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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.

State Seal

ANDREW M. CUOMO
GOVERNOR

STATE OF NEW YORK
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov

JERRY BOONE
COMMISSIONER

PA14-20
PAEX14-20

TO: Participating Agency Chief Executive Officers & Health Benefit Administrators
FROM: David Boland, Acting Director of the Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: June 27, 2014

Enclosed are the First Quarter Empire Plan Experience Report for 2014 and the cover letter to the Chief Executive Officers. This report presents the 2013 Empire Plan experience, the projected 2014 Empire Plan experience and the projected 2015 premium rates.

Enclosures

 

June 27, 2014

Dear Chief Executive Officer:

Attached is the Empire Plan First Quarter Experience Report for 2014. This report presents the 2013 Empire Plan experience, the projected 2014 Empire Plan experience, based on claims paid through March 31, 2014, and the projected 2015 premium rates.

For the 2013 Plan Year, the Empire Plan carriers declared a net surplus of $300.6 million, or 4.5% of premium. The underlying causes for these amounts are discussed in the report.

For the 2014 Plan Year, the Empire Plan vendors project a net loss of $18.0 million, or 0.3% of premium. Historically, experience projections based on three months of paid claim data have been conservative. We expect the projected experience to modestly improve as actual claims materialize.

Exhibit III presents the projected 2015 Empire Plan premium rates. These projections include a tentative dividend application amount of $250 million, $122 million greater than the dividend credit included in the 2014 rates. The projected dividend application for 2015 results in an increase in the projected premium rates charged to payors that is modestly lower than the increase in the projected gross premium rates.

The "best estimate" projected net premium increase for 2015 is 5.5% in aggregate for The Empire Plan and 7.2% in aggregate for The Excelsior Plan. These projections are based on a number of assumptions made by the vendors and the Department of Civil Service. Historically, the actual increase in the premium has been less than the increase in premium projected in the 1st Quarter Reports; however, these projections include a degree of optimism not previously reflected in prior 1st Quarter Reports.

Given the ongoing fiscal challenges faced by the State and its localities, our continuing goal is to achieve 2015 NYSHIP rates that are as low as possible while promoting rate stability into the future. The rate development and related proceedings will begin in September.

I hope this report is informative. If you have any questions, comments or suggestions, please don't hesitate to contact me.

Sincerely,

David Boland
Acting Director
Employee Benefits Division

 

PARTICIPATING AGENCIES

EMPIRE PLAN
2014 First Quarter
Experience Report

Prepared by the State of New York
Department of Civil Service

 

EMPIRE PLAN EXPERIENCE REPORT
FIRST QUARTER
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
The Employee Benefits Division
New York State Department of Civil Service

 

Actual 2013 Empire Plan Experience

Projected 2014 Empire Plan Experience

Projected 2015 Premium Rates

EXHIBITS

  1. 2013 Empire Plan Experience
  2. Projected 2014 Empire Plan Experience
  3. Projected 2015 PA Premium Rates
  4. Empire Plan PA 5-Tier Group Rates (2006-2015)
  5. Empire Plan PA 2-Tier Group Rates (2006-2015)

NYSHIP News

NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
FIRST QUARTER REPORT

ACTUAL 2013 EMPIRE PLAN EXPERIENCE

As presented in Exhibit I, the Empire Plan vendors declared an aggregate surplus of $300.6 million (4.5% of premium), which is nearly identical to the surplus projected in the 2013 Fourth Quarter Report.

There was an overall improvement of $445.9 million in the 2013 experience from the level projected at the time the premiums were developed. The substantial improvement in experience is primarily attributable to a decrease in the projected 2013 claim base and a reduction in the 2013 trend estimates as anticipated by the State and its benefit consultant. Other contributing factors include an increase in pharma revenue receipts and Employer Group Waiver Plan (EGWP) subsidies from the implementation of the Empire Plan Medicare Rx plan in 2013 and $80 million in premium tax savings associated with the conversion of the Medical Program contract to a self-insured arrangement effective January 1, 2013.

