2016 Actuarial Value Calculator Changes and Cost Share Changes

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Gervais Porter
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1 Small Employers (with 1 50 eligible employees) Effective on January 1, 2016 Blue Cross Blue Shield of Massachusetts will make changes to our health plans beginning on or after January 1, These changes will ensure that our health plans continue to meet the ongoing requirements of health care reform under the Affordable Care Act (ACA) while providing employers and their employees with access to high-quality, affordable health plan options. The 2016 changes to our health plans for employers with 1-50 eligible employees are explained in the following pages Actuarial Value Calculator Changes and Cost Share Changes The ACA requires use of an Actuarial Value (AV) Calculator by issuers of health insurance plans offered in the individual and small group markets, for the purposes of determining levels of coverage. The final 2016 AV Calculator has been revised from As a result, changes to out-of-pocket costs or cost shares (like copayments, coinsurance, deductibles, or maximum out-of-pocket expenses) are needed across our small group plans to ensure that we meet certain levels of cost sharing, as required under the ACA. These changes will vary by plan design. To determine the cost share amounts and benefit changes for a particular plan, please view the Summary of Benefits or benefit comparison Fact Sheet for that particular plan. Maximum Out-of-Pocket Limit Changes to Plans for Small Groups Under the Patient Protection and Affordable Care Act, all non-grandfathered health plans must have a maximum out-of-pocket that limits the overall out-of-pocket costs (including all deductibles, co-insurance, and copayments) for all Essential Health Benefits, including pharmacy (or Rx ) benefits, to a specified dollar amount for the year. The maximum out-of-pocket limit for health plans cannot be more than the dollar amounts set annually by the ACA (and the IRS for health savings account compatible, high-deductible health plans). The annual Maximum-Out-of-Pocket dollar limits, under the ACA for 2016, are: Plan Type Self-Only Coverage (Individual) Family Coverage Health Savings Account (HSA) qualified high-deductible health plans 2016 Product and Benefit Updates $6,550 $13,100 Non-HSA qualified health plans $6,850 $13,700 continued Blue Cross Blue Shield of Massachusetts is an Independent Licensee of the Blue Cross and Blue Shield Association

2 Our health plans already include ACA-compliant annual maximum out-of-pocket limits. Beginning January 1, 2016, upon renewal, new out-of-pocket maximum amounts will apply to many of our small group health plans. The maximum out-of-pocket will either increase or decrease and the amounts will vary by plan design. We will maintain separate maximum out-of-pocket limits for medical and pharmacy benefits, across our small group Non-HSA qualified health plans. However, in some cases we are moving the current standard $1,000 per individual/$2,000 per family pharmacy maximum out of pocket to a $2,000 per individual/$4,000 per family pharmacy maximum out-of-pocket. The combination of the medical and pharmacy maximum out-of-pocket will not be greater than the limits set by the ACA. To determine the out-of-pocket maximum amount for a particular plan, please view the Summary of Benefits or benefit comparison Fact Sheet for your particular plan. New Maximum Out-of-Pocket Calculation for HSA Qualified Plans (Saver Plans) 2016 Individual-Only Annual Limitation on Cost Sharing: According to the 2016 Notice of Benefit and Payment Parameters Final Rule, the 2016 maximum annual outof-pocket limit on cost sharing applies to each individual regardless of whether the individual is covered by an individual or a family plan. This means that no individual on a plan can be made to pay more than the individual annual out-of-pocket limit: $6,550 for HSA-qualified high-deductible health plans (Saver plans) $6,850 for Non-HSA qualified health plans In order to meet the individual annual limit on cost sharing requirement, effective on the account s renewal date beginning January 1, 2016, there will be a change in the calculation of the maximum out-of-pocket for all of our HSA qualified high deductible health plans (Saver Plans). The maximum out-of-pocket will automatically be updated so that no one member will have to pay more than the per member (individual) maximum out-of-pocket for that specific plan. This means individuals on a family plan will no longer need to ensure the entire amount of the family maximum out-of-pocket is met before full benefits are paid for any one member (individual) under the plan. The annual maximum out-of-pocket calculation will change for the following plans on January 1, 2016: Access Blue Saver II Access Blue New England Saver $2000 Access Blue Basic Saver Preferred Blue PPO Saver $1,500 Access Blue New England Saver Preferred Blue PPO Saver $2,000 Access Blue New England Basic Saver Preferred Blue PPO Saver $2,900 1 Access Blue New England Basic Saver II Preferred Blue PPO Basic Saver The individual annual limitation on cost sharing applies to the maximum out-of-pocket only. There is no change as a result of this provision to how the deductible operates on HSA-qualified high-deductible health plans. 1. In order to meet AV requirements, the overall deductible amount for Preferred Blue PPO $2,900 is changing to $3,000 resulting in this plan being renamed as Preferred Blue PPO Saver $3,000 beginning January 1, 2016.

