience based on claims paid through September, 1999 and actual 2000 premium rates.
The Empire Plan carriers project a combined surplus of $27.5 million or 1.4% 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 1999.
The 2000 premium rates are included in Exhibit II. These rates reflect increases of approximately 7.6% in the gross rates and 12.7% in the net rates. The report explains the basis for these rates.
The Keeping You Informed section of the report includes an update on NYBEAS, the New York Benefits Eligibility and Accounting System, which became available to Participating Agencies on November 17, 1999. The information on transmission of reports via E-mail is also included. If you are interested in using this technology to receive future reports, please complete and return the form on Attachment 1.
In recent years, the cost of prescription drugs increased significantly in comparison to other components of the NYS Health Insurance Program. The Keeping You Informed section provides information on the drug trend and factors that contribute to the increase in costs.
Attachment 2 to this report is a summary of the Y2K compliance activities and contingency plans developed by the Employee Benefits Division. As indicated, we are confident that there will be no major disruptions of service.
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. Best wishes for a happy and healthy New Year!
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
PARTICIPATING AGENCIES
EMPIRE PLAN
1999 3RD QUARTER
EXPERIENCE REPORT
PREPARED BY THE STATE OF NEW YORK DEPARTMENT OF CIVIL SERVICE
JULY - SEPTEMBER 1999
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 1999 EMPIRE PLAN EXPERIENCE
Based on claims paid through September 30, 1999, the Empire Plan carriers project a composite dividend of $27.5 million (1.4% of premium), or $9.3 million less than the margin loaded in the 1999 rates. The 1999 annual experience projected by the insurance carriers is reported in Exhibit I with individual carrier projections explained as follows:
Blue Cross
Blue Cross projects a 1999 gain of $33.9 million (5.2% of premium). This is $18.4 million more than the margin loaded in the 1999 rates and is primarily attributable to a lower 1998 claims base than was used in the 1999 rate development.
UnitedHealthcare Medical
UnitedHealthcare projects a composite 1999 dividend of $23.1 million (2.7% of premium) representing an $3.3 million gain over the margin loaded in the 1999 rates.
Group Health Incorporated Mental Health and Substance Abuse Program
Group Health Incorporated projects a 1999 surplus of 842,000 (1.3% of premium) for the Mental Health and Substance Abuse (MHSA) Program, or $751,000 less than the margin loaded in the 1999 rates.
Cigna
Cigna projects a 1999 loss of $30.3 million representing 7.1% of premium. This loss is primarily attributable to an increase in prescription drug trends over the last two years from 15% to approximately 22%.
2000 PREMIUM RATES
Exhibit II presents the approved 2000 Empire Plan gross and net premium assuming the application of $69.4 million in dividend to all payors. The Empire Plan gross premium will increase approximately 7.6% with a net premium increase of 12.7%. The higher rate increase of net premium in relation to the increase in the gross premium reflects the decreased level of available dividend to be applied in 2000 as compared to 1999.
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, while Exhibit IV presents the five tier history from 1996 to 2000.
KEEPING YOU INFORMED
NYBEAS (New York Benefits Eligibility and Accounting System)
The Employee Benefits Division has implemented NYBEAS for Participating Agencies. As of November 17, 1999, NYBEAS became available to PAs for processing transactions. Agencies, which do not process more than 100 transactions annually, and did not choose to connect to NYBEAS, must now send transaction forms directly to the Employee Benefits Division for processing. Please refer to PA99-16, dated November 19, 1999, for additional information.
Transmission of Reports Electronically
The Employee Benefits Division has the capability to transmit the Participating Agency Quarterly Experience Report via E-mail. Using a software product called Adobe Acrobat Reader™, the PA Quarterly Report is converted into a portable document format (PDF). This is a format that can be read by any recipient, if they have Adobe Acrobat Reader™ installed on their system. Adobe Acrobat Reader™ is available free from the Internet. For your reference, Attachment 2 includes the instructions on how to obtain Adobe Acrobat Reader™.
There are many advantages to receiving the reports electronically including: reports will be received sooner; there will be less paper to handle; and the reports can be stored electronically and/or a hard copy may be printed.
If you would like to receive the report electronically, please provide your E-mail address by completing the bottom section of Attachment 1 and returning it to the Employee Benefits Division.
