ANNUAL REPORT OF ALASKA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION JANUARY 1, DECEMBER 31, 2015

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1 ANNUAL REPORT OF ALASKA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION JANUARY 1, DECEMBER 31, 2015

2 ACHIA ANNUAL REPORT Executive Summary The Alaska Comprehensive Health Insurance Association (ACHIA) originated in late 1992 following creation by the Alaska State Legislature for the purpose of covering individuals who are unable to purchase major medical insurance in the private market place. The first sales occurred in The pool grew from 59 at the end of 1993 to 448 at the end of During the period 2002 through 2008 the number of individuals in force were relatively level, ranging from 469 to 510. At the end of 2008, 469 individuals were in force with ACHIA. However, following a significantly increased marketing effort in 2009 and 2010, the year end 2011 in force had risen to 525 and 542 in 2012 but falling to 498 at yearend 2013 in part in response to the Affordable Care Act (ACA) and 211 by end of In 2013, ACHIA paid $11.6 million in medical and pharmacy claims and collecting $4.4 million in premium from the policyholders, while in 2015 those numbers were $8.1 million in claims and $1.3 million in premiums. Insurance programs like ACHIA are not for profit entities; using a collaboration of public and private resources to provide a needed service to individuals whose health prevents them from getting health insurance coverage. The losses incurred by ACHIA are paid for by assessments on the private health insurers doing business in Alaska. The carriers do get some relief from the assessments since they receive a 50% offset against their premium taxes, a provision adopted by the legislature in In addition, the Federal government currently has a program which provides some help with the losses as well as a program of bonus grants for certain efforts put forth by these pools. In ACHIA s case, this bonus program has been used to develop a marketing program throughout the state and more recently premium relief. For , $334,000 was provided by the Federal program for this purpose and was used to develop video, message points, advertising time as well as a new logo. For 2013, $242,331 was provided and used to provide premium relief to all policyholders through a premium holiday for the month of October In the final year of the grant program, ACHIA received $510,509 which was used for the same purpose. ACHIA has a secondary purpose which is to provide coverage under a Federal program called HIPAA. HIPAA provides for continuity of coverage for those leaving employer group plans and are not eligible for new plans. Many, if not most, of these individuals are uninsurable as well or they would go out into the individual marketplace to purchase coverage. One reason that they might do this is that the premiums charged for the coverage under ACHIA are set at a level of above 100% of a similarly priced policy in the marketplace. It is important to note that even with this elevated premium level, ACHIA loses money on average on everyone it insures. Some of the typical illnesses insured by ACHIA include diabetes, cardiovascular/blood, weight, renal, cancer, hemophilia, end stage renal disease (ESRD), hepatitis and pulmonary. The ACHIA Board has worked hard to provide coverage to the policyholders that meet their needs. 6 Preferred Provider Organization (PPO) plans have deductibles ranging from $1,000 to $15,000, 1 non-ppo $1,000 plan, two Medicare Supplement plans and a Medicare Carveout plan are offered. At the beginning of 2009, a new PPO, First Health Choice, and a new Pharmacy Benefit Management Program (PBM), Medco - now Express Scripts, were put in place. This is an effort to save as much as possible while providing excellent service. Benefit Management Inc. from Great Bend, Kansas has been the third-party administrator since During 2009 and early 2010, the Board worked with Medco to put the new pharmacy program in place that allows policyholders to purchase their drugs at member pharmacies and reduce their claim filings. In addition, if the policyholder has already reached their deductible limit, they will only need to pay the co-pay amount. If they have already met their out of pocket limit, they will not have to pay anything. In late 2011 and early 2012, the Board worked with Medco in an effort to provide more efficient ways to provide treatment through pharmaceuticals rather than medical treatment. 2

3 The Affordable Care Act (ACA) presented the ACHIA Board with much to consider regarding the future of ACHIA as the insurance market environment changed to a guarantee issue with no preexisting conditions. However, the uncertainty of the Exchanges along with the difficulty to work through the application process coupled with general lack of knowledge of the citizens caused a number of individuals to decide to stay with the coverage they had with ACHIA. Late in 2013, the Board determined that they would commit to staying open through at least the end of The Board again made a decision in late 2014 to remain open through at least It is also the case that there is still no legislation enacted to extinguish ACHIA. CCIIO, the Federal agency implementing ACA, also opined that for at least 2014 high risk pool coverage such as ACHIA would be considered to fulfill the mandate requirement for individuals and then in early 2015, it opined that high risk pool coverage would be considered to fulfill the mandate requirement indefinitely. The Board has continued to track the situation going into Once again at the beginning of 2016, the Association continued the same as 2014 and The Legislature did not introduce any legislation that would shut ACHIA down. As this report will demonstrate, the number of people covered by the pool continues to reduce as some drop off, most likely finding other coverage in the guarantee issue environment while new entrants have dwindled to almost none. The Legislature was active in considering whether ACHIA could act as a reinsurance mechanism for the active carriers in the state. Such legislation was introduced and passed and is in the process of being implemented. Introduction The Alaska Comprehensive Health Insurance Association (ACHIA) was established by the Alaska Legislature to provide access to health insurance to all residents of the state who are unable to find or are denied health insurance or who are considered uninsurable. During 1997, legislation was passed that also made ACHIA coverage available to individuals who are considered federally eligible individuals under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Additional legislation was passed in 1999 that allowed the introduction of Preferred Provider (PPO) discount plans. Legislation in 2003 allows ACHIA to provide coverage to those individuals who are eligible for the Federal Trade Adjustment Act of saw passage of legislation that broadens the assessment impact by allowing the member organizations to offset 50% of their assessment against their premium taxes thus providing an additional source of funding, which helps to keep the plan a viable option for all Alaskans in the future. Passage of this legislation by unanimous vote in both the Alaska House and the Alaska Senate is clear indication of the importance and support that ACHIA has. ACHIA is a nonprofit incorporated legal entity established under the provisions of Alaska Statute Title 21, Chapter 55, and is exempt from the payment of fees and taxes levied by the state or any of its political subdivisions except taxes levied on real or personal property. The Plan is governed by a Board of Directors composed of seven individuals. Five board members represent participating member health insurance companies of the association approved by the Director of the Division of Insurance and two are consumers selected by the Director of the Division of Insurance. The Director or the Director's designee serves as a nonvoting ex-officio member of the Board. Effective July 1, 2002, Benefit Management became the new administrative carrier. As administrator, BMI processes applications for coverage under the plan, collects premiums, pays claims on behalf of the association and performs other administrative functions as provided in the administrative contract. Prior to that and from inception of the Plan, January 1, 1993, Aetna Insurance Company had served as the administrator of the Plan. As noted, the Plan is funded through premiums collected from insureds and assessments received from health insurers transacting business in Alaska. 3

