HomeMy WebLinkAboutMINUTES - 11181986 - 1.96 TO BOARD OF SUPERVISORS
FRCM: Mark Finucane, Health Services Director Gontra
Costa
DATE: November 5, 1986 Coin
SUBJECT: Application to the Health Care Financing
Administration by the Contra Costa Health Plan
for Community Rating by Class
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
I . RECOMMENDED ACTION:
Approve application by Contra Costa Health Plan and authorize Executive Director
of the Plan to submit this request to the Health Care Financing Administration
for their approval of Community Rating by Class using age/sex, family size,
industry and lifestyle factors. Lifestyle factors include smoking, hypertension
and weight,
II , FINANCIAL IMPACT:
The primary purpose of Community Rating by Class is to recognize differences in
anticipated utilization of services for populations with varying risk charac-
teristics (i .e. age/sex) . By recognizing these differences, Contra Costa Health
Plan will be able to prospectively vary premium rates, reflecting expected uti-
lization differences, and enhance competitiveness with other plans.
III . REASONS FOR RECOMMENDATION/BACKGROUND:
The Contra Costa Health Plan, the County operated federally qualified HMO, now
community rates its premiums. It must apply to the Health Care Financing
Administration to obtain approval to community rate by class. The Health Plan
needs the ability to community rate by class in order to offer lower premium
rates to classes of individuals with lower risk characteristics. For example,
the Contra Costa Health Plan cannot offer lower rates to non-smokers without
obtaining approval from the Health Care Financing Administration to community
rating by class using smoking as a factor. Milliman & Robertson, Inc.,
consulting actuaries, were utilized in preparing the application. They have
actuarially certified the factors.
IV. CONSEQUENCES OF NEGATIVE ACTION:
The Health Plan will not be able to community rate by class and, therefore, will
not be able to adjust its premium rates according to risk factors. If the
Contra Costa Health Plan does not adjust premium rates in this manner, there is
an increased risk of adverse selection.
Also, it will not be able to -encourage healthful behaviors, such as non-smoking,
through its premium structure.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON November 18--,; APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS (ABSENT I ) AND CORRECT COPY OF AN ACTION TARN
AYES: NOES'. AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
CC: County Administrator ATTESTED November 18 , 1986
Auditor-Controller -
Health Services Director PHIL BATCHELOR, CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
BY v ,DEPUTY
M382/7-83