2015 blue cross and blue shield of kansas city individual-1 rate filing

Prepared for:Missouri Department of Insurance

Prepared by: One Pershing SquareThomas Nightingale, FSA, CERA, MAAA 2301 MainVice President, Finance & Chief Actuary Kansas City, MO 64108Blue Cross and Blue Shield of Kansas City Tel (888) 989-8842

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

Part III Actuarial Memorandum

Blue Cross and Blue Shield of Kansas CityIndividual Rate Filing

Effective January 1, 2015

_____________________________________________________________________ BCBSKC Individual Rate Filing Effective January 1, 2015 June 26,2014

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum_____________________________________________________________________

Exhibit 25 Reliance

Exhibit 26 Actuarial Certification

Exhibit 22 Plan Type

Exhibit 23 Warning Alerts

Exhibit 24 Eff Rate Review Info

Exhibit 19 AV Pricing Values

Exhibit 20 Membership Projections

Exhibit 21 Terminated Products

Exhibit 16 Calibration

Exhibit 17 Cons Adj Prem Rate Dev

Exhibit 18 AV Metal Values

Exhibit 13 Index Rate

Exhibit 14 Market Adj Index Rates

Exhibit 15 Plan Adj Index Rates

Exhibit 10 NBE, Profit, & Risk

Exhibit 11 Projected Loss Ratio

Exhibit 12 Single Risk Pool

Exhibit 7 Credibility of Experience

Exhibit 8 Paid to Allowed Ratio

Exhibit 9 Risk Adj and Reinsurance

Exhibit 4 Benefit Categories

Exhibit 5 Projection Factors

Exhibit 6 Credibility Man Rate Dev

Exhibit 1 General Information

Exhibit 2 Proposed Rate Increase(s)

Exhibit 3 Exp Premium and Claims

TABLE OF CONTENTS

The following table summarizes the exhibits included in this document. Some exhibits may span multiple pages.

Exhibit # Exhibit Title

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Primary Contact Telephone Number: (816) 395-2295Primary Contact Email Address: [email protected]

State: The State of Missouri has regulatory authority over these policies.HIOS Issuer ID: 34762Market: IndividualEffective Date: January 1, 2015

Company Contact Information

Primary Contact Name: Dustin Tindall

EXHIBIT 1. GENERAL INFORMATION

Document Overview

This document contains the Part III Actuarial Memorandum for Blue Cross and Blue Shield of Kansas Citys (BCBSKC)individual block of business, effective January 1, 2015. This actuarial memorandum is submitted in conjunction with the PartI Unified Rate Review Template.

The purpose of the actuarial memorandum is to provide certain information related to the submission, including support forthe values entered into the Part I Unified Rate Review Template, which supports compliance with the market rating rules andreasonableness of applicable rate increases. This information may not be appropriate for other purposes.

Company Identifying Information

Company Legal Name: Blue Cross and Blue Shield of Kansas City

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Table 2.1

Attribution Analysis of Proposed Rate IncreasesValue

$233.921.1151.0480.9590.980

$256.99

Service Type Inflation Utilization TotalInpatient 2.6% 17.2% 20.2%Outpatient 5.6% 13.0% 19.3%Professional 1.4% -1.5% -0.2%Ancillary 1.4% -1.5% -0.2%Pharmacy 1.4% -1.5% -0.2%

ItemPrior Year

ValueEffective

Year ValueTransitional Reinsurance $5.25 $3.67

Commissions 5.4% 3.2%

Effective January 1, 2015 benefits have changed based on state requirements, business decisions and new Actuarial ValueCalculator testing. The following are a list of the benefit changes:

Select Network plans changed the out-of-network, out-of-pocket maximum to $25,000. We are not making a rate change due to the increase in out-of-network out-of-pocket maximum because we are currently exceeding 2014 pricing assumptions for out-of-network use. Early 2014 experience indicates our projected discount savings is not reaching targets due to high out-of-network utilization. The change in benefits is intended to increase Select network use to be consistent with current pricing assumptions.

Blue Cross and Blue Shield of Kansas CityAnticipated Non-Benefit Expenses Changes

Reason for Adjustment

See belowThis change is not due to a change in the commission rate but rather a change in the expected utilization of commission payments.

Prospective Benefit Changes

Table 2.2Blue Cross and Blue Shield of Kansas City

Unit Cost and Utilization Trend Assumptions

New Taxes, Fees and Administrative Expenses

Changes to the overall premium level are needed because of required changes in federal/state taxes and fees. In addition, thereare expected changes in certain administrative costs. The following is a list of any anticipated changes and comments regardingthe adjustment:

Table 2.3

Transitional Reinsurance Benefit FactorNon Benefit Expense FactorMedical Management

2015 Rate

Medical Inflation & Increased Utilization

Claims costs were increased for anticipated changes due to medical/prescription drug inflation and increased medical/prescriptiondrug utilization. Below are the percentage increases for these changes:

EXHIBIT 2. PROPOSED RATE INCREASE(S)

Table 2.1 summarizes proposed rate increases by product effective January 1, 2015. The following are significant factors drivingthe proposed rate increases discussed below.

Blue Cross and Blue Shield of Kansas City

Factor2014 Rate

Trend & Change in Underlying Experience

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Table 2.4

Summary of Proposed Rate IncreasesProduct 2014 Rate 2015 Rate Rate Increase

Blue & U Classic PCB Silver $264.91 $291.21 9.9%

Blue & U Classic PCB Gold $318.18 $349.78 9.9%Blue & U Classic PCB Gold $324.05 $356.22 9.9%

Blue & U First PCB Bronze $188.34 $207.04 9.9%Blue & U First PCB Bronze $192.61 $211.73 9.9%


Blue & U First PCB Silver $245.46 $282.63 15.1%Blue & U First PCB Silver $250.36 $288.33 15.2%

Federal transitional reinsurance program contributions and benefit limits have changed from last year. Specifically, the reinsurancecontribution has changed from $63 PMPY to $44 PMPY. Further, the claims threshold upon which reinsurance recoveries aretriggered has changed from $60,000 to $70,000 and the federal coinsurance percentage has changed from 80% to 50%; therefore,there will be an increase in the individual rates. Changes in the benefit levels of the reinsurance recoveries will only impact theindividual market, while the changes in the reinsurance contribution levels will impact both the individual and small group markets.

Anticipated Single Risk Pool Morbidity

No change in Anticipated Single Risk Pool Morbidity adjustment for 2015 relative to 2014. See Exhibit 5 for details on the change in morbidity.

Medical Management

Medical management changes are expected to reduce costs by 2% in 2015.

The following table summarizes proposed rates increase(s) by product:

Removal of Value Based Benefits. We are not making a rate change due to the removal of value based benefits. Increased claim experience is expected to offset benefit reduction.

First PCB Silver and First Select Silver changed the deductible and out-of-pocket maximum from $4,750 to $4,200. Due to newCMS guidance using the Federal AV calculator for 2015 (CMS now requires 99.99% to be entered for non-copay based plans with100% coinsurance), our 2014 plan design fell outside the 2% de minimis range. The benefit change noted above is to bring theplans AV back into the de minimis range. We analyzed the impact of the benefit change using the Milliman Health Cost Guidelinesand we determined it to be a 4.7% increase in benefits.

Safety Net PCB Catastrophic and Safety Net Select Catastrophic changed the deductible and out-of-pocket maximum from $6,350to $6,600. The 2015 deductible and out-of-pocket maximum required for catastrophic plans changed from $6,350 to $6,600. Weanalyzed the impact of the benefit change using the Milliman Health Cost Guidelines and we determined it to be a -1.4% decreasein benefits.

