Rate and Form Filing Seminar - Silver State Health Insurance ...

Managing Existing Product Portfolios

Non-Grandfathered Individual and Small
Group Products
• Must comply with new market rules upon renewal
on or after 1/1/2014
• These requirements are also applicable to closed
block products
• A 60 day renewal with altered terms notice will be
required
• Closed blocks will not be allowed beginning
1/1/2014

Mapping Non-Grandfathered Products
• Mapping strategies must be submitted by
3/1/2013 as part of a carrier’s individual and
small group annual operations reports
• Reasonable mapping strategies may include
- Moving to closest actuarial value plan
- Minimizing premium disruption
- Maintaining current provider network

Products Open on 3/23/2010
• Nevada will consider a product that contains both
grandfathered and non-grandfathered policies to be
two distinct products
• Discontinuation of the entire product for
obsolescence is allowed with a 180 day notice to
policyholders
• Alternatively, the product will be considered a
closed block grandfathered product if no nongrandfathered
policies remain on 1/1/2015

Single Risk Pool
The premium rate for any non-grandfathered
individual or small group plan can vary from the
market wide index rate only for the following factors:
– The actuarial value and cost-sharing design of the plan
– The plan’s provider network and delivery system
characteristics
– Plan utilization management practices
– Plan benefits in addition to the essential health benefits

Nevada Rating Bands
Individual Market Now
50% Between Blocks

Nevada Rating Bands
Individual Market 1/1/2014
Single Risk Pool
Non-
Grandfathered
Plans
50% Between Blocks

Nevada Rating Bands
Small Group Market Now
20% Between Classes

Nevada Rating Bands
Small Group Market 1/1/2014
Single Risk Pool
Non-
Grandfathered
Plans
20% Between Classes

Filing Products in 2013
• The filing process for grandfathered and large group
products mostly remains unchanged
• Carriers will need to obtain plan ID’s from HHS through
HIOS for all new non-grandfathered plans in and out of the
Exchange
• Carriers will need to complete the rate filing template in
HIOS for all non-grandfathered individual and small group
product rate filings beginning 4/1/2013

Non-Grandfathered Product Filings
• Form filings can be submitted beginning 2/1/2013
• Individual and small group product form filings must include
both input and output from the Actuarial Value Calculator
• Adequate data and documentation to support actuarial
equivalent benefit substitutions must also be provided
• Individual and small group rate or form/rate filings can be
submitted beginning 4/1/2013

Non-Grandfathered Product Filings
• No more than one product per filing will be allowed
• A product will consist of various plans
• Plans within a product should only vary by cost sharing
structure
• Benefit and network variability within a product will not
be allowed

Rate Review

State Decisions
Within 30 days of publication of the final rule,
Nevada will need to decide on:
• Age curve
• Age rating, if less than 3:1
• Geographic rating areas
• Merger of individual and small group risk pools
• Whether composite rates are required in small group
market
• Tobacco rating, if less than 1.5 to 1

Rating areas
• Apply uniformly to all non-grandfathered plans in
individual and small group market
• Presumed adequate (default) if:
– There is only one rating area within a state, or
– Seven or fewer rating areas based on:
• Counties
• 3-digit area codes
• Metropolitan Statistical Areas (MSAs) / non-MSAs
• A state may define the rating areas based on
different criteria, subject to approval by CMS
• Considerations in selecting rating areas
• Current rating areas used by carriers
• Minimize disruption

Geographic Rating
Areas By Carrier –
Individual Market
Based on 2012 study of the
Nevada Health Insurance
Market by Gorman Actuarial.
• One of the carriers
surveyed did not vary
rates by geographic area.
• Some carriers used
slightly different rating
areas for small group.
• Carriers used a maximum
of 4 rating areas.
• General consistency in
rating areas among
carriers.

Nevada Rating
Areas for 2014
Four Rating Areas:
1. Clark county plus Pahrump
2. Washoe county
3. Carson City, Lyon and Douglas
and Storey counties
4. All other counties

Geographic Rating
Factors
• Federal regulations are
silent on responsibility
for setting rating factors
• States can set the
rating factors
2010 Geographic Rating Factors - Individual Market
Minimum Maximum Average
Las Vegas Area -1% 14% 2%
Reno Area -10% 19% -4%
Other 20% 22% 22%
2010 Geographic Rating Factors –Small Group Market
Minimum Maximum Average
Las Vegas Area -7% 3% -2%
Reno Area -7% 20% 6%
Other 22% 50% 23%

Geographic Rating Factors
• Carriers may continue to determine rating
factors in Nevada
– Methodology must be actuarially sound
– Cannot be based on claims experience
• Because it will reflect prohibited factors such as
health status
– Should reflect provider contracts
– Basis must be fully documented in actuarial
memo

