Aftermath: Policies and Procedures following the Blue Cross Blue Shield of Massachusetts DOI Rate Settlement

As you read in our last post. Blue Cross Blue Shield of Massachusetts has settled with the Massachusetts Division of Insurance. They’ve agreed on new rates they can charge their policy holders who renewed on 4/1/10 through the present day – http://bit.ly/adztWw. If you renewed this year anytime after 4/1/10 you’ll most likely be affected by this with higher premiums moving forward.

I’ve since spoken to reps at Blue Cross to find out how this will affect our clients currently with Blue Cross with renewal dates in the affected time period. They’ve given me specific directions which I would like to share in today’s blog post.

Essentially, they’ve broken down their policies and procedures into three different groups:

-          April 1 , 2010 – July 31, 2010 Renewals

-          August 1, 2010  - August 31, 2010 Renewals

-          September 1 – Present Day Renewals

April 1 , 2010 – July 31, 2010 Renewals

Blue Cross has made this group the first priority in communicating new medical insurance rates. They’re currently working on calculating rates for all groups with renewals in this time period and are aiming to get them out the door by Wednesday, 8/18/10. These rates will go into effect on 9/1/2010. Once a group has received their new rates, they’ll have 60 days to decide if they’d like to switch plan designs within Blue Cross. If the group decides to make a plan design switch, Blue Cross will implement the changes 30 days from the decision date.

Examples:

If you’re renewal date was anywhere between 4/1/10 and 7/31/10, you can expect to receive your new rates on 8/18/2010 which will become effective as of 9/1/2010. (Since you’re September bill will most likely have already been generated by then, a retroactive adjustment including the additional premium for September should be expected on your October bill. The September invoice should be paid as billed).

You’ll have 60 days from the date you found out (if its 8/18/10 as Blue Cross has projected you’ll have until 10/17/10 to decide if your company will make a plan design change within Blue Cross). If you decide anytime within this 60 day period to make a change, that change won’t become effective until 30 days after the request. A few scenarios:

-          If the group decides to make a plan design change on the day it finds out what it’s new rates are (8/18/10 in this example) the change won’t become effective until 9/17/10 (30 days). Since the new rates for your old plan become effective on 9/1/10, the group would have to pay the higher rate for this coverage through the new effective date of 9/17/10.

-          If the group chooses to wait until the last possible date to make a switch (10/17/10 in this example), that change won’t become effective until 11/16/10 resulting in your group being billed at the higher new rate for the old plan through 11/16/10.

-          If the group decides to not make a change in plan design, nothing needs to be done on the carrier end. You may just want to contact your payroll vendor if you’re planning to adjust employee withholdings to maintain an agreed upon employer/employee cost share percentage.

In all cases, you’re anniversary date will remain the same and Blue Cross will not retroactively bill back past September 1, 2010 for any lost premiums during the April – July months of lower interim rates.

August 1, 2010 – August 31, 2010 Renewals

As the groups that renewed their medical insurance in April, May, June and July are scheduled to receive their premium increases relatively soon as mentioned above; groups that renew in the month of August actually won’t receive their premium increases until sometime in the first two weeks of September. These rates will go into effect on 9/1/2010 however. Once a group has received their new rates, they’ll have 60 days to decide if they’d like to switch plan designs within Blue Cross. If the group decides to make a plan design switch, Blue Cross will implement the changes 30 days from the decision date.

Examples:

If you’re renewal date was 8/1/2010, you can expect to receive your new rates sometime between 9/1/2010 – 9/14/2010. These rates will become effective as of 9/1/2010. (Since you’re September bill will have already been generated and most likely paid by then, a retroactive adjustment including the additional premium for September should be expected on your October bill. The September invoice should be paid as billed).

You’ll have 60 days from the date you found out what your new medical insurance rates are to decide if your company will make a plan design change within Blue Cross. For example, if your group finds out about its premiums on 9/14/10, you’ll have until 11/13/10 to make a plan design switch.  If you decide anytime within this 60 day period to make a change, that change won’t become effective until 30 days after the request. A few scenarios:

-          If the group decides to make a plan design change on the day it finds out what it’s new rates are (we’ll use 9/14/10 on this example) the change won’t become effective until 10/14/10 (30 days). Since the new rates for your old plan become effective on 9/1/10, the group would have to pay the higher rate for this coverage through the new effective date of 10/14/10.

-          If the group chooses to wait until the last possible date to make a switch (11/13/10 in this example), that change won’t become effective until 12/13/10 resulting in your group being billed at the higher new rate for the old plan through 12/13/10.

-          If the group decides to not make a change in plan design, nothing needs to be done on the carrier end. You may just want to contact your payroll vendor if you’re planning to adjust employee withholdings to maintain an agreed upon employer/employee cost share percentage.