Federal Transitional Reinsurance Program Changes

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Table 2.4 (cont.)

Summary of Proposed Rate IncreasesProduct 2014 Rate 2015 Rate Rate Increase

Blue & U Basic Select Silver N/A $218.15 New Plan in 2015Blue & U Basic Select Bronze N/A $163.44 New Plan in 2015

Blue & U Basic Select Silver N/A $213.16 New Plan in 2015Blue & U Basic Select Bronze N/A $159.72 New Plan in 2015

Blue & U Saver Select Bronze N/A $171.75 New Plan in 2015Blue & U Saver2 Select Bronze N/A $197.15 New Plan in 2015

Blue & U Saver Select Silver N/A $224.98 New Plan in 2015Blue & U Saver2 Select Silver N/A $219.69 New Plan in 2015

Blue & U Saver PCB Bronze N/A $202.06 New Plan in 2015Blue & U Saver2 PCB Bronze N/A $231.94 New Plan in 2015

Blue & U SafetyNet Select $130.14 $141.01 8.3%Blue & U Saver2 PCB Silver N/A $258.46 New Plan in 2015

Blue & U Saver Select Bronze $160.13 $176.03 9.9%Blue & U Saver2 Select Bronze $183.67 $201.91 9.9%

Blue & U Saver Select Silver $209.45 $230.25 9.9%Blue & U Saver2 Select Silver $204.81 $225.14 9.9%

Blue & U Classic Select Silver $225.18 $247.54 9.9%Blue & U Classic Select Silver $228.22 $250.89 9.9%

Blue & U Classic Select Gold $270.45 $297.31 9.9%Blue & U Classic Select Gold $275.44 $302.79 9.9%

Blue & U First Select Bronze $160.09 $175.99 9.9%Blue & U First Select Bronze $163.72 $179.97 9.9%

Blue & U First Select Silver $208.64 $240.23 15.1%Blue & U First Select Silver $212.81 $245.08 15.2%

Blue & U Saver2 PCB Bronze $216.09 $237.54 9.9%Blue & U SafetyNet PCB $153.11 $165.88 8.3%

Blue & U Saver2 PCB Silver $240.95 $264.87 9.9%Blue & U Saver PCB Bronze $188.39 $207.09 9.9%

Blue & U Saver PCB Silver $246.41 $270.87 9.9%Blue & U Saver PCB Silver $240.77 $264.68 9.9%


Blue & U Classic PCB Silver $268.50 $295.16 9.9%

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Blue Cross and Blue Shield of Kansas City Actuarial Memorandum______________________________________________________________________

Table 3.1

Experience Allowed Claims and Premium

MonthTotal Billed Premiums

AllowedMedical

Medical Completion

FactorEstimated

Medical Allowed Rx

Rx Completion

FactorEstimated

RxAllowed

Capitation

Total Claims

Including IBNR

Jan 13 $3,008,674 $2,841,401 1.0016 $2,836,795 $451,644 0.9989 $452,136 $23,024 $3,311,955Feb 13 $3,045,427 $2,380,368 1.0013 $2,377,187 $391,751 0.9988 $392,205 $23,776 $2,793,167Mar 13 $3,071,347 $2,798,721 1.0012 $2,795,245 $431,785 0.9988 $432,302 $24,352 $3,251,898Apr 13 $3,180,675 $3,415,391 1.0011 $3,411,618 $466,163 0.9987 $466,747 $25,219 $3,903,585May 13 $3,206,331 $3,324,364 1.0008 $3,321,672 $464,954 0.9988 $465,522 $25,882 $3,813,076Jun 13 $3,274,240 $3,469,377 1.0003 $3,468,364 $458,836 0.9987 $459,417 $26,535 $3,954,316Jul 13 $3,397,421 $4,098,713 0.9995 $4,100,877 $477,978 0.9987 $478,601 $27,339 $4,606,817Aug 13 $3,466,472 $3,699,234 0.9946 $3,719,229 $529,569 0.9987 $530,264 $28,369 $4,277,862Sep 13 $3,577,436 $3,788,816 0.9935 $3,813,438 $505,446 0.9986 $506,137 $29,482 $4,349,057Oct 13 $3,713,818 $3,963,426 0.9890 $4,007,377 $562,247 0.9986 $563,060 $30,596 $4,601,033Nov 13 $3,785,968 $3,678,671 0.9830 $3,742,460 $572,431 0.9984 $573,329 $31,590 $4,347,379Dec 13 $3,978,932 $4,469,840 0.9730 $4,593,788 $676,211 0.9982 $677,414 $33,476 $5,304,678Total $40,706,740 $41,928,322 0.9938 $42,188,049 $5,989,015 0.9986 $5,997,134 $329,639 $48,514,822

Ineligible claims such as duplicate claims, third party liabilities (e.g. coordination of benefits claims), and any other claimsthat are denied under the policy terms.

Payments for services other than medical care provided, (e.g., medical management, quality improvement, and frauddetection and recovery expenses) even if these amounts are included in claims for MLR reporting purposes.

Recovery payments the issuer may receive from private reinsurance or internal large claim pooling mechanisms.

Active life reserves (policy reserves, contract reserves, contingency reserves, or any kind of reserves except traditionallydefined reserves for claims incurred but not paid) or change in such reserves).

Method for Determining Paid Claims

The following table summarizes the experience premium and incurred claims as listed in Worksheet 1, Section I of the Part IUnified Rate Review Template:

EXHIBIT 3. EXPERIENCE PREMIUM AND CLAIMS

Experience for CY2013 is used as a basis for rate development. Experience period claims are paid through March 31, 2014.

Method for Determining Allowed Claims

The following table summarizes the experience premium and allowed claims as listed in Worksheet 1, Section I of the Part IUnified Rate Review Template:


Allowed Claims are defined as the total payments made under the policy to healthcare providers on behalf of covered members,and include payments made by the issuer, member cost sharing, and cost sharing paid by HHS on behalf of low-income members.Consequently, they include actual payments made or estimates of costs incurred but not yet paid during the period. They alsoinclude claims not tied to a specific date of service, such as capitation or risk sharing payments, if the payments were for servicesprovided during the Experience Period. They include claims for essential health benefits (EHB) as well as benefits other than EHB.By definition, Allowed Claims do not include:

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Blue Cross and Blue Shield of Kansas City Actuarial Memorandum______________________________________________________________________

EXHIBIT 3. EXPERIENCE PREMIUM AND CLAIMS

Table 3.2

Experience Incurred Claims and Premium by Product

MonthTotal Billed Premiums

Paid Medical

Medical Completion

FactorEstimated

Medical Paid Rx

Rx Completion

FactorEstimated

RxPaid

Capitation

Total Claims

Including IBNR

Jan 13 $3,008,674 $1,625,375 1.0016 $1,622,743 $329,538 0.9989 $329,900 $23,024 $1,975,667Feb 13 $3,045,427 $1,468,202 1.0013 $1,466,249 $290,026 0.9988 $290,366 $23,776 $1,780,390Mar 13 $3,071,347 $1,905,948 1.0012 $1,903,601 $322,705 0.9988 $323,096 $24,352 $2,251,049Apr 13 $3,180,675 $2,365,646 1.0011 $2,363,032 $351,194 0.9987 $351,640 $25,219 $2,739,891May 13 $3,206,331 $2,340,163 1.0008 $2,338,301 $346,097 0.9988 $346,524 $25,882 $2,710,707Jun 13 $3,274,240 $2,515,574 1.0003 $2,514,819 $353,450 0.9987 $353,904 $26,535 $2,895,258Jul 13 $3,397,421 $3,127,159 0.9995 $3,128,835 $358,652 0.9987 $359,128 $27,339 $3,515,301Aug 13 $3,466,472 $2,645,554 0.9947 $2,659,638 $402,919 0.9987 $403,453 $28,369 $3,091,460Sep 13 $3,577,436 $2,624,208 0.9936 $2,641,234 $386,699 0.9986 $387,233 $29,482 $3,057,949Oct 13 $3,713,818 $2,798,632 0.9890 $2,829,637 $426,885 0.9985 $427,508 $30,596 $3,287,740Nov 13 $3,785,968 $2,709,477 0.9830 $2,756,456 $445,639 0.9984 $446,344 $31,590 $3,234,391Dec 13 $3,978,932 $3,305,067 0.9730 $3,396,807 $528,884 0.9982 $529,835 $33,476 $3,960,118Total $40,706,740 $29,431,004 0.9936 $29,621,352 $4,542,686 0.9986 $4,548,930 $329,639 $34,499,921

