A new HMO network A new plan design A new solution

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1 Agent Guide 2 A new HMO network built upon a foundation of cost-efficient medical groups and independent physicians A new plan design that features variable copays for primary care physicians and specialists A new solution that allows Blue Cross and independent agents to work together to make a positive difference for more Californians

2 Opening Doors A New Network To help California s small businesses open health care access to more employees close to where they live and work, Blue Cross is pleased to introduce the new Select HMO Network and the Power Select HMO Plan. We are proud of our portfolio of Small Group products, and the success we have had in building a strong, trusted Blue Cross network of providers. We also recognize that a distinct need exists in certain California communities, especially those where many businesses employ lower income workers. The new Select Network is designed to help clear away barriers and open the door to quality, low cost HMO coverage for more Californians. Effective June 1, 2004, Blue Cross is offering HMO coverage through two separate networks. Our traditional Blue Cross HMO (CaliforniaCare) Network will continue to serve members enrolled in our HMO 100% Plan, Classic HMO Plan and Saver HMO Plan. The Select Network will serve only members enrolled in our new Power Select HMO Plan. Reliable, consistent health care close to home and work The Power Select HMO Plan offers an affordable solution to help address the needs of employers looking for lower cost alternatives or those who do not currently offer coverage. By keeping health care convenient and close to home, it may also help overcome transportation barriers that some lower income employees face. Employers benefit from healthier workers and lower absenteeism. Employees and their families get the care they need to stay healthy close to work and close to home. Important: Employers that offer HMO coverage must choose either the Power Select HMO Plan (Select Network) or one of the other three HMO plans (Blue Cross CaliforniaCare Network), but cannot combine the Power Select HMO with the other HMO plans. The Power Select HMO Plan features a full scope of health care benefits find out more on the following pages. A plan so unique, it comes with its own network. Affordable access and flexible options for employers and employees and more sales opportunities for you. 1

3 Reaching Communities Quality Providers For detailed information on providers, please see the enclosed Provider Directory. Stretching from Northern California to the Mexican border in both rural and densely populated areas, the Select Network encompasses over 6,000 providers in 22 counties across California: Alameda Contra Costa Fresno Imperial Kern Los Angeles Merced Nevada Orange Placer Riverside Sacramento San Bernardino San Diego San Francisco San Joaquin San Mateo Santa Clara Santa Cruz Stanislaus Tulare Yolo Select Network The Select Network is comprised of over 6,000 providers in 22 California counties. It draws from a strong base of well-established physicians and specialists, including many of the medical groups and IPAs in our traditional Blue Cross HMO CaliforniaCare Network, along with a select group of independently contracted physicians.the experience, efficiency and convenient proximity of these providers allow the Select Network to deliver quality, low cost HMO health care close to home in more California communities. While many physicians participate in both the Blue Cross HMO (CaliforniaCare) Network and Select Network, the Select Network is a smaller network, precisely adapted to the unique needs of many Californians. Upholding the quality and integrity of our traditional network, the Select Network will serve members enrolled in the Power Select HMO Plan. 2

4 Unique Advantages A New Plan The Power Select HMO Plan is part of a well-structured, strategically crafted family of Small Group plans designed to meet a wide range of needs unique to California small businesses. Our vision in creating this plan is to ensure that Small Group employers and employees do not have to compromise quality for affordability. Along with its network of over 6,000 providers in 22 counties, the Power Select HMO Plan offers variable copays depending on the type of office visit. Employees pay a slightly higher copay when visiting a specialist than they do when seeing a primary care physician or medical group. This benefit design helps maintain robust, comprehensive HMO benefits at a remarkably affordable price. Fast Facts on California s Uninsured Statistics show that almost one half of California s uninsured have family incomes that place them above the income threshold for most public programs. The Power Select HMO Plan is a new solution for these thousands of residents caught in the gap between qualifying for state-sponsored coverage and being able to afford more expensive commercial HMO plans. These recent statistics clearly demonstrate the need for the Select Network concept: Approximately 6.5 million Californians went without health insurance. Employment-based coverage is the most important source of insurance (59%). 38% of California s uninsured are employed by businesses with less than 25 employees. Sources: California HealthCare Foundation, Employee Benefit Research Institute estimates of the Current Population Survey, March 2003 Supplement. Affordability Without Compromise 3

