HEALTH BENEFIT PLAN FILING & REVIEW COMPONENTS

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2 Agenda Health benefit plan filing and review components Forms Plans Rates Ratemaking and rate review Company ratemaking considerations History and context of Oregon s rate review process Rate review process for 2014 plans Hot topics in rate review Cover Oregon Q&A

3 HEALTH BENEFIT PLAN FILING & REVIEW COMPONENTS

4 How we regulate health benefit plans in Oregon Prior approval required:» Policy forms Contract language» Plan designs Specific combinations of benefits and cost-sharing arrangements» Rates

5 Review process for 2014 filings Existing review process for forms and rates New process for plan filings» Contract and actuarial review components» Compliance with federal and state planspecific requirements» Support for Cover Oregon s qualified health plan (QHP) certification

6 Form review for 2014 plans completed Important first step in QHP approval process Leveraged existing process for review of 2014 policy forms» Led by experienced health insurance analyst team» Continuous discussion with division management, Cover Oregon, and industry regarding emerging issues

7 Form review for 2014 plans completed Key aspects of review:» Compliance with federal and state laws and regulations, including Affordable Care Act (ACA) requirements» Readability and clarity of contract provisions and covered benefits

8 Plan Review: Coordination and collaboration First time carriers are filing specific combinations of benefits and cost-sharing designs Adapted from form review process with added elements:» Metal level/actuarial value (AV) validation» Essential health benefits (EHB) and substitutions» Non-discriminatory benefit design» Alignment with form and rate filings» Several required federal templates Cover Oregon to review compliance with QHP requirements

9 Coordination and collaboration in plan review Challenges» Significant federal guidance released near filing deadline» Carriers, the division, and Cover Oregon all navigating new platform Plan filings due by April 30

10 Rate Review Rate review to focus on cross-market comparisons» Carriers must quantify and support key assumptions to justify rates» Some assumptions may reasonably vary by carrier Continued consumer education about ACA impact on rates and market dynamics» Minimum coverage requirements (EHB, AV)» Guaranteed issue/individual mandate» Rating factor restrictions» Risk mitigation programs (risk adjustment, risk corridor, reinsurance)

11 Rate review will be the focal point Challenges» Large, concentrated filing volume» Significant federal guidance released near filing deadline» Longer lead time between approval and effective date of rates» Effects of reforms on future costs Rate filings due April 30

12 HEALTH BENEFIT PLAN RATEMAKING & RATE REVIEW

13 How carriers develop rates Rates based on past experience and projected changes Key ratemaking considerations in 2014:» Historical claims costs» Adjustments to historical claims costs o Changes in benefits and cost-sharing structure o Impact of guaranteed issue/individual mandate on individual market (i.e., relative cost of previously uninsured, high risk pool and portability enrollees) o Impact of rating factor restrictions o Impact of risk mitigation programs» Trend» Administrative costs

14 Table of Assumptions Factors Description Company Standard Bronze Plan Proposed Rate Rating Assumptions Morbidity Changes Medical Trend Company's proposed monthly premium for standard bronze plan for a 40-year-old, single, non-tobacco user in the Portland metro area. Estimated change in health status of small group market, including impact new people entering or leaving the small group market. Estimated annual change in future claims costs, including factors such as changes in the cost of medical services or new technology. Essential Health Benefits Minimum Actuarial Value Assessments and Fees State Reinsurance Assessment Federal Reinsurance Assessment Insurer Fee Estimated impact of new benefits. Estimated impact of changes in the expected portion of claims costs covered by health insurance. State assessment to fund proposed Oregon reinsurance program. Federal assessment to fund national reinsurance program. Federal assessment to fund Medicaid expansion.

15 Oregon s strong rate review process Among most robust and transparent in the country Rates must be actuarially sound: reasonable and not excessive, inadequate, or unfairly discriminatory Division actuaries thoroughly review each filing» Rate review team includes three experienced, credentialed health actuaries» Senior management, including the commissioner, sign off on each decision

16 Development of current rate review process In 2009, HB 2009:» Enhanced information the division can consider in evaluating rate filings» Increased transparency (all documents public)» Established a public comment period» Allowed consideration of an insurer s cost containment and quality improvement efforts

17 Development of current rate review process Public hearings now held for most rate filings» Opportunity to inform consumers» Forum for public comment and testimony from consumer advocacy group (OSPIRG)

18 Filing requirements largely unchanged for 2014 Each filing must include:» Filing description» Filing summary» Actuarial memorandum» Rate tables/factors» Plan relativities» Development of base rate» Trend information/projection» Premium retention» Financial information» Benefit/plan design changes» Cost containment/quality improvement:

19 Rate review process for 2014 Rate filings due April 30 Division actuaries review filings for completeness» Complete filings made public and posted for review/comment within 10 days of receipt» Comparison of key assumptions posted Division actuaries continue full review of filings and request additional support or revisions» Correspondence posted for public review

20 Rate review process for 2014 Public hearings held May 28 June 7» Opportunity for OSPIRG and consumer testimony at each hearing Final decisions by June 30 Decisions posted early July

21 How will we know that rates are fair? Compare with current costs and project effect of federal reforms 16 companies filing at the same time will show any outliers Filings will include new information such as impact of the entrance of high-risk and uninsured populations

22 Incentives to avoid overpricing Oregon has highly competitive health insurance market Oregon s strong rate review process is effective at eliminating excessive overhead Consumers have more choices and a more transparent marketplace in which to shop via Cover Oregon Oregon will not approve rate filings that show expectation of paying rebates

23 Cost containment a key issue Carriers must explain significant changes in cost containment and/or quality improvement efforts since prior rate filing» Difficulty in isolating which efforts are truly new or different» Challenges in quantifying impact and identifying effects on projected claims costs Ongoing discussion of how to evaluate measures that reflect provider contract features

24 Cover Oregon overview Cover Oregon is a state-run exchange 2011 Oregon legislature created the exchange as a public corporation In 2012, the Legislature approved a business plan to serve the small group and individual markets HHS grants established exchange Ongoing funding through administrative fee on insurers

25 Cover Oregon Marketplace programming finished end of April System testing and plan loading completed through the summer, ready to go live in October Cover Oregon certified 15 medical carriers and 7 dental carriers

26 Exchange and division collaborate Insurance commissioner on exchange s Governor-appointed, nine-member board of directors Insurance Division and Cover Oregon ensure that coverage in and out of the exchange meets state and federal requirements Both implement final federal regulations and offer continuing guidance Inter-agency agreement signed in April

27 QUESTIONS?