2. MINUTES of SEPTEMBER 9, 2004, and OCTOBER 15, 2004

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1 Washington State Health Insurance Pool Board Meeting Minutes, Thursday, November 11, 2004, 8:30 a.m. to 12:30 p.m. Westin Hotel, Seattle St. Helen s Room DRAFT Board Members Present: Bob Appel, Michael Arnis, Patti L. Carter, Sean Corry, Bernie Dochnahl, Bob Jaffe, M.D., Rob Kuecker, Pat Maddock, Bob Moore, and Beth Pitt Board Members Absent: David Toomey. Also Present: Brad Berg, Foster Pepper & Shefelman, Legal Counsel; James Reed, Milliman, USA; Kären Larson, WSHIP Executive Director; Anne Mackie, WSHIP Executive Assistant; and by telephone: Chris Clasen, Pool Administrator, and Chad Somers, Vice Pres., BMI. Guests: Dale Ahlskog, Molina; Ross Baker, Lifelong AIDS Alliance; Sharon Moore, Northwest Kidney Centers; Laura Treadway, EHIP; and John Zander, KPS Health Plans. 1. INTRODUCTIONS / REVIEW AGENDA Chair Bob Moore called the meeting to order at 8:35 a.m. The agenda was rearranged to allow Mr. Reed to complete his reports consecutively and be excused. 2. MINUTES of SEPTEMBER 9, 2004, and OCTOBER 15, 2004 MOTION: It was moved and seconded to approve the minutes of the September 9, 2004, board meeting. The motion passed unanimously. MOTION: It was moved and seconded to approve the minutes of the October 15, 2004, board teleconference. The motion passed unanimously.] WSHIP RATES A. Medicare (Plan 2) Standard Risk Rates Mr. Reed presented the proposed 2005 Medicare Plan 2 rates, representing a 3.1% increase over 2004 rates. The same methodology was used this year as last year, whereby a Standard Risk Rate based on commercial market Medicare Plan F rates was defined, taking into account the addition of WSHIP s prescription drug benefits. MOTION: It was moved and seconded to approve the Medicare Plan 2 rates as presented by Milliman, USA. The motion passed unanimously. B. Non-Medicare (Plan 1 & Plan 3) Standard Risk Rates Page 1 of 7

2 The same methodology was used for Plans 1 and 3 rates as was used for Plan 2. The law requires that an average rate be calculated from Washington s top five carriers rates for similar benefit plans. Mr. Reed said the new benefits contributed 3.6% to the proposed rate increase. Board member discussion points included: Consider different methods for analyzing rates, over a longer period of time. The law specifies rates must be developed using the rates that are in use now by the carriers; and it specifies that the five largest carriers be used. Enrollees have the option to move to a higher deductible plan to save on premium; they cannot drop to a lower deductible. The board has the discretion to make the rates as low as 110% of the Standard Risk Rate, or in some cases as high as 150%. If all enrollees are averaged, the mark up equals about 133%. Discounts are available for enrollees who have been on another plan for 18 continuous months prior to coming to the pool, and discounts are available for people who have been in the pool for 36 months. WSHIP s survey of rejected applicants from 2003 showed that of the 4,800 individuals denied coverage by the carriers, only 677 enrolled in WSHIP, which is 14%. Two-thirds of those who did not enroll in WSHIP said it was too expensive. Carriers had a $75 million profit, after backing out their premium tax, from their individual products. Assessments for the pool are costs added into premium rates by the carriers. Approximately 70 % of WSHIP enrollees are already at the 110% rate level. More people without health coverage means an increase in uncompensated care. WSHIP s benefit plans are much richer than what is available in the individual commercial market. MOTION: It was moved and seconded that the board accept rates for 2005 that are equal to 110% of the Standard Risk Rate (SRR) for each plan that is available in the market. The motion failed. MOTION: It was moved and seconded to adopt the rates as calculated by Milliman, USA, at the existing multiplier relative to the Standard Risk Rate, and using the schedule that the board has used historically. The motion passed. Recommendations included: 1. Now that two higher deductibles are offered, survey rejected applicants again to determine if these choices have improved access. 2. Consider different principles for setting rates; add to the 2005 September work plan a strategic discussion on rates. 3. Ms. Larson will bring a proposal to the board on how the volatility of the rate increases can be smoothed out. Page 2 of 7