4 At the beginning of 2015, there were 211 insureds on the plan. As of December 31, 2015, there were 145 insureds. During the year, there were 26 new issues from January 1 December 31, 2015, and 97 terminations from January 1 December 31, Since inception, 2,369 terminations have occurred. The following chart shows the distribution for reason for termination from January 1 December 31, Terminations by Cause Year End 2015 CAN'T AFFORD DECEASED MEDICARE/MEDICAID MOVED NON PAY OTHER INS. NONE GIVEN 10 DAY FREE LOOK In 2015, 26 policies were issued. As of December 31, 2015, there were a total of 145 policies in force. In-force by Year Fairbanks Zip 997 Active Policyholder 12 Insureds by Geographic Area Zip Insureds Juneau Zip Insureds Anchorage Zip Insureds Ketchikan Zip Insureds 4

5 Age Carveout Policyholders by Plan and Age at Year End 2015 Medicare Plans Trad. Plan PPO Plans Med Supp A Med Supp I Med Supp F Age $1,000 Age $1,000 $1,500 $2,500 $5,000 $10,000 $15, Total Total 5 Total TOTAL ENROLLMENT: Carveout Med Sup A Med Sup I w\o RX Med Sup F Traditional Plan $1,000 Plan $1,500 Plan $2,500 Plan $5,000 Plan $10,000 Plan $15,000 Plan Observations & Recommendations The plan experienced a downward trend from 2006 through 2008 which ended with 469 total insureds. In 2009 we began with an upward trend in part due to the new marketing program in place. We ended 2015 with 145 insureds, down about 31% from 2014 due most likely to ACA. As for claim cost, ACHIA paid claims in the amount of $8,060,278 for the time period of 1/1/15-12/31/15. This amount includes some high cost insureds who have hemophilia and continuously need very expensive infusions as well as some high cost members needing kidney dialysis. Fortunately, each identified insured of these large claim dollars has been assigned to large case management that has been successful in obtaining discounts for their medications. 5

6 Various malignancies are the diagnosis for several other insureds. 284 individuals have been identified as eligible for case management since 7/1/02. Coronary disease and diabetes have been looked at through case management as well. Numerous insureds leave the State of Alaska to seek medical care, particularly to the State of Washington. Fortunately, the PPO network provides for discounts at many commonly used facilities. Expected reasons for increased claim levels include the expiration of pre-existing condition limits as well as the initial behavioral changes that result when someone who has not had health insurance coverage for some period of time, obtains coverage and sees physicians for long standing conditions. This is exacerbated in the case of non-hipaa individuals who are eligible for ACHIA coverage since they must prove that they have significant health conditions in order to participate. The trend toward increased prescription drug costs has persisted saw very high prescription drug utilization and cost despite the use of the drug vendor PNK which provided for discounts for those using a member pharmacy. Pharmacy claims dropped from 18% to 9% in 2006 most likely due to the removal of drug benefits from the Medicare Carveout and Medicare Supplement I plans saw about 10% of the claims being pharmacy claims. In part due to the low level of acute care that was needed in 2008, the pharmacy claims reflected a much higher percentage of claims of 23%. Perhaps in part due to a new PBM, Medco, pharmacy claims dropped to 7.2% of claims in 2009 rebounding to 10.8% in 2010 then to 9.7% in In 2012, the percentage of drug usage went up to 12% which could be due to efforts to move some treatments to the pharmacy side rather than the medical side. However, drug costs went back up to 20% in Product for hemophilia insureds has also been a very costly item. Cancer and coronary disease as you will notice in the graphs to follow have been looked at through case management as well. The total savings that have been tracked by case management has been $1,738,644 from July 1, 2002 through December 31, 2015, whereas ACHIA paid $460,221 in that same time frame for those large case management services. Assessment Rates for Private Health Insurers. Since its establishment, ACHIA s assessment rates have varied due to a variety of factors such as changing premium rates, claim levels and impacts from both Federal and State legislation. Rates ranged from a low of 0.8% to a high of 2.23%. At times, Alaska s assessment rates for insurance companies have been high compared to other risk pools around the country. The assessment rate dropped in 2013 to about 1.2% due in part to the ACHIA-FED program taking a number of the higher cost individuals rather than having them come to ACHIA. Historically, the upward trend of the assessments is obvious from the table below. It should be noted that during the early years of the program, the Board s ability to anticipate the needed assessment amount caused some irregular assessment patterns. In more recent years, the Board has attempted to allocate the assessments by accounting methodology to the appropriate year of need. The following graph has been developed by actually calculating the revenue shortfall that occurred in each designated year was an unusual year in that the Board did not take the full normal assessment due to the changing enrollment of the pool. In view of the lower assessment taken in 2014, the Board did take a $4,000,000 assessment early in 2015 and an additional $6,000,000 later in the year. 6

7 $12,000,000 Allocated Assessments $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ Assessment Year Assessment Amount Allocated Amount 1993 $ 330,000 $ N/A 1994 $ 0 $ N/A 1995 $1,800,000 $ N/A 1996 $2,700,000 $ N/A 1997 $ 0 $1,200, $2,500,000 $1,500, $1,500,000 $2,500, $3,300,000 $3,300, $3,500,000 $3,500, $2,500,000 $2,500, $4,500,000 $4,913, $5,000,000 $4,041, $3,000,000 $4,429, $4,500,000 $5,912, $6,200,000 $4,996, $3,000,000 $2,549, $10,250,000 $8,802, $8,000,000 $7,710, $10,000,000 $10,633, $12,000,000 $9,817, $6,000,000 $7,698, $3,000,000 $8,228, $10,000,000 $6,333,841 During 2003 some exceptionally large claims were incurred which resulted in a sizeable increase in reserves at year end s experience was favorably improved by receiving a grant from the Federal Government in the amount of $969,110. ACHIA again received grant money in 2006 in the amount of $846,810, $516,427 in 2008 and $1,368,242 in 2009 ($170,000 of which was actually awarded in 2008 but drawn in 2009). In 2010, $842,940 was awarded although $298,355 was not spent until 2011 when a premium reduction program was instituted. Additional Federal grants were awarded for use in 2012 of $695,959, in 2013 of $668,308 and in 2014 of $510,509. For purposes of this display, grant money is included in the allocated amount above since that much more assessment would have been required without the grant monies. No Federal grant money was 7

8 Premium Strategy. High risk pool legislation across the country was never intended to result in an insurance operation that was self-sustaining and Alaska is no exception. Legislative history indicates that this fact was discussed during the deliberations of the Alaska legislation. At times, the poor claim to premium ratio (loss ratio) of the pool has been very distressing to everyone connected with the pool, particularly those not familiar with this type of legislation. But, high risk pools were developed to cover individuals who have been deemed to be essentially uninsurable by insurance carriers. If actuarially sound premiums could have been developed for these individuals, insurance carriers would have sold them appropriately priced coverage and a high risk pool would be unnecessary. These were all issues which eventually led to key elements in the Federal Affordable Care Act. As it stands now, while ACHIA premiums do support some of the cost, the loss ratio (claims divided by premiums) has generally been high, ranging from 160% to 325%. The Board has raised premiums at various times to address the challenges. However, premiums can only do so much. Individuals can only afford so much. Very specific cases can impact an entire year s loss ratio. For example, 2003 saw the loss ratio climb to around 285%. This was in part due to some very large drug claims for hemophiliacs and two organ transplants. In 2009 the 325% was reached to due an extremely large claim actually incurred in very late Alaska statute also sets a maximum ACHIA rate in order to prevent the premium costs from getting too high, This maximum premium is developed by obtaining the average standard risk premium rates of the top five insurance carriers in the state and multiplying that average by 1.5. [Legislation in 2003 reduced the original maximum of 2.0, i.e., 200%, to 1.5.] Through the years the Board has adjusted the premiums within those guidelines. For the year 2015 they were set at an average 1.30 (130%) for the major medical plans including Medicare Carveout and 149% for the other Medicare plans. Over the twenty-three years that ACHIA has existed, the Board has used several strategies in an effort to manage ACHIA s financial condition. These include (1) implementation of higher deductible/out-of-pocket maximum plans that are priced at lower rates to encourage individuals to manage their costs better (a $15,000 deductible plan was added beginning in 2008 and there are now 12 individuals with $10,000 deductible plans and 12 with $15,000 deductible plans), (2) exploring options for disease management, case management and pharmaceutical management, (3) raising the premium levels to offset inflation, (4) requiring, in cooperation with the Administrator, better and more timely financial reports with which to monitor the plan, (5) establishment of more efficient and appropriate assessment procedures and (6) development of a PPO plan that takes advantage of hospital discounts. This later approach required legislation which was enacted during During 2000, the Board developed PPO plans which were implemented on January 1, The $500 deductible non-ppo plan was increased to $1000 in 2002, and remains a straight indemnity plan with an 80/20 coinsurance level for all covered benefits over the $1000 up to the out-of-pocket maximum of $2500. All other non-medicare related plans are now on a PPO basis with in-network benefits covered at the 80/20 level while out-of-network benefits are 60/40 up to the out-of-pocket maximum. In 2002, the out-of-pocket maximum was increased on most plans. Also, following a great deal of input from the consumer representatives on the Board as well as policyholders that were Medicare eligible, the Board implemented a Medicare Carveout plan during This product better met the needs of individuals who wanted to have better prescription drug coverage within their plan but were frustrated by the fact that Medicare did not provide such on an outpatient basis. At the end of 2003, 51 individuals had selected the plan compared to 12 on Plan A and 13 on Plan I of the Medicare Supplement products. Effective January 1, 2003, the Carveout Plan was modified to ensure an equitable out of pocket for each insured enrolled. Effective January 1, 2003, only the amounts that insureds are actually responsible for paying and for which ACHIA is not responsible, would be applied to the deductible and out of pocket. That meant that, unlike in the past, the amount that Medicare paid on an insureds behalf would NOT be applied to the deductible and out of pocket. 8

9 amounts that insureds are actually responsible for paying and for which ACHIA is not responsible, would be applied to the deductible and out of pocket. That meant that, unlike in the past, the amount that Medicare paid on an insureds behalf would NOT be applied to the deductible and out of pocket saw the introduction of Medicare Part D by the federal government. As a result of that availability, the drug benefit was removed from the Carveout plan. Medicare Supplement Plan I was eliminated for new sales being replaced by Plan F. Since the drug benefit needed to be removed from Plan I due to the federal legislation, three choices were offered to the 11 Plan I enrollees at the end of chose to move to new Plan F, 4 chose to keep Plan I with the drug benefits removed (only one remains) and 3 chose to move to the Carveout which no longer has drugs either. Federal Health Care Reform In early 2010, the ACHIA Board was asked by the Governor to help set up and run a program funded by the Federal government which is called ACHIA-FED. Additional information regarding the ACHIA- FED program can be found toward the back of this report. However, no noticeable impact was seen on the regular ACHIA program, i.e., enrollment did not decrease during that time although it may have syphoned off some of the higher risks. In 2012, the legislature passed a bill authorizing ACHIA to set up a reinsurance mechanism to enable carriers to once again issue policies to individuals under the age of 19. The end of 2013 in-force number began to show the impact of guaranteed open enrollment that would begin in 2014 in the marketplace with numbers declining by 7%. By yearend 2014, enrollment had dropped to 211 which is 39% of the enrollment at the end of This program expired at the end of March Summary In summary, the Board feels that ACHIA has served a useful purpose to the citizens of Alaska. With the HIPAA legislation, ACHIA provided a vehicle which allowed the private insurers continued flexibility to provide private health insurance to the citizens of Alaska as well as allow them to help fund ACHIA. The ACHIA Board has revised the Plan of Operation, application, contracts and other support information continuously over the years. The Board seeks input, dialogue and suggestions from the policyholders, the public, the insurance industry, legislators and others who are interested in reducing the number of uninsured in the State of Alaska. Late in 2013, the Board determined that they would commit to staying open through at least the end of The Board again made a decision in late 2014 to remain open through at least It is also the case that there is still no legislation enacted to extinguish ACHIA. CCIIO, the Federal agency implementing ACA, also opined that for at least 2014 high risk pool coverage such as ACHIA would be considered to fulfill the mandate requirement for individuals and then in early 2015, it opined that high risk pool coverage would be considered to fulfill the mandate requirement indefinitely. CCIIO has indicated that the grants in 2014 would be the last grants awarded under the program. Note: For a more extensive history of ACHIA prior to 2001 please see the 2000 Annual Report that is available on or from the Executive Director. What are the Benefits? The lifetime maximum benefit was originally established at $1,000,000 for all injuries and sicknesses combined. Following consideration of changes to benefit levels as well as the increasing cost of health care over the years, the Board increased the maximum to $2,000,000 effective May 11, 2006 to better fit with the typical major medical product sold in the marketplace. And they raised the maximum further to $3,000,000 in June The Plan provides benefits which include inpatient and outpatient hospital care, office visits, surgery and anesthesia, x-ray and lab, radiation and chemotherapy, ambulance, oxygen, durable medical equipment, prosthetics, home health care, mammography, hospice services, prescription drugs, phenylketonuria treatment, treatment for complications of pregnancy, mental or nervous, alcoholism and drug abuse. 9

10 What Is Not Covered? The following is a brief list of expenses not covered under the Plan and may not reflect the full extent of the policy limitations: services that are not medically necessary, well baby care, eyeglasses, contact lenses, hearing aids, dental care, acupuncture therapy, routine physical or preventive exams, normal pregnancy, TMJ, any treatment of obesity, experimental procedures (including related services, drugs and other supplies), and reconstructive or cosmetic surgery. Does a Waiting Period Apply? The Plan will not cover expenses incurred during the first six months after the policy date for a preexisting condition. Payments will be in accordance with the provisions of the policy, however, if the person had coverage under another medical plan which was involuntarily terminated and coverage is applied for under ACHIA within 31 days after such involuntary termination, the preexisting condition waiting period will apply only to the excess, if any, of six months over the time coverage was in force under the prior plan. Additionally, federally eligible individuals under the HIPAA legislation will have all waiting periods and preexisting condition limitations waived provided they apply for ACHIA coverage within 90 days after coverage under an employer-sponsored group. Who Is Eligible? Any person is eligible for the ACHIA plan if he or she: is not currently covered by any other health plan or health insurance policy; is not eligible for coverage under AS 21.56, Small Employer Health Reform; has been a resident for the past 12 months and continues to be a resident of Alaska; and *at least one of the following: - has received from one health insurer notice of rejection for health insurance dated within the last six months; [1999 legislation changed this from two to one rejection] - has received restrictive riders that substantially reduce coverage - if you are under age 65, were covered by Medicare and were eligible due to disability or ESRD; or - has any of the conditions listed below: Acquired Immune Deficiency Syndrome Malignant Tumor (if treatment within last 4 yrs) Alzheimer s Mental Retardation Angina Pectoris Metastatic Cancer Anorexia Nervosa Motor or Sensory Aphasia Arteriosclerosis Obliteran Multiple or Disseminated Sclerosis Artificial Heart Valve Muscular Atrophy or Dystrophy Ascites Myasthenia Gravis Brain Tumors Myotonia Cardiomyopathy Obesity - Morbid Cerebral Palsy Open Heart Surgery Chronic Pancreatitis Paraplegia or Quadriplegia Cirrhosis of the Liver Parkinson's Disease Coronary Insufficiency Peripheral Arteriosclerosis (if treatment Coronary Occlusion within last 3 yrs) Crohn's Disease Poliomyelitis Cystic Fibrosis Polyarteritis (Periarteritis Nodosa) Dermatomyositis Polysystic Kidney Diabetes Postero-lateral Sclerosis Epilepsy Psychotic Disorders Friederich's Disease Rheumatoid Arthritis Heart Disorders Sickle Cell Anemia Hemophilia Silicosis 10

11 Hepatitis C (Active) (1998) Splenic Anemia (True Banti's Syndrome) HIV+ Still's Disease Hodgkin's Disease Stroke (CVA) Huntington's Chorea Syringomyelia Hydrocephalus Tabes Dorsalis (locomotor Ataxia) Intermittent Claudication Thalassemia (Cooley's or Mediterranean) Kidney Failure Anemia Topectomy and Lobotomy Lead Poisoning w/ Cerebral Involvement Ulcerative Colitis Leukemia Wilson's Disease Lupus Erythematosus Disseminate Individuals covered by Medicare may still be eligible for coverage under this plan. Effective July 1, 1997, a federally eligible individual could purchase ACHIA coverage provided they are a resident of Alaska at the time of application. ACHIA is also available to those individuals who qualify under the federal Health Coverage Tax Credit program. Policyholder Profile Six PPO deductible options were available during 2015 as well as one non PPO deductible option. The $15,000 plan was added as a new plan beginning January 1, In addition, Medicare Supplements Plan A, Plan F and a Carveout Plan were also available. Medicare Supplement Plan I no longer accepts new enrollment due to the implementation of Plan F. As of December 31, 2015, the plan insured the following: 2015 Year End Active Policyholders by Plan Type PPO Plans Non PPO Medicare Supp Medicare Carveout Deduct. 1,000 1,500 2,500 5,000 10,000 15,000 1,000 A I F C/O Total Issues ,500 Ded 1,500 Ded 1,000 Ded 1,000 Ded. - Trad. 15,000 Ded 2015 Enrollment 5,000 Ded 10,000 Ded Med Supp A Med Supp I Med Carveout Med Supp F 11

12 The following chart shows the average years our 2015 members have been with ACHIA Average Years Enrolled in ACHIA 40 # of Insureds Primary Medical Condition Applicants applying for ACHIA are asked to identify their primary medical condition. The most frequently listed category includes conditions related to a history of diabetes. The next most frequently listed condition is cardiovascular/blood. These conditions, as well as experience from member companies, make up the list of specified conditions for which eligibility in ACHIA will be considered without the normal requirement that individuals have at least one rejection for coverage in the last six months. Insureds who qualified for ACHIA coverage through HIPAA eligibility provisions are counted in the tables and charts, including the primary medical condition chart. 12

13 Policyholders All Issued Years Diabetes Cardiovascular/Blood Unknown Weight Renal Cancer Neurological Hepatitis Muscular/Skeletal Arthritis Pulmonary AIDS/HIV Psychological Tumor Gastrointestinal General Other Alcohol/Drug Abuse Liver Multiple Sclerosis Congenital Condition Crohn's Disease Ulcerative Colitis Lupus Abdomen/Pelvis Raynauds Disease Neck/Throat 13

14 Policyholders 2015 Issued Federally Defined Renal AIDS/HIV Diabetes Multiple Sclerosis Stroke Leukemia Denial Letter 5 0 Claims & Providers The following details the distribution of claim payments first as a percentage of dollars paid to provider groups and second as a percentage of the number of claims to providers Claims Paid 2015 Dollars Paid 35% 28% 13% 24% 15% 18% 10% 57% Hospital Other Hospital Other Pharmacy Physician Pharmacy Physician 14

15 2015 Medical and Pharmacy Claims Combined For the calendar year 2015, a total of $8,068,675 was paid in both pharmacy and medical claims. $1,000 $1,500 $2,500 $5,000 $10,000 $15,000 $1000 Traditional Plan A Plan F Plan I Carveout Pharmacy $102,588 $95,237 $259,820 $540,094 $129,994 $6,347 $56,261 $0 $0 $0 $0 Medical $29,885 $8,528 $1,928,721 $495,333 $288,050 $876,980 $2,325,565 $34,324 $448,469 $4,060 $438,418 Total $132,473 $103,765 $2,188,541 $1,035,427 $418,044 $883,327 $2,381,826 $34,324 $448,469 $4,060 $438,418 Medical and Pharmacy Claims Paid by Plan $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- $1000 Deductible $1500 Deductible $2500 Deductible $5000 Deductible $10000 Deductible $15,000 Deductible Traditional $1,000 Med Supp A Med Supp F Med Supp I Carveout Pharmacy Medical Medical and Pharmacy Claims Paid by Plan Comparison Medical and Pharmacy Claims Paid by Plan (PMPM Basis) $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- $8,118 $948 Non Medicare Plans Medicare Plans 15

16 Rank 2015 Top Providers Provider Name # of Claims Paid Amount 1 RENAL CARE GROUP ALASKA INC 369 $ 2,836, LIBERTY DIALYSIS ALASKA 221 $ 743, PROVIDENCE HEALTH & SERVICES WASHINGTON 322 $ 536, UNIVERSITY OF WASHINGTON 30 $ 324, UCSD MEDICAL CENTER 1 $ 291, GALEN HOSPITAL ALASKA INC 34 $ 207, SWEDISH HEALTH SERVICES 6 $ 126, AIRLIFT NORTHWEST 2 $ 95, ANCHORAGE NEUROSURGICAL ASSOCIATES 21 $ 86, SPRING VALLEY HOSPITAL MEDICAL CENTER 1 $ 75, MAT-SU VALLEY MEDICAL CENTER LLC 59 $ 71, ORTHOPEDIC PHYSICIANS ANCHORAGE 91 $ 67, CATHOLIC HEALTH INITIATIVES COLORADO 3 $ 55, DIALYSIS ASSOCIATES OF ALASKA 319 $ 50, COASTAL RADIATION ONCOLOGY CENTER 39 $ 48, ACENT ALASKA CENTER FOR OTOLARYNOLOGY 3 $ 41, SOUTH PENINSULA HOSPITAL INC 87 $ 41, ANDRZEJ R MACIEWSKI MD 28 $ 38, ASSOCIATION OF UNIVERSITY PHYSICIANS 119 $ 37, ARCTIC SPINE LLC 4 $ 36, FRANKLIN E ELLENSON MD 91 $ 35, FRESENIUS MEDICAL CARE 63 $ 33, ALASKA SURGERY CENTER 8 $ 28, PROVIDENCE ANCHORAGE ANESTHESIA 35 $ 26, AROM INC 6 $ 26, Total 1,962 $ 5,964,

17 Rank 2015 Top Diagnosis Report Diagnosis Code # of Claims Paid Amount 1 END STAGE RENAL DISEASE 1348 $ 3,571, AMI INFERIOR WALL, INIT 1 $ 270, ACQ SPONDYLOLISTHESIS 28 $ 234, AC ON CHR SYST HRT FAIL 2 $ 180, AORTIC VALVE DISORDER 18 $ 129, PATH FX VERTEBRAE 4 $ 114, CARDIOGENIC SHOCK 20 $ 105, LOC OSTEOARTH NOS-PELVIS 1 $ 86, INTESTINAL OBSTRUCT NEC 1 $ 69, LUMBAR DISC DISPLACEMENT 23 $ 54, OSTEOARTHROS NOS-SHLDER 10 $ 51, MAL NEO OROPHARYNX NEC 1 $ 50, RHEUMATOID ARTHRITIS 32 $ 46, MALIG NEO OROPHARYNX NOS 2 $ 41, FEM GENITAL SYMPTOMS NOS 12 $ 39, ULCERATVE COLITIS UNSPCF 6 $ 39, SECONDARY MALIG NEO BONE 10 $ 38, LOC OSTEOARTH NOS-ANKLE 14 $ 38, CERVICALGIA 66 $ 34, LUMBAGO 115 $ 33, COMP-REN DIALYS DEV/GRFT 68 $ 31, AC/CHR SYST/DIA HEART FAILURE 3 $ 30, LOC PRIM OSTEOART-UP/ARM 6 $ 25, MALIGNANT NEOPLASM OF OVERLAPPING SITES OF TONSIL 24 $ 22, SPINAL STENOSIS-LUMBAR 15 $ 22, COAGULAT DEFECT NEC/NOS 1 $ 20, SIX DEGREE HEALTH VENDOR 1 $ 20, MULTIPLE SCLEROSIS 81 $ 19, CONSTIPATION NOS 7 $ 18, BACKACHE NOS 56 $ 17, Total 1,976 $ 5,460,