5 Sales Potential Expanding Opportunities The Power Select HMO Plan makes it possible for more small businesses to offer health coverage and is ideal for employers wanting to: begin offering coverage and enjoying the tax advantages reserved for employer-sponsored health plans continue offering coverage in a time of rising costs by switching to a more affordable, accessible option expand their company s coverage choices by combining this affordable new HMO solution with Blue Cross plan(s) to meet the full range of employee needs Important: Employers that offer HMO coverage must choose either the Power Select HMO Plan (Select Network) or one of the other three HMO plans (Blue Cross CaliforniaCare Network), but cannot combine the Power Select HMO with the other HMO plans. A New Solution The Power Select HMO Plan and Network are the result of one of our visions for California: To use our networkbuilding strength as a means of expanding access to low cost, quality health care for more Californians, close to where they live and work. We are confident that this new solution will help you reach untapped markets and grow your book of business. Working together, we can make a positive difference in California communities. quality health care for more Californians, close to where they live and work This new solution will help you reach untapped markets. 4

6 Plan Highlights Power Select HMO Plan Effective June 1, 2004 $500 annual deductible per member $2,250 annual out-of-pocket maximum per member; $4,500 per family $25 copay for office visit to Medical Group or Primary Care Physician $35 copay for office visit to Specialist or Referral Care $150 brand-name prescription drug deductible per member $15 generic drug copay Brand-name copays vary by category; see Summary of Features for details 20% coinsurance for outpatient services 10% coinsurance for hospitalization services Offered as part of EmployeeElect Plus, however employers cannot combine the Select HMO Plan with other Blue Cross HMO plans For detailed information on benefits, please see the enclosed Summary of Features. The Select Solution: Efficient Network + Benefit Design = Affordable Access Select Premium Example: 29-year-old living in Los Angeles, Select HMO v. Saver HMO Saver $0 $50 $100 $150 $200 5

7 Small Group Power Select HMO Plan 1.00 RAF Rates* Effective 6/1/2004 Rates 65 + PRIMARY - BLUE CROSS IS PRIMARY TO MEDICARE 65 + SECONDARY - BLUE CROSS IS SECONDARY TO MEDICARE *Rates rounded to whole dollars EMPLOYEE EMPLOYEE AND SPOUSE EMPLOYEE AND CHILDREN FAMILY RATING AREA AGE RANGES UNDER 30 N/A $176 $161 $119 $127 $145 $163 N/A $ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PRIMARY N/A N/A SECONDARY N/A N/A 335 UNDER 30 N/A $441 $409 $305 $320 $375 $408 N/A $ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PRIMARY N/A 1,244 1, ,082 1,150 N/A SECONDARY N/A 1,030 1, N/A 790 UNDER 30 N/A $412 $368 $273 $288 $343 $383 N/A $ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PRIMARY N/A N/A SECONDARY N/A N/A 392 UNDER 30 N/A $587 $525 $393 $411 $482 $544 N/A $ N/A N/A N/A N/A N/A N/A N/A N/A N/A 1, ,009 N/A PRIMARY N/A 1,431 1,412 1,083 1,075 1,246 1,325 N/A 1, SECONDARY N/A 1,150 1, ,041 1,063 N/A 885 Rating Areas by County The following list summarizes areas and counties served by the Select Network. Please note that the Power Select HMO Plan is not available in all Rating Areas and may not be available in all ZIP codes of covered counties. A list of ZIP codes served by the Select Network will be posted on the agent Web site with the official launch notification package materials. *Rates may vary according to the group s Risk Adjustment Factor (RAF) **Other ZIP code exclusions may apply Area 1: Not available. Area 4: Orange, Riverside (ZIP code only**) Area 7: Kern, Tulare Area 2: Fresno, Merced, Nevada, Placer, Sacramento, San Joaquin, San Mateo, Santa Clara (ZIP code only**), Stanislaus Area 5: Los Angeles (except ZIP codes beginning with , 915, , 935**) Area 8: Not available. Area 3: Alameda, Contra Costa, San Francisco, Santa Clara (except ZIP code 94303**), Santa Cruz, Yolo Area 6: Imperial, Riverside (except ZIP code 92883**), San Bernardino, San Diego Area 9: Los Angeles (ZIP codes beginning with , 915, , 935**) 6

