Overview Medical Loss Ratio (MLR) Rate Review

Premera Blue Cross Blue Shield of Alaska Rate Review in Alaska

Premera Blue Cross Blue Shield of Alaska has asked for a rate increase* for the following products in Alaska: Alaska Active-PPO-Individual-38344AK002, Alaska Best Care-PPO-Individual-38344AK003, Alaska Peak-PPO-Individual-38344AK006, Alaska Health Savings Account-PPO-Individual-38344AK007, Alaska Safeguard-PPO-Individual-38344AK008, Alaska Secure-PPO-Individual-38344AK009, Group Conversion-Indemnity-Individual-38344AK020, Peak-PPO-Individual-38344AK028, Safeguard-PPO-Individual-38344AK029, Active HSA-PPO-Individual-38344AK031 and Secure HSA-PPO-Individual-38344AK032.

Review Status: Withdrawn Prior to Review

If the increase happens:

The average rate increase will be 17.90%
The proposed rate increase is an average rate increase for all covered groups or individuals. The premiums may be higher or lower than this average based on factors such as age, family structure, and health experience of the covered groups and individuals.
The effective date of the rate increase is 01/01/2013. The actual date of your rate increase may vary based on the anniversary date of your policy and other factors.
This increase will affect 3852 people

More Information about this Rate Increase:

Why does my insurance company want to raise my premium?
What kinds of Medical Services are causing this rate increase?
How would my insurance company use my premium?
Last three rate increases for this product
Who is reviewing this rate increase?
Insurer's explanation of the rate increase

Why does my insurance company want to raise my premium?

Your insurer says that costs are going up:

Type of Cost:	Per Member Increase Per Month Increase**	Portion of Increase
Medical Services* - Cost of providing healthcare services to policyholders	$15.18	80.15%
Administrative Expenses - Marketing, claims processing, and other costs to the company	$2.81	14.83%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	$0.95	5.02%

* 21.60% of the Medical Services cost increases are due to how many people use the services and how often they use them and 67.93% is due to the cost of services.

** These increases won't add up to the average rate increase if everyone doesn't get the rate increase at the same time.

What kinds of Medical Services are causing this rate increase?

Medical Service	Per Member Per Month Increase	Portion of Increase
Hospital Inpatient - Care in a Hospital	$8.21	54.05%
Outpatient - Care in a hospital or other facility that doesn't require an overnight stay	$6.83	44.96%
Professional Services - Payments to doctors and other healthcare professionals	$11.50	75.75%
Prescription Drugs - Medicines you need a prescription to buy	$1.02	6.73%
Ancillary Services - Medical supplies, ambulance fees, etc.	$1.02	6.73%
Capitation - A fixed per person payment the insurer pays to a provider to cover a person's medical costs	$0.00	0.00%
Cost Sharing - Changes in deductibles, copayments, benefits, etc.	$0.00	0.00%
Current Medical Cost Adjustment - The difference between what your insurer thought it was going to pay for medical services and what it actually paid during the current year	-$13.39	-88.22%
Total Medical Service Cost Changes	$15.18	100.00%

How would my insurance company use my premium?

Type of Cost	How Premium Dollars Will be Spent if the Requested Rate is used
Type of Cost	Per Member Per Month	Portion of Rate
Medical Services - Cost of providing healthcare services to policyholders	$343.14	79.62%
Administrative Expenses - Marketing, claims processing, and other costs to the company	$66.26	15.38%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	$21.55	5.00%
Total Request Rate	$430.95	100.00%

Last three rate increases for this product:

Year	Requested	Got
2012	12.70%	12.70%
2011	17.80%	17.80%
2010	15.10%	15.10%

Who is reviewing this rate increase?

The rate increase request is being reviewed by the State.

State laws either:

Allow the insurance regulator to review rate filings, but do not allow the regulator to stop a rate from being used, or
Allow the insurance regulator to both review rate filings and stop an unreasonable rate from being used.

If a state's laws do not allow the insurance regulator to perform effective rate reviews, the federal government* will review any rate increases at or above 10% in the individual or small group market.

*If the federal government is reviewing, click here to see the filing.

Insurer's explanation of the rate increase

Premera Blue Cross Blue Shield of Alaska has prepared the following written explanation of this rate increase.

Summary Information on Premera Blue Cross Blue Shields
Individual Market Rate Filing, Effective January 1, 2013


Premera Blue Cross Blue Shield is filing this rate change request to cover (1) the impact of healthcare reform mandates on womens health coverage, and (2) the cost of providing coverage for Autism Spectrum Disorders, in response to Alaska States SB74 mandate.

In January 2012, we provided information to support our rate filing, effective May 1, 2012. The information provided in Part I and Part II is specific to the requested January 1, 2013 rate change  and does not include details from the filing approved for a May 1, 2012 effective date.
Our use of the rate dollar and financial performance are not expected to change as a result of this request and, are therefore not detailed in this filing. The cost of medical services used by our members has no impact on this rate request and we have not included an updated analysis from our previous filing.

Rate Increase:

Q.  What is the average rate increase Premera is proposing?  

A.  We are requesting an average rate increase of 4.6%.  This combined with the approved 12.7% rate increase from May 1, 2012 results in an annual average increase of 17.9%

Q.  How many members are affected by this rate filing?

A. Approximately 3,827 non-grandfathered members, based on the data 2012 used for this rate filing.  
*	3,821 members will see a rate increase of 4.4%; 
*	6 members, whose plans do not currently include any pharmacy coverage, will see a rate increase of 6.1%, due to the additional pharmacy costs involved in these changes.

Benefit Change:

Q. What benefit changes does this filing cover?

A.  There are 2 benefit changes covered by this filing:
1. In response to Alaska States SB74 mandate, we will be providing coverage for the diagnosis and treatment of autism spectrum disorders from January 1, 2013. 
2. Since August 1, 2012, we have been providing coverage for womens preventive health benefits as mandated by the Affordable Care Act.

Comment on this rate increase

You may submit your comments about this rate increase to Alaska on its website at http://www.dced.state.ak.us/insurance/Insurance/programs/Consumers/fileAConsumerComplaint.html; by email at insurance@alaska.gov; by telephone at 1-800-467-8725; and by U.S. mail to the Alaska Division of Insurance, P.O. Box 110805, Juneau, Alaska 99811-0805.