Healthcare Group of AZ

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Healthcare Group of Arizona Director Anthony
D. Rodgers State Coverage Initiatives - Summer
Workshop Pressing Forward Cuts, Coverage, and
Creativity June 28 June 29
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What We See Happening
Key Economic Drivers
For every one percent increase in premiums
200,000 to 400,000 people lose coverage
nationwide
Source The Lewin Group, 1997
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Arizona small business economy

• 93 of business in Arizona are small businesses
  with less than 50 employees
• Arizona has over 110,000 small businesses
• Average annual growth rate of small business in
  Arizona is 2.7 .
• Since 1999, Arizona has averaged 13,500 new small
  businesses start-ups annually.
• Small business added more workers in the
  aggregate than large business in Arizona.
• Only 28 of small business offer employer
  sponsored health care coverage.

University of Arizona Health Care Coverage in
Arizona
4
Arizonans Household Income
AHCCCS Catastrophic Care
AHCCCS Eligible
15
20
28
19
18
Most likely AHCCCS Eligible
AHCCCS Spin down
5
Percent of Arizonans on Arizona State Medicaid
and SCHIP Programs
Over 1.5 million Arizonans by 2006
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The Political and Business Case for the
Arizona Healthcare Group Program

• The commercial health insurance market has become
  unaffordable in Arizona more and more business
  are dropping coverage or reducing the number of
  employees, often sending jobs out of the country.
• HCG was created to address this problem.
• If HCG does not aggressively address this issue,
  the state has a huge potential financial exposure
  because nearly 60 of low income workers will
  qualify for Arizonas Medicaid program.
• Politically the conservative in the Arizona
  legislature are between a rock and hard place
  about government financing health care for the
  poor and low income but there is a growing
  recognition that one way or the other the State
  of Arizona will end up with the fiscal liability
  for so many uninsured.
• HCG is the last chance to use the market to
  attract and increasing large number of uninsured
  into a premium based program.

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Enrollment and Demographics Target Population
1 Million Uninsured Arizonans
Source St. Lukes Health Initiatives, 2004
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HCG Strategic Objectives

• Provide premium based coverage for uninsured
  small businesses and their employees to reduce
  States potential Medicaid cost exposure from low
  income employees.
• Assure HCG premiums are affordable and offer a
  cafeteria plan of benefit options that will allow
  employees of small business employers, sole
  proprietors, and political subdivisions greater
  choices.
• Become self funded from premium revenue by 2006.
• Demonstrate the business case for the States
  HealthCare Group Program as a solution for
  providing health care coverage to uninsured
  workers.

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How Healthcare Group Works

• HCG enrolls eligible small businesses and
  governmental subdivisions and their employees and
  dependents into the program based on benefit
  options selected.
• Sets rates and pays capitation or administrative
  fees to contracted MCO/TPA and provides
  reinsurance coverage.
• Sets benefit option pricing and bills premium to
  employers
• Performs marketing and sales and pays broker
  enrollment fees.
• Develops new products and benefit offerings.
• Oversees the quality and MCO operations and
  network adequacy.
• MCOs contract with providers and networks and
  manage medical risks based on operational and
  quality standards set by HCG

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Reinsurance Mechanisms

• THE PURPOSE To protect MCO network contractors
  from the risk of high medical cases and assure
  financial stability.
• HCG purchases reinsurance from a third party
  carrier by withholding a PMPM amount all premiums
  collected.
• The reinsurance stop loss coverage reimburses the
  MCO contractor when the total annual medical
  services costs for that member, valued based on
  the third party carriers reimbursement schedule,
  less actual recoveries for service costs from any
  other third party coverage, exceeds 100,000 in
  any contract year.
• HealthCare Group also maintains a separate
  financial stability reserve which is set aside
  for acuity adjustments for adversely selected
  MCOs.

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Healthstyles Benefit Grid
Benefit Type (partial list) Classic Secure Active
Physician Services (PCP) 20 copay 0 copay 10 copay
Specialist Services 20 copay 20 copay 30 copay
Preventive Care 20 copay 0 copay 10 copay
Maternity Services Included None/Rider None/Rider
Urgent Care 40 copay 20 copay 20 copay
Emergency Care 100/150 copay 50 copay 20 coinsurance
Inpatient Hospitalization 100 admission 50 coinsurance 20 coinsurance
Diagnostic Services 0 copay 0 copay 20 coinsurance
Rehabilitation Services 15 copay 20 coinsurance 20 coinsurance
Prescription Medicine 15/30 copay 0/20 copay 0/20 copay
100 coverage for first 10 days, thereafter 50
coinsurance.
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Employer Eligibility
Employee Participation
Business Size employees that must participate
1-5 FT employees 6-50 FT employees 100 80

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Premium Comparison by Health Plan In One Service
Area
Commercial Portability HMO Plans
HCG Current HMO Benefit Plans
Cigna and PacifiCare plans are guaranteed Issue
individual HMO Plans. BCBS plan is individual
underwritten HMO.
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Key Success Factors

• Hire managed care operations and medical
  management knowledgeable staff.
• Develop a marketing strategy conformed to the
  unique characteristics of the market.
• Develop more than one healthcare benefit option
  and constantly verify pricing strategy and
  benefits based on market response.
• Make sure you have provider acceptance and good
  network design with access to community primary
  care physicians and specialist.
• Focus on member retention through customer care
  and follow-up.
• Include programs that specifically benefit small
  business like employee wellness, workplace safety
  and disease management.