MEDICAL CLAIMS AND ADMINISTRATIVE SERVICES, SPECIFIC AND AGGREGATE STOP LOSS COVERAGE, AND PRESCRIPTION DRUG CLAIMS ADMINISTRATION

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1 ADDENDUM TWO (2) To that certain NJPA RFP # Issued by National Joint Powers Alliance For the procurement of MEDICAL CLAIMS AND ADMINISTRATIVE SERVICES, SPECIFIC AND AGGREGATE STOP LOSS COVERAGE, AND PRESCRIPTION DRUG CLAIMS ADMINISTRATION Consider the following to be part of the above titled RFP: 1. Questions received from Potential Responders are in Black and NJPA answers are in blue. Q. Although the RFP was released on July 18 th, we did not receive the RFP until July 24 th. As such, is it possible to have an extension on the August 8 th due date? A. Addendum One (1) extended this RFP for one week. New dates are as follows. Bids are due August 15, 2014 at 12:00 P.M. Central Time and bid opening is scheduled for August 15, 2014 at 12:01 P.M. Central Time. Q. Do you currently write business outside of Minnesota, if so what states? If not, are there specific states you are hoping to target? A. Minnesota only at this time. Q. Would you like to expand? If so, which states? A. Not at this time. Q. Please provide details on the structure in which your model is set up today with HealthPartners. Do all groups roll up to one common Plan ID or is each group independent? A. Each group is rated independently and then we meld the rates based on the overall experience within NJPA. Q. Does each individual group (plan sponsor) have on line access to information and services via the internet? Provide detail on what information or functionality they have access to. A. Yes. Group utilization, rosters, paid claims, and numerous wellness and support programs through HealthPartners. Q. Section D, Q. 16 please confirm you are looking for 2013 and then 2014 YTD vs and 2013 YTD. A. Correct Q. How is eligibility handled today? A. Eligibility is determined at the group level. Q. How is eligibility passed to HP today, by group or centrally from NJPA? A. By Group Q. Provide details on the existing networks utilized today. A. HealthPartners Open Access Network Q. Who currently administers the HRA and HSA accounts? Will you consider alternatives for these as well? A. This is left to the discretion of each group. Q. Who administers the Rx program today?

2 A. HealthPartners Q. How are rebates handled today? A. 100% is returned to NJPA. Q. What were the total rebates received in 2013? A. FY total drug rebates were $264, Q. Section I Performance Guarantees, Q. 1 You ask for results from 2004 and Please confirm. A. This should read 2012 and Q. Provide details on premium structure for individual entities. Does NJPA charge a fully insured equivalent rate? If so, is this the maximum a group can be charged? A. Expected claims rates are determined by HealthPartners and the fixed costs are then added. This is the maximum a group can be charged for the 12 month period. Q. Is there any margin added to expected claims? A. No. Q. Confirm there s a 110% corridor on these expected claims. A. Yes. Q. Who hold the liability for claims beyond what you offer the group and the 110% corridor? A. NJPA Reserves Q. Do you include any rate stabilization reserve or Program Funds within the premiums charged to a group? If so, how much? A. No Q. Please provide details on the current balance of the Program Fund. A. Our reserves are at an estimated 33%. Q. Will you entertain a defined contribution model that offers each entity the option to offer anywhere from 8 to 20 plan designs? A. We will entertain anything that you propose but the final decision, regarding benefits, will be by each group. Q. Please provide the current formulary. A. Please see attached. Q. Do you audit current rebate contracts? A. We retain the right to do so. Q. Will you entertain an alternative dental proposal? If so, please provide current plan designs and utilization. A. Not at this time. Q. Does NJPA currently hold the IBNR fund today? A. Yes. Q. Do all plans currently allow 4 th quarter carry over for deductibles? A. No.

3 Q. Do you currently laser out individuals on new groups? A. Never. Q. Please identify which plans are considered grandfathered today. A. St. Anthony New Brighton ISD. Q. Please provide details on current wellness offerings. A. The standard Smart Steps HealthPartners Program as well as some internal funding for the groups approved wellness programs. Q. Please provide more details or brochures on this program. A. It includes health assessments as well as promoting annual physicals and wellness related activities. Q. What are the current Service Cooperative service fees? A. We do not charge an administrative fee. We function on drug rebates and interest income. Q. What level of utilization detail is provided to groups and timing of the reports? A. This varies by group requests. Groups can access monthly utilization reports on line at their convenience. We typically have utilization review meetings with each group on a semi annual basis, and annual renewal meetings during which utilization is reviewed. Q. What information is provided to a given group at renewal? A. Current year to date utilization, IP and OP claims categories, High Cases, Prescription Drug Utilization by drug type and a listing of providers used. Q. How do you establish renewal rates for each group? A. HealthPartners underwriting determines the Expected Claims Rates and we add the fixed costs. We then do some melding of rates based on the groups funding history at NJPA. Q. What were the renewal rates by group for 2014? A. HealthPartners did not release these as we are out to bid. Q. Please provide details on current billing practices for each covered group. A. HealthPartners handles the enrollment and sends to NJPA a fixed cost invoice including enrollment changes each month, from this NJPA bills each group. Q. Please provide details on current $200K Spec and 110% Agg Deductible premiums. A. Our Legal Department is reviewing this request and we will provide it if it is deemed applicable. Q. Please provide details on current admin fee and services included. A. Our Legal Department is reviewing this request and we will provide it if it is deemed applicable. Q. Appendix IV you state Please provide Uniform Benefit Alternatives for all groups listed in the census. All groups should be provided each of the three benefit plans enclosed. The four benefit plans are: There s actually five benefit plans listed in this section. Please confirm it is all five plans that are to be offered uniformly. A. We would like the following five (5) benefit plans: $500 Deductible $1,000 Deductible Minimum Value Plan $2,500 High Deductible Plan HSA Qualified $5,000 High Deductible Plan HSA Qualified.

4 Q. Please provide detail on why NJPA is out to bid. A. We are out to bid due to HITA. Q. Are there any issues or concerns regarding the current administration of your health plan offering? A. We have no concerns and are very satisfied with our current carrier. Q. Many of the current plan designs have the same in and out of network deductible and out of pocket maximums. Do these cross accumulate or are they completely separate? Is this the desired approach or can we offer plans with higher deductibles and out of pocket maximums that do not cross accumulate to encourage greater in network utilization? A. They cross accumulate which is what we prefer. Q. Please provide additional plan design details for your requested Uniform Benefit Alternatives, i.e. copay, coinsurance, out of pocket max, Rx, out of network benefits, etc. A. Please see attached. Q. RFP indicates that some participating groups renew on January 1 and others on July 1. Please provide a list that identifies the renewal date for each group. A. Westonka Schools, McGregor School, St. Anthony New Brighton School, Albert Lea School and Freshwater Education District all renew July 1. All other groups renew January 1. Q. If NJPA changes carriers, will 1) all groups move on 1/1/15 or 2) January renewal groups move 1/1/15 and the July groups will stay with the current carrier until 7/1/15? A. #2 is Correct. Q. Are renewal rates delivered at separate times for each of these renewal periods or is there a single renewal negotiation time per year for the entire pool? A. The entire pool is rated twice a year with only the renewal rates given to the date appropriate groups. Q. For groups whose contract is on a July through June basis, is their plan year on the same basis or is it on a calendar year basis? A. All July groups are on a plan year basis with the exception of McGregor Schools, which is on a calendar year basis. Q. How many new groups have joined the NJPA plan in the past 3 years? A. We have added 8 groups to the pool since Q. How many groups have left the NJPA plan in the past 3 years? A. 4 groups have left for various reasons. Q. As a service co op organized under MN law and providing employee health benefits, does NJPA limit membership to political subdivisions of MN, as described in Minnesota Rules Chapter 2785? A. We are able to quote and add to the pool all ERISA Exempt entities. Q. Has the NJPA completed an application to form a self insurance pool under Minnesota Rules Section ? A. This may have been done in Q. The Background Information in Section 2 includes a list of the types of entities that can become NJPA members. Some of the entities on this list are non public sector entities. It is our understanding their benefit plans would be subject to ERISA. If these types of entities are or become part of NJPA, it is our understanding that state and federal provisions concerning MEWAs come into play. Has NJPA

5 considered these issues and how NJPA would comply with Minnesota Statutes Chapter 62H if it becomes applicable? All of our groups are ERISA Exempt A. All of the groups in the insurance pool are ERISA Exempt. This is verified prior to any quoting process. Q. In Attachment 3 K: The cited regulation 62.L.08, subd 7a and references to rate bands are outdated, so it is difficult for us to respond to this section of the RFP. Please provide additional details on NJPA s interpretation of the rating and other requirements that are applicable to small employer groups within your self insured pool in light of recent PPACA and MN State regulation changes. Are small groups within the NJPA pool subject to community rating now in place of the referenced rate band restrictions? The definition of small employer will increase from 50 to 100 in NJPA is looking for a contract term of 24 months, commencing January 1, How will NJPA groups be affected by the 2016 small employer regulatory changes in 2016? A. This is to be determined. Q. Please identify which participating groups qualify as small groups from a regulatory standpoint. A. The groups are responsible for calculating FTE s and whether or not they qualify as a small group from a regulatory standpoint. Q. Please provide a draft Operating Agreement the carrier would be expected to execute with NJPA. A. Laura Dwyer sent this to all inquirers on August 4, Q. In an earlier response to our question, we were told that reserves are approximately 33%. Is this 33% of annual premium or some other denominator? A. Of the annual premium. Q. Does this include monies set aside for IBNR purposes or is the IBNR reserve separate? A. This includes IBNR funding. Q. The RFP indicates that groups are not assessed any additional revenue beyond the agreed upon premium. How does NJPA ensure that reserves will be adequate to cover excess costs beyond the premium remitted by the groups up to the stop loss protection level? A. This is reviewed semi annually and adjustments may be made through the rate melding process. Again, we do not make a separate charge or assessment to fund the reserves or the 10% stop loss corridor. Q. The RFP included a list of groups with their rate tier type, contract count, and total rate. Please confirm that the total rate in this case includes administrative fees, stop loss rates, and expected claims. If broker commissions apply, is the commission amount also included in these rates? If any other costs are included, please identify. Does the total rate reflect rates that were effective in 2014 for January and July renewal groups? A. All fixed costs are included in the total rate, including stop loss premiums, administrative fees, broker fees, expected claims rates, and for some groups a non compliance charge that is in relation to manual benefits such as an accident waiver. Correct, the total rates are those that were effective January 1, 2014 and July 1, 2014, respectively. Q. Please confirm that the Sample Rate Sheet is to be completed separately for each group. The Rate Sheet includes fields for single and family rates. Some groups appear to have 3 tier rates or 4 tier rates. Are we to provide rates only on a single/family basis or on a basis consistent with each group s current rate tiers? May we modify the Rate Sheet exhibit to show expected claim costs for each benefit plan offered by a group and a total of all plans? Confirm that you are only looking for rates on each group for the 5 uniform benefit alternatives. Should the expected claims for each of the requested uniform alternate benefit plans also be shown on the Rate Sheets for each group?

6 A. At a minimum, single and family rate tiers, but ideally rate tiers that correspond with the current structure. You may modify the rate sheet to include additional information, however the sample rate sheet structure should be followed. Correct, we are looking for proposed rates on the proposed uniform benefit alternatives and those rates should be shown in the same rate sheet format. Q. For the requested alternate plans, how and when would these be implemented? At each group s choice as negotiated in the bargaining process? Will these potentially be implemented on 1/1/15 for some groups? A. Correct, they are implemented at the group s choice as negotiated and could potentially be implemented on 1/1/15. Q. In the provided HealthPartners claim reports, do the claim costs include any other expenses beyond fee for service claims, such as network management fees, capitated claim costs, etc? A. Yes, the claims costs include those additional expenses. Q. The provided claim reports do not include a list of high claim dollar amounts for the smaller groups (City of Baxter, City of Little Falls, City of Pequot Lakes, Wadena Deer Creek Public, City of Wyoming, Mid State Education District, NJPA, Northland Community School, Pillager Area Charter School, City of Wadena). We understand that the standard high claimant report with diagnosis information may not be available due to the size of these groups, however, we would like a list of high claimant amounts to use for pooling purposes so a group s pricing is not adversely affected due to catastrophic claims we are not able to identify. For each of these groups, please provide a list of total dollars amounts for each deidentified claimant with $30,000 or more that matches the same timeframe as the provided aggregate claim reports. A. Pursuant to Minnesota Statutes Chapter 13, government entities are only required to provide information they possess. NJPA does not possess this information, thus it is not subject to Minnesota Data Practices Act. Q. The claim report package provided for the NJPA group is on a 24 month roll up basis (unlike reports for other groups that are on a 12 month roll up basis). Please provide a 12 month roll up report for NJPA with high claimant data consistent with this 12 month period. A. The data requested is in the report already provided. Q. Is the stop loss contract issued to NJPA or to each group? Is the aggregate stop loss reconciled on an overall pool basis or separately for each group? A. The stop loss contract is issued to NJPA. The aggregate stop loss is reconciled on an overall pool basis. Q. Please confirm if the carrier works directly with the group or with NJPA for the following administration responsibilities: A. Administrative Services Contract NJPA Stop Loss Contract NJPA Summary Plan Descriptions Group Eligibility updates Group Claim Invoicing/Banking NJPA Equivalent premium billings NJPA handles the billing internally. Claim and enrollment reporting Both Performance guarantee reconciliation (at the pool level only?) NJPA Account Management Both Q. Who handles remittance of the PPACA reinsurance fee groups or NJPA? A. The groups handle the remittance.

7 ACKNOWLEDGMENT OF ADDENDUM TWO (2) TO RFP DISTRIBUTED VIA ON AUGUST 6, 2014 COMPANY NAME: SIGNATURE: DATE: