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Board approves administrative fees, budgets and reserve disclosures; rate stabilization reserve to rebate about $3.8 million
Summary
The Health Service System board accepted UnitedHealthcare's administrative fees, reviewed reserve balances (IBNR and contingency reserves), approved general-fund and 205 fund budgets, and noted a rate-stabilization rebate of roughly $3.8 million to be applied to 2017 rates.
The Health Service System board approved several administrative and financial items during the meeting, including UnitedHealthcare's administrative fee schedule, budget approvals and public disclosures of reserve levels.
Actuarial staff presented UnitedHealthcare's 2017 administrative fee request and associated embedded fees. The actuary said the carrier proposed a standard administrative-fee increase (about 3% for actives and early retirees, with smaller increases for Medicare retirees) and described ancillary components such as a $2.05 HSS sustainability fee and a shared-savings arrangement for out-of-network claim negotiations. The board moved to accept the recommended administrative fees.
Separately, staff reviewed the rate stabilization-reserve mechanics: surplus or deficits are amortized over three years so members receive rebates or surcharges smoothly. The actuary calculated that the reserve position would reduce 2017 rates by approximately $3.8 million, an amount that will appear as a line-item adjustment in the upcoming rate materials. Staff also summarized required incurred-but-not-reported (IBNR) reserves for self-funded programs (about one to two months of claims) and confirmed contingency/excess-loss coverage and reserves on the balance sheet.
Finance Committee reports led to board approval of a two-year general-fund administration budget for FY2016–17 and FY2017–18 and the Health Care Sustainability Fund ("205") budget; committee members noted a recommended increase in the 205 per-member contribution from $2.05 to $3.00 per month and asked staff to return in March with a spending plan for that increase. The board adopted the budgets as presented.
What happens next: Staff will bring the 205 fee-increase proposal with itemized expenditures to the next meeting; the actuary will include the stabilization-reserve rebate and other line items when presenting preliminary 2017 rates in April.