Liabilities for both incurred but not reported and received but not yet paid claims are determined using actuarial methods that arecommonly used by health insurance actuaries and meet Actuarial Standards of Practice. Actuarial Standards of Practice requirethat the claims liabilities be adequate under moderately adverse circumstances. BCBSKC determines the amount of the liabilityfor incurred but not reported claims by following a detailed actuarial process that uses both historical claim payments as well asemerging medical cost trends.

For the most recent incurred months, the percentage of claims paid for claims incurred in those months is generally low. Thismakes the completion factor methodology less reliable for such months. Therefore, incurred claims for recent months are not onlyprojected from historical completion and payment patterns; rather, they are supplemented by estimating a per member per monthclaims expense based on recent experience. Seasonality adjustments are utilized where appropriate. A weighting mechanism isused to develop final incurred claims estimates whereby, for a given month, the incurred claims developed using the completionfactor method and the incurred claims developed using the recent PMPM values are blended to arrive at a final estimate for the

thBecause the reserve methodology is based upon historical information, it must be adjusted for known or suspected operationaland environmental changes. These kinds of changes include utilization levels, unit costs, mix of business, benefit plan designs,membership changes, large (shock) cases, provider reimbursement levels, processing system conversions and changes, claiminventory levels, claim processing patterns and claim submission patterns. A comparison of prior period liabilities to re-estimatedclaim liabilities based on subsequent claims development, called a recast of claims, is also considered in making the liabilitydetermination. The recast serves as a check on prior calculations, and can also serve as a guide to more accurately calculateclaim reserves in the future.


All paid claims processed both in and out of the claim system were included. All of the medical claims were processed within thesystem and the prescription drug claims were processed outside of the system. An estimate of incurred but not paid claims wasadded to the processed amount to arrive at a final estimate of total paid claims. No estimate of incurred but not paid claims wasadded to the capitated claims.

Method for Determining Paid Cost Sharing

All paid member cost sharing processed both in and out of the claim system were included. All of the medical claims wereprocessed within the system and the prescription drug claims were processed outside of the system. An estimate of incurred butnot paid member cost sharing was added to the processed amount to arrive at a final estimate of total paid member cost sharing.For capitated paid claims, cost sharing was estimated using plan design information.

Method for Determining Incurred But Not Reported Paid Claims

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Prescription Drug

Includes drugs dispensed by a pharmacy. This amount is net of rebates received from drug manufacturers.

Professional

Includes non-capitated primary care, specialist, therapy, the professional component of laboratory and radiology, and otherprofessional services, other than hospital based professionals whose payments are included in facility fees.

Other Medical

Includes non-capitated ambulance, home health care, DME, prosthetics, supplies, vision exams, dental services and otherservices.

Capitation

Includes all services provided under one or more capitated arrangements.

EXHIBIT 4. BENEFIT CATEGORIES

We assigned the experience data utilization and cost information to benefit categories based on place and type of serviceusing a detailed claims mapping algorithm summarized as follows:

Inpatient Hospital

Includes non-capitated facility services for medical, surgical, maternity, mental health and substance abuse, skilled nursing,and other services provided in an inpatient facility setting and billed by the facility.

Outpatient Hospital

Includes non-capitated facility services for surgery, emergency room, lab, radiology, therapy, observation and other servicesprovided in an outpatient facility setting and billed by the facility.

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1.

2.

3. Combine steps 1 and 2 to determine the change from Blue KC average experience period risk to 2014 statewide averagerisk. The final adjustment factor of 26.2% to our experience is the product of step 1 and 2. This is the estimated increasefrom current Blue KC risk level to 2014 statewide average risk.

1.414 / (1 + .1203) = 1.262

Estimate the change in statewide average risk for all issuers from the experience period to 2014.

The Affordable Care Act will result in a complete transformation of the individual/direct pay insurance market in 2014.Significant new enrollment is expected as previously uninsured people choose to enroll. However, not all uninsured areexpected to enroll, particularly more healthy people, resulting in potential adverse selection. In addition, existing high-riskpool members are likely to move to less expensive exchange products and group enrollees may enter the individualmarket as they or their employers make economically rational decisions regarding their existing coverage.

Unfortunately, there is a wide range of potential outcomes and many variables will affect the average risk and cost in 2014.Our projection of the change in statewide average risk is primarily based on a report published in March 2013 by theSociety of Actuaries (SOA), Cost of the Future Newly Insured under the Affordable Care Act (ACA), along with thesupporting population movement and cost model for the State of Kansas. The ACA report is based on the Lewin GroupHealth Benefits Simulation Model (HBSM). We also made use of state specific population and health status migrationmetrics, based on a population study performed by Milliman.

These two studies, along with internal Blue KC modeling, resulted in potential outcomes ranging from a 32% increase instatewide average risk to a 50% increase. In estimating the potential cost of the currently uninsured, both the HBSM andthe Milliman model rely on self-reported health status information from the Current Population Survey and may makedifferent assumptions about the credibility of that data. In addition, each model makes different assumptions regardingindividual choices and the propensity to purchase insurance.

After assessing all of the information available, we have estimated a change in state average risk to 2014 of 41.4%, whichis approximately mid-way between at the HBSM and the Milliman models.

BCBSKCs proposed rate should reflect the anticipated statewide average risk level for the enrolled population in 2015. This isnecessary since the federal/state risk adjustment program will cause issuers to pay into the risk adjustment pool if they havebetter than average risk, compared to the state average, and will receive funds from the pool if they have worse than averagerisk. In order to have funds available to pay into the pool (if our risk is better than average) or, alternatively, to not overchargeenrollees (if our risk is worse than average), we should establish rates at the expected statewide average risk level.

At this time, we do not have sufficient new information that would allow for a change to the morbidity assumed in 2014.Therefore, we have not changed our assumed morbidity level for 2015 relative to 2014.

In order to maintain the same morbidity level in 2015 as in 2014, two adjustments are needed (1) an adjustment factor toreturn the baseline morbidity to the level implied in the 2014 rating population (see Exhibit 5 Other Adjustments for furtherexplanation); and (2) the 26.2% morbidity load used in 2014 rating (see process below for additional details).

The three-step process listed below was used to develop the 2014 morbidity adjustment.

Determine the difference between the Blue KC average risk for our insured enrollees as compared to the insured risk levelfor all issuers in the state during a common experience period.

Blue KC participated in a risk adjustment simulation sponsored and performed by Wakely Consulting. Based on theresults of this analysis, Blue KC has a risk level 12.03% below the average for all issuers in Missouri.

EXHIBIT 5. PROJECTION FACTORS

This section includes a description of each factor used to project the experience period allowed claims to the projection period,and supporting information related to the development of those factors.