18 ALASKA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION (ACHIA) MAJOR MEDICAL PLANS 2015 Monthly Individual Premium Rates Plan Type: Attained Age¹ Traditional Non-PPO $1,000 Ded Plan F PPO PPO PPO PPO PPO PPO $1,000 Ded Plan A $1,500 Ded Plan B $2,500 Ded Plan C $5,000 Ded Plan D $10,000 Ded Plan E $15,000 Ded Plan G 0-18 $583 $530 $467 $356 $251 $170 $ $922 $838 $739 $563 $398 $269 $ $932 $847 $746 $569 $402 $272 $ $942 $856 $754 $575 $406 $275 $ $951 $865 $762 $581 $410 $277 $ $968 $880 $775 $591 $417 $282 $ $984 $894 $788 $600 $424 $287 $ $1,000 $909 $801 $610 $431 $292 $ $1,016 $924 $814 $620 $438 $296 $ $1,032 $939 $827 $630 $445 $301 $ $1,055 $959 $845 $644 $455 $308 $ $1,078 $980 $863 $658 $465 $314 $ $1,102 $1,002 $883 $673 $475 $321 $ $1,126 $1,024 $902 $687 $486 $328 $ $1,150 $1,046 $921 $702 $496 $335 $ $1,186 $1,078 $950 $724 $512 $346 $ $1,223 $1,112 $980 $747 $528 $357 $ $1,262 $1,147 $1,011 $770 $544 $368 $ $1,303 $1,184 $1,043 $795 $562 $380 $ $1,343 $1,221 $1,076 $820 $579 $392 $ $1,395 $1,268 $1,117 $851 $602 $407 $ $1,447 $1,315 $1,159 $883 $624 $422 $ $1,502 $1,365 $1,203 $917 $648 $438 $ $1,558 $1,417 $1,248 $951 $672 $454 $ $1,618 $1,471 $1,296 $988 $698 $472 $ $1,683 $1,530 $1,348 $1,027 $726 $491 $ $1,751 $1,592 $1,402 $1,069 $755 $510 $ $1,820 $1,655 $1,458 $1,111 $785 $531 $ $1,893 $1,721 $1,516 $1,156 $817 $552 $ $1,969 $1,790 $1,577 $1,202 $849 $574 $ $2,066 $1,878 $1,655 $1,261 $891 $602 $ $2,170 $1,973 $1,738 $1,324 $936 $633 $ $2,277 $2,070 $1,823 $1,390 $982 $664 $ $2,390 $2,173 $1,914 $1,459 $1,031 $697 $ $2,508 $2,280 $2,009 $1,531 $1,082 $731 $ $2,616 $2,379 $2,096 $1,597 $1,129 $763 $ $2,730 $2,482 $2,186 $1,666 $1,177 $796 $ $2,848 $2,589 $2,281 $1,738 $1,228 $830 $ $2,971 $2,701 $2,379 $1,813 $1,281 $866 $ $3,099 $2,817 $2,482 $1,891 $1,337 $903 $ $3,214 $2,921 $2,574 $1,961 $1,386 $937 $ $3,332 $3,029 $2,668 $2,034 $1,437 $971 $ $3,455 $3,141 $2,767 $2,109 $1,490 $1,007 $ $3,581 $3,255 $2,868 $2,186 $1,545 $1,044 $ $3,714 $3,376 $2,974 $2,267 $1,602 $1,083 $ $3,832 $3,483 $3,069 $2,339 $1,653 $1,117 $ $3,926 $3,569 $3,144 $2,396 $1,693 $1,145 $973 ¹Age/Rate is calculated as age upon effective date, then attained age each year on January 1st, thereafter. ACHIA 2015 Non-Medicare Premium Rates rev

19 ALASKA COMPREHENSIVE HEALTH INSURANCE ASSOCIATION ACHIA MEDICARE SUPPLEMENT PLANS 2015 Monthly Individual Premium Rates Attained Age¹ Plan A Plan F 0-64 $298 $ $200 $ $207 $ $217 $ $228 $ $234 $ $241 $ $248 $ $255 $ $260 $ $265 $ $270 $ $275 $ $280 $ $284 $ $287 $ $298 $445 MEDICARE CARVE-OUT PLAN 2015 Monthly Individual Premium Rates Attained Age¹ Rates $151 $423 ¹Age/Rate is calculated as age upon effective date, then attained age each year on January 1st thereafter ACHIA 2015 Medicare Premium Rates rev

20 Financial This section details the policy year financial experience for ACHIA. Statement 1 is the ACHIA balance sheet for years ended 2015 and Statement 2 shows the revenues, expenses and changes in the fund balance. ACHIA began 2015 with surplus of $6,955,444 and ended with surplus of $2,237,295 net of reserves or $4,421,021 in cash. Premiums for the year were $1,357,503 and expenses including claims were $7,691,344. Statement 3 shows the cash flow for 2015 and It should be noted that in 2010, ACHIA received a total of $842,940 through the Federal TAA grant monies to help offset losses and to support a premium holiday program. Due to continuing resolutions in the Federal budget process, awards for 2011 were delayed until early ACHIA was awarded $695,960; $449,652 of which was used to reduce needed assessments and the remaining $246,308 was to be used for other purposes which are provided for in the grant program legislation. ACHIA was again awarded additional monies for use in 2013, $668,308 in total, $425,977 used in lieu of assessments and $242,331 for a premium holiday. ACHIA received a total of $510,509 in This program ended at the end of Federal Health Care Reform ACHIA-FED In early 2010, the ACHIA Board was asked by the Governor to help set up and run a program funded by the Federal government which is called ACHIA-FED. This program started up August 1, 2010 and provided coverage to individuals who had been uninsured for at least six months, had a pre-existing condition (or had been declined by an insurer carrier), was in the United States legally and was a resident of Alaska. The premium rates were set at standard new business rates. The program was initially scheduled to end December 31, 2013 when other Federal reforms were scheduled to kick in. It is important to note that no state funds were involved with the ACHIA-FED program. ACHIA-FED offered 1 PPO plan with a $1,500 deductible which was essentially the same $1,500 deductible plan offered by ACHIA. ACHIA-FED used the same Board, Executive Director, and Administrator as well as networks, PPO and PBM, First Choice Health and Express Scripts, as ACHIA. Initially, Alaska was awarded $13 million for the 42-month period. By year end 2010, 25 individuals were enrolled in ACHIA-FED and these individuals had incurred $370,000 in claims. At the beginning of 2014, there were 32 insureds on the plan. The plan was scheduled to end on December 31, 2013 but was extended through February 28, 2014 when the last policyholder non-renewed. During 2013, there were 19 new issues, 34 terminations and 2 reinstatements. Over the life of the program, 143 different individuals were enrolled at some point in the Federal plan. $17,475,842 in claims was paid out, $1,605,737 in premiums was received and ACHIA-FED drew down $15,870,105 from its Federal account. By March 1, 2015, all policyholders had dropped their coverage knowing that the program would terminate on March 31. This concluded the program. The Board feels that the program was a success for the citizens of Alaska. 20