8 Fact Sheet New Enrollment Rate guarantee: All newly enrolled AB1672 groups will receive rate and benefit guarantees of 12 months, regardless of group size. Applications: Until revised applications are available later in 2004, your clients must write in their selection of the Power Select HMO Plan. Follow the simple steps below: For the Small Group 2-50 Employer Application: Check the Other box in Section 2a and write in Power Select HMO on the adjacent line. For the Small Group 2-50 Employee Application: Check the Other box in Section 1 under A and write in Power Select HMO on the adjacent line. Moving Existing Business to the Power Select HMO Plan Important: Employers that offer HMO coverage must choose either the Power Select HMO Plan (Select Network) or one of the other three HMO plans (Blue Cross CaliforniaCare Network), but cannot combine the Power Select HMO with the other HMO plans. Special open window period: Existing Small Group clients may request the Power Select HMO Plan from June 1, 2004 to August 1, Submission deadline: Interested groups must submit appropriate documents no later than August 1, Groups wishing to move to the Power Select HMO Plan must submit the following: Single Plan Groups Please refer to the Employer Plan Change Guide (EPC) on the opposite page. If the change does not require underwriting approval, groups currently on a single plan can replace it with the Power Select HMO Plan.The group must submit a letter from an officer/owner on company letterhead requesting the change. All employees will be moved to the new plan selection. See the All Groups bullet below about PMG identification. Designated Plans or Mix N Match Plans Groups currently enrolled on a Designated Plans option or Mix n Match Plan option can replace their existing HMO product with the Power Select HMO Plan, as long as it is not offered along with another HMO plan. If moving from a current plan to a Power Select HMO Plan is indicated as an N on the EPC Guide, they may simply submit a letter from an officer/owner on company letterhead requesting the change. All employees whose plans are replaced will be moved to the new plan selection. See the All Groups bullet below about PMG identification. EmployeeElect/EmployeeElect Plus Groups The Power Select HMO Plan is automatically available during the open window period or at the group s anniversary date if they have selected All Plans. However, because the Power Select HMO Plan cannot be offered in conjunction with any other HMO plan, the All Plans option will function differently than it has in the past. When a group checks All Plans on the Employer Application, and wishes to offer the Power Select HMO, they must write in Power Select HMO on the Other line (in which case our other HMO plans will not be available to the group). They must also make that request on company letterhead and submit Change of Coverage applications for any affected employees. See the All Groups PMG Selection bullet below. All Groups - Primary Medical Group (PMG) Selection For ALL groups, employees must submit Change of Coverage applications to identify their PMG if: 1) moving from a plan to the Power Select HMO, or 2) a new HMO provider needs to be chosen in the Select HMO Network. However, no health questions will be required. Underwriting Approval May Be Required Any employer group plan changes considered an upgrade are subject to underwriting approval and will require a new Employer Application, current reconciled DE6, letter from an officer/owner on company letterhead, and Change of Coverage Applications for those employees requesting change. Groups that wish to increase the number of plans offered, in addition to their current plans, are subject to underwriting approval. Support If you have questions about the new Power Select HMO Plan, contact your Regional Sales Manager or Sales Support at (800) Also: Market Specialists fluent in Spanish, Chinese and Korean may be available to help you close sales and conduct employee enrollment sessions. 7