Changes in the Morbidity of the Population Insured

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The projected decrease in claims cost resulting from the addition of a new narrow network plan option in the projectedperiod experience.

Shifts in the mixture of services across existing network providers.

Trend Factors (Cost/Utilization)

Other Adjustments

The other adjustments shown in Worksheet 1, Section II of the Unified Rate Review Template include the following items:

The addition of EHB coverages that were not present in the base period experience.

As noted above under Exhibit 5 Changes in Morbidity of the population Insured, the 2015 URRT instructions require theuse of an experience base for a different population than we used in setting the 2014 rates. Therefore, in order to maintainthe same morbidity level for 2015 as for 2014, an adjustment, or calibration, factor has been applied to the CY2013 data toadjust for the differences in populations used in the 2014 and 2015 rate setting process. BCBSKC believes the populationused in the 2014 rate filing will be more reflective of the 2015 single risk pool, prior to the 2014 41.4% morbidity adjustment(see Exhibit 5 Changes in Morbidity of the population Insured). Also, at this time, we do not have sufficient newinformation that would allow for a change to the morbidity assumed in 2014. Therefore we believe it is appropriate tomaintain the same morbidity level assume in the 2014 rates, which requires the use of this calibration factor.

The estimated change in average age from the base period experience to the projected period experience.

The anticipated change in smoker/non-smoker distribution of membership from the base period experience to the projectedperiod experience.

All experience period plans' current 2013 benefits were valued using the Milliman HealthCost Guidelines ("HCGs").

The experience period plans were alternately valued with the addition of all required EHB coverages.

A weighted average EHB benefit increase was calculated using the ratio of the estimated cost with all EHBs versus the starting experience period costs (where both experience and projected costs are measured using the HCGs).

Changes in Demographics

We used the following data source(s) and methodology in order to estimate the changes in the demographic and geographicmix of the population, as shown in the Other column of Worksheet 1, Section II:

The assumption regarding changes in demographics is based on the projected migration of individuals in the state from theSOA study. These projections were used to determine not only the shift in the average age of the state but also that ofBCBSKC.

Note that since our risk level is below the current statewide average, our increase needs to be greater than 41.4% toachieve the same final 2014 statewide average risk. The final population risk morbidity adjustment shown on worksheet #1of the Unified Rate Review template reflects the shift in the actual expected morbidity of BCBSKC, which is below theanticipated state average risk morbidity level. The remaining portion of the total risk adjustment is therefore an anticipatedrisk transfer payment that would be made to the state.

Changes in Benefits

The benefit change factors which are embedded in the "Other" adjustments column on Worksheet I, Section II were developedby the following method:

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Our observed per member per month claim cost trend for direct pay has been exceptionally volatile over the past 18 to 24months. For the 12 months ending March 2013, direct pay observed trend was approximately 11.7%. Right now the trend isincreasing as the 3-month moving average trend is higher than the 12-month moving trend, but this will reverse. Projectingtrends into the future, we expect the observed trend to decrease and level out in the 6% to 8% range.

However, observed trend is affected by changes in benefits, demographic changes, along with lapse rates and new sales. Thefactor with the largest impact is the tendency of existing policyholders and new enrollees to move to higher cost sharing benefitplans. We have analyzed the effect of these factors and normalized claim trend to remove the effect of age/gender changes,health status changes, benefit changes, and other movements within the rate structure (e.g., geographic area, family size,etc.). The resulting underlying trend is, in general, approximately 2% to 4% higher than observed trend. Therefore, we areexpecting underlying claim trend to be in the 11% to 12% range.

Direct pay cost and utilization observed trends by type of service (i.e., inpatient, outpatient, etc.) are measured independentlyand then adjusted for the above noted effect of changes in benefits, demographics and other factors such that they balance tothe overall 11% to 12% forecasted underlying claim trend. The resulting trends are best estimates of future underlyingutilization and cost per service increases by type of service for direct pay business.

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EXHIBIT 6. CREDIBILITY MANUAL RATE DEVELOPMENT

Not applicable. BCBSKCs experience in the base period is fully credible, for the purposes of the rate projection.

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Since prescription drug and medical coverage are both covered under one plan, then the above medical formula wasused for the determination of partial credibility. The use of the CMS MA/PD credibility is appropriate given that bothMA/PD and Commerical cover similar benefit categories.

Resulting Credibility Level Assigned to the Base Period Experience

The credibility assigned ot the base period experience is 100%.

EXHIBIT 7. CREDIBILITY OF EXPERIENCE

Description of the Credibility Method Used

The CMS guidelines used for Medicare Advantage/Prescription Drug Plans (MA/PD) were used to determine thecredibility of the experience. These guidelines specify 24,000 member months as 100% credible for medical and specifythe following formula for determination of partial credibility:

(n / 24,000)^(1/2) for medical and (n / 12,000)^(1/2) for prescription drugs,

where n = member months in the experience period.

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Average Paid to Allowed Ratio 65.8% 68.3%

The average factor Worksheet 1 shown above was developed based on the projection of the average mix of plans sold. TheWorksheet 2 factor shown above was measured using the projected Allowed PMPMs by plan from Worksheet 2 and theActuarial Value calculated using the Federal AV Calculator model.

Allowed Per Member Per Month $390.91 $390.90Paid Per Member Per Month $257.34 $266.84

EXHIBIT 8. PAID TO ALLOWED RATIO

The following table provides support for the average paid to allowed ratio shown in Worksheet 1, Section III. The table alsodemonstrates that the ratio is consistent with membership projections by plan included in Worksheet 2.


Paid to Allowed Average Factor Support ExhibitWorksheet 1, Section III Worksheet 2 Section IV

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Individual membership is eligible for reinsurance recoveries. Based on BCBSKCs projected enrollment mix of individual andsmall group membership, the average reinsurance recoveries PMPM are $19.02 PMPM. After the reinsurance contribution of$3.67 the net recovery is $15.35 PMPM.

EXHIBIT 9. RISK ADJUSTMENT AND REINSURANCE

Projected Risk Adjustments PMPM

The risk score for the plan's experience in 2015 is projected to be about 34% below the expected state average risk score in2015. The estimates of relative risk and risk transfer payments are highly dependent on the number of currently uninsuredwho elect coverage in 2015 not only with BCBSKC but also with other carriers.

The risk transfer payments were allocated proportionally to all plans based on plan premium. BCBSKC's average risk isprojected to be under the state average risk level. As a result BCBSKC has set premium levels at the anticipated stateaverage risk level with the expectation that a portion of this premium will be paid to those carriers with higher risk levels.

Projected ACA Reinsurance Recoveries Net of Reinsurance Premium (Individual Market and Combined Markets Only)

We estimated additional costs due to the Federal transitional reinsurance program. Differences exist between the marketssince only the individual market is subsidy-eligible. We assumed the individual market, on and off the exchange, will pay$3.67 PMPM in reinsurance contributions.

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The following table summarizes retention components included in rate development.

PMPM % Premium BasisAdministrative Expense LoadGeneral Administrative Expense Load 39.41$ 9.36% % of PremiumCommissions 13.33$ 3.16% % of Premium

+ Quality Improvement 1.37$ 0.33% PMPMSubtotal: Administrative Expense Load 54.11$ 12.85%

+ Profit and Risk Load 16.05$ 3.81% % of PremiumSubtotal: Profit and Risk Load 16.05$ 3.81%

Taxes and FeesComparative Effectiveness Research Fee 0.17$ 0.04% PMPMHealth Insurance Provider Fee 10.11$ 2.40% % of Premium (7)State Premium Tax -$ 0.00% % of Premium (8)

+ Exchange Fee 10.32$ 2.45% % of PremiumSubtotal: Taxes and Fees 20.60$ 4.89%

+ (8) + (9)90.76$ 21.55%

The following table summarizes taxes and fees included in rate development.