21 Alaska Comprehensive Health Insurance Association 2015 Board of Directors BOARD MEMBERS J. Brian Angel, Chairperson AFLAC 1932 Wynnton Road Columbus, GA Ph: (706) Fax: (706) Shawn Pollock, Vice Chair Mutual of Omaha Insurance Company Mutual of Omaha Plaza Omaha, NE Ph: (402) Fax: (402) Jim Grazko, Secretary-Treasurer Premera Blue Cross/Blue Shield of Alaska 2550 Denali St., Suite 1404 Anchorage, AK Ph: (425) Fax: (425) Jason R. Gootee Moda Health Director, Alaska Sales and Service 510 L Street Anchorage, AK x jason.gootee@modahealth.com Non-Board Members Cecil Bykerk,Executive Director 9643 Oak Circle Omaha, NE Ph: (402) Cell: (402) Fax: (402) oakoffice1@cox.net Chester Lozowski Continental General Insurance Group Patriot Way Huntley IL Ph: (224) lozowski@earthlink.net Marilyn W. Kasmar, RNC, MBA Consumer Advocate 334 W. 11 th Avenue Anchorage, AK Mona McAleese Consumer Advocate Heritage Road Anchorage, AK Sarah Bailey Director s Designee Ex-officio Member State of Alaska Division of Insurance 333 Willoughby Juneau, AK Ph: (907) Fax: (907) Sarah.Bailey@alaska.gov Shauna Nickel State of Alaska Division of Insurance 550 West 7 th Avenue, Suite 1560 Anchorage, AK Ph: (907) Fax: (907) shauna.nickel@alaska.gov 21

22 COMMITTEES June 23, 2015 ACTUARIAL COMMITTEE Jim Grazko, Chair Peggy Onstott Cecil Bykerk ADVERTISING & COMMUNICATIONS COMMITTEE Shawn Pollock, Chair Marilyn Kasmar Mona McAleese Debbie McCormick Shauna Nickel Cecil Bykerk AUDIT COMMITTEE Jim Grazko, Chair Shawn Pollock GRIEVANCE COMMITTEE Shawn Pollock, Chair Jason Gootee Jim Grazko Mona McAleese Cecil Bykerk Brian Angel (ex-officio) POLICY COMMITTEE Jim Grazko, Chair Jason Gootee Marilyn Kasmar Katie Campbell Sarah Bailey Brian Angel (ex-officio) NOMINATING COMMITTEE Shawn Pollock, Chair Brian Angel 22

23 Alaska Comprehensive Health Insurance Association Balance Sheets - Statement 1 December Assets Cash $ 7,193,790 $ 4,421,021 Premiums receivable 6,537 50,388 Due from ACHIA-FED Prepaid expenses 18,260 18,449 Total assets $ 7,218,587 $ 4,490,183 Liabilities and unassigned surplus Reserve for unpaid claims and claims adjustment expense $ 1,196,000 $ 2,080,000 Unearned premiums 91, ,459 General expenses due and accrued 12,567 8,104 Other liabilities 15,010 5,325 Total liabilities 1,315,048 2,252,888 Unassigned surplus 5,903,539 2,237,295 Total liabilities and unassigned surplus $ 7,218,587 $ 4,490,183 See accompanying notes and report of independent auditors. 23

24 Alaska Comprehensive Health Insurance Association Statements of Operations and Unassigned Surplus - Statement 2 Years ended December Operating revenues: Premiums earned $ 1,357,503 $ 2,033,130 Operating expenses: Policy benefits incurred 7,176,314 9,733,491 Plan administration fees 248, ,128 Other general and administrative expenses 266, ,188 7,691,344 10,261,807 Operating loss (6,333,841) (8,228,677) Non-operating revenues and expenses: Federal grant awards - 510,509 Investment income ,609 Loss before assessments (6,333,756) (7,718,068) Assessments 10,000,000 2,999,919 Change in unassigned surplus 3,666,244 (4,718,149) Unassigned surplus at beginning of year 2,237,295 6,955,444 Unassigned surplus at end of year $ 5,903,539 $ 2,237,295 See accompanying notes and report of independent auditors. 24

25 Alaska Comprehensive Health Insurance Association Statements of Cash Flows - Statement 3 Years ended December Operating activities Premiums collected $ 1,336,270 $ 1,912,752 Benefits paid (8,060,278) (10,227,490) General administrative expenses paid (503,308) (533,584) Cash used by operating activities (7,227,316) (8,848,322) Investing activities Interest income Cash provided from investing activities Financing activities Assessments collected 10,000,000 2,999,919 Federal grant receipts - 752,840 Cash provided by financing activities 10,000,000 3,752,759 Net (decrease) in cash 2,772,769 (5,095,463) Cash at beginning of year 4,421,021 9,516,484 Cash at end of year $ 7,193,790 $ 4,421,021 See accompanying notes and report of independent auditors. 25