PROJECTED 2014 EMPIRE PLAN EXPERIENCE

The Empire Plan vendors project a net loss of $18.0 million (0.3% of premium) for 2014, as presented in Exhibit II. This projection is based on three months of 2014 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid, as well as the most recent projected 2014 trend as compared to the trend assumed during the 2014 premium rate development:

 

% of Paid Claims to Projected
Incurred Claims

Projected 2014 Trend

 

2013

2014

At Renewal

At 2014 1st Quarter

Blue Cross Hospital

97.9% 14.4% 7.1% 7.4%

UHC Medical

98.9% 16.1% 6.0% 5.9%

UHC MHSA

94.9% 8.1% 7.4% 7.4%

UHC Rx

99.9% 24.8% 5.5% 5.5%

Effective January 1, 2014 the Empire Plan and Excelsior Plan are fully self-funded plans and as a result the Department developed the rates based on incurred claim amounts projected by the vendors as well as by the Department's benefits consultant, Aon Hewitt. Furthermore, the premium rates established for the 2014 plan year did not include any margin. The projected surplus as compared to the margin level included in the 2014 premium is as follows:

 

Margin

Projected 2014
Dividend/(Loss)

Experience Change

Blue Cross Hospital

$0 ($50.8) ($50.8)

UHC Medical

$0 ($29.8) ($29.8)

UHC MHSA

$0 $3.2 $3.2

UHC Rx

$0 $59.4 $59.4

Total

$0 ($18.0) ($18.0)

In millions

The overall projected 2014 experience has decreased by $18.0 million from the projections made at the time the premium was developed. The projected loss is primarily attributable to an increase in the 2013 claim base projected for the Hospital and Medical Programs as compared to the projections used in developing the 2014 premium rates. The projected loss is offset, in part, by improvement in the observed Prescription Drug and Mental Health and Substance Program 2014 claims experience. The Department remains confident that the final 2014 plan year experience will be comparable to the premium charged participants.

2015 PROJECTED PREMIUM RATES

The development of the 2015 premium rates will once again be challenging as a result of the Empire Plan becoming fully self-funded effective January 1, 2014. Similar to 2014, premium rates will be developed by the Department with assistance from the Department's benefit consultant and the contractors administering the Plan's programs. Empire Plan vendor rate recommendations for 2015 are required to be submitted to the Department by September 1st. Our continuing goal is to achieve the lowest rates possible while maintaining rate stability for the coming years. Taking these changes into account, the projected "best estimate" increase in the 2015 net premium as presented in Exhibit III is 5.5% and 7.2% for The Empire Plan and the Excelsior Plan, respectively. The underlying assumptions/factors contributing to this increase include:

  • 2014 premium rates that are expected to result in a marginal dividend.
  • 2015 projected trend of 6.0%.
  • Transitional Reinsurance Fee mandated by the Affordable Care Act is projected to decrease from $54 million in 2014 to $38 million in 2015.
  • Increased application of federal and manufacturer subsidies received under the Employer Group Waiver Plan.

While a $443.0 million surplus is anticipated to be available on December 31, 2014, the projected 2015 premium rates include the tentative use of $250.0 million in dividend or $122.0 million more than the dividend credit included in the 2014 rates. The remaining dividend balance will be used to provide stability to future year's rate increases. The actual amount of dividend to be applied in the 2015 premium rates will be determined in October 2014 when the new rates are established.

Exhibit III presents The Empire Plan individual and family 5-tier billing rate history since 2006. Exhibit IV presents, for illustrative purposes only, the 2-tier rate history from 2006 to 2015.

 

NYSHIP News Information for local governments participating in NYSHIP

First Quarter Report - 2014

Federal Health Care Reform

As part of the Affordable Care Act, health insurers and plan sponsors of self-insured health plans are required to finance the Patient-Centered Outcomes Research Institute (PCORI) Trust Fund. PCORI fees fund the Institute's research into the comparative effectiveness of medical treatments. The fee, which applies to policy or plan years ending on or after October 1, 2012, and before October 1, 2019, is based on the average number of covered lives under the policy and is due by July 31 of the calendar year following the last day of the plan year. The fee for the 2013 plan year is $2 per covered life. For plan years ending on or after October 1, 2014, the fee increases are based on a formula that includes increases in the projected per capita amount of National Health Expenditures provided by the Department of Health and Human Services (HHS).

For the 2013 plan year, PCORI assessments related to the fully insured components of the Empire Plan (Hospital, Prescription Drug and Mental Health & Substance Abuse programs) were funded through the established premium rates charged to plan participants. For the Empire Plan Medical program, which converted to self-funding effective January 1, 2013, the PCORI assessment is also applicable; however, since Internal Revenue Service (IRS) rules and regulations prohibit plan sponsors from charging enrollees for PCORI fees associated with self-funded plans, this amount was not included in the premium rates.

