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1-®38
TO BOARD OF SUPERVISORS
Mark Finucane FAContra
°"' Health Services Director
Costa
`0ctober1"r0 `;, 1989
DATE; Coi '•J
Approval of projected revenue requirement for
SUBJECT: Contra Costa Health Plan for 1989-90 and Authorization
to use the revenue requirement to develop rates. .
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
1. RECOMMENDED ACTION
Adopt the actuarially determined projected revenue
requirement per month of $79.84 for Fiscal Year 1989-90.
Authorize the Executive Director, Contra Costa Health
Plan, to increase the revenue requirement on a quarterly
basis as appropriate by an amount not to exceed 4% (four
percent) per quarter.
Authorize the Executive Director, Contra Costa Health
Plan, to use the Board approved revenue requirement to
develop and establish specific premium rates required by
commercial groups and individuals. Included will be two,
three and four tier basic community rates, composite
rates, adjusted community rates, and rates for special
Health Plan programs such as For Rids Only and
SeniorHealth. Small group and individual rates will
include additional administrative overhead costs for
handling these contracts. Premium rates will also be
affected by the level of benefits in each package.
Authorize the Executive Director, Contra Costa Health
Plan, to utilize the community rating by class ( "CRC" )
rate determination process for groups with 25 or more
employees. Rating factors which may be used include
age/sex, family size, industry and smoking/non-smoking
ratios.
II. FINANCIAL IMPACT
Gross premium revenue is expected to increase. The level
of the net revenue increase will vary depending upon
total enrollment, membership mix, and service utilization
in the affected groups.
CONTINUED ON ATTACHMENT: _ YES SIGNATURE: r �✓i✓i _
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE I S :
ACTION OF BOARD ON OCT to 1M APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS (ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES. AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTA 1 NOF SUPERV 1 SORS ON THE DATE SHOWN.
CC,. ATTESTED 0 C T 10 1989
PHIL BATCHELOR, CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
BY ,DEPUTY
M3B2/7-83
III. REASON FOR RECOMMENDATIONS/BACKGROUND
The Contra Costa Health Plan, as do all Federally
Qualified HMO's, bases its premium rates on a basic
revenue requirement per member per month. The projected
revenue requirement is used as the base for premium rate
development, and adjusted for membership mix, family size
and the anticipated impact of competition. The revenue
requirement as well as the adjustment factors are
( developed by contracted actuaries to ensure accuracy.
This year the projected revenue requirement is $79 .84
which represents an increase of 13% over current realized
revenue of $70.57. The ' 13% increase in revenue
requirement will result in a like increase in premium
rates. This increase compares favorably with anticipated
increases of 15% to 30% or more among other Bay Area
health care insurers.
Through the recommended action, the Board adopts the-
revenue requirement of $79 .84 referenced above. The
Board also authorizes the Executive Director, Contra
Costa Health Plan, to increase the basic revenue
requirement no more than 4% (four percent) a quarter in
developing the various premium rates required by groups
and individuals to keep pace with inflation, competition,
and expense trends.
F5:borates
RTH:fw
ccs: Health Services Director
CCHP, Attn. Rich Harrison