In all cases, you’re anniversary date will remain the same and Blue Cross will not retroactively bill back past September 1, 2010 for any lost premiums during the April – July months of lower interim rates.

September 1, 2010 – Present Day Renewals

As of today, rates for 9/1/10 medical insurance renewals and later are updated in the system and available for viewing. You should consult your broker to find out what these updated rates are so they can help you make a decision on whether or not to switch plan designs within the carrier.

You should also consider other insurance companies at this time the same way you would during a normal renewal. Keep in mind that all carriers require that all applications, enrollment forms and payment be submitted 30 days in advance of the proposed Effective date. Since we’re already past the 30 day window for 9/1/10, it would still makes sense to look at the other carriers because their new business rates will remain the same throughout the month of September. So even if the effective date ends up being later in the month, this shouldn’t have an effect on the rates (just the Effective Date). This gives groups approximately 13 days to gather quotes, make decisions and submit paperwork before the end of the month. 13 days gets you to September 25^th (generally the last possible September Effective date for most carriers).

I’m planning to post similar policies and procedures for the other major health insurers as soon as I can. If you have any questions on any of this or if you have a related question that we didn’t answer in this post, please don’t hesitate to reach out as we’re happy to be a resource for you.

Ryan P. McDermott

Ceasefire between the Insurance Companies and the Massachusetts Division of Insurance?

As many of you have probably read, all of the major carriers in Massachusetts have settled with the Division of Insurance on medical insurance rates with the most recent settlement coming this past week with Blue Cross Blue Shield of Massachusetts, the State’s largest medical insurer. If you haven’t been following this, check out these Boston Globe articles highlighting each of the three major carriers rate dispute settlements:

- Blue Cross Blue Shield of Massachusetts –  http://bit.ly/adztWw

- Tufts Health Plan - http://bit.ly/bZLSsX

- Harvard Pilgrim Health Care – http://bit.ly/ca4Fcc

The settlements have solved some short term issues for the carriers in that they were able to increase their rates somewhat to keep up with the increased costs for services they claim their members rack up at high cost providers. Small employers, while having their rates increased slightly (anywhere from .5% – 12 % amongst all major carriers) avoided the colossal increases that were mentioned back in January (well over 25% in some cases). And with the current legislation on the Governor’s desk (awaiting signature) touted to be a major step towards containing long term healthcare costs (Here’s an article summarizing it – http://bit.ly/bf4Ers) should we be celebrating that we’re out of the dark with healthcare concerns in Massachusetts? I say far from it. 

My prediction is that this cease fire we’re seeing between the insurance companies and the Division of Insurance is about as temporary as a ceasefire between the two spies in the famous Mad Magazine comic strip Spy vs. Spy.  We’ll see a major change in the Massachusetts health insurance landscape in the coming months and years with the current legislation awaiting signature  alone. (I’ve read through this bill a few times and will dedicate an entire post to it soon.)

In the end there will likely be material changes to employee benefits and it’s important for employers to track this. Follow our blog, tweet with us, friend us on Facebook and/or connect with me on Linkedin below to get the latest news along with our advice on best practices:

                                

The technical aspect of this post deals with the aftermath of the settlements. If you had a medical insurance renewal anytime after 4/1/2010, you’re rates will most likely change in the next month (if they haven’t changed allready). If you don’t know what your rates are changing to, this week should be the week you find out so you can begin to execute your game plan.

Hopefully, you used some sort of metric at renewal where you either began to bank savings for a projected rate increase or used that projection to pass on a higher premium share to your employees. You’ll be happy to know that all of the carriers, while increasing their premiums moving forward, will not be retroactively charging back for the months of lost premium increases. So if you were banking money all this time, you won’t have to spend this on retroactive premium increases and can deploy the savings elsewhere. If you passed on premium increases to the employees and in turn saved money on the companies health care outlay, you can now calculate how much you saved and either bonus the money to your employees in some way or use the savings you received to not increase the premium share any further with the rate increase.

While this news requires technical analysis and financial changes this should also be used as an opportunity to communicate with your employee on their benefits by giving them some background on what’s been happening and how you’ve done your due diligence to make wise and well thoughtout decisions on behalf of their corporate benefits. Rely on your broker and/or representatives from your Insurance company for assistance in this regard. Invite them in to make presentations along side management or at least help you draft communications to your employees. By educating the employees and answering the questions they have honestly and completely, they’ll not only gain clarity on any uncertaininties they’ve had from following this in the news themselves, but they’ll also feel that the company is doing everything in it’s power to make wise benefits decisions while engaging them in the process.

These next few years could prove to be particularly challenging with contentious health care reform at both the state and national level. Employee Benefits and group medical insurance, as I said, will likely experience drastic changes and employee communication will become more and more important in maintaining morale as changes are implemented.

If you have any questions on what’s happening or would like to bounce an idea off of us, please feel free to consider us a resource by reaching out or connecting with us.