To fund this fee, the Employee Benefits Division is billing each NYSHIP chargeable agency for its allocated portion of the 2013 PCORI fee related to the self-funded Empire Plan Medical program. In calculating the 2013 PCORI fee, IRS rules and regulations require plan sponsors to use one of three counting methods for determining the average number of lives covered during the plan year. Plans may select the counting method that is most favorable to the plan. For the 2013 plan year, the "Snapshot Factor" method produced the most favorable average enrollment count and lowest PCORI fee for the NYSHIP. The calculated fee was then allocated to each NYSHIP agency based on average enrollment using the "Snapshot Factor" counting method. If an agency did not participate in the NYSHIP for the entire 2013 plan year, the assessment was prorated accordingly.

PCORI fee assessments for the plan year ended December 31, 2013, will be included on the July 2014 NYSHIP Participating Agency/Employer monthly billing statement. The charge is labeled "ACA PCORI FEE2013" and is included in the total amount due June 25, 2014. The Employee Benefits Division will remit payment to the Internal Revenue Service on behalf of the entire plan by July 31, 2014.

Employee Benefits Division staff continues to review and monitor updates and clarifications related to Federal Healthcare Reform and its numerous provisions which NYSHIP will be required to implement in the future. We will continue to provide information as it becomes available.

Agency Experience Reports

Agency specific Empire Plan and Excelsior Plan financial experience reports are available from the Employee Benefits Division upon request. These reports are calendar year based and provide aggregate data broken down by Plan component - hospital, medical/surgical, mental health/substance abuse and prescription drug. To obtain a financial experience report, PAs may submit an official written request on agency letterhead indicating the calendar years for which reports are desired. The request may be directed to the Employee Benefits Division - Director's Office.

GASB 45 Assumptions Report and Census Data

The 2012 Buck Consultants report Development of Recommended Actuarial Assumptions for New York State/SUNY GASB Valuation - Participating Agency Version is now available online at: http://www.cs.ny.gov/GASB/2012PAReport.pdf.

NYSHIP will provide agency census reports upon request, for use in complying with the provisions of GASB 45. Since the data included in this report will be current at the time it is provided, it is important that an agency's NYBEAS file is up-to-date, including correctly identifying and coding retirees before requesting census data.

To request a copy of your agency's census information, please send an e-mail to: MaryEllen.Brucculeri@cs.ny.gov 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 Memos PA06-11 and PA06-18.

Prompt Payment of NYSHIP Premium

The Employee Benefits Division continues to aggressively monitor 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 premium. To avoid disruption of NYSHIP coverage, agencies must ensure submission of premium payments by the due date, as we must submit payments to the NYSHIP vendors that are compliant with the contracts. Agencies may wish to consider submitting payments electronically to promote timely payments.

Mailing of HBA Memos

As you may be aware, it is mandatory that all Participating Agencies have access to the New York State Benefits Eligibility and Accounting System (NYBEAS) and HBA Online. On January 27, 2012 we issued Memo PA12-02/PAEX12-02, which notified agency HBAs that we will no longer be mailing printed copies of HBA Memos. All new HBA Memos are posted to HBA Online, with a notification sent through NYBEAS. As a result, it is very important that a representative of your agency access NYBEAS and HBA Online frequently to ensure receipt of the most up-to-date information from the Employee Benefits Division. It is also very important that your agency maintain current contact information and system access permissions with the Department of Civil Service. If your agency needs to request new permissions or needs to update its current permissions, please email the ITS Enterprise Service Desk at its.sm.esd.ags@its.ny.gov to request a copy of the Information Resource Management Form IRM-302.

Availability of Reports Electronically

The Empire Plan Experience Reports are available through the following direct link to our website: http://www.cs.ny.gov/ebd/ebdonlinecenter/pamarket/qer.cfm.

CEO, CFO & HBA Name and Address Changes

Agencies must notify the Employee Benefits Division of any changes in the names and/or addresses (including e-mail addresses) of agency CEOs, CFOs and/or HBAs to ensure that our mailing and contact lists are up-to-date. Any updates should be e-mailed to: Deborah.D'Orazio@cs.ny.gov.