2013 Annual Report for the Year Ending December 31, 2013
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ILLINOIS COMPREHENSIVE HEALTH INSURANCE PLAN 2013 ANNUAL REPORT FOR THE YEAR ENDING DECEMBER 31, 2013 Pat Quinn, Governor Lisa Madigan, Attorney General Andrew Boron, Chairman of the Board Melissa Hansen, Executive Director ICHIP 2013 ANNUAL REPORT ILLINOIS COMPREHENSIVE HEALTH TABLE OF CONTENTS MISSION AND HISTORY 1 MISSION2013 EXECUTIVE AND HISTORY SUMMARY 2 APPLICATIONS FOR COVERAGE 4 ENROLLEE PROFILE 5 RATE AREA DISTRIBUTION 7 ENROLLMENT DISTRIBUTION AND ACTIVITY 8 FINANCIAL HIGHLIGHTS 13 ASSESSMENTS AND PREMIUMS 16 6 CLAIMS 17 CHIP HIGHLIGHTS FROM 1989 TO PRESENT 21 ADMINISTRATION 24 ICHIP 2013 ANNUAL REPORT ILLINOIS COMPREHENSIVE HEALTH THE MISSION AND HISTORY OF CHIP The Comprehensive Health Insurance Plan (CHIP) has a two-fold mission. One is to provide health coverage for Illinois residents who cannot obtain health insurance due to health reasons or have substantially similar coverage that cost more than the individual Traditional rate. The second is to provide coverage to Illinois residents that have recently lost group coverage and have exhausted COBRA or other continuation coverage. The CHIP Act became law in 1987 with first coverage being provided on May 1, 1989. Illinois was the fifteenth state to enact such a mechanism, known as a “high risk pool,” and the first to use state general revenue funds. The original purpose of the CHIP program was to provide coverage to individuals who were “uninsurable”. This part of CHIP is known as the Traditional CHIP pool. There are two plans available under the Traditional pool. The Traditional Non Medicare Plan is for individuals who are either unable to obtain private coverage because of a medical condition or able to find coverage but at a rate exceeding the applicable CHIP rate. The Traditional Medicare Plan was for individuals under age 65 who are covered by Medicare Parts A and B because of end-stage renal disease or other disability. In 2013 the Board made the decision to discontinue the Traditional Medicare Plan effective December 31, 2013. Following the passage of the federal Health Insurance Portability and Accountability Act (HIPAA) in 1996, CHIP also became responsible for providing health coverage to individuals who have had, but subsequently lost, group insurance. On the state level, legislation was enacted creating the HIPAA-CHIP Pool, and coverage in it was first provided to eligible individuals on July 1, 1997. The pool is funded primarily by an assessment on health insurers and enrollees’ premiums. Additional responsibility came in 2003 with the designation of CHIP as a “qualified health plan” as established in the federal Trade Act of 2002. Qualified Illinois residents could use coverage in the HIPAA-CHIP pool to claim the Health Coverage Tax Credit (HCTC) if they are Trade Adjustment Act (TAA) certified or receiving a pension from the Pension Benefit Guaranty Corporation (PBGC). Pursuant to federal law, the HCTC ended December 31, 2013. In 2008 coverage changes were implemented in response to the Medicare Reform Act to provide High Deductible Health Plan (HDHP) options to CHIP enrollees in either the Traditional or the HIPAA pool. HDHP plans can be used in conjunction with Health Savings Accounts to allow enrollees to take advantage of federal income tax provisions that allow payment for out-of-pocket medical expenses from pretax dollars. On March 23, 2010 the President signed into law the Patient Protection and Affordable Care Act commonly called the ACA, that in part prohibits health insurers from denying coverage due to pre-existing conditions. In 2013, plans were developed and implemented in preparation for CHIP enrollees who would be transitioning to other cover- age through the new health insurance exchange or in the marketplace as a result of the ACA. PAGE 1 | ICHIP 2013 ANNUAL REPORT ILLINOIS COMPREHENSIVE HEALTH 2013 EXECUTIVE SUMMARY AFFORDABLE CARE ACT A significant portion of 2013 involved preparation for CHIP members to transition to other coverage through the ACA with the start of open enrollment on October 1, 2013. Committee members, Board, and staff worked on the following rate changes, communications, and CHIP’s transition plan: In an effort to wind down the Traditional pool, the Board decided that effective January 1, 2014, the Traditional pool would not accept applications during the ACA open enrollment period, since other coverage would be available in the private market that would not discriminate against pre-existing conditions. A proposal to revise CHIP’s rate-setting methodology in order to conform to the rates of the ACA was deliberated upon and implemented by the Actuarial/Finance committee. The committee recommended and the Board approved not to change rates in August 2013, maintaining instead the February 2013 rates until January 1, 2014. The new rates would become effective for all in-force enrollees irrespective of their renewal dates. Changes were made to CHIP’s rate