Prescription Drug Trend
In recent years, the cost of prescription drugs increased substantially in comparison to other components of the NYS Health Insurance Program. While the increase in prescription drug costs from 1996 to 1997 was observed at 14%, the increase in 1998 and 1999 is approximately 20% with an increase for Plan Year 2000 projected at 22%.
This surge in prescription drug costs is attributable to a number of factors including:
- Increase in Direct Consumer Advertising (DCA)
- Increase in the Average Days Supply Per Script
- Acceleration of New, More Expensive Drugs to Market
- General Cost Increases
- Increase in Average Number of Scripts Per Contract Due to an Aging Population
An analysis of the NYS Empire Plan Prescription Drug Program's change in the total drug cost between 1997 and 1998 shows the dramatic impact that Direct to Consumer (DTC) advertising of drugs has had on drug costs. From 1997 to 1998, the Empire Plan experienced a $43.3 million increase in the ingredient cost of prescription drugs. Increases in the cost of 9 of the 10 most heavily addressed DTC drugs, along with Lipitor and Viagra, accounted for $17.8 million or 41% of the increase.
In general, according to a survey conducted by the National Institute of Health Care Management Research and Educational Foundation, the 10 drugs most heavily advertised Direct to Consumers accounted for 22% of the total increase in drug costs over the last 5 years.
NYSHIP Representation at Municipal Events
NYSHIP's Empire Plan was represented at the 1999 Annual Convention sponsored by the NYS School Boards Association on October 21-23, 1999, in Syracuse.
Name and Address Changes
Please be sure to notify the Employee Benefits Division of any changes so that we may keep our mailing lists up-to-date. This updated information may be sent to:
Mr. Stephen Kavanaugh
Assistant Director
Employee Benefits Division
NYS Department of Civil Service
State Office Building Campus
Building #1, Rm. 159
Albany, New York 12239
TRANSMISSION OF REPORTS ELECTRONICALLY
Instructions to read PDF files using ADOBE ACROBAT READER:
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Disclaimer
The Department of Civil Service is not responsible for Adobe Acrobat Reader™ or your use of it. The information provided herein is provided for your convenience and does not in any way constitute an endorsement of this software product or company.
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If you would like to receive the report electronically, please complete this form and return it to:
Mr. Stephen Kavanaugh
Assistant Director
Employee Benefits Division
NYS Department of Civil Service
State Office Campus, Building #1
Albany, New York 12239
Agency Code:
Contact Person:
Agency Name:
E-mail Address:
Exhibit I
1999 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 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Premium (1) | 646,849 | 698,043 | 89,474 | 74,769 | 862,286 | 54,628 | 6,287 | 5,060 | 65,975 | 429,214 | 2,004,324 |
| Incurred Claims (2) | 578,967 | 590,742 | 88,786 | 64,471 | 743,999 | 43,760 | 5,036 | 4,054 | 52,850 | 446,591 | 1,822,407 |
| Administrative Expense (3) | 34,026 | 77,746 | 9,522 | 7,957 | 95,225 | 10,170 | 1,171 | 942 | 12,283 | 12,887 | 154,421 |
| Gain/(Loss) (A-B-C) | 33,856 | 29,555 | (8,834) | 2,341 | 23,062 | 698 | 80 | 64 | 842 | (30,264) | 27,496 |
(1) Earned Premium - Premium that 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: 1999 3rd Quarter Report
Exhibit II
EMPIRE PLAN
Participating Employer Premium Rates
Comparison of 1999 and 2000 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 (81) | 247.05 | 261.99 | 6.0% | 233.20 | 256.64 | 10.1% |
| Family (82) | 507.42 | 540.83 | 6.6% | 476.31 | 529.89 | 11.2% |
CORE ONLY - MEDICARE
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual | 178.22 | 209.65 | 17.6% | 169.33 | 206.55 | 22.0% |
| Family - 1 medicare | 439.33 | 489.15 | 11.3% | 413.18 | 480.46 | 16.3% |