3 4. TOOL COMMITTEE REPORT A company has been selected to develop the online SHQ guidelines; the guidelines will be presented to the board in January. The committee met twice with carriers and Milliman representatives to consider Standard Health Questionnaire (SHQ) changes. Mr. Reed presented the recertification for the SHQ with the new point threshold of 300. The threshold of 288 has produced a 7.9% rejection rate, and Mr. Reed believes the adjusted threshold will provide the 8% rate called out in RCW Parkinson s disease was removed from Part A; two new conditions were added to Part B. MOTION: It was moved and seconded to adopt the recertification of the Standard Health Questionnaire as presented by Mr. Reed. Add a new Exception to indicate that newborns and newly adopted, or newly placed children, are not required to fill out the SHQ. The motion passed unanimously. Mr. Reed was excused from the meeting. 5. ADMINISTRATIVE SERVICES REPORT A. Review September Monthly Operating Report Questions were raised about the data reported for claims received in August; Mr. Somers will review the data and provide a footnote on the graph to indicate the duplicate claims processed. Customer Service call rates continue to be high due to the ongoing problemsolving following the TPA transition. The Customer Service report was inadvertently left out of the board packets; it will be posted to the website. The Plan & Age Distribution Summary now includes the new $2500 and $5000 deductible plans; both plans have new enrollment. B. Operational Issues Mr. Somers presented BMI s proposal on resolution of the duplicate claims processing expenses. BMI has agreed to make WSHIP whole for the duplicate claims, and BMI will defer its normal PMPM charges as a means to reimburse any duplicate claims amount that are not refunded. BMI will not charge for the processing of the duplicate claims. Mr. Corry requested that Mr. Somers provide a written summary of the proposal. Mr. Somers said BMI has strengthened its staff performance requirements as a commitment to ongoing quality improvements. BMI is committed to working with the OIC to provide timely turn around for grievances, and Customer Service staff has been instructed on how to communicate to enrollees the appropriate procedures for appeals. Ms. Larson said a periodic OIC complaint report can be provided to the board. In February BMI will implement a new automated attendance phone system capable of reporting abandoned-calls and on-hold rates. A customer satisfaction survey will be conducted before the implementation Page 3 of 7

4 6. EXECUTIVE COMMITTEE REPORT On behalf of the Executive Committee, Mr. Moore requested the board s approval for BMI s proposal on resolving the duplicate claims issues, which include: BMI will take full responsibility for the financial impact of the duplicate payments, making the pool whole; BMI will receive no payment for the processing of duplicate claims; WSHIP will pay BMI, at a discounted rate, for the processing of claims with service dates prior to 1/1/04, which were acquired from the previous TPA as unprocessed claims; WSHIP will defer performance penalties for the first quarter of the transition and July claim timeliness. MOTION: It was moved and seconded to adopt the recommendation of the Executive Committee to compensate BMI for processing of run-in claims prior to 1/1/04; to defer the penalties as outlined; and BMI will not be paid for processing of duplicate claims and will make WSHIP whole for duplicate claims payments. The motion passed unanimously. 7. TREASURER S REPORT A. September 2004 Financials Ms. Dochnahl reported that WSHIP s cash position is good and financially sound. B Assessment III Update The $14.5 million Interim Assessment III, approved October 15, should carry us through the first quarter of Changes to the assessment timing will provide a more predictable process and better cash management. Ms. Larson reported that one carrier has not paid its second assessment, but payment is expected this week. A second carrier contends they should not be considered a Member Plan; Ms. Larson will consult with the OIC on this issue. C. Assessment Policy Changes Mr. Berg presented the Member Assessment Policy document with the following changes as agreed to by the Board October 15: (1) conduct the first assessment in March, instead of May; (2) provide each member, by December 1 of each year, with an estimate of its advance interim assessment for the following calendar year; and (3) set member assessments based on the most current data. Mr. Arnis asked if Section 2.c., regarding the period of time a member has to request a reconsideration of its proposed final assessment, should be changed to a 90-day period instead of 30 days. Mr. Berg said the assessment is intended as an Interim assessment, and the member could still file a grievance if they disagreed with the assessment. MOTION: It was moved and seconded to approve the Member Assessment policy as amended. The motion passed unanimously. Page 4 of 7

