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Commonwealth Choice Plans Renewal Recommendations December 4, 2007

Commonwealth Choice Plans Renewal Recommendations December 4, 2007. Context/Objectives. Control trend and focus on affordability Simplify and improve member choices and experience Provide program stability. Renewal Recommendations. Increase cost sharing for Gold level plans

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Commonwealth Choice Plans Renewal Recommendations December 4, 2007

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  1. Commonwealth Choice Plans Renewal Recommendations December 4, 2007

  2. Context/Objectives • Control trend and focus on affordability • Simplify and improve member choices and experience • Provide program stability

  3. Renewal Recommendations • Increase cost sharing for Gold level plans • Establish 5% premium increase target for all plans • Allow carriers to offer two Bronze level plans using broad and limited or tiered networks • Exclude Tier 1 drugs from separate Rx deductible • Prohibit carriers from using industry rate adjustment factor (SIC code) in setting non-group rates

  4. 1. Increase Cost Sharing for Gold Level • Current benefit design includes $10 co-pay for office visits and no cost sharing for most services (e.g., inpatient, outpatient, lab/x-ray) • Increasing cost sharing would better align Gold level benefits with top end of most common small group offerings • Fewer than 10% of Commonwealth Choice enrollees have selected Gold level plans

  5. Gold Level Plans

  6. 2. Establish 5% Premium Increase Target • Five percent increase target requires carriers to submit renewal proposals at or below target • Carriers with trend above five percent would need to submit two proposals: • One that maintains benefits • Second that meets target through tighter care mgmt, lower provider reimbursements, use of limited networks, increase in point-of-service cost sharing, etc.) • Through first six months (July – January), increases in premiums ranged from 2% to more than 7% (annualized -- trend of 4% to 14%)

  7. How Premium $$ are Spent *Source: PriceWaterhouseCoopers 2006 report **Connector staff estimate based on MA premiums PEPM

  8. 3. Allow Carriers to Offer Two Bronze Plans -- Broad and Limited or Tiered Networks • Encourage carriers to offer health plans using two networks – broad and limited or tiered • Require minimum premium savings differential of at least 7.5 percent between broad and limited or tiered networks

  9. 4. Encourage Carriers to Exclude Tier 1 Drugs from Any Separate Rx Deductible • Provides enrollees with pre-deductible access to Tier 1 drugs, subject to co-pay • Improves value of the benefit with marginal impact on premium • Encourages members to use cost-effective generic drugs

  10. 5. Prohibit Industry Rate Adjustment Factor (SIC Code) in Setting Non-Group Rates • Five of six Commonwealth Choice carriers do not use industry rate factor in non-group market • Requirement would apply to carriers’ non-group products sold outside the Connector

  11. Renewal Options Not Recommended • Reduce value of Gold level plans and reduce value of Silver and Bronze level plans proportionally • Eliminate one Silver level offering for each carrier and encourage limited or tiered network

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