Changes to Effective Rate Review
Standards
• Nevada must now review:
– Reasonableness of assumptions used to estimate the rate
impact of the federal reinsurance and risk adjustment
programs
– Carriers’ data related to the implementation of the
• Market-wide single risk pool
• Essential health benefits
• Actuarial values
• Other market reforms
– Impact of cost-sharing changes
– Impact of geographic factors and variations
– Impact of changes within a single risk pool, on all products
or plans within the risk pool

Actuarial Memorandum - Forms
• Forms filed separately from rates will be
automatically disapproved if an actuarial
memorandum is not included.
• The DOI will be reviewing forms for:
– Discriminatory benefit design
– Substantially similar benefits offered inside
and outside the Exchange

Actuarial Memorandum - Forms
• The actuarial memorandum accompanying
forms must include support for:
– Calculation of actuarial value (AV). At a minimum,
include:
• Assumptions and methodology used to project the
expected average paid and allowed claims
• Include documentation from AV calculator – inputs and
outputs
• If AV calculator is not used, provide detailed description
of methodology and assumptions, including the
justification of why they are appropriate

Actuarial Memorandum - Forms
– Actuarially equivalent substitutions for dollar
limits. Include:
• Detailed descriptions of assumptions and
methodology.
• Justification of appropriateness of data,
assumptions and methodology used. The
substitutions must be appropriate for the coverage
– Other actuarially determined items

Actuarial Memorandum - Rates
Carriers will need to provide detailed descriptions of assumptions and
methods used to determine items affecting the premium levels for new
and existing plans. This will include a detailed description of the
underlying data and a discussion of the appropriateness of the data
used to determine the assumptions for:
• Index rates
• Experience Period Premium and Claims
• Projection Factors
– Trend
– Morbidity of uninsured
• Include modeling methodology and assumptions
• At a minimum, be prepared to demo the model to DOI staff
– New benefits (EHB)
– Other
• Credibility

Actuarial Memorandum, Cont’d
• Impact of premium stabilization programs
– Estimate risk transfer payments and impact of transitional
reinsurance program (individual market only)
– Detailed description of the modeling methodology
– At a minimum, be prepared to demo the model to DOI staff
• Non-Benefit Expenses
• Allowed Rating Factors
– Age
– Geography
– Tobacco use
– Family composition

Actuarial Memorandum, Cont’d
• Ratio of expected paid claims to allowed claims (Actuarial
Value)
– Assumptions and methodology used to project the expected
average paid and allowed claims
– Include documentation from AV calculator – inputs and outputs
– If AV calculator is not used, provide detailed description of
methodology and assumptions, including the justification of why
they are appropriate
• Actuarially equivalent substitutions for dollar limits. Include:
– Detailed descriptions of assumptions and methodology.
– Justification of appropriateness of data, assumptions and
methodology used. The substitutions must be appropriate for the
coverage

Actuarial Memorandum, Cont’d
• Company Financial Position
– Pure loss ratio at plan, product,
market and company levels
• Incurred claims
• Earned premiums
– Expected MLR
– Admitted assets
– Capital and surplus
– Net earned premiums
– Net underwriting gain / (loss)
– Investment income
– Net investment realized gain /
(loss)
– Net income (loss)
• Actuarial Certification
– Certify compliance with:
• Applicable statutes and
regulations of the State
of Nevada
• Applicable federal
statues and regulations;
• Applicable Actuarial
Standards of Practice
(ASOPs)

2014 ACA Fees in 2013 Premiums
ACA imposes fees on issuers
• Annual fee on health insurers (ACA sec. 9010)
– Based on previous year’s premium
• Transitional Reinsurance Program Assessments
– $5.25 PMPM in 2014
• Comparative effectiveness research assessment
– $1PMPM in 2013, $2 PMPM in 2014 to 2009
• Timing of inclusion of fees in premiums for noncalendar
year plans

2014 ACA Fees in 2013 Premiums
• Considered several approaches
• Biggest concern – uncertainty of lapse
experience due to the impact of market reforms
starting January 1, 2014
– Can be alleviated by:
• Refunds to members terminating before the end of the year
• Explicit termination assumption

2014 ACA Fees in 2013 Premiums
• Decision: DOI will approve rates for the entire
plan year without fees
– Allows for itemizing of fees
– Allows adequate time to price and implement fees
– Members who terminate coverage before 2014 will
not have to pay these fees
• Carriers may file for rate increase to reflect fees
only effective January 1, 2014
– Will consider implementing an expedited process to
accommodate efficient review.