1Applies to On Exchange members only

Health Insurer Fee 2.4% of PremiumExchange User Fee1 3.5% of Premium


Summary of Taxes and FeesDescription AmountComparative Effectiveness Research $0.17 PMPM

(9)(10) = (6) + (7)

Total Retention (11) = (4) + (5) + (10)

Cost accounting figures were examined to determine the appropriate level for administrative expenses and then any anticipatedchanges in administrative costs were considered.

BCBSKC is targeting a 3.0% contribution to surplus. This has been a standard for pricing products at BCBSKC. The remaining0.81% in profit and risk load is intended to offset lost premium due to the inability to charge for children in excess of 3 dependents.

(1)(2)(3)(4) = (1) + (2) + (3)

(5)

(6)

EXHIBIT 10. NON-BENEFIT EXPENSES AND PROFIT & RISK


Illustration of Administrative Expenses by URRT Worksheet 1 CategoryRetention Description Annotation

17_



EXHIBIT 11. PROJECTED LOSS RATIO

The projected loss ratio is 84.8%. This loss ratio is calculated consistently with the MLR methodology according to the National Association of Insurance Commissioners as prescribed by 211 CMR 147.00.

18_



EXHIBIT 12. SINGLE RISK POOL

BCBSKC rates are developed using a single risk pool that reflects all covered lives for every non-grandfathered product/plancombination, in the State of Missouri individual health insurance market.

Note that the Single Risk Pool includes transitional products/plans for purposes of the base rate experience; however, theexperience for these policies has only been used in the projection to the extent that BCBSKC anticipates the members inthose policies will be enrolled in their fully ACA-compliant plans during the projected period.

19_



EXHIBIT 13. INDEX RATE

The index rate for the experience period is a measurement of the average allowed claims PMPM for EHB benefits. The experience period index rate reflects the actual mixture of smoker/non-smoker population, area factors, catastrophic/non-catastrophic enrollment, and the actual mixture of risk morbidity that BCBSKC received in the Single Risk Pool during the experience period. Note that there were no additional benefits offered beyond the EHB benefits. The experience Index Rate has not been adjusted for payments and charges under the risk adjustment and reinsurance programs, or for Exchange user fees.

The experience period Index Rate is equal to the experience period total allowed claims PMPM since there are no benefits that were offered beyond the EHB benefits.

The index rate for the projection period is a measurement of the average allowed claims PMPM for EHB benefits. The projected index rate reflects the projected 2015 mixtures of smoker/non-smoker population, area factors, catastrophic/non-catastrophic enrollment, and the projected mixture of risk morbidity that BCBSKC expects to receive in the Single Risk Pool. Note that there are no additional benefits being offered beyond the EHB benefits. The projected Index Rate has not been adjusted for payments and charges projected under the risk adjustment and reinsurance programs, or for Exchange user fees.

The projected Index Rate is equal to the projected total allowed claims PMPM since there are no benefits offered beyond the EHB benefits. However, it is not the same as the Index rate that is used for development of plan premiums.

20_



Each of the above modifiers were developed as follows:

The exchange user fee adjustment was determined as the weighted average of no adjustment and the exchangeuser fee adjustment using the expected distribution of enrolloment sold off versus on exchange.

The Market Adjusted Index Rate is not calibrated. This means that this rate reflects the average demographic characteristicsof the single risk pool.

Net Risk AdjustmentThe risk score for the plan's experience in 2015 is projected to be about 34% under the expected state averagerisk score in 2015. The estimates of relative risk and risk transfer payments are highly dependent on the numberof currently uninsured who elect coverage in 2015 not only with BCBSKC but also with other carriers. The risktransfer payments were allocated proportionally to all plans based on plan premium. BCBSKC's average risk isprojected to be below the state average risk level. As a result BCBSKC has set premium levels at the anticipatedstate average risk level with the expectation that a portion of this premium will be paid to those carriers with higherrisk levels.

Net Transitional ReinsuranceThis factor includes the impact of the estimated Transitional Reinsurance PMPM recovery in addition to theassumed recoveries as discussed in Exhibit 9.

Exchange user fee adjustment

Exchange Fee 1.031Impact of Market Reforms 1.324

Market Adjusted Index Rate $517.73

Index Rate $390.91

Net Risk Adjustment 1.344Net Transitional Reinsurance 0.956

EXHIBIT 14. MARKET ADJUSTED INDEX RATES

The following table summarizes the factors applied to the Index Rate to determine the Market Adjusted Index Rate.

Table 14.1Blue Cross and Blue Shield of Kansas CityMarked Adjusted Index Rate Development

21_


Blue Cross and Blue Shield of Kansas City Actuarial Memorandum_________________________________________________________________________

Plan

Market Adjusted

Index RateAV & Cost

Sharing

Provider Network

Adjustment

Benefits In Addition to

EHBs

Tobacco Surcharge Adjustment

Administrative Costs Excl.

Exchange Fee

Specific Catastrophic

Eligibility

Plan Adjusted

Index Rate

Blue & U First PCB Silver $517.73 0.684 1.049 1.000 0.986 1.236 1.002 $453.62Blue & U First PCB Silver $517.73 0.698 1.049 1.000 0.986 1.236 1.002 $462.77Blue & U First PCB Bronze $517.73 0.501 1.049 1.000 0.986 1.236 1.002 $332.29Blue & U First PCB Bronze $517.73 0.512 1.049 1.000 0.986 1.236 1.002 $339.83Blue & U Classic PCB Gold $517.73 0.846 1.049 1.000 0.986 1.236 1.002 $561.38Blue & U Classic PCB Gold $517.73 0.862 1.049 1.000 0.986 1.236 1.002 $571.72Blue & U Classic PCB Silver $517.73 0.705 1.049 1.000 0.986 1.236 1.002 $467.39Blue & U Classic PCB Silver $517.73 0.714 1.049 1.000 0.986 1.236 1.002 $473.73Blue & U Saver PCB Silver $517.73 0.655 1.049 1.000 0.986 1.236 1.002 $434.75Blue & U Saver PCB Silver $517.73 0.640 1.049 1.000 0.986 1.236 1.002 $424.81Blue & U Saver2 PCB Silver $517.73 0.641 1.049 1.000 0.986 1.236 1.002 $425.12Blue & U Saver PCB Bronze $517.73 0.501 1.049 1.000 0.986 1.236 1.002 $332.38Blue & U Saver2 PCB Bronze $517.73 0.575 1.049 1.000 0.986 1.236 1.002 $381.25Blue & U SafetyNet PCB $517.73 0.446 1.049 1.000 0.986 1.236 0.902 $266.24Blue & U First Select Silver $517.73 0.684 0.892 1.000 0.986 1.236 1.002 $385.57Blue & U First Select Silver $517.73 0.698 0.892 1.000 0.986 1.236 1.002 $393.35

Blue Cross and Blue Shield of Kansas CityPlan Adjusted Index Rate Development

Impact of specific eligibility categories for the catastrophic plan This adjustment was developed to illustrate the impact of the restricted age requirements in the Catastrophic risk pool, and the expected risk score specific to that population. There is an offsetting adjustment in the Metallic risk pool in order to stay at the 1.0 overall, due to the fact that the Index Rate was developed for both the Metallic and Catastrophic risk pools combined.

Adjustment for distribution and administrative costs Adjustment is developed to indicate the impact of non benefit expenses. This adjustment may differ by plan due to the relative impact of administrative costs that are developed as a PMPM rather than as a percent of premium.

