RESOURCES

Recent fee guides and claim requirements:

Reasonable and Customary (R&C) Pricing Guide

Medical Supplies – Claim Requirements

Dispensing Fee Update – June 2013

Dispensing Fee Update – June 2012

Dispensing Fee Update – March 2012

Some helpful industry terms:

Alternate Treatment (Dental)

When there are two or more courses of eligible treatments, each of which would be adequate results for a given condition, a carrier will pay for the least expensive course of treatment, even if the more expensive treatment option is chosen by the claimant. Carriers work with professional dental consultants to determine the adequacy of various courses of treatments available.

Coinsurance

Is the percentage of eligible expenses payable by the carrier of a group plan. For example, if a benefit has a coinsurance of 80%, the carrier will pay the 80% of the expense (minus any deductible, if applicable) and the plan member pays the remainder.

Deductible:

If a plan includes a deductible (ie $25 / year), this amount must be paid first before benefits become eligible for payment.

Dental Fee Guide:

The dental association of each province publishes a dental fee guide each year. The guide summarizes recommended charges for each dental procedure. Guides are updated annually to account for inflation and other factors. Plan sponsors can choose which dental fee guide (current year, or specific year or specific province) to use to determine the maximum amount payable for each dental procedure in their plan.

Generic Drugs:

1. Generic drugs are a chemically equivalent alternative to brand-name drugs. They contain the same high quality active ingredients as brand-name drugs. They are federally tested using the same strict criteria for safety and effectiveness and must meet the same scientific norms and standards.

Generic drugs’ inactive ingredients, such as coatings, may differ (although the fillers used in drugs come from a limited range of available products) and they may appear different – in colour or shape – but they work the same. They are less expensive than brand-name drugs.

Dispensing Fee Cap:

A plan sponsor can place a fixed dollar limit on dispensing fees (the fee charged by a pharmacy for filling a prescription).

Open Space Limitation:

The Open Space limitation may apply to certain dental procedures that use appliances to replace extracted teeth. When a dentist recommends placing a prosthodontic appliance – such as a bridge or a denture – as part of the patient’s treatment plan, the carrier needs to know the extraction date for each tooth that the appliance will be replacing. If your plan includes this limitation, and any of the teeth involved were extracted before the patient became insured under the plan, the plan will not pay for the treatment. Check your benefit booklet to see if your plan includes the Open Space limitation.

Reasonable and Customary (R&C):

A fee is reasonable and customary if its dollar value falls within the usual range of charges for the same or comparable services (or supplies) made by similar practitioners in an area.

Some helpful industry terms:

CLAIMS

Adjusted Incurred Claims:

The Incurred Claims, adjusted for Trend to be brought up to current levels.

Incurred Claims:

Paid Claims for an experience period, adjusted to include the Change in Reserve.

Paid Claims:

The actual amount of claims submitted and paid within an experience period.

Pooled Claims:

1. Claims in excess of a pre-determined level that are removed from the Paid Claims in each experience period, so they will not impact the experience rating.

Typically, all claims are removed for Emergency Out-of-Country, Accidental Dental and Private Duty Nursing services, as well as Drug claims in excess of the Drug Stop Loss amount per member and, in the province of Quebec, claims in excess of the limits set by RAMQ legislation.

FACTORS

Demographic Adjustment:

A factor reflecting the change in ratio of males to females, occupation and province of residence, as well as aging within a group. The renewal rates are partially based on the evolving composition of a group.

Economic Adjustment Factor:

A factor used to adjust pricing at the benefit level in situations where the carrier makes changes to the manual rates and there is a lag updating all of the required tables. It can also be used as a transitional adjustment to help move pricing toward target levels.

Manual Factor:

Represents the change required to bring current premium in line with the carrier’s manual rates.

Trend Factor:

The expected increase to paid claims as the result of inflation, increased utilization, the introduction of new drugs and treatments, delisting of government services, deductible leveraging and changes to provincial dental fee guides.

PREMIUM

Adjusted Premium:

The Billed Premium for each experience period, adjusted to reflect current rates, demographic changes and the impact of plan amendments.

Billed Premium:

The actual amount of premium billed to the client during each experience period.

RAMQ Premium:

A representation of the amount of premium that would be required to be paid into Quebec’s provincially legislated RAMQ pool on behalf of the client for each experience period. This amount is deducted from the experience premium for each period.

RATING

Credibility:

The probability that past claims experience for the client will be consistent and therefore an accurate reflection of claiming patterns that are likely occur in the future. Credibility to the client’s own experience will normally increase with the size of the group and the number of years of experience.

Weighting:

The level of emphasis applied to each experience period used to calculate the Weighted Adjusted Incurred Loss Ratio, the weighting used depends on the benefit and the pattern of past experience.

RATIOS

Acceptable Loss Ratio (ALR):

The ratio of claims to premium, reflecting the portion of premium required to cover claim costs. The balance covers required expenses for the plan.

Current Loss Ratio:

The current loss ratio of claims to premium, reflecting the portion of premium required to cover claim costs.

Target Loss Ratio:

The ratio of claims to premium, reflecting the portion of premium required to cover claim costs for the upcoming renewal period.

Adjusted Incurred Loss Ratio:

The ratio of Adjusted Incurred Claims to Adjusted Premium. This ratio brings all premium and claims for an experience period up to current levels.

Experience Loss Ratio:

The ration of Paid Claims to Billed Premium

Incurred Loss Ratio:

The ratio of Incurred Claims to Billed Premium

Weighted Adjusted Incurred Loss Ratio:

The blended result of the Adjusted Incurred Loss Ratio for each experience period based on the applied Weighting.

RESERVES

Adjusted Disabled Life Reserves:

Reserve levels that reflect current morbidity and interest assumptions

Change in Reserve:

The change in Disabled Life, IBNR and Waiver of Premium Reserves from the end of the previous experience period to the end of the current experience period.

Disabled Life Reserve:

For each disabled plan member that has been approved for claim payment under the Long Term Disability benefit, the carrier assumes responsibility for payment until the claim terminates, regardless of whether or not the policy remains in force. In order for a carrier to meet this liability, they must establish a reserve for each disabled member based on a number of factors including age at the time of disability, gender and payment amount.

Incurred But Not Reported Reserve (IBNR):

A reserve established to cover the liability for claims incurred by plan members during an experience period but, due to natural lag, will be reported to and paid by the carrier during the following period. The carrier retains liability for these lag claims, even if the client terminates their coverage.

Litigation Reserve:

When notification is received that a Long Term Disability claim is in litigation, the carrier will set up a reserve to cover the potential liability.

Waiver of Premium Reserve:

When a plan member has been approved for disability, payment of the Basic Life premium is waived. When a plan member becomes disabled, the carrier has responsibility for payment of the Life claim when it is incurred. To meet this liability, a reserve is established for each disabled member based on a number of factors including age at the time of disability, gender and volume of insurance.

INDUSTRY DRUG POOLING

EP3:

EP3 means a proprietary extended drug policy protection plan of a CDIPC member that meets CDIPC minimum EP3 standards.