5 D Budget Discussion The 2005 draft operational budget was presented: Using a membership projection of 1% per month growth, a PMPM expense was calculated for each vendor (BMI, Health Integrated, and First Choice). Expense variables include such items as extra mailings and network directories. Salary and benefit expenses are included for Ms. Larson and Ms. Mackie, who will become a full time employee in January The prescription administrative fee has been reduced to zero with the new Systemed contract. The Medicare Part D project costs have been included. BMI will provide detail for the miscellaneous item when the budget is discussed at the January board meeting. Professional fees for 2005 will be lower due to the fact that there will be no SHQ recertification required in 2005; recertification occurs on an 18-month cycle. Overall, the proposed 2005 budget represents a 9% increase. Ms. Dochnahl requested that a report be prepared for the board that compares WSHIP s administrative costs with other state risk pools, as a means to benchmark WSHIP and pinpoint costs. Ms. Larson said the comparison is available in the 2003 Annual Report. Mr. Kuecker said the proposed costs appear very much in line with Oregon and Utah risk pools. Mr. Somers and Ms. Clasen were excused from the meeting. 8. EXECUTIVE DIRECTOR S REPORT A. Audits ACS: A report should be available next week. BMI: The audit will be conducted in January, which allows for a three-month run out of claims processed within the first 6 months of the contract. First Choice: CRS will conduct the audit. First Choice has provided documentation of their URAC accreditation, so credentialing will be excluded from the audit. Systemed Audit: A kick off meeting for the audit was held November 10. B. Coordination of Benefits for Medicare Rx The change in coordination of benefits for Plan 2 enrollees will be effective November 15; letters have been mailed to enrollees. A small number of Plan 1 & 3 enrollees with dual coverage have been sent a letter requesting verification of their primary care coverage. C. Actuarial RFP Ms. Larson is considering selecting two different firms to provide two different services: one for rate actuarial work and one for recertification of the SHQ. D. PMPM Calculation for 2002, 2003, and 2004 Discussion of the PMPM calculation method will occur at the January board meeting. Page 5 of 7

6 E. Assessment Audit This audit is underway. Two Member Plans disagree with their assessments; Ms. Larson will consult with the OIC on these issues. F. Medicare Part D Ms. Larson briefly described rules as explained by CMS. Enrollees themselves must pay the doughnut hole charges in order to be eligible for catastrophic coverage. G. NASCHIP Conference Dr. Jaffe, Ms. Larson, and Ms. Mackie attended the conference. Dr. Jaffe said it provided a good overview on health care issues and predictions about where the high risk market is headed. The NASCHIP Board has named Ms. Larson as NASCHIP s President Elect. Seattle is a possible location for a future conference. 9. PUBLIC COMMENT There were no comments. 10. GOVERNANCE COMMITTEE REPORT The committee held a teleconference and developed its 2005 work plan. A board retreat is being considered in The committee will focus on board evaluation and performance standards. 11. GRIEVANCE COMMITTEE The committee has not met because there were no new grievances to consider. A previous grievance related to denial of claims was upheld by the committee and forwarded to the IRO (independent review organization), which also upheld the denial. 12. MARKETING & PLANNING COMMITTEE REPORT The committee was unable to schedule a meeting in October or November but will meet in December. Included in the board packet is Health Integrated s care management summary report quarterly averages in the report need to be recalculated. Case management is showing a 2.8 to 1 average savings. A report from Health Integrated will be forthcoming on the pilot disease management project. 13. BOARD SCHEDULE AND WORK PLAN 2004 & 2005 Work scheduled in 2004 has been completed. The 2005 draft work plan was presented; it will be voted on at the January board meeting. The schedule includes: 1. Three Governor-appointed board positions are up for reappointment in 2005; the Disability Member Plan position comes up for election. 2. Ms. Larson will be in contact with Legislators to reintroduce the WSHIP immunity bill. Page 6 of 7

7 3. An RFP for a financial audit firm will be considered in OPEN MICROPHONE Ms. Carter said her position on the board may be affected by the fact that she is selling her business and may no longer be a small-business owner. 15. Adjournment The meeting adjourned at 12:15 p.m. NEXT MEETING: Thursday, January 13, 2005, at the Westin Hotel in Seattle. Page 7 of 7