The following table demonstrates Plan Adjusted Index Rate development for each plan:

Table 15.1

Products offered through the Select network are priced to be 15% below their PCB counterparts. This is due to higher discounts offered by providers through the narrower Select network. The Basic family of plans receives a 0.5% reduction in price due to a drug network through Wal-Mart/Sams Club. The reduction is due to the network offering slightly higher discounts off AWP and reduced dispensing fees.

Adjustment for benefits in addition to the EHBs There are no benefits being offered above the EHBs.

Impact of tobacco surcharge adjustment Adjustment is developed so that the resulting Plan Adjusted Index Rate excludes the cost expected to be recouped through the tobacco surcharge. Industry research regarding tobacco use and differences in health costs for smokers by age was used as the basis of our adjustment.

EXHIBIT 15. PLAN ADJUSTED INDEX RATES

The Market Adjusted Index Rate is adjusted to compute the Plan Adjusted Index Rates using the following allowable adjustments:

Actuarial value and cost sharing adjustment The CMS Actuarial Value Calculator was used to determine the actuarial value for each plan. The cost sharing adjustment was developed utilizing Milliman's 2013 Health Cost Guidelines. Relativities between plans were based on the differences in cost and utilization for varying levels of cost sharing.

Provider network, delivery system and utilization management adjustment

22_



EXHIBIT 15. PLAN ADJUSTED INDEX RATES

Plan

Market Adjusted

Index RateAV & Cost

Sharing

Provider Network

Adjustment

Benefits In Addition to

EHBs



Exchange Fee


Eligibility

Plan Adjusted

Index Rate

Blue & U First Select Bronze $517.73 0.501 0.892 1.000 0.986 1.236 1.002 $282.46Blue & U First Select Bronze $517.73 0.512 0.892 1.000 0.986 1.236 1.002 $288.85Blue & U Classic Select Gold $517.73 0.846 0.892 1.000 0.986 1.236 1.002 $477.17Blue & U Classic Select Gold $517.73 0.862 0.892 1.000 0.986 1.236 1.002 $485.97Blue & U Classic Select Silver $517.73 0.705 0.892 1.000 0.986 1.236 1.002 $397.29Blue & U Classic Select Silver $517.73 0.714 0.892 1.000 0.986 1.236 1.002 $402.66Blue & U Saver Select Silver $517.73 0.655 0.892 1.000 0.986 1.236 1.002 $369.54Blue & U Saver2 Select Silver $517.73 0.641 0.892 1.000 0.986 1.236 1.002 $361.35Blue & U Saver Select Bronze $517.73 0.501 0.892 1.000 0.986 1.236 1.002 $282.53Blue & U Saver2 Select Bronze $517.73 0.575 0.892 1.000 0.986 1.236 1.002 $324.06Blue & U SafetyNet Select $517.73 0.446 0.892 1.000 0.986 1.236 0.902 $226.31Blue & U Saver2 PCB Silver $517.73 0.625 1.049 1.000 0.986 1.236 1.002 $414.82Blue & U Saver PCB Bronze $517.73 0.489 1.049 1.000 0.986 1.236 1.002 $324.31Blue & U Saver2 PCB Bronze $517.73 0.561 1.049 1.000 0.986 1.236 1.002 $372.26Blue & U Saver Select Silver $517.73 0.640 0.892 1.000 0.986 1.236 1.002 $361.08Blue & U Saver2 Select Silver $517.73 0.625 0.892 1.000 0.986 1.236 1.002 $352.59Blue & U Saver Select Bronze $517.73 0.489 0.892 1.000 0.986 1.236 1.002 $275.66Blue & U Saver2 Select Bronze $517.73 0.561 0.892 1.000 0.986 1.236 1.002 $316.42Blue & U Basic Select Silver $517.73 0.610 0.887 1.000 0.986 1.236 1.002 $342.12Blue & U Basic Select Bronze $517.73 0.457 0.887 1.000 0.986 1.236 1.002 $256.34Blue & U Basic Select Silver $517.73 0.624 0.887 1.000 0.986 1.236 1.002 $350.13Blue & U Basic Select Bronze $517.73 0.468 0.887 1.000 0.986 1.236 1.002 $262.31Total $517.73 0.657 1.000 1.000 0.986 1.236 1.000 $415.42

Table 15.1 (cont.)Blue Cross and Blue Shield of Kansas City

Plan Adjusted Index Rate Development

The Plan Adjusted Index Rates reflect the average demographic characteristics of the single risk pool and therefore are not calibrated.

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Plan

Plan Adjusted

Index Rate

Age Calibration

Factor

Geography Calibration

FactorCalibration

Factor

Calibrated Plan Adjusted Index

RateBlue & U First PCB Silver $453.62 1.605 1.000 1.605 $282.63Blue & U First PCB Silver $462.77 1.605 1.000 1.605 $288.33Blue & U First PCB Bronze $332.29 1.605 1.000 1.605 $207.04Blue & U First PCB Bronze $339.83 1.605 1.000 1.605 $211.73Blue & U Classic PCB Gold $561.38 1.605 1.000 1.605 $349.77Blue & U Classic PCB Gold $571.72 1.605 1.000 1.605 $356.21Blue & U Classic PCB Silver $467.39 1.605 1.000 1.605 $291.21Blue & U Classic PCB Silver $473.73 1.605 1.000 1.605 $295.16Blue & U Saver PCB Silver $434.75 1.605 1.000 1.605 $270.87Blue & U Saver PCB Silver $424.81 1.605 1.000 1.605 $264.68Blue & U Saver2 PCB Silver $425.12 1.605 1.000 1.605 $264.87Blue & U Saver PCB Bronze $332.38 1.605 1.000 1.605 $207.09Blue & U Saver2 PCB Bronze $381.25 1.605 1.000 1.605 $237.54Blue & U SafetyNet PCB $266.24 1.605 1.000 1.605 $165.88Blue & U First Select Silver $385.57 1.605 1.000 1.605 $240.23Blue & U First Select Silver $393.35 1.605 1.000 1.605 $245.08Blue & U First Select Bronze $282.46 1.605 1.000 1.605 $175.99Blue & U First Select Bronze $288.85 1.605 1.000 1.605 $179.97Blue & U Classic Select Gold $477.17 1.605 1.000 1.605 $297.30Blue & U Classic Select Gold $485.97 1.605 1.000 1.605 $302.78Blue & U Classic Select Silver $397.29 1.605 1.000 1.605 $247.53Blue & U Classic Select Silver $402.66 1.605 1.000 1.605 $250.88Blue & U Saver Select Silver $369.54 1.605 1.000 1.605 $230.25

Plan Adjusted Index Rate Calibration

Geographic Factor Calibration

In order to determine the calibration factor for geography, the projected distribution of members by area was determined. Theweighted average of the area factors was then determined using this distribution. BCBSKC set its geographic area factors suchthat the calibration factor would be 1.0.

Additional information regarding the area rating factors can be found on Exhibit 17.

The following table demonstrates the calibration performed for each plan.


EXHIBIT 16. CALIBRATION

A single calibration factor is applied to the Plan Adjusted Index Rates from Exhibit 15 to calibrate rates for the expected age,tobacco, and geographic distribution expected to enroll in the plan. The single calibration factor is applied uniformly across allplans.

Age Curve Calibration

The approximate weighted average age, rounded to a whole number, for the single risk pool is 48. The weighted average agecurve calibration factor is 1.605.

In order to determine the calibration factor for age, the projected distribution of members by age was determined. The weightedaverage of the factors in the age curve was then determined using this distribution. The average age was then determined byfinding the age of a member that would have the closest factor to the weighted average age curve calibration factor. Prior toapplying the allowed rating factors for age, geography and tobacco, the plan adjusted index rates need to be divided by the agecurve calibration factor.