9 Employer Plan Change Guide 1 Underwriting MOVE FROM: MOVE TO $10 Copay Premier $20 Copay HMO 100% HMO Classic HMO Saver HMO Power Select HMO 2 Advantage $25 Copay Copay $30 Copay $35 Copay GenRx $40 Copay Power HealthFund Power Health Fund 750 Power Health Fund 500 EPO 3 High Deductible EPO Saver Basic Premier HMO $10 Copay $20 Copay HMO 100% Classic HMO Saver HMO N Y N N N N N N N N N N N N Y Y N N N N N N N N N N N N Y Y N N N N N N N N N N N N Y Y Y N N N N N N N N N N N Y Y Y Y N N N N N Y Y N N N Power Select HMO 2 Y Y Y Y Y Y Y Y Y Y Y Y Y N Copay Power Health Fund Advantage $25 Copay $30 Copay $35 Copay GenRx $40 Copay Power Health Fund 750 Power Health Fund 500 Y Y Y Y Y N N N N N N N N N Y Y Y Y Y N Y N N Y N N N N Y Y Y Y Y N Y Y N Y Y N N N Y Y Y Y Y N Y Y N Y N N N N Y Y Y Y N N Y N N N N N N N Y Y Y Y N N Y N N N Y N N N EPO 3 High Deductible EPO Y Y Y Y Y N Y Y Y Y Y Y N N Saver Basic Y Y Y Y Y N Y Y Y Y Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y Y 1 Use this chart to help determine if underwriting will be required when moving from one plan to another. Identify current plan for moving from in the left vertical column; find desired plan for moving to along the top row; follow lines to their meeting point. Y = Yes, underwriting approval is required N = No, underwriting approval is not required NOTES 1 Moving to a less expensive plan may also mean moving to a plan with lesser coverage. 2 Power Select HMO is not available in conjunction with any other HMO product(s). 3 High Deductible EPO Plan is HSA compatible. 8

10 Q&A Q: What kinds of Small Groups would be interested in the Power Select HMO Plan? A: This plan will be attractive to a variety of Small Groups in many California communities (both large cities and rural areas), including: businesses employing lower income workers, companies who want to enjoy the tax advantages of offering health coverage but have previously found it unaffordable, employers wanting to switch to a more affordable, accessible option in a time of rising costs, and those wanting to expand their company s coverage by combining this HMO plan with other Blue Cross plans. Q: How large is the Select HMO Network? A: The Select Network draws from a strong base of over 6,000 physicians and specialists in 22 California counties. Q: Do some physicians and specialists participate in both the Select HMO Network and the traditional Blue Cross HMO (CaliforniaCare) Network? A: Yes, many physicians participate in both the Blue Cross HMO Network and Select Network. However, the Select Network is a smaller, separate network. Q: Is there a separate Provider Directory for the Select HMO Network? A: Yes. A Select Provider Directory is included in this mailing. Additional directories may be ordered from Supply (item #IU , 4/04). To locate a provider online, you and your clients can go to and click on the Find a Doctor or Hospital (Provider Finder) link. Q: Why must a group choose one HMO network or the other, instead of having access to both? A: We are able to maintain competitive pricing for the full Blue Cross HMO (CaliforniaCare) Network HMO products based upon the statistical likelihood that the members who utilize the more cost-effective providers will offset those that choose the less cost-effective providers. The smaller Select HMO Network provides premium savings by contracting only with those providers who maintain quality at a more cost-effective price. If we offered side by side selection of networks, it would be natural for those who wish to utilize the less cost-effective providers to select the larger network. Those that are comfortable with the providers included in the Select Network would elect the Select HMO Plan. Under this scenario, the larger network plans would experience higher costs because utilization of the higher cost providers would not be offset by those members who instead chose the Select HMO Plan. By having all HMO members in a group use the same network, adverse selection is controlled and premiums can be maintained at more affordable levels. Q: Does the Power Select HMO Plan offer comprehensive benefits? A: Yes. This plan offers robust, comprehensive HMO benefits at an affordable price. Q: Are there out-of-network benefits? A: Like other HMO plans, the Power Select HMO Plan s benefits are in-network only, except for emergency services. Q: Do the copays for physicians differ compared to the copays for specialists? A: Yes. One of the unique aspects of the benefit design is that members pay a slightly higher copay for specialists than they do for primary care physicians. Q: What kinds of plans compete in the marketplace with the Power Select HMO Plan? A: The Power Select HMO Plan is a quality, affordable alternative that fills a distinct need in certain California communities where many businesses employ lower income workers. Q: How does the pricing of the Power Select HMO Plan compare to other Blue Cross Small Group HMO plans? A: The Power Select HMO Plan s monthly premiums are typically less than the Small Group Saver HMO monthly premiums. For example, a 29-year-old living in Los Angeles would typically pay $127 a month for the Power Select HMO Plan v. $153 a month for the Saver HMO Plan. Q: How does the benefit design of the Power Select HMO Plan compare to other Blue Cross Small Group HMO plans? A: The Select HMO Plan has its own, separate network a slightly smaller, extremely efficient network. Another unique aspect of the Power Select HMO Plan is that members pay variable copays for primary care physicians and specialists. See the enclosed Summary of Features for details. Q: There is a Blue Cross Large Group version of the Power Select HMO Plan. Is it similar to the Small Group Power Select HMO Plan? A: The Small Group Power Select HMO Plan is entirely separate, designed specifically for groups with 2-50 employees. However, both the Small Group plan and the Large Group plan share the same Select Network. 9 Together, we can make a positive difference in California communities.

