VIDEO: Vice Speaker Believes SelectCare Owes GovGuam & Its Employees $8.7M in Rebates

303
New window

Guam -Vice Speaker B.J. Cruz believes that the Government of Guam and individual GovGuam employees are entitled to an $8.7 million dollar rebate from Calvo’s SelectCare Insurance because a federal law requires insurers to provide rebates, if the amount spent on medical services does not meet a minimum standard of value based on the premium dollars paid into the health insurance plan.

The Federal law,  is the Patient Protection and Addordability Care Act,  which,  Senator Cruz argues, requires a rebate be paid if the insurance companies medical loss ratio is less than 85%.

The Vice Speaker has sent a letter to Appropriations Committee Chair Senator Ben Pangelinan citing the federal law and he includes calculations which he says show that this year’s SelectCare Health Insurance plan is tracking a medical loss ratio of  below 60%  for the first three quarters.

READ Senator Cruz’s Letter to Appropriationes Committee Chair Senator Pangelinan

As a result, the Vice Speaker believes that GovGuam is entitled to a $6.5 million dollar rebate from SelectCare and individual GovGuam employees are entitled to split $1.9 million dollars in rebates.

The Vice Speaker is so sure of his analysis that he has sent Senator Pangelinan an amendment to the budget bill which includes an additional $6.5 million dollars in revenue he believes that SelecCare owes as a rebate to GovGuam.

READ Senator Cruz’s amendment adding $6.5M in revenue to 2012 Budget

Print all

FW: FY2012 Revenue to be derived by the applicability of the Patient Protection and Affordable Care Act (PPACA) on the 2011 Government of Guam Group Health Insurance Contract

X
Inbox
X

 
ReplyReply
 
More|
alt
altaltChris Carillo to me
show details 7:11 AM (40 minutes ago) alt

Sent from my Windows Phone


From: Benjamin J.F. Cruz
Sent: Friday, August 19, 2011 2:35 AM
To: ben c. pangelinan
Cc: Aline Yamashita; Judy Won Pat; Adolpho Palacios; Dennis Rodriguez; Sam Mabini; Senator Rory J. Respicio; Mana Taijeron; Tony Ada; Senator Rory J. Respicio; Frank Blas, Jr.; Chris Duenas; Judi Guthertz; tinamunabarnes@gmail.com; Tom Ada; chris.budasi@guamlegislature.org; tterlaje@guam.net; dfbrooks@guamopa.org; benita.manglona@doa.guam.gov; law@guamattorneygeneral.com; aillagan@revtax.gov.gu
Subject: FY2012 Revenue to be derived by the applicability of the Patient Protection and Affordable Care Act (PPACA) on the 2011 Government of Guam Group Health Insurance Contract

­

August 19, 2011

MEMORANDUM

TO:                  The Honorable Vicente C. Pangelinan, Chairman

                        Committee on Appropriations, Taxation, Public Debt, Banking, Insurance, Retirement & Land

FROM:            Vice Speaker Benjamin J.F. Cruz

SUBJECT:      FY2012 Revenue to be derived by the applicability of the Patient Protection and Affordable Care Act (PPACA) on the 2011 Government of Guam Group Health Insurance Contract

Although the legislature is deliberating the FY 2012 Budget for the Government of Guam, I believe we must consider the provisions of the U.S. Public Law 111-148 – Patient Protection and Affordable Care Act (PPACA) and its applicability to the Government of Guam Group Health Insurance Program, which will result in an increase in FY 2012 General Fund Revenues.

 

The PPACA amended the Public Health Services (PHS) Act and established a requirement for insurers to provide value for premium dollar spent. This is widely referred to as the medical loss ratio provision. The provision requires insurers to provide rebates to enrollees if the amount spent on medical services does not meet a minimum standard of value for premium dollars spent on the insurance plan.

Section 2718(b)(1)(A) of the PHS Act, as amended by §1001 of the PPACA, states

 

“(A) REQUIREMENT. — Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than –

             (i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or

            (ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State”           

As you know, the federal standard set for the Government of Guam’s Group Health Insurance Program is a medical loss ratio requirement of 85%. On December 1, 2010, an Interim Final Rule implementing §2718(b)(1)(A) by the U.S. Department of Health and Human Services requires that rebates be paid “on a pro rata basis to the person or entity that paid the premium on behalf of the enrollee” was published in the Federal Register/Vol. 75 No. 230.