Additional information regarding the age curve can be found on Exhibit 17.

24_



EXHIBIT 16. CALIBRATION

Plan

Plan Adjusted

Index Rate

Age Calibration

Factor

Geography Calibration

FactorCalibration

Factor

Calibrated Plan Adjusted Index

RateBlue & U Saver2 Select Silver $361.35 1.605 1.000 1.605 $225.14Blue & U Saver Select Bronze $282.53 1.605 1.000 1.605 $176.03Blue & U Saver2 Select Bronze $324.06 1.605 1.000 1.605 $201.91Blue & U SafetyNet Select $226.31 1.605 1.000 1.605 $141.00Blue & U Saver2 PCB Silver $414.82 1.605 1.000 1.605 $258.45Blue & U Saver PCB Bronze $324.31 1.605 1.000 1.605 $202.06Blue & U Saver2 PCB Bronze $372.26 1.605 1.000 1.605 $231.94Blue & U Saver Select Silver $361.08 1.605 1.000 1.605 $224.97Blue & U Saver2 Select Silver $352.59 1.605 1.000 1.605 $219.68Blue & U Saver Select Bronze $275.66 1.605 1.000 1.605 $171.75Blue & U Saver2 Select Bronze $316.42 1.605 1.000 1.605 $197.15Blue & U Basic Select Silver $342.12 1.605 1.000 1.605 $213.16Blue & U Basic Select Bronze $256.34 1.605 1.000 1.605 $159.72Blue & U Basic Select Silver $350.13 1.605 1.000 1.605 $218.15Blue & U Basic Select Bronze $262.31 1.605 1.000 1.605 $163.43

Table 16.1 (cont.)Blue Cross and Blue Shield of Kansas City

Plan Adjusted Index Rate Calibration

25_



Age Rate Tobacco Age Rate TobaccoBand Factor Factor Band Factor Factor0-17 0.635 1.000 41 1.302 1.16018 0.635 1.000 42 1.325 1.16019 0.635 1.000 43 1.357 1.16020 0.635 1.000 44 1.397 1.16021 1.000 1.100 45 1.444 1.17022 1.000 1.100 46 1.500 1.17023 1.000 1.100 47 1.563 1.17024 1.000 1.100 48 1.635 1.17025 1.004 1.120 49 1.706 1.17026 1.024 1.120 50 1.786 1.18027 1.048 1.120 51 1.865 1.18028 1.087 1.120 52 1.952 1.18029 1.119 1.120 53 2.040 1.18030 1.135 1.140 54 2.135 1.18031 1.159 1.140 55 2.230 1.19032 1.183 1.140 56 2.333 1.19033 1.198 1.140 57 2.437 1.19034 1.214 1.140 58 2.548 1.19035 1.222 1.150 59 2.603 1.19036 1.230 1.150 60 2.714 1.20037 1.238 1.150 61 2.810 1.20038 1.246 1.150 62 2.873 1.20039 1.262 1.150 63 2.952 1.20040 1.278 1.160 64+ 3.000 1.200

Premium for family coverage is determined by summing the consumer adjusted premium rates for each individual family member,provided at most three child dependents under age 21 are taken into account.

MO KC Metro 0.969 MO Northwest 1.063 MO KC Outstate 1.026

BCBSKC's 2015 geographic rating factors are shown below. BCBSKC is offering products in three rating regions in MO.


2015 Geographic Area FactorsArea Rate Factor

EXHIBIT 17. CONSUMER ADJUSTED PREMIUM RATE DEVELOPMENT

The Consumer Adjusted Premium Rate is the final premium rate for a plan that is charged to an individual, family, or smallemployer group utilizing the rating and premium adjustments as articulated in the applicable Market Reform Rating Rules. It is theproduct of the Plan Adjusted Index Rate, the geographic rating factor, the age rating factor and the tobacco status rating factor. Allrating factors are described and shown below.

BCBSKC's 2015 age and tobacco rating factors are shown below. The age rating factors used by BCBSKC are identical to thoseprescribed by CMS. Industry research regarding tobacco use and differences in health costs for smokers by age was used as thebasis of our adjustment factors.


2015 Age and Tobacco Factors

26_



EXHIBIT 17. CONSUMER ADJUSTED PREMIUM RATE DEVELOPMENT

Below is an example of how to arrive at the rate for an age 34 individual in the MO KC Metro area that is a smoker:

Plan Adjusted Index Rate for Blue & U Classic PCB Gold, Calibrated $349.77Age factor for a 34-year-old 1.214Smoker status adjustment: Smoker 1.140MO KC Metro factor 0.969Consumer Adjusted Premium Rate $469.06


Sample Consumer Adjusted Premium Rate Development

27_



Actuarial Value

Actuarial Value Source

0.680 Federal AV Calculator0.680 Federal AV Calculator0.609 Federal AV Calculator0.609 Federal AV Calculator0.783 Federal AV Calculator0.783 Federal AV Calculator0.688 Federal AV Calculator0.688 Federal AV Calculator0.683 Federal AV Calculator0.683 Federal AV Calculator0.680 Federal AV Calculator0.590 Federal AV Calculator0.609 Federal AV Calculator0.603 Federal AV Calculator0.709 Federal AV Calculator0.709 Federal AV Calculator0.609 Federal AV Calculator0.609 Federal AV Calculator0.785 Federal AV Calculator0.785 Federal AV Calculator0.685 Federal AV Calculator0.685 Federal AV Calculator0.687 Federal AV Calculator0.683 Federal AV Calculator0.592 Federal AV Calculator0.609 Federal AV Calculator0.603 Federal AV Calculator0.680 Federal AV Calculator0.590 Federal AV Calculator0.609 Federal AV Calculator0.687 Federal AV Calculator0.683 Federal AV Calculator0.592 Federal AV Calculator0.609 Federal AV Calculator0.702 Federal AV Calculator0.619 Federal AV Calculator0.702 Federal AV Calculator0.619 Federal AV Calculator

Blue & U Basic Select SilverBlue & U Basic Select Bronze

Blue & U Saver Select SilverBlue & U Saver2 Select SilverBlue & U Saver Select BronzeBlue & U Saver2 Select BronzeBlue & U Basic Select SilverBlue & U Basic Select Bronze

Blue & U Saver Select BronzeBlue & U Saver2 Select BronzeBlue & U SafetyNet SelectBlue & U Saver2 PCB SilverBlue & U Saver PCB BronzeBlue & U Saver2 PCB Bronze

Blue & U Classic Select GoldBlue & U Classic Select GoldBlue & U Classic Select SilverBlue & U Classic Select SilverBlue & U Saver Select SilverBlue & U Saver2 Select Silver

Blue & U Saver2 PCB BronzeBlue & U SafetyNet PCBBlue & U First Select SilverBlue & U First Select SilverBlue & U First Select BronzeBlue & U First Select Bronze

Blue & U Classic PCB SilverBlue & U Classic PCB SilverBlue & U Saver PCB SilverBlue & U Saver PCB SilverBlue & U Saver2 PCB SilverBlue & U Saver PCB Bronze

Blue & U First PCB SilverBlue & U First PCB SilverBlue & U First PCB BronzeBlue & U First PCB BronzeBlue & U Classic PCB GoldBlue & U Classic PCB Gold

EXHIBIT 18. AV METAL VALUES

The AV metal values included in Worksheet 2 are entirely based on the AV Calculator. Table 18.1 below summarizes thesevalues for each product.


