Health Net
Health Net has announced that they must discontinue their 2016 PPO plans at the request of the California Department of Insurance. Health Net had originally filed for a 23% rate increase for their 2017 PPO plans. Through negotiations with the Department of Insurance, Health Net lowered the rate increase to an average 12.1%. Because of the changes to the PPO plans, Health Net will need to cancel their 2016 PPO Plans on December 31, 2016 and offer a new PPO plan design to new and existing members. On October 4, 2016, the Department of Insurance concluded that the lower rate increase was not unreasonable.
New Health Net 2017 PPO plans and rates to be released
The lower rates required adjustments to some of the benefits to the PPO plans as noted in a rate filing submission to the California Department of Insurance.
Health Net PPO New Rate Justification Submission
Actuarial Memorandum and Certification
Introduction
Submitted for your review are Health Net’s proposed premium rates for ten EPO and five PPO plan designs. Five of the EPO plans are to be offered through Covered California, all other plans are to be offered off-Exchange. All rates are guaranteed for a 12-month period.
The On-Exchange and Off-Exchange EPO rates within are our proposed EPO rates to CoveredCA and the CDI and we do not expect them to change.
The Off-Exchange PPO rates (there is no Exchange PPO plans) within are developed on a preliminary basis and are subject to change based on our continuing negotiations with the CDI.
As it stands, Health Net is expected to have an after-tax profit loss. It is not Health Net’s intention to continue to run at a deficit. The intention is to bring costs down as much as is possible to reach our long term target.
Proposed Rate Increase(s)
This rate filing is for all Individuals, both those sold onto these plans and those renewing from the 2016 version of these plans. The rates are guaranteed until December 31, 2017.
The projected claims experience was developed using calendar year non-grandfathered 2015 experience.
The overall renewal of 12.1% is the weighted average of the PPO and EPO plan increases, weighted on projected premium and projected 2017 members.
The PPO rates are being increased 9.9% with no area variation in renewal. EPO rates are increased by 23.2% (EPO premium rates are the same as established in the July 14th filing).
Note the rate increase of 12.1% assumes that we are operating at an after-tax profit loss on risk adjusted premium of -12.2%. We have identified the loss as a consequence of benefit design vulnerabilities on our Off-Exchange PPO product.
Compared to the filing submitted July 14th, this filing incorporates the following revisions:
- Out of Network deductibles for Platinum and Gold at $5,000 Individual/$10,000 Family
- Out of Network Out of Pocket Maximums at $25,000 Individual/$50,000 Family
- Current membership updated to August 2016 members. 2017 Projected Membership has the same metal tier distribution % as in August 2016.
- 2017 Substance membership ties to August 2016
- Risk Adjustment projection based on latest Wakely January – July 2016 forecast
- Morbidity assumption data incorporates January –July 2016 claims experience
Category: PPO Rate Increase Date: October 21, 2016
An actuarial study commission by Health Net, and submitted to the Department of Insurance, concluded that the lower rates were not actuarially sound.
Opinion – Not Actuarially Sound in the Aggregate
In my opinion, the proposed premium rates are not actuarially sound in the aggregate. I based my opinion on what the company modeled and what data was available to the company at the time of filing, along with emerging experience that indicates that Health Net’s costs are assumed to considerably exceed their premium and the resulting losses could be greater than expected.
While I determined a minimum range of rate increases based on the assumed loss as of the filing, I would need to perform further testing and analysis to determine the appropriate magnitude of the rate increase to reach actuarially sound rates in the aggregate.
Opinion – Insufficient Premium Rate Levels
In my opinion, the proposed premium rate levels are not sufficient. I based my opinion of insufficient rate levels on the claims trends and claims experience adjustment factors below. – David G. Hayes, Milliman.
Milliman HAO20160086SubsequentSubmissionSeptember132016
Milliman_HAO20160086SubsequentSubmissionSeptember132016.pdf
Category: PPO Rate Increase Date: October 21, 2016
Letters being to current PPO members
On October 21, Health Net announced that they would be discontinuing the 2016 PPO plan design. They will be release a new 2017 PPO plans will have the same plan name as in 2016. Member’s in the 2016 PPO plans will be migrated to the ne 2017 plan design.
Major plan design changes include:
- Member share of cost for certain services both in-network and out-of-network
- Method for out-of-network provider reimbursement
- Elimination of out-of-state coverage except for urgent and emergency services
Discontinuance notices are mailing to members on October 24, 2016. The PPO rates average a 9.9% increase. Actual increases will vary by county.
Member in the 2016 PPO plans can accept the migration to the new 2017 PPO plans or they may shop for a different plan during Open Enrollment from November 1st though January 31, 2017. If a consumer wants a different plan to be effective January 1, 2017, he or she must enroll by December 15th.
California Department of Insurance Disposition Notice
With the lower PPO rates DOI concluded, “Finding: This Rate Filing, as lowered at the request of the Department of Insurance is Not Unreasonable.”
| Category: | PPO Rate Increase |
| Date: | October 21, 2016 |
DOI Questions, Health Net Responses to Rate Filing
Responses_HAO20160086SubsequentSubmissionAugust222016.pdf
| Category: | PPO Rate Increase |
| Date: | October 21, 2016 |