| Family - 2 medicares | 369.71 | 436.06 | 17.9% | 348.51 | 429.63 | 23.3% |
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) | 277.67 | 293.01 | 5.5% | 260.48 | 284.97 | 9.4% |
| Family (62) | 568.84 | 602.75 | 6.0% | 530.54 | 586.46 | 10.5% |
CORE PLUS MEDICAL ENHANCEMENT - MEDICARE
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual | 186.36 | 217.84 | 16.9% | 175.61 | 214.16 | 22.0% |
| Family - 1 medicare | 478.26 | 528.23 | 10.4% | 446.33 | 516.30 | 15.7% |
| Family - 2 medicares | 386.15 | 452.31 | 17.1% | 360.73 | 444.75 | 23.3% |
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) | 279.56 | 294.94 | 5.5% | 261.18 | 286.53 | 9.7% |
| Family (72) | 573.33 | 607.33 | 5.9% | 531.89 | 590.16 | 11.0% |
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 | 186.46 | 217.94 | 16.9% | 175.61 | 214.25 | 22.0% |
| Family - 1 medicare | 480.95 | 530.97 | 10.4% | 447.05 | 518.52 | 16.0% |
| Family - 2 medicares | 387.05 | 453.22 | 17.1% | 360.66 | 445.51 | 23.5% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit III
EMPIRE PLAN
PA GROUP RATES
1985-2000 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 | 10.8% |
| 1989 | 168.72 | 18.8% | 168.05 | 39.2% |
| 1990 (2) | 179.50 | 6.4% | 167.09 | 18.7% |
| 1991 (3) | 202.09 | 12.6% | 185.09 | -0.6% |
| 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% |
| 1999 | 239.24 | 5.2% | 222.00 | 8.6% |
| 2000 | 260.67 | 9.0% | 253.98 | 14.4% |
Individual Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 7.3% | 7.4% |
| Most Recent 10 Years | 3.9% | 4.4% |
| Most Recent 5 Years | 4.0% | 5.7% |
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 | 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 | 514.28 | 3.7% | 463.62 | 3.7% |
| 1999 | 539.14 | 4.8% | 499.75 | 7.8% |
| 2000 | 578.26 | 7.3% | 563.03 | 12.7% |
Family Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 7.8% | 7.8% |
| Most Recent 10 Years | 3.8% | 4.1% |
| Most Recent 5 Years | 3.5% | 5.2% |
* 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.
Exhibit IV
EMPIRE PLAN
PA 5 TIER GROUP RATES
1995-2000 Monthly Rates
Individual Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 |
| 193.54 | |
| 1996 (3) | 234.59 | 9.3% | 207.66 | 7.3% |
| 1997 | 261.80 | 11.6% | 240.22 | 15.7% |
| 1998 | 267.89 | 2.3% | 246.07 | 2.4% |
| 1999 | 279.56 | 4.4% | 261.18 | 6.1% |
| 2000 | 294.94 | 5.5% | 286.53 | 9.7% |
Individual Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 6.6% | 8.3% |
Family Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | | 440.35 | |
| 1996 (3) | 521.96 | 7.2% | 459.16 | 4.3% |
| 1997 | 537.96 | 3.1% | 489.22 | 6.5% |
| 1998 | 552.00 | 2.6% | 503.78 | 3.0% |
| 1999 | 573.33 | 3.9% | 531.89 | 5.6% |
| 2000 | 607.33 | 5.9% | 590.16 | 11.0% |
Family Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 4.5% | 6.1% |
Individual Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 | | 193.54 | |
| 1996 (3) | 158.65 | -26.1% | 131.72 | -31.9% |
| 1997 | 150.53 | -5.1% | 129.28 | -1.9% |
| 1998 | 167.91 | 11.5% | 151.34 | 17.1% |
| 1999 | 186.46 | 11.0% | 175.61 | 16.0% |
| 2000 | 217.94 | 16.9% | 214.25 | 22.0% |
Individual Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 1.7% | 4.3% |
Family - 1 Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | | 440.35 | |
| 1996 (3) | 446.03 | -8.4% | 383.23 | -13.0% |
| 1997 | 427.23 | -4.2% | 378.82 | -1.2% |
| 1998 | 452.73 | 6.0% | 409.76 | 8.2% |
| 1999 | 480.95 | 6.2% | 447.05 | 9.1% |
| 2000 | 530.97 | 10.4% | 518.52 | 16.0% |
Family - 1 Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 2.0% | 3.8% |
Family - 2 or More Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | | 440.35 | |
| 1996 (3) | 369.87 | -24.0% | 307.07 | -30.3% |
| 1997 | 315.24 | -14.8% | 267.15 | -13.0% |
| 1998 | 351.98 | 11.7% | 314.25 | 17.6% |
| 1999 | 387.05 | 10.0% | 360.66 | 14.8% |
| 2000 | 453.22 | 17.1% | 445.51 | 23.5% |
Family - 2 or More Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 0.0% | 2.5% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.