August 10, 2006
COPY OF LETTER TO BROKERS
PacAdvantage Pooled Health Care Coverage For Small Employers Will Cease Operations at End of Year.
Dear PacAdvantage Broker: Pacific Health Advantage (“PacAdvantage”), a small group purchasing pool, is announcing the closure of its health insurance operations effective December 31, 2006. As you may know, the number of health plans voluntarily participating in the HIPC/PacAdvantage program has dropped from 10 statewide health plans in 1994 to three in 2006: Blue Shield of California, Health Net of California and related companies, and Kaiser Permanente. Blue Shield of California, a long-term PacAdvantage plan, has notified us it can no longer participate after December 31, 2006, due to its financial losses in the program. Despite concerted good-faith efforts among all parties, we could not reach a financially viable arrangement that would allow for continued participation of Blue Shield of California, Health Net of California and Kaiser Permanente. A core premise behind PacAdvantage is health plan “choice” for participating small employers. Without that choice, PacAdvantage no longer can offer a suitable, competitive option for our employer groups. PacAdvantage has worked closely with both the participating carriers and the state regulators (the departments of Managed Health Care and Insurance) to assure that participating groups and subscribers are notified of this closure and given ample opportunity to find alternative coverage on or before January 1, 2007. In support of this, PacAdvantage is communicating directly with small employers, the employees of these employers, and with the brokers who service the affected employers.
What This Means For Your Groups Receiving Coverage Through PacAdvantage
Effective December 31, 2006, PacAdvantage will no longer provide access to coverage. The last effective date new business will be accepted is August 1, 2006, if postmarked August 10, 2006 or earlier. For such new groups, PacAdvantage will call the applicable broker and confirm that the group wants to continue to be enrolled, even though coverage will end December 31, 2006. Any new case submissions post marked August 11, 2006 or after will not be accepted. Any applications for new employees of enrolled groups, or other changes to a current group’s census will be processed normally and those enrollees will have a termination date in accordance with the schedule below. Additionally, PacAdvantage benefits and co-pays will not change during a group’s current open enrollment cycle. If the group is eligible for renewal in September, October, or November, any benefit or co-pay changes in the PacAdvantage offering will be clearly communicated. All current PacAdvantage groups with renewal dates up to and including November 1, 2006 effective dates will be able to renew their coverage. However, these groups will have coverage terminating on December 31, 2006. December renewals will have a coverage termination date of November 30, 2006. Current groups receiving coverage through PacAdvantage will retain their coverage according to the following schedule:
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Key Group Coverage Termination Information
Note: December renewals have an earlier termination date of 11-30-2006
Scheduled Group Coverage Renewal Date 8/1/06 9/1/06 10/1/06 11/1/06 12/1/06 1/1/07 and after Will PacAdvantage Accept Renewal? Yes Yes Yes Yes No No PacAdvantage Coverage Termination Date 12/31/06 12/31/06 12/31/06 12/31/06 11/30/06 12/31/06
What You Will Receive From PacAdvantage
Enclosed are generic copies of letters to employers and enrollees who have coverage through PacAdvantage. While we normally like to provide you with as much advanced notice as possible, in order to meet regulatory mandated notification periods, we will mail these letters to employers on August 11, 2006 and to enrollees on August 16, 2006. You can view a listing of your groups by renewal month right away via your broker logon to www.pacadvantage.org. In order to help you during this transition, starting Monday, August 14, 2006, PacAdvantage has arranged for access to a downloadable excel file listing your groups and their census information also available via your broker logon to PacAdvantage.org.
What Your Groups Will Receive From PacAdvantage
Again, copies of the initial notices to your groups and enrollees are enclosed. These notices are going to all PacAdvantage employer groups and subscribers. Dependents at an address different from the subscriber will receive their own notice. This mailing will also be sent to persons enrolled under COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) or Cal-COBRA (California Continuation Benefits Replacement Act) associated with a PacAdvantage group. These letters will be posted on our website www.pacadvantage.org, as well. Additional Communications to Groups Groups with a November 1 renewal will be advised in their open enrollment materials that their renewal will only be effective until December 31, 2006. PacAdvantage will place outbound calls to brokers with November 1 groups to ensure that the groups understand the limited duration of their renewing coverage and so that the groups can work with you to find replacement coverage effective January 1, 2007. PacAdvantage groups with a December 1 renewal date will have a coverage end date of November 30, 2006 and will not receive a renewal offer. All other groups have a coverage end date of December 31, 2006. PacAdvantage will send a reminder notice to groups and individuals still enrolled as of November 30, 2006, stating that coverage through PacAdvantage will no longer be available after December 31, 2006. As part of this mailing, we will direct the group to work with their broker to find other appropriate coverage to meet their needs. Shortly after coverage ends, groups may receive reconciliation billing statements. Additional Communications to Employees and Members In addition to the enclosed letter being mailed to subscribers, individuals who remain enrolled on November 30, 2006 will also receive a final reminder, just like the reminder to groups. Upon termination of coverage, PacAdvantage will mail to each enrolled person a Health Insurance Portability and Accountability Act (“HIPAA”) Certificate of Creditable Coverage. As you may know, and as is described more fully in the enrollee letter available on our website and an attachment to this letter, the Certificate of Creditable Coverage has two primary uses. First, Certificates of Creditable Coverage can be used to reduce or eliminate pre-existing condition exclusion waiting periods for enrollees who get new group or individual coverage. These waiting periods, imposed by some insurance carriers, can be affected by the amount of time an individual had "creditable coverage."
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Second, the Certificate of Creditable Coverage can be used to establish eligibility for a HIPAA individual guaranteed issue policy, should an enrollee want to purchase one.
Actions You Need to Take
PacAdvantage is committed to serving its brokers throughout this transition. Groups you represent that are enrolled through PacAdvantage will maintain their current coverage according to the schedule included in this letter, as long as they timely pay their premiums. PacAdvantage will provide transition information to you and directly to the employers as outlined above. The greatest support you can provide to your groups at this time is to help them plan for and obtain other coverage.
Support For You and Your Groups
During this time of transition, PacAdvantage is committed to serving the employers, employees and their families who receive coverage through PacAdvantage as well as the brokerage community. We understand we have an important mission to complete as well as a professional responsibility to all those we serve. We have set a goal to remain focused and continue to provide excellent customer service. Should you have additional questions, please contact your local PacAdvantage representative or our Broker Services Unit at 877-735-5742. Sincerely,
John Grgurina Jr. President Attachments: Sample Employer notice Sample Employee notice