3 For our HSA-qualified high-deductible health plans (Saver Plans), the entire amount of the family deductible must continue to be met before benefits will be paid for any one member (individual) under the plan. This is not changing. In addition, all of our HSA plans will have a family deductible that is lower than the individual Max out-of-pocket in For more information about these plans, please view the Summary of Benefits or benefit comparison Fact Sheet for your particular plan. Essential Dental Benefits for Members Under Age 19 Our small group health plans includes Essential Pediatric Dental Benefits for children under age 19. A change is being made to these plans to extend this pediatric dental coverage through the end of month an enrolled child turns age 19. This new age limit for essential dental benefits will apply to these plans beginning January 1, 2016, on renewal. Pharmacy Coverage Beginning in 2016, the pharmacy benefits will change for all of our small group plans. When these plans renew on January 1, 2016, they will no longer have a 3-tier pharmacy benefit. Instead they will have a new 4-tier pharmacy benefit. A new tier for lower cost generic medications (Tier 1) is being introduced. Members will now pay a lower cost share when they purchase certain low-cost generic medications from either a retail pharmacy or the mail service pharmacy. Tier 1 = low-cost generic drugs Tier 2 = other generic drugs (most generic drugs are in this category) Tier 3 = preferred brand-name drugs Tier 4 = non-preferred brand-name drugs With this change, we are also updating our value-based pharmacy benefits for certain value drugs to a new standard 4-tier value-based structure. The cost share will now be waived for qualified tiers 1, 2, and 3 smoking cessation drugs at the retail pharmacy or mail service pharmacy. The cost share for other qualified chronic conditions via mail service will now be the same as the retail cost for tiers 1, 2, and 3. To view the new pharmacy cost shares, please view the Summary of Benefits or benefit comparison Fact Sheet for your particular plan. Pharmacy Benefit Exclusion Effective January 1, 2017: All drugs in the therapeutic class of inhaled topical nasal steroids used to treat allergies will be excluded from our pharmacy benefit coverage across all of our plans on a one-day basis effective January 1, We are communicating this change now because this change will appear in Subscriber Certificates issued beginning January 1, Prescription drug exceptions, including those previously approved, will no longer be available for this class of medications.

4 Blue Options and Hospital Choice Cost Sharing Tiering Update As of January 1, 2016, we will update the hospital and primary care provider tiers within our Blue Options and Hospital Choice Cost Sharing (HCCS) tiered plans. Why We Are Updating our Tiers? Periodic updating of our tiers with the most current available data is an important step in maintaining our tiered network plans as an affordable choice for our members. It also encourages providers in our network to continue to improve their cost and quality performance by reflecting these changes over time in the provider s tier. The analysis of the data and the update to our tiers is based on the cost and quality methodologies. This is our fifth tiering of the network and it reflects changes in the providers data that have occurred since the last update. We review the underlying data with providers so they have the opportunity to review it before making final tier changes. What is the Impact on Members? The tier update will change the cost of care for some primary care providers and hospitals. Member cost will increase or decrease, depending on the new tier their primary care provider or hospital is assigned. These changes will go into effect for all Blue Options plans the next time they renew, beginning January 1, All of the changes to plans with the Hospital Choice Cost Sharing (HCCS) feature are positive changes (i.e. hospitals moving to a lower cost share). For plans that include HCCS, the changes will go into effect for all members on January 1, The updating of tiers will be identified on member ID cards and in our provider directory as Blue Options v.5. Summary of Massachusetts Hospital Changes for Blue Options Hospital Name 2015 (current) Blue Options Tier 2016 (new) Blue Options Tier Addison Gilbert Hospital Standard Benefits Tier Enhanced Benefits Tier Beth Israel Deaconess Plymouth Standard Benefits Tier Enhanced Benefits Tier Beth Israel Deaconess Med. Center Enhanced Benefits Tier Standard Benefits Tier Beverly Hospital Standard Benefits Tier Enhanced Benefits Tier Charlton Memorial Hospital Standard Benefits Tier Enhanced Benefits Tier Clinton Hospital Standard Benefits Tier Enhanced Benefits Tier Cooley Dickinson Hospital Standard Benefits Tier Enhanced Benefits Tier Good Samaritan Medical Center Standard Benefits Tier Enhanced Benefits Tier Holy Family Hospital Enhanced Benefits Tier Standard Benefits Tier Marlborough Hospital Enhanced Benefits Tier Standard Benefits Tier Nashoba Valley Medical Center Enhanced Benefits Tier Standard Benefits Tier North Shore Med. Ctr (Salem & Union) Basic Benefits Tier Enhanced Benefits Tier South Shore Hospital Basic Benefits Tier Enhanced Benefits Tier St. Anne s Hospital Standard Benefits Tier Enhanced Benefits Tier St. Elizabeth s Medical Center Enhanced Benefits Tier Standard Benefits Tier St. Luke s Hospital Standard Benefits Tier Enhanced Benefits Tier Tobey Hospital Standard Benefits Tier Enhanced Benefits Tier Summary of Massachusetts Hospital Changes for Hospital Choice Cost Sharing (HCCS) Hospital Name Previous HCCS Cost Share HCCS Cost Share North Shore Med. Center (Salem & Union) Higher Cost Share Lower Cost Share South Shore Hospital Higher Cost Share Lower Cost Share continued

5 Update to HMO Blue New England Options Tiered Network Plans As of January 1, 2016, upon renewal, members of our HMO Blue New England Options plans will have access to tiered providers in New Hampshire. These plans include: HMO Blue New England Options HMO Blue New England Options Deductible HMO Blue New England Options Deductible II HMO Blue New England Options Deductible III Members in these plans already have access to participating providers from six provider networks within the New England states. These members will continue to have access to the same network of providers they do today. However, New Hampshire primary care providers and hospitals will now be placed into one of two benefit tiers. Member costs for some doctors and hospitals in New Hampshire will change, depending on the new tier a doctor or hospital is assigned. A network primary care provider or network general hospital located in NH will now be considered either: A Tier 1 (Enhanced Benefits Tier) provider There will be no NH providers equivalent to the Basic Benefits Tier. A Tier 2 (Standard Benefits Tier) provider Network primary care providers or general hospitals in the New England network located outside of Massachusetts or New Hampshire will continue to be in the Enhanced Benefits Tier. For our New England plans with the Hospital Choice Cost Sharing feature, there is no change to the member s cost share. All New Hampshire hospitals are considered Lower Cost Share. For help in finding the benefits tier of a provider, visit the online provider search tool at and search for HMO Blue New England Options v.5. New Plan Designs for Small Groups We are pleased to announce that we will introduce several new plan designs, effective January 1, 2016: New HSA Qualified (Saver) Plans: Access Blue New England Saver $2,500 Access Blue New England Saver $3,000 New HMO Blue New England Deductible plans that include the Hospital Choice Cost Sharing Benefit Feature: HMO Blue New England $1,000 Deductible with Copayment with Hospital Choice Cost Sharing HMO Blue New England $1,500 Deductible with Hospital Choice Cost Sharing New PPO Tiered Options Deductible plans: Preferred Blue PPO Options Deductible II Preferred Blue PPO Options Deductible III Questions? Feel free to contact your broker or account executive with questions or visit

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