Actuarial Values

Plan

28_


Blue Cross and Blue Shield of Kansas City Actuarial Memorandum________________________________________________________________________

PlanAV & Cost

Sharing

Provider Network

Adjustment

Benefits In

Addition to EHBs



Exchange Fee


EligibilityAV Pricing

ValueBlue & U First PCB Silver 0.684 1.049 1.000 0.986 1.236 1.002 0.876 Blue & U First PCB Silver 0.698 1.049 1.000 0.986 1.236 1.002 0.894 Blue & U First PCB Bronze 0.501 1.049 1.000 0.986 1.236 1.002 0.642 Blue & U First PCB Bronze 0.512 1.049 1.000 0.986 1.236 1.002 0.656 Blue & U Classic PCB Gold 0.846 1.049 1.000 0.986 1.236 1.002 1.084 Blue & U Classic PCB Gold 0.862 1.049 1.000 0.986 1.236 1.002 1.104 Blue & U Classic PCB Silver 0.705 1.049 1.000 0.986 1.236 1.002 0.903 Blue & U Classic PCB Silver 0.714 1.049 1.000 0.986 1.236 1.002 0.915 Blue & U Saver PCB Silver 0.655 1.049 1.000 0.986 1.236 1.002 0.840 Blue & U Saver PCB Silver 0.640 1.049 1.000 0.986 1.236 1.002 0.821 Blue & U Saver2 PCB Silver 0.641 1.049 1.000 0.986 1.236 1.002 0.821 Blue & U Saver PCB Bronze 0.501 1.049 1.000 0.986 1.236 1.002 0.642 Blue & U Saver2 PCB Bronze 0.575 1.049 1.000 0.986 1.236 1.002 0.736 Blue & U SafetyNet PCB 0.446 1.049 1.000 0.986 1.236 0.902 0.514 Blue & U First Select Silver 0.684 0.892 1.000 0.986 1.236 1.002 0.745 Blue & U First Select Silver 0.698 0.892 1.000 0.986 1.236 1.002 0.760 Blue & U First Select Bronze 0.501 0.892 1.000 0.986 1.236 1.002 0.546 Blue & U First Select Bronze 0.512 0.892 1.000 0.986 1.236 1.002 0.558 Blue & U Classic Select Gold 0.846 0.892 1.000 0.986 1.236 1.002 0.922 Blue & U Classic Select Gold 0.862 0.892 1.000 0.986 1.236 1.002 0.939 Blue & U Classic Select Silver 0.705 0.892 1.000 0.986 1.236 1.002 0.767 Blue & U Classic Select Silver 0.714 0.892 1.000 0.986 1.236 1.002 0.778 Blue & U Saver Select Silver 0.655 0.892 1.000 0.986 1.236 1.002 0.714 Blue & U Saver2 Select Silver 0.641 0.892 1.000 0.986 1.236 1.002 0.698 Blue & U Saver Select Bronze 0.501 0.892 1.000 0.986 1.236 1.002 0.546 Blue & U Saver2 Select Bronze 0.575 0.892 1.000 0.986 1.236 1.002 0.626 Blue & U SafetyNet Select 0.446 0.892 1.000 0.986 1.236 0.902 0.437 Blue & U Saver2 PCB Silver 0.625 1.049 1.000 0.986 1.236 1.002 0.801 Blue & U Saver PCB Bronze 0.489 1.049 1.000 0.986 1.236 1.002 0.626 Blue & U Saver2 PCB Bronze 0.561 1.049 1.000 0.986 1.236 1.002 0.719 Blue & U Saver Select Silver 0.640 0.892 1.000 0.986 1.236 1.002 0.697 Blue & U Saver2 Select Silver 0.625 0.892 1.000 0.986 1.236 1.002 0.681 Blue & U Saver Select Bronze 0.489 0.892 1.000 0.986 1.236 1.002 0.532 Blue & U Saver2 Select Bronze 0.561 0.892 1.000 0.986 1.236 1.002 0.611 Blue & U Basic Select Silver 0.610 0.887 1.000 0.986 1.236 1.002 0.661 Blue & U Basic Select Bronze 0.457 0.887 1.000 0.986 1.236 1.002 0.495 Blue & U Basic Select Silver 0.624 0.887 1.000 0.986 1.236 1.002 0.676 Blue & U Basic Select Bronze 0.468 0.887 1.000 0.986 1.236 1.002 0.507 Total 0.657 1.000 1.000 0.986 1.236 1.000 0.801

The adjustment for plan cost sharing includes expected differences in utilization due to differences in cost sharing.Adjustments in utilization due to differences in cost sharing were based on the contractual adjustments from Milliman's2013 Health Cost Guidelines . These adjustment factors only contain expected differences in utilization due to differencesin cost sharing and not due to health status.

EXHIBIT 19. AV PRICING VALUES

The following table summarizes all of the adjustments included in the AV Pricing Value:


Actuarial Value Pricing Values

The AV Pricing Value represents the cumulative effect of the adjustments made by BCBSKC to move from the MarketAdjusted Index Rate to the Plan Adjusted Index Rate.

29_



73% 87% 94% Total1,512 5,940 10,476 17,928 648 3,240 4,968 8,856

1,728 4,212 7,236 13,176 1,296 3,024 7,992 12,312 432 1,728 3,024 5,184

1,080 1,944 4,104 7,128 216 432 1,080 1,728 432 648 1,080 2,160

1,296 2,592 3,240 7,128 8,640 23,760 43,200 75,600 Total

Blue & U First Select SilverBlue & U Classic Select SilverBlue & U Saver2 PCB SilverBlue & U Saver Select SilverBlue & U Saver2 Select SilverBlue & U Basic Select Silver

Blue Cross and Blue Shield of Kansas CityProjected Enrollment (Members) by Subsidy Level

Plan NameBlue & U First PCB SilverBlue & U Classic PCB SilverBlue & U Saver PCB Silver

Projected population growth in the State

Projected "take-up" rates based on current membership status (i.e., current insured/uninsured) and federal subsidy available if a member enrolls in an exchange plan

There are no differences between the distribution of projected member months relative to the current membership

Silver plan enrollment is eligible for cost sharing reduction in the individual market. The table below illustrates theprojected enrollment in each subsidy level, by plan.

Table 20.1

EXHIBIT 20. MEMBERSHIP PROJECTIONS

The projected membership (as displayed in Worksheet 2, Section IV of the URRT) was determined by considering thesize of the projected Missouri individual market in 2015 in the plan's service area and an assumed penetration rate ofthis market. The size of the market was estimated based on the following:

Current size of the Missouri individual market in the plan's service area

Current BCBSKC group membership and any anticipated lapses

The individual mandate

Qualification of members for Medicaid

30_



EXHIBIT 21. TERMINATED PRODUCTS

There are no products terminating prior to the effective date.

31_



EXHIBIT 22. PLAN TYPE

There are no differences between the plans of BCBSKC and the plan type selected in the drop-down box in Worksheet 2, Section I of the Part I Unified Rate Review Template.

32_



EXHIBIT 23. WARNING ALERTS

The are no Warning Alerts on Worksheet 2.

33_



EXHIBIT 24. EFFECTIVE RATE REVIEW INFORMATION (OPTIONAL)

Not applicable.

34_



EXHIBIT 25. RELIANCE

I did not rely on any information or underlying assumptions provided by another individual.

35_


2015 MO - DP Act Memo-20140626 v2 (2)MO_DP_Sign

2015 blue cross and blue shield of kansas city individual-1 rate filing

Documents

blue shield of kansas

blue shield of kansas

actuarial memorandumblue

bcbskc individual rate

rate review infoexhibit

actuarial certificationexhibit

proposed rate increasesexhibit

cons adj prem rate devexhibit