© 2011 Blue Cross and Blue Shield of Minnesota. All rights reserved.

South Central Service Cooperative School Renewal7/1/2013

Genie NewvilleUnderwriting DirectorApril 2, 2013

Service Cooperative Minimum Premium Model

• Minimum premium/self insured hybrid• No MCHA or Premium Taxes

• Reduced Stop Loss and Administrative Fees negotiated at the Statewide level by multiple cooperatives

• Service Cooperative assumes risk between expected and maximum claims of 110% of expected claim level

• Specific Stop Loss Levels vary by Region• Groups’ experience pooled to smooth peaks and valleys• Drug Rebates, Performance Guarantees, all paid to Rate Stabilization Reserve

(held by Cooperative) to fund risk• Access Fees paid to Rate Stabilization Reserve to fund Corridor• IBNR (Incurred but not reported) Reserve held by Service Cooperative• Groups retain plan design control• Groups have a fixed premium with no potential downside risk, with some

refund potential

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Fixed Costs:

Blue Cross Administrative Fee+3% Rate Guarantee, Includes pass through for ACA Taxes: $2.71 $9.97

Single Family Single Family Single FamilyStandard Common CDHPReform $26.81 $74.33 Reform $24.64 $68.50 Reform $18.33 $51.6551- 99 $25.02 $69.51 51- 99 $22.98 $64.11 51- 99 $17.15 $48.52100-199 $23.33 $65.04 100-199 $21.47 $60.04 100-199 $16.07 $45.64200-499 $21.78 $60.90 200-499 $20.04 $56.27 200-499 $15.07 $42.96500-899 $20.35 $57.09 500-899 $18.76 $52.81 500-899 $14.14 $40.49900+ $19.04 $53.56 900+ $17.56 $49.60 900+ $13.28 $38.20

Fixed Costs:

• Stop Loss +5.5%

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Single FamilySpecific Stop Loss $75,000 Per Member; 110% Aggregate 91.00$ 243.31$ Less than 100 lives $150,000 Per Member; 110% Aggregate 38.91$ 104.17$ 100 - 199 lives $200,000 Per Member; 110% Aggregate 20.06$ 53.90$ 200 + lives

Aggregate Stop Loss 110%

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Fixed Costs:

Five percent of savings negotiated with providers is set aside to build reserves; 0.75% is used for network development by Blue Cross and 4.25% is passed through to the Service Cooperative.

A charge of 1.2% of paid claims will be accrued for the Year End Provider Settlement Fee. This fee is an adjustment or payment made to certain providers following the end of the year

to cover deferred expenses in aligned incentive contracts or pay for performance incentives.

Service Cooperative Administrative Fee $11.85

Fitness Discount: $3.05 Single $6.09 Family

Overall 2013 Renewal Formula

• 50 Groups

• 6168 Contracts

• $75,000,000 Annual Equivalent Premium

• Individual Increases from -34.6% to +76.6%

• Overall Increase 17.4%

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Overall Renewal Released +9.9%

• Groups 100 lives and over:• Minimum 0%• Maximum 10.5%

• Groups under 100 lives (under 51 subject to MN reform)• Minimum 5%• Maximum 16.5%• Statutory limit may trump pool min and max

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