11 Q&A Q: Do retail pharmacies participate in the Select HMO Network, or does the plan utilize pharmacies in the traditional Blue Cross HMO Network? A: The Power Select HMO Plan utilizes participating pharmacies from the traditional Blue Cross HMO Network. Q: How does prescription drug coverage work under the Power Select HMO Plan? A: Generics: Members are responsible for a $15 copay (for each 30-day supply) not subject to deductibles. Brand-name if Generic not available: 50% of negotiated fee up to $25 copay (for each 30-day supply) after $150 annual brand-name prescription deductible. Brand-name if Generic is available: 50% of negotiated fee up to $15 copay (for each 30-day supply) after $150 annual brand-name prescription deductible plus the difference in cost between brand-name drug and generic equivalent. Self-injectables: 30% of negotiated fee (for each 30-day supply) after $150 annual brand-name prescription drug deductible for self-administered injectable drugs, when applicable. Q: What online resources are available to Power Select HMO Plan members? A: All Blue Cross HMO members can find a world of health information by visiting including the comprehensive Healthy Living section, links to value-added programs and services such as HealthyExtensions, and helpful articles in publications including Today s Health & Wellness Magazine and Women s Health e-newsletter. Members can also locate health and wellness classes with our online Education Programs Directory. Bonus Incentives Sell the new Power Select HMO Plan and take advantage of these bonuses for effective dates through 12/15/04: $350 for Starters Bonus Receive $35 per medical enrolling member, for groups of 10+ enrolling subscribers only. New Plans Bonus Receive $15 per medical enrolling member, for any size group, for enrollments in our new plans only: Power Select HMO, $35 Copay GenRx, Power HealthFund 750 and Power HealthFund 500 plans. PLEASE NOTE: Associations are not eligible. Bonuses to be paid quarterly (bonus for April, May & June to be paid at the end of July, etc.). Sales Materials Small Group Power Select HMO Plan Summary of Features (#1000, 5/04): Posted on the agent Web site at for downloading; hard copies available through Supply and may be ordered online or by FAX. This agent information packet: Posted on the agent Web site in the Small Group section of Notification Letters under Agent Supplies. Small Group Medical and Life Plans Comparison and You Choose brochures: Will be updated to include the Power Select HMO Plan at the next revision cycle (approximately Q3 2004). In the meantime, please use the Power Select HMO Plan Summary of Features as your sales tool for this new plan. Rate Guide: A separate online rate guide for the Power Select HMO Plan is available for downloading from our agent Web site. Our printed rate guide will be updated to include the Power Select HMO Plan at the next revision cycle (approximately Q3 2004). 10

12 The Power of Blue SM Blue Cross of California (BCC) and BC Life & Health Insurance Company (BCL&H) are Independent Licensees of the Blue Cross Association (BCA). The Power of Blue is a service mark and the Blue Cross name and symbol are registered service marks with the BCA. BCC offers: Dental Net & Dental SelectHMO, and all medical products except Basic, Saver, $35 Copay with GenRx, Power HealthFund & Advantage. BCL&H offers: Basic, Saver, $35 Copay with GenRx, Power Health Fund, Advantage ; all dental products except Dental Net and Dental SelectHMO; Life & AD&D plans. SC1112 5/04