Essential Health Benefits

Essential Health Benefits
• Also known as “EHBs”
• Establishes a minimum level of coverage
• Chosen by Nevada for Nevadans
• Applies to all non-grandfathered individual and
small group insurance plans
• Applies to plans sold on and off the Exchange

EHB Requirements
• No annual dollar limits
• No lifetime dollar limits
• Service/visit limits ARE allowed
• Adult vision and dental are NOT EHBs

EHB Restrictions
• Since dollar limits are prohibited, each carrier
must either provide the coverage without a limit
or establish an actuarial equivalent substitution
• Nevada’s EHB package will apply for years 2014
and 2015

EHB Package Chosen
Health Plan of Nevada
Point-of-Service C-XV
Form #: HPN POS C-XV
This was the largest small employer
plan in the state.

Missing Services
• Habilitative services must be in parity with
rehabilitative services
• Pediatric Dental supplemented by the Medicaid
CHIP
• Pediatric Vision supplemented by the FEDVIP

Dollar Limits No Longer Allowed
Applied Behavioral Analysis:
$36,000 annual limit
Inherited Metabolic Disease:
$2,500 annual limit for special foods
Bariatric Surgery:
$5,000 lifetime limit
Manual Manipulation of the Spine:
$1,000 annual limit

Dollar Limits No Longer Allowed
Durable Medical Equipment:
$4,000 lifetime limit
Prosthetic and Orthotic Devices:
$10,000 lifetime limit
TMJ:
$2,500 annual limit; $4,000 lifetime limit
Hearing Aids:
$5,000 annual limit

Organ and Tissue Transplant:
Procurement
$15,000 per transplant / per benefit period
Travel Lodging and Meals
$10,000 per transplant / per benefit period
Daily Lodging and Meals
$200 per day

Physical Therapy, Speech Therapy and
Occupational Therapy:
60 visits per year combined
Private Duty Nursing:
30 visits per year
Skilled Nursing Facility:
100 days per year
Home Health Care Services:
30 visits per year

Hospice Services:
Benefits for expenses arising from hospice care
Hospice Bereavement Services:
5 visits per year; treatment must be completed within 6 months
of the date of death
Infertility Office Evaluation Visits:
Covered as a physician visit
Infertility Treatments:
6 cycles per person per lifetime

The formulary benchmark is the greater of the
number of drugs in the benchmark plan formulary
or one in every distinct pharmacopeia category and
class.
• Brand name drugs and generic drugs are not
chemically distinct
• Dosage size is not chemically distinct
• Formulary quantity is locked in until 2016

Plan Certification

Qualified Health Plans
• Carriers will be able to offer up to five plans per
metal tier per service area
• Individual market plan offerings will be in place for
one year
• Changes to individual market QHPs can only be
made annually, prior to the open enrollment period
• Rates must be set for an entire benefit year, or plan
year for products in the SHOP Exchange

Certified Carriers
• Carriers must offer at least one silver and one gold
plan
• Carriers must offer 73%, 87% and 94% variations
of each standard silver plan for individuals with
household incomes below 250% of the FPL
• Carriers must offer no-cost sharing variations for
Native Americans with household incomes below
300% at each metallic level of coverage

Certified Carriers
• Carriers in the individual market may offer one
catastrophic plan. Catastrophic plans may only be
sold to people under age 30 at the start of the plan
year, people for whom coverage is considered
“unaffordable” under 5000A(e)(1) of the Internal
Revenue Code (IRC), and people with a “hardship”
under 5000A(e)(5) of the IRC

Accreditation
• Carriers must either have a current accreditation by
NCQA, URAC or another accreditation entity
recognized by HHS or demonstrate, during QHP
certification, evidence of a scheduled accreditation
survey that will be completed within 24 months of
the date of application for certification
• A carrier that does not receive accreditation within
24 months of the date of application for certification
will lose their QHP status following the completion
of the plan year in which the deadline occurred

Submitting Qualified Health Plans
• QHPs must be submitted through SERFF within
“Binders”
• Binders will be available in SERFF on 3/28/13
• Submission of a binder will initiate the
certification process for a carrier
• A separate certification application will not be
required

QHP Data Collection
• The Division of Insurance will collect QHP data using
SERFF binders
• Carriers will need to provide plan and company
information using data templates within binders
• Nevada will not deviate from the standard templates
used by HHS for the FFE
• Additional carrier and product information needed by
the Exchange will be collected within other binder fields
outside the standard data templates

Standard Data Templates
• There are currently eight draft templates:
– Administrative Data Template
– Plan Benefits Template
– Rates Template
– Rating Rules Template
– Service Area Template
– Network Template
– Prescription Drug Template
– Essential Community Providers Template

Certification Timeline
• Thursday, March 28 th : Carriers can submit
“Binders” via SERFF
• Friday, June 7 th : Deadline for submission of initial
“Binder”
• Friday, July 5 th : Final day to submit a “Binder”
• Thursday, August 1 st : All “Binders” must be
approved in order for QHPs to be available for
OPEN enrollment