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Employer Bulletin

State Agencies & Local Health Employers
Vol. 18, No. 10
June 29, 2001

GIB Adopts Changes to Help Curb Rising Health Insurance Costs

At their June 19, 2001 meeting, the Group Insurance Board adopted significant changes to the upcoming health insurance premium rate development and negotiation process with the Health Maintenance Organizations (HMOs). The changes are designed to prevent excessive or unwarranted rate increases by health insurance plans participating in the State of Wisconsin Group Health Insurance program for 2002.

The Board approved steps to put individual health insurance plans on notice that they will not be allowed to participate in the health insurance program if the Board deems their final premium bids unsatisfactory or not justified. The Board intends to critically examine all proposed premium rate increases for coverage year 2002. Negotiations between the Board and the participating plans on the proposed premium rates occurs in early August, with final rates set by month's end.

ETF has learned that some of the health insurance plans have tentatively suggested premium increases for next year that appear to be out of line, based on their claim experience. The proposed rates may not be supported or justified by the plan's claims experience. This discovery prompted the Board's action to make procedural changes to improve the current process without becoming too cumbersome.

The major changes are as follows:

  • Upon review of the claims and other data supplied by each plan, the Board's actuary will independently develop a recommended premium range for each plan.

  • Plans with proposed bids that fall outside of the recommended range will be called in for negotiations in early August to review the data, discuss variances, and clarify the Board's expectations. Following this, all plans will be offered the opportunity to submit final best offers by August 15.

  • Plans that are not able to justify the final premium rate increase submitted will be notified that the Board will be advised to drop that plan from the program. The Board will notify plans of its final decision by September 1.

The Board will contact each plan before their final bids are in place thus providing them with a fair chance to either demonstrate the validity of their bids or to adjust their bids to meet what is supported by the claims data. The procedural changes will strengthen the Board's position in the negotiation process and help to ensure that the employers and their employees pay only their fair share.

Currently, 18 HMOs and four fee-for-service plans participate in the Group Health Insurance program. Although the Department does not anticipate any changes to the number of plans participating in the program for 2002, with this change there is the likelihood that some HMOs may not agree to adjust their bids and will be dropped from the program.

Questions about this information can be directed to the Employer Communication Center at (608) 264-7900.


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