The date of enactment of PPACA is March 23, 2010. Section 1004(a) of Part A of the PPACA reads as follows:

“SEC. 1004. EFFECTIVE DATES.

(a)     IN GENERAL.—Except as provided for in subsection (b), this subtitle (and the amendments made by this subtitle) shall become effective for plan years beginning on or after the date that is 6 months after the date of enactment of this Act, except that the amendments made by sections 1002 and 1003 shall become effective for fiscal years beginning with fiscal year 2010.”

 

Therefore, the effective date of the medical loss ratio requirement established by §2718(b)(1)(A) is September 23, 2010. Both of the 2011 Government of Guam Employee Group Health Insurance Contracts, the HAS 2000 Plan FY 2011 Group Health Insurance Agreement and Calvo’s SC 1500 Plan FY 2011 were executed on September 28, 2010 with terms beginning October 1, 2010. The signature pages of these contracts are attached for your review.

It is clear that the 85% Medical Loss Ratio requirement of PPACA applies to the current Government of Guam Group Health Insurance Contracts, which were signed on September 28, 2010 and made effective October 1, 2010.

§4302(g) of Chapter 4, Article 3 of Title 4 of the Guam Code Annotated requires quarterly reporting of detailed claims utilization and cost information to the Office of Finance and Budget. My staff has been monitoring these reports and has analyzed these amounts in cooperation with the Office of Finance and Budget staff to project the amount of any rebate due to the Government of Guam and its employees.

For Fiscal Year 2010, the Medical Loss Ratio is estimated to be 73.88% in a plan that included first dollar coverage on medical services excluding hospitalization and ambulatory care. Although current FY2011 data provided by Calvo’s Selectcare is tracking a Medical Loss Ratio below 60% for the first 3 quarters, by our mutual estimation, even if we use the FY2010 Medical Loss Ratio of 73.88% to project the FY2011 Medical Loss Ratio for the Government of Guam Health Insurance Contracts, the following amounts would be rebated to the Government of Guam and its employees:

 

 

General Fund

Other Sources

TOTAL

Estimated Amount of Rebates owed to Employer

$5,184,956

$1,393,690

$6,578,647

Estimated Amount of Rebates owed to Employees

$1,637,325

$521,195

$2,158,520

TOTALS

$6,822,281

$1,914,885

$8,737,166

 

 

Based on this conservative projection, the Government of Guam and its employees are entitled to a rebate of $8,737,166. Of this amount, up to $6,578,647 in additional FY2012 revenues is available for the legislature to allocate for government obligations and approximately $1,914,885 to refund to the government’s employees. I believe these amounts will be greater because the FY2011 Government Health Insurance Benefit did not include the first dollar coverage for medical services.

 

I intend to offer an amendment to Substitute Bill 145 that would include these amounts in the Total General Fund Revenue Projection and establish a permanent process to rebate employee contributions for future years.

 

Senseramente,

 

 

BENJAMIN J.F. CRUZ

 

cc:        All Senators

            Honorable Doris Flores Brooks, Public Auditor

            Honorable Lenny Rapada, Attorney General

            Ms. Benita Manglona, Department of Administration

            Mr. Art Illagan, Insurance & Banking Commissioner           

 

Enclosures:

(1)   Signature Page of the HAS 2000 Plan FY 2011 Group Health Insurance Agreement

(2)   Signature Page of Calvo’s SC 1500 Plan FY 2011 Group Health Insurance Agreement

(3)   §2718 of the Public Health Act amended by PPACA, U.S. Public Law 111-148

(4)   Federal Register Interim Final Rule implementing §2718(b)(1)(A)

(5)   §1004 of U.S. Public Law 111-148 (PPACA)

(6)   Section 2718 PPACA Projection

2 attachments — Download all attachments  
Letter to Pangelinan re ppaca 2011 GovGuam Health Insurance Contract.pdf Letter to Pangelinan re ppaca 2011 GovGuam Health Insurance Contract.pdf
1449K   View   Download  
BJ Cruz Amendment FY2012.pdf BJ Cruz Amendment FY2012.pdf
775K   View   Download  
alt Reply
alt Forward