structure that would conform to the rate structure of the ACA that would go into effect January 1, 2014. Pursuant to the CHIP Act, CHIP’s rates would be a multiple, known as the “multiplier,” of the 2014 private market rates. The rationale for making CHIP’s rates a multiple of the 2014 private market rates enabled CHIP to assure applicants and enrollees that, in terms of cost and benefits, coverage purchased through or off an Exchange would be a better value than CHIP coverage. The committee moved to increase the percentage of the HIPAA pool’s multiplier from 125% to 150% as allowed by the Act. The Board adopted the rate-setting mechanism specified by the ACA that includes unisex rating, 13 geographical rating areas, age and tobacco use limitations. CHIP’s 2014 rate would be equal to the average rate charged by health insurance issuers multiplied by the multiplier in effect for CHIP. This rate-setting mechanism would be effective January 1, 2014. CHIP eliminated the quarterly and semi-annual modes of premium payment requiring everyone to pay monthly. ACA related communication plans were implemented. Letters were sent to insurance agents informing them that the $50 stipend for assisting with the enrollment of an applicant would be discontinued on July 1, 2013. Another communications effort was to survey enrollees in order to ascertain their main concerns pertaining to transitioning from CHIP to new coverage. Of the active enrollees 1,756 or 8.5% responded to the surveys. The survey results were posted on the CHIP website. Informational letters to enrollees regarding the ACA and CHIP’s future were sent throughout the remainder of the year. The letters encouraged enrollees to access coverage through the federal Marketplace website to obtain coverage that would go into effect on January 1, 2014. CHIP’s communication efforts were coordinated as part of a statewide effort with the Department of Insurance (DOI), Healthcare and Family Services (HFS) and the Governor’s Office encouraging individuals to visit the marketplace website, “GetCovered Illinois”. A key component in CHIP’s transition plan was to encourage enrollees to purchase ACA coverage. Board staff attended training classes to become designated by the federal government as “Certified Application Counselors”. A workstation was setup at the Board office for the specific purpose of assisting enrollees with their ACA applications. PAGE 2 | ICHIP 2013 ANNUAL REPORT ILLINOIS COMPREHENSIVE HEALTH 2013 EXECUTIVE SUMMARY APPLICATIONS Applications received in 2013 decreased by 42% compared to 2012. In the last half of 2013 CHIP applications declined by 67% with 1,268 applications received compared to the same six month period in 2012 when 3,796 applications were received. The decrease is likely attributed to the ACA’s open enrollment period that went into effect October 1, 2013 and the Traditional pool’s six-month pre-existing conditions exclusion. TERMINATIONS Termination activity increased during the later part of 2013 due to the ACA’s open enrollment period that started on October 1, 2013 and rate increase letters mailed to members in November 2013. Overall, there were 8,290 terminations in 2013 with 59% of members terminating due to other coverage, non-payment, and premium too high. CONTRACTUAL OVERVIEW Catamaran Catamaran, the Plan’s pharmacy benefits manager, transitioned CHIP enrollees’ specialty drug needs from Walgreens Specialty Pharmacy to BriovaRx in March 2013. The transition resulted from SXC Health Solutions acquisition of Catalyst Health Solutions’. The transfer is expected to enhance specialty drug services with a minimum amount of enrollee disruption. Specialty drug cost increased 22%, representing 43% of Total Plan Costs and 2% of Total Claims. Generic Dispensing Rate increased 5.4 points over 2012 to 73.1%. Blue Cross Blue Shield of Illinois (BCBSIL) BCBSIL, the Plans medical benefits manager reported 2013 year to date total paid expenses of $183,550,808. Out of this paid expense High Cost Claimants (HCC) accounted for $95,925,243 in paid expenses. During 2013 HCC represented 3.8% of total claimants and accounted for 52.3% of total paid expenses. The average paid expense per claimant was $8,767 while the average paid cost per HCC was $116,414. Amongst HCC paid expenses, inpatient facility accounted for 44% of total HCC paid expenses, outpatient facility accounted for 30.7% and professional services accounted for 25.3%. Out of the $95,925,243 in paid expenses for HCC, Neoplasms accounted for 21.8%, Circulatory accounted for 14.3% and Musculoskeletal and Connective Tissue accounted for 11.5%. PAGE 3 | ICHIP 2013 ANNUAL REPORT ILLINOIS COMPREHENSIVE HEALTH APPLICATIONS FOR COVERAGE The total number of applications received in 2013 declined by 42% over 2012. Overall, total applications received for 2013 is the lowest compared to the last five years. In the last half of 2013 there were 1,268 applications received representing a decline of 67% compared to the same six month period in 